Conformed Copy
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GENERAL BANK
GBC BANCORP
AND
CATHAY BANK
CATHAY BANCORP, INC.
DATED AS OF
MAY 6, 2003
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of May 6,
2003, is by and among General Bank, a California banking corporation ("GENERAL
BANK"), GBC Bancorp, a California corporation and the sole shareholder of
General Bank ("GBC"), Cathay Bank, a California banking corporation ("CATHAY
BANK"), and Cathay Bancorp, Inc., a Delaware corporation and the sole
shareholder of Cathay Bank ("CATHAY BANCORP"). Capitalized terms not otherwise
defined in this Agreement are defined in EXHIBIT A to this Agreement.
A. General Bank and Cathay Bank wish to provide for the terms and
conditions of a business combination in which General Bank will be merged (the
"BANK MERGER") with and into Cathay Bank with Cathay Bank as the surviving
entity.
B. Simultaneously with the Bank Merger, GBC and Cathay Bancorp wish to
provide for the terms and conditions of a business combination in which GBC will
be merged (the "MERGER") with and into Cathay Bancorp with Cathay Bancorp as the
surviving entity under the name "Cathay General Bancorp."
C. For federal income tax purposes, it is intended that the Merger shall
qualify as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "CODE"), and, with respect to the
Merger, this Agreement shall constitute a plan of reorganization pursuant to
Section 368 of the Code.
D. The parties hereto desire to make certain representations, warranties,
covenants and agreements in connection with the Bank Merger and the Merger and
also to prescribe various conditions to the Bank Merger and the Merger.
E. The respective Boards of Directors of the parties hereto have each
approved this Agreement, the Bank Merger and the Merger and determined that the
Bank Merger and the Merger are advisable and in the best interests of their
respective shareholders.
F. Concurrently with the execution of this Agreement, certain directors of
GBC have entered into an agreement with Cathay Bancorp to vote their shares in
favor of the transactions contemplated by this Agreement in the form attached
hereto as EXHIBIT B (the "VOTING AGREEMENTS"), an affiliate agreement with
Cathay Bancorp in the form attached hereto as EXHIBIT C (the "AFFILIATE
AGREEMENTS") and a nonsolicitation agreement with Cathay Bancorp in the form
attached hereto as EXHIBIT D.
Accordingly, and in consideration of the representations, warranties,
covenants, agreements and conditions herein contained, the parties hereto agree
as follows:
ARTICLE I
THE MERGER AND RELATED MATTERS
1.1 BANK MERGER; SURVIVING ENTITY.
(a) THE BANK MERGER. Subject to the terms and conditions of this
Agreement, and pursuant to the provisions of the California General Corporation
Law (the "CGCL") and the California Financial Code (the "CFC") and the rules and
regulations promulgated by the California Department of Financial Institutions
(the "DFI"), at the Effective Time (as defined in Section 1.3(a) hereof),
General Bank shall be merged with and into Cathay Bank pursuant to the terms and
conditions set forth herein.
(b) SURVIVING BANK. Upon consummation of the Bank Merger, the separate
corporate existence of General Bank shall cease, and Cathay Bank shall continue
as the surviving entity under the laws of the State of California. The name of
Cathay Bank as the surviving entity of the Bank Merger shall remain "Cathay
Bank." From and after the Effective Time, Cathay Bank, as the surviving entity
of the Bank Merger, shall possess all of the properties and rights and be
subject to all of the liabilities and obligations of Cathay Bank and General
Bank, all as more fully described in the CGCL and the CFC.
(c) ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING BANK. The
articles of incorporation and bylaws of Cathay Bank, as in effect immediately
prior to the Effective Time, shall be the articles of incorporation and bylaws
of Cathay Bank, as the surviving corporation of the Bank Merger, until either is
thereafter amended in accordance with applicable law.
(d) DIRECTORS OF THE SURVIVING BANK. The directors of Cathay Bank
immediately prior to the Effective Time shall be the directors of Cathay Bank,
as the surviving corporation of the Bank Merger; provided, that the Chairman,
President and Chief Executive Officer of General Bank and two other directors of
General Bank or GBC designated by Cathay Bank (each, a "CONTINUING DIRECTOR")
shall, at the Effective Time, also be appointed to serve as directors of Cathay
Bank, as the surviving corporation of the Bank Merger, from and after the
Effective Time and until the earlier of their death, resignation or removal, or
until their respective successors shall be duly elected and qualified; provided
further, that the Chairman, President and Chief Executive Officer of General
Bank shall be appointed as Executive Vice Chairman of Cathay Bank's Board of
Directors. After the Effective Time until the next annual meeting of
shareholders, in the event that a Continuing Director shall resign, be removed
or no longer be able to serve (for whatever reason), then the Board of Directors
of Cathay Bank shall fill such vacancy by either electing a member of the Board
of Directors of General Bank or GBC immediately prior to the Effective Time or,
if appropriate, shall nominate such person for election as a director by Cathay
General Bancorp (as the sole shareholder of Cathay Bank), and Cathay General
Bancorp shall vote its shares of Cathay Bank to elect the nominee to fill such
vacancy.
(e) OFFICERS OF THE SURVIVING BANK. The officers of Cathay Bank
immediately prior to the Effective Time shall be the officers of Cathay Bank, as
the surviving corporation of the Bank Merger, until their successors shall have
been duly elected or appointed
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and qualified or until their earlier death, resignation or removal; provided,
that the Chairman, President and Chief Executive Officer of General Bank shall
be appointed as the Executive Vice Chairman and Chief Operating Officer of
Cathay Bank at the Effective Time and shall report to the Chairman and
President/CEO of Cathay Bank from and after the Effective Time; provided
further, that an Office of the President/CEO shall be established from and after
the Effective Time, which shall be occupied by two members, the Executive Vice
Chairman and Chief Operating Officer of Cathay Bank and the Chairman and
President/CEO of Cathay Bank; provided further that, subject to approval of the
Board of Directors of Cathay Bank, such other General Bank executives as are
nominated by the Office of the President/CEO shall be appointed to executive
positions of Cathay Bank.
(f) PRINCIPAL OFFICE OF THE SURVIVING BANK. The location of the
principal office of Cathay Bank, as the surviving corporation of the Bank
Merger, shall be ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.2 MERGER; EFFECTS OF THE MERGER.
(a) THE MERGER. Subject to the terms and conditions of this Agreement,
in accordance with the Delaware General Corporation Law (the "DGCL") and the
CGCL, at the Effective Time (in other words, simultaneous with the Bank Merger),
GBC shall merge with and into Cathay Bancorp. Cathay Bancorp shall be the
surviving corporation in the Merger and shall continue its corporate existence
under the laws of the State of Delaware. Upon consummation of the Merger, the
separate corporate existence of GBC shall terminate.
(b) EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
shall have the effects set forth in the DGCL and the CGCL. The certificate of
incorporation and bylaws of Cathay Bancorp as the surviving corporation shall
remain unchanged by the actions anticipated under the terms of this Agreement,
except that the Merger Agreement (as defined below) shall stipulate that the
certificate of incorporation of the surviving corporation shall be amended
thereby to change the name of the surviving corporation to "Cathay General
Bancorp."
(c) DIRECTORS OF THE SURVIVING CORPORATION. The directors of Cathay
Bancorp immediately prior to the Effective Time shall be the directors of Cathay
General Bancorp, as the surviving corporation of the Merger; provided, that the
Chairman, President and Chief Executive Officer of GBC and two other Continuing
Directors shall, at the Effective Time, also be appointed to serve as a Class I
director, a Class II director and a Class III director, respectively, of Cathay
General Bancorp, as the surviving corporation of the Merger, from and after the
Effective Time and until the earlier of their death, resignation or removal, or
until their respective successors shall be duly elected and qualified; provided
further, that the Chairman, President and Chief Executive Officer of GBC shall
be appointed as Executive Vice Chairman of Cathay General Bancorp's Board of
Directors. After the Effective Time until the annual meeting of shareholders
that is held in the year in which the term of any Continuing Director expires,
as the case may be, in the event that a Continuing Director shall resign, be
removed or no longer be able to serve (for whatever reason), then the Board of
Directors of Cathay General Bancorp shall fill such vacancy by either electing a
member of the Board of Directors of General Bank or GBC immediately prior to the
Effective Time or, if appropriate, shall nominate such person for election as a
director by the shareholders.
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(d) OFFICERS OF THE SURVIVING CORPORATION. The officers of Cathay
Bancorp immediately prior to the Effective Time shall be the officers of Cathay
General Bancorp, as the surviving corporation of the Merger, until their
successors shall have been duly elected or appointed and qualified or until
their earlier death, resignation or removal; provided, that the Chairman,
President and Chief Executive Officer of GBC shall be appointed as the Executive
Vice Chairman and Chief Operating Officer of Cathay General Bancorp at the
Effective Time and report to the Chairman and President/CEO of Cathay General
Bancorp from and after the Effective Time; provided further, that an Office of
the President/CEO shall be established from and after the Effective Time, which
shall be occupied by two members, the Executive Vice Chairman and Chief
Operating Officer of Cathay General Bancorp and the Chairman and President/CEO
of Cathay General Bancorp; provided further that, subject to approval of the
Board of Directors of Cathay General Bancorp, such other GBC executives as are
nominated by the Office of the President/CEO shall be appointed to executive
positions of Cathay General Bancorp.
1.3 FILING OF MERGER AGREEMENTS.
(a) THE BANK MERGER. As soon as practicable after each of the
conditions set forth in Article VI hereof have been satisfied or waived, the
parties (i) will obtain, or cause to be obtained, the endorsement of approval of
the California Commissioner of Financial Institutions on the bank merger
agreement in the form attached hereto as EXHIBIT E (the "BANK MERGER
AGREEMENT"), (ii) shall file, or cause to be filed, with the California
Secretary of State, in accordance with Section 1103 of the CGCL, a copy of the
Bank Merger Agreement so endorsed, together with appropriate officers'
certificates evidencing the approval and adoption of the Bank Merger Agreement
and such other certificates and documents as may be necessary or appropriate to
consummate the Bank Merger, in each case in the form required by and executed in
accordance with the CGCL and the CFC, and (iii) shall file, or cause to be
filed, with the California Commissioner of Financial Institutions a copy of such
Bank Merger Agreement, certified by the California Secretary of State, with a
request that the Bank Merger be deemed effective as of the date and time
mutually agreed by Cathay Bancorp and GBC, all in accordance with Section 4887
of the CFC. The Bank Merger shall become effective at the time deemed by the
California Commissioner of Financial Institutions to be the time of the filing
as described in clause (iii) of the immediately preceding sentence (the
"EFFECTIVE TIME").
(b) THE MERGER. Without other conditions or intervening actions, the
parties will file, or cause to be filed, at the Effective Time, with the
Delaware Secretary of State and the California Secretary of State the agreement
of merger in the form attached hereto as EXHIBIT F (the "MERGER AGREEMENT") and
such certificates and other documents as may be deemed necessary or appropriate
to consummate the Merger at the Effective Time, which Merger Agreement and
certificates and other documents shall in each case be in the form required by
and executed in accordance with the applicable provisions of the DGCL and the
CGCL. The Merger shall become effective at the time the Merger Agreement is
filed with the Delaware Secretary of State and the California Secretary of
State.
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1.4 EXCHANGE AMOUNT; CONVERSION OF GBC COMMON STOCK; CASH/ STOCK ELECTION.
(a) CONVERSION OF GBC COMMON STOCK. At the Effective Time, the
conversion of each outstanding share of common stock of GBC, no par value ("GBC
COMMON STOCK"), shall proceed as follows:
(i) Promptly (and in any event within five (5) Business Days)
after the Effective Time, Cathay Bancorp shall deliver to an independent
exchange agent to be selected by Cathay Bancorp and reasonably acceptable to GBC
(the "EXCHANGE AGENT") the Adjusted Stock Component and the Adjusted Cash
Component. Each share of GBC Common Stock, (except for Dissenting Shares, if
applicable) shall, by virtue of the Merger and without any action on the part of
the holder thereof, but subject to Sections 1.4(b) and (g) hereof, be converted
into the right to receive the Per Share Merger Consideration. Cathay Bancorp
shall set aside, in cash out of the Cash Component, an amount equal to the
product of the GBC Per Share Fair Market Value multiplied by the number of
Dissenting Shares (the "DISSENTERS SET ASIDE").
(ii) From and after the Effective Time, the holders of
certificates formerly representing shares of GBC Common Stock shall cease to
have any rights as GBC shareholders, except such rights, if any, as they may
have pursuant to the CGCL. Except as provided above, until such certificates are
surrendered for exchange, the certificates of each holder shall, after the
Effective Time, represent for all purposes only the right to receive the Per
Share Merger Consideration.
(iii) If, subsequent to the date of this Agreement but prior to
the Effective Time, the outstanding shares of Cathay Common Stock shall, through
a reclassification, recapitalization, stock dividend, stock split or reverse
stock split have been increased, decreased, changed into or exchanged for a
different number or kind of shares or securities, appropriate adjustment will be
made to the Stock Component.
(b) CASH/STOCK ELECTION. Each GBC shareholder may state a preference to
receive his or her Per Share Merger Consideration for each share of GBC Common
Stock owned in (x) shares of Cathay Common Stock or (y) cash. A GBC shareholder
need not make a Cash/Stock Election at all, in which case such GBC shareholder
shall be treated as a Non-Elector. The number of shares of Cathay Common Stock
issuable to GBC shareholders pursuant to the Cash/Stock Election (together with
the shares of Cathay Common Stock allocable to Non-Electors) shall not in the
aggregate exceed the Adjusted Stock Component, and the amount of cash payable to
GBC shareholders pursuant to the Cash/Stock Election (together with the
Dissenters Set Aside and the cash allocable to Non-Electors) shall not in the
aggregate exceed the Cash Component. After allocating the Dissenters Set Aside,
the Merger Consideration shall be allocated in accordance with the following
provisions of this Section 1.4(b).
(i) If the Adjusted Stock Component is Oversubscribed, then the
Merger Consideration shall be allocated as follows:
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(A) First, the entire Adjusted Stock Component shall be
divided among the Stock Electors pro rata by the number of shares
for which a stock election has been made;
(B) Second, an amount from the Adjusted Cash Component, when
taken together with the shares of Cathay Common Stock (valued at
the Cathay Closing Price) distributed to Stock Electors from the
Adjusted Stock Component in clause (A) above, sufficient to
provide each Stock Elector with the Per Share Merger
Consideration shall be distributed among the Stock Electors; and
(C) Third, the balance of the Adjusted Cash Component shall
be divided among the Cash Electors and the Non-Electors pro rata
by the number of shares held by them.
(ii) If the Adjusted Cash Component is Oversubscribed, then the
Merger Consideration shall be allocated as follows:
(A) First, the entire Adjusted Cash Component shall be
divided among the Cash Electors pro rata by the number of shares
for which a cash election has been made;
(B) Second, an amount of shares of Cathay Common Stock
(valued at the Cathay Closing Price) from the Adjusted Stock
Component, when taken together with the cash distributed to Cash
Electors from the Adjusted Cash Component in clause (A) above,
sufficient to provide each Cash Elector with the Per Share Merger
Consideration shall be distributed among the Cash Electors; and
(C) Third, the balance of the Adjusted Stock Component shall
be divided among the Stock Electors and the Non-Electors pro rata
by the number of shares held by them.
(iii) If neither the Adjusted Stock Component is Oversubscribed
nor the Adjusted Cash Component is Oversubscribed, then the Merger Consideration
shall be allocated as follows:
(A) First, an amount from the Adjusted Stock Component
sufficient to provide each Stock Elector with the Per Share
Merger Consideration shall be distributed among the Stock
Electors;
(B) Second, an amount from the Adjusted Cash Component
sufficient to provide each Cash Elector with the Per Share Merger
Consideration shall be distributed among the Cash Electors; and
(C) Third, the balance of the Adjusted Stock Component and
the Adjusted Cash Component shall each be divided among the
Non-Electors pro rata by the number of shares held by them.
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(c) EXCHANGE PROCEDURES. For his or her Cash/Stock Election to be
effective, a GBC shareholder must make a Cash/Stock Election prior to the
Election Deadline. Cathay Bancorp shall prepare a transmittal letter
incorporating a Cash/Stock Election form mutually agreeable to Cathay and GBC
("FORM OF ELECTION"), which shall be mailed to GBC's shareholders no later than
fifteen (15) days prior to the anticipated Effective Time so as to permit them
to exercise their right to make a Cash/Stock Election prior to the Election
Deadline. As used herein, "ELECTION DEADLINE" means 5:00 p.m. local time in the
city in which the principal office of the Exchange Agent is located on the
twentieth (20th) day following but not including the date of mailing of the Form
of Election (or such other time and date as GBC and Cathay Bancorp shall
mutually agree). GBC and Cathay Bancorp shall cooperate to issue a press release
reasonably satisfactory to each of them announcing the date of the Election
Deadline at or about the time of the mailing of the Form of Election.
(i) A GBC shareholder may make a separate Cash/Stock Election for
each share of GBC Common Stock (regardless of whether represented by the same
stock certificate). A GBC shareholder who holds shares in two or more capacities
or in different names may make a separate Cash/Stock Election for each name or
capacity in which shares are held.
(ii) Cathay Bancorp shall use all commercially reasonable efforts
to make available as promptly as possible a Form of Election to any GBC
shareholder who requests such Form of Election following the initial mailing of
the Forms of Election and prior to the Election Deadline. In no event shall the
Form of Election be made available less than five (5) days prior to the Election
Deadline.
(iii) Any Cash/Stock Election shall have been made properly only
if the Exchange Agent shall have received by the Election Deadline a Form of
Election properly completed and signed and accompanied by certificates of the
shares of GBC Common Stock (the "CERTIFICATES") to which such Form of Election
relates or by an appropriate customary guarantee of delivery of such
Certificates, as set forth in the Form of Election, from a member of any
registered national securities exchange or a commercial bank or trust company in
the United States; provided, that such certificates are in fact delivered to the
Exchange Agent by the time required in such guarantee of delivery. Failure to
deliver shares of GBC Common Stock covered by such a guarantee of delivery
within the time set forth on such guarantee shall be deemed to invalidate any
otherwise properly made Cash/Stock Election, unless otherwise determined by
Cathay Bancorp in its sole discretion.
(iv) Any GBC shareholder may, at any time prior to the Election
Deadline, change his or her Cash/Stock Election by written notice received by
the Exchange Agent prior to the Election Deadline accompanied by a properly
completed and signed, revised Form of Election. If Cathay Bancorp determines in
its reasonable discretion that any Cash/Stock Election is not properly made with
respect to any shares of GBC Common Stock, such Cash/Stock Election shall be
deemed to be not in effect, and the holder of the shares of GBC Common Stock
covered by such Cash/Stock Election shall, for purposes hereof, be deemed to be
a Non-Elector with respect to such shares, unless a proper Cash/Stock Election
is thereafter timely made.
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(v) Any GBC shareholder may, at any time prior to the Election
Deadline, revoke his or her Election by written notice received by the Exchange
Agent prior to the Election Deadline or by withdrawal prior to the Election
Deadline of his or her Certificates previously deposited with the Exchange
Agent, or of the guarantee of delivery of such Certificates. All Cash/Stock
Elections shall be revoked automatically if the Exchange Agent is notified in
writing by Cathay Bancorp or GBC that this Agreement has been terminated in
accordance with Article VII.
(vi) GBC shareholders who make a Cash/Stock Election have no
assurance that they will receive all cash or all stock or any specific
proportion thereof.
(d) RESERVATION OF SHARES. Prior to the Effective Time, the Board of
Directors of Cathay Bancorp shall reserve for issuance a sufficient number of
shares of Cathay Common Stock for the purpose of issuing its shares to GBC
shareholders in accordance herewith, including upon exercise of Assumed Options.
(e) DISSENTING SHARES. Any shares of GBC Common Stock held by a holder
who dissents from the Merger (and does not fail to perfect, and does not
withdraw or otherwise lose his or her right to appraisal) in accordance with
Section 1300 of the CGCL (if and to the extent that dissenters' rights are
permitted under such section) shall be herein called "DISSENTING SHARES."
Notwithstanding any other provision of this Agreement, any holder of Dissenting
Shares shall not, after the Effective Time, be entitled to vote for any purpose
or receive any dividends or other distributions and shall be entitled only to
such rights as are afforded in respect of such Dissenting Shares pursuant to the
CGCL.
(f) EXCHANGE OF GBC COMMON STOCK.
(i) As to those GBC shareholders who have not tendered their
shares in connection with the election procedures set forth above, within five
(5) Business Days after the Effective Time, holders of record of Certificates
shall be instructed to tender such Certificates to the Exchange Agent pursuant
to a letter of transmittal that Cathay Bancorp shall deliver or cause to be
delivered to such holders within five (5) Business Days after the Effective
Time. Such letter of transmittal shall specify that risk of loss and title to
Certificates shall pass only upon acceptance of such Certificates by the
Exchange Agent.
(ii) After the Effective Time, each holder of a Certificate that
surrenders such Certificate to the Exchange Agent or Cathay Bancorp will, upon
acceptance thereof by the Exchange Agent or Cathay Bancorp, be entitled to the
Per Share Merger Consideration payable in respect of the shares represented
thereby as determined under Section 1.4(b).
(iii) The Exchange Agent or Cathay Bancorp shall accept
Certificates upon compliance with such reasonable terms and conditions as the
Exchange Agent or Cathay Bancorp may impose to effect an orderly exchange
thereof in accordance with customary exchange practices. Certificates shall be
appropriately endorsed or accompanied by such instruments of transfer as the
Exchange Agent or Cathay Bancorp may reasonably require.
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(iv) Each outstanding Certificate, other than those representing
Dissenting Shares, shall until duly surrendered to the Exchange Agent or Cathay
Bancorp be deemed to evidence the right to receive the Per Share Merger
Consideration payable in respect of the shares represented thereby.
(v) After the Effective Time, holders of Certificates shall cease
to have rights with respect to the GBC Common Stock previously represented by
such Certificates, and their sole rights (other than the holders of Certificates
representing Dissenting Shares) shall be to exchange such Certificates for the
Per Share Merger Consideration. At the Effective Time, GBC shall deliver a
certified copy of a list of its shareholders to the Exchange Agent. After the
Effective Time, there shall be no further transfer of Certificates on the
records of GBC and, if such Certificates are presented to GBC for transfer, they
shall be cancelled against delivery of the Per Share Merger Consideration.
Cathay Bancorp shall not be obligated to deliver any merger consideration to any
holder of GBC Common Stock until such holder surrenders the Certificates as
provided herein. No dividends declared will be remitted, nor any voting rights
granted, to any person entitled to receive Cathay Common Stock under this
Agreement until such person surrenders the Certificate representing the right to
receive such Cathay Common Stock, at which time such dividends on whole shares
of Cathay Common Stock with a record date on or after the Effective Time shall
be remitted to such person, without interest and less any taxes that may have
been imposed thereon, and voting rights will be restored. Neither the Exchange
Agent nor any party to this Agreement nor any affiliate thereof shall be liable
to any holder of GBC Common Stock represented by any Certificate for any merger
consideration paid to a public official pursuant to applicable abandoned
property, escheat or similar laws. Cathay Bancorp and the Exchange Agent shall
be entitled to rely upon the stock transfer books of GBC to establish the
identity of those persons entitled to receive merger consideration specified in
this Agreement, which books shall be conclusive with respect thereto. In the
event of a dispute with respect to ownership of stock represented by any
Certificate, Cathay Bancorp or the Exchange Agent shall be entitled to deposit
any merger consideration in respect thereof in escrow with an independent third
party and thereafter be relieved with respect to any claims thereto.
