<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON , 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
WESTERN BANCORP
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
CALIFORNIA 6712 95-3863296
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
4100 NEWPORT PLACE, SUITE 900 NEWPORT BEACH, CALIFORNIA 92660
(949) 863-2300
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
JULIUS G. CHRISTENSEN, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
WESTERN BANCORP
4100 NEWPORT PLACE, SUITE 900
NEWPORT BEACH, CALIFORNIA 92660
(949) 863-2459
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
WITH COPIES TO:
STANLEY F. FARRAR, ESQ. ARTHUR COREN, ESQ.
Sullivan & Cromwell Horgan Rosen Beckham & Coren LLP
444 South Flower Street 21700 Oxnard St., Suite 1400
Los Angeles, CA 90071 Woodland Hills, CA 91367
(213) 955-8000 (818) 340-6100
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after the effective date of this Registration Statement
and the satisfaction or waiver of all other conditions to the Merger described
in the Proxy Statement-Prospectus.
------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE(2)
<S> <C> <C> <C>
Common Stock, no par value............................. [2,425,033] shares $17.00 $97,598,360
<CAPTION>
TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
<S> <C>
Common Stock, no par value............................. $28,792
</TABLE>
(1) Represents the estimated maximum number of shares of Common Stock, no par
value, of Western Bancorp ("Western Common Stock") that are issuable upon
consummation of the merger of Bank of Los Angeles ("BKLA") with Santa Monica
Bank, a wholly-owned subsidiary of Western Bancorp (the "Merger").
(2) Pursuant to Rule 457(f)(1), the registration fee is based on the average of
the high and low sale prices on June 23, 1998 of the Common Stock, no par
value ("BKLA Common Stock"), of BKLA on the Nasdaq National
Market-Registered Trademark- and computed based on the estimated maximum
number of shares of BKLA Common Stock that may be converted into the shares
of Western Common Stock to be registered.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT BECOMES EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
BANK OF LOS ANGELES
, 1998
Dear Shareholder:
You are cordially invited to attend a special meeting of shareholders of
Bank of Los Angeles ("BKLA") to be held on September 23, 1998, at 5:30 p.m. (the
"Special Meeting" or the "BKLA Meeting"). At such time you will be asked to
consider and vote on a proposal to approve the principal terms of a proposed
merger (the "Merger") of BKLA with and into Santa Monica Bank, a wholly-owned
subsidiary of Western Bancorp ("Western"), pursuant to an Agreement and Plan of
Merger (the "Merger Agreement"), dated as of April 16, 1998, and amended and
restated as of June 24, 1998, by and among Western, Santa Monica Bank and BKLA.
Upon the Merger becoming effective, each outstanding share of common stock, no
par value, of BKLA ("BKLA Common Stock") (other than as provided in the Merger
Agreement) will be converted into 0.4224 shares of common stock, no par value
per share, of Western (the "Consideration"). For a more detailed description of
the terms and conditions of the Merger see "THE MERGER AGREEMENT" in the
attached Proxy Statement-Prospectus and a copy of the Merger Agreement, which is
reproduced as Appendix A thereto. Additional information about the Merger, Santa
Monica Bank and Western are contained in the accompanying Proxy
Statement-Prospectus and the appendices thereto, all of which should be
carefully reviewed.
THE BOARD OF DIRECTORS OF BKLA HAS CONCLUDED THAT THE MERGER IS IN THE BEST
INTERESTS OF BKLA AND THE BKLA SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE
BKLA SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE PRINCIPAL TERMS OF THE MERGER.
Wedbush Morgan Securities, BKLA's financial advisor, has delivered to the BKLA
Board its opinion, dated April 15, 1998, that the Consideration received by the
BKLA shareholders pursuant to the Merger is fair to the shareholders from a
financial point of view. The opinion of Wedbush Morgan Securities, dated July
, 1998 (and certain assumptions and qualifications therein), is described in
the accompanying Proxy Statement-Prospectus and reproduced in Appendix B
thereto.
At the Special Meeting, each BKLA shareholder will also be asked to set the
number of directors at nine, and consider and approve the election of nine
directors to hold office until the Merger is consummated or, if the Merger is
not consummated, until the next annual meeting of BKLA and until their
successors have been elected and duly qualified.
It is important that your shares be represented and voted at the Special
Meeting regardless of the number of shares you own and whether or not you plan
to attend the Special Meeting. The affirmative vote of the holders of a majority
of BKLA Common Stock entitled to vote at the Special Meeting is required for
approval of the principal terms of the Merger. Your failure to vote for approval
of the principal terms of the Merger has the same effect as voting against the
Merger. Therefore, we urge you to sign, date and mail the enclosed proxy. If you
decide to attend the Special Meeting and wish to vote in person, you may
withdraw your proxy at that time.
YOU SHOULD NOT SEND IN SHARE CERTIFICATES AT THIS TIME.
Sincerely,
--------------------------------------
Adriana M. Boeka
CHAIRMAN OF THE BOARD
--------------------------------------
John J. Feldman
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF BANK OF LOS ANGELES
TO BE HELD AT BEVERLY HILLS, CALIFORNIA, ON SEPTEMBER 23, 1998
------------------------
TO THE SHAREHOLDERS
OF BANK OF LOS ANGELES:
Notice is hereby given that a special meeting ("Special Meeting") of
Shareholders of Bank of Los Angeles ("BKLA") will be held at 9601 Santa Monica
Boulevard, Beverly Hills, California 90210, on Wednesday, September 23, 1998, at
5:30 p.m. for the following purposes:
1. To consider and vote on a proposal to approve the principal terms of the
proposed merger of BKLA with and into Santa Monica Bank, a wholly-owned
subsidiary of Western Bancorp ("Western") pursuant to the Agreement and
Plan of Merger (the "Merger Agreement");
2. To set the number of directors at nine, and consider and approve the
election of nine persons to the BKLA Board of Directors to serve until
the Merger is consummated or, if the Merger is not consummated, until the
1999 Annual Meeting of Shareholders at which their successors will be
elected. The following persons are the nominees:
<TABLE>
<S> <C> <C>
Adriana M. Boeka John J. Feldman James V. Reimann
Mary Anne Chalker Rickey M. Gelb Melvin F. Shaw
Roy Doumani John R. Newhouse Burton N. Sterman
</TABLE>
The Bylaws of BKLA currently provide that nominations for election of
members of the BKLA Board may be made by the BKLA Board or by any
shareholder of any outstanding class of voting stock of BKLA entitled to
vote for the election of directors. Notice of intention to make any
nominations, other than by the BKLA Board, shall be made in writing and
shall be received by the President and Chief Executive Officer of BKLA no
more than 60 days prior to any meeting of shareholders called for the
election of directors, no more than ten days after the date the notice of
such meeting is sent to shareholders pursuant to Section 2.2 of BKLA's
bylaws, and no later than the time fixed in the notice of the BKLA
Meeting for the opening of the Meeting. Notification shall contain the
following information to the extent known to the notifying shareholder:
(a) the name and address of each proposed nominee; (b) the principal
occupation of each proposed nominee; (c) the number of shares of voting
stock of BKLA owned by each proposed nominee; (d) the name and residence
address of the notifying shareholder; and (e) the number of shares of
voting stock of BKLA owned by the notifying shareholder. Nominations made
without nominee information may be disregarded by the Chairman of the
Meeting, and the election inspectors shall disregard all votes cast for
each nominee; and
3. To transact such other business as may properly come before the Special
Meeting or any postponement or adjournment thereof.
Under the terms of the Merger Agreement, Adriana M. Boeka will be appointed
to the Board of Directors of Western, effective immediately following the
Merger. In the event that the Merger is not consummated as contemplated, all
directors of BKLA previously elected will continue to serve as directors for the
balance of their terms and until their successors have been elected and duly
qualified.
The Board of Directors has fixed the close of business on July 27, 1998 as
the record date for determination of the shareholders entitled to notice of and
to vote at the Special Meeting or any adjournment thereof. Approval of the
matters to be voted upon in connection with the Merger requires the affirmative
vote of a majority of the outstanding shares of common stock, no par value, of
BKLA (the "BKLA Common Stock").
THE BOARD OF DIRECTORS HAS CONCLUDED THAT THE MERGER IS IN THE BEST
INTERESTS OF BKLA AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" THE PRINCIPAL TERMS OF THE MERGER.
<PAGE>
Shareholders may be entitled to exercise dissenters' rights as provided in
the California General Corporation Law (the "CGCL") and to receive cash in the
amount equal to the fair market value of their shares of BKLA Common Stock as of
April 16, 1998 in lieu of receiving the Consideration provided in the Merger
Agreement by complying with certain procedures specified by the CGCL. See "THE
MERGER-- Dissenters' Rights" in the accompanying Proxy Statement-Prospectus.
The accompanying Proxy Statement-Prospectus and the Appendices thereto
(including the Merger Agreement attached as Appendix A thereto and certain of
the Annexes to the Merger Agreement) form a part of this Notice.
By Order of the Board of Directors
--------------------------------------
Beverly A. Dyck,
CORPORATE SECRETARY
Dated: June , 1998
YOUR VOTE IS IMPORTANT. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE
SPECIAL MEETING, YOU SHOULD DATE, SIGN AND RETURN THE ENCLOSED PROXY. IF YOU
ATTEND THE SPECIAL MEETING, YOU WILL BE ENTITLED TO VOTE IN PERSON, IF YOU WISH.
YOU SHOULD NOT FORWARD SHARE CERTIFICATES AT THIS TIME.
<PAGE>
BANK OF LOS ANGELES
PROXY STATEMENT
---------------------
WESTERN BANCORP
PROSPECTUS
---------------------
This Proxy Statement-Prospectus is being furnished to the shareholders of
the Bank of Los Angeles ("BKLA"), a California corporation, in connection with
the solicitation of proxies by the Board of Directors of BKLA (the "BKLA Board")
from holders of outstanding shares of common stock, no par value ("BKLA Common
Stock"), of BKLA, for use at the special meeting of shareholders of BKLA ("BKLA
Shareholders") to be held on September 23, 1998, at 5:30 p.m. (the "Special
Meeting" or the "BKLA Meeting") and at any adjournments and postponements
thereof.
At the BKLA Meeting, the BKLA Shareholders will be asked to consider and
vote upon, among other things, a proposal to approve the principal terms of the
merger (the "Merger") of BKLA with Santa Monica Bank, a California banking
corporation ("SMB") and a wholly-owned subsidiary of Western Bancorp
("Western"), pursuant to an Agreement and Plan of Merger dated as of April 16,
1998, and amended and restated as of June 24, 1998 (the "Merger Agreement"), by
and among Western, Santa Monica Bank and BKLA, which is attached as Appendix A
to this Proxy Statement-Prospectus and is incorporated herein by reference.
Pursuant to the Merger Agreement, BKLA will merge with and into SMB, with SMB
being the surviving bank (the "Surviving Corporation") and operating under the
name "Santa Monica Bank". Upon the Merger becoming effective, each share of BKLA
Common Stock issued and outstanding at the Effective Time (as defined herein)
(other than (a) shares that have not been voted in favor of the approval of the
principal terms of the Merger and with respect to which Dissenters' Rights (as
defined herein) shall have been perfected in accordance with the California
General Corporation Code ("CGCL") and (b) shares held directly or indirectly by
Western, or any of its subsidiaries, in each case other than in a fiduciary
(including custodial or agency) capacity or as a result of debts previously
contracted in good faith), will be converted automatically into, subject to
certain limitations set forth in the Merger Agreement with respect to proration
and fractional shares, 0.4224 shares of common stock, no par value, of Western
("Western Common Stock"). Based on the closing price per share of Western Common
Stock on June , 1998, as reported on the Nasdaq National
Market-Registered Trademark- ("Nasdaq"), the per share equivalent price of BKLA
Common Stock based on the 0.4224 conversion number was $ . Because the
0.4224 conversion number is fixed pursuant to the Merger Agreement, a change in
the trading price of Western Common Stock before the Effective Time will affect
the implied market value of Western Common Stock to be received in the Merger by
BKLA Shareholders. See "RISK FACTORS--Limited Market for Western Common Stock",
"INFORMATION REGARDING WESTERN" and "SUMMARY--Markets and Market Prices".
Based upon the [4,788,735] shares of BKLA Common Stock outstanding on the
BKLA Record Date (as defined herein), it is expected that [2,111,057] shares of
Western Common Stock would be issued in the Merger (or, if all of the
[323,300] shares of BKLA Common Stock reserved for issuance upon exercise of
employee stock options outstanding on the BKLA Record Date were issued and
outstanding at the Effective Time and if all of the [629,045] shares of BKLA
Common Stock reserved for issuance upon exercise of warrants outstanding on the
BKLA Record Date were issued and outstanding at the Effective Time, it is
expected that [2,425,033] shares of Western Common Stock would be issued in the
Merger), assuming (i) no Dissenters' Rights are perfected by BKLA Shareholders
and (ii) no cash is paid in lieu of fractional shares.
In order for any BKLA Shareholder to exercise Dissenters' Rights, a notice
must be sent by such Shareholder and received by BKLA on or before September 23,
1998, the date of the BKLA Meeting, and any such Shareholder must vote against
the approval of the principal terms of the Merger. See "SUMMARY--Dissenters'
Rights" and "THE MERGER--Dissenters' Rights".
Western Common Stock is designated for quotation on Nasdaq under the symbol
"WEBC".
SEE "RISK FACTORS" ON PAGE 26 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHAREHOLDERS SHOULD CONSIDER WITH RESPECT TO THE MERGER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION, THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------------
THE SHARES OF WESTERN COMMON STOCK OFFERED HEREBY ARE NOT DEPOSITS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION. WESTERN AND BKLA DO
NOT GUARANTEE THE INVESTMENT VALUE OF THE TRANSACTION DESCRIBED IN THIS
PROXY STATEMENT-PROSPECTUS. AN INVESTMENT IN WESTERN COMMON STOCK
MAY LOSE VALUE BEFORE OR AFTER THE EFFECTIVE DATE OF THE MERGER.
--------------------------
THE DATE OF THIS PROXY STATEMENT-PROSPECTUS IS JUNE , 1998.
1
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS IN
CONNECTION WITH THE SOLICITATION OF PROXIES OR THE OFFERING OF SECURITIES MADE
HEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT-PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE
SECURITIES OFFERED BY THIS PROXY STATEMENT-PROSPECTUS, OR THE SOLICITATION OF A
PROXY, BY ANY PERSON IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN
OFFER, OR SOLICITATION OF AN OFFER, OR PROXY SOLICITATION. NEITHER DELIVERY OF
THIS PROXY STATEMENT-PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES BEING
OFFERED PURSUANT TO THIS PROXY STATEMENT-PROSPECTUS SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH HEREIN SINCE THE DATE OF THIS PROXY STATEMENT-PROSPECTUS.
AVAILABLE INFORMATION
Each of Western and BKLA is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In accordance
therewith, Western files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission") and BKLA files
reports, proxy statements and other information with the Federal Deposit
Insurance Corporation (the "FDIC"). The reports, proxy statements and other
information filed by BKLA with the FDIC may be inspected and copied at the
offices of the FDIC, Registration, Disclosure and Securities Operations Unit,
550 17th Street N.W., Washington, D.C. 20429, Room F-6043. The voice phone
numbers are 202/898-8911 and 202/898-8913. The facsimile number is 202/898-3909.
The reports, proxy statements and other information filed by Western with the
Commission may be inspected and copied at the public reference facilities of the
Commission located at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's regional offices at 7 World Trade Center, New York, New York 10048,
and Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661, at
prescribed rates. Such material may also be accessed electronically by means of
the Commission's home page on the Internet at http://www.sec.gov. Shares of
Western Common Stock are designated for quotation on the Nasdaq. Material filed
by Western can be inspected at the offices of the National Association of
Securities Dealers, Inc., Reports Section, 1735 K Street, N.W., Washington, D.C.
20006. The reports, proxy statements and other information filed by BKLA with
the FDIC during the 12 calendar months immediately preceding the filing of
Western's Registration Statement (as defined below) have been filed with the
Commission as part of the Current Reports on Form 8-K filed by Western on June
25, 1998, and may be inspected and copied at the public reference facilities of
the Commission and at the Commission's regional offices at the addresses listed
above, and accessed electronically at the Commission's home page listed above.
Western has filed with the Commission a registration statement on Form S-4
(including exhibits thereto, the "Registration Statement") pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), covering the shares
of Western Common Stock issuable in the Merger. This Proxy Statement-Prospectus
does not contain all the information set forth in the Registration Statement.
Such additional information may be obtained from the Commission's principal
office in Washington, D.C. Statements contained in this Proxy
Statement-Prospectus as to the contents of any contract or other document
referred to herein are not necessarily complete, and in each instance reference
is made to the copy of such contract or other document filed as an exhibit to
the Registration Statement, each such statement being qualified in all respects
by such reference.
This Proxy Statement-Prospectus constitutes the proxy statement of BKLA
relating to the solicitation of proxies for its use at the BKLA Meeting as well
as the Prospectus filed as part of the Registration Statement. This Proxy
Statement-Prospectus and the related proxy and other materials are first being
provided to the shareholders of BKLA on or about August 17, 1998.
2
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS NOT
INCLUDED HEREIN. DOCUMENTS RELATING TO WESTERN, EXCLUDING EXHIBITS UNLESS
SPECIFICALLY INCORPORATED HEREIN, ARE AVAILABLE WITHOUT CHARGE UPON REQUEST TO
JULIUS G. CHRISTENSEN, EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY,
WESTERN BANCORP, 4100 NEWPORT PLACE, SUITE 900, NEWPORT BEACH, CALIFORNIA 92660.
TELEPHONE REQUESTS MAY BE DIRECTED TO JULIUS G. CHRISTENSEN, AT (949) 863-2459.
DOCUMENTS RELATING TO BKLA, EXCLUDING EXHIBITS UNLESS SPECIFICALLY INCORPORATED
HEREIN, ARE AVAILABLE WITHOUT CHARGE UPON REQUEST TO BEVERLY A. DYCK, VICE
PRESIDENT AND CORPORATE SECRETARY, BANK OF LOS ANGELES, 8901 SANTA MONICA
BOULEVARD, WEST HOLLYWOOD, CALIFORNIA 90069. TELEPHONE REQUESTS MAY BE DIRECTED
TO BEVERLY A. DYCK, AT (310) 843-1455. IN ORDER TO ENSURE TIMELY DELIVERY OF
DOCUMENTS, ANY REQUESTS SHOULD BE MADE BY JULY , 1998.
The following documents filed with the Commission by Western are
incorporated herein by reference:
(a) Western's Annual Report on Form 10-K for the year ended December 31,
1997 (the "Western Annual Report");
(b) Western's Quarterly Report on Form 10-Q for the quarter ended March 31,
1998;
(c) Western's Current Reports on Form 8-K dated February 11, 1998, April 30,
1998 and June 18, 1998 and on Form 8-K/A dated April 9, 1998.
(d) The description of Western's Common Stock contained in Western's
Registration Statement on Form 10 (File No. 2-85442).
(e) The following documents filed with the FDIC by BKLA, which have been
filed as part of the Current Report on Form 8-K filed by Western on June 25,
1998:
(i) BKLA's Annual Report on Form 10-K for the fiscal year ended December
31, 1997 (the "BKLA Annual Report");
(ii) BKLA's Current Reports on Form 8-K, dated April 30, 1998 and May 6,
1998; and
(iii) BKLA's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998.
Such incorporation by reference shall not be deemed to incorporate by
reference the information referred to in Item 402(a)(8) of Regulation S-K.
All documents and reports filed by Western pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
BKLA Meeting shall be deemed to be incorporated herein by reference and to be a
part hereof from the date of such filing and all documents and reports filed by
BKLA pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date hereof and prior to the BKLA Meeting shall be filed by
Western with the Commission and shall be deemed to be incorporated by reference
and to be a part hereof from the date of such filing with the Commission and any
statement contained herein or in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein or in any
other subsequently filed document that also is, or is deemed to be, incorporated
herein by reference, modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed to constitute a part hereof,
except as so modified or superseded.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION..................................................... 2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE......................... 3
TABLE OF CONTENTS......................................................... 4
TABLE OF DEFINED TERMS.................................................... 7
SUMMARY................................................................... 10
The Companies........................................................... 10
Additional Information.................................................. 11
The Merger.............................................................. 11
The BKLA Meeting........................................................ 12
Votes Required.......................................................... 12
Revocability of Proxies................................................. 13
Recommendations of the Boards of Directors.............................. 13
Opinion of Wedbush...................................................... 13
Effective Time.......................................................... 13
Conditions to the Merger................................................ 13
Waiver and Amendment.................................................... 14
Termination............................................................. 14
Stock Option Agreement.................................................. 15
Regulatory Approvals.................................................... 15
Operations and Management After the Merger.............................. 15
Interests of Certain Persons in the Merger.............................. 15
Certain Federal Income Tax Consequences................................. 16
Accounting Treatment.................................................... 16
Dissenters' Rights...................................................... 16
Risk Factors............................................................ 17
Markets and Market Prices............................................... 17
Summary Historical Financial Data....................................... 19
Summary Unaudited Pro Forma Combined Financial Data..................... 22
Selected Historical and Pro Forma per Share Data........................ 24
RISK FACTORS.............................................................. 26
Forward-Looking Statements May Not Prove Accurate....................... 26
Competition............................................................. 26
Ability to Integrate the Operations of Western and BKLA; Rapid Growth... 26
General Business Risk................................................... 27
Concentration of Operations; Recessionary Environments; Decline in Real
Estate Values......................................................... 27
Interest Rate Risk...................................................... 28
Shares Eligible for Future Sale; Dilution............................... 28
Regulation.............................................................. 29
Limited Market for Western Common Stock................................. 29
INFORMATION REGARDING WESTERN............................................. 30
Business of Western..................................................... 30
Quarterly Dividend...................................................... 30
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Incorporation of Certain Information By Reference....................... 30
INFORMATION REGARDING BKLA................................................ 31
Business of BKLA........................................................ 31
Incorporation of Certain Information by Reference....................... 31
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA..................... 32
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA............ 40
THE SPECIAL MEETING OF BKLA SHAREHOLDERS.................................. 42
General................................................................. 42
Matters To Be Considered at the BKLA Special Meeting.................... 42
The BKLA Record Date.................................................... 43
Votes Required and Voting of Proxies.................................... 43
Solicitation of Proxies................................................. 44
Revocability of Proxies................................................. 44
Security Ownership of Certain Beneficial Owners and Management of
BKLA.................................................................. 44
Dissenters' Rights...................................................... 46
Election of BKLA Directors.............................................. 47
Certain Committees of the BKLA Board.................................... 48
BKLA Director Compensation.............................................. 48
BKLA Executive Officers................................................. 48
Compensation of BKLA Executive Officers................................. 49
BKLA Aggregated Option Exercise and Option Values as of December 31,
1997.................................................................. 50
BKLA Options Granted as of December 31, 1997............................ 50
Certain BKLA Transactions............................................... 50
BKLA Compensation/Stock Option Committee Report......................... 51
BKLA Performance Graph.................................................. 51
THE MERGER................................................................ 53
Background and Reasons for the Merger................................... 53
Structure of the Merger................................................. 54
Reasons for the Merger; Recommendations of the BKLA Board of
Directors............................................................. 55
Opinion of Wedbush...................................................... 56
Wedbush Fee............................................................. 61
Certain Federal Income Tax Consequences................................. 61
Regulatory Approvals.................................................... 63
Resale of Western Common Stock.......................................... 64
Certain Effects of the Merger........................................... 64
Interests of Certain Persons in the Merger.............................. 65
Submission of Shareholders' Proposals for BKLA's 1999 Annual Meeting.... 66
Dissenters' Rights...................................................... 66
Accounting Treatment.................................................... 68
THE MERGER AGREEMENT...................................................... 69
The Merger.............................................................. 69
Effective Time and Effective Date....................................... 69
Exchange of Stock Certificates; Dividends............................... 70
No Fractional Shares.................................................... 70
Conduct of the Business of BKLA and Western Prior to the Merger......... 70
Representations and Warranties.......................................... 71
Certain Covenants....................................................... 72
</TABLE>
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<TABLE>
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Conditions.............................................................. 74
Termination............................................................. 75
Termination Payment..................................................... 75
Expenses................................................................ 75
THE STOCK OPTION AGREEMENT................................................ 76
General................................................................. 76
The Stock Option........................................................ 76
Termination............................................................. 77
THE SHAREHOLDER AGREEMENTS................................................ 77
COMPARISON OF SHAREHOLDER RIGHTS.......................................... 78
Comparison of Corporate Structure....................................... 78
Dividends and Dividend Policy........................................... 78
Number of Directors..................................................... 79
Indemnification of Directors and Officers............................... 79
VALIDITY OF WESTERN COMMON STOCK.......................................... 79
EXPERTS................................................................... 79
</TABLE>
LIST OF APPENDICES
Appendix A-- Agreement and Plan of Merger, dated as of April 16, 1998, and
amended and restated as of June 24, 1998, by and among Western, SMB
and BKLA.
Appendix B--Fairness Opinion of Wedbush Morgan Securities.
Appendix C--Chapter 13 of the CGCL.
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TABLE OF DEFINED TERMS
<TABLE>
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Acquisition Premium....................................................... 59
Acquisition Proposal...................................................... 72
Acquisition Transaction................................................... 77
AWB....................................................................... 11
Beneficial Owner.......................................................... 46
BHCA...................................................................... 10
BKLA...................................................................... 1
BKLA Affiliates........................................................... 64
BKLA Annual Report........................................................ 3
BKLA Board................................................................ 1
BKLA Common Stock......................................................... 1
BKLA Management........................................................... 15
BKLA Meeting.............................................................. 1
BKLA Record Date.......................................................... 12
BKLA Shareholders......................................................... 1
BKLA Stock Option......................................................... 40
BKLA Subsidiary........................................................... 76
BKLA Warrant.............................................................. 40
BKX Index Percentage...................................................... 75
BMA....................................................................... 63
Book Value Multiple....................................................... 59
Cash Net Income........................................................... 59
CCB....................................................................... 10
CCB Merger................................................................ 10
CGCL...................................................................... 1
CNB....................................................................... 11
Code...................................................................... 16
Commission................................................................ 2
Comparable Banks.......................................................... 60
Comparison Merger Transactions............................................ 59
Consideration............................................................. 11
Conversion Number......................................................... 12
Costs..................................................................... 72
CRA....................................................................... 63
Demand.................................................................... 67
Diluted EPS............................................................... 58
Dissenters' Rights........................................................ 16
Dissenting Shareholder.................................................... 67
Dissenting Shares......................................................... 67
Dividendable Net Income................................................... 59
Effective Date............................................................ 69
Effective Time............................................................ 69
Equivalent Per Share Price................................................ 18
Exchange Act.............................................................. 2
Exchange Agent............................................................ 70
FDIC...................................................................... 2
</TABLE>
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<TABLE>
<CAPTION>
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Federal Reserve Board..................................................... 13
FIP....................................................................... 29
GAAP...................................................................... 57
Grantee................................................................... 15
Holding Period............................................................ 62
Hovde..................................................................... 29
Indemnified Parties....................................................... 72
IRS....................................................................... 62
Issuer.................................................................... 15
Letter of Transmittal..................................................... 70
LTM Multiple.............................................................. 59
Maximum Amount............................................................ 73
Merger.................................................................... 1
Merger Agreement.......................................................... 1
Nasdaq.................................................................... 1
NBSC...................................................................... 10
New Certificates.......................................................... 70
Old Certificates.......................................................... 70
Option.................................................................... 15
Party Shareholders........................................................ 77
Preliminary Purchase Event................................................ 76
Purchase Event............................................................ 76
Registration Rights....................................................... 77
Registration Statement.................................................... 2
Reorganization............................................................ 16
Replacement Shares........................................................ 40
Replacement Warrant....................................................... 40
SCB....................................................................... 10
SCB Merger................................................................ 10
Securities Act............................................................ 2
Shareholder Agreements.................................................... 12
SMB....................................................................... 1
SMB Acquisition........................................................... 10
SMB Board................................................................. 11
Special Meeting........................................................... 1
Spread.................................................................... 40
State Commissioner........................................................ 11
Stock Option Agreement.................................................... 15
Surviving Corporation..................................................... 1
Tangible Book Value Multiple.............................................. 59
Tax Opinions.............................................................. 16
Ten Day Average Price..................................................... 75
Ten Day Period............................................................ 75
Vavrinek.................................................................. 14
Wedbush................................................................... 13
Wedbush Agreement......................................................... 56
Wedbush Opinion........................................................... 56
Wedbush Reconfirming Opinion.............................................. 56
</TABLE>
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Western................................................................... 1
Western Annual Report..................................................... 3
Western Board............................................................. 11
Western Common Stock...................................................... 1
Western Common Stock Price Percentage..................................... 75
Western Management........................................................ 19
Western Subsidiary........................................................ 76
WTB....................................................................... 11
</TABLE>
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SUMMARY
THE FOLLOWING SUMMARY IS NOT INTENDED TO BE COMPLETE AND IS QUALIFIED IN ALL
RESPECTS BY THE MORE DETAILED INFORMATION INCLUDED IN THIS PROXY
STATEMENT-PROSPECTUS, THE APPENDICES HERETO AND THE DOCUMENTS INCORPORATED
HEREIN BY REFERENCE. SHAREHOLDERS ARE URGED TO READ CAREFULLY THIS PROXY
STATEMENT-PROSPECTUS, INCLUDING THE APPENDICES HERETO AND THE DOCUMENTS
INCORPORATED HEREIN BY REFERENCE, IN THEIR ENTIRETY.
ALL INFORMATION CONCERNING WESTERN, SOUTHERN CALIFORNIA BANK ("SCB") AND
SANTA MONICA BANK INCLUDED IN THIS PROXY STATEMENT-PROSPECTUS, THE APPENDICES
HERETO AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE HAS BEEN FURNISHED BY
WESTERN, AND ALL INFORMATION CONCERNING BKLA INCLUDED IN THIS PROXY
STATEMENT-PROSPECTUS, THE APPENDICES HERETO AND THE DOCUMENTS INCORPORATED
HEREIN BY REFERENCE HAS BEEN FURNISHED BY BKLA. UNLESS THE CONTEXT OTHERWISE
REQUIRES, REFERENCES TO "WESTERN" HEREIN SHALL BE TO WESTERN AND ITS
SUBSIDIARIES, INCLUDING SCB AND SMB.
THIS PROXY STATEMENT-PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN
THE MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE
ACT. ALTHOUGH EACH OF WESTERN AND BKLA BELIEVES THAT ITS PLANS, INTENTIONS AND
EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE,
NEITHER CAN GIVE ANY ASSURANCE THAT SUCH PLANS, INTENTIONS OR EXPECTATIONS WILL
BE ACHIEVED. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM WESTERN'S AND BKLA'S FORWARD-LOOKING STATEMENTS ARE SET FORTH
BELOW AND ELSEWHERE IN THIS PROXY STATEMENT-PROSPECTUS. FURTHERMORE, WESTERN AND
BKLA DO NOT INTEND TO UPDATE OR REVISE THE FORWARD-LOOKING STATEMENTS TO REFLECT
EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS. SHAREHOLDERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON
ANY OF THE FORWARD-LOOKING STATEMENTS INCLUDED HEREIN. ALL FORWARD-LOOKING
STATEMENTS ATTRIBUTABLE TO WESTERN, BKLA OR PERSONS ACTING ON EITHER OF THEIR
BEHALVES ARE QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS SET FORTH
HEREIN. SEE "RISK FACTORS--FORWARD-LOOKING STATEMENTS MAY NOT PROVE ACCURATE".
THE COMPANIES
WESTERN
Western is a bank holding company registered under the Bank Holding Company
Act of 1956, as amended (the "BHCA"), and its principal business is to serve as
a holding company for its banking subsidiaries, SCB and SMB. Western was
organized on May 20, 1983 as a California corporation and commenced operation as
a bank holding company on June 18, 1984. Western Bank was acquired by Western on
September 30, 1996. On June 4, 1997, Western consummated its merger (the "CCB
Merger") with California Commercial Bankshares ("CCB") pursuant to which CCB
merged with and into Western. Also on June 4, 1997, Monarch Bank, a wholly-owned
subsidiary of Western prior to the CCB Merger, merged with and into National
Bank of Southern California ("NBSC"), a wholly-owned subsidiary of CCB prior to
the CCB Merger. The banking operations of NBSC and Monarch Bank were combined in
June 1997. On October 10, 1997, Western consummated its merger with SC Bancorp
(the "SCB Merger") pursuant to which SC Bancorp merged with and into Western. On
December 15, 1997, Western merged NBSC with and into SCB, a wholly-owned
subsidiary of SC Bancorp prior to the SCB Merger, with SCB being the surviving
bank. The operations of NBSC and SCB were combined in March 1998. On January 27,
1998, Western acquired Santa Monica Bank through the merger of Santa Monica Bank
with and into Western Bank (the "SMB Acquisition"). As part of the SMB
Acquisition, the name of Western Bank was changed to "Santa Monica Bank". As
used hereafter, "SMB" refers to the surviving entity in the merger of Santa
Monica Bank with and into Western Bank.
Santa Monica Bank's primary market area is the western part of Los Angeles
County. As of March 31, 1998 Santa Monica Bank had thirteen branch offices,
including branch offices in Santa Monica, Westwood, Malibu, Pacific Palisades,
Marina Del Rey, Beverly Hills, Century City and Encino. SCB's primary market
area includes southern Los Angeles County, Orange County and San Diego County.
As of March 31, 1998 SCB had six branch offices in southern Los Angeles County,
nine branch offices throughout Orange County and one in northern San Diego
County. SMB and SCB offer a broad range of banking products
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and services, including many types of business and personal savings and checking
accounts and other consumer banking services.
Western's principal executive offices are located at 4100 Newport Place,
Suite 900, Newport Beach, California 92660, and its telephone number is (949)
863-2444.
BKLA
BKLA was organized on May 8, 1981 as a California corporation and commenced
operations pursuant to a charter issued by the predecessor to the California
Commissioner of Financial Institutions (the "State Commissioner"), on May 6,
1982. On November 15, 1995, BKLA acquired World Trade Bank ("WTB"), with total
assets of approximately $42,487,000 and one banking office. Effective April 1,
1997, BKLA consummated a merger with American West Bank ("AWB"), with
approximately $67,291,000 in assets and two banking offices with BKLA being the
surviving bank. On December 31, 1997, BKLA consummated its merger with Culver
National Bank ("CNB"), a national banking corporation with approximately
$56,944,000 in total assets and one branch office, with BKLA being the surviving
bank.
BKLA is a full-service community bank which engages in general commercial
banking in Los Angeles County, California. BKLA's main office and its executive
offices are located in West Hollywood, California. As of June 15, 1998 BKLA had
six branch offices in the cities of Beverly Hills, West Hollywood, Encino,
Culver City and Glendale. Services include those traditionally offered by
commercial banks, such as checking and saving accounts and commercial and real
estate loans, and, for its business customers, personal, home improvement,
automobile and other installment loans. The vast majority of BKLA's loans are
direct loans made to individuals, professionals, real estate developers, and
small and medium sized businesses within BKLA's marketing area.
BKLA's principal executive offices are located at 8901 Santa Monica
Boulevard, West Hollywood, California 90069 and its telephone number is (310)
550-8900.
ADDITIONAL INFORMATION
For additional information regarding the business of Western and BKLA, see
"AVAILABLE INFORMATION", "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE",
"UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA", "INFORMATION REGARDING
BKLA" and "INFORMATION REGARDING WESTERN".
THE MERGER
On April 16, 1998 the BKLA Board, on April 7, 1998 the Board of Directors of
Western (the "Western Board"), and on April 16, 1998 the Board of Directors of
SMB (the "SMB Board"), each respectively approved the Merger Agreement, and the
Merger Agreement was executed and delivered on April 16, 1998 by Western, SMB
and BKLA. The Merger Agreement provides for the merger of BKLA with and into SMB
with SMB being the surviving bank. In connection with the Merger, each share of
BKLA Common Stock issued and outstanding at the Effective Time (other than (a)
shares that have not been voted in favor of approval of the principal terms of
the Merger and with respect to which Dissenters' Rights have been perfected in
accordance with the CGCL and (b) shares held by any of BKLA's subsidiaries or by
Western or any of its subsidiaries, in each case other than in a fiduciary
(including custodial or agency) capacity or as a result of debts previously
contracted in good faith) will be converted automatically into, subject to the
limitations set forth in the Merger Agreement with respect to proration and
fractional shares, 0.4224 shares of Western Common Stock (the "Consideration").
Each share of Western Common Stock outstanding immediately prior to the
Effective Time will remain outstanding after the Merger as one share of Western
Common Stock. See "THE MERGER--Background and Reasons for the Merger",
"--Reasons for the Merger; Recommendations of the BKLA Board of Directors" and
"--Dissenters' Rights".
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The Merger Agreement provides that, if the BKLA Shareholders approve the
principal terms of the Merger Agreement, and subject to receipt of regulatory
approvals and other customary closing conditions as more fully set forth below,
then BKLA will merge into SMB, with SMB being the Surviving Corporation. At the
Effective Time, shares of BKLA Common Stock will be converted into 0.4224 shares
(the "Conversion Number") of Western Common Stock, subject to the limitations
described above and elsewhere herein. See "THE MERGER--Certain Federal Income
Tax Consequences" and "THE MERGER AGREEMENT--The Merger".
All BKLA Stock Options (as defined herein), unless otherwise exercised
pursuant to BKLA's stock option plan, shall be converted into the right to
receive for each share of BKLA Common Stock otherwise issuable upon exercise
thereof, a number of shares of Western Common Stock equal to the quotient
obtained by dividing the Spread (as defined herein) by $42.61. At the Effective
Time, each BKLA Warrant (as defined herein), shall be converted into a warrant
to acquire, on the same terms and conditions as were applicable under such BKLA
warrant agreement, the number of shares of Western Common Stock equal to (a) the
number of shares of BKLA Common Stock subject to the BKLA Warrant, multiplied by
(b) the Conversion Number (such product rounded down to the nearest whole
number), at an exercise price per share (rounded up to the nearest whole cent)
equal to (y) the aggregate exercise price for the shares of BKLA Common Stock
which were purchasable pursuant to such BKLA Warrant divided by (z) the number
of full shares of Western Common Stock subject to such Replacement Shares (as
defined herein). See "THE MERGER--Structure of the Merger".
THE BKLA MEETING
The BKLA Meeting to consider and vote on, among other things, approval of
the principal terms of the Merger will be held on Wednesday, September 27, 1998
at 5:30 p.m. local time, at the Beverly Hills Branch of BKLA, 9601 Wilshire
Boulevard, Beverly Hills, California. Only holders of record of BKLA Common
Stock at the close of business on July 23, 1998 (the "BKLA Record Date") will be
entitled to vote at the BKLA Meeting. At such date, there were outstanding and
entitled to vote [4,788,735] shares of BKLA Common Stock. Each share of BKLA
Common Stock is entitled to one vote for each share held of record upon each
matter properly submitted at the BKLA Meeting except certain cumulative voting
exceptions regarding the election of directors described below.
For additional information relating to the BKLA Meeting, see "THE SPECIAL
MEETING OF BKLA SHAREHOLDERS".
VOTES REQUIRED
Approval of the matters to be voted upon in connection with the Merger by
the BKLA Shareholders requires the affirmative vote of the holders of a majority
of the outstanding shares of BKLA Common Stock entitled to vote. As a result,
the failure to vote in person or by proxy on any such proposal at the BKLA
Meeting or abstaining on any proposal has the same effect as voting against the
applicable proposal. In the election of directors at the BKLA Meeting, the
candidates receiving the highest number of affirmative votes of the shares
entitled to vote for them up to the number of directors to be elected by such
shares will be elected, assuming a quorum is present. In addition, BKLA
Shareholders will have cumulative voting rights with respect to the election of
directors if certain conditions are met. See "THE SPECIAL MEETING OF BKLA
SHAREHOLDERS--Votes Required and Voting of Proxies".
As of the BKLA Record Date, BKLA's directors and officers beneficially held,
in the aggregate, the ability to direct the voting with respect to approximately
[18.5%] of the outstanding BKLA Common Stock entitled to vote at the BKLA
Meeting. BKLA Shareholders (who are also directors, or the estate of a former
director, of BKLA) holding approximately [18.5%] of BKLA Common Stock
outstanding on the BKLA Record Date have entered into agreements (the
"Shareholder Agreements") pursuant to which
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they have agreed, among other things, to vote "FOR" the adoption and approval of
the Merger Agreement and the Merger. See "THE SHAREHOLDER AGREEMENTS".
REVOCABILITY OF PROXIES
The presence of a BKLA Shareholder at the BKLA Meeting (or at any
postponement or adjournment thereof) will not automatically revoke such
shareholder's proxy. However, a BKLA Shareholder may revoke a proxy at any time
prior to its exercise by (a) delivery to the secretary of BKLA of a written
notice of revocation prior to or at the BKLA Meeting (or, if such BKLA Meeting
is adjourned or postponed, prior to or at the time the adjourned or postponed
meeting is actually held); (b) delivery to the secretary of BKLA prior to or at
the BKLA Meeting of a duly executed proxy bearing a later date; or (c) attending
the BKLA Meeting (or, if such BKLA Meeting is adjourned or postponed, by
attending the adjourned or postponed meeting) and voting in person thereat. Any
written revocation of proxy or other related communications should be addressed
to Beverly Dyck, Corporate Secretary of Bank of Los Angeles, 8901 Santa Monica
Boulevard, West Hollywood, California 90069.
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
The BKLA Board unanimously approved the Merger Agreement and the
transactions contemplated thereby. The members of the BKLA Board unanimously
believe that the Merger and the transactions contemplated by the Merger
Agreement are fair to, and in the best interests of, the BKLA Shareholders and
unanimously recommend a vote "FOR" the matters to be voted upon by such
shareholders in connection with the Merger. The conclusions of the BKLA Board
with respect to the Merger are based upon a number of factors. See "THE
MERGER--Background and Reasons for the Merger", "--Reasons for the Merger;
Recommendations of the Board of Directors" and "--Opinion of Wedbush".
OPINION OF WEDBUSH
Wedbush Morgan Securities ("Wedbush") delivered to the BKLA Board its
opinions, dated April 15, 1998 and the date hereof, to the effect that, as of
each of such dates, the Conversion Number to be paid by Western in the Merger is
fair to the BKLA Shareholders from a financial point of view. The written
opinion of Wedbush, dated as of July , 1998, is attached to this Proxy
Statement-Prospectus as Appendix B and should be read in its entirety. See "THE
MERGER--Opinion of Wedbush".
EFFECTIVE TIME
The Merger will become effective on the date and at the time that an
agreement of merger and related documents are filed with the California
Secretary of State, provided that the California Secretary of State accepts such
agreement and documents for filing as of such date, or such later date as may be
specified in such agreement of merger or as may be required by the California
Secretary of State. Subject to conditions specified in the Merger Agreement, the
parties expect the Merger to become effective on or about October 1, 1998,
although there can be no assurance as to whether or when the Merger will become
effective. See "THE MERGER AGREEMENT--Effective Time and Effective Date" and
"--Conditions".
CONDITIONS TO THE MERGER
The respective obligations of Western and BKLA to consummate the Merger are
subject to certain conditions, including: (a) the approval by the BKLA
Shareholders of the principal terms of the Merger; (b) receipt of approvals,
consents and waivers required by law in connection with the Merger and the other
transactions contemplated by the Merger Agreement, including approval or waiver
by the Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), the FDIC and the State Commissioner; (c) the absence of any statute,
rule, regulation, order, injunction or decree being in effect
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and prohibiting the consummation of the Merger or any other transaction
contemplated by the Merger Agreement; and (d) the Registration Statement having
become effective and there having been issued no stop order suspending the
effectiveness of the Registration Statement and no proceedings for that purpose
initiated or threatened by the Commission.
The obligations of Western and SMB to consummate the Merger also are subject
to the fulfillment or waiver by Western prior to the Effective Time of certain
conditions, including the following: (a) the representations and warranties of
BKLA being true and correct unless the failure to be true and correct is not
likely to have a material adverse effect on BKLA; (b) the performance by BKLA in
all material respects of all obligations contained in the Merger Agreement
required to be performed by BKLA before the Effective Time; and (c) receipt by
Western of a customary "cold comfort" letter from Vavrinek, Trine, Day & Co.,
LLP ("Vavrinek") with respect to certain financial statements and data of BKLA.
In addition, the obligation of BKLA to consummate the Merger also is subject
to the fulfillment or waiver by BKLA prior to the Effective Time of certain
conditions, including the following: (a) the representations and warranties of
Western being true and correct unless the failure to be true and correct is not
likely to have a material adverse effect on Western; (b) the performance by
Western in all material respects of all obligations contained in the Merger
Agreement required to be performed before the Effective Time; (c) receipt by
BKLA of a customary "cold comfort" letter from KPMG Peat Marwick LLP with
respect to certain financial statements and data of Western; and (d) as of the
Effective Time, the appointment by Western of Adriana M. Boeka, the BKLA
Chairman of the Board, as a director to the Western Board.
WAIVER AND AMENDMENT
Prior to the Effective Time, the conditions to each party's obligation to
consummate the Merger may be waived by such party in whole or in part to the
extent permitted by applicable law. In addition, Western and BKLA may amend the
Merger Agreement at any time prior to the Effective Time by written agreement,
approved by their respective Boards, so long as the principal terms of the
Merger are not changed after approval by the BKLA Shareholders. See "THE MERGER
AGREEMENT--Conditions".
TERMINATION
The Merger Agreement may be terminated and the Merger abandoned at any time
prior to the Merger, either prior to or subsequent to its approval by the
Shareholders: (a) by mutual consent of Western and BKLA, if so determined by
their respective Boards; (b) by either Western or BKLA, if so determined by its
Board, if (i) the shareholders of BKLA fail to approve the principal terms of
the Merger, (ii) the other party materially breaches any representation,
warranty, covenant or agreement contained in the Merger Agreement and such
breach is not cured or curable within a specified grace period, or (iii) the
Merger is not consummated by December 31, 1998; (c) by either Western or BKLA,
if the approval of a governmental authority required for consummation of the
Merger is not obtained; (d) by BKLA, if the Ten Day Average Price (as defined
herein) of the Western Common Stock shall be below a certain designated level;
(e) by Western, if the BKLA Board shall fail to recommend the Merger for
approval by the BKLA Shareholders; or (f) by BKLA, if the BKLA Board receives an
Acquisition Proposal (as defined herein) and determines, based upon the written
advice of counsel, to accept the proposal and that proceeding with the Merger
would violate fiduciary duties of the BKLA Board to the BKLA Shareholders. See
"THE MERGER AGREEMENT--Termination".
If the Merger Agreement is terminated by BKLA pursuant to a material breach
of any representation, warranty, covenant or agreement of Western therein that
is not cured or curable within 30 days after written notice of such breach,
Western will pay to BKLA all costs and expenses incurred by BKLA in connection
with the Merger, up to $500,000. If the Merger Agreement is terminated by
Western under the circumstances described in clauses b(ii), (e) or (f) of the
preceding paragraph, BKLA will pay to Western
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all costs and expenses incurred by Western in connection with the Merger, up to
$500,000. See "THE MERGER AGREEMENT--Termination Payment".
STOCK OPTION AGREEMENT
As an inducement and condition to Western's entering into the Merger
Agreement, BKLA (as "Issuer") entered into a Stock Option Agreement with Western
(as "Grantee"), dated as of April 16, 1998 (the "Stock Option Agreement").
Pursuant to the Stock Option Agreement, BKLA granted to Western an irrevocable
option (the "Option"), exercisable only under certain limited and specifically
defined circumstances, none of which, to the best of BKLA's and Western's
knowledge, has occurred as of the date hereof, to purchase up to 945,585
authorized but theretofore unissued shares of BKLA Common Stock (but in no event
more than 19.9% of the shares of BKLA Common Stock outstanding at the time of
exercise), for a purchase price per share of $17.375 which is equal to the daily
average closing price of the BKLA Common Stock as reported on the Nasdaq for the
ten trading days beginning April 10, 1998, subject to adjustment in certain
circumstances. The purchase of BKLA Common Stock pursuant to the Stock Option
Agreement is subject to compliance with applicable law, including receipt of any
necessary approvals under the BHCA. See "THE STOCK OPTION AGREEMENT".
The Stock Option Agreement and the Option are intended to increase the
likelihood that the Merger will be consummated on the terms set forth in the
Merger Agreement, and may be expected to discourage offers by third parties to
acquire BKLA prior to the Merger.
REGULATORY APPROVALS
The Merger is subject to prior approval by the Federal Reserve Board under
Section 3 of the BHCA, the FDIC under the Bank Merger Act and the State
Commissioner pursuant to the California Financial Code. Western and BKLA
submitted applications seeking approval of the Merger and related matters to the
FDIC on June , 1998 and to the State Commissioner on June , 1998. Western
and BKLA also submitted a request for a waiver of jurisdiction from the Federal
Reserve Board on June , 1998. See "THE MERGER--Regulatory Approvals" and "THE
MERGER AGREEMENT--Conditions". It is expected that the approvals and waiver will
be received prior to the BKLA Meeting, but there can be no assurance that such
approvals and waiver will be obtained.
OPERATIONS AND MANAGEMENT AFTER THE MERGER
Pursuant to the Merger Agreement, BKLA has elected to nominate, and Western
has consented to appoint, Adriana M. Boeka to the Western Board. Prior to the
Effective Time, the Western Board will adopt resolutions increasing the exact
number of directors by one, and Adriana M. Boeka will be appointed to fill the
vacancy on the Western Board created thereby. See "THE MERGER
AGREEMENT--Conditions". In the event that the Merger is not consummated as
contemplated, all directors of BKLA will continue to serve as directors of BKLA
until the completion of their respective terms and until their successors have
been elected and duly qualified. See "THE MERGER--Certain Effects of the
Merger".
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendations of the BKLA Board, BKLA Shareholders
should be aware that certain members of management of BKLA ("BKLA Management")
and of the BKLA Board have certain interests in the transactions contemplated by
the Merger Agreement that are in addition to the interests of shareholders
generally and that may create potential conflicts of interest.
These interests include, among others, provisions in the Merger Agreement
relating to the indemnification of BKLA officers and directors, directors' and
officers' liability insurance and certain employee benefit plans. In addition,
Adriana M. Boeka will be appointed to the Western Board as of the Effective
15
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Time. See "THE MERGER--Interests of Certain Persons in the Merger" and "THE
MERGER AGREEMENT--Certain Covenants--INDEMNIFICATION; DIRECTORS' AND OFFICERS'
INSURANCE".
In addition, as a result of the Merger, all unvested options under the
BKLA's stock option plan will vest at 30 days prior to the Effective Time. As of
the BKLA Record Date, John J. Feldman, Adriana M. Boeka, Robert G. Jacobsen and
Wendy Moskal held 56,250, 29,500, 22,750 and 19,000 unvested options,
respectively, which had values, based on the market value of Western Common
Stock at such date and the Conversion Number, as of such date, of $ ,
$ , $ and $ , respectively.
Additionally, Scott Burford, son of the late Maurice J. Burford, and
president of Burford Capital, provided consulting services to BKLA through GBS
Financial in connection with the Merger. GBS entered into an agreement pursuant
to which it will receive a flat fee of 1% of the value received by BKLA
shareholders if BKLA is sold for between $15 per share and $16.99 per share, or
1.5% of the value received if BKLA is sold for $17 per share or more. As of the
date of this Proxy Statement-Prospectus, GBS will receive approximately $1.5
million for its services. GBS Financial will receive no compensation if BKLA
sells for less than $15 per share or if the Merger is not consummated.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
It is intended that the Merger will be treated as a reorganization (a
"Reorganization") under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), so that BKLA Shareholders will not recognize any gain or
loss for tax purposes on the receipt of Western Common Stock in exchange for
their shares of BKLA Common Stock in the Merger (except to the extent such
shareholder receives cash in lieu of a fractional share interest in Western
Common Stock). Consummation of the Merger as a Reorganization is conditioned
upon receipt by Western of confirmation, immediately prior to the Effective
Time, of the opinion of Sullivan & Cromwell and receipt by BKLA of confirmation,
immediately prior to the Effective Time, of the opinion of Vavrinek, which
opinions will be dated as of the Effective Date (the "Tax Opinions"),
substantially to the effect that, for federal income tax purposes: (i) the
Merger will be treated as a reorganization within the meaning of Section 368(a)
of the Code and (ii) each of Western, SMB and BKLA will be a party to that
reorganization within the meaning of Section 368(b) of the Code. See "THE
MERGER--Certain Federal Income Tax Consequences".
Because of the complexity of the tax laws and the individual nature of
certain tax consequences of the Merger to each BKLA Shareholder, each BKLA
Shareholder should consult his or her own tax advisor concerning certain other
federal and all state, local and foreign tax consequences of the Merger that may
be applicable.
ACCOUNTING TREATMENT
For accounting and financial reporting purposes, the Merger will be
accounted for as a pooling of interests in accordance with generally accepted
accounting principles. See "THE MERGER--Accounting Treatment".
DISSENTERS' RIGHTS
In connection with the Merger, the BKLA Shareholders may be entitled to
dissenters' rights under Chapter 13 of the CGCL ("Dissenters' Rights"), the text
of which is attached hereto as Appendix C. IN ORDER FOR ANY BKLA SHAREHOLDER TO
EXERCISE DISSENTERS' RIGHTS, A NOTICE OF SUCH SHAREHOLDER'S INTENTION TO
EXERCISE HIS OR HER DISSENTERS' RIGHTS AND DEMAND PAYMENT FOR HIS OR HER SHARES
AS PROVIDED IN THE CGCL MUST BE SENT BY SUCH SHAREHOLDER AND RECEIVED BY BKLA,
ON OR BEFORE THE DATE OF THE BKLA MEETING, AND ANY SUCH SHAREHOLDER MUST VOTE
AGAINST THE APPROVAL OF THE PRINCIPAL TERMS OF THE MERGER. FAILURE TO SEND SUCH
NOTICE TO BKLA, 8901 SANTA MONICA BOULEVARD, WEST HOLLYWOOD, CALIFORNIA 90069,
ATTN: BEVERLY DYCK, AND TO VOTE AGAINST THE PRINCIPAL TERMS OF THE MERGER WILL
RESULT IN A WAIVER OF SUCH SHAREHOLDER'S DISSENTERS' RIGHTS. SEE "THE
MERGER--DISSENTERS' RIGHTS".
16
<PAGE>
RISK FACTORS
In deciding whether to vote for the approval of the principal terms of the
Merger, BKLA Shareholders should carefully evaluate the matters set forth under
"Risk Factors" herein in addition to the other matters described herein.
MARKETS AND MARKET PRICES
As of the BKLA Record Date, there were approximately [2,100] holders of
record of Western Common Stock. No shares of Western's Preferred Stock have been
issued or are outstanding. Western Common Stock is designated for quotation on
the Nasdaq under the symbol "WEBC".
As of the BKLA Record Date, there were approximately [1,700] holders of
record of BKLA Common Stock. BKLA Common Stock is designated for quotation on
the Nasdaq under the symbol "BKLA".
The following table summarizes the approximate high and low sales prices on
a per share basis for the Western Common Stock (prior to June 3, 1997, the
prices are the average of the bid and ask prices as quoted by dealers making a
market in such common stock, and after June 3, 1997, the prices are as reported
by Nasdaq), and the approximate high and low sales prices on a per share basis
for BKLA Common Stock (prior to July 29, 1996, BKLA stock was traded on a very
limited basis on the over-the-counter market through various brokerage firms
that were market makers for BKLA stock, and after July 29, 1996, the prices are
as reported by Nasdaq), for the periods indicated.
<TABLE>
<CAPTION>
HIGH LOW HIGH LOW
--------- --------- --------- ---------
WESTERN COMMON BKLA COMMON STOCK(2)
STOCK(1) --------------------
--------------------
<S> <C> <C> <C> <C>
1996
First Quarter............................................. 11.05 8.93 6.00 4.00
Second Quarter............................................ 17.00 8.50 6.75 5.75
Third Quarter............................................. 14.88 8.50 6.63 5.75
Fourth Quarter............................................ 29.75 13.86 6.75 5.75
1997
First Quarter............................................. 34.00 19.13 8.38 6.38
Second Quarter............................................ 37.19 28.63 8.00 6.63
Third Quarter............................................. 33.25 28.63 12.00 7.50
Fourth Quarter............................................ 33.88 29.88 15.63 10.75
1998
First Quarter............................................. 43.50 30.75 14.63 11.03
Second Quarter............................................
--------- --------- --------- ---------
</TABLE>
- ------------------------
(1) Prior to June 3, 1997, Western Common Stock was traded solely "over the
counter". Consequently, the prices listed before that date represent
quotations by dealers making a market in Western Common Stock and reflect
inter-dealer prices, without adjustments for mark-ups, mark-downs or
commissions, and may not necessarily represent actual transactions. Prior to
June 3, 1997, trading in Western Common Stock was limited in volume and may
not be a reliable indicator of its market value. On June 3, 1997, Western
Common Stock was designated for quotation on the Nasdaq and on that date
Western effected a 1.0 for 8.5 reverse stock split. The prices of Western
Common Stock prior to June 3, 1997 in the preceding table have been adjusted
for the Reverse Stock Split. The prices listed above for periods subsequent
to June 3, 1997 are as reported by Nasdaq.
(2) Prior to July 29, 1996, BKLA Common Stock was traded on a very limited basis
on the over-the-counter market through various brokerage firms.
Consequently, the prices listed before that date
17
<PAGE>
represent quotations by dealers making a market in BKLA Common Stock and
reflect inter-dealer prices, without adjustments for mark-ups, mark-downs or
commissions, and may not necessarily represent actual transactions. Prior to
July 29, 1996, trading in BKLA Common Stock was limited in volume and may
not be a reliable indicator of its market value. On October 23, 1996, BKLA
effected a one for five reverse stock split as part of BKLA's holding
company reorganization. The prices of BKLA Common Stock prior to July 29,
1996 in the preceding table have been adjusted for the reverse stock split.
The prices listed above for periods subsequent to July 29, 1996 are as
reported by Nasdaq.
The following table sets forth the closing price per share of Western Common
Stock as reported by Nasdaq, the closing price per share of BKLA Common Stock as
reported by Nasdaq and the "Equivalent Per Share Price" (as defined below) of
BKLA Common Stock as of April 16, 1998, the last trading day before the date on
which Western and BKLA announced the execution of the Merger Agreement and as of
[June 22], 1998, the last practicable date prior to the date of this Proxy
Statement-Prospectus. The "Equivalent Per Share Price" of BKLA Common Stock on
any date equals the closing price of the Western Common Stock on such date, as
reported on the Nasdaq, multiplied by the Conversion Number.
<TABLE>
<CAPTION>
WESTERN COMMON BKLA COMMON EQUIVALENT PER
MARKET PRICE PER SHARE AS OF STOCK STOCK SHARE PRICE
- ------------------------------------------- ----------------- -------------- ---------------
<S> <C> <C> <C>
April 16, 1998............................. $ 47.88 $ 16.50 $ 20.22
[June 22, 1998............................. $ 42.25 $ 17.375 $ 17.85]
</TABLE>
Because the Conversion Number is fixed pursuant to the Merger Agreement, a
change in the trading price of Western Common Stock before the Effective Time
will affect the implied market value of the Western Common Stock to be received
in the Merger by BKLA Shareholders. See "RISK FACTORS-- Limited Market for
Western Common Stock". THERE CAN BE NO ASSURANCE AS TO THE MARKET PRICE OF
WESTERN COMMON STOCK AT ANY TIME BEFORE, AT OR AFTER THE EFFECTIVE TIME.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR WESTERN COMMON
STOCK AND BKLA COMMON STOCK.
Upon consummation of the Merger, it is expected that there will be up to
approximately [3,800] holders of record of Western Common Stock.
18
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
WESTERN
The following summary historical financial data for the three months ended
March 31, 1998 and 1997 are derived from unaudited consolidated financial
statements of Western and include, in the opinion of the management of Western
("Western Management"), all adjustments (consisting only of normal accruals)
necessary to present fairly the data for such periods. The results for the three
month period ended March 31, 1998 are not necessarily indicative of the results
to be expected for the full fiscal year. The following summary historical
financial data for the five years ended December 31, 1997 are derived from the
audited consolidated financial statements of Western. The data should be read in
conjunction with the consolidated financial statements, related notes, and other
financial information included or incorporated by reference in this Proxy
Statement-Prospectus.
<TABLE>
<CAPTION>
AT OR FOR THE THREE
MONTHS ENDED MARCH
31,(1) AT OR FOR THE YEARS ENDED DECEMBER 31,
------------------------ ---------------------------------------------------------
1998 1997 1997 1996(2) 1995(3) 1994 1993
----------- ----------- ----------- ----------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Interest income..................... $ 32,767 $ 23,965 $ 101,034 $ 74,237 $ 62,629 $ 53,079 $ 57,722
Interest expense.................... 8,882 7,015 29,358 22,311 19,804 13,388 18,677
----------- ----------- ----------- ----------- --------- --------- ---------
NET INTEREST INCOME............... 23,885 16,950 71,676 51,926 42,825 39,691 39,045
Provision for loan and lease
losses............................ 150 725 2,800 1,018 8,564 3,510 17,919
----------- ----------- ----------- ----------- --------- --------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN AND LEASE
LOSSES.......................... 23,735 16,225 68,876 50,908 34,261 36,181 21,126
Non-interest income................. 3,613 2,509 9,686 9,875 7,826 8,447 15,871
Non-interest expense................ 16,981 13,327 65,757 48,138 45,609 41,235 45,825
----------- ----------- ----------- ----------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME
TAXES........................... 10,367 5,407 12,805 12,645 (3,522) 3,393 (8,828)
Income tax expense (benefit)........ 5,032 2,431 9,643 3,656 (1,733) 1,680 (1,979)
----------- ----------- ----------- ----------- --------- --------- ---------
INCOME (LOSS) BEFORE CUMULATIVE
EFFECT OF A CHANGE IN ACCOUNTING
PRINCIPLE....................... 5,335 2,976 3,162 8,989 (1,789) 1,713 (6,849)
Cumulative effect of change in
accounting principle.............. (41)
----------- ----------- ----------- ----------- --------- --------- ---------
NET INCOME (LOSS)................. $ 5,335 $ 2,976 $ 3,162 $ 8,989 $ (1,789) $ 1,713 $ (6,890)
----------- ----------- ----------- ----------- --------- --------- ---------
----------- ----------- ----------- ----------- --------- --------- ---------
COMPREHENSIVE INCOME (LOSS)....... $ 5,361 $ 2,034 $ 3,930 $ 8,666 $ 2,876 $ (3,544) $ (6,837)
----------- ----------- ----------- ----------- --------- --------- ---------
----------- ----------- ----------- ----------- --------- --------- ---------
ENDING BALANCE SHEET DATA:
Assets.............................. $ 2,084,743 $ 1,357,268 $ 1,383,510 $ 1,338,913 $ 866,385 $ 759,194 $ 799,558
Securities.......................... 256,670 286,534 207,514 332,818 184,978 220,905 248,879
Loans and leases, net of deferred
fees and unearned income.......... 1,253,887 814,805 880,734 817,358 543,042 439,241 460,975
Allowance for loan and lease
losses............................ 24,985 15,714 15,894 15,757 13,130 12,115 19,077
Goodwill............................ 148,135 32,334 30,430 32,968 4,131 2,464 2,616
Deposits............................ 1,763,624 1,201,300 1,226,793 1,177,014 774,057 675,971 731,829
Borrowed funds...................... 18,169 14,780 12,751 20,290 7,366 15,161 10,168
Common shareholders' equity......... 284,905 131,032 129,655 129,047 77,628 62,274 51,572
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE THREE
MONTHS ENDED MARCH
31,(1) AT OR FOR THE YEARS ENDED DECEMBER 31,
------------------------ ---------------------------------------------------------
1998 1997 1997 1996(2) 1995(3) 1994 1993
----------- ----------- ----------- ----------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA AND OTHER SELECTED
RATIOS:
Earnings (loss) per common and
common equivalent share
Basic............................. $ 0.38 $ 0.28 $ 0.30 $ 1.11 $ (0.28) $ 0.34 $ (1.68)
Diluted........................... 0.38 0.28 0.29 1.09 (0.28) 0.33 (1.68)
Dividends declared per share(4)..... -- -- 0.30(4) -- -- -- --
Book value per share................ 18.16 12.48 12.18 12.36 10.64 10.52 12.59
Tangible book value per share....... 8.72 9.40 9.32 9.20 10.08 10.10 11.95
Shareholders' equity to assets at
period end........................ 13.67% 9.65% 9.37% 9.64% 8.96% 8.20% 6.45%
Tangible shareholders' equity to
assets at period end.............. 7.06 7.45 7.33 7.36 8.52 7.90 6.14
Return on average assets............ 1.18 0.92 0.23 0.90 (0.21) 0.22 (0.79)
Return on average equity............ 9.46 9.20 2.37 9.78 (2.59) 2.65 (12.54)
Average equity/average assets....... 12.49 9.96 9.82 9.25 8.31 8.20 6.26
Net interest margin................. 6.20 5.93 5.99 5.88 5.78 5.74 4.93
</TABLE>
- --------------------------
(1) On January 27, 1998, Western acquired Santa Monica Bank in a transaction
accounted for as a purchase. At January 31, 1998, Santa Monica Bank had
approximately $671 million in assets, $388 million in net loans and $584
million in deposits. At the time of the SMB Acquisition, Western issued
approximately 2,653,000 shares of Western Common Stock to certain former
shareholders of Santa Monica Bank and also paid approximately $114 million
to the other former shareholders of Santa Monica Bank. Western also raised
approximately $65 million in additional equity in a private placement by
issuing 2,327,550 shares of Western Common Stock. Santa Monica Bank's
results of operations are included only since January 27, 1998. Due to the
relatively large size of this transaction, any comparison of data as of and
for the three months ended March 31, 1998 to data as of or for prior dates
or periods may not be meaningful.
