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AGREEMENT AND PLAN OF MERGER
dated as of April 16, 1998
by and among
Western Bancorp
Santa ▇▇▇▇▇▇ Bank
and
Bank of Los Angeles
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TABLE OF CONTENTS
PAGE
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RECITALS
ARTICLE ICertain Definitions
1.01 CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE IIThe Merger
2.01 THE MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.02 EFFECTIVE DATE AND EFFECTIVE TIME . . . . . . . . . . . . . . . . . . . 7
ARTICLE IIIConsideration; Exchange Procedures
3.01 MERGER CONSIDERATION. . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.02 RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS . . . . . . . . . . . . . . . . 8
3.03 FRACTIONAL SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.04 EXCHANGE PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.05 ANTI-DILUTION PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . .10
3.06 OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.07 WARRANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
ARTICLE IVActions Pending Acquisition
4.01 FOREBEARANCES OF BKLA . . . . . . . . . . . . . . . . . . . . . . . . .11
4.02 FOREBEARANCES OF WESTERN. . . . . . . . . . . . . . . . . . . . . . . .14
ARTICLE VRepresentations and Warranties
5.01 DISCLOSURE SCHEDULES. . . . . . . . . . . . . . . . . . . . . . . . . .14
5.02 STANDARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
5.03 REPRESENTATIONS AND WARRANTIES OF BKLA. . . . . . . . . . . . . . . . .15
5.04 REPRESENTATIONS AND WARRANTIES OF WESTERN . . . . . . . . . . . . . . .24
ARTICLE VICovenants
6.01 REASONABLE BEST EFFORTS . . . . . . . . . . . . . . . . . . . . . . . .28
6.02 SHAREHOLDER APPROVAL. . . . . . . . . . . . . . . . . . . . . . . . . .28
6.03 REGISTRATION STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . .28
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6.04 PRESS RELEASES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
6.05 ACCESS; INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . .30
6.06 ACQUISITION PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . .30
6.07 AFFILIATE AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . .31
6.08 TAKEOVER LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
6.09 CERTAIN POLICIES. . . . . . . . . . . . . . . . . . . . . . . . . . . .31
6.10 NASDAQ LISTING. . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
6.11 REGULATORY APPLICATIONS . . . . . . . . . . . . . . . . . . . . . . . .31
6.12 INDEMNIFICATION; DIRECTOR AND OFFICERS' INSURANCE . . . . . . . . . . .32
6.13 BENEFIT PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
6.14 ACCOUNTANTS' LETTERS. . . . . . . . . . . . . . . . . . . . . . . . . .33
6.15 NOTIFICATION OF CERTAIN MATTERS . . . . . . . . . . . . . . . . . . . .34
6.16 SHAREHOLDER AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . .34
ARTICLE VIIConditions to Consummation of the Merger
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. . . . . . .34
7.02 CONDITIONS TO OBLIGATION OF BKLA. . . . . . . . . . . . . . . . . . . .35
7.03 CONDITIONS TO OBLIGATION OF WESTERN . . . . . . . . . . . . . . . . . .36
ARTICLE VIIITermination
8.01 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
8.02 EFFECT OF TERMINATION AND ABANDONMENT . . . . . . . . . . . . . . . . .38
8.03 TERMINATION FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
ARTICLE IXMiscellaneous
9.01 SURVIVAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
9.02 WAIVER; AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . .39
9.03 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
9.04 GOVERNING LAW; WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . .40
9.05 EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
9.06 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. . . . . . . . . . .41
9.08 INTERPRETATION; EFFECT. . . . . . . . . . . . . . . . . . . . . . . . .41
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PAGE
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EXHIBIT A Form of Affiliate Agreement
EXHIBIT B Form of Shareholder's Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of April 16, 1998 (this
"AGREEMENT"), by and among Bank of Los Angeles ("BKLA"), Western Bancorp
("Western") and Santa ▇▇▇▇▇▇ Bank.
RECITALS
A. BKLA. BKLA is a California corporation, having its principal
place of business in West Hollywood, California.
B. WESTERN. Western is a California corporation, having its
principal place of business in Newport Beach, California.
C. SANTA ▇▇▇▇▇▇ BANK. Santa ▇▇▇▇▇▇ Bank is a California corporation
having its principal place of business in Santa Monica, California.
D. STOCK OPTION AGREEMENT. Concurrently herewith, BKLA and Western
are entering into a stock option agreement (the "STOCK OPTION AGREEMENT"), to be
dated the date hereof, whereby BKLA will grant to Western the option to purchase
up to 19.9% of the outstanding shares of the BKLA Common Stock upon the
occurrence of certain events.