(vi) If any merger consideration is to be issued to a person other
than a person in whose name a surrendered Certificate is registered, it shall be
a condition of issuance that the surrendered Certificate shall be properly
endorsed or otherwise in proper form for transfer and that the person requesting
such issuance shall pay to Cathay Bancorp or the Exchange Agent any required
transfer or other taxes or establish to the satisfaction of Cathay Bancorp or
the Exchange Agent that such tax has been paid or is not applicable.
(vii) In the event any Certificate shall have been lost, stolen or
destroyed, the owner of such lost, stolen or destroyed Certificate shall deliver
to Cathay Bancorp or the Exchange Agent an affidavit stating such fact, in form
reasonably satisfactory to Cathay Bancorp, and, at Cathay Bancorp's discretion,
a bond in such reasonable sum as Cathay Bancorp or the Exchange Agent may direct
as indemnity against any claim that may be made against Cathay Bancorp or GBC or
its successor or any other party with respect to the Certificate alleged to have
been lost, stolen or destroyed. Upon such delivery, the owner shall have the
right to receive the Per Share Merger Consideration with respect to the shares
represented by the lost, stolen or destroyed Certificate.
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(g) NO FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, neither certificates nor scrip for fractional shares of Cathay Common
Stock shall be issued in the Merger. Each holder who otherwise would have been
entitled to a fraction of a share of Cathay Common Stock (after taking into
account all Certificates of such holder) shall receive in lieu thereof cash
(without interest) in an amount determined by multiplying the fractional share
interest to which such holder would otherwise be entitled by the Cathay Closing
Price. No such holder shall be entitled to dividends, voting rights or any other
rights in respect of any fractional share interest.
(h) STOCK OPTIONS.
(i) CONTINGENCY STOCK OPTIONS. Prior to the Effective Time, GBC
shall use its best efforts to obtain commitments for the (1) cashless exercise
of each outstanding Contingency Stock Option immediately prior to the Effective
Time such that, upon such exercise, the holder thereof shall receive a number of
shares of GBC Common Stock (rounded down to the nearest whole number) equal to
the product of (i) the number of shares of GBC Common Stock subject to such
Contingency Stock Option multiplied by (ii) a fraction, the numerator of which
is the Spread for such Contingency Stock Option, and the denominator of which is
the closing price of a share of GBC Common Stock on the Nasdaq NM on the trading
day immediately preceding the Closing Date or (2) the cash exercise of each
outstanding Contingency Stock Option prior to the Effective Time. Upon the
cashless exercise of each outstanding Contingency Stock Option immediately prior
to the Effective Time as described in clause (1) above, GBC will retain a
sufficient number of shares of GBC Common Stock to satisfy all applicable income
tax and employment tax withholding obligations, and such retained shares shall
be retired and cancelled and shall not be issued and outstanding as of the
Effective Time. Upon the cash exercise of each outstanding Contingency Stock
Option prior to the Effective Time as described in clause (2) above, the holder
of the Contingency Stock Options will be required to pay sufficient funds to GBC
to satisfy all applicable income tax and employment tax withholding obligations.
The shares of GBC Common Stock issuable upon the exercise of the Contingency
Stock Options (but excluding the retained and cancelled shares) shall be issued
and outstanding prior to the Effective Time and shall therefore be exchanged and
converted at the Effective Time for the right to receive the Per Share Merger
Consideration as provided in, and in accordance with, Section 1.4 above.
(ii) 1999 PLAN OPTIONS. At the Effective Time, each outstanding
option to purchase shares of GBC Common Stock under the GBC Bancorp 1999
Employee Stock Incentive Plan (each, a "1999 OPTION"), whether or not vested,
shall by virtue of the Merger be assumed by Cathay Bancorp (each, an "ASSUMED
OPTION"). Each Assumed Option will continue to have, and be subject to, the same
terms and conditions of such options immediately prior to the Effective Time
(subject to any accelerated vesting as a result of the Merger provided under the
terms of GBC's 1999 Employee Stock Incentive Plan), except that (i) each Assumed
Option will be exercisable (or will become exercisable in accordance with its
terms) for that number of shares of Cathay Common Stock (rounded down to the
nearest whole number) equal to the product of (A) the Exchange Ratio, multiplied
by (B) that number of shares of GBC Common Stock that were subject to such
Assumed Option immediately prior to the Effective Time and (ii) the per share
exercise price for each share of Cathay Common Stock issuable upon exercise of
such Assumed Option will be equal to the quotient of (A) the exercise
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price for a share of GBC Common Stock at which such Assumed Option was
exercisable immediately prior to the Effective Time, divided by (B) the Exchange
Ratio. After the date hereof, GBC shall offer each holder of a 1999 Option the
right to full acceleration and vesting, prior to the Effective Time, of all
unvested 1999 Option(s) held by him or her on the condition that such holder
agrees to exercise all of his or her outstanding 1999 Option(s) (both vested and
unvested) prior to the Effective Time. GBC shall also offer each such holder of
a 1999 Option who agrees to exercise all of his or her outstanding vested and
unvested 1999 Option(s) prior to the Effective Time the option either (i) to pay
cash (p) for the aggregate exercise price of the shares subject to the 1999
Option(s) and (q) to satisfy all applicable income tax and employment tax
withholding obligations or (ii) to have GBC retain a sufficient number of shares
of GBC Common Stock to (x) pay the aggregate exercise price and (y) satisfy all
applicable income tax and employment tax withholding obligations. Shares
retained under clause (ii) of the immediately preceding sentence shall be
retired and cancelled and shall not be issued and outstanding as of the
Effective Time. The shares of GBC Common Stock issuable upon such exercise of
the 1999 Option(s) (but excluding the retained and cancelled shares) shall be
issued and outstanding immediately prior to the Effective Time and shall
therefore be exchanged and converted at the Effective Time for the right to
receive the Per Share Merger Consideration as provided in, and in accordance
with, Section 1.4 above.
(iii) 1988 PLAN OPTIONS. Each outstanding share of GBC Common
Stock issued upon exercise of an option granted under the GBC Bancorp Amended
and Restated 1988 Stock Option Plan (each, a "1988 OPTION") prior to the
Effective Time shall be exchanged and converted at the Effective Time for the
right to receive the Per Share Merger Consideration as provided in, and in
accordance with, Section 1.4 above. Each holder of a 1988 Option who exercises
any of his or her outstanding 1988 Option(s) prior to the Effective Time shall
have the option either (i) to pay cash (p) for the aggregate exercise price of
the shares subject to the 1988 Option(s) and (q) to satisfy all applicable
income tax and employment tax withholding obligations or (ii) to have GBC retain
a sufficient number of shares of GBC Common Stock to (x) pay such aggregate
exercise price and (y) satisfy all such applicable income tax and employment tax
withholding obligations. Shares retained under clause (ii) of the immediately
preceding sentence shall be retired and cancelled and shall not be issued and
outstanding as of the Effective Time. Any outstanding 1988 Options that remain
unexercised as of the Effective Time shall terminate at the Effective Time, as
provided in Section 10 of the GBC Bancorp Amended and Restated 1988 Stock Option
Plan.
(iv) As soon as practicable after the Effective Time, Cathay
General Bancorp shall deliver to each holder of an outstanding Assumed Option an
appropriate notice setting forth such holder's rights pursuant thereto and such
Assumed Option shall continue in effect on the same terms and conditions
(subject to the adjustments made in Section 1.4(h)(ii) above after giving effect
to the Merger). Cathay Bancorp shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Cathay Common Stock for
delivery upon exercise of such Assumed Option pursuant to the terms set forth in
Section 1.4(h)(ii) above.
(v) Cathay General Bancorp shall file with the United States
Securities and Exchange Commission (the "SEC"), within five (5) Business Days
after the Effective Time, a registration statement on Form S-8 (or any successor
form) relating to the shares of Cathay
11
Common Stock issuable pursuant to the Assumed Options, which registration
statement shall include a reoffer prospectus. Cathay General Bancorp shall use
its commercially reasonable efforts to maintain the effectiveness of such
registration statement (and maintain the current status of the prospectus
contained therein) for as long as any Assumed Options remain outstanding. Cathay
General Bancorp shall use its commercially reasonable efforts to cause such
shares, when issued upon exercise of Assumed Options, to be listed on such
exchanges as Cathay Common Stock are listed immediately prior to the Effective
Time.
(vi) Prior to the Effective Time, the Boards of Directors of
Cathay Bancorp and GBC, or an appropriate committee of non-employee directors
thereof, shall each comply as applicable with the provisions of the SEC's No
Action Letter dated January 12, 1999 addressed to Skadden, Arps, Slate, ▇▇▇▇▇▇▇
and ▇▇▇▇ LLP relating to Rule 16b of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), so that the assumption of 1999 Options pursuant to
the Merger shall be an exempt transaction for purposes of Section 16 of the
Exchange Act by any officer or director of GBC who may become a covered person
for purposes of Section 16.
(i) SECTION 16(B) COMPLIANCE. Cathay Bancorp shall take all such steps
within its power to take as may be required to cause any dispositions of shares
of Cathay Common Stock (including options with respect to such shares) by any
individual who is subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to GBC to be exempt under Rule 16b-3 promulgated under
the Exchange Act.
1.5 CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the transactions contemplated in this Agreement (the "CLOSING") shall
take place at the offices of Cathay Bancorp, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ at 5:00 p.m. Pacific time on the first Friday that is a Business Day
occurring at least two Business Days after the satisfaction or waiver (subject
to applicable law) of the latest to occur of the conditions set forth in Article
VI hereof, other than conditions which by their terms are to be satisfied at
Closing, or at such other date, time and location as the parties may agree. The
date on which the Closing actually occurs is herein referred to as the "CLOSING
DATE."
1.6 REVISION OF TRANSACTION. After consultation with GBC and with GBC's
consent, which consent shall not unreasonably be delayed or withheld, Cathay
Bancorp shall have the right to change the method of effecting the Bank Merger
and/or the Merger (including without limitation the provisions of this Article
I), to the extent permitted by applicable law and to the extent it deems such
change to be desirable, provided, however, that no such change shall (a) alter
or change the amount or kind of the Merger Consideration, (b) diminish the
benefits to be received by the directors, officers or employees of GBC, General
Bank or their Subsidiaries as set forth in this Agreement or in any agreements
involving the parties made in connection with this Agreement, (c) materially
impede or delay the consummation of the Bank Merger or the Merger, or increase
the risk that it will be consummated or diminish the likelihood that Regulatory
Approvals will be received, or (d) adversely affect the tax treatment of GBC
shareholders as a result of receiving the Per Share Merger Consideration. Cathay
Bancorp may exercise this right of revision (after consulting with GBC and
obtaining GBC's consent) by giving written notice thereof in the manner provided
in Section 8.2 of this Agreement.
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1.7 ADDITIONAL ACTIONS. If, at any time after the Effective Time, Cathay
Bancorp shall consider or be advised that any further deeds, assignments or
assurances or any other acts are necessary or desirable to (a) vest, perfect or
confirm, of record or otherwise, in Cathay Bancorp or Cathay Bank its right,
title or interest in, to or under any of the rights, properties or assets of GBC
or General Bank or (b) otherwise carry out the purposes of this Agreement, GBC
and General Bank hereby grant to Cathay Bancorp an irrevocable power of
attorney, to be effective following the Effective Time, to execute and deliver
all such deeds, assignments or assurances and to do all acts necessary or
desirable to vest, perfect or confirm title and possession to such rights,
properties or assets in Cathay Bancorp or Cathay Bank and otherwise carry out
the purposes of this Agreement, and the officers and directors of Cathay Bancorp
are authorized in the name of GBC and General Bank to take any and all such
action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CATHAY BANK AND CATHAY BANCORP
Except as set forth on a disclosure schedule delivered to GBC and General
Bank concurrently with the execution of this Agreement and updated as of the
Closing (the "CATHAY BANCORP DISCLOSURE SCHEDULE"), Cathay Bank and Cathay
Bancorp jointly and severally represent and warrant to GBC and General Bank
that:
2.1 ORGANIZATION.
(a) Cathay Bank is a California banking corporation duly organized,
validly existing and in good standing under the laws of the State of California
and has all requisite power and authority, corporate and otherwise, to own,
operate and lease its assets and properties and to carry on its business
substantially as it has been and is now being conducted.
(b) Cathay Bancorp is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, is a bank holding
company under the Bank Holding Company Act of 1956 and is the sole shareholder
of Cathay Bank.
(c) Each of Cathay Bancorp and Cathay Bank is duly qualified to do
business and is in good standing in each jurisdiction where the character of the
assets or properties owned or leased by it or the nature of the business
transacted by it requires that it be so qualified, except where the failure to
so qualify would not be reasonably expected to have a Material Adverse Effect on
Cathay Bancorp. Each of Cathay Bancorp and Cathay Bank has all requisite
corporate power and authority to enter into this Agreement and, subject to the
approval of this Agreement by its shareholders and to the receipt of all
Regulatory Approvals, to consummate the transactions contemplated hereby.
2.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement, the Merger Agreement and the Bank Merger Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
approved and authorized by the Boards of Directors of Cathay Bank and Cathay
Bancorp and by the affirmative vote of a majority of the outstanding shares of
common stock of Cathay Bank. Subject to the approval of this Agreement and the
Merger by the affirmative vote of a majority of the outstanding shares of Cathay
13
Common Stock, no other corporate action on the part of Cathay Bancorp is
required to be taken. This Agreement has been duly executed and delivered by
Cathay Bank and Cathay Bancorp and, assuming the due authorization, execution
and delivery by General Bank and GBC of this Agreement, constitutes the valid
and binding obligation of each of them and is enforceable against each of them,
except to the extent that enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship or similar laws or equitable principles or doctrines.
2.3 CONFLICTS, CONSENTS AND APPROVALS.
(a) The execution and delivery of this Agreement, the Merger Agreement
and the Bank Merger Agreement does not, and the consummation of the transactions
contemplated hereby and thereby will not, (i) violate any provision of the
certificate of incorporation or bylaws of Cathay Bancorp, the articles of
incorporation or bylaws of Cathay Bank or similar documents of any of their
Subsidiaries or (ii) assuming the Regulatory Approvals are obtained, violate or
conflict with or result in any violation, breach or termination of, or default
or loss of a material benefit under, permit the acceleration of any obligation
under, or result in the creation of any material lien, charge or encumbrance on
any of the property or assets under, any mortgage, indenture, lease, agreement
or other instrument, permit, concession, grant, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Cathay
Bank, Cathay Bancorp or any of their Subsidiaries or their respective
properties, other than any such conflicts, violations or defaults which (x) will
be cured or waived prior to the Effective Time or (y) would not be reasonably
expected to have a Material Adverse Effect on Cathay Bancorp.
(b) Except for (i) Cathay Bancorp stockholder approval, (ii) the
consents and approvals set forth on Section 2.3 of the Cathay Bancorp Disclosure
Schedule and (iii) the consents and approvals of third parties that are not
Governmental Entities, the failure of which to be obtained will not have and
would not be reasonably expected to have a Material Adverse Effect on Cathay
Bancorp, no consents or approvals of, or filings or registrations with, any
third party (other than a Governmental Entity) are necessary in connection with
the execution and delivery by Cathay Bancorp and Cathay Bank of this Agreement,
the Merger Agreement and the Bank Merger Agreement and the consummation by
Cathay Bancorp and Cathay Bank of the Merger, the Bank Merger and the other
transactions contemplated hereby.
2.4 CAPITALIZATION.
(a) As of the date hereof, the authorized capital stock of Cathay
Bancorp consists of (i) 25,000,000 shares of Cathay Common Stock, of which
18,019,830 shares were issued and outstanding as of May 2, 2003 and (ii)
10,000,000 shares of preferred stock, $0.01 par value per share, of which none
are issued and outstanding. All of the issued and outstanding shares of Cathay
Common Stock have been, and all of the shares of Cathay Common Stock to be
issued in the Merger and upon exercise of Assumed Options will be, at the
Effective Time, duly and validly authorized and issued, and are or will be, as
the case may be, fully paid and non-assessable. None of the outstanding shares
of Cathay Common Stock has been issued in violation of any preemptive rights of
the current or past shareholders of Cathay Bancorp, and none of the outstanding
shares of Cathay Common Stock is or will be entitled to any preemptive rights in
respect of the Merger or any of the other transactions contemplated by this
Agreement.
14
(b) As of the date hereof, the authorized capital stock of Cathay Bank
consists of 20,000,000 shares of common stock, of which 6,149,173 shares are
issued and outstanding as of May 2, 2003. All of the issued and outstanding
shares of Cathay Bank common stock have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned beneficially and of
record by Cathay Bancorp, and are not subject to pledge, lien or other direct or
indirect collateral interest.
(c) As of May 2, 2003, 578,820 shares of Cathay Common Stock were
subject to outstanding stock options under Cathay Bancorp's stock option plans
and 1,508,760 shares of Cathay Common Stock were reserved for future issuance
under Cathay Bancorp's stock option plans. Except as set forth in this Section
2.4, as of the date of this Agreement, there are no shares of capital stock or
other equity securities of Cathay Bancorp or Cathay Bank outstanding and no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock of Cathay
Bancorp or Cathay Bank, or contracts, commitments, understandings or
arrangements by which either Cathay Bancorp or Cathay Bank is or may be bound to
issue additional shares of its capital stock or options, warrants or rights to
purchase or acquire any additional shares of its capital stock. There are no
outstanding phantom stock rights or awards.
2.5 CATHAY BANCORP FILINGS AND REPORTS.
(a) Each of Cathay Bank, Cathay Bancorp and its Subsidiaries has filed
as of the date of this Agreement, and will continue to file, all reports and
statements, together with any amendment required to be made with respect
thereto, that it was, or will be required to file with the SEC, the DFI, the
FDIC, the Federal Reserve Board (the "FRB"), Nasdaq NM and other applicable
bank, securities and other regulatory authorities (except filings which are not
material). As of their respective dates (and without giving effect to any
amendments or modifications filed after the date of this Agreement with respect
to reports and documents filed before the date of this Agreement), each of such
reports and documents, including the financial statements, exhibits and
schedules thereto, complied in all material respects with all of the statutes,
rules and regulations enforced or promulgated by the authority with which they
were filed and did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. Other than normal examinations conducted by the Internal Revenue
Service (the "IRS"), state and local taxing authorities, or the FDIC, DFI or FRB
in the regular course of the business of Cathay Bank, Cathay Bancorp and its
Subsidiaries, no federal, state or local governmental agency, commission or
other entity has initiated any proceeding or, to the best knowledge of Cathay
Bank and Cathay Bancorp, investigation into the business or operations of Cathay
Bank, Cathay Bancorp or its Subsidiaries since December 31, 2001. There is no
unresolved violation, criticism or exception by the SEC, DFI, FRB, FDIC or other
agency, commission or entity with respect to any report or statement referred to
herein that is material to Cathay Bancorp on a consolidated basis.
(b) Cathay Bancorp has provided to GBC a true and complete copy of each
report, schedule, registration statement and definitive proxy statement filed by
Cathay Bancorp with the SEC pursuant to the Securities Act of 1933, as amended
(the "SECURITIES ACT"), or the Exchange Act (other than reports filed pursuant
to Section 13(g) of the Exchange Act) since
15
December 31, 2000 (as such documents have since the time of their filing been
amended, the "CATHAY SEC REPORTS"), which are all the documents (other than
preliminary material and reports required pursuant to Section 13(g) of the
Exchange Act) that Cathay Bancorp was required to file with the SEC since such
date; provided, that Cathay Bancorp has not provided to GBC copies of any Cathay
SEC Reports that generally are available in public databases. The financial
statements of Cathay Bancorp included in the Cathay SEC Reports complied as to
form, as of their respective dates of filing with the SEC, in all material
respects with applicable accounting requirements, have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) and fairly present
in all material respects the consolidated financial position of Cathay Bancorp
and its consolidated Subsidiaries as at the dates thereof and the consolidated
results of operations, changes in stockholders' equity and cash flows of such
companies for the periods then ended.
2.6 SUBSIDIARIES; OFF BALANCE SHEET DISCLOSURE; MATERIAL CHANGES.
(a) Section 2.6(a) of the Cathay Bancorp Disclosure Schedule sets forth
a true and complete list of all Subsidiaries of Cathay Bancorp. There are no
special purpose entities, limited purpose entities and qualified special purpose
entities in which Cathay Bancorp or any of its Subsidiaries have a material
controlling economic or management interest.
(b) Between December 31, 2002 and the date of this Agreement, Cathay
Bancorp has not undergone or suffered any Material Adverse Effect.
2.7 COMPLIANCE WITH LAWS.
(a) Except for exceptions the maximum exposure for which would not be
reasonably expected to have a have a Material Adverse Effect on Cathay Bancorp,
the businesses of Cathay Bank, Cathay Bancorp and their Subsidiaries are being
conducted in all material respects in compliance with all laws, ordinances and
regulations of any Governmental Entity, including, without limitation, any laws
affecting financial institutions (including those pertaining to the Bank Secrecy
Act, the investment of funds, the lending of money, the collection of interest
and the extension of credit), federal and state securities laws, laws and
regulations relating to financial statements and reports, truth-in-lending,
truth-in-savings, usury, fair credit reporting, consumer protection,
occupational safety, fair employment practices, fair labor standards and all
other laws and regulations relating to employees and employee benefits, and any
statutes or ordinances relating to the properties occupied or used by Cathay
Bank, Cathay Bancorp or their Subsidiaries.
(b) No investigation or review by any Governmental Entity with respect
to Cathay Bank, Cathay Bancorp or any of their Subsidiaries is pending or, to
the best knowledge of Cathay Bank and Cathay Bancorp, threatened, nor has any
Governmental Entity indicated to Cathay Bank, Cathay Bancorp or any of their
Subsidiaries an intention to conduct the same, other than normal bank regulatory
examinations.
(c) As of the date of this Agreement, neither Cathay Bank nor Cathay
Bancorp has been advised of the existence of any fact or circumstance or set of
facts or
16
circumstances which, if true, would cause Cathay Bancorp, Cathay Bank or any of
the their Subsidiaries to fail to be in substantial compliance with such
provisions. Cathay Bank has not received a CRA rating from an applicable
regulatory authority which is less than "satisfactory."
2.8 JOINT PROXY REGISTRATION STATEMENT. The information to be supplied by
Cathay Bank and Cathay Bancorp for inclusion in the Joint Proxy Registration
Statement will not, on the date it (or any amendment thereof or supplement
thereto) is first mailed to the respective shareholders of GBC and Cathay
Bancorp, and at the time of their respective Shareholders' Meetings, contain any
statement that, in light of the circumstances under which it is made, is false
or misleading with respect to any material fact, omits to state any material
fact necessary in order to make the statements made therein not false or
misleading, or omits to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the respective GBC and Cathay Bancorp Shareholders' Meeting that has
become false or misleading. If, at any time prior to the Effective Time, any
event relating to Cathay Bancorp or any of its affiliates, officers or directors
is discovered by Cathay Bancorp that should be set forth in an amendment or a
supplement to the Joint Proxy Registration Statement, Cathay Bancorp will
promptly inform GBC and such amendment or supplement will be promptly filed with
the SEC and, as required by law, disseminated to the respective GBC and Cathay
Bancorp shareholders. Notwithstanding the foregoing, Cathay Bank and Cathay
Bancorp make no representation or warranty with respect to any information
supplied by GBC or its Subsidiaries that is contained in the Joint Proxy
Registration Statement. The Joint Proxy Registration Statement will (with
respect to Cathay Bank and Cathay Bancorp) comply in all material respects as to
form and substance with the requirements of the Exchange Act, the Securities Act
and the rules and regulations thereunder.
