EXHIBIT 2
------------------------
AGREEMENT AND PLAN OF REORGANIZATION
by and among
BAY VIEW CAPITAL CORPORATION
BV ACQUISITION CORP.
and
EXXE DATA CORPORATION
------------------------
------------------------
January 21, 1997
------------------------
TABLE OF CONTENTS
Page
RECITALS 1
ARTICLE I
THE MERGER AND RELATED MATTERS 3
1.1 Structure of the Merger 3
1.2 Effective Time 3
1.3 Aggregate Purchase Price 4
1.4 The Merger 5
1.5 Conversion of BV Acquisition Common Stock 9
1.6 EXXE Warrants 10
1.7 EXXE Options 10
1.8 The Earn-Out 12
1.9 Payment to Certain Persons 21
1.10 Closing 21
1.11 Repayment of Debt 22
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF EXXE 22
2.1 Organization and Authority 23
2.2 Subsidiaries 23
2.3 Capitalization 24
2.4 Authorization 25
2.5 Stockholder Approval 27
2.6 EXXE Financial Statements 27
2.7 Properties and Leases 28
2.8 Taxes 29
2.9 Material Adverse Change 30
2.10 Material Interests of Certain Persons 30
2.11 Commitments and Contracts 31
2.12 Litigation and Other Proceedings 33
2.13 Insurance 34
2.14 Compliance with Laws 34
2.15 Labor 36
2.16 Loans 37
2.17 Employee Benefit Plans 38
2.18 Conduct to Date 41
2.19 Statement to EXXE Stockholders, etc. 43
2.20 Registration Obligations 43
2.21 Undisclosed Liabilities 43
2.22 Takeover Provisions Not Applicable 44
2.23 Brokers and Finders 44
2.24 Accuracy of Information 44
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BAY VIEW 45
3.1 Organization and Authority 45
3.2 Authorization 46
3.3 Bay View Financial Statements 47
3.4 Bay View Reports 48
3.5 Material Adverse Change 48
3.6 Accuracy of Information 49
ARTICLE IV
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME 49
4.1 Conduct of Businesses Prior to the Effective Time 49
4.2 Forbearances 51
ARTICLE V
ADDITIONAL AGREEMENTS 54
5.1 Access and Information 54
5.2 Regulatory Filings 55
5.3 Stockholder Approval 55
5.4 Current Information 56
5.5 Expenses 56
5.6 Miscellaneous Agreements and Consents 57
5.7 Employee Agreements and Benefits 57
5.8 Press Releases 59
5.9 Takeover Provisions 59
5.10 D&O Indemnification 59
5.11 Third Parties 60
5.12 Dissenting Stockholders' Appraisal Rights 60
5.13 Governmental Inquiries 60
5.14 Establishment of Accruals 60
5.15 Assistance with Third Parties 61
5.16 Insurance Policy Claims 61
ARTICLE VI
CONDITIONS 62
6.1 Conditions to Each Party's Obligation to
Effect the Merger 62
6.2 Conditions to Obligations of EXXE to Effect
the Merger 63
6.3 Conditions to Obligations of Bay View to
Effect the Merger 63
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER 67
7.1 Termination 67
7.2 Effect of Termination 68
7.3 Amendment 71
7.4 Severability 72
7.5 Waiver 72
ARTICLE VIII
POST-EFFECTIVE SURVIVAL; INDEMNIFICATION 72
8.1 General Survival 72
8.2 Indemnification 73
ARTICLE IX
GENERAL PROVISIONS 76
9.1 Non-Survival of Representations,
Warranties and Agreements 76
9.2 Arbitration 76
9.3 Notices 79
9.4 Miscellaneous 80
EXHIBIT A - Form of Agreement of Merger and Certificates of
Approval of Merger
Appendix A - Form of Support Agreements
Appendix B - Form of Warrant Cash-Out Agreements
Appendix C - Form of Option Cash-Out Agreements
Appendix D - Employment Agreement with ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Appendix E - Employment Agreement with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Appendix F - Employment Agreement with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"),
dated January 21, 1997, is by and among Bay View Capital
Corporation, a Delaware corporation ("Bay View"), BV Acquisition
Corp., a California corporation and a wholly owned first-tier
transitory subsidiary of Bay View ("BV Acquisition"), and EXXE Data
Corporation, a California corporation ("EXXE").
RECITALS
A. Bay View and EXXE, on the terms and conditions hereinafter
set forth, desire to effect an acquisition transaction pursuant to
which Bay View will acquire for cash all of the shares of EXXE
Common Stock and EXXE Series B Preferred Stock, and all of the EXXE
Warrants and EXXE Options (the capitalized terms in this paragraph
are defined in Section 1.3 below) for an aggregate purchase price
as set forth in Section 1.3 hereof.
B. The parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with this
Agreement and the merger contemplated thereby and to prescribe
certain conditions to the merger.
C. Concurrently with the execution and delivery of this
Agreement, and as a condition and inducement to Bay View's
willingness to enter into this Agreement, each of the directors of
EXXE and certain other holders of EXXE Common Stock have entered
into support agreements in the form attached hereto as Appendix A
(the "Support Agreements"), and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
the current Chief Executive Officer of EXXE, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
the current Executive Vice President - Finance and Administration
of Concord Growth Corporation ("Concord"), a wholly owned
subsidiary of EXXE, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, the current Executive Vice
President - Marketing and Strategic Development of Concord, have
each entered into an Employment Agreement in the form of Appendices
D, E, and F, respectively. In addition, concurrently with the
execution and delivery of this Agreement, and as a condition and
inducement to Bay View's willingness to enter into this Agreement,
each holder of EXXE Warrants has entered into a warrant cash-out
agreement in form and substance satisfactory to Bay View.
NOW THEREFORE, in consideration of the representations,
warranties, promises, covenants, agreements and conditions herein
and hereunder, the parties hereto agree as follows:
2
ARTICLE I
THE MERGER AND RELATED MATTERS
1.1 Structure of the Merger. At the Effective Time (as
defined in Section 1.2 below), BV Acquisition will merge with and
into EXXE (the "Merger"), with EXXE being the surviving corporation
(the "Surviving Corporation"), pursuant to the Agreement of Merger
and Certificates of Approval of Merger (attached hereto as Exhibit
A and, collectively, the "Agreement of Merger") in accordance with
the provisions of, and with the effect provided in, the California
General Corporation Law (the "CGCL"). At the Effective Time, the
articles of incorporation and bylaws of the Surviving Corporation
shall be the articles of incorporation and bylaws of BV Acquisition
in effect immediately prior to the Effective Time. At the
Effective Time, the directors and officers of the Surviving
Corporation shall be the directors and officers of BV Acquisition
immediately prior to the Effective Time, which shall include
officers: Chairman ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
Executive Vice President and Chief Operating Officer ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇ and directors: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇. The name of the Surviving
Corporation shall continue to be EXXE Data Corporation (however,
immediately after the Effective Time, Bay View presently intends to
cause the Surviving Corporation to be merged with and into Concord,
with Concord being the surviving corporation and retaining its
existing corporate name). Upon consummation of the Merger, the
separate corporate existence of BV Acquisition shall terminate.
1.2 Effective Time. As soon as practicable after each of the
conditions set forth in Article VI hereof have been satisfied or
waived, the parties will, upon such date and time as shall
3
be designated by Bay View to EXXE, file, or cause to be filed with
the Secretary of State of the State of California, the Agreement of
Merger and such other certificates and documents as may be deemed
necessary or appropriate by Bay View for the Merger to become
effective in accordance with the CGCL. The Merger shall become
effective in accordance with the CGCL, and such time is herein
referred to as the "Effective Time".
1.3 Aggregate Purchase Price. The holders of (i) shares of
common stock, no par value, of EXXE ("EXXE Common Stock"), (ii)
shares of Series B redeemable convertible cumulative participating
preferred stock, no par value, of EXXE ("EXXE Series B Preferred
Stock"), (iii) warrants to purchase shares of EXXE Common Stock
(the "EXXE Warrants") and (iv) options to purchase shares of EXXE
Common Stock issued pursuant to the 1993 EXXE Data Corporation
Stock Plan (the "EXXE Options") will be entitled to receive in the
aggregate (A) $19,797,619 in cash (the "Merger Consideration")
promptly following the Effective Time in accordance with the
provisions of Section 1.4 and (B) up to $34.0 million in cash as
provided in Section 1.8 based upon Concord meeting certain
financial performance goals during 1997, 1998, 1999 and 2000 and
satisfying the other conditions set forth in Section 1.8 hereof
(the "Earn-Out"); provided, however, that the Merger Consideration
shall be reduced by the amount that the premiums (including the
write-off of deferred financing costs) to reverse securitizations
and participations, as provided for in Section 6.3(l) hereof, shall
exceed $1.8 million (the "Excess Premium Amount"), provided,
further, that the Merger Consideration shall not be reduced by the
Excess Premium Amount if Bay View, in its discretion, determines to
make the Excess Premium Amount an item of expense pursuant to
Section 1.8(b)(vii)(G).
4
1.4 The Merger.
(a) Conversion of EXXE Common Stock. At the Effective
Time:
(i) Each share of EXXE Common Stock, issued and
outstanding immediately prior thereto (except for
Dissenting Shares, if applicable, as defined in Section
1.4(c) hereof) shall, by virtue of the Merger and without
any action on the part of the holder thereof, be
converted into the right to receive Merger Consideration
of $3.876 in cash (subject to the reduction of the Merger
Consideration by the Excess Premium Amount pursuant to
Section 1.3 hereof), without any interest thereon from
the Effective Time until the time of payment (the "Merger
Consideration Per Common Share") and the contract right
to receive a share of the Earn-Out in accordance with
Section 1.8 hereof.
Notwithstanding any other provision of this
Agreement, any shares of EXXE Common Stock issued and
outstanding immediately prior to the Effective Time which
are then owned beneficially or of record by Bay View, BV
Acquisition or EXXE, or by any direct or indirect
subsidiary of any of them shall, by virtue of the Merger,
be canceled without payment of any consideration therefor
and without any conversion thereof.
(ii) Upon the Effective Time, the holders of
certificates representing shares of EXXE Common Stock
shall cease to have any rights as stockholders of EXXE,
except the right to receive the Merger Consideration Per
Common Share
5
upon proper surrender of their certificates
representing shares of EXXE Common Stock in accordance
with Section 1.4(d), the contract right to receive the
share of the Earn-Out represented by the certificates
surrendered as provided in the Earn-Out schedule (the
"Earn-Out Schedule") to be included in the Proxy
Statement (as defined in Section 2.19 hereof), and such
rights, if any, as they may have pursuant to the CGCL.
Until certificates representing shares of EXXE Common
Stock are surrendered for exchange, no payments will be
made.
(b) Conversion of EXXE Series B Preferred Stock. At the
Effective Time:
(i) Each share of EXXE Series B Preferred Stock,
issued and outstanding immediately prior thereto (except
for Dissenting Shares, if applicable, as defined in
Section 1.4(c) hereof) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be
converted into the right to receive Merger Consideration
of $6.28 in cash (subject to the reduction of the Merger
Consideration by the Excess Premium Amount pursuant to
Section 1.3 hereof), without any interest thereon from
the Effective Time until the time of payment (the "Merger
Consideration Per Preferred Share") and the contract
right to receive a share of the Earn-Out in accordance
with Section 1.8 hereof.
Notwithstanding any other provision of this
Agreement, any shares of the EXXE Series B Preferred
Stock issued and outstanding immediately prior to the
Effective Time which are then owned beneficially or of
record by Bay View, BV Acquisition or EXXE, or by any
direct or indirect subsidiary of any of them shall,
6
by virtue of the Merger, be canceled without payment of
any consideration therefor and without any conversion
thereof.
(ii) Upon the Effective Time, the holders of
certificates representing shares of the EXXE Series B
Preferred Stock shall cease to have any rights as
stockholders of EXXE, except the right to receive the
Merger Consideration Per Preferred Share upon proper
surrender of their certificates representing shares of
EXXE Series B Preferred Stock in accordance with Section
1.4(d), the contract right to receive the share of the
Earn-Out represented by the certificates surrendered as
provided in the Earn-Out Schedule, and such rights, if
any, as they may have pursuant to the CGCL. Until
certificates representing shares of EXXE Series B
Preferred Stock are surrendered for exchange no payments
will be made.
(c) Dissenting Shares. Any shares of EXXE Common Stock
or EXXE Series B Preferred Stock held by a holder who dissents from
the Merger in accordance with the CGCL and becomes entitled to
obtain payment of the fair value of such shares of EXXE Common
Stock or EXXE Series B Preferred Stock, as the case may be,
pursuant to the applicable provisions of the CGCL shall be herein
called "Dissenting Shares". Notwithstanding any other provision of
this Agreement, any 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 offered in respect of Dissenting Shares pursuant to
the CGCL.
(d) Exchange of EXXE Common Stock and EXXE Series B
Preferred Stock
7
(i) As soon as practicable after the Effective
Time, holders of record of certificates formerly
representing shares of EXXE Common Stock and EXXE Series
B Preferred Stock (collectively, the "Certificates")
shall be instructed to tender such Certificates to Bay
View or, at the election of Bay View, a paying agent
designated by Bay View (the "Paying Agent"), pursuant to
a letter of transmittal that Bay View shall deliver or
cause to be delivered to such holders. Such letters of
transmittal shall specify that risk of loss and title to
Certificates shall pass only upon delivery of such
Certificates to Bay View.
(ii) After the Effective Time, each holder of a
Certificate that surrenders such Certificate to Bay View
or, at the election of Bay View, the Paying Agent will,
upon acceptance thereof by Bay View or the Paying Agent,
be entitled to the Merger Consideration Per Common Share
or Merger Consideration Per Preferred Share, as the case
may be, payable in respect of the shares represented
thereby.
(iii) Bay View or, at the election of Bay View,
the Paying Agent, shall accept Certificates upon
compliance with such reasonable terms and conditions as
Bay View or the Paying Agent, 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 Bay View or the Paying Agent may reasonably require,
or a lost certificate affidavit and bond in customary
form reasonably acceptable to Bay View or the Paying
Agent.
