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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 21, 2000
Greater Bay Bancorp
(Exact name of registrant as specified in its charter)
California 77-0387041
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
Commission file number: 0-25034
2860 West Bayshore Road
Palo Alto, California 94303
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (650) 813-8200
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Item 5. Other Events.
On March 21, 2000, Greater Bay Bancorp (the "Registrant") entered into an
Agreement and Plan of Reorganization with Bank of Petaluma ("BOP") and DKSS
Corp. ("Newco") providing for the merger of Newco with and into BOP (the
"Merger"), subject to the terms and conditions therein, including the receipt of
all required regulatory approvals and the approval of the shareholders of BOP.
As a result of the Merger, BOP will become a wholly owned subsidiary of the
Registrant.
Item 7. Financial Statements and Exhibits.
Exhibits
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2 Agreement and Plan of Reorganization, dated as of March 21, 2000, by and
among Greater Bay Bancorp, Bank of Petaluma and DKSS Corp.
99.1 Press Release dated March 21, 2000
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Greater Bay Bancorp
(Registrant)
Dated: March 22, 2000 By: /s/ Linda M. Iannone
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Linda M. Iannone
Senior Vice President and General
Counsel
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Exhibit Index
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2 Agreement and Plan of Reorganization, dated as of March 21, 2000 by and
among Greater Bay Bancorp, Bank of Petaluma and DKSS Corp.
99.1 Press Release dated March 21, 2000
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EXHIBIT 2
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
GREATER BAY BANCORP,
DKSS CORP.
AND
BANK OF PETALUMA
March 21, 2000
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AGREEMENT AND PLAN OF REORGANIZATION
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THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made and entered
into as of the 21st day of March, 2000, by and among GREATER BAY BANCORP, a
California corporation ("GBB"), DKSS CORP., a California corporation and wholly
owned subsidiary of GBB ("Newco") and Bank of Petaluma, a California corporation
("BOP").
WHEREAS, the Boards of Directors of GBB, Newco and BOP deem advisable and
in the best interests of their respective shareholders the merger of Newco with
and into BOP (the "Merger") upon the terms and conditions set forth herein and
in accordance with the California General Corporation Law (the "CGCL") (BOP,
following the effectiveness of the Merger, being hereinafter sometimes referred
to as the "Surviving Corporation");
WHEREAS, the Boards of Directors of GBB, Newco and BOP have approved the
Merger pursuant to this Agreement and the Agreement of Merger by and between
Newco and BOP (the "Agreement of Merger"), in substantially the form of Exhibit
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A attached hereto, pursuant to which Newco will merge with and into BOP and each
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outstanding share of BOP common stock, no par value ("BOP Stock"), excluding any
BOP Perfected Dissenting Shares (as defined below), will be converted into the
right to receive a specified amount of GBB common stock, no par value ("GBB
Stock"), upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Merger is intended to qualify as a tax-free reorganization
within the meaning of the provisions of Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code").
NOW, THEREFORE, on the basis of the foregoing recitals and in consideration
of the mutual covenants, agreements, representations and warranties contained
herein, the parties hereto do covenant and agree as follows:
ARTICLE 1
DEFINITIONS
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Except as otherwise expressly provided for in this Agreement, or unless the
context otherwise requires, as used throughout this Agreement the following
terms shall have the respective meanings specified below:
"Affiliate" of, or a person "Affiliated" with, a specific person(s) is a
person that directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, the person(s)
specified.
"Affiliated Group" means, with respect to any entity, a group of entities
required or permitted to file consolidated, combined or unitary Tax Returns (as
defined herein).
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"Agreement of Merger" has the meaning set forth in the second recital of
this Agreement.
"Average Closing Price" means the average of the daily closing price of a
share of GBB Stock reported on the Nasdaq National Market System during the 20
consecutive trading days ending at the end of the third trading day immediately
preceding the Effective Time of the Merger (as defined herein).
"BAB" means Bay Area Bank, a California state chartered bank and wholly
owned subsidiary of GBB.
"BBC" means Bay Bank of Commerce, a California state chartered bank and
wholly owned subsidiary of GBB.
"Banks" means BAB, BBC, CNB, GGB, MDNB, MPB and PBC.
"Benefit Arrangements" has the meaning set forth in Section 4.20(b).
"BHC Act" means the Bank Holding Company Act of 1956, as amended.
"BOP 401(k) Plan" means the BOP Profit Sharing and Salary Deferral 401(k)
Plan.
"BOP Conflicts and Consents List" has the meaning set forth in Section 4.6.
"BOP Contract List" has the meaning set forth in Section 4.16.
"BOP Derivatives List" has the meaning set forth in Section 4.32.
"BOP Dissenting Shares" means any shares of BOP Stock held by "dissenting
shareholders" within the meaning of Chapter 13 of the CGCL.
"BOP Employee Plan List" has the meaning set forth in Section 4.20.
"BOP Environmental Compliance List" has the meaning set forth in Section
4.12(b).
"BOP Filings" has the meaning set forth in Section 4.5.
"BOP Filings List" has the meaning set forth in Section 4.5.
"BOP Fully Diluted Book Value" means the total stockholders' equity of BOP
as reflected on the financial statements to be provided by BOP to GBB pursuant
to Section 11.14, as adjusted (a) to eliminate all amounts paid in connection
with the exercise of any BOP Stock Options (as defined herein) since December
31, 1999, (b) to eliminate any amount related to accumulated other comprehensive
income, (c) to deduct any dividends to be paid pursuant to Section 6.1(b) hereof
after the date of such financial statements and (d) to eliminate amounts paid or
accrued for Merger-related expenses, including but not limited to, legal,
accounting and financial advisory fees.
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"BOP Indemnification List" has the meaning set forth in Section 4.30.
"BOP Insurance List" has the meaning set forth in Section 4.7.
"BOP Intellectual Property List" has the set forth in Section 4.35.
"BOP Investment Securities List" has the meaning set forth in Section 4.26.
"BOP List" means any list required to be furnished by BOP to GBB herewith.
"BOP Litigation List" has the meaning set forth in Section 4.10.
"BOP Loan List" has the meaning set forth in Section 4.25.
"BOP Offices List" has the meaning set forth in Section 4.23.
"BOP Operating Losses List" has the meaning set forth in Section 4.24.
"BOP Perfected Dissenting Shares" means BOP Dissenting Shares which the
holders thereof have not withdrawn or caused to lose their status as BOP
Dissenting Shares.
"BOP Personal Property List" has the meaning set forth in Section 4.8.
"BOP Real Property List" has the meaning set forth in Section 4.9.
"BOP Shareholders' Meeting" means the meeting of BOP's shareholders
referred to in Section 6.6.
"BOP Stock" has the meaning set forth in the second recital of this
Agreement.
"BOP Stock Option" means any option issued pursuant to the BOP Stock Option
Plan.
"BOP Stock Option Plan" means the BOP 1997 Stock Option Plan.
"BOP Supplied Information" has the meaning set forth in Section 4.34.
"BOP Tax List" has the meaning set forth in Section 4.11.
"BOP Undisclosed Liabilities List" has the meaning set forth in Section
4.19.
"Business Day" means any day other than a Saturday, Sunday or day on which
a bank chartered under the laws of the State of California is closed.
"Certificates" has the meaning set forth in Section 2.5(b).
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"CFC" means the California Financial Code.
"CGCL" has the meaning set forth in the first recital of this Agreement.
"Classified Credits" has the meaning set forth in Section 6.7.
"Closing" means the consummation of the Merger provided for in Article 2 of
this Agreement on the Closing Date (as defined herein) at the offices of Greater
Bay Bancorp, 400 Emerson Street, Palo Alto, California, or at such other place
as the parties may agree upon.
"Closing Date" means the date which is the first Friday which follows the
last to occur of (i) the approval of this Agreement and the transactions
contemplated hereby by the shareholders of BOP, (ii) the receipt of all permits,
authorizations, approvals and consents specified in Section 9.3 hereof, (iii)
the expiration of all applicable waiting periods under the law, (iv) the
expiration of the 30 day period following the mailing by BOP to its shareholders
of a notice of approval of the Merger by the outstanding shares pursuant to
Section 1301 of the CGCL, or such other date as the parties may agree upon.
Notwithstanding the foregoing, if in the good faith judgment of GBB the Closing
would (a) interfere with or affect any financing, acquisition or other
significant transaction being contemplated by GBB, whether or not a final
determination has been made to undertake such transaction, or (b) GBB has a
bona fide business purpose for delaying the Closing, GBB will have the right to
delay the Closing for a period of not more than 60 Business Days from the date
which would otherwise be the Closing Date as determined by the first sentence of
this paragraph, except that in no event shall the Closing Date occur after
October 15, 2000, unless the parties hereto shall otherwise mutually agree.
"CNB" means Cupertino National Bank, a national banking association and
wholly owned subsidiary of GBB.
"Code" has the meaning set forth in the fourth recital of this Agreement.
"Commissioner" means the Commissioner of the Department of Financial
Institutions of the State of California.
"Competing Transaction" has the meaning set forth in Section 6.1(n).
"Conversion Ratio" has the meaning set forth in Section 2.2(a).
"Covered Person" has the meaning set forth in Section 4.30.
"Dain Rauscher Agreement" means the letter agreement between GBB and Dain
Rauscher Wessels Equity Capital Markets, a division of Dain Rauscher
Incorporated, dated March 20, 2000.
"DFI" means the Department of Financial Institutions of the State of
California.
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"Effective Time of the Merger" means the date upon which the Merger is
consummated and the Agreement of Merger is filed with the Secretary of State of
the State of California.
"Employee Plans" has the meaning set forth in Section 4.20(a).
"Encumbrance" shall mean any option, pledge, security interest, lien,
charge, encumbrance or restriction (whether on voting or disposition or
otherwise), whether imposed by agreement, understanding, law or otherwise.
"Environmental Regulations" has the meaning set forth in Section 4.12(b).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliates" has the meaning set forth in Section 4.20(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" means Norwest Bank Minnesota, N.A.
"Exchange Fund" has the meaning set forth in Section 2.5(a) hereof.
"FDIC" means the Federal Deposit Insurance Corporation.
"Financial Statements of BOP" means the audited financial statements of BOP
consisting of the balance sheets as of December 31, 1997, 1998 and 1999, the
related statements of income, stockholders' equity and cash flows for the years
then ended and related notes thereto and related opinions thereon for the years
then ended.
"Financial Statements of GBB" means the audited consolidated financial
statements of GBB consisting of the consolidated balance sheets as of December
31, 1997, 1998 and 1999, the related consolidated statements of operations,
shareholders' equity and cash flows for the years then ended and the related
notes thereto and related opinions thereon for the years then ended.
"FRB" means the Board of Governors of the Federal Reserve System.
"GBB 401(k) Plan" means the Greater Bay Bancorp 401(k) Profit Sharing Plan.
"GBB Acquisition Transaction" has the meaning set forth in Section
2.2(a)(v).
"GBB Conflicts and Consents List" has the meaning set forth in Section 5.5.
"GBB Filings" has the meaning set forth in Section 5.4.
"GBB Stock" has the meaning set forth in the second recital of this
Agreement.
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"GBB Stock Option Plan" means the Greater Bay Bancorp 1996 Stock Option
Plan, as amended.
"GBB Subsidiaries" means Newco, the Banks, GBB Merger Corp., Pacific
Business Funding Corporation and Peninsula Real Estate Corporation.
"GBB Supplied Information" has the meaning set forth in Section 5.14.
"GGB" means Golden Gate Bank, a California state chartered bank and wholly
owned subsidiary of GBB.
"Governmental Entity" shall mean any court or tribunal in any jurisdiction
or any United States federal, state, municipal, domestic, foreign or other
administrative authority or instrumentality.
"Hazardous Materials" has the meaning set forth in Section 4.12(b).
"Hoefer Agreement" means the letter agreement between BOP and Hoefer &
Arnett Incorporated dated February 4, 2000.
"Immediate Family" means a person's spouse, parents, in-laws, children and
siblings.
"Investment Security" means any equity security or debt security as defined
in Statement of Financial Accounting Standards No. 115.
"IRS" means the Internal Revenue Service.
"MDNB" means Mt. Diablo National Bank, a national banking association and
wholly-owned subsidiary of GBB.
"MPB" means Mid-Peninsula Bank, a California state chartered bank and
wholly-owned subsidiary of GBB.
"Operating Loss" has the meaning set forth in Section 4.24.
"PBC" means Peninsula Bank of Commerce, a California state chartered bank
and wholly owned subsidiary of GBB.
"Person" means any individual, corporation, association, partnership,
limited liability company, trust, joint venture, other entity, unincorporated
body, government or governmental department or agency.
"Proxy Statement and Prospectus" means the Proxy Statement and Prospectus
that is included as part of the Registration Statement on Form S-4 (as defined
herein) and used to solicit proxies for the BOP Shareholders' Meeting and to
offer and sell the shares of GBB Stock to be issued in connection with the
Merger.
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"PwC" means PricewaterhouseCoopers LLP, GBB's independent public
accountants.
"Related Group of Persons" means Affiliates, members of an Immediate Family
or Persons the obligations of whom would be attributed to another Person
pursuant to the regulations promulgated by the SEC (as defined herein).
"Registration Statement on Form S-4" means the Registration Statement on
Form S-4, and such amendments thereto, that is filed with the SEC to register
the shares of GBB Stock to be issued in the Merger under the Securities Act and
to clear use of the Proxy Statement and Prospectus in connection with the BOP
Shareholders' Meeting pursuant to the regulations promulgated under the Exchange
Act.
"Richardson" means Richardson & Company, BOP's independent public
accountants.
"Scheduled Contracts" has the meaning set forth in Section 4.16.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Surviving Corporation" has the meaning set forth in the first recital of
this Agreement.
"Tanks" has the meaning set forth in Section 4.12(b).
"Tax Returns" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes.
"Taxes" means (i) all federal, state, local or foreign taxes, charges,
fees, imposts, levies or other assessments, including, without limitation, all
net income, gross receipts, capital, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp,
occupation, property, corporation and estimated taxes, custom duties, fees,
assessments and charges of any kind whatsoever; (ii) all interest, penalties,
fines, additions to tax or additional amounts imposed by any taxing authority in
connection with any item described in clause (i); and (iii) any transferred
liability in respect of any items described in clauses (i) and/or (ii).
"Top Up Option" means, in the event that the Average Closing Price is less
than $38.97, the right of GBB to elect to issue that number of shares of GBB
Stock equal to the quotient obtained by dividing $25.97 by the Average Closing
Price.
"Understanding" means any contract, agreement, understanding, commitment or
offer, whether oral or written, which may become a binding obligation if
accepted by another Person.
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ARTICLE 2.
TERMS OF MERGER
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2.1. Effect of Merger and Surviving Corporation. At the Effective Time
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of the Merger, Newco will be merged with and into BOP pursuant to the terms,
conditions and provisions of the Agreement of Merger and in accordance with the
applicable provisions of the CGCL. By virtue of the Merger, all the rights,
privileges, powers and franchises and all property and assets of every kind and
description of Newco and BOP shall be vested in and be held and enjoyed by the
Surviving Corporation, without further act or deed, and all the interests of
every kind of Newco and BOP, including all debts due to either of them on
whatever account, shall be the property of the Surviving Corporation as they
were of Newco and BOP and the title to any interest in real property and any
interest in personal property vested by deed or otherwise in either Newco or BOP
shall not revert or be in any way impaired by reason of the Merger; and all
rights of creditors and liens upon any property of Newco and BOP shall be
preserved unimpaired and all debts, liabilities and duties of Newco and BOP
shall be debts, liabilities and duties of the Surviving Corporation and may be
enforced against it to the same extent as if said debts, liabilities and duties
had been incurred or contracted by it.
2.2. Stock of BOP. Subject to Section 2.4, each share of BOP Stock
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issued and outstanding immediately prior to the Effective Time of the Merger
shall, without any further action on the part of BOP or the holders of such
shares, be treated on the basis set forth herein.
(a) Conversion of BOP Stock. At the Effective Time of the Merger,
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pursuant to the Agreement of Merger, each outstanding share of BOP Stock
excluding any BOP Perfected Dissenting Shares shall, without any further action
on the part of BOP or the holders of any such shares, be automatically canceled
and cease to be an issued and outstanding share of BOP Stock and be converted
into shares of GBB Stock (the "Conversion Ratio") as follows:
(i) If the Average Closing Price is greater than or equal to $37.91 or
less than or equal to $46.34, 0.6850 shares of GBB Stock;
(ii) If the Average Closing Price is greater than $46.34, a number of
shares of GBB Stock equal to the quotient obtained by dividing (x) $31.74 plus
the product of .3333 times the difference between the Average Closing Price and
$46.34, by (y) the Average Closing Price; or
(iii) If the Average Closing Price is less than $37.91, GBB may, but
shall not be required to, elect the Top Up Option. GBB shall notify BOP in
writing, within one Business Day from the date of calculation of the Average
Closing Price, whether GBB will elect the Top Up Option. If GBB does not elect
the Top Up Option, BOP may terminate the Agreement pursuant to Section 13.1(l)
within one Business Day from the date of receipt of written notice from GBB of
its decision not to elect the Top Up Option. If BOP does not give GBB written
notice of its decision to so terminate the Agreement within such one Business
Day period, the Conversion Ratio will be 0.6850 shares of GBB Stock. If GBB
elects the Top Up Option, the
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Conversion Ratio will equal that number of shares of GBB Stock equal to the
quotient obtained by dividing $25.97 by the Average Closing Price.
(iv) In the event that, prior to the Closing Date, GBB publicly
announces the signing of a definitive agreement with a third party with respect
to a business combination, tender offer or similar transaction which if
consummated would result in the GBB shareholders as of the date of such
announcement owning less than 51% of the outstanding shares of common stock of
the surviving corporation, the price to be paid to GBB shareholders in such
transaction would exceed $46.34 and such transaction is not terminated or
abandoned prior to the Closing Date (a "GBB Acquisition Transaction"), the
Conversion Ratio shall be 0.6850 shares of GBB Stock. If such GBB Acquisition
Transaction is terminated or abandoned during the period for determining the
Average Closing Price, GBB can elect to either set the Conversion Ratio at
0.6850 shares of GBB Stock or unilaterally delay the Closing Date to a date
which is 25 trading days after the date of the public announcement of the
termination or abandonment of such GBB Acquisition Transaction. To preserve the
rights of holders of shares of BOP Stock pursuant to this Section 2.2(a)(iv),
GBB and BOP agree to coordinate the closing of any GBB Acquisition Transaction
with the Closing and to cooperate with such third party in otherwise
accomplishing the purpose hereof.
(b) BOP Perfected Dissenting Shares. BOP Perfected Dissenting Shares
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shall not be converted into shares of GBB Stock, but shall, after the Effective
Time of the Merger, be entitled only to such rights as are granted them by
Chapter 13 of the CGCL. Each dissenting shareholder who is entitled to payment
for his shares of BOP Stock shall receive such payment in an amount as
determined pursuant to Chapter 13 of the CGCL.
(c) Dividends, Etc. If, prior to the Effective Time of the Merger,
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GBB shall declare a stock dividend or distribution upon or subdivide, split up,
reclassify or combine the GBB Stock, or make a distribution on the GBB Stock in
any security convertible into GBB Stock, with a record date prior to the
Effective Time of the Merger, appropriate adjustment or adjustments will be made
to the Conversion Ratio.
2.3. Effect on GBB Stock. At the Effective Time of the Merger, each
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outstanding share of GBB Stock shall remain an outstanding share of GBB Stock
and shall not be converted or otherwise affected by the Merger.