(2) On September 30, 1996, Western acquired Western Bank in a transaction
accounted for as a purchase. At September 30, 1996, Western Bank had
approximately $410 million in assets, $198 million in net loans and $353
million in deposits. At the time of such acquisition, Western also raised
approximately $42 million in additional equity in a private placement by
issuing 3,076,045 shares of Western Common Stock. Western Bank's results of
operations are included only since the fourth quarter of fiscal 1996. Due to
the relatively large size of this transaction, any comparison of data as of
and for the year ended December 31, 1996 to data as of or for prior dates or
periods may not be meaningful.
(3) In 1995, Western, through a private placement and a separate shareholders'
rights and public offering, raised approximately $9 million in additional
equity, net of approximately $470,000 in offering costs, in connection with
the issuance of 874,589 shares of Western Common Stock. Also in 1995
Western, through a private placement of 474,000 shares, raised approximately
$3.2 million in additional equity in connection with the issuance of shares
of Western Common Stock.
(4) A $0.15 per share dividend was declared in the Fourth Quarter of 1997 and
was paid in the First Quarter of 1998.
BKLA
The following summary historical financial data for the three months ended
March 31, 1998 and 1997 are derived from unaudited financial statements of BKLA
and include, in the opinion of BKLA Management, all adjustments (consisting only
of normal accruals) necessary to present fairly the data for such periods. The
results for the three month period ended March 31, 1998 are not necessarily
indicative of the results to be expected for the full fiscal year. The following
summary historical financial data for the five years ended December 31, 1997 are
derived from the audited financial statements of BKLA. The data should be read
in conjunction with the consolidated financial statements, related notes, and
other financial information included or incorporated by reference in this Proxy
Statement-Prospectus.
20
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE THREE
MONTHS ENDED MARCH
31,(1,2) AT OR FOR THE YEARS ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1998 1997 1997(2) 1996 1995(3,4) 1994 1993
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Interest income.............................. $ 5,116 $ 2,535 $ 14,854 $ 10,561 $ 6,819 $ 5,794 $ 7,092
Interest expense............................. 1,451 741 3,931 3,087 1,852 1,758 2,262
--------- --------- --------- --------- --------- --------- ---------
NET INTEREST INCOME........................ 3,665 1,794 10,923 7,474 4,967 4,036 4,830
Provision for (recovery of) loan losses...... -- 85 410 750 (311) -- 1,953
--------- --------- --------- --------- --------- --------- ---------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN AND LEASE LOSSES.................... 3,665 1,709 10,513 6,724 5,278 4,036 2,877
Non-interest income.......................... 487 261 1,388 1,037 878 923 1,725
Non-interest expense......................... 2,682 1,577 8,542 6,760 5,510 6,171 6,915
--------- --------- --------- --------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES.......... 1,470 393 3,359 1,001 646 (1,212) (2,313)
Income tax expense (benefit)................. 531 -- (372) -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
NET INCOME (LOSS).......................... $ 939 $ 393 $ 3,731 $ 1,001 $ 646 $ (1,212) $ (2,313)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
COMPREHENSIVE INCOME (LOSS)................ $ 987 $ 213 $ 3,903 $ 641 $ 1,259 $ (1,685) $ (2,313)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
ENDING BALANCE SHEET DATA:
Assets....................................... $ 278,161 $ 127,048 $ 272,033 $ 130,705 $ 129,745 $ 80,507 $ 98,992
Securities................................... 79,382 26,464 60,433 22,126 33,322 30,602 28,420
Loans and leases, net of deferred fees and
unearned income............................ 146,303 70,825 142,633 72,266 66,021 38,114 50,760
Allowance for loan and lease losses.......... 2,688 1,833 2,819 1,682 2,358 1,633 2,478
Goodwill..................................... 5,817 1,632 5,939 1,662 1,733 -- --
Deposits..................................... 236,720 111,809 238,012 115,596 114,850 74,471 91,388
Borrowed funds............................... 7,757 1,844 1,849 1,842 1,836 1,830 1,827
Common shareholders' equity.................. 32,099 12,845 31,054 12,632 11,991 3,817 5,502
PER SHARE DATA AND OTHER SELECTED RATIOS:
Earnings (loss) per common and common
equivalent share
Basic...................................... $ 0.20 $ 0.18 $ 1.16 $ 0.46 $ 0.63 $ (4.85) $ (9.25)
Diluted.................................... 0.17 0.15 1.00 0.40 0.51 (4.85) (9.25)
Dividends declared per share................. -- -- -- -- -- -- --
Book value per share......................... 6.74 5.85 6.54 5.75 5.46 15.25 22.00
Tangible book value per share................ 5.52 5.11 5.29 5.00 4.67 15.25 22.00
Shareholders' equity to assets at period
end........................................ 11.54% 10.11% 11.42% 9.66% 9.24% 4.74% 5.56%
Tangible shareholders' equity to assets at
period end................................. 9.65 8.94 9.44 8.50 8.01 4.74 5.56
Return on average assets..................... 1.40 1.23 2.05 0.79 0.77 (1.36) (2.08)
Return on average equity..................... 12.06 12.51 21.10 8.13 8.71 (26.01) (32.30)
Average equity/average assets................ 11.64 9.84 9.72 9.72 8.89 5.24 6.44
Net interest margin.......................... 6.28 6.26 6.67 6.47 6.63 5.04 4.82
</TABLE>
- --------------------------
(1) On December 31, 1997, BKLA acquired CNB in a transaction accounted for as a
purchase. At December 31, 1997, CNB had approximately $57 million in assets,
$26 million in net loans and $51 million in deposits. At the time of such
acquisition, BKLA issued 1,155,326 shares of BKLA Common Stock to former
shareholders of CNB. CNB's results of operations are included only since
January 1998. Due to the relatively large size of this transaction, any
comparison of data as of and for the three months ended March 31, 1998 to
data as of or for prior dates or periods may not be meaningful.
(2) On April 1, 1997, BKLA acquired AWB in a transaction accounted for as a
purchase. At April 1, 1997, AWB had approximately $67 million in assets, $37
million in net loans and $61 million in deposits. At the time of such
21
<PAGE>
acquisition, BKLA issued 1,367,493 shares of BKLA Common Stock to former
shareholders of AWB. AWB's results of operations are included only since
April 1997. Due to the relatively large size of this transaction, any
comparison of data as of and for the three months ended March 31, 1998 and
the year ended December 31, 1997 to data as of or for prior dates or periods
may not be meaningful.
(3) On November 15, 1995, BKLA acquired WTB in a transaction accounted for as a
purchase. At November 15, 1995, WTB had approximately $42 million in assets,
$21 million in net loans and $40 million in deposits. At the time of such
acquisition, BKLA issued 346,325 shares of BKLA Common Stock to former
shareholders of WTB. WTB's results of operations are included only since
November 1995.
(4) On March 31, 1995, BKLA received a capital infusion of approximately $3.4
million for 946,352 shares of BKLA Common Stock and 473,176 warrants. On
November 30, 1995 as a result of a rights offering to all shareholders of
record at October 24, 1995, 651,325 shares of BKLA Common Stock and 217,160
warrants were issued for net proceeds of approximately $2.1 million. Each
warrant issued in both the capital infusion and the rights offering entitled
the holder thereof to purchase one share of BKLA Common Stock for $3.75 and
will expire on December 1, 1998.
SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following table sets forth certain summary unaudited pro forma combined
financial data for Western after giving effect to the Merger, as if it had
occurred as of the beginning of each of the periods presented, using the
Conversion Number of 0.4224 and accounting for the Merger as a pooling of
interests. See "THE MERGER--Accounting Treatment". This information should be
read in conjunction with the historical consolidated financial statements of
Western and BKLA including the notes thereto, appearing elsewhere in this Proxy
Statement-Prospectus or incorporated herein by reference. See "UNAUDITED PRO
FORMA COMBINED CONDENSED FINANCIAL DATA".
The unaudited pro forma combined condensed balance sheets are not
necessarily indicative of the actual financial position that would have existed
had the Merger been consummated on the dates indicated, or that may exist in the
future. The unaudited pro forma combined condensed results of operations are not
necessarily indicative of the results that would have occurred had the Merger
been consummated on the dates indicated or that may be achieved in the future.
Assuming the consummation of the Merger, the actual financial position and
results of operations will differ, perhaps significantly, from the pro forma
amounts reflected herein because of a variety of factors, including changes in
value and changes in operating results between the dates of the unaudited pro
forma financial data and the date on which the Merger takes place.
<TABLE>
<CAPTION>
AT OR FOR THE THREE
MONTHS ENDED MARCH AT OR FOR THE YEARS ENDED DECEMBER
31,(1,4,5) 31,
------------------------ -------------------------------------
1998 1997 1997(5) 1996(2) 1995(3,6,7)
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Interest income................................ $ 41,814 $ 37,444 $ 162,440 $ 84,798 $ 69,448
Interest expense............................... 11,529 11,126 48,060 25,398 21,656
----------- ----------- ----------- ----------- -----------
NET INTEREST INCOME.......................... 30,285 26,318 114,380 59,400 47,792
Provision for loan and lease losses............ 230 810 3,210 1,768 8,253
----------- ----------- ----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN
AND LEASE LOSSES........................... 30,055 25,508 111,170 57,632 39,539
Non-interest income............................ 4,714 4,496 18,348 10,912 8,704
Non-interest expense........................... 22,690 22,973 107,478 54,898 51,119
----------- ----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES............ 12,079 7,031 22,040 13,646 (2,876)
Income tax expense (benefit)................... 5,924 3,476 13,948 3,656 (1,733)
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS)............................ $ 6,155 $ 3,555 $ 8,092 $ 9,990 $ (1,143)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE THREE
MONTHS ENDED MARCH AT OR FOR THE YEARS ENDED DECEMBER
31,(1,4,5) 31,
------------------------ -------------------------------------
1998 1997 1997(5) 1996(2) 1995(3,6,7)
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
COMPREHENSIVE INCOME (LOSS).................. $ 6,348 $ 2,247 $ 7,833 $ 9,307 $ 4,135
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
ENDING BALANCE SHEET DATA:
Assets......................................... $ 2,364,584 $ 1,484,316 $ 1,657,223 $ 1,469,618 $ 996,130
Securities..................................... 336,052 312,998 267,947 354,944 218,300
Loans and leases, net of deferred fees and
unearned income.............................. 1,400,190 885,630 1,023,367 889,624 609,063
Allowance for loan and lease losses............ 27,673 17,547 18,713 17,439 15,488
Goodwill....................................... 153,952 33,966 36,369 34,630 5,864
Deposits....................................... 2,000,344 1,313,109 1,464,805 1,292,610 888,907
Borrowed funds................................. 25,926 16,624 14,600 22,132 9,202
Common shareholders' equity.................... 311,604 143,877 155,309 141,679 89,619
PER SHARE DATA AND OTHER SELECTED RATIOS:
Earnings (loss) per common and common
equivalent share
Basic........................................ $ 0.35 $ 0.22 $ 0.48 $ 1.11 $ (0.17)
Diluted...................................... 0.34 0.21 0.47 1.07 (0.17)
Dividends declared per share................... -- -- 0.30(8) -- --
Book value per share........................... 17.52 12.50 12.19 12.42 10.90
Tangible book value per share.................. 8.86 9.55 9.33 9.38 10.19
Shareholders' equity to assets at period end... 13.18% 9.69% 9.37% 9.64% 9.00%
Tangible shareholders' equity to assets at
period end................................... 7.13 7.58 7.34 7.46 8.46
Return on average assets....................... 1.06 0.67 0.36 0.89 (0.12)
Return on average equity....................... 8.05 4.91 2.69 9.59 (1.49)
Average equity/average assets.................. 13.21 13.66 13.24 9.30 8.36
Net interest margin............................ 6.21 6.00 6.03 5.95 5.86
</TABLE>
- --------------------------
(1) On January 27, 1998, Western acquired Santa Monica Bank in a transaction
accounted for as a purchase. At January 31, 1998, Santa Monica Bank had
approximately $671 million in assets, $388 million in net loans and $584
million in deposits. At the time of the SMB Acquisition, Western issued
approximately 2,653,000 shares of Western Common Stock to certain former
shareholders of Santa Monica Bank and also paid approximately $114 million
to the other former shareholders of Santa Monica Bank. Western also raised
approximately $65 million in additional equity in a private placement by
issuing 2,327,550 shares of Western Common Stock. Santa Monica Bank's
results of operations are included only since January 27, 1998. Due to the
relatively large size of this transaction, any comparison of data as of and
for the three months ended March 31, 1998 to data as of or for prior dates
or periods may not be meaningful.
(2) On September 30, 1996, Western acquired Western Bank in a transaction
accounted for as a purchase. At September 30, 1996, Western Bank had
approximately $410 million in assets, $198 million in net loans and $353
million in deposits. At the time of such acquisition, Western also raised
approximately $42 million in additional equity in a private placement by
issuing 3,076,045 shares of Western Common Stock. Western Bank's results of
operations are included only since the fourth quarter of fiscal 1996. Due to
the relatively large size of this transaction, any comparison of data as of
and for the year ended December 31, 1996 to data as of or for prior dates or
periods may not be meaningful.
(3) In 1995, Western, through a private placement and a separate shareholders'
rights and public offering, raised approximately $9 million in additional
equity, net of approximately $470,000 in offering costs, in connection with
the issuance of 874,589 shares of Western Common Stock. Also in 1995
Western, through a private placement of 474,000 shares, raised approximately
$3.2 million in additional equity in connection with the issuance of shares
of Western Common Stock.
23
<PAGE>
(4) On December 31, 1997, BKLA acquired CNB in a transaction accounted for as a
purchase. At December 31, 1997, CNB had approximately $57 million in assets,
$26 million in net loans and $51 million in deposits. At the time of such
acquisition, BKLA issued 1,155,326 shares of BKLA Common Stock to former
shareholders of CNB. CNB's results of operations are included only since
January of fiscal 1998. Due to the relatively large size of this
transaction, any comparison of data as of and for the three months ended
March 31, 1998 to data as of or for prior dates or periods may not be
meaningful.
(5) On April 1, 1997, BKLA acquired AWB in a transaction accounted for as a
purchase. At April 1, 1997, AWB had approximately $67 million in assets, $37
million in net loans and $61 million in deposits. At the time of such
acquisition, BKLA issued 1,367,493 shares of BKLA Common Stock to former
shareholders of AWB. AWB's results of operations are included only since
April of fiscal 1997. Due to the relatively large size of this transaction,
any comparison of data as of and for the three months ended March 31, 1998
and the year ended December 31, 1997 to data as of or for prior dates or
periods may not be meaningful.
(6) On November 15, 1995, BKLA acquired WTB in a transaction accounted for as a
purchase. At November 15, 1995, WTB had approximately $42 million in assets,
$21 million in net loans and $40 million in deposits. At the time of such
acquisition, BKLA issued 346,325 shares of BKLA Common Stock to former
shareholders of WTB. WTB's results of operations are included only since
November of fiscal 1995.
(7) On March 31, 1995, BKLA received a capital infusion of approximately $3.4
million for 946,352 shares of BKLA Common Stock and 473,176 warrants. On
November 30, 1995 as a result of a rights offering to all shareholders of
record at October 24, 1995, 651,325 shares of BKLA Common Stock and 217,160
warrants were issued for net proceeds of approximately $2.1 million. Each
warrant issued in both the capital infusion and the rights offering entitled
the holder to purchase one share of BKLA Common Stock for $3.75 and will
expire on December 1, 1998.
(8) A $0.15 dividend was declared in the Fourth Quarter of 1997 and was paid in
the First Quarter of 1998.
SELECTED HISTORICAL AND PRO FORMA PER SHARE DATA
The following table sets forth for Western Common Stock and BKLA Common
Stock certain selected historical and unaudited pro forma equivalent per share
data at March 31, 1998 and 1997 and for the three months ended March 31, 1998
and 1997, and at the end of and for each of the three years ended December 31,
1997, giving effect to the Merger using the pooling-of-interests method of
accounting. The information is derived from the historical consolidated
financial statements of Western and the historical financial statements of BKLA,
including the related notes thereto, and the pro forma combined financial
information giving effect to the Merger, including the related notes thereto,
appearing elsewhere herein. The information below should be read in conjunction
with the historical and pro forma combined financial information of Western and
BKLA, including the notes thereto, appearing elsewhere in this Proxy
Statement-Prospectus or incorporated herein by reference. See "UNAUDITED PRO
FORMA COMBINED CONDENSED FINANCIAL DATA" and "INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE".
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
FOR THE YEARS ENDED DECEMBER
ENDED MARCH 31, 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BASIC EARNINGS (LOSS) PER SHARE(1):
Western................................................................ $ 0.38 $ 0.28 $ 0.30 $ 1.11 $ (0.28)
BKLA................................................................... 0.20 0.18 1.16 0.46 0.63
Western combined pro forma............................................. 0.35 0.22 0.48 1.11 (0.17)
BKLA equivalent pro forma.............................................. 0.15 0.09 0.20 0.47 (0.07)
DILUTED EARNINGS (LOSS) PER SHARE(1):
Western................................................................ $ 0.38 $ 0.28 $ 0.29 $ 1.09 $ (0.28)
BKLA................................................................... 0.17 0.15 1.00 0.40 0.51
Western combined pro forma............................................. 0.34 0.21 0.47 1.07 (0.17)
BKLA equivalent pro forma.............................................. 0.14 0.09 0.20 0.45 (0.07)
DIVIDENDS PER SHARE(2):
Western dividends declared per share................................... -- -- 0.30 -- --
BKLA dividends declared per share...................................... -- -- -- -- --
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
FOR THE YEARS ENDED DECEMBER
ENDED MARCH 31, 31,
-------------------- -------------------------------
1998 1997 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BKLA equivalent pro forma dividends declared per share................. -- -- 0.13 -- --
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31, AT DEC 31,
1998 1997
------------- -----------
<S> <C> <C>
BOOK VALUE PER SHARE(3):
Western............................................................................... $ 18.16 $ 12.18
BKLA.................................................................................. 6.74 6.54
Western combined pro forma............................................................ 17.52 12.19
BKLA equivalent pro forma............................................................. 7.40 5.15
TANGIBLE BOOK VALUE PER SHARE(3):
Western............................................................................... $ 8.72 $ 9.32
BKLA.................................................................................. 5.52 5.29
Western combined pro forma............................................................ 8.86 9.33
BKLA equivalent pro forma............................................................. 3.74 3.94
</TABLE>
- --------------------------
(1) The Western combined pro forma earnings (loss) per share amounts were
calculated by using aggregate historical income (loss) information divided
by the average pro forma shares outstanding of the combined entity. The
average pro forma shares outstanding of the combined entity were calculated
by combining the Western historical shares outstanding with the historical
shares outstanding of BKLA as adjusted by the Conversion Number of 0.4224.
See "THE MERGER AGREEMENT--Exchange of Stock Certificates; Dividends". The
BKLA equivalent pro forma earnings (loss) per share amounts were computed by
multiplying the Western combined pro forma amounts by the Conversion Number
of 0.4224.
(2) The BKLA equivalent pro forma dividends declared per share amounts were
computed by multiplying the Western dividends declared per share by the
Conversion Number of 0.4224.
(3) The Western combined pro forma book value per share and tangible book value
per share amounts are based on the aggregate historical common shareholders'
equity of BKLA and Western divided by the total pro forma common shares
outstanding of the combined entity based on the Conversion Number of 0.4224.
The BKLA equivalent pro forma book value per share and tangible book value
per share amounts at period end represent the Western pro forma amounts
multiplied by the Conversion Number of 0.4224. See "THE MERGER
AGREEMENT--Exchange of Stock Certificates; Dividends".
25
<PAGE>
RISK FACTORS
IN ADDITION TO THE INFORMATION CONTAINED ELSEWHERE IN THIS PROXY
STATEMENT-PROSPECTUS OR INCORPORATED HEREIN BY REFERENCE, BKLA SHAREHOLDERS
CONSIDERING THE PROPOSAL TO APPROVE THE PRINCIPAL TERMS OF THE MERGER SHOULD
CAREFULLY CONSIDER THE FOLLOWING FACTORS, AMONG OTHERS, BEFORE MAKING ANY FINAL
DECISION.
FORWARD-LOOKING STATEMENTS MAY NOT PROVE ACCURATE
When used or incorporated by reference in this Proxy Statement-Prospectus,
the words "anticipate", "estimate", "expect", "project", "believe" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks, uncertainties and assumptions including those set
forth below. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated, expected or projected. Several key
factors that have a direct bearing on Western's ability to attain its goals are
discussed below.
COMPETITION
The banking business in California generally, and in Western's and BKLA's
service areas in particular, is highly competitive with respect to both loans
and deposits and is dominated by a relatively small number of major financial
institutions that have many offices operating throughout wide geographic areas.
In addition, there are numerous other independent commercial banks and savings
associations within their primary service areas, many of which have greater
resources, greater capital and, in some cases, less stringent regulatory
limitations. Certain of Western's and BKLA's competitors may be better able to
respond to changing capital and other regulatory requirements and better able to
maintain or improve market share.
ABILITY TO INTEGRATE THE OPERATIONS OF WESTERN AND BKLA; RAPID GROWTH
Because the markets in which Western, SMB and BKLA operate are highly
competitive and because of the inherent uncertainties associated with merging
two companies, there can be no assurance that the Surviving Corporation will be
able to realize fully the operating efficiencies Western currently expects to
realize as a result of the Merger and the consolidation of the administrative
operations of BKLA and Santa Monica Bank or that such operating efficiencies
will be realized in the time frame currently anticipated. See "THE
MERGER--Background and Reasons for the Merger".
Western has experienced rapid growth in total assets, primarily due to
several recent, significant acquisitions. In the first of such acquisitions,
Western acquired Western Bank on September 30, 1996, thereby increasing its
total assets as of September 30, 1996, from approximately $80 million to
approximately $490 million, an increase of 513%. In June 1997, Western merged
with CCB, thereby acquiring NBSC and increasing Western's total assets from
approximately $512 million at December 31, 1996 to approximately $860 million at
June 30, 1997, an increase of 68%. As a result of the SCB Merger, which was
consummated on October 10, 1997, Western's total assets increased from
approximately $867 million at September 30, 1997 to $1.38 billion at December
31, 1997, an increase of 60%. Following the SMB Acquisition, as of March 31,
1998, Western's total assets increased to $2.08 billion, an increase of
approximately $700 million or 51% from $1.38 billion at December 31, 1997.
Assuming the consummation of the BKLA Acquisition, Western would add
approximately $280 million of additional assets. The ability of Western to
operate effectively following this rapid growth will depend in part on its
ability to integrate the operations of the recently acquired entities and its
ability to attract and retain key personnel. If the integration of Western Bank,
CCB, SCB, Santa Monica Bank and BKLA does not proceed as anticipated, the
results of operations of Western could be adversely affected. Also, there can be
no assurance that Western will be able to realize the operating efficiencies
that Western Management expects to achieve
26
<PAGE>
through the acquisition of Western Bank, the CCB Merger, the SCB Merger, the SMB
Acquisition and the Merger.
In addition, due to the substantial size of these acquisitions, any
comparison of financial data as of and for the time periods prior to such
acquisitions may not be meaningful.
GENERAL BUSINESS RISK
The businesses of Western and BKLA are subject to various business risks.
The volume of loan originations is dependent upon demand for loans of the type
originated and serviced by Western and BKLA and the competition in the
marketplace for such loans. The level of consumer confidence, fluctuations in
real estate values, fluctuations in prevailing interest rates and fluctuations
in investment returns expected by the financial community could combine to make
loans of the type originated by Western and BKLA less attractive. In addition,
Western and BKLA may be adversely affected by other factors that could (a)
increase the cost to the borrower of loans originated by Western and BKLA, (b)
create alternative lending sources for such borrowers, or (c) increase the cost
of funds of Western and BKLA at rates faster than any increase in interest
income, thereby narrowing their net interest rate margins. Although both Western
and BKLA also have seen continued improvement in loan demand consistent with
overall market growth during the continued recovery of the Southern California
economy, the increase in demand to date has not been sufficient to permit either
Western or BKLA fully to utilize new deposits to fund loans, and accordingly
each has maintained a significant portion of its funds in securities and federal
funds sold. In addition, competition for loans has increased and some lenders
have shown a willingness to lend on terms that Western and BKLA Managements are
unwilling to match due to their credit philosophies. Managements of both Western
and BKLA believe that loan demand will continue to improve, but there can be no
assurance that there will be sufficient loan demand in the future to keep pace
with increases in deposits such that the asset mix desired by Western and BKLA
can be achieved and maintained. Governmental interventions through elimination
of tax benefits for home equity loans, regulation of an increased scope of loans
or introduction of additional regulations aimed at mortgage loans could also
adversely affect the business in which Western and BKLA are engaged.
In the ordinary course of business, Western and BKLA are subject to claims
made against them by borrowers, depositors and investors arising from, among
other things, losses that are claimed to have been incurred as a result of (a)
alleged breaches of fiduciary obligation, (b) alleged misrepresentations, errors
or omissions by employees and officers (including appraisers), (c) alleged
incomplete documentation, or (d) alleged failure by Western or BKLA to comply
with applicable laws and regulations. Western believes that any liability with
respect to any currently asserted claims or legal actions against Western or
BKLA is not likely to be material to the consolidated financial position or
results of operations of Western or the Surviving Corporation; however, any
claims asserted in the future may result in legal expense or liabilities that
could have a material adverse effect on the financial positions and results of
operations of Western or the Surviving Corporation.
CONCENTRATION OF OPERATIONS; RECESSIONARY ENVIRONMENTS; DECLINE IN REAL ESTATE
VALUES
The business activities of Western and BKLA currently are focused in
Southern California, with the majority of their business concentrated in Los
Angeles and Orange counties. The business of Western after the Merger is
expected to continue to be concentrated in Southern California for the
foreseeable future. Although Western intends to expand within Southern
California, there can be no assurance when or if such expansion will take place.
Consequently, the results of operations and financial condition of Western and
BKLA are dependent upon general trends in the Los Angeles County, Orange County
and Southern California economies and residential and commercial real estate
markets. The risks to which the business of Western and BKLA is subject, and to
which the business of Western after the Merger will be subject, become more
acute during an economic slow-down or recession such as that experienced during
the recent California recession. During such periods, delinquencies and
foreclosures generally increase and can result
27
<PAGE>
in increased numbers of, and larger, claims and legal actions and in a decline
in demand for the services provided by Western and BKLA. In addition, a
significant decline in market values of properties of the type that secure loans
originated by Western and BKLA would reduce homeowners' equity in their homes
and businesses' equity in their properties, thereby reducing their borrowing
power and also weakening collateral coverage on loans made previously by Western
and BKLA. Such a decline could also diminish the market for loans originated by
Western and BKLA. Any of the foregoing could have a material adverse effect on
the financial position and results of operations of Western and the Surviving
Corporation, and could have a greater adverse impact on Western and the
Surviving Corporation than on certain competitors that may have greater
resources and capital. In addition, the concentration of Western's operations in
Los Angeles and Orange counties exposes it to greater risk than other banking
companies with a wider geographic base in the event of catastrophes, such as
earthquakes, fires and floods, in this region.
INTEREST RATE RISK
It is expected that Western, through its subsidiaries including the
Surviving Corporation, will continue to realize income primarily from the
differential or "spread" between the interest earned on loans, securities and
other interest-earning assets, and interest paid on deposits, borrowings and
other interest-bearing liabilities. Net interest spreads are affected by the
difference between the maturities and repricing characteristics of
interest-earning assets and interest-bearing liabilities. In addition, loan
volume and yields are affected by market interest rates on loans, and rising
interest rates generally are associated with a lower volume of loan
originations. There can be no assurance that Western's interest rate risk will
be minimized or eliminated. In addition, an increase in the general level of
interest rates may adversely affect the ability of certain borrowers to pay the
interest on and principal of their obligations. Accordingly, changes in levels
of market interest rates could materially adversely affect Western's net
interest spread, asset quality, loan origination volume and overall results of
operation.
SHARES ELIGIBLE FOR FUTURE SALE; DILUTION
Shares of Western Common Stock eligible for future sale could have a
dilutive effect on the market for Western Common Stock and could adversely
affect market prices.
As of the BKLA Record Date, the Restated Articles of Incorporation of
Western authorized 100,000,000 shares of Western Common Stock, of which
[15,699,364] shares were outstanding. Approximately [2,111,057] additional
shares of Western Common Stock will be issued in the Merger to BKLA
Shareholders, assuming (i) no shares of BKLA Common Stock reserved for issuance
on the BKLA Record Date are issued on or prior to the Effective Date; (ii) no
Dissenters' Rights are perfected by BKLA Shareholders; and (iii) no cash is paid
in lieu of fractional shares. Approximately [2,425,033] additional shares of
BKLA Common Stock will be issued in the Merger to BKLA Shareholders assuming (i)
all shares of BKLA Common Stock reserved for issuance on the BKLA Record Date
are issued and outstanding on the Effective Date; (ii) no Dissenters Rights are
perfected by BKLA Shareholders; and (iii) no cash is paid in lieu of fractional
shares. Pursuant to its stock option plans, Western had outstanding options to
purchase an additional [406,245] shares of Western Common Stock on the BKLA
Record Date with exercise prices of between $5.25 and $32.38. Western also had
outstanding warrants to purchase an additional [140,675] shares of Western
Common Stock with exercise prices of between $13.77 and $16.83. As of the BKLA
Record Date, BKLA had [372,610] options authorized under its stock option plan,
and outstanding options to purchase [323,300] shares of BKLA Common Stock with
exercise prices of between $3.75 and $44.30. BKLA also had outstanding warrants
to purchase an additional [629,045] shares of BKLA Common Stock with an exercise
price of $3.75.
It is Western's intention to pursue acquisitions of other financial
institutions from time to time where such acquisitions are believed by Western
to enhance shareholder value or satisfy other strategic objectives. Such
acquisitions, if any, could be accomplished by the issuance of additional shares
of Western Common
28
<PAGE>
Stock or other securities convertible into or exercisable for Western Common
Stock. See "UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA".
In addition, Hovde Capital, Inc. ("Hovde"), as a purported assignee of
Financial Institution Partners, L.P. (collectively, "FIP"), has asserted a right
under an agreement between FIP and CCB to purchase 266,659 additional shares of
common stock of CCB at $6.75 per share and to an ongoing right of first refusal
to maintain FIP's beneficial ownership interest in CCB. Hovde seeks specific
enforcement of this agreement, but does not in its complaint specify whether the
common stock it believes it has the right to purchase is that of CCB or of
Western. Nor does Hovde specify whether the number of shares it seeks to
purchase or have a right of first refusal to purchase, if in Western Common
Stock, is subject to adjustment in any way as a result of the CCB Merger.
Western Management considers Hovde's claims to be without merit and believes
that FIP has no contractual right or current right of first refusal to purchase
any shares of common stock of CCB or Western. If, however, FIP were entitled to
purchase 266,659 additional shares of Western Common Stock, the management of
Western estimates, for illustrative purposes, that the effect would be that the
diluted shares outstanding, for the purpose of computing earnings per share,
would have increased by approximately 2.5% for the year ended December 31, 1997,
resulting in earnings per share dilution of approximately 2.4%.
REGULATION
The operations of Western and BKLA are subject to extensive regulation by
federal, state and local governmental authorities and are subject to various
laws and judicial and administrative decisions imposing requirements and
restrictions on part or all of their respective operations. Western and BKLA
each believes that it is in substantial compliance in all material respects with
applicable federal, state and local laws, rules and regulations. Because the
business of each of Western and BKLA is highly regulated, the laws, rules and
regulations applicable to Western and BKLA are subject to regular modification
and change. There are currently proposed various laws, rules and regulations
that, if adopted, would impact Western and the Surviving Corporation. There can
be no assurance that these proposed laws, rules and regulations, or other such
laws, rules or regulations, will not be adopted in the future, which could make
compliance much more difficult or expensive, restrict Western's ability to
originate, broker or sell loans, further limit or restrict the amount of
commissions, interest or other charges earned on loans originated or sold by
Western or otherwise adversely affect the business or prospects of Western.
LIMITED MARKET FOR WESTERN COMMON STOCK
There is currently only a limited trading market for Western Common Stock.
Western Common Stock was designated for quotation on the Nasdaq on June 3, 1997.
There can be no assurance that an active trading market for Western Common Stock
will develop, or if developed, will continue, or that shareholders of Western
after the Merger will be able to resell their securities or otherwise liquidate
their investment, if at all, without considerable delay or considerable impact
on the sales price. See "SUMMARY--Markets and Market Prices".
There can be no assurance as to the market value of Western Common Stock,
which market value may be significantly affected by various factors, including
but not limited to announcements of expanded services by Western or its
competitors, acquisitions of related companies and variations in quarterly
operating results, as well as by the dilutive effects of the matters described
above in "--Shares Eligible for Future Sale; Dilution". The limited trading
market for Western Common Stock may cause fluctuations in the market value of
Western Common Stock to be exaggerated, leading to price volatility in excess of
that which would occur in a more active trading market.
29
<PAGE>
INFORMATION REGARDING WESTERN
BUSINESS OF WESTERN
Western is a bank holding company registered under the BHCA, and its
principal business is to serve as a holding company for its banking
subsidiaries, SCB and SMB. Western was organized on May 20, 1983 as a California
corporation and commenced operation as a bank holding company on June 18, 1984.
Western Bank was acquired by Western on September 30, 1996. On June 4, 1997,
Western consummated the CCB Merger pursuant to which CCB merged with and into
Western and Monarch Bank, a wholly-owned subsidiary of Western prior to the CCB
Merger, merged with and into NBSC, a wholly-owned subsidiary of CCB prior to the
CCB Merger. On October 10, 1997, Western consummated the SCB Merger pursuant to
which SCB merged with and into Western. On December 15, 1997, Western merged
NBSC with and into SCB, a wholly-owned subsidiary of SC Bancorp prior to the SCB
Merger, with SCB being the surviving bank. On January 27, 1998, Western
consummated the SMB Acquisition pursuant to which Santa Monica Bank merged with
and into Western Bank with Western Bank being the surviving bank. As part of the
SMB Acquisition, the name of Western Bank was changed to "Santa Monica Bank".
Santa Monica Bank's primary market area is the western part of Los Angeles
County. As of March 31, 1998 Santa Monica Bank had thirteen branch offices,
including branch offices in Santa Monica, Westwood, Malibu, Pacific Palisades,
Marina Del Rey, Beverly Hills, Century City and Encino. SCB's primary market
area includes southern Los Angeles County, Orange County and northern San Diego
County. As of March 31, 1998 SCB had six branch offices in southern Los Angeles
County, nine branch offices throughout Orange County and one in northern San
Diego County. Santa Monica Bank and SCB offer a broad range of banking products
and services, including many types of business and personal savings and checking
accounts and other consumer banking services. At March 31, 1998, Western had
consolidated total assets, total deposits and shareholders' equity of $2.1
billion, $1.8 billion and $285 million, respectively.
Western's principal executive offices are located at 4100 Newport Place,
Suite 900, Newport Beach, California 92660, and its telephone number is (949)
863-2444.
QUARTERLY DIVIDEND
On May 20, 1998, the Western Board declared a dividend of $0.15 per share of
Western Common Stock payable on June 26, 1998 to Western Shareholders of record
on June 5, 1998.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
Additional information relating to Western, including information relating
to the business, management, properties, financial condition and results of
operations of Western, is included in documents incorporated by reference into
this Proxy Statement-Prospectus. See "AVAILABLE INFORMATION" and "INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE".
30
<PAGE>
INFORMATION REGARDING BKLA
BUSINESS OF BKLA
BKLA was organized on May 8, 1981 as a California corporation and commenced
operations pursuant to a charter issued by the State Commissioner on May 6,
1982. On November 15, 1995, BKLA acquired WTB, with total assets of
approximately $42,487,000 and one banking office. Effective April 1, 1997, BKLA
consummated a merger with AWB, with approximately $67,291,000 in assets and two
banking offices. On December 31, 1997, BKLA consummated its merger with CNB, a
national banking corporation with approximately $56,944,000 in total assets and
one branch office, with BKLA being the surviving corporation.
BKLA is a full-service community bank which engages in general commercial
banking in Los Angeles County, California. As of March 31, 1998 BKLA had six
branch offices in the cities of Beverly Hills, West Hollywood, Encino, Culver
City and Glendale. Services include those traditionally offered by commercial
banks, such as checking and saving accounts and commercial and real estate
loans, and, for its business customers, personal, home improvement, automobile
and other installment loans. The vast majority of BKLA's loans are direct loans
made to individuals, professionals, real estate developers, and small and medium
sized businesses within BKLA's marketing area.
BKLA's principal executive offices are located at 8901 Santa Monica
Boulevard, West Hollywood, California and its telephone number is (310)
550-8900.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
Additional information relating to BKLA, including information relating to
the business, management, properties, financial condition and results of
operations of BKLA, is included in documents incorporated by reference into this
Proxy Statement-Prospectus. See "AVAILABLE INFORMATION" and "INCORPORATION OF
CERTAIN INFORMATION BY REFERENCE".
31
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
The following unaudited pro forma combined condensed financial data combines
the historical consolidated condensed financial statements of Western and the
historical consolidated condensed Financial Statements of BKLA, giving effect to
the Merger as if it had been effective on March 31, 1998 and December 31, 1997,
with respect to the Pro Forma Combined Condensed Balance Sheets, and as of the
beginning of the periods indicated, with respect to the Pro Forma Combined
Condensed Statements of Income. This information is presented under
pooling-of-interests accounting. The unaudited pro forma combined condensed
financial data also combines the historical condensed statements of income of
Santa Monica Bank, acquired by Western on January 27, 1998, in a merger
accounted for under the purchase method of accounting, for the year ended
December 31, 1997 and the three months ended March 31, 1998 and 1997, as if the
SMB Acquisition occurred at the beginning of such periods. The information for
the three months ended March 31, 1998 and 1997 is derived from the unaudited
financial statements of Western, BKLA and Santa Monica Bank which includes, in
the opinion of the management of Western, BKLA and Santa Monica Bank, all
adjustments (consisting only of normal accruals) necessary to present fairly the
data for such periods. This information should be read in conjunction with the
historical consolidated financial statements of Western, BKLA and Santa Monica
Bank, including their respective notes thereto, which are included and
incorporated by reference into this Proxy Statement-Prospectus, and in
conjunction with the combined condensed historical selected financial data and
other pro forma combined financial information, including the notes thereto,
appearing elsewhere in this Proxy Statement-Prospectus. See "INCORPORATION OF
CERTAIN INFORMATION BY REFERENCE". The effect of estimated merger and
reorganization costs expected to be incurred in connection with the Merger has
been reflected in the Unaudited Pro Forma Combined Condensed Balance Sheets;
however, since the estimated costs are nonrecurring, they have not been
reflected in the Unaudited Pro Forma Combined Condensed Statements of Income.
See Note 2 to the Unaudited Pro Forma Combined Condensed Financial Information.
The unaudited pro forma combined condensed data does not give effect to any
anticipated operating efficiencies in conjunction with the Merger. The Unaudited
Pro Forma Combined Condensed Balance Sheets are not necessarily indicative of
the actual financial position that would have existed had the Merger been
consummated on March 31, 1998 or December 31, 1997, or that may exist in the
future. The Unaudited Pro Forma Combined Condensed Statements of Income are not
necessarily indicative of the results that would have occurred had the Merger
been consummated on the dates indicated or that may be achieved in the future.
Assuming the consummation of the Merger, the actual financial position and
results of operations will differ, perhaps significantly, from the pro forma
amounts reflected herein because of a variety of factors, including changes in
value and changes in operating results between the dates of the unaudited pro
forma financial data and the date on which the Merger takes place.
32
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET AT
MARCH 31, 1998
<TABLE>
<CAPTION>
WESTERN AND
WESTERN BKLA PRO FORMA BKLA PRO
(HISTORICAL) (HISTORICAL)(1) ADJUSTMENTS(2) FORMA
------------ ------------- -------------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
ASSETS:
Cash and due from banks............................... $ 145,300 $ 23,629 $ -- $ 168,929
Federal funds sold.................................... 239,621 14,600 -- 254,221
------------ ------------- ------- ------------
TOTAL CASH AND CASH EQUIVALENTS..................... 384,921 38,229 -- 423,150
Federal Reserve Bank and Federal Home Loan Bank stock,
at cost............................................. 5,673 813 -- 6,486
Securities held to maturity........................... -- 78,508 -- 78,508
Securities available for sale......................... 250,997 61 -- 251,058
------------ ------------- ------- ------------
TOTAL SECURITIES.................................... 256,670 79,382 -- 336,052
Net loans............................................. 1,228,902 143,615 -- 1,372,517
Property, plant and equipment......................... 31,065 2,568 -- 33,633
Other real estate owned............................... 7,508 1,545 -- 9,053
Goodwill.............................................. 148,135 5,817 -- 153,952
Other assets.......................................... 27,542 7,005 1,680 36,227
------------ ------------- ------- ------------
TOTAL ASSETS........................................ $ 2,084,743 $ 278,161 $ 1,680 $ 2,364,584
------------ ------------- ------- ------------
------------ ------------- ------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Non-interest bearing deposits......................... $ 631,002 $ 90,786 $ -- $ 721,788
Interest bearing deposits............................. 1,132,622 145,934 -- 1,278,556
------------ ------------- ------- ------------
Total deposits...................................... 1,763,624 236,720 -- 2,000,344
Borrowed funds........................................ 18,169 7,757 -- 25,926
Accrued interest payable and other liabilities........ 18,045 1,585 7,080 26,710
------------ ------------- ------- ------------
TOTAL LIABILITIES................................... 1,799,838 246,062 7,080 2,052,980
SHAREHOLDERS' EQUITY:
Preferred stock....................................... -- -- -- --
Common stock.......................................... 262,968 30,688 -- 293,656
Retained earnings..................................... 22,005 1,411 (5,400) 18,016
Comprehensive income (loss)........................... (68) -- -- (68)
------------ ------------- ------- ------------
TOTAL SHAREHOLDERS' EQUITY.......................... 284,905 32,099 (5,400) 311,604
------------ ------------- ------- ------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY............ $ 2,084,743 $ 278,161 $ 1,680 $ 2,364,584
------------ ------------- ------- ------------
------------ ------------- ------- ------------
Number of common shares outstanding(1)................ 15,689.9 4,762.1 17,790.4
Common shareholders' equity per share(1).............. $ 18.16 $ 6.74 $ 17.52
Tangible book value per share(1)...................... $ 8.72 $ 5.52 $ 8.86
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA".
33
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET AT
DECEMBER 31, 1997
<TABLE>
<CAPTION>
WESTERN AND
WESTERN BKLA PRO FORMA BKLA PRO
(HISTORICAL) (HISTORICAL)(1) ADJUSTMENTS(2) FORMA
------------ ------------- -------------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
ASSETS:
Cash and due from banks............................... $ 97,456 $ 22,646 $ -- $ 120,102
Federal funds sold.................................... 138,702 29,555 -- 168,257
------------ ------------- ------- ------------
TOTAL CASH AND CASH EQUIVALENTS..................... 236,158 52,201 -- 288,359
Federal Reserve Bank and Federal Home Loan
Bank stock, at cost................................. 5,610 801 -- 6,411
Securities held to maturity........................... -- 48,138 -- 48,138
Securities available for sale......................... 201,904 11,494 -- 213,398
------------ ------------- ------- ------------
TOTAL SECURITIES.................................... 207,514 60,433 -- 267,947
Net loans............................................. 864,840 139,814 -- 1,004,654
Property, plant and equipment......................... 13,685 2,650 -- 16,335
Other real estate owned............................... 6,261 1,475 -- 7,736
Goodwill.............................................. 30,430 5,939 -- 36,369
Other assets.......................................... 24,622 9,521 1,680 35,823
------------ ------------- ------- ------------
TOTAL ASSETS........................................ $ 1,383,510 $ 272,033 $ 1,680 $ 1,657,223
------------ ------------- ------- ------------
------------ ------------- ------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Non-interest bearing deposits......................... $ 457,503 $ 85,222 $ -- $ 542,725
Interest bearing deposits............................. 769,290 152,790 -- 922,080
------------ ------------- ------- ------------
Total deposits...................................... 1,226,793 238,012 -- 1,464,805
Borrowed funds........................................ 12,751 1,849 -- 14,600
Accrued interest payable and other liabilities........ 14,311 1,118 7,080 22,509
------------ ------------- ------- ------------
TOTAL LIABILITIES................................... 1,253,855 240,979 7,080 1,501,914
SHAREHOLDERS' EQUITY:
Preferred stock....................................... -- -- -- --
Common stock.......................................... 112,947 30,630 -- 143,577
Retained earnings..................................... 16,802 472 (5,400) 11,874
Comprehensive income (loss)........................... (94) (48) -- (142)
------------ ------------- ------- ------------
TOTAL SHAREHOLDERS' EQUITY.......................... 129,655 31,054 (5,400) 155,309
------------ ------------- ------- ------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY............ $ 1,383,510 $ 272,033 $ 1,680 $ 1,657,223
------------ ------------- ------- ------------
------------ ------------- ------- ------------
Number of common shares outstanding(1)................ 10,648.3 4,751.7 12,744.4
Common shareholders' equity per share(1).............. $ 12.18 $ 6.54 $ 12.19
Tangible book value per share(1)...................... $ 9.32 $ 5.29 $ 9.33
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA".
34
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
WESTERN, BKLA
WESTERN AND SANTA MONICA AND SANTA
WESTERN BKLA BKLA PRO JANUARY PRO FORMA MONICA PRO
(HISTORICAL) (HISTORICAL)(1) FORMA (HISTORICAL)(3) ADJUSTMENTS(3) FORMA
----------- ------------- ----------- ------------- ----------------- -------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans........ $ 26,755 $ 3,763 $ 30,518 $ 3,185 $ -- $ 33,703
Interest on interest bearing
deposits in other banks......... -- 24 24 -- -- 24
Interest on investment
securities...................... 3,710 885 4,595 616 -- 5,211
Interest on federal funds sold.... 2,302 444 2,746 365 (235) 2,876
----------- ------------- ----------- ------------- ----- -------------
TOTAL INTEREST INCOME........... 32,767 5,116 37,883 4,166 (235) 41,814
INTEREST EXPENSE:
Interest expense on deposits...... 8,665 1,351 10,016 1,180 -- 11,196
Interest expense on borrowings.... 217 100 317 16 -- 333
----------- ------------- ----------- ------------- ----- -------------
TOTAL INTEREST EXPENSE.......... 8,882 1,451 10,333 1,196 -- 11,529
----------- ------------- ----------- ------------- ----- -------------
NET INTEREST INCOME: 23,885 3,665 27,550 2,970 (235) 30,285
Less: provision for loan and lease
losses.......................... 150 -- 150 80 -- 230
----------- ------------- ----------- ------------- ----- -------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN AND LEASE
LOSSES........................ 23,735 3,665 27,400 2,890 (235) 30,055
NON-INTEREST INCOME:
Service charges, commissions and
fees............................ 3,247 462 3,709 595 -- 4,304
Securities gains.................. 113 14 127 -- -- 127
Other income...................... 253 11 264 19 -- 283
----------- ------------- ----------- ------------- ----- -------------
TOTAL NON-INTEREST INCOME....... 3,613 487 4,100 614 -- 4,714
NON-INTEREST EXPENSE:
Salaries and benefits............. 8,542 1,433 9,975 1,123 (11) 11,087
Occupancy, furniture and
equipment....................... 2,347 671 3,018 347 23 3,388
Advertising and business
development..................... 276 59 335 58 -- 393
Other real estate owned........... 189 2 191 9 -- 200
Professional services............. 838 147 985 73 -- 1,058
Telephone, stationery and
supplies........................ 736 131 867 55 -- 922
Goodwill amortization............. 1,951 122 2,073 -- 665 2,738
Data processing................... 558 -- 558 9 -- 567
Customer services cost............ 321 -- 321 8 -- 329
Merger Costs...................... -- -- -- 429 -- 429
Other............................. 1,223 117 1,340 239 -- 1,579
----------- ------------- ----------- ------------- ----- -------------
TOTAL NON-INTEREST EXPENSE...... 16,981 2,682 19,663 2,350 677 22,690
----------- ------------- ----------- ------------- ----- -------------
Income before income taxes.......... 10,367 1,470 11,837 1,154 (912) 12,079
Income taxes........................ 5,032 531 5,563 463 (102) 5,924
----------- ------------- ----------- ------------- ----- -------------
NET INCOME...................... $ 5,335 $ 939 $ 6,274 $ 691 $ (810) $ 6,155
----------- ------------- ----------- ------------- ----- -------------
----------- ------------- ----------- ------------- ----- -------------
PER SHARE INFORMATION(1):
Number of shares (weighted
average)
Basic........................... 13,938.4 4,758.6 15,948.4 7,084.2 17,606.2
Diluted......................... 14,141.8 5,402.7 16,423.9 7,084.2 18,081.7
Income per share
Basic........................... $ 0.38 $ 0.20 $ 0.39 $ 0.10 $ 0.35
Diluted......................... $ 0.38 $ 0.17 $ 0.38 $ 0.10 $ 0.34
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA".
35
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
WESTERN, BKLA
WESTERN AND AND SANTA
WESTERN BKLA BKLA PRO SANTA MONICA PRO FORMA MONICA PRO
(HISTORICAL) (HISTORICAL)(1) FORMA (HISTORICAL)(3) ADJUSTMENTS(3) FORMA
----------- ------------- ----------- ------------- --------------- -------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans........ $ 19,045 $ 1,895 $ 20,940 $ 8,828 $ -- $ 29,768
Interest on interest bearing
deposits in other banks......... -- -- -- -- -- --
Interest on investment
securities...................... 4,308 401 4,709 1,953 -- 6,662
Interest on federal funds sold.... 612 239 851 867 (704) 1,014
----------- ------------- ----------- ------------- ------- -------------
TOTAL INTEREST INCOME........... 23,965 2,535 26,500 11,648 (704) 37,444
INTEREST EXPENSE:
Interest expense on deposits...... 6,676 676 7,352 3,322 -- 10,674
Interest expense on borrowings.... 339 65 404 48 -- 452
----------- ------------- ----------- ------------- ------- -------------
TOTAL INTEREST EXPENSE.......... 7,015 741 7,756 3,370 -- 11,126
----------- ------------- ----------- ------------- ------- -------------
NET INTEREST INCOME:................ 16,950 1,794 18,744 8,278 (704) 26,318
Less: provision for loan and lease
losses.......................... 725 85 810 -- -- 810
----------- ------------- ----------- ------------- ------- -------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN AND LEASE
LOSSES........................ 16,225 1,709 17,934 8,278 (704) 25,508
NON-INTEREST INCOME:
Service charges and fees.......... 2,042 247 2,289 1,668 -- 3,957
Gain on sale of loans and other
assets.......................... 78 -- 78 -- -- 78
Securities gains.................. 107 -- 107 -- -- 107
Other income...................... 282 14 296 58 -- 354
----------- ------------- ----------- ------------- ------- -------------
TOTAL NON-INTEREST INCOME....... 2,509 261 2,770 1,726 -- 4,496
NON-INTEREST EXPENSE:
Salaries and benefits............. 6,660 850 7,510 3,540 (33) 11,017
Occupancy, furniture and
equipment....................... 1,916 323 2,239 987 69 3,295
Advertising and business
development..................... 370 43 413 176 -- 589
Other real estate owned........... 46 6 52 55 -- 107
Professional services............. 1,064 117 1,181 409 -- 1,590
Telephone, stationery and
supplies........................ 712 62 774 167 -- 941
Goodwill amortization............. 636 30 666 -- 1,994 2,660
Data processing................... 388 -- 388 33 -- 421
Customer services cost............ 131 -- 131 32 -- 163
Merger costs...................... 66 -- 66 -- -- 66
Other............................. 1,338 146 1,484 640 -- 2,124
----------- ------------- ----------- ------------- ------- -------------
TOTAL NON-INTEREST EXPENSE...... 13,327 1,577 14,904 6,039 2,030 22,973
----------- ------------- ----------- ------------- ------- -------------
Income before income taxes.......... 5,407 393 5,800 3,965 (2,734) 7,031
Income taxes........................ 2,431 -- 2,431 1,352 (307) 3,476
----------- ------------- ----------- ------------- ------- -------------
NET INCOME...................... $ 2,976 $ 393 $ 3,369 $ 2,613 $ (2,427) $ 3,555
----------- ------------- ----------- ------------- ------- -------------
----------- ------------- ----------- ------------- ------- -------------
PER SHARE INFORMATION(1):
Number of shares (weighted
average)
Basic........................... 10,487.0 2,195.1 11,414.2 7,084.2 16,387.7
Diluted......................... 10,757.7 2,575.6 11,845.6 7,084.2 16,819.1
Income per share
Basic........................... $ 0.28 $ 0.18 $ 0.30 $ 0.37 $ 0.22
Diluted......................... $ 0.28 $ 0.15 $ 0.28 $ 0.37 $ 0.21
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA".
36
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
WESTERN, BKLA
WESTERN AND AND SANTA
WESTERN BKLA BKLA PRO SANTA MONICA PRO FORMA MONICA PRO
(HISTORICAL) (HISTORICAL)(1) FORMA (HISTORICAL)(3) ADJUSTMENTS(3) FORMA
----------- ------------- ----------- ------------- -------------- --------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans......... $ 80,639 $ 11,229 $ 91,868 $ 36,794 $ -- $ 128,662
Interest on interest bearing
deposits in other banks.......... -- 1 1 -- -- 1
Interest on investment
securities....................... 15,714 2,731 18,445 8,922 -- 27,367
Interest on federal funds sold..... 4,681 893 5,574 3,652 (2,816) 6,410
----------- ------------- ----------- ------------- -------------- --------------
TOTAL INTEREST INCOME............ 101,034 14,854 115,888 49,368 (2,816) 162,440
INTEREST EXPENSE:
Interest expense on deposits....... 28,276 3,673 31,949 14,575 -- 46,524
Interest expense on borrowings..... 1,082 258 1,340 196 -- 1,536
----------- ------------- ----------- ------------- -------------- --------------
TOTAL INTEREST EXPENSE........... 29,358 3,931 33,289 14,771 -- 48,060
----------- ------------- ----------- ------------- -------------- --------------
NET INTEREST INCOME:................. 71,676 10,923 82,599 34,597 (2,816) 114,380
Less: provision for loan and lease
losses........................... 2,800 410 3,210 -- -- 3,210
----------- ------------- ----------- ------------- -------------- --------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN AND LEASE
LOSSES......................... 68,876 10,513 79,389 34,597 (2,816) 111,170
NON-INTEREST INCOME:
Service charges, commissions and
fees............................. 7,533 1,273 8,806 7,032 -- 15,838
Gain on sale of loans and other
assets........................... 78 -- 78 -- -- 78
Securities gains................... 342 -- 342 13 -- 355
Other income....................... 1,733 115 1,848 229 -- 2,077
----------- ------------- ----------- ------------- -------------- --------------
TOTAL NON-INTEREST INCOME........ 9,686 1,388 11,074 7,274 -- 18,348
NON-INTEREST EXPENSE:
Salaries and benefits.............. 25,023 4,802 29,825 14,661 (131) 44,355
Occupancy, furniture and
equipment........................ 7,843 1,778 9,621 4,151 274 14,046
Advertising and business
development...................... 1,225 155 1,380 844 -- 2,224
Other real estate owned............ 242 29 271 (547) -- (276)
Professional services.............. 3,706 382 4,088 1,444 -- 5,532
Telephone, stationery and
supplies......................... 2,735 347 3,082 632 -- 3,714
Goodwill amortization.............. 2,538 246 2,784 -- 7,977 10,761
Data processing.................... 1,667 -- 1,667 116 -- 1,783
Customer services cost............. 1,263 -- 1,263 265 -- 1,528
Merger related costs............... 14,201 -- 14,201 1,052 -- 15,253
Other.............................. 5,314 803 6,117 2,441 -- 8,558
----------- ------------- ----------- ------------- -------------- --------------
TOTAL NON-INTEREST EXPENSE....... 65,757 8,542 74,299 25,059 8,120 107,478
----------- ------------- ----------- ------------- -------------- --------------
Income before income taxes........... 12,805 3,359 16,164 16,812 (10,936) 22,040
Income taxes (benefits).............. 9,643 (372) 9,271 5,905 (1,228) 13,948
----------- ------------- ----------- ------------- -------------- --------------
NET INCOME....................... $ 3,162 $ 3,731 $ 6,893 $ 10,907 $ (9,708) $ 8,092
----------- ------------- ----------- ------------- -------------- --------------
----------- ------------- ----------- ------------- -------------- --------------
PER SHARE INFORMATION(1):
Number of shares (weighted average)
Basic............................ 10,523.9 3,226.0 11,886.6 7,084.2 16,860.1
Diluted.......................... 10,731.6 3,749.7 12,315.5 7,084.2 17,289.0
Income per share
Basic............................ $ 0.30 $ 1.16 $ 0.58 $ 1.54 $ 0.48
Diluted.......................... $ 0.29 $ 1.00 $ 0.56 $ 1.54 $ 0.47
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA".
37
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
WESTERN AND
WESTERN BKLA BKLA PRO
(HISTORICAL) (HISTORICAL)(1) FORMA
----------- ------------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans............................................. $ 58,374 $ 7,702 $ 66,076
Interest on interest bearing deposits in other banks................... 3 12 15
Interest on investment securities...................................... 12,862 2,008 14,870
Interest on federal funds sold......................................... 2,998 839 3,837
----------- ------------- -----------
TOTAL INTEREST INCOME................................................ 74,237 10,561 84,798
INTEREST EXPENSE:
Interest expense on deposits........................................... 21,382 2,830 24,212
Interest expense on borrowings......................................... 929 257 1,186
----------- ------------- -----------
TOTAL INTEREST EXPENSE............................................... 22,311 3,087 25,398
----------- ------------- -----------
NET INTEREST INCOME:..................................................... 51,926 7,474 59,400
Less: provision for loan and lease losses.............................. 1,018 750 1,768
----------- ------------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES........ 50,908 6,724 57,632
NON-INTEREST INCOME:
Service charges, commissions and fees.................................. 7,485 966 8,451
Gain on sale of loans and other assets................................. 665 -- 665
Securities gains (losses).............................................. 281 (5) 276
Other income........................................................... 1,444 76 1,520
----------- ------------- -----------
TOTAL NON-INTEREST INCOME............................................ 9,875 1,037 10,912
NON-INTEREST EXPENSE:
Salaries and benefits.................................................. 23,016 3,408 26,424
Occupancy, furniture and equipment..................................... 7,649 1,306 8,955
Advertising and business development................................... 1,342 137 1,479
Other real estate owned................................................ (134) 68 (66)
Professional services.................................................. 6,054 472 6,526
Telephone, stationery and supplies..................................... 2,201 346 2,547
Goodwill amortization.................................................. 1,004 119 1,123
Data processing........................................................ 1,064 -- 1,064
Customer services cost................................................. 510 -- 510
Other.................................................................. 5,432 904 6,336
----------- ------------- -----------
TOTAL NON-INTEREST EXPENSE........................................... 48,138 6,760 54,898
----------- ------------- -----------
Income before income taxes............................................... 12,645 1,001 13,646
Income taxes............................................................. 3,656 -- 3,656
----------- ------------- -----------
NET INCOME........................................................... $ 8,989 $ 1,001 $ 9,990
----------- ------------- -----------
----------- ------------- -----------
PER SHARE INFORMATION(1):
Number of shares (weighted average)
Basic................................................................ 8,095.7 2,195.1 9,022.9
Diluted.............................................................. 8,248.4 2,475.9 9,294.2
Income per share
Basic................................................................ $ 1.11 $ 0.46 $ 1.11
Diluted.............................................................. $ 1.09 $ 0.40 $ 1.07
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA".
38
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
WESTERN AND
WESTERN BKLA BKLA PRO
(HISTORICAL) (HISTORICAL)(1) FORMA
----------- ------------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans............................................. $ 49,014 $ 4,808 $ 53,822
Interest on interest bearing deposits in other banks................... 43 2 45
Interest on investment securities...................................... 10,726 1,575 12,301
Interest on federal funds sold......................................... 2,846 434 3,280
----------- ------------- -----------
TOTAL INTEREST INCOME................................................ 62,629 6,819 69,448
INTEREST EXPENSE:
Interest expense on deposits........................................... 19,167 1,542 20,709
Interest expense on borrowings......................................... 637 310 947
----------- ------------- -----------
TOTAL INTEREST EXPENSE............................................... 19,804 1,852 21,656
----------- ------------- -----------
NET INTEREST INCOME:..................................................... 42,825 4,967 47,792
Less: provision for (recovery of) loan and lease losses................ 8,564 (311) 8,253
----------- ------------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES........ 34,261 5,278 39,539
NON-INTEREST INCOME:
Service charges, commissions and fees.................................. 6,551 757 7,308
Gain on sale of loans and other assets................................. 145 118 263
Securities (losses).................................................... (692) (46) (738)
Other income........................................................... 1,822 49 1,871
----------- ------------- -----------
TOTAL NON-INTEREST INCOME............................................ 7,826 878 8,704
NON-INTEREST EXPENSE:
Salaries and benefits.................................................. 19,575 2,798 22,373
Occupancy, furniture and equipment..................................... 7,878 941 8,819
Advertising and business development................................... 1,199 128 1,327
Other real estate owned................................................ 3,080 24 3,104
Professional services.................................................. 3,176 547 3,723
Telephone, stationery and supplies..................................... 2,337 254 2,591
Goodwill amortization.................................................. 821 20 841
Lower of cost or market adjustment on loans available for sale......... 756 -- 756
Data processing........................................................ 822 -- 822
Customer services cost................................................. 184 -- 184
Other.................................................................. 5,781 798 6,579
----------- ------------- -----------
TOTAL NON-INTEREST EXPENSE........................................... 45,609 5,510 51,119
----------- ------------- -----------
Income (loss) before income taxes........................................ (3,522) 646 (2,876)
Income taxes (benefit)................................................... (1,733) -- (1,733)
----------- ------------- -----------
NET INCOME (LOSS).................................................... $ (1,789) $ 646 $ (1,143)
----------- ------------- -----------
----------- ------------- -----------
PER SHARE INFORMATION(1):
Number of shares (weighted average)
Basic................................................................ 6,486.9 1,017.5 6,916.7
Diluted.............................................................. 6,598.5 1,268.8 7,134.4
Income (loss) per share
Basic................................................................ $ (0.28) $ 0.63 $ (0.17)
Diluted.............................................................. $ (0.28) $ 0.51 $ (0.17)
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA".