8
(iv) After the Effective Time, there shall be no
further transfer on the records of EXXE of Certificates,
and if such Certificates are presented to EXXE for
transfer, they shall be canceled against delivery of the
Merger Consideration Per Common Share or Merger
Consideration Per Preferred Share, whichever is
applicable. Bay View shall not be obligated to deliver
the Merger Consideration Per Common Share or Merger
Consideration Per Preferred Share to any holder of EXXE
Common Stock or EXXE Series B Preferred Stock, as the
case may be, until such holder surrenders the
Certificates as provided herein. Neither the Paying
Agent nor any party to this Agreement nor any affiliate
thereof shall be liable to any holder of EXXE Common
Stock or EXXE Series B Preferred Stock represented by any
Certificate for any consideration paid to a public
official pursuant to applicable abandoned property,
escheat or similar laws. Bay View and the Paying Agent
shall be entitled to rely upon the stock transfer books
of EXXE to establish the identity of those persons
entitled to receive 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, Bay
View and the Paying Agent shall be entitled to deposit
any consideration in respect thereof in escrow with an
independent third party and thereafter be relieved with
respect to any claims thereto.
1.5 Conversion of BV Acquisition Common Stock. Each of the
shares of the common stock of BV Acquisition issued and outstanding
immediately prior to the Effective Time shall, by virtue of the
Merger, automatically and without any action on the part of any
party hereto, be converted into one share of EXXE Common Stock.
9
1.6 EXXE Warrants. At the Effective Time, each EXXE Warrant,
issued and outstanding immediately prior thereto shall, by virtue
of the Merger and without any action on part of the holder thereof,
be converted into the right to receive Merger Consideration, in
cash, without any interest thereon from the Effective Time until
the time of payment, in an amount determined by multiplying (a) the
number of shares of EXXE Common Stock underlying such EXXE Warrant
by (b) the amount equal to the positive difference, if any, between
the Merger Consideration Per Common Share and the purchase price
per share of such EXXE Warrant (the "Merger Consideration Per
Warrant"), whereupon such warrant shall terminate and have no
further force and effect. Holders of EXXE Warrants shall be
entitled to exchange such EXXE Warrants for the Merger
Consideration Per Warrant by surrendering their warrants to Bay
View, whereupon Bay View shall make prompt payment of the Merger
Consideration Per Warrant as provided in this Section 1.6. Upon
the Effective Time, the holders of EXXE Warrants shall cease to
have any rights as warrantholders of EXXE, except the right to
receive the Merger Consideration Per Warrant upon proper surrender
of their warrants in accordance with this Section 1.6, the contract
right to receive the share of the Earn-Out represented by the
warrants surrendered as provided in the Earn-Out Schedule, and such
rights, if any, as they may have pursuant to the CGCL. Until
warrants are surrendered for exchange no payments will be made.
EXXE has obtained and delivered to Bay View on or prior to the date
hereof executed warrant cash-out agreements, in substantially the
form attached hereto as Appendix B, with respect to all EXXE
Warrants.
1.7 EXXE Options. At the Effective Time, each EXXE Option,
issued and outstanding immediately prior thereto, whether or not
then vested or exercisable, shall, by virtue of the Merger and
without any action on part of the holder thereof, be converted into
the right
10
to receive Merger Consideration, in cash, without any interest
thereon from the Effective Time until the time of payment, in an
amount determined by multiplying (a) the number of shares of EXXE
Common Stock underlying such EXXE Option by (b) the amount equal to
the positive difference, if any, between the Merger Consideration
Per Common Share and the exercise price per share of such EXXE
Option (the "Merger Consideration Per Option"), whereupon such
option shall terminate and have no further force and effect.
Holders of EXXE Options shall be entitled to exchange such EXXE
Options for the Merger Consideration Per Option by surrendering
their option agreements and submitting their Option Cash-Out
Agreements to Bay View, whereupon Bay View shall make prompt
payment of the Merger Consideration Per Option as provided in this
Section 1.7. Upon the Effective Time, the holders of EXXE Options
shall cease to have any rights as optionholders of EXXE, except the
right to receive the Merger Consideration Per Option upon proper
surrender of their option agreements and tender of executed Option
Cash-Out Agreements, in accordance with this Section 1.7, the
contract right to receive the share of the Earn-Out as provided in
The Earn-Out Schedule, and such rights, if any, as they may have
pursuant to the CGCL. Until an EXXE Option holder surrenders his
or her option agreements and tenders his or her Option Cash-Out
Agreement, no payments will be made for his or her EXXE Options.
Each Option Cash-Out Agreement shall be in the form of Appendix C
hereto or in such other form as is reasonably acceptable to Bay
View. EXXE shall use its best efforts to obtain and deliver to Bay
View within 15 calendar days of the date hereof, executed Option
Cash-Out Agreements with respect to all EXXE Options.
11
1.8 The Earn-Out
(a) Payment of Earn-Out. Bay View shall pay to the holders
of EXXE Common Stock, EXXE Series B Preferred Stock, EXXE Warrants
and EXXE Options (together, the "EXXE Stockholders"), in addition
to the Merger Consideration, the Earn-Out, if and to the extent
earned, as set forth below. The Earn-Out for each of the calendar
years 1997, 1998, 1999 and 2000 (each, an "Annual Earn-Out"), shall
be calculated as follows: Tangible Net Income (or Loss) (as
hereinafter defined) of Concord for the applicable calendar year
(in the case of 1997, including only the period subsequent to the
Closing Date (as defined in Section 1.10 below) shall be divided by
0.15. From this resulting amount are subtracted (i) the aggregate
amount of Annual Earn-Outs previously paid and (ii) $21,000,000.
If the resulting amount (the "Final Resulting Amount") is positive,
that amount, plus an additional amount of 6% per annum (compounded)
on the Final Resulting Amount calculated from the Closing Date,
shall constitute the Annual Earn-Out for that year. If the Final
Resulting Amount is a negative number, the Annual Earn-Out shall be
$0. Payment of the Annual Earn-Out, if any, shall be made in full
within 30 days after the final determination of the Annual Earn-Out
pursuant to Section 1.8(c) by Bay View mailing to the EXXE
Stockholders listed on the Earn-Out Schedule New York clearing
house funds in an aggregate amount equal to the Annual Earn-Out.
The amount of the Annual Earn-Out to be paid to each EXXE
Stockholder shall equal the product of the percentage indicated on
the Earn-Out Schedule for each EXXE Stockholder and the Annual
Earn-Out. The Earn-Out shall not be paid with respect to any year
subsequent to 2000 and shall not exceed $34.0 million. Any portion
of the Earn-Out that shall not be disbursed with respect to the
years 1997, 1998, 1999 or 2000 shall be forfeited thereafter.
12
(b) Determination of Tangible Net Income (or Loss) of
Concord. Concord's tangible net income (or loss) after all taxes
of any kind (including, but not limited to, income and net worth
taxes) and before goodwill amortization arising from the Merger
("Tangible Net Income (or Loss)") for each of 1997 (including only
the period subsequent to the Closing Date), 1998, 1999 and 2000
(the "Earn-Out Period") shall be determined as follows:
Tangible Net Income (or Loss) for each of the aforesaid years
(or partial year in the case of 1997) shall mean the income (or
loss) of Concord for such period, after all expenses, taxes and
other charges, including the after-tax effects of any extraordinary
or nonrecurring expenses and other items decreasing income, but
specifically excluding, (i) any gain or loss on sale or disposal of
capital assets, other than the gain or loss on defaulted loans
repurchased during the Earn-Out period or the collateral underlying
such loans but any gain shall be offset by any charge-offs during
the year of such sale or disposal, (ii) any gain or loss on the
disposal of or discontinuance of the operation of any segment of
Concord's business, (iii) any goodwill amortization arising from
the consummation of the Merger, (iv) any amortization of deferred
financing costs which are not written off prior to the Closing,
(v) income generated by businesses, entities or pools of assets
acquired by Concord subsequent to the Closing Date) and (vi) any
deductions for additions to bad debt reserves, it being expressly
understood that deduction will be taken in computing Tangible Net
Income only for actual loan chargeoffs. For purposes of
determining Tangible Net Income (or Loss), the term "Concord" shall
not include any currently existing subsidiary of Concord (which Bay
View presently intends to dissolve or liquidate subsequent to the
Effective Time). Except as otherwise provided herein, Tangible Net
Income (or Loss) shall be computed in accordance with generally
accepted accounting principles ("GAAP") applied on a basis
consistent with the past practices of Concord. In addition,
Tangible
13
Net Income (or Loss) shall be determined or adjusted for purposes
of computation of the Earn-Out in accordance with, and shall be
subject to, the following provisions of this subsection (b):
(i) Income Taxes. For purposes of determining Tangible
Net Income (or Loss) for any given period, federal income tax
expense based upon Concord's income shall be computed on a
separate company basis with the effective rate of income tax
being calculated at the rate which would be applicable to
Concord on a stand-alone basis for such year, including the
benefit of any pre-Merger net operating loss carryovers of
EXXE actually in effect at January 31, 1997, as, when and if,
they are actually utilized by Bay View for federal income tax
purposes. In addition, state and local income tax expense for
purposes of the calculation shall also be determined as if
Concord filed its state and local taxes as a separate company.
(ii) Purchase Accounting Allocations or Adjustments. For
purposes of determining Tangible Net Income (or Loss) for any
given period, no accounting entries or adjustments made on the
financial statements of Concord arising from the Merger,
including, but not limited to, the adjustment of the basis of
assets, the creation of amortizable goodwill, or other
purchase accounting entries and adjustments, will be invoked
or applied.
(iii) Debt Rate. All indebtedness for borrowed
funds of Concord shall be assumed to bear annual interest at
the Debt Rate (as defined below). The "Debt Rate" shall be
equal to the one-year U.S.A. London InterBank Offer Rate as
published in the New York City edition of the Wall Street
Journal on the first business day of January of
14
the applicable year, plus 112.5 basis points. Notwithstanding
the foregoing, for 1997 (including only the period subsequent
to the Closing Date) the Debt Rate shall be 7.0%
(iv) Tangible Capital. To the extent that the tangible
capital of Concord is greater or less than 9.0% of tangible
assets, the excess or shortfall tangible capital amount shall
be subject to an assumed interest charge calculated at the
Debt Rate then in effect (the "Assumed Interest Rate Amount").
In the case where the Assumed Interest Rate Amount results
from an excess tangible capital position, the Assumed Interest
Rate Amount shall be deemed an item of expense for purposes of
calculating Tangible Net Income (or Loss). In the case where
the Assumed Interest Rate Amount results from a shortfall of
tangible capital, the Assumed Interest Rate Amount shall be
deemed an item of income for purposes of calculating Tangible
Net Income (or Loss).
(v) Allocation of Certain Costs/Reimbursement for
Services. Bay View may charge to Concord reasonable general
and administrative charges, including, but not limited to, (i)
accounting fees reasonably and equitably allocated to Concord
for the performance of services on behalf of and for the
benefit of Concord by Bay View's internal auditing staff and
independent certified public accountants, (ii) taxes relating
to Concord's operations and assets (excluding reimbursement
for income taxes, which is to be calculated in the manner set
forth in subsection (i) above), (iii) legal fees reasonably
and equitably allocated to Concord for the performance of
services on behalf of and for the benefit of Concord by Bay
View's internal legal staff and outside counsel, (iv) fees
reasonably and equitably allocated to Concord for the
performance of services on behalf of and for the benefit of
Concord by Bay View's human resources staff and outside
15
benefits consultants and (v) other charges reasonably and
equitably allocated to Concord for the performance of services
on behalf of and for the benefit of Concord. Notwithstanding
anything to the contrary in this Section 1.8(b)(v), Bay View
shall not charge to Concord any cost related to Bay View's
compliance with the Securities Exchange Act of 1934, as
amended. Any dispute with respect to the allocation of such
general and administrative charges to Concord shall be
resolved as a part of and pursuant to the procedures set forth
in Section 1.8(c). To the extent that Bay View utilizes the
services of Concord employees in connection with the
management or administration of other businesses owned by Bay
View (except any business whose net income is taken into
account in arriving at Tangible Net Income (or Loss)), Bay
View shall reimburse (or otherwise credit) Concord for such
services based upon fees established as if Bay View and
Concord were dealing on an arm's length basis.
(vi) Certain Loan Charge-Offs and Recoveries. All loan
loss recoveries that are realized by Concord pursuant to GAAP
during the period January 1, 2001 through September 30, 2001,
relating to loans made prior to December 31, 2000 shall be
taken into account for purposes of recomputing Tangible Net
Income (or Loss) for calendar year 2000 and the difference, if
any, between the resulting Annual Earn-Out and the original
Annual Earn-Out for calendar year 2000 shall be promptly paid
to the EXXE Stockholders.
(vii) For purposes of determining Tangible Net Income (or
Loss) for any given period, the following amounts shall be
deemed items of expense, but only to the extent that including
any such amounts in the calculation of Tangible Net Income (or
Loss)
16
reduces the Final Resulting Amount to no less than $0.
To the extent such amounts are not required to reduce the
Final Resulting Amount to no less than $0, such excess amounts
shall be deemed items of expense for purposes of calculating
Tangible Net Income (or Loss) in subsequent years.
(A) the amount of any fees, expenses, charges and other
costs incurred by EXXE or any EXXE Subsidiary (as defined in
Section 2.2 below) (whether prior to or subsequent to the
Merger) in connection with the Merger, including, but not
limited to, legal counsel fees, auditors' fees and other
professional fees but not financial advisor fees;
(B) the amount of any fees, expenses, charges and other
costs incurred by EXXE, any EXXE Subsidiary or Bay View or any
Bay View Subsidiary (whether prior to or subsequent to the
Merger) in connection with, or arising from, any inquiry of
the Securities and Exchange Commission (the "SEC") or any
other governmental authority relating to EXXE, any EXXE
Subsidiary or any EXXE or EXXE Subsidiary director or officer
or any shareholder actions related, directly or indirectly,
thereto;
(C) the amount of any charge-offs by EXXE or any EXXE
Subsidiary related to any loans to Vastech;
(D) the amount by which the Net Worth (as defined below)
of EXXE on the Closing Date, as certified by Novogradac &
Company LLP ("Novogradac"), shall be below $6.1 million. "Net
Worth" shall mean consolidated stockholders' equity of EXXE
calculated in accordance with GAAP applied on a consistent
basis, but (i) excluding the
17
effects of any adjustments made pursuant to Section 5.14
hereof, (ii) giving effect to the deemed exercise of all
outstanding options and warrants cancelled in accordance with
Sections 1.6 and 1.7 hereof as if they had been exercised
immediately prior to the Closing, (iii) plus the accelerated
amortization of EXXE's prior deferred financing costs due to
the Closing of the Merger (to the extent amortized on the
EXXE Financial Statements prior to the Closing), (iv) plus the
"make whole" costs associated with the termination of the
Master Trust (estimated to be $150,000 as of the date hereof)
(to the extent realized on the EXXE Financial Statements prior
to Closing) and (v) plus the writeoff of the Vastech loan up
to $750,000.