2.4. Fractional Shares. No fractional shares of GBB Stock shall be
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issued in the Merger. In lieu thereof, each holder of BOP Stock who would
otherwise be entitled to receive a fractional share shall receive an amount in
cash equal to the product (calculated to the nearest cent) obtained by
multiplying (a) the closing price of GBB Stock reported on the Nasdaq National
Market System on the Business Day immediately preceding the Closing Date times
(b) the fraction of the share of GBB Stock to which such holder would otherwise
be entitled. No such holder shall be entitled to dividends or other rights in
respect of any such fraction.
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2.5 Exchange Procedures.
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(a) As of the Effective Time of the Merger, GBB shall have deposited
with the Exchange Agent for the benefit of the holders of shares of BOP Stock,
for exchange in accordance with this Section 2.5 through the Exchange Agent,
certificates representing the shares of GBB Stock issuable pursuant to Section
2.2 in exchange for shares of BOP Stock outstanding immediately prior to the
Effective Time of the Merger, and funds in an amount not less than the amount of
cash payable in lieu of fractional shares of GBB Stock which would otherwise be
issuable in connection with Section 2.2 hereof but for the operation of Section
2.4 of this Agreement (collectively, the "Exchange Fund").
(b) GBB shall direct the Exchange Agent to mail, promptly after the
Effective Time of the Merger, to each holder of record of a certificate or
certificates which immediately prior to the Effective Time of the Merger
represented outstanding shares of BOP Stock (the "Certificates") whose shares
were converted into the right to receive shares of GBB Stock pursuant to Section
2.2 hereof, (i) a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as GBB and BOP may reasonably specify), and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of GBB Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by GBB, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of GBB
Stock and cash in lieu of fractional shares which such holder has the right to
receive pursuant to Sections 2.2 and 2.4 hereof, and the Certificate so
surrendered shall forthwith be canceled. In the event a certificate is
surrendered representing BOP Stock, the transfer of ownership of which is not
registered in the transfer records of BOP, a certificate representing the proper
number of shares of GBB Stock may be issued to a transferee if the Certificate
representing such BOP Stock is presented to the Exchange Agent, accompanied by
all documents required to evidence and effect such transfer and by evidence that
any applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.5, each Certificate shall be deemed at any time
after the Effective Time of the Merger to represent only the right to receive
upon such surrender the certificate representing shares of GBB Stock and cash in
lieu of any fractional shares of stock as contemplated by this Section 2.5.
Notwithstanding anything to the contrary set forth herein, if any holder of
shares of BOP should be unable to surrender the Certificates for such shares,
because they have been lost or destroyed, such holder may deliver in lieu
thereof a bond in form and substance and with surety reasonably satisfactory to
GBB and shall be entitled to receive the certificate representing the proper
number of shares of GBB Stock and cash in lieu of fractional shares in
accordance with Sections 2.2 and 2.4 hereof.
(c) No dividends or other distributions declared or made with respect
to GBB Stock with a record date after the Effective Time of the Merger shall be
paid to the holder of any unsurrendered Certificate with respect to the shares
of GBB Stock represented thereby and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 2.4 until the holder
of record of such Certificate shall surrender such Certificate. Subject to the
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effect of applicable laws, following surrender of any such Certificate, there
shall be paid to the record holder of the certificates representing whole shares
of GBB Stock issued in exchange thereof, without interest, (i) at the time of
such surrender, the amount of any cash payable in lieu of a fractional share of
GBB Stock to which such holder is entitled pursuant to Section 2.4 and the
amount of dividends or other distributions with a record date after the
Effective Time of the Merger theretofore paid with respect to such whole shares
of GBB Stock, and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time of the Merger
but prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of GBB Stock.
(d) All shares of GBB Stock issued upon the surrender for exchange of
BOP Stock in accordance with the terms hereof (including any cash paid pursuant
to Section 2.4) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of BOP Stock, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of BOP Stock which were outstanding immediately prior
to the Effective Time of the Merger. If, after the Effective Time of the
Merger, Certificates are presented to GBB for any reason, they shall be canceled
and exchanged as provided in this Agreement.
(e) Any portion of the Exchange Fund which remains undistributed to
the shareholders of BOP following the passage of six months after the Effective
Time of the Merger shall be delivered to GBB, upon demand, and any shareholders
of BOP who have not theretofore complied with this Section 2.5 shall thereafter
look only to GBB for payment of their claim for GBB Stock, any cash in lieu of
fractional shares of GBB Stock and any dividends or distributions with respect
to GBB Stock.
(f) Neither GBB, Newco nor BOP shall be liable to any holder of shares
of BOP Stock for such shares (or dividends or distributions with respect
thereto) or cash from the Exchange Fund delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(g) The Exchange Agent shall not be entitled to vote or exercise any
rights of ownership with respect to the shares of GBB Stock held by it from time
to time hereunder, except that it shall receive and hold all dividends or other
distributions paid or distributed with respect to such shares of GBB Stock for
the account of the Persons entitled thereto.
(h) Certificates surrendered for exchange by any Person constituting
an "Affiliate" of BOP for purposes of Rule 145(c) under the Securities Act shall
not be exchanged for certificates representing whole shares of GBB Stock until
GBB has received a written agreement from such person as provided in Section
6.9.
2.6. Directors of Surviving Corporation. Immediately after the Effective
----------------------------------
Time of the Merger, the Board of Directors of the Surviving Corporation shall be
comprised of the persons serving as directors of BOP immediately prior to the
Effective Time of the Merger and David L. Kalkbrenner, or such other person
designated by GBB and reasonably acceptable to BOP. Immediately after the
Effective Time of the Merger, the Board of Directors of GBB shall be
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comprised of the persons serving as directors of GBB immediately prior to the
Effective Time of the Merger and one member of BOP's Board of Directors
designated by BOP and reasonably acceptable to GBB (to be designated as a Class
II director with a term expiring in 2002). Such persons shall serve until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified. During the six month period following the Effective
Time of the Merger, the BOP Board of Directors shall continue to meet on a
monthly basis and receive its current director fees of $600.00 per monthly
meeting attended and $125.00 per committee meeting attended. Commencing with the
first calendar quarter after such six month period, the BOP Board of Directors
will meet on a quarterly basis and the BOP director fees will be revised to
equal the amount of director fees paid to members of the Boards of Directors of
the Banks.
2.7 Executive Officers of Surviving Corporation. Immediately after the
--------------------------------------------
Effective Time of the Merger, the executive officers of the Surviving
Corporation shall be comprised of the persons serving as executive officers of
BOP immediately prior to the Effective Time of the Merger. Such persons shall
serve until the earlier of their resignation or termination.
ARTICLE 3.
THE CLOSING
-----------
3.1. Closing Date. The Closing shall take place on the Closing Date.
------------
3.2. Execution of Agreements. As soon as practicable after execution of
-----------------------
this Agreement, the Agreement of Merger together with all other agreements
necessary to consummate the transactions described herein shall be executed by
the parties thereto. On the Closing Date, the Agreement of Merger, together
with all requisite certificates, shall be duly filed with the Secretary of State
of the State of California as required by applicable law and regulations.
3.3 Further Assurances. At the Closing, the parties hereto shall
------------------
deliver, or cause to be delivered, such documents or certificates as may be
necessary in the reasonable opinion of counsel for any of the parties, to
effectuate the transactions contemplated by this Agreement. From and after the
Effective Time of the Merger, each of the parties hereto covenants and agrees,
without the necessity of any further consideration whatsoever, to execute,
acknowledge and deliver any and all other documents and instruments and take any
and all such other action as may be reasonably necessary or desirable to more
effectively carry out the intent and purpose of this Agreement and the Agreement
of Merger.
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ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF BOP
-------------------------------------
BOP represents and warrants to GBB as follows:
4.1. Incorporation, Standing and Power. BOP is a California state
---------------------------------
chartered bank duly organized, validly existing and in good standing under the
laws of the State of California and is authorized by the DFI to conduct a
general banking business. BOP's deposits are insured by the FDIC in the manner
and to the fullest extent provided by law. BOP has all requisite corporate
power and authority to own, lease and operate its properties and assets and to
carry on its business as presently conducted. Neither the scope of the business
of BOP nor the location of any of its properties requires that BOP be licensed
to do business in any jurisdiction other than the State of California where the
failure to be so licensed would, individually or in the aggregate, have a
material adverse effect on the business, financial condition, results of
operations or prospects of BOP. BOP has delivered to GBB true and correct
copies of its Articles of Incorporation and Bylaws, as amended, and in effect as
of the date hereof.
4.2. Capitalization. As of the date of this Agreement, the authorized
--------------
capital stock of BOP consists of 20,000,000 shares of BOP Stock, of which
1,444,797 shares are outstanding as of March 10, 2000, and 5,000,000 shares of
preferred stock, none of which is outstanding. All of the outstanding shares of
BOP Stock are duly authorized, validly issued, fully paid and nonassessable.
Except for BOP Options covering 209,282 shares of BOP Stock granted pursuant to
the BOP Stock Option Plan, there are no outstanding options, warrants or other
rights in or with respect to the unissued shares of BOP Stock nor any securities
convertible into such stock, and BOP is not obligated to issue any additional
shares of its common stock or any additional options, warrants or other rights
in or with respect to the unissued shares of such stock or any other securities
convertible into such stock. BOP has furnished GBB a list (the "BOP Option
List") setting forth the name of each holder of a BOP Option, the number of
shares of BOP Stock covered by each such option, the vesting schedule of such
option, the exercise price per share and the expiration date of each such
option.
4.3. Subsidiaries. BOP does not own, directly or indirectly (except as
------------
a pledgee pursuant to loans or upon acquisition in satisfaction of debt
previously contracted), the outstanding stock or equity or other voting interest
in any Person.
4.4. Financial Statements. BOP has previously furnished to GBB a copy of
--------------------
the Financial Statements of BOP. The Financial Statements of BOP: (a) present
fairly the financial condition of BOP as of the respective dates indicated and
its results of operations and changes in cash flows, for the respective periods
then ended, subject, in the case of the unaudited interim financial statements,
to normal recurring adjustments; (b) have been prepared in accordance with
generally accepted accounting principles consistently applied (except as
otherwise indicated therein); (c) set forth as of the respective dates indicated
adequate reserves for loan losses and other contingencies; and (d) are based
upon the books and records of BOP.
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4.5. Reports and Filings. Except as set forth in a list (the "BOP Filings
-------------------
List"), since January 1, 1997, BOP has filed all reports, returns, registrations
and statements (collectively, "BOP Filings"), together with any amendments
required to be made with respect thereto, that were required to be filed with
(a) the FDIC, (b) the DFI, (c) the SEC and (d) any other applicable Governmental
Entity, including taxing authorities, except where the failure to file such
reports, returns, registrations or statements has not had and is not reasonably
expected to have a material adverse effect on the business, financial condition,
results of operations or prospects of BOP. No administrative actions have been
taken or orders issued in connection with such BOP Filings. As of their
respective dates, each of such BOP Filings (y) complied in all material respects
with all laws and regulations enforced or promulgated by the Governmental Entity
with which it was filed (or was amended so as to be in compliance promptly
following discovery of any such noncompliance); and (z) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Any financial
statement contained in any of such BOP Filings fairly presented the financial
position of BOP, and was prepared in accordance with generally accepted
accounting principles or banking regulations consistently applied, except as
stated therein, during the periods involved. BOP has furnished or made available
to GBB true and correct copies of all BOP Filings filed by BOP since January 1,
1997.
4.6. Authority of BOP. The execution and delivery by BOP of this Agreement
----------------
and the Agreement of Merger and, subject to the requisite approval of the
shareholders of BOP of this Agreement and the transactions contemplated hereby,
the consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary corporate action on the part of
BOP. This Agreement is, and the Agreement of Merger will be, upon due execution
and delivery by the respective parties thereto, a valid and binding obligation
of BOP enforceable in accordance with their respective terms, except as the
enforceability thereof may be limited by bankruptcy, liquidation, receivership,
conservatorship, insolvency, moratorium or other similar laws affecting the
rights of creditors generally and by general equitable principles. Except as set
forth in a list furnished by BOP to GBB (the "BOP Conflicts and Consents List"),
neither the execution and delivery by BOP of this Agreement and the Agreement of
Merger, the consummation of the transactions contemplated herein or therein, nor
compliance by BOP with any of the provisions hereof or thereof, will: (a)
conflict with or result in a breach of any provision of its Articles of
Incorporation, as amended, or Bylaws, as amended; (b) constitute a breach of or
result in a default (or give rise to any rights of termination, cancellation or
acceleration, or any right to acquire any securities or assets) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
franchise, license, permit, agreement or other instrument or obligation to which
BOP is a party, or by which BOP any of its properties or assets are bound; (c)
result in the creation or imposition of any Encumbrance on any of the properties
or assets of BOP; or (d) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to BOP or any of its properties or assets. Except
as set forth in the BOP Conflicts and Consents List, no consent of, approval of,
notice to or filing with any Governmental Entity having jurisdiction over any
aspect of the business or assets of BOP, and no consent of, approval of or
notice to any other Person, is required in connection with the execution and
delivery by BOP of this Agreement and the Agreement of Merger or the
consummation by BOP of the Merger or the transactions contemplated hereby or
thereby, except (i) the approval of
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this Agreement and the Agreement of Merger and the transactions contemplated
hereby and thereby by the shareholders of BOP; (ii) such approvals as may be
required by the FRB, the FDIC and the DFI; (iii) the filing of the Proxy
Statement and Prospectus and Registration Statement on Form S-4 with the SEC and
the FDIC; and (iv) the filing of the Agreement of Merger with the Secretary of
State.
4.7. Insurance. BOP has policies of insurance and bonds with respect to its
---------
assets and business against such casualties and contingencies and in such
amounts, types and forms as are customarily appropriate for its business,
operations, properties and assets. All such insurance policies and bonds are in
full force and effect. Except as set forth in a list furnished by BOP to GBB
(the "BOP Insurance List"), no insurer under any such policy or bond has
canceled or indicated an intention to cancel or not to renew any such policy or
bond or generally disclaimed liability thereunder. Except as set forth in the
BOP Insurance List, BOP is not in default under any such policy or bond and all
material claims thereunder have been filed in a timely fashion. Set forth in the
BOP Insurance List is a list of all policies of insurance carried and owned by
BOP showing the name of the insurance company, the nature of the coverage, the
policy limit, the annual premiums and the expiration dates. There has been
delivered to GBB a copy of each such policy of insurance.
4.8. Personal Property. BOP has good and marketable title to all its
-----------------
properties and assets, other than real property, owned or stated to be owned by
BOP, free and clear of all Encumbrances except: (a) as set forth in the
Financial Statements of BOP; (b) for Encumbrances for current taxes not yet due;
(c) for Encumbrances incurred in the ordinary course of business; (d) for
Encumbrances that are not substantial in character, amount or extent and that do
not materially detract from the value, or interfere with present use, of the
property subject thereto or affected thereby, or otherwise materially impair the
conduct of business of BOP; or (e) as set forth in a list furnished by BOP to
GBB (the "BOP Personal Property List.")
4.9. Real Estate. BOP has furnished GBB a list of real property, including
-----------
leaseholds and all other interests in real property (other than security
interests), owned by BOP (the "BOP Real Property List"). Except as set forth on
the BOP Real Property List, BOP has duly recorded or caused to be recorded, in
the appropriate county, all recordable interests in the real property described
in the BOP Real Property List. BOP has good and marketable title to the real
property, and valid leasehold interests in the leaseholds, described in the BOP
Real Property List, free and clear of all Encumbrances, except (a) for rights of
lessors, co-lessees or sublessees in such matters that are reflected in the
lease; (b) for current taxes not yet due and payable; (c) for such Encumbrances,
if any, as do not materially detract from the value of or materially interfere
with the present use of such property; and (d) as described in the BOP Real
Property List. BOP has furnished GBB with true and correct copies of all leases
included in the BOP Real Property List, all title insurance policies and all
documents evidencing recordation of all recordable interests in real property
included in the BOP Real Property List.
4.10. Litigation. Except as set forth in a list furnished by BOP to GBB
----------
(the "BOP Litigation List"), there is no private or governmental suit, claim,
action or proceeding pending, nor to BOP's knowledge threatened, against BOP or
any of its subsidiaries or against any of their respective directors, officers
or employees relating to the performance of their duties in such
20
<PAGE>
capacities or against or affecting any properties of BOP or any of its
subsidiaries which, if adversely determined, would have, individually or in the
aggregate, a material adverse effect upon the business, financial condition or
results of operations of BOP, or the transactions contemplated hereby, or which
may involve a judgment against BOP in excess of $50,000. Also, except as
disclosed in the BOP Litigation List, there are no material judgments, decrees,
stipulations or orders against BOP or any of its subsidiaries or enjoining their
respective directors, officers or employees in respect of, or the effect of
which is to prohibit, any business practice or the acquisition of any property
or the conduct of business in any area.
4.11. Taxes.
-----
(a) Except as set forth in a list furnished by BOP to GBB (the "BOP
Tax List"), (i) all Tax Returns required to be filed by or on behalf of BOP or
any of its subsidiaries or the Affiliated Group(s) of which any of them is or
was a member, have been duly and timely filed with the appropriate taxing
authorities in all jurisdictions in which such Tax Returns are required to be
filed (after giving effect to any valid extensions of time in which to make such
filings), and all such Tax Returns were true, complete and correct in all
material respects; (ii) all Taxes due and payable by or on behalf of BOP or any
of its subsidiaries, either directly, as part of an Affiliated Group Tax Return,
or otherwise, have been fully and timely paid, except to the extent adequately
reserved therefor in accordance with generally accepted accounting principles
and/or applicable regulatory accounting principles or banking regulations
consistently applied on the BOP balance sheet, and adequate reserves or accruals
for Taxes have been provided in the BOP balance sheet with respect to any period
through the date thereof for which Tax Returns have not yet been filed or for
which Taxes are not yet due and owing; and (iii) no agreement, waiver or other
document or arrangement extending or having the effect of extending the period
for assessment or collection of Taxes (including, but not limited to, any
applicable statute of limitation) has been executed or filed with any taxing
authority by or on behalf of BOP or any of its subsidiaries, or any Affiliated
Group(s) of which any of them is or was a member.
(b) BOP and its subsidiaries have complied in all material respects
with all applicable laws, rules and regulations relating to the payment and
withholding of Taxes and have duly and timely withheld from employee salaries,
wages and other compensation and have paid over to the appropriate taxing
authorities all amounts required to be so withheld and paid over for all periods
under all applicable laws.
(c) GBB has received complete copies of (i) all income or franchise
Tax Returns of BOP and any of its subsidiaries relating to the taxable periods
since January 1, 1996 and (ii) any audit report issued within the last three
years relating to any Taxes due from or with respect to BOP or any of its
subsidiaries with respect to their respective income, assets or operations.
(d) Except as set forth in the BOP Tax List, no written claim has
been made by a taxing authority in a jurisdiction where BOP or any of its
subsidiaries do not file an income or franchise Tax Return such that BOP or any
of its subsidiaries are or may be subject to taxation by that jurisdiction.
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(e) Except as set forth in the BOP Tax List: (i) all deficiencies
asserted or assessments made as a result of any examinations by any taxing
authority of the Tax Returns of or covering or including BOP or any of its
subsidiaries have been fully paid, and, to the best of BOP's knowledge, there
are no other audits or investigations by any taxing authority in progress, nor
has BOP or any of its subsidiaries received any written notice from any taxing
authority that it intends to conduct such an audit or investigation; (ii) no
requests for a ruling or a determination letter are pending with any taxing
authority; and (iii) no issue has been raised in writing by any taxing authority
in any current or prior examination which, by application of the same or similar
principles, could reasonably be expected to result in a proposed deficiency
against BOP or any of its subsidiaries for any subsequent taxable period that
could be material.