39
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
NOTE 1: BASIS OF PRESENTATION.
Certain historical data of BKLA have been reclassified on a pro forma basis
to conform to Western's classifications. Transactions between Western and BKLA
are not material in relation to the unaudited pro forma combined financial
statements, and have not been eliminated from the pro forma combined amounts.
The unaudited pro forma number of common shares outstanding, common
shareholders' equity per share, number of shares (basic and diluted) and income
(loss) per share (basic and diluted) are based on the share amounts for Western
plus the historical share amounts for BKLA multiplied by the Conversion Number
of 0.4224. In addition, at the Effective Time, all outstanding options to
purchase shares of BKLA Common Stock under BKLA's stock option plan (each, a
"BKLA Stock Option"), unless otherwise exercised pursuant to Section 10 of
BKLA's stock option plan, shall be converted into the right to receive for each
share of BKLA Common Stock otherwise issuable upon exercise thereof a number of
shares of Western Common Stock equal to the quotient obtained by dividing the
Spread by $42.61 ("Replacement Shares"). As used herein, "Spread" means the
difference, if positive, obtained by subtracting the exercise price of such BKLA
Stock Option from $18.00. After accumulating all such Replacement Shares
issuable to any holder of BKLA Stock Options, any fractional Replacement Shares
issuable to any holder of BKLA Stock Options of .2 or above shall be rounded
upwards. Further, at the Effective Time, each outstanding warrant to purchase
shares of BKLA Common Stock under BKLA's warrant agreement (each, a "BKLA
Warrant"), shall be converted into a warrant to acquire, on the same terms and
conditions as were applicable under such BKLA warrant agreement, the number of
shares of Western Common Stock equal to (a) the number of shares of BKLA Common
Stock subject to the BKLA Warrant, multiplied by (b) the Conversion Number (such
product rounded down to the nearest whole number) (a "Replacement Warrant"), at
an exercise price per share (rounded up to the nearest whole cent) equal to (y)
the aggregate exercise price for the shares of BKLA Common Stock which were
purchasable pursuant to such BKLA Warrant divided by (z) the number of full
shares of Western Common Stock subject to such Replacement Warrant in accordance
with the foregoing.
NOTE 2: MERGER COSTS.
The unaudited pro forma combined condensed financial data reflects Western
Management's current estimate, for purposes of pro forma presentation, of the
aggregate estimated merger costs of $7,080,000 ($5,400,000 net of taxes,
computed using the combined federal and state tax rate of 41.5%) expected to be
incurred in connection with the Merger. While a portion of these costs may be
required to be recognized over time, the current estimate of these costs has
been recorded in the pro forma combined balance sheets in order to disclose the
aggregate effect of these activities on Western's pro forma combined financial
position. The estimated aggregate costs include the following:
<TABLE>
<CAPTION>
(DOLLARS IN
THOUSANDS)
-----------
<S> <C>
Employee costs.................................................................... $ 1,500
Conversion costs.................................................................. 500
Other costs....................................................................... 2,050
-----------
4,050
Tax effects....................................................................... (1,680)
-----------
2,370
Investment banking and other professional fees.................................... 3,030
-----------
TOTAL ESTIMATED AGGREGATE COSTS............................................... $ 5,400
-----------
-----------
</TABLE>
40
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
Western Management's cost estimates are forward-looking. While the costs
represent Western Management's current estimate of merger costs that will be
incurred, the ultimate level and timing of recognition of such costs will be
based on the final merger and integration plan to be completed prior to
consummation of the Merger, which will be developed by various of Western's and
BKLA's task forces and integration committees. Readers are cautioned that the
completion of the merger and integration plan and the resulting management plans
detailing actions to be undertaken to effect the Merger and resultant
integration of operations will impact these estimates; the type and amount of
actual costs incurred could vary materially from these estimates if future
developments differ from the underlying assumptions used by management in
determining the current estimate of these costs.
NOTE 3: PRO FORMA ADJUSTMENTS RELATED TO THE SMB ACQUISITION.
The SMB Acquisition was accounted for as a purchase effective on January 27,
1998. Accordingly, Western's balance sheet as of March 31, 1998, reflects such
acquisition. Under this method of accounting, assets and liabilities of Santa
Monica Bank were adjusted to their estimated fair values and combined with the
recorded book values of the assets and liabilities of Western. Applicable income
tax effects of such adjustments are included as a component of Western's net
deferred tax asset with a corresponding offset to goodwill.
The unaudited pro forma combined condensed statements of income for the
three month periods ending March 31, 1998, March 31, 1997 and for the year ended
December 31, 1997 are presented as if the acquisition was consummated at the
beginning of each period. The pro forma combined statements of income for these
periods combine the individual pro forma results of operations of Western, BKLA
and Santa Monica Bank for each period after giving effect to the amortization of
purchase accounting adjustments, the additional equity which was raised by
Western and the reduced interest income resulting from the cash payments made as
part of the SMB Acquisition. The pro forma purchase accounting adjustments for
each period represent the amortization that would have taken place from the
beginning of the period.
For the purposes of the unaudited pro forma combined condensed statement of
income, it is estimated that Western would have earned 5.50 percent on the $51.2
million cash portion of the SMB Acquisition purchase price during each period,
resulting in approximately $235,000 less interest income for the three month
period ended March 31, 1998, $704,000 less interest income for the three month
period ended March 31, 1997 and $2.8 million less interest income for 1997.
Salaries and benefits expense is estimated to be reduced by approximately
$11,000, $33,000 and $131,000 for the three month period ended March 31, 1998,
the three month period ended March 31, 1997 and for the year ended December 31,
1997, respectively, as a result of the write-off of the unrecognized transition
obligation related to post-retirement health care benefits.
For the year ended December 31, 1997, occupancy, furniture and equipment
expense increased by an estimated $194,000 of depreciation expense related to
the fair market value adjustment of Santa Monica Bank's property, plant and
equipment and by approximately $80,000 related to the amortization of favorable
lease assets, resulting in an approximately $274,000 additional expense. For the
three month periods ended March 31, 1998 and March 31, 1997, this additional
expense is $23,000 and $69,000, respectively.
Goodwill of approximately $119.7 million is amortized on a straight line
basis over 15 years.
Income taxes are estimated to be at a rate of 41.5% of pretax income before
goodwill amortization.
41
<PAGE>
THE SPECIAL MEETING OF BKLA SHAREHOLDERS
GENERAL
This Proxy Statement-Prospectus is furnished in connection with the
solicitation by the BKLA Board of proxies representing BKLA Common Stock to be
voted at the BKLA Meeting to be held on September 23, 1998, and at any
postponement or adjournment thereof. This Proxy Statement-Prospectus and
accompanying proxy card are first being mailed to BKLA Shareholders on or about
August 17, 1998.
MATTERS TO BE CONSIDERED AT THE BKLA SPECIAL MEETING
The purpose of the BKLA Meeting is to (a) consider and vote upon the
principal terms of the Merger; (b) set the number of directors at nine, and
consider and approve the election of nine directors to hold office until the
merger is consummated or, if the Merger is not consummated, until the next
annual meeting of BKLA and until their successors have been elected and duly
qualified; and (c) transact such other business as may properly come before the
BKLA Meeting or any adjournments or postponements thereof.
Based upon (a) the [4,788,735] shares of BKLA Common Stock outstanding on
the BKLA Record Date, (b) the [323,300] shares of BKLA Common Stock reserved for
issuance upon exercise of employee and director stock options to acquire BKLA
Common Stock outstanding on the BKLA Record Date and (c) the [629,045] shares of
BKLA Common Stock reserved for issuance upon exercise of warrants to acquire
BKLA Common Stock outstanding on the BKLA Record Date and assuming no
Dissenters' Rights are perfected by BKLA Shareholders and no cash is paid in
lieu of fractional shares, (i) in the event that no options, warrants or other
rights outstanding are exercised prior to the Effective Date, [2,111,057] shares
of Western Common Stock would be issued in the Merger, and (ii) in the event
that all options, warrants and rights outstanding are exercised prior to the
Effective Date, [2,425,033] shares of Western Common Stock would be issued in
the Merger. Based upon the [15,699,364] shares of Western Common Stock
outstanding on the BKLA Record Date, the [406,245] shares of Western Common
Stock reserved for issuance upon the exercise of employee and director stock
options to acquire Western Common Stock on the BKLA Record Date and the
[140,675] shares of Western Common Stock reserved for issuance upon the exercise
of warrants to acquire Western Common Stock outstanding on the BKLA Record Date,
and assuming no Dissenters' Rights are perfected by BKLA Shareholders, and no
cash is paid in lieu of fractional shares: (i) in the event that no options,
warrants or other rights outstanding of BKLA and Western Common Stock are
exercised prior to the Effective Date, shares held by BKLA Shareholders after
consummation of the Merger would represent 11.9% of Western Common Stock, and
(ii) in the event that all options, warrants and rights outstanding of BKLA and
Western Common Stock are exercised prior to the Effective Date, shares held by
BKLA Shareholders after consummation of the Merger, would represent 13.0% of
Western Common Stock. Consummation of the Merger is subject to satisfaction of a
number of conditions, including the receipt of various regulatory approvals for
the Merger, and the approval of the principal terms of the Merger by BKLA
Shareholders. See "MERGER AGREEMENT-- Conditions".
The Merger Agreement provides, among other things, that Adriana M. Boeka
will be appointed to the board of directors of Western at the time the Merger is
consummated. Accordingly, at the Effective Time, the Western Board will adopt
resolutions increasing the number of Western directors by one and appoint Ms.
Boeka to fill the vacancy created thereby. The directors and certain officers of
BKLA as specified by Western will be required to resign, effective upon
consummation of the Merger. See "THE MERGER-- Certain Effects of the Merger". In
the event that the Merger is not consummated as contemplated, all directors of
BKLA elected at the BKLA Meeting will continue to serve as directors of BKLA
until the next annual meeting of BKLA and until their successors have been
elected and duly qualified.
42
<PAGE>
THE BKLA RECORD DATE
The BKLA Board has fixed the close of business on July 27, 1998 as the BKLA
Record Date for the determination of the BKLA Shareholders entitled to receive
notice of, and to vote at, the BKLA Meeting. Only holders of record of shares of
BKLA Common Stock at the close of business on the BKLA Record Date will be
entitled to notice of, and to vote at, the BKLA Meeting and any postponements or
adjournments thereof. On the BKLA Record Date, [4,788,735] shares of BKLA Common
Stock were issued and outstanding.
VOTES REQUIRED AND VOTING OF PROXIES
In advance of the BKLA Meeting, the BKLA Board will appoint one or three
persons, other than nominees for office, as inspectors of the election, whose
duties will be those set forth in Section 707 of the CGCL, among which are
determining the shares represented at the meeting, determining the existence of
a quorum, determining the authenticity, validity and effect of proxies, and
counting and tabulating all votes or consents as to all matters presented to the
BKLA Shareholders. A majority of all shares of BKLA Common Stock entitled to
vote, represented in person or by proxy, constitutes a quorum. Abstentions will
each be included in the determination of the number of shares present; however,
they will not be counted as votes in favor of the principal terms of the Merger.
Subject to the cumulative voting rights described below with respect to the
election of directors, each share of BKLA Common Stock held of record will be
entitled to one vote upon each matter properly submitted to the BKLA
Shareholders at the BKLA Meeting and any postponement or adjournment thereof.
The affirmative vote of the holders of at least a majority of the total
number of outstanding shares of BKLA Common Stock entitled to vote at the BKLA
Meeting is required to approve the principal terms of the Merger. The failure to
vote, an abstention or a broker non-vote thus has the same effect as a vote
against the principal terms of the Merger.
Each share of BKLA Common Stock represented by a proxy properly executed and
received by BKLA in time to be voted at the BKLA Meeting and not revoked will be
voted in accordance with the instructions indicated on such proxy and, if no
instructions are indicated, will be voted "FOR" the proposal to approve the
principal terms of the Merger and, in the case of the election of directors of
BKLA, equally "FOR" each of the nine candidates for the office of director of
BKLA named in this Proxy Statement-Prospectus; however, if sufficient numbers of
BKLA Shareholders exercise cumulative voting rights to elect one or more
candidates, the named proxies will determine the number of directors they are
entitled to elect, such number from the named candidates, cumulate their votes,
and cast their votes for each candidate among the number they are entitled to
elect. All proxies voted "FOR" such matters, including proxies on which no
instructions are indicated, may, at the discretion of the proxy-holder, be voted
"FOR" a motion to adjourn or postpone the BKLA Meeting to another time and/or
place for the purpose of soliciting additional proxies or otherwise. Any proxy
that is voted against approval of the principal terms of the Merger or on which
the relevant BKLA Shareholder specifically abstains from voting with respect to
such approval will not be voted in favor of any such adjournment or
postponement.
The BKLA Board is not currently aware of any business to be acted upon at
the BKLA Meeting other than as described herein. If, however, other matters are
properly brought before the BKLA Meeting, persons appointed as proxies will have
discretion to vote or act thereon in their best judgment.
Certain BKLA Shareholders, all of whom are directors or former directors of
BKLA, holding approximately [18.5]% of BKLA Common Stock outstanding on the BKLA
Record Date have agreed, among other things, to vote "FOR" the adoption and
approval of the Merger Agreement and the Merger. See "THE SHAREHOLDER
AGREEMENTS".
If a quorum is not obtained, or fewer shares of BKLA Common Stock are voted
in favor of the principal terms of the Merger than the number required for
approval of the principal terms of the Merger,
43
<PAGE>
it is expected that the BKLA Meeting will be postponed or adjourned for the
purpose of allowing additional time to obtain additional proxies or votes, and
at any subsequent reconvening of the BKLA Meeting, all proxies will be voted in
the same manner as such proxies would have been voted at the original convening
of the BKLA Meeting (except for any proxies that have theretofore effectively
been revoked or withdrawn).
SOLICITATION OF PROXIES
The cost of soliciting proxies relating to the BKLA Meeting will be paid by
BKLA. In addition to solicitation of proxies by the use of mail, directors,
officers and employees of BKLA and its subsidiaries may solicit proxies from
BKLA Shareholders personally or by telephone or telegram without additional
remuneration therefor. BKLA also will provide persons, firms, banks and
corporations holding shares in their names or in the names of nominees, which in
any case are beneficially owned by others, with proxy materials for transmittal
to such beneficial owners and will reimburse such record owners for their
expenses of doing so.
REVOCABILITY OF PROXIES
The presence of a BKLA Shareholder at the BKLA Meeting (or at any
postponement or adjournment thereof) will not automatically revoke such BKLA
Shareholder's proxy. However, a BKLA Shareholder may revoke a proxy at any time
prior to its exercise by (a) delivery to the Secretary of BKLA of a written
notice of revocation prior to or at the BKLA Meeting (or, if the BKLA Meeting is
adjourned or postponed, prior to or at the time the adjourned or postponed
meeting is actually held); (b) delivery to the Secretary of BKLA prior to or at
the BKLA Meeting (or, if the BKLA Meeting is adjourned or postponed, prior to or
at the time the adjourned or postponed meeting is actually held) of a duly
executed proxy bearing a later date; or (c) attending the BKLA Meeting (or, if
the BKLA Meeting is adjourned or postponed, by attending the adjourned or
postponed meeting) and voting in person thereat. Any written revocation of proxy
or other related communications should be addressed to Beverly A. Dyck, Vice
President and Corporate Secretary, 8901 Santa Monica Boulevard, West Hollywood,
California 90069.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF BKLA
As of the BKLA Record Date, the directors and officers of BKLA beneficially
held, in the aggregate, the ability to direct the voting with respect to
[884,611] shares of BKLA Common Stock, comprising approximately [18.5%] of the
voting power of the BKLA Common Stock outstanding. The directors and executive
officers of BKLA have informed BKLA that they intend to vote their shares of
BKLA Common Stock for the approval of the principal terms of the Merger.
The following table reflects as of the BKLA Record Date the beneficial
ownership of BKLA Common Stock, including stock options that will become
exercisable within 60 days, by BKLA's directors, executive
44
<PAGE>
officers and shareholders known to BKLA to be holding more than 5% of such
stock, and by BKLA's directors and officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL PERCENTAGE OF CLASS
NAME AND TITLE OWNERSHIP(1) BENEFICIALLY OWNED(2)
- -------------------------------------------------------------------- ---------------------- -----------------------
<S> <C> <C>
Adriana M. Boeka.................................................... Shares 39,175 [1.8%]
Chairman of the Board of Directors Warrants 17,365
Options 31,000
Total 87,540
Alix Truax, as Trustee for the...................................... Shares 181,091 [6.1%]
1998 Morry J. Burford Revocable Trust(3) Warrants 79,842
3050 Crestview Drive South Options 37,500
Salem, Oregon 97302 Total 298,433
Mary Anne Chalker................................................... Shares 12,585 [0.4%]
Director Warrants 500
Options 7,800
Total 20,885
Roy Doumani......................................................... Shares 97,913 [2.1%]
Director Options 6,000
Total 103,913
John J. Feldman..................................................... Shares 81,750 [3.2%]
Director, President and Chief Executive Officer Options 75,000
Total 156,750
Rickey M. Gelb...................................................... Shares 73,000 [1.6%]
Director Options 6,000
Total 79,000
John R. Newhouse.................................................... Shares 144,883 [3.1%]
Director and Senior Vice President of Business Development Options 6,000
Total 150,883
James V. Reimann(4)................................................. Shares 97,239 [3.0%]
Director Warrants 42,967
Options 6,000
Total 146,206
Melvin F. Shaw...................................................... Shares 76,475 [1.7%]
Director Options 6,000
Total 82,475
Burton N. Sterman................................................... Shares 72,950 [1.6%]
Director Options 6,000
Total 78,950
Robert G. Jacobsen.................................................. Shares 1,550 [0.5%]
Executive Vice President and Chief Credit Officer Warrants 100
Options 22,750
Total 24,400
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL PERCENTAGE OF CLASS
NAME AND TITLE OWNERSHIP(1) BENEFICIALLY OWNED(2)
- -------------------------------------------------------------------- ---------------------- -----------------------
<S> <C> <C>
Wendy R. Moskal..................................................... Shares(5) 6,000 [0.6%]
Executive Vice President and Chief Operating Officer Options 24,000
Total 30,000
All directors and executive officers as a group
(12 persons)...................................................... Shares 884,611 [24.6%]
Warrants 140,774
Options 209,300
Total 1,257,435
</TABLE>
- ------------------------
(1) The term "Beneficial Owner" includes any person who, directly or indirectly,
through any contract, arrangement, understanding, relationship, or otherwise
has or shares: (a) voting power, which includes the power to vote, or to
direct the voting power, of such security; and/or (b) investment power,
which includes the power to dispose, or to direct the disposition of, such
security. The term "beneficial owner" also includes any person who has the
right to acquire beneficial ownership of such security as defined above
within 60 days of the BKLA Record Date. Ownership includes stock options and
warrants exercisable within 60 days of the BKLA Record Date. Except as
disclosed in notes 4 through 14, all shares held by directors, executive
officers and shareholders are with their sole investment power.
(2) In computing the percentage of shares beneficially owned, the number of
shares which the person or group has the right to acquire within 60 days of
the BKLA Record Date are deemed outstanding for the purposes of computing
the percentage of BKLA Common Stock beneficially owned by such person or
group, but are not deemed outstanding for the purpose of computing the
percentage of shares beneficially owned by any other person.
(3) The 1998 Morry J. Burford Revocable Trust was set up for Maurice J. Burford
who died on May 6, 1998. On that date, all of the shares of BKLA Common
Stock owned by Mr. Burford were transferred to the 1998 Morry J. Burford
Revocable Trust. Alix Truax, Trustee of the Trust, has all voting rights for
the Trust. Ms. Truax's spouse, Mike Truax, owns 10,331 shares of Common
Stock with Rob Douglas. Ms. Truax's daughter, Catherine Kitzmiller, owns
15,727 shares of Common Stock and 6,086 Warrants to acquire BKLA Common
Stock.
(4) Mr. Reimann has 51% ownership in Vintage Investment Group, which owns 74,002
shares of BKLA Common Stock and 33,111 warrants to acquire BKLA Common
Stock. Mr. Reimann's spouse, Beverly Reimann, owns 10,575 shares of BKLA
Common Stock and 3,525 warrants to acquire BKLA Common Stock.
(5) The 6,000 shares are held in Joint Tenancy with John W. Moskal.
DISSENTERS' RIGHTS
If the principal terms of the Merger are approved by the BKLA Shareholders,
holders of BKLA Common Stock who elect to dissent from the approval of the
principal terms of the Merger may be entitled to have their shares purchased in
accordance with Chapter 13 of the CGCL. IN ORDER FOR A BKLA SHAREHOLDER TO
EXERCISE DISSENTERS' RIGHTS, A NOTICE OF SUCH SHAREHOLDER'S INTENTION TO
EXERCISE HIS OR HER DISSENTERS' RIGHTS AS PROVIDED IN THE CGCL MUST BE SENT BY
SUCH SHAREHOLDER AND RECEIVED BY BKLA ON OR BEFORE THE DATE OF THE BKLA MEETING,
AND ANY SUCH SHAREHOLDER MUST VOTE AGAINST THE APPROVAL OF THE PRINCIPAL TERMS
OF THE MERGER AND COMPLY WITH SUCH OTHER PROCEDURES AS REQUIRED BY THE CGCL, AS
MORE FULLY DESCRIBED BELOW IN "THE MERGER--DISSENTERS' RIGHTS". FAILURE TO SEND
SUCH NOTICE, TO VOTE AGAINST THE PRINCIPAL TERMS OF THE MERGER OR TO FOLLOW SUCH
OTHER PROCEDURES WILL RESULT IN A WAIVER OF SUCH
46
<PAGE>
SHAREHOLDER'S DISSENTERS' RIGHTS. See "SUMMARY--Dissenters' Rights" and "THE
MERGER--Dissenters' Rights" for a discussion of Dissenters' Rights and a
description of the procedures that must be followed to perfect such rights.
ELECTION OF BKLA DIRECTORS
The persons named below have been nominated for election to serve as
directors of BKLA. In the event that the Merger is not consummated, all
directors of BKLA elected at the BKLA Meeting will continue to serve as
directors of BKLA until the next annual meeting of BKLA and until their
successors have been elected and duly qualified.
The bylaws of BKLA currently provide that nominations for election of
members of the BKLA Board may be made by the BKLA Board or by any shareholder of
any outstanding class of voting stock of BKLA entitled to vote for the election
of directors. Notice of intention to make any nominations, other than by the
BKLA Board, shall be made in writing and shall be received by the President and
Chief Executive Officer of BKLA no more than 60 days prior to any meeting of
Shareholders called for the election of directors, no more than ten days after
the date the notice of such meeting is sent to shareholders pursuant to Section
2.2 of BKLA's bylaws, and not later than the time fixed in the notice of the
BKLA meeting for the opening of the BKLA meeting. Notification shall contain the
following information to the extent known to the notifying shareholder: (a) the
name and address of each proposed nominee; (b) the principal occupation of each
proposed nominee; (c) the number of shares of voting stock of BKLA owned by each
proposed nominee; (d) the name and residence address of the notifying
shareholder; and (e) the number of shares of voting stock of BKLA owned by the
notifying shareholder. Nominations made without nominee information may be
disregarded by the Chairman of the meeting, and the election inspectors shall
disregard all votes cast for each nominee. See "--Votes Required and Voting of
Proxies".
The following table sets forth information concerning BKLA's nominees for
directors:
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED OR
NAME TITLE AGE APPOINTED
- --------------------------------- ---------------------------------- ----------- ----------------
<S> <C> <C> <C>
Adriana M. Boeka................. Chairman of the Board 47 1996
Mary Anne Chalker................ Director 68 1981
Roy Doumani...................... Director 62 1996
John J. Feldman.................. President/CEO and Director 66 1997
Rickey M. Gelb................... Director 53 1997
John R. Newhouse................. Senior Vice President/Director 43 1998
James V. Reimann................. Director 58 1995
Melvin F. Shaw................... Director 62 1997
Burton N. Sterman................ Director 65 1997
</TABLE>
Adriana M. Boeka. Chairman of the Board since May 6, 1998. Vice Chairman of
BKLA from October 1997 to May 1998. Principal of Manex Group, a business and
management consulting corporation from 1995 to present; Senior Vice
President/Division Manager at Union Bank of California from 1987 to 1995.
Mary Anne Chalker. Board member of BKLA since inception in 1981; Insurance
Broker and President of LFC Insurance Brokers & Agents, Inc. from 1950 to
present.
Roy Doumani. Former Chairman of the Board of WTB from 1982 to 1995;
currently Mr. Doumani is retired and is a private investor.
John J. Feldman. President and Chief Executive Officer of BKLA from April
1997 to the present; President and Chief Executive Officer from August 1993 to
March 1997.
47
<PAGE>
Rickey M. Gelb. General Partner of Gelb Enterprises a real estate and
property management company since 1955.
John R. Newhouse. Senior Vice President/Business Development of BKLA from
January 1998 to present; President/Chief Executive Officer of CMB from January
1991 to December 1997.
James V. Reimann. Board member of BKLA since 1995; President of Reimann
Associates, a real estate development and sales company since December 1987;
President of Pacific Management Company, a real estate management company; and
Director of R.B. Rubber since 1995.
Melvin F. Shaw. President and Chief Executive Officer of Accounts Receivable
and Resource Management Company from 1968 to present.
Burton N. Sterman. Certified Public Accountant with Brown & Sterman,
Accountancy Corporation for the past 26 years.
CERTAIN COMMITTEES OF THE BKLA BOARD
BKLA has no Nominating Committee. The procedures for nominating directors,
other than by the BKLA Board itself, are set forth in BKLA's bylaws.
The Audit Committee of BKLA is chaired by Mary Anne Chalker, and includes as
current members, directors Mary Anne Chalker, James V. Reimann and Burton N.
Sterman. The Audit Committee meets every other month and met six times during
1997. The purpose of the Audit Committee is to review audit reports generated by
R. Maslac Associates, an outside consulting firm. In addition, the Audit
Committee reviews all audits and examinations and management's response. It is
also the responsibility of this Committee to recommend to BKLA's Board the
appointment of independent auditors and to meet with these auditors for the
review of the audit of the financial statements.
The BKLA Compensation/Stock Option Committee was chaired by Maurice J.
Burford until his death on May 6, 1998. Roy Doumani and James V. Reimann are the
remaining two committee members. The Compensation/Stock Option Committee meets
on an as-needed basis and met three times during 1997. The Compensation/Stock
Option Committee is responsible for setting the compensation for the Chief
Executive Officer and awarding stock options to all employees and directors. The
Compensation/Stock Option Committee answers to the BKLA Board, and
recommendations from this Committee are submitted to the BKLA Board for
ratification or approval.
During 1997, the Board of Directors of BKLA met twelve times. Each of the
persons who is a current member of the Board of Directors of BKLA, and was
serving as a member of BKLA Board in 1997, attended at least 75% of the
aggregate of (i) the total number of meetings of BKLA's Board held during the
time such a person was a director and (ii) the total number of meetings held by
all committees of the BKLA Board during the time such person served on such
committees.
BKLA DIRECTOR COMPENSATION
BKLA outside directors are compensated $500 for each meeting of the BKLA
Board. In addition, outside directors are compensated $150 for each committee
meeting attended that is not held on the day of the monthly BKLA Board meeting.
48
<PAGE>
BKLA EXECUTIVE OFFICERS
The following table sets forth, as to each of the persons who currently
serves as an Executive Officer of BKLA, such person's age, position with BKLA,
and the period during which the person has served in such position:
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED OR
NAME TITLE AGE APPOINTED
- --------------------------------- ---------------------------------- ----------- ----------------
<S> <C> <C> <C>
Adriana M. Boeka................. Chairman of the Board 47 1996
John J. Feldman.................. President/CEO and Director 66 1997
</TABLE>
Robert G. Jacobsen. Executive Vice President/Chief Credit Officer of BKLA
from April 1997 to present; Senior Vice President/Chief Credit Officer of BKLA
from 1995 to 1997; Vice President /Loan Administrator of BKLA from 1992 to 1995.
Wendy R. Moskal. Executive Vice President/Chief Operating Officer of BKLA
from April 1997 to present; Executive Vice President/Chief Operating Officer of
AWB from 1994 to March 1997; Executive Vice President of Columbia National Bank
from 1991 to 1993.
COMPENSATION OF BKLA EXECUTIVE OFFICERS
The following table reflects all compensation paid to John J. Feldman, the
President and Chief Executive Officer, Maurice J. Burford, BKLA's former
Chairman of the Board and Adriana M. Boeka, the current Chairman of the Board,
who were the only executive officers receiving a total annual salary and bonus
of $100,000 or more.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------- --------------------------
AWARDS SECURITIES ALL OTHER
---------------------- UNDERLYING COMPENSATION
YEAR SALARY BONUS OTHER OPTIONS (1)
--------- ---------- ----------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John J. Feldman.............................. 1997 $ 138,750 $ 406 -- 75,000 $ 2,775
President and Chief Executive Officer(2)
Maurice J. Burford(3)........................ 1997 110,000 441 -- -- 2,199
Former Chairman of the Board 1996 145,000 441 -- 37,500 3,088
1995 108,000 -- -- -- 795
Adriana M. Boeka(4).......................... 1997 19,602 435 29,200 (6) -- --
Current Chairman of the Board
</TABLE>
- ------------------------
(1) Employer contributions for 401K retirement plans.
(2) Mr. Feldman's annual salary is $185,000.
(3) Deceased on May 6, 1998.
(4) Ms. Boeka's current annual salary of $110,000 became effective as of October
29, 1997. She also received 25,000 options on January 21, 1998.
(5) Amount represents $6,200 in fees paid for attending meetings of the BKLA
Board of Directors and BKLA Audit Committee.
(6) Amount represents $23,000 in fees paid for consulting services as an outside
director.
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<PAGE>
The following table sets forth certain information regarding the options
exercised by those certain executive officers during 1997 and the value of
unexercised options held by those executive officers at December 31, 1997.
BKLA AGGREGATED OPTION EXERCISE AND OPTION VALUES AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1997(#) DECEMBER 31, 1997($)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Maurice J. Burford.............. -- -- 18,750 56,250 $ 185,156 $ 555,469
Adriana M. Boeka................ -- -- 1,500 4,500 $ 14,813 $ 44,438
John J. Feldman................. -- -- -- 75,000 $ -- $ 523,125
</TABLE>
BKLA OPTIONS GRANTED AS OF DECEMBER 31, 1997(1)
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
SECURITIES TOTAL OPTIONS GRANT DATE
UNDERLYING GRANTED TO PRESENT
NAME OPTIONS EMPLOYEES EXERCISE PRICE EXPIRATION DATE VALUE(2)
- ------------------------------------ ----------- ----------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
John J. Feldman..................... 75,000 45% $ 6.90 May 20, 2007 $ 276,000
</TABLE>
- ------------------------
(1) Adriana M. Boeka received 25,000 options at an exercise price of $11.05
expiring on January 21, 2008.
(2) Value of stock option was determined at date of grant using the
Black-Scholes model.
CERTAIN BKLA TRANSACTIONS
Mr. Feldman became the President and Chief Executive Officer of BKLA,
effective April 1, 1997, as a result of the merger of AWB with and into BKLA.
Mr. Burford was the Chairman of the Board of BKLA. Ms. Boeka, previously the
Vice Chairman, was appointed Chairman of the Board on May 6, 1998, upon Mr.
Burford's death.
Some of the directors, officers and principal shareholders of BKLA, and the
businesses with which they are associated, were customers of, and had banking
transactions with, BKLA in the ordinary course of BKLA's business during 1997.
All loans and commitments to lend included in such transactions were made in
compliance with applicable laws and on substantially the same terms, including
interest rates, collateral and repayment terms, as those prevailing at the time
for comparable transactions with other persons of similar creditworthiness and,
in the opinion of management of BKLA, did not involve more than a normal risk of
collectability or present other unfavorable features. As of December 31, 1997
the aggregate principal amount of extensions of credit to directors and
executive officers and related interests was $1,601,000 which represents
approximately 5% of BKLA's shareholder's equity as of December 31, 1997.
EMPLOYMENT AGREEMENT
BKLA has entered into a contract with John R. Newhouse, former President and
Chief Executive Office of Culver National Bank, pursuant to which Mr. Newhouse
will be employed by BKLA from December 31, 1997 through December 31, 1999.
During this period, Mr. Newhouse will serve as Senior Vice President of the
Culver City Branch.
The employment agreement may be terminated by BKLA for reasons of death,
disability or for cause (as defined therein), or by Mr. Newhouse for any reason
with written notice. The employment agreement may be terminated by BKLA at will,
however, Mr. Newhouse is then entitled to six months salary upon a
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<PAGE>
30-day written notice, or if the term of the contract remaining is less than six
months, pay equal to the months remaining.
BKLA COMPENSATION/STOCK OPTION COMMITTEE REPORT
BKLA's executive compensation program is designed to attract, reward and
retain highly qualified executives and to encourage the achievement of business
objectives, including superior corporate performance. Total compensation to
BKLA's executive management is composed of base salary, annual bonuses and stock
option awards. Base salaries for executive management are determined by
evaluating the responsibilities associated with the position held and an
individual's overall level of experience.
BKLA's compensation program also includes stock option awards, which are
intended to provide additional incentive to increase stockholder value. All
stock option awards were granted with an exercise price equal to the fair market
value of BKLA's stock on the date of grant and become exercisable over four
years on a pro rata basis. Because BKLA stock option awards provide value only
in the event of share price appreciation, the Committee believes stock options
represent an important component of a well-balanced incentive program.
Individual awards are based upon a subjective evaluation of each individual's
overall past and expected future contribution; therefore, no specific formula is
used to determine option awards for any employee. Key employees are eligible to
receive stock options. The Committee also believes that BKLA is successfully
pursuing strategic growth and strengthening its position as a community bank in
a highly competitive environment.
Mr. Feldman, President and Chief Executive Officer, was allocated the
largest number of shares in stock option awards for 1997, together with the base
salary of $185,000. The Committee believed that the total compensation was at
market and did not require adjustment in 1998. In setting Mr. Feldman's
compensation, the Committee also took into account the compensation levels of
Chief Executive Officers at BKLA's peer companies and the compensation of other
executive officers of BKLA.
Adriana M. Boeka, a non-employee director since 1996, was appointed Vice
Chairman of the Board on October 29, 1997. Ms. Boeka's compensation was set at
$110,000 annually, with 25,000 BKLA stock options to be granted in conjunction
with future employee grants. The salary of the previous Chairman of the Board,
Maurice J. Burford, was reduced to $25,000 annually at that time.
No current member of the BKLA Compensation/Stock Option Committee is a
former or current member of BKLA or any of its subsidiaries. However, Maurice J.
Burford, who chaired the committee until his death on May 6, 1998, was also the
Chairman of the BKLA Board.
The committee's report was completed as of January 21, 1998. The members of
the BKLA Compensation/Stock Option Committee filing the report were Maurice J.
Burford, Roy Doumani and James V. Reimann.
BKLA PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in BKLA's
cumulative total shareholder return on BKLA Common Stock as measured by the
difference between BKLA's share price for the five years presented. BKLA has not
issued dividends in the five years presented for use in determining total
shareholder return. The cumulative total shareholder return of BKLA is compared
to the Nasdaq Bank Stock Index and the Nasdaq Stock Market Total Return Index as
prepared for Nasdaq by the Center for Research in Security Prices at the
University of Chicago.
BKLA began trading on the Nasdaq on July 29, 1996. Prior to that date, BKLA
Common Stock was traded on a very limited basis on the over-the-counter market
through various brokerage firms and records of those trades are not available.
Consequently, the prices listed before that date represent quotations by dealers
making a market in BKLA Common Stock and reflect inter-dealer prices, without
adjustments for mark-ups, mark-downs or commissions, and may not necessarily
represent actual transactions. Prior to
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<PAGE>
July 29, 1996, trading in BKLA Common Stock was limited in volume and may not be
a reliable indicator of its market value. To compute the change in the
cumulative total shareholder return on BKLA Common Stock, the 1993 stock market
price of BKLA was derived from various brokerage firms that were market makers
for BKLA stock reporting the high sale price in the fourth quarter. The source
of the data for 1994 and 1995 is Black and Company, reporting the high sale
price in the fourth quarter. The stock market prices for the years 1996 and 1997
are the BKLA share price at the end of those years, as listed on the Nasdaq.
PERFORMANCE GRAPH
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BKLA NASDAQ BANKS NASDAQ INDEX
<S> <C> <C> <C>
1992 100 100 100
1993 23 114 115
1994 27 114 112
1995 29 169 139
1996 46 223 195
1997 101 377 240
</TABLE>
52
<PAGE>
THE MERGER
THIS SECTION OF THE PROXY STATEMENT-PROSPECTUS DESCRIBES CERTAIN ASPECTS OF
THE PROPOSED MERGER, AND SUCH INFORMATION IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE OTHER INFORMATION CONTAINED ELSEWHERE IN THIS PROXY
STATEMENT-PROSPECTUS, INCLUDING THE APPENDICES HERETO, AND THE DOCUMENTS
INCORPORATED HEREIN BY REFERENCE. A COPY OF THE MERGER AGREEMENT IS SET FORTH AS
APPENDIX A TO THIS PROXY STATEMENT-PROSPECTUS AND THE TEXT THEREOF IS
INCORPORATED HEREIN BY REFERENCE, AND REFERENCE IS MADE THERETO FOR A COMPLETE
DESCRIPTION OF THE TERMS OF THE MERGER. SHAREHOLDERS ARE URGED TO READ CAREFULLY
THE MERGER AGREEMENT AND EACH OF THE OTHER APPENDICES HERETO IN THEIR ENTIRETY.
BACKGROUND AND REASONS FOR THE MERGER
Western, principally through its wholly-owned subsidiary SMB, and BKLA each
conducts general banking operations in western Los Angeles County. In serving
individuals, small businesses and mid-market corporations, each historically has
focused on a community-based approach to banking. Management of each of Western
and BKLA has been cognizant of the rapidly changing structure of the banking
market in Southern California and Los Angeles County, in part as a result of the
severe problems associated with the savings and loan industry and the problems
experienced by other independent banks within Los Angeles County during the
recent recession. As is the case throughout the United States, the managements
of Western and BKLA believe that a process of consolidation will continue to
occur in the Southern California financial services industry resulting in, among
other things, a reduction in the number of community and independent banks.
In order to compete effectively with the larger financial institutions that
Western Management believed would result from the various consolidations and
mergers in the industry locally, Western Management saw a need to expand
prudently and recognized the opportunity to build a larger regional, independent
financial institution in the Los Angeles County market. Accordingly, as a part
of its effort to achieve long-term stable profitability, Western has explored
acquisition opportunities to achieve greater market share in Los Angeles County
and in Southern California.
In 1995 a small group of investors recapitalized BKLA. One of the
attractions of the investment was the opportunity to acquire and/or combine with
other California banks whose stock prices were then depressed due to the very
difficult economic conditions at that time. Between 1995 and 1997, BKLA was
successful in acquiring and/or combining with three other community banks. See
"SUMMARY--Summary Unaudited Pro Forma Combined Financial Data".
By mid 1997, however, the economy in California had improved significantly,
and along with it the prices of California bank stocks had also risen. In
October 1997, BKLA Management asked GBS Financial, its investment bankers, to
analyze the opportunities available to BKLA, including the opportunities for
acquisitions. GBS Financial advised that, given the recent and dramatic
appreciation in California bank stocks, the opportunities for acquisitions for
BKLA were very limited.
BKLA Management and GBS Financial, independently and jointly, reviewed
BKLA's strategic plan and compared the results that could be achieved by
pursuing that plan with the results that could be achieved by modifying BKLA's
strategic plan or being acquired by a larger institution, including an analysis
of bank and bank holding company mergers, discounted cash flow analysis, and
comparable bank and bank holding data. BKLA Management concluded that
shareholder value would be maximized by a merger with a larger bank.
The BKLA Board, at their regular meeting on October 19, 1997, authorized the
engagement of an investment banking firm to pursue a merger with a larger
partner. After researching various firms on December 31, 1997, GBS Financial was
retained. Management decided that if a sale of BKLA was to take place, it would
be in the best interest of shareholders, employees and customers of the Bank if
the bidding be limited to a select group of banks. Consequently, on January 20,
1998, GBS Financial was instructed to
53
<PAGE>
draw up a list of the most desirable banks available. BKLA Management narrowed
that initial list to approximately one dozen candidates. Of those initial
candidates, seven expressed interest in bidding. Confidential material on the
Bank was sent on February 18, 1998 to those candidates returning confidentiality
agreements.
In February 1998, Scott Burford of GBS Financial, contacted Matthew Wagner,
President and Chief Executive Officer of Western, to explore a possible merger
of the two institutions. On March 4, 1998, a non-binding indication of interest
to acquire BKLA was received from Belle Plaine Partners, Inc., exclusive
financial advisor to Western. Several discussions were conducted between Scott
Burford, Matthew Wagner and John M. Eggemeyer III, director of Western and
principal of Belle Plaine Partners, Inc. A meeting was arranged on March 31,
1998 to negotiate the major terms of the acquisition. The meeting was attended
by Scott Burford, Maurice Burford, the Chairman of the Board of BKLA at the
time, Adriana M. Boeka, the Vice Chairman of the Board of BKLA at the time, John
M. Eggemeyer III, Matthew Wagner, Arnold Hahn, Chief Financial Officer of
Western and Julius Christensen, General Counsel of Western. The principal terms
of the transaction were agreed upon.
On April 9, 1998, BKLA hired Wedbush to provide an opinion as to the
fairness of the Conversion Number. The BKLA Board held a special meeting on
April 16, 1998, at which the proposed merger was considered in detail and the
opinion provided by Wedbush and the Merger Agreement was presented. At such
meeting, the BKLA Board unanimously approved the Merger Agreement and the
various matters and related agreement contemplated thereby. Maurice Burford did
not attend the meeting, but assented in absence. Due diligence was performed by
BKLA and the Merger was executed.
The Western Board held a meeting on April 7, 1998, at which the proposed
Merger was considered in detail with Western's Management, including the
consideration to be paid by Western and the related transactions. At such
meeting, the Western Board approved the Merger Agreement and the various matters
and related agreements contemplated thereby and authorized Western Management to
take all action reasonably necessary to effect the Merger. The Merger Agreement
as approved contained a "due diligence out" provision pursuant to which Western
could, in its sole discretion, upon completion of its due diligence review of
BKLA, terminate the Merger at any time prior to 5:00 p.m. on April 29, 1998. On
April 29, 1998, Western completed its due diligence and determined not to
terminate the Merger Agreement.
On April 16, 1998, the SMB Board held a special meeting and approved the
Merger after reviewing the terms of the Merger in detail. On April 17, 1998,
Western and BKLA publicly announced the Merger.
The managements of Western and BKLA believe that the two institutions
complement each other in their community-based approaches to banking and in
terms of their markets, both geographic and demographic. Consequently both
managements perceive opportunities for increased operating efficiencies through
combination and believe that, by combining forces, they will be able more
effectively to compete and successfully to take advantage of banking
opportunities in the rapidly evolving Los Angeles and Southern California
markets. See "RISK FACTORS--Ability to Integrate the Operations of Western and
BKLA; Rapid Growth".
STRUCTURE OF THE MERGER
The Merger Agreement provides for the merger of BKLA with and into Santa
Monica Bank, with Santa Monica Bank being the Surviving Corporation, operating
under that name. As more fully described below in "THE MERGER AGREEMENT" in
connection with the Merger, each share of BKLA Common Stock issued and
outstanding at the Effective Time (other than (a) shares that have not been
voted in favor of approval of the principal terms of the Merger and with respect
to which Dissenters' Rights have been perfected in accordance with the CGCL and
(b) shares held directly or indirectly by Western, other than shares held in a
fiduciary capacity or in satisfaction of a debt previously contracted in good
faith) will be converted automatically into, subject to the limitations set
forth in the Merger
54
<PAGE>
Agreement with respect to proration and fractional shares, the Consideration.
Each share of Western Common Stock outstanding immediately prior to the
Effective Time will remain outstanding after the Merger as one share of Western
Common Stock. See "THE MERGER AGREEMENT--The Merger".
At the Effective Time, all BKLA Stock Options, unless otherwise exercised
pursuant to BKLA's Stock Option Plan, shall be converted into the right to
receive for each share of BKLA Common Stock otherwise issuable upon exercise
thereof a number of shares of Western Common Stock equal to the quotient
obtained by dividing the Spread by $42.61. At the Effective Time, each BKLA
Warrant shall be converted into a warrant to acquire, on the same terms and
conditions as were applicable under such BKLA warrant agreement, the number of
shares of Western Common Stock equal to (a) the number of shares of BKLA Common
Stock subject to the BKLA Warrant, multiplied by (b) the Conversion Number (such
product rounded down to the nearest whole number), at an exercise price per
share (rounded up to the nearest whole cent) equal to (y) the aggregate exercise
price for the shares of BKLA Common Stock which were purchasable pursuant to
such BKLA Warrant divided by (z) the number of full shares of Western Common
Stock subject to such Replacement Warrant.
See "UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA--NOTE 1".
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BKLA BOARD OF DIRECTORS
The BKLA Board has unanimously approved the Merger and the Merger Agreement
and unanimously recommends that BKLA Shareholders vote "FOR" the approval of the
principal terms of the Merger. In reaching its determination to approve the
Merger, the BKLA Board analyzed BKLA's alternatives for enhancement of BKLA
Shareholder value, including BKLA's prospects under several assumptions so as to
be able to compare the value of a share of BKLA Common Stock with the
Consideration as well as with comparable transactions. At the same time, the
BKLA Board also reviewed the history of Western and the prospects of Western if
the Merger were consummated. The factors that were examined as part of this
analysis, include, but were not limited to the following:
(a) Data showing BKLA's results of operations and financial condition;
(b) The increasing competition in BKLA's markets from both existing and
potential competitors, some of whom have far greater assets and resources,
in part as a result of the consolidation taking place in the banking
industry;
(c) The efficacy of BKLA's strategic plan under current competitive
conditions and actions which would increase financial performance and
shareholder value over the period of its projection;
(d) The consolidation of the banking industry nationally and in California;
(e) A review of potential benefits for shareholders of a larger organization
with greater resources, increased operating efficiencies, the ability to
utilize trust department capacity over a larger base, an increased lending
limit and a stronger market position in western Los Angeles County;
(f) The belief of the BKLA Board and Management that a business combination
with Western would offer increased long-term value and liquidity to current
BKLA Shareholders;
(g) A comparison of the Western offer with reported transactions, nationally
and in California, by financial institutions with similar characteristics;
and
(h) The opinion of Wedbush that, as of April 15, 1998, and based upon, and
subject to, the matters stated in that opinion, the Conversion Number was
fair, from a financial point of view, to the BKLA Shareholders.
The foregoing discussion of material factors considered by the BKLA Board is
not intended to be exhaustive but does set forth the principal factors
considered by the BKLA Board. The BKLA Board collectively reached the unanimous
conclusion to approve the Merger in light not only of the factors
55
<PAGE>
described above but of such other factors as each Board member felt were
appropriate. The BKLA Board did not assign relative or specific weights to any
of the factors described above and individual directors may have weighed such
factors differently.
FOR THE REASONS SET FORTH ABOVE THE BKLA BOARD HAS UNANIMOUSLY APPROVED THE
MERGER AS IN THE BEST INTERESTS OF BKLA AND ITS SHAREHOLDERS AND UNANIMOUSLY
RECOMMENDS THAT BKLA SHAREHOLDERS APPROVE THE PRINCIPAL TERMS OF THE MERGER.
OPINION OF WEDBUSH
Pursuant to a letter agreement dated April 9, 1998 (the "Wedbush
Agreement"), Wedbush was retained by the board of directors of BKLA to render an
opinion as to whether the Conversion Number in the Merger is fair, from a
financial point of view, to the BKLA Shareholders.
Representatives of Wedbush attended the special meeting of the BKLA Board
held on April 16, 1998 at which time the BKLA Board considered and approved the
Merger Agreement. At that meeting, Wedbush rendered its opinion dated April 15,
1998 that, as of such date, the Conversion Number was fair to the holders of
shares of BKLA Common Stock from a financial point of view (the "Wedbush
Opinion"). Such opinion was reconfirmed in writing as of the date of this Proxy
Statement-Prospectus (the "Wedbush Reconfirming Opinion"). No limitations were
imposed by BKLA's Board on Wedbush with respect to the investigations made or
procedures followed in rendering its opinion.
THE FULL TEXT OF THE WEDBUSH RECONFIRMING OPINION, WHICH SETS FORTH THE
PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND QUALIFICATIONS AND
LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED HERETO AS APPENDIX B TO THIS
PROXY STATEMENT-PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE WITH THE
CONSENT OF WEDBUSH. THE SUMMARY OF THE WEDBUSH OPINION SET FORTH IN THIS PROXY
STATEMENT-PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF SUCH OPINION. HOLDERS OF BKLA'S COMMON STOCK ARE URGED TO READ THE WEDBUSH
RECONFIRMING OPINION IN ITS ENTIRETY IN CONNECTION WITH THEIR CONSIDERATION OF
THE PROPOSED MERGER. THE WEDBUSH OPINION AND THE WEDBUSH RECONFIRMING OPINION
ARE ADDRESSED TO THE BKLA BOARD OF DIRECTORS ONLY AND DO NOT CONSTITUTE A
RECOMMENDATION TO ANY SHAREHOLDER AS TO HOW THAT SHAREHOLDER SHOULD VOTE AT THE
SPECIAL MEETING.
For purposes of its opinion, Wedbush reviewed and analyzed, among other
things: (1) a draft of the Merger Agreement and the specific terms of the
Merger, (2) certain publicly available business and financial information
relating to BKLA and Western that Wedbush deemed to be relevant, (3) certain
internal information, primarily financial in nature, including financial
projections and other financial and operating data relating to strategic
implications and operational benefits anticipated to result from the Merger,
furnished to Wedbush by BKLA and Western, (4) certain publicly available and
other information concerning the trading of, and the trading market for, BKLA
and Western Common Stock, (5) certain publicly available information with
respect to other companies that Wedbush believed to be comparable in certain
respects to BKLA or Western, and (6) certain publicly available information with
respect to other merger and acquisition transactions that Wedbush believed to be
comparable in certain respects to the Merger. In addition, Wedbush held
discussions with the managements of BKLA and Western concerning their views as
to the financial and other information described above and the potential cost
savings, operating synergies, revenue enhancements and strategic benefits
expected to result from the Merger. In addition to the foregoing, Wedbush
conducted such other analyses and examinations and considered such other
financial, economic and market criteria as it deemed appropriate to arrive at
its opinion.
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<PAGE>
In arriving at its opinion, Wedbush assumed and relied upon the accuracy and
completeness of all financial and other information provided to or reviewed by
it or publicly available, and Wedbush has not assumed any responsibility for
independent verification of any such information. With respect to financial
projections and other information provided to or reviewed by Wedbush, it has
been advised by the managements of BKLA and Western that such projections and
other information were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the respective managements of
BKLA and Western as to the expected future financial performance of BKLA and
Western and the strategic implications and operational benefits anticipated from
the Merger, and Wedbush assumed that, after the Merger, Western and its
subsidiaries will perform substantially in accordance with such projections.
Wedbush further relied on the assurances of managements of BKLA and Western that
they are unaware of any facts that would make the information or projections
provided to Wedbush incomplete or misleading. In particular, Wedbush relied upon
a schedule provided by Western of estimated synergies and related cost savings
that BKLA expects to achieve as a result of the Merger. With respect to pending
legal and regulatory proceedings involving BKLA or Western, Wedbush was not in a
position to evaluate the impact of such proceedings and it assumed that these
matters would be resolved in a manner that would not adversely affect in any
material respect the financial projections on which Wedbush relied for purposes
of its opinion. Wedbush did not make or receive any independent evaluations or
appraisals of any of BKLA's or Western's assets, properties, liabilities or
securities, nor did Wedbush make any physical inspection of the properties or
assets of BKLA or Western. Wedbush assumed that Western will account for the
Merger as a pooling of interests in accordance with generally accepted
accounting principles ("GAAP"), and that the Merger qualifies for such
accounting treatment under GAAP. Wedbush also assumed that the Merger will
constitute a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and neither BKLA, Western, Santa
Monica Bank nor holders of BKLA Shares will recognize gain or loss for U.S.
federal and state income tax purposes as a result of the Merger. Wedbush also
assumed that all conditions to the Agreement will be satisfied and not waived.
Wedbush is not an expert in the evaluation of loan losses or reserves or
allowances therefor, and it did not make an independent evaluation of the
adequacy of the reserve or allowance for loan losses of BKLA or Western, nor did
it review any individual credit files relating to BKLA or Western. Rather,
Wedbush assumed that the aggregate reserve or allowance for loan losses for each
of BKLA and Western was adequate to cover such losses and will be adequate after
the Merger for Western and its subsidiaries.
The Wedbush Opinion relates to the relative values of BKLA and Western and
does not imply any conclusion as to what the values of the Western Shares
actually will be when issued pursuant to the Merger or the price at which such
stock will trade following the consummation of the Merger. The Wedbush Opinion
necessarily is based upon conditions and circumstances as they exist and can be
evaluated as of the date of such opinion and does not address the underlying
business decision of BKLA to enter into the Agreement or complete the Merger.
Specifically, Wedbush was not asked to nor did it express an opinion as to the
relative merits of the Merger as compared to any alternative business strategies
that might exist for BKLA or the effect of any other transaction in which BKLA
might engage.
The Wedbush Opinion was based on economic, market and other conditions as in
effect on, and the information made available to Wedbush as of, the date of such
opinion. Events occurring after that date could materially affect the
assumptions used in preparing the opinion.
Wedbush was selected to render its opinion as to the fairness of the
Conversion Number from a financial point of view based upon its qualifications,
expertise and reputation, including the fact that, as part of its investment
banking business, Wedbush is regularly engaged in the valuation of businesses
and securities in connection with mergers and acquisitions, underwritings, sales
and distributions of listed and unlisted securities, private placements and
other transactions.
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SUMMARY OF ANALYSES OF WEDBUSH
While the following summaries describe the principal elements of the
analyses and examinations that Wedbush performed in arriving at the Wedbush
Opinion, they are not a comprehensive description of all analyses and
examinations actually conducted by Wedbush. The preparation of a fairness
opinion involves various determinations of the most appropriate and relevant
methods of financial analysis and the application of those methods to the
particular circumstances, and, therefore, such an opinion is not susceptible to
partial analysis or summary description. Each of the analyses conducted by
Wedbush was carried out in order to provide a different perspective on the
transaction and to add to the total mix of information available. Wedbush did
not form a conclusion as to whether any individual analysis, considered alone,
supported or failed to support an opinion as to fairness from a financial point
of view. Rather, in reaching its conclusion, Wedbush considered the results of
the analyses as a whole and did not place particular reliance or weight on any
individual factor. Therefore, selecting portions of the analyses and the factors
considered, without considering all such analyses and factors, would create an
incomplete or misleading view of the evaluation process underlying the Wedbush
Opinion. The range of valuations resulting from any particular analysis
described herein should not be taken to be Wedbush's view of the actual value or
predicted future value of BKLA or Western Common Stock.
In performing its analyses, Wedbush made numerous assumptions with respect
to industry performance and general business and economic conditions such as
industry growth, inflation, interest rates and various other matters, many of
which are beyond the control of BKLA, Western, and Wedbush. Any estimates
contained in Wedbush's analyses are not necessarily indicative of actual values
or future results, which may be significantly more or less favorable than
indicated by such analyses. See "RISK FACTORS". Such analyses were prepared
solely as part of Wedbush's analysis of the fairness of the Conversion Number to
BKLA Shareholders. Additionally, estimates of the values of the business and
securities do not purport to be appraisals of the assets or market values of
BKLA or Western, or their respective securities, nor do they necessarily reflect
the prices at which such businesses or securities may actually be sold.
The following is a summary of the material financial analyses performed by
Wedbush in connection with the Wedbush Opinion.
SUMMARY OF THE PROPOSED TRANSACTION
Wedbush reviewed the terms of the Merger, including the Conversion Number
and the implied aggregate and per share transaction value. Based on a price of
$47.13 per share of Western Common Stock on April 15, 1998, Wedbush calculated
an implied aggregate transaction value of approximately $115.0 million assuming:
(i) exercise of all stock options and warrants; (ii) no Dissenters Rights are
perfected by BKLA Shareholders; (iii) no cash is paid in lieu of fractional
shares; and (iv) an implied transaction value per share of BKLA Common Stock of
approximately $19.91. Wedbush noted that the implied transaction per share value
represented multiples of (1) 19.5x BKLA's twelve months' ending March 31, 1998
diluted earnings per share ("Diluted EPS"), (2) 3.11x BKLA's diluted book value
per share at March 31, 1998, and (3) 3.69x BKLA's diluted tangible book value
per share at March 31, 1998, as well as a premium of 26% over BKLA's closing
stock price of $15.75 on April 9, 1998 (five trading days prior to public
announcement of the Merger).
ANALYSIS OF SELECTED BANK MERGER TRANSACTIONS
Wedbush reviewed certain publicly available information regarding selected
merger and acquisition transactions: (1) involving banks and bank holding
companies located in California, (2) with assets of between $100 million and
$600 million, and (3) announced between September 1, 1996 and April 15, 1998.
The selection of the comparable transactions involves complex considerations and
judgments concerning similarities and differences in financial, operational and
other characteristics that could affect the acquisition value of potentially
comparable banks. None of the acquired banks utilized in the selected merger and
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acquisition comparable valuation were identical to BKLA and none of the
transactions were identical to the Merger.
The transactions deemed appropriate for comparison (the "Comparison Merger
Transactions") involved the following sets of institutions (identified by
acquiror/acquired bank): Bank of Commerce/ Rancho Vista National Bank; Mid-State
Bank/BSM Bancorp; Pacific Bank; NA/Sterling West Banc; Zions Bancorp/FP Bancorp,
Inc.; SierraWest Bancorp/CA Community Bancshares; Urban Bank/Redwood Bancorp;
Greater Bay Bancorp/Peninsula Bank; City National Corporation/Harbor Bancorp;
Western/ SCB; US Bancorp/Business & Professional Bank; Dartmouth
Capital/Eldorado Bancorp; Western/CCB; Santa Barbara Bancorp/First Valley Bank;
Golden State Bancorp/Transworld Bancorp; City National Corporation/Riverside
National Bank; Bank SinoPac/Far East National Bank; and City National
Corporation/Ventura County National Bancorp.
For each of the Comparison Merger Transactions, Wedbush analyzed the
transaction's value as a multiple of the acquired bank's (1) prior twelve months
publicly reported basic earnings per share ("LTM Multiple"), (2) publicly
reported book value at the end of the last accounting period prior to the
acquisition ("Book Value Multiple"), and (3) publicly reported tangible book
value at the end of the last accounting period prior to the acquisition
("Tangible Book Value Multiple"). Additionally, Wedbush analyzed the
"Acquisition Premium" paid in each transaction, defined as the amount by which
the acquisition price per share surpassed the price per share of the acquired
bank's common stock five days before the acquisition was publicly announced.
This analysis indicated a range of transaction values for the Comparison
Merger Transactions representing LTM Multiples of 6.8x to 28.2x (with a median
of 17.5x) compared to 19.5x for BKLA at the Conversion Number; Book Value
Multiples of 1.16x to 4.08x (with a median of 1.93x) compared to 3.11x for BKLA
at the Conversion Number; Tangible Book Value Multiples of 1.16x to 4.08x (with
a median of 1.98x) compared to 3.69x for BKLA at the Conversion Number; and
Acquisition Premiums of 3% to 91% (with a median of 20%) compared to 26% for
BKLA at the Conversion Number.
Wedbush then calculated an implied transaction per share equity reference
range for BKLA by applying the median of the range of multiples derived from the
Comparison Merger Transactions to corresponding financial data for BKLA, which
indicated an implied transaction equity value reference range of between $10.66
and $18.93 per share of BKLA.
DISCOUNTED CASH FLOW ANALYSIS
Using a discounted cash flow analysis, Wedbush estimated the present value
of the future streams of after-tax cash flow that BKLA could produce on a
stand-alone basis from 1998 through 2002 and distribute to BKLA's shareholders
("Dividendable Net Income"). Wedbush projected after-tax distributions such that
BKLA's ratio of tangible common equity to tangible assets would be maintained at
a 6.0% level. Wedbush estimated the residual value of BKLA at the end of 2002 to
be in the range of 13x to 17x projected 2002 net income plus goodwill
amortization ("Cash Net Income"). The projected Dividendable Net Income streams
and residual values were then discounted to present value at rates ranging from
12% to 16%. Wedbush then aggregated (1) the present value of the Dividendable
Net Income flows and (2) the present value of the residual values to derive an
implied transaction equity value reference range of $9.60 to $13.00 per share of
BKLA. Wedbush also performed a discounted cash flow analysis assuming the
realization of certain cost savings and revenue enhancements expected to result
from the Merger. This analysis indicated an implied equity value reference range
of $13.20 to $18.60 per share of BKLA.
In determining the discount rates used in the discounted cash flow analysis
of BKLA, Wedbush noted, among other things, factors such as inflation,
prevailing market interest rates, the business risk inherent to Western, the
required rates of return of holders or prospective buyers of BKLA Common Stock,
and the cost of capital for banks similar to BKLA. In determining the range of
residual value multiples used in deriving the residual value of BKLA, Wedbush
noted, among other things, the multiples at which BKLA
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Common Stock historically traded, the multiples at which public banks Wedbush
deemed appropriate for comparison to BKLA historically traded, and the multiples
observed in historical business combination transactions which Wedbush deemed
relevant.
COMPARABLE BANK ANALYSIS
Using publicly available information, Wedbush compared certain financial,
operating and stock market data of BKLA with similar data of selected publicly
traded companies in the banking industry of a size considered by Wedbush to be
appropriate for comparison to BKLA, after applying an equity control premium of
20% (based on the median premium paid in the Comparison Merger Transactions).
Although such banks were considered similar to BKLA, none of them has the same
management, assets, deposit base, size or franchise as BKLA.
Wedbush considered the following banks appropriate for comparison (the
"Comparable Banks") to BKLA: Bank of Hemet, Bank of Santa Clara, Borel Bank &
Trust Company, BYL Bancorp, California Independent Bancorp, Coast Bancorp,
Desert Community Bank, First Regional Bancorp, North County Bancorp, North
Valley Bancorp, Orange National Bancorp, Professional Bancorp, Inc., and Six
Rivers National Bank.
All multiples were based on closing share prices as of April 13, 1998. This
analysis indicated a range of share prices for the Comparable Banks (after
applying the equity control premium of 20%) representing multiples of such
companies' (1) latest twelve months basic earnings per share of 14.24x to 43.48x
(with a median of 20.87x); (2) latest publicly reported book value of 1.56x to
3.89x (with a median of 2.44x); and (3) latest publicly reported tangible book
value of 1.59x to 3.89x (with a median of 2.49x). Wedbush then calculated an
implied transaction equity value reference range for BKLA by applying the median
of these multiples to corresponding data for BKLA, which indicated an implied
per share value reference range of $15.70 to $20.87.
CONTRIBUTION ANALYSIS
Wedbush analyzed the respective contributions of BKLA and Western to the
combined company's pro forma balance sheet as of March 31, 1998 and pro forma
historic net income for the latest twelve months ended March 31, 1998 without
giving effect to certain cost savings and revenue enhancements expected to
result from the Merger. The financial and operating information reviewed
included, among other things, total assets, deposits, net loans, common equity,
tangible equity, at March 31, 1998; pro forma net income and pro forma Cash Net
Income for the twelve months ended March 31, 1998. This analysis showed that
BKLA would have contributed approximately 11.8% of total assets, 10.5% of net
loans, 11.8% of deposits, 10.1% of common equity, 16.1% of tangible equity,
43.7% of pro forma net income, 20.9% of pro forma Cash Net Income, for the
twelve months ended March 31, 1998. By contrast, BKLA Shareholders would own
approximately 13% of the diluted shares of the combined company upon
consummation of the Merger based upon the Conversion Number.