2.9 LITIGATION. There is no suit, action, investigation or proceeding,
legal, quasi-judicial, administrative or otherwise, pending or, to the best
knowledge of Cathay Bank and Cathay Bancorp, threatened, against or affecting
Cathay Bank, Cathay Bancorp or any of their Subsidiaries, or any of their
respective officers, directors, employees or agents, in their capacities as
such, which, if adversely determined, would reasonably be expected to have a
Material Adverse Effect on Cathay Bancorp or which would materially affect the
ability of Cathay Bank or Cathay Bancorp to consummate the transactions
contemplated herein or which is seeking to enjoin consummation of the
transactions provided for herein or to obtain other relief in connection with
this Agreement or the transactions contemplated hereby or thereby, nor is there
any judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against Cathay Bank, Cathay Bancorp or any of their Subsidiaries or any of their
respective officers, directors, employees or agents, in their capacities as
such, having, or which, insofar as reasonably can be foreseen in the future,
would have any such effect.
2.10 GOVERNMENTAL APPROVALS AND OTHER CONDITIONS. To the best knowledge of
Cathay Bank and Cathay Bancorp, there is no reason relating specifically to them
or any of their Subsidiaries why (a) the Regulatory Approvals should not be
granted, (b) the Regulatory Approvals should be subject to a condition which
would differ from conditions customarily imposed in orders approving
acquisitions of the type contemplated hereby or (c) any of the conditions
precedent as specified in Article VI hereof to the obligations of any of the
parties hereto to consummate the transactions contemplated hereby are unlikely
to be fulfilled within the
17
applicable time period or periods required for satisfaction of such condition or
conditions. No consent, approval, order or authorization of, or registration,
declaration or filing with, any federal or state governmental authority is
required by or with respect to Cathay Bank or Cathay Bancorp in connection with
the execution and delivery of this Agreement or the consummation by them of the
transactions contemplated hereby or thereby except for: (i) the filing of all
Regulatory Applications by Cathay Bancorp, Cathay Bank and/or their respective
Subsidiaries for approval of the transactions contemplated by this Agreement;
(ii) the receipt of all Regulatory Approvals; (iii) the filing by Cathay Bancorp
of the registration statement relating to the Cathay Common Stock to be issued
pursuant to this Agreement ("JOINT PROXY REGISTRATION STATEMENT") with the SEC
and various blue sky authorities, which Joint Proxy Registration Statement shall
include the prospectus/proxy statement (the "PROXY STATEMENT") for use in
connection with the GBC and Cathay Bancorp shareholders' meeting to approve the
Merger (each a "SHAREHOLDERS' MEETING"); (iv) the filing of the Bank Merger
Agreement with respect to the Bank Merger, bearing the endorsement of the DFI
and the California Secretary of State, with the DFI; (v) the filing of the
Merger Agreement with respect to the Merger with the Delaware Secretary of State
and the California Secretary of State; and (vi) any filings, approvals or
no-action letters with or from state securities authorities.
2.11 INSIDER INTERESTS. All outstanding loans and other contractual
arrangements (including deposit relationships) between Cathay Bank and any
officer, director or employee of Cathay Bancorp, Cathay Bank or their
Subsidiaries conform to the applicable rules and regulations and requirements of
all applicable regulatory agencies which were in effect when such loans and
other contractual arrangements were entered into. No officer, director or
employee of Cathay Bancorp, Cathay Bank or their Subsidiaries has any material
interest in any tangible property, real or personal, used in or pertaining to
the business of Cathay Bancorp, Cathay Bank or their Subsidiaries.
2.12 FAIRNESS OPINION. Cathay Bancorp has received from Credit Suisse First
Boston LLC a fairness opinion, dated the date of this Agreement, that the Merger
Consideration is fair to Cathay Bancorp from a financial point of view.
2.13 INSURANCE. Each of Cathay Bancorp and Cathay Bank has maintained and
now maintains insurance in such amounts and covering such risks as is usually
carried by prudent companies engaged in similar businesses and owning similar
properties in the same general area in which they operate.
2.14 IMPEDIMENTS TO PERFORMANCE. Neither Cathay Bank nor Cathay Bancorp has
taken or agreed to take any action, or has knowledge of any fact or
circumstance, that would materially impede or delay the consummation of the
transactions contemplated by this Agreement or the ability of the parties to
obtain any Regulatory Approval or to perform their covenants and agreements
under this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GBC AND GENERAL BANK
Except as set forth on a disclosure schedule delivered to Cathay Bancorp
concurrently with the execution of this Agreement and updated as of the Closing
(the "GBC DISCLOSURE
18
SCHEDULE"), GBC and General Bank represent and warrant to Cathay Bank and Cathay
Bancorp that:
3.1 ORGANIZATION.
(a) General Bank is a California banking corporation duly organized,
validly existing and in good standing under the laws of the State of California
and has all requisite power and authority, corporate and otherwise, to own,
operate and lease its assets and properties and to carry on its business
substantially as it has been and is now being conducted.
(b) GBC is a corporation duly organized, validly existing and in good
standing under the laws of the State of California, is a bank holding company
under the Bank Holding Company Act of 1956 and is the sole shareholder of
General Bank.
(c) Each of GBC and General Bank is duly qualified to do business and
is in good standing in each jurisdiction where the character of the assets or
properties owned or leased by it or the nature of the business transacted by it
requires that it be so qualified, except where the failure to so qualify would
not be reasonably expected to have a Material Adverse Effect on GBC. Each of GBC
and General Bank has all requisite corporate power and authority to enter into
this Agreement and, subject to the approval of this Agreement by its
shareholders and the receipt of all Regulatory Approvals, to consummate the
transactions contemplated hereby or thereby.
3.2 AUTHORIZATION. The execution, delivery and performance of this
Agreement, the Merger Agreement and the Bank Merger Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
approved and authorized by the Boards of Directors of GBC and General Bank and
by the affirmative vote of a majority of the outstanding shares of common stock
of General Bank. Subject to the approval of this Agreement and the Merger by the
affirmative vote of a majority of the outstanding shares of GBC Common Stock, no
other corporate action on the part of GBC is required to be taken. This
Agreement has been duly executed and delivered by GBC and General Bank and,
assuming the due authorization, execution and delivery by Cathay Bank and Cathay
Bancorp of this Agreement, constitutes the valid and binding obligation of each
of them and is enforceable against each of them, except to the extent that
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, receivership, conservatorship or similar laws or
equitable principles or doctrines.
3.3 CONFLICTS, CONSENTS AND APPROVALS.
(a) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, (i) violate any
provision of the articles of incorporation or bylaws of GBC or similar documents
of any of its Subsidiaries or (ii) assuming the Regulatory Approvals are
obtained, violate or conflict with or result in any violation, breach or
termination of, or default or loss of a material benefit under, permit the
acceleration of any obligation under, or result in the creation of any material
lien, charge or encumbrance on any property or assets under, any mortgage,
indenture, lease, agreement or other instrument, permit, concession, grant,
franchise, license, judgment, order, decree, statute, law,
19
ordinance, rule or regulation applicable to GBC or its Subsidiaries or their
respective properties, other than any such conflicts, violations or defaults
which (x) will be cured or waived prior to the Effective Time or (y) would not
reasonably be expected to have a Material Adverse Effect on GBC.
(b) Except for (i) GBC shareholder approval, (ii) the consents and
approvals set forth on Section 3.3 of the GBC Disclosure Schedule and (iii) the
consents and approvals of third parties that are not Governmental Entities, the
failure of which to be obtained will not have and would not be reasonably
expected to have a Material Adverse Effect on GBC, no consents or approvals or,
or filings or registrations with, any third party (other than Governmental
Entities) are necessary in connection with the execution and delivery by GBC and
General Bank of this Agreement, the Merger Agreement and the Bank Merger
Agreement and the consummation by GBC and General Bank of the Merger, the Bank
Merger and the other transactions contemplated hereby.
3.4 ANTI-TAKEOVER PROVISIONS INAPPLICABLE. To the best knowledge of GBC and
General Bank, no "business combination," "moratorium," "control share" or other
state anti-takeover statute or regulation, (i) applies to the Merger or the
Voting Agreements, (ii) prohibits or restricts the ability of GBC or General
Bank to perform its obligations under this Agreement or the ability of them to
consummate the Merger, (iii) would have the effect of invalidating or voiding
this Agreement, any of the Voting Agreements or any provision hereof or thereof
or (iv) would subject Cathay Bank or Cathay Bancorp to any material impediment
or condition in connection with the exercise of any of its rights under this
Agreement with respect to the Merger or any of the Voting Agreements.
3.5 CAPITALIZATION.
(a) As of the date hereof, the authorized capital stock of GBC consists
of (i) 20,000,000 shares of GBC Common Stock, of which 11,636,563 shares were
issued and outstanding as of March 31, 2003 and (ii) 10,000,000 shares of
preferred stock, of which no shares are issued and outstanding. All of the
issued and outstanding shares of GBC Common Stock have been duly and validly
authorized and issued, and are fully paid and non-assessable. None of the
outstanding shares of GBC Common Stock has been issued in violation of any
preemptive rights of current or past shareholders of GBC. All of the issued and
outstanding shares of GBC Common Stock, as of the record date set for such
meeting, will be entitled to vote to approve this Agreement and the Merger.
(b) As of the date hereof, the authorized capital stock of General Bank
consists of 4,000,000 shares of common stock, of which 1,387,000 shares were
issued and outstanding as of March 31, 2003. All of the issued and outstanding
shares of General Bank common stock have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned beneficially and of
record by GBC, and are not subject to pledge, lien or other direct or indirect
collateral interest.
(c) As of May 3, 2003, 1,175,300 shares of GBC Common Stock were
subject to outstanding stock options under the GBC Bancorp 1999 Employee Stock
Incentive Plan and 89,993 shares of GBC Common Stock were reserved for future
issuance under the GBC Bancorp
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1999 Employee Stock Incentive Plan. As of May 3, 2003, 337,400 shares of GBC
Common Stock were subject to outstanding stock options under the GBC Bancorp
Amended and Restated 1988 Stock Option Plan and zero shares of GBC Common Stock
were reserved for future issuance under the GBC Bancorp Amended and Restated
1988 Stock Option Plan. As of the date hereof, 320,800 shares of GBC Common
Stock were subject to outstanding Contingency Stock Options. Except as set forth
in this Section 3.5, as of the date of this Agreement, there are no shares of
capital stock or other equity securities of GBC outstanding and no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of GBC, or contracts, commitments,
understandings or arrangements by which GBC is or may be bound to issue
additional shares of its capital stock or options, warrants or rights to
purchase or acquire any additional shares of its capital stock. There are no
outstanding phantom stock rights or awards.
3.6 SUBSIDIARIES; OFF BALANCE SHEET DISCLOSURE; MATERIAL CHANGES.
(a) Section 3.6(a) of the GBC Disclosure Schedule sets forth a true and
complete list of all Subsidiaries of GBC. There are no special purpose entities,
limited purpose entities and qualified special purpose entities in which GBC or
its Subsidiaries have a material controlling economic or management interest.
Except as disclosed in the GBC SEC Reports or on Section 3.6(a) of the GBC
Disclosure Schedule, GBC owns directly or indirectly all of the issued and
outstanding shares of capital stock of its Subsidiaries.
(b) Between December 31, 2002 and the date of this Agreement, GBC has
not undergone or suffered any Material Adverse Effect.
3.7 GBC REPORTS.
(a) Each of GBC and its Subsidiaries has filed as of the date of this
Agreement, and will continue to file, all reports and statements, together with
any amendment required to be made with respect thereto, that it has, or will be,
required to file with the SEC, DFI, the FDIC, FRB, and other applicable bank,
securities and other regulatory authorities (except filings which are not
material). As of their respective dates (and without giving effect to any
amendments or modifications filed after the date of this Agreement with respect
to reports and documents filed before the date of this Agreement), each of such
reports and documents, including the financial statements, exhibits and
schedules thereto, complied in all material respects with all of the statutes,
rules and regulations enforced or promulgated by the authority with which they
were filed and did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. Other than normal examinations conducted by the IRS, state and local
taxing authorities, the SEC, DFI, the FRB or the FDIC in the regular course of
the business of GBC or its Subsidiaries, no federal, state or local governmental
agency, commission or other entity has initiated any proceeding or, to the best
knowledge of GBC, investigation into the business or operations of GBC or its
Subsidiaries since December 31, 2001. There is no unresolved violation,
criticism or exception by the SEC, DFI, FRB, FDIC or other agency, commission or
entity with respect to any report or statement referred to herein that is
material to GBC on a consolidated basis.
21
(b) GBC has provided to Cathay Bank a true and complete copy of each
report, schedule, registration statement and definitive proxy statement filed by
GBC with the SEC pursuant to the Securities Act or the Exchange Act (other than
reports filed pursuant to Section 13(g) of the Exchange Act) since December 31,
2000 (as such documents have since the time of their filing been amended, the
"GBC SEC REPORTS"), which are all the documents (other than preliminary material
and reports required pursuant to Section 13(g) of the Exchange Act) that GBC was
required to file with the SEC since such date; provided, that GBC has not
provided to Cathay Bancorp copies of any GBC SEC Reports that generally are
available in public databases. The financial statements of GBC included in the
GBC SEC Reports complied as to form, as of their respective dates of filing with
the SEC, in all material respects with applicable accounting requirements, have
been prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by Form 10-Q of the SEC) and
fairly present in all material respects the consolidated financial position of
GBC and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of operations, changes in shareholders' equity and cash
flows of such companies for the periods then ended.
3.8 COMPLIANCE WITH LAWS.
(a) Except as disclosed in any GBC SEC Reports and except for
exceptions the maximum exposure for which would not be reasonably expected to
have a Material Adverse Effect on GBC, the businesses of GBC and its
Subsidiaries are being conducted in all material respects in compliance with all
laws, ordinances or regulations of governmental authorities, including without
limitation, laws affecting financial institutions (including those pertaining to
the Bank Secrecy Act, the investment of funds, the lending of money, the
collection of interest and the extension of credit), federal and state
securities laws, laws and regulations relating to financial statements and
reports, truth-in-lending, truth-in-savings, usury, fair credit reporting,
consumer protection, occupational safety, fair employment practices, fair labor
standards and all other laws and regulations relating to employees and employee
benefits, and any statutes or ordinances relating to the properties occupied or
used by GBC or any of its Subsidiaries.
(b) As of the date of this Agreement, neither GBC nor its Subsidiaries
has been advised of the existence of any fact or circumstance or set of facts or
circumstances which, if true, would cause GBC or its Subsidiaries to fail to be
in substantial compliance with such provisions. General Bank has not received
since December 31, 2000 a CRA rating from an applicable regulatory authority
which is less than "satisfactory."
3.9 JOINT PROXY REGISTRATION STATEMENT. The information to be supplied by
GBC and its Subsidiaries for inclusion in the Joint Proxy Registration Statement
will not, on the date it (or any amendment thereof or supplement thereto) is
first mailed to GBC and Cathay Bancorp shareholders, and at the time of the
respective Shareholders' Meetings, contain any statement that, in light of the
circumstances under which it is made, is false or misleading with respect to any
material fact, omit to state any material fact necessary in order to make the
statements made therein not false or misleading, or omit to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies for the GBC and Cathay Bancorp
Shareholders' Meetings that has become false or misleading. If at any time prior
to the Effective Time, any event relating to GBC or any of its affiliates,
officers or directors
22
is discovered by GBC that should be set forth in an amendment to the Joint Proxy
Registration Statement or a supplement to the Proxy Statement, GBC will promptly
inform Cathay Bancorp, and such amendment or supplement will be promptly filed
with the SEC and, as required by law, disseminated to the GBC and Cathay Bancorp
shareholders. Notwithstanding the foregoing, GBC makes no representation or
warranty with respect to any information supplied by Cathay Bank or Cathay
Bancorp that is contained in the Joint Proxy Registration Statement. The Joint
Proxy Registration Statement will (with respect to GBC and its Subsidiaries)
comply in all material respects as to form and substance with the requirements
of the Exchange Act, the Securities Act and the rules and regulations
thereunder.
3.10 LITIGATION. There is no suit, action, investigation or proceeding,
legal, quasi-judicial, administrative or otherwise, pending or, to the best
knowledge of GBC, threatened, against or affecting GBC or its Subsidiaries, or
any of their respective officers, directors, employees or agents, in their
capacities as such, which, if adversely determined, would be reasonably expected
to have a Material Adverse Effect on GBC or which would materially affect the
ability of General Bank or GBC to consummate the transactions contemplated
herein or which would materially affect the ability of GBC to consummate the
transactions contemplated herein or which is seeking to enjoin consummation of
the transactions provided for herein or to obtain other relief in connection
with this Agreement or the transactions contemplated hereby, nor is there any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against GBC or its Subsidiaries or any of their respective officers, directors,
employees or agents, in their capacities as such, having, or which, insofar as
reasonably can be foreseen in the future, would have any such effect. There is
no outstanding claim for indemnification by officers, directors, employees or
agents of GBC or its Subsidiaries under their respective bylaws or articles or
incorporation nor, to the best knowledge of GBC, is any such claim threatened.
3.11 LICENSES. GBC and its Subsidiaries hold all licenses, certificates,
permits, franchises and all patents, trademarks, service marks, trade names,
copyrights or rights thereto, and required authorizations, approvals, consents,
licenses, clearances and orders or registrations with all appropriate federal,
state or other authorities that are material to the conduct of their respective
businesses as now conducted.
3.12 TAXES.
(a) GBC and its Subsidiaries have each timely filed all material tax
and information returns required to be filed and all such returns were correct
and complete in all material respects. GBC and its Subsidiaries paid (or GBC has
paid on behalf of its Subsidiaries), or have accrued on their respective books
and set up an adequate reserve for the payment of, all material taxes reflected
on such returns as required to be paid in respect of the periods covered by such
returns and have accrued on their respective books and set up an adequate
reserve for the payment of all income and other taxes anticipated to be payable
in respect of periods through the end of the calendar month next preceding the
date hereof. To the best knowledge of GBC, neither GBC nor any Subsidiary of GBC
is delinquent in the payment of any tax, assessment or governmental charge. No
deficiencies for any taxes have been, to the best knowledge of GBC, proposed,
asserted or assessed against GBC or any Subsidiary of GBC that have not been
resolved or settled and none of GBC and its Subsidiaries has waived any statute
of limitations in
23
respect of taxes or agreed to any extension of time with respect to a tax
assessment or deficiency. The income tax returns of GBC and its Subsidiaries
have not been audited by the IRS, state, municipal or other taxing authority
after the 1998 tax year. Neither GBC nor any Subsidiary of GBC is a party to any
current action or proceeding by any Governmental Entity for the assessment or
the collection of material taxes. Deferred taxes of GBC and its Subsidiaries
have been accounted for in accordance with GAAP.
(b) GBC has not filed any consolidated federal income tax return with
an "affiliated group" (within the meaning of Section 1504 of the Code) where GBC
was not the common parent of the group and neither GBC nor any Subsidiary of GBC
has any liability for the taxes of any person other than a Subsidiary of GBC
under Treasury Regulations Section 1.1502-6. Neither GBC nor any Subsidiary of
GBC is, or has been, a party to any tax allocation agreement or arrangement
pursuant to which it has any contingent, successor, or outstanding liability for
the taxes of anyone other than a Subsidiary of GBC. Neither GBC nor any
Subsidiary of GBC is required to include in income any adjustment pursuant to
Section 481(a) of the Code, no such adjustment has been, to the best knowledge
of GBC, proposed by the IRS and no pending request for permission to change any
accounting method has been submitted by GBC or any Subsidiary of GBC. Neither
GBC nor any Subsidiary of GBC has filed a consent pursuant to Section 341 of the
Code or agreed to have Section 341(f)(2) of the Code apply.
(c) GBC and its Subsidiaries have each (i) withheld amounts from its
employees, shareholders, or holders of public deposit accounts in material
compliance with the tax withholding provisions of applicable federal, state and
local laws, (ii) filed all federal, state and local returns and reports for all
periods for which such returns or reports would be due with respect to material
income tax withholding, social security, unemployment taxes, income and other
taxes. All payments or deposits with respect to such taxes have been timely
made.
(d) GBC has not constituted either a "distributing corporation" or a
"controlled corporation" in a distribution of stock qualifying for tax-free
treatment under section 355 of the Code in three years prior to the date of this
Agreement.
3.13 INSURANCE. GBC has maintained and now maintains insurance in such
amounts and covering such risks as is usually carried by prudent companies
engaged in similar businesses and owning similar properties in the same general
area in which they operate. All such insurance policies and bonds are in full
force and effect, and no insurer under any insurance policy or bond has
cancelled or notified GBC of an intention to cancel or not to renew any such
policy or bond effective at any time prior to the Closing or generally
disclaimed liability thereunder for any submitted claims. To the extent that any
insurance policy or bond has been or will be cancelled prior to the Closing
Date, GBC will use its commercially reasonable efforts to obtain comparable
insurance policies with comparable coverage prior to the Closing Date. GBC is
not in default under any such policy or bond, nor has it failed to give any
notice or present any claims thereunder in a timely fashion. Except as set forth
on Section 3.13 of the GBC Disclosure Schedule, as of the date hereof, there are
no claims in excess of $100,000 under any of such insurance policies or bonds
which claims are pending or as to which coverage has been denied or disputed by
the underwriters of such insurance policies or bonds. GBC has made available to
24
Cathay Bancorp true and complete copies of the policies listed at Section 3.13
of the GBC Disclosure Schedule.
3.14 LOANS; INVESTMENTS.
(a) Each loan reflected as an asset on the GBC Financial Statements,
and each loan originated or acquired after December 31, 2002, is evidenced by
appropriate and sufficient documentation and constitutes the legal, valid and
binding obligation of the obligor named therein, enforceable in accordance with
its terms, except to the extent that the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles or doctrines. Except for pledges to secure public and trust
deposits or to secure advances or discount window availability from the FHLBSF
or FRBSF and loans sold pursuant to repurchase agreements, all such loans are as
of the date hereof, and at the Closing will be, free and clear of any security
interest, lien, encumbrance or other charge and do not as of the date hereof,
and will not at the Closing, include any provision for prepayment penalties in
violation of any law or regulation. Section 3.14 of the GBC Disclosure Schedule
sets forth as of March 31, 2003, and will be updated as of the latest complete
fiscal quarter prior to the Closing Date to include, a complete list of all
loans and other assets of GBC and its Subsidiaries that have been classified by
GBC or its Subsidiaries (or by the FDIC, the DFI or GBC's independent auditors)
as "Other Loans of Concern," "Substandard," "Doubtful" or "Loss." Section 3.14
of the GBC Disclosure Schedule sets forth as of March 31, 2003, and will be
updated as of the latest complete fiscal quarter prior to the Closing Date to
include, a complete list of the real estate acquired through foreclosure,
repossession or deed in lieu thereof on the books of GBC and its Subsidiaries.
(b) All guarantees of indebtedness owed to GBC or its Subsidiaries,
including but not limited to those of the Federal Housing Administration, the
Small Business Administration and other state and federal agencies, are, to the
best knowledge of GBC, valid and enforceable, except to the extent
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles or doctrines.
(c) All interest rate swaps, caps, floors and option agreements and
other interest rate risk management arrangements to which GBC or its
Subsidiaries is a party or by which any of their properties or assets may be
bound were entered into in the ordinary course of business and, to the best
knowledge of GBC, in accordance with then-customary practice and applicable
rules, regulations and policies of bank regulatory authorities and with
counterparties believed to be financially responsible at the time and are legal,
valid and binding obligations of the obligors thereto and are in full force and
effect. GBC and its Subsidiaries have duly performed in all material respects
all of their respective obligations thereunder to the extent that such
obligations to perform have accrued and, to the best knowledge of GBC, there are
no material breaches, violations or defaults or allegations or assertions of
such by any party thereunder. None of the transactions contemplated by this
Agreement would permit without the prior consent of General Bank: (i) a
counterparty under any interest rate swap, cap, floor and option agreement or
any other interest rate risk management agreement or (ii) any party to any
mortgage-backed security financing arrangement, to accelerate, discontinue,
terminate or
25
otherwise modify any such agreement or arrangement or would require GBC or its
Subsidiaries to recognize any gain or loss with respect to such arrangement.