(f) Except as set forth in the BOP Tax List, neither BOP, any of its
subsidiaries nor any other Person on behalf of BOP or any of its subsidiaries
has (i) filed a consent pursuant to Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as such term is defined in Section 341(f)(4) of the Code) owned by BOP or any
of its subsidiaries (ii) agreed to or is required to make any adjustments
pursuant to Section 481(a) of the Code or any similar provision of state, local
or foreign law by reason of a change in accounting method initiated by BOP or
any of its subsidiaries or has any knowledge that the Internal Revenue Service
has proposed in writing any such adjustment or change in accounting method, or
has any application pending with any taxing authority requesting permission for
any changes in accounting methods that relate to the business or operations of
BOP or any of its subsidiaries or (iii) executed or entered into a closing
agreement pursuant to Section 7121 of the Code or any predecessor provision
thereof or any similar provision of state, local or foreign law with respect to
BOP or any of its subsidiaries.
(g) Except as set forth in the BOP Tax List, no property owned by BOP
or any of its subsidiaries is (i) property required to be treated as being owned
by another Person pursuant to provisions of Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986, (ii) constitutes "tax exempt use
property" within the meaning of Section 168(h)(1) of the Code or (iii) is "tax-
exempt bond financed property" within the meaning of Section 168(g) of the Code.
(h) BOP is not a party to any tax sharing agreement or similar
agreement or arrangement (whether written or not written) pursuant to which it
will have any obligation to make any payments after the Closing.
(i) Except as set forth in the BOP Tax List, there is no contract,
agreement, plan or arrangement covering any Person that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible by BOP or any of its subsidiaries or their respective affiliates by
reason of Section 280G of the Code, or would constitute compensation in excess
of the limitation set forth in Section 162(m) of the Code.
(j) There are no liens as a result of any due and unpaid Taxes upon
any of the assets of BOP or any of its subsidiaries.
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(k) Except as set forth in the BOP Tax List, BOP or any of its
subsidiaries have no elections in effect for federal income tax purposes under
Sections 108, 168, 338, 441, 472, 1017, 1033, or 4977 of the Code.
(l) Except as set forth in the BOP Tax list, none of the members of
BOP's Affiliated Group has any net operating loss carryovers.
(m) BOP agrees, and agrees to cause its subsidiaries, to cooperate
with tax counsel in furnishing reasonable and customary written tax
representations to tax counsel for purposes of supporting tax counsel's opinion
that the Merger qualifies as a tax-deferred reorganization within the meaning of
Section 368(a) of the Code as contemplated in Section 9.6 hereof. BOP
acknowledges that its or any of its subsidiaries' inability or unwillingness to
provide such reasonable and customary written representations could preclude tax
counsel from rendering such opinion, with consequences specified elsewhere
herein.
4.12. Compliance with Laws and Regulations.
------------------------------------
(a) BOP is not in default under or in breach or violation of (i) any
provision its Articles of Incorporation, as amended, or Bylaws, as amended, or
(ii) law, ordinance, rule or regulation promulgated by any Governmental Entity,
except, with respect to this clause (ii), for such violations as would not have,
individually or in the aggregate, a material adverse effect on the business,
financial condition, results of operations or prospects of BOP.
(b) Except as set forth on a list furnished by BOP to GBB (the "BOP
Environmental Compliance List"), to the best of BOP's knowledge, (i) BOP is in
compliance with all Environmental Regulations; (ii) there are no Tanks on or
about BOP Property; (iii) there are no Hazardous Materials on, below or above
the surface of, or migrating to or from BOP Property; (iv) BOP has no loans
outstanding secured by real property that is not in compliance with
Environmental Regulations or which has a leaking Tank or upon which there are
Hazardous Materials on or migrating to or from; and (v) without limiting Section
4.10 or the foregoing representations and warranties contained in clauses (i)
through (iv), as of the date of this Agreement, there is no claim, action, suit,
or proceeding or notice thereof before any Governmental Entity pending against
BOP or concerning property securing BOP loans and there is no outstanding
judgment, order, writ, injunction, decree, or award against or affecting BOP
Property or property securing BOP loans, relating to the foregoing
representations (i) - (iv), in each case the noncompliance with which, or the
presence of which would have a material adverse effect on the business,
financial condition, results of operations or prospects of BOP. For purposes of
this Agreement, the term "Environmental Regulations" shall mean all applicable
statutes, regulations, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, concessions, franchises, and similar items, of
all Governmental Entities and all applicable judicial, administrative, and
regulatory decrees, judgments, and orders relating to the protection of human
health or the environment, including, without limitation: all requirements,
including, but not limited to those pertaining to reporting, licensing,
permitting, investigation, and remediation of emissions, discharges, releases,
or threatened releases of Hazardous Materials, chemical substances, pollutants,
contaminants, or hazardous or toxic substances, materials or wastes whether
solid, liquid, or gaseous in nature, into the air, surface water,
23
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groundwater, or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of chemical
substances, pollutants, contaminants, or hazardous or toxic substances,
materials, or wastes, whether solid, liquid, or gaseous in nature and all
requirements pertaining to the protection of the health and safety of employees
or the public. "BOP Property" shall mean real estate currently owned, leased, or
otherwise used by BOP, or in which BOP has an investment or security interest
(by mortgage, deed of trust, sale and lease-back or otherwise), including,
without limitation, properties under foreclosure and properties held by BOP in
its capacity as a trustee or otherwise. "Tank" shall mean treatment or storage
tanks, sumps, or water, gas or oil wells and associated piping transportation
devices. "Hazardous Materials" shall mean any substance the presence of which
requires investigation or remediation under any federal, state or local statute,
regulation, ordinance, order, action, policy or common law; or which is or
becomes defined as a hazardous waste, hazardous substance, hazardous material,
used oil, pollutant or contaminant under any federal, state or local statute,
regulation, rule or ordinance or amendments thereto including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. Section 9601, et seq.); the Resource Conservation and Recovery
Act (42 U.S.C. Section 6901, et seq.); the Clean Air Act, as amended (42 U.S.C.
Section 7401, et seq.); the Federal Water Pollution Control Act, as amended (33
U.S.C. Section 1251, et seq.); the Toxic Substances Control Act, as amended (15
U.S.C. Section 9601, et seq.); the Occupational Safety and Health Act, as
amended (29 U.S.C. Section 651; the Emergency Planning and Community Right-to-
Know Act of 1986 (42 U.S.C. Section 11001, et seq.); the Mine Safety and Health
Act of 1977, as amended (30 U.S.C. Section 801, et seq.); the Safe Drinking
Water Act (42 U.S.C. Section 300f, et seq.); and all comparable state and local
laws, including without limitation, the Carpenter-Presley-Tanner Hazardous
Substance Account Act (State Superfund), the Porter-Cologne Water Quality
Control Act, Section 25140, 25501(j) and (k), 25501.1,25281 and 25250.1 of the
California Health and Safety Code and/or Article I of Title 22 of the California
Code of Regulations, Division 4, Chapter 30; laws of other jurisdictions or
orders and regulations; or the presence of which causes or threatens to cause a
nuisance, trespass or other common law tort upon real property or adjacent
properties or poses or threatens to pose a hazard to the health or safety of
persons or without limitation, which contains gasoline, diesel fuel or other
petroleum hydrocarbons; polychlorinated biphenyls (PCBs), asbestos or urea
formaldehyde foam insulation.
(c) BOP has provided to GBB phase I environmental assessments with
respect to each interest in real property set forth on the BOP Real Property
List as to which such a phase I environmental investigation has been prepared by
or on behalf of BOP. The BOP Real Property List shall disclose each such
property as to which such an assessment has not been prepared on behalf of BOP.
4.13. Performance of Obligations. BOP has performed in all material
--------------------------
respects all of the obligations required to be performed by it to date and is
not in default under or in breach of any term or provision of any covenant,
contract, lease, indenture or any other agreement to which it is a party, is
subject or is otherwise bound, and no event has occurred that, with the giving
of notice or the passage of time or both, would constitute such default or
breach, where such default or breach would have, individually or in the
aggregate, a material adverse effect on the business, financial condition,
results of operations or prospects of BOP. Except for loans and leases made by
BOP in the ordinary course of business, to the best of BOP's knowledge, no party
with whom
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BOP has an agreement that is of material importance to the business of
BOP is in default thereunder.
4.14. Employees. There are no controversies pending or, to the best of
---------
BOP's knowledge, threatened between BOP and any of its employees that are likely
to have a material adverse effect on the business, financial condition, results
of operations or prospects of BOP. BOP is not a party to any collective
bargaining agreement with respect to any of its employees or any labor
organization to which its employees or any of them belong.
4.15. Brokers and Finders. Except for the obligation to Hoefer & Arnett
-------------------
Incorporated set forth in the Hoefer Agreement, a copy of which has been
delivered to GBB, BOP is not a party to or obligated under any agreement with
any broker or finder relating to the transactions contemplated hereby, and
neither the execution of this Agreement nor the consummation of the transactions
provided for herein will result in any liability to any broker or finder.
4.16. Material Contracts. Except as set forth in a list furnished by
------------------
BOP to GBB (the "BOP Contract List") hereto (all items listed or required to be
listed in such BOP Contract List being referred to herein as "Scheduled
Contracts"), BOP is not a party or otherwise subject to:
(a) any employment, deferred compensation, bonus or consulting
contract that (i) has a remaining term, as of the date of this Agreement, of
more than one year in length of obligation on the part of BOP and is not
terminable by BOP within one year without penalty or (ii) requires payment by
BOP of $50,000 or more per annum;
(b) any advertising, brokerage, licensing, dealership, representative
or agency relationship or contract requiring payment by BOP of $50,000 or more
per annum;
(c) any contract or agreement that restricts BOP (or would restrict
any Affiliate of BOP or the Surviving Corporation (including GBB and its
subsidiaries) after the Effective Time of the Merger) from competing in any line
of business with any Person or using or employing the services of any Person;
(d) any lease of real or personal property providing for annual lease
payments by or to BOP in excess of $50,000 per annum other than (A) financing
leases entered into in the ordinary course of business in which BOP is lessor
and (B) leases of real property presently used by BOP as banking offices;
(e) any mortgage, pledge, conditional sales contract, security
agreement, option, or any other similar agreement with respect to any interest
of BOP (other than as mortgagor or pledgor in the ordinary course of its banking
business or as mortgagee, secured party or deed of trust beneficiary in the
ordinary course of its business) in personal property having a value of $50,000
or more;
(f) other than as described in the BOP Filings or as set forth in the
BOP Employee Plan List, any stock purchase, stock option, stock bonus, stock
ownership, profit sharing, group insurance, bonus, deferred compensation,
severance pay, pension, retirement,
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savings or other incentive, welfare or employment plan or material agreement
providing benefits to any present or former employees, officers or directors of
BOP;
(g) any agreement to acquire equipment or any commitment to make
capital expenditures of $50,000 or more;
(h) other than agreements entered into in the ordinary course of
business, including sales of other real estate owned, any agreement for the sale
of any property or assets in which BOP has an ownership interest or for the
grant of any preferential right to purchase any such property or asset;
(i) any agreement for the borrowing of any money (other than
liabilities or interbank borrowings made in the ordinary course of its banking
business and reflected in the financial records of BOP);
(j) any restrictive covenant contained in any deed to or lease of
real property owned or leased by BOP (as lessee) that materially restricts the
use, transferability or value of such property;
(k) any guarantee or indemnification which involves the sum of
$50,000 or more, other than letters of credit or loan commitments issued in the
normal course of business;
(l) any supply, maintenance or landscape contracts not terminable by
BOP without penalty on 30 days' or less notice and which provides for payments
in excess of $50,000 per annum;
(m) any material agreement which would be terminable other than by
BOP as a result of the consummation of the transactions contemplated by this
Agreement;
(n) any contract of participation with any other bank in any loan in
excess of $50,000 or any sales of assets of BOP with recourse of any kind to BOP
except the sale of mortgage loans, servicing rights, repurchase or reverse
repurchase agreements, securities or other financial transactions in the
ordinary course of business;
(o) any agreement providing for the sale or servicing of any loan or
other asset which constitutes a "recourse arrangement" under applicable
regulation or policy promulgated by a Governmental Entity (except for agreements
for the sale of guaranteed portions of loans guaranteed in part by the U. S.
Small Business Administration and related servicing agreements);
(p) any contract relating to the provision of data processing
services to BOP; or
(q) any other agreement of any other kind which involves future
payments or receipts or performances of services or delivery of items requiring
payment of $50,000 or more to or by BOP other than payments made under or
pursuant to loan agreements, participation agreements and other agreements for
the extension of credit in the ordinary course of their business.
26
<PAGE>
True copies of all Scheduled Contracts, including all amendments and
supplements thereto, have been delivered to GBB.
4.17. Certain Material Changes. Except as specifically required, permitted
------------------------
or effected by this Agreement, since December 31, 1999, there has not been,
occurred or arisen any of the following (whether or not in the ordinary course
of business unless otherwise indicated):
(a) any change in any of the assets, liabilities, permits, methods of
accounting or accounting practices, business, or manner of conducting business,
of BOP or any other event or development that has had or may reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
the assets, liabilities, permits, business, financial condition, results of
operations or prospects of BOP;
(b) any damage, destruction or other casualty loss (whether or not
covered by insurance) that has had or may reasonably be expected to have a
material adverse effect on the assets, liabilities, business, financial
condition, results of operations or prospects of BOP or that may involve a loss
of more than $50,000 in excess of applicable insurance coverage;
(c) any amendment, modification or termination of any existing, or
entry into any new, material contract or permit that has had or may reasonably
be expected to have a material adverse effect on the assets, liabilities,
business, financial condition, results of operations or prospects of BOP;
(d) any disposition by BOP of an asset the lack of which has had or
may reasonably be expected to have a material adverse effect on the assets,
liabilities, business, financial condition, results of operations or prospects
of BOP; or
(e) any direct or indirect redemption, purchase or other acquisition
by BOP of any equity securities or any declaration, setting aside or payment of
any dividend or other distribution on or in respect of BOP Stock whether
consisting of money, other personal property, real property or other things of
value.
4.18. Licenses and Permits. BOP has all material licenses and permits
--------------------
that are necessary for the conduct of its business, and such licenses are in
full force and effect, except for any failure to be in full force and effect
that would not, individually or in the aggregate, have a material adverse effect
on the business, financial condition, results of operations or prospects of BOP.
The properties, assets, operations and businesses of BOP are and have been
maintained and conducted, in all material respects, in compliance with all
applicable (a) licenses and permits; and (b) laws and regulations.
4.19. Undisclosed Liabilities. BOP does not have any liabilities or
-----------------------
obligations, either accrued or contingent, that are material to BOP and that
have not been: (a) reflected or disclosed in the Financial Statements of BOP;
(b) incurred subsequent to December 31, 1999 in the ordinary course of business
consistent with past practices; or (c) disclosed in a list furnished by BOP to
GBB (the "Undisclosed Liabilities List") or on any other BOP List. BOP does not
know
27
<PAGE>
of any basis for the assertion against it of any liability, obligation or claim
(including, without limitation, that of any regulatory authority) that is likely
to result in or cause a material adverse change in the business, financial
condition, results of operations or prospects of BOP that is not fairly
reflected in the Financial Statements of BOP or otherwise disclosed in this
Agreement.
4.20. Employee Benefit Plans.
----------------------
(a) BOP has previously made available to GBB copies of each "employee
benefit plan," as defined in Section 3(3) of ERISA, of which BOP or any member
of the same controlled group of corporations, trades or businesses as BOP within
the meaning of Section 4001(a)(14) of ERISA ("ERISA Affiliates") is a sponsor or
participating employer or as to which BOP or any of its ERISA Affiliates makes
contributions or is required to make contributions and which is subject to any
provision of ERISA and covers any employee, whether active or retired, of BOP or
any of its ERISA Affiliates, together with all amendments thereto, all currently
effective and related summary plan descriptions, the determination letter from
the IRS, the annual reports for the most recent three years (Form 5500
including, if applicable, Schedule B thereto) and a summary of material
modifications and all material employee communications prepared in connection
with any such plan. Such plans are hereinafter referred to collectively as the
"Employee Plans." BOP does not participate in an employee benefit pension plan
that is a "multiemployer plan" within the meaning of Section 3(37) of ERISA.
Each Employee Plan which is intended to be qualified in form and operation under
Section 401(a) of the Code is so qualified and the associated trust for each
such Employee Plan is exempt from tax under Section 501(a) of the Code. No
event has occurred that will subject such Employee Plans to a material amount of
tax under Section 511 of the Code. All amendments required to bring each
Employee Plan into conformity with all of the applicable provisions of ERISA,
the Code and all other applicable laws have been made. Except as disclosed in a
list furnished by BOP to GBB (the "BOP Employee Plan List"), all Employee Plans
were in effect for substantially all of 1999, and there has been no material
amendment thereof (other than amendments required to comply with applicable law)
or increase in the cost thereof or benefits thereunder on or after January 1,
1999.
(b) BOP has previously made available to GBB copies or descriptions
of each plan or arrangement maintained or otherwise contributed to by BOP or any
of its ERISA Affiliates which is not an Employee Plan and which (exclusive of
base salary and base wages) provides for any form of current or deferred
compensation, bonus, stock option, stock awards, stock-based compensation or
other forms of incentive compensation or post-termination insurance, profit
sharing, benefit, retirement, group health or insurance, disability, workers'
compensation, welfare or similar plan or arrangement for the benefit of any
employee or class of employees, whether active or retired, of BOP or any of its
ERISA Affiliates (such plans and arrangements being collectively referred to
herein as "Benefit Arrangements"). Except as disclosed in the BOP Employee Plan
List hereto, all Benefit Arrangements which are in effect were in effect for
substantially all of 1999 and to date. Except as disclosed in the BOP Employee
Plan List, there has been no material amendment thereof or increase in the cost
thereof or benefits payable thereunder since January 1, 1998. Except as set
forth in the BOP Employee Plan List, there has been no material increase in the
compensation of or benefits payable to any senior executive employee of BOP
since December 31, 1998, nor any employment, severance or
28
<PAGE>
similar contract entered into with any such employee, nor any amendment to any
such contract, since December 31, 1998.
(c) With respect to all Employee Plans and Benefit Arrangements, BOP
and its ERISA Affiliates are in compliance (other than noncompliance the cost or
liability for which is not material) with the requirements prescribed by any and
all statutes, governmental or court orders, or governmental rules or regulations
currently in effect, including but not limited to ERISA and the Code, applicable
to such plans or arrangements. All government reports and filings required by
law have been properly and timely filed and all information required to be
distributed to participants or beneficiaries has been distributed with respect
to each Employee Plan. BOP and its ERISA Affiliates have performed all of their
obligations under all such Employee Plans and Benefit Arrangements in all
material aspects. There is no pending or, to the best of BOP's knowledge,
threatened legal action, proceeding or investigation against or involving any
Employee Plan or Benefit Arrangement. No condition exists that could constitute
grounds for the termination of any Employee Plan under Section 4042 of ERISA.