PRO FORMA MERGER ANALYSIS
Based on projections and various other assumptions provided by BKLA and
Western, including estimated cost savings and revenue enhancements expected to
result from the Merger, Wedbush analyzed the pro forma per share impact of the
Merger on a variety of projected financial measures including, among others,
BKLA's Diluted EPS, book value per share and tangible book value per share
during the calendar years 1999 through 2000 relative to BKLA on a stand-alone
basis.
The analysis indicated that on a per share basis, the proposed Merger could
be accretive to BKLA's Diluted EPS and book value, while dilutive to its
tangible book value, in each of the years analyzed assuming certain cost savings
and revenue enhancements anticipated by the management of Western to result from
the Merger are achieved. Wedbush also analyzed the potential pro forma effect of
the Merger
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on Western's Diluted EPS during the calendar years 1999 and 2000 relative to
Western on a stand-alone basis. This analysis indicated that the Merger could be
accretive to Western's Diluted EPS in each year, assuming certain cost savings
and revenue enhancements anticipated by the Western Management to result from
the Merger are achieved.
Wedbush also performed a pro forma sensitivity analysis by varying many of
the underlying assumptions of the analysis including, among others, the cost
savings, revenue enhancement, and growth estimates of BKLA, Western and the
combined company as part of the analysis of the estimated pro forma effect of
the Merger.
HISTORICAL TRADING AND CONVERSION NUMBER ANALYSIS
Wedbush analyzed the ratios of closing stock prices per share of Western
Common Stock to BKLA Common Stock as reported on the Nasdaq during various time
periods. Wedbush observed that from June 4, 1997 through April 14, 1998, the
average ratio of closing stock prices of BKLA and Western was 0.3560x, with a
high of 0.4710x and a low of 0.2458x. For the 30 trading day period of March 3,
1998 through April 14, 1998, the average ratio of closing stock prices of BKLA
and Western was 0.3438x, with a high of 0.3702x and a low of 0.3223x.
Wedbush reviewed the comparative performance of Western and BKLA Common
Stock relative to the S&P 500 index, the Nasdaq Banking index, and the S&P Bank
Index. This analysis indicated that both companies outperformed the indexes over
the period of June 4, 1997 through April 14, 1998.
WEDBUSH FEE
Pursuant to the terms of the Wedbush Agreement, BKLA has paid Wedbush a fee
of $75,000, half of which was payable upon execution of the Wedbush Agreement
and the other half of which became payable at the time Wedbush notified BKLA
that it was prepared to deliver to the Board of BKLA its opinion as to the
fairness of the Conversion Number without disclosing the conclusion reached
therein. BKLA considered this fee reasonable after soliciting and receiving bids
from other qualified firms for $150,000 to $250,000. BKLA has also agreed to
reimburse Wedbush for its reasonable out-of-pocket expenses incurred in
connection with its engagement and to indemnify Wedbush and its employees,
agents, officers, attorneys and shareholders and any person who controls or is
deemed to control Wedbush against certain liabilities, including liabilities
under the federal securities laws.
In the ordinary course of business, Wedbush and its affiliates may actively
trade the equity securities of BKLA and of Western for their own account and for
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FEDERAL INCOME TAX DISCUSSION SET FORTH BELOW MAY NOT BE APPLICABLE TO
CERTAIN CLASSES OF TAXPAYERS, INCLUDING SECURITIES DEALERS AND OTHERS THAT USE A
"MARKET-TO-MARKET" METHOD OF ACCOUNTING FOR FEDERAL INCOME TAX PURPOSES, TAX
EXEMPT ORGANIZATIONS OR TRUSTS, FOREIGN PERSONS, PERSONS WHO HOLD SHARES OF BKLA
COMMON STOCK AS PART OF A STRADDLE OR CONVERSION TRANSACTION AND PERSONS WHO
ACQUIRED SHARES OF BKLA COMMON STOCK PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK
OPTIONS OR RIGHTS OR OTHERWISE AS COMPENSATION. BKLA SHAREHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF
THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL AND
OTHER TAX LAWS.
TAX OPINIONS
It is intended that the Merger will be treated as a reorganization within
the meaning of Section 368(a) of the Code. Consummation of the Merger as a
reorganization is conditioned upon receipt by Western of confirmation,
immediately prior to the Effective Time, of the opinion of Sullivan & Cromwell,
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and receipt by BKLA of confirmation, immediately prior to the Effective Time, of
the opinion of Vavrinek, which opinions will be dated as of the Effective Date,
substantially to the effect that, for federal income tax purposes: (i) the
Merger will be treated as a reorganization within the meaning of Section 368(a)
of the Code, and (ii) each of Western, SMB and BKLA will be a party to that
reorganization within the meaning of Section 368(b) of the Code.
The Tax Opinions will not be binding on the Internal Revenue Service (the
"IRS"), and there can be no assurance that the IRS will not contest the
conclusions expressed therein. The Tax Opinions will be based in part upon
certain factual assumptions and upon certain representations made, and
certificates delivered, by Western, SMB and BKLA, which representations and
certificates Sullivan & Cromwell and Vavrinek will assume to be true, correct
and complete. If such representations or certificates are inaccurate, the Tax
Opinions could be adversely affected.
TAX CONSEQUENCES OF THE MERGER
GENERAL. The following summary sets forth certain anticipated material
federal income tax consequences of the Merger to BKLA Shareholders. The tax
treatment of each BKLA Shareholder will depend in part upon such shareholder's
particular situation. This summary is based on the provisions of the Code, the
Treasury Regulations promulgated thereunder and administrative and judicial
interpretations thereof, all as in effect as of the date hereof. Such laws,
regulations or interpretations may differ at the Effective Time, and relevant
facts also may differ.
No gain or loss will be recognized by a BKLA Shareholder who receives solely
Western Common Stock for such BKLA Shareholder's shares of BKLA Common Stock
(except to the extent such shareholder receives cash in lieu of a fractional
share interest in Western Common Stock).
Such a BKLA Shareholder's aggregate tax basis in the Western Common Stock
received pursuant to the Merger will equal such shareholder's aggregate tax
basis in the shares of BKLA Common Stock exchanged therefor, reduced by any
amount allocable to a fractional share interest of Western Common Stock for
which cash is received. The holding period of Western Common Stock received
pursuant to the Merger (the "Holding Period" as described in the paragraph
below), will include the holding period of the shares of BKLA Common Stock
exchanged therefor, provided that such shares were held as a capital asset as of
the Effective Date.
FRACTIONAL SHARES OF WESTERN COMMON STOCK. No fractional shares of Western
Common Stock will be issued in the Merger. A BKLA Shareholder who receives cash
in lieu of such a fractional share will be treated as having received such
fractional share pursuant to the Merger and then as having exchanged such
fractional share for cash in a redemption by Western subject to Section 302 of
the Code. Such a deemed redemption will be treated as a sale of the fractional
share, provided that it is not "essentially equivalent to a dividend". If the
Western Common Stock represents a capital asset in the hands of the shareholder,
the shareholder will generally recognize capital gain or loss on such a deemed
redemption of the fractional share in an amount determined by the difference
between the amount of cash received therefor and the shareholder's tax basis in
the fractional share. The Holding Period of any such capital gain or loss will
be long-term if the BKLA Common Stock exchanged was held for more than one year.
Long-term capital gain of a non-corporate shareholder is generally subject to a
maximum capital gains rate of 28% for capital assets held for more than one year
and the maximum rate is reduced to 20% for capital assets held for more than 18
months.
BACKUP WITHHOLDING
Unless an exemption applies under applicable law and regulations, the
Exchange Agent (as defined herein), will be required to withhold 31% of any cash
payments to which a non-corporate shareholder or the payee is entitled pursuant
to the Merger unless the shareholder or other payee provides its taxpayer
identification number (social security number, employer identification number or
individual taxpayer
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identification number) and certifies that such number is correct. Each
shareholder and, if applicable, each other payee must provide the information
and certification necessary to avoid backup withholding, unless an applicable
exemption exists and is established in a manner satisfactory to Western and the
Exchange Agent.
REGULATORY APPROVALS
GENERAL
The Merger cannot proceed in the absence of the regulatory approvals.
Western and BKLA are not aware of any material governmental approvals or actions
that are required for consummation of the Merger, except as described below.
Western and BKLA have agreed in the Merger Agreement to use reasonable best
efforts promptly to take all actions necessary, proper or advisable to
consummate the transactions contemplated by the Merger Agreement, including
using efforts to obtain all necessary approvals from all applicable governmental
entities, making all necessary registrations, applications and filings and
obtaining any contractual consents and regulatory approvals. However, there can
be no assurance that such regulatory approvals will be obtained, nor can there
be assurance as to the date of any such approval. There can also be no assurance
that any such approval will not contain a condition or requirement that causes
such approvals to fail to satisfy the conditions set forth in the Merger
Agreement and described below under "THE MERGER AGREEMENT--Conditions".
FEDERAL DEPOSIT INSURANCE CORPORATION AND FEDERAL RESERVE BOARD APPROVALS
Consummation of the Merger is subject to receipt of the prior approval of
the FDIC under the Bank Merger Act, 12 U.S.C. Section 1828(c) (the "BMA"). The
BMA requires that the FDIC take into consideration, among other factors, the
financial and managerial resources and future prospects of the institutions and
the convenience and needs of the communities to be served. The BMA prohibits the
FDIC from approving the Merger (i) if such transaction would result in a
monopoly or be in furtherance of any combination or conspiracy to monopolize or
to attempt to monopolize the business of banking in any part of the United
States, or (ii) if the effect of such transaction in any section of the country
may be substantially to lessen competition or to tend to create a monopoly, or
if it would in any other manner be a restraint of trade, unless the relevant
regulatory agency finds that the anti-competitive effects of such merger are
clearly outweighed by the public interest and by the probable effect of the
transaction in meeting the convenience and needs of the communities to be
served.
The Merger is also subject to prior approval by the Federal Reserve Board
under Section 3 of the BHCA or a waiver of such requirement in accordance with
regulations adopted by the Federal Reserve Board under the BHCA. If an
application is required under the BHCA, the Federal Reserve Board will take into
consideration, among other things, competition, the financial and managerial
resources and future prospects of the holding companies and banks concerned and
the convenience and needs of the communities to be served. The BHCA prohibits
the Federal Reserve Board from approving the Merger if (a) it would result in a
monopoly or would be in furtherance of any combination or conspiracy to
monopolize or attempt to monopolize the business of banking in any part of the
United States or (b) its effect in any section of the country may be
substantially to lessen competition or tend to create a monopoly, or it would in
any other manner be in restraint of trade, unless the Federal Reserve Board
finds that the anti-competitive effects of the Merger are clearly outweighed in
the public interest by the probable effect of the transaction in meeting the
convenience and needs of the communities to be served.
Each of the FDIC and the Federal Reserve Board has the authority to deny an
application if it concludes that the combined organization would have an
inadequate capital structure, taking into account, among other factors, the
nature of the business and operations and plans for expansion. Furthermore, the
FDIC and the Federal Reserve Board must also assess the records of the
depository institution subsidiaries of Western and BKLA under the Community
Reinvestment Act of 1977, as amended (the "CRA"). The
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CRA requires that the FDIC and the Federal Reserve Board assess, when evaluating
an application, each depository institution's record of meeting the credit needs
of its local communities, including low- and moderate-income neighborhoods,
consistent with safe and sound operation and take such record into account when
evaluating certain regulatory applications. Each of SMB, SCB and BKLA has a CRA
rating of "satisfactory".
Under the BMA and the BHCA, the Merger may not be consummated until the
thirtieth day following the date of FDIC or Federal Reserve Board approval, as
the case may be, or such earlier date as may be determined by the FDIC or the
Federal Reserve Board, as the case may be. If the United States Department of
Justice commenced an action challenging the Merger on antitrust grounds during
such waiting period, commencement of such action would stay the effectiveness of
the FDIC and Federal Reserve Board approvals, unless a court specifically orders
otherwise.
Western and BKLA submitted an application seeking approval of the Merger and
related matters to the FDIC on June , 1998. Western and BKLA sought a waiver
of jurisdiction from the Federal Reserve Board on June , 1998. It is expected
that the approval and waiver will be received prior to the BKLA Meeting, but
there can be no assurance that such approval and waiver will be obtained.
STATE COMMISSIONER APPROVAL
Since BKLA and SMB are state-chartered banks, Western must obtain approval
of the State Commissioner pursuant to the California Financial Code prior to the
consummation of the Merger. Western sought such approval on June , 1998. It is
expected that the approval will be received prior to the BKLA Meeting, but there
can be no assurance that such approval will be obtained.
RESALE OF WESTERN COMMON STOCK
All shares of Western Common Stock received by BKLA Shareholders in the
Merger will be freely transferrable, except that shares of Western Common Stock
received by BKLA Shareholders who are deemed to be "affiliates" (as defined for
purposes of Rule 145 under the Securities Act or SEC Accounting Series Releases
130 and 135) of BKLA ("BKLA Affiliates") as of the date of the BKLA Meeting may
be resold by BKLA Affiliates only pursuant to an effective registration
statement under the Securities Act covering resales of such shares or in
transactions permitted by the resale provisions of Rule 145 of the Securities
Act or as otherwise permitted under the Securities Act. Persons who may be
deemed to be affiliates of BKLA or Western generally include individuals or
entities that control, are controlled by, or are under common control with, such
entities and may include certain officers and directors of such entities as well
as principal shareholders of such entities.
BKLA has agreed in the Merger Agreement to use its best efforts to obtain a
written agreement from each officer or director of BKLA who is identified as a
possible BKLA Affiliate providing that each such person will not sell, pledge,
transfer or otherwise dispose of any shares of Western Common Stock to be
received by such person in the Merger, except in compliance with the applicable
provisions of the Securities Act. See "THE MERGER AGREEMENT--Exchange of Stock
Certificates; Dividends".
CERTAIN EFFECTS OF THE MERGER
SMB will be the Surviving Corporation following the Merger. Once the Merger
is consummated, the trading of BKLA Common Stock on the Nasdaq will cease, and
BKLA will no longer be required to file reports pursuant to the Exchange Act. It
is anticipated that the management and operation of SMB and BKLA will be
integrated after the Merger and will allow additional services to be provided to
customers, without adversely affecting current day-to-day service. BKLA has
agreed, subject to certain conditions, at or before the Effective Time, to make
such accounting adjustments as Western requests in order to implement its plans
regarding BKLA or to reflect merger-related expenses and costs incurred by BKLA.
See "THE MERGER AGREEMENT--Certain Covenants--CERTAIN POLICIES OF BKLA".
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After the Merger, the Surviving Corporation will be headquartered at 1251
Fourth Street, Santa Monica, California 90401. The telephone number at such
offices will be (310) 394-9611.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
GENERAL
In considering the recommendations of the BKLA Board, BKLA Shareholders
should be aware that certain employees and members of management of BKLA and of
the BKLA Board have certain interests in the transactions contemplated by the
Merger Agreement that are in addition to the interests of shareholders generally
and that may create potential conflicts of interest. These interests include,
among others, provisions in the Merger Agreement relating to the indemnification
of BKLA officers and directors; directors' and officers' liability insurance;
the appointment of Adriana M. Boeka to the Western Board as of the Effective
Time; and certain employee benefits discussed below.
Additionally, Scott Burford, son of the late Maurice J. Burford and
president of Burford Capital, provided consulting services to BKLA through GBS
Financial in connection with the Merger. GBS entered into an agreement pursuant
to which it will receive a flat fee of 1% of value received by BKLA shareholders
if BKLA is sold for between $15 per share and $16.99 per share, or 1.5% of the
value received if BKLA is sold for $17 per share or more. As of the date of this
Proxy Statement-Prospectus, GBS will receive approximately $1.5 million for its
services. GBS financial will receive no compensation if BKLA sells for less than
$15 per share or if the Merger is not consummated.
Further, American West Associates is a partnership which leases the Encino
branch building to BKLA for approximately $277,000 per year. Melvin F. Shaw and
Burton N. Sterman, directors of BKLA, are 15% and 17% partners, respectively, of
American West Associates. BKLA Management believes this transaction to be on
substantially the same terms as those prevailing at the time for comparable
transactions.
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE
The Merger Agreement provides that for a period of six years after the
Effective Time, Western will indemnify each director and officer determined as
of the Effective Time, against certain liabilities arising out of matters
existing or occurring at or prior to the Effective Time to the extent to which
such indemnified parties were entitled under California law and BKLA's articles
of incorporation or bylaws in effect on April 16, 1998. Western also will
advance expenses as incurred to the extent permitted under California law and
BKLA's articles of incorporation and bylaws. In addition, for a period of six
years after the Effective Time, Western will use its reasonable best efforts to
cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by BKLA, provided that Western may
substitute therefor policies of comparable coverage with respect to claims
arising from facts or events that occurred before the Effective Time.
APPOINTMENT OF DIRECTOR
Pursuant to the Merger Agreement, BKLA has elected to nominate, and Western
has consented to appoint, Adriana M. Boeka to the Western Board as of the
Effective Time.
EMPLOYEE BENEFITS
Pursuant to the Merger Agreement, all benefit and compensation plans,
contracts, policies or arrangements covering current employees or former
employees of BKLA and its subsidiaries and current or former directors of BKLA,
including, but not limited to, "employee benefit plans" within the meaning of
Section 3(3) of ERISA, and deferred compensation, stock option, stock purchase,
stock appreciation rights, stock based, incentive and bonus plans will be
governed, managed and/or terminated by Western in
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Western's sole discretion from and after the Effective Date. See "THE MERGER
AGREEMENT-- Certain Covenants--EMPLOYEE BENEFITS".
RELATED TRANSACTIONS
Other than the Merger Agreement, the Shareholder Agreements, the Stock
Option Agreement and the transactions contemplated by and described in this
Proxy Statement-Prospectus, Western and BKLA do not know of any past, present or
proposed material contracts, arrangements or understandings between Western or
its affiliates, on the one hand, and BKLA and its affiliates, on the other hand.
STOCK OPTIONS
Upon delivery of notice by the BKLA Board to holders of BKLA Stock Options
of the pendency of the Merger, any option granted prior to the Merger shall be
exercisable in full and not only as to those shares with respect to which
installments, if any, have then accrued, subject, however, to earlier expiration
or termination as provided elsewhere in BKLA's stock option plan.
At the Effective Time, all BKLA Stock Options, unless otherwise exercised
pursuant to Section 10 of BKLA's stock option plan, shall be converted into the
right to receive for each share of BKLA Common Stock otherwise issuable upon
exercise thereof a number of shares of Western Common Stock equal to the
quotient obtained by dividing the spread by $42.61. After accumulating all such
Replacement Shares issuable to any holder of BKLA Stock Options, any fractional
Replacement Shares issuable to any holder of BKLA Stock Options of .2 or above
shall be rounded upwards. See "UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL
DATA--NOTE 1" and "THE MERGER AGREEMENT-- Exchange of Stock Certificates;
Dividends".
As of the BKLA Record Date, there were [285,800] options outstanding, and
executive officers of BKLA held the following unvested options to purchase BKLA
Common Stock which will vest at the Effective Time as a result of the Merger:
<TABLE>
<CAPTION>
NUMBER OF UNVESTED OPTIONS VALUE AT THE BKLA RECORD DATE
WHICH BECOME EXERCISABLE AT THE OF OPTIONS WHICH VEST AT THE
NAME EFFECTIVE TIME EFFECTIVE TIME ($)(1)
- -------------------------------------------------- ------------------------------- -----------------------------
<S> <C> <C>
John J. Feldman................................... 56,250
Adriana M. Boeka.................................. 29,500
Robert G. Jacobsen................................ 22,750
Wendy Moskal...................................... 19,000
</TABLE>
- ------------------------
(1) Value is based on the closing sale price for BKLA Common Stock on the Nasdaq
on the BKLA Record Date, less the weighted average per share exercise price.
SUBMISSION OF SHAREHOLDERS' PROPOSALS FOR BKLA'S 1999 ANNUAL MEETING
BKLA Shareholders may submit proposals for shareholder action at the 1999
Annual Meeting of BKLA Shareholders if they do so in accordance with applicable
regulations of the Securities Exchange Commission. Any such proposals must be
submitted to Beverly A. Dyck, the Corporate Secretary of BKLA, no later than
November 5, 1998, in order to be considered for inclusion in BKLA's 1999 proxy
materials.
DISSENTERS' RIGHTS
In connection with the Merger, the Shareholders may be entitled to
Dissenters' Rights under Chapter 13 of the CGCL. Sections 1300 through 1304 of
the CGCL are attached hereto as Appendix C. The description of Dissenters'
Rights contained in this Proxy Statement-Prospectus is qualified in its
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entirety by reference to Chapter 13 of the CGCL. IN ORDER FOR A BKLA SHAREHOLDER
TO EXERCISE DISSENTERS' RIGHTS, A NOTICE OF SUCH SHAREHOLDER'S INTENTION TO
EXERCISE HIS OR HER DISSENTERS' RIGHTS AS PROVIDED IN THE CGCL MUST BE SENT BY
SUCH SHAREHOLDER AND RECEIVED BY BKLA ON OR BEFORE THE DATE OF THE BKLA MEETING,
AND SUCH SHAREHOLDER MUST VOTE AGAINST THE APPROVAL OF THE PRINCIPAL TERMS OF
THE MERGER AND COMPLY WITH SUCH OTHER PROCEDURES AS REQUIRED BY THE CGCL, AS
MORE FULLY DESCRIBED BELOW. FAILURE TO SEND SUCH NOTICE, TO VOTE AGAINST THE
PRINCIPAL TERMS OF THE MERGER OR TO FOLLOW SUCH OTHER PROCEDURES WILL RESULT IN
A WAIVER OF SUCH SHAREHOLDER'S DISSENTERS' RIGHTS.
Any demands, notices, certificates or other documents delivered to BKLA
prior to the Merger may be sent to Beverly A. Dyck, Vice President and Corporate
Secretary, Bank of Los Angeles, 8901 Santa Monica Boulevard, West Hollywood,
California 90069. Thereafter, they may be sent to Julius G. Christensen,
Executive Vice President, General Counsel and Secretary, Western Bancorp, 4100
Newport Place, Suite 900, Newport Beach, California 92660.
If no instructions are indicated on proxies received by BKLA, such proxies
will be voted for the proposal to approve the principal terms of the Merger at
the BKLA Meeting. Those BKLA Shareholders who return their proxies without
instructions, resulting in a vote for the approval of the principal terms of the
Merger, will not be entitled to Dissenters' Rights.
In addition, because the BKLA Common Stock is traded on the Nasdaq, the BKLA
Shareholders will not have Dissenters' Rights unless demands for purchase in
cash of such shares at their fair market value as of April 16, 1998 pursuant to
Section 1301 of the CGCL (each, a "Demand") are made with respect to 5% or more
of the outstanding shares of BKLA Common Stock, (before giving effect to the
Merger). Such Demands must be received by BKLA or its transfer agent not later
than the date of the BKLA Meeting. In the event that Demands are made with
respect to 5% or more of the outstanding shares of BKLA Common Stock on or
before the date of the BKLA Meeting, the BKLA Shareholders who made Demands will
be entitled to Dissenters' Rights, provided that such Dissenters' Rights are
perfected pursuant to Chapter 13 of the CGCL.
In the event that (i) the Merger is approved by the BKLA Shareholders and
(ii) Demands are made by holders of 5% or more of the BKLA Common Stock, a
holder of BKLA Common Stock who objects to the Merger (a "Dissenting
Shareholder") will be entitled to payment in cash of the fair market value as of
April 16, 1998 (the day before the public announcement of the Merger) of his or
her Shares ("Dissenting Shares"); provided that (a) such shares were outstanding
immediately prior to the date for the determination of shareholders entitled to
vote on the Merger; (b) the Dissenting Shareholder voted his or her shares
against the approval of the principal terms of the Merger; (c) the Dissenting
Shareholder made a Demand; and (d) the Dissenting Shareholder has submitted for
endorsement certificates representing his or her Dissenting Shares, in
accordance with Section 1302 of the CGCL.
The Demand must (a) be a written demand to purchase the Dissenting Shares
and make payment to the Dissenting Shareholder in cash of their fair market
value as of April 16, 1998; (b) be received by BKLA on or before the date of the
BKLA Meeting; (c) state the number and class of the shares held of record by the
Dissenting Shareholder that the Dissenting Shareholder demands that BKLA
purchase; and (d) contain a statement of what the Dissenting Shareholder claims
to be the fair market value of his or her Dissenting Shares as of April 16,
1998. Such statement of the fair market value constitutes an offer by the
Dissenting Shareholder to sell his or her Dissenting Shares at such price. A
Dissenting Shareholder who has made such a demand for payment may not withdraw
such Demand unless BKLA consents thereto. A proxy or vote against the approval
of the principal terms of the Merger Agreement does not in itself constitute a
Demand.
The Dissenting Shareholder must submit the certificates representing the
Dissenting Shares for endorsement as Dissenting Shares to BKLA at its principal
office or at the office of its transfer agent within 30 days after the date on
which notice of approval of the Merger by BKLA Shareholders was mailed to such
Dissenting Shareholder.
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If any Shareholder has Dissenters' Rights, BKLA will mail to each such
shareholder a notice of the approval of the Merger by the BKLA Shareholders,
within ten days after the date of such approval, accompanied by (a) a copy of
Sections 1300, 1301, 1302, 1303 and 1304 of Chapter 13 of the CGCL; (b) a
statement of the price determined by BKLA to represent the fair market value as
of April 16, 1998 of the Dissenting Shares (which BKLA believes to be the
closing price on April 16, 1998 of $47.88); and (c) a brief description of the
procedure to be followed if the shareholder desires to exercise his or her
Dissenters' Rights under such sections. The statement of price constitutes an
offer by BKLA to purchase such Dissenting Shares.
If BKLA denies that shares submitted to it as Dissenting Shares are
Dissenting Shares, or if BKLA and a Dissenting Shareholder fail to agree on the
fair market value of the Dissenting Shares, either such Dissenting Shareholder
or BKLA may file a complaint in the Superior Court of the proper county in
California requesting that the court determine such issue. Such complaint must
be filed within six months after the date on which notice of the approval of the
Merger is mailed to Dissenting Shareholders. It is the opinion of BKLA that the
fair market value of its Shares with regard to valuation for Dissenting Share
purposes is $47.88, the closing price of BKLA Common Stock as reported on the
Nasdaq for April 16, 1998, the day prior to announcement of the Merger.
On trial of the action, the court will first determine if the shares are
Dissenting Shares, and if so determined, the court will either determine the
fair market value or appoint one or more impartial appraisers to do so. If both
BKLA and the Dissenting Shareholder fail to file a complaint within six months
after the date on which notice of the approval of the Merger was mailed to the
Dissenting Shareholders, such Dissenting Shareholder will lose his or her
Dissenters' Rights. In addition, if the Dissenting Shareholder transfers such
Dissenting Shares prior to their submission for the required endorsement, such
shares will lose their status as Dissenting Shares.
FAILURE TO TAKE ANY NECESSARY STEP WILL RESULT IN A TERMINATION OR WAIVER OF
THE RIGHTS OF THE HOLDER UNDER CHAPTER 13 OF THE CGCL. A PERSON HAVING A
BENEFICIAL INTEREST IN BKLA COMMON STOCK THAT IS HELD OF RECORD IN THE NAME OF
ANOTHER PERSON, SUCH AS A TRUSTEE OR NOMINEE, MUST ACT PROMPTLY TO CAUSE THE
RECORD HOLDER TO FOLLOW THE REQUIREMENTS OF CHAPTER 13 OF THE CGCL IN A TIMELY
MANNER IF SUCH PERSON ELECTS TO DEMAND PAYMENT OF THE FAIR MARKET VALUE OF SUCH
SHARES.
ACCOUNTING TREATMENT
For accounting and financial reporting purposes, it is currently expected
that the Merger will be accounted for as a pooling of interests in accordance
with generally accepted accounting principles, and comfort by the independent
auditors for both Western and BKLA of the ability to use such accounting
treatment is one of the conditions to the consummation of the Merger. Under this
method of accounting, the previously recorded assets and liabilities of Western
and BKLA would be carried forward to the Surviving Corporation at their recorded
amounts; income and expenses of the Surviving Corporation would include income
and expenses of Western and BKLA for the entire fiscal year in which the Merger
occurs; and the reported results of the separate corporations for prior periods
would be combined and restated as the results of the Surviving Corporation. The
results of the pooling treatment for accounting purposes would not be reflected
in historical consolidated financial statements of Western.
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THE MERGER AGREEMENT
SET FORTH BELOW IS A DESCRIPTION OF CERTAIN OF THE TERMS AND CONDITIONS OF
THE MERGER AGREEMENT AND RELATED MATTERS. THIS SUMMARY OF THE TERMS AND
CONDITIONS OF THE MERGER AGREEMENT DOES NOT PURPORT TO BE COMPLETE AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE MERGER AGREEMENT
AS SET FORTH IN APPENDIX A HERETO AND THE TEXT THEREOF IS INCORPORATED BY
REFERENCE HEREIN.
THE MERGER
The Merger Agreement was entered into by and among Western, SMB and BKLA on
April 16, 1998, and amended and restated as of June 24, 1998. Pursuant to the
Merger Agreement, at the Effective Time, BKLA will merge with SMB, with SMB
being the Surviving Corporation and operating under the name "Santa Monica
Bank". The separate corporate existence of BKLA will then cease. In connection
with the Merger, each share of BKLA Common Stock issued and outstanding at the
Effective Time (other than (a) shares that have not been voted in favor of
approval of the principal terms of the Merger and with respect to which
Dissenters' Rights have been perfected in accordance with the CGCL and (b)
shares held by any of BKLA's subsidiaries or by Western or any of its
Subsidiaries, in each case other than in a fiduciary (including custodial or
agency) capacity or as a result of debts previously contracted in good faith)
will be converted automatically into, subject to the limitations set forth in
the Merger Agreement with respect to proration and fractional shares, the
Consideration. Each share of Western Common Stock outstanding immediately prior
to the Effective Time will remain outstanding after the Merger as one share of
Western Common Stock.
At the Effective Time, all BKLA Stock Options, unless otherwise exercised
pursuant to BKLA's stock option plan, shall be converted into the right to
receive for each share of BKLA Common Stock otherwise issuable upon exercise
thereof a number of shares of Western Common Stock equal to the quotient
obtained by dividing the Spread by $42.61. At the Effective Time, each BKLA
Warrant shall be converted into a warrant to acquire, on the same terms and
conditions as were applicable under such BKLA warrant agreement, the number of
shares of Western Common Stock equal to (a) the number of shares of BKLA Common
Stock subject to the BKLA Warrant, multiplied by (b) the Conversion Number (such
product rounded down to the nearest whole number), at an exercise price for the
share (rounded up to the nearest whole cent) equal to (y) the aggregate exercise
price for the shares of BKLA Common Stock which were purchasable pursuant to
such BKLA Warrant divided by (z) the number of full shares of Western Common
Stock subject to such Replacement Warrant.
It is expected that the Merger will be a reorganization within the meaning
of Section 368(a) of the Code. See "THE MERGER--Certain Federal Income Tax
Consequences".
EFFECTIVE TIME AND EFFECTIVE DATE
On a date to be selected by Western, which will be within ten days after the
last to occur of the expiration of all applicable waiting periods in connection
with approvals of governmental authorities and the receipt of all approvals of
governmental authorities and all conditions to the consummation of the Merger
being satisfied or waived (or, at the election of Western, on the last business
day of the month in which such tenth day occurs or, if such tenth day occurs on
one of the last five business days of such month, on the last business day of
the succeeding month), or on such earlier or later date as may be agreed in
writing by Western and BKLA, an agreement of merger will be executed in
accordance with all appropriate legal requirements and will be filed as required
by law, and the Merger will become effective upon such filing or on such date as
may be specified in such agreement of merger. The date of such filing or such
later effective date is herein called the "EFFECTIVE DATE". The "EFFECTIVE TIME"
of the Merger will be the time of such filing or as set forth in such agreement
of merger.
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EXCHANGE OF STOCK CERTIFICATES; DIVIDENDS
At or prior to the Effective Time, Western will deposit, or will cause to be
deposited, with U.S. Stock Transfer or with such other unaffiliated exchange
agent as Western will reasonably select (in such capacity, the "Exchange
Agent"), for the benefit of the holders of certificates formerly representing
shares of BKLA Common Stock ("Old Certificates"), for exchange, certificates
representing the shares of Western Common Stock ("New Certificates") and an
estimated amount of cash to be paid in exchange for outstanding shares of BKLA
Common Stock.
As soon as practicable, but no later than five (5) business days after the
Effective Date, Western will send or cause to be sent to each former holder of
record of shares of BKLA Common Stock immediately prior to the Effective Time
transmittal materials (the "Letter of Transmittal") for use in exchanging such
shareholder's Old Certificates for the Consideration. Western will cause the New
Certificates into which shares of a shareholder's BKLA Common Stock are
converted on the Effective Date and/or any check in respect of any fractional
share interests or dividends or distributions which such person will be entitled
to receive to be delivered to such shareholder upon delivery to the Exchange
Agent of Old Certificates representing such shares of BKLA Common Stock owned by
such shareholder. No interest will be paid on any such cash to be paid in lieu
of fractional share interests or in respect of dividends or distributions which
any such person will be entitled to receive upon such delivery.
At the election of Western, no dividends or other distributions with respect
to Western Common Stock with a record date occurring after the Effective Time
will be paid to the holder of any unsurrendered Old Certificate representing
shares of BKLA Common Stock converted in the Merger into the right to receive
shares of such Western Common Stock until the holder thereof will be entitled to
receive New Certificates in exchange therefor in accordance with the procedures
set forth in the Merger Agreement, and no such shares of BKLA Common Stock will
be eligible to vote until the holder of Old Certificates is entitled to receive
New Certificates in accordance with the procedures set forth in the Merger
Agreement. After becoming so entitled in accordance with Section 3.04 of the
Merger Agreement, the record holder thereof also will be entitled to receive any
such dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of Western Common Stock
such holder had the right to receive upon surrender of the Old Certificate.
BKLA SHAREHOLDERS SHOULD NOT FORWARD BKLA COMMON STOCK CERTIFICATES TO THE
EXCHANGE AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL FORMS. BKLA SHAREHOLDERS
SHOULD NOT RETURN CERTIFICATES WITH THE ENCLOSED PROXY.
NO FRACTIONAL SHARES
No fractional shares of Western Common Stock will be issued in the Merger.
In lieu of the issuance of any fractional share of Western Common Stock that
would otherwise be issuable in conversion or exchange for warrants, a cash
adjustment will be paid to BKLA Shareholders in an amount equal to such
fractional proportion of the price of a share of Western Common Stock as of the
close of business on the day immediately prior to the Effective Time. In lieu of
the issuance of any fractional share of Western Common Stock that would
otherwise be issuable in accordance with the Stock Option Agreement, any
Fractional Replacement Shares of holders of BKLA Stock Options of .2 or above
shall be rounded upwards. See "NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL DATA" and "THE MERGER--Interests of Certain Persons in the
Merger--STOCK OPTIONS".
CONDUCT OF THE BUSINESS OF BKLA AND WESTERN PRIOR TO THE MERGER
Pursuant to the Merger Agreement, each of Western and BKLA has agreed that,
during the period from the date of the Merger Agreement until the Effective
Time, except as permitted by the Merger Agreement, each will not (a) take any
action that would adversely affect or delay the ability of BKLA or
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Western to perform any of their obligations on a timely basis under the Merger
Agreement, or take any action that is reasonably likely to have a material
adverse effect on BKLA or Western; or (b) (i) take any action which it knows or
reasonably should know that such action would, or would be reasonably likely to,
prevent or impede the Merger from qualifying (A) for pooling-of-interests
accounting treatment or (B) as a reorganization within the meaning of Section
368 of the Code; or (ii) knowingly take any action that is intended or is
reasonably likely to result in (A) any of its representations and warranties set
forth in the Merger Agreement being or becoming untrue in any material respect
at any time at or prior to the Effective Time, (B) any of the conditions to the
Merger set forth in Article VII of the Merger Agreement not being satisfied or
(C) a violation of any provision of the Merger Agreement.
In addition, BKLA has agreed that, during the same period, it will not,
subject to certain exceptions, without the prior consent of Western, (a) conduct
the business of BKLA other than in the ordinary and usual course; (b) (i) issue,
sell or otherwise permit to become outstanding, or authorize the creation of,
any additional shares of BKLA Common Stock or preferred stock, (ii) enter into
any agreement with respect to the foregoing or (iii) permit any additional
shares of BKLA Common Stock to become subject to new grants of employee or
director stock options or other similar stock-based employee rights; (c) (i)
make, declare, pay or set aside for payment any dividend or declare or make any
distribution or (ii) directly or indirectly adjust, split, combine, redeem,
reclassify, purchase or otherwise acquire, any shares of its capital stock; (d)
increase the compensation of employees or directors, or make any other changes
with respect to compensation, other than (i) general increases in compensation
for employees, (ii) for grants of awards to newly hired employees consistent
with past practice, (iii) in accordance with applicable law or (iv) to satisfy
contractual obligations existing as of April 16, 1998; (e) enter into,
establish, adopt or amend any pension, retirement, stock option, or similar plan
or arrangement, or take any action to accelerate the vesting or exercisability
of stock options, restricted stock or other compensation or benefits payable
thereunder; (f) dispose of or discontinue any of its assets, deposits, business
or properties except in the ordinary course of business and in a transaction
that is not material to BKLA; (g) acquire all or any portion of, the assets,
business, deposits or properties of any other entity except in the ordinary
course of business; (h) make any capital expenditures other than those in the
ordinary course of business in amounts not exceeding $10,000 individually or
$50,000 in the aggregate; (i) amend its articles or by-laws; (j) implement or
adopt any change in its accounting principles or practices or methods; (k)
except in the ordinary course of business, enter into or terminate any material
contract or amend or modify in any material respect any existing material
contracts; (l) except in the ordinary course of business, settle any claim,
action or proceeding, except for those involving solely money damages in an
amount, individually or in the aggregate, not material to BKLA; (m) (i)
implement or adopt any material change in its interest rate and other risk
management policies, procedures or practices; (ii) fail to follow its existing
policies or practices with respect to managing its exposure to interest rate and
other risk; or (iii) fail to use commercially reasonable means to avoid any
material increase in its aggregate exposure to interest rate risk; (n) incur any
indebtedness for borrowed money other than in the ordinary course of business;
(o) make any loan, loan commitment or renewal or extension thereof to any person
which would, when aggregated with all outstanding loans, commitments for loans
or renewals or extensions thereof made by BKLA to such person and any affiliate
or immediate family member of such person, exceed $500,000 without submitting
loan package information to the chief credit officer of Western for review with
a right of comment at least one full business day prior to taking such action;
or (p) agree or commit to do any of the foregoing.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various customary representations and
warranties relating to, among other things, (a) organization and similar
corporate matters; (b) the capital structure of each of BKLA, Western and SMB;
(c) authorization, execution, delivery, performance and enforceability of the
Merger Agreement and related matters; (d) conflicts under articles or bylaws,
required consents or approvals, and violations of any agreements or law; (e)
documents filed with the Commission and the FDIC and the accuracy of information
contained therein; (f) absence of certain material adverse events, changes,
effects
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or undisclosed liabilities; (g) retirement and other employee plans and matters
relating to the Employee Retirement Income Security Act of 1974, as amended; (h)
litigation; (i) compliance with law, including environmental compliance; (j) tax
returns and audits; (k) ownership of real property; (l) absence of regulatory
actions; and (m) labor matters.
CERTAIN COVENANTS
ACQUISITION PROPOSALS
Pursuant to the Merger Agreement, BKLA agrees that it will not, and will
cause its officers, directors, agents, advisors and affiliates not to, solicit
or encourage inquiries or proposals with respect to, or engage in any
negotiations concerning, or provide any confidential information to, or have any
discussions with, any person relating to, any tender or exchange offer, proposal
for a merger, consolidation or other business combination involving BKLA or any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the assets or deposits of, BKLA, other than the
transactions contemplated by the Merger Agreement (any such proposal or offer
being referred to as an "Acquisition Proposal"), except to the extent legally
required for the discharge by the BKLA Board of its fiduciary duties as advised
by counsel to the BKLA Board.
BKLA has also agreed, as of the date of the Merger Agreement, to immediately
cease and cause to be terminated any activities, discussions or negotiations
conducted prior to the date of the Merger Agreement with any parties other than
Western with respect to any of the foregoing and to use its reasonable best
efforts to enforce any confidentiality or similar agreement relating to an
Acquisition Proposal. BKLA will promptly (within 24 hours) advise Western
following the receipt by BKLA of any Acquisition Proposal and the substance
thereof (including the identity of the person making such Acquisition Proposal),
and advise Western of any developments with respect to such Acquisition Proposal
immediately upon the occurrence thereof.
CERTAIN POLICIES OF BKLA
At or before the Effective Time, BKLA will, consistent with generally
accepted accounting principles and on a basis mutually satisfactory to it and
Western, modify and change its loan, litigation and real estate valuation
policies and practices (including loan classifications and levels of reserves)
so as to be applied on a basis that is consistent with that of Western.
EMPLOYEE BENEFITS
Pursuant to Merger Agreement, from and after the Effective Date, all of
BKLA's benefit and compensation plans, contracts, policies or arrangements
covering employees or former employees of BKLA and current or former directors
of BKLA, including, but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of ERISA, and deferred compensation, stock option, stock
purchase, stock appreciation rights, stock based, incentive and bonus plans,
will be governed, managed and/or terminated by Western in Western's sole
discretion.
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE
From and for a period of six years after the Effective Time, Western and SMB
have agreed to indemnify and hold harmless each director and officer of BKLA,
determined as of the Effective Time (the "Indemnified Parties"), against any
costs or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities (collectively, "Costs") incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of matters
existing or occurring at or prior to the Effective Time (including with respect
to the Merger Agreement or any of the transactions contemplated thereby),
whether asserted, claimed or arising prior to, at or after the Effective Time,
to the extent to which such Indemnified Parties were entitled under
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California law and BKLA's articles of incorporation or bylaws in effect on April
16, 1998, and Western also will advance expenses as incurred to the extent
permitted under California law and BKLA's articles of incorporation and bylaws.
Any Indemnified Party wishing to claim indemnification under the Merger
Agreement, upon learning of any such claim, action, suit, proceeding or
investigation, must as promptly as possible notify Western thereof, but the
failure so to notify will not relieve Western of any liability it may have to
such Indemnified Party if such failure does not materially prejudice Western. In
the event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (a) Western will have the right to
assume the defense thereof and Western will not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection with the defense
thereof, except that if Western elects not to assume such defense, or counsel
for the Indemnified Parties advises that there are issues that raise conflicts
of interest between Western and the Indemnified Parties, the Indemnified Parties
may retain counsel satisfactory to them, and Western will pay the reasonable
fees and expenses of one such counsel for the Indemnified Parties in any
jurisdiction promptly as statements thereof are received; (b) the Indemnified
Parties will cooperate in the defense of any such matter; and (c) Western will
not be liable for any settlement effected without its prior written consent.
Notwithstanding the foregoing, Western will not have any obligation under the
Merger Agreement to any Indemnified Party when and if a court of competent
jurisdiction ultimately determines, and such determination becomes final and
nonappealable, that the indemnification of such Indemnified Party in the manner
contemplated hereby is not permitted or is prohibited by applicable law.
Western also has agreed that for a period of six years after the Effective
Time, it will use its reasonable best efforts to cause to be maintained in
effect at a minimum the policies of directors' and officers' liability insurance
maintained by BKLA as of April 16, 1998 (provided that Western may substitute
therefor policies of comparable coverage with respect to claims arising from
facts or events that occurred before the Effective Time); PROVIDED, HOWEVER,
that in no event will Western be obligated to expend, in order to maintain or
provide insurance coverage pursuant to the Merger Agreement, any amount per
annum in excess of 125% of the amount of the annual premiums paid as of the date
of the Merger Agreement by BKLA for such insurance (the "Maximum Amount"). If
the amount of the annual premiums necessary to maintain or procure such
insurance coverage exceeds the Maximum Amount, Western will use all reasonable
efforts to maintain the most advantageous policies of directors' and officers'
insurance obtainable for an annual premium equal to the Maximum Amount.
Notwithstanding the foregoing, prior to the Effective Time, Western may request
BKLA to, and BKLA thereupon will, purchase insurance coverage, on such terms and
conditions as shall be acceptable to Western, extending for a period of six
years BKLA's directors' and officers' liability insurance coverage in effect as
of the date of the Merger Agreement (covering past or future claims with respect
to periods before the Effective Time) and such coverage will satisfy Western's
obligations under the Merger Agreement.
If Western or any of its successors or assigns (a) 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 (b) 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 will be made to ensure that the successors and assigns of Western
assume the obligations described above.
NOTIFICATION OF CERTAIN MATTERS
Western and BKLA each has agreed to give prompt notice to the other of any
fact, event or circumstance known to it that (i) is reasonably likely,
individually or taken together with all other facts, events and circumstances
known to it, to result in any material adverse effect with respect to it or (ii)
would cause or constitute a material breach of any of its representations,
warranties, covenants or agreements contained in the Merger Agreement.
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SECURITIES ACT
Not later than the 15th day prior to the mailing of this Prospectus-Proxy
Statement to the BKLA Shareholders, BKLA has agreed to deliver to Western a
schedule of each person that, to the best of BKLA's knowledge, is or is
reasonably likely to be, as of the date of the BKLA Meeting, deemed to be a BKLA
Affiliate.
BKLA will use its reasonable best efforts to cause each person who may be
deemed to be a BKLA Affiliate to execute and deliver to Western on or before the
date of mailing of this Prospectus-Proxy Statement to BKLA Shareholders an
agreement which provides that each such person will agree not to sell, pledge,
transfer or otherwise dispose of the shares of Western Common Stock to be
received by such person in the Merger except in compliance with the applicable
provisions of the Securities Act.
CONDITIONS
The respective obligations of Western and BKLA to consummate the Merger are
subject to certain conditions, including (a) the approval by the BKLA
Shareholders of the principal terms of the Merger; (b) receipt of approvals
required by law in connection with the Merger and the other transactions
contemplated by the Merger Agreement (the parties having agreed that no such
approval will be deemed to have been received if it includes any condition or
requirement that would result in a material adverse effect on the Surviving
Corporation or would reduce the economic benefits of the Merger in so
significant and adverse a manner that Western would not have entered into the
Merger Agreement had such condition or requirement been known to it); (c) the
absence of any statute, rule, regulation, order, injunction or decree being in
effect and prohibiting the consummation of the Merger or any other transaction
contemplated by the Merger Agreement; (d) the Registration Statement having
become effective and there being issued no stop order suspending the
effectiveness of the Registration Statement and no proceedings for that purpose
initiated or threatened by the Commission; (e) the receipt and continued
effectiveness of all permits and other authorizations under state securities
laws necessary to consummate the transactions contemplated by the Merger
Agreement and to issue the shares of Western Common Stock to be issued in the
Merger; (f) the approval for listing on the Nasdaq, subject to official notice
of issuance, of the shares of Western Common Stock to be issued in the Merger;
(g) the receipt by each of Western and BKLA from each of their respective
accountants stating that in its opinion the Merger will qualify for
pooling-of-interests accounting treatment; and (h) the receipt by each of
Western and BKLA from Sullivan & Cromwell and Vavrinek, respectively, each
stating that in its opinion, the Merger will be treated as a reorganization
within the meaning of Section 368(a) of the Code.
The obligations of Western and SMB to consummate the Merger also are subject
to the fulfillment or waiver by Western prior to the Effective Time of certain
conditions, including the following: (a) the representations and warranties of
BKLA being true and correct unless the failure so to be true and correct is not
likely to have a material adverse effect on BKLA; (b) the performance by BKLA in
all material respects of all obligations contained in the Merger Agreement
required to be performed by BKLA before the Effective Time; and (c) receipt by
Western of a customary "cold comfort" letter from Vavrinek, with respect to
certain financial statements and data of BKLA.
In addition, the obligation of BKLA to consummate the Merger also is subject
to the fulfillment or waiver by BKLA prior to the Effective Time of certain
conditions, including the following: (a) the representations and warranties of
Western being true and correct unless the failure so to be true and correct is
not likely to have a material adverse effect on Western; (b) the performance by
Western in all material respects of all obligations contained in the Merger
Agreement required to be performed before the Effective Time; (c) receipt by
BKLA of a customary "cold comfort" letter from KPMG Peat Marwick LLP with
respect to certain financial statements and data of Western; and (d) as of the
Effective Time, the appointment by BKLA of a director to the Western Board.
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TERMINATION
The Merger Agreement may be terminated, and the Merger abandoned, prior to
the Effective Date, either before or after its approval by the BKLA
Shareholders: (a) by the mutual consent of Western and BKLA, if so determined by
their respective Boards; (b) by either of Western or BKLA, if so determined by
its Board, by written notice to the other, in the event of (i) the failure of
the BKLA Shareholders to approve the Merger at the BKLA Meeting, (ii) a material
breach by the other party of any representation, warranty, covenant or agreement
contained in the Merger Agreement that is not cured or not curable within 30
days after written notice of such breach is given to the party committing such
breach, or (iii) the Merger not having been consummated by December 31, 1998;
(c) by either of Western or BKLA, by written notice to the other, if any
approval of a governmental authority required to permit consummation of the
Merger or any transaction necessary to consummate the Merger shall have been
denied; (d) by BKLA, if with respect to any Ten Day Period (as defined below),
both (i)(A) the Ten Day Average Price (as defined below) shall be less than
$35.37 per share and (B) the Western Common Stock Price Percentage (as defined
below) shall be less than the BKX Index Percentage (as defined below) and (ii)
BKLA has delivered written notice to Western of its intention to terminate this
Agreement within forty-eight (48) hours following the date of such event; (e) by
Western, if the BKLA Board shall fail to recommend the Merger for approval by
the BKLA Shareholders; or (f) by BKLA, if the BKLA Board receives an Acquisition
Proposal and determines, based upon the written advice of counsel, to accept the
proposal and that proceeding with the Merger would violate fiduciary duties of
the BKLA Board to the BKLA Shareholders.
"Western Common Stock Price Percentage" is defined in the Merger Agreement
to mean the percentage determined by dividing the Ten Day Average Price by
$42.61 (as such amount may be adjusted pursuant to the paragraph above); (x)
"BKX Index Percentage" means the percentage determined by dividing (i) the
product of (A) the Keefe Bank Index as of the date of determination times (B)
.66 by (ii) the Keefe Bank Index as of the date hereof; (y) "Ten Day Average
Price" means the average sales price per share of Western Common Stock for a Ten
Day Period determined by averaging the last reported sales price on each trading
day, and (z) "Ten Day Period" means any period of ten (10) consecutive trading
days.
TERMINATION PAYMENT
If the Merger Agreement is terminated by BKLA pursuant to a material breach
of any representation, warranty, covenant or agreement contained therein by
Western that is not cured or not curable within 30 days after written notice of
such breach is given to Western by BKLA, Western will pay to BKLA a fee equal to
BKLA's out-of-pocket expenses in connection with the Merger, up to $500,000. If
the Merger Agreement is terminated by Western pursuant to a material breach of
any representation, warranty, covenant or agreement contained therein by BKLA
that is not cured or not curable within 30 days after written notice of such
breach is given to BKLA by Western, or under the circumstances described in
clause (e) under "--Termination" above, BKLA shall pay to Western a fee equal to
BKLA's out-of-pocket expenses in connection with the Merger, up to $500,000. In
the event that there is a termination as a result of BKLA entering into an
Acquisition Proposal under the circumstances described in clause (e) under
"--Termination" above, BKLA shall pay Western up to $500,000 to cover
out-of-pocket expenses in addition to Western's rights under the Stock Option
Agreement.
EXPENSES
All costs and expenses incurred in connection with the Merger Agreement and
the transactions contemplated thereby shall be paid by the party incurring such
costs or expenses, except upon termination of the Merger Agreement under certain
circumstances. See "--Termination Payment".
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THE STOCK OPTION AGREEMENT
GENERAL
As an inducement and condition to Western's entering into the Merger
Agreement, BKLA entered into the Stock Option Agreement with Western. Pursuant
to the Stock Option Agreement, BKLA granted to Western an irrevocable Option,
exercisable only under certain limited and specifically defined circumstances,
none of which, to the best of BKLA's and Western's knowledge, has occurred as of
the date hereof, to purchase up to 945,585 authorized but theretofore unissued
shares of BKLA Common Stock (but in no event more than 19.9 percent of the
shares of BKLA Common Stock outstanding at the time of exercise), for a purchase
price per share of $17.375, calculated by taking the average of the daily
closing price of the BKLA Common Stock as reported on the Nasdaq for the Ten Day
Period beginning April 10, 1998, subject to adjustment in certain circumstances.
The purchase of BKLA Common Stock pursuant to the Stock Option Agreement is
subject to compliance with applicable law, including receipt of any necessary
approvals under the BHCA.
The Stock Option Agreement and the Option are intended to increase the
likelihood that the Merger will be consummated according to the terms set forth
in the Merger Agreement, and may be expected to discourage offers by third
parties to acquire BKLA prior to the Merger.
THE STOCK OPTION
Western may exercise the Option, in whole or in part, at any time and from
time to time following the occurrence of certain events (each a "Purchase
Event"), including (a) the acquisition by any person other than Western or any
subsidiary of Western of beneficial ownership of shares of BKLA Common Stock,
other than by exercise of existing options, warrants or other rights or as a
result of the execution and delivery of the Shareholder Agreements, such that,
upon the consummation of such acquisition, such person would have beneficial
ownership, in the aggregate, of 25 percent or more of the then outstanding
shares of BKLA Common Stock; or (b) the occurrence of certain other events (each
also referred to as a "Preliminary Purchase Event"), including:
(i) BKLA or any of its subsidiaries (each a "BKLA Subsidiary"), without
having received Western's prior written consent, having entered into an
agreement to engage in an Acquisition Transaction (as defined herein) with any
person other than Western or any of its subsidiaries (each a "Western
Subsidiary") or the BKLA Board having recommended that the BKLA Shareholders
approve or accept any Acquisition Transaction with any person other than Western
or any Western Subsidiary;
(ii) Any person, other than Western or any Western Subsidiary, having
acquired beneficial ownership or the right to acquire beneficial ownership,
other than by exercise of existing options, warrants or other rights, of shares
of BKLA Common Stock such that, upon the consummation of such acquisition, such
person would have beneficial ownership, in the aggregate, of ten percent or more
of the then outstanding shares of BKLA Common Stock;
(iii) Any person, other than Western or any Western Subsidiary, having made a
BONA FIDE proposal to BKLA or its shareholders, by public announcement or
written communication that is or becomes the subject of public disclosure, to
engage in an Acquisition Transaction; or
(iv) After a proposal is made by a third party to BKLA or its shareholders
to engage in an Acquisition Transaction, (A) BKLA having breached any covenant
or obligation contained in the Merger Agreement which breach would entitle
Western to terminate the Merger Agreement or (B) the holders of BKLA Common
Stock not approving the Merger Agreement at the meeting of such shareholders
held for the purpose of voting on the Merger Agreement, such meeting not having
been held or having been canceled prior to termination of the Merger Agreement
or the BKLA Board having withdrawn or modified in a manner adverse to Western
the recommendation of the BKLA Board with respect to the Merger Agreement.
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"Acquisition Transaction" is defined in the Stock Option Agreement to mean
(a) a merger or consolidation, or any similar transaction, involving BKLA or any
of BKLA's subsidiaries, (b) a purchase, lease or other acquisition of all or
substantially all of the assets of BKLA or any of BKLA's Subsidiaries or (c) a
purchase or other acquisition of securities representing ten percent or more of
the voting power of BKLA or any BKLA Subsidiary, other than by exercise of
existing options, warrants or other rights.
The Stock Option Agreement also provides for certain adjustments intended to
protect Western against dilution of its rights to acquire BKLA Common Stock. The
Stock Option Agreement grants certain registration rights ("Registration
Rights") to Western with respect to the shares issuable upon exercise of the
Option.
TERMINATION
The Option will terminate upon the earliest to occur of (a) the time
immediately prior to the Effective Time; (b) 12 months after the first
occurrence of a Purchase Event; (c) 18 months after the termination of the
Merger Agreement following the occurrence of a Preliminary Purchase Event; (d)
termination of the Merger Agreement in accordance with the terms thereof prior
to the occurrence of a Purchase Event or a Preliminary Purchase Event (other
than a termination of the Merger Agreement under the certain circumstances
referred to in the next clause (e)); or (e) 12 months after the termination of
the Merger Agreement upon the happening of certain events, including a material
breach of the Merger Agreement by BKLA and certain events relating to an
Acquisition Proposal.
THE SHAREHOLDER AGREEMENTS
Western has entered into Shareholder Agreements with Adriana M. Boeka,
Maurice J. Burford, Mary Anne Chalker, Roy Doumani, John J. Feldman, Rickey M.
Gelb, Robert G. Jacobsen, Wendy Moskal, John R. Newhouse, James V. Reimann,
Melvin F. Shaw and Burton N. Sterman (the "Party Shareholders"), each a BKLA
Shareholder and current or former director of BKLA. The Party Shareholders,
holding in the aggregate shares representing approximately [24.4]% of the total
voting power of BKLA Common Stock as of the BKLA Record Date, each agreed, in
consideration of the substantial expenses incurred by Western and SMB in
connection with the Merger Agreement and as a condition to Western and SMB
entering into the Merger Agreement, to vote or to cause to be voted, or to
execute a written consent with respect to, all of such Party Shareholder's
shares of BKLA Common Stock (a) in favor of adoption and approval of the Merger
Agreement and the Merger at every meeting of BKLA Shareholders at which such
matters are considered and at every adjournment thereof and in connection with
every proposal to take action by written consent with respect thereto; and (b)
against any other Acquisition Proposal at every meeting of the BKLA Shareholders
at which such matters are considered and at every adjournment thereof and in
connection with every proposal to take action by written consent with respect
thereto.
Each Shareholder Agreement also provides that the Party Shareholder will
not, and will not permit any entity under its control to, deposit any of such
Party Shareholder's shares of BKLA Common Stock in a voting trust or subject any
such shares to any agreement, arrangement or understanding with respect to the
voting of such shares inconsistent with the Shareholder Agreement entered into
by that Party Shareholder. In addition, the Party Shareholders each agreed not
to sell, assign, transfer or dispose of any of his or her shares of BKLA Common
Stock during the term of the relevant Shareholder Agreement.
The Shareholder Agreements will terminate upon the earlier to occur of the
Effective Time (except for certain provisions which will survive the Effective
Time) and the date on which the Merger Agreement is terminated in accordance
with its terms.
The Shareholder Agreements bind the actions of the signatories thereto only
in their capacity as BKLA Shareholders. Those directors of BKLA who signed
Shareholder Agreements are not and could not be contractually bound to abrogate
their fiduciary duties as directors of BKLA. Accordingly, while such
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shareholders/directors are, under the Shareholder Agreements executed by them,
contractually bound to vote as a BKLA Shareholder in favor of the Merger and
against other Acquisition Proposals (should any be presented), their fiduciary
duties as BKLA Directors nevertheless require them to act in their capacity as
directors in the best interest of BKLA when they decided to approve the Merger.
In addition, such shareholders/directors will continue to be bound by their
fiduciary duties as BKLA Directors with respect to any decisions they may take
in connection with the Merger or otherwise.
COMPARISON OF SHAREHOLDER RIGHTS
COMPARISON OF CORPORATE STRUCTURE
Both Western and BKLA are California corporations and as such are governed
by the CGCL. Consequently, except as otherwise noted below, there is no material
difference between the rights of the holders of Western Common Stock and the
rights of the holders of BKLA Common Stock with regard to electing members of
the board of directors, amending the articles of incorporation or bylaws,
calling special meetings of shareholders, acting by written consent of
shareholders without a meeting, indemnifying directors and other voting rights.
Certain differences in the articles of incorporation and bylaws of Western
and BKLA are discussed below.
DIVIDENDS AND DIVIDEND POLICY
BKLA
As a California state bank, BKLA may not make a distribution without prior
approval of the State Commissioner to the BKLA Shareholders (including a payment
of dividends, but excluding stock dividends) which exceeds the lesser of (i) its
retained earnings and (ii) its net income for the last three fiscal years, less
the amount of any previous distributions during such period. With the approval
of the State Commissioner, BKLA may make a distribution not exceeding its
retained earnings, its net income for the past fiscal year or its net income for
the current fiscal year. To date, BKLA has not declared or paid any dividends.
WESTERN
Holders of Western Common Stock are entitled to receive dividends declared
by the Western Board out of funds legally available therefor under the laws of
the State of California, subject to the rights of holders of any preferred stock
of Western that may be issued after the date hereof. On August 20, 1997, the
Western Board approved the institution of a quarterly dividend and thereafter
declared a dividend of $0.15 per common share in the fourth quarter of 1997.
Western also paid a second dividend in the first quarter of 1998 of $0.15 per
common share, and on May 20, 1998, the Western Board declared a third dividend
of $0.15 per common share which is payable on June 26, 1998 to shareholders of
record on June 5, 1998. Western Management believes that it will be able to
continue paying quarterly dividends. However, because Western must comply with
the CGCL and banking regulations when paying dividends, there can be no
assurance that Western will continue to pay dividends at this level, if at all.
See "RISK FACTORS-- Regulation" and "INFORMATION REGARDING WESTERN--Quarterly
Dividend".
Western's ability to pay dividends is limited by a Third Amendment to
Revolving Credit Agreement, dated as of January 26, 1998, between Western and
The Northern Trust Company which provides that Western may not declare or pay
any dividend other than dividends payable in Western Common Stock or in the
ordinary course of business not to exceed 50% of net income per fiscal quarter
of Western before goodwill amortization and any restructuring charges incurred
in connection with any merger, consolidation or other restructuring contemplated
by the SMB Merger or similar transactions.
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NUMBER OF DIRECTORS
The BKLA bylaws provide that the authorized number of directors of BKLA
shall be not less than six and not more than eleven. Currently, the actual
number of directors of BKLA is nine.
The Western Restated Bylaws provide that the authorized number of directors
of Western shall not be less than nine nor more than 15 and that any amendment
to the Western Restated Bylaws affecting the authorized number of directors must
be approved by a majority of the Western Shareholders, provided that an
amendment to the bylaws reducing the number of directors to a number less than
five cannot be adopted if the votes cast against its adoption are equal to more
than 16 2/3% of the outstanding shares entitled to vote on such amendment.
Currently, the actual number of directors of Western is nine.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 317 of the CGCL authorizes a court to award, or a corporation's
Board of Directors to grant, indemnity to directors, officers and employees in
terms sufficiently broad to permit such indemnification under certain
circumstances for liabilities (including reimbursement for expenses incurred)
arising under the Securities Act. Article Five of Western's restated articles of
incorporation provides for elimination of liability for monetary damages of its
directors, and Article Six of Western's Restated Articles of Incorporation and
Article VI of Western's Restated Bylaws provide for indemnification of its
directors, officers, employees and other agents to the fullest extent permitted
by the CGCL. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of Western pursuant to the foregoing provisions, or otherwise, Western has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
VALIDITY OF WESTERN COMMON STOCK
The validity of the shares of Western Common Stock to be issued in the
Merger has been passed upon by Julius G. Christensen, Executive Vice President,
General Counsel and Secretary of Western.