E. INTENTIONS OF THE PARTIES. It is the intention of the parties to
this Agreement that the business combination contemplated hereby be accounted
for under the "pooling-of-interests" accounting method and be treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986 as
amended (the "CODE").
F. BOARD ACTION. The respective Boards of Directors of each of
Western and BKLA have determined that it is in the best interests of their
respective companies and their stockholders to consummate the strategic business
combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
I.1 CERTAIN DEFINITIONS. The following terms are used in this
Agreement with the meanings set forth below:
"ACQUISITION PROPOSAL" means any tender or exchange offer, proposal
for a merger, consolidation or other business combination involving BKLA or
any of its Subsidiaries or any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets or
deposits of, BKLA or any of its Subsidiaries, other than the transactions
contemplated by this Agreement.
"AFFILIATE AGREEMENTS" has the meaning set forth in Section 6.07(b).
"AGREEMENT" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"BENEFIT PLANS" has the meaning set forth in Section 5.03(m).
"BKLA" has the meaning set forth in the preamble to this Agreement.
"BKLA AFFILIATE" has the meaning set forth in Section 6.07(a).
"BKLA ARTICLES" means the Articles of Incorporation of BKLA.
"BKLA BOARD" means the Board of Directors of BKLA.
"BKLA BY-LAWS" means the By-laws of BKLA.
"BKLA Common Stock" means the common stock, no par value per share, of
BKLA.
"BKLA MEETING" has the meaning set forth in Section 6.02.
"BKLA STOCK OPTION" has the meaning set forth in Section 3.06.
"BKLA STOCK PLAN" means BKLA's 1988 Stock Option Plan (as amended).
"BKLA WARRANT" has the meaning set forth in Section 3.07.
"BKLA WARRANT AGREEMENT" has the meaning set forth in Section 3.07.
"BUSINESS COMBINATION" has the meaning set forth in Section 3.05.
"CGCL" means the California General Corporation law.
"CALIFORNIA SECRETARY" means the California Secretary of State.
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"CODE" has the meaning set forth in the recitals.
"COMMISSIONER" means the California Commissioner of Financial
Institutions.
"COSTS" has the meaning set forth in Section 6.12(a).
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 5.01.
"EFFECTIVE DATE" means the date on which the Effective Time occurs, as
provided for in Section 2.02.
"EFFECTIVE TIME" means the effective time of the Merger, as provided
for in Section 2.02.
"EMPLOYEES" has the meaning set forth in Section 5.03(m).
"ENVIRONMENTAL LAW" has the meaning set forth in Section 5.03(o).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" has the meaning set forth in Section 5.03(m).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"EXCHANGE AGENT" has the meaning set forth in Section 3.04.
"EXCHANGE FUND" has the meaning set forth in Section 3.04.
"EXCHANGE RATIO" has the meaning set forth in Section 3.01(a).
"FDIC" means the Federal Deposit Insurance Corporation.
"FEDERAL RESERVE" means the Board of Governors of the Federal Reserve
System.
"GOVERNMENTAL AUTHORITY" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality, or any Regulatory Authority.
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"HAZARDOUS SUBSTANCE" has the meaning set forth in Section 5.03(o).
"INDEMNIFIED PARTY" has the meaning set forth in Section 6.12(a).
"INSURANCE POLICY" has the meaning set forth in Section 5.03(s).
"LIENS" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance.
"LOAN PROPERTY" has the meaning set forth in Subsection 5.03(o).
"MATERIAL ADVERSE EFFECT" means, with respect to Western or BKLA, any
effect that (i) is material and adverse to the financial position, results
of operations or business of Western and its Subsidiaries taken as a whole
or BKLA and its Subsidiaries taken as a whole, respectively, or (ii) would
materially impair the ability of either Western or BKLA to perform its
obligations under this Agreement or otherwise materially threaten or
materially impede the consummation of the Merger and the other transactions
contemplated by this Agreement; PROVIDED, HOWEVER, that Material Adverse
Effect shall not be deemed to include the impact of (a) changes in banking
and similar laws of general applicability or interpretations thereof by
courts or governmental authorities, (b) changes in generally accepted
accounting principles or regulatory accounting requirements applicable to
banks and their holding companies generally and (c) any modifications or
changes to valuation policies and practices in connection with the Merger
or restructuring charges taken in connection with the Merger, in each case
in accordance with generally accepted accounting principles.
"MAXIMUM AMOUNT" has the meaning set forth in Section 6.12(c).
"MERGER" has the meaning set forth in Section 2.01.
"MERGER CONSIDERATION" has the meaning set forth in Section 2.01.