No "prohibited transaction," as defined in Section 406 of ERISA and Section 4975
of the Code, has occurred with respect to any Employee Plan, or any other
employee benefit plan maintained by BOP or any of its ERISA Affiliates which is
covered by Title I of ERISA, which could subject any person (other than a person
for whom BOP is not directly or indirectly responsible) to liability under
Title I of ERISA or to the imposition of tax under Section 4975 of the Code. No
Employee Plan subject to Part III of Subtitle B of Title I of ERISA or Section
412 of the Code, or both, has incurred any "accumulated funding deficiency," as
defined in Section 412 of the Code, whether or not waived, nor has BOP failed to
make any contribution or pay any amount due and owing as required by the terms
of any Employee Plan or Benefit Arrangement. No "reportable event" as defined
in ERISA has occurred with respect to any of the Employee Plans. Neither BOP
nor any of its ERISA Affiliates has incurred nor expects to incur, directly or
indirectly, any liability under Title IV or ERISA arising in connection with
the termination of, or a complete or partial withdrawal from, any plan covered
or previously covered by Title IV of ERISA which could constitute a liability of
GBB or of any of its Affiliates (including BOP) at or after the Effective Time
of the Merger.
(d) Neither BOP nor any of its ERISA Affiliates has provided or is
required to provide security to any Employee Plan pursuant to Section 401(a)(29)
of the Code. Each of the Employee Plans which is intended to be a qualified
plan under Section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service and BOP does not know of any fact which
could adversely affect the qualified status of any such Employee Plan. All
contributions required to be made to each of the Employee Plans under the terms
of the Employee Plan, ERISA, the Code or any other applicable laws have been
timely made. The Financial Statements of BOP properly reflect all amounts
required to be accrued as liabilities to date under each of the Employee Plans.
The fair market value of the assets of each Employee Plan and Benefit
Arrangement that is funded, or required to be funded under the terms of the
Employee Plan or Benefit Arrangement, ERISA, the Code or any other applicable
law, equals or exceeds the liabilities, including the present value of benefit
obligations, of such Employee Plan or Benefit Arrangement.
29
<PAGE>
(e) Except for Scheduled Contracts set forth in the BOP Contract List
or as set forth in the BOP Employee Plan List, as the case may be, each Employee
Plan or Benefit Arrangement and each personal services contract, fringe benefit,
consulting contract or similar arrangement with or for the benefit of any
officer, director, employee or other person can be terminated by BOP within a
period of 30 days following the Effective Time of the Merger, without payment of
any specified amount as a penalty, bonus, premium, severance pay or other
compensation for such termination.
(f) All group health plans of BOP have been operated in compliance
with the group health plan continuation coverage requirements of Section 4980B
of the Code and with the group health plan portability, access and renewability
requirements of Sections 9801 through 9833 of the Code, and corresponding
provisions of ERISA, in all material respects.
(g) BOP has not used the services of (i) workers who have been
provided by a third party contract labor supplier for more than six months or
who may otherwise be eligible to participate in any of the Employee Plans or to
an extent that would reasonably be expected to result in the disqualification of
any of the Employee Plans or the imposition of penalties or excise taxes with
respect to the IRS, the Department of Labor, the Pension Benefit Guaranty
Corporation or any other Governmental Entity; (ii) temporary employees who have
worked for more than six months or who may otherwise be eligible to participate
in any of the Employee Plans or to an extent that would reasonably be expected
to result in the disqualification of any of the Employee Plans or the imposition
of penalties or excise taxes with respect to the IRS, the Department of Labor,
the Pension Benefit Guaranty Corporation or any other Governmental Entity; (iii)
individuals who have provided services to BOP as independent contractors for
more than six months or who may otherwise be eligible to participate in the
Employee Plans or to an extent that would reasonably be expected to result in
the disqualification of any of the Employee Plans or the imposition of penalties
or excise taxes with respect to the IRS, the Department of Labor, the Pension
Benefit Guaranty Corporation or any other Governmental Entity or (iv) leased
employees, as that term is defined in section 414(n) of the Code.
(h) Except as set forth in the BOP Employee Plan List, with respect
to each Employee Plan that is funded wholly or partially through an insurance
policy, there will be no liability of BOP, as of the Closing Date, under any
such insurance policy or ancillary agreement with respect to such insurance
policy in the nature of a retroactive rate adjustment, loss sharing arrangement
or other actual or contingent liability arising wholly or partially out of
events occurring prior to the Closing Date.
4.21. Corporate Records. The minute books of BOP accurately reflect all
-----------------
material actions taken to this date by the respective shareholders, board of
directors and committees of BOP.
4.22. Accounting Records. BOP maintains accounting records which fairly
------------------
and accurately reflect, in all material respects, its transactions and
accounting controls exist sufficient to provide reasonable assurances that such
transactions are, in all material respects, (i) executed in accordance with its
management's general or specific authorization, and (ii) recorded as necessary
to permit the preparation of financial statements in conformity with generally
accepted
30
<PAGE>
accounting principles. Such records, to the extent they contain
important information pertaining to BOP which is not easily and readily
available elsewhere, have been duplicated, and such duplicates are stored safely
and securely.
4.23. Offices and ATMs. BOP has furnished to GBB a list (the "BOP Offices
----------------
List") setting forth the headquarters of BOP (identified as such) and each of
the offices and automated teller machines ("ATMs") maintained and operated by
BOP (including, without limitation, representative and loan production offices
and operations centers) and the location thereof. Except as set forth on the BOP
Offices List, BOP does not maintain any other office or ATM or conducts business
at any other location, and BOP has not applied for or received permission to
open any additional branch or operate at any other location.
4.24. Operating Losses. BOP has furnished to GBB a list (the "BOP Operating
----------------
Losses List") setting forth any Operating Loss (as herein defined) which has
occurred at BOP during the period after December 31, 1998 to the date of the
Agreement. To the best of BOP's knowledge, no action has been taken or omitted
to be taken by any employee of BOP that has resulted in the incurrence by BOP of
an Operating Loss or that might reasonably be expected to result in the
incurrence of any individual Operating Loss which, net of any insurance proceeds
payable in respect thereof, would exceed $50,000 on an individual basis or in
the aggregate. For purposes of this section "Operating Loss" means any loss
resulting from cash shortages, lost or misposted items, disputed clerical and
accounting errors, forged checks, payment of checks over stop payment orders,
counterfeit money, wire transfers made in error, theft, robberies, defalcations,
check kiting, fraudulent use of credit cards or ATMs, civil money penalties,
fines, litigation, claims or other similar acts or occurrences.
4.25. Loan Portfolio. BOP has furnished to GBB a list (the "BOP Loan List")
--------------
that sets forth (a) as of January 31, 2000, a description of, by type and
classification, if any, each loan, lease, other extension of credit or
commitment to extend credit by BOP; (b) sets forth as of January 31, 2000, by
type and classification, all loans, leases, other extensions and commitments to
extend credit of BOP that have been classified by its bank examiners or auditors
(external or internal) as "Watch List," "Substandard," "Doubtful," "Loss" or any
comparable classification; and (c) all consumer loans due to BOP as to which any
payment of principal, interest or any other amount is 90 days or more past due.
4.26. Investment Securities. BOP has furnished to GBB a list (the "BOP
---------------------
Investment Securities List") setting forth a description of each Investment
Security held by BOP on January 31, 2000. The BOP Investment Securities List
sets forth, with respect to each such Investment Security: (i) the issuer
thereof; (ii) the outstanding balance or number of shares; (iii) the maturity,
if applicable; (iv) the title of issue; and (v) the classification under SFAS
No. 115. BOP has no Investment Security classified as trading.
4.27. Power of Attorney. BOP has not granted any Person a power of attorney
-----------------
or similar authorization that is presently in effect or outstanding.
4.28. Facts Affecting Regulatory Approvals. To the best knowledge of BOP,
------------------------------------
there is no fact, event or condition applicable to BOP which will, or reasonably
could be expected to,
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<PAGE>
adversely affect the likelihood of securing the requisite approvals or consents
of any Governmental Entity to the Merger and the transactions contemplated by
this Agreement.
4.29. Accounting and Tax Matters. To the best of BOP's knowledge, BOP has
--------------------------
not through the date hereof taken or agreed to take any action that would
prevent GBB from accounting for the business combination to be effected by the
Merger as a pooling-of-interests or would prevent the Merger from qualifying as
a tax-free reorganization under the Code.
4.30. Indemnification. Other than pursuant to the provisions of their
---------------
respective Articles of Incorporation or Bylaws, and the Hoefer Agreement, BOP is
not a party to any indemnification agreement with any of its present officers,
directors, employees, agents or other persons who serve or served in any other
capacity with any other enterprise at the request of BOP (a "Covered Person"),
and to the best knowledge of BOP, there are no claims for which any Covered
Person would be entitled to indemnification by BOP if such provisions were
deemed in effect, except as set forth in a list furnished by BOP to GBB (the
"BOP Indemnification List").
4.31. Community Reinvestment Act. BOP has received rating of "outstanding"
--------------------------
in its most recent examination or interim review with respect to the Community
Reinvestment Act. BOP has not been advised of any supervisory concerns regarding
BOP's compliance with the Community Reinvestment Act.
4.32. Derivative Transactions. Except as set forth in a list furnished by
-----------------------
BOP to GBB (the "BOP Derivatives List"), BOP is not a party to or has agreed to
enter into an exchange traded or over-the-counter equity, interest rate, foreign
exchange or other swap, forward, future, option, cap, floor or collar or any
other contract that is not included on the balance sheet and is a derivative
contract (including various combinations thereof) or owns securities that are
referred to generically as "structured notes," "high risk mortgage derivatives,"
"capped floating rate notes," or "capped floating rate mortgage derivatives."
4.33. Trust Administration. Except for acting as a custodian or trustee
--------------------
under individual retirement accounts, BOP does not presently maintain trusts or
exercises trust powers, including, but not limited to, trust administration, and
neither of them nor any predecessor has maintained any trusts or exercised such
trust powers for a period of at least three years prior to the date hereof. The
term "trusts" as used in this Section 4.33 includes (i) any and all common law
or other trusts between an individual, corporation or other entities and BOP or
any of its predecessors, as trustee or co-trustee, including, without
limitation, pension or other qualified or nonqualified employee benefit plans,
compensation, testamentary, inter vivos, and charitable trust indentures; (ii)
any and all decedents' estates where BOP or any of its predecessors is serving
or has served as a co-executor or sole executor, personal representative or
administrator, administrator de bonis non, administrator de bonis non with will
annexed, or in any similar fiduciary capacity; (iii) any and all guardianships,
conservatorships or similar positions where BOP or any of its predecessors is
serving or has served as a co-grantor or a sole grantor or a conservator or co-
conservator of the estate, or any similar fiduciary capacity; and (iv) any and
all agency and/or custodial accounts and/or similar arrangements, including plan
administrator for employee benefit accounts, under which BOP or any of its
predecessors is serving or has served
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<PAGE>
as an agent or custodian for the owner or other party establishing the account
with or without investment authority.
4.34. Disclosure Documents and Applications. None of the information
-------------------------------------
supplied or to be supplied by or on behalf of BOP ("BOP Supplied Information")
for inclusion in (a) the Registration Statement on Form S-4 and the Proxy
Statement and Prospectus and (b) any other documents to be filed with the SEC,
the FRB, the FDIC, the DFI or any other Governmental Entity in connection with
the transactions contemplated in this Agreement, will, at the respective times
such documents are filed or become effective, or with respect to the Proxy
Statement and Prospectus when mailed, contain any untrue statement of a material
fact, or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
4.35. Intellectual Property. Except as set forth in a list furnished by
---------------------
BOP to GBB (the "BOP Intellectual Property List"), BOP owns or possesses valid
and binding licenses and other rights to use without payment all material
patents, copyrights, trade secrets, trade names, service marks and trademarks
used in their respective businesses; and BOP has not received any notice with
respect thereto that asserts the rights of others. BOP has in all material
respects performed all the obligations required to be performed by them, and are
not in default in any material respect under any license, contract, agreement,
arrangement or commitment relating to any of the foregoing.
4.36. Insider Loans; Other Transactions. BOP has previously provided GBB
---------------------------------
or its agent with a listing, current as of January 31, 2000, of all extensions
of credit made by BOP to each of its executive officers and directors and their
related interests (all as defined under Federal Reserve Board Regulation O), all
of which have been made in compliance with Regulation O, and Section 23B under
the Federal Reserve Act which listing is true, correct and complete in all
material respects. BOP does not owe any amount to, or has any contract or lease
with or commitment to, any of the present executive officers or directors of BOP
(other than for compensation for current services not yet due and payable,
reimbursement of expenses arising in the ordinary course of business, options or
awards available under the BOP Stock Option Plans or any amounts due pursuant to
BOP's Employee Plans).
4.37. Registration Obligation. BOP is not under any obligation, contingent
-----------------------
or otherwise, to register any of their respective securities under the
Securities Act.
4.38. Accuracy and Currentness of Information Furnished. The
-------------------------------------------------
representations and warranties made by BOP hereby or in the BOP Lists or
schedules hereto do not contain any untrue statement of a material fact or omit
to state any material fact which is necessary under the circumstances under
which they were made to prevent the statements contained herein or in such
schedules from being misleading.
33
<PAGE>
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF GBB
-------------------------------------
GBB represents and warrants to BOP as follows:
5.1. Incorporation, Standing and Power. GBB has been duly organized, is
---------------------------------
validly existing and in good standing as a corporation under the laws of the
State of California and is registered as a bank holding company under the BHC
Act. Newco has been duly organized, is validly existing and in good standing as
corporation under the laws of the State of California. GBB and Newco each has
all requisite corporate power and authority to own, lease and operate its
properties and assets and to carry on its business as presently conducted. Each
of GBB and Newco is duly qualified and in good standing as a foreign
corporation, and is authorized to do business, in all states or other
jurisdictions in which such qualification or authorization is necessary, except
where the failure to be so qualified or authorized would not, individually or in
the aggregate, have a material adverse effect on the business, financial
condition, results of operations or prospects of GBB on a consolidated basis.
True and correct copies of the Articles of Incorporation and Bylaws of GBB and
Newco have been delivered to BOP. Such Articles of Incorporation and Bylaws are
in full force and effect as of the date hereof.
5.2. Capitalization.
--------------
(a) As of the date of this Agreement, the authorized capital stock of
GBB consists of 24,000,000 shares of common stock, no par value, of which
14,376,768 shares are outstanding as of March 20, 2000, and 4,000,000 shares of
preferred stock, no par value, of which no shares are outstanding. All of the
outstanding shares of GBB Stock are duly authorized, validly issued, fully paid
and nonassessable. The GBB Stock to be used in the Merger will be duly
authorized, validly issued, fully paid and nonassessable.
(b) As of the date of this Agreement, the authorized capital stock of
Newco consists of 10,000 shares of common stock, no par value of which 1000
shares are outstanding and owned of record and beneficially by GBB. All the
outstanding shares of such common stock are duly authorized, validly issued,
fully paid and nonassessable. There are no outstanding options, warrants or
other rights in or with respect to the unissued shares of such common stock or
any other securities convertible into such stock, and Newco is not obligated to
issue any additional shares of its common stock or any options, warrants or
other rights in or with respect to the unissued shares of its common stock or
any other securities convertible into such stock.
5.3. Financial Statements. GBB has previously furnished to BOP a copy of
--------------------
the Financial Statements of GBB. The Financial Statements of GBB: (a) present
fairly and accurately the consolidated financial condition of GBB as of the
respective dates indicated and its consolidated results of operations and
changes in cash flows, as applicable, for the respective periods then ended,
subject, in the case of the unaudited consolidated interim financial statements,
to normal recurring adjustments; (b) have been prepared in accordance with
generally accepted accounting principles consistently applied (except as
otherwise indicated therein); (c)
34
<PAGE>
set forth as of the respective dates indicated adequate reserves for loan losses
and other contingencies; and (d) are based upon the books and records of GBB and
its subsidiaries.
5.4. Reports and Filings. Since January 1, 1997, GBB has filed all
-------------------
reports, returns, registrations and statements (collectively, "GBB Filings"),
together with any amendments required to be made with respect thereto, that were
required to be filed with (a) the SEC, (b) the FRB, and (c) any other applicable
Governmental Entity, including taxing authorities, except where the failure to
file such reports, returns, registrations or statements has not had and is not
reasonably expected to have a material adverse effect on the business, financial
condition, results of operations or prospects of GBB on a consolidated basis.
No administrative actions have been taken or orders issued in connection with
such GBB Filings. As of their respective dates, each of such GBB Filings (y)
complied in all material respects with all laws and regulations enforced or
promulgated by the Governmental Entity with which it was filed (or was amended
so as to be in such compliance promptly following discovery of any such
noncompliance); and (z) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Any financial statement contained in any of such GBB
Filings that was intended to present the financial position of GBB on a
consolidated basis fairly presented the financial position of GBB on a
consolidated basis and was prepared in accordance with generally accepted
accounting principles or banking regulations consistently applied, except as
stated therein, during the periods involved.
5.5. Authority.
---------
(a) Of GBB. The execution and delivery by GBB of this Agreement and
------
the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of GBB. This
Agreement is a valid and binding obligation of GBB enforceable in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, liquidation, receivership, conservatorship, insolvency, moratorium
or other similar laws affecting the rights of creditors generally and by general
equitable principles. Except as set forth in a list furnished by GBB to BOP
(the "GBB Conflicts and Consents List"), neither the execution and delivery by
GBB of this Agreement, the consummation of the transactions contemplated herein,
nor compliance by GBB with any of the provisions hereof, will: (a) conflict
with or result in a breach of any provision of its Articles of Incorporation,
as amended, or Bylaws, as amended; (b) constitute a breach of or result in a
default (or give rise to any rights of termination, cancellation or
acceleration, or any right to acquire any securities or assets) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture,
franchise, license, permit, agreement or other instrument or obligation to which
GBB or any GBB Subsidiary is a party, or by which GBB or any GBB Subsidiary or
any of its properties or assets is bound; (c) result in the creation or
imposition of any Encumbrance on any of the respective properties or assets of
GBB or any GBB Subsidiary; or (d) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to GBB or any GBB Subsidiary or any of
its respective properties or assets. Except as set forth in the GBB Conflicts
and Consents List, no consent of, approval of, notice to or filing with any
Governmental Entity having jurisdiction over any aspect of the business or
assets of GBB or any of its subsidiaries, and no consent of, approval of or
notice to any other Person, is required in
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<PAGE>
connection with the execution and delivery by GBB of this Agreement or the
consummation by GBB of the Merger or the transactions contemplated hereby,
except (i) such approvals as may be required by the FRB, the FDIC and the DFI;
(ii) the filing of the Proxy Statement and Prospectus and Registration Statement
on Form S-4 with the SEC and the FDIC and the issuance by the SEC of an order
declaring the Registration Statement on Form S-4 effective; (iii) the filing of
the Agreement of Merger with the Secretary of State of the State of California;
and (iv) such approvals as may be required to approve for inclusion on the
Nasdaq National Market System of the GBB Stock to be issued in the Merger.
(b) Of Newco. The execution and delivery by Newco of this Agreement
--------
and the Agreement of Merger and, subject to the requisite approval of the
shareholder of Newco, the consummation of the transactions contemplated hereby
and thereby, have been duly and validly authorized by all necessary corporate
action on the part of Newco, and this Agreement and the Agreement of Merger will
be, upon due execution and delivery by the respective parties, a valid and
binding obligation of Newco enforceable in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, liquidation,
receivership, conservatorship, insolvency, moratorium or other similar laws
affecting the rights of creditors generally and by general equitable principles.