(d) Except for pledges to secure public and trust deposits or to secure
advances or discount window availability from the FHLBSF or FRBSF and securities
sold pursuant to repurchase agreements, and except for pledges of securities to
secure fed funds borrowings from other banks, none of the investments reflected
in the GBC Financial Statements dated as of December 31, 2002 under the heading
"Investment Securities," and none of the investments made by GBC and its
Subsidiaries since December 31, 2002, is subject to any restriction, whether
contractual or statutory, which materially impairs the ability of GBC or its
Subsidiaries to freely dispose of such investment at any time, other than those
restrictions imposed on securities held for investment under GAAP. With respect
to all material reverse repurchase agreements to which GBC or its Subsidiaries
is a party, GBC or such Subsidiary has title or a valid, perfected first lien or
security interest in the government securities or other collateral securing each
such reverse repurchase agreement, and the value of the collateral securing each
such reverse repurchase agreement equals or exceeds the amount of the debt
secured by such collateral under such agreement. Except for repurchase
agreements entered into in the ordinary course of business, neither GBC nor any
Subsidiary of GBC has sold or otherwise disposed of any assets in a transaction
in which the acquiror of such assets or other person has the right, either
conditionally or absolutely, to require GBC or its Subsidiaries to repurchase or
otherwise reacquire any such assets, other than for a breach of a representation
or warranty by GBC or its Subsidiaries.
(e) All United States Treasury securities, obligations of other United
States Government agencies and corporations, obligations of States of the United
States and their political subdivisions, and other investment securities
classified as "held to maturity" and "available for sale" held by GBC and its
Subsidiaries, as reflected in the GBC Financial Statements were classified and
accounted for in accordance with Statement of Financial Accounting Standards No.
115 and the intentions of management.
3.15 ALLOWANCE FOR CREDIT LOSSES.
(a) The allowance for credit losses shown on the GBC Financial
Statements has been established by application of General Bank's policies and
methodologies for establishment of such allowances and the requirements of GAAP
and applicable regulatory accounting practices, consistently applied, to provide
for possible credit losses as of such date and, in management's judgment, is
adequate to provide for reasonably foreseeable potential credit losses as of
such date.
(b) Section 3.15 of the GBC Disclosure Schedule sets forth as of March
31, 2003, and will be updated as of the latest complete fiscal quarter prior to
the Closing Date to include, all nonperforming assets and all troubled debt
restructurings (as each term is defined under GAAP) on the books of GBC and its
Subsidiaries as of such date. Section 3.15 of the GBC Disclosure Schedule sets
forth as of March 31, 2003, and will be updated as of the latest complete fiscal
quarter prior to the Closing Date to include, all loans (excluding the
guaranteed portion of any loan that is guaranteed by the U.S. Small Business
Administration) that were contractually past due 90 days or more in the payment
of principal and/or interest.
26
3.16 GBC BENEFIT PLANS.
(a) Section 3.16 of the GBC Disclosure Schedule contains a list of each
compensation, consulting, employment, termination or collective bargaining
agreement, and each stock option, stock purchase, stock appreciation right,
restricted stock, life, health, accident or other insurance, bonus, deferred or
incentive compensation, director emeritus, severance or separation agreement or
any agreement providing any payment or benefit resulting from a change in
control, profit sharing, retirement or other employee benefit plan, practice,
policy or arrangement of any kind, oral or written, covering any employee,
former employee, director or former director of GBC or its Subsidiaries or his
or her beneficiaries, including, but not limited to, any employee benefit plans
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974 ("ERISA"), which GBC or any Subsidiary of GBC maintains, to which
GBC or any Subsidiary of GBC contributes, or under which any employee, former
employee, director or former director of GBC or any Subsidiary of GBC is covered
or has benefit rights and pursuant to which any liability of GBC or any
Subsidiary of GBC exists or is reasonably likely to occur (the "GBC BENEFIT
PLANS"). GBC has previously delivered to Cathay Bank copies of each GBC Benefit
Plan. The term "GBC BENEFIT PLANS" as used herein refers to all plans
contemplated under the preceding sentences of this Section 3.16; provided, that
the term "plan" or "plans" is used in this Agreement for convenience only and
does not constitute an acknowledgment that a particular arrangement is an
employee benefit plan within the meaning of Section 3(3) of ERISA. No GBC
Benefit Plan is a multiemployer plan within the meaning of Section 3(37) of
ERISA.
(b) Except as set forth on Section 3.16 of the GBC Disclosure Schedule,
the execution of this Agreement and the consummation of the transactions
contemplated herein will not, by itself or in combination with any other event
result in any payment (whether of severance pay or otherwise) becoming due from
or under any GBC Benefit Plan to any current or former director, officer,
consultant or employee of GBC or any Subsidiary of GBC or result in the vesting,
acceleration of payment or increases in the amount of any benefit payable to or
in respect of any such current or former director, officer, consultant or
employee.
(c) Each of the GBC Benefit Plans that is intended to be a pension,
profit sharing, stock bonus, thrift or savings plan that is qualified under
Section 401(a) of the Code and any related trust (collectively "GBC QUALIFIED
PLANS") has been determined by the IRS to qualify under Section 401(a) of the
Code, or an application for determination of such qualification has been timely
made to the IRS prior to the end of the applicable remedial amendment period
under Section 401(b) of the Code (a copy of each such determination letter or
pending application was previously made available to Cathay Bancorp) and, to the
best knowledge of GBC, there exist no circumstances likely to adversely affect
the qualified status of any such GBC Qualified Plan, and these representations
and warranties expressly include the request for a compliance statement under
the Voluntary Correction with Service Approval Program made on or about December
2, 2002.
(d) Each of the GBC Benefit Plans established or maintained by GBC or
any of its Subsidiaries or to which GBC or any of its Subsidiaries contribute
has been maintained and operated in material compliance with the terms of such
Plan and with all applicable requirements prescribed (whether as a matter of
substantive law or as necessary to secure and maintain
27
favorable tax treatment) by all applicable laws, governmental or court orders,
or governmental rules or regulations including ERISA, and the Code.
(e) Neither GBC nor any Subsidiary of GBC maintains, sponsors or
contributes to an employee pension benefit plan that is subject to the Plan
Termination Insurance provisions of ERISA, Sections 4001 et seq.
(f) All accrued contributions and other payments required to be made by
GBC or its Subsidiaries to any GBC Benefit Plan through March 31, 2003 have been
made or reserves adequate for such purposes as of March 31, 2003 have been set
aside therefor and are reflected in GBC's financial statements as of March 31,
2003. Neither GBC nor any Subsidiary of GBC is in material default in performing
any of its respective contractual obligations under any of the GBC Benefit Plans
or any related trust agreement or insurance contract, and there are no material
outstanding liabilities of any such Plan other than liabilities for benefits to
be paid to participants in such Plan and their beneficiaries in accordance with
the terms of such Plan or which requires or could require action under the
compliance resolution programs of the IRS to preserve such qualification.
(g) There is no pending or, to the best knowledge of GBC, threatened
litigation, audit by governmental agency or pending claim (other than routine
benefit claims made in the ordinary course) by or on behalf of or against any of
the GBC Benefit Plans (or with respect to the administration of any such Plans)
now or heretofore maintained by GBC or any GBC Subsidiary which are reasonably
likely to result in a liability on the part of GBC or any Subsidiary of GBC or
any such Plan. To the best knowledge of GBC, there is no pending or threatened
litigation, audit or pending claim (other than routine benefit claims) against
any fiduciary, insurer or service provider of any GBC Benefit Plan.
(h) Neither GBC, any Subsidiary of GBC nor any GBC Benefit Plan has
incurred or is reasonably likely to incur any material liability for any
"prohibited transactions" (as defined in Section 406 of ERISA or Section 4975 of
the Code), or any material liability under Section 601 of ERISA or Section 4980B
of the Code. All GBC Benefit Plans that are group health plans have been
operated in substantial compliance with the group health plan continuation
requirements of Section 4980B of the Code and Sections 601 through 608 of ERISA
such that any noncompliance has not resulted and will not result in material
liability to GBC or its Subsidiaries.
(i) Neither GBC nor any Subsidiary of GBC has made any payments, or is
or has been a party to any agreement or any GBC Benefit Plan, that under any
circumstances could obligate it or its successor to make payments that are not
or will not be deductible because of Sections 162(m) or 280G of the Code.
(j) Section 3.16 of the GBC Disclosure Schedule describes any
obligation that GBC or any Subsidiary of GBC has to provide health or welfare
benefits to present or future retirees or other former employees, directors or
their dependents (other than rights under Section 4980B of the Code or Section
601 of ERISA), including information as to the number of current and vested
future retirees, other former employees or directors and dependents entitled to
such coverage and their ages, and the present value of any benefits to be
provided thereto.
28
(k) To the best knowledge of GBC, GBC and its Subsidiaries have filed
or caused to be filed, and will continue to file or cause to be filed, in a
timely manner all filings pertaining to each GBC Benefit Plan with the IRS, the
Department of Labor, as prescribed by the Code or ERISA, or regulations issued
thereunder. To the best knowledge of GBC, all such filings, as amended, were
complete and accurate in all material respects as of the dates of such filings.
(l) GBC and its Subsidiaries have not announced an intention, or
undertaken whether or not legally bound to modify or terminate any GBC Benefit
Plan or adopt any arrangement or program which, once established, would come
within the definition of a GBC Benefit Plan.
(m) GBC and its Subsidiaries have not undertaken to maintain any GBC
Benefit Plan for any period of time and each such Plan is terminable at the sole
discretion of the sponsor thereof, subject only to such constraints as may be
imposed by applicable law.
3.17 COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) (i) The operations of GBC and each of its Subsidiaries comply in
all material respects with all applicable Environmental Laws; (ii) to the best
knowledge of GBC, (A) none of the operations of GBC or any Subsidiary of GBC is
subject to any judicial or administrative proceedings alleging the violation of
any past or present Environmental Law; and (B) none of the operations of GBC or
any GBC Subsidiary is the subject of any federal, state or local order requiring
an investigation or remedial action by GBC or any GBC Subsidiary to respond to a
release or threatened release of any Hazardous Substance, or any other substance
into the environment; and (iii) neither GBC nor any GBC Subsidiary has filed any
notice required under any Environmental Law to report the improper past or
present treatment, storage or disposal of a Hazardous Substance or reporting a
spill or release of a Hazardous Substance, or any other substance into the
environment.
(b) With respect to the real property currently owned by GBC or any GBC
Subsidiary (the "GBC PREMISES"): (i) no part of the GBC Premises has been used
for the generation, manufacture, handling, storage or disposal of material
quantities of any Hazardous Substances other than for routine use as part of an
ordinary consumer or business product; (ii) to the best knowledge of GBC, the
GBC Premises do not contain, and have never contained, an underground storage
tank; and (iii) to the best knowledge of GBC, the GBC Premises do not contain
and are not contaminated by any material quantity of a Hazardous Substance that
requires remedial action by any federal, state or local government agency.
3.18 CONTRACTS AND COMMITMENTS. Except to the extent such documents are
included in the GBC SEC Reports, Section 3.18 of the GBC Disclosure Schedule
contains as of the date of this Agreement (and shall be supplemented by GBC
pursuant to Section 5.10 hereof to contain at the Closing Date) a list of each
of the following documents, a true and correct copy of each of which has been
made available to Cathay Bancorp (provided, however, that no document referenced
in Section 3.16 shall be required to be listed or provided under this Section
3.18):
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(a) any outstanding "extension of credit" to any "Insider" of General
Bank, as such terms are defined in Federal Reserve Regulation O;
(b) each contract or agreement (not otherwise included in the GBC
Disclosure Schedule or specifically excluded therefrom in accordance with the
terms of this Agreement) involving goods or services and which (i) has a term of
one year or more and an annual value of at least $100,000 (excluding telephone
and utility service agreements) or (ii) allows for the sharing of information
regarding customers of GBC and its Subsidiaries other than with customer
consent, including but not limited to;
(i) each agreement in which GBC or its Subsidiaries agreed to
guaranty an obligation of, or indemnify, any officer, director, employee or
agent of GBC or its Subsidiaries;
(ii) each agreement containing any covenant limiting the right of
GBC or its Subsidiaries to engage in any line of business or compete with any
person;
(iii) each agreement relating to the servicing of loans and each
mortgage forward commitment and similar agreement pursuant to which GBC or any
of its Subsidiaries sells to others mortgages that they originate;
(iv) each contract relating to the purchase or sale of financial
or other futures, or any put or call option relating to cash, securities or
commodities and each interest rate swap agreement or other agreement relating to
the hedging of interest rate risks and each agreement or arrangement described
in Section 3.14(d) hereof;
(v) a list of all salaries and bonuses provided by GBC and its
Subsidiaries to any employee, officer or director who earned in salary and bonus
in excess of $100,000 during the calendar year 2002;
(c) each contract or commitment (other than GBC Permitted Liens and
other than those described in Section 3.14) affecting ownership of or title to,
real property which is currently owned by GBC or any GBC Subsidiary;
(d) the articles of incorporation and bylaws and specimen certificates
of each type of security issued by GBC and General Bank;
(e) each other contract or commitment providing for payment based in
any manner upon outstanding loans or profits of GBC or any GBC Subsidiary;
(f) each lease or license with respect to real or tangible personal
property, whether as lessor, lessee, licensor or licensee, with annual rental or
other payments due thereunder in excess of $100,000 to which GBC or any GBC
Subsidiary is a party, which does not expire within six months from the date
hereof and cannot be terminated upon 30 days (or less) written notice without
penalty;
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(g) all consulting, financial advisory, investment banking and
professional services contracts other than legal counsel to which GBC or its
Subsidiaries is a party and in which GBC or its Subsidiaries expect to pay more
than $100,000 during the calendar year 2003;
(h) all judgments, orders, injunctions, court decrees or settlement
agreements arising out of or relating to the labor and employment practices or
decisions of GBC or any GBC Subsidiary which, by their terms, continue to bind
or affect GBC or any GBC Subsidiary;
(i) all orders, decrees, memoranda, agreements or understandings with
regulatory agencies binding upon or affecting the current operations of GBC or
any GBC Subsidiary or any of their directors or officers in their capacities as
such;
(j) all registered trademarks, trade names, service marks, patents or
copyrights that are owned by GBC or any GBC Subsidiary;
(k) list of all bank-owned life insurance policies (each, a "BOLI
POLICY") owned by GBC or any Subsidiary of GBC insuring the life of any officer,
employee or director of GBC and naming GBC or any of its Subsidiaries as the
beneficiary in the event of the death of the insured officer, employee or
director, and copies of related insurance policy applications and of consent
forms signed by the insured officer, employee or director authorizing GBC or any
Subsidiary of GBC to purchase each BOLI Policy.
3.19 DEFAULTS. There has not been any material default in any material
obligation to be performed by GBC or its Subsidiaries under any material
contract or commitment, and neither GBC nor or any of its Subsidiaries has
waived as of the date hereof any material right under any material contract or
commitment.
3.20 OPERATIONS SINCE DECEMBER 31, 2002. Between December 31, 2002 and the
date hereof, there has not been:
(a) any increase in the compensation payable or to become payable by
GBC or any GBC Subsidiary to any employee, officer or director, other than
routine annual increases to employees consistent with past practices;
(b) any payment of dividends or other distributions by GBC to its
shareholders or any redemption by GBC of its capital stock, other than regular
quarterly dividends;
(c) any mortgage, pledge or subjection to lien, charge or encumbrance
of any kind of or on any asset, tangible or intangible, of GBC or any GBC
Subsidiary, except the following (each of which, whether arising before or after
the date hereof, is herein referred to as a "GBC PERMITTED LIEN"): (i) liens
arising out of judgments or awards in respect of which GBC or any GBC Subsidiary
is in good faith prosecuting an appeal or proceeding for review and in respect
of which it has secured a subsisting stay of execution pending such appeal of
proceeding; (ii) liens for taxes, assessments and other governmental charges or
levies, the payment of which is not past due, or as to which GBC or any GBC
Subsidiary is diligently contesting in good faith and by appropriate proceeding
either the amount thereof or the liability therefor or both; (iii) deposits,
liens or pledges to secure payments of worker's compensation, unemployment
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insurance, pensions or other social security obligations, or the performance of
bids, tenders, leases, contracts (other than contracts for the payment of
money), public or statutory obligations, surety, stay or appeal bonds, or
similar obligations arising in the ordinary course of business; (iv) zoning
restrictions, easements, licenses and other restrictions on the use of real
property or any interest therein, or minor irregularities in title thereto,
which do not materially impair the use of such property or the merchantability
or the value of such property or interest therein; (v) purchase money mortgages
or other purchase money or vendor's liens or security interests (including,
without limitation, finance leases), provided that no such mortgage, lien or
security interest shall extend to or cover any other property of GBC or any GBC
Subsidiary other than that so purchased; (vi) pledges and liens given to secure
deposits and other liabilities of GBC or any GBC Subsidiary arising in the
ordinary course of business (including those given to secure public and trust
deposits and to secure advances or discount window availability from the FHLBSF
or the FRBSF); (vii) pledges of securities to secure fed funds borrowings from
other banks; and (viii) pledges and liens otherwise created in the ordinary
course of business;
(d) any creation or assumption of indebtedness (including the extension
or renewal of any existing indebtedness, or the increase thereof) by GBC or any
GBC Subsidiary for borrowed money, or otherwise, other than in the ordinary
course of business, none of which is in default;
(e) the establishment of any new, modification of or amendment to, or
increase in the formula for contributions to or benefits under, any GBC Benefit
Plan by GBC or any GBC Subsidiary, other than in the ordinary course of
business;
(f) any action by GBC or any GBC Subsidiary seeking any cancellation
of, or decrease in the insured limit under, or increase in the deductible amount
or the insured's retention (whether pursuant to coinsurance or otherwise) of or
under, any policy of insurance maintained directly or indirectly by GBC or any
GBC Subsidiary on any of their respective assets or businesses, including but
not by way of limitation, fire and other hazard insurance on its assets,
automobile liability insurance, general public liability insurance, and
directors' and officers' liability insurance; and if an insurer takes any such
action, GBC shall promptly notify Cathay Bancorp;
(g) any change in GBC's or its Subsidiaries' independent auditors or
historic methods of accounting (other than as required by GAAP or regulatory
accounting principles);
(h) any purchase, whether for cash or secured or unsecured obligations
(including finance leases) by GBC or any GBC Subsidiary of any fixed asset which
has a purchase price individually in excess of $100,000 or in the aggregate in
excess of $500,000;
(i) any sale or transfer of any real or tangible personal property in
excess of $100,000 of GBC or any GBC Subsidiary outside of the ordinary course
of business;
(j) any material damage or destruction to any assets or property of GBC
or any GBC Subsidiary whether or not covered by insurance; or
(k) any agreement or commitment to do any of the foregoing.
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3.21 CORPORATE RECORDS. The corporate record books, transfer books and
stock ledgers of GBC and General Bank are complete and accurate in all material
respects and reflect all meetings, consents and other material actions of the
organizers, incorporators, shareholders, Boards of Directors and committees of
the Boards of Directors of each, and all transactions in their respective
capital stocks, since their respective inceptions.
3.22 UNDISCLOSED LIABILITIES. Except for liabilities incurred in the
ordinary course of business, liabilities reflected in the draft of GBC's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 (a copy of
which was provided to Cathay Bancorp) and liabilities that would not be
reasonably expected to have a Material Adverse Effect on GBC, since December 31,
2002, neither GBC nor any GBC Subsidiary has incurred any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise that,
if incurred prior to December 31, 2002, would have been required by GAAP to be
recognized or disclosed on the GBC Financial Statements.
3.23 ASSETS.
(a) GBC and its Subsidiaries have good and marketable title to their
real and tangible personal properties reflected as owned by GBC or any GBC
Subsidiary in the GBC Financial Statements and those acquired since December 31,
2002, except for (i) assets and properties since disposed of in the ordinary
course of business and (ii) GBC Permitted Liens none of which, in the aggregate,
are material to the assets of GBC on a consolidated basis. To the best knowledge
of GBC, all buildings, structures, fixtures and appurtenances comprising part of
the real properties owned or leased by GBC and its Subsidiaries are in
reasonable operating condition. GBC and its Subsidiaries have title or other
rights to its assets sufficient in all material respects for the conduct of
their respective businesses as presently conducted.
(b) All leases pursuant to which GBC or its Subsidiaries, as lessee,
leases real or tangible personal property and which are material to the conduct
of their businesses are, to the best knowledge of GBC as of the date of this
Agreement, valid, effective and enforceable against the lessor in accordance
with their respective terms. There is not under any of such material leases any
existing material default, or any event which with notice or lapse of time or
both would constitute a material default, with respect to either GBC or any GBC
Subsidiary, or to the best knowledge of GBC, the other party. Section 3.23(b) of
the GBC Disclosure Schedule sets forth those leases that contain a provision
which would preclude the surviving corporation or resulting institution or any
GBC Subsidiary from possessing and using the leased premises for the same
purposes and upon the same rental and other terms upon the consummation of the
Merger as are applicable to the use by GBC or any GBC Subsidiary as of the date
of this Agreement.
3.24 INSIDER INTERESTS. All outstanding loans and other contractual
arrangements (including deposit relationships) between GBC or any GBC Subsidiary
and any officer, director or employee of GBC or any GBC Subsidiary conform to
the applicable rules and regulations and requirements of all applicable
regulatory agencies which were in effect when such loans and other contractual
arrangements were entered into. No officer, director or employee of GBC or any
GBC Subsidiary has any material interest in any tangible property, real or
personal, used in or pertaining to the business of GBC or its Subsidiaries.
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3.25 REGISTRATION OBLIGATIONS. Neither GBC nor any GBC Subsidiary are under
any obligation, contingent or otherwise, which will survive the Effective Time
by reason of any agreement to register any of its securities under the
Securities Act or other federal or state securities laws or regulations.
3.26 IMPEDIMENTS TO PERFORMANCE. Neither GBC nor any of its Subsidiaries
has taken or agreed to take any action, or has knowledge of any fact or
circumstance, that would materially impede or delay the consummation of the
transactions contemplated by this Agreement or the ability of the parties to
obtain any Regulatory Approval or to perform their covenants and agreements
under this Agreement.
3.27 BROKERS AND FINDERS. Except as set forth in the agreement with ▇▇▇▇▇▇
Brothers dated January 28, 2002 (which agreement has not been amended since such
date), a copy of which has previously been made available to Cathay Bancorp,
neither GBC nor any GBC Subsidiary nor any of their respective officers,
directors or employees has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions or
finders' fees to any person, including but not limited to any officer, director
or employee of GBC or its Subsidiaries, and no other broker or finder has acted
directly or indirectly for GBC or any of its Subsidiaries in connection with
this Agreement or the transactions contemplated hereby.
3.28 FAIRNESS OPINION. GBC has received from ▇▇▇▇▇▇ Brothers a fairness
opinion, dated as of the date of this Agreement, that, from a financial point of
view, the Merger Consideration to be received by the holders of GBC Common Stock
is fair to such holders.