(E) the amount of any Indemnification Claim (as defined
in Section 8.2(a) hereof); and
(F) the amount of any fees with respect to an exception
with which the Third-Party Accountant (as defined in Section
1.8(c) below) does not concur pursuant to the said Section
1.8(c).
(G) the amount of any Excess Premium Amount, provided
that the Excess Premium Amount shall not be deemed an item of
expense for purposes of this Section 1.8(b)(vii) if Bay View,
in its discretion, determines to reduce the Merger
Consideration by the Excess Premium Amount pursuant to Section
1.3.
(c) Final Determination of Financial Statements, Tangible Net
Income (or Loss), Earn-Out, and Earn-Out Calculation. The final
determination relating to the financial statements and
18
Tangible Net Income (or Loss) of Concord for each year of the Earn-Out
Period, and the final determination of the Annual Earn-Out for
each such year, shall occur as follows: Bay View's independent
accountants, in consultation with management of Concord, shall
audit the financial statements of Concord as of the end of and for
each of the first calendar year (consisting of the period
commencing on the date of the Effective Time and ending December
31, 1997) and calendar years 1998 through 2000, and Bay View's
independent accountants, in consultation with management of
Concord, shall calculate the Tangible Net Income (or Loss) of
Concord for each of such years in accordance with the provisions of
subsection (b) above. It is understood and agreed that the
financial statements of Concord for calendar year 2001 will not be
prepared until the expiration of the nine-month period set forth in
Section 1.8(b)(vi) above. Simultaneous with its preparation of the
financial statements and Statement of Tangible Net Income (or Loss)
of Concord for each such calendar year of the Earn-Out Period, Bay
View's independent accountants shall submit to the EXXE Stockholder
Committee (as defined in Section 1.8(d) below) and Bay View its
calculation of the Annual Earn-Out. The determination of Bay
View's independent accountants in each instance shall be final,
binding and conclusive upon all parties unless the EXXE Stockholder
Committee, with the written concurrence of Novogradac, submits a
written statement of exceptions to Bay View and Bay View's
independent accountants within 30 days after receipt of Bay View's
independent accountants' determination by the EXXE Stockholder
Committee. Bay View's independent accountants shall reasonably
cooperate with the EXXE Stockholder Committee and Novogradac and
shall provide the EXXE Stockholder Committee with monthly financial
statements of Concord, and shall provide such parties, upon written
request, with such financial information and access to Concord's
books and records as the EXXE Stockholder Committee and Novogradac
deem necessary for the performance of their functions. If a
written statement of exceptions in any instance is submitted by the
EXXE Stockholder
19
Committee and Novogradac to Bay View and Bay View's independent
accountants within the time period specified above, such statement
of exceptions shall be submitted to KPMG Peat Marwick LLP or such
other accounting firm (the "Third-Party Accountant") as shall be
agreed upon by Bay View and the EXXE Stockholder Committee for its
review. The statement of exceptions submitted to the Third-Party
Accountant shall clearly identify each separate exception. Bay
View and the EXXE Stockholder Committee shall instruct the Third-Party
Accountant to maintain detailed records of the time spent on
and fees billed with respect to each separate exception. The
Third-Party Accountant shall review the exceptions and render its
determination as to the final disposition of the exceptions for all
purposes of this Agreement. All determinations by the Third-Party
Accountant shall be final, binding and conclusive on all parties,
including the EXXE Stockholders. Bay View's independent
accountants shall fully cooperate with the Third-Party Accountant
and shall provide it with such workingpaper files and other
information as the Third-Party Accountant deems necessary or
appropriate for the performance of its functions. The fees of the
Third-Party Accountant shall be paid by Bay View; provided,
however, that any fees with respect to an exception with which the
Third-Party Accountant does not concur shall be an item of expense
for purposes of calculating Tangible Net Income (or Loss) pursuant
to Section 1.8(b)(vii).
(d) EXXE Stockholder Committee. Prior to the mailing of
the Proxy Statement, the EXXE Board of Directors shall appoint a
committee of up to four natural persons to act for such
stockholders for all purposes for purposes of this Agreement (the
"EXXE Stockholder Committee"). The Proxy Statement (as defined in
Section 2.19) shall provide that approval of the Merger and this
Agreement by the EXXE stockholders voting on the Merger and this
Agreement shall constitute approval of (i) the appointment of the
EXXE Stockholder Committee,
20
(ii) the agreement to be bound by any and all determinations of the
EXXE Stockholder Committee made on behalf of such stockholders,
including, without limitation, in connection with matters relating
to the Earn-Out and Indemnification Claims and (iii) the waiver of
any and all rights that any such stockholders may have at any time
to bring any independent claim, action or proceeding against Bay
View, BV Acquisition or EXXE and its Subsidiaries with respect to
or arising from this Agreement or the transactions contemplated
hereby. EXXE shall use its best efforts to obtain and deliver to
Bay View prior to the Closing executed agreements with respect to
the foregoing matters from the EXXE Warrant holders and EXXE Option
holders.
1.9. Payment to Certain Persons. Promptly following the
Closing Date, Bay View shall issue and mail via first class mail a
check to each of ▇▇▇▇ ▇▇▇▇ and the Trust of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ in the
aggregate amount of $40,587. Notwithstanding the foregoing, Bay
View shall not be obligated to deliver any such amounts to any such
person until such person delivers to Bay View a letter certifying
to the effect that such person has no claim of any kind against
EXXE or any EXXE Subsidiary or Bay View or any Bay View Subsidiary
and (ii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ shall have delivered to
Bay View its opinion to the effect that such payments will not
violate any law or constitute a breach under any agreement or
governing instrument or require any consent or approval. The
foregoing payments represent accumulated but unpaid dividends on
the formerly outstanding shares of Series A redeemable convertible
cumulative preferred stock, no par value, of EXXE.
1.10. Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place as soon as
practicable after each of the conditions set forth in Article VI
hereof have been satisfied or waived and shall be at such date,
time and location as shall be
21
designated by Bay View to EXXE. The date on which the Closing
actually occurs is herein referred to as the "Closing Date".
1.11 Repayment of Debt. Bay View shall use its best efforts
to repay as soon as practicable following the Closing the following
borrowings:
(a) all borrowings under the line of credit with Cupertino
National Bank, the principal amount of which was $3,000,000 at
December 31, 1996.
(b) all subordinated promissory notes of Concord, the
aggregate principal amount of which was $9,817,600 at December 31,
1996.
To the extent such borrowings may be repaid, Bay View shall
advance to Concord funds sufficient to enable Concord to retire
such debt, such advanced funds to bear annual interest in
accordance with the provisions of Section 1.8(b)(iii) hereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF EXXE
EXXE represents and warrants to and covenants with Bay View as
follows:
22
2.1 Organization and Authority. EXXE is a corporation duly
organized, validly existing and in good standing under the laws of
the State of California, is duly qualified to do business and is in
good standing in all jurisdictions where its ownership or leasing
of property or the conduct of its business requires it to be so
qualified and has the corporate power and authority to own its
properties and assets and to carry on its business as it is now
being conducted. EXXE is the sole stockholder of Concord. True
and complete copies of the Articles of Incorporation and Bylaws of
EXXE and Concord, each as in effect on the date of this Agreement,
have previously been furnished to Bay View or its counsel.
2.2 Subsidiaries. Set forth in Schedule 2.2 is a complete
and correct list of all Subsidiaries of EXXE, including, without
limitation, Concord (each an "EXXE Subsidiary" and collectively the
"EXXE Subsidiaries"). The term "Subsidiary" when used with respect
to any party means any entity (including without limitation any
corporation, partnership, joint venture or other organization,
whether incorporated or unincorporated) which is consolidated with
such party for financial reporting purposes. Other than EXXE
Subsidiaries, there are no entities in which EXXE has a five
percent or greater direct or indirect equity or ownership interest.
All outstanding Equity Securities (as defined in Section 2.3) of
each EXXE Subsidiary are owned directly or indirectly by EXXE. All
of the outstanding shares of capital stock of EXXE Subsidiaries are
validly issued, fully paid and nonassessable and are owned directly
or indirectly by EXXE free and clear of any lien, claim, charge,
option, encumbrance, agreement, mortgage, pledge, security interest
or restriction (each a "Lien") with respect thereto. Each of the
EXXE Subsidiaries is a corporation duly incorporated or organized,
validly existing, and in good standing under the laws of its
jurisdiction of incorporation or organization, and has the
corporate power and authority to own or lease its properties and
assets and to carry on its business as it
23
is now being conducted. Each of the EXXE Subsidiaries is duly
qualified to do business in each jurisdiction where its ownership
or leasing of property or the conduct of its business requires it
so to be qualified, except where the failure to so qualify would
not have a material adverse effect on the financial condition,
assets, deposit liabilities, results of operations or business
(collectively, the "Condition") of EXXE and the EXXE Subsidiaries,
taken as a whole. Set forth in Schedule 2.2 is a complete and
correct list of all such jurisdictions where EXXE and the EXXE
Subsidiaries are qualified or licensed to do business. Except as
set forth on Schedule 2.2, neither EXXE nor any EXXE Subsidiary
owns beneficially, directly or indirectly, any shares of any class
of Equity Securities or similar interests of any corporation, bank,
business trust, association or similar organization. Except as set
forth on Schedule 2.2, neither EXXE nor any EXXE Subsidiary holds
any interest in a partnership or joint venture of any kind.
2.3 Capitalization. The authorized capital stock of EXXE
consists of (i) 5,500,000 shares of EXXE Common Stock, of which, as
of the date hereof, 2,166,757 shares are issued and outstanding,
and (ii) 760,000 shares of preferred stock, no par value, of which,
as of the date hereof, no shares of EXXE Series A Preferred Stock
are issued and outstanding and 400,000 shares of EXXE Series B
Preferred Stock are issued and outstanding. As of the date hereof,
(i) two warrants to purchase an aggregate of 1,500,000 shares of
EXXE Common Stock are issued and outstanding and (ii) options to
purchase an aggregate of 811,534 shares of EXXE Common Stock are
issued and outstanding. Set forth on Schedule 2.3 is an itemized
listing of the holders of all issued and outstanding EXXE Common
Stock, EXXE Series B Preferred Stock, EXXE Warrants and EXXE
Options, indicating the number of such shares or shares subject to
EXXE Warrants or EXXE Options, as the case may be, and in the case
of EXXE Warrants and EXXE Options the purchase prices or exercise
prices per share. Except as set forth above, there are no
24
other Equity Securities of EXXE outstanding. "Equity Securities"
of an issuer means capital stock or other equity securities of such
issuer, options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities
or rights convertible into, shares of any capital stock or other
equity securities of such issuer, or contracts, commitments,
understandings or arrangements by which such issuer is or may
become bound to issue additional shares of its capital stock or
other equity securities of such issuer, or options, warrants, scrip
or rights to purchase, acquire, subscribe to, calls on or
commitments for any shares of its capital stock or other equity
securities. All of the issued and outstanding shares of EXXE
Common Stock and EXXE Series B Preferred Stock are validly issued,
fully paid, and nonassessable, and have not been issued in
violation of any preemptive right of any stockholder of EXXE. The
EXXE Warrants are validly issued, and were issued for fair
consideration as determined by the Board of Directors of EXXE and
are nonassessable.
2.4 Authorization.
(a) EXXE has the corporate power and authority to enter
into this Agreement and to carry out its obligations
hereunder. The execution, delivery and performance of this
Agreement by EXXE and the consummation by EXXE of the
transactions contemplated hereby have been duly authorized by
the Board of Directors of EXXE. This Agreement is a valid and
binding obligation of EXXE and enforceable against EXXE in
accordance with its terms; except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization, receivership, conservatorship or similar laws
affecting creditors' rights generally, and by general
principles of equity, whether applied by a court of law or
equity.
25
(b) Neither the execution, delivery or performance by
EXXE of this Agreement, nor the consummation by EXXE of the
transactions contemplated hereby, nor compliance by EXXE with
any of the provisions hereof, will (i) violate or conflict
with any term, condition or provision of the articles of
incorporation, charter or bylaws of EXXE or any EXXE
Subsidiary, (ii) violate, conflict with, or result in a breach
of any provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute
a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right
of termination or acceleration of, or result in the creation
of any Lien upon any of the properties or assets of EXXE or
any EXXE Subsidiary, under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or
obligation to which EXXE or any EXXE Subsidiary is a party or
by which it may be bound, or to which EXXE or any EXXE
Subsidiary or any of their properties or assets may be
subject, or (iii) subject to compliance with the statutes and
regulations referred to in subsection (c) of this Section 2.4,
to the best knowledge of EXXE (the "Best Knowledge of EXXE"),
violate any judgment, ruling, order, writ, injunction, decree,
statute, rule or regulation applicable to EXXE or any EXXE
Subsidiary or any of their respective properties or assets.
(c) Other than in connection or in compliance with the
provisions of the CGCL or filings, consents, reviews,
authorizations, approvals or exemptions required under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇
▇▇▇"), no notice to, filing with, exemption or review by, or
authorization, consent or approval of, any public
26
body or authority is necessary for the consummation by EXXE of
the transactions contemplated by this Agreement.
2.5 Stockholder Approval. The affirmative vote of the
holders of a majority of all shares of EXXE Common Stock and EXXE
Series B Preferred Stock entitled to vote, voting as separate
classes, is the only stockholder vote required for approval of this
Agreement and consummation of the Merger and the other transactions
contemplated hereby.