Neither the consummation of the transactions contemplated by this Agreement and
the Agreement of Merger, nor compliance by Newco with any of the provisions
hereof or thereof, will: (a) conflict with or result in a breach of any
provision of its Articles of Incorporation or Bylaws; (b) constitute a breach of
or result in a default (or give rise to any rights of termination, cancellation
or acceleration, or any right to acquire any securities or assets) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
franchise, license, permit, agreement or other instrument or obligation to which
Newco is a party, or by which Newco or any of its properties or assets is bound:
(c) result in the creation or imposition of any Encumbrance on any of the
properties or assets of Newco; or (d) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Newco or any of its properties
or assets. No consent of, approval of, notice to or filing with any
Governmental Entity having jurisdiction over any aspect of the business or
assets of Newco, and no consent of, approval of or notice to any other Person,
is required in connection with the execution and delivery by Newco of this
Agreement or the Agreement of Merger or the consummation by Newco of the
transactions contemplated hereby or thereby, except (i) the approval of the
Agreement of Merger and the transactions contemplated hereby by the shareholder
of Newco, (ii) such approvals as may be required by the SEC, the FRB, the DFI,
the FDIC or any other Governmental Authority; and (iii) filing of the Agreement
of Merger with the Secretary of State of the State of California.
5.6. Subsidiaries. As of the date of this Agreement, GBB owns, directly
------------
or indirectly, 100% of the outstanding stock of each of the GBB Subsidiaries.
As of the date of this Agreement, and except for its investments in the GBB
Subsidiaries, GBB Capital I and GBB Capital II, GBB does not own, directly or
indirectly (except as a pledgee pursuant to loans or upon acquisition in
satisfaction of debt previously contracted), the outstanding stock or equity or
other voting interest in any other Person. GBB and Coast Bancorp entered into
an Agreement and Plan of Reorganization, dated as of December 14, 1999, pursuant
to which Coast Bancorp will merge with and into GBB and Coast Commercial Bank, a
wholly owned subsidiary of Coast Bancorp, will become a wholly owned subsidiary
of GBB. GBB, GBB Merger Corp. and Bank of Santa Clara entered into an Agreement
and Plan of Reorganization, dated as of January 26,
36
<PAGE>
2000, pursuant to which GBB Merger Corp. will merge with and into Bank of Santa
Clara, as a result of which Bank of Santa Clara will become a wholly owned
subsidiary of GBB.
5.7. Brokers and Finders. Except for the obligation to Dain Rauscher
-------------------
Wessels Equity Capital Markets, a division of Dain Rauscher Incorporated, as set
forth in Dain Rauscher Agreement, GBB is not a party to or obligated under any
agreement with any broker or finder relating to the transactions contemplated
hereby, and neither the execution of this Agreement nor the consummation of the
transactions provided for herein will result in any liability to any broker or
finder.
5.8. Certain Material Changes . Except as specifically required,
------------------------
permitted or effected by this Agreement or as disclosed in any GBB Filings,
since December 31, 1999, there has not been, occurred or arisen any of the
following (whether or not in the ordinary course of business unless otherwise
indicated):
(a) any change in any of the assets, liabilities, permits, methods of
accounting or accounting practices, business, or manner or conducting business,
of GBB or the GBB Subsidiaries or any other event or development that has had or
may reasonably be expected to have a material adverse effect on the assets,
liabilities, permits, business, financial condition, results of operations or
prospects of GBB on a consolidated basis;
(b) any damage, destruction or other casualty loss (whether or not
covered by insurance) that has had or may reasonably be expected to have a
material adverse effect on the assets, liabilities, permits, business, financial
condition, results of operations or prospects of GBB on a consolidated basis;
(c) any amendment, modification or termination of any existing, or
entry into any new, material contract or permit that has had or may reasonably
be expected to have a material adverse effect on the assets, liabilities,
permits, business, financial condition, results of operations or prospects of
GBB on a consolidated basis; or
(d) any disposition by GBB or any of the GBB Subsidiaries of an asset
the lack of which has had or may reasonably be expected to have a material
adverse effect on the assets, liabilities, permits, business, financial
condition, results of operations or prospects of GBB on a consolidated basis.
5.9. Licenses and Permits. GBB has all material licenses and permits
--------------------
that are necessary for the conduct of its business, and such licenses are in
full force and effect, except for any failure to be in full force and effect
that would not, individually or in the aggregate, have a material adverse effect
on the business, financial condition, results of operations or prospects of GBB
on a consolidated basis. The properties, assets, operations and businesses of
GBB are and have been maintained and conducted, in all material respects, in
compliance with all applicable licenses and permits. The properties and
operations of GBB are and have been maintained and conducted, in all material
respects, in compliance with all applicable laws and regulations.
37
<PAGE>
5.10 Corporate Records. The minute books of GBB reflect all material
-----------------
actions taken to this date by its shareholders, boards of directors and
committees.
5.11. Accounting Records. GBB maintains accounting records which fairly
------------------
and accurately reflect, in all material respects, its transactions and
accounting controls exist sufficient to provide reasonable assurances that such
transactions are, in all material respects, (i) executed in accordance with
their management's general or specific authorization, and (ii) recorded as
necessary to permit the preparation of financial statements in conformity with
generally accepted accounting principles. Such records, to the extent they
contain important information pertaining to GBB which is not easily and readily
available elsewhere, have been duplicated, and such duplicates are stored safely
and securely.
5.12. Facts Affecting Regulatory Approvals. To the best knowledge of
------------------------------------
GBB, there is no fact, event or condition applicable to GBB or any of the GBB
Subsidiaries which will, or reasonably could be expected to, adversely affect
the likelihood of securing the requisite approvals or consents of any
Governmental Entity to the Merger and the transactions contemplated by this
Agreement.
5.13. Accounting and Tax Matters. To the best knowledge of GBB, GBB has
--------------------------
not through the date hereof taken or agreed to take any action that would
prevent it from accounting for the business combination to be effected by the
Merger as a pooling-of-interests or would prevent the Merger from qualifying as
a tax-free reorganization under the Code.
5.14. Disclosure Documents and Applications. None of the information
-------------------------------------
supplied or to be supplied by or on behalf of GBB ("GBB Supplied Information")
for inclusion in (a) the Registration Statement on Form S-4 and the Proxy
Statement and Prospectus to be mailed to the shareholders of BOP in connection
with obtaining the approval of the shareholders of BOP of this Agreement, the
Merger and the other transactions contemplated hereby, and (b) any other
documents to be filed with the SEC, the FRB, the FDIC, the DFI or any other
Governmental Entity in connection with the transactions contemplated in this
Agreement, will, at the respective times such documents are filed or become
effective, or with respect to the Proxy Statement and Prospectus when mailed,
contain any untrue statement of a material fact, or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
5.15. Nasdaq Listing. As of the date hereof, GBB Stock is listed on the
--------------
Nasdaq National Market System.
5.16. Accuracy and Currentness of Information Furnished. The
-------------------------------------------------
representations and warranties made by GBB hereby or in the GBB Lists or
Schedules hereto do not contain any untrue statement of material fact or omit to
state any material fact which is necessary under the circumstances under which
they were made to prevent the statements contained herein or in such schedules
from being misleading.
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<PAGE>
ARTICLE 6. COVENANTS OF BOP
---------------------------
PENDING EFFECTIVE TIME OF THE MERGER
------------------------------------
BOP covenants and agrees with GBB as follows:
6.1. Limitation on Conduct Prior to Effective Time of the Merger.
-----------------------------------------------------------
Between the date hereof and the Effective Time of the Merger, except as
contemplated by this Agreement and subject to requirements of law and
regulation, BOP agrees to conduct its business in the ordinary course in
substantially the manner heretofore conducted and in accordance with sound
banking practices, and BOP shall not, without the prior written consent of GBB,
which consent GBB shall not unreasonably withhold or delay:
(a) issue, sell or grant any BOP Stock (except pursuant to the
exercise of BOP Options outstanding as of the date hereof), any other securities
(including long term debt) of BOP, or any rights, stock appreciation rights,
options or securities to acquire any BOP Stock, or any other securities
(including long term debt) of BOP;
(b) declare, set aside or pay any dividend or make any other
distribution upon or split, combine or reclassify any shares of capital stock or
other securities of BOP, provided, however, that subject to Section 6.10, BOP
may pay to its shareholders its regular cash dividend in amounts and in a manner
consistent with past practices;
(c) purchase, redeem or otherwise acquire any capital stock or other
securities of BOP or any rights, options, or securities to acquire any capital
stock or other securities of BOP;
(d) except as may be required to effect the transactions contemplated
herein, amend its Articles of Incorporation or Bylaws;
(e) grant any general or uniform increase in the rate of pay of
employees or employee benefits;
(f) grant any increase in salary, incentive compensation or employee
benefits or pay any bonus to any Person or voluntarily accelerate the vesting of
any employee benefits;
(g) make any capital expenditure or commitments with respect thereto
in excess of $50,000 in the aggregate, except for ordinary repairs, renewals and
replacements;
(h) compromise or otherwise settle or adjust any assertion or claim of
a deficiency in taxes (or interest thereon or penalties in connection
therewith), extend the statute of limitations with any tax authority or file any
pleading in court in any tax litigation or any appeal from an asserted
deficiency, or file or amend any federal, foreign, state or local tax return, or
make any tax election;
39
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(i) grant, renew or commit to grant or renew any extension of credit
if such extension of credit, together with all other credit then outstanding to
the same Person and all Affiliated Persons, would exceed $500,000 on an
unsecured basis, or $1,000,000 if secured by a lien on real estate or cash
(consent shall be deemed granted if within two Business Days of written notice,
together with all relevant documents, delivered to GBB's Chief Credit Officer,
written notice of objection is not received by BOP);
(j) change its tax or accounting policies and procedures or any method
or period of accounting unless required by generally accepted accounting
principles or a Governmental Entity;
(k) grant or commit to grant any extension of credit or amend the
terms of any such credit outstanding on the date hereof to any executive
officer, director or holder of 10% or more of the outstanding BOP Stock, or any
Affiliate of such Person, if such credit would exceed $50,000;
(l) close any offices at which business is conducted or open any new
offices;
(m) adopt or enter into any new employment agreement or other employee
benefit plan or arrangement or amend or modify any employment agreement or
employee benefit plan or arrangement of any such type except for such amendments
as are required by law;
(n) initiate, solicit or encourage (including by way of furnishing
information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal which constitutes, or may reasonably be
expected to lead to, any Competing Transaction (as such term is defined below),
or negotiate with any person in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or any other
representative retained by it or any of its Affiliates to take any such action,
and BOP shall promptly notify GBB (orally and in writing) of all of the relevant
details relating to all inquiries and proposals which it may receive relating to
any of such matters. For purposes of this Agreement, "Competing Transaction"
shall mean any of the following involving BOP: any merger, consolidation, share
exchange or other business combination; a sale, lease, exchange, mortgage,
pledge, transfer or other disposition of assets of BOP representing 10% or more
of the assets of BOP; a sale of shares of capital stock (or securities
convertible or exchangeable into or otherwise evidencing, or any agreement or
instrument evidencing, the right to acquire capital stock), representing 10% or
more of the voting power of BOP; a tender offer or exchange offer for at least
10% of the outstanding shares of BOP; a solicitation of proxies in opposition to
approval of the Merger by BOP's shareholders; or a public announcement of an
unsolicited bona fide proposal, plan, or intention to do any of the foregoing.
BOP will immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties (other than GBB) conducted
heretofore with respect to any of the foregoing. BOP shall take the necessary
steps to inform promptly the appropriate individuals or entities referred to
above of the obligations undertaken in this Section. BOP agrees that it shall
notify GBB immediately if any such inquiries, proposals or offers are received
by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated
40
<PAGE>
or continued with BOP. BOP also agrees that it shall promptly request each other
person, other than GBB, that has heretofore executed a confidentiality agreement
in connection with its consideration of acquiring BOP to return all confidential
information heretofore furnished to such person by or on behalf of BOP and
enforce any such confidentiality agreements. Notwithstanding any other provision
in this Section 6.1(n), nothing in this Agreement shall prevent BOP from (i)
engaging in any discussions or negotiations with, or providing any information
to, any Person in response to an unsolicited bona fide written proposal
concerning a Competing Transaction by any such Person or (ii) recommending such
an unsolicited bona fide written proposal concerning a Competing Transaction to
the holders of BOP Stock if and only if, prior to participating in any of the
foregoing, (A) the Board of Directors of BOP concludes in good faith that the
Competing Transaction, if consummated, would result in a transaction more
favorable to holders of BOP Stock than the transaction contemplated by this
Agreement (any such more favorable Competing Transaction being referred to in
this Agreement as a "Superior Proposal"); (B) the Board of Directors of BOP
determines in good faith based upon the advice of outside counsel that
participating in any such action is necessary for it to act in a manner not
inconsistent with its fiduciary duties under applicable law; and (C) at least
forty-eight (48) hours prior to providing any information or data to any person
or entering into discussions or negotiations with any Person, the Board of
Directors of BOP notifies GBB of such inquiries, proposals or offers received
by, any such information requested from, or any such discussions or negotiations
sought to be initiated or continued with BOP;
(o) change any basic policies and practices with respect to liquidity
management and cash flow planning, marketing, deposit origination, lending,
budgeting, profit and tax planning, personnel practices or any other material
aspect of BOP's business or operations, except such changes as may be required
in the opinion of BOP's management to respond to economic or market conditions
or as may be required by any Governmental Entity;
(p) grant any Person a power of attorney or similar authority;
(q) make any investment by purchase of stock or securities (including
an Investment Security), contributions to capital, property transfers or
otherwise in any other Person, except for federal funds, obligations of the
United States Treasury or an agency of the United States Government the
obligations of which are entitled to or implied to have the full faith and
credit of the United States government and which have an original maturity not
in excess of one year, bank qualified investment grade municipal bonds, in any
case, in the ordinary course of business consistent with past practices and
which are not designated as trading (consent shall be deemed granted if within
three Business Days of written notice together with all relevant documents
delivered to GBB's Chief Financial Officer or Controller, written notice of
objection is not received by BOP);
(r) amend or modify any Scheduled Contract or enter into any agreement
or contract that would be a Scheduled Contract under Section 4.16;
(s) sell, transfer, mortgage, encumber or otherwise dispose of any
assets or release or waive any claim, except in the ordinary course of business
and consistent with past practices;
41
<PAGE>
(t) take any action which would or is reasonably likely to (i)
adversely affect the ability of GBB or BOP to obtain any necessary approval of
any Governmental Entity required for the transactions contemplated hereby; (ii)
adversely affect BOP's ability to perform its covenants and agreements under
this Agreement; or (iii) result in any of the conditions to the performance of
GBB's or BOP's obligations hereunder, as set forth in Articles 9, 10 or 11
herein not being satisfied;
(u) make any special or extraordinary payments to any Person;
(v) reclassify any Investment Security from held-to-maturity or
available for sale to trading;
(w) sell any security other than in the ordinary course of business,
or engage in gains trading;
(x) take title to any real property without conducting prior thereto
an environmental investigation, which investigation shall disclose the absence
of any suspected environmental contamination;
(y) take or cause to be taken any action which would disqualify the
Merger as a "reorganization" within the meaning of Section 368(a)(2)(e) of the
Code or prevent GBB from accounting for the business combination to be effected
by the Merger as a pooling-of-interests;
(z) settle any claim, action or proceeding involving any material
liability for monetary damages or enter into any settlement agreement containing
material obligations;
(aa) make, acquire a participation in, or reacquire an interest in a
participation sold of, any loan that is not in compliance with its normal credit
underwriting standards, policies and procedures as in effect on December 31,
1999; or renew, extend the maturity of, or alter any of the material terms of
any such loan for a period of greater than six months;
(bb) incur any indebtedness for borrowed money or assume, guaranty,
endorse or otherwise as an accommodation become responsible for the obligations
of any other person, except for (i) in connection with banking transactions with
banking customers in the ordinary course of business, or (ii) short-term
borrowings made at prevailing market rates and terms; or
(cc) agree or make any commitment to take any actions prohibited by
this Section 6.1.
6.2 Affirmative Conduct Prior to Effective Time of the Merger . Between
---------------------------------------------------------
the date hereof and the Effective Time of the Merger, BOP shall:
(a) use its commercially reasonable efforts consistent with this
Agreement to maintain and preserve intact its present business organization and
to maintain and preserve its
42
<PAGE>
relationships and goodwill with account holders, borrowers, employees and others
having business relationships with BOP;
(b) use its commercially reasonable efforts to keep in full force and
effect all of the existing material permits and licenses of BOP;
(c) use its commercially reasonable efforts to maintain insurance
coverage at least equal to that now in effect on all properties which it owns or
leases and on its business operations;
(d) perform its material contractual obligations and not become in
material default on any such obligations;
(e) duly observe and conform in all material respects to all lawful
requirements applicable to its business;
(f) maintain its assets and properties in good condition and repair,
normal wear and tear excepted;
(g) promptly upon learning of such information, advise GBB in writing
of any event or any other transaction whereby any Person or Related Group of
Persons acquires, directly or indirectly, record or beneficial ownership or
control (as defined in Rule 13d-3 promulgated by the SEC under the Exchange Act)
of 5% or more of the outstanding BOP Stock prior to the record date fixed for
the BOP Shareholders' Meeting or any adjourned meeting thereof to approve this
Agreement and the transactions contemplated herein;
(h) promptly notify GBB regarding receipt from any tax authority of
any notification of the commencement of an audit, any request to extend the
statute of limitations, any statutory notice of deficiency, any revenue agent's
report, any notice of proposed assessment, or any other similar notification of
potential adjustments to the tax liabilities of BOP, or any actual or threatened
collection enforcement activity by any tax authority with respect to tax
liabilities of BOP;
(i) make available to GBB monthly unaudited balance sheets and income
statements of BOP within 25 days after the close of each calendar month;
(j) not later than the 30th day of each calendar month, amend or
supplement the BOP Lists prepared and delivered pursuant to Article 4 to ensure
that the information set forth in the BOP Lists accurately reflects the then-
current status of BOP in all material respects;
(k) use its commercially reasonable efforts to obtain any third party
consent with respect to any contract, agreement, lease, license, arrangement,
permit or release that is material to the business of BOP or that is
contemplated in this Agreement as required in connection with the Merger;
43
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(l) maintain an allowance for loan and lease losses consistent with
practices and methodology as in effect on the date of the execution of this
Agreement; and
(m) furnish to Manatt, Phelps & Phillips, LLP, promptly upon its
written request, written representations and certificates as deemed reasonably
necessary or appropriate for purposes of enabling Manatt, Phelps & Phillips, LLP
to render the tax opinion referred to in Section 9.6 hereof.
6.3 Access to Information.
---------------------
(a) BOP will afford, upon reasonable notice, to GBB and its
representatives, counsel, accountants, agents and employees reasonable access
during normal business hours to all of their business, operations, properties,
books, files and records and will do everything reasonably necessary to enable
GBB and its representatives, counsel, accountants, agents and employees to make
a complete examination of the financial statements, business, assets and
properties of BOP and the condition thereof and to update such examination at
such intervals as GBB shall deem appropriate. Such examination shall be
conducted in cooperation with the officers of BOP and in such a manner as to
minimize any disruption of, or interference with, the normal business operations
of BOP. Upon the request of GBB, BOP will request Richardson to provide
reasonable access to representatives of PwC working on behalf of GBB to
auditors' work papers with respect to the business and properties of BOP,
including tax accrual work papers prepared for BOP during the preceding 60
months, other than (a) books, records and documents covered by the attorney-
client privilege, or that are attorneys' work product, and (b) books, records
and documents that BOP is legally obligated to keep confidential. No
examination or review conducted under this section shall constitute a waiver or
relinquishment on the part of GBB of the right to rely upon the representations
and warranties made by BOP herein; provided, that GBB shall disclose to BOP any
fact or circumstance it may discover which GBB believes renders any
representation or warranty made by BOP hereunder incorrect in any respect. GBB
covenants and agrees that it, its subsidiaries, and their respective
representatives, counsel, accountants, agents and employees will hold in strict
confidence all documents and information concerning BOP so obtained from any of
them (except to the extent that such documents or information are a matter of
public record or require disclosure in the Proxy Statement and Prospectus or any
of the public information of any applications required to be filed with any
Governmental Entity to obtain the approvals and consents required to effect the
transactions contemplated hereby), and if the transactions contemplated herein
are not consummated, such confidence shall be maintained and all such documents
shall be returned to BOP.