3.29 GOVERNMENTAL APPROVALS AND OTHER CONDITIONS. To the best knowledge of
GBC, there is no reason relating specifically to GBC or any GBC Subsidiary why
(i) the Regulatory Approvals should not be granted, (ii) such Regulatory
Approvals should be subject to a condition which would differ from conditions
customarily imposed in orders approving acquisitions of the type contemplated
hereby or (iii) any of the conditions precedent as specified in Article VI
hereof to the obligations of any of the parties hereto to consummate the
transactions contemplated hereby are unlikely to be fulfilled within the
applicable time period or periods required for satisfaction of such condition or
conditions. No consent, approval, order or authorization of, or registration,
declaration or filing with, any federal or state governmental authority is
required by or with respect to GBC or any GBC Subsidiary in connection with the
execution and delivery of this Agreement or the consummation by GBC of the
transactions contemplated hereby or thereby except for: (a) the filing of all
Regulatory Applications; (b) the receipt of all Regulatory Approvals; (c) the
filing by Cathay Bancorp of the Joint Proxy Registration Statement with the SEC
and various blue sky authorities, which Joint Proxy Registration Statement shall
include the Proxy Statement for use in connection with the GBC Shareholders'
Meeting; (d) the filing of the Bank Merger Agreement with respect to the Bank
Merger, bearing the endorsement of the DFI and California Secretary of State,
with the DFI; (e) the filing of the Merger Agreement with respect to the Merger
with the Secretaries of State of Delaware and California; and (f) any filings,
approvals or no-action letters with or from state securities authorities.
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3.30 MOU COMPLIANCE. General Bank is in compliance in all material respects
with the MOU.
ARTICLE IV
COVENANTS PENDING THE CLOSING
4.1 BUSINESS IN ORDINARY COURSE OF GBC.
(a) Without the prior written consent of Cathay Bancorp, GBC shall not
declare or pay any dividend other than its regular quarterly dividend in an
amount not to exceed $0.12 per share or make any other distribution with respect
to its capital stock whether in cash, stock or other property, after the date of
this Agreement.
(b) Except as contemplated or permitted by this Agreement or the GBC
Disclosure Schedule or another agreement to which GBC or any GBC Subsidiary is a
party as of the date of this Agreement, or as required by applicable law, rule
or regulation, or as requested by the DFI, FDIC or FRB, during the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Time, GBC and its Subsidiaries shall continue
to carry on their respective businesses and the discharge or incurring of
obligations and liabilities, only in the usual, regular and ordinary course of
business, as heretofore conducted, and by way of amplification and not
limitation, except as contemplated or permitted by this Agreement or the GBC
Disclosure Schedule, GBC and each of its Subsidiaries will not, without the
prior written consent of Cathay Bancorp (which consent shall not be unreasonably
withheld, delayed or conditioned):
(i) issue any capital stock or any options, warrants or other
rights to subscribe for or purchase capital stock or any securities convertible
into or exchangeable for any capital stock, except pursuant to the exercise of
options under GBC's stock option plans outstanding on the date hereof;
(ii) directly or indirectly redeem, purchase or otherwise acquire
any capital stock or ownership interests of GBC or any of its Subsidiaries
(except in connection with the termination of employment) or pre-pay or
voluntarily re-pay any subordinated debt or trust preferred securities of GBC;
(iii) effect a reclassification, recapitalization, split-up,
exchange of shares, readjustment or other similar change in or to any capital
stock or otherwise reorganize or recapitalize;
(iv) change its articles of incorporation or bylaws;
(v) other than the hiring of "at will" employees in the ordinary
course of business, enter into any new, or modify any existing, employment
agreement, severance agreement, change of control agreement or plan relative to
the foregoing; or grant any material increase (other than routine annual
increases to employees consistent with past practices) in the compensation
payable or to become payable to directors, officers or employees except as
required by law; pay or agree to pay or accrue for any bonus except in
accordance with bonus and incentive plans in existence on the date hereof and
for which accruals have been made in the
35
ordinary course; or adopt or make any change in any bonus, insurance, BOLI
Policy, pension or other GBC Benefit Plan other than in the ordinary course and
consistent with past practices; provided, that General Bank may make exceptional
bonus payments to its employees as recommended by management and approved by its
board of directors, which exceptional bonus payments shall be consistent with
the summary and schedule set forth on Section 4.1(b)(v) of the BGC Disclosure
Schedule (the "STAFF BONUS");
(vi) except deposit-taking, reverse repurchase transactions,
purchases of Federal Funds, discount window borrowings and FHLBSF advances, and
other funding transactions in the ordinary course of its business, borrow or
agree to borrow any funds or indirectly guarantee or agree to guarantee any
obligations of others;
(vii) except for loans or lines of credit or commitments for loans
or lines of credit that have been approved prior to the date hereof, (A) make
any loan or extend any line of credit that would require the approval of General
Bank's Executive Loan Committee under existing loan approval authority granted
to General Bank's management, (B) make any loan or extend any line of credit to
any new customer in excess of $5,000,000 or (C) restructure, renew, extend,
modify or otherwise amend any (1) unsecured loan or line of credit that is
classified as "Substandard" or worse in excess of $1,000,000 or (2) secured loan
or line of credit that is classified as "Substandard" or worse in excess of
$3,000,000; provided, that Cathay Bank shall use its best efforts to communicate
its decision regarding its consent with respect to any such loan or line of
credit promptly after delivery by General Bank to Cathay Bank of the loan
package therefor requesting Cathay Bank's consent; provided further, that, if
Cathay Bank does not communicate in writing its decision regarding its consent
or reasonably request additional information regarding such proposed loan or
line of credit within three (3) Business Days of Cathay Bank's receipt of
General Bank's request for consent (or the provision of such additional
information), then Cathay Bank shall be deemed to have granted its prior written
consent;
(viii) make any material changes in its policies concerning loan
underwriting or which persons may approve loans;
(ix) enter into any securities transaction for its own account or
purchase, or otherwise acquire any investment security for its own account
(other than (i) U.S. Treasury obligations or obligations of agencies of the U.S.
government with maturities of less than one year and deposits in an overnight
account at the FRBSF or the FHLBSF, (ii) readily marketable investment
securities or (iii) securities with ratings of at least Aa2, AA or AA from
▇▇▇▇▇'▇ Investors Service, Standard and Poor's or Fitch Ratings, respectively);
(x) except for GBC Permitted Liens, place on any of its assets or
properties any mortgage, pledge, lien, charge, or other encumbrance;
(xi) sell or otherwise dispose of any interest in real property or
any material amount of tangible personal property other than properties acquired
in foreclosure or otherwise in the ordinary collection of indebtedness owed to
GBC or its Subsidiaries;
(xii) foreclose upon or otherwise take title to or possession or
control of any real property without first obtaining a phase one environmental
report thereon, and except in
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the ordinary course of business and consistent with past practices, without
first having consulted with Cathay Bank; provided, however, that GBC and its
Subsidiaries shall not be required to obtain such a report with respect to
single-family, non-agricultural residential property of one acre or less to be
foreclosed upon unless it has reason to believe that such property might contain
Hazardous Substances other than customary household products;
(xiii) knowingly or willfully commit any act or fail to commit any
act which will cause a material breach of any agreement, contract or commitment;
(xiv) except for property acquired by foreclosure, repossession or
deed in lieu thereof, purchase (A) any real or tangible personal property or
make any capital expenditure where the amount paid or committed therefor is in
excess of $100,000, except for outstanding commitments set forth in Section 3.18
of the GBC Disclosure Schedule, or (B) whether for cash or secured or unsecured
obligations (including finance leases) any fixed asset which has a purchase
price individually in excess of $100,000 or in the aggregate in excess of
$500,000;
(xv) enter into or acquire any derivatives contract other than
warrants taken as additional compensation in connection with extensions of
credit;
(xvi) knowingly or willfully take any action that would materially
impede or delay the consummation of the transactions contemplated by this
Agreement or the ability of the parties hereto to obtain any approval of any
regulatory authority required for the transactions contemplated by this
Agreement or to perform its covenants and agreements under this Agreement; or
(xvii) agree in writing or otherwise to take any of the foregoing
actions or engage in any of the foregoing activities.
(c) GBC will, and will cause its Subsidiaries to, use their
commercially reasonable efforts to maintain their respective properties and
assets in their present state of repair, order and condition, reasonable wear
and tear excepted, and to maintain and keep in full force and effect all
policies of insurance presently in effect, or replacements for such policies,
including insurance of accounts with the FDIC. GBC will, and will cause its
Subsidiaries to, take all requisite action (including without limitation the
making of claims and the giving of notices) pursuant to its directors' and
officers' liability insurance policy or policies in order to preserve all rights
thereunder with respect to all matters which could reasonably give rise to a
claim prior to the Effective Time.
(d) GBC and General Bank each will use its best efforts to operate in a
manner such that at all times GBC and General Bank will be in compliance with
the requirements of the MOU as in effect on the date of this Agreement and shall
report to Cathay Bancorp all material developments with respect to its
compliance with the MOU. GBC and General Bank will maintain an allowance for
credit losses by application of General Bank's policies and methodologies for
establishment of such allowances and the requirements of GAAP and applicable
regulatory accounting practices, consistently applied.
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4.2 CONFORMING ACCOUNTING AND RESERVE POLICIES; RESTRUCTURING MATTERS.
Notwithstanding that GBC believes that it, General Bank and their Subsidiaries
have established all reserves and taken all provisions for possible loan losses
required by GAAP and applicable laws, rules and regulations, GBC recognizes that
Cathay Bancorp or Cathay Bank may have adopted different loan, accrual and
reserve policies (including loan classifications and levels of reserves for
possible loan losses). At the request of Cathay Bancorp, GBC and General Bank
agree, immediately prior to or simultaneous with the Closing and after
satisfaction or waiver of the conditions to Closing set forth in Article VI
hereof, to establish and take such reserves and accruals as Cathay Bancorp
reasonably shall request to conform General Bank's allowance for credit losses,
accrual, reserve and other accounting policies to the policies of Cathay Bank,
provided, however, that (a) GBC or General Bank shall not be required to take
such actions prior to the time Cathay Bancorp agrees in writing that all of the
conditions to its obligation to close as set forth in Section 6.1 have been
satisfied or waived and each of the Regulatory Approvals have been received, and
(b) no such adjustment shall (i) require any filing with any Governmental
Entity, (ii) violate any law, rule or regulation applicable to GBC or any of its
Subsidiaries, (iii) constitute, or be deemed to constitute, any breach,
violation, modification or contradiction of any certification filed with any
Governmental Entity prior to such date by GBC or any of its Subsidiaries or any
officer or employee thereof and (c) such requested conforming adjustments,
including any expenses incurred in connection with Cathay Bancorp requested
termination of employee benefit plans under Section 5.12 hereof, shall not be
taken into account in determining whether GBC has experienced a Material Adverse
Effect nor shall it constitute or be deemed to be a breach, violation of or
failure to satisfy any representation, warranty, covenant, condition or other
provision of this Agreement or otherwise be considered in determining whether
any such breach, violation or failure to satisfy shall have occurred.
4.3 BUSINESS IN ORDINARY COURSE OF CATHAY BANCORP.
(a) Without the prior written consent of GBC, Cathay Bancorp shall not
declare or pay any dividend other than its regular quarterly dividend in an
amount not to exceed $0.14 per share or make any other distribution with respect
to its capital stock whether in cash, stock or other property, after the date of
this Agreement.
(b) Except as contemplated or permitted by this Agreement or the Cathay
Bancorp Disclosure Schedule, or as required by applicable law, rule or
regulation, during the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective Time,
Cathay Bancorp, Cathay Bank and their Subsidiaries shall (i) continue to carry
on their respective businesses and the discharge or incurring of obligations and
liabilities, only in the usual, regular and ordinary course of business,
consistent with past practice, (ii) use commercially reasonable efforts to
maintain and preserve intact its business organization, employees and
advantageous business relationships and retain the services of its officers and
key employees and (iii) knowingly or willfully take any action which would
reasonably be expected to adversely affect or delay its ability to obtain any
Regulatory Approvals or to consummate the transactions contemplated hereby.
Without limiting the foregoing, and except as contemplated or permitted by this
Agreement, Cathay Bancorp and Cathay Bank shall not (v) issue any capital stock
or any options, warrants or other rights to subscribe for or purchase capital
stock or any securities convertible into or exchangeable for any capital stock,
except pursuant to the exercise of stock options granted prior to the date of
this
38
Agreement; (w) effect a reclassification, recapitalization, split-up, exchange
of shares, readjustment or other similar change in or to any capital stock or
otherwise reorganize or recapitalize; (x) change its articles or certificate, as
the case may be, of incorporation or bylaws; (y) not knowingly or willfully
commit any act or fail to commit any act which will cause a material breach of
any agreement, contract or commitment or (z) knowingly or willfully take any
action that would materially impede or delay the consummation of the
transactions contemplated by this Agreement or the ability of the parties hereto
to obtain any Regulatory Approvals or to perform its covenants and agreements
under this Agreement.
(c) Except for the transactions contemplated by this Agreement, Cathay
Bancorp, Cathay Bank or any their Subsidiaries shall not enter into any
transaction between the date of this Agreement and the Effective Time that would
require filing any application under the Bank Merger Act or Sections 3 or 4 of
the Bank Holding Company Act of 1956.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 INSPECTION OF RECORDS.
(a) GBC and its Subsidiaries shall afford to Cathay Bancorp and to
Cathay Bancorp's accountants, counsel and other representatives reasonable
access on reasonable advance notice during normal business hours during the
period prior to the Effective Time to all of their properties, books, contracts,
commitments, monthly packages, reports (including those prepared by external
consultants) and minutes prepared for its Boards of Directors, and records,
including all personnel files and other employment records, and all attorneys'
responses to auditors' requests for information and, to the extent available,
accountants' work papers, developed by GBC and its Subsidiaries or their
accountants or attorneys, and will permit Cathay Bancorp and Cathay Bancorp's
representatives to discuss such information directly with GBC's and its
Subsidiaries' officers, directors, employees, attorneys and accountants. GBC and
its Subsidiaries shall permit designated representatives of Cathay Bancorp to
attend and participate (but not vote) in all loan committee meetings and shall
meet with such representatives monthly to review General Bank's loan portfolio.
GBC and its Subsidiaries shall use their commercially reasonable efforts to
furnish all other information concerning its business, properties and personnel
as Cathay Bancorp may reasonably request; provided, however, such access may be
limited by GBC and its Subsidiaries so as to avoid unreasonable disruption or
interference with their business operations or violation of any duty of customer
confidentiality or privacy.
(b) Cathay Bancorp shall afford to GBC and to GBC's accountants,
counsel and other representatives reasonable access on reasonable advance notice
during normal business hours during the period prior to the Effective Time to
all of (its and its Subsidiaries') properties, books, contracts, commitments,
monthly packages, reports (including those prepared by external consultants) and
minutes prepared for its Boards of Directors, and records, and all attorneys'
responses to auditors' requests for information and, to the extent available,
accountants' work papers, developed by Cathay Bancorp or its Subsidiaries and
their accountants or attorneys, and will permit GBC and GBC's representatives to
discuss such information directly with the officers, directors, employees,
attorneys and accountants of Cathay Bancorp and its Subsidiaries. Cathay Bancorp
shall use its commercially reasonable efforts to furnish all other information
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concerning its business, properties and personnel as GBC may reasonably request;
provided, however, such access may be limited by Cathay Bancorp so as to avoid
unreasonable disruption or interference with its business operations or
violation of any duty of customer confidentiality or privacy.
(c) The availability or actual delivery of information shall not affect
the representations, warranties, covenants and agreements of the party providing
such information that are contained in this Agreement or in any certificates or
other documents delivered pursuant hereto.
5.2 JOINT PROXY REGISTRATION STATEMENT; SHAREHOLDER APPROVAL. As soon as
practicable after the date hereof, Cathay Bancorp shall file the Joint Proxy
Registration Statement with the SEC, and GBC and Cathay Bancorp shall use their
commercially reasonable efforts to cause the Joint Proxy Registration Statement
to become effective under the Securities Act. Cathay Bancorp will take any
action required to be taken under the applicable blue sky or securities laws in
connection with the issuance of the shares of Cathay Common Stock in the Merger.
Each party shall furnish all information concerning it and the holders of its
capital stock as the other party may reasonably request in connection with such
action. Each of Cathay Bancorp and GBC shall duly call, give notice of, convene
and hold their respective Shareholders' Meetings as soon as reasonably
practicable after the date of this Agreement for the purpose of voting upon this
Agreement and the Merger. In connection with the Shareholders' Meetings, (i)
Cathay Bancorp and GBC shall jointly prepare their respective Proxy Statements
as part of the Joint Proxy Registration Statement, (ii) the Boards of Directors
of Cathay Bancorp and GBC shall recommend to their respective shareholders the
approval of this Agreement and the Merger; (iii) each shall use its commercially
reasonable efforts to have the Joint Proxy Registration Statement declared
effective under the Securities Act as soon as practicable; and (iv) Cathay
Bancorp and GBC shall mail the Joint Proxy Registration Statement to their
respective shareholders.
5.3 AGREEMENTS OF DIRECTORS AND OTHER AFFILIATES. As soon as practicable
after the date of this Agreement, GBC shall deliver to Cathay Bancorp a letter,
reviewed by GBC's counsel, identifying all persons who are or may be deemed to
be "affiliates" of GBC for purposes of Rule 145 under the Securities Act at the
time of the GBC Shareholders' Meeting. GBC shall use its commercially reasonable
efforts to cause each person who is so identified as an "affiliate," and who has
not previously delivered to Cathay Bancorp an executed Affiliate Agreement, to
deliver to Cathay Bancorp, as soon as practicable thereafter, an Affiliate
Agreement. Prior to the Effective Time, GBC shall amend and supplement such
letter and use its commercially reasonable efforts to cause each additional
person who is identified as an "affiliate" to execute an Affiliate Agreement.
5.4 EXPENSES. Each party hereto shall bear its own expenses incident to
preparing, entering into and carrying out this Agreement and to consummating the
Bank Merger and the Merger. Notwithstanding the foregoing, Cathay Bancorp and
GBC will share equally all third party printing costs incurred with respect to
the Joint Proxy Registration Statement in preliminary and final form.
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5.5 COOPERATION.
(a) Each party covenants that it will use its commercially reasonable
efforts to bring about the transactions contemplated by this Agreement as soon
as practicable, unless this Agreement is terminated as provided herein. Subject
to the terms and conditions herein provided, each of the parties hereto agrees
to use all commercially reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement at the earliest practicable
time. GBC will cooperate with Cathay Bancorp in identifying material contracts
of GBC and its Subsidiaries that are scheduled for renewal between the date of
this Agreement and the Effective Time to provide appropriate notice of
non-renewal if Cathay Bancorp informs GBC that it does not intend to continue
the contractual relationship following the Effective Time; provided, however,
such notice of non-renewal shall not be given if, in the reasonable judgment of
GBC, the notice would impair the ability of GBC or any of its Subsidiaries to
conduct its business in the event that this Agreement is terminated pursuant to
Article VII hereof.
(b) In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and/or directors of the parties shall take all such necessary action.
Each party shall use its commercially reasonable efforts to preserve for itself
and the other parties hereto each available legal privilege with respect to the
confidentiality of their negotiations and related communications, including the
attorney-client privilege.
(c) The parties shall cooperate with each other in announcing dividends
and establishing dividend eligibility and payment dates for dividends permitted
pursuant to Sections 4.1(a) and 4.3(a) hereof so that GBC's shareholders shall
not receive a dividend from GBC and Cathay Bancorp in the same calendar quarter.
5.6 REGULATORY APPLICATIONS.
(a) Each of the parties shall, as soon as practicable after the date of
this Agreement, file all applications that it is responsible to file with all
applicable regulatory authorities, including (a) an application to the DFI for
approval of the Bank Merger under the CFC, (b) an application to the FDIC for
approval of the Bank Merger under Section 18(c) of the Federal Deposit Insurance
Act and (c) an application to the FRB under Sections 3 and 4 of the Bank Holding
Company Act of 1956 or an application for a waiver from consideration under
these provisions as appropriate (together, the "REGULATORY APPLICATIONS"), and
shall use their commercially reasonable efforts to respond as promptly as
practicable to all inquiries received concerning said Regulatory Applications.
GBC shall cause GBC Venture Capital, Inc. to merge into GBC immediately prior to
the Effective Time; provided, that GBC shall not be required to cause such
merger if it would result in a detriment to GBC.
(b) In the event that the appearance of any officers, directors or
employees, or counsel, of any party is requested at any hearing in connection
with such Regulatory Application, the party whose representative is so requested
to appear shall make commercially reasonable efforts to arrange for those
appearances. The parties shall promptly advise each other upon
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receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the Bank Merger or the Merger that
causes such party to believethat there is a reasonable likelihood that any
required Regulatory Approval will not be obtained or that the receipt of any
such approval will be materially delayed or conditioned. In the event the Bank
Merger or the Merger is challenged or opposed by any administrative or legal
proceeding, whether by the United States Department of Justice or otherwise, the
parties shall consult with each other and decide upon a reasonable course of
action designed to bring about consummation of the Bank Merger or the Merger,
and shall use commercially reasonable efforts to defend any litigation seeking
to enjoin, prevent or delay consummation of the Bank Merger or the Merger.
5.7 FINANCIAL STATEMENTS AND REPORTS. From the date of this Agreement and
prior to the Effective Time, each party will deliver to the other (a) not later
than fifteen (15) days after the end of each month, all monthly internal
unaudited financial statements, financial reports, balance sheets and budget
analyses prepared by it for its internal use and for its Boards of Directors;
(b) promptly after filing with the DFI and the FDIC and in no event later than
thirty (30) days after the end of any fiscal quarter, the quarterly call report
filed by each of General Bank and Cathay Bank with the DFI and the FDIC; (c)
unless generally available in public databases, promptly after filing with the
SEC and in no event later than forty-five (45) days after the end of each
quarter, their respective Quarterly Reports on Form 10-Q for such quarter as
filed with the SEC, which shall be prepared in conformity with GAAP and the
rules and regulations of the SEC; and (d) unless generally available in public
databases, within five (5) Business Days after filing, any and all other
material reports filed with the SEC, the FDIC, the DFI or the FRB.
5.8 NOTICE. At all times prior to the Effective Time, each party shall
promptly notify the others in writing of (a) any failure by such party to
materially comply with or satisfy any covenant, condition or agreement contained
herein, (b) the inaccuracy in any material respect of its representations and
warranties contained herein and (c) the occurrence or non-occurrence of any
event the occurrence or non-occurrence of which would be likely to cause any
representation or warranty made by such party to be materially untrue or
inaccurate; provided, however, that the delivery of any such notice shall not
limit, affect or waive the remedies available to the parties receiving such
notice or the conditions to the obligations of the parties hereto; provided
further, that delivery of any notice pursuant to this Section 5.8 shall only be
required in the event the conditions set forth in Sections 6.1(a), 6.1(b),
6.2(a) or 6.2(b) would not be satisfied.
5.9 PUBLICITY. Following the execution of this Agreement, the parties shall
prepare and issue a mutually acceptable joint press release and materials to be
presented in a joint investor presentation, at which appropriate management
officials of both parties shall participate. The parties shall consult with each
other before issuing any further press release or public statement with respect
to the Merger or this Agreement and shall not issue any such press release or
make any such public statement with respect thereto without the prior consent of
the other party, which consent shall not be unreasonably withheld; provided,
however, that a party may, without the prior consent of the other party (but
after prior consultation, to the extent practicable in the circumstances) issue
such press release or make such public statement as may upon the advice of
counsel be required by law or the rules and regulations governing the Nasdaq NM.
42
The parties shall make appropriate management available at presentations related
to the Merger and the Bank Merger as reasonably requested by the other party.