2.6 EXXE Financial Statements. The consolidated balance
sheets of EXXE and the EXXE Subsidiaries as of December 31, 1995
and 1994 and the related consolidated statements of income, cash
flows and changes in stockholders' equity for each of the three
years in the three-year period ended December 31, 1995, together
with the notes thereto, audited by Novogradac and included in
EXXE's Annual Report for the fiscal year ended December 31, 1995,
and the unaudited consolidated condensed balance sheets of EXXE and
the EXXE Subsidiaries as of March 31, 1996, June 30, 1996 and
September 30, 1996, and the related unaudited consolidated
condensed statements of income and cash flows for the periods then
ended (collectively, the "EXXE Financial Statements"), have been
prepared in accordance with GAAP applied on a consistent basis
(subject to the absence of year-end audit adjustments and financial
statement footnotes), present fairly the consolidated financial
position of EXXE and the EXXE Subsidiaries at such dates (subject
to the absence of year-end audit adjustments and financial
statement footnotes), and the consolidated results of operations,
cash flows and changes in stockholders' equity of EXXE and the EXXE
Subsidiaries for the periods stated therein and are derived from
the books and records of EXXE and the EXXE Subsidiaries, which are
complete and accurate in all material respects and have been
maintained in accordance with GAAP applied on a
27
consistent basis and good business practices. Neither EXXE nor any
of the EXXE Subsidiaries has any contingent liabilities other than
(i) those described in the EXXE Financial Statements or (ii)
contractual obligations under contracts described on the Schedules
attached hereto. Draft unaudited consolidated financial statements
for the year ended December 31, 1996 have been furnished to Bay
View prior to the date of this Agreement. In the event audited
consolidated financial statements for the year ended December 31,
1996 are available prior to the Closing, they shall be furnished to
Bay View promptly and the term "EXXE Financial Statements" shall be
deemed to include such financial statements.
2.7 Properties and Leases. Except (i) as may be reflected in
the EXXE Financial Statements, (ii) any Lien for current taxes not
yet delinquent, and (iii) any easements or other non-monetary
restrictions of record on real property that do not adversely
affect use or value, EXXE and the EXXE Subsidiaries have good title
free and clear of any Lien to all the real and personal property
reflected in EXXE's consolidated balance sheet as of September 30,
1996, in each case, all real and personal property acquired since
such date, except such real and personal property as has been
disposed of since September 30, 1996 in the ordinary course of
business for fair value. All leases material to EXXE or any EXXE
Subsidiary, pursuant to which EXXE or the any EXXE Subsidiary is a
lessee or lessor of real or personal property, are valid and
effective in accordance with their respective terms, and there is
not, under any of such leases, any material existing default by
EXXE or any EXXE Subsidiary or any event which, with notice or
lapse of time or both, would constitute a material default by EXXE
or any EXXE Subsidiary. All of EXXE's and EXXE Subsidiaries'
buildings, structures and equipment in regular use have been well
maintained and are in good and serviceable condition, normal wear
and tear excepted. To the Best Knowledge of EXXE, none of the
buildings, structures and equipment of EXXE or any
28
EXXE Subsidiary violates or fails to comply in any material respect
with any applicable health, fire, environmental, safety, zoning or
building laws or ordinances or any restrictive covenant pertaining
thereto; except such violations or failures which, individually or
in the aggregate, do not have a material adverse effect on the
Condition of EXXE and the EXXE Subsidiaries, taken as a whole.
2.8 Taxes. Except as set forth on Schedule 2.8, EXXE and
each of the EXXE Subsidiaries have timely filed and will timely
file (including extensions) all tax returns and reports required to
be filed at or prior to the Closing Date (the "EXXE Returns").
Each of EXXE and the EXXE Subsidiaries has paid, or set up adequate
reserves on EXXE Financial Statements for the payment of, all taxes
required to be paid in respect of the periods covered by such
returns and reports and will pay all taxes required to be paid on
or prior to the Closing Date and establish adequate reserves on its
financial statements up to the Closing Date relating to accruals or
reserves for taxes in accordance with GAAP applied on a consistent
basis. EXXE has filed for the payment of all taxes anticipated to
be payable in respect of all periods up to and including the latest
period covered by such financial statements. Neither EXXE nor any
EXXE Subsidiary will have any liability for any such taxes in
excess of the amounts so paid or reserves so established and no
deficiencies for any tax, assessment or governmental charge have
been proposed, asserted or assessed (tentatively or definitely)
against EXXE or any EXXE Subsidiary which would not be covered by
reserves established prior to the Closing Date. Except as set
forth on Schedule 2.8, neither EXXE nor any EXXE Subsidiary is
delinquent in the payment of any tax, assessment or governmental
charge, nor has it requested any extension of time within which to
file any tax return in respect of any fiscal year which has not
since been filed and no requests for waivers of the time to assess
any tax are pending. The federal, state and local
29
income tax returns of EXXE and the EXXE Subsidiaries have been
audited by the Internal Revenue Service (the "IRS") or other
appropriate tax authorities with respect to those periods and
jurisdictions set forth on Schedule 2.8. There is no deficiency or
refund litigation or matter in controversy with respect to the EXXE
Returns. Except as set forth on Schedule 2.8, neither EXXE nor any
EXXE Subsidiary (i) has extended or waived any statute of
limitations on the assessment of any tax due; (ii) is a party to
any agreement providing for the allocation or sharing of taxes
(other than the allocation of federal income taxes as provided by
regulation 1.1552-1(a)(1) under the Internal Revenue Code of 1986,
as amended (the "Code")); (iii) is required to include in income
any adjustment pursuant to Section 481(a) of the Code, by reason of
a voluntary change in accounting method (nor to the Best Knowledge
of EXXE has the IRS has proposed any such adjustment or change of
accounting method) or (iv) has filed a consent pursuant to Section
341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply.
2.9 Material Adverse Change. Except as set forth on Schedule
2.9 and other than changes in assets and liabilities reflected in
the draft EXXE financial statements for the year ended and at
December 31, 1996, previously provided to Bay View, since December
31, 1995, there has been no material adverse change in the
Condition of EXXE and the EXXE Subsidiaries, taken as a whole.
2.10 Material Interests of Certain Persons.
(a) Except as set forth on Schedule 2.10, no officer or
director of EXXE or any EXXE Subsidiary, or any "associate"
(as such term is defined in Rule 14a-1 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of any
such
30
officer or director, has any material interest in any
material contract or property (real or personal, tangible or
intangible), used in or pertaining to the business of EXXE or
any EXXE Subsidiary, which in the case of EXXE or any such
EXXE Subsidiary would be required to be disclosed by Item 404
of Regulation S-K promulgated by the SEC if EXXE or such EXXE
Subsidiary had a class of securities registered under Section
12 of the Exchange Act.
(b) Except as set forth on Schedule 2.10, there are no
loans in excess of $50,000 from EXXE or any EXXE Subsidiary to
any present or past officer, director, employee or any
associate or related interest of any such person ("Insider
Loans"). All outstanding Insider Loans from EXXE or any EXXE
Subsidiary were approved by the appropriate board of
directors. No Insider Loans are delinquent or otherwise in
default and are performing in accordance with their initial
terms.
2.11 Commitments and Contracts.
(a) Except as set forth on Schedule 2.11 (and with a
true and correct copy of the document or other item in
question provided to Bay View or its counsel prior to the date
hereof), neither EXXE nor any EXXE Subsidiary is a party or
subject to any of the following (whether written or oral,
express or implied):
(i) any agreement, arrangement or commitment
(A) not made in the ordinary course of business or (B)
pursuant to which EXXE or any EXXE
31
Subsidiary is or may become obligated to invest in or
contribute capital to any EXXE Subsidiary or any other
entity;
(ii) any agreement, indenture or other instrument
not disclosed in the EXXE Financial Statements relating
to the borrowing of money by EXXE or any EXXE Subsidiary
or the guarantee by EXXE or any EXXE Subsidiary of any
such obligation;
(iii) any contract, agreement or understanding
with any labor union or collective bargaining
organization;
(iv) any contract containing covenants which limit
the ability of EXXE or any EXXE Subsidiary to compete in
any line of business or with any person or containing any
restriction of the geographical area in which, or method
by which, EXXE or any EXXE Subsidiary may carry on
its business (other than as may be required by law);
(v) any contract representing a monetary obligation
on the part of EXXE or any EXXE Subsidiary in excess of
$10,000 or that has a term in excess of six months
(except any contract that can be terminated on 30 days or
less written notice by EXXE or the applicable EXXE
Subsidiary without penalty or premium, and any loan
agreement or commitment), made in the ordinary course
32
of business representing a monetary funding obligation on
the part of EXXE or any EXXE Subsidiary of less than
$500,000; or
(vi) any other contract or agreement which is a
"material contract" within the meaning of Item 601
Instruction 10 of Regulation S-K promulgated under the
Securities Act of 1933.
(b) Except as set forth on Schedule 2.11, neither EXXE
nor any EXXE Subsidiary is in violation of its charter or
organizational documents or bylaws; or in default under any
agreement, commitment, arrangement, lease, insurance policy,
or other instrument, whether entered into in the ordinary
course of business or otherwise and whether written or oral,
and there has not occurred any event that, with the lapse of
time or giving of notice or both, would constitute such a
default, except defaults under any such agreements,
commitments, arrangements, leases, insurance policies or other
instruments which individually, or in the aggregate, will not
have and reasonably could not be expected to have a material
adverse affect on the Condition of EXXE and the EXXE
Subsidiaries, taken as a whole.
2.12 Litigation and Other Proceedings. Other than as set
forth on Schedule 2.12, neither EXXE nor any EXXE Subsidiary is a
party to any pending or, to the Best Knowledge of EXXE, threatened
claim, action, suit, investigation or proceeding, or is subject to
any order, judgment or decree, a request for non-monetary relief,
or a request to enjoin or restrain the transactions contemplated by
this Agreement. Without limiting the generality of the foregoing,
except as set forth on Schedule 2.12 there are no actions, suits,
or proceedings pending or, to the
33
Best Knowledge of EXXE, threatened against EXXE or any EXXE
Subsidiary or any of their respective officers or directors by any
stockholder of EXXE or any EXXE Subsidiary (or any former
stockholder of EXXE or any EXXE Subsidiary).
2.13 Insurance. Each of EXXE and the EXXE Subsidiaries has
in effect policies of insurance with respect to their respective
assets and business against such casualties and contingencies and
in such amounts, types and forms as in the judgment of EXXE's
management are appropriate for their respective business,
operations, properties and assets. Each of EXXE and the EXXE
Subsidiaries has taken 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 (other than matters arising in connection with this
Agreement and the transactions contemplated hereby) occurring prior
to the Effective Time that are known to EXXE. Set forth on
Schedule 2.13 is a list of all insurance policies maintained by or
for the benefit of EXXE or any EXXE Subsidiary or their respective
directors, officers, employees or agents. During the past five
years, neither EXXE nor any EXXE Subsidiary has had an insurance
policy canceled or been denied insurance coverage for which any of
such companies has applied, and no coverage with respect to any
material claim under existing policies is being disputed.
2.14 Compliance with Laws.
(a) EXXE and each of the EXXE Subsidiaries have all
permits, licenses, authorizations, orders and approvals of,
and have made all filings, applications and registrations that
are required or necessary in order to permit them to own or
lease their
34
properties and assets and to carry on their business as
presently conducted; all such permits, licenses,
authorizations, orders and approvals are in full force and
effect and, to the Best Knowledge of EXXE, no suspension or
cancellation of any of them is threatened; and all such
filings, applications and registrations are current, except
with respect to each of the foregoing representations for such
failures which individually, or in the aggregate, do not have
and reasonably could not be expected to have a material
adverse affect on the Condition of EXXE and the EXXE
Subsidiaries, taken as a whole.
(b) (i) EXXE and each of the EXXE Subsidiaries have
complied in all material respects with all laws, regulations
and orders (including without limitation securities, tax,
environmental, civil rights, and occupational health and
safety laws and regulations, zoning ordinances, building
codes, the Employee Retirement Income Security Act of 1974
("ERISA"), wage and hour laws, truth-in-lending and other laws
and regulations relating to the origination, sale, purchase
and servicing of loans, the Investment Company Act of 1940 and
all statutes, rules, regulations, orders and policy statements
pertaining to the conduct of a lending or related business and
governing instruments applicable to an entity engaged in such
type of business), and (ii) neither EXXE nor any EXXE
Subsidiary is in default under, and no event has occurred
which, with the lapse of time or notice or both, could result
in a default under, the terms of any judgment, order, writ,
decree, permit, or license of any court, whether federal,
state, municipal, or local and whether at law or in equity,
except where the failure to comply or such default do not
individually, or in the aggregate, have or reasonably could
not be expected to have a material adverse affect on the
Condition of EXXE and the EXXE Subsidiaries, taken as a whole.
Except as set forth on Schedule 2.14, neither EXXE nor
35
any EXXE Subsidiary is subject to or reasonably likely to
incur a liability as a result of its past or present
ownership, operation, or use of any Property (as defined
below) whether directly or, to the Best Knowledge of EXXE, as
a consequence of such Property securing a loan originated or
purchased by EXXE or any EXXE Subsidiary being part of the
investment portfolio of EXXE or any EXXE Subsidiary (A) that
is contaminated by or contains any hazardous waste, toxic
substance, or related materials, including without limitation
asbestos, PCBs, pesticides, herbicides, and any other
substance or waste that is hazardous to human health or the
environment (collectively, a "Toxic Substance"), or (B) on
which any Toxic Substance has been stored, disposed of,
placed, or used in the construction thereof. "Property" of a
person shall include all property (real or personal, tangible
or intangible) owned, leased or controlled by such person,
including without limitation property under foreclosure,
property held by such person or any Subsidiary of such
person in its capacity as a trustee and property in which any
venture capital or similar unit of such person or any
Subsidiary of such person has an interest. No claim, action,
suit, or proceeding is pending against EXXE or any EXXE
Subsidiary relating to Property of EXXE or any EXXE Subsidiary
before any court or arbitration tribunal relating to Toxic
Substances, pollution, or the environment, and there is no
outstanding judgment, order, writ, injunction, decree, or
award against or affecting EXXE or any EXXE Subsidiary with
respect to the same.
2.15 Labor. No work stoppage involving EXXE or any EXXE
Subsidiary is pending or, to the Best Knowledge of EXXE,
threatened. Neither EXXE nor any EXXE Subsidiary is involved in,
or, to the Best Knowledge of EXXE, threatened with or affected by,
any labor dispute, arbitration, lawsuit or administrative
proceeding which could be reasonably expected to
36
have a material adverse effect on the Condition of EXXE and the
EXXE Subsidiaries, taken as a whole. No employees of EXXE or any
EXXE Subsidiary are represented by any labor union or any
collective bargaining organization.