(b) A representative of GBB, selected by GBB in its sole discretion,
shall be authorized and permitted to review each loan, lease, or other credit
funded or renewed by BOP after the date hereof, and all information associated
with such loan, lease or other credit, such review to take place, if possible,
on BOP's premises.
(c) A representative of GBB, selected by GBB in its sole discretion,
shall be permitted by BOP to attend, but not otherwise participate in, all
regular and special Board of Directors' and committee meetings of BOP from the
date hereof until the Effective Time of the Merger; provided, however, that the
attendance of such representative shall not be permitted at
44
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any meeting, or portion thereof, for the sole purpose of discussing the
transactions contemplated by this Agreement or the obligations of BOP under this
Agreement.
6.4 Filings. BOP agrees that through the Effective Time of the Merger,
-------
each of BOP's reports, registrations, statements and other filings required to
be filed with any applicable Governmental Entity will comply in all material
respects with all the applicable statutes, rules and regulations enforced or
promulgated by the Governmental Entity with which it will be filed and none will
contain any untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Any
financial statement contained in any such report, registration, statement or
other filing that is intended to present the financial position of the entity to
which it relates will fairly present the financial position of such entity and
will be prepared in accordance with generally accepted accounting principles or
applicable banking regulations consistently applied during the periods involved.
6.5 Notices; Reports. BOP will promptly notify GBB of any event of
----------------
which BOP obtains knowledge which has had or may have a materially adverse
effect on the financial condition, operations, business or prospects of BOP, or
in the event that BOP determines that it is unable to fulfill any of the
conditions to the performance of GBB's obligations hereunder, as set forth in
Articles 9 or 11 herein, and BOP will furnish GBB (i) as soon as available, and
in any event within one Business Day after it is mailed or delivered to the
Board of Directors of BOP or committees thereof, any report by BOP for
submission to the Board of Directors of BOP or committees thereof, provided,
however, that BOP need not furnish to GBB communications of BOP's legal counsel
regarding BOP's rights and obligations under this Agreement or the transactions
contemplated hereby, or books, records and documents covered by confidentiality
agreements or the attorney-client privilege, or which are attorneys' work
product, (ii) as soon as available, all proxy statements, information
statements, financial statements, reports, letters and communications sent by
BOP to its shareholders or other security holders, and all reports filed by BOP
with the FDIC or the DFI, and (iii) such other existing reports as GBB may
reasonably request relating to BOP.
6.6 BOP Shareholders' Meeting. Promptly after the execution of this
-------------------------
Agreement, BOP will take action necessary in accordance with applicable law and
its Articles of Incorporation and Bylaws to convene a meeting of its
shareholders to consider and vote upon this Agreement and the transactions
contemplated hereby so as to permit the consummation of the transactions
contemplated hereby. The Board of Directors of BOP shall, subject to its
fiduciary duties, recommend that its shareholders approve this Agreement and the
transactions contemplated hereby, and the Board of Directors of BOP shall,
subject to its fiduciary duties, use its best efforts to obtain the affirmative
vote of the holders of the largest possible percentage of the outstanding BOP
Stock to approve this Agreement and the transactions contemplated hereby.
6.7 Certain Loans and Other Extensions of Credit. BOP will promptly
--------------------------------------------
inform GBB of the amounts and categories of any loans, leases or other
extensions of credit that have been classified by any unit of BOP or by any
other Person as "Criticized," "Specially Mentioned," "Substandard," "Doubtful,"
"Loss" or any comparable classification ("Classified Credits"). BOP will
furnish GBB, as soon as practicable, and in any event within 20 days after the
end of each
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calendar month, schedules including the following: (a) Classified Credits
(including with respect to each credit its classification category and the
originating unit); (b) nonaccrual credits (including the originating unit); (c)
accrual exception credits that are delinquent 90 or more days and have not been
placed on nonaccrual status (including its originating unit); (d) credits
delinquent as to payment of principal or interest (including its originating
unit), including an aging into current-to-29, 30-59, 60-89, and 90+ day
categories; (e) participating loans and leases, stating, with respect to each,
whether it is purchased or sold and the originating unit; (f) loans or leases
(including any commitments) by BOP to any BOP director, officer at or above the
senior vice president level, or shareholder holding 10% or more of the capital
stock of BOP, including with respect to each such loan or lease the identity
and, to the knowledge of BOP, the relation of the borrower to BOP, and the
outstanding and undrawn amounts; (g) letters of credit (including the
originating unit); (h) loans or leases wholly or partially charged off during
the previous month (including with respect to each loan or lease, the
originating amount, the write-off amount and its originating unit); and (i)
other real estate or assets acquired in satisfaction of debt.
6.8 Applications. Subject to Section 7.5, BOP will promptly prepare or
------------
cause to be prepared the portions of the Proxy Statement and Prospectus as it
pertains to BOP and any other applications necessary, including applications to
the FDIC and the DFI, to consummate the transactions contemplated hereby, and
further agrees to provide any information requested by GBB for the preparation
of any applications necessary to consummate the transactions contemplated
hereby. BOP shall afford GBB a reasonable opportunity to review the portions of
the Proxy Statement and Prospectus pertaining to BOP and all such applications
and all amendments and supplements thereto before the filing thereof. BOP
covenants and agrees that, with respect to the information relating to BOP, the
Proxy Statement and Prospectus will comply in all material respects with the
provisions of applicable law, and will not contain any untrue statement of
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. BOP will use its
commercially reasonable efforts to obtain all regulatory approvals or consents
necessary to effect the Merger and the transactions contemplated herein.
6.9 Affiliate Agreements. Concurrently with the execution of this
--------------------
Agreement, (a) BOP shall deliver to GBB a letter identifying all persons who are
then "affiliates" of BOP for purposes of ASR 130 and 135 and Rule 145 under the
Securities Act and (b) BOP shall advise the persons identified in such letter of
the resale restrictions imposed by applicable securities laws and shall use
reasonable efforts to obtain from each person identified in such letter a
written agreement substantially in the form attached hereto as Exhibit B. BOP
---------
shall use reasonable efforts to obtain from any person who becomes an affiliate
of BOP after BOP's delivery of the letter referred to above, and on or prior to
the date of the BOP Shareholders' Meeting to approve this Agreement, a written
agreement substantially in the form attached as Exhibit B hereto as soon as
---------
practicable after obtaining such status.
6.10 Coordination of Dividends. BOP shall coordinate with GBB the
-------------------------
declaration of any dividends that may be allowed pursuant to Section 6.1(b)
hereof, and the record date and the payment dates relating thereto, it being the
intention of the parties that holders of BOP Stock shall not receive two
dividends, or fail to receive one dividend, for any applicable dividend
46
<PAGE>
period with respect to their shares of BOP Stock and any shares of GBB Stock any
such holder will receive in exchange therefor in the Merger.
6.11 D&O Coverage. In the event that GBB is unable to have BOP's
------------
directors and officers added to GBB's directors' and officers' liability
insurance policy pursuant to Section 7.2(d) hereof and upon GBB's request, BOP
shall use commercially reasonable efforts to obtain (i) coverage for a period of
at least 36 months following the Effective Time of the Merger for the directors
and officers of BOP under a directors' and officers' liability insurance policy
which is no less protective in terms of coverage or limitations than now
possessed by BOP covering acts or omissions occurring prior to the Effective
Time of the Merger and actions related to this Agreement, and (ii) coverage for
a period of at least 36 months following the Effective Time of the Merger under
a bankers' blanket bond which is no less protective in terms of coverage or
limitations than now possessed by BOP covering acts or omissions occurring prior
to the Effective Time of the Merger and actions related to this Agreement.
ARTICLE 7.
COVENANTS OF GBB
-----------------
PENDING EFFECTIVE TIME OF THE MERGER
------------------------------------
GBB covenants and agrees with BOP as follows:
7.1. Limitation on Conduct Prior to Effective Time of the Merger.
-----------------------------------------------------------
Between the date hereof and the Effective Time of the Merger, except as
contemplated by this Agreement and subject to requirements of law and regulation
generally applicable to bank holding companies and banks, GBB shall not, without
the prior written consent of BOP, which consent BOP shall not unreasonably
withhold or delay:
(a) take any action which would or is reasonably likely to (i)
adversely affect the ability of GBB to obtain any necessary approvals of any
Governmental Entity required for the transactions contemplated hereby; (ii)
adversely affect GBB's ability to perform its covenants and agreements under
this Agreement; or (iii) result in any of the conditions to the performance of
GBB's obligations hereunder, as set forth in Articles 9 or 11 herein not being
satisfied;
(b) take or cause to be taken any action which would disqualify the
Merger as a "reorganization" within the meaning of Section 368 of the Code or
prevent GBB from accounting for the business combination to be effected by the
Merger as a pooling-of-interests;
(c) amend its articles of incorporation in any respect which would
materially and adversely affect the rights and privileges attendant to the GBB
Stock; or
(d) enter into a GBB Acquisition Transaction that includes as a
condition precedent to such GBB Acquisition Transaction that GBB terminate this
Agreement; provided, however, notwithstanding the foregoing, nothing in this
Agreement shall prevent GBB from entering into such a GBB Acquisition
Transaction if the Board of Directors of GBB determines in good faith based upon
the advice of counsel that taking such action is necessary for it to act in
47
<PAGE>
a manner not inconsistent with its fiduciary duties under applicable law;
provided, however, that nothing herein shall prohibit BOP from terminating this
Agreement pursuant to Section 13.1(l); or
(e) agree or make any commitment to take any actions prohibited by
this Section 7.1.
7.2. Affirmative Conduct of GBB and Subsidiaries Prior to Effective Time of
----------------------------------------------------------------------
the Merger. Between the date hereof and the Effective Time of the Merger, GBB
- ----------
shall:
(a) duly observe and conform in all material respects to all lawful
requirements applicable to the business of GBB;
(b) use its commercially reasonable efforts to obtain any third party
consent with respect to any contract, agreement, lease, license, arrangement,
permit or release that is material to the business of GBB on a consolidated
basis and that is contemplated in this Agreement as required in connection with
the Merger;
(c) not later than the 20th day of each calendar month, amend or
supplement the GBB Lists prepared and delivered pursuant to Article 5 to ensure
that the information set forth in the GBB Lists accurately reflects the then-
current status of GBB. GBB shall further amend or supplement the GBB Lists as
of the Closing Date if necessary to reflect any additional information that
needs to be included in the GBB Lists; and
(d) use its commercially reasonable efforts to purchase, or permit BOP
to purchase, tail coverage for BOP pursuant to BOP's directors' and officers'
liability insurance policy, providing for coverage for a period of at least 36
months following the Effective Time of the Merger and covering acts or omissions
occurring prior to the Effective Time of the Merger and actions related to this
Agreement.
7.3. Access to Information. Upon reasonable request by BOP, GBB shall
---------------------
(i) make its Chief Executive Officer, Chief Administrative Officer/Chief
Financial Officer, Chief Credit Officer and Controller available to discuss with
BOP and its representatives GBB's operations; and (ii) shall provide BOP with
written information which is (a) similar to the written information that BOP
reviewed in connection with this Agreement, and (b) related to GBB's business
condition, operations and prospects on a consolidated basis. No examination or
review conducted under this section shall constitute a waiver or relinquishment
on the part of BOP of the right to rely upon the representations and warranties
made by GBB herein; provided, that BOP shall disclose to GBB any fact or
circumstance it may discover which BOP believes renders any representation or
warranty made by GBB hereunder incorrect in any respect. BOP covenants and
agrees that it and its representatives, counsel, accountants, agents and
employees will hold in strict confidence all documents and information
concerning GBB so obtained (except to the extent that such documents or
information are a matter of public record or require disclosure in the Proxy
Statement and Prospectus or any of the public information of any applications
required to be filed with any Governmental Entity to obtain the approvals and
consents required to effect the transactions contemplated hereby), and if the
transactions contemplated herein are not
48
<PAGE>
consummated, such confidence shall be maintained and all such documents shall be
returned to GBB.
7.4. Filings. GBB agrees that through the Effective Time of the Merger,
-------
each of its reports, registrations, statements and other filings required to be
filed with any applicable Governmental Entity will comply in all material
respects with all the applicable statutes, rules and regulations enforced or
promulgated by the Governmental Entity with which it will be filed and none will
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Any
financial statement contained in any such report, registration, statement or
other filing that is intended to present the financial position of the entities
or entity to which it relates will fairly present the financial position of such
entities or entity and will be prepared in accordance with generally accepted
accounting principles or applicable banking regulations consistently applied
during the periods involved.
7.5. Applications. GBB will promptly prepare and file or cause to be
------------
prepared and filed (i) an application for approval of the Merger with the FRB;
(ii) an application for approval of the Merger with the DFI and the FDIC; (iii)
in conjunction with BOP, the Registration Statement on Form S-4 and the Proxy
Statement and Prospectus as it pertains to GBB; and (iv) any other applications
necessary to consummate the transactions contemplated hereby. GBB shall afford
BOP a reasonable opportunity to review the Proxy Statement and Prospectus and
all such applications and all amendments and supplements thereto before the
filing thereof. GBB covenants and agrees that the Registration Statement on
Form S-4 and the Proxy Statement and Prospectus and all applications to the
appropriate regulatory agencies for approval or consent to the Merger, with
respect to information relating to GBB or its subsidiaries, will comply in all
material respects with the provisions of applicable law, and will not contain
any untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. GBB will use its commercially reasonable efforts to obtain all
regulatory approvals or consents necessary to effect the Merger.
7.6. Blue Sky. GBB agrees to use commercially reasonable efforts to have
--------
the shares of GBB Stock to be issued in connection with the Merger qualified or
registered for offer and sale, to the extent required, under the securities laws
of each jurisdiction in which shareholders of BOP reside.
7.7. Notices; Reports. GBB will promptly notify BOP of any event of
----------------
which GBB obtains knowledge which has had or may have a material adverse affect
on the financial condition, operations, business or prospects of GBB on a
consolidated basis or in the event that GBB determines that it is unable to
fulfill any of the conditions to the performance of BOP's obligations hereunder,
as set forth in Articles 9 or 10 herein.
7.8. Removal of Conditions. In the event of the imposition of a
---------------------
condition to any regulatory approvals which GBB deems to materially adversely
affect it or to be materially burdensome, GBB shall use its commercially
reasonable efforts for purposes of obtaining the removal of such condition.
49
<PAGE>
7.9. Stock Options.
-------------
(a) At and as of the Effective Time of the Merger, GBB shall assume
each and every outstanding option to purchase shares of BOP Stock ("BOP Stock
Option") under the BOP Stock Option Plan. Subject to Section 7.9(d), each and
every BOP Stock Option so assumed by GBB under this Agreement shall be exchanged
for a substitute option under the GBB Stock Option Plan with the following
terms: (i) such BOP Stock Option shall be exercisable for that number of whole
shares of GBB Stock equal to the product of (A) the number of shares of BOP
Stock that were granted under such BOP Stock Option immediately prior to the
Effective Time of the Merger (the vesting of which will be accelerated in
accordance with the terms of the BOP Stock Option Plan and the agreements
pursuant thereto) multiplied by (B) the Conversion Ratio, with such product
rounded down to the nearest whole number of shares of GBB Stock; and (ii) the
per share exercise price for the shares of GBB Stock issuable upon exercise of
such BOP Stock Option shall be equal to the quotient determined by dividing (A)
the exercise price per share of BOP Stock at which such BOP Stock Option was
exercisable immediately prior to the Effective Time of the Merger by (B) the
Conversion Ratio. After the Effective Time of the Merger, GBB shall issue to
each holder of an outstanding BOP Stock Option a document evidencing the
substitute option pursuant to this Section 7.9.
(b) The terms of the substitute options shall correspond in all
material respects to the terms of the BOP Stock Options and, subject to the
requirements of law, the BOP Stock Options which qualify as incentive stock
options prior to the Effective Time of the Merger qualify as incentive stock
options of GBB after the Effective Time of the Merger.
(c) At or prior to the Effective Time of the Merger, GBB shall take
all corporate action necessary to reserve for issuance a sufficient number of
shares of GBB Stock for delivery upon exercise of GBB Stock Options assumed by
it in accordance with this Section 7.9. At the Effective Time of the Merger, or
as soon as practicable thereafter, GBB shall, if necessary, file a registration
statement on Form S-8 (or any successor or other appropriate form) with respect
to the shares of GBB Stock subject to such options and shall use all reasonable
efforts to maintain the effectiveness of such registration statement (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding.
(d) In the event the shareholders of GBB fail to approve an increase
in the number of shares reserved for issuance under the GBB Stock Option Plan at
the shareholders' meeting to be held in connection with the merger of GBB and
Coast Bancorp, GBB will assume the BOP Stock Option Plan and each BOP Stock
Option granted thereunder. Each such BOP Stock Option so assumed by GBB under
this Agreement shall continue to have, and be subject to, the same terms and
conditions set forth in the BOP Stock Option Plan and in the other documents
governing such BOP Stock Option immediately prior to the Effective Time of the
Merger; provided, however, that such BOP Stock Options will be exercisable for
that number of shares of GBB Stock computed in accordance with Section 7.9(a)(i)
and (ii). In such event, the BOP Stock Option Plan (as amended, if necessary,
to provide for the exchange of GBB Stock for BOP Stock upon the exercise of BOP
Stock Options) will continue in effect for the BOP Stock Options so assumed.
50
<PAGE>
7.10 Reservation, Issuance and Registration of GBB Stock. GBB shall
---------------------------------------------------
reserve and make available for issuance in connection with the Merger and in
accordance with the terms and conditions of this Agreement such number of shares
of GBB Stock to be issued to the shareholders of BOP in the Merger pursuant to
Article 2 hereof.
7.11 Nasdaq Listing. GBB shall use its commercially reasonable efforts to
--------------
cause the shares of GBB Stock to be issued in the Merger to be approved for
listing on the Nasdaq National Market System, subject to official notice of
issuance, prior to the Effective Time of the Merger.
ARTICLE 8.
ADDITIONAL COVENANTS
--------------------
The parties hereto hereby mutually covenant and agree with each other as
follows:
8.1. Commercially Reasonable Efforts. Subject to the terms and
-------------------------------
conditions of this Agreement, each party will use its commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement as
promptly as practical.
8.2. Public Announcements. No press release or other public disclosure
--------------------
of matters related to this Agreement or any of the transactions contemplated
hereby shall be made by GBB or BOP unless the other party shall have provided
its prior consent to the form and substance thereof; provided, however, that
nothing herein shall be deemed to prohibit any party hereto from making any
disclosure which its counsel deems necessary or advisable in order to fulfill
such party's disclosure obligations imposed by law.