5.10 DELIVERY OF SUPPLEMENTS TO DISCLOSURE SCHEDULES. During the period
beginning on the fifth Business Day preceding the Closing Date, each party will
supplement or amend its Disclosure Schedule with respect to any matter hereafter
arising which, if existing or occurring at or prior to the date of this
Agreement, would have been required to be set forth or described in such
Disclosure Schedule or which is necessary to correct any information in the
Disclosure Schedule or in any representation and warranty made by the disclosing
party which would have been rendered inaccurate thereby; provided, that each
party shall use its best efforts to deliver to the other parties as soon as
possible during such period a draft of the updated Disclosure Schedule required
by this Section 5.10 in substantially final form. For purposes of determining
the accuracy of the representations and warranties of Cathay Bank or Cathay
Bancorp and GBC or General Bank contained in Articles II and III, respectively,
at the time of execution and delivery of this Agreement, the Disclosure Schedule
of each party shall be deemed to include only that information contained therein
on the date it is initially delivered to the other party.
5.11 LITIGATION MATTERS.
(a) GBC shall provide to Cathay Bancorp such reports on litigation
involving GBC and any of its Subsidiaries as Cathay Bancorp shall reasonably
request; provided that GBC shall not be required to divulge information to the
extent that, in the good faith opinion of its counsel, by doing so, it would
risk waiver of the attorney-client privilege to its detriment. Notwithstanding
the foregoing, GBC will consult with Cathay Bancorp about any proposed
settlement, or any disposition of, any litigation involving amounts in excess of
$250,000.
(b) Cathay Bancorp shall provide to GBC such reports on litigation
involving Cathay Bancorp, Cathay Bank and their Subsidiaries as GBC shall
reasonably request; provided, that Cathay Bancorp shall not be required to
divulge information to the extent that, in the good faith opinion of its
counsel, by doing so, it would risk waiver of the attorney-client privilege to
its detriment.
5.12 EMPLOYEES; BENEFITS AND RELATED MATTERS.
(a) Cathay General Bancorp shall honor all written employment and
severance agreements between GBC and its Subsidiaries on the one hand and any of
their current or former employees or directors on the other hand.
(b) Each person who is employed by GBC or its Subsidiaries immediately
prior to the Effective Time shall, at the Effective Time, become an employee of
Cathay General Bancorp or its Subsidiaries (the "CONTINUING EMPLOYEES").
Following the Effective Time, Cathay General Bancorp shall maintain the employee
benefit plans, programs and arrangements, including medical, dental and vision
but excluding the General Bank 401(k) ESOP Plan (the "GBC EMPLOYEE BENEFIT
PLANS"), of GBC and its Subsidiaries until such time as Cathay General Bancorp
shall arrange for the Continuing Employees to participate in its employee
benefit plans, programs and arrangements, including medical, dental and vision
(the "CATHAY EMPLOYEE BENEFIT PLANS"), on terms no less favorable than those
provided to similarly situated employees
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of Cathay Bancorp (it being understood that the Continuing Employees shall be
eligible to participate in the Amended and Restated Cathay Bank Employee Stock
Ownership Plan and the Cathay Bancorp, Inc. 401(k) Profit Sharing Plan at the
next regularly scheduled enrollment date following the Effective Time).
(c) The Continuing Employees shall, to the extent permitted by law and
applicable tax qualification requirements, and subject to any generally
applicable break-in service or similar rule, receive credit for all purposes,
including for eligibility to participate and vesting, under any of the Cathay
Employee Benefit Plans for years of service (calculated for periods prior to the
Effective Time in accordance with GBC's policies in effect on the date hereof)
with GBC (and its Subsidiaries and predecessors) prior to the Effective Time,
except to the extent where such credit would result in duplication of benefits.
Cathay General Bancorp shall not terminate the GBC Employee Benefit Plans unless
and until Cathay General Bancorp is able to cause any and all pre-existing
condition (or actively-at-work or similar) limitations, eligibility waiting
periods and evidence of insurability requirements under any group health plans
to be waived with respect to such Continuing Employees and their eligible
dependents and shall provide them with credit for any co-payments, deductibles,
and offsets (or similar payments) prior to the Effective Time for purposes of
satisfying any applicable deductible, out-of-pocket, or similar requirements
under any of the Cathay Employee Benefits Plans in which they are eligible to
participate after the Effective Time.
(d) Subject to and conditioned upon the Closing, GBC shall take all
actions reasonably necessary to terminate the General Bank 401(k) ESOP Plan
effective as of the Effective Time.
(e) GBC has provided to Cathay Bancorp a summary of its Retention
Incentive Program, a schedule of recipients, timing and amount of retention
bonus payments thereunder and a form of letter agreement thereunder
(collectively, the "GBC RETENTION PLAN"). Cathay General Bancorp shall honor the
terms and conditions of the GBC Retention Plan. Cathay General Bancorp shall
make retention bonus payments to each Continuing Employee set forth on Section
5.12(e) of the Cathay Bancorp Disclosure Schedule in the amounts and at the
times set forth opposite such Continuing Employee's name (and subject to the
eligibility conditions) on Section 5.12(e) of the Cathay Bancorp Disclosure
Schedule (but only to the extent that such payments--when taken together with
any other payment or benefit paid or payable to such Continuing Employee in
connection with the Merger--would not be subject to the excise tax imposed under
Section 4999 of the Code). Promptly after the date hereof, Cathay Bancorp shall
execute and deliver a retention letter agreement to each such Continuing
Employee consistent with this Section 5.12(e) and substantially in the form of
the letter agreement under the GBC Retention Plan.
(f) GBC has provided to Cathay Bancorp a copy of its Severance Pay
Plan, a summary of its Supplemental Severance Program and a form of letter
agreement thereunder (collectively, the "GBC SEVERANCE PLAN"). For a period of
twelve (12) months following the Effective Time, Cathay General Bancorp shall
honor the terms and conditions of the GBC Severance Plan.
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(g) Cathay General Bancorp shall honor the terms and conditions of
GBC's Profit Sharing and Incentive Compensation Program, as in effect on the
date hereof, through and until the Effective Time, with such prorations and
other adjustments as may be appropriate or necessary to carry out the purposes
of such program.
(h) Cathay General Bancorp shall recognize and honor all unused sick
leave accrued by the Continuing Employees as of the Effective Time
notwithstanding any limitations on sick leave accruals or carry-overs applicable
under Cathay Bancorp's sick leave policies; provided, that, from and after
Effective Time, the Continuing Employees shall not accrue additional sick leave
unless and until their unused sick leave is reduced below the maximum allowable
under Cathay General Bancorp's sick leave policies.
(i) At the Effective Time, Cathay General Bancorp shall pay cash to the
Continuing Employees for any and all unused vacation accrued in excess of ten
(10) days by the Continuing Employees as of the Effective Time. Cathay General
Bancorp shall recognize and honor any vacation accrued by the Continuing
Employees (and not paid out in cash) as of the Effective Time, and any such
vacation shall be taken in accordance with Cathay General Bancorp's vacation
policies.
(j) With respect to the Continuing Employees, to the extent GBC's
flexible benefits plan provides for annual deferrals for unreimbursed medical
expenses and/or dependent care expenses in excess of those permitted under
Cathay Bancorp's flexible benefits plan, Cathay General Bancorp shall maintain
the higher annual deferral limits applicable under GBC's flexible benefits plan
through December 31, 2003.
5.13 INDEMNIFICATION AND INSURANCE.
(a) Subject to the limitations of the Federal Deposit Insurance Act,
the CGCL, or other applicable Banking Regulations:
(i) Cathay Bancorp agrees that the Merger shall not affect or
diminish any of GBC's or its Subsidiaries' duties and obligations of
indemnification existing immediately prior to the Effective Time in favor of the
directors, officers, employees and agents of GBC and its Subsidiaries arising by
virtue of the articles of incorporation or bylaws of GBC or its Subsidiaries in
the form in effect at the date of this Agreement or arising by operation of law,
and such duties and obligations shall continue in full force and effect for so
long as they would (but for the Merger) otherwise survive and continue in full
force and effect. All provisions for indemnification and limitation of liability
now existing in favor of the employees, agents, directors or officers of GBC or
its Subsidiaries, as provided by law or regulation or in their respective
articles of incorporation or bylaws shall survive the Merger for a period of six
years and for that period shall be assumed by Cathay General Bancorp and shall
continue in full force and effect with respect to acts or omissions occurring
prior to the Effective Time for a period of six years thereafter or, in the case
of matters occurring prior to the Effective Time which have not been resolved
prior to the sixth anniversary of the Effective Time, until such matters are
finally resolved.
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(ii) In addition to all rights conferred by reason of subparagraph
(i) above, Cathay General Bancorp shall indemnify, defend and hold harmless the
present and former officers and directors of GBC and its Subsidiaries and
persons who become any of the foregoing prior to the Effective Time, against all
losses, claims, damages, liabilities, costs, fees and expenses (including
reasonable fees and disbursements of counsel and judgments, fines, losses,
claims, liabilities and amounts paid in settlement (provided, that such
settlement is effected with the written consent of Cathay General Bancorp, which
consent shall not unreasonably be withheld)) arising out of actions or omissions
occurring at or prior to the Effective Time to the full extent permissible under
applicable provisions of the CGCL, the terms of the articles of incorporation
and bylaws of GBC and its Subsidiaries and under any agreements as in effect at
the date hereof (true and correct copies of which have been previously provided
to Cathay Bancorp); provided, however, that in the event any claim or claims are
asserted or made within such six-year period, all rights to indemnification in
respect of any such claim or claims shall continue until disposition of any and
all such claims.
(iii) Cathay General Bancorp shall maintain the existing officers'
and directors' liability insurance ("D&O INSURANCE") for a period of not less
than six years after the Effective Time; provided, however, that Cathay General
Bancorp may substitute therefor policies of substantially equivalent coverage
and amounts containing terms no less favorable to such former directors or
officers; provided further, that if the existing D&O Insurance expires or is
terminated or cancelled during such period, then Cathay General Bancorp shall
use all commercially reasonable efforts to obtain substantially similar D&O
Insurance.
(b) GBC shall use commercially reasonable efforts to cause each of its
currently existing insurance policies to remain in full force and effect until
the Closing Date. In addition, GBC shall use commercially reasonable efforts to
arrange, in collaboration with Cathay Bancorp and at Cathay Bancorp's expense,
for the purchase of extended reporting period coverage for all claims-made
policies, all as determined by Cathay Bancorp. Cathay Bancorp will be included
as a named insured for the extended reporting period coverage.
5.14 ENVIRONMENTAL REPORTS. GBC shall reasonably cooperate with Cathay
Bancorp so that Cathay Bancorp may as soon as reasonably practicable obtain, at
Cathay Bancorp's expense, a report of a phase one environmental investigation on
all real property designated in writing by Cathay Bancorp and owned, leased or
operated by GBC or any of its Subsidiaries as of the date hereof or hereafter
(but excluding property held in trust or in a fiduciary capacity and space in
retail or similar establishments leased by GBC or any of its Subsidiaries for
automatic teller machines or bank branch facilities where the space leased
comprises less than twenty percent (20%) of the total space leased to all
tenants of such property). Cathay Bancorp shall promptly upon receipt of any
such report (or any phase two report described below) make it available to GBC.
If advisable in light of the phase one report with respect to any parcel of real
property referred to above, in the reasonable opinion of Cathay Bancorp, GBC
shall also cooperate with Cathay Bancorp so that Cathay Bancorp may obtain, at
Cathay Bancorp's expense, a phase two investigation report on such designated
parcels. Cathay Bancorp shall have fifteen (15) Business Days from the receipt
of any such phase two investigation report to notify GBC of any dissatisfaction
with the contents of such report and Cathay Bancorp's determination that such
dissatisfaction will constitute a Material Adverse Effect on GBC.
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5.15 INTELLECTUAL PROPERTY. From and after the Effective Time, Cathay
General Bancorp and Cathay Bank shall possess all rights with respect to any and
all trade names, trademarks, service marks, logos and other intellectual
property used by GBC or any of its Subsidiaries, including without limitation
"General Bank" or "GBC Bancorp" or any variant thereof. From and after the
Effective Time, Cathay Bank shall be identified on business cards, letterhead
and other stationery as a subsidiary of "Cathay General Bancorp" or as part of
the "Cathay General" group.
5.16 FINANCING. Cathay Bancorp agrees to raise sufficient additional
capital prior to October 31, 2003 (or such later date as the Closing may be
extended pursuant to Section 7.1(f) hereof) such that Cathay General Bancorp, as
set forth in the pro forma financial statements to be included in the Regulatory
Applications, will be "well capitalized" as such term is defined in applicable
federal bank regulations, or shall otherwise demonstrate in the Regulatory
Applications that Cathay General Bancorp will be "well capitalized" without
raising additional capital. Cathay shall promptly provide to GBC copies of any
term sheets, letters of intent or other written proposals with respect to such
financing and shall from time to time provide such information as GBC may
reasonably request regarding the status of such financing and negotiations
related thereto.
5.17 CERTAIN ACTIONS.
(a) Neither GBC nor any of its Subsidiaries (i) shall solicit,
initiate, participate in discussions of, or encourage or take any other action
to facilitate (including by way of the disclosing or furnishing of any
information that it is not legally obligated to disclose or furnish) any inquiry
or the making of any proposal relating to any Acquisition Proposal (as defined
below) or (ii) shall (A) solicit, initiate, participate in discussions of, or
encourage or take any other action to facilitate any inquiry or proposal, or (B)
enter into any agreement, arrangement or understanding (whether written or oral)
regarding any proposal or transaction providing for or requiring it to abandon,
terminate or fail to consummate this Agreement, under any of the instances
described in this Section 5.17(a). GBC shall immediately instruct and otherwise
use its commercially reasonable efforts to cause its directors, officers,
employees, agents, advisors (including, without limitation, any investment
banker, attorney or accountant retained by it or any of its Subsidiaries),
consultants and other representatives to comply with such prohibitions. GBC
shall immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to such activities.
(b) Notwithstanding the foregoing, if an Acquisition Proposal is made
to GBC by a third party, GBC may provide information at the request of such
third party and negotiate and enter into a definitive agreement with such third
party, and GBC's Board of Directors may withdraw its favorable recommendation or
recommend disapproval of this Agreement, but only on the condition that the
Board of Directors of GBC determines, in good faith after consultation with
counsel, that the exercise of its fiduciary duties to GBC's shareholders under
applicable law requires it to take such action; provided, that GBC and its
Subsidiaries may not, in any event, provide to such third party any information
which it has not provided (or does not concurrently provide) to Cathay Bancorp.
GBC shall promptly notify Cathay Bancorp orally and in writing in the event it
receives any such inquiry or proposal and shall provide reasonable detail of all
47
relevant facts relating to such inquiries. This Section 5.17 shall not prohibit
accurate disclosure by GBC in any document (including the Joint Proxy
Registration Statement) or other disclosure under applicable law if, in the
opinion of the Board of Directors of GBC, disclosure is appropriate under
applicable law. No action duly taken by GBC or General Bank or their respective
Boards of Directors pursuant to this Section 5.17(b) shall be deemed to be a
breach of this Agreement.
(c) Neither Cathay Bancorp nor any of its Subsidiaries (i) shall
solicit, initiate, participate in discussions of, or encourage or take any other
action to facilitate (including by way of the disclosing or furnishing of any
information that it is not legally obligated to disclose or furnish) any inquiry
or the making of any proposal relating to any Acquisition Proposal (as defined
below) with respect to itself or any of its Subsidiaries or (ii) shall (A)
solicit, initiate, participate in discussions of, or encourage or take any other
action to facilitate any inquiry or proposal, or (B) enter into any agreement,
arrangement or understanding (whether written or oral) regarding any proposal or
transaction providing for or requiring it to abandon, terminate or fail to
consummate this Agreement, under any of the instances described in this Section
5.17(c). Cathay Bancorp shall immediately instruct and otherwise use its
commercially reasonable efforts to cause its directors, officers, employees,
agents, advisors (including, without limitation, any investment banker, attorney
or accountant retained by it or any of its Subsidiaries), consultants and other
representatives to comply with such prohibitions. Cathay Bancorp shall
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to such activities.
(d) Notwithstanding the foregoing, Cathay Bancorp may provide
information at the request of or enter into negotiations with a third party with
respect to an Acquisition Proposal if the Board of Directors of Cathay Bancorp
determines, in good faith after consultation with counsel, that the exercise of
its fiduciary duties to Cathay Bancorp's shareholders under applicable law
requires it to take such action and, provided further, that neither Cathay
Bancorp or its Subsidiaries may, in any event, provide to such third party any
information which it has not provided (or does not concurrently provide) to GBC.
Cathay Bancorp shall promptly notify GBC orally and in writing in the event it
receives any such inquiry or proposal and shall provide reasonable detail of all
relevant facts relating to such inquiries. Notwithstanding the terms hereof,
Cathay Bancorp or Cathay Bank may entertain or solicit an Acquisition Proposal
for the acquisition by Cathay Bancorp or Cathay Bank of a financial institution
having total assets not to exceed $500,000,000 but shall not enter into any
definitive agreement or file any regulatory applications with respect thereto
unless and until the Merger and the Bank Merger has been consummated or this
Agreement is terminated. This Section 5.17 shall not prohibit accurate
disclosure by Cathay Bancorp in any document (including the Joint Proxy
Registration Statement) or other disclosure under applicable law if in the
opinion of the Board of Directors of Cathay Bancorp, disclosure is appropriate
under applicable law.
(e) "ACQUISITION PROPOSAL" shall mean any of the following (other than
the Merger and the Bank Merger): (i) any proposal for a merger or consolidation
or any similar transaction of any company with, as the case may be, either GBC
or Cathay Bancorp, (ii) any proposal for a purchase, lease or other acquisition
of a material portion of all the assets of either GBC or Cathay Bancorp, (iii)
any proposal for a purchase or other acquisition of "beneficial ownership" by
any "person" or "group" (as such terms are defined in Section 13(d)(3) of the
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Exchange Act) (including by way of merger, consolidation, share exchange or
otherwise) which would cause such person or group to become the beneficial owner
of securities representing 25% or more of the voting power of either GBC or
Cathay Bancorp, (iv) a tender or exchange offer to acquire securities
representing 25% or more of the voting power of GBC or Cathay Bancorp, (v) a
public proxy or consent solicitation made to GBC or Cathay Bancorp shareholders
seeking proxies in opposition to any proposal relating to any of the
transactions contemplated by this Agreement, (vi) the filing of an application
or notice with any federal or state regulatory authority (which application has
been accepted for processing) seeking approval to engage in one or more of the
transactions referenced in clauses (i) through (v) above, or (vii) the making of
a bona fide offer to the Board of Directors of GBC or Cathay Bancorp by written
communication, that is or becomes the subject of public disclosure, to engage in
one or more of the transactions referenced in clauses (i) through (v) above.
5.18 TAX-FREE REORGANIZATION.
(a) Prior to the Effective Time, each party shall use its commercially
reasonable efforts to cause the Merger to qualify as a "reorganization" within
the meaning of Section 368(a) of the Code, and will not take any action that
could cause the Merger not so to qualify. Cathay General Bancorp shall not take,
or cause any Subsidiary to take, any action after the Effective Time that could
cause the Merger not to qualify as a reorganization under Section 368(a) of the
Code. The parties shall use their commercially reasonable efforts to obtain the
opinions described in Sections 6.1(g) and 6.2(e), including the provision of
representations to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP and ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP by Cathay
Bancorp in the form attached hereto as EXHIBIT G and by GBC in the form attached
as EXHIBIT H.
(b) Following the Merger, Cathay General Bancorp will comply with
record-keeping and information filing requirements of Section 1.368-3 of the
Treasury Regulations with respect to the Merger.
5.19 NASDAQ LISTING. Cathay General Bancorp agrees to use its commercially
reasonable efforts to cause and maintain the authorization for listing on the
Nasdaq NM of the shares of Cathay Common Stock issuable in connection with the
transactions contemplated by this Agreement.
5.20 BOARD OF DIRECTORS.
(a) Cathay Bank shall appoint each of the three Continuing Directors as
a member of its Board of Directors, including the Chairman, President and Chief
Executive Officer of General Bank as Executive Vice Chairman, immediately
following the Effective Time. Cathay Bank and Cathay Bancorp shall take all
actions necessary prior to the Effective Time, including amending Cathay Bank's
bylaws or articles of incorporation if necessary, to appoint the three
Continuing Directors as members of the Board of Directors, including the
Chairman, President and Chief Executive Officer of General Bank as Executive
Vice Chairman, immediately following the Effective Time.
(b) Cathay General Bancorp shall appoint the Chairman, President and
Chief Executive Officer of GBC as a Class I director (it being understood that
this class has the longest
49
remaining term) and Executive Vice Chairman of Cathay General Bancorp and the
two other Continuing Directors as a Class II director and Class III director,
respectively, of Cathay General Bancorp immediately following the Effective
Time. Cathay Bancorp shall take all actions necessary prior to the Effective
Time, including amending its bylaws or certificate of incorporation if
necessary, to appoint the Chairman, President and Chief Executive Officer of GBC
as a Class I director and Executive Vice Chairman of Cathay General Bancorp and
the two other Continuing Directors as a Class II director and Class III
director, respectively, of Cathay General Bancorp immediately following the
Effective Time.
5.21 CONFIDENTIALITY.
(a) All Confidential Information disclosed by any party hereto (the
"DISCLOSING PARTY") to any other party to this Agreement (the "RECEIVING
PARTY"), whether prior or subsequent to the date of this Agreement, including
without limitation any information obtained pursuant to Section 5.1 above, shall
be kept confidential in accordance with this Section 5.21.
(b) "CONFIDENTIAL INFORMATION" shall mean non-public, confidential
information relating to the businesses of the parties hereto and any analyses
compilations, studies, documents or records containing or otherwise reflecting
or generated from such information; provided, that Confidential Information
shall not include information that (i) is or becomes publicly available (other
than as a result of disclosure by the Receiving Party or any of its
Representatives), (ii) was available to the Receiving Party on a
non-confidential basis prior to its disclosure by the Disclosing Party as
evidenced by prior documentation and (iii) becomes available to the Receiving
Party on a non-confidential basis from a source that is not, to its knowledge,
subject to a confidentiality agreement with the Disclosing Party.
(c) Each party hereto hereby confirms that it is aware that the
Confidential Information is confidential and proprietary and that it will
respect its confidential nature and take all normal and reasonable precautions
to maintain such confidentiality. Each party hereto further agrees that it will
use the Confidential Information solely in the course of its business with each
other relating to the consummation of the Merger and the other transactions
contemplated hereby, not for any other commercial purpose, and will not, without
the other parties' prior written consent, directly or indirectly divulge or
disclose the Confidential Information to any person or entity; provided, that
any such Confidential Information may be disclosed to its directors, officers,
employees, consultants and representatives who need to know such Confidential
Information in connection with the consummation of the Merger and the other
transactions contemplated hereby (collectively, "REPRESENTATIVES") (it being
understood that such Representatives shall be informed of the confidential
nature of such information and shall be directed to treat such information
confidentially and not to use the Confidential Information other than for the
purposes described in this Section 5.21(c)).
(d) If this Agreement is terminated by any party pursuant to Section
7.1, then each party hereto shall promptly deliver or destroy (and provide, if
requested, written certification by an appropriate officer of said destruction
or delivery) all Confidential Information, including all copies, reproductions,
summaries, analyses or extracts thereof or based thereon in such party's
possession or in the possession of any of its Representatives. Any
50
Confidential Information that is not returned or destroyed, including without
limitation, any oral Confidential Information, shall remain subject to the
confidentiality obligations set forth in this Section 5.21.