2.16 Loans.
(a) All loans, leases and other extensions of credit,
and guaranties, security agreements or other agreements
supporting any loans or extensions of credit originated,
owned, purchased or sold by EXXE or any EXXE Subsidiary,
constitute the legal, valid and binding obligations of the
parties thereto and are enforceable against such parties in
accordance with their terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting the rights of lending
institutions or creditors generally and by general equitable
principles. Except as set forth on Schedule 2.16, no loans,
leases or sales finance contracts held by EXXE or any EXXE
Subsidiary are (i) more than 90 days past due with respect to
any scheduled payment of principal or interest, other than
loans on a non-accrual status, or (ii) on a non-accrual status
in accordance with EXXE's or any EXXE Subsidiary's loan review
procedures.
(b) All loans sold by EXXE or any EXXE Subsidiary
pursuant to securitizations or otherwise have been sold
without recourse and all representations, warranties, and
covenants made by EXXE or any EXXE Subsidiary in connection
with the sale of any loans, pursuant to securitizations or
otherwise, are true and accurate in all material respects and
neither EXXE nor any EXXE Subsidiary has violated any such
representations, warranties or covenants.
37
(c) The allowances for credit losses contained in the
EXXE Financial Statements were established in accordance with
the past practices and experiences of EXXE and the EXXE
Subsidiaries, and the allowance for credit losses reflected in
financial statements for all periods up to and including the
Closing Date shall be adequate in all respects under the
requirements of GAAP.
2.17 Employee Benefit Plans.
(a) Schedule 2.17 lists all pension, retirement,
supplemental retirement, stock option, stock purchase, stock
ownership, savings, stock appreciation right, profit sharing,
employment, deferred compensation, consulting, bonus, medical,
disability, workers' compensation, vacation, group insurance,
severance and other material employee benefit, incentive and
welfare policies, contracts, plans and arrangements, and all
trust or loan agreements or arrangements related thereto,
maintained, sponsored or contributed to by EXXE or any EXXE
Subsidiary in respect of any of the present or former
directors, officers, or other employees of and/or consultants
to EXXE or any EXXE Subsidiary (individually an "EXXE Employee
Plan" and collectively the "EXXE Employee Plans"). The
following documents with respect to each EXXE Employee Plan
have previously been furnished to Bay View or its counsel or
are included in Schedule 2.17: (i) a true and complete copy
of all written documents comprising such EXXE Employee Plan
(including amendments and individual agreements relating
thereto) or, if there is no such written document, an accurate
and complete description of EXXE Employee Plan; (ii) the most
recent Form 5500 or Form 5500-C (including all schedules
thereto), if applicable; (iii) the most recent financial
statements and actuarial reports, if any; (iv) the summary
38
plan description currently in effect and all material
modifications thereof, if any; and (v) the most recent IRS
determination letter, if any.
(b) All of EXXE Employee Plans have been maintained and
operated materially in accordance with their terms and with
the material requirements of all applicable statutes, orders,
rules and final regulations, including without limitation
ERISA and the Code. All contributions required to be made to
EXXE Employee Plans have been made.
(c) With respect to each of EXXE Employee Plans which is
a pension plan (as defined in Section 3(2) of ERISA) (the
"Pension Plans"): (i) each Pension Plan which is intended to
be "qualified" within the meaning of Section 401(a) of the
Code is so qualified and, to the extent a determination letter
has been received from the IRS with respect to any such
Pension Plan, such determination letter may still be relied
upon, and each related trust is exempt from taxation under
Section 501(a) of the Code; (ii) the present value of all
benefits vested and all benefits accrued under each Pension
Plan which is subject to Title IV of ERISA, valued using the
assumptions in the most recent actuarial report, did not, in
each case, as of the last applicable annual valuation date (as
indicated on Schedule 2.17), exceed the value of the assets of
the Pension Plan allocable to benefits on a plan termination
basis; (iii) there has been no "prohibited transaction," as
such term is defined in Section 4975 of the Code or Section
406 of ERISA, which could subject any Pension Plan or
associated trust, or, to the Best Knowledge of EXXE or any
fiduciary or ERISA affiliate, to any material tax or penalty;
(iv) no Pension Plan or any trust created thereunder has been
terminated, nor have there been any "reportable
39
events" with respect to any Pension Plan, as that term is
defined in Section 4043 of ERISA since January 1, 1986; and
(v) no Pension Plan or any trust created thereunder has
incurred any "accumulated funding deficiency", as such term is
defined in Section 302 of ERISA (whether or not waived). No
Pension Plan is a "multiemployer plan" as that term is defined
in Section 3(37) of ERISA. With respect to each Pension Plan
that is described in Section 4063(a) of ERISA (a "Multiple
Employer Pension Plan"): (i) neither EXXE nor any EXXE
Subsidiary would have any liability or obligation to post a
bond under Section 4063 of ERISA if EXXE and all EXXE
Subsidiaries were to withdraw from such Multiple Employer
Pension Plan; and (ii) neither EXXE nor any EXXE Subsidiary
would have any liability under Section 4064 of ERISA if such
Multiple Employer Pension Plan were to terminate.
(d) Neither EXXE nor any EXXE Subsidiary has any
liability for any post-retirement health, medical or similar
benefit of any kind whatsoever, except as required by statute
or regulation.
(e) Neither EXXE nor any EXXE Subsidiary has any
material liability under ERISA or the Code as a result of its
being a member of a group described in Sections 414(b), (c),
(m) or (o) of the Code.
(f) Neither EXXE nor any EXXE Subsidiary has any
material liability under the continuation of health care
provisions of the Consolidated Omnibus Budget Reconciliation
Act of 1985 or any comparable state law.
40
(g) Except as set forth on Schedule 2.17, neither the
execution nor delivery of this Agreement, nor the consummation
of any of the transactions contemplated hereby, will
(i) result in any payment (including without limitation
severance, unemployment compensation or golden parachute
payment) becoming due to any director or employee of EXXE or
any EXXE Subsidiary from any of such entities, (ii) materially
increase any benefit otherwise payable under any of EXXE
Employee Plans or (iii) result in the acceleration of the time
of payment of any such benefit. EXXE shall insure that no
amounts paid or payable by EXXE, the EXXE Subsidiaries or Bay
View to or with respect to any employee or former employee of
EXXE or any EXXE Subsidiary will fail to be deductible for
federal income tax purposes by reason of Section 280G or
Section 162(m) of the Code or otherwise.
2.18 Conduct to Date. From and after September 30, 1996,
through the date of this Agreement, except as set forth on Schedule
2.18 or in the EXXE Financial Statements: (i) EXXE and the EXXE
Subsidiaries have conducted their respective businesses in the
ordinary and usual course consistent with past practices;
(ii) neither EXXE nor any EXXE Subsidiary has issued, sold,
granted, conferred or awarded any of its Equity Securities, or any
corporate debt securities which would be classified under GAAP as
long-term debt on the consolidated balance sheets of EXXE;
(iii) EXXE has not effected any stock split or adjusted, combined,
reclassified or otherwise changed its capitalization; (iv) EXXE has
not declared, set aside or paid any dividend or other distribution
in respect of its capital stock, or purchased, redeemed, retired,
repurchased, or exchanged, or otherwise acquired or disposed of,
directly or indirectly, any of its Equity Securities, whether
pursuant to the terms of such Equity Securities or otherwise;
(v) neither EXXE nor any EXXE Subsidiary has incurred any material
obligation or liability
41
(absolute or contingent), except normal trade or business
obligations or liabilities incurred in the ordinary course of
business, or subjected to Lien any of its assets or properties
other than in the ordinary course of business consistent with past
practice; (vi) neither EXXE nor any EXXE Subsidiary has discharged
or satisfied any material Lien or paid any material obligation or
liability (absolute or contingent), other than in the ordinary
course of business; (vii) neither EXXE nor any EXXE Subsidiary has
sold, assigned, transferred, leased, exchanged, or otherwise
disposed of any of its properties or assets other than for a fair
consideration in the ordinary course of business; (viii) except as
required by contract or law, neither EXXE nor any EXXE Subsidiary
has (A) increased the rate of compensation of, or paid any bonus
to, any of its directors, officers, or other employees, except
merit or promotion increases in accordance with existing policy and
past practices, (B) entered into any new, or amended or
supplemented any existing, employment, management, consulting,
deferred compensation, severance, or other similar contract,
(C) entered into, terminated, or modified any of EXXE Employee
Plans or (D) agreed to do any of the foregoing; (ix) neither EXXE
nor any EXXE Subsidiary has suffered any material damage,
destruction, or loss, whether as the result of fire, explosion,
earthquake, accident, casualty, labor trouble, requisition, or
taking of property by any governmental authority, flood, windstorm,
embargo, riot, act of God or the enemy, or other casualty or event,
and whether or not covered by insurance; (x) neither EXXE nor any
EXXE Subsidiary has canceled or compromised any debt, except for
debts charged off or compromised in accordance with the past
practice of EXXE and the EXXE Subsidiaries; (xi) neither EXXE nor
any EXXE Subsidiary has entered into any transaction, contract or
commitment outside the ordinary course of its business and
(xii) neither EXXE nor any EXXE Subsidiary has made or guaranteed
any loan to any of EXXE Employee Plans.
42
2.19 Statement to EXXE Stockholders, etc. None of the
information regarding EXXE or any EXXE Subsidiary supplied or to be
supplied by EXXE for inclusion or included in (i) the proxy or
information statement (the "Proxy Statement") to be mailed to
EXXE's stockholders in connection with the transactions
contemplated by this Agreement or (ii) any other documents to be
filed with any governmental authority in connection with the
transactions contemplated hereby will, at the respective times such
documents are filed with any governmental authority and, with
respect to the Proxy Statement, when mailed, be false or misleading
with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not
misleading or, in the case of the Proxy Statement or any amendment
thereof or supplement thereto, at the time of the meeting of EXXE's
stockholders referred to in Section 5.3 (the "Meeting") (or, if no
Meeting is held, at the time the Proxy Statement is first furnished
to EXXE's stockholders), be false or misleading with respect to any
material fact, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Meeting. All documents which
EXXE or any EXXE Subsidiary is responsible for filing with any
governmental authority in connection with the Merger will comply as
to form in all material respects with the provisions of applicable
law.
2.20 Registration Obligations. Neither EXXE nor any EXXE
Subsidiary is 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 of 1933, as
amended, or other Federal or State securities laws or regulations.
2.21 Undisclosed Liabilities. Except (i) to the extent
reflected, disclosed or reserved against in audited consolidated
financial statements of EXXE as at December 31, 1995, (ii)
43
liabilities incurred by EXXE and the EXXE Subsidiaries since
December 31, 1995 in the ordinary course of business and consistent
with past practices, (iii) as set forth on Schedule 2.21, or (iv)
contractual obligations under contracts described on Schedules
attached hereto, neither EXXE nor any EXXE Subsidiary has any
liabilities, whether absolute, accrued, contingent, or otherwise,
or due or to become due, including without limitation any
liabilities as guarantor under any guaranty.
2.22 Takeover Provisions Not Applicable. The transactions
contemplated by this Agreement are exempt from any applicable state
takeover law, and EXXE has taken or will take all steps necessary
so that any takeover provisions in the charter documents or bylaws
of EXXE or any EXXE Subsidiary, will not apply to this Agreement or
any of the transactions contemplated hereby or thereby.
2.23 Brokers and Finders. Except as set forth in Schedule
2.23, neither EXXE nor any EXXE 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 finder's fees, and no broker
or finder has acted directly or indirectly for EXXE or any EXXE
Subsidiary, in connection with this Agreement or the transactions
contemplated hereby. Set forth in Schedule 2.23 is a bona fide
estimate of the fees and expenses expected to be paid by EXXE to
each of its (i) financial advisor, (ii) attorneys and (iii)
accountants in connection with the Merger.
2.24 Accuracy of Information. The statements of EXXE
contained in this Agreement, the Schedules hereto and any other
written document executed and delivered by or on behalf of
44
EXXE pursuant to the terms of this Agreement are true and correct
in all material respects, and such documents do not omit any
material fact necessary to make the statements contained therein
not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF BAY VIEW
Bay View and BV Acquisition represent and warrant to and
covenant with EXXE as follows:
3.1 Organization and Authority. Bay View is a corporation,
duly organized, validly existing and in good standing under the
laws of the State of Delaware, and BV Acquisition is a corporation,
duly organized, validly existing and in good standing under the
laws of the State of California. Bay View and BV Acquisition are
duly qualified to do business and are in good standing in all
jurisdictions where their ownership or leasing of property or the
conduct of their business requires them to be so qualified and have
the corporate power and authority to own their properties and
assets and to carry on their businesses as they are now being
conducted, except where the failure to be so qualified would not
have a material adverse effect on the Condition of Bay View or BV
Acquisition, as the case may be. Bay View is registered as a
savings and loan holding company with the Office of Thrift
Supervision under the Home Owners' Loan Act of 1933, as amended.
45
3.2 Authorization.
(a) Bay View and BV Acquisition have the corporate power and
authority to enter into this Agreement and to carry out their
obligations hereunder. The execution, delivery and performance of
this Agreement by Bay View and BV Acquisition and the consummation
by Bay View and BV Acquisition of the transactions contemplated
hereby have been duly authorized by all requisite corporate action
of Bay View and BV Acquisition and subject to the receipt of such
approvals of governmental authorities as may be required by statute
or regulation, will be valid and binding obligations of Bay View
and BV Acquisition enforceable against Bay View and BV Acquisition
in accordance with its terms, except as the enforceability thereof
may be limited by (i) bankruptcy, insolvency, moratorium,
reorganization, receivership, conservatorship or similar laws
relating to or affecting the enforcement of creditors' rights
generally and (ii) general principles of equity, whether applied by
a court of law or equity.