8.3. Environmental Assessment and Remediation. GBB may cause to be
----------------------------------------
prepared at GBB's sole cost and expense within 45 days of the date of this
Agreement one or more phase I environmental investigations with respect to the
Real Property set forth on the BOP Real Property List. In the event any such
phase I environmental investigation report, or any such report which BOP has
already obtained on any of the Real Property set forth on BOP's Real Property
List, discloses facts which, in the sole discretion of GBB, warrant further
investigation, GBB shall provide written notice to BOP, and BOP shall be
required to cause to be completed within 60 days of such written notice, at the
sole cost and expense of GBB, a phase II environmental investigation and report
with respect to such property. The consultant engaged by BOP to conduct such
investigation and provide such report shall be reasonably acceptable to GBB.
GBB shall have 10 days from the receipt of such investigation report to
reasonably object thereto, which objection shall be by written notice. In the
event of any such objection, GBB shall engage an environmental consultant
reasonably satisfactory to BOP who shall provide an estimate of the cost of
taking any remedial action recommended or suggested in such phase II
environmental investigation report, or which is required by law, or which is
determined to be prudent by GBB, in its sole discretion, and, unless the
estimated cost of such remediation is in excess of $100,000 or is not reasonably
determinable by such consultant (and written notice thereof provided by BOP to
GBB) BOP shall immediately commence such remediation, all at the
51
<PAGE>
sole cost and expense of BOP. In the event such environmental consultant
determines that the estimated cost of such remediation is in excess of $100,000
or is not reasonably determinable, GBB shall have the right to terminate the
Agreement pursuant to Section 13.1(k) hereof before the expiration of 21 days
from the date of such written notice.
GBB agrees to keep confidential and not to disclose any nonpublic
information obtained in the course of such environmental investigation relating
to environmental contamination or suspected contamination of any property on the
BOP Real Property List, except as required by law.
8.4 Appointment of Director. GBB agrees to take all necessary action,
-----------------------
including, if necessary, increasing the authorized number of it directors, to
appoint as contemplated by Section 2.6 hereof one member of BOP's Board of
Directors to the Board of Directors of GBB effective at Effective Time of the
Merger, or as soon thereafter as practicable.
ARTICLE 9.
CONDITIONS PRECEDENT TO THE MERGER
----------------------------------
The obligations of each of the parties hereto to consummate the
transactions contemplated herein are subject to the satisfaction, on or before
the Closing Date, of the following conditions:
9.1. Shareholder Approval. The Agreement and the transactions
--------------------
contemplated hereby shall have received all requisite approvals of the
shareholders of BOP.
9.2. No Judgments or Orders. No judgment, decree, injunction, order or
----------------------
proceeding shall be outstanding or threatened by any Governmental Entity which
prohibits or restricts the effectuation of, or threatens to invalidate or set
aside, the Merger substantially in the form contemplated by this Agreement,
unless counsel to the party against whom such action or proceeding was
instituted or threatened renders to the other parties hereto a favorable opinion
that such judgment, decree, injunction, order or proceeding is without merit.
9.3. Regulatory Approvals. To the extent required by applicable law or
--------------------
regulation, all approvals or consents of any Governmental Entity, including,
without limitation, those of the FRB, the FDIC and the DFI shall have been
obtained or granted for the Merger and the transactions contemplated hereby and
the applicable waiting period under all laws shall have expired. All other
statutory or regulatory requirements for the valid completion of the
transactions contemplated hereby shall have been satisfied.
9.4. Securities Laws. The Registration Statement on Form S-4 shall have
---------------
been declared effective by the SEC (and cleared for release by the FDIC) and
shall not be the subject of any stop order or proceedings seeking or threatening
a stop order. GBB shall have received all state securities or "Blue Sky"
permits and other authorizations necessary to issue the GBB Stock to consummate
the Merger.
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9.5. Listing. The GBB Stock issuable in the Merger shall have been
-------
included for listing on the Nasdaq National Market System.
9.6. Tax Opinion. GBB and BOP shall have received from Manatt, Phelps &
-----------
Phillips, LLP an opinion reasonably satisfactory to GBB and BOP to the effect
that the Merger shall not result in the recognition of gain or loss for federal
or California income tax purposes to GBB or BOP, nor shall the issuance of the
GBB Stock result in the recognition of gain or loss for federal or California
income tax purposes by the holders of BOP Stock who receive such stock, nor
shall the substitution or assumption of options under Section 7.9 result in any
income or gain to the option holder for federal or California income tax
purposes or disqualify any such options as incentive stock options in connection
with the Merger, dated prior to the date the Proxy Statement and Prospectus is
first mailed to the shareholders of BOP and GBB and such opinions shall not have
been withdrawn or modified in any material respect.
9.7. Pooling of Interests. Prior to the Effective Time of the Merger,
--------------------
GBB shall have received from PwC a written confirmation that the Merger will
qualify for pooling-of-interests accounting treatment. Additionally, prior to
the Effective Time of the Merger, Richardson shall have delivered a letter to
BOP to the effect that, as of the Effective Time of the Merger, no conditions
exist with respect to BOP that would preclude accounting for the Merger as a
pooling-of-interests. In making their determinations that the Merger will
qualify for such treatment, PwC and Richardson shall be entitled to assume that
cash will be paid with respect to all shares held of record by any holder of GBB
Dissenting Shares or BOP Dissenting Shares.
ARTICLE 10.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BOP
----------------------------------------------
All of the obligations of BOP to effect the transactions contemplated
hereby shall be subject to the satisfaction, on or before the Closing Date, of
the following conditions, any of which may be waived in writing by BOP:
10.1. Legal Opinion. BOP shall have received the opinion of Linda M.
-------------
Iannone, General Counsel of GBB, dated as of the Closing Date, and in form and
substance satisfactory to the counsel of BOP, to the effect that: (a) GBB and
Newco are corporations validly existing under the laws of the State of
California with full corporate power and authority to enter into this Agreement
and the Agreement of Merger, as applicable, and to consummate the transactions
contemplated hereby and thereby; (b) all corporate proceedings on the part of
GBB and Newco necessary to be taken in connection with the Merger in order to
make the same effective have been duly and validly taken; (c) this Agreement and
the Agreement of Merger have been duly and validly authorized, executed and
delivered on behalf of GBB and Newco and constitute (subject to standard
exceptions of enforceability arising from the bankruptcy laws and rules of
equity) valid and binding agreements of GBB Newco; and (d) the shares of GBB
Stock to be issued in the Merger will, when issued, be duly authorized, validly
issued, fully paid and nonassessable.
53
<PAGE>
10.2. Representations and Warranties; Performance of Covenants. All the
--------------------------------------------------------
covenants, terms and conditions of this Agreement to be complied with and
performed by GBB on or before the Closing Date shall have been complied with and
performed in all material respects. Each of the representations and warranties
of GBB contained in Article 5 hereof shall have been true and correct in all
material respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall be
true and correct in all respects) on and as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date or for changes expressly contemplated by this Agreement) on and as of the
Closing Date, with the same effect as though such representations and warranties
had been made on and as of the Closing Date. It is understood and acknowledged
that the representations being made on and as of the Closing Date shall be made
without giving effect to any update with respect to the GBB Lists in accordance
with Section 7.2(c).
10.3. Authorization of Merger. All actions necessary to authorize the
-----------------------
execution, delivery and performance of this Agreement and the Agreement of
Merger by GBB and Newco and the consummation of the transactions contemplated
hereby and thereby shall have been duly and validly taken by the Boards of
Directors of GBB and Newco, as required by applicable law, and Newco shall have
full power and right to merge pursuant to the Agreement of Merger.
10.4. Absence of Certain Changes. Between the date of this Agreement
--------------------------
and the Effective Time of the Merger, there shall not have occurred any event
that has had or could reasonably be expected to have a material adverse effect
on the business, financial condition, results of operations or prospects of GBB
on a consolidated basis, whether or not such event, change or effect is
reflected in the GBB Lists as amended or supplemented after the date of this
Agreement.
10.5 Third Party Consents. GBB shall have obtained all consents of other
--------------------
parties to their respective mortgages, notes, leases, franchises, agreements,
licenses and permits as may be necessary to permit the Merger and the
transactions contemplated herein to be consummated without a material default,
acceleration, breach or loss of rights or benefits thereunder.
10.6 Officers' Certificate. There shall have been delivered to BOP on
---------------------
the Closing Date a certificate executed by the Chief Executive Officer and the
Chief Financial Officer of GBB certifying, to the best of their knowledge,
compliance with all of the provisions of Sections 10.2, 10.3, 10.4 and 10.5.
10.7 Fairness Opinion. BOP shall have received a letter from Hoefer &
----------------
Arnett, Incorporated, dated as of a date within five Business Days of the
mailing of the Proxy Statement and Prospectus to the shareholders of BOP, to the
effect that the transactions contemplated by this Agreement are fair from a
financial point of view to the shareholders of BOP.
54
<PAGE>
ARTICLE 11.
CONDITIONS PRECEDENT TO OBLIGATIONS OF GBB
-------------------------------------------
All of the obligations of GBB to effect the transactions contemplated
hereby shall be subject to the satisfaction, on or before the Closing Date, of
the following conditions, any of which may be waived in writing by GBB:
11.1. Legal Opinion. GBB shall have received the opinion of Leland,
-------------
Parachini, Steinberg, Matzger & Melnick, LLP, attorneys for BOP, and in form and
substance satisfactory to the counsel of GBB, to the effect that: (a) BOP is a
corporation validly existing under the laws of the State of California with full
corporate power and authority to enter into this Agreement and the Agreement of
Merger and to consummate the transactions contemplated hereby and thereby; (b)
all corporate proceedings on the part of BOP necessary to be taken in connection
with the Merger in order to make the same effective have been duly and validly
taken; and (c) this Agreement and the Agreement of Merger have been duly and
validly authorized, executed and delivered on behalf of BOP, and constitute
(subject to standard exceptions of enforceability arising from the bankruptcy
laws and rules of equity) valid and binding agreements of BOP.
11.2. Representations and Warranties; Performance of Covenants. All the
--------------------------------------------------------
covenants, terms and conditions of this Agreement to be complied with and
performed by BOP at or before the Closing Date shall have been complied with and
performed in all material respects. Each of the representations and warranties
of BOP contained in Article 4 hereof shall have been true and correct in all
material respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall be
true and correct in all respects) on and as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date or for changes expressly contemplated by this Agreement) on and as of the
Closing Date, with the same effect as though such representations and warranties
had been made on and as of the Closing Date. It is understood and acknowledged
that the representations being made on and as of the Closing Date shall be made
without giving effect to any update with respect to the BOP Lists in accordance
with Section 6.2(j).
11.3. Authorization of Merger. All actions necessary to authorize the
-----------------------
execution, delivery and performance of this Agreement and the Agreement of
Merger by BOP and the consummation of the transactions contemplated hereby and
thereby shall have been duly and validly taken by the Board of Directors and
shareholders of BOP, and BOP shall have full power and right to merge pursuant
to the Agreement of Merger.
11.4. Third Party Consents. BOP shall have obtained all consents of
--------------------
other parties to their respective mortgages, notes, leases, franchises,
agreements, licenses and permits as may be necessary to permit the Merger and
the transactions contemplated herein to be consummated without a material
default, acceleration, breach or loss of rights or benefits thereunder.
11.5. Absence of Certain Changes. Between the date of this Agreement
--------------------------
and the Effective Time of the Merger, there shall not have occurred any event
that has had or could
55
<PAGE>
reasonably be expected to have a material adverse effect on the business,
financial condition, results of operations or prospects of BOP whether or not
such event, change or effect is reflected in the BOP Lists as amended or
supplemented after the date of this Agreement.
11.6. Officers' Certificate. There shall have been delivered to GBB on
---------------------
the Closing Date a certificate executed by the Chief Executive Officer and the
Chief Financial Officer of BOP certifying, to the best of their knowledge,
compliance with all of the provisions of Sections 11.2, 11.3, 11.4 and 11.5.
11.7. Fairness Opinion. GBB shall have received a letter from First
----------------
Security Van Kasper dated as of a date within five Business Days of the mailing
of the Proxy Statement and Prospectus to the shareholders of GBB, to the effect
that the transactions contemplated by this Agreement are fair from a financial
point of view to the shareholders of GBB.
11.8. Shareholder's Agreements. Concurrently with the execution of this
------------------------
Agreement, each director of BOP shall have executed and delivered to GBB
agreements substantially in the form of Exhibit D hereto.
---------
11.9. Agreements Not to Compete. Concurrently with the execution of
-------------------------
this Agreement, the directors of BOP shall have executed and delivered to GBB
agreements substantially in the form of Exhibit C hereto.
---------
11.10. Affiliates Agreements. GBB shall have received from each person
---------------------
named in the letter or otherwise referred to in Section 6.9 an executed copy of
an agreement substantially in the form on Exhibit B hereto.
---------
11.11. Employee Benefit Plans. GBB shall have received satisfactory
----------------------
evidence that all of BOP's employee benefit plans, programs and arrangements,
including, without limitation, the BOP 401(k) Plan, have been treated as
provided in Article 12 of this Agreement.
11.12. Dissenting Shares. The number of shares of BOP Stock for which
-----------------
demand is made to be BOP Perfected Dissenting Shares shall not exceed an amount
which, when combined with other amounts payable in connection with the Merger,
would result in the Merger being disqualified from pooling of interest
accounting treatment.
11.13. Remediation. All remediation of environmental contamination or
-----------
conditions on any BOP Property shall have been completed to the satisfaction of
GBB.
11.14. BOP Adjusted Book Value. At least five Business Days prior to
-----------------------
the Effective Time of the Merger, BOP shall provide GBB with BOP's financial
statements as of the close of business on the last day of the month prior to the
Effective Time of the Merger. Such financial statements shall have been
prepared in all material respects in accordance with generally accepted
accounting principles and other applicable legal and accounting requirements,
and reflect all period-end accruals and other adjustments. At the close of
business on the last day of the month preceding the Effective Time of the
Merger, the BOP Adjusted Book Value, as determined in accordance with such
financial statements, shall be:
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(a) not less than $16,719,000 if the Effective Time of the Merger
occurs in June 2000;
(b) not less than $16,860,000 if the Effective Time of the Merger
occurs in July 2000;
(c) not less than $17,032,000 if the Effective Time of the Merger
occurs in August 2000;
(d) not less than $17,197,000 if the Effective Time of the Merger
occurs in September 2000; and
(e) not less than $17,359,000 if the Effective Time of the Merger
occurs in October 2000.
11.15. Termination of BOP Stock Option Plan. Subject to the provisions
------------------------------------
of Section 7.9(d), GBB shall have received satisfactory evidence that the BOP
Stock Option Plan has been terminated prior to the Effective Time of the Merger.
11.16 Allowance for Loan Losses. BOP's allowance for loan and lease
-------------------------
losses, as reflected on the financial statements referred to in Section 11.14,
shall equal the greater of 1.33% of BOP's total gross loans (less deferred loan
fees) or $1,596,000.
11.17 Regulatory Approvals. Any and all approvals or consents of any
--------------------
Governmental Entity which are necessary to consummate the Merger and the
transactions contemplated hereby shall have been granted without the imposition
of any conditions which GBB deems, in its sole and absolute opinion, to
materially adversely affect it or be materially burdensome.
11.18 Bylaws Amendment. The Board of Directors of BOP shall have
----------------
amended BOP's Bylaws to eliminate Article II, Section 12 regarding director
qualifications.
ARTICLE 12.
EMPLOYEE BENEFITS
-----------------
12.1 Employee Benefits. GBB in its sole discretion, may elect to
-----------------
terminate the BOP 401(k) or to discontinue contributions to the BOP 401(k) Plan
following the Effective Time of the Merger, to cause BOP to terminate the BOP
401(k) Plan or to discontinue contributions to the BOP 401(k) Plan prior to the
Effective Time of the Merger, or to merge the BOP 401(k) Plan with and into the
GBB 401(k) Plan after the Effective Time of the Merger. In no event shall the
BOP 401(k) Plan be merged with and into the GBB 401(k) Plan, however, unless GBB
determines, in its sole discretion, that: (i) the BOP 401(k) Plan is a
qualified plan under Section 401(a) of the Code, both as to the form of the BOP
401(k) Plan and as to its operation; and (ii) there are no facts in existence
that would be reasonably likely to adversely affect the qualified
57
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status of the BOP 401(k) Plan. If GBB determines in its sole discretion not to
merge the BOP 401(k) Plan into the GBB 401(k) Plan and that the BOP 401(k) Plan
should be terminated immediately prior to the Effective Time of the Merger, BOP
agrees to use its best efforts to have the BOP 401(k) Plan terminated prior to
the Effective Time of the Merger and to obtain an IRS determination that the BOP
401(k) Plan continues to be qualified upon termination.
As soon as practicable after the Effective Time of the Merger, all other
Employee Plans will be discontinued or merged into GBB plans, in the discretion
of GBB, and employees of BOP shall become eligible for the employee benefit
plans of GBB on the same terms as such plans and benefits are generally offered
from time to time to employees of GBB and its subsidiaries in comparable
positions with GBB or its subsidiaries. For purposes of determining such
employment eligibility and vesting under the employee benefit plans of GBB, GBB
shall recognize such employees' years of service with BOP beginning on the date
such employees commenced employment with BOP through the Effective Time of the
Merger.
ARTICLE 13.
TERMINATION
-----------
13.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Effective Time of the Merger upon the occurrence of any of the following:
(a) By mutual agreement of the parties, in writing;
(b) By BOP (unless BOP's Board of Directors shall have withdrawn or
modified in a manner adverse to GBB in any respect its recommendation of the
Merger to the holders of BOP Stock) or GBB upon the failure of the shareholders
of BOP to give the requisite approval of this Agreement;
(c) By BOP promptly following the expiration of 20 days from delivery
of written notice by BOP to GBB of GBB's breach of or failure to satisfy any
covenant or agreement contained herein resulting in a material impairment of the
benefit reasonably expected to be derived by BOP from the performance or
satisfaction of such covenant or agreement (provided that such breach has not
been waived by BOP or cured by GBB prior to expiration of such 20 day period);
(d) By GBB promptly following the expiration of 20 days from delivery
of written notice by GBB to BOP of BOP's breach of or failure to satisfy any
covenant or agreement contained herein resulting in a material impairment of the
benefit reasonably expected to be derived by GBB from the performance or
satisfaction of such covenant or agreement (provided that such breach has not
been waived by GBB or cured by BOP prior to expiration of such 20 day period);
(e) By BOP or GBB upon the expiration of 30 days after any
Governmental Entity denies or refuses to grant any approval, consent or
authorization required to be obtained in order to consummate the transactions
contemplated by this Agreement unless, within said 30 day
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period after such denial or refusal, all parties hereto agree to resubmit the
application or appeal the decision to the regulatory authority that has denied,
or refused to grant the approval, consent or qualification requested;
(f) By BOP or GBB if any conditions set forth in Article 9 shall not
have been met by October 15, 2000; provided, however, that this Agreement shall
not be terminated pursuant to this Section 13.1(f) if the relevant condition
shall have failed to occur as a result of any act or omission of the party
seeking to terminate;
(g) By BOP if any of the conditions set forth in Article 10 shall not
have been met by October 15, 2000, or such earlier time as it becomes apparent
that such condition shall not be met, provided, however, that this Agreement
shall not be terminated pursuant to this Section 13.1(g) if the relevant
condition shall have failed to occur as a result of any act or omission of BOP;
(h) By GBB if any of the conditions set forth in Article 11 shall not
have been met by October 15, 2000, or such earlier time as it becomes apparent
that such condition shall not be met, provided, however, that this Agreement
shall not be terminated pursuant to this Section 13.1(h) if the relevant
condition shall have failed to occur as a result of any act or omission of GBB;
(i) By GBB if BOP shall have breached any of the obligations contained
in Section 6.1(n);
(j) By GBB if (i) BOP shall have exercised a right specified in the
last sentence of Section 6.1(n) with respect to any Superior Proposal and shall,
directly or through agents or representatives, continue any discussions with any
third party concerning such Superior Proposal for more than ten (10) Business
Days after the date of receipt of such Superior Proposal; or (ii) a Superior
Proposal that is publicly disclosed shall have been commenced, publicly proposed
or communicated to BOP which contains a proposal as to price (without regard to
the specificity of such price proposal) and BOP shall not have rejected such
proposal within ten (10) Business Days of receipt of such Superior Proposal or
the date its existence first becomes publicly disclosed, if earlier;
(k) By GBB under the circumstances set forth in Section 8.3;
(l) By BOP if GBB shall have entered into a GBB Acquisition
Transaction that includes as a condition precedent to such GBB Acquisition
Transaction that GBB terminate this Agreement; or
(m) By BOP if the Average Closing Price is less than $37.91, subject
to GBB's right to elect to exercise the Top Up Option as provided in Section
2.2(a)(iii).