"MULTIEMPLOYER PLANS" has the meaning set forth in Section 5.03(m).
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market.
"NEW CERTIFICATE" has the meaning set forth in Section 3.04.
"OLD CERTIFICATE" has the meaning set forth in Section 3.04.
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"PERSON" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated
organization.
"PENSION PLAN" has the meaning set forth in Section 5.03(m).
"PLANS" has the meaning set forth in Section 5.03(m).
"PREVIOUSLY DISCLOSED" by a party shall mean information set forth in
its Disclosure Schedule.
"PROXY STATEMENT" has the meaning set forth in Section 6.03.
"REGISTRATION STATEMENT" has the meaning set forth in Section 6.03.
"REGULATORY AUTHORITY" has the meaning set forth in Section 5.03(i).
"REGULATORY DOCUMENTS" means documents filed with the SEC or the FDIC,
as applicable, of the types referred to in Section 5.03(g) and
Section 5.04(f).
"REPLACEMENT WARRANT" has the meaning set forth in Section 3.07.
"REPRESENTATIVES" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"RIGHTS" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person
any right to subscribe for or acquire, or any options, calls or commitments
relating to, or any stock appreciation right or other instrument the value
of which is determined in whole or in part by reference to the market price
or value of, shares of capital stock of such Person.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
rules and regulations thereunder.
"SHAREHOLDER AGREEMENTS" has the meaning set forth in Section 6.16.
"STOCK OPTION AGREEMENT" has the meaning set forth in the Recitals.
"SUBSIDIARY" AND "SIGNIFICANT SUBSIDIARY" have the meanings ascribed
to them in Rule 1-02 of Regulation S-X of the SEC.
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"SURVIVING CORPORATION" has the meaning set forth in Section 2.01.
"TAKEOVER LAWS" means any "moratorium", "control share", "fair price",
"affiliate transaction", "business combination" or other antitakeover laws
and regulations of the state of California.
"TAX" AND "TAXES" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts,
sales, use, ad valorem, goods and services, capital, production, transfer,
franchise, windfall profits, license, withholding, payroll, employment,
disability, employer health, excise, estimated, severance, stamp,
occupation, property, environmental, unemployment or other taxes, custom
duties, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority whether arising before, on or after the
Effective Date.
"TAX RETURNS" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with respect to any Tax.
"TREASURY STOCK" shall mean shares of BKLA Common Stock held by any of
BKLA's Subsidiaries or by Western or any of its Subsidiaries, in each case
other than in a fiduciary (including custodial or agency) capacity or as a
result of debts previously contracted in good faith.
"WESTERN" has the meaning set forth in the preamble to this Agreement.
"WESTERN BOARD" means the Board of Directors of Western.
"WESTERN COMMON STOCK" means the common stock, no par value per share,
of Western.
"WESTERN PREFERRED STOCK" means the preferred, no par or stated value
per share, of Western.
ARTICLE II
THE MERGER
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II.1 THE MERGER. (a) At the Effective Time, BKLA shall merge with
and into Santa ▇▇▇▇▇▇ Bank (the "MERGER"), the separate corporate existence of
BKLA shall cease and Santa ▇▇▇▇▇▇ Bank shall survive and continue to exist as a
California corporation (Santa ▇▇▇▇▇▇ Bank, as the surviving corporation in the
Merger, sometimes being referred to herein as the "SURVIVING CORPORATION").
Western may at any time prior to the Effective Time change the method of
effecting the combination with BKLA (including, without limitation, the
provisions of this Article II) if and to the extent it deems such change to be
necessary, appropriate or desirable; PROVIDED, HOWEVER, that no such change
shall (i) alter or change the amount or kind of consideration to be issued to
holders of BKLA Common Stock as provided for in this Agreement (the "MERGER
CONSIDERATION"), (ii) cause the transaction to be treated as anything other than
a tax-free reorganization to the shareholders of BKLA or (iii) materially impede
or delay consummation of the transactions contemplated by this Agreement.
(b) Subject to the satisfaction or waiver of the conditions set
forth in Article VII, the Merger shall become effective upon the occurrence of
the filing in the office of the California Secretary of an agreement of merger
in accordance with the CGCL or such later date and time as may be set forth in
such agreement. The Merger shall have the effects prescribed in the CGCL.
(c) ARTICLES OF INCORPORATION AND BY-LAWS. The articles of
incorporation and by-laws of Santa ▇▇▇▇▇▇ Bank immediately after the Merger
shall be those of Santa ▇▇▇▇▇▇ Bank as in effect immediately prior to the
Effective Time.