EXPERTS
The consolidated financial statements of Western and subsidiaries as of
December 31, 1997 and 1996, and for the years then ended, have been incorporated
by reference herein and in the registration statement in reliance on the report
of KPMG Peat Marwick LLP, independent auditors, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing. Such report indicates that: (i) KPMG Peat Marwick LLP did not audit
either the 1996 consolidated financial statements of CCB or the 1996
consolidated financial statements of SCB, both of which were acquired during
1997 in mergers accounted for as poolings of interests. Such financial
statements were audited by other auditors whose reports were furnished to KPMG
Peat Marwick LLP, and KPMG Peat Marwick LLP's opinion, insofar as it related to
CCB and SCB, is based solely on the reports of the other auditors; (ii) the 1995
consolidated statements of operations, changes in shareholders' equity, and cash
flows of Western, prior to their restatement for the 1997 poolings of interest,
were audited by other auditors; (iii) the separate 1995 consolidated financial
statements of CCB and SCB included in the 1995 consolidated financial statements
of Western were audited by other auditors; and (iv) the combination of the
consolidated statements of operations, changes in shareholders' equity and cash
flows for the year ended December 31, 1995, after restatement for the 1997
poolings of interest, has been audited by KPMG Peat Marwick LLP.
The consolidated financial statements of Western for the year ended December
31, 1995, prior to their restatement for the 1997 poolings of interest, have
been incorporated by reference herein in reliance upon the report given thereto
upon the authority of Vavrinek (the successor to Dayton & Associates) as experts
in accounting and auditing.
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The consolidated statements of financial condition of CCB and subsidiaries
as of December 31, 1996, and the related consolidated statements of operations,
changes in shareholders' equity and cash flows for each of the two years in the
period ended December 31, 1996, incorporated in this prospectus by reference
from the Annual Report on Form 10-K, for the year ended December 31, 1997, of
Western have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference, and has been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The consolidated balance sheet of SCB and subsidiary as of December 31,
1996, and the related consolidated statements of operations, changes in
shareholders' equity and cash flows for each of the two years in the period
ended December 31, 1996 incorporated in this prospectus by reference from the
Annual Report on Form 10-K, for the year ended December 31, 1997, of Western
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and has been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The financial statements of Santa Monica Bank as of and for the years ended
December 31, 1997 and 1996, incorporated by reference from the Current Report on
Form 8-K/A, dated April 9, 1998 of Western, have been audited by Arthur Andersen
LLP, as indicated in their report thereto, and are incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting and
auditing in giving said report.
The statements of operations, changes in shareholders' equity and cash
flows, of Santa Monica Bank, for the year ended December 31, 1995 incorporated
in this prospectus by reference from the Current Report on Form 8-K/A, dated
April 9, 1998 of Western, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein by
reference, and has been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
The balance sheets of BKLA as of the years ended December 31, 1997 and 1996,
and the related statements of operations, changes in shareholders' equity and
cash flows for each of the three years in the period ended December 31, 1997,
incorporated herein by reference from the Current Report on Form 8-K filed by
Western on June 25, 1998, have been audited by Vavrinek, independent auditors,
as indicated in their report with respect thereto, and are incorporated herein
by reference in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
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APPENDIX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 24, 1998
BY AND AMONG
WESTERN BANCORP
SANTA MONICA BANK
AND
BANK OF LOS ANGELES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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TABLE OF CONTENTS
RECITALS
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ARTICLE I
Certain Definitions
1.01 CERTAIN DEFINITIONS................................................................................ A-1
ARTICLE II
The Merger
2.01 THE MERGER......................................................................................... A-4
2.02 EFFECTIVE DATE AND EFFECTIVE TIME.................................................................. A-5
ARTICLE III
Consideration; Exchange Procedures
3.01 MERGER CONSIDERATION............................................................................... A-5
3.02 RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS............................................................ A-5
3.03 FRACTIONAL SHARES.................................................................................. A-6
3.04 EXCHANGE PROCEDURES................................................................................ A-6
3.05 ANTI-DILUTION PROVISIONS........................................................................... A-7
3.06 OPTIONS............................................................................................ A-7
3.07 WARRANTS........................................................................................... A-8
ARTICLE IV
Actions Pending Acquisition
4.01 FOREBEARANCES OF BKLA.............................................................................. A-8
4.02 FOREBEARANCES OF WESTERN........................................................................... A-10
ARTICLE V
Representations and Warranties
5.01 DISCLOSURE SCHEDULES............................................................................... A-10
5.02 STANDARD........................................................................................... A-10
5.03 REPRESENTATIONS AND WARRANTIES OF BKLA............................................................. A-11
5.04 REPRESENTATIONS AND WARRANTIES OF WESTERN.......................................................... A-17
ARTICLE VI
Covenants
6.01 REASONABLE BEST EFFORTS............................................................................ A-20
6.02 SHAREHOLDER APPROVAL............................................................................... A-20
6.03 REGISTRATION STATEMENT............................................................................. A-20
6.04 PRESS RELEASES..................................................................................... A-21
6.05 ACCESS; INFORMATION................................................................................ A-21
6.06 ACQUISITION PROPOSALS.............................................................................. A-22
6.07 AFFILIATE AGREEMENTS............................................................................... A-22
6.08 TAKEOVER LAWS...................................................................................... A-22
</TABLE>
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6.09 CERTAIN POLICIES................................................................................... A-22
6.10 NASDAQ LISTING..................................................................................... A-22
6.11 REGULATORY APPLICATIONS............................................................................ A-22
6.12 INDEMNIFICATION; DIRECTOR AND OFFICERS' INSURANCE.................................................. A-23
6.13 BENEFIT PLANS...................................................................................... A-24
6.14 ACCOUNTANTS' LETTERS............................................................................... A-24
6.15 NOTIFICATION OF CERTAIN MATTERS.................................................................... A-24
6.16 SHAREHOLDER AGREEMENTS............................................................................. A-24
ARTICLE VII
Conditions to Consummation of the Merger
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER......................................... A-24
7.02 CONDITIONS TO OBLIGATION OF BKLA................................................................... A-25
7.03 CONDITIONS TO OBLIGATION OF WESTERN................................................................ A-25
ARTICLE VIII
Termination
8.01 TERMINATION........................................................................................ A-26
8.02 EFFECT OF TERMINATION AND ABANDONMENT.............................................................. A-27
8.03 TERMINATION FEE.................................................................................... A-27
ARTICLE IX
Miscellaneous
9.01 SURVIVAL........................................................................................... A-28
9.02 WAIVER; AMENDMENT.................................................................................. A-28
9.03 COUNTERPARTS....................................................................................... A-28
9.04 GOVERNING LAW; WAIVER OF JURY TRIAL................................................................ A-28
9.05 EXPENSES........................................................................................... A-28
9.06 NOTICES............................................................................................ A-29
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES................................................. A-29
9.08 INTERPRETATION; EFFECT............................................................................. A-29
EXHIBIT A Form of Affiliate Agreement
EXHIBIT B Form of Shareholder's Agreement
</TABLE>
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of June 24, 1998
(this "Agreement"), by and among Bank of Los Angeles ("BKLA"), Western Bancorp
("Western") and Santa Monica Bank.
RECITALS
A. BKLA. BKLA is a California corporation, having its principal place of
business in West Hollywood, California.
B. WESTERN. Western is a California corporation, having its principal
place of business in Newport Beach, California.
C. SANTA MONICA BANK. Santa Monica Bank is a California corporation having
its principal place of business in Santa Monica, California.
D. STOCK OPTION AGREEMENT. Concurrently herewith, BKLA and Western are
entering into a stock option agreement (the "STOCK OPTION AGREEMENT"), to be
dated the date hereof, whereby BKLA will grant to Western the option to purchase
up to 19.9% of the outstanding shares of the BKLA Common Stock upon the
occurrence of certain events.
E. INTENTIONS OF THE PARTIES. It is the intention of the parties to this
Agreement that the business combination contemplated hereby be accounted for
under the "pooling-of-interests" accounting method and be treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986 as
amended (the "CODE").
F. BOARD ACTION. The respective Boards of Directors of each of Western and
BKLA have determined that it is in the best interests of their respective
companies and their stockholders to consummate the strategic business
combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. The following terms are used in this Agreement
with the meanings set forth below:
"ACQUISITION PROPOSAL" means any tender or exchange offer, proposal for
a merger, consolidation or other business combination involving BKLA or any
of its Subsidiaries or any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets or
deposits of, BKLA or any of its Subsidiaries, other than the transactions
contemplated by this Agreement.
"AFFILIATE AGREEMENTS" has the meaning set forth in Section 6.07(b).
"AGREEMENT" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"BENEFIT PLANS" has the meaning set forth in Section 5.03(m).
"BKLA" has the meaning set forth in the preamble to this Agreement.
"BKLA AFFILIATE" has the meaning set forth in Section 6.07(a).
"BKLA ARTICLES" means the Articles of Incorporation of BKLA.
"BKLA BOARD" means the Board of Directors of BKLA.
"BKLA BY-LAWS" means the By-laws of BKLA.
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"BKLA COMMON STOCK" means the common stock, no par value per share, of
BKLA.
"BKLA MEETING" has the meaning set forth in Section 6.02.
"BKLA STOCK OPTION" has the meaning set forth in Section 3.06.
"BKLA STOCK PLAN" means BKLA's 1988 Stock Option Plan (as amended).
"BKLA WARRANT" has the meaning set forth in Section 3.07.
"BKLA WARRANT AGREEMENT" has the meaning set forth in Section 3.07.
"BUSINESS COMBINATION" has the meaning set forth in Section 3.05.
"CGCL" means the California General Corporation law.
"CALIFORNIA SECRETARY" means the California Secretary of State.
"CODE" has the meaning set forth in the recitals.
"COMMISSIONER" means the California Commissioner of Financial
Institutions.
"COSTS" has the meaning set forth in Section 6.12(a).
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 5.01.
"EFFECTIVE DATE" means the date on which the Effective Time occurs, as
provided for in Section 2.02.
"EFFECTIVE TIME" means the effective time of the Merger, as provided for
in Section 2.02.
"EMPLOYEES" has the meaning set forth in Section 5.03(m).
"ENVIRONMENTAL LAW" has the meaning set forth in Section 5.03(o).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" has the meaning set forth in Section 5.03(m).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"EXCHANGE AGENT" has the meaning set forth in Section 3.04.
"EXCHANGE FUND" has the meaning set forth in Section 3.04.
"EXCHANGE RATIO" has the meaning set forth in Section 3.01(a).
"FDIC" means the Federal Deposit Insurance Corporation.
"FEDERAL RESERVE" means the Board of Governors of the Federal Reserve
System.
"GOVERNMENTAL AUTHORITY" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality, or any Regulatory Authority.
"HAZARDOUS SUBSTANCE" has the meaning set forth in Section 5.03(o).
"INDEMNIFIED PARTY" has the meaning set forth in Section 6.12(a).
"INSURANCE POLICY" has the meaning set forth in Section 5.03(s).
"LIENS" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance.
"LOAN PROPERTY" has the meaning set forth in Subsection 5.03(o).
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"MATERIAL ADVERSE EFFECT" means, with respect to Western or BKLA, any
effect that (i) is material and adverse to the financial position, results
of operations or business of Western and its Subsidiaries taken as a whole
or BKLA and its Subsidiaries taken as a whole, respectively, or (ii) would
materially impair the ability of either Western or BKLA to perform its
obligations under this Agreement or otherwise materially threaten or
materially impede the consummation of the Merger and the other transactions
contemplated by this Agreement; PROVIDED, HOWEVER, that Material Adverse
Effect shall not be deemed to include the impact of (a) changes in banking
and similar laws of general applicability or interpretations thereof by
courts or governmental authorities, (b) changes in generally accepted
accounting principles or regulatory accounting requirements applicable to
banks and their holding companies generally and (c) any modifications or
changes to valuation policies and practices in connection with the Merger or
restructuring charges taken in connection with the Merger, in each case in
accordance with generally accepted accounting principles.
"MAXIMUM AMOUNT" has the meaning set forth in Section 6.12(c).
"MERGER" has the meaning set forth in Section 2.01.
"MERGER CONSIDERATION" has the meaning set forth in Section 2.01.
"MULTIEMPLOYER PLANS" has the meaning set forth in Section 5.03(m).
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market.
"NEW CERTIFICATE" has the meaning set forth in Section 3.04.
"OLD CERTIFICATE" has the meaning set forth in Section 3.04.
"PERSON" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated
organization.
"PENSION PLAN" has the meaning set forth in Section 5.03(m).
"PLANS" has the meaning set forth in Section 5.03(m).
"PREVIOUSLY DISCLOSED" by a party shall mean information set forth in
its Disclosure Schedule.
"PROXY STATEMENT" has the meaning set forth in Section 6.03.
"REGISTRATION STATEMENT" has the meaning set forth in Section 6.03.
"REGULATORY AUTHORITY" has the meaning set forth in Section 5.03(i).
"REGULATORY DOCUMENTS" means documents filed with the SEC or the FDIC,
as applicable, of the types referred to in Section 5.03(g) and Section
5.04(f).
"REPLACEMENT WARRANT" has the meaning set forth in Section 3.07.
"REPRESENTATIVES" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"RIGHTS" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person
any right to subscribe for or acquire, or any options, calls or commitments
relating to, or any stock appreciation right or other instrument the value
of which is determined in whole or in part by reference to the market price
or value of, shares of capital stock of such Person.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and rules
and regulations thereunder.
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"SHAREHOLDER AGREEMENTS" has the meaning set forth in Section 6.16.
"STOCK OPTION AGREEMENT" has the meaning set forth in the Recitals.
"SUBSIDIARY" and "SIGNIFICANT SUBSIDIARY" have the meanings ascribed to
them in Rule 1-02 of Regulation S-X of the SEC.
"SURVIVING CORPORATION" has the meaning set forth in Section 2.01.
"TAKEOVER LAWS" means any "moratorium", "control share", "fair price",
"affiliate transaction", "business combination" or other antitakeover laws
and regulations of the state of California.
"TAX" and "TAXES" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts,
sales, use, ad valorem, goods and services, capital, production, transfer,
franchise, windfall profits, license, withholding, payroll, employment,
disability, employer health, excise, estimated, severance, stamp,
occupation, property, environmental, unemployment or other taxes, custom
duties, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority whether arising before, on or after the
Effective Date.
"TAX RETURNS" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with respect to any Tax.
"TREASURY STOCK" shall mean shares of BKLA Common Stock held by any of
BKLA's Subsidiaries or by Western or any of its Subsidiaries, in each case
other than in a fiduciary (including custodial or agency) capacity or as a
result of debts previously contracted in good faith.
"WESTERN" has the meaning set forth in the preamble to this Agreement.
"WESTERN BOARD" means the Board of Directors of Western.
"WESTERN COMMON STOCK" means the common stock, no par value per share,
of Western.
"WESTERN PREFERRED STOCK" means the preferred, no par or stated value
per share, of Western.
ARTICLE II
THE MERGER
2.01 THE MERGER. (a) At the Effective Time, BKLA shall merge with and into
Santa Monica Bank (the "Merger"), the separate corporate existence of BKLA shall
cease and Santa Monica Bank shall survive and continue to exist as a California
corporation (Santa Monica Bank, as the surviving corporation in the Merger,
sometimes being referred to herein as the "SURVIVING CORPORATION"). Western may
at any time prior to the Effective Time change the method of effecting the
combination with BKLA (including, without limitation, the provisions of this
Article II) if and to the extent it deems such change to be necessary,
appropriate or desirable; PROVIDED, HOWEVER, that no such change shall (i) alter
or change the amount or kind of consideration to be issued to holders of BKLA
Common Stock as provided for in this Agreement (the "MERGER CONSIDERATION"),
(ii) cause the transaction to be treated as anything other than a tax-free
reorganization to the shareholders of BKLA or (iii) materially impede or delay
consummation of the transactions contemplated by this Agreement.
(b) Subject to the satisfaction or waiver of the conditions set forth in
Article VII, the Merger shall become effective upon the occurrence of the filing
in the office of the California Secretary of an agreement of merger in
accordance with the CGCL or such later date and time as may be set forth in such
agreement. The Merger shall have the effects prescribed in the CGCL.
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(c) ARTICLES OF INCORPORATION AND BY-LAWS. The articles of incorporation and
by-laws of Santa Monica Bank immediately after the Merger shall be those of
Santa Monica Bank as in effect immediately prior to the Effective Time.
(d) DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors and
officers of Santa Monica Bank immediately after the Merger shall be the
directors and officers of Santa Monica Bank immediately prior to the Effective
Time, until such time as their successors shall be duly elected and qualified.
(e) DIRECTORS AND OFFICERS OF WESTERN. The directors and officers of Western
immediately after the Merger shall be the directors and officers of Western
immediately prior to the Effective Time, until such time as their successors
shall be duly elected and qualified. Notwithstanding the foregoing, at the
Effective Time a director of BKLA's election to be mutually agreed upon prior to
the date of the initial filing of any application with a Regulatory Authority
shall be appointed to the board of directors of Western.
2.02 EFFECTIVE DATE AND EFFECTIVE TIME. On such date as Western selects
(and promptly provides notice thereof to BKLA), which shall be within ten days
after the last to occur of the expiration of all applicable waiting periods in
connection with approvals of governmental authorities and the receipt of all
approvals of governmental authorities and all conditions to the consummation of
the Merger are satisfied or waived (or, at the election of Western, on the last
business day of the month in which such tenth day occurs or, if such tenth day
occurs on one of the last five business days of such month, on the last business
day of the succeeding month), or on such earlier or later date as may be agreed
in writing by the parties, an agreement of merger shall be executed in
accordance with all appropriate legal requirements and shall be filed as
required by law, and the Merger provided for herein shall become effective upon
such filing or on such date as may be specified in such agreement of merger. The
date of such filing or such later effective date is herein called the "EFFECTIVE
DATE." The "EFFECTIVE TIME" of the Merger shall be the time of such filing or as
set forth in such agreement of merger.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 MERGER CONSIDERATION. Subject to the provisions of this Agreement, at
the Effective Time, automatically by virtue of the Merger and without any action
on the part of any Person:
(a) OUTSTANDING BKLA COMMON STOCK. Each share, excluding Treasury Stock,
of BKLA Common Stock issued and outstanding immediately prior to the
Effective Time shall become and be converted into 0.4224 of a share of
Western Common Stock (the "EXCHANGE RATIO"). The Exchange Ratio shall be
subject to adjustment as set forth in Section 3.05.
(b) OUTSTANDING WESTERN COMMON STOCK. Each share of Western Common Stock
and each share of Santa Monica Bank Common Stock, in each case as issued and
outstanding immediately prior to the Effective Time, shall remain issued and
outstanding and unaffected by the Merger.
(c) TREASURY SHARES. Each share of BKLA Common Stock held as Treasury
Stock immediately prior to the Effective Time shall be canceled and retired
at the Effective Time and no consideration shall be issued in exchange
therefor.
(d) DISSENTING SHAREHOLDERS. Any shares of BKLA Common Stock held by
persons who have satisfied the requirements of Chapter 13 of the California
General Corporation Law ("Chapter 13"), and have not effectively withdrawn
or lost their dissenters' rights under Section 1309 of the California
General Corporation Law, shall not be converted pursuant to Section 3.01(a),
but the holders thereof shall be entitled only to such consideration
determined pursuant to Chapter 13.
3.02 RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS. At the Effective Time,
holders of BKLA Common Stock shall cease to be, and shall have no rights as,
shareholders of BKLA (except as provided for in Section 3.01(d)), other than to
receive any dividend or other distribution with respect to such BKLA
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Common Stock with a record date occurring prior to the Effective Time and the
consideration provided under this Article III. After the Effective Time, there
shall be no transfers on the stock transfer books of BKLA or the Surviving
Corporation of shares of BKLA Common Stock.
3.03 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of Western Common Stock and no certificates or scrip therefor,
or other evidence of ownership thereof, will be issued in the Merger; instead,
Western shall pay to each holder of BKLA Common Stock who would otherwise be
entitled to a fractional share of Western Common Stock (after taking into
account all Old Certificates delivered by such holder) an amount in cash
(without interest) determined by multiplying such fraction by the average of the
closing prices of Western Common Stock, as reported on NASDAQ (as reported in
THE WALL STREET JOURNAL or, if not reported therein, in another authoritative
source), for the five NASDAQ trading days immediately preceding the Effective
Date.
3.04 EXCHANGE PROCEDURES. (a) At or prior to the Effective Time, Western
shall deposit, or shall cause to be deposited, with U.S. Stock Transfer or with
such other unaffiliated exchange agent as Western shall reasonably elect (in
such capacity, the "EXCHANGE AGENT"), for the benefit of the holders of
certificates formerly representing shares of BKLA Common Stock ("OLD
CERTIFICATES"), for exchange in accordance with this Article III, certificates
representing the shares of Western Common Stock ("NEW CERTIFICATES") and an
estimated amount of cash (such cash and New Certificates, together with any
dividends or distributions with a record date occurring after the Effective Date
with respect to the New Certificates (without any interest on any such cash,
dividends or distributions), being hereinafter referred to as the "EXCHANGE
FUND") to be paid pursuant to this Article III in exchange for outstanding
shares of BKLA Common Stock.
(b) As soon as practicable, but no later than five (5) business days after
the Effective Date, Western shall send or cause to be sent to each former holder
of record of shares of BKLA Common Stock immediately prior to the Effective Time
transmittal materials for use in exchanging such stockholder's Old Certificates
for the consideration set forth in this Article III. Western shall cause the New
Certificates into which shares of a shareholder's BKLA Common Stock are
converted on the Effective Date and/or any check in respect of any fractional
share interests or dividends or distributions which such person shall be
entitled to receive to be delivered to such shareholder upon delivery to the
Exchange Agent of Old Certificates representing such shares of BKLA Common Stock
(or an affidavit of lost certificate and, if required by the Exchange Agent,
indemnity reasonably satisfactory to Western and the Exchange Agent, if any of
such certificates are lost, stolen or destroyed) owned by such shareholder. No
interest will be paid on any such cash to be paid in lieu of fractional share
interests or in respect of dividends or distributions which any such person
shall be entitled to receive pursuant to this Article III upon such delivery. In
the event of a transfer of ownership of any shares of BKLA Common Stock not
registered in the transfer records of BKLA, the exchange described in this
Section 3.04(b) may nonetheless be effected and a check for the cash to be paid
in lieu of fractional shares may be issued to the transferee if the Old
Certificate representing such BKLA Common Stock is presented to the Exchange
Agent, accompanied by documents sufficient, in the discretion of Western and the
Exchange Agent, (i) to evidence and effect such transfer but for the provisions
of Section 3.02 hereof and (ii) to evidence that all applicable stock transfer
taxes have been paid.
(c) If Old Certificates are not surrendered or the consideration therefor is
not claimed prior to the date on which such consideration would otherwise
escheat to or become the property of any governmental unit or agency, the
unclaimed consideration shall, to the extent permitted by abandoned property and
any other applicable law, become the property of the Surviving Corporation (and
to the extent not in its possession shall be paid over to the Surviving
Corporation), free and clear of all claims or interest of any person previously
entitled to such claims. Notwithstanding the foregoing, neither the Exchange
Agent nor any party hereto shall be liable to any former holder of BKLA Common
Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
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(d) At the election of Western, no dividends or other distributions with
respect to Western Common Stock with a record date occurring after the Effective
Time shall be paid to the holder of any unsurrendered Old Certificate
representing shares of BKLA Common Stock converted in the Merger into the right
to receive shares of such Western Common Stock until the holder thereof shall be
entitled to receive New Certificates in exchange therefor in accordance with the
procedures set forth in this Section 3.04, and no such shares of BKLA Common
Stock shall be eligible to vote until the holder of Old Certificates is entitled
to receive New Certificates in accordance with the procedures set forth in this
Section 3.04. After becoming so entitled in accordance with this Section 3.04,
the record holder thereof also shall be entitled to receive any such dividends
or other distributions, without any interest thereon, which theretofore had
become payable with respect to shares of Western Common Stock such holder had
the right to receive upon surrender of the Old Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of BKLA for six months after the Effective Time shall be returned
by the Exchange Agent to Western at the election of Western. Any shareholders of
BKLA who have not theretofore complied with this Article III shall thereafter
look only to Western for payment of the shares of Western Common Stock, cash in
lieu of any fractional shares and unpaid dividends and distributions on Western
Common Stock deliverable in respect of each share of BKLA Common Stock such
shareholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon.
3.05 ANTI-DILUTION PROVISIONS. In the event Western changes (or
establishes a record date for changing) the number of shares of Western Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding Western Common Stock and the record date therefor shall be prior
to the Effective Date, the Exchange Ratio shall be proportionately adjusted. If,
between the date hereof and the Effective Time, Western shall consolidate with
or into any other corporation (a "BUSINESS COMBINATION") and the terms thereof
shall provide that Western Common Stock shall be converted into or exchanged for
the shares of any other corporation or entity, then provision shall be made as
part of the terms of such Business Combination so that (i) shareholders of BKLA
who would be entitled to receive shares of Western Common Stock pursuant to this
Agreement shall be entitled to receive, in lieu of each share of Western Common
Stock issuable to such shareholders as provided herein, the same kind and amount
of securities or assets as shall be distributable upon such Business Combination
with respect to one share of Western Common Stock.
3.06 OPTIONS. At the Effective Time, all outstanding options to purchase
shares of BKLA Common Stock under the BKLA Stock Plan (each, a "BKLA STOCK
OPTION"), unless otherwise exercised pursuant to Section 10 of the BKLA Stock
Plan, shall be converted into the right to receive for each share of BKLA Common
Stock otherwise issuable upon exercise thereof a number of shares of Western
Common Stock equal to the quotient obtained by dividing the Spread by $42.61
("Replacement Shares"). As used herein, "Spread" means the difference, if
positive, obtained by subtracting the exercise price of such BKLA Stock Option
from $18.00. After accumulating all such Replacement Shares issuable to any
holder of BKLA Stock Options, any fractional Replacement Shares issuable to any
holder of BKLA Stock Options of .2 or above shall be rounded upwards. Each
person who is a BKLA Affiliate as described in Section 6.07 hereby consents that
the Replacement Shares and/or Western Common Stock to be received by such person
on exercise of such persons BKLA Stock Option (collectively, the "Escrow
Shares"), as applicable, shall be placed, at Western's sole discretion, in an
escrow account until such time as the sale of such shares shall be permitted
pursuant to the Affiliate Agreement and applicable securities laws, at which
time the appropriate number of shares of Western Common Stock necessary to
satisfy any withholding tax obligation shall be sold, unless provided for
otherwise by such BKLA Affiliate, and applied to payment of such obligation,
with the balance of the shares of Western Common Stock of such BKLA Affiliate
transferred promptly to such BKLA Affiliate. Notwithstanding the foregoing, each
BKLA Affiliate shall have any and all rights to any dividends and voting rights
applicable to such BKLA Affiliate's Escrow Shares.
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3.07 WARRANTS. At the Effective Time, each outstanding warrant to purchase
shares of BKLA Common Stock under the BKLA Warrant Agreement (each, a "BKLA
WARRANT"), shall be converted into a warrant to acquire, on the same terms and
conditions as were applicable under such BKLA Warrant Agreement, the number of
shares of Western Common Stock equal to (a) the number of shares of BKLA Common
Stock subject to the BKLA Warrant, multiplied by (b) the Exchange Ratio (such
product rounded down to the nearest whole number) (a "REPLACEMENT WARRANT"), at
an exercise price per share (rounded up to the nearest whole cent) equal to (y)
the aggregate exercise price for the shares of BKLA Common Stock which were
purchasable pursuant to such BKLA Warrant divided by (z) the number of full
shares of Western Common Stock subject to such Replacement Warrant in accordance
with the foregoing. At or prior to the Effective Time, BKLA shall take all
action, if any, necessary with respect to the BKLA Warrant Agreement to permit
the replacement of the outstanding BKLA Warrants by Western pursuant to this
Section 3.07. At the Effective Time, Western shall assume the BKLA Warrant
Agreement; PROVIDED, that such assumption shall be only in respect of the
Replacement Warrants and that Western shall have no obligation with respect to
any awards under the BKLA Warrant Agreement other than the Replacement Warrants
and shall have no obligation to make any additional grants or awards under such
assumed BKLA Warrant Agreement.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 FOREBEARANCES OF BKLA. From the date hereof until the Effective Time,
except as expressly contemplated by this Agreement, without the prior written
consent of Western, BKLA will not, and will cause each of its Subsidiaries not
to:
(a) ORDINARY COURSE. Conduct the business of BKLA and its Subsidiaries
other than in the ordinary and usual course or fail to use reasonable best
efforts to preserve intact their business organizations and assets and
maintain their rights, franchises and existing relations with customers,
suppliers, employees and business associates, take any action that would
adversely affect or delay the ability of BKLA, Western or any of their
Subsidiaries to perform any of their obligations on a timely basis under
this Agreement, or take any action that is reasonably likely to have a
Material Adverse Effect on BKLA or its Subsidiaries, taken as a whole.
(b) CAPITAL STOCK. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (i) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of
BKLA Common Stock or any Rights or issue any shares of preferred stock, (ii)
enter into any agreement with respect to the foregoing or (iii) permit any
additional shares of BKLA Common Stock to become subject to new grants of
employee or director stock options, other Rights or similar stock-based
employee rights.
(c) DIVIDENDS, ETC. (a) Make, declare, pay or set aside for payment
any dividend on or in respect of, or declare or make any distribution on any
shares of BKLA Common Stock or (b) directly or indirectly adjust, split,
combine, redeem, reclassify, purchase or otherwise acquire, any shares of
its capital stock.
(d) COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of BKLA or its
Subsidiaries, or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments), except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice, (ii) for other changes that are
required by applicable law, (iii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof or (iv) for grants of
awards to newly hired employees consistent with past practice.
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(e) BENEFIT PLANS. Enter into, establish, adopt or amend (except (i)
as may be required by applicable law or (ii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof) any pension,
retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
(or similar arrangement) related thereto, in respect of any director,
officer or employee of BKLA or its Subsidiaries, or take any action to
accelerate the vesting or exercisability of stock options, restricted stock
or other compensation or benefits payable thereunder.
(f) DISPOSITIONS. Except as Previously Disclosed, sell, transfer,
mortgage, encumber or otherwise dispose of or discontinue any of its assets,
deposits, business or properties except in the ordinary course of business
and in a transaction that is not material to it and its Subsidiaries taken
as a whole.
(g) ACQUISITIONS. Except as Previously Disclosed, acquire (other than
by way of foreclosures or acquisitions of control in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in good faith, in
each case in the ordinary and usual course of business consistent with past
practice) all or any portion of, the assets, business, deposits or
properties of any other entity except in the ordinary course of business
consistent with past practice and in a transaction that is not material to
the BKLA and its Subsidiaries, taken as a whole.
(h) CAPITAL EXPENDITURES. Except as Previously Disclosed, make any
capital expenditures other than capital expenditures in the ordinary course
of business consistent with past practice in amounts not exceeding $10,000
individually or $50,000 in the aggregate.
(i) GOVERNING DOCUMENTS. Amend the BKLA Articles, BKLA By-Laws or the
articles of incorporation or by-laws (or similar governing documents) of any
of BKLA's Subsidiaries.
(j) ACCOUNTING METHODS. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(k) CONTRACTS. Except in the ordinary course of business consistent
with past practice, enter into or terminate any material contract (as
defined in Section 5.03(k)) or amend or modify in any material respect any
of its existing material contracts.
(l) CLAIMS. Except in the ordinary course of business consistent with
past practice, settle any claim, action or proceeding, except for any claim,
action or proceeding involving solely money damages in an amount,
individually or in the aggregate for all such settlements, that is not
material to BKLA and its Subsidiaries, taken as a whole.
(m) ADVERSE ACTIONS. (a) Take any action which BKLA either knows or
reasonably should know that such action would, or would be reasonably likely
to, prevent or impede the Merger from qualifying (i) for "pooling of
interests" accounting treatment or (ii) as a reorganization within the
meaning of Section 368 of the Code; or (b) knowingly take any action that is
intended or is reasonably likely to result in (i) any of its representations
and warranties set forth in this Agreement being or becoming untrue in any
material respect at any time at or prior to the Effective Time, (ii) any of
the conditions to the Merger set forth in Article VII not being satisfied or
(iii) a violation of any provision of this Agreement except, in each case,
as may be required by applicable law or regulation.
(n) RISK MANAGEMENT. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest rate
and other risk management policies, procedures or practices; (ii) fail to
follow its existing policies or practices with respect to managing its
exposure to interest rate and other risk; or (iii) fail to use commercially
reasonable means to avoid any material increase in its aggregate exposure to
interest rate risk.
(o) INDEBTEDNESS. Incur any indebtedness for borrowed money other than
in the ordinary course of business consistent with past practice.
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(p) LOANS. Make any loan, loan commitment or renewal or extension
thereof to any person which would, when aggregated with all outstanding
loans, commitments for loans or renewals or extensions thereof made by BKLA
to such person and any affiliate or immediate family member of such person,
exceed $500,000 without submitting loan package information to the chief
credit officer of Western for review with a right of comment at least one
full business day prior to taking such action.
(q) COMMITMENTS. Agree or commit to do any of the foregoing.
4.02 FOREBEARANCES OF WESTERN. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of BKLA, Western will not, and will cause each of its
Subsidiaries not to:
(a) ORDINARY COURSE. Take any action that would adversely affect or
delay the ability of BKLA or Western to perform any of their obligations on
a timely basis under this Agreement, or take any action that is reasonably
likely to have a Material Adverse Effect on Western or its Subsidiaries,
taken as a whole.
(b) ADVERSE ACTIONS. (i) Take any action which Western either knows or
reasonably should know that such action would, or would be reasonably likely
to, prevent or impede the Merger from qualifying (A) for "pooling of
interests" accounting treatment or (B) as a reorganization within the
meaning of Section 368 of the Code; or (ii) knowingly take any action that
is intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time at or prior to the Effective
Time, (B) any of the conditions to the Merger set forth in Article VII not
being satisfied or (C) a violation of any provision of this Agreement
except, in each case, as may be required by applicable law or regulation.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 DISCLOSURE SCHEDULES. On or prior to the date hereof, each of BKLA
and Western has delivered to the other a schedule (a "DISCLOSURE SCHEDULE")
setting forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement contained in
a provision hereof, or items which are an exception to one or more
representations or warranties contained in Section 5.03 or Section 5.04;
PROVIDED, that (a) no such item is required to be set forth in a Disclosure
Schedule as an exception to a representation or warranty if its absence would
not be reasonably likely to result in the related representation or warranty
being deemed untrue or incorrect under the standard established by Section 5.02,
and (b) the mere inclusion of an item in a Disclosure Schedule as an exception
to a representation or warranty shall not be deemed an admission by a party that
such item represents a material exception or fact, event or circumstance or that
such item is reasonably likely to result in a Material Adverse Effect.
5.02 STANDARD. No representation or warranty of BKLA, Western or Santa
Monica Bank contained in Section 5.03 or 5.04 shall be deemed untrue or
incorrect, and no party hereto shall be deemed to have breached a representation
or warranty, as a consequence of the existence of any fact, event or
circumstance unless such fact, circumstance or event, individually or taken
together with all other facts, events or circumstances inconsistent with any
representation or warranty contained in Section 5.03 or 5.04 has had or is
reasonably likely to have a Material Adverse Effect on the party making such
representation or warranty.
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5.03 REPRESENTATIONS AND WARRANTIES OF BKLA. Subject to Sections 5.01 and
5.02 and except as Previously Disclosed in its Disclosure Schedule corresponding
to the relevant paragraph below, BKLA hereby represents and warrants to Western:
(a) ORGANIZATION, STANDING AND AUTHORITY. BKLA is a corporation duly
organized, validly existing and in good standing under the laws of the State
of California. BKLA is duly qualified to do business and is in good standing
in the State of California and any foreign jurisdictions where its ownership
or leasing of property or assets or the conduct of its business requires it
to be so qualified. BKLA is duly licensed by the Commissioner as a
commercial bank and its deposits are insured by the FDIC through the Bank
Insurance Fund in the manner and to the fullest extent provided by law.
(b) BKLA CAPITAL STOCK. As of the date hereof, the authorized capital
stock of BKLA consists solely of (i) 75,000,000 shares of BKLA Common Stock,
of which no more than 4,762,100 shares were outstanding as of the date
hereof and (ii) 25,000,000 shares of preferred stock, of which no shares
were outstanding as of the date hereof. As of the date hereof, no shares of
BKLA Common Stock were held in treasury by BKLA or otherwise owned by BKLA
or its Subsidiaries. The outstanding shares of BKLA Common Stock have been
duly authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued in
violation of any preemptive rights). As of the date hereof, there are no
shares of BKLA Common Stock authorized and reserved for issuance, BKLA does
not have any Rights issued or outstanding with respect to BKLA Common Stock,
and BKLA does not have any commitment to authorize, issue or sell any BKLA
Common Stock or Rights, except pursuant to this Agreement, any BKLA Stock
Option, the BKLA Stock Plan, any BKLA Warrant and the BKLA Warrant
Agreement. The number of shares of BKLA Common Stock which are issuable and
reserved for issuance upon exercise of BKLA Stock Options as of the date
hereof are Previously Disclosed in BKLA's Disclosure Schedule. The number of
shares of BKLA Common Stock which are issuable and reserved for issuance
upon exercise of BKLA Warrants as of the date hereof are Previously
Disclosed in BKLA's Disclosure Schedule.
(c) SUBSIDIARIES. (i)(A) BKLA has Previously Disclosed a list of all
of its Subsidiaries together with the jurisdiction of organization of each
such Subsidiary, (B) BKLA owns, directly or indirectly, all the issued and
outstanding equity securities of each of its Subsidiaries, (C) no equity
securities of any of its Subsidiaries are or may become required to be
issued (other than to it or its wholly-owned Subsidiaries) by reason of any
Right or otherwise, (D) there are no contracts, commitments, understandings
or arrangements by which any of such Subsidiaries is or may be bound to sell
or otherwise transfer any equity securities of any such Subsidiaries (other
than to it or its wholly-owned Subsidiaries), (E) there are no contracts,
commitments, understandings, or arrangements relating to its rights to vote
or to dispose of such securities and (F) all the equity securities of each
Subsidiary held by BKLA or its Subsidiaries are fully paid and nonassessable
and are owned by BKLA or its Subsidiaries free and clear of any Liens.
(ii) BKLA does not own beneficially, directly or indirectly, any equity
securities or similar interests of any Person, or any interest in a
partnership or joint venture of any kind, other than its Subsidiaries.
(iii) Each of BKLA's Subsidiaries has been duly organized and is validly
existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and in good standing in
the jurisdictions where its ownership or leasing of property or the conduct
of its business requires it to be so qualified.
(d) CORPORATE POWER. BKLA and each of its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and BKLA has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby.
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(e) CORPORATE AUTHORITY. Subject in the case of this Agreement to
receipt of the requisite approval of the principal terms of the agreement of
merger set forth in this Agreement by the holders of a majority of the
outstanding shares of BKLA Common Stock entitled to vote thereon (which is
the only shareholder vote required thereon), this Agreement, the Stock
Option Agreement and the transactions contemplated hereby and thereby have
been authorized by all necessary corporate action of BKLA and the BKLA Board
on or prior to the date hereof. This Agreement is a valid and legally
binding obligation of BKLA, enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles). The BKLA Board has received the written opinion of
Wedbush Morgan Securities to the effect that as of the date hereof the
consideration to be received by the holders of BKLA Common Stock in the
Merger is fair to the holders of BKLA Common Stock from a financial point of
view.
(f) REGULATORY APPROVALS; NO DEFAULTS. (i) No consents or approvals
of, or filings or registrations with, any Governmental Authority or with any
third party are required to be made or obtained by BKLA or any of its
Subsidiaries in connection with the execution, delivery or performance by
BKLA of this Agreement, the Stock Option Agreement, the BKLA Warrant
Agreement, or to consummate the Merger except for (A) filings of
applications or notices with the Commissioner, the FDIC and the Federal
Reserve, as required, (B) filings with the SEC and state securities
authorities and the approval of this Agreement by the shareholders of BKLA,
(C) the filing of an agreement of merger with the California Secretary
pursuant to the CGCL and with the Commissioner pursuant to the California
Financial Code. As of the date hereof, BKLA is not aware of any reason why
the approvals set forth in Section 7.01(b) will not be received without the
imposition of a condition, restriction or requirement of the type described
in Section 7.01(b).
(ii) Subject to receipt of the approvals referred to in the preceding
paragraph, and the expiration of related waiting periods, and required
filings under federal and state securities laws, the execution, delivery and
performance of this Agreement and the Stock Option Agreement and the
consummation of the transactions contemplated hereby and thereby do not and
will not (A) constitute a breach or violation of, or a default under, or
give rise to any Lien, any acceleration of remedies or any right of
termination under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or instrument
of BKLA or of any of its Subsidiaries or to which BKLA or any of its
Subsidiaries or properties is subject or bound, (B) constitute a breach or
violation of, or a default under, the BKLA Articles or the BKLA By-Laws, or
(C) require any consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental permit or license, agreement,
indenture or instrument.
(g) FINANCIAL REPORTS AND REGULATORY DOCUMENTS. (i) BKLA's (or its
predecessors') Annual Reports on Form 10-K for the fiscal years ended
December 31, 1995, 1996 and 1997, and all other reports, registration
statements, definitive proxy statements or information statements filed or
to be filed by it or any of its Subsidiaries subsequent to December 31, 1995
under the Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act or under the securities regulations of the FDIC, in the form
filed or to be filed (collectively, BKLA's "REGULATORY DOCUMENTS") with the
FDIC as of the date filed, (A) complied or will comply in all material
respects as to form with the applicable requirements under the Securities
Act, the Exchange Act or the securities regulations of the FDIC, as the case
may be, and (B) did not 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 the light of the
circumstances under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any such
Regulatory Document (including the related notes and schedules thereto)
fairly presents, or will fairly present, the financial position of BKLA and
its Subsidiaries as of its date, and each of the statements of income and
changes in shareholders' equity and cash flows or equivalent statements in
such Regulatory Documents (including any related notes and schedules
thereto) fairly presents, or will fairly present, the results of
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operations, changes in shareholders' equity and cash flows, as the case may
be, of BKLA and its Subsidiaries for the periods to which they relate, in
each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as may
be noted therein, subject to normal year-end audit adjustments in the case
of unaudited statements.
(ii) Since December 31, 1997, BKLA and its Subsidiaries have not
incurred any liability other than in the ordinary course of business
consistent with past practice.
(iii) Since December 31, 1997, (A) BKLA and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of expenses related
to this Agreement and the transactions contemplated hereby) and (B) no event
has occurred or circumstance arisen that, individually or taken together
with all other facts, circumstances and events (described in any paragraph
of this Section 5.03 or otherwise), is reasonably likely to have a Material
Adverse Effect with respect to BKLA.
(h) LITIGATION. No litigation, claim or other proceeding before any
court or governmental agency is pending against BKLA or any of its
Subsidiaries and, to BKLA's knowledge, no such litigation, claim or other
proceeding has been threatened and there are no facts which could reasonably
give rise to such litigation, claim or other proceeding.
(i) REGULATORY MATTERS. (i) Neither BKLA nor any of its Subsidiaries
or any of their properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary supervisory
letter from, any federal or state governmental agency or authority charged
with the supervision or regulation of financial institutions or issuers of
securities or engaged in the insurance of deposits (including, without
limitation, the Commissioner and the FDIC) or the supervision or regulation
of it or any of its Subsidiaries (collectively, the "REGULATORY
AUTHORITIES").
(ii) Neither BKLA nor any of its Subsidiaries has been advised by, nor
has any knowledge of facts which could give rise to an advisory notice by,
any Regulatory Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(j) COMPLIANCE WITH LAWS. BKLA and each of its Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders
or decrees applicable thereto or to the employees conducting such
businesses, including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the Home
Mortgage Disclosure Act and all other applicable fair lending laws and
other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own
or lease their properties and to conduct their businesses as presently
conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to BKLA's knowledge, no
suspension or cancellation of any of them is threatened; and
(iii) has received, since December 31, 1996, no notification or
communication from any Governmental Authority (A) asserting that BKLA or
any of its Subsidiaries is not in compliance with any of the statutes,
regulations or ordinances which such Governmental Authority enforces or
(B) threatening to revoke any license, franchise, permit or governmental
authorization (nor, to BKLA's knowledge, do any grounds for any of the
foregoing exist).
(k) MATERIAL CONTRACTS; DEFAULTS. Except for those agreements and
other documents filed as exhibits to its Regulatory Documents, neither it
nor any of its Subsidiaries is a party to, bound by or
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subject to any agreement, contract, arrangement, commitment or understanding
(whether written or oral) (i) that is a "material contract" within the
meaning of Item 601(b)(10) of the SEC's Regulation S-K or (ii) that
materially restricts the conduct of business by it or any of its
Subsidiaries. Neither BKLA nor any of its Subsidiaries is in default under
any contract, agreement, commitment, arrangement, lease, insurance policy or
other instrument to which it is a party, by which its respective assets,
business, or operations may be bound or affected, or under which it or its
respective assets, business, or operations receives benefits, and there has
not occurred any event that, with the lapse of time or the giving of notice
or both, would constitute such a default.
(l) NO BROKERS. No action has been taken by BKLA that would give rise
to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, excluding Previously Disclosed fees to be
paid to Wedbush Morgan Securities and GBS Financial.
(m) EMPLOYEE BENEFIT PLANS.
(i) All benefit and compensation plans, contracts, policies or
arrangements covering current employees or former employees of BKLA and its
subsidiaries (the "EMPLOYEES") and current or former directors of BKLA,
including, but not limited to, "employee benefit plans" within the meaning
of Section 3(3) of ERISA, and deferred compensation, stock option, stock
purchase, stock appreciation rights, stock based, incentive and bonus plans
(the "BENEFIT PLANS"), are Previously Disclosed in the Disclosure Schedule.
True and complete copies of all Benefit Plans, including, but not limited
to, any trust instruments and insurance contracts forming a part of any
Benefit Plans, and all amendments thereto have been provided or made
available to BKLA.
(ii) All employee benefit plans, other than "multiemployer plans" within
the meaning of Section 3(37) of ERISA, covering Employees (the "PLANS"), to
the extent subject to ERISA, are in substantial compliance with ERISA. BKLA
is not a party to any "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA ("PENSION PLAN") and which is intended to be qualified
under Section 401(a) of the Code. There is no material pending or threatened
litigation relating to the Plans. Neither BKLA nor any of its Subsidiaries
has engaged in a transaction with respect to any Plan that, assuming the
taxable period of such transaction expired as of the date hereof, could
subject BKLA or any Subsidiary to a tax or penalty imposed by either Section
4975 of the Code or Section 502(i) of ERISA in an amount which would be
material.
(iii) No liability under Subtitle C or D of Title IV of ERISA has been or
is expected to be incurred by BKLA or any of its Subsidiaries with respect
to any ongoing, frozen or terminated "single-employer plan", within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered
one employer with BKLA under Section 4001 of ERISA or Section 414 of the
Code (an "ERISA AFFILIATE'). Neither BKLA, any of its Subsidiaries nor an
ERISA Affiliate has contributed to a "multiemployer plan", within the
meaning of Section 3(37) of ERISA, at any time on or after September 26,
1980. No notice of a "reportable event," within the meaning of Section 4043
of ERISA for which the 30-day reporting requirement has not been waived, has
been required to be filed for any Pension Plan or by any ERISA Affiliate
within the 12-month period ending on the date hereof or will be required to
be filed in connection with the transactions contemplated by this Plan.
(iv) All contributions required to be made under the terms of any Plan
have been timely made or have been reflected on the consolidated financial
statements of BKLA included in the Regulatory Documents. Neither any Pension
Plan nor any single-employer plan of an ERISA Affiliate has an "accumulated
funding deficiency" (whether or not waived) within the meaning of Section
412 of the Code or Section 302 of ERISA and no ERISA Affiliate has an
outstanding funding waiver. Neither BKLA nor any of its Subsidiaries has
provided, or is required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of
the Code.
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(v) Under each Pension Plan which is a single-employer plan, as of the
last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities," within
the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of
the actuarial assumptions contained in the Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such
Plan, and there has been no material change in the financial condition of
such Plan since the last day of the most recent plan year.
(vi) Neither BKLA nor any of its Subsidiaries has any obligations for
retiree health and life benefits under any Benefit Plan. BKLA or its
Subsidiaries may amend or terminate any such Benefit Plan at any time
without incurring any liability thereunder.
(vii) The consummation of the transactions contemplated by this Agreement
will not (A) entitle any employees of BKLA or any of its Subsidiaries to
severance pay, (B) accelerate the time of payment or vesting or trigger any
payment of compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any of the Benefit Plans
or (C) result in any breach or violation of, or a default under, any of the
Benefit Plans. Without limiting the foregoing, as a result of the
consummation of the transactions contemplated by this Agreement, none of
Western, BKLA, or any of its Subsidiaries will be obligated to make a
payment to an individual that would be a "parachute payment" to a
"disqualified individual" as those terms are defined in Section 280G of the
Code, without regard to whether such payment is reasonable compensation for
personal services performed or to be performed in the future.
(n) LABOR MATTERS. Neither BKLA nor any of its Subsidiaries is a party
to or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is
BKLA or any of its Subsidiaries the subject of a proceeding asserting that
it or any such Subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel BKLA or
any such Subsidiary to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other labor dispute
involving it or any of its Subsidiaries pending or, to BKLA's knowledge,
threatened, nor is BKLA aware of any activity involving its or any of its
Subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in other organizational activity.
(o) ENVIRONMENTAL MATTERS.
(i) BKLA and each of its Subsidiaries has complied at all times with
applicable Environmental Laws; (ii) no real property (including buildings or
other structures) currently or formerly owned or operated by BKLA or any of
its Subsidiaries, or any property in which BKLA or any of its Subsidiaries
has held a security interest, lien or a fiduciary or management role ("LOAN
PROPERTY"), has been contaminated with, or has had any release of, any
Hazardous Substance; (iii) neither BKLA nor any of its Subsidiaries could be
deemed the owner or operator of any Loan Property under any Environmental
Law which such Loan Property has been contaminated with, or has had any
release of, any Hazardous Substance; (iv) neither BKLA nor any of its
Subsidiaries is subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (v) neither BKLA nor any of its
Subsidiaries has received any notice, demand letter, claim or request for
information alleging any violation of, or liability under, any Environmental
Law; (vi) neither BKLA nor any of its Subsidiaries is subject to any order,
decree, injunction or other agreement with any Governmental Authority or any
third party relating to any Environmental Law; (vii) to the best of BKLA's
knowledge, there are no circumstances or conditions (including the presence
of asbestos, underground storage tanks, lead products, polychlorinated
biphenyls, prior manufacturing operations, dry-cleaning, or automotive
services) involving BKLA or any of its Subsidiaries, any currently or
formerly owned or operated property, or any Loan Property, that could
reasonably be expected to result in any claims, liability or investigations
against BKLA or any of its Subsidiaries, result in any restrictions on the
ownership, use, or transfer of any property pursuant to any Environmental
Law, or adversely affect the value of any Loan Property, and (viii) BKLA has
delivered to Western copies of all environmental
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reports, studies, sampling data, correspondence, filings and other
environmental information in its possession or reasonably available to it
relating to BKLA, any Subsidiary of BKLA, any currently or formerly owned or
operated property or any Loan Property.
As used herein, the term "ENVIRONMENTAL LAW" means any federal, state or
local law, regulation, order, decree, permit, authorization, opinion, common
law or agency requirement relating to: (A) the protection or restoration of
the environment, health, safety, or natural resources, (B) the handling,
use, presence, disposal, release or threatened release of any Hazardous
Substance or (C) noise, odor, wetlands, indoor air, pollution, contamination
or any injury or threat of injury to persons or property in connection with
any Hazardous Substance and the term "HAZARDOUS SUBSTANCE" means any
substance in any concentration that is: (A) listed, classified or regulated
pursuant to any Environmental Law; (B) any petroleum product or by-product,
asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon; or (C) any other
substance which is or may be the subject of regulatory action by any
Governmental Authority in connection with any Environmental Law.
(p) TAX MATTERS. (i) (A) All Tax Returns that are required to be filed
(taking into account any extensions of time within which to file) by or with
respect to BKLA and its Subsidiaries have been duly filed, (B) all Taxes
shown to be due on the Tax Returns referred to in clause (A) have been paid
in full, (C) the Tax Returns referred to in clause (A) have been examined by
the Internal Revenue Service or the appropriate Tax authority or the period
for assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired, (D) all deficiencies asserted or
assessments made as a result of such examinations have been paid in full,
(E) no issues that have been raised by the relevant taxing authority in
connection with the examination of any of the Tax Returns referred to in
clause (A) are currently pending, and (F) no waivers of statutes of
limitation have been given by or requested with respect to any Taxes of BKLA
or its Subsidiaries. BKLA has made available to Western true and correct
copies of the United States federal income Tax Returns filed by BKLA and its
Subsidiaries for each of the three most recent fiscal years ended on or
before December 31, 1996. Neither BKLA nor any of its Subsidiaries has any
liability with respect to income, franchise or similar Taxes that accrued on
or before the end of the most recent period covered by BKLA's Regulatory
Documents filed prior to the date hereof in excess of the amounts accrued
with respect thereto that are reflected in the financial statements included
in BKLA's Regulatory Documents filed on or prior to the date hereof. Neither
BKLA nor any of its Subsidiaries is a party to any Tax allocation or sharing
agreement, is or has been a member of an affiliated group filing
consolidated or combined Tax returns (other than a group the common parent
of which is or was BKLA) or otherwise has any liability for the Taxes of any
person (other than BKLA and its Subsidiaries). As of the date hereof,
neither BKLA nor any of its Subsidiaries has any reason to believe that any
conditions exist that might prevent or impede the Merger from qualifying as
a reorganization within the meaning of Section 368 of the Code.
(ii) No Tax is required to be withheld pursuant to Section 1445 of the
Code as a result of the transfer contemplated by this Agreement.
(q) RISK MANAGEMENT INSTRUMENTS. All interest rate swaps, caps,
floors, option agreements, futures and forward contracts and other similar
risk management arrangements, whether entered into for BKLA's own account,
or for the account of one or more of BKLA's Subsidiaries or their customers
(all of which are listed on BKLA's Disclosure Schedule), if any, were
entered into (i) in accordance with prudent business practices and all
applicable laws, rules, regulations and regulatory policies and (ii) with
counter parties believed to be financially responsible; and each of them
constitutes the valid and legally binding obligation of BKLA or one of its
Subsidiaries, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles), and are in full force and effect. Neither BKLA nor its
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Subsidiaries, nor to BKLA's knowledge, any other party thereto, is in breach
of any of its obligations under any such agreement or arrangement.
(r) BOOKS AND RECORDS. The books and records of BKLA and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein, and they fairly present the
financial position of BKLA and its Subsidiaries.
(s) INSURANCE. BKLA has Previously Disclosed all of the insurance
policies, binders, or bonds maintained by BKLA or its Subsidiaries
("INSURANCE POLICIES"). BKLA and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as the management of BKLA
reasonably has determined to be prudent in accordance with industry
practices. All the Insurance Policies are in full force and effect; BKLA and
its Subsidiaries are not in material default thereunder; and all claims
thereunder have been filed in due and timely fashion.
(t) ACCOUNTING TREATMENT. As of the date hereof, BKLA is not aware of
any reason with respect to it why the Merger will fail to qualify for
"pooling of interests" accounting treatment.
5.04 REPRESENTATIONS AND WARRANTIES OF WESTERN. Subject to Sections 5.01
and 5.02 and except as Previously Disclosed in its Disclosure Schedule
corresponding to the relevant paragraph below, Western hereby represents and
warrants to BKLA:
(a) ORGANIZATION, STANDING AND AUTHORITY. Each of Western and Santa
Monica Bank is duly organized, validly existing and in good standing under
the laws of the State of California. Each of Western and Santa Monica Bank
is duly qualified to do business and is in good standing in the states of
the United States and foreign jurisdictions where its ownership or leasing
of property or assets or the conduct of its business requires it to be so
qualified. Western and Santa Monica Bank have in effect all federal, state,
local, and foreign governmental authorizations necessary for them to own or
lease their respective properties and assets and to carry on their
respective business as it is now conducted.
(b) WESTERN CAPITAL STOCK. As of the date hereof, the authorized
capital stock of Western consists solely of 100,000,000 shares of Western
Common Stock, of which no more than 15,704,000 shares were outstanding as of
the date hereof and 5,000,000 shares of Western Preferred Stock, of which no
shares were outstanding as of the date hereof.
(c) SANTA MONICA BANK CAPITAL STOCK. As of the date hereof, the
authorized capital stock of Santa Monica Bank consists solely of 50,000,000
shares of Santa Monica Bank common stock, of which one share was outstanding
as of the date hereof.
(d) CORPORATE POWER. Western and each of its Significant Subsidiaries
has the corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and each of
Western and Santa Monica Bank has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby.
(e) CORPORATE AUTHORITY. This Agreement and the transactions
contemplated hereby have been authorized by all necessary corporate action
of each of Western and Santa Monica Bank and their respective board of
directors. This Agreement is a valid and legally binding agreement of each
of Western and Santa Monica Bank, as the case may be, enforceable in
accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles).
(f) REGULATORY APPROVALS; NO DEFAULTS. (i) No consents or approvals
of, or filings or registrations with, any court, administrative agency or
commission or other governmental authority or instrumentality or with any
third party are required to be made or obtained by Western or any of its
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Subsidiaries in connection with the execution, delivery or performance by
either Western or Santa Monica Bank of this Agreement or to consummate the
Merger except for (A) the filing of applications and notices, as applicable,
with federal and state banking Governmental Authorities; (B) approval of the
listing on the NASDAQ of Western Common Stock to be issued in the Merger;
(C) the filing and declaration of effectiveness of the Registration
Statement; (D) the filing of an agreement of merger with the California
Secretary pursuant to the CGCL; (E) filing of an agreement of merger with
the Commissioner pursuant to the California Financial Code; (F) such filings
as are required to be made or approvals as are required to be obtained under
the securities or "Blue Sky" laws of various states in connection with the
issuance of Western Common Stock in the Merger; and (G) receipt of the
approvals set forth in Section 7.01(b). As of the date hereof, Western is
not aware of any reason why the approvals set forth in Section 7.01(b) will
not be received without the imposition of a condition, restriction or
requirement of the type described in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph and expiration of the related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (A) constitute a breach
or violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license,
or agreement, indenture or instrument of Western or of any of its
Subsidiaries or to which Western or any of its Subsidiaries or properties is
subject or bound, (B) constitute a breach or violation of, or a default
under, the articles of incorporation or by-laws (or similar governing
documents) of Western or any of its Significant Subsidiaries, or (C) require
any consent or approval under any such law, rule, regulation, judgment,
decree, order, governmental permit or license, agreement, indenture or
instrument.
(g) FINANCIAL REPORTS AND REGULATORY DOCUMENTS; MATERIAL ADVERSE
EFFECT. (i) Western's Regulatory Documents, as of the date filed, (A)
complied or will comply in all material respects as to form with the
applicable requirements under the Securities Act or the Exchange Act, as the
case may be, and (B) did not 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 the light of the
circumstances under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any such
Regulatory Document (including the related notes and schedules thereto)
fairly presents, or will fairly present, the financial position of Western
and its Subsidiaries as of its date, and each of the statements of income
and changes in shareholders' equity and cash flows or equivalent statements
in such Regulatory Documents (including any related notes and schedules
thereto) fairly presents, or will fairly present, the results of operations,
changes in shareholders' equity and cash flows, as the case may be, of
Western and its Subsidiaries for the periods to which they relate, in each
case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as may
be noted therein, subject to normal year-end audit adjustments in the case
of unaudited statements.
(ii) Since December 31, 1997, no event has occurred or circumstance
arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of this Section 5.04 or
otherwise), is reasonably likely to have a Material Adverse Effect with
respect to it.
(h) NO BROKERS. No action has been taken by Western that would give
rise to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, excluding a Previously Disclosed fee payable
to Belle Plaine Partners, Inc.
(i) ACCOUNTING TREATMENT; TAX MATTERS. As of the date hereof, Western
is aware of no reason with respect to it why the Merger will fail to qualify
for "pooling of interests" accounting treatment. As of the date hereof,
neither Western nor any of its Subsidiaries has any reason to believe that
any
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conditions exist that might prevent or impede the Merger from qualifying as
a reorganization within the meaning of Section 368 of the Code.
(j) REGULATORY MATTERS. (i) Neither Western nor any of its Significant
Subsidiaries or any of its properties is a party to or is subject to any
order, decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, or extraordinary
supervisory letter from, any Regulatory Authorities.
(ii) Neither Western nor any of its Significant Subsidiaries has been
advised by, nor has any knowledge of facts which could give rise to an
advisory notice by, any Regulatory Authority that such Regulatory Authority
is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter, supervisory letter or
similar submission.
(k) COMPLIANCE WITH LAWS. Each of Western and its Significant
Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders
or decrees applicable thereto or to the employees conducting such
businesses, including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the Home
Mortgage Disclosure Act and all other applicable fair lending laws and
other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own
or lease their properties and to conduct their businesses as presently
conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to Western's knowledge,
no suspension or cancellation of any of them is threatened; and
(iii) has received, since December 31, 1996, no notification or
communication from any Governmental Authority (A) asserting that Western
or any of its Significant Subsidiaries is not in compliance with any of
the statutes, regulations or ordinances which such Governmental Authority
enforces or (B) threatening to revoke any license, franchise, permit or
governmental authorization (nor, to Western's knowledge, do any grounds
for any of the foregoing exist).
(l) BOOKS AND RECORDS. The books and records of each of Western and
its Significant Subsidiaries have been fully, properly and accurately
maintained in all material respects, and there are no material inaccuracies
or discrepancies of any kind contained or reflected therein, and they fairly
present the financial position of Western and its Significant Subsidiaries.
(m) ENVIRONMENTAL MATTERS.
(i) Each of Western and its Significant Subsidiaries has complied at all
times with applicable Environmental Laws; (ii) no real property (including
buildings or other structures) currently or formerly owned or operated by
Western or its Significant Subsidiaries, or any Loan Property, has been
contaminated with, or has had any release of, any Hazardous Substance; (iii)
neither Western nor any of its Significant Subsidiaries could be deemed the
owner or operator of any Loan Property under any Environmental Law which
such Loan Property has been contaminated with, or has had any release of,
any Hazardous Substance; (iv) neither Western nor any of its Significant
Subsidiaries is subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (v) neither Western nor any of
its Significant Subsidiaries has received any notice, demand letter, claim
or request for information alleging any violation of, or liability under,
any Environmental Law; (vi) neither Western nor any of its Significant
Subsidiaries is subject to any order, decree, injunction or other agreement
with any Governmental Authority or any third party relating to any
Environmental Law; (vii) to the best of Western's knowledge, there are no
circumstances or conditions (including the presence of asbestos, underground
storage tanks, lead products, polychlorinated biphenyls, prior
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manufacturing operations, dry-cleaning, or automotive services) involving
Western or its Significant Subsidiaries, any currently or formerly owned or
operated property, or any Loan Property, that could reasonably be expected
to result in any claims, liability or investigations against Western or its
Significant Subsidiaries, result in any restrictions on the ownership, use,
or transfer of any property pursuant to any Environmental Law, or adversely
affect the value of any Loan Property, and (viii) each of Western and its
Significant Subsidiaries has made available to BKLA copies of all
environmental reports, studies, sampling data, correspondence, filings and
other environmental information in its possession or reasonably available to
it, if any, relating to each of Western and its Significant Subsidiaries,
any currently or formerly owned or operated property or any Loan Property.
ARTICLE VI
COVENANTS
6.01 REASONABLE BEST EFFORTS. Subject to the terms and conditions of this
Agreement, each of BKLA, Western and Santa Monica Bank agrees to use its
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby and shall cooperate fully with the other
party hereto to that end.
6.02 SHAREHOLDER APPROVAL. BKLA agrees to take, in accordance with
applicable law and the BKLA Articles and the BKLA By-Laws, all action necessary
to convene an appropriate meeting of its shareholders to consider and vote upon
the approval and adoption of this Agreement and any other matters required to be
approved by BKLA's shareholders for consummation of the Merger (including any
adjournment or postponement, the "BKLA MEETING"), in each case as promptly as
practicable after the Registration Statement is declared effective. Except to
the extent legally required for the discharge by the BKLA Board of its fiduciary
duties as advised by counsel to the BKLA Board, the BKLA Board shall recommend
such approval, and BKLA shall take all reasonable, lawful action to solicit such
approval by its shareholders.