13.2. Effect of Termination. In the event of termination of this
---------------------
Agreement by either BOP or GBB as provided in Section 13.1, neither BOP nor GBB
shall have any further obligation or liability to the other party except (a)
with respect to the last sentences of each of Section 6.3(a), Section 7.3 and
Section 8.3, (b) with respect to Section 14.1; and (c) to the extent
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such termination results from a party's willful and material breach of the
warranties and representations made by it, or willful and material failure in
performance of any of its covenants, agreements or obligations hereunder.
13.3. Force Majeure. BOP and GBB agree that, notwithstanding anything
-------------
to the contrary in this Agreement, in the event this Agreement is terminated as
a result of a failure of a condition, which failure is due to a natural disaster
or other act of God, or an act of war, and provided neither party has materially
failed to observe the obligations of such party under this Agreement, neither
party shall be obligated to pay to the other party to this Agreement any
expenses or otherwise be liable hereunder.
ARTICLE 14.
MISCELLANEOUS
-------------
14.1. Expenses.
--------
(a) GBB hereby agrees that if this Agreement is terminated by BOP
pursuant to Section 13.1(c), GBB shall promptly and in any event within 10 days
after such termination pay BOP all Expenses (as defined in Section 14.1(d)
below) of BOP, but not to exceed $175,000.
(b) BOP hereby agrees that if the Agreement is terminated by GBB or
BOP pursuant to Section 13.1(b) with respect to the failure of BOP shareholders
to approve the Agreement and the transactions contemplated hereby, or by GBB
pursuant to Section 13.1(d), 13.1(i) 13.1(j), BOP shall promptly and in any
event within 10 days after such termination pay GBB all Expenses of GBB, but not
to exceed $250,000.
(c) Except as otherwise provided herein, all Expenses incurred by
GBB and BOP in connection with or related to the authorization, preparation and
execution of this Agreement, the solicitation of shareholder approvals and all
other matters related to the closing of the transactions contemplated hereby,
including, without limitation of the generality of the foregoing, all fees and
expenses of agents, representatives, counsel and accountants employed by either
such party or its affiliates, shall be borne solely and entirely by the party
which has incurred the same. Notwithstanding the foregoing, GBB and BOP shall
share equally the cost of printing the Proxy Statement and Prospectus.
(d) "Expenses" as used in this Agreement shall include all
reasonable out-of-pocket expenses (including all fees and expenses of attorneys,
accountants, investment bankers, experts and consultants to the party and its
affiliates) incurred by the party or on its behalf in connection with the
consummation of the transactions contemplated by this Agreement.
14.2 Competing Transaction Fee. As an inducement to GBB to enter into
-------------------------
this Agreement, (a) in the event this Agreement is terminated by GBB pursuant to
Sections 13.1(i) or 13.1(j), or (b) if BOP otherwise consummates a Competing
Transaction during the 12-month period following termination of this Agreement
pursuant to Sections 13.1(b) or 13.1(d), BOP shall wire to GBB within three
Business Days of the date of termination in the case of
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clause (a) and concurrent with the consummation of the Competing Transaction in
the case of clause (b), the amount of $1,750,000, which amount the parties
acknowledge as representing (i) GBB's direct costs and expenses (including, but
not limited to, fees and expenses of financial or other consultants, printing
costs, accountants, and counsel) incurred in negotiating and undertaking to
carry out the transactions contemplated by this Agreement, including GBB's
management time devoted to negotiation and preparation for the transactions
contemplated by this Agreement; (ii) GBB's indirect costs and expenses incurred
in connection with the transactions contemplated by this Agreement; and (iii)
GBB's loss as a result of the transactions contemplated by this Agreement not
being consummated. Any payment previously made by BOP pursuant to Section
14.1(b) hereof shall be credited against any amount due under this Section.
14.3 GBB Acquisition Transaction Fee. As an inducement to BOP to enter
-------------------------------
into this Agreement, (i) in the event this Agreement is terminated by BOP
pursuant to Section 13.1(l) or (ii) if GBB consummates a GBB Acquisition
Transaction within 12 months following termination by BOP of this Agreement
pursuant to Section 13.1(c), (g) (except with respect to a failure of the
condition set forth in Section 10.7) or (m), GBB shall wire to BOP within three
Business Days of the date of termination in the case of clause (i) and
concurrent with the consummation of the GBB Acquisition Transaction in the case
of clause (ii), the amount of $1,500,000, which amount the parties acknowledge
as representing (x) BOP's Expenses incurred in negotiating and undertaking to
carry out the transactions contemplated by this Agreement, including BOP's
management time devoted to negotiation and preparation for the transactions
contemplated by this Agreement; (y) BOP's indirect expenses incurred in
connection with the transactions contemplated by this Agreement; and (z) BOP's
loss as a result of the transactions contemplated by this Agreement not being
consummated. Any payment previously made by GBB pursuant to Section 14.1(a)
hereof shall be credited against any amount due under this Section 14.3. Any
payment previously made by GBB pursuant to Section 14.1(a) hereof shall be
credited against any amount due under this Section.
14.4 Notices. Any notice, request, instruction or other document to be
-------
given hereunder by any party hereto to another shall be in writing and delivered
personally or by confirmed facsimile transmission or sent by registered or
certified mail, postage prepaid, with return receipt requested, addressed as
follows:
To GBB: Greater Bay Bancorp
2860 West Bayshore Road
Palo Alto, California 94303
Attention: Steven C. Smith
Facsimile Number: (415) 494-9220
With a copy to: Greater Bay Bancorp
400 Emerson Street, 3rd Floor
Palo Alto, California 94301
Attention: Linda M. Iannone, Esq.
Facsimile Number: (650) 473-9419
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To BOP: Bank of Petaluma
1360 Redwood Way - Suite A
Petaluma, California 94954
Attention: Walter E. Bragdon
Facsimile Number: (707) 793-8100
With a copy to: Leland, Parachini, Steinberg, Matzger & Melnick, LLP
333 Market Street, 27th Floor
San Francisco, California 94105
Attention: David Block, Esq.
Facsimile Number: (415) 974-1520
Any such notice, request, instruction or other document shall be deemed
received (i) on the date delivered personally or delivered by confirmed
facsimile transmission, (ii) on the next Business Day after it was sent by
overnight courier, postage prepaid; or (iii) on the third Business Day after it
was sent by registered or certified mail, postage prepaid. Any of the persons
shown above may change its address for purposes of this section by giving notice
in accordance herewith.
14.5. Successors and Assigns. All terms and conditions of this
----------------------
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective transferees, successors and assigns; provided,
however, that this Agreement and all rights, privileges, duties and obligations
of the parties hereto may not be assigned or delegated by any party hereto and
any such attempted assignment or delegation shall be null and void.
14.6. Counterparts. This Agreement and any exhibit hereto may be
------------
executed in one or more counterparts, all of which, taken together, shall
constitute one original document and shall become effective when one or more
counterparts have been signed by the appropriate parties and delivered to each
party hereto.
14.7. Effect of Representations and Warranties. The representations and
----------------------------------------
warranties contained in this Agreement or in any List shall terminate
immediately after the Effective Time of the Merger.
14.8. Third Parties. Each party hereto intends that this Agreement
-------------
shall not benefit or create any right or cause of action to any person other
than parties hereto. As used in this Agreement the term "parties" shall refer
only to GBB and BOP as the context may require.
14.9. Lists; Exhibits; Integration. Each List, exhibit and letter
----------------------------
delivered pursuant to this Agreement shall be in writing and shall constitute a
part of the Agreement. This Agreement, together with such Lists, exhibits and
letters, constitutes the entire agreement between the parties pertaining to the
subject matter hereof and supersedes all prior agreements and understandings of
the parties in connection therewith.
14.10. Knowledge. Whenever any statement herein or in any list,
---------
certificate or other document delivered to any party pursuant to this Agreement
is made "to the knowledge" or "to
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the best knowledge" of any party or another Person, such party or other Person
shall make such statement only after conducting an investigation reasonable
under the circumstances of the subject matter thereof, and each such statement
shall constitute a representation that such investigation has been conducted.
14.11 Governing Law. This Agreement is made and entered into in the
-------------
State of California, except to the extent that the provisions of federal law are
mandatorily applicable, and the laws of the State of California shall govern the
validity and interpretation hereof and the performance of the parties hereto of
their respective duties and obligations hereunder.
14.12. Captions. The captions contained in this Agreement are for
--------
convenience of reference only and do not form a part of this Agreement and shall
not affect the interpretation hereof.
14.13. Severability. If any portion of this Agreement shall be deemed
------------
by a court of competent jurisdiction to be unenforceable, the remaining portions
shall be valid and enforceable only if, after excluding the portion deemed to be
unenforceable, the remaining terms hereof shall provide for the consummation of
the transactions contemplated herein in substantially the same manner as
originally set forth at the date this Agreement was executed.
14.14. Waiver and Modification; Amendment. No waiver of any term,
----------------------------------
provision or condition of this Agreement, whether by conduct or otherwise, in
any one or more instances, shall be deemed to be or construed as a further or
continuing waiver of any such term, provision or condition of this Agreement.
Except as otherwise required by law, this Agreement and the Agreement of Merger,
when executed and delivered, may be modified or amended by action of the Boards
of Directors of GBB and BOP without action by their respective shareholders.
This Agreement may be modified or amended only by an instrument of equal
formality signed by the parties or their duly authorized agents.
14.15 Attorneys' Fees. If any legal action or any arbitration upon
---------------
mutual agreement is brought for the enforcement of this Agreement or because of
an alleged dispute, controversy, breach, or default in connection with this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs and expenses incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.
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<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have duly executed this
Agreement as of the day and year first above written.
ATTEST: GREATER BAY BANCORP
/s/ Linda M. Iannone By: /s/ David L. Kalkbrenner
- -------------------- ------------------------
Secretary David L. Kalkbrenner
President and Chief Executive Officer
ATTEST: DKSS CORP.
/s/ Linda M. Iannone By: /s/ David L. Kalkbrenner
- -------------------- ------------------------
Secretary David L. Kalkbrenner
President and Chief Executive Officer
ATTEST: BANK OF PETALUMA
/s/ Patricia A. Wasik By: /s/ Walter E. Bragdon
- --------------------- ---------------------
Secretary Walter E. Bragdon
President and Chief Executive Officer
64
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EXHIBIT 99.1
For Information Contact
At Greater Bay Bancorp: At Financial Relations Board:
David L. Kalkbrenner, President & CEO Christina Carrabino (general information)
(650) 614-5767 Stephanie Mishra (analyst contact)
Steven C. Smith, EVP, CAO & CFO (415) 986-1591
(650) 813-8222
At Bank of Petaluma:
Walter E. Bragdon, President & CEO
(707) 769-7610
FOR IMMEDIATE RELEASE
---------------------
GREATER BAY BANCORP AND
BANK OF PETALUMA ANNOUNCE AGREEMENT TO MERGE
--------------------------------------------
PALO ALTO, CA; March 21, 2000 -- Greater Bay Bancorp (Nasdaq:GBBK), Palo Alto,
California, and Bank of Petaluma (OTC Bulletin Board:BPLU), Petaluma,
California, announced today the signing of a definitive merger agreement. Upon
completion of the merger, Bank of Petaluma will operate as a wholly owned
subsidiary of Greater Bay Bancorp.
In the merger, Greater Bay Bancorp will issue shares of its stock in a tax free
exchange for the shares of stock of Bank of Petaluma for an estimated value of
approximately $41 million, depending on the market price of Greater Bay
Bancorp's stock at the time of the merger closing. Based on Greater Bay
Bancorp's closing price on March 21, 2000 of $39 3/8, Bank of Petaluma
shareholders would receive a price equating to a multiple of 17.8 times Bank of
Petaluma's last 12 months earnings and 2.76 times Bank of Petaluma's book value
at December 31, 1999. The merger, which will be accounted for as a pooling of
interests, is expected to be completed in the third quarter of 2000.
Greater Bay Bancorp anticipates the transaction, including cost savings, to be
approximately 1% accretive to 2000 earnings per share. Greater Bay Bancorp has
not included any anticipated revenue enhancements that may be realized from the
merger, even though Greater Bay Bancorp's prior acquisitions have resulted in
significant revenue growth.
Bank of Petaluma, founded in 1987, is situated in the growing area of the San
Francisco Bay Area's northern market known as the "Telecom Valley." This area
includes start-up and seasoned companies specializing in the burgeoning
telecommunications industry. Bank of Petaluma maintains four banking offices in
Petaluma, Point Reyes Station and Valley Ford, California and serves the small-
to mid-sized business community and retail banking clients. As of December 31,
1999, Bank of Petaluma had total assets of $194.7 million and deposits of $162.2
million. For the year ended December 31, 1999, net income was $2.3 million, a
10% increase over net income of $2.1 million in 1998.
David Kalkbrenner, President and Chief Executive Officer of Greater Bay Bancorp,
stated, "Bank of Petaluma meets our merger criteria of a high performing bank
with strong management located
<PAGE>
in a high growth area. On several occasions, Greater Bay's Venture Banking Group
has participated in loans in the Telecom Valley and will continue to pursue
those opportunities with the strong foothold Bank of Petaluma has developed in
its market area." Mr. Kalkbrenner added, "We look forward to becoming active
members of the North Bay community through the support which the Greater Bay
Bancorp Foundation will provide to community and philanthropic organizations in
the area. When the merger closes, we will also be pleased to welcome Daniel G.
Libarle, Chairman of Bank of Petaluma, to our Board of Directors."
"We found the super community banking philosophy of Greater Bay Bancorp uniquely
attractive," said Daniel G. Libarle, Chairman of the Bank of Petaluma. "This is
a proven successful formula which preserves the name of Bank of Petaluma, our
Board and our management while providing the expanded resources of Greater Bay
Bancorp."
Walter E. Bragdon, President and Chief Executive Officer of Bank of Petaluma,
commented, "We have developed a loyal client base over the years among the
agricultural and small business communities in our markets. Bank of Petaluma
will continue to focus on real estate, business and consumer lending and our
clients will benefit from the increased lending limit and expanded services Bank
of Petaluma will be able to offer as part of the Greater Bay family. We also
believe the merger is in the best interests of our shareholders, as they will
receive greater liquidity in a stock that is a component of the Nasdaq
Financial-100 Index."
Greater Bay Bancorp previously announced the execution of definitive agreements
to merge with Coast Bancorp and Bank of Santa Clara. When these mergers and the
Bank of Petaluma merger are all completed, Greater Bay Bancorp would have had,
on a pro forma basis as of December 31, 1999, total assets of approximately $3.7
billion, total shareholders' equity of approximately $253 million, total loans
of approximately $2.5 billion and total deposits of approximately $3.3 billion.
Greater Bay Bancorp's net income (before merger expenses, nonrecurring costs and
extraordinary items) on a pro forma basis as of December 31, 1999 would have
been approximately $51 million.
With the addition of Bank of Petaluma, Greater Bay Bancorp will have banks
located in the North Bay, San Francisco Peninsula, South Bay, East Bay and
Coastal regions of the Greater San Francisco Bay Area.
Terms of the Merger
The terms of the agreement provide for the shareholders of Bank of Petaluma to
receive shares of Greater Bay Bancorp stock. Bank of Petaluma currently has
approximately 1.4 million shares of common stock outstanding. If the average
closing price of Greater Bay Bancorp common stock is between $37.91 and $46.34,
each share of Bank of Petaluma stock will be exchanged for 0.685 shares of
Greater Bay Bancorp stock.
If the average closing price of Greater Bay Bancorp common stock is greater than
$46.34, the exchange ratio will decrease by dividing the average closing price
into $31.74 plus one-third of the amount by which the average closing price
exceeds $46.34.
If the average closing price of Greater Bay Bancorp common stock is less than
$37.91, Greater Bay Bancorp may elect to exercise a top up option. In that
case, the exchange ratio will equal the
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quotient obtained by dividing $25.97 by the average closing price of Greater Bay
Bancorp stock. If Greater Bay Bancorp does not elect the top up option, Bank of
Petaluma may either terminate the merger agreement or accept an exchange ratio
of 0.685.
The merger is subject to certain conditions, including the approval of the
shareholders of Bank of Petaluma and regulatory approval. Upon consummation of
the merger, former Bank of Petaluma shareholders will own approximately 4.7% of
Greater Bay Bancorp's outstanding shares, assuming completion of the previously
announced Greater Bay Bancorp mergers with Coast Bancorp and Bank of Santa
Clara.
Greater Bay Bancorp through its seven subsidiary banks, Bay Area Bank, Bay Bank
of Commerce, Cupertino National Bank, Golden Gate Bank, Mid-Peninsula Bank, Mt.
Diablo National Bank and Peninsula Bank of Commerce, along with its operating
divisions, serves clients throughout Silicon Valley, San Francisco, the San
Francisco Peninsula, and the Contra Costa Tri Valley Region, with offices
located in Cupertino, Danville, Fremont, Hayward, Lafayette, Millbrae, Palo
Alto, Pleasanton, Redwood City, San Francisco, San Jose, San Leandro, San Mateo,
San Ramon, Santa Clara, and Walnut Creek.
Safe Harbor
Certain matters discussed in this press release constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These forward looking statements relate to future financial performance
and condition and pending acquisitions. These forward looking statements are
subject to certain risks and uncertainties that could cause the actual results,
performance or achievements to differ materially from those expressed, suggested
or implied by the forward looking statements due to a number of factors,
including, but not limited to, when and if the proposed mergers are consummated,
the success of Greater Bay Bancorp in integrating the new banks into its
organization and other risks detailed in the Greater Bay Bancorp reports filed
with the Securities and Exchange Commission and Bank of Petaluma reports filed
with the Federal Deposit Insurance Corporation, including their Annual Report on
Form 10-K for the year ended December 31, 1999.
Greater Bay Bancorp will file a registration statement on Form S-4 with the SEC
in connection with the proposed merger. The registration statement will include
a prospectus/proxy statement which will be sent to shareholders of Bank of
Petaluma seeking their approval of the proposed merger. When filed, the
registration statement can be obtained at the Internet World Wide Web site
maintained by the SEC at "http://www.sec.gov."
For investor information on Greater Bay Bancorp at no charge, call our automated
shareholder information line at 1-800-PRO-INFO (1-800-776-4636) and enter code
GBBK. For international access, dial 1-201-432-6555.
# # #
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