(b) Neither the execution, delivery or performance by Bay
View of this Agreement, nor the consummation by Bay View of the
transactions contemplated hereby, nor compliance by Bay View with
any of the provisions hereof, will (i) violate or conflict with any
term, condition or provision of the articles or certificate of
incorporation or bylaws of Bay View or any Bay View Subsidiary,
(ii) violate, conflict with or result in a breach of any provisions
of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result
in the termination of, or accelerate the performance required by,
or result in a right of termination or acceleration of, or result
in the creation of, any Lien upon any of the properties or assets
of Bay View or any Bay View Subsidiary under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or
46
other instrument or obligation to which Bay View or any Bay View
Subsidiary is a party or by which it may be bound, or to which Bay
View or any Bay View Subsidiary or any of their properties or
assets may be subject, or (iii) subject to compliance with the
statutes and regulations referred to in subsection (c) of this
Section 3.2, to the best knowledge of Bay View (the "Best Knowledge
of Bay View"), violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to Bay
View or any Bay View Subsidiary or any of their respective
properties or assets.
(c) Other than in connection with or in compliance with the
provisions of the CGCL or filings, consents, reviews,
authorizations, approvals or exemptions required under the HSR Act,
no notice to, filing with, exemption or review by, or
authorization, consent or approval of, any public body or authority
is necessary for the consummation by Bay View of the transactions
contemplated by this Agreement.
3.3 Bay View Financial Statements. The consolidated balance
sheets of Bay View and the subsidiaries of Bay View (each a "Bay
View Subsidiary" and collectively the "Bay View Subsidiaries"), as
of December 31, 1995 and 1994 and related consolidated statements
of income, cash flows and changes in stockholders' equity for each
of the three years in the three-year period ended December 31,
1995, together with the notes thereto, audited by Deloitte & Touche
LLP and included in Bay View's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995 as filed with the SEC, and the
unaudited consolidated condensed balance sheets of Bay View and the
Bay View Subsidiaries as of March 31, 1996, June 30, 1996 and
September 30, 1996, and the related unaudited consolidated
condensed statements of income and cash flows for the periods then
ended included in Bay View's Quarterly reports on Forms 10-Q for
the periods
47
then ended as filed with the SEC (collectively the "Bay View
Financial Statements"), have been prepared in accordance with GAAP
applied on a consistent basis, present fairly the consolidated
financial position of Bay View and the Bay View Subsidiaries at
such dates, and the consolidated results of operations, cash flows
and changes in stockholders' equity of Bay View and the Bay View
Subsidiaries for the periods stated therein and are derived from
the books and records of Bay View and the Bay View Subsidiaries,
which are complete and accurate in all material respects and have
been maintained in accordance with good business practices.
Neither Bay View nor any Bay View Subsidiary has any material
contingent liabilities that are not described in the Bay View
Financial Statements described above.
3.4 Bay View Reports. Since December 31, 1995, Bay View has
filed all material reports, registrations and statements, together
with any required material amendments thereto, that it was required
to file with any governmental authority. All such reports and
statements filed with any such governmental authority are
collectively referred to herein as the "Bay View Reports" and shall
include any such report or statement filed between the date hereof
and the Closing Date. As of its respective date, each Bay View
Report complied in all material respects with all the rules and
regulations promulgated by the applicable governmental authority
and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.5 Material Adverse Change. Since December 31, 1995, there
has been no material adverse change in the Condition of Bay View,
except as may have resulted or may result from changes to laws and
regulations or changes in economic conditions applicable to
depositary
48
institutions generally (including, but not limited to, the
$11,750,000 charge (on a pre-tax basis) to Bay View in connection
with the recapitalization of the Savings Association Insurance
Fund).
3.6 Accuracy of Information. The statements of Bay View
contained in this Agreement, the Schedules hereto and in any other
written document executed and delivered by or on behalf of Bay View
pursuant to the terms of this Agreement are true and correct in all
material respects, and such statements and documents do not omit
any material fact necessary to make the statements contained herein
or therein not misleading.
ARTICLE IV
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Businesses Prior to the Effective Time.
During the period from the date of this Agreement to the Effective
Time, EXXE shall, and shall cause each of the EXXE Subsidiaries to:
(a) conduct its business only in the ordinary and usual
course consistent with past business practices;
(b) use its best efforts to maintain and preserve its
business organization, employees and advantageous business
relationships and retain the services of its officers and key
employees;
49
(c) maintain and keep its properties (i) in good repair
and condition except for obsolete properties and for
deterioration due to ordinary wear and tear, and damage due to
casualty, and (ii) free of liens, except as permitted by
Section 2.7;
(d) maintain in full force and effect insurance
comparable in amount and in scope of coverage to that now
maintained by it;
(e) perform all of its material obligations under
material contracts, leases and documents relating to and
affecting its assets, properties and business except such
obligations as it may in good faith reasonably dispute;
(f) charge off all loans receivable and other assets, or
portions thereof, deemed uncollectible in accordance with GAAP
applied on a consistent basis;
(g) comply with and perform in all material respects all
obligations and duties imposed upon it by all material federal
and state laws, and all material rules, regulations and orders
imposed by federal, state and local governmental authorities;
(h) take no action which would adversely affect or delay
the ability of Bay View, BV Acquisition or EXXE to obtain any
necessary approvals, consents or waivers of any governmental
authority required for the transactions contemplated hereby or
to perform its covenants and agreements on a timely basis
under this Agreement;
(i) file all EXXE Returns and pay all taxes when due;
and
50
(j) not deviate, in any material respect, from recent
lending policies and practices.
4.2 Forbearances. During the period from the date of this
Agreement to the Effective Time, EXXE shall not and shall not
permit any EXXE Subsidiary to, without the prior written consent of
Bay View:
(a) declare, set aside or pay any dividends or other
distributions, directly or indirectly, in respect of its
capital stock (other than ordinary, normal dividends from a
wholly owned Subsidiary of EXXE to EXXE or another wholly
owned Subsidiary of EXXE);
(b) enter into or amend any employment, severance or
similar agreement or arrangement with any director or officer
or employee, or modify any of EXXE Employee Plans or any loans
relating thereto (or prepay in whole or in part any such
loans) or grant any salary or wage increase or increase any
employee benefit (including incentive or bonus payments),
except (i) normal individual increases in compensation to
employees consistent with past practice, or as required by law
or contract, and (ii) such increases of which EXXE notifies
Bay View in writing and which Bay View does not disapprove
within three business days of the receipt of such notice;
(c) authorize, recommend, propose or announce an
intention to authorize, so recommend or propose, or enter into
an agreement in principle with respect to, any merger,
consolidation or business combination (other than the Merger),
any acquisition
51
of a material amount of assets or securities, any disposition
of a material amount of assets or securities or any release or
relinquishment of any material contract rights;
(d) propose or adopt any amendments to its articles or
certificate of incorporation or other charter document or
bylaws;
(e) issue, sell, grant, confer or award any of its
Equity Securities or effect any stock split or adjust,
combine, reclassify or otherwise change its capitalization as
it exists on the date of this Agreement;
(f) purchase, redeem, retire, repurchase, or exchange,
or otherwise acquire or dispose of, directly or indirectly,
any of its Equity Securities, whether pursuant to the terms of
such Equity Securities or otherwise;
(g) (i) without first obtaining the consent of Bay View,
which consent shall not be unreasonably withheld or delayed,
enter into or increase any loan or credit commitment to, or
invest or agree to invest in, any person or entity or modify
any of the material provisions or renew or otherwise extend
the maturity date of any existing loan or credit commitment
(collectively, "Lend to"), or repurchase any loan
participation interest, in an amount in excess of $500,000;
(ii) Lend to any person other than in accordance with lending
policies (including, EXXE's current practice of elevating
noncomplying loans to higher levels of credit authorization)
as in effect on the date hereof, provided that EXXE or any
EXXE Subsidiary may make any such loan in the event (A) EXXE
or any EXXE Subsidiary has delivered to Bay View or its
designated
52
representative a notice of its intention to make such loan and
such information as Bay View or its designated representative
may reasonably require in respect thereof and (B) Bay View or
its designated representative shall not have objected to such
loan by giving written or facsimile notice of such objection
within two business days following the delivery to Bay View of
the notice of intention and information as aforesaid;
(iii) Lend to any person or entity, with respect to any of the
loans or other extensions of credit to which or investments in
which are on a list of non-accrual loans or similar internal
report of EXXE or any EXXE Subsidiary (except those denoted
"pass" or similar notation thereon); (iv) enter into any
agreement or engage in any transaction which reasonably could
be construed as materially affecting the asset/liability
management or interest rate risk management position of
Concord; or (v) change lending, credit, investment, liability
management and other material lending policies in any respect
which is material to Concord; provided, however, that nothing
in this paragraph shall prohibit EXXE or any EXXE Subsidiary
from honoring any contractual obligation in existence on the
date of this Agreement;
(h) directly or indirectly (including through its
officers, directors, employees or other representatives)
initiate, solicit or encourage any discussions, inquiries or
proposals with any third party relating to the disposition of
any significant portion of the business or assets of EXXE or
any EXXE Subsidiary or the acquisition of Equity Securities of
EXXE or any EXXE Subsidiary or the merger of EXXE or any EXXE
Subsidiary with any person or any similar transaction (each
such transaction being referred to herein as an "Acquisition
Transaction"), or provide any such person with information or
assistance or negotiate with any such person with respect to
an Acquisition
53
Transaction, and EXXE shall immediately notify Bay View orally
of all the relevant details relating to all inquiries,
indications of interest and proposals which it may receive
with respect to any Acquisition Transaction and promptly
confirm the same to Bay View in writing;
(i) take any action that would materially impede or
delay the consummation of the transactions contemplated by
this Agreement;
(j) except in the ordinary course of business consistent
with prudent business practices and existing policy, incur any
indebtedness for borrowed money, assume, guarantee, endorse or
otherwise as an accommodation become responsible or liable for
the obligations of any other individual, corporation or other
entity; or
(k) agree in writing or otherwise to take any of the
foregoing actions or engage in any activity, enter into any
transaction or take or omit to take any other act which would
make any of the representations and warranties in Article II
of this Agreement untrue or incorrect in any material respect
if made anew after engaging in such activity, entering into
such transaction, or taking or omitting such other act.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Access and Information. EXXE shall and shall cause the
EXXE Subsidiaries to afford to Bay View and to its accountants,
counsel and other representatives, full access during
54
normal business hours, during the period prior to the Effective
Time, to all their respective properties, books, contracts,
commitments and records and, during such period, shall furnish
promptly to Bay View (i) a copy of each report, schedule and other
document filed or received by it during such period pursuant to the
requirements of governmental authorities and (ii) all other
information concerning its business, properties and personnel as
Bay View may reasonably request. Any information secured or
obtained by Bay View pursuant to the preceding sentence shall be
subject to the confidentiality agreement between Bay View and EXXE
dated August 21, 1996, which confidentiality agreement shall remain
in full force and effect and the non-disclosure provisions therein
shall survive the termination provisions of this Agreement. Bay
View and EXXE shall afford each other the opportunity to review the
other parties' notice pursuant to the HSR Act prior to the filing
thereof.
5.2 Regulatory Filings. EXXE and Bay View shall and EXXE
shall cause the EXXE Subsidiaries to cooperate and use their
respective best efforts to prepare all documentation, to effect the
notices pursuant to the HSR Act and all other filings and to obtain
all permits, consents, approvals and authorizations of all third
parties and governmental authorities necessary to consummate the
transactions contemplated by this Agreement and, as and if directed
by Bay View.
5.3 Stockholder Approval. EXXE shall call a meeting of its
stockholders to be held on or prior to February 28 for the purpose
of approving this Agreement and the Merger. In connection with
such meeting, Bay View and EXXE shall cooperate in the preparation
of the Proxy Statement and, with the approval of each of Bay View
and EXXE, which approvals will not be unreasonably withheld, the
Proxy Statement shall be mailed to the stockholders of EXXE.
55
The Proxy Statement shall disclose all material information
regarding any governmental inquiries relating to EXXE, any EXXE
Subsidiary, any director or officer of EXXE or any EXXE Subsidiary
or any affiliate of EXXE or any EXXE Subsidiary. The Board of
Directors of EXXE shall submit for approval of EXXE's stockholders
the matters to be voted upon at such meeting. The Board of
Directors of EXXE has approved this Agreement and the transactions
contemplated hereby and has approved resolutions recommending this
Agreement and the transactions contemplated hereby to the
stockholders of EXXE and, subject to their fiduciary duties under
law, will use its best efforts to obtain any vote of EXXE's
stockholders necessary for the approval and adoption of this
Agreement and the Merger.
5.4 Current Information. During the period from the date of
this Agreement to the Effective Time, EXXE shall and shall cause
the EXXE Subsidiaries to promptly furnish Bay View with copies of
all monthly and other interim financial statements as the same
become available and shall cause one or more of its designated
representatives to confer on a regular and frequent basis with
representatives of Bay View. EXXE shall promptly notify Bay View
of any material change in the business or operations of EXXE or any
EXXE Subsidiary and of any governmental complaints, investigations
or hearings (or communications indicating that the same may be
contemplated), or the institution or the threat of material
litigation involving EXXE or any EXXE Subsidiary.
5.5 Expenses. Each party hereto shall bear its own expenses
incident to preparing, entering into and carrying out this
Agreement.
56
5.6 Miscellaneous Agreements and Consents. Subject to the
terms and conditions herein provided, each of the parties hereto
agrees to use its respective best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement as expeditiously as possible,
including without limitation using its respective best efforts to
lift or rescind any injunction or restraining order adversely
affecting the ability of the parties to consummate the transactions
contemplated hereby. Each party shall, and shall cause each of its
respective Subsidiaries to, use its best efforts to obtain consents
of all third parties and governmental authorities necessary or, in
the reasonable opinion of Bay View, desirable for the consummation
of the transactions contemplated by this Agreement.
5.7 Employee Agreements and Benefits.
(a) At the Effective Time, Bay View shall honor in
accordance with their terms the employment agreements entered
into between Concord and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, the current
President of Concord, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, the current
Executive Vice President - Finance and Administration of
Concord, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, the current Executive Vice
President - Marketing and Strategic Development of Concord, in
the form attached hereto as Appendices D, E and F
respectively, which agreements shall be executed simultaneous
with the execution of this Agreement (the "New Employment
Agreements"). Pursuant to the New Employment Agreements, at
the Effective Time, all employment contracts or similar
agreements theretofore existing between EXXE or any EXXE
Subsidiary and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇
▇. ▇▇▇▇▇, including
57
without limitation the Employment Agreement, dated as of July
1, 1993, amended and restated as of May 15, 1995, between ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ and Concord, the Employment Agreement, dated July
1, 1993, amended and restated as of May 15, 1995, between
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and Concord and the Letter of Employment,
dated October 31, 1994, between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and Concord
shall terminate without any payment or penalty obligation and
be superseded and replaced in their entirety by the
appropriate employment agreement referred to in the
immediately preceding sentence of this Section 5.7(a).