(d) DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors and officers of Santa ▇▇▇▇▇▇ Bank immediately after the Merger shall
be the directors and officers of Santa ▇▇▇▇▇▇ Bank immediately prior to the
Effective Time, until such time as their successors shall be duly elected and
qualified.
(e) DIRECTORS AND OFFICERS OF WESTERN. The directors and officers
of Western immediately after the Merger shall be the directors and officers of
Western immediately prior to the Effective Time, until such time as their
successors shall be duly elected and qualified. Notwithstanding the foregoing,
at the Effective Time a director of BKLA's election to be mutually agreed upon
prior to the date of the initial filing of any application with a Regulatory
Authority shall be appointed to the board of directors of Western.
II.2 EFFECTIVE DATE AND EFFECTIVE TIME. On such date as Western
selects (and promptly provides notice thereof to BKLA), which shall be within
ten days after the last to occur of the expiration of all applicable waiting
periods in connection with approvals of governmental authorities and the receipt
of all approvals of governmental authorities and all conditions to the
consummation of the Merger are satisfied or waived (or, at the election of
Western, on the last business day of the month in which such tenth day occurs
or, if such tenth day occurs on one of
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the last five business days of such month, on the last business day of the
succeeding month), or on such earlier or later date as may be agreed in writing
by the parties, an agreement of merger shall be executed in accordance with all
appropriate legal requirements and shall be filed as required by law, and the
Merger provided for herein shall become effective upon such filing or on such
date as may be specified in such agreement of merger. The date of such filing
or such later effective date is herein called the "EFFECTIVE DATE." The
"EFFECTIVE TIME" of the Merger shall be the time of such filing or as set forth
in such agreement of merger.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
III.1 MERGER CONSIDERATION. Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the Merger and
without any action on the part of any Person:
(a) OUTSTANDING BKLA COMMON STOCK. Each share, excluding Treasury
Stock, of BKLA Common Stock issued and outstanding immediately prior to the
Effective Time shall become and be converted into 0.4224 of a share of Western
Common Stock (the "EXCHANGE RATIO"). The Exchange Ratio shall be subject to
adjustment as set forth in Section 3.05.
(b) OUTSTANDING WESTERN COMMON STOCK. Each share of Western
Common Stock and each share of Santa ▇▇▇▇▇▇ Bank Common Stock, in each case as
issued and outstanding immediately prior to the Effective Time, shall remain
issued and outstanding and unaffected by the Merger.
(c) TREASURY SHARES. Each share of BKLA Common Stock held as
Treasury Stock immediately prior to the Effective Time shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
(d) DISSENTING SHAREHOLDERS. Any shares of BKLA Common Stock held
by persons who have satisfied the requirements of Chapter 13 of the California
General Corporation Law ("Chapter 13"), and have not effectively withdrawn or
lost their dissenters' rights under Section 1309 of the California General
Corporation Law, shall not be converted pursuant to Section 3.01(a), but the
holders thereof shall be entitled only to such consideration determined pursuant
to Chapter 13.
III.2 RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS. At the Effective
Time, holders of BKLA Common Stock shall cease to be, and shall have no rights
as, shareholders of BKLA (except as provided for in Section 3.01(d)), other than
to receive any dividend or other
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distribution with respect to such BKLA Common Stock with a record date occurring
prior to the Effective Time and the consideration provided under this Article
III. After the Effective Time, there shall be no transfers on the stock
transfer books of BKLA or the Surviving Corporation of shares of BKLA Common
Stock.
III.3 FRACTIONAL SHARES. Notwithstanding any other provision
hereof, no fractional shares of Western Common Stock and no certificates or
scrip therefor, or other evidence of ownership thereof, will be issued in the
Merger; instead, Western shall pay to each holder of BKLA Common Stock who would
otherwise be entitled to a fractional share of Western Common Stock (after
taking into account all Old Certificates delivered by such holder) an amount in
cash (without interest) determined by multiplying such fraction by the average
of the closing prices of Western Common Stock, as reported on NASDAQ (as
reported in THE WALL STREET JOURNAL or, if not reported therein, in another
authoritative source), for the five NASDAQ trading days immediately preceding
the Effective Date.
III.4 EXCHANGE PROCEDURES. (a) At or prior to the Effective Time,
Western shall deposit, or shall cause to be deposited, with U.S. Stock Transfer
or with such other unaffiliated exchange agent as Western shall reasonably elect
(in such capacity, the "EXCHANGE AGENT"), for the benefit of the holders of
certificates formerly representing shares of BKLA Common Stock ("OLD
CERTIFICATES"), for exchange in accordance with this Article III, certificates
representing the shares of Western Common Stock ("NEW CERTIFICATES") and an
estimated amount of cash (such cash and New Certificates, together with any
dividends or distributions with a record date occurring after the Effective Date
with respect to the New Certificates (without any interest on any such cash,
dividends or distributions), being hereinafter referred to as the "EXCHANGE
FUND") to be paid pursuant to this Article III in exchange for outstanding
shares of BKLA Common Stock.