(e) It is understood that a party hereto may be required to disclose
Confidential Information or portions thereof in connection with any judicial or
administrative proceedings (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigation demand or similar
process), to its banking regulators, independent auditors or otherwise, in the
opinion of its counsel, as required by law. In any such event such party agrees
that it will, to the extent legally permissible, in advance of any such
disclosure (i) provide the other parties with prompt notice of such
requirement(s), and (ii) provide the other parties with copies of any
Confidential Information it intends to disclose (and, if applicable, the text of
the disclosure language itself). In addition, each party hereto agrees to
cooperate with the other parties to the extent such other parties may seek to
limit such disclosure.
(f) Each party to this Agreement hereby agrees that it shall not
directly or indirectly use Confidential Information to solicit any customers or
suppliers of the other parties' businesses for any reason, unless specifically
requested in writing to do so in advance by such customers or suppliers or
consented prior thereto in writing by such other parties; provided, that this
Section 5.21(f) shall automatically terminate at, and be of no further force or
effect from and after, the Effective Time.
(g) Notwithstanding anything herein to the contrary or in any other
written or oral understanding or agreement to which the parties are bound, the
parties hereby acknowledge and agree that (i) any obligations of confidentiality
contained herein and therein do not apply and have not applied from the
commencement of discussions between the parties to the tax treatment and tax
structure of the Merger (and any related transactions or arrangements) and (ii)
each party (and each of its employees, representatives or other agents) may
disclose to any and all persons, without limitation of any kind, the tax
treatment and tax structure of the Merger and all materials of any kind
(including opinions or other tax analyses) that are provided to such party
relating to such tax treatment and tax structure, all within the meaning of
Treasury Regulations Section 1.6011-4; provided, that each party recognizes the
privilege each has to maintain, in its sole discretion, the confidentiality of a
communication relating to the Merger, including a confidential communication
with its attorney or a confidential communication with a federally authorized
tax practitioner under Section 7525 of the Code, is not intended to be affected
by the foregoing; provided further, that any information relating to the tax
treatment or tax structure shall remain subject to the confidentiality
provisions hereof (and the foregoing sentence shall not apply) to the extent
reasonably necessary to enable the parties hereto, their respective affiliates,
and their respective affiliates' directors and employees to comply with
applicable securities laws. The provisions of this Section 5.21(g) shall survive
the Closing or, in the event the Closing does not occur, the termination of this
Agreement.
ARTICLE VI
CONDITIONS
6.1 CONDITIONS TO THE OBLIGATIONS OF CATHAY BANK AND CATHAY BANCORP.
Notwithstanding any other provision of this Agreement, the obligations of Cathay
Bank and
51
Cathay Bancorp to consummate the Bank Merger and the Merger are subject to the
following conditions precedent (except as to those which Cathay Bank may choose
to waive):
(a) the representations and warranties made by GBC and General Bank in
this Agreement shall have been true and correct as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date (except
for those representations and warranties which address matters only as of a
particular date, which shall remain true and correct as of such date); provided,
however, that the closing condition set forth in this Section 6.1(a) shall be
deemed to be satisfied if the inaccuracies in such representations and
warranties (without giving effect to any knowledge or materiality qualifier or
standard contained in any such representation or warranty) would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on GBC;
(b) GBC and General Bank shall have performed in all material respects
all obligations and shall have complied in all material respects with all
agreements and covenants required by this Agreement to be performed or complied
with by it prior to or at the Closing Date;
(c) since the date hereof, GBC shall not have suffered a Material
Adverse Effect;
(d) no Governmental Entity shall have imposed any non-standard or
unduly burdensome condition relating to the Bank Merger or the Merger that would
materially adversely affect the economic benefits of the Merger to Cathay
Bancorp;
(e) Cathay Bancorp shall have received a certificate signed by the
President and Chief Executive Officer of GBC, dated as of the Closing Date,
certifying that based upon his best knowledge, the conditions set forth in
Sections 6.1 (a), (b), (c) and (f) hereof have been satisfied;
(f) Cathay Bancorp shall have received from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP,
after providing appropriate representations to that firm and to ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, in the form attached hereto as EXHIBIT G, an opinion, in form and
substance reasonably satisfactory to Cathay Bancorp, to the effect that the
Merger will constitute a "reorganization" within the meaning of Section 368 of
the Code and that, with respect to the Merger, Cathay Bancorp and GBC will each
by a "party to a reorganization" within the meaning of Section 368 of the Code;
(g) General Bank's Tier 1 leverage ratio (as such term is defined in
federal bank regulations applicable to General Bank) shall be at least 7.5% as
of its latest complete fiscal quarter prior to the Closing Date; and
(h) General Bank's percentage of Nonaccrual Loans and Leases to total
loans and leases shall be less than 2.85% as of the end of the month preceding
the Closing Date; provided, that in calculating this percentage, there shall be
excluded from the numerator and denominator the loans and leases to the
borrowers identified on Section 6.1(h) of the GBC Disclosure Schedule.
52
6.2 CONDITIONS TO THE OBLIGATIONS OF GBC. Notwithstanding any other
provision of this Agreement, the obligations of GBC and General Bank to
consummate the Bank Merger and the Merger are subject to the following
conditions precedent (except as to those which GBC may choose to waive):
(a) the representations and warranties made by Cathay Bancorp and
Cathay Bank in this Agreement shall have been true and correct as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date (except for those representations and warranties which address
matters only as of a particular date, which shall remain true and correct as of
such date); provided, however, that the closing condition set forth in this
Section 6.2(a) shall be deemed to be satisfied if the inaccuracies in such
representations and warranties (without giving effect to any knowledge or
materiality qualifier or standard contained in any such representation or
warranty) would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Cathay Bancorp;
(b) Cathay Bancorp and Cathay Bank shall have performed in all material
respects all obligations and shall have complied in all material respects with
all agreements and covenants required by this Agreement to be performed or
complied with by it prior to or at the Closing Date;
(c) since the date hereof, Cathay Bancorp shall not have suffered a
Material Adverse Effect;
(d) GBC shall have received a certificate signed by the President and
Chief Executive Officer of Cathay Bank and Cathay Bancorp, dated as of the
Closing Date, that based upon his best knowledge, the conditions set forth in
Sections 6.2(a), (b) and (c) have been satisfied;
(e) GBC shall have received from ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, after
providing appropriate representation to that firm and to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP,
in the form attached hereto as EXHIBIT H, an opinion, in form and substance
reasonably satisfactory to GBC, to the effect that the Merger will constitute a
"reorganization" within the meaning of Section 368 of the Code and that, with
respect to the Merger, Cathay Bancorp and GBC will each be a "party to the
reorganization" within the meaning of Section 368;
(f) no Governmental Entity shall have imposed any non-standard or
unduly burdensome condition relating to the Bank Merger or the Merger that would
materially adversely affect the economic benefits of the Merger to GBC or its
shareholders; and
(g) the shares of Cathay Common Stock to be issued in connection with
the Merger (including shares of Cathay Common Stock to be issued upon exercise
of Assumed Options) shall have been approved for listing on the Nasdaq NM
subject to official notice of issuance.
6.3 CONDITIONS TO THE OBLIGATIONS OF THE PARTIES. Notwithstanding any other
provision of this Agreement, the obligations of Cathay Bank and Cathay Bancorp
on the one hand and GBC and General Bank on the other hand to consummate the
Bank Merger and the
53
Merger are subject to the following conditions precedent (except as to those
which Cathay Bancorp or GBC, as the case may be, may choose to waive):
(a) no preliminary or permanent injunction or other order by any
Governmental Entity that prevents the consummation of the Bank Merger or the
Merger shall have been issued and shall remain in effect;
(b) the parties shall have received all applicable Regulatory
Approvals;
(c) since the date hereof, there shall not have been enacted,
promulgated or issued any statute, rule, regulation or order deemed applicable
to the Bank Merger or the Merger that would prohibit ownership or operation by
Cathay Bancorp of all or a material portion of the assets of GBC and its
Subsidiaries, taken as a whole;
(d) the Joint Proxy Registration Statement shall have been declared
effective under the Securities Act and no stop orders shall be in effect and no
proceedings for such purpose shall be pending or threatened by the SEC and, if
the offering for sale of the Cathay Common Stock in the Merger pursuant to this
Agreement is subject to the securities laws of any state, the Joint Proxy
Registration Statement shall not be subject to a stop order of any state
securities authority;
(e) the respective shareholders of GBC and Cathay Bancorp shall have
duly approved the Merger; and
(f) there shall not have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on the Nasdaq
NM for a period in excess of five (5) hours (excluding any organized halt
triggered solely as a result of a specified decrease in a market index or
suspensions or limitations resulting solely from physical damage, technological
or software breakdowns or malfunctions or interference with such exchanges not
related to market conditions); or (ii) a declaration by a Governmental Entity of
a banking moratorium or any suspension of payments in respect of banks in the
United States.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time:
(a) By the mutual written consent of Cathay Bancorp and GBC.
(b) By Cathay Bancorp or GBC if there shall have been a final judicial
or regulatory determination denying any application seeking a Regulatory
Approval.
(c) By Cathay Bancorp or GBC before the date specified in Section
7.1(f) hereof, in the event that any of the conditions precedent to the
obligations of the other party to the Bank Merger or the Merger are rendered
impossible to be satisfied or fulfilled by said date (other than by reason of a
breach by the party seeking to terminate).
54
(d) By (i) Cathay Bancorp if GBC shareholders fail to duly approve this
Agreement and the Merger at the GBC Shareholders' Meeting or (ii) GBC if Cathay
Bancorp shareholders fail to duly approve this Agreement and the Merger at the
Cathay Bancorp Shareholders' Meeting (provided, however, that the right to
terminate under this Section 7.1(d) shall not be available to any party if the
failure to obtain shareholder approval shall have been principally caused by
such party's breach of this Agreement).
(e) By Cathay Bancorp or GBC, in the event of a material breach by the
other party of any representation, warranty, covenant or agreement contained
herein, which breach would result in the failure to satisfy the closing
condition set forth in Section 6.1(a) or 6.1(b) in the case of Cathay Bancorp,
or Section 6.2(a) or 6.2(b) in the case of GBC, and which breach cannot be or is
not cured within 30 days after written notice of such breach is given by the
non-breaching party to the party committing such breach.
(f) By Cathay Bancorp or GBC on or after October 31, 2003, in the event
the Bank Merger and the Merger have not been consummated by such date (provided,
however, that the right to terminate under this Section 7.1(f) shall not be
available to any party whose failure to perform an obligation hereunder has
contributed materially to, or has resulted in, the failure of the Bank Merger or
the Merger to occur on or before such date); provided further, that if the
Closing has not occurred by October 31, 2003 as a result of a delay in the
receipt of Regulatory Approvals, and there exists a reasonable basis to believe
that the Regulatory Approvals are likely to be received in the sixty-day period
following October 31, 2003, each of GBC and Cathay Bancorp shall have the
unilateral right to extend such deadline by sixty (60) days by giving written
notice to the other party prior to 5:00 p.m. (Pacific time) on such date, which
notice shall explain the basis for such party's belief that Regulatory Approvals
are likely to be received during such extension; provided further, that if the
Closing has not occurred by October 31, 2003 as a result of a delay in the Joint
Proxy Registration Statement being declared effective by the SEC, each of GBC
and Cathay Bancorp shall have the unilateral right to extend such deadline by
sixty (60) days by giving written notice to the other party prior to 5:00 p.m.
(Pacific time) on such date.
(g) By GBC if, after any adjustment made pursuant to Section 7.1(h) or
(i), the allocation of cash results in the Cash Component exceeding 55% of the
Merger Consideration.
(h) Subject to the right of Cathay Bancorp to avoid termination as
provided further in this paragraph (h), by GBC at any time during the five (5)
Business Days following the Determination Date, if the Cathay Ratio shall be
less than 0.75 as of the date of such termination.
If GBC elects to exercise its termination right pursuant to the immediately
preceding sentence, it shall give prompt written notice to Cathay Bancorp during
such five-Business Day period by means of facsimile transmission (as provided in
Section 8.2 hereof); provided that such notice of election to terminate may be
withdrawn, by further notice, at any time within the aforementioned
five-Business Day period. During the five Business Days following the day on
which GBC's notice of election to terminate is given, Cathay Bancorp shall have
the option, but not the obligation, to increase the Stock Component by adding a
sufficient number of shares of Cathay Common Stock so that the product of (x)
the Cathay Ratio and (y) the ratio arrived at by dividing
55
(A) the sum of the Stock Component and the shares so added by Cathay Bancorp, by
(B) the Stock Component will be equal to or greater than 0.75. If Cathay Bancorp
makes the election contemplated by the preceding sentence within such five
Business-Day period, it shall give prompt written notice to GBC of such
election, specifying the amount of the increase in the Stock Component,
whereupon no termination shall have occurred pursuant to this paragraph (h) and
this Agreement shall remain in effect in accordance with its terms (except that
the Stock Component shall have been so increased), and any references in this
Agreement to "STOCK COMPONENT" shall thereafter be deemed to refer to the
Adjusted Stock Component as increased pursuant to this paragraph (h).
(i) Subject to the right of GBC to avoid termination as provided
further in this paragraph (i), by Cathay Bancorp at any time during the five (5)
Business Days following the Determination Date, if the Cathay Ratio shall be
greater than 1.25 as of the date of such termination.
If Cathay Bancorp elects to exercise its termination right pursuant to the
immediately preceding sentence, it shall give prompt written notice to GBC
during such five-Business Day period by means of facsimile transmission (as
provided in Section 8.2 hereof); provided that such notice of election to
terminate may be withdrawn, by further notice, at any time within the
aforementioned five-Business Day period. During the five Business Days following
the day on which Cathay Bancorp's notice of election to terminate is given, GBC
shall have the option, but not the obligation, to accept a decreased Stock
Component, to be calculated by subtracting a sufficient number of shares of
Cathay Common Stock so that the product of (x) the Cathay Ratio and (y) the
ratio arrived at by dividing (A) the sum of the Stock Component and the shares
so subtracted, by (B) the Stock Component will be equal to or less than 1.25. If
GBC makes the election contemplated by the preceding sentence within such five
Business-Day period, it shall give prompt written notice to Cathay Bancorp of
such election, whereupon no termination shall have occurred pursuant to this
paragraph (i) and this Agreement shall remain in effect in accordance with its
terms (except that the Stock Component shall have been so decreased), and any
references in this Agreement to "STOCK COMPONENT" shall thereafter be deemed to
refer to the Adjusted Stock Component as decreased pursuant to this paragraph
(i).
(j) By Cathay Bancorp, in the event the GBC Shareholders' Meeting does
not take place, the Board of Directors of GBC fails to recommend approval of
this Agreement and the Merger to the GBC shareholders, or the GBC Board of
Directors shall adversely alter or modify in a material respect its favorable
recommendation of this Agreement and the Merger to the GBC shareholders, and
this Agreement and the Merger is not duly approved by the GBC shareholders, or
if GBC willfully abandons the Bank Merger and the Merger in material breach of
this Agreement, and neither Cathay Bank nor Cathay Bancorp is, as of the date of
such event, in material breach of this Agreement.
(k) By GBC, pursuant to Section 5.17(b); provided, however, that prior
to any such termination, (A) GBC shall have provided Cathay Bancorp written
notice prior to delivering the notice of termination required by Section 7.1(l)
that it intends to terminate this Agreement pursuant to Section 5.17(b),
identifying the Acquisition Proposal it has chosen to pursue and the parties
thereto, and delivering a copy of any letter of intent, agreement in principle
or definitive agreement therefor substantially in the form proposed to be
entered into and (B) for a period of
56
seventy-two (72) hours following the delivery of the notice referred to in
clause (A), Cathay Bancorp shall have the right to propose adjustments in the
terms and conditions of this Agreement, and GBC shall have caused its financial
and legal advisors to negotiate with Cathay Bancorp in good faith such proposed
adjustments in terms and conditions (without, however, there being any
obligation to agree to them). Any notice of termination given by GBC pursuant to
this Section 7.1(k) may be given contingent upon the termination of this
Agreement becoming effective immediately prior to GBC entering into a definitive
agreement with respect to an Acquisition Proposal.
(l) In the event a party elects to effect any termination pursuant to
Section 7.1(a) through 7.1(k) above, it shall give written notice to the other
party hereto specifying the basis for such termination and certifying that such
termination has been duly approved by its Board of Directors.
(m) Notwithstanding anything herein to the contrary, in the event that
Cathay Bancorp elects to effect a termination pursuant to this Section 7.1
because of the failure of the conditions set forth in Section 6.1(g) or 6.1(h)
to be satisfied, upon giving of the written notice to GBC specified in Section
7.1(l) above, GBC shall have thirty (30) days from the date of such written
notice to cure the condition or conditions that have not been satisfied by,
among other actions, selling Nonaccrual Loans or Leases and/or raising new
capital for GBC and/or General Bank, and the deadline set forth in Section
7.1(f) shall thereupon be deemed extended by the duration of the cure period.
7.2 LIABILITIES AND REMEDIES. In the event this Agreement is terminated by
any party pursuant to Section 7.1, this Agreement shall forthwith become void
and have no effect (except that the agreements contained in Section 5.21, this
Section 7.2 and Section 7.3 shall survive) and none of the parties hereto or any
of their officers or directors or any of them shall have any liability of any
nature whatsoever hereunder except that:
(a) Termination will not relieve a breaching party from any liability
for any willful breach giving rise to such termination.
(b) In the event that Cathay Bancorp terminates this Agreement pursuant
to Section 7.1(j), or GBC terminates this Agreement pursuant to Section 7.1(k),
then upon termination of this Agreement, GBC shall pay Cathay Bank in
immediately available funds Sixteen Million Dollars ($16,000,000) as the sole
and exclusive remedy of Cathay Bank and Cathay Bancorp under this Agreement. In
order to obtain the benefit of the remedy provided in this Section 7.2(b),
Cathay Bank and Cathay Bancorp shall be required to execute a waiver of their
rights under Section 7.2(a) above, and shall not have taken any action to
enforce any right that they might have under Section 7.2(a) hereof.
(c) If Cathay Bancorp or GBC, as the case may be, terminates this
Agreement pursuant to Section 7.1(d), and the terminating party is not in
material breach of this Agreement, then the non-terminating party shall pay to
the terminating party in immediately available funds Two Million Dollars
($2,000,000) as the sole and exclusive remedy of the terminating party under
this Agreement. In order to obtain the benefit of the remedy provided in this
Section 7.2(c), the terminating party shall be required to execute a waiver of
their rights under
57
Section 7.2(a) above, and shall not have taken any action to enforce any right
that they might have under Section 7.2(a) hereof. This Section 7.2(c) shall not
apply where Cathay Bancorp or Cathay Bank seek to exercise a remedy under
Section 7.2(b) above or Section 7.2(d) below.
(d) Upon satisfaction of all of the following conditions, GBC shall pay
Cathay Bancorp in immediately available funds Sixteen Million Dollars
($16,000,000) as the sole and exclusive remedy of Cathay Bank and Cathay Bancorp
under this Agreement: (i) Cathay Bancorp shall have terminated this Agreement
pursuant to Section 7.1(d)(i), (ii) an Acquisition Proposal shall have been made
by a third party that shall have become the subject of public disclosure prior
to the GBC Shareholders' Meeting and shall not have been withdrawn and (iii) GBC
shall have executed a definitive agreement with respect to such Acquisition
Proposal within six (6) months following the date of such termination. In order
to obtain the benefit of the remedy provided in this Section 7.2(d), Cathay Bank
and Cathay Bancorp shall be required to execute a waiver of their rights under
Section 7.2(a) above, and shall not have taken any action to enforce any right
that they might have under Section 7.2(a) hereof.
7.3 NONSOLICITATION. If this Agreement is terminated by any party pursuant
to Section 7.1, then GBC and General Bank on the one hand and Cathay Bancorp and
Cathay Bank on the other hand hereby agree that, for a period of twelve (12)
months following the date of such termination, they shall not solicit for
employment or employ (i) any executive employed by the other parties or (ii) any
other employees of the other parties or their Subsidiaries; provided, that none
of the parties shall be precluded from hiring any such employee or executive who
has voluntarily left or has been terminated by the other parties or their
Subsidiaries prior to the commencement of employment discussions between such
other parties and such employee or executive; provided further, that this
Section 7.3 shall not preclude any party from hiring any employee responding to
general advertising for employees not targeted specifically at the other
parties' employees or from hiring any individual employee of a party who
initiates employment discussions with the other parties.
7.4 STANDSTILL. If this Agreement is terminated by any party pursuant to
Section 7.1, then GBC and General Bank on the one hand and Cathay Bancorp and
Cathay Bank on the other hand hereby agree that, for a period of twelve (12)
months following the date of such termination, they and their affiliates shall
not directly or indirectly, unless specifically consented prior thereto in
writing by all of the parties:
(a) acquire or agree, offer, seek, or propose to acquire, or cause to
be acquired, ownership of any of the other parties' voting securities, all or
substantially all of the other parties' assets or any of their Subsidiaries, or
any rights or options to acquire such ownership (including from a third party);
(b) otherwise act, whether alone or in concert with others, to seek to
propose to the other parties any merger, business combination, restructuring,
recapitalization or similar transaction to or with any of the other parties or
any of their Subsidiaries or otherwise seek to propose to influence, advise,
change or control, in any manner whatsoever, the other parties' management,
Board of Directors, governing instruments, affairs or policies; or
58
(c) enter into any discussions, negotiations, arrangements or
understandings with or advise, assist or encourage any third party with respect
to any of the foregoing.
7.5 AMENDMENT. This Agreement may be amended by the parties hereto by an
instrument in writing signed on behalf of each of the parties hereto at any time
before or after approval hereof by the GBC shareholders but, after such
approval, no amendment shall be made which changes the form of consideration or
the value of the consideration to be received by the GBC shareholders without
the approval of the GBC shareholders and, if required, the Cathay Bancorp
shareholders.
7.6 WAIVER. Any term, provision or condition of this Agreement (other than
the requirement of GBC shareholder approval) may be waived in writing at any
time by the party which is entitled to the benefits hereof. Each and every right
granted to any party hereunder, or under any other document delivered in
connection herewith or therewith, and each and every right allowed it by law or
equity, shall be cumulative and may be exercised from time to time. The failure
of a party at any time or times to require performance of any provision hereof
shall in no manner affect such party's right at a later time to enforce the
same. No waiver by any party of a condition or of the breach of any term,
covenant, representation or warranty contained in 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 condition or breach or a
waiver of any other condition or of the breach of any other term, covenant,
representation or warranty of this Agreement. No investigation, review or audit
by a party of another party prior to or after the date hereof shall stop or
prevent such party from exercising any right hereunder or be deemed to be a
waiver of any such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 SURVIVAL. All representations, warranties, covenants and agreements of
the parties in this Agreement or in any instrument delivered by the parties
pursuant to this Agreement (other than the agreements, covenants and obligations
set forth herein which are contemplated to be performed after the Effective
Time) shall not survive the Effective Time.
8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, by facsimile
transmission or by registered or certified mail to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice) and shall be deemed to be delivered on the date so delivered:
(a) if to Cathay Bank or Cathay Bancorp:
Cathay Bancorp
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman, President & CEO
copy to:
59
Cathay Bancorp
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇, Esq.
General Counsel
and a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, LLP
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(b) if to GBC or General Bank:
GBC Bancorp
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇
Chairman, President & CEO
copy to:
GBC Bancorp
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Maan-▇▇▇▇ ▇▇▇▇, Esq.
General Counsel
and a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
8.3 APPLICABLE LAW. This Agreement shall be construed and interpreted
according to the laws of the State of California without regard to conflicts of
laws principles thereof, except to the extent that the federal laws of the
United States apply.