Neither EXXE or any EXXE Subsidiary nor Bay View or any Bay
View Subsidiary shall make, and shall not be in any manner
obligated to make, any payment whatsoever to any director or
employee of EXXE or any EXXE Subsidiary under any circumstance
in which such payment is not or will not be deductible under
Section 162(m) or Section 280G of the Code.
(b) Following the Effective Time, EXXE shall cause the
benefit plans of EXXE and the EXXE Subsidiaries in effect as
of the date of this Agreement (other than the EXXE Option
Plan) to remain in effect with respect to employees of EXXE
and the EXXE Subsidiaries covered by such plans at the
Effective Time until such time as Bay View shall, subject to
applicable law, the terms of this Agreement and the terms of
such plans, amend, modify or terminate any such plans.
Notwithstanding the foregoing, Bay View agrees to honor in
accordance with their terms all benefits vested as of the date
hereof under the benefit plans of EXXE and the EXXE
Subsidiaries or under other contracts, arrangements or
understandings described in the EXXE Schedules. Nothing
herein shall obligate Bay View to provide or cause to be
provided any benefits, including any benefits duplicative of
those provided under any benefit plan of EXXE or any EXXE
58
Subsidiaries continued, modified or terminated pursuant to
this Section 5.7, under any existing or future plan of Bay
View or any Bay View Subsidiary. In the event Bay View
permits employees of EXXE or any EXXE Subsidiary who continue
in employment after the Effective Time to participate in any
benefit plan of Bay View or any Bay View Subsidiary, such
employees shall not be credited for prior years of service
with EXXE or any EXXE subsidiary for purposes of eligibility,
vesting and the accrual of benefits. Bay View shall use its
best efforts to integrate the current employees of EXXE and
the EXXE Subsidiaries into the benefit plans of Bay View on or
before January 1, 1998.
5.8 Press Releases. Except as may be required by law, Bay
View shall issue any and all press releases relating to this
Agreement or any of the transactions contemplated hereby, following
consultation with EXXE as to the form and substance of such press
releases.
5.9 Takeover Provisions. EXXE has taken or will take all
steps necessary to exempt the transactions contemplated by this
Agreement from, and if necessary challenge the validity of, any
applicable state takeover or similar law.
5.10 D&O Indemnification. Bay View agrees that the Merger
shall not affect or diminish any of EXXE's or EXXE Subsidiaries'
duties and obligations of indemnification existing as of the
Effective Time in favor of its employees, agents, directors or
officers arising by virtue of its articles of incorporation,
charter or bylaws in the form in effect at the date of this
Agreement or arising by operation of law or arising by virtue of
any contract, resolution or other agreement or document existing at
the date of this Agreement, and such duties and obligations
59
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.
5.11 Third Parties. EXXE shall immediately terminate all
negotiations or discussions concerning any Acquisition Transaction
with parties other than Bay View and enforce the terms of all
confidentiality agreements with such other parties.
5.12 Dissenting Stockholders' Appraisal Rights. EXXE will
comply with all applicable notification and other provisions of
regulations or statutes relating to Dissenting Shares.
5.13 Governmental Inquiries. Bay View may, in conjunction
with Bay View counsel, take such steps as it may deem necessary or
appropriate to investigate any governmental inquiries. Should Bay
View reasonably determine upon the basis of such investigation that
any such inquiries or any matters directly related thereto may have
a material adverse impact on Bay View, any Bay View Subsidiary,
EXXE or Concord, Bay View shall have the right pursuant to Section
7.1(d) hereof to terminate this Agreement, which shall be Bay
View's sole remedy in such event.
5.14 Establishment of Accruals. If requested by Bay View,
immediately prior to the Effective Time, EXXE shall cause Concord
to, consistent with GAAP, establish such additional accruals and
reserves as may be necessary to conform Concord's accounting and
credit loss reserve practices and methods to those of Bay View (as
such practices and methods are to be applied to Concord from and
after the Effective Time) and reflect Bay View's plans with respect
to the conduct of Concord's business following the Merger.
Notwithstanding anything to the
60
contrary contained in this Agreement, no accrual or reserve made by
Concord pursuant to this Section 5.14, or any litigation or
regulatory proceeding arising out of any such accrual or reserve,
or any other effect on Concord resulting from EXXE's compliance
with this Section 5.14, shall 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.
5.15 Assistance with Third Parties. EXXE shall and shall
cause the EXXE Subsidiaries to cooperate with, and use all
reasonable efforts to assist Bay View in (i) gaining access to all
of EXXE's and EXXE Subsidiaries' third-party vendors, and the
landlords of each property leased by them, promptly after the date
of this Agreement, and (b) obtaining the cooperation of such third-parties
in a smooth transition in accordance with Bay View's
timetable at or after the Effective Time. EXXE and the EXXE
Subsidiaries shall also, at Bay View's reasonable request, give
notice of termination of third-party contracts to be effective at
or after the Effective Time, and take such reasonable additional
action as may be necessary or reasonably appropriate to ensure that
such contracts are terminated at the date requested.
5.16 Insurance Policy Claims. EXXE shall inform Bay View no
later than the Effective Time of any material unfiled insurance
claims of EXXE or any EXXE Subsidiary which it has knowledge and
for which it believes coverage exists.
61
ARTICLE VI
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the
Merger shall be subject to the fulfillment or waiver at or prior to
the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement shall have
been approved and adopted by the requisite vote of the
stockholders of EXXE.
(b) Regulatory Approvals. All requisite approvals of
this Agreement and the transactions contemplated hereby shall
have been received from all governmental authorities, if any,
having approval authority with respect to the Merger, without
the imposition of any condition which differs from conditions
customarily imposed by such governmental authorities in orders
approving acquisitions of the type contemplated hereby and in
the good faith opinion of Bay View compliance with which would
materially adversely affect the reasonably anticipated
benefits of the Merger to Bay View, and all applicable waiting
periods shall have expired, including pursuant to the HSR Act.
(c) No Injunctions. Neither Bay View, EXXE nor any EXXE
Subsidiary shall be subject to any order, decree or injunction
of a court or agency of competent jurisdiction which enjoins
or prohibits the consummation of the Merger.
62
6.2 Conditions to Obligations of EXXE to Effect the Merger.
The obligations of EXXE to effect the Merger shall be subject to
the fulfillment or waiver at or prior to the Effective Time of the
following additional conditions:
(a) Representations and Warranties. The representations
and warranties of Bay View set forth in Article III of this
Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the Effective Time
(as though made on and as of the Effective Time except (i) to
the extent such representations and warranties are by their
express provisions made as of a specified date and (ii) for
the effect of transactions contemplated by this Agreement) and
EXXE shall have received a certificate of the president and
chief executive officer of Bay View to that effect.
(b) Performance of Obligations. Bay View shall have
performed in all material respects all obligations required to
be performed by it under this Agreement prior to the Effective
Time, and EXXE shall have received a certificate of the
president and chief executive officer of Bay View to that
effect.
(c) Opinion of Counsel. EXXE shall have received an
opinion from Silver, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, L.L.P., counsel to Bay
View, dated the Closing Date in form and substance reasonably
satisfactory to EXXE.
6.3 Conditions to Obligations of Bay View to Effect the
Merger. The obligations of Bay View to effect the Merger shall be
subject to the fulfillment or waiver at or prior to the Effective
Time of the following additional conditions:
63
(a) Representations and Warranties. The representations
and warranties of EXXE set forth in Article II of this
Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the Effective Time
(as though made on and as of the Effective Time except (i) to
the extent such representations and warranties are by their
express provisions made as of a specific date and (ii) for the
effect of transactions contemplated by this Agreement) and Bay
View shall have received a certificate of the chief executive
officer of EXXE to that effect.
(b) Performance of Obligations. EXXE shall have
performed in all material respects all obligations required to
be performed by it under this Agreement prior to the Effective
Time, and Bay View shall have received a certificate of the
chief executive officer of EXXE to that effect.
(c) Opinion of Counsel. Bay View shall have received an
opinion from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to
EXXE, dated the Closing Date, in form and substance reasonably
satisfactory to Bay View.
(d) Support Agreements. Simultaneous with the execution
and delivery of this Agreement, each of the directors of EXXE
and ▇▇▇ ▇. Giulie and ▇▇▇▇ ▇. ▇▇▇▇▇▇, shall have executed and
delivered to Bay View a Support Agreement in the form attached
hereto as Appendix A.
(e) New Employment Agreements. Simultaneous with the
execution and delivery of this Agreement by the parties
hereto, Concord and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
64
▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ shall have executed and
delivered the New Employment Agreements referred to in Section
5.7 in the form attached hereto as Appendices D, E and F
respectively.
(f) No Material Adverse Change. Since the date of this
Agreement, there shall have been no material adverse change in
the Condition of EXXE and the EXXE Subsidiaries, taken as a
whole.
(g) Option Cash-Out Agreements. The holders of EXXE
Options shall have executed and delivered stock option
cancellation agreements with respect to the outstanding EXXE
Options in substantially the form attached hereto as Appendix
C.
(h) Warrant Cash-Out Agreements. Simultaneous with the
execution and delivery of this Agreement by the parties
hereto, the holders of EXXE Warrants shall have executed and
delivered warrant cash-out agreements with respect to the
outstanding EXXE Warrants in form satisfactory to Bay View.
(i) Third Party Consents. All consents or approvals of
all persons (other than governmental authorities) required for
or in connection with the execution, delivery and performance
of this Agreement shall have been obtained and shall be in
full force and effect.
(j) Significant Restriction on Activities. The
consummation of the Merger will not result in any significant
restriction on the activities of, or significant limitation
upon
65
the conduct of business by, any existing Bay View Subsidiary,
other than a significant restriction or limitation that can be
cured by having another Bay View Subsidiary perform such
activity or conduct such business in the manner theretofore
performed or conducted.
(k) Director Resignations. Bay View shall have received
a letter of resignation, effective as of the Effective Time,
from each of the directors of EXXE and the EXXE Subsidiaries
from whom Bay View shall have requested such letter.
(l) Loan Portfolio. At the time of Closing, Concord
will have one or more written commitments to reverse
securitizations and participations selected by Bay View to
enable Concord to demonstrate to Bay View's reasonable
satisfaction that it has had at least $48.6 million of average
earning assets for the 30 days prior to Closing in its
portfolio or available upon the reversal of securitizations
and participations and that it will be able to deliver for its
portfolio at least $48.6 million of principal amount of
earning assets within 45 days following the Effective Time,
subject only to the availability of funding for the portfolio
position.
(m) Fairness Opinion. Bay View shall have received a
fairness opinion from a financial advisor satisfactory to Bay
View, dated the date of this Agreement, to the effect that the
consideration to be paid for the shares of EXXE Common Stock
and EXXE Series B Preferred Stock and EXXE Warrants and EXXE
Options pursuant to this Agreement is fair to the holders of
common stock, par value $.01 per share, of Bay View.
66
(n) Dissenting Stockholders. Immediately prior to the
Effective Time, the holders of 10% or more of the outstanding
shares of each of the EXXE Common Stock and EXXE Series B
Preferred Stock shall not have taken the appropriate steps to
qualify as dissenting stockholders under Section 1300 et seq.
of the CGCL.
(o) Termination of Warehouse Credit Facility and Master
Trust Facility. At the time of the Closing, Concord shall
have obtained (i) the consent of ContiFinancial Services to
terminate the Warehouse Credit Facility and (ii) the consent
of Mutual of Omaha and Southern State Insurance to terminate
the Master Trust Facility.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time:
(a) by mutual consent by the Boards of Directors of Bay
View and EXXE;
(b) by the Board of Directors of Bay View or EXXE at any
time after June 30, 1997 if the Merger shall not theretofore
have been consummated (provided that the terminating party is
not then in material breach of any representation, warranty,
covenant or other agreement contained herein);
67
(c) by the Board of Directors of Bay View or EXXE if (i)
any governmental authority has denied approval of the Merger
and such denial has become final and nonappealable or (ii) the
stockholders of EXXE shall not have approved this Agreement
and the Merger at the meeting referred to in Section 5.3
(provided that the terminating party is not then in material
breach of any representation, warranty, covenant or other
agreement contained herein);
(d) by the Board of Directors of Bay View pursuant to
Section 5.13 hereof by giving written notice thereof to EXXE;
(e) by the Board of Directors of Bay View in the event
of a material breach by EXXE of any material representation,
warranty, covenant or other agreement contained in this
Agreement, which breach is not cured within 30 days after
written notice thereof to EXXE by Bay View; or
(f) by the Board of Directors of EXXE in the event of a
material breach by Bay View of any material representation,
warranty, covenant or other agreement contained in this
Agreement, which breach is not cured within 30 days after
written notice thereof is given to Bay View by EXXE.
7.2 Effect of Termination.
(a) In the event of termination of this Agreement as
provided in Sections 7.1(a), 7.1(b), 7.1(c)(i), 7.1(e) and
68
7.1(f)(provided for purposes of Section 7.1(e) and 7.1(f) that
any such breach is not willful on the part of EXXE or Bay
View, respectively), this Agreement shall forthwith become
void and there shall be no liability under this Agreement on
the part of Bay View or EXXE or their respective officers or
directors except as set forth in the second sentence of
Section 5.1 and in Section 5.5.