6.03 REGISTRATION STATEMENT. (a) Western agrees to prepare a registration
statement on Form S-4 or other applicable form (the "REGISTRATION STATEMENT") to
be filed by Western with the SEC in connection with the issuance of Western
Common Stock in the Merger (including the proxy statement and prospectus and
other proxy solicitation materials of BKLA constituting a part thereof (the
"PROXY STATEMENT") and all related documents). BKLA agrees to cooperate, and to
cause its Subsidiaries to cooperate, with Western, its counsel and its
accountants, in preparation of the Registration Statement and the Proxy
Statement. BKLA agrees to file the Proxy Statement in preliminary form with the
FDIC as soon as reasonably practicable on a confidential basis, and Western
agrees to file the Registration Statement with the SEC as soon as reasonably
practicable on a confidential basis, after any SEC comments with respect to the
preliminary Proxy Statement are resolved. Each of BKLA and Western agrees to use
all reasonable efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as reasonably practicable after
filing thereof. Western also agrees to use all reasonable efforts to obtain all
necessary state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement. BKLA agrees to
furnish to Western all information concerning BKLA, its Subsidiaries, officers,
directors and shareholders as may be reasonably requested in connection with the
foregoing.
(b) Each of BKLA and Western agrees, as to itself and its Subsidiaries, that
none of the information supplied or to be supplied by it for inclusion or
incorporation by reference in (i) the Registration Statement will, at the time
the Registration Statement and each amendment or supplement thereto, if any,
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) the Proxy
Statement and any amendment or supplement thereto will, at the date of mailing
to shareholders and at the time of the BKLA Meeting, contain any untrue
statement of a material fact or
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omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or any statement which, in the light
of the circumstances under which such statement is made, will be false or
misleading with respect to any material fact, or which will omit to state any
material fact necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier statement in the
Proxy Statement or any amendment or supplement thereto. Each of BKLA and Western
further agrees that if it shall become aware prior to the Effective Date of any
information furnished by it that would cause any of the statements in the Proxy
Statement to be false or misleading with respect to any material fact, or to
omit to state any material fact necessary to make the statements therein not
false or misleading, promptly to inform the other party thereof and to take the
necessary steps to correct the Proxy Statement.
(c) Western agrees to advise BKLA, promptly after Western receives notice
thereof, of the time when the Registration Statement has become effective or any
supplement or amendment has been filed, of the issuance of any stop order or the
suspension of the qualification of Western Common Stock for offering or sale in
any jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
6.04 PRESS RELEASES. Each of BKLA and Western agrees that it will not,
without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NASDAQ rules (provided that the issuing party shall nevertheless
provide the other party with notice of, and the opportunity to review, any such
press release or written statement).
6.05 ACCESS; INFORMATION. (a) Each of BKLA and Western agrees that upon
reasonable notice and subject to applicable laws relating to the exchange of
information, each party shall afford the other party and the other party's
officers, employees, counsel, accountants and other authorized representatives,
such access during normal business hours throughout the period prior to the
Effective Time to the books, records (including, without limitation, tax returns
and work papers of independent auditors), properties, personnel and to such
other information as the requesting party may reasonably request and, during
such period, the providing party shall furnish promptly to the requesting party
(i) a copy of each material report, schedule and other document filed by it
pursuant to the requirements of federal or state securities or banking laws, and
(ii) all other information concerning the business, properties and personnel of
it as the requesting party may reasonably request.
(b) Each party agrees that it will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 6.05 (as well as
any other information obtained prior to the date hereof in connection with the
entering into of this Agreement) for any purpose unrelated to the consummation
of the transactions contemplated by this Agreement or the Stock Option
Agreement. Subject to the requirements of law, each party will keep
confidential, and will cause its representatives to keep confidential, all
information and documents obtained pursuant to this Section 6.05 (as well as any
other information obtained prior to the date hereof in connection with the
entering into of this Agreement) unless such information (i) was already known
to such party, (ii) becomes available to such party from other sources not known
by such party to be bound by a confidentiality obligation, (iii) is disclosed
with the prior written approval of the providing party or (iv) is or becomes
readily ascertainable from published information or trade sources. In the event
that this Agreement is terminated or the transactions contemplated by this
Agreement shall otherwise fail to be consummated, each party shall promptly
cause all copies of documents or extracts thereof containing information and
data as to the other party to be returned to the other party. No investigation
by either party of the business and affairs of the other party shall affect or
be deemed to modify or waive any representation, warranty, covenant or agreement
in this Agreement, or the conditions to either party's obligation to consummate
the transactions contemplated by this Agreement.
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6.06 ACQUISITION PROPOSALS. BKLA agrees that it shall not, and shall cause
its Subsidiaries and its and its Subsidiaries' officers, directors, agents,
advisors and affiliates not to, solicit or encourage inquiries or proposals with
respect to, or engage in any negotiations concerning, or provide any
confidential information to, or have any discussions with, any person relating
to, any Acquisition Proposal, except to the extent legally required for the
discharge by the BKLA Board of its fiduciary duties as advised by counsel to the
BKLA Board. BKLA shall immediately cease and cause to be terminated any
activities, discussions or negotiations conducted prior to the date of this
Agreement with any parties other than Western with respect to any of the
foregoing and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to an Acquisition Proposal. BKLA
shall promptly (within 24 hours) advise Western following the receipt by BKLA of
any Acquisition Proposal and the substance thereof (including the identity of
the person making such Acquisition Proposal), and advise Western of any
developments with respect to such Acquisition Proposal immediately upon the
occurrence thereof.
6.07 AFFILIATE AGREEMENTS. (a) Not later than the 15th day prior to the
mailing of the Proxy Statement, BKLA shall deliver to Western a schedule of each
person that, to the best of its knowledge, is or is reasonably likely to be, as
of the date of the BKLA Meeting, deemed to be an "affiliate" of BKLA (each, a
"BKLA AFFILIATE") as that term is used in Rule 145 under the Securities Act or
SEC Accounting Series Releases 130 and 135.
(b) BKLA shall use its reasonable best efforts to cause each person who may
be deemed to be a BKLA Affiliate to execute and deliver to Western on or before
the date of mailing of the Proxy Statement an agreement in the form attached
hereto as EXHIBIT A (the "Affiliate Agreements").
6.08 TAKEOVER LAWS. No party hereto shall take any action that would cause
the transactions contemplated by this Agreement or the Stock Option Agreement to
be subject to requirements imposed by any Takeover Law and each of them shall
take all necessary steps within its control to exempt (or ensure the continued
exemption of) the transactions contemplated by this Agreement from, or if
necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect.
6.09 CERTAIN POLICIES. Prior to the Effective Date, BKLA shall, consistent
with generally accepted accounting principles and on a basis mutually
satisfactory to it and Western, modify and change its loan, litigation and real
estate valuation policies and practices (including loan classifications and
levels of reserves) so as to be applied on a basis that is consistent with that
of Western.
6.10 NASDAQ LISTING. Western agrees to use its reasonable best efforts to
list, prior to the Effective Date, on the NASDAQ, subject to official notice of
issuance, the shares of Western Common Stock to be issued to the holders of BKLA
Common Stock in the Merger.
6.11 REGULATORY APPLICATIONS. (a) Western and BKLA and their respective
Subsidiaries shall cooperate and use their respective reasonable best efforts to
prepare all documentation, to effect all filings and to obtain all permits,
consents, approvals and authorizations of all third parties and Governmental
Authorities necessary to consummate the transactions contemplated by this
Agreement. Western and BKLA shall use their reasonable best efforts to make all
required bank regulatory filings, including the appropriate filings with the
Commissioner, the FDIC and the Federal Reserve. Each of Western and BKLA shall
have the right to review in advance, and to the extent practicable each will
consult with the other, in each case subject to applicable laws relating to the
exchange of information, with respect to all material written information
submitted to any third party or any Governmental Authority in connection with
the transactions contemplated by this Agreement. In exercising the foregoing
right, each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party hereto agrees that it will consult with the other party
hereto with respect to the obtaining of all material permits, consents,
approvals and authorizations of all third parties and Governmental Authorities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other party appraised of the status of
material matters relating to completion of the transactions contemplated hereby.
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(b) Each party agrees, upon request, to furnish the other party with all
information concerning itself, its Subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries to any third party or Governmental
Authority.
6.12 INDEMNIFICATION; DIRECTOR AND OFFICERS' INSURANCE. (a) From and after
the Effective Time through the sixth anniversary of the Effective Date, Western
agrees to indemnify and hold harmless each present and former director and
officer of BKLA or any Subsidiary of BKLA determined as of the Effective Time
(the "INDEMNIFIED PARTIES"), against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "COSTS") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or prior to the
Effective Time (including with respect to this Agreement or any of the
transactions contemplated hereby) (but excluding any Costs arising out of any
violation or alleged violation of the Exchange Act or the rules and regulations
thereunder with respect to insider trading), whether asserted, claimed or
arising prior to, at or after the Effective Time, to the extent to which such
Indemnified Parties were entitled under California law and the BKLA Articles or
the BKLA By-Laws in effect on the date hereof, and Western shall also advance
expenses as incurred to the extent permitted under California law, the Western
Articles and the Western By-Laws and, with respect to any Indemnified Party, any
indemnification agreement to which such person is a party.
(b) Any Indemnified Party wishing to claim indemnification under Section
6.12(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall as promptly as possible notify Western thereof, but the
failure to so notify shall not relieve Western of any liability it may have to
such Indemnified Party if such failure does not materially prejudice Western. In
the event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) Western shall have the right to
assume the defense thereof and Western shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection with the defense
thereof, except that if Western elects not to assume such defense or counsel for
the Indemnified Parties advises in writing that there are issues which raise
conflicts of interest between Western and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them, and Western shall
pay the reasonable fees and expenses of one such counsel for the Indemnified
Parties in any jurisdiction promptly as statements thereof are received, (ii)
the Indemnified Parties will cooperate in the defense of any such matter and
(iii) Western shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld); and
PROVIDED, FURTHER, that Western shall not have any obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and nonappealable,
that the indemnification of such Indemnified Party in the manner contemplated
hereby is not permitted or is prohibited by applicable law.
(c) For a period of six years after the Effective Time, Western shall use
its reasonable best efforts to cause to be maintained in effect at a minimum the
current policies of directors' and officers' liability insurance maintained by
BKLA (provided that Western may substitute therefor policies of comparable
coverage with respect to claims arising from facts or events which occurred
before the Effective Time); PROVIDED, HOWEVER, that in no event shall Western be
obligated to expend, in order to maintain or provide insurance coverage pursuant
to this Section 6.12(c), any amount per annum in excess of 125% of the amount of
the annual premiums paid as of the date hereof by BKLA for such insurance (the
"MAXIMUM AMOUNT"). If the amount of the annual premiums necessary to maintain or
procure such insurance coverage exceeds the Maximum Amount, Western shall use
all reasonable efforts to maintain the most advantageous policies of directors'
and officers' insurance obtainable for an annual premium equal to the Maximum
Amount. Notwithstanding the foregoing, prior to the Effective Time, Western may
request BKLA to, and BKLA shall, purchase insurance coverage, on such terms and
conditions as shall be acceptable to Western, extending for a period of six
years BKLA's directors' and officers' liability insurance
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coverage in effect as of the date hereof (covering past or future claims with
respect to periods before the Effective Time) and such coverage shall satisfy
Western's obligations under this Section 6.12(c).
(d) If Western 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 successors and assigns of Western shall
assume the obligations set forth in this Section 6.12.
6.13 BENEFIT PLANS. BKLA consents and covenants that from and after the
Effective Date BKLA's Benefits Plans will be governed, managed and/or terminated
by Western, all within Western's sole discretion.
6.14 ACCOUNTANTS' LETTERS. Each of BKLA and Western shall use its
reasonable best efforts to cause to be delivered to the other party, and to
Western's directors and officers who sign the Registration Statement, a letter
of their respective independent auditors, dated (i) the date on which the
Registration Statement shall become effective and (ii) a date shortly prior to
the Effective Date, and addressed to such directors and officers, in form and
substance customary for "comfort" letters delivered by independent accountants
in accordance with Statement of Accounting Standards No. 72.
6.15 NOTIFICATION OF CERTAIN MATTERS. Each of BKLA and Western shall give
prompt notice to the other of any fact, event or circumstance known to it that
(i) is reasonably likely, individually or taken together with all other facts,
events and circumstances known to it, to result in any Material Adverse Effect
with respect to it or (ii) would cause or constitute a material breach of any of
its representations, warranties, covenants or agreements contained herein.
6.16 SHAREHOLDER AGREEMENTS. The directors and certain officers and
shareholders of BKLA, in their capacities as shareholders, in exchange for good
and valuable consideration, have executed and delivered to Western shareholder
agreements substantially in the form of EXHIBIT B hereto (the "SHAREHOLDER
AGREEMENTS"), committing such persons, among other things, (i) to vote their
shares of BKLA Common Stock in favor of the Agreement at the BKLA Meeting and
(ii) to certain representations concerning the ownership of BKLA Common Stock
and Western Common Stock to be received in the Merger.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each of Western and BKLA to consummate the Merger is
subject to the fulfillment or written waiver by Western and BKLA prior to the
Effective Time of each of the following conditions:
(a) SHAREHOLDER APPROVALS. This Agreement and the Merger shall have
been duly adopted by the requisite vote of the shareholders of BKLA.
(b) REGULATORY APPROVALS. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain any
conditions, restrictions or requirements which the Western Board reasonably
determines would (i) following the Effective Time, have a Material Adverse
Effect on the Surviving Corporation and its Subsidiaries taken as a whole or
(ii) reduce the benefits of the transactions contemplated hereby to such a
degree that Western would not have entered into this Agreement had such
conditions, restrictions or requirements been known at the date hereof.
(c) NO INJUNCTION. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or
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other order (whether temporary, preliminary or permanent) which is in effect
and prohibits consummation of the transactions contemplated by this
Agreement.
(d) REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) BLUE SKY APPROVALS. All permits and other authorizations under
state securities laws necessary to consummate the transactions contemplated
hereby and to issue the shares of Western Common Stock to be issued in the
Merger shall have been received and be in full force and effect.
(f) LISTING. The shares of Western Common Stock to be issued in the
Merger shall have been approved for listing on the NASDAQ, subject to
official notice of issuance.
7.02 CONDITIONS TO OBLIGATION OF BKLA. The obligation of BKLA to
consummate the Merger is also subject to the fulfillment or written waiver by
BKLA prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Western set forth in this Agreement (subject to the standard set forth in
Section 5.02) shall be true and correct as of the date of this Agreement and
as of the Effective Date as though made on and as of the Effective Date
(except that representations and warranties that by their terms speak only
as of the date of this Agreement or some other date shall be true and
correct as of such date), and BKLA shall have received a certificate, dated
the Effective Date, signed on behalf of Western by the Chief Executive
Officer and the Chief Financial Officer of Western to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF WESTERN. Western shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and BKLA shall
have received a certificate, dated the Effective Date, signed on behalf of
Western by the Chief Executive Officer and the Chief Financial Officer of
Western to such effect.
(c) ACCOUNTANTS' LETTERS. BKLA shall have received the letters
referred to in Section 6.14 from Western's independent auditors.
(d) OPINION OF BKLA'S INDEPENDENT AUDITORS; ACCOUNTING TREATMENT. BKLA
shall have received from Vavrinek, Trine, Day & Co., LLP, its independent
auditors, (i) an opinion dated the Effective Date, to the effect that, on
the basis of facts, representations and assumptions set forth in such
opinion, (A) the Merger constitutes a "reorganization" within the meaning of
Section 368 of the Code and (B) no gain or loss will be recognized by
shareholders of BKLA who receive shares of Western Common Stock in exchange
for shares of BKLA Common Stock, except with respect to cash received in
lieu of fractional share interests, and (ii) letters, dated the date of or
shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment. In rendering its opinion,
Vavrinek, Trine, Day & Co., LLP may require and rely upon representations
contained in letters from BKLA, Western and shareholders of BKLA.
(e) DIRECTOR. Western shall have elected as a director, the individual
agreed in accordance with Section 2.01 hereof, effective immediately after
the Effective Time.
7.03 CONDITIONS TO OBLIGATION OF WESTERN. The obligation of Western to
consummate the Merger is also subject to the fulfillment or written waiver by
Western prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of BKLA set forth in this Agreement (subject to the standard set forth in
Section 5.02) shall be true and correct as of the date of this Agreement and
as of the Effective Date as though made on and as of the Effective Date
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(except that representations and warranties that by their terms speak only
as of the date of this Agreement or some other date shall be true and
correct as of such date) and Western shall have received a certificate,
dated the Effective Date, signed on behalf of BKLA by the Chief Executive
Officer and the Chief Financial Officer of BKLA to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF BKLA. BKLA shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Effective Time, and Western shall have
received a certificate, dated the Effective Date, signed on behalf of BKLA
by the Chief Executive Officer and the Chief Financial Officer of BKLA to
such effect.
(c) OPINION OF WESTERN'S COUNSEL. Western shall have received an
opinion of Sullivan & Cromwell, special counsel to Western, dated the
Effective Date, to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion, the Merger constitutes a
reorganization under Section 368 of the Code. In rendering its opinion,
Sullivan & Cromwell may require and rely upon representations contained in
letters from BKLA, Western and shareholders of BKLA.
(d) ACCOUNTANTS' LETTERS. Western shall have received the letters
referred to in Section 6.14 from BKLA's independent auditors.
(e) ACCOUNTING TREATMENT. Western shall have received from KPMG Peat
Marwick LLP, Western's independent auditors, letters, dated the date of or
shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
ARTICLE VIII
TERMINATION
8.01 TERMINATION. This Agreement may be terminated, and the Acquisition
may be abandoned:
(a) MUTUAL CONSENT. At any time prior to the Effective Time, by the
mutual consent of Western and BKLA, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b) BREACH. At any time prior to the Effective Time, by Western or
BKLA, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event of either: (i) a breach by the
other party of any representation or warranty contained herein (subject to
the standard set forth in Section 5.02), which breach cannot be or has not
been cured within 30 days after the giving of written notice to the
breaching party of such breach; or (ii) a breach by the other party of any
of the covenants or agreements contained herein, which breach cannot be or
has not been cured within 30 days after the giving of written notice to the
breaching party of such breach, provided that such breach (whether under (i)
or (ii)) would be reasonably likely, individually or in the aggregate with
other breaches, to result in a Material Adverse Effect.
(c) DELAY. At any time prior to the Effective Time, by Western or
BKLA, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Merger is not consummated
by December 31, 1998.
(d) NO APPROVAL. By BKLA or Western in the event (i) the approval of
any Governmental Authority required for consummation of the Merger and the
other transactions contemplated by this Agreement shall have been denied by
final nonappealable action of such Governmental Authority or (ii) the
shareholder approval required by Section 7.01(a) herein is not obtained at
the BKLA Meeting.
(e) FAILURE TO RECOMMEND, ETC. At any time prior to the BKLA Meeting,
by Western if the BKLA Board shall have failed to make its recommendation
referred to in Section 6.02, withdrawn
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such recommendation or modified or changed such recommendation in a manner
adverse in any respect to the interests of Western.
(f) TERMINATION BY WESTERN. This Agreement may be terminated and the
Merger may be abandoned by Western by the giving of notice to BKLA at any
time prior to 5 p.m. on April 29, 1998, if Western determines in its sole
discretion, upon completion of its due diligence review of BKLA, to so
terminate.
(g) WESTERN COMMON STOCK. This Agreement may be terminated by BKLA in
the event that, with respect to any Ten Day Period (as defined below), both
(i)(A) the Ten Day Average Price (as defined below) shall be less that
$35.37 per share and (B) the Western Common Stock Price Percentage (as
defined below) shall be less than the BKX Index Percentage (as defined
below) and (ii) BKLA has delivered written notice to Western of its
intention to terminate this Agreement within forty-eight (48) hours
following the date of such event (it being understood that, if the
circumstances set forth in clause (i) shall have occurred and BKLA fails to
timely deliver the notice referred to in this clause (ii), BKLA shall have
the right to terminate if any such event subsequently occurs and BKLA timely
delivers such notice); PROVIDED, HOWEVER, that, if Western effects a stock
dividend, reclassification, recapitalization, stock split, combination,
exchange of shares or similar transaction after the date hereof and prior to
the Effective Time, the provisions of this Section 8.01(g) shall be
appropriately adjusted;
As used in this Section 8.01(g), (w) "Western Common Stock Price
Percentage" means the percentage determined by dividing the Ten Day Average
Price by $42.61 (as such amount may be adjusted pursuant to the paragraph
above); (x) "BKX Index Percentage " means the percentage determined by
dividing (i) the product of (A) the Keefe Bank Index as of the date of
determination times (B) .66 by (ii) the Keefe Bank Index as of the date
hereof; (y) "Ten Day Average Price" means the average sales price per share
of Western Common Stock for a Ten Day Period determined by averaging the
last reported sales price on each trading day, and (z) "Ten Day Period"
means any period of ten (10) consecutive trading days.
(h) ACQUISITION PROPOSAL. This Agreement may be terminated by BKLA by
written notice to Western if BKLA receives an Acquisition Proposal on terms
and conditions which the BKLA Board determines, after receiving the advice
of its outside counsel that to proceed with the Merger will violate the
fiduciary duties of the BKLA Board to BKLA's shareholders in light of such
Acquisition Proposal, to accept such proposal; provided, however, that BKLA
shall not be entitled to terminate this Agreement pursuant to this Section
8.01(h) unless it shall have provided Western with written notice of such a
possible determination (which written notice will inform Western of the
material terms and conditions of the proposal, including the identity of the
proponent) not less than two business days prior to such determination.
8.02 EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination of
this Agreement and the abandonment of the Merger pursuant to Section 8.01, no
party to this Agreement shall have any liability or further obligation to any
other party hereunder except as set forth in Section 8.03 and Section 9.01.
8.03 TERMINATION FEE.
(a) MATERIAL BREACH BY WESTERN. Should BKLA terminate this Agreement
pursuant to Section 8.01(b) (unless such breach under Section 8.01(b) shall
result from no act or omission of Western), Western shall promptly, if so
requested by BKLA, but in no event later than five business days after the date
of such request, pay BKLA a fee equal to BKLA's out-of-pocket expenses in
connection with this Agreement and the transactions contemplated hereby, up to a
maximum of $500,000, which amount shall be payable in same day funds, provided
however that no fee shall be paid pursuant to this Section 8.03(a) if BKLA shall
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<PAGE>
be in material breach of its obligations hereunder and Western shall owe no
further duty or liability on account of this Agreement to BKLA.
(b) MATERIAL BREACH BY BKLA; ENTERING ACQUISITION PROPOSAL. Should Western
terminate this Agreement pursuant to either Section 8.01(e) or 8.01(b) (unless
such breach under Section 8.01(b) shall result from no act or omission of BKLA),
BKLA shall promptly, if so requested by Western, but in no event later than five
business days after the date of such request, pay Western a fee equal to
Western's out-of-pocket expenses in connection with this Agreement and the
transactions contemplated hereby, up to a maximum of $500,000, which amount
shall be payable in same day funds, provided however that no fee shall be paid
pursuant to this Section 8.03 if Western shall be in material breach of its
obligations hereunder and BKLA and the shareholders who are parties to the
Shareholder Agreements shall owe no further duty or liability on account of this
Agreement or the Shareholders Agreement to either Western or Santa Monica Bank.
In the event that there is a termination as a result of BKLA entering into an
Acquisition Proposal pursuant to Section 8.01(h), BKLA shall pay Western up to
$500,000 to cover out-of-pocket expenses in addition to Western's rights under
the Stock Option Agreement and BKLA and the shareholders who are parties to the
Shareholder Agreements shall owe no further duty or liability on account of this
Agreement to either Western or Santa Monica Bank except under the Stock Option
Agreement.
ARTICLE IX
MISCELLANEOUS
9.01 SURVIVAL. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than
Sections 3.01, 3.03, 3.04, 3.07, 6.12 and this Article IX which shall survive
the Effective Time) or the termination of this Agreement if this Agreement is
terminated prior to the Effective Time (other than Sections 6.03(b), 6.05(b),
8.02, 8.03 and this Article IX which shall survive such termination).
9.02 WAIVER; AMENDMENT. Prior to the Effective Time, any provision of this
Agreement may be (i) waived by the party benefitted by the provision, or (ii)
amended or modified at any time, by an agreement in writing between the parties
hereto executed in the same manner as this Agreement, except that after the BKLA
Meeting, this Agreement may not be amended if it would violate the CGCL or
reduce the consideration to be received by BKLA shareholders in the Merger.
9.03 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 GOVERNING LAW; WAIVER OF JURY TRIAL. This Agreement shall be governed
by, and interpreted in accordance with, the laws of the State of California
applicable to contracts made and to be performed entirely within such State.
Each of the parties hereto hereby irrevocably waives any and all right to trial
by jury in any legal proceeding arising out of or related to this Agreement or
the transactions contemplated hereby.
9.05 EXPENSES. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby, except
as provided in Section 8.02.
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9.06 NOTICES. All notices, requests and other communications hereunder to
a party shall be in writing and shall be deemed given if personally delivered,
telecopied (with machine-generated confirmation) or mailed by registered or
certified mail (return receipt requested) to such party at its address set forth
below or such other address as such party may specify by notice to the parties
hereto.
If to, to:
Bank of Los Angeles
8901 Santa Monica Blvd.
West Hollywood, CA 90069-4901
Attention: Adriana M. Boeka
Facsimile: (310) 843-1498
With a copy to:
Horgan, Rosen, Beckham & Coren
21700 Oxnard Street
Suite 1400
Woodland Hills, CA 91367
Attention: Arthur Coren
Facsimile: (818) 340-6190
If to Western or Santa Monica Bank, to:
Western Bancorp
1251 Westwood Boulevard
Los Angeles, CA 90024
Attention: Matthew P. Wagner
Facsimile: (310) 477-8611
With a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Attention: Stanley F. Farrar
Facsimile: (213) 683-0457
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Agreement,
the Stock Option Agreement, the Affiliate Agreements and the Shareholder
Agreements represent the entire understanding of the parties hereto with
reference to the transactions contemplated hereby and thereby and this Agreement
supersedes any and all other oral or written agreements heretofore made (other
than any such Stock Option Agreement, Affiliate Agreements or Shareholder
Agreements). Nothing in this Agreement expressed or implied, is intended to
confer upon any person, other than the parties hereto or their respective
successors, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
9.08 INTERPRETATION; EFFECT. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." No provision of this Agreement shall
be construed to require BKLA, Western or any of their respective Subsidiaries,
affiliates or directors to take any action which would violate applicable law
(whether statutory or common law), rule or regulation.
* * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
<TABLE>
<S> <C> <C>
BANK OF LOS ANGELES
By:
-----------------------------------------
Name:
Title:
WESTERN BANCORP
By:
-----------------------------------------
Name:
Title:
SANTA MONICA BANK
By:
-----------------------------------------
Name:
Title:
</TABLE>
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<PAGE>
APPENDIX B
1000 WILSHIRE BOULEVARD, LOS ANGELES, CALIFORNIA 90017-2465
MAILING ADDRESS: P.O. BOX 30014, LOS ANGELES, CALIFORNIA 90030-0014
[LOGO]
WEDBUSH MORGAN (213) 688-4545
SECURITIES FAX (213) 688-6642
INVESTMENT BANKERS SINCE 1925
April 15, 1998
Board of Directors
Bank of Los Angeles
8901 West Santa Monica Blvd.
West Hollywood, CA 90069
Members of the Board:
We understand that Western Bancorp ("Western"), its wholly-owned subsidiary,
Santa Monica Bank ("Santa Monica"), and Bank of Los Angeles (the "Bank") propose
to enter into an Agreement and Plan of Merger (the "Agreement"), pursuant to
which the Bank will be merged with and into Santa Monica (the "Merger"), as a
result of which each outstanding share of the Bank's common stock (the "Bank of
Los Angeles Shares") will be converted into 0.4224 of a share (the "Exchange
Ratio") of the common stock of Western (the "Western Shares"). We have reviewed
a draft of the Agreement dated April 7, 1998 (the "Draft Agreement"), which sets
forth in more detail the terms and conditions of the merger. For purposes of
this opinion, we have assumed that the Agreement will be substantially similar
in form and substance to the Draft Agreement in all material respects.
You have asked us whether, in our opinion, the proposed Exchange Ratio in the
Merger is fair to the stockholders of the Bank from a financial point of view.
For purposes of this opinion and in connection with our review of the Merger, we
have reviewed and analyzed, among other things: (1) the Draft Agreement and the
specific terms of the Merger, (2) certain publicly available business and
financial information relating to the Bank and Western that we deem to be
relevant, (3) certain internal information, primarily financial in nature,
including financial projections and other financial and operating data relating
to strategic implications and operational benefits anticipated to result from
the Merger, furnished to us by the Bank and Western, (4) certain publicly
available and other information concerning the trading of, and the trading
market for, the common stock of the Bank and Western, (5) certain publicly
available information with respect to other companies that we believe to be
comparable in certain respects to the Bank or Western, and (6) certain publicly
available information with respect to other merger and acquisition transactions
that we believe to be comparable in certain respects to the Merger. In addition,
we have held discussions with the managements of the Bank and Western concerning
their views as to the financial and other information described above and the
potential cost savings, operating synergies, revenue enhancements and strategic
benefits expected to result from the Merger. In addition to the foregoing, we
have conducted such other analyses and examinations and considered such other
financial, economic and market criteria as we deem appropriate to arrive at our
opinion.
In arriving at our opinion, we have assumed and relied upon the accuracy and
completeness of all financial and other information provided to or reviewed by
us or publicly available, and we have not assumed any
MEMBER NEW YORK STOCK EXCHANGE
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Board of Directors April 15, 1998
Bank of Los Angeles Page 2 of 3
responsibility for independent verification of any such information. With
respect to financial projections and other information provided to or reviewed
by us, we have been advised by the managements of the Bank and Western that such
projections and other information were reasonably prepared on bases reflecting
the best currently available estimates and judgments of the respective
managements of the Bank and Western as to the expected future financial
performance of the Bank and Western and the strategic implications and
operational benefits anticipated from the Merger, and we have assumed that,
after the Merger, Western and its subsidiaries will perform substantially in
accordance with such projections. We further relied on the assurances of
managements of the Bank and Western that they are unaware of any facts that
would make the information or projections provided to us incomplete or
misleading. In particular, we were provided with and relied upon a schedule
provided by Western of estimated synergies and related cost savings that the
Bank expects to achieve as a result of the Merger. With respect to pending legal
and regulatory proceedings involving the Bank or Western, we were not in a
position to evaluate the impact of such proceedings and we have assumed that
these matters will be resolved in a manner that will not adversely affect in any
material respect the financial projections on which we have relied for purposes
of our opinion. We have not made or been provided with any independent
evaluations or appraisals of any of the Bank's or Western's assets, properties,
liabilities or securities, nor have we made any physical inspection of the
properties or assets of the Bank or Western. We have assumed that Western will
account for the Merger as a pooling-of-interests in accordance with generally
accepted accounting principals ("GAAP"), and that the Merger qualifies for such
accounting treatment under GAAP. We have also assumed that the Merger will
constitute a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and neither the Bank, Western, Santa
Monica nor holders of Bank of Los Angeles Shares will recognize gain or loss for
U.S. federal and state income tax purposes as a result of the Merger. We have
further assumed that all conditions to the Agreement will be satisfied and not
waived.
We are not experts in the evaluation of loan losses or reserves or allowances
therefor, and with your consent, we have not made an independent evaluation of
the adequacy of the reserve or allowance for loan losses of the Bank or Western,
nor have we reviewed any individual credit files relating to the Bank or
Western. Rather, with your consent, we have assumed that the aggregate reserve
or allowance for loan losses for each of the Bank and Western is adequate to
cover such losses and will be adequate after the Merger for Western and its
subsidiaries.
Our opinion as expressed below relates to the relative values of the Bank and
Western and does not imply any conclusion as to what the values of the Western
Shares actually will be when issued pursuant to the Merger or the price at which
such stock will trade following the consummation of the Merger. Our opinion
necessarily is based upon conditions and circumstances as they exist and can be
evaluated as of the date hereof and does not address the underlying business
decision of the Bank to enter into the Agreement or complete the Merger.
Specifically, we have not been asked to nor do we express an opinion as to the
relative merits of the Merger as compared to any alternative business strategies
that might exist for the Bank or the effect of any other transaction in which
the Bank might engage.
Our opinion is based on economic, market and other conditions as in effect on,
and the information made available to us as of, the date hereof. Events
occurring after the date hereof could materially affect the assumptions used in
preparing this opinion.
In the ordinary course of our business, we and our affiliates may actively trade
the common stock of the Bank and Western for our own account and for the
accounts of our customers and, accordingly, we may at any time hold a long or
short position in the common stock of the Bank or Western.
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Board of Directors April 15, 1998
Bank of Los Angeles Page 3 of 3
This opinion is for the benefit and use of the members of the Board of Directors
of the Bank in connection with their evaluation of the Merger and does not
constitute a recommendation to any holder of Bank of Los Angeles Shares as to
how such shareholder should vote with respect to the Merger. This opinion may
not be used for any other purpose without our prior written consent, except as
provided for in the engagement letter dated as of April 9, 1998 between the Bank
and Wedbush Morgan Securities.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the Exchange Ratio in the Merger is fair to the shareholders of the Bank
from a financial point of view.
Very truly yours,
/s/ WEDBUSH MORGAN SECURITIES INC.
WEDBUSH MORGAN SECURITIES INC.
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APPENDIX C
CORPORATIONS CODE
TITLE 1. CORPORATIONS
DIVISION 1. GENERAL CORPORATION LAW
CHAPTER 13. DISSENTERS' RIGHTS
Section 1300. Reorganization or short-form merger; dissenting shares;
corporate purchase at fair market value; definitions.
(a) If the approval of the outstanding shares (Section 152) of a corporation
is required for a reorganization under subdivisions (a) and (b) or subdivision
(e) or (f) of Section 1201, each shareholder of the corporation entitled to vote
on the transaction and each shareholder of a subsidiary corporation in a
short-form merger may, by complying with this chapter, require the corporation
in which the shareholder holds shares to purchase for cash at their fair market
value the shares owned by the shareholder which are dissenting shares as defined
in subdivision (b). The fair market value shall be determined as of the day
before the first announcement of the terms of the proposed reorganization or
short-form merger, excluding any appreciation or depreciation in consequence of
the proposed action, but adjusted for any stock split, reverse stock split, or
share dividend which becomes effective thereafter.
(b) As used in this chapter, "dissenting shares" means shares which come
within all of the following descriptions:
(1) Which were not immediately prior to the reorganization or short-form
merger either (A) listed on any national securities exchange certified by
the Commissioner of Corporations under subdivision (o) of Section 25100 or
(B) listed on the list of OTC margin stocks issued by the Board of Governors
of the Federal Reserve System, and the notice of meeting of shareholders to
act upon the reorganization summarizes this section and Sections 1301, 1302,
1303 and 1304; provided, however, that this provision does not apply to any
shares with respect to which there exists any restriction on transfer
imposed by the corporation or by any law or regulation; and provided,
further, that this provision does not apply to any class of shares described
in subparagraph (A) or (B) if demands for payment are filed with respect to
5 percent or more of the outstanding shares of that class.
(2) Which were outstanding on the date for the determination of
shareholders entitled to vote on the reorganization and (A) were not voted
in favor of the reorganization or, (B) if described in subparagraph (A) or
(B) of paragraph (1) (without regard to the provisos in that paragraph),
were voted against the reorganization, or which were held of record on the
effective date of a short-form merger; provided, however, that subparagraph
(A) rather than subparagraph (B) of this paragraph applies in any case where
the approval required by Section 1201 is sought by written consent rather
than at a meeting.
(3) Which the dissenting shareholder has demanded that the corporation
purchase at their fair market value, in accordance with section 1301.
(4) Which the dissenting shareholder has submitted for endorsement, in
accordance with Section 1302.
(c) As used in this chapter, "dissenting shareholder" means the recordholder
of dissenting shares and includes a transferee of record.
Section 1301. Notice to holders of dissenting shares in reorganizations;
demand for purchase; time; contents
(a) If, in the case of a reorganization, any shareholders of a corporation
have a right under section 1300, subject to compliance with paragraphs (3) and
(4) of subdivision (b) thereof, to require the
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corporation to purchase their shares for cash, such corporation shall mail to
each such shareholder a notice of the approval of the reorganization by its
outstanding shares (Section 152) within 10 days after the date of such approval,
accompanied by a copy of Sections 1300, 1302, 1303, 1304 and this section, a
statement of the price determined by the corporation to represent the fair
market value of the dissenting shares, and a brief description of the procedure
to be followed if the shareholder desires to exercise the shareholder's right
under such sections. The statement of price constitutes an offer by the
corporation to purchase at the price stated any dissenting shares as defined in
subdivision (b) of Section 1300, unless they lose their status as dissenting
shares under Section 1309.
(b) Any shareholder who has a right to require the corporation to purchase
the shareholder's shares for cash under Section 1300, subject to compliance with
paragraphs (3) and (4) of subdivision (b) thereof, and who desires the
corporation to purchase such shares shall make written demand upon the
corporation for the purchase of such shares and payment to the shareholder in
cash of their fair market value. The demand is not effective for any purpose
unless it is received by the corporation or any transfer agent thereof (1) in
the case of shares described in clause (i) or (ii) of paragraph (1) of
subdivision (b) of Section 1300 (without regard to the provisos in that
paragraph), not later than the date of the shareholders' meeting to vote upon
the reorganization, or (2) in any other case within 30 days after the date on
which the notice of the approval by the outstanding shares pursuant to
subdivision (a) or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder.
(c) The demand shall state the number and class of the shares held of record
by the shareholder which the shareholder demands that the corporation purchase
and shall contain a statement of what such shareholder claims to be the fair
market value of those shares as of the day before the announcement of the
proposed reorganization or short-form merger. The statement of fair market value
constitutes an offer by the shareholder to sell the shares at such price.
Section 1302. Submission of share certificates for endorsement;
uncertificated securities
Within 30 days after the date on which notice of the approval by the
outstanding shares or the notice pursuant to subdivision (i) of section 1110 was
mailed to the shareholder, the shareholder shall submit to the corporation at
its principal office or at the office of any transfer agent thereof, (a) if the
shares are certificated securities, the shareholder's certificates representing
any shares which the shareholder demands that the corporation purchase, to be
stamped or endorsed with a statement that the shares are dissenting shares or to
be exchanged for certificates of appropriate denomination so stamped or endorsed
or (b) if the shares are uncertificated securities, written notice of the number
of shares which the shareholder demands that the corporation purchase. Upon
subsequent transfers of the dissenting shares on the books of the corporation,
the new certificates, initial transaction statement, and other written
statements issued therefor shall bear a like statement, together with the name
of the original dissenting holder of the shares.
Section 1303. Payment of agreed price with interest; agreement fixing fair
market value; filing; time of payment
(a) If the corporation and the shareholder agree that the shares are
dissenting shares and agree upon the price of the shares, the dissenting
shareholder is entitled to the agreed price with interest thereon at the legal
rate on judgments from the date of the agreement. Any agreements fixing the fair
market value of any dissenting shares as between the corporation and the holders
thereof shall be filed with the secretary of the corporation.
(b) Subject to the provisions of Section 1306, payment of the fair market
value of dissenting shares shall be made within 30 days after the amount thereof
has been agreed or within 30 days after any statutory or contractual conditions
to the reorganization are satisfied, whichever is later, and in the case of
certificated securities, subject to surrender of the certificates therefor,
unless provided otherwise by agreement.
C-2
<PAGE>
Section 1304. Action to determine whether shares are dissenting shares or
fair market value; limitation; joinder; consolidation; determination of issues;
appointment of appraisers
(a) If the corporation denies that the shares are dissenting shares, or the
corporation and the shareholder fail to agree upon the fair market value of the
shares, then the shareholder demanding purchase of such shares as dissenting
shares or any interested corporation, within six months after the date on which
notice of the approval by the outstanding shares (Section 152) or notice
pursuant to subdivision (i) of Section 1110 was mailed to the shareholder, but
not thereafter, may file a complaint in the superior court of the proper county
praying the court to determine whether the shares are dissenting shares or the
fair market value of the dissenting shares or both or may intervene in any
action pending on such a complaint.
(b) Two or more dissenting shareholders may join as plaintiffs or be joined
as defendants in any such action and two or more such actions may be
consolidated.
(c) On the trial of the action, the court shall determine the issues. If the
status of the shares as dissenting shares is in issue, the court shall first
determine that issue. If the fair market value of the dissenting shares is in
issue, the court shall determine, or shall appoint one or more impartial
appraisers to determine, the fair market value of the shares.
Section 1305. Report of appraisers; confirmation; determination by court;
judgment payment; appeal; costs
(a) If the court appoints an appraiser or appraisers, they shall proceed
forthwith to determine the fair market value per share. Within the time fixed by
the court, the appraisers, or a majority of them, shall make and file a report
in the office of the clerk of the court. Thereupon, on the motion of any party,
the report shall be submitted to the court and considered on such evidence as
the court considers relevant. If the court finds the report reasonable, the
court may confirm it.
(b) If a majority of the appraisers appointed fail to make and file a report
within 10 days from the date of their appointment or within such further time as
may be allowed by the court or the report is not confirmed by the court, the
court shall determine the fair market value of the dissenting shares.
(c) Subject to the provisions of Section 1306, judgment shall be rendered
against the corporation for payment of an amount equal to the fair market value
of each dissenting share multiplied by the number of dissenting shares which any
dissenting shareholder who is a party, or who has intervened, is entitled to
require the corporation to purchase, with interest thereon at the legal rate
from the date on which judgment was entered.
(d) Any such judgment shall be payable forthwith with respect to
uncertificated securities and, with respect to certificated securities, only
upon the endorsement and delivery to the corporation of the certificates for the
shares described in the judgment. Any party may appeal from the judgment.
(e) The costs of the action, including reasonable compensation to the
appraisers to be fixed by the court, shall be assessed or apportioned as the
court considers equitable, but, if the appraisal exceeds the price offered by
the corporation, the corporation shall pay the costs (including in the
discretion of the court attorneys' fees, fees of expert witnesses and interest
at the legal rate on judgments from the date of compliance with Sections 1300,
1301 and 1302 if the value awarded by the court for the shares is more than 125
percent of the price offered by the corporation under subdivision (a) of Section
1301).
Section 1306. Prevention of immediate payment; status as creditors;
interest
To the extent that the provisions of Chapter 5 prevent the payment to any
holders of dissenting shares of their fair market value, they shall become
creditors of the corporation for the amount thereof together with interest at
the legal rate on judgments until the date of payment, but subordinate to all
other creditors in any liquidation proceeding, such debt to be payable when
permissible under the provisions of Chapter 5.
C-3
<PAGE>
Section 1307. Dividends on dissenting shares
Cash dividends declared and paid by the corporation upon the dissenting
shares after the date of approval of the reorganization by the outstanding
shares (Section 152) and prior to payment for the shares by the corporation
shall be credited against the total amount to be paid by the corporation
therefor.
Section 1308. Rights of dissenting shareholders pending valuation;
withdrawal of demand for payment
Except as expressly limited in this chapter, holders of dissenting shares
continue to have all the rights and privileges incident to their shares, until
the fair market value of their shares is agreed upon or determined. A dissenting
shareholder may not withdraw a demand for payment unless the corporation
consents thereto.
Section 1309. Termination of dissenting share and shareholder status
Dissenting shares lose their status as dissenting shares and the holders
thereof cease to be dissenting shareholders and cease to be entitled to require
the corporation to purchase their shares upon the happening of any of the
following:
(a) The corporation abandons the reorganization. Upon abandonment of the
reorganization, the corporation shall pay on demand to any dissenting
shareholder who has initiated proceedings in good faith under this chapter all
necessary expenses incurred in such proceedings and reasonable attorneys' fees.
(b) The shares are transferred prior to their submission for endorsement in
accordance with Section 1302 or are surrendered for conversion into shares of
another class in accordance with the articles.
(c) The dissenting shareholder and the corporation do not agree upon the
status of the shares as dissenting shares or upon the purchase price of the
shares, and neither files a complaint or intervenes in a pending action as
provided in Section 1304, within six months after the date on which notice of
the approval by the outstanding shares or notice pursuant to subdivision (i) of
Section 1110 was mailed to the shareholder.
(d) The dissenting shareholder, with the consent of the corporation,
withdraws the shareholder's demand for purchase of the dissenting shares.
Section 1310. Suspension of right to compensation or valuation proceedings;
litigation of shareholders' approval
If litigation is instituted to test the sufficiency or regularity of the
votes of the shareholders in authorizing a reorganization, any proceedings under
Sections 1304 and 1305 shall be suspended until final determination of such
litigation.
Section 1311. Exempt shares
This chapter, except Section 1312, does not apply to classes of shares whose
terms and provisions specifically set forth the amount to be paid in respect to
such shares in the event of a reorganization or merger.
Section 1312. Right of dissenting shareholders to attack, set aside or
rescind merger or reorganization; restraining order or injunction; conditions
(a) No shareholder of a corporation who has a right under this chapter to
demand payment of cash for the shares held by the shareholder shall have any
right at law or in equity to attack the validity of the reorganization or
short-form merger, or to have the reorganization or short-form merger set aside
or rescinded, except in an action to test whether the number of shares required
to authorize or approve the reorganization have been legally voted in favor
thereof; but any holder of shares of a class whose terms and provisions
specifically set forth the amount to be paid in respect to them in the event of
a reorganization or short-form merger is entitled to payment in accordance with
those terms and provisions or, if the principal
C-4
<PAGE>
terms of the reorganization are approved pursuant to subdivision (b) of Section
1202, is entitled to payment in accordance with the terms and provisions of the
approved reorganization.
(b) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, subdivision (a) shall not
apply to any shareholder of such party who has not demanded payment of cash for
such shareholder's shares pursuant to this chapter; but if the shareholder
institutes any action to attack the validity of the reorganization or short-form
merger or to have the reorganization or short-form merger set aside or
rescinded, the shareholder shall not thereafter have any right to demand payment
of cash for the shareholder's shares pursuant to this chapter. The court in any
action attacking the validity of the reorganization or short-form merger or to
have the reorganization or short-form merger set aside or rescinded shall not
restrain or enjoin the consummation of the transaction except upon 10 days'
prior notice to the corporation and upon a determination by the court that
clearly no other remedy will adequately protect the complaining shareholder or
the class of shareholders of which such shareholder is a member.
(c) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, in any action to attack the
validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded, (1) a party to a
reorganization or short-form merger which controls another party to the
reorganization or short-form merger shall have the burden of proving that the
transaction is just and reasonable as to the shareholders of the controlled
party, and (2) a person who controls two or more parties to a reorganization
shall have the burden of proving that the transaction is just and reasonable as
to the shareholders of any party so controlled.
C-5
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 317 of the CGCL authorizes a court to award, or a corporation's
Board of Directors to grant, indemnity to directors, officers and employees in
terms sufficiently broad to permit such indemnification under certain
circumstances for liabilities (including reimbursement for expenses incurred)
arising under the Securities Act. Article Six of Western's Restated Articles of
Incorporation and Article VI of Western's Restated Bylaws provide for
indemnification of its directors, officers, employees and other agents to the
fullest extent permitted by the CGCL.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION AND METHOD OF FILING
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of April 16, 1998, and amended and restated as of June 24, 1998,
by and among Western, SMB and BKLA (incorporated by reference to Appendix A to this Registration
Statement on Form S-4)
4.1 Form of Certificate representing shares of Western Common Stock (incorporated by reference to Exhibit 4
to the Registrant's Current Report on Form 8-K, dated June 19, 1997)
5.1 Opinion of Julius G. Christensen
8.1* Tax Opinion of Sullivan & Cromwell
8.2* Tax Opinion of Vavrinek, Trine, Day & Co., LLP
9.1 Shareholder Agreement, dated as of April 16, 1998, by and among Adriana M. Boeka and Bank of Los Angeles
9.2 Shareholder Agreement, dated as of April 16, 1998, by and among Maurice J. Burford and Bank of Los
Angeles
9.3 Shareholder Agreement, dated as of April 16, 1998, by and among Mary Anne Chalker and Bank of Los
Angeles
9.4 Shareholder Agreement, dated as of April 16, 1998, by and among John J. Feldman and Bank of Los Angeles
9.5 Shareholder Agreement, dated as of April 16, 1998, by and among Rickey Gelb and Bank of Los Angeles
9.6 Shareholder Agreement, dated as of April 16, 1998, by and among Robert G. Jacobsen and Bank of Los
Angeles
9.7 Shareholder Agreement, dated as of April 16, 1998, by and among Wendy R. Moskal and Bank of Los Angeles
9.8 Shareholder Agreement, dated as of April 16, 1998, by and among John R. Newhouse and Bank of Los Angeles
9.9 Shareholder Agreement, dated as of April 16, 1998, by and among James V. Reimann and Bank of Los Angeles
9.10 Shareholder Agreement, dated as of April 16, 1998, by and among Melvin F. Shaw and Bank of Los Angeles
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION AND METHOD OF FILING
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
9.11 Shareholder Agreement, dated as of April 16, 1998, by and among Burton N. Sterman and Bank of Los
Angeles
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Vavrinek, Trine, Day & Co., LLP (BKLA)
23.3 Consent of Deloitte & Touche LLP (Santa Monica Bank)
23.4 Consent of Deloitte & Touche LLP (SC Bancorp)
23.5 Consent of Deloitte & Touche LLP (California Commercial Bankshares)
23.6 Consent of Julius G. Christensen (included in opinion filed as Exhibit 5.1 hereto)
23.7* Consent of Sullivan & Cromwell for Tax Opinion that is filed as Exhibit 8.1 hereto
23.8* Consent of Vavrinek, Trine, Day & Co., LLP for Tax Opinion that is filed as Exhibit 8.2 hereto
23.9 Consent of Vavrinek, Trine, Day & Co., LLP (Monarch Bancorp)
23.10 Consent of Arthur Andersen LLP (Santa Monica Bank)
24.1 Power of Attorney (set forth on Page II-3 hereof)
99.1 Consent of Wedbush
99.2 Form of Letter of Transmittal
99.3 Consent of Adriana M. Boeka, proposed Western director
</TABLE>
- ------------------------
* To be filed by amendment.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(b) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(c) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
II-2
<PAGE>
(d) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (c) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 20 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(f) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(g) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Newport Beach, State of
California, on , 1998.
<TABLE>
<S> <C> <C>
WESTERN BANCORP
By:
-----------------------------------------
Name: Arnold C. Hahn
Title: Executive Vice President and
Chief Financial Officer
</TABLE>
We, the undersigned officers and directors of Western Bancorp, do hereby
constitute and appoint Arnold C. Hahn and Julius G. Christensen, and each of
them, our true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, for each of us and in each of our names, places
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as each of us might or could do in person,
hereby ratifying and confirming all that each of said attorneys-in-fact and
agents, or his/her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
- ------------------------------ Chairman and Director June 18, 1998
Hugh S. Smith, Jr.
Executive Vice President
- ------------------------------ and Chief Financial June 18, 1998
Arnold C. Hahn Officer
- ------------------------------ Chief Executive Officer, June 18, 1998
Matthew P. Wagner President and Director
- ------------------------------ Director June 18, 1998
Aubrey L. Austin
- ------------------------------ Director June 18, 1998
Rice E. Brown
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
- ------------------------------ Director June 18, 1998
John M. Eggemeyer
- ------------------------------ Director June 18, 1998
William C. Greenbeck
- ------------------------------ Director June 18, 1998
Robert L. McKay
- ------------------------------ Director June 18, 1998
Mark H. Stuenkel
- ------------------------------ Director June 18, 1998
Dale E. Walter
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION AND METHOD OF FILING
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of April 16, 1998, and amended and restated as of June 24, 1998,
by and among Western, SMB and BKLA (incorporated by reference to Appendix A to this Registration
Statement on Form S-4)
4.1 Form of Certificate representing shares of Western Common Stock (incorporated by reference to Exhibit 4
to the Registrant's Current Report on Form 8-K, dated June 19, 1997)
5.1 Opinion of Julius G. Christensen
8.1* Tax Opinion of Sullivan & Cromwell
8.2* Tax Opinion of Vavrinek, Trine, Day & Co., LLP
9.1 Shareholder Agreement, dated as of April 16, 1998, by and among Adriana M. Boeka and Bank of Los Angeles
9.2 Shareholder Agreement, dated as of April 16, 1998, by and among Maurice J. Burford and Bank of Los
Angeles
9.3 Shareholder Agreement, dated as of April 16, 1998, by and among Mary Anne Chalker and Bank of Los
Angeles
9.4 Shareholder Agreement, dated as of April 16, 1998, by and among John J. Feldman and Bank of Los Angeles
9.5 Shareholder Agreement, dated as of April 16, 1998, by and among Rickey Gelb and Bank of Los Angeles
9.6 Shareholder Agreement, dated as of April 16, 1998, by and among Robert G. Jacobsen and Bank of Los
Angeles
9.7 Shareholder Agreement, dated as of April 16, 1998, by and among Wendy R. Moskal and Bank of Los Angeles
9.8 Shareholder Agreement, dated as of April 16, 1998, by and among John R. Newhouse and Bank of Los Angeles
9.9 Shareholder Agreement, dated as of April 16, 1998, by and among James V. Reimann and Bank of Los Angeles
9.10 Shareholder Agreement, dated as of April 16, 1998, by and among Melvin F. Shaw and Bank of Los Angeles
9.11 Shareholder Agreement, dated as of April 16, 1998, by and among Burton N. Sterman and Bank of Los
Angeles
9.12 Shareholder Agreement, dated as of April 16, 1998, by and among Roy Doumani and Bank of Los Angeles.
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Vavrinek, Trine, Day & Co., LLP (BKLA)
23.3 Consent of Deloitte & Touche LLP (Santa Monica Bank)
23.4 Consent of Deloitte & Touche LLP (SC Bancorp)
23.5 Consent of Deloitte & Touche LLP (California Commercial Bankshares)
23.6 Consent of Julius G. Christensen (included in opinion filed as Exhibit 5.1 hereto)
23.7* Consent of Sullivan & Cromwell for Tax Opinion that is filed as Exhibit 8.1 hereto
23.8* Consent of Vavrinek, Trine, Day & Co., LLP for Tax Opinion that is filed as Exhibit 8.2 hereto
23.9 Consent of Vavrinek, Trine, Day & Co., LLP (Monarch Bancorp)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION AND METHOD OF FILING
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
23.10 Consent of Arthur Andersen LLP (Santa Monica Bank)
24.1 Power of Attorney (set forth on Page II-3 hereof)
99.1 Consent of Wedbush
99.2 Form of Letter of Transmittal
99.3 Consent of Adriana M. Boeka, proposed Western director
</TABLE>
- ------------------------
* To be filed by amendment.
<PAGE>
EXHIBIT 5.1
June ___, 1998
Western Bancorp,
4100 Newport Place, Suite 900,
Newport Beach, California 92660.
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933, as
amended (the "Act"), of 2,425,033 shares (the "Securities") of Common Stock,
without par value, of Western Bancorp, a California corporation (the "Company"),
I, as General Counsel of the Company, have examined such corporate records,
certificates and other documents, and such questions of law, as I have
considered necessary or appropriate for the purpose of this opinion. Upon the
basis of such examination, I advise you that, in my opinion, when the
registration statement on Form S-4 relating to the Securities (the "Registration
Statement") has become effective under the Act and the Securities have been duly
issued and sold as contemplated by the Registration Statement and upon
consummation of the merger of Bank of Los Angeles with and into Santa Monica
Bank, a wholly-owned subsidiary of the Company, the Securities will be validly
issued, fully paid and nonassessable.
The foregoing opinion is limited to the Federal laws of the United States
and the laws of the State of California, and I am expressing no opinion as to
the effect of the laws of any other jurisdiction.
I have relied as to certain matters on information obtained from public
officials and other sources believed by me to be responsible.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the heading "Validity of
Western Common Stock" in the Proxy Statement-Prospectus contained in the
Registration Statement. In giving such consent, I do not thereby admit that I
am in the category of persons whose consent is required under Section 7 of the
Act.
Very truly yours,
Julius G. Christensen,
Executive Vice President
General Counsel and Secretary
<PAGE>
EXHIBIT 9.1
SHAREHOLDER AGREEMENT
Shareholder Agreement (the "Agreement"), dated as of April 16, 1998,
by and among (i) Adriana M. Boeka, a shareholder (the "Shareholder") of Bank of
Los Angeles, a California banking corporation (the "Company"), (ii) Western
Bancorp, a California corporation ("Western") and (iii) Santa Monica Bank, a
California banking corporation ("Santa Monica"). All terms used herein and not
defined herein shall have the meanings assigned thereto in the Merger Agreement
(defined below).
Whereas, Western, Santa Monica and the Company have entered into an
Agreement and Plan of Merger, dated the date hereof (the "Merger Agreement"),
providing for the business combination transaction contemplated therein in which
the Company will merge with and into Santa Monica pursuant to the terms and
conditions of the Merger Agreement (the "Merger") and Western will pay
consideration to the Company's shareholders in the form of Western Common Stock;
Whereas, the Shareholder owns the shares of Company Common Stock
identified on ANNEX I hereto (such shares, together with all shares of Company
Common Stock subsequently acquired by the Shareholder during the term of this
Agreement, being referred to as the "Shares"); and
Whereas, in order to induce Western and Santa Monica to enter into the
Merger Agreement and in consideration of the substantial expenses incurred and
to be incurred by Western and Santa Monica in connection therewith, the
Shareholder, solely in such Shareholder's capacity as a shareholder of the
Company, has agreed to enter into and perform this Agreement.
Now, therefore, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO VOTE SHARES. Shareholder shall vote or cause to be
voted, or execute a written consent with respect to, the Shares (a) in favor of
adoption and approval of the Merger Agreement and the Merger and all
transactions relating thereto at every meeting of the shareholders of the
Company at which such matters are considered and at every adjournment thereof
and in connection with every proposal to take action by written consent with
respect thereto, and (b) against any other Acquisition Proposal at every meeting
of the shareholders of the Company at which such matters are considered and at
every adjournment thereof and in connection with every proposal to take action
by written consent with respect thereto.
<PAGE>
2. NO VOTING TRUSTS. Shareholder agrees that Shareholder will not,
nor will Shareholder permit any entity under Shareholder's control to, deposit
any Shares in a voting trust or subject the Shares to any agreement, arrangement
or understanding with respect to the voting of the Shares inconsistent with this
Agreement.
3. LIMITATION ON SALES. Except to a donee who agrees in writing to be
bound by the provisions of Section 1 hereof, during the term of this Agreement,
Shareholder agrees not to sell, assign, transfer or dispose of any of the
Shares.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Shareholder
represents and warrants to and agrees with Western and Santa Monica as follows:
a. CAPACITY. Shareholder has all requisite capacity and authority to
enter into and perform his or her obligations under this Agreement.
b. BINDING AGREEMENT. This Agreement constitutes the valid and
legally binding obligation of Shareholder, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
c. NON-CONTRAVENTION. The execution and delivery of this Agreement by
Shareholder does not, and the performance by Shareholder of his or her
obligations hereunder and the consummation by Shareholder of the
transactions contemplated hereby will not, violate or conflict with, or
constitute a default under, any agreement, instrument, contract or other
obligation or any order, arbitration award, judgment or decree to which
Shareholder is a party or by which Shareholder is bound, or any statute,
rule or regulation to which Shareholder is subject or, in the event that
Shareholder is a corporation, partnership, trust or other entity, any
charter, bylaw or other organizational document of the Shareholder.
d. OWNERSHIP OF SHARES. Shareholder has good title to all of the
Shares as of the date hereof, and, except as set forth on Annex A hereto,
the Shares are so owned free and clear of any liens, security interests,
charges or other encumbrances.
5. DISCLOSURE; SOLICITATION. Neither Shareholder nor any corporation,
partnership, trust or other entity controlled by Shareholder shall:
a. at any time following the Effective Date, disclose confidential
information regarding the Company to any third parties, except as required
by law, regulation, a court order, in the defense of litigation for which
the Company may be liable, or in any actions relating to this Agreement or
the Merger Agreement and the transactions contemplated hereby or thereby;
and
-2-
<PAGE>
b. for a period of two years following the Effective Date, solicit,
directly or indirectly, on its own behalf or on behalf of any other person
or entity, management personnel employed by Western or Santa Monica
immediately after the Effective Time for employment with any other
business;
PROVIDED, HOWEVER, that with respect to any of the matters covered in this
Section 5, to the extent that any restriction set forth in this Section 5 is
adjudicated to be invalid or unenforceable in any jurisdiction, the court making
such determination shall have the power to limit, construe or reduce the
duration, scope, activity or area of such provision to the extent necessary to
render such provision enforceable to the maximum extent permitted by applicable
law, such limited form to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made.
6. SPECIFIC PERFORMANCE AND REMEDIES. Shareholder acknowledges that
it will be impossible to measure in money the damage to Western or to Santa
Monica if Shareholder fails to comply with the obligations imposed by this
Agreement and that, in the event of any such failure, Western and Santa Monica
will not have an adequate remedy at law or in damages. Accordingly, Shareholder
agrees that injunctive relief or other equitable remedy, in addition to remedies
at law or in damages, is the appropriate remedy for any such failure and will
not oppose the granting of such relief on the basis that Western or Santa Monica
have an adequate remedy at law. Shareholder agrees that it will not seek, and
agrees to waive any requirement for, the securing or posting of a bond in
connection with Western or Santa Monica's seeking or obtaining such equitable
relief. In addition to all other rights or remedies which Western or Santa
Monica may have against Shareholder in the event of a default in Shareholder's
performance of Shareholder's obligations under this Agreement, Shareholder shall
be liable to Western and Santa Monica for all litigation costs and attorneys'
fees incurred by Western and Santa Monica in connection with the enforcement of
any of its rights or remedies against Shareholder. In addition, after
discussing the matter with Shareholder, Western and Santa Monica shall have the
right to inform any third party that Western and Santa Monica reasonably
believes to be, or to be contemplating, participating with Shareholder or
receiving from Shareholder assistance in violation of this Agreement, of the
terms of this Agreement and of the rights of Western and Santa Monica hereunder,
and that participation by any such persons with Shareholder in activities in
violation of Shareholder's agreement with Western and Santa Monica set forth in
this Agreement may give rise to claims by Western and Santa Monica against such
third party.
7. TERM OF AGREEMENT; TERMINATION. a. The term of this Agreement
shall commence on the date hereof.
b. This Agreement shall terminate upon the date, if any, of the
termination of the Merger Agreement prior to the Effective Time in accordance
with its terms. Upon such termination, no party shall have any further
obligations or liabilities hereunder; PROVIDED, HOWEVER, such termination shall
not relieve any party from liability for any breach
-3-
<PAGE>
of this Agreement PRIOR to such termination. If this Agreement is terminated
pursuant to Section 8.01 of the Merger Agreement, so long as the Company honors
its applicable obligations under Section 8.03 of the Merger Agreement, no party
shall have any further obligations or liabilities under this Agreement.
c. If the Merger Agreement is not terminated prior to the Effective
Time, this Agreement (except for the provisions of Sections 4, 5(b), 6, 9 and
10, which shall survive the Effective Time), shall terminate upon the Effective
Time. Sections 4, 5, 6, 9 and 10 shall terminate on the date two years after
the Effective Time.
8. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements,
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 by an
instrument in writing signed by each party hereto. No waiver of any provisions
hereof by either party shall be deemed a waiver of any other provisions hereof
by any such party, nor shall any such waiver be deemed a continuing waiver of
any provision hereof by such party.
9. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by a
reputable overnight courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Western or Santa Monica:
Western Bancorp
1251 Westwood Blvd.
Los Angeles, California 90024
Telecopier: (310) 477-8611
Attention: Matthew P. Wagner
With a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Telecopier: (213) 683-0458
Attention: Stanley F. Farrar, Esq.