8.4 HEADINGS, ETC. The article headings and section headings contained in
this Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
8.5 CONSTRUCTION. In this Agreement, (a) words denoting the singular
include the plural and vice versa, (b) "it" or "its" or words denoting any
gender include all genders, (c) the word "including" shall mean "including
without limitation," (d) any reference herein to a Section, Article, Exhibit or
Schedule refers to a Section or Article of, or an Exhibit or Schedule
60
to, this Agreement, unless otherwise stated, and (e) any reference to the words
"shareholder" or "shareholders" shall mean "stockholder" or "stockholders" as
appropriate.
8.6 ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including, without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
8.7 WAIVER OF RIGHT TO JURY TRIAL. EACH PARTY HEREBY WAIVES ITS RIGHT TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, THE MERGER OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING
BUT NOT LIMITED TO CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
8.8 SEVERABILITY. If any term, provision, covenant or restriction contained
in this Agreement is held by a final and unappealable order of a court of
competent jurisdiction to be invalid, void or unenforceable, then the remainder
of the terms, provisions, covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated unless the effect would be to cause this Agreement to not achieve
its essential purposes.
8.9 ENTIRE AGREEMENT; BINDING EFFECT; NON-ASSIGNMENT; COUNTERPARTS. Except
as otherwise expressly provided herein, this Agreement (including the documents
and instruments referred to herein) (a) constitutes the entire agreement between
the parties hereto and supersedes all other prior agreements, including the
mutual confidentiality agreement, dated as of July 15, 2002, between GBC and
Cathay Bancorp, and undertakings, both written and oral, between the parties,
with respect to the subject matter hereof; and (b) is not intended to confer
upon any other person any rights or remedies hereunder except for Section 5.13
or as otherwise specifically provided herein. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and their respective
successors. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any party hereto without the prior
written consent of the other party hereto. This Agreement may be executed in two
or more counterparts which together shall constitute a single agreement. The
parties hereto agree that they have been represented by counsel during the
negotiation, preparation and execution of this Agreement and, therefore, waive
the application of any law, regulation, holding or rule of construction
providing that ambiguities in an agreement or document will be construed against
the party drafting such agreement or document.
61
The undersigned have caused this Agreement and Plan of Merger to be
executed as of the day and year first above written.
CATHAY BANCORP, INC. CATHAY BANK
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------- ----------------------------------------
▇▇▇▇▇▇ K. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman, President & CEO Chairman, President & CEO
GENERAL BANK GBC BANCORP
By /s/ ▇▇▇▇▇ ▇▇ By /s/ ▇▇▇▇▇ ▇▇
---------------------------------- ----------------------------------------
▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇
Chairman, President & CEO Chairman, President & CEO
EXHIBIT A
DEFINITIONS
"1988 OPTION" shall have the meaning ascribed to it in Section 1.4(h)(iii).
"1999 OPTION" shall have the meaning ascribed to it in Section 1.4(h)(ii).
"ACQUISITION PROPOSAL" shall have the meaning ascribed to it in Section 5.17(e).
"ADJUSTED CASH COMPONENT" shall mean cash in an amount equal to the difference
between (x) the Cash Component minus (y) the Dissenters Set Aside.
"ADJUSTED PER SHARE CASH COMPONENT" shall mean the Adjusted Cash Component
divided by the difference between (x) the number of Outstanding Shares minus (y)
the total number of Dissenting Shares.
"ADJUSTED PER SHARE STOCK COMPONENT" shall mean the number of shares of Cathay
Common Stock equal to an amount derived by dividing the Adjusted Stock Component
by the difference between (x) the number of Outstanding Shares and (y) the total
number of Dissenting Shares.
"ADJUSTED STOCK COMPONENT" shall mean the Stock Component (i) increased, as
applicable, by the number of shares of Cathay Common Stock added by reason of
the exercise of Cathay Bancorp's option to increase the Stock Component pursuant
to Section 7.1(h) or (ii) decreased, as applicable by the number of shares of
Cathay Common Stock subtracted by reason of the exercise of GBC's option to
accept a decrease in the Stock Component pursuant to Section 7.1(i).
"AFFILIATE AGREEMENT" shall have the meaning ascribed to it in Recital F.
"AGREEMENT" shall have the meaning ascribed to it in the introductory paragraph.
"ASSUMED OPTION" shall have the meaning ascribed to it in Section 1.4(h)(ii).
"AVERAGE CATHAY DETERMINATION DATE PRICE" shall mean the average of the closing
prices of a share of Cathay Common Stock as reported in the Wall Street Journal
for the twenty consecutive trading days of the Nasdaq NM immediately preceding
the Determination Date.
"AVERAGE CATHAY STARTING PRICE" shall mean the average of the closing prices of
a share of Cathay Common Stock as reported in the Wall Street Journal for the
twenty consecutive trading days of the Nasdaq NM immediately preceding the day
on which a press release regarding this Agreement shall be issued.
"BANK MERGER" shall have the meaning ascribed to it in Recital A.
A-1
"BANK MERGER AGREEMENT" shall have the meaning ascribed to it in Section 1.3(a).
"BOLI POLICY" shall have the meaning ascribed to it in Section 3.18(j).
"BUSINESS DAY" shall mean any day that is not a Saturday, a Sunday or other day
on which the office of the California Secretary of State, the California
Department of Financial Institutions or the Delaware Secretary of State is
closed.
"CASH COMPONENT" shall mean One Hundred Sixty Two Million Four Hundred Thousand
Dollars ($162,400,000) in cash.
"CASH ELECTOR" shall mean a GBC shareholder who has timely submitted a proper
Form of Election expressing a request to receive cash as his or her Per Share
Merger Consideration.
"CASH/STOCK ELECTION" shall mean the process described herein by which each GBC
shareholder shall be permitted to state a preference to receive cash or stock
(or a combination of cash and stock) in exchange for his or her shares of GBC
Common Stock.
"CATHAY BANCORP" shall have the meaning ascribed to it in the introductory
paragraph.
"CATHAY BANCORP DISCLOSURE SCHEDULE" shall have the meaning ascribed to it in
the introductory paragraph of Article II.
"CATHAY BANK" shall have the meaning ascribed to it in the introductory
paragraph.
"CATHAY CLOSING PRICE" shall mean the closing price of a share of Cathay Common
Stock as reported in the Wall Street Journal on the trading day immediately
preceding the Closing Date.
"CATHAY COMMON STOCK" shall mean the common stock, no par value, of Cathay
Bancorp.
"CATHAY EMPLOYEE BENEFIT PLANS" shall have the meaning ascribed to it in Section
5.12(b).
"CATHAY RATIO" shall mean a fraction, the numerator of which is the Average
Cathay Determination Date Price, and the denominator of which is the Average
Cathay Starting Price.
"CATHAY SEC REPORTS" shall have the meaning ascribed to it in Section 2.5(b).
"CERTIFICATES" shall have the meaning ascribed to it in Section 1.4(c)(iii).
"CFC" shall have the meaning ascribed to it in Section 1.1(a).
"CGCL" shall have the meaning ascribed to it in Section 1.1(a).
A-2
"CLOSING" shall have the meaning ascribed to it in Section 1.5.
"CLOSING DATE" shall have the meaning ascribed to it in Section 1.5.
"CODE" shall have the meaning ascribed to it in Recital C.
"CONFIDENTIAL INFORMATION" shall have the meaning ascribed to it in Section
5.21(b).
"CONTINGENCY STOCK OPTION" shall mean the contingency stock options granted
under those certain Contingency Stock Option and Employment Agreements between
General Bank and certain of its officers and directors.
"CONTINUING DIRECTOR" shall have the meaning ascribed to it in Section 1.1(d).
"CONTINUING EMPLOYEES" shall have the meaning ascribed to it in Section 5.12(b).
"CRA" shall mean the Community Reinvestment Act of 1977 and the regulations
promulgated thereunder.
"D&O INSURANCE" shall have the meaning ascribed to it in Section 5.13(a)(iii).
"DETERMINATION DATE" shall mean the date on which all Regulatory Approvals
required for consummation of the Merger and the Bank Merger shall have been
received and all applicable waiting periods shall have expired.
"DFI" shall have the meaning ascribed to it in Section 1.1(a).
"DGCL" shall have the meaning ascribed to it in Section 1.2(a).
"DISCLOSING PARTY" shall have the meaning ascribed to it in Section 5.21(a).
"DISSENTERS SET ASIDE" shall have the meaning ascribed to it in Section
1.4(a)(i).
"DISSENTING SHARES" shall have the meaning ascribed to it in Section 1.4(e).
"EFFECTIVE TIME" shall have the meaning ascribed to it in Section 1.3(a).
"ELECTION DEADLINE" shall have the meaning ascribed to it in Section 1.4(c).
A-3
"ENVIRONMENTAL LAWS" shall mean any common law or federal, state, local or
foreign statute, treaty, ordinance, rule, regulation, policy, guidelines,
standards, permit or order, and all amendments thereto, relating to the
protection of human health, safety, wildlife or the environment, including,
without limitation, all requirements pertaining to: (i) the manufacture,
processing, distribution, use, handling, treatment, storage and disposal of
Hazardous Substances; (ii) the reporting, investigation and remediation of
releases of Hazardous Substances into any media, including soil, groundwater,
surface water and air; (iii) the health and safety of employees in the workplace
or of any member of the public; (iv) natural resources; (v) wetlands; and (vi)
endangered or threatened species or habitats, 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
2601, et seq.); the Occupational Safety and Health Act, as amended (29 U.S.C.
Section 651, et seq.); 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 any similar, equivalent, or related state or
local laws.
"ERISA" shall have the meaning ascribed to it in Section 3.16(a).
"EXCHANGE ACT" shall have the meaning ascribed to it in Section 1.4(i).
"EXCHANGE AGENT" shall have the meaning ascribed to it in Section 1.4(a)(i).
"EXCHANGE RATIO" shall mean a fraction, the numerator of which is (x) the sum of
(1) the Adjusted Per Share Cash Component and (2) the value of the Adjusted Per
Share Stock Component (derived by using the Cathay Closing Price) and the
denominator of which is (y) the Cathay Closing Price.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"FHLBSF" shall mean the Federal Home Loan Bank of San Francisco.
"FORM OF ELECTION" shall have the meaning ascribed to it in Section 1.4(c).
"FRB" shall have the meaning ascribed to it in Section 2.5(a).
"FRBSF" shall mean the Federal Reserve Bank of San Francisco.
"GAAP" shall mean United States generally accepted accounting principles.
"GBC" shall have the meaning ascribed to it in the introductory paragraph to the
Agreement.
A-4
"GBC BENEFIT PLANS" shall have the meaning ascribed to it in Section 3.16(a).
"GBC COMMON STOCK" shall have the meaning ascribed to it in Section 1.4(a).
"GBC DISCLOSURE SCHEDULE" shall have the meaning ascribed to it in the
introductory paragraph of Article III.
"GBC EMPLOYEE BENEFIT PLANS" shall have the meaning ascribed to it in Section
5.12(b).
"GBC FINANCIAL STATEMENTS" shall mean GBC's audited consolidated financial
statements for the year ended December 31, 2002, including the footnotes
thereto.
"GBC PER SHARE FAIR MARKET VALUE" shall mean the closing price of a share of GBC
Common Stock on the Nasdaq NM on the trading day immediately preceding the first
announcement of the terms of the Merger, excluding any appreciation or
depreciation in consequence of the proposed action, but adjusted for any stock
split, reverse stock split, or share dividend which become effective thereafter.
"GBC PERMITTED LIEN" shall have the meaning ascribed to it in Section 3.20(c).
"GBC PREMISES" shall have the meaning ascribed to it in Section 3.17(b).
"GBC QUALIFIED PLANS" shall have the meaning ascribed to it in Section 3.16(b).
"GBC RETENTION PLAN" shall have the meaning ascribed to it in Section 5.12(e).
"GBC SEC REPORTS" shall have the meaning ascribed to it in Section 3.7(a).
"GBC SEVERANCE PLAN" shall have the meaning ascribed to it in Section 5.12(f).
"GENERAL BANK" shall have the meaning ascribed to it in the introductory
paragraph to this Agreement.
"GOVERNMENTAL ENTITY" means any court, arbitral tribunal, administrative agency
or commission or other governmental or other regulatory authority or agency,
foreign or domestic.
A-5
"HAZARDOUS SUBSTANCE" shall mean any substance which is listed, regulated or
defined as a hazardous substance, hazardous material, hazardous waste, hazardous
chemical, toxic substance, carcinogen, mutagen, reproductive toxicant, explosive
substance, corrosive substance, flammable substance, ignitable substance,
pollutant or contaminant under any Laws, including, without limitation, (i)
radioactive substances; (ii) asbestos; (iii) radon gas; (iv) polychlorinated
biphenyls (PCBs); (v) petroleum (including crude oil and any fractions thereof)
and petroleum products, and any additives thereto (including MTBE); (vi) used
oil; (vii) natural or synthetic gas or any mixture thereof; (viii) medical or
infectious waste; (ix) lead-based paint; (x) urea foam insulation; and (xi)
microbial matter, including without limitation, mold, or mildew or fungi,
bacterial, or viral matter, or the presence of which substance causes or
threatens to cause a nuisance, trespass or other common law tort upon real
property or properties or poses or threatens to pose a hazard to the health or
safety of persons.
"IRS" shall have the meaning ascribed to it in Section 2.5(a).
"JOINT PROXY REGISTRATION STATEMENT" shall have the meaning ascribed to it in
Section 2.10.
A-6
"MATERIAL ADVERSE EFFECT" with respect to Cathay Bancorp or GBC, as the case may
be, means any effect, condition, event, change or occurrence (or any combination
thereof) (a) that is materially adverse to the business, assets, liabilities,
prospects, results of operation or condition (financial or otherwise) of such
entity and its Subsidiaries, taken as a whole or (b) that materially impairs the
ability of Cathay Bancorp or GBC, as the case may be, to consummate the Merger;
provided, however, that in determining whether a Material Adverse Effect with
respect to Cathay Bancorp or GBC, as the case may be, has occurred there shall
be excluded any effect, condition, event, change or occurrence impacting such
party to the extent caused by:
(i) any change generally affecting banks or bank holding companies in
laws, regulations or rules (or interpretations thereof), or of GAAP or
regulatory accounting principles or requirements (unless such change
has a materially disproportionate adverse effect on Cathay Bancorp or
GBC, as the case may be, relative to similarly situated banking
organizations);
(ii) any change in conditions in (or affecting) the national or local
economy or financial markets or the banking industry (unless such
change has a materially disproportionate adverse effect on Cathay
Bancorp or GBC, as the case may be, relative to similarly situated
banking organizations);
(iii) actions taken, delayed or omitted to be taken by GBC or any of its
Subsidiaries at the request of Cathay Bancorp or Cathay Bank, or any
of its representatives, including any financial change resulting from
adjustments taken pursuant to Section 4.2 hereof; or
(iv) any disruption of employee, customer, supplier or other similar
relationships or other event or circumstance resulting from or
attributable to the execution or announcement of this Agreement or the
pendency of the Merger.
"MERGER" shall have the meaning ascribed to it in Recital B.
"MERGER AGREEMENT" shall have the meaning ascribed to it in Section 1.3(b).
"MERGER CONSIDERATION" shall mean the combination of (x) the Cash Component and
(y) the Adjusted Stock Component.
"MOU" shall mean the Memorandum of Understanding between General Bank, the DFI
and the FDIC dated as of November 4, 2002.
"NASDAQ NM" shall mean the Nasdaq National Market.
"NONACCRUAL LOANS AND LEASES" shall mean loans and leases of General Bank that
are past due 90 days or more in the payment of principal and/or interest or
otherwise are placed on "nonaccrual" status by General Bank consistent with past
practice.
A-7
"NON-ELECTOR" shall mean a GBC shareholder who does not make a Cash/Stock
Election or who otherwise does not properly or timely submit a Form of Election.
"OUTSTANDING SHARES" shall mean the number of shares of GBC Common Stock
outstanding immediately prior to the Effective Time, it being understood that
all Contingency Stock Options shall have been exercised.
"OVERSUBSCRIBED" shall mean, as the case may be, the circumstances in which (i)
Stock Electors have requested more shares of Cathay Common Stock than is
available in the Adjusted Stock Component or (ii) Cash Electors have requested
more cash in the aggregate than is available in the Adjusted Cash Component.
"PER SHARE MERGER CONSIDERATION" shall mean the combined value of the Adjusted
Per Share Stock Component (derived by using the Cathay Closing Price) and the
Adjusted Per Share Cash Component as of the Effective Time.
"PROXY STATEMENT" shall have the meaning ascribed to it in Section 2.10.
"RECEIVING PARTY" shall have the meaning ascribed to it in Section 5.21(a).
"REGULATORY APPLICATIONS" shall have the meaning ascribed to it in Section 5.6.
"REGULATORY APPROVALS" shall mean approval by the DFI, the FDIC, the FRB and
applicable state bank regulators, as the case may be, of the Regulatory
Applications (including the lapse of all applicable waiting periods following
approval).
"REPRESENTATIVES" shall have the meaning ascribed to it in Section 5.21(c).
"SEC" shall have the meaning ascribed to it in Section 1.4(h)(v).
"SECURITIES ACT" shall have the meaning ascribed to it in Section 2.5(b).
"SHAREHOLDERS' MEETING" shall have the meaning ascribed to it in Section 2.10.
"SPREAD" with respect to a Contingency Stock Option shall mean the difference
between (x) the closing price of a share of GBC Common Stock on the Nasdaq NM on
the trading day immediately preceding the Closing Date and (y) the applicable
per share exercise price for such Contingency Stock Option.
"STAFF BONUS" shall have the meaning ascribed to it in Section 4.1(b)(v).
"STOCK COMPONENT" shall mean Six Million Seven Hundred Fifty Thousand
(6,750,000) shares of Cathay Common Stock.
"STOCK ELECTOR" shall mean a GBC shareholder who has timely submitted a proper
Form of Election expressing a request to receive shares of Cathay Common Stock
as his or her Per Share Merger Consideration.
A-8
"SUBSIDIARY" shall mean with respect to any party, any corporation, partnership
or other organization, whether incorporated or unincorporated, of which (i) at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the board of directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or (ii) such party or any other Subsidiary
of such party is a general partner (excluding any such partnership where such
party or any Subsidiary of such party does not have a majority of the voting
interest in such partnership).
"TREASURY REGULATIONS" shall mean the treasury regulations promulgated under the
Code.
"VOTING AGREEMENTS" shall have the meaning ascribed to it in Recital F.
A-9
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER AND RELATED MATTERS..................................2
1.1 Bank Merger; Surviving Entity......................................2
1.2 Merger; Effects of the Merger......................................3
1.3 Filing of Merger Agreements........................................4
1.4 Exchange Amount; Conversion of GBC Common Stock;
Cash/ Stock Election.............................................5
1.5 Closing...........................................................12
1.6 Revision of Transaction...........................................12
1.7 Additional Actions................................................13
ARTICLE II REPRESENTATIONS AND WARRANTIES OF CATHAY BANK
AND CATHAY BANCORP...........................................13
2.1 Organization......................................................13
2.2 Authorization.....................................................13
2.3 Conflicts, Consents and Approvals.................................14
2.4 Capitalization....................................................14
2.5 Cathay Bancorp Filings and Reports................................15
2.6 Subsidiaries; Off Balance Sheet Disclosure;
Material Changes................................................16
2.7 Compliance with Laws..............................................16
2.8 Joint Proxy Registration Statement................................17
2.9 Litigation........................................................17
2.10 Governmental Approvals and Other Conditions.......................17
2.11 Insider Interests.................................................18
2.12 Fairness Opinion..................................................18
2.13 Insurance.........................................................18
2.14 Impediments to Performance........................................18
ARTICLE III REPRESENTATIONS AND WARRANTIES OF GBC AND GENERAL BANK.........18
3.1 Organization......................................................19
3.2 Authorization.....................................................19
3.3 Conflicts, Consents and Approvals.................................19
3.4 Anti-takeover Provisions Inapplicable.............................20
3.5 Capitalization....................................................20
3.6 Subsidiaries; Off Balance Sheet Disclosure;
Material Changes................................................21
3.7 GBC Reports.......................................................21
3.8 Compliance With Laws..............................................22
3.9 Joint Proxy Registration Statement................................22
3.10 Litigation........................................................23
3.11 Licenses..........................................................23
3.12 Taxes.............................................................23
3.13 Insurance.........................................................24
3.14 Loans; Investments................................................25
3.15 Allowance for Credit Losses.......................................26
3.16 GBC Benefit Plans.................................................27
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3.17 Compliance with Environmental Laws................................29
3.18 Contracts and Commitments.........................................29
3.19 Defaults..........................................................31
3.20 Operations Since December 31, 2002................................31
3.21 Corporate Records.................................................33
3.22 Undisclosed Liabilities...........................................33
3.23 Assets............................................................33
3.24 Insider Interests.................................................33
3.25 Registration Obligations..........................................34
3.26 Impediments to Performance........................................34
3.27 Brokers and Finders...............................................34
3.28 Fairness Opinion..................................................34
3.29 Governmental Approvals and Other Conditions.......................34
3.30 MOU Compliance....................................................35
ARTICLE IV COVENANTS PENDING THE CLOSING..................................35
4.1 Business in Ordinary Course of GBC................................35
4.2 Conforming Accounting and Reserve Policies;
Restructuring Matters...........................................37
4.3 Business in Ordinary Course of Cathay Bancorp.....................38
ARTICLE V ADDITIONAL AGREEMENTS..........................................39
5.1 Inspection of Records.............................................39
5.2 Joint Proxy Registration Statement; Shareholder Approval..........40
5.3 Agreements of Directors and Other Affiliates......................40
5.4 Expenses..........................................................40
5.5 Cooperation.......................................................41
5.6 Regulatory Applications...........................................41
5.7 Financial Statements and Reports..................................42
5.8 Notice............................................................42
5.9 Publicity.........................................................42
5.10 Delivery of Supplements to Disclosure Schedules...................43
5.11 Litigation Matters................................................43
5.12 Employees; Benefits and Related Matters...........................43
5.13 Indemnification and Insurance.....................................45
5.14 Environmental Reports.............................................46
5.15 Intellectual Property.............................................46
5.16 Financing.........................................................46
5.17 Certain Actions...................................................46
5.18 Tax-Free Reorganization...........................................48
5.19 Nasdaq Listing....................................................49
5.20 Board of Directors................................................49
5.21 Confidentiality...................................................49
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ARTICLE VI CONDITIONS.....................................................51
6.1 Conditions to the Obligations of Cathay Bank and
Cathay Bancorp..................................................51
6.2 Conditions to the Obligations of GBC..............................52
6.3 Conditions to the Obligations of the Parties......................53
ARTICLE VII TERMINATION; AMENDMENT; WAIVER.................................54
7.1 Termination.......................................................54
7.2 Liabilities and Remedies..........................................56
7.3 Nonsolicitation...................................................57
7.4 Standstill........................................................58
7.5 Amendment.........................................................58
7.6 Waiver............................................................58
ARTICLE VIII GENERAL PROVISIONS.............................................59
8.1 Survival..........................................................59
8.2 Notices...........................................................59
8.3 Applicable Law....................................................60
8.4 Headings, Etc.....................................................60
8.5 Construction......................................................60
8.6 Attorneys' Fees...................................................60
8.7 Waiver of Right to Jury Trial.....................................60
8.8 Severability......................................................60
8.9 Entire Agreement; Binding Effect; Non-Assignment;
Counterparts....................................................61
EXHIBITS
Exhibit A Definitions
Exhibit B Form of Voting Agreement
Exhibit C Form of Affiliate Agreement
Exhibit D Form of Nonsolicitation Agreement
Exhibit E Form of Bank Merger Agreement
Exhibit F Form of Merger Agreement
Exhibit G Form of Cathay Bancorp Officer's Tax Certificate
Exhibit H Form of GBC Officer's Tax Certificate
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