(b) In recognition of the expenses of, and other
opportunities foregone by, Bay View in connection with this
Agreement and the Merger, the parties agree that EXXE shall
pay to Bay View a termination fee equal to the lesser (i) of
Bay View's actual out-of-pocket expenses related to the Merger
(including legal, accounting and consulting fees and expenses,
and travel costs, but excluding the salaries or noncash
allocable charges of Bay View employees) and (ii) $225,000 in
cash on demand in the event of termination of this Agreement
as provided in Section 7.1(c)(ii) hereof or because of the
failure of EXXE to meet the conditions set forth in Sections
6.3(l), 6.3(n) and 6.3(o); provided, however, in the event
that the Board of Directors of EXXE did not make its favorable
recommendation of this Agreement and the Merger at all times
up to and including the date of the EXXE stockholders' meeting
and the EXXE stockholders shall not have approved the
Agreement and the Merger at such meeting, then Bay View shall
be entitled to the termination fee provided for under Section
7.2(c) hereof. In addition, in the event of termination of
this Agreement as provided in Section 7.1(c)(ii) hereof in
circumstances where Bay View's termination fee is determined
under this Section 7.2(b) and not 7.2(c), then the parties
agree that EXXE shall pay to Bay View a termination fee of
$2,275,000 in cash on demand if, within 24 months after the
date hereof, the Merger has not been completed and there
occurs any of the events set forth in subparagraphs (i), (ii)
or (iii) below:
69
(i) Any person other than Bay View or an affiliate
of Bay View acquires beneficial ownership of 51% or more
of the then-outstanding EXXE Common Stock or common stock
of Concord;
(ii) EXXE or Concord, without having received Bay
View's prior written consent, enters into an agreement to
engage in an Acquisition Transaction (as defined below)
with any person (the term "person" for purposes of this
Agreement having the meaning assigned thereto in Sections
3(a)(9) and 13(d)(3) of the Exchange Act, and the rules
and regulations thereunder) other than Bay View or any of
its Subsidiaries or EXXE's or Concord's Board of
Directors recommends that the stockholders of EXXE or
Concord approve or accept any Acquisition Transaction
with any person other than Bay View or any of its
Subsidiaries. For purposes of this Agreement,
"Acquisition Transaction" shall mean (A) a merger or
consolidation, or any similar transaction, involving EXXE
or Concord, (B) a purchase, lease or other acquisition of
all or substantially all of the assets of EXXE or Concord
or (C) a purchase or other acquisition (including by way
of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power
of EXXE or Concord; provided that the term "Acquisition
Transaction" does not include any internal merger or
consolidation involving only EXXE and/or its
Subsidiaries; or
(iii) A bona fide proposal is made by a third
party to EXXE or Concord or their stockholders to engage
in an Acquisition Transaction and after such
70
proposal is made any of the following events occurs: EXXE
willfully breaches this Agreement and such breach
entitles Bay View to terminate this Agreement; the
holders of EXXE Common Stock and EXXE Series B Preferred
Stock do not approve this Agreement at the meeting
referred to in Section 5.3; such meeting is not held or
is canceled prior to termination of this Agreement for
reasons other than the fault of EXXE's; or EXXE's Board
of Directors withdraws or modifies in a manner adverse to
Bay View the recommendation of Bay View's Board of
Directors with respect to this Agreement.
(c) In the event of termination of this Agreement by Bay
View as provided in Section 7.1(e) (provided such breach is
willful on the part of EXXE) or pursuant to the certain
circumstances as provided in 7.2(b), EXXE shall pay to Bay
View a termination fee of $2.5 million in cash on demand.
(d) In the event that all conditions to Closing are
satisfied and Bay View refuses to consummate the Merger, Bay
View shall pay to EXXE agreed upon liquidated damages of $2.5
million in cash on demand, as the sole and exclusive remedy of
EXXE under this Agreement.
7.3 Amendment. This Agreement and the Schedules hereto may
be amended by the parties hereto, by action taken by or on behalf
of their respective Boards of Directors; provided, however, that
(i) after any such approval by the stockholders of EXXE no such
modification shall alter or change the amount or kind of
consideration to be received by holders of EXXE Common Stock, EXXE
Series B Preferred Stock, EXXE Options or EXXE Warrants as provided
in this
71
Agreement and (ii) Bay View may make, and EXXE's Board of
Directors shall approve and its duly authorized representative
shall execute, such amendments as are permitted by Section 1.10
hereof. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of Bay View, BV Acquisition and
EXXE.
7.4 Severability. Any term, provision, covenant or
restriction contained in this Agreement held by a court or a
governmental authority of competent jurisdiction to be invalid,
void or unenforceable, shall be ineffective to the extent of such
invalidity, voidness or unenforceability, but neither the remaining
terms, provisions, covenants or restrictions contained in this
Agreement nor the validity or enforceability thereof in any other
jurisdictions shall be affected or impaired thereby. Any term,
provision, covenant or restriction contained in this Agreement that
is so found to be so broad as to be unenforceable shall be
interpreted to be as broad as is enforceable.
7.5 Waiver. Any term, condition or provision of this
Agreement may be waived in writing at any time by the Board of
Directors of the party which is, or whose stockholders are,
entitled to the benefits thereof.
ARTICLE VIII
POST-EFFECTIVE SURVIVAL; INDEMNIFICATION
8.1 General Survival. If the Merger is consummated, the
parties hereto agree that, notwithstanding the provisions of
Section 9.1 and regardless of any investigation made by Bay View,
(a) the representations, warranties, covenants and agreements of
EXXE contained in this
72
Agreement shall survive the Effective Time through January 1, 2001
(the "Post-Effective Time Survival Period"). No Post-Effective
Time claim or proceeding for breach of any representation,
warranty, covenant or agreement of EXXE set forth in this Agreement
may be brought by Bay View unless written notice of such claim
shall have been given to the EXXE Stockholder Committee on or prior
to the last day of the Post-Effective Time Survival Period (in
which event each such representation, warranty, covenant or
agreement shall, with respect to the specific claim made, survive
the Post-Effective Time Survival Period until such claim is finally
resolved and all obligations with respect thereto are fully
satisfied).
8.2 Indemnification.
(a) Indemnification Claims. Subject to the provisions
of Section 8.1 any and all Post-Effective Time Losses (as defined
below) resulting from, arising out of, relating to, or imposed upon
or incurred by Bay View, EXXE, Concord or any other EXXE Subsidiary
by reason of, any inaccuracy and/or breach of any of the
representations, warranties, covenants or agreements of EXXE
contained in this Agreement or in any other agreement or document
entered into or delivered by EXXE or Concord on or after the date
hereof and prior to the Effective Time in connection with this
Agreement or any of the transactions contemplated hereby and
thereby shall constitute indemnification claims (each an
"Indemnification Claim"). For purposes of this Agreement, the term
"Post-Effective Time Losses" means monetary costs and expenses,
including any and all deficiencies, judgments, settlements,
demands, claims, actions or causes of action, assessments,
liabilities, losses, damages (whether direct, indirect or
consequential), interest, fines, penalties, costs and expenses
(including, without limitation, reasonable legal, accounting and
other costs and expenses incurred in connection with investigating,
defending,
73
settling or satisfying any and all demands, claims, actions, causes
of action, suits, proceedings, assessments, judgments or appeals).
Indemnification Claims will be recognized during the Earn-Out
period consistent with GAAP, to the extent GAAP is applicable, in
accordance with Section 1.8 hereof. Notwithstanding the foregoing,
no amount of Indemnification Claims will be allocated to any
periods prior to or after the Earn-Out period, and the full amount
of Indemnification Claims will be charged to periods within the
Earn-Out period.
(b) Disregarding Specific Materiality Exceptions. For
purposes of determining Post-Effective Time Losses, any inaccuracy
in or breach of a representation or warranty by EXXE shall be
deemed to constitute a breach of a representation or warranty
notwithstanding any limitation or qualification as to materiality
set forth in such representation or warranty on the scope, accuracy
or completeness thereof, it being the intention of the parties that
any and all Post-Effective Time Losses shall be determined based on
the failure of any such representation or warranty of EXXE to be
true, correct and complete in any respect.
(c) Notice of an Indemnification Claim and Objection
Procedure. If any Indemnification Claim shall be asserted by Bay
View, it shall notify the EXXE Stockholder Committee in writing, in
a reasonably prompt manner, setting forth in detail the basis of
the Indemnification Claim and the amount of the Post-Effective Time
Losses associated therewith. The EXXE Stockholder Committee shall
have 30 days after receipt of such written notice to object to the
Indemnification Claim by written notice to Bay View detailing its
specific exceptions thereto (an "Objection Statement"). If an
Objection Statement is not timely delivered, the Indemnification
Claim shall become binding, conclusive and final, and no objection
may thereafter be made by the EXXE Stockholder Committee or any
EXXE stockholder thereto. In
74
the event an Objection Statement is received and Bay View and the
EXXE Stockholder Committee are unable to resolve the
Indemnification Claim within 30 days thereafter, then the disputed
Indemnification Claim (a "Disputed Indemnification Claim") shall be
submitted to arbitration in accordance with the procedures set
forth in Section 9.2 below.
(d) Method for Satisfying Indemnification Claims. The
amount of each Indemnification Claim shall constitute an adjustment
in the calculation of Tangible Net Income as provided in Section
1.8(b) in the calendar year in which notice of the claim is given
by Bay View to the EXXE Stockholder Committee, subject to the
carryover provisions set forth in said Section 1.8(b)(vii). In the
event an Objection Statement is received and Bay View and the EXXE
Stockholder Committee resolve the dispute in a manner which results
in an adjustment to the amount of the Indemnification Claim, then
the adjusted amount will be substituted and the Earn-Out for such
period will be recalculated based upon the adjusted amount. The
procedure set forth in the preceding sentence shall likewise apply
in the event a Disputed Indemnification Claim is submitted to
arbitration and the amount determined by the arbitrator differs
from the amount of the Indemnification Claim charged against income
in the calculation of Tangible Net Income under Section 1.8(b).
Nothing contained in this Article VIII shall alter or diminish
the rights of Bay View under Section 7.2 hereof, it being the
intent of the parties that the provisions of Article VIII shall
only apply if the Merger is consummated.
75
ARTICLE IX
GENERAL PROVISIONS
9.1 Non-Survival of Representations, Warranties and
Agreements. No investigation by the parties hereto made heretofore
or hereafter shall affect the representations and warranties of the
parties which are contained herein and each such representation and
warranty shall survive such investigation. Except as set forth
above in Section 8.1, and this Section 9.1, all representations,
warranties and agreements in this Agreement of the parties or in
any instrument delivered by a party pursuant to or in connection
with this Agreement shall not survive the Effective Time or the
termination of this Agreement in accordance with its terms. In the
event of consummation of the Merger, the agreements of Bay View
contained in or referred to in Sections 5.7 and 5.10, and the
covenants and agreements of EXXE as provided in Section 8.1, shall
survive the Effective Time. In the event of termination of this
Agreement in accordance with its terms, the Agreements contained in
or referred to in the second sentence of Section 5.1 and Section
5.5 and Section 7.2 shall survive such termination.
9.2 Arbitration. The parties hereby agree that any
controversy or dispute arising out of or relating to this Agreement
shall be resolved pursuant to this Section 9.2.
(i) Agreement to Negotiate. Prior to submitting any
controversy, dispute or claim arising out of, or relating to,
this Agreement to arbitration, Bay View and the EXXE
Stockholders Committee (each of which shall be deemed a
"party") hereto agree to observe the following procedures:
76
(1) The party desiring to submit any such
controversy, dispute or claim to arbitration (the "claimant")
first shall give written notice thereof to the other party
(the "recipient") setting forth in detail the pertinent facts
and circumstances relating to such controversy, dispute or
claim;
(2) The recipient shall have a period of 15 days in
which to consider the controversy, dispute or claim which is
the subject to the notice and to furnish in writing to the
claimant a written statement of the recipient's position;
(3) Within seven days of claimant's receipt of
recipient's written statement, the parties shall meet in an
effort to resolve amicably any differences which may exist
and, failing such resolution, either or both of the parties
shall have the right to submit the matter to arbitration.
(ii) Procedure for Arbitration.
(1) EXXE, Bay View and the EXXE Stockholders
Committee each agree that any controversy, dispute or claim
arising out of, or relating to, this Agreement, or breach of
this Agreement, including disputes concerning termination of
this Agreement, shall be settled by arbitration in San Mateo,
California. This Agreement to arbitrate shall be specifically
enforceable. Judgment upon any award rendered by an
arbitrator may be entered in any court having jurisdiction.
77
(2) Any demand for arbitration must be served on
the other party within 45 days of the act or omission giving
rise to the controversy, dispute or claim.
(3) There shall be one impartial arbitrator chosen
by Bay View and the EXXE Stockholder Committee from a list
procured from the California Mediation and Conciliation
Services.
(4) The arbitrator shall not extend, modify or
suspend any of the terms of this Agreement.
(5) The decision of the Arbitrator within the scope
of the submission shall be final and binding on all parties,
and any right to judicial action on any matter subject to
arbitration hereunder is hereby waived (unless otherwise
provided by applicable law), except suit to enforce this
arbitration award.
(6) EXXE, Bay View and the EXXE Stockholder
Committee each agree that such arbitration shall be the
exclusive forum for any controversy, dispute or claim
arising out of or relating to this Agreement, or breach
or termination of this Agreement; and further agree that
in arbitration their remedy at law shall not include
punitive damages.
(7) Each of EXXE, Bay View and the EXXE
Stockholders acting through the EXXE Stockholders
Committee shall pay its own attorney or other
representative, and the expenses of its witnesses and all
other expenses connected with
78
its case. Other costs of the arbitration, including the cost
of any record or transcript of the arbitration, administrative
fees, arbitrator's fees, and all other fees and costs, shall
be borne by the parties to the arbitration equally.
9.3 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to be duly received (i) on
the date given if delivered personally or (ii) upon confirmation of
receipt, if by facsimile transmission or (iii) on the date received
if mailed by registered or certified mail (return receipt
requested), to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(i) if to Bay View or BV Acquisition, or both:
Bay View Capital Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Copies to:
Silver, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, P.C.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to EXXE:
EXXE Data Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
79
Copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
9.4 Miscellaneous. This Agreement (including the Schedules
referred to herein) (i) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect
to the subject matter hereof, (ii) is not intended to confer upon
any person not a party hereto any rights or remedies hereunder,
(iii) shall not be assigned by operation of law or otherwise and
(iv) shall be governed in all respects by the laws of the State of
Delaware, except as otherwise specifically provided herein or
required by the CGCL or by federal law or regulation. This
Agreement may be executed in counterparts which together shall
constitute a single agreement.
80
Bay View, EXXE and BV Acquisition have caused this Agreement
to be duly executed by their authorized representatives on the date
first above written.
BAY VIEW CAPITAL CORPORATION EXXE DATA CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------ ----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------- --------------------------
Title: President Title: CEO
--------------------------- -------------------------
Attested by: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ Attested by: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------- -------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------- --------------------------
Title: Secretary Title: Corporate Secretary
--------------------------- -------------------------
BV ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Title: President
---------------------------
Attested by: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------
Title: Secretary
---------------------------