-4-
<PAGE>
If to the Shareholder:
10. MISCELLANEOUS.
a. SEVERABILITY. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid or unenforceable by a court of competent jurisdiction, such
provision or application shall be unenforceable only to the extent of such
invalidity or unenforceability, and the remainder of the provision held
invalid or unenforceable and the application of such provision to persons
or circumstances, other than the party as to which it is held invalid, and
the remainder of this Agreement, shall not be affected.
b. CAPACITY. The covenants contained herein shall apply to
Shareholder solely in his or her capacity as a shareholder of the Company,
and no covenant contained herein shall apply to Shareholder in his or her
capacity as a director or officer of the Company.
c. COUNTERPARTS. 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. HEADINGS. 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.
e. CHOICE OF LAW. 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 REFERENCE TO ITS CONFLICTS OF LAW
PRINCIPLES.
11. ATTORNEY'S FEES. The prevailing party or parties in any
litigation, arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party or parties all fees and disbursements of
counsel (including expert witness and other consultants' fees and costs)
relating to or arising out of (a) the Proceeding (whether or not the Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding
including, without limitation, one to enforce or collect any judgment or award
resulting from
-5-
<PAGE>
the Proceeding. All such judgments and awards shall contain a specific
provision for the recovery of all such subsequently incurred costs, expenses,
and fees and disbursements of counsel.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
WESTERN BANCORP
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
SANTA MONICA
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
Adriana M. Boeka
--------------------------------
(Print or type name)
/s/ Adriana M. Boeka
--------------------------------
(Signature)
-7-
<PAGE>
EXHIBIT 9.2
SHAREHOLDER AGREEMENT
Shareholder Agreement (the "Agreement"), dated as of April 16,
1998, by and among (i) Maurice J. Burford, a shareholder (the "Shareholder")
of Bank of Los Angeles, a California banking corporation (the "Company"),
(ii) Western Bancorp, a California corporation ("Western") and (iii) Santa
Monica Bank, a California banking corporation ("Santa Monica"). All terms
used herein and not defined herein shall have the meanings assigned thereto
in the Merger Agreement (defined below).
Whereas, Western, Santa Monica and the Company have entered into an
Agreement and Plan of Merger, dated the date hereof (the "Merger Agreement"),
providing for the business combination transaction contemplated therein in which
the Company will merge with and into Santa Monica pursuant to the terms and
conditions of the Merger Agreement (the "Merger") and Western will pay
consideration to the Company's shareholders in the form of Western Common Stock;
Whereas, the Shareholder owns the shares of Company Common Stock
identified on ANNEX I hereto (such shares, together with all shares of Company
Common Stock subsequently acquired by the Shareholder during the term of this
Agreement, being referred to as the "Shares"); and
Whereas, in order to induce Western and Santa Monica to enter into the
Merger Agreement and in consideration of the substantial expenses incurred and
to be incurred by Western and Santa Monica in connection therewith, the
Shareholder, solely in such Shareholder's capacity as a shareholder of the
Company, has agreed to enter into and perform this Agreement.
Now, therefore, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO VOTE SHARES. Shareholder shall vote or cause to be
voted, or execute a written consent with respect to, the Shares (a) in favor of
adoption and approval of the Merger Agreement and the Merger and all
transactions relating thereto at every meeting of the shareholders of the
Company at which such matters are considered and at every adjournment thereof
and in connection with every proposal to take action by written consent with
respect thereto, and (b) against any other Acquisition Proposal at every meeting
of the shareholders of the Company at which such matters are considered and at
every adjournment thereof and in connection with every proposal to take action
by written consent with respect thereto.
<PAGE>
2. NO VOTING TRUSTS. Shareholder agrees that Shareholder will not,
nor will Shareholder permit any entity under Shareholder's control to, deposit
any Shares in a voting trust or subject the Shares to any agreement, arrangement
or understanding with respect to the voting of the Shares inconsistent with this
Agreement.
3. LIMITATION ON SALES. Except to a donee who agrees in writing to be
bound by the provisions of Section 1 hereof, during the term of this Agreement,
Shareholder agrees not to sell, assign, transfer or dispose of any of the
Shares.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Shareholder
represents and warrants to and agrees with Western and Santa Monica as follows:
a. CAPACITY. Shareholder has all requisite capacity and authority to
enter into and perform his or her obligations under this Agreement.
b. BINDING AGREEMENT. This Agreement constitutes the valid and
legally binding obligation of Shareholder, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
c. NON-CONTRAVENTION. The execution and delivery of this Agreement by
Shareholder does not, and the performance by Shareholder of his or her
obligations hereunder and the consummation by Shareholder of the
transactions contemplated hereby will not, violate or conflict with, or
constitute a default under, any agreement, instrument, contract or other
obligation or any order, arbitration award, judgment or decree to which
Shareholder is a party or by which Shareholder is bound, or any statute,
rule or regulation to which Shareholder is subject or, in the event that
Shareholder is a corporation, partnership, trust or other entity, any
charter, bylaw or other organizational document of the Shareholder.
d. OWNERSHIP OF SHARES. Shareholder has good title to all of the
Shares as of the date hereof, and, except as set forth on Annex A hereto,
the Shares are so owned free and clear of any liens, security interests,
charges or other encumbrances.
5. DISCLOSURE; SOLICITATION. Neither Shareholder nor any corporation,
partnership, trust or other entity controlled by Shareholder shall:
a. at any time following the Effective Date, disclose confidential
information regarding the Company to any third parties, except as required
by law, regulation, a court order, in the defense of litigation for which
the Company may be liable, or in any actions relating to this Agreement or
the Merger Agreement and the transactions contemplated hereby or thereby;
and
-2-
<PAGE>
b. for a period of two years following the Effective Date, solicit,
directly or indirectly, on its own behalf or on behalf of any other person
or entity, management personnel employed by Western or Santa Monica
immediately after the Effective Time for employment with any other
business;
PROVIDED, HOWEVER, that with respect to any of the matters covered in this
Section 5, to the extent that any restriction set forth in this Section 5 is
adjudicated to be invalid or unenforceable in any jurisdiction, the court making
such determination shall have the power to limit, construe or reduce the
duration, scope, activity or area of such provision to the extent necessary to
render such provision enforceable to the maximum extent permitted by applicable
law, such limited form to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made.
6. SPECIFIC PERFORMANCE AND REMEDIES. Shareholder acknowledges that
it will be impossible to measure in money the damage to Western or to Santa
Monica if Shareholder fails to comply with the obligations imposed by this
Agreement and that, in the event of any such failure, Western and Santa Monica
will not have an adequate remedy at law or in damages. Accordingly, Shareholder
agrees that injunctive relief or other equitable remedy, in addition to remedies
at law or in damages, is the appropriate remedy for any such failure and will
not oppose the granting of such relief on the basis that Western or Santa Monica
have an adequate remedy at law. Shareholder agrees that it will not seek, and
agrees to waive any requirement for, the securing or posting of a bond in
connection with Western or Santa Monica's seeking or obtaining such equitable
relief. In addition to all other rights or remedies which Western or Santa
Monica may have against Shareholder in the event of a default in Shareholder's
performance of Shareholder's obligations under this Agreement, Shareholder shall
be liable to Western and Santa Monica for all litigation costs and attorneys'
fees incurred by Western and Santa Monica in connection with the enforcement of
any of its rights or remedies against Shareholder. In addition, after
discussing the matter with Shareholder, Western and Santa Monica shall have the
right to inform any third party that Western and Santa Monica reasonably
believes to be, or to be contemplating, participating with Shareholder or
receiving from Shareholder assistance in violation of this Agreement, of the
terms of this Agreement and of the rights of Western and Santa Monica hereunder,
and that participation by any such persons with Shareholder in activities in
violation of Shareholder's agreement with Western and Santa Monica set forth in
this Agreement may give rise to claims by Western and Santa Monica against such
third party.
7. TERM OF AGREEMENT; TERMINATION. a. The term of this Agreement
shall commence on the date hereof.
b. This Agreement shall terminate upon the date, if any, of the
termination of the Merger Agreement prior to the Effective Time in accordance
with its terms. Upon such termination, no party shall have any further
obligations or liabilities hereunder; PROVIDED, HOWEVER, such termination shall
not relieve any party from liability for any breach
-3-
<PAGE>
of this Agreement PRIOR to such termination. If this Agreement is terminated
pursuant to Section 8.01 of the Merger Agreement, so long as the Company honors
its applicable obligations under Section 8.03 of the Merger Agreement, no party
shall have any further obligations or liabilities under this Agreement.
c. If the Merger Agreement is not terminated prior to the Effective
Time, this Agreement (except for the provisions of Sections 4, 5(b), 6, 9 and
10, which shall survive the Effective Time), shall terminate upon the Effective
Time. Sections 4, 5, 6, 9 and 10 shall terminate on the date two years after
the Effective Time.
8. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements,
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 by an
instrument in writing signed by each party hereto. No waiver of any provisions
hereof by either party shall be deemed a waiver of any other provisions hereof
by any such party, nor shall any such waiver be deemed a continuing waiver of
any provision hereof by such party.
9. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by a
reputable overnight courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Western or Santa Monica:
Western Bancorp
1251 Westwood Blvd.
Los Angeles, California 90024
Telecopier: (310) 477-8611
Attention: Matthew P. Wagner
With a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Telecopier: (213) 683-0458
Attention: Stanley F. Farrar, Esq.
-4-
<PAGE>
If to the Shareholder:
10. MISCELLANEOUS.
a. SEVERABILITY. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid or unenforceable by a court of competent jurisdiction, such
provision or application shall be unenforceable only to the extent of such
invalidity or unenforceability, and the remainder of the provision held
invalid or unenforceable and the application of such provision to persons
or circumstances, other than the party as to which it is held invalid, and
the remainder of this Agreement, shall not be affected.
b. CAPACITY. The covenants contained herein shall apply to
Shareholder solely in his or her capacity as a shareholder of the Company,
and no covenant contained herein shall apply to Shareholder in his or her
capacity as a director or officer of the Company.
c. COUNTERPARTS. 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. HEADINGS. 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.
e. CHOICE OF LAW. 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 REFERENCE TO ITS CONFLICTS OF LAW
PRINCIPLES.
11. ATTORNEY'S FEES. The prevailing party or parties in any
litigation, arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party or parties all fees and disbursements of
counsel (including expert witness and other consultants' fees and costs)
relating to or arising out of (a) the Proceeding (whether or not the Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding
including, without limitation, one to enforce or collect any judgment or award
resulting from
-5-
<PAGE>
the Proceeding. All such judgments and awards shall contain a specific
provision for the recovery of all such subsequently incurred costs, expenses,
and fees and disbursements of counsel.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
WESTERN BANCORP
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
SANTA MONICA
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
Maurice J. Burford
--------------------------------
(Print or type name)
/s/ Maurice J. Burford
--------------------------------
(Signature)
-7-
<PAGE>
EXHIBIT 9.3
SHAREHOLDER AGREEMENT
Shareholder Agreement (the "Agreement"), dated as of April 16,
1998, by and among (i) Mary Anne Chalker, a shareholder (the "Shareholder")
of Bank of Los Angeles, a California banking corporation (the "Company"),
(ii) Western Bancorp, a California corporation ("Western") and (iii) Santa
Monica Bank, a California banking corporation ("Santa Monica"). All terms
used herein and not defined herein shall have the meanings assigned thereto
in the Merger Agreement (defined below).
Whereas, Western, Santa Monica and the Company have entered into an
Agreement and Plan of Merger, dated the date hereof (the "Merger Agreement"),
providing for the business combination transaction contemplated therein in which
the Company will merge with and into Santa Monica pursuant to the terms and
conditions of the Merger Agreement (the "Merger") and Western will pay
consideration to the Company's shareholders in the form of Western Common Stock;
Whereas, the Shareholder owns the shares of Company Common Stock
identified on ANNEX I hereto (such shares, together with all shares of Company
Common Stock subsequently acquired by the Shareholder during the term of this
Agreement, being referred to as the "Shares"); and
Whereas, in order to induce Western and Santa Monica to enter into the
Merger Agreement and in consideration of the substantial expenses incurred and
to be incurred by Western and Santa Monica in connection therewith, the
Shareholder, solely in such Shareholder's capacity as a shareholder of the
Company, has agreed to enter into and perform this Agreement.
Now, therefore, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO VOTE SHARES. Shareholder shall vote or cause to be
voted, or execute a written consent with respect to, the Shares (a) in favor of
adoption and approval of the Merger Agreement and the Merger and all
transactions relating thereto at every meeting of the shareholders of the
Company at which such matters are considered and at every adjournment thereof
and in connection with every proposal to take action by written consent with
respect thereto, and (b) against any other Acquisition Proposal at every meeting
of the shareholders of the Company at which such matters are considered and at
every adjournment thereof and in connection with every proposal to take action
by written consent with respect thereto.
<PAGE>
2. NO VOTING TRUSTS. Shareholder agrees that Shareholder will not,
nor will Shareholder permit any entity under Shareholder's control to, deposit
any Shares in a voting trust or subject the Shares to any agreement, arrangement
or understanding with respect to the voting of the Shares inconsistent with this
Agreement.
3. LIMITATION ON SALES. Except to a donee who agrees in writing to be
bound by the provisions of Section 1 hereof, during the term of this Agreement,
Shareholder agrees not to sell, assign, transfer or dispose of any of the
Shares.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Shareholder
represents and warrants to and agrees with Western and Santa Monica as follows:
a. CAPACITY. Shareholder has all requisite capacity and authority to
enter into and perform his or her obligations under this Agreement.
b. BINDING AGREEMENT. This Agreement constitutes the valid and
legally binding obligation of Shareholder, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
c. NON-CONTRAVENTION. The execution and delivery of this Agreement by
Shareholder does not, and the performance by Shareholder of his or her
obligations hereunder and the consummation by Shareholder of the
transactions contemplated hereby will not, violate or conflict with, or
constitute a default under, any agreement, instrument, contract or other
obligation or any order, arbitration award, judgment or decree to which
Shareholder is a party or by which Shareholder is bound, or any statute,
rule or regulation to which Shareholder is subject or, in the event that
Shareholder is a corporation, partnership, trust or other entity, any
charter, bylaw or other organizational document of the Shareholder.
d. OWNERSHIP OF SHARES. Shareholder has good title to all of the
Shares as of the date hereof, and, except as set forth on Annex A hereto,
the Shares are so owned free and clear of any liens, security interests,
charges or other encumbrances.
5. DISCLOSURE; SOLICITATION. Neither Shareholder nor any corporation,
partnership, trust or other entity controlled by Shareholder shall:
a. at any time following the Effective Date, disclose confidential
information regarding the Company to any third parties, except as required
by law, regulation, a court order, in the defense of litigation for which
the Company may be liable, or in any actions relating to this Agreement or
the Merger Agreement and the transactions contemplated hereby or thereby;
and
-2-
<PAGE>
b. for a period of two years following the Effective Date, solicit,
directly or indirectly, on its own behalf or on behalf of any other person
or entity, management personnel employed by Western or Santa Monica
immediately after the Effective Time for employment with any other
business;
PROVIDED, HOWEVER, that with respect to any of the matters covered in this
Section 5, to the extent that any restriction set forth in this Section 5 is
adjudicated to be invalid or unenforceable in any jurisdiction, the court making
such determination shall have the power to limit, construe or reduce the
duration, scope, activity or area of such provision to the extent necessary to
render such provision enforceable to the maximum extent permitted by applicable
law, such limited form to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made.
6. SPECIFIC PERFORMANCE AND REMEDIES. Shareholder acknowledges that
it will be impossible to measure in money the damage to Western or to Santa
Monica if Shareholder fails to comply with the obligations imposed by this
Agreement and that, in the event of any such failure, Western and Santa Monica
will not have an adequate remedy at law or in damages. Accordingly, Shareholder
agrees that injunctive relief or other equitable remedy, in addition to remedies
at law or in damages, is the appropriate remedy for any such failure and will
not oppose the granting of such relief on the basis that Western or Santa Monica
have an adequate remedy at law. Shareholder agrees that it will not seek, and
agrees to waive any requirement for, the securing or posting of a bond in
connection with Western or Santa Monica's seeking or obtaining such equitable
relief. In addition to all other rights or remedies which Western or Santa
Monica may have against Shareholder in the event of a default in Shareholder's
performance of Shareholder's obligations under this Agreement, Shareholder shall
be liable to Western and Santa Monica for all litigation costs and attorneys'
fees incurred by Western and Santa Monica in connection with the enforcement of
any of its rights or remedies against Shareholder. In addition, after
discussing the matter with Shareholder, Western and Santa Monica shall have the
right to inform any third party that Western and Santa Monica reasonably
believes to be, or to be contemplating, participating with Shareholder or
receiving from Shareholder assistance in violation of this Agreement, of the
terms of this Agreement and of the rights of Western and Santa Monica hereunder,
and that participation by any such persons with Shareholder in activities in
violation of Shareholder's agreement with Western and Santa Monica set forth in
this Agreement may give rise to claims by Western and Santa Monica against such
third party.
7. TERM OF AGREEMENT; TERMINATION. a. The term of this Agreement
shall commence on the date hereof.
b. This Agreement shall terminate upon the date, if any, of the
termination of the Merger Agreement prior to the Effective Time in accordance
with its terms. Upon such termination, no party shall have any further
obligations or liabilities hereunder; PROVIDED, HOWEVER, such termination shall
not relieve any party from liability for any breach
-3-
<PAGE>
of this Agreement PRIOR to such termination. If this Agreement is terminated
pursuant to Section 8.01 of the Merger Agreement, so long as the Company honors
its applicable obligations under Section 8.03 of the Merger Agreement, no party
shall have any further obligations or liabilities under this Agreement.
c. If the Merger Agreement is not terminated prior to the Effective
Time, this Agreement (except for the provisions of Sections 4, 5(b), 6, 9 and
10, which shall survive the Effective Time), shall terminate upon the Effective
Time. Sections 4, 5, 6, 9 and 10 shall terminate on the date two years after
the Effective Time.
8. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements,
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 by an
instrument in writing signed by each party hereto. No waiver of any provisions
hereof by either party shall be deemed a waiver of any other provisions hereof
by any such party, nor shall any such waiver be deemed a continuing waiver of
any provision hereof by such party.
9. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by a
reputable overnight courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Western or Santa Monica:
Western Bancorp
1251 Westwood Blvd.
Los Angeles, California 90024
Telecopier: (310) 477-8611
Attention: Matthew P. Wagner
With a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Telecopier: (213) 683-0458
Attention: Stanley F. Farrar, Esq.
-4-
<PAGE>
If to the Shareholder:
10. MISCELLANEOUS.
a. SEVERABILITY. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid or unenforceable by a court of competent jurisdiction, such
provision or application shall be unenforceable only to the extent of such
invalidity or unenforceability, and the remainder of the provision held
invalid or unenforceable and the application of such provision to persons
or circumstances, other than the party as to which it is held invalid, and
the remainder of this Agreement, shall not be affected.
b. CAPACITY. The covenants contained herein shall apply to
Shareholder solely in his or her capacity as a shareholder of the Company,
and no covenant contained herein shall apply to Shareholder in his or her
capacity as a director or officer of the Company.
c. COUNTERPARTS. 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. HEADINGS. 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.
e. CHOICE OF LAW. 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 REFERENCE TO ITS CONFLICTS OF LAW
PRINCIPLES.
11. ATTORNEY'S FEES. The prevailing party or parties in any
litigation, arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party or parties all fees and disbursements of
counsel (including expert witness and other consultants' fees and costs)
relating to or arising out of (a) the Proceeding (whether or not the Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding
including, without limitation, one to enforce or collect any judgment or award
resulting from
-5-
<PAGE>
the Proceeding. All such judgments and awards shall contain a specific
provision for the recovery of all such subsequently incurred costs, expenses,
and fees and disbursements of counsel.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
WESTERN BANCORP
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
SANTA MONICA
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
Mary Anne Chalker
--------------------------------
(Print or type name)
/s/ Mary Anne Chalker
--------------------------------
(Signature)
-7-
<PAGE>
EXHIBIT 9.4
SHAREHOLDER AGREEMENT
Shareholder Agreement (the "Agreement"), dated as of April 16,
1998, by and among (i) John J. Feldman, a shareholder (the "Shareholder")
of Bank of Los Angeles, a California banking corporation (the "Company"),
(ii) Western Bancorp, a California corporation ("Western") and (iii) Santa
Monica Bank, a California banking corporation ("Santa Monica"). All terms
used herein and not defined herein shall have the meanings assigned thereto
in the Merger Agreement (defined below).
Whereas, Western, Santa Monica and the Company have entered into an
Agreement and Plan of Merger, dated the date hereof (the "Merger Agreement"),
providing for the business combination transaction contemplated therein in which
the Company will merge with and into Santa Monica pursuant to the terms and
conditions of the Merger Agreement (the "Merger") and Western will pay
consideration to the Company's shareholders in the form of Western Common Stock;
Whereas, the Shareholder owns the shares of Company Common Stock
identified on ANNEX I hereto (such shares, together with all shares of Company
Common Stock subsequently acquired by the Shareholder during the term of this
Agreement, being referred to as the "Shares"); and
Whereas, in order to induce Western and Santa Monica to enter into the
Merger Agreement and in consideration of the substantial expenses incurred and
to be incurred by Western and Santa Monica in connection therewith, the
Shareholder, solely in such Shareholder's capacity as a shareholder of the
Company, has agreed to enter into and perform this Agreement.
Now, therefore, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO VOTE SHARES. Shareholder shall vote or cause to be
voted, or execute a written consent with respect to, the Shares (a) in favor of
adoption and approval of the Merger Agreement and the Merger and all
transactions relating thereto at every meeting of the shareholders of the
Company at which such matters are considered and at every adjournment thereof
and in connection with every proposal to take action by written consent with
respect thereto, and (b) against any other Acquisition Proposal at every meeting
of the shareholders of the Company at which such matters are considered and at
every adjournment thereof and in connection with every proposal to take action
by written consent with respect thereto.
<PAGE>
2. NO VOTING TRUSTS. Shareholder agrees that Shareholder will not,
nor will Shareholder permit any entity under Shareholder's control to, deposit
any Shares in a voting trust or subject the Shares to any agreement, arrangement
or understanding with respect to the voting of the Shares inconsistent with this
Agreement.
3. LIMITATION ON SALES. Except to a donee who agrees in writing to be
bound by the provisions of Section 1 hereof, during the term of this Agreement,
Shareholder agrees not to sell, assign, transfer or dispose of any of the
Shares.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Shareholder
represents and warrants to and agrees with Western and Santa Monica as follows:
a. CAPACITY. Shareholder has all requisite capacity and authority to
enter into and perform his or her obligations under this Agreement.
b. BINDING AGREEMENT. This Agreement constitutes the valid and
legally binding obligation of Shareholder, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
c. NON-CONTRAVENTION. The execution and delivery of this Agreement by
Shareholder does not, and the performance by Shareholder of his or her
obligations hereunder and the consummation by Shareholder of the
transactions contemplated hereby will not, violate or conflict with, or
constitute a default under, any agreement, instrument, contract or other
obligation or any order, arbitration award, judgment or decree to which
Shareholder is a party or by which Shareholder is bound, or any statute,
rule or regulation to which Shareholder is subject or, in the event that
Shareholder is a corporation, partnership, trust or other entity, any
charter, bylaw or other organizational document of the Shareholder.
d. OWNERSHIP OF SHARES. Shareholder has good title to all of the
Shares as of the date hereof, and, except as set forth on Annex A hereto,
the Shares are so owned free and clear of any liens, security interests,
charges or other encumbrances.
5. DISCLOSURE; SOLICITATION. Neither Shareholder nor any corporation,
partnership, trust or other entity controlled by Shareholder shall:
a. at any time following the Effective Date, disclose confidential
information regarding the Company to any third parties, except as required
by law, regulation, a court order, in the defense of litigation for which
the Company may be liable, or in any actions relating to this Agreement or
the Merger Agreement and the transactions contemplated hereby or thereby;
and
-2-
<PAGE>
b. for a period of two years following the Effective Date, solicit,
directly or indirectly, on its own behalf or on behalf of any other person
or entity, management personnel employed by Western or Santa Monica
immediately after the Effective Time for employment with any other
business;
PROVIDED, HOWEVER, that with respect to any of the matters covered in this
Section 5, to the extent that any restriction set forth in this Section 5 is
adjudicated to be invalid or unenforceable in any jurisdiction, the court making
such determination shall have the power to limit, construe or reduce the
duration, scope, activity or area of such provision to the extent necessary to
render such provision enforceable to the maximum extent permitted by applicable
law, such limited form to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made.
6. SPECIFIC PERFORMANCE AND REMEDIES. Shareholder acknowledges that
it will be impossible to measure in money the damage to Western or to Santa
Monica if Shareholder fails to comply with the obligations imposed by this
Agreement and that, in the event of any such failure, Western and Santa Monica
will not have an adequate remedy at law or in damages. Accordingly, Shareholder
agrees that injunctive relief or other equitable remedy, in addition to remedies
at law or in damages, is the appropriate remedy for any such failure and will
not oppose the granting of such relief on the basis that Western or Santa Monica
have an adequate remedy at law. Shareholder agrees that it will not seek, and
agrees to waive any requirement for, the securing or posting of a bond in
connection with Western or Santa Monica's seeking or obtaining such equitable
relief. In addition to all other rights or remedies which Western or Santa
Monica may have against Shareholder in the event of a default in Shareholder's
performance of Shareholder's obligations under this Agreement, Shareholder shall
be liable to Western and Santa Monica for all litigation costs and attorneys'
fees incurred by Western and Santa Monica in connection with the enforcement of
any of its rights or remedies against Shareholder. In addition, after
discussing the matter with Shareholder, Western and Santa Monica shall have the
right to inform any third party that Western and Santa Monica reasonably
believes to be, or to be contemplating, participating with Shareholder or
receiving from Shareholder assistance in violation of this Agreement, of the
terms of this Agreement and of the rights of Western and Santa Monica hereunder,
and that participation by any such persons with Shareholder in activities in
violation of Shareholder's agreement with Western and Santa Monica set forth in
this Agreement may give rise to claims by Western and Santa Monica against such
third party.
7. TERM OF AGREEMENT; TERMINATION. a. The term of this Agreement
shall commence on the date hereof.
b. This Agreement shall terminate upon the date, if any, of the
termination of the Merger Agreement prior to the Effective Time in accordance
with its terms. Upon such termination, no party shall have any further
obligations or liabilities hereunder; PROVIDED, HOWEVER, such termination shall
not relieve any party from liability for any breach
-3-
<PAGE>
of this Agreement PRIOR to such termination. If this Agreement is terminated
pursuant to Section 8.01 of the Merger Agreement, so long as the Company honors
its applicable obligations under Section 8.03 of the Merger Agreement, no party
shall have any further obligations or liabilities under this Agreement.
c. If the Merger Agreement is not terminated prior to the Effective
Time, this Agreement (except for the provisions of Sections 4, 5(b), 6, 9 and
10, which shall survive the Effective Time), shall terminate upon the Effective
Time. Sections 4, 5, 6, 9 and 10 shall terminate on the date two years after
the Effective Time.
8. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements,
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 by an
instrument in writing signed by each party hereto. No waiver of any provisions
hereof by either party shall be deemed a waiver of any other provisions hereof
by any such party, nor shall any such waiver be deemed a continuing waiver of
any provision hereof by such party.
9. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by a
reputable overnight courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Western or Santa Monica:
Western Bancorp
1251 Westwood Blvd.
Los Angeles, California 90024
Telecopier: (310) 477-8611
Attention: Matthew P. Wagner
With a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Telecopier: (213) 683-0458
Attention: Stanley F. Farrar, Esq.
-4-
<PAGE>
If to the Shareholder:
10. MISCELLANEOUS.
a. SEVERABILITY. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid or unenforceable by a court of competent jurisdiction, such
provision or application shall be unenforceable only to the extent of such
invalidity or unenforceability, and the remainder of the provision held
invalid or unenforceable and the application of such provision to persons
or circumstances, other than the party as to which it is held invalid, and
the remainder of this Agreement, shall not be affected.
b. CAPACITY. The covenants contained herein shall apply to
Shareholder solely in his or her capacity as a shareholder of the Company,
and no covenant contained herein shall apply to Shareholder in his or her
capacity as a director or officer of the Company.
c. COUNTERPARTS. 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. HEADINGS. 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.
e. CHOICE OF LAW. 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 REFERENCE TO ITS CONFLICTS OF LAW
PRINCIPLES.
11. ATTORNEY'S FEES. The prevailing party or parties in any
litigation, arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party or parties all fees and disbursements of
counsel (including expert witness and other consultants' fees and costs)
relating to or arising out of (a) the Proceeding (whether or not the Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding
including, without limitation, one to enforce or collect any judgment or award
resulting from
-5-
<PAGE>
the Proceeding. All such judgments and awards shall contain a specific
provision for the recovery of all such subsequently incurred costs, expenses,
and fees and disbursements of counsel.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
WESTERN BANCORP
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
SANTA MONICA
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
John J. Feldman
--------------------------------
(Print or type name)
/s/ John J. Feldman
--------------------------------
(Signature)
-7-
<PAGE>
EXHIBIT 9.5
SHAREHOLDER AGREEMENT
Shareholder Agreement (the "Agreement"), dated as of April 16,
1998, by and among (i) Rickey Gelb, a shareholder (the "Shareholder")
of Bank of Los Angeles, a California banking corporation (the "Company"),
(ii) Western Bancorp, a California corporation ("Western") and (iii) Santa
Monica Bank, a California banking corporation ("Santa Monica"). All terms
used herein and not defined herein shall have the meanings assigned thereto
in the Merger Agreement (defined below).
Whereas, Western, Santa Monica and the Company have entered into an
Agreement and Plan of Merger, dated the date hereof (the "Merger Agreement"),
providing for the business combination transaction contemplated therein in which
the Company will merge with and into Santa Monica pursuant to the terms and
conditions of the Merger Agreement (the "Merger") and Western will pay
consideration to the Company's shareholders in the form of Western Common Stock;
Whereas, the Shareholder owns the shares of Company Common Stock
identified on ANNEX I hereto (such shares, together with all shares of Company
Common Stock subsequently acquired by the Shareholder during the term of this
Agreement, being referred to as the "Shares"); and
Whereas, in order to induce Western and Santa Monica to enter into the
Merger Agreement and in consideration of the substantial expenses incurred and
to be incurred by Western and Santa Monica in connection therewith, the
Shareholder, solely in such Shareholder's capacity as a shareholder of the
Company, has agreed to enter into and perform this Agreement.
Now, therefore, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO VOTE SHARES. Shareholder shall vote or cause to be
voted, or execute a written consent with respect to, the Shares (a) in favor of
adoption and approval of the Merger Agreement and the Merger and all
transactions relating thereto at every meeting of the shareholders of the
Company at which such matters are considered and at every adjournment thereof
and in connection with every proposal to take action by written consent with
respect thereto, and (b) against any other Acquisition Proposal at every meeting
of the shareholders of the Company at which such matters are considered and at
every adjournment thereof and in connection with every proposal to take action
by written consent with respect thereto.
<PAGE>
2. NO VOTING TRUSTS. Shareholder agrees that Shareholder will not,
nor will Shareholder permit any entity under Shareholder's control to, deposit
any Shares in a voting trust or subject the Shares to any agreement, arrangement
or understanding with respect to the voting of the Shares inconsistent with this
Agreement.
3. LIMITATION ON SALES. Except to a donee who agrees in writing to be
bound by the provisions of Section 1 hereof, during the term of this Agreement,
Shareholder agrees not to sell, assign, transfer or dispose of any of the
Shares.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Shareholder
represents and warrants to and agrees with Western and Santa Monica as follows:
a. CAPACITY. Shareholder has all requisite capacity and authority to
enter into and perform his or her obligations under this Agreement.
b. BINDING AGREEMENT. This Agreement constitutes the valid and
legally binding obligation of Shareholder, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
c. NON-CONTRAVENTION. The execution and delivery of this Agreement by
Shareholder does not, and the performance by Shareholder of his or her
obligations hereunder and the consummation by Shareholder of the
transactions contemplated hereby will not, violate or conflict with, or
constitute a default under, any agreement, instrument, contract or other
obligation or any order, arbitration award, judgment or decree to which
Shareholder is a party or by which Shareholder is bound, or any statute,
rule or regulation to which Shareholder is subject or, in the event that
Shareholder is a corporation, partnership, trust or other entity, any
charter, bylaw or other organizational document of the Shareholder.
d. OWNERSHIP OF SHARES. Shareholder has good title to all of the
Shares as of the date hereof, and, except as set forth on Annex A hereto,
the Shares are so owned free and clear of any liens, security interests,
charges or other encumbrances.
5. DISCLOSURE; SOLICITATION. Neither Shareholder nor any corporation,
partnership, trust or other entity controlled by Shareholder shall:
a. at any time following the Effective Date, disclose confidential
information regarding the Company to any third parties, except as required
by law, regulation, a court order, in the defense of litigation for which
the Company may be liable, or in any actions relating to this Agreement or
the Merger Agreement and the transactions contemplated hereby or thereby;
and
-2-
<PAGE>
b. for a period of two years following the Effective Date, solicit,
directly or indirectly, on its own behalf or on behalf of any other person
or entity, management personnel employed by Western or Santa Monica
immediately after the Effective Time for employment with any other
business;
PROVIDED, HOWEVER, that with respect to any of the matters covered in this
Section 5, to the extent that any restriction set forth in this Section 5 is
adjudicated to be invalid or unenforceable in any jurisdiction, the court making
such determination shall have the power to limit, construe or reduce the
duration, scope, activity or area of such provision to the extent necessary to
render such provision enforceable to the maximum extent permitted by applicable
law, such limited form to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made.
6. SPECIFIC PERFORMANCE AND REMEDIES. Shareholder acknowledges that
it will be impossible to measure in money the damage to Western or to Santa
Monica if Shareholder fails to comply with the obligations imposed by this
Agreement and that, in the event of any such failure, Western and Santa Monica
will not have an adequate remedy at law or in damages. Accordingly, Shareholder
agrees that injunctive relief or other equitable remedy, in addition to remedies
at law or in damages, is the appropriate remedy for any such failure and will
not oppose the granting of such relief on the basis that Western or Santa Monica
have an adequate remedy at law. Shareholder agrees that it will not seek, and
agrees to waive any requirement for, the securing or posting of a bond in
connection with Western or Santa Monica's seeking or obtaining such equitable
relief. In addition to all other rights or remedies which Western or Santa
Monica may have against Shareholder in the event of a default in Shareholder's
performance of Shareholder's obligations under this Agreement, Shareholder shall
be liable to Western and Santa Monica for all litigation costs and attorneys'
fees incurred by Western and Santa Monica in connection with the enforcement of
any of its rights or remedies against Shareholder. In addition, after
discussing the matter with Shareholder, Western and Santa Monica shall have the
right to inform any third party that Western and Santa Monica reasonably
believes to be, or to be contemplating, participating with Shareholder or
receiving from Shareholder assistance in violation of this Agreement, of the
terms of this Agreement and of the rights of Western and Santa Monica hereunder,
and that participation by any such persons with Shareholder in activities in
violation of Shareholder's agreement with Western and Santa Monica set forth in
this Agreement may give rise to claims by Western and Santa Monica against such
third party.
7. TERM OF AGREEMENT; TERMINATION. a. The term of this Agreement
shall commence on the date hereof.
b. This Agreement shall terminate upon the date, if any, of the
termination of the Merger Agreement prior to the Effective Time in accordance
with its terms. Upon such termination, no party shall have any further
obligations or liabilities hereunder; PROVIDED, HOWEVER, such termination shall
not relieve any party from liability for any breach
-3-
<PAGE>
of this Agreement PRIOR to such termination. If this Agreement is terminated
pursuant to Section 8.01 of the Merger Agreement, so long as the Company honors
its applicable obligations under Section 8.03 of the Merger Agreement, no party
shall have any further obligations or liabilities under this Agreement.
c. If the Merger Agreement is not terminated prior to the Effective
Time, this Agreement (except for the provisions of Sections 4, 5(b), 6, 9 and
10, which shall survive the Effective Time), shall terminate upon the Effective
Time. Sections 4, 5, 6, 9 and 10 shall terminate on the date two years after
the Effective Time.
8. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements,
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 by an
instrument in writing signed by each party hereto. No waiver of any provisions
hereof by either party shall be deemed a waiver of any other provisions hereof
by any such party, nor shall any such waiver be deemed a continuing waiver of
any provision hereof by such party.
9. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by a
reputable overnight courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Western or Santa Monica:
Western Bancorp
1251 Westwood Blvd.
Los Angeles, California 90024
Telecopier: (310) 477-8611
Attention: Matthew P. Wagner
With a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Telecopier: (213) 683-0458
Attention: Stanley F. Farrar, Esq.
-4-
<PAGE>
If to the Shareholder:
10. MISCELLANEOUS.
a. SEVERABILITY. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid or unenforceable by a court of competent jurisdiction, such
provision or application shall be unenforceable only to the extent of such
invalidity or unenforceability, and the remainder of the provision held
invalid or unenforceable and the application of such provision to persons
or circumstances, other than the party as to which it is held invalid, and
the remainder of this Agreement, shall not be affected.
b. CAPACITY. The covenants contained herein shall apply to
Shareholder solely in his or her capacity as a shareholder of the Company,
and no covenant contained herein shall apply to Shareholder in his or her
capacity as a director or officer of the Company.
c. COUNTERPARTS. 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. HEADINGS. 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.
e. CHOICE OF LAW. 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 REFERENCE TO ITS CONFLICTS OF LAW
PRINCIPLES.
11. ATTORNEY'S FEES. The prevailing party or parties in any
litigation, arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party or parties all fees and disbursements of
counsel (including expert witness and other consultants' fees and costs)
relating to or arising out of (a) the Proceeding (whether or not the Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding
including, without limitation, one to enforce or collect any judgment or award
resulting from
-5-
<PAGE>
the Proceeding. All such judgments and awards shall contain a specific
provision for the recovery of all such subsequently incurred costs, expenses,
and fees and disbursements of counsel.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
WESTERN BANCORP
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
SANTA MONICA
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
Rickey Gelb
--------------------------------
(Print or type name)
/s/ Rickey Gelb
--------------------------------
(Signature)
-7-
<PAGE>
EXHIBIT 9.6
SHAREHOLDER AGREEMENT
Shareholder Agreement (the "Agreement"), dated as of April 16,
1998, by and among (i) Robert Jacobsen, a shareholder (the "Shareholder")
of Bank of Los Angeles, a California banking corporation (the "Company"),
(ii) Western Bancorp, a California corporation ("Western") and (iii) Santa
Monica Bank, a California banking corporation ("Santa Monica"). All terms
used herein and not defined herein shall have the meanings assigned thereto
in the Merger Agreement (defined below).
Whereas, Western, Santa Monica and the Company have entered into an
Agreement and Plan of Merger, dated the date hereof (the "Merger Agreement"),
providing for the business combination transaction contemplated therein in which
the Company will merge with and into Santa Monica pursuant to the terms and
conditions of the Merger Agreement (the "Merger") and Western will pay
consideration to the Company's shareholders in the form of Western Common Stock;
Whereas, the Shareholder owns the shares of Company Common Stock
identified on ANNEX I hereto (such shares, together with all shares of Company
Common Stock subsequently acquired by the Shareholder during the term of this
Agreement, being referred to as the "Shares"); and
Whereas, in order to induce Western and Santa Monica to enter into the
Merger Agreement and in consideration of the substantial expenses incurred and
to be incurred by Western and Santa Monica in connection therewith, the
Shareholder, solely in such Shareholder's capacity as a shareholder of the
Company, has agreed to enter into and perform this Agreement.
Now, therefore, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO VOTE SHARES. Shareholder shall vote or cause to be
voted, or execute a written consent with respect to, the Shares (a) in favor of
adoption and approval of the Merger Agreement and the Merger and all
transactions relating thereto at every meeting of the shareholders of the
Company at which such matters are considered and at every adjournment thereof
and in connection with every proposal to take action by written consent with
respect thereto, and (b) against any other Acquisition Proposal at every meeting
of the shareholders of the Company at which such matters are considered and at
every adjournment thereof and in connection with every proposal to take action
by written consent with respect thereto.
<PAGE>
2. NO VOTING TRUSTS. Shareholder agrees that Shareholder will not,
nor will Shareholder permit any entity under Shareholder's control to, deposit
any Shares in a voting trust or subject the Shares to any agreement, arrangement
or understanding with respect to the voting of the Shares inconsistent with this
Agreement.
3. LIMITATION ON SALES. Except to a donee who agrees in writing to be
bound by the provisions of Section 1 hereof, during the term of this Agreement,
Shareholder agrees not to sell, assign, transfer or dispose of any of the
Shares.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Shareholder
represents and warrants to and agrees with Western and Santa Monica as follows:
a. CAPACITY. Shareholder has all requisite capacity and authority to
enter into and perform his or her obligations under this Agreement.
b. BINDING AGREEMENT. This Agreement constitutes the valid and
legally binding obligation of Shareholder, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
c. NON-CONTRAVENTION. The execution and delivery of this Agreement by
Shareholder does not, and the performance by Shareholder of his or her
obligations hereunder and the consummation by Shareholder of the
transactions contemplated hereby will not, violate or conflict with, or
constitute a default under, any agreement, instrument, contract or other
obligation or any order, arbitration award, judgment or decree to which
Shareholder is a party or by which Shareholder is bound, or any statute,
rule or regulation to which Shareholder is subject or, in the event that
Shareholder is a corporation, partnership, trust or other entity, any
charter, bylaw or other organizational document of the Shareholder.
d. OWNERSHIP OF SHARES. Shareholder has good title to all of the
Shares as of the date hereof, and, except as set forth on Annex A hereto,
the Shares are so owned free and clear of any liens, security interests,
charges or other encumbrances.
5. DISCLOSURE; SOLICITATION. Neither Shareholder nor any corporation,
partnership, trust or other entity controlled by Shareholder shall:
a. at any time following the Effective Date, disclose confidential
information regarding the Company to any third parties, except as required
by law, regulation, a court order, in the defense of litigation for which
the Company may be liable, or in any actions relating to this Agreement or
the Merger Agreement and the transactions contemplated hereby or thereby;
and
-2-
<PAGE>
b. for a period of two years following the Effective Date, solicit,
directly or indirectly, on its own behalf or on behalf of any other person
or entity, management personnel employed by Western or Santa Monica
immediately after the Effective Time for employment with any other
business;
PROVIDED, HOWEVER, that with respect to any of the matters covered in this
Section 5, to the extent that any restriction set forth in this Section 5 is
adjudicated to be invalid or unenforceable in any jurisdiction, the court making
such determination shall have the power to limit, construe or reduce the
duration, scope, activity or area of such provision to the extent necessary to
render such provision enforceable to the maximum extent permitted by applicable
law, such limited form to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made.
6. SPECIFIC PERFORMANCE AND REMEDIES. Shareholder acknowledges that
it will be impossible to measure in money the damage to Western or to Santa
Monica if Shareholder fails to comply with the obligations imposed by this
Agreement and that, in the event of any such failure, Western and Santa Monica
will not have an adequate remedy at law or in damages. Accordingly, Shareholder
agrees that injunctive relief or other equitable remedy, in addition to remedies
at law or in damages, is the appropriate remedy for any such failure and will
not oppose the granting of such relief on the basis that Western or Santa Monica
have an adequate remedy at law. Shareholder agrees that it will not seek, and
agrees to waive any requirement for, the securing or posting of a bond in
connection with Western or Santa Monica's seeking or obtaining such equitable
relief. In addition to all other rights or remedies which Western or Santa
Monica may have against Shareholder in the event of a default in Shareholder's
performance of Shareholder's obligations under this Agreement, Shareholder shall
be liable to Western and Santa Monica for all litigation costs and attorneys'
fees incurred by Western and Santa Monica in connection with the enforcement of
any of its rights or remedies against Shareholder. In addition, after
discussing the matter with Shareholder, Western and Santa Monica shall have the
right to inform any third party that Western and Santa Monica reasonably
believes to be, or to be contemplating, participating with Shareholder or
receiving from Shareholder assistance in violation of this Agreement, of the
terms of this Agreement and of the rights of Western and Santa Monica hereunder,
and that participation by any such persons with Shareholder in activities in
violation of Shareholder's agreement with Western and Santa Monica set forth in
this Agreement may give rise to claims by Western and Santa Monica against such
third party.
7. TERM OF AGREEMENT; TERMINATION. a. The term of this Agreement
shall commence on the date hereof.
b. This Agreement shall terminate upon the date, if any, of the
termination of the Merger Agreement prior to the Effective Time in accordance
with its terms. Upon such termination, no party shall have any further
obligations or liabilities hereunder; PROVIDED, HOWEVER, such termination shall
not relieve any party from liability for any breach
-3-
<PAGE>
of this Agreement PRIOR to such termination. If this Agreement is terminated
pursuant to Section 8.01 of the Merger Agreement, so long as the Company honors
its applicable obligations under Section 8.03 of the Merger Agreement, no party
shall have any further obligations or liabilities under this Agreement.
c. If the Merger Agreement is not terminated prior to the Effective
Time, this Agreement (except for the provisions of Sections 4, 5(b), 6, 9 and
10, which shall survive the Effective Time), shall terminate upon the Effective
Time. Sections 4, 5, 6, 9 and 10 shall terminate on the date two years after
the Effective Time.
8. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements,
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 by an
instrument in writing signed by each party hereto. No waiver of any provisions
hereof by either party shall be deemed a waiver of any other provisions hereof
by any such party, nor shall any such waiver be deemed a continuing waiver of
any provision hereof by such party.
9. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by a
reputable overnight courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Western or Santa Monica:
Western Bancorp
1251 Westwood Blvd.
Los Angeles, California 90024
Telecopier: (310) 477-8611
Attention: Matthew P. Wagner
With a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Telecopier: (213) 683-0458
Attention: Stanley F. Farrar, Esq.
-4-
<PAGE>
If to the Shareholder:
10. MISCELLANEOUS.
a. SEVERABILITY. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid or unenforceable by a court of competent jurisdiction, such
provision or application shall be unenforceable only to the extent of such
invalidity or unenforceability, and the remainder of the provision held
invalid or unenforceable and the application of such provision to persons
or circumstances, other than the party as to which it is held invalid, and
the remainder of this Agreement, shall not be affected.
b. CAPACITY. The covenants contained herein shall apply to
Shareholder solely in his or her capacity as a shareholder of the Company,
and no covenant contained herein shall apply to Shareholder in his or her
capacity as a director or officer of the Company.
c. COUNTERPARTS. 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. HEADINGS. 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.
e. CHOICE OF LAW. 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 REFERENCE TO ITS CONFLICTS OF LAW
PRINCIPLES.
11. ATTORNEY'S FEES. The prevailing party or parties in any
litigation, arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party or parties all fees and disbursements of
counsel (including expert witness and other consultants' fees and costs)
relating to or arising out of (a) the Proceeding (whether or not the Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding
including, without limitation, one to enforce or collect any judgment or award
resulting from
-5-
<PAGE>
the Proceeding. All such judgments and awards shall contain a specific
provision for the recovery of all such subsequently incurred costs, expenses,
and fees and disbursements of counsel.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
WESTERN BANCORP
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
SANTA MONICA
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
Robert G. Jacobsen
--------------------------------
(Print or type name)
/s/ Robert G. Jacobsen
--------------------------------
(Signature)
-7-
<PAGE>
EXHIBIT 9.7
SHAREHOLDER AGREEMENT
Shareholder Agreement (the "Agreement"), dated as of April 16, 1998,
by and among (i) Wendy R. Moskal, a shareholder (the "Shareholder") of Bank of
Los Angeles, a California banking corporation (the "Company"), (ii) Western
Bancorp, a California corporation ("Western") and (iii) Santa Monica Bank, a
California banking corporation ("Santa Monica"). All terms used herein and not
defined herein shall have the meanings assigned thereto in the Merger Agreement
(defined below).
Whereas, Western, Santa Monica and the Company have entered into an
Agreement and Plan of Merger, dated the date hereof (the "Merger Agreement"),
providing for the business combination transaction contemplated therein in which
the Company will merge with and into Santa Monica pursuant to the terms and
conditions of the Merger Agreement (the "Merger") and Western will pay
consideration to the Company's shareholders in the form of Western Common Stock;
Whereas, the Shareholder owns the shares of Company Common Stock
identified on ANNEX I hereto (such shares, together with all shares of Company
Common Stock subsequently acquired by the Shareholder during the term of this
Agreement, being referred to as the "Shares"); and
Whereas, in order to induce Western and Santa Monica to enter into the
Merger Agreement and in consideration of the substantial expenses incurred and
to be incurred by Western and Santa Monica in connection therewith, the
Shareholder, solely in such Shareholder's capacity as a shareholder of the
Company, has agreed to enter into and perform this Agreement.
Now, therefore, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO VOTE SHARES. Shareholder shall vote or cause to be
voted, or execute a written consent with respect to, the Shares (a) in favor of
adoption and approval of the Merger Agreement and the Merger and all
transactions relating thereto at every meeting of the shareholders of the
Company at which such matters are considered and at every adjournment thereof
and in connection with every proposal to take action by written consent with
respect thereto, and (b) against any other Acquisition Proposal at every meeting
of the shareholders of the Company at which such matters are considered and at
every adjournment thereof and in connection with every proposal to take action
by written consent with respect thereto.
<PAGE>
2. NO VOTING TRUSTS. Shareholder agrees that Shareholder will not,
nor will Shareholder permit any entity under Shareholder's control to, deposit
any Shares in a voting trust or subject the Shares to any agreement, arrangement
or understanding with respect to the voting of the Shares inconsistent with this
Agreement.
3. LIMITATION ON SALES. Except to a donee who agrees in writing to be
bound by the provisions of Section 1 hereof, during the term of this Agreement,
Shareholder agrees not to sell, assign, transfer or dispose of any of the
Shares.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Shareholder
represents and warrants to and agrees with Western and Santa Monica as follows:
a. CAPACITY. Shareholder has all requisite capacity and authority to
enter into and perform his or her obligations under this Agreement.
b. BINDING AGREEMENT. This Agreement constitutes the valid and
legally binding obligation of Shareholder, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
c. NON-CONTRAVENTION. The execution and delivery of this Agreement by
Shareholder does not, and the performance by Shareholder of his or her
obligations hereunder and the consummation by Shareholder of the
transactions contemplated hereby will not, violate or conflict with, or
constitute a default under, any agreement, instrument, contract or other
obligation or any order, arbitration award, judgment or decree to which
Shareholder is a party or by which Shareholder is bound, or any statute,
rule or regulation to which Shareholder is subject or, in the event that
Shareholder is a corporation, partnership, trust or other entity, any
charter, bylaw or other organizational document of the Shareholder.
d. OWNERSHIP OF SHARES. Shareholder has good title to all of the
Shares as of the date hereof, and, except as set forth on Annex A hereto,
the Shares are so owned free and clear of any liens, security interests,
charges or other encumbrances.
5. DISCLOSURE; SOLICITATION. Neither Shareholder nor any corporation,
partnership, trust or other entity controlled by Shareholder shall:
a. at any time following the Effective Date, disclose confidential
information regarding the Company to any third parties, except as required
by law, regulation, a court order, in the defense of litigation for which
the Company may be liable, or in any actions relating to this Agreement or
the Merger Agreement and the transactions contemplated hereby or thereby;
and
-2-
<PAGE>
b. for a period of two years following the Effective Date, solicit,
directly or indirectly, on its own behalf or on behalf of any other person
or entity, management personnel employed by Western or Santa Monica
immediately after the Effective Time for employment with any other
business;
PROVIDED, HOWEVER, that with respect to any of the matters covered in this
Section 5, to the extent that any restriction set forth in this Section 5 is
adjudicated to be invalid or unenforceable in any jurisdiction, the court making
such determination shall have the power to limit, construe or reduce the
duration, scope, activity or area of such provision to the extent necessary to
render such provision enforceable to the maximum extent permitted by applicable
law, such limited form to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made.
6. SPECIFIC PERFORMANCE AND REMEDIES. Shareholder acknowledges that
it will be impossible to measure in money the damage to Western or to Santa
Monica if Shareholder fails to comply with the obligations imposed by this
Agreement and that, in the event of any such failure, Western and Santa Monica
will not have an adequate remedy at law or in damages. Accordingly, Shareholder
agrees that injunctive relief or other equitable remedy, in addition to remedies
at law or in damages, is the appropriate remedy for any such failure and will
not oppose the granting of such relief on the basis that Western or Santa Monica
have an adequate remedy at law. Shareholder agrees that it will not seek, and
agrees to waive any requirement for, the securing or posting of a bond in
connection with Western or Santa Monica's seeking or obtaining such equitable
relief. In addition to all other rights or remedies which Western or Santa
Monica may have against Shareholder in the event of a default in Shareholder's
performance of Shareholder's obligations under this Agreement, Shareholder shall
be liable to Western and Santa Monica for all litigation costs and attorneys'
fees incurred by Western and Santa Monica in connection with the enforcement of
any of its rights or remedies against Shareholder. In addition, after
discussing the matter with Shareholder, Western and Santa Monica shall have the
right to inform any third party that Western and Santa Monica reasonably
believes to be, or to be contemplating, participating with Shareholder or
receiving from Shareholder assistance in violation of this Agreement, of the
terms of this Agreement and of the rights of Western and Santa Monica hereunder,
and that participation by any such persons with Shareholder in activities in
violation of Shareholder's agreement with Western and Santa Monica set forth in
this Agreement may give rise to claims by Western and Santa Monica against such
third party.
7. TERM OF AGREEMENT; TERMINATION. a. The term of this Agreement
shall commence on the date hereof.
b. This Agreement shall terminate upon the date, if any, of the
termination of the Merger Agreement prior to the Effective Time in accordance
with its terms. Upon such termination, no party shall have any further
obligations or liabilities hereunder; PROVIDED, HOWEVER, such termination shall
not relieve any party from liability for any breach
-3-
<PAGE>
of this Agreement PRIOR to such termination. If this Agreement is terminated
pursuant to Section 8.01 of the Merger Agreement, so long as the Company honors
its applicable obligations under Section 8.03 of the Merger Agreement, no party
shall have any further obligations or liabilities under this Agreement.
c. If the Merger Agreement is not terminated prior to the Effective
Time, this Agreement (except for the provisions of Sections 4, 5(b), 6, 9 and
10, which shall survive the Effective Time), shall terminate upon the Effective
Time. Sections 4, 5, 6, 9 and 10 shall terminate on the date two years after
the Effective Time.
8. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements,
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 by an
instrument in writing signed by each party hereto. No waiver of any provisions
hereof by either party shall be deemed a waiver of any other provisions hereof
by any such party, nor shall any such waiver be deemed a continuing waiver of
any provision hereof by such party.
9. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by a
reputable overnight courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Western or Santa Monica:
Western Bancorp
1251 Westwood Blvd.
Los Angeles, California 90024
Telecopier: (310) 477-8611
Attention: Matthew P. Wagner
With a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Telecopier: (213) 683-0458
Attention: Stanley F. Farrar, Esq.
-4-
<PAGE>
If to the Shareholder:
10. MISCELLANEOUS.
a. SEVERABILITY. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid or unenforceable by a court of competent jurisdiction, such
provision or application shall be unenforceable only to the extent of such
invalidity or unenforceability, and the remainder of the provision held
invalid or unenforceable and the application of such provision to persons
or circumstances, other than the party as to which it is held invalid, and
the remainder of this Agreement, shall not be affected.
b. CAPACITY. The covenants contained herein shall apply to
Shareholder solely in his or her capacity as a shareholder of the Company,
and no covenant contained herein shall apply to Shareholder in his or her
capacity as a director or officer of the Company.
c. COUNTERPARTS. 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. HEADINGS. 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.
e. CHOICE OF LAW. 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 REFERENCE TO ITS CONFLICTS OF LAW
PRINCIPLES.
11. ATTORNEY'S FEES. The prevailing party or parties in any
litigation, arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party or parties all fees and disbursements of
counsel (including expert witness and other consultants' fees and costs)
relating to or arising out of (a) the Proceeding (whether or not the Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding
including, without limitation, one to enforce or collect any judgment or award
resulting from
-5-
<PAGE>
the Proceeding. All such judgments and awards shall contain a specific
provision for the recovery of all such subsequently incurred costs, expenses,
and fees and disbursements of counsel.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
WESTERN BANCORP
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
SANTA MONICA
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
--------------------------------
(Print or type name)
/s/ Wendy R. Moskal
--------------------------------
(Signature)
-7-
<PAGE>
EXHIBIT 9.8
SHAREHOLDER AGREEMENT
Shareholder Agreement (the "Agreement"), dated as of April 16, 1998,
by and among (i) John R. Newhouse, a shareholder (the "Shareholder") of Bank of
Los Angeles, a California banking corporation (the "Company"), (ii) Western
Bancorp, a California corporation ("Western") and (iii) Santa Monica Bank, a
California banking corporation ("Santa Monica"). All terms used herein and not
defined herein shall have the meanings assigned thereto in the Merger Agreement
(defined below).
Whereas, Western, Santa Monica and the Company have entered into an
Agreement and Plan of Merger, dated the date hereof (the "Merger Agreement"),
providing for the business combination transaction contemplated therein in which
the Company will merge with and into Santa Monica pursuant to the terms and
conditions of the Merger Agreement (the "Merger") and Western will pay
consideration to the Company's shareholders in the form of Western Common Stock;
Whereas, the Shareholder owns the shares of Company Common Stock
identified on ANNEX I hereto (such shares, together with all shares of Company
Common Stock subsequently acquired by the Shareholder during the term of this
Agreement, being referred to as the "Shares"); and
Whereas, in order to induce Western and Santa Monica to enter into the
Merger Agreement and in consideration of the substantial expenses incurred and
to be incurred by Western and Santa Monica in connection therewith, the
Shareholder, solely in such Shareholder's capacity as a shareholder of the
Company, has agreed to enter into and perform this Agreement.
Now, therefore, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO VOTE SHARES. Shareholder shall vote or cause to be
voted, or execute a written consent with respect to, the Shares (a) in favor of
adoption and approval of the Merger Agreement and the Merger and all
transactions relating thereto at every meeting of the shareholders of the
Company at which such matters are considered and at every adjournment thereof
and in connection with every proposal to take action by written consent with
respect thereto, and (b) against any other Acquisition Proposal at every meeting
of the shareholders of the Company at which such matters are considered and at
every adjournment thereof and in connection with every proposal to take action
by written consent with respect thereto.
<PAGE>
2. NO VOTING TRUSTS. Shareholder agrees that Shareholder will not,
nor will Shareholder permit any entity under Shareholder's control to, deposit
any Shares in a voting trust or subject the Shares to any agreement, arrangement
or understanding with respect to the voting of the Shares inconsistent with this
Agreement.
3. LIMITATION ON SALES. Except to a donee who agrees in writing to be
bound by the provisions of Section 1 hereof, during the term of this Agreement,
Shareholder agrees not to sell, assign, transfer or dispose of any of the
Shares.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Shareholder
represents and warrants to and agrees with Western and Santa Monica as follows:
a. CAPACITY. Shareholder has all requisite capacity and authority to
enter into and perform his or her obligations under this Agreement.
b. BINDING AGREEMENT. This Agreement constitutes the valid and
legally binding obligation of Shareholder, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
c. NON-CONTRAVENTION. The execution and delivery of this Agreement by
Shareholder does not, and the performance by Shareholder of his or her
obligations hereunder and the consummation by Shareholder of the
transactions contemplated hereby will not, violate or conflict with, or
constitute a default under, any agreement, instrument, contract or other
obligation or any order, arbitration award, judgment or decree to which
Shareholder is a party or by which Shareholder is bound, or any statute,
rule or regulation to which Shareholder is subject or, in the event that
Shareholder is a corporation, partnership, trust or other entity, any
charter, bylaw or other organizational document of the Shareholder.
d. OWNERSHIP OF SHARES. Shareholder has good title to all of the
Shares as of the date hereof, and, except as set forth on Annex A hereto,
the Shares are so owned free and clear of any liens, security interests,
charges or other encumbrances.
5. DISCLOSURE; SOLICITATION. Neither Shareholder nor any corporation,
partnership, trust or other entity controlled by Shareholder shall:
a. at any time following the Effective Date, disclose confidential
information regarding the Company to any third parties, except as required
by law, regulation, a court order, in the defense of litigation for which
the Company may be liable, or in any actions relating to this Agreement or
the Merger Agreement and the transactions contemplated hereby or thereby;
and
-2-
<PAGE>
b. for a period of two years following the Effective Date, solicit,
directly or indirectly, on its own behalf or on behalf of any other person
or entity, management personnel employed by Western or Santa Monica
immediately after the Effective Time for employment with any other
business;
PROVIDED, HOWEVER, that with respect to any of the matters covered in this
Section 5, to the extent that any restriction set forth in this Section 5 is
adjudicated to be invalid or unenforceable in any jurisdiction, the court making
such determination shall have the power to limit, construe or reduce the
duration, scope, activity or area of such provision to the extent necessary to
render such provision enforceable to the maximum extent permitted by applicable
law, such limited form to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made.
6. SPECIFIC PERFORMANCE AND REMEDIES. Shareholder acknowledges that
it will be impossible to measure in money the damage to Western or to Santa
Monica if Shareholder fails to comply with the obligations imposed by this
Agreement and that, in the event of any such failure, Western and Santa Monica
will not have an adequate remedy at law or in damages. Accordingly, Shareholder
agrees that injunctive relief or other equitable remedy, in addition to remedies
at law or in damages, is the appropriate remedy for any such failure and will
not oppose the granting of such relief on the basis that Western or Santa Monica
have an adequate remedy at law. Shareholder agrees that it will not seek, and
agrees to waive any requirement for, the securing or posting of a bond in
connection with Western or Santa Monica's seeking or obtaining such equitable
relief. In addition to all other rights or remedies which Western or Santa
Monica may have against Shareholder in the event of a default in Shareholder's
performance of Shareholder's obligations under this Agreement, Shareholder shall
be liable to Western and Santa Monica for all litigation costs and attorneys'
fees incurred by Western and Santa Monica in connection with the enforcement of
any of its rights or remedies against Shareholder. In addition, after
discussing the matter with Shareholder, Western and Santa Monica shall have the
right to inform any third party that Western and Santa Monica reasonably
believes to be, or to be contemplating, participating with Shareholder or
receiving from Shareholder assistance in violation of this Agreement, of the
terms of this Agreement and of the rights of Western and Santa Monica hereunder,
and that participation by any such persons with Shareholder in activities in
violation of Shareholder's agreement with Western and Santa Monica set forth in
this Agreement may give rise to claims by Western and Santa Monica against such
third party.
7. TERM OF AGREEMENT; TERMINATION. a. The term of this Agreement
shall commence on the date hereof.
b. This Agreement shall terminate upon the date, if any, of the
termination of the Merger Agreement prior to the Effective Time in accordance
with its terms. Upon such termination, no party shall have any further
obligations or liabilities hereunder; PROVIDED, HOWEVER, such termination shall
not relieve any party from liability for any breach
-3-
<PAGE>
of this Agreement PRIOR to such termination. If this Agreement is terminated
pursuant to Section 8.01 of the Merger Agreement, so long as the Company honors
its applicable obligations under Section 8.03 of the Merger Agreement, no party
shall have any further obligations or liabilities under this Agreement.
c. If the Merger Agreement is not terminated prior to the Effective
Time, this Agreement (except for the provisions of Sections 4, 5(b), 6, 9 and
10, which shall survive the Effective Time), shall terminate upon the Effective
Time. Sections 4, 5, 6, 9 and 10 shall terminate on the date two years after
the Effective Time.
8. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements,
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 by an
instrument in writing signed by each party hereto. No waiver of any provisions
hereof by either party shall be deemed a waiver of any other provisions hereof
by any such party, nor shall any such waiver be deemed a continuing waiver of
any provision hereof by such party.
9. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by a
reputable overnight courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Western or Santa Monica:
Western Bancorp
1251 Westwood Blvd.
Los Angeles, California 90024
Telecopier: (310) 477-8611
Attention: Matthew P. Wagner
With a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Telecopier: (213) 683-0458
Attention: Stanley F. Farrar, Esq.
-4-
<PAGE>
If to the Shareholder:
10. MISCELLANEOUS.
a. SEVERABILITY. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid or unenforceable by a court of competent jurisdiction, such
provision or application shall be unenforceable only to the extent of such
invalidity or unenforceability, and the remainder of the provision held
invalid or unenforceable and the application of such provision to persons
or circumstances, other than the party as to which it is held invalid, and
the remainder of this Agreement, shall not be affected.
b. CAPACITY. The covenants contained herein shall apply to
Shareholder solely in his or her capacity as a shareholder of the Company,
and no covenant contained herein shall apply to Shareholder in his or her
capacity as a director or officer of the Company.
c. COUNTERPARTS. 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. HEADINGS. 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.
e. CHOICE OF LAW. 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 REFERENCE TO ITS CONFLICTS OF LAW
PRINCIPLES.
11. ATTORNEY'S FEES. The prevailing party or parties in any
litigation, arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party or parties all fees and disbursements of
counsel (including expert witness and other consultants' fees and costs)
relating to or arising out of (a) the Proceeding (whether or not the Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding
including, without limitation, one to enforce or collect any judgment or award
resulting from
-5-
<PAGE>
the Proceeding. All such judgments and awards shall contain a specific
provision for the recovery of all such subsequently incurred costs, expenses,
and fees and disbursements of counsel.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
WESTERN BANCORP
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
SANTA MONICA
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
--------------------------------
(Print or type name)
/s/ John R. Newhouse
--------------------------------
(Signature)
-7-
<PAGE>
EXHIBIT 9.9
SHAREHOLDER AGREEMENT
Shareholder Agreement (the "Agreement"), dated as of April 16, 1998,
by and among (i) James V. Reimann, a shareholder (the "Shareholder") of Bank of
Los Angeles, a California banking corporation (the "Company"), (ii) Western
Bancorp, a California corporation ("Western") and (iii) Santa Monica Bank, a
California banking corporation ("Santa Monica"). All terms used herein and not
defined herein shall have the meanings assigned thereto in the Merger Agreement
(defined below).
Whereas, Western, Santa Monica and the Company have entered into an
Agreement and Plan of Merger, dated the date hereof (the "Merger Agreement"),
providing for the business combination transaction contemplated therein in which
the Company will merge with and into Santa Monica pursuant to the terms and
conditions of the Merger Agreement (the "Merger") and Western will pay
consideration to the Company's shareholders in the form of Western Common Stock;
Whereas, the Shareholder owns the shares of Company Common Stock
identified on ANNEX I hereto (such shares, together with all shares of Company
Common Stock subsequently acquired by the Shareholder during the term of this
Agreement, being referred to as the "Shares"); and
Whereas, in order to induce Western and Santa Monica to enter into the
Merger Agreement and in consideration of the substantial expenses incurred and
to be incurred by Western and Santa Monica in connection therewith, the
Shareholder, solely in such Shareholder's capacity as a shareholder of the
Company, has agreed to enter into and perform this Agreement.
Now, therefore, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO VOTE SHARES. Shareholder shall vote or cause to be
voted, or execute a written consent with respect to, the Shares (a) in favor of
adoption and approval of the Merger Agreement and the Merger and all
transactions relating thereto at every meeting of the shareholders of the
Company at which such matters are considered and at every adjournment thereof
and in connection with every proposal to take action by written consent with
respect thereto, and (b) against any other Acquisition Proposal at every meeting
of the shareholders of the Company at which such matters are considered and at
every adjournment thereof and in connection with every proposal to take action
by written consent with respect thereto.
<PAGE>
2. NO VOTING TRUSTS. Shareholder agrees that Shareholder will not,
nor will Shareholder permit any entity under Shareholder's control to, deposit
any Shares in a voting trust or subject the Shares to any agreement, arrangement
or understanding with respect to the voting of the Shares inconsistent with this
Agreement.
3. LIMITATION ON SALES. Except to a donee who agrees in writing to be
bound by the provisions of Section 1 hereof, during the term of this Agreement,
Shareholder agrees not to sell, assign, transfer or dispose of any of the
Shares.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Shareholder
represents and warrants to and agrees with Western and Santa Monica as follows:
a. CAPACITY. Shareholder has all requisite capacity and authority to
enter into and perform his or her obligations under this Agreement.
b. BINDING AGREEMENT. This Agreement constitutes the valid and
legally binding obligation of Shareholder, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
c. NON-CONTRAVENTION. The execution and delivery of this Agreement by
Shareholder does not, and the performance by Shareholder of his or her
obligations hereunder and the consummation by Shareholder of the
transactions contemplated hereby will not, violate or conflict with, or
constitute a default under, any agreement, instrument, contract or other
obligation or any order, arbitration award, judgment or decree to which
Shareholder is a party or by which Shareholder is bound, or any statute,
rule or regulation to which Shareholder is subject or, in the event that
Shareholder is a corporation, partnership, trust or other entity, any
charter, bylaw or other organizational document of the Shareholder.
d. OWNERSHIP OF SHARES. Shareholder has good title to all of the
Shares as of the date hereof, and, except as set forth on Annex A hereto,
the Shares are so owned free and clear of any liens, security interests,
charges or other encumbrances.
5. DISCLOSURE; SOLICITATION. Neither Shareholder nor any corporation,
partnership, trust or other entity controlled by Shareholder shall:
a. at any time following the Effective Date, disclose confidential
information regarding the Company to any third parties, except as required
by law, regulation, a court order, in the defense of litigation for which
the Company may be liable, or in any actions relating to this Agreement or
the Merger Agreement and the transactions contemplated hereby or thereby;
and
-2-
<PAGE>
b. for a period of two years following the Effective Date, solicit,
directly or indirectly, on its own behalf or on behalf of any other person
or entity, management personnel employed by Western or Santa Monica
immediately after the Effective Time for employment with any other
business;
PROVIDED, HOWEVER, that with respect to any of the matters covered in this
Section 5, to the extent that any restriction set forth in this Section 5 is
adjudicated to be invalid or unenforceable in any jurisdiction, the court making
such determination shall have the power to limit, construe or reduce the
duration, scope, activity or area of such provision to the extent necessary to
render such provision enforceable to the maximum extent permitted by applicable
law, such limited form to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made.
6. SPECIFIC PERFORMANCE AND REMEDIES. Shareholder acknowledges that
it will be impossible to measure in money the damage to Western or to Santa
Monica if Shareholder fails to comply with the obligations imposed by this
Agreement and that, in the event of any such failure, Western and Santa Monica
will not have an adequate remedy at law or in damages. Accordingly, Shareholder
agrees that injunctive relief or other equitable remedy, in addition to remedies
at law or in damages, is the appropriate remedy for any such failure and will
not oppose the granting of such relief on the basis that Western or Santa Monica
have an adequate remedy at law. Shareholder agrees that it will not seek, and
agrees to waive any requirement for, the securing or posting of a bond in
connection with Western or Santa Monica's seeking or obtaining such equitable
relief. In addition to all other rights or remedies which Western or Santa
Monica may have against Shareholder in the event of a default in Shareholder's
performance of Shareholder's obligations under this Agreement, Shareholder shall
be liable to Western and Santa Monica for all litigation costs and attorneys'
fees incurred by Western and Santa Monica in connection with the enforcement of
any of its rights or remedies against Shareholder. In addition, after
discussing the matter with Shareholder, Western and Santa Monica shall have the
right to inform any third party that Western and Santa Monica reasonably
believes to be, or to be contemplating, participating with Shareholder or
receiving from Shareholder assistance in violation of this Agreement, of the
terms of this Agreement and of the rights of Western and Santa Monica hereunder,
and that participation by any such persons with Shareholder in activities in
violation of Shareholder's agreement with Western and Santa Monica set forth in
this Agreement may give rise to claims by Western and Santa Monica against such
third party.
7. TERM OF AGREEMENT; TERMINATION. a. The term of this Agreement
shall commence on the date hereof.
b. This Agreement shall terminate upon the date, if any, of the
termination of the Merger Agreement prior to the Effective Time in accordance
with its terms. Upon such termination, no party shall have any further
obligations or liabilities hereunder; PROVIDED, HOWEVER, such termination shall
not relieve any party from liability for any breach
-3-
<PAGE>
of this Agreement PRIOR to such termination. If this Agreement is terminated
pursuant to Section 8.01 of the Merger Agreement, so long as the Company honors
its applicable obligations under Section 8.03 of the Merger Agreement, no party
shall have any further obligations or liabilities under this Agreement.
c. If the Merger Agreement is not terminated prior to the Effective
Time, this Agreement (except for the provisions of Sections 4, 5(b), 6, 9 and
10, which shall survive the Effective Time), shall terminate upon the Effective
Time. Sections 4, 5, 6, 9 and 10 shall terminate on the date two years after
the Effective Time.
8. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements,
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 by an
instrument in writing signed by each party hereto. No waiver of any provisions
hereof by either party shall be deemed a waiver of any other provisions hereof
by any such party, nor shall any such waiver be deemed a continuing waiver of
any provision hereof by such party.
9. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by a
reputable overnight courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Western or Santa Monica:
Western Bancorp
1251 Westwood Blvd.
Los Angeles, California 90024
Telecopier: (310) 477-8611
Attention: Matthew P. Wagner
With a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Telecopier: (213) 683-0458
Attention: Stanley F. Farrar, Esq.
-4-
<PAGE>
If to the Shareholder:
10. MISCELLANEOUS.
a. SEVERABILITY. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid or unenforceable by a court of competent jurisdiction, such
provision or application shall be unenforceable only to the extent of such
invalidity or unenforceability, and the remainder of the provision held
invalid or unenforceable and the application of such provision to persons
or circumstances, other than the party as to which it is held invalid, and
the remainder of this Agreement, shall not be affected.
b. CAPACITY. The covenants contained herein shall apply to
Shareholder solely in his or her capacity as a shareholder of the Company,
and no covenant contained herein shall apply to Shareholder in his or her
capacity as a director or officer of the Company.
c. COUNTERPARTS. 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. HEADINGS. 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.
e. CHOICE OF LAW. 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 REFERENCE TO ITS CONFLICTS OF LAW
PRINCIPLES.
11. ATTORNEY'S FEES. The prevailing party or parties in any
litigation, arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party or parties all fees and disbursements of
counsel (including expert witness and other consultants' fees and costs)
relating to or arising out of (a) the Proceeding (whether or not the Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding
including, without limitation, one to enforce or collect any judgment or award
resulting from
-5-
<PAGE>
the Proceeding. All such judgments and awards shall contain a specific
provision for the recovery of all such subsequently incurred costs, expenses,
and fees and disbursements of counsel.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
WESTERN BANCORP
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
SANTA MONICA
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
James V. Reimann
--------------------------------
(Print or type name)
/s/ James V. Reimann
--------------------------------
(Signature)
-7-
<PAGE>
EXHIBIT 9.10
SHAREHOLDER AGREEMENT
Shareholder Agreement (the "Agreement"), dated as of April 16, 1998,
by and among (i) Mel F. Shaw, a shareholder (the "Shareholder") of Bank of
Los Angeles, a California banking corporation (the "Company"), (ii) Western
Bancorp, a California corporation ("Western") and (iii) Santa Monica Bank, a
California banking corporation ("Santa Monica"). All terms used herein and not
defined herein shall have the meanings assigned thereto in the Merger Agreement
(defined below).
Whereas, Western, Santa Monica and the Company have entered into an
Agreement and Plan of Merger, dated the date hereof (the "Merger Agreement"),
providing for the business combination transaction contemplated therein in which
the Company will merge with and into Santa Monica pursuant to the terms and
conditions of the Merger Agreement (the "Merger") and Western will pay
consideration to the Company's shareholders in the form of Western Common Stock;
Whereas, the Shareholder owns the shares of Company Common Stock
identified on ANNEX I hereto (such shares, together with all shares of Company
Common Stock subsequently acquired by the Shareholder during the term of this
Agreement, being referred to as the "Shares"); and
Whereas, in order to induce Western and Santa Monica to enter into the
Merger Agreement and in consideration of the substantial expenses incurred and
to be incurred by Western and Santa Monica in connection therewith, the
Shareholder, solely in such Shareholder's capacity as a shareholder of the
Company, has agreed to enter into and perform this Agreement.
Now, therefore, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO VOTE SHARES. Shareholder shall vote or cause to be
voted, or execute a written consent with respect to, the Shares (a) in favor of
adoption and approval of the Merger Agreement and the Merger and all
transactions relating thereto at every meeting of the shareholders of the
Company at which such matters are considered and at every adjournment thereof
and in connection with every proposal to take action by written consent with
respect thereto, and (b) against any other Acquisition Proposal at every meeting
of the shareholders of the Company at which such matters are considered and at
every adjournment thereof and in connection with every proposal to take action
by written consent with respect thereto.
<PAGE>
2. NO VOTING TRUSTS. Shareholder agrees that Shareholder will not,
nor will Shareholder permit any entity under Shareholder's control to, deposit
any Shares in a voting trust or subject the Shares to any agreement, arrangement
or understanding with respect to the voting of the Shares inconsistent with this
Agreement.
3. LIMITATION ON SALES. Except to a donee who agrees in writing to be
bound by the provisions of Section 1 hereof, during the term of this Agreement,
Shareholder agrees not to sell, assign, transfer or dispose of any of the
Shares.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Shareholder
represents and warrants to and agrees with Western and Santa Monica as follows:
a. CAPACITY. Shareholder has all requisite capacity and authority to
enter into and perform his or her obligations under this Agreement.
b. BINDING AGREEMENT. This Agreement constitutes the valid and
legally binding obligation of Shareholder, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
c. NON-CONTRAVENTION. The execution and delivery of this Agreement by
Shareholder does not, and the performance by Shareholder of his or her
obligations hereunder and the consummation by Shareholder of the
transactions contemplated hereby will not, violate or conflict with, or
constitute a default under, any agreement, instrument, contract or other
obligation or any order, arbitration award, judgment or decree to which
Shareholder is a party or by which Shareholder is bound, or any statute,
rule or regulation to which Shareholder is subject or, in the event that
Shareholder is a corporation, partnership, trust or other entity, any
charter, bylaw or other organizational document of the Shareholder.
d. OWNERSHIP OF SHARES. Shareholder has good title to all of the
Shares as of the date hereof, and, except as set forth on Annex A hereto,
the Shares are so owned free and clear of any liens, security interests,
charges or other encumbrances.
5. DISCLOSURE; SOLICITATION. Neither Shareholder nor any corporation,
partnership, trust or other entity controlled by Shareholder shall:
a. at any time following the Effective Date, disclose confidential
information regarding the Company to any third parties, except as required
by law, regulation, a court order, in the defense of litigation for which
the Company may be liable, or in any actions relating to this Agreement or
the Merger Agreement and the transactions contemplated hereby or thereby;
and
-2-
<PAGE>
b. for a period of two years following the Effective Date, solicit,
directly or indirectly, on its own behalf or on behalf of any other person
or entity, management personnel employed by Western or Santa Monica
immediately after the Effective Time for employment with any other
business;
PROVIDED, HOWEVER, that with respect to any of the matters covered in this
Section 5, to the extent that any restriction set forth in this Section 5 is
adjudicated to be invalid or unenforceable in any jurisdiction, the court making
such determination shall have the power to limit, construe or reduce the
duration, scope, activity or area of such provision to the extent necessary to
render such provision enforceable to the maximum extent permitted by applicable
law, such limited form to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made.
6. SPECIFIC PERFORMANCE AND REMEDIES. Shareholder acknowledges that
it will be impossible to measure in money the damage to Western or to Santa
Monica if Shareholder fails to comply with the obligations imposed by this
Agreement and that, in the event of any such failure, Western and Santa Monica
will not have an adequate remedy at law or in damages. Accordingly, Shareholder
agrees that injunctive relief or other equitable remedy, in addition to remedies
at law or in damages, is the appropriate remedy for any such failure and will
not oppose the granting of such relief on the basis that Western or Santa Monica
have an adequate remedy at law. Shareholder agrees that it will not seek, and
agrees to waive any requirement for, the securing or posting of a bond in
connection with Western or Santa Monica's seeking or obtaining such equitable
relief. In addition to all other rights or remedies which Western or Santa
Monica may have against Shareholder in the event of a default in Shareholder's
performance of Shareholder's obligations under this Agreement, Shareholder shall
be liable to Western and Santa Monica for all litigation costs and attorneys'
fees incurred by Western and Santa Monica in connection with the enforcement of
any of its rights or remedies against Shareholder. In addition, after
discussing the matter with Shareholder, Western and Santa Monica shall have the
right to inform any third party that Western and Santa Monica reasonably
believes to be, or to be contemplating, participating with Shareholder or
receiving from Shareholder assistance in violation of this Agreement, of the
terms of this Agreement and of the rights of Western and Santa Monica hereunder,
and that participation by any such persons with Shareholder in activities in
violation of Shareholder's agreement with Western and Santa Monica set forth in
this Agreement may give rise to claims by Western and Santa Monica against such
third party.
7. TERM OF AGREEMENT; TERMINATION. a. The term of this Agreement
shall commence on the date hereof.
b. This Agreement shall terminate upon the date, if any, of the
termination of the Merger Agreement prior to the Effective Time in accordance
with its terms. Upon such termination, no party shall have any further
obligations or liabilities hereunder; PROVIDED, HOWEVER, such termination shall
not relieve any party from liability for any breach
-3-
<PAGE>
of this Agreement PRIOR to such termination. If this Agreement is terminated
pursuant to Section 8.01 of the Merger Agreement, so long as the Company honors
its applicable obligations under Section 8.03 of the Merger Agreement, no party
shall have any further obligations or liabilities under this Agreement.
c. If the Merger Agreement is not terminated prior to the Effective
Time, this Agreement (except for the provisions of Sections 4, 5(b), 6, 9 and
10, which shall survive the Effective Time), shall terminate upon the Effective
Time. Sections 4, 5, 6, 9 and 10 shall terminate on the date two years after
the Effective Time.
8. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements,
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 by an
instrument in writing signed by each party hereto. No waiver of any provisions
hereof by either party shall be deemed a waiver of any other provisions hereof
by any such party, nor shall any such waiver be deemed a continuing waiver of
any provision hereof by such party.
9. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by a
reputable overnight courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Western or Santa Monica:
Western Bancorp
1251 Westwood Blvd.
Los Angeles, California 90024
Telecopier: (310) 477-8611
Attention: Matthew P. Wagner
With a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Telecopier: (213) 683-0458
Attention: Stanley F. Farrar, Esq.
-4-
<PAGE>
If to the Shareholder:
10. MISCELLANEOUS.
a. SEVERABILITY. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid or unenforceable by a court of competent jurisdiction, such
provision or application shall be unenforceable only to the extent of such
invalidity or unenforceability, and the remainder of the provision held
invalid or unenforceable and the application of such provision to persons
or circumstances, other than the party as to which it is held invalid, and
the remainder of this Agreement, shall not be affected.
b. CAPACITY. The covenants contained herein shall apply to
Shareholder solely in his or her capacity as a shareholder of the Company,
and no covenant contained herein shall apply to Shareholder in his or her
capacity as a director or officer of the Company.
c. COUNTERPARTS. 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. HEADINGS. 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.
e. CHOICE OF LAW. 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 REFERENCE TO ITS CONFLICTS OF LAW
PRINCIPLES.
11. ATTORNEY'S FEES. The prevailing party or parties in any
litigation, arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party or parties all fees and disbursements of
counsel (including expert witness and other consultants' fees and costs)
relating to or arising out of (a) the Proceeding (whether or not the Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding
including, without limitation, one to enforce or collect any judgment or award
resulting from
-5-
<PAGE>
the Proceeding. All such judgments and awards shall contain a specific
provision for the recovery of all such subsequently incurred costs, expenses,
and fees and disbursements of counsel.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
WESTERN BANCORP
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
SANTA MONICA
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
Mel F. Shaw
--------------------------------
(Print or type name)
/s/ Mel F. Shaw
--------------------------------
(Signature)
-7-
<PAGE>
EXHIBIT 9.11
SHAREHOLDER AGREEMENT
Shareholder Agreement (the "Agreement"), dated as of April 16, 1998,
by and among (i) Burton N. Sterman, a shareholder (the "Shareholder") of Bank of
Los Angeles, a California banking corporation (the "Company"), (ii) Western
Bancorp, a California corporation ("Western") and (iii) Santa Monica Bank, a
California banking corporation ("Santa Monica"). All terms used herein and not
defined herein shall have the meanings assigned thereto in the Merger Agreement
(defined below).
Whereas, Western, Santa Monica and the Company have entered into an
Agreement and Plan of Merger, dated the date hereof (the "Merger Agreement"),
providing for the business combination transaction contemplated therein in which
the Company will merge with and into Santa Monica pursuant to the terms and
conditions of the Merger Agreement (the "Merger") and Western will pay
consideration to the Company's shareholders in the form of Western Common Stock;
Whereas, the Shareholder owns the shares of Company Common Stock
identified on ANNEX I hereto (such shares, together with all shares of Company
Common Stock subsequently acquired by the Shareholder during the term of this
Agreement, being referred to as the "Shares"); and
Whereas, in order to induce Western and Santa Monica to enter into the
Merger Agreement and in consideration of the substantial expenses incurred and
to be incurred by Western and Santa Monica in connection therewith, the
Shareholder, solely in such Shareholder's capacity as a shareholder of the
Company, has agreed to enter into and perform this Agreement.
Now, therefore, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO VOTE SHARES. Shareholder shall vote or cause to be
voted, or execute a written consent with respect to, the Shares (a) in favor of
adoption and approval of the Merger Agreement and the Merger and all
transactions relating thereto at every meeting of the shareholders of the
Company at which such matters are considered and at every adjournment thereof
and in connection with every proposal to take action by written consent with
respect thereto, and (b) against any other Acquisition Proposal at every meeting
of the shareholders of the Company at which such matters are considered and at
every adjournment thereof and in connection with every proposal to take action
by written consent with respect thereto.
<PAGE>
2. NO VOTING TRUSTS. Shareholder agrees that Shareholder will not,
nor will Shareholder permit any entity under Shareholder's control to, deposit
any Shares in a voting trust or subject the Shares to any agreement, arrangement
or understanding with respect to the voting of the Shares inconsistent with this
Agreement.
3. LIMITATION ON SALES. Except to a donee who agrees in writing to be
bound by the provisions of Section 1 hereof, during the term of this Agreement,
Shareholder agrees not to sell, assign, transfer or dispose of any of the
Shares.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Shareholder
represents and warrants to and agrees with Western and Santa Monica as follows:
a. CAPACITY. Shareholder has all requisite capacity and authority to
enter into and perform his or her obligations under this Agreement.
b. BINDING AGREEMENT. This Agreement constitutes the valid and
legally binding obligation of Shareholder, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
c. NON-CONTRAVENTION. The execution and delivery of this Agreement by
Shareholder does not, and the performance by Shareholder of his or her
obligations hereunder and the consummation by Shareholder of the
transactions contemplated hereby will not, violate or conflict with, or
constitute a default under, any agreement, instrument, contract or other
obligation or any order, arbitration award, judgment or decree to which
Shareholder is a party or by which Shareholder is bound, or any statute,
rule or regulation to which Shareholder is subject or, in the event that
Shareholder is a corporation, partnership, trust or other entity, any
charter, bylaw or other organizational document of the Shareholder.
d. OWNERSHIP OF SHARES. Shareholder has good title to all of the
Shares as of the date hereof, and, except as set forth on Annex A hereto,
the Shares are so owned free and clear of any liens, security interests,
charges or other encumbrances.
5. DISCLOSURE; SOLICITATION. Neither Shareholder nor any corporation,
partnership, trust or other entity controlled by Shareholder shall:
a. at any time following the Effective Date, disclose confidential
information regarding the Company to any third parties, except as required
by law, regulation, a court order, in the defense of litigation for which
the Company may be liable, or in any actions relating to this Agreement or
the Merger Agreement and the transactions contemplated hereby or thereby;
and
-2-
<PAGE>
b. for a period of two years following the Effective Date, solicit,
directly or indirectly, on its own behalf or on behalf of any other person
or entity, management personnel employed by Western or Santa Monica
immediately after the Effective Time for employment with any other
business;
PROVIDED, HOWEVER, that with respect to any of the matters covered in this
Section 5, to the extent that any restriction set forth in this Section 5 is
adjudicated to be invalid or unenforceable in any jurisdiction, the court making
such determination shall have the power to limit, construe or reduce the
duration, scope, activity or area of such provision to the extent necessary to
render such provision enforceable to the maximum extent permitted by applicable
law, such limited form to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made.
6. SPECIFIC PERFORMANCE AND REMEDIES. Shareholder acknowledges that
it will be impossible to measure in money the damage to Western or to Santa
Monica if Shareholder fails to comply with the obligations imposed by this
Agreement and that, in the event of any such failure, Western and Santa Monica
will not have an adequate remedy at law or in damages. Accordingly, Shareholder
agrees that injunctive relief or other equitable remedy, in addition to remedies
at law or in damages, is the appropriate remedy for any such failure and will
not oppose the granting of such relief on the basis that Western or Santa Monica
have an adequate remedy at law. Shareholder agrees that it will not seek, and
agrees to waive any requirement for, the securing or posting of a bond in
connection with Western or Santa Monica's seeking or obtaining such equitable
relief. In addition to all other rights or remedies which Western or Santa
Monica may have against Shareholder in the event of a default in Shareholder's
performance of Shareholder's obligations under this Agreement, Shareholder shall
be liable to Western and Santa Monica for all litigation costs and attorneys'
fees incurred by Western and Santa Monica in connection with the enforcement of
any of its rights or remedies against Shareholder. In addition, after
discussing the matter with Shareholder, Western and Santa Monica shall have the
right to inform any third party that Western and Santa Monica reasonably
believes to be, or to be contemplating, participating with Shareholder or
receiving from Shareholder assistance in violation of this Agreement, of the
terms of this Agreement and of the rights of Western and Santa Monica hereunder,
and that participation by any such persons with Shareholder in activities in
violation of Shareholder's agreement with Western and Santa Monica set forth in
this Agreement may give rise to claims by Western and Santa Monica against such
third party.
7. TERM OF AGREEMENT; TERMINATION. a. The term of this Agreement
shall commence on the date hereof.
b. This Agreement shall terminate upon the date, if any, of the
termination of the Merger Agreement prior to the Effective Time in accordance
with its terms. Upon such termination, no party shall have any further
obligations or liabilities hereunder; PROVIDED, HOWEVER, such termination shall
not relieve any party from liability for any breach
-3-
<PAGE>
of this Agreement PRIOR to such termination. If this Agreement is terminated
pursuant to Section 8.01 of the Merger Agreement, so long as the Company honors
its applicable obligations under Section 8.03 of the Merger Agreement, no party
shall have any further obligations or liabilities under this Agreement.
c. If the Merger Agreement is not terminated prior to the Effective
Time, this Agreement (except for the provisions of Sections 4, 5(b), 6, 9 and
10, which shall survive the Effective Time), shall terminate upon the Effective
Time. Sections 4, 5, 6, 9 and 10 shall terminate on the date two years after
the Effective Time.
8. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements,
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 by an
instrument in writing signed by each party hereto. No waiver of any provisions
hereof by either party shall be deemed a waiver of any other provisions hereof
by any such party, nor shall any such waiver be deemed a continuing waiver of
any provision hereof by such party.
9. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by a
reputable overnight courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Western or Santa Monica:
Western Bancorp
1251 Westwood Blvd.
Los Angeles, California 90024
Telecopier: (310) 477-8611
Attention: Matthew P. Wagner
With a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Telecopier: (213) 683-0458
Attention: Stanley F. Farrar, Esq.
-4-
<PAGE>
If to the Shareholder:
10. MISCELLANEOUS.
a. SEVERABILITY. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid or unenforceable by a court of competent jurisdiction, such
provision or application shall be unenforceable only to the extent of such
invalidity or unenforceability, and the remainder of the provision held
invalid or unenforceable and the application of such provision to persons
or circumstances, other than the party as to which it is held invalid, and
the remainder of this Agreement, shall not be affected.
b. CAPACITY. The covenants contained herein shall apply to
Shareholder solely in his or her capacity as a shareholder of the Company,
and no covenant contained herein shall apply to Shareholder in his or her
capacity as a director or officer of the Company.
c. COUNTERPARTS. 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. HEADINGS. 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.
e. CHOICE OF LAW. 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 REFERENCE TO ITS CONFLICTS OF LAW
PRINCIPLES.
11. ATTORNEY'S FEES. The prevailing party or parties in any
litigation, arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party or parties all fees and disbursements of
counsel (including expert witness and other consultants' fees and costs)
relating to or arising out of (a) the Proceeding (whether or not the Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding
including, without limitation, one to enforce or collect any judgment or award
resulting from
-5-
<PAGE>
the Proceeding. All such judgments and awards shall contain a specific
provision for the recovery of all such subsequently incurred costs, expenses,
and fees and disbursements of counsel.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
WESTERN BANCORP
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
SANTA MONICA
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
Burton N. Sterman
--------------------------------
(Print or type name)
/s/ Burton N. Sterman
--------------------------------
(Signature)
-7-
<PAGE>
EXHIBIT 9.12
SHAREHOLDER AGREEMENT
Shareholder Agreement (the "Agreement"), dated as of April 16, 1998,
by and among (i) Roy Doumani, a shareholder (the "Shareholder") of Bank of
Los Angeles, a California banking corporation (the "Company"), (ii) Western
Bancorp, a California corporation ("Western") and (iii) Santa Monica Bank, a
California banking corporation ("Santa Monica"). All terms used herein and not
defined herein shall have the meanings assigned thereto in the Merger Agreement
(defined below).
Whereas, Western, Santa Monica and the Company have entered into an
Agreement and Plan of Merger, dated the date hereof (the "Merger Agreement"),
providing for the business combination transaction contemplated therein in which
the Company will merge with and into Santa Monica pursuant to the terms and
conditions of the Merger Agreement (the "Merger") and Western will pay
consideration to the Company's shareholders in the form of Western Common Stock;
Whereas, the Shareholder owns the shares of Company Common Stock
identified on ANNEX I hereto (such shares, together with all shares of Company
Common Stock subsequently acquired by the Shareholder during the term of this
Agreement, being referred to as the "Shares"); and
Whereas, in order to induce Western and Santa Monica to enter into the
Merger Agreement and in consideration of the substantial expenses incurred and
to be incurred by Western and Santa Monica in connection therewith, the
Shareholder, solely in such Shareholder's capacity as a shareholder of the
Company, has agreed to enter into and perform this Agreement.
Now, therefore, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. AGREEMENT TO VOTE SHARES. Shareholder shall vote or cause to be
voted, or execute a written consent with respect to, the Shares (a) in favor of
adoption and approval of the Merger Agreement and the Merger and all
transactions relating thereto at every meeting of the shareholders of the
Company at which such matters are considered and at every adjournment thereof
and in connection with every proposal to take action by written consent with
respect thereto, and (b) against any other Acquisition Proposal at every meeting
of the shareholders of the Company at which such matters are considered and at
every adjournment thereof and in connection with every proposal to take action
by written consent with respect thereto.
<PAGE>
2. NO VOTING TRUSTS. Shareholder agrees that Shareholder will not,
nor will Shareholder permit any entity under Shareholder's control to, deposit
any Shares in a voting trust or subject the Shares to any agreement, arrangement
or understanding with respect to the voting of the Shares inconsistent with this
Agreement.
3. LIMITATION ON SALES. Except to a donee who agrees in writing to be
bound by the provisions of Section 1 hereof, during the term of this Agreement,
Shareholder agrees not to sell, assign, transfer or dispose of any of the
Shares.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Shareholder
represents and warrants to and agrees with Western and Santa Monica as follows:
a. CAPACITY. Shareholder has all requisite capacity and authority to
enter into and perform his or her obligations under this Agreement.
b. BINDING AGREEMENT. This Agreement constitutes the valid and
legally binding obligation of Shareholder, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
c. NON-CONTRAVENTION. The execution and delivery of this Agreement by
Shareholder does not, and the performance by Shareholder of his or her
obligations hereunder and the consummation by Shareholder of the
transactions contemplated hereby will not, violate or conflict with, or
constitute a default under, any agreement, instrument, contract or other
obligation or any order, arbitration award, judgment or decree to which
Shareholder is a party or by which Shareholder is bound, or any statute,
rule or regulation to which Shareholder is subject or, in the event that
Shareholder is a corporation, partnership, trust or other entity, any
charter, bylaw or other organizational document of the Shareholder.
d. OWNERSHIP OF SHARES. Shareholder has good title to all of the
Shares as of the date hereof, and, except as set forth on Annex A hereto,
the Shares are so owned free and clear of any liens, security interests,
charges or other encumbrances.
5. DISCLOSURE; SOLICITATION. Neither Shareholder nor any corporation,
partnership, trust or other entity controlled by Shareholder shall:
a. at any time following the Effective Date, disclose confidential
information regarding the Company to any third parties, except as required
by law, regulation, a court order, in the defense of litigation for which
the Company may be liable, or in any actions relating to this Agreement or
the Merger Agreement and the transactions contemplated hereby or thereby;
and
-2-
<PAGE>
b. for a period of two years following the Effective Date, solicit,
directly or indirectly, on its own behalf or on behalf of any other person
or entity, management personnel employed by Western or Santa Monica
immediately after the Effective Time for employment with any other
business;
PROVIDED, HOWEVER, that with respect to any of the matters covered in this
Section 5, to the extent that any restriction set forth in this Section 5 is
adjudicated to be invalid or unenforceable in any jurisdiction, the court making
such determination shall have the power to limit, construe or reduce the
duration, scope, activity or area of such provision to the extent necessary to
render such provision enforceable to the maximum extent permitted by applicable
law, such limited form to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made.
6. SPECIFIC PERFORMANCE AND REMEDIES. Shareholder acknowledges that
it will be impossible to measure in money the damage to Western or to Santa
Monica if Shareholder fails to comply with the obligations imposed by this
Agreement and that, in the event of any such failure, Western and Santa Monica
will not have an adequate remedy at law or in damages. Accordingly, Shareholder
agrees that injunctive relief or other equitable remedy, in addition to remedies
at law or in damages, is the appropriate remedy for any such failure and will
not oppose the granting of such relief on the basis that Western or Santa Monica
have an adequate remedy at law. Shareholder agrees that it will not seek, and
agrees to waive any requirement for, the securing or posting of a bond in
connection with Western or Santa Monica's seeking or obtaining such equitable
relief. In addition to all other rights or remedies which Western or Santa
Monica may have against Shareholder in the event of a default in Shareholder's
performance of Shareholder's obligations under this Agreement, Shareholder shall
be liable to Western and Santa Monica for all litigation costs and attorneys'
fees incurred by Western and Santa Monica in connection with the enforcement of
any of its rights or remedies against Shareholder. In addition, after
discussing the matter with Shareholder, Western and Santa Monica shall have the
right to inform any third party that Western and Santa Monica reasonably
believes to be, or to be contemplating, participating with Shareholder or
receiving from Shareholder assistance in violation of this Agreement, of the
terms of this Agreement and of the rights of Western and Santa Monica hereunder,
and that participation by any such persons with Shareholder in activities in
violation of Shareholder's agreement with Western and Santa Monica set forth in
this Agreement may give rise to claims by Western and Santa Monica against such
third party.
7. TERM OF AGREEMENT; TERMINATION. a. The term of this Agreement
shall commence on the date hereof.
b. This Agreement shall terminate upon the date, if any, of the
termination of the Merger Agreement prior to the Effective Time in accordance
with its terms. Upon such termination, no party shall have any further
obligations or liabilities hereunder; PROVIDED, HOWEVER, such termination shall
not relieve any party from liability for any breach
-3-
<PAGE>
of this Agreement PRIOR to such termination. If this Agreement is terminated
pursuant to Section 8.01 of the Merger Agreement, so long as the Company honors
its applicable obligations under Section 8.03 of the Merger Agreement, no party
shall have any further obligations or liabilities under this Agreement.
c. If the Merger Agreement is not terminated prior to the Effective
Time, this Agreement (except for the provisions of Sections 4, 5(b), 6, 9 and
10, which shall survive the Effective Time), shall terminate upon the Effective
Time. Sections 4, 5, 6, 9 and 10 shall terminate on the date two years after
the Effective Time.
8. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements,
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 by an
instrument in writing signed by each party hereto. No waiver of any provisions
hereof by either party shall be deemed a waiver of any other provisions hereof
by any such party, nor shall any such waiver be deemed a continuing waiver of
any provision hereof by such party.
9. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by a
reputable overnight courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Western or Santa Monica:
Western Bancorp
1251 Westwood Blvd.
Los Angeles, California 90024
Telecopier: (310) 477-8611
Attention: Matthew P. Wagner
With a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Telecopier: (213) 683-0458
Attention: Stanley F. Farrar, Esq.
-4-
<PAGE>
If to the Shareholder:
10. MISCELLANEOUS.
a. SEVERABILITY. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid or unenforceable by a court of competent jurisdiction, such
provision or application shall be unenforceable only to the extent of such
invalidity or unenforceability, and the remainder of the provision held
invalid or unenforceable and the application of such provision to persons
or circumstances, other than the party as to which it is held invalid, and
the remainder of this Agreement, shall not be affected.
b. CAPACITY. The covenants contained herein shall apply to
Shareholder solely in his or her capacity as a shareholder of the Company,
and no covenant contained herein shall apply to Shareholder in his or her
capacity as a director or officer of the Company.
c. COUNTERPARTS. 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. HEADINGS. 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.
e. CHOICE OF LAW. 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 REFERENCE TO ITS CONFLICTS OF LAW
PRINCIPLES.
11. ATTORNEY'S FEES. The prevailing party or parties in any
litigation, arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party or parties all fees and disbursements of
counsel (including expert witness and other consultants' fees and costs)
relating to or arising out of (a) the Proceeding (whether or not the Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding
including, without limitation, one to enforce or collect any judgment or award
resulting from
-5-
<PAGE>
the Proceeding. All such judgments and awards shall contain a specific
provision for the recovery of all such subsequently incurred costs, expenses,
and fees and disbursements of counsel.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
WESTERN BANCORP
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
SANTA MONICA
By: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
Roy Doumani
--------------------------------
(Print or type name)
/s/ Roy Doumani
--------------------------------
(Signature)
-7-
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Western Bancorp:
We consent to the use of our report, dated January 30, 1998, incorporated by
reference herein and included in Western Bancorp's December 31, 1997 annual
report on Form 10-K, and to the reference to our firm under the heading
"Experts" in the Proxy Statement-Prospectus. Our report indicates that: (i) KPMG
Peat Marwick LLP did not audit either the 1996 consolidated financial statements
of California Commercial Bankshares or the 1996 consolidated financial
statements of SC Bancorp, both of which were acquired during 1997 in mergers and
accounted for as poolings-of-interests. Such financial statements were audited
by other auditors whose reports were furnished to KPMG Peat Marwick LLP, and
KPMG Peat Marwick LLP's opinion, insofar as it relates to California Commercial
Bankshares and SC Bancorp, is based solely on the reports of the other auditors;
(ii) The 1995 consolidated statements of operations, changes in shareholders'
equity, and cash flows of Western Bancorp, prior to their restatement for the
1997 poolings-of-interests, were audited by other auditors; (iii) The separate
1995 consolidated financial statements of California Commercial Bankshares and
SC Bancorp included in the 1995 consolidated financial statements of Western
Bancorp were audited by other auditors; and (iv) The combination of the
consolidated statements of operations, changes in shareholders' equity and cash
flows for the year ended December 31, 1995, after restatement for the 1997
poolings-of-interest, has been audited by KPMG Peat Marwick LLP.
KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Los Angeles, California
June 22, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the inclusion of our Independent Auditor's Report dated
January 23, 1998 regarding the balance sheets of Bank of Los Angeles as of
December 31, 1997 and 1996, and the related statements of operations, changes in
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 1997, in the Form 8-K filed by Western Bancorp with the
Securities and Exchange Commission, and incorporated by reference in their Form
S-4, and the reference to our firm as experts.
VAVRINEK, TRINE, DAY & CO., LLP
June 23, 1998
Rancho Cucamonga, California
<PAGE>
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Western Bancorp (formerly Monarch Bancorp) on Form S-4 of our report dated
January 19, 1996, on the statements of operations, changes in stockholders'
equity, and cash flows, of Santa Monica Bank, for the year ended December 31,
1995 (such financial statements are not included herein) incorporated by
reference in the Current Report on Form 8-K/A, filed on April 9, 1998, of
Western Bancorp, and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Los Angeles, California
June 24, 1998
<PAGE>
EXHIBIT 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Western Bancorp (formerly Monarch Bancorp) on Form S-4 of our report dated
January 24, 1997 on the consolidated balance sheet of SC Bancorp and subsidiary
as of December 31, 1996, and the related consolidated statements of operations,
changes in shareholders' equity, and cash flows for each of the two years in the
period ended December 31, 1996 (such financial statements are not included
herein) appearing in and incorporated by reference in the Annual Report on Form
10-K of Western Bancorp for the year ended December 31, 1997, and to the
reference to us under the heading "Experts" in the prospectus, which is part of
this Registration Statement.
DELOITTE & TOUCHE LLP
Los Angeles, California
June 24, 1998
<PAGE>
EXHIBIT 23.5
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Western Bancorp (formerly Monarch Bancorp) on Form S-4 of our report dated
January 24, 1997 (March 17, 1997, as to Notes 8 and 16) on the consolidated
statements of financal condition of California Commercial Bankshares and
subsidiaries as of December 31, 1996, and the related consolidated statements of
operations, changes in shareholders' equity, and cash flows for each of the two
years in the period ended December 31, 1996 (such financial statements are not
included herein) appearing in and incorporated by reference in the Annual Report
on Form 10-K of Western Bancorp for the year ended December 31, 1997, and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
DELOITTE & TOUCHE LLP
Los Angeles, California
June 24, 1998
<PAGE>
EXHIBIT 23.9
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent, as successor accountants of Dayton & Associates (said
firm being merged with and into Vavrinek, Trine, Day & Co. on September 1, 1996)
to the incorporation by reference of their Independent Auditor's Report dated
February 29, 1996 regarding the consolidated balance sheets of Monarch Bancorp
and Subsidiaries as of December 31, 1995 and December 31, 1994, and the related
statements of operations, changes in capital, and cash flows for each of the two
years in the period ended December 31, 1995, in the Form 10-K of Western Bancorp
filed with the Securities and Exchange Commission, which is to be incorporated
by reference in the Form S-4 and the reference to our firm as experts.
VAVRINEK, TRINE, DAY & CO. LLP
June 23, 1998
Laguna Hills, California
<PAGE>
EXHIBIT 23.10
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our Report of Independent Public
Accountants dated January 21, 1998 on the financial statements of Santa Monica
Bank (the Bank) as of and for the years ended December 31, 1997 and 1996,
included in the Form 8K/A of Western Bancorp dated April 9, 1998, and to all
references to our Firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
June 23, 1998
Los Angeles, California
<PAGE>
EXHIBIT 99.1
WEDBUSH MORGAN SECURITIES, INC.
Board of Directors
Bank of Los Angeles
8901 Santa Monica Boulevard
West Hollywood, CA 90069
Ladies and Gentlemen:
We hereby consent to the inclusion of our opinion letter dated April 15,
1998 to the Board of Directors of Bank of Los Angeles ("BKLA") regarding the
merger of BKLA with and into Santa Monica Bank, a wholly-owned subsidiary of
Western Bancorp, in the Joint Proxy Statement-Prospectus and to the references
therein to our firm and to our opinion under the headings: SUMMARY--Opinion of
Wedbush; THE MERGER--Background and Reasons for the Merger, --Reasons for the
Merger; Recommendations of the BKLA Board of Directors, --Opinion of Wedbush and
- --Wedbush Fee; and THE MERGER AGREEMENT --Conditions. In giving the foregoing
consent, we do not admit (i) that we come within the category of persons whose
consent is required under Section 7 of the Securities Act of the 1933, as
amended (the "Securities Act"), or the rules and regulations of the Securities
and Exchange Commission promulgated thereunder, and (ii) that we are experts
with respect to any part of the Joint Proxy Statement-Prospectus within the
meaning of the term "experts" as used in the Securities Act and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
Very truly yours,
WEDBUSH MORGAN SECURITIES, INC.
June 24, 1998
Los Angeles, California
<PAGE>
WESTERN BANCORP AND BANK OF LOS ANGELES
LETTER OF TRANSMITTAL
FOR
BANK OF LOS ANGELES COMMON STOCK
PLEASE READ THE ENCLOSED INSTRUCTIONS CAREFULLY BEFORE COMPLETING THIS FORM.
TO BE COMPLETED, SIGNED AND MAILED OR DELIVERED WITH CERTIFICATES FORMERLY
REPRESENTING SHARES OF THE COMMON STOCK OF THE BANK OF LOS ANGELES, WHICH ARE TO
BE EXCHANGED FOR CERTIFICATES REPRESENTING SHARES OF THE COMMON STOCK OF WESTERN
BANCORP.
EXCHANGE AGENT:
U.S. Stock Transfer Corporation
1745 Gardena Avenue, Suite 200
Glendale, California 91204-2991
Telephone: (818) 502-1404
Facsimile: (818) 502-0674
Attention: William Garza
Ladies and Gentlemen:
In accordance with the Agreement and Plan of Merger (the "Merger
Agreement"), dated as of April 16, 1998, and amended and restated as of June ,
1998, by and among Western Bancorp ("Western"), Santa Monica Bank and the Bank
of Los Angeles ("BKLA"), which provides for the merger (the "Merger") of BKLA
with and into Santa Monica Bank, a California banking corporation and a
wholly-owned subsidiary of Western, the undersigned, as the registered holder(s)
of the certificate(s) representing common stock of BKLA ("BKLA Common Stock")
described in Box A below (the "BKLA Certificate(s)") or the assignee of such
registered holder(s), hereby surrender(s) such BKLA Certificate(s) listed below
in exchange for a certificate or certificates representing shares of common
stock, no par value, of Western (the "Western Common Stock") on the basis of
0.4224 shares of Western Common Stock for each share of BKLA Stock represented
by the certificate(s) so surrendered.
Please issue one certificate (unless otherwise directed by written
instructions attached hereto) for the shares of Western Common Stock to which
the undersigned is entitled. Unless otherwise specified in Box B or C below, the
undersigned requests that his or her certificate(s) be issued in the name(s) and
mailed to the address(es) set forth in Box A.
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
BOX A: DESCRIPTION OF BKLA COMMON STOCK SURRENDERED
----------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF HOLDER(S) OF RECORD CERTIFICATE(S) BEING SURRENDERED
AS SHOWN ON RECORDS OF BKLA* (ATTACH SEPARATE SCHEDULE IF NECESSARY)
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
CERTIFICATE NUMBER
NUMBERS OF SHARES
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
TOTAL SHARES
- ------------------------------------------------------------------------------------------------------
</TABLE>
*If shares are held jointly, list first and circle the name of the person whose
taxpayer identification number you enter in Substitute Form W-9 (see the
Instructions on the enclosed Substitute Form W-9 for guidance as to which
taxpayer identification number to report).
- --------------------------------------------------------------------------------
BOX B:
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTION 5)
To be completed ONLY if the certificate(s) representing Western Common
Stock is (are) to be issued in the name(s) of someone other than the
person(s) in whose name(s) the BKLA Certificate(s) being surrendered
pursuant to this Letter of Transmittal is (are) registered or to correct the
name(s) set forth in Box A. (Unless otherwise indicated in Box C, the
certificate(s) representing the Western Common Stock will be mailed to the
address indicated in Box A).
Issue the certificate(s) representing Western Common Stock in the
name(s) of:
(PLEASE PRINT)
(ATTACH SEPARATE SCHEDULE IF NECESSARY)
Name _______________________________________________________________________
____________________________________________________________________________
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
(Taxpayer Identification or Social Security Number(s) of Person(s) Named in
this Box B: ________________________________________________________________
____________________________________________________________________________
- --------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------
BOX C:
SPECIAL MAILING INSTRUCTIONS
(SEE INSTRUCTION 8)
To be completed ONLY if the certificate(s) representing Western Common
Stock is (are) to be mailed to an address other than indicated in Box A
above.
Mail the certificate(s) representing Western Common Stock to:
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Attention:__________________________________________________________________
- ------------------------------------------------------------
- ------------------------------------------------------------
BOX D:
SIGNATURE GUARANTEE
(SEE INSTRUCTION 6)
To be completed in all cases specified in Instructions 5 and 6 herein.
The undersigned hereby guarantees the signature(s) that appear(s) in Box
E on this Transmittal Form.
____________________________________________________________________________
(NAME OF GUARANTEEING FIRM)
By _________________________________________________________________________
(SIGNATURE OF OFFICER)
__________________________________________________________________________
(TITLE OF OFFICER SIGNING THIS GUARANTEE)
__________________________________________________________________________
__________________________________________________________________________
(ADDRESS OF GUARANTEEING FIRM AND TELEPHONE NUMBER)
- -----------------------------------------------------
<PAGE>
NOTE: ALL SHAREHOLDERS MUST SIGN IN THE SPACE PROVIDED BELOW
- --------------------------------------------------------------------------------
BOX E:
SIGNATURE(S)
Dated: ______________________________________________________________ , 1998
(PLEASE PRINT)
SIGN
HERE -->____________________________________________________________________
____________________________________________________________________________
(SIGNATURE(S) OF HOLDER(S))
Telephone Number:___________________________________________________________
(INCLUDE AREA CODE)
Must be signed by registered holder(s) exactly as the name(s) appear(s) on
the BKLA Certificate(s) as indicated in Box A, or by person(s) authorized to
become registered holder(s). Signature(s) must be guaranteed in Box D in all
cases specified in Instructions 5 and 6. SEE INSTRUCTIONS 2, 5 AND 6.
- ------------------------------------------
PLEASE COMPLETE THE ENCLOSED SUBSTITUTE FORM W-9 AND RETURN IT TO U.S. STOCK
TRANSFER CORPORATION WITH YOUR CERTIFICATES REPRESENTING SHARES OF BKLA COMMON
STOCK.
*IMPORTANT TAX INFORMATION*
Please be advised that irrespective of whether you have previously furnished a
taxpayer identification number (social security number for individuals, or
employer identification number for corporations) or the certification on
Substitute Form W-9 with respect to dividend payments, you must again furnish
this number, certified to be correct under penalties of perjury, to assure that
back-up withholding of 31% will not be applied. CERTIFICATION SHOULD BE MADE TO
THE EXCHANGE AGENT ON SUBSTITUTE FORM W-9, A COPY OF WHICH IS ENCLOSED.
<PAGE>
INSTRUCTIONS TO LETTER OF TRANSMITTAL FOR SURRENDERING
CERTIFICATES THAT HERETOFORE REPRESENTED
SHARES OF COMMON STOCK OF THE BANK OF LOS ANGELES
1. GENERAL. In accordance with the Agreement and Plan of Merger (the
"Merger Agreement"), dated as of April 16, 1998, and amended and restated as of
June , 1998, by and among Western Bancorp ("Western"), Santa Monica Bank and
the Bank of Los Angeles ("BKLA"), which provides for the merger (the "Merger")
of BKLA with and into Santa Monica Bank, a California banking corporation and a
wholly-owned subsidiary of Western, each holder of shares of common stock of
BKLA ("BKLA Common Stock") (other than (a) shares that have not been voted in
favor of the approval of the principal terms of the Merger and with respect to
which Dissenters' Rights (as defined in the Merger Agreement) have been
perfected in accordance with the California General Corporation Law and (b)
shares held directly or indirectly by Western, other than shares held in a
fiduciary capacity or in satisfaction of a debt previously contracted) has
become entitled to receive a certificate or certificates representing 0.4224
shares of common stock of Western ("Western Common Stock") for each former share
of BKLA Common Stock represented by BKLA Common Stock certificate(s) ("BKLA
Certificate(s)"). The Letter of Transmittal, or a copy thereof, properly
completed and SIGNED, must be used in connection with all exchanges of BKLA
Certificate(s) for Western Common Stock certificate(s), under the terms of the
Merger Agreement. THE METHOD OF DELIVERY OF BKLA CERTIFICATE(S) AND ANY OTHER
DOCUMENTS (SEE BELOW) IS AT THE ELECTION AND RISK OF SURRENDERING SHAREHOLDERS
OF BKLA, BUT IF SENT BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY
INSURED, BE USED. Transmit your BKLA Certificate(s) and other required documents
to the address set forth on the Letter of Transmittal. DELIVERY WILL BE DEEMED
EFFECTIVE ONLY WHEN ACTUALLY RECEIVED AT THE OFFICE OF THE EXCHANGE AGENT.
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN THAT SET FORTH IN
THE LETTER OF TRANSMITTAL WILL NOT CONSTITUTE A VALID DELIVERY.
2. SIGNATURES, AND GUARANTY OF SIGNATURE. The signature (or signatures, in
the case of any BKLA Certificate(s) owned by two or more joint holders) on the
Letter of Transmittal should correspond exactly with the name(s) of the
registered owner(s) as written on the face of the BKLA Certificate(s) unless
such BKLA Certificate(s) has (have) been transferred by the registered owner(s),
in which event the Letter of Transmittal should be signed in exactly the same
form as the name of the last transferee indicated on the transfers attached to
or endorsed on the BKLA Certificate(s).
When signing as agent, attorney, administrator, executor, guardian, trustee,
or in any other fiduciary or representative capacity, or as an officer of a
corporation on behalf of the corporation, give full title as such. If the BKLA
Certificate(s) has (have) been transferred or assigned and new certificate(s)
has (have) not yet been received in the name of the transferee or assignee, the
Transmittal Letter must be signed by the transferee or assignee or by his or her
agent, and should not be signed by the transferor or assignor.
The BKLA Certificate(s), if registered in the name(s) of the person(s)
signing the Letter of Transmittal, needs (need) not be endorsed or accompanied
by any instrument of assignment or transfer other than the Letter of
Transmittal.
3. 31% BACK-UP WITHHOLDING. Under the federal income tax law, a
shareholder who delivers BKLA Common Stock is required by law to provide the
Exchange Agent with his or her correct taxpayer identification number ("TIN")
(i.e., social security number for individuals or employer identification number
for corporations) on the Substitute Form W-9 provided below. If the Exchange
Agent is not provided with the correct TIN, the shareholder may be subject to a
$50 penalty imposed by the Internal Revenue Service. In addition, delivery to
such shareholder of a check for the payment of dividends, if any, on Western
Common Stock will be subject to 31% back-up withholding unless the completed
Substitute Form W-9 is received by the Exchange Agent. See the enclosed
Substitute Form W-9 for additional instructions.
Certain shareholders, including, among others, all corporations and certain
foreign individuals, are not subject to these back-up withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that shareholder must submit a statement, signed under penalty of
perjury, to the Exchange Agent (which form the Exchange Agent will provide upon
request) attesting to the individual's exempt status. NOTE: Other exempt
recipients (such as corporations) must in any event complete and return the
Substitute Form W-9 to the Exchange Agent in order to avoid back-up withholding
(see the Specific Instructions on the Substitute Form W-9 dealing with "Exempt
Payees and Payments").
If back-up withholding applies, the Exchange Agent is required to withhold
31% of the payment made to the shareholder of dividends, if any, on Western
Common Stock. Back-up withholding is not an additional tax. Rather, the tax
liability of persons subject to back-up withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
<PAGE>
Western reserves the right in its sole discretion to direct the Exchange
Agent to take whatever steps are necessary to comply with Western's obligations
regarding back-up withholding.
To prevent back-up withholding with respect to any payment, the shareholder
is required to notify the Exchange Agent of his or her correct TIN by completing
the enclosed Substitute Form W-9.
The shareholder is required to give the Exchange Agent the TIN of the record
owner of BKLA Common Stock. If the shares of BKLA Common Stock are in more than
one name or are not in the name of the actual owner, consult the enclosed
Substitute Form W-9 for additional guidance on which TIN to report.
4. MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES. If any BKLA
Certificate(s) has (have) been mutilated, lost, stolen or destroyed, you should
so indicate in Box A of this Letter of Transmittal. The Exchange Agent will send
you additional documentation to complete in order to surrender effectively such
lost or destroyed BKLA Certificate(s) and further instructions as to obtaining
any surety bond that may be required to be posted.
THE INSTRUCTIONS IN ITEMS 5 AND 6, BELOW, NEED ONLY BE FOLLOWED IF THE
REGISTERED OWNER DESIRES TO MAKE A CHANGE OF OWNERSHIP OR A CORRECTION OF, OR
CHANGE IN, NAME.
5. TRANSFER INSTRUCTIONS.
(a) CHANGE OF OWNERSHIP. If any certificate(s) representing Western
Common Stock is (are) to be issued in the name of someone other than the
registered owner(s) of the BKLA Certificate(s) being surrendered, please
complete the Special Issuance instructions in Box B on the Letter of
Transmittal and be guided by the following:
(i) ENDORSEMENT. The BKLA Certificate(s) being surrendered must be
properly endorsed (or accompanied by appropriate stock powers properly
executed) by the registered owner(s) of such BKLA Certificate(s) to the
person who is to receive the certificate(s) representing Western Common
Stock. The signature of the registered owner(s) on the endorsement or
stock powers must correspond exactly with the name as written upon the
face of the BKLA Certificate(s) being surrendered and must be guaranteed
as described in Instruction 6.
(ii) TRANSFER TAXES. In the event that any transfer or other taxes
may become payable by reason of the issuance of any certificate(s)
representing Western Common Stock in any name other than that of the
registered owner(s) of the BKLA Certificate(s) being surrendered, the
transferee or assignee must pay such tax to the Exchange Agent or must
establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable. Except as otherwise provided in this
Instruction 5(a)(ii), it will not be necessary for transfer tax stamps to
be affixed to the BKLA Certificate(s) transmitted with the Letter of
Transmittal.
(b) CORRECTION OF, OR CHANGE IN, NAME. For a correction of name or for
a change in name that does not involve a change of ownership, please
complete the Special Issuance Instructions in Box B on the Letter of
Transmittal and proceed as follows: for a change in name by marriage, etc.,
the BKLA Certificate(s) being surrendered should be endorsed, E.G., "Mary
Doe, now by marriage Mary Jones," with the endorsement signature guaranteed
as described in Instruction 6. For a correction in name, the BKLA
Certificate(s) being surrendered should be endorsed, E.G., "Samuel J. Snow,
incorrectly inscribed as S.J. Snow," with the endorsement signature
guaranteed as described in Instruction 6.
6. SIGNATURE GUARANTEE. If the certificate(s) representing Western Common
Stock is (are) to be issued in a name different from that appearing on the face
of the surrendered BKLA Certificate(s), the BKLA Certificate(s) must be properly
endorsed by the registered owner(s) thereof or accompanied by appropriate stock
powers properly executed and the signature(s) to the endorsement or on the stock
power must be guaranteed by an eligible institution, such as a bank, credit
union or broker, that is a member of, or a participant in, a signature medallion
program.
7. SUPPORTING EVIDENCE. If the Letter of Transmittal, an endorsement of
the surrendered BKLA Certificate(s) or a stock power is executed by a person
(other than the registered owner) as an agent, attorney, administrator,
executor, guardian, trustee, or in any other fiduciary or representative
capacity, or by an officer of a corporation on behalf of the corporation, there
must be submitted with the Letter of Transmittal the following: the BKLA
Certificate(s) being surrendered and any stock powers and documentary evidence
of appointment and authority to act in such capacity (including court orders
where necessary), as well as evidence of the authority of the person making such
execution to assign, sell or transfer shares. Such documentary evidence of
authority must be in form satisfactory to the Exchange Agent.
8. SPECIAL MAILING INSTRUCTIONS. Unless instructions to the contrary are
given in the Special Mailing Instructions in Box C on the Letter of Transmittal,
any certificate(s) representing Western Common Stock and to be issued upon
surrender of BKLA Certificate(s) in accordance with the Letter of Transmittal
will be mailed to the address shown in Box A.
<PAGE>
9. ADDITIONAL COPIES. Additional copies of the Letter of Transmittal may
be obtained from the Exchange Agent.
10. INQUIRIES. All inquiries with respect to the surrender of BKLA
Certificate(s) should be made directly to the Exchange Agent at the address or
telephone number on the first page.
<PAGE>
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN Social Security Number OR
FORM W-9 IN THE BOX AT RIGHT AND CERTIFY Employer Identification Number
Department of the Treasury BY SIGNING AND DATING BELOW
Internal Revenue Service ------------------------
-----------------------------------------------------------------
For Payees exempt from backup withholding, see the enclosed
Guidelines of Taxpayer Identification Number on Substitute Form
W-9 and complete as instructed under
Payer's Request for Taxpayer "Important Tax Information" above.
Identification Number (TIN)
-----------------------------------------------------------------
PART 3--Awaiting TIN / /
- ---------------------------------------------------------------------------------------------------
PART 2--CERTIFICATION--UNDER PENALTY OF PERJURY, I CERTIFY THAT:
(1) the number shown on this form is my correct Taxpayer Identification Number (or I am waiting
for a number to be issued to me); and
(2) I am not subject to backup withholding because (i) I am exempt from backup withholding, (ii) I
have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all interest or dividends, or (iii) the IRS has
notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) in Part 2 above if you have been notified
by the IRS that you are subject to backup withholding because of under-reporting interest or
dividends on your tax return. However, if after being notified by the IRS that you were subject to
backup withholding you received another notification from the IRS stating that you are no longer
subject to backup withholding, do not cross out item (2).
Signature ----------------------------------------------------------------- Date
--------------------
Name (Please Print)
---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL INFORMATION.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER NAME AND IDENTIFICATION NUMBER.-- Social
Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000.
Employer identification numbers have nine digits separated by only one hyphen:
i.e., 00-0000000. The table below will help determine the name and number to
provide.
<TABLE>
<CAPTION>
GIVE THE NAME AND SOCIAL
FOR THIS TYPE OF ACCOUNT SECURITY NUMBER OF--
- ----------------------------- -----------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, any one of the
individuals(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also
trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under State
law
5. Sole proprietorship The owner(3)
account
<CAPTION>
GIVE THE NAME AND EMPLOYER
FOR THIS TYPE OF ACCOUNT IDENTIFICATION NUMBER OF--
- ----------------------------- -----------------------------
<S> <C>
6. Sole proprietorship The owner(3)
account
7. A valid trust, estate, or The legal entity(4)
pension trust
8. Corporate account The corporation
9. Association, club, The organization
religious, charitable,
educational or other
tax-exempt organization
account
10. Partnership The partnership
11. A broker or registered The broker or nominee
nominee
12. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State
or local government,
school district, or
prison) that receives
agricultural program
payments
</TABLE>
- ------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your Social Security Number or
Employer Identification Number.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the identifying number of the personal representative or
trustee unless the legal entity itself is not designated in the account
title.)
Note: If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
The following is a list of payees specifically exempted from backup withholding
depending upon the type of payment (see below):
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an IRA or a
custodial account under section 403 (b) (7).
(3) The United States or any agency or instrumentality thereof.
(4) A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
(5) A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
(6) An international organization or any agency or instrumentality thereof.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures Trading
Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the Investment
Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
For interest and dividends, all listed payees are exempt except item (9). For
broker transactions, payees listed in items (1) through (13) and a person
registered under the Investment Advisers Act of 1940 who regularly acts as a
broker are exempt.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART 1 OF THE FORM, AND RETURN IT TO
THE PAYER. If you are a nonresident alien or a foreign entity not subject to
backup withholding, give the payer a completed Form W-8, Certificate of Foreign
Status.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) Failure To Furnish Taxpayer Identification Number.--If you fail to furnish
your correct taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) Civil Penalty For False Information With Respect To Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty For Falsifying Information.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT 99.3
June 24, 1998
Board of Directors
Western Bancorp
4100 Newport Place, Suite 900
Newport Beach, California 92660
Ladies and Gentlemen:
Pursuant to Rule 438 under the Securities Act of 1933, as amended, the
undersigned hereby consents to being named as a person who will become a
director of Western Bancorp, a California corporation (the "Company"), in the
Company's Registration Statement on Form S-4 filed with the Securities and
Exchange Commission (the "Registration Statement"), and to the filing of this
consent as an exhibit to such Registration Statement.
Sincerely,
/s/ ADRIANA M. BOEKA
- ---------------------------------------------
Adriana M. Boeka