(b) As soon as practicable, but no later than five (5) business
days after the Effective Date, Western shall send or cause to be sent to each
former holder of record of shares of BKLA Common Stock immediately prior to the
Effective Time transmittal materials for use in exchanging such stockholder's
Old Certificates for the consideration set forth in this Article III. Western
shall cause the New Certificates into which shares of a shareholder's BKLA
Common Stock are converted on the Effective Date and/or any check in respect of
any fractional share interests or dividends or distributions which such person
shall be entitled to receive to be delivered to such shareholder upon delivery
to the Exchange Agent of Old Certificates representing such shares of BKLA
Common Stock (or an affidavit of lost certificate and, if required by the
Exchange Agent, indemnity reasonably satisfactory to Western and the Exchange
Agent, if any of such certificates are lost, stolen or destroyed) owned by such
shareholder. No interest will be paid on any such cash to be paid in lieu of
fractional share interests or in respect of dividends or distributions which any
such person shall be entitled to receive pursuant to this Article III upon such
delivery. In the event of a transfer of ownership of any shares of BKLA
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Common Stock not registered in the transfer records of BKLA, the exchange
described in this Section 3.04(b) may nonetheless be effected and a check for
the cash to be paid in lieu of fractional shares may be issued to the transferee
if the Old Certificate representing such BKLA Common Stock is presented to the
Exchange Agent, accompanied by documents sufficient, in the discretion of
Western and the Exchange Agent, (i) to evidence and effect such transfer but for
the provisions of Section 3.02 hereof and (ii) to evidence that all applicable
stock transfer taxes have been paid.
(c) If Old Certificates are not surrendered or the consideration
therefor is not claimed prior to the date on which such consideration would
otherwise escheat to or become the property of any governmental unit or agency,
the unclaimed consideration shall, to the extent permitted by abandoned property
and any other applicable law, become the property of the Surviving Corporation
(and to the extent not in its possession shall be paid over to the Surviving
Corporation), free and clear of all claims or interest of any person previously
entitled to such claims. Notwithstanding the foregoing, neither the Exchange
Agent nor any party hereto shall be liable to any former holder of BKLA Common
Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(d) At the election of Western, no dividends or other
distributions with respect to Western Common Stock with a record date occurring
after the Effective Time shall be paid to the holder of any unsurrendered Old
Certificate representing shares of BKLA Common Stock converted in the Merger
into the right to receive shares of such Western Common Stock until the holder
thereof shall be entitled to receive New Certificates in exchange therefor in
accordance with the procedures set forth in this Section 3.04, and no such
shares of BKLA Common Stock shall be eligible to vote until the holder of Old
Certificates is entitled to receive New Certificates in accordance with the
procedures set forth in this Section 3.04. After becoming so entitled in
accordance with this Section 3.04, the record holder thereof also shall be
entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore had become payable with respect to shares of
Western Common Stock such holder had the right to receive upon surrender of the
Old Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of BKLA for six months after the Effective Time shall be returned
by the Exchange Agent to Western at the election of Western. Any shareholders
of BKLA who have not theretofore complied with this Article III shall thereafter
look only to Western for payment of the shares of Western Common Stock, cash in
lieu of any fractional shares and unpaid dividends and distributions on Western
Common Stock deliverable in respect of each share of BKLA Common Stock such
shareholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon.
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III.5 ANTI-DILUTION PROVISIONS. In the event Western changes (or
establishes a record date for changing) the number of shares of Western Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding Western Common Stock and the record date therefor shall be prior
to the Effective Date, the Exchange Ratio shall be proportionately adjusted.
If, between the date hereof and the Effective Time, Western shall consolidate
with or into any other corporation (a "BUSINESS COMBINATION") and the terms
thereof shall provide that Western Common Stock shall be converted into or
exchanged for the shares of any other corporation or entity, then provision
shall be made as part of the terms of such Business Combination so that
(i) shareholders of BKLA who would be entitled to receive shares of Western
Common Stock pursuant to this Agreement shall be entitled to receive, in lieu of
each share of Western Common Stock issuable to such shareholders as provided
herein, the same kind and amount of securities or assets as shall be
distributable upon such Business Combination with respect to one share of
Western Common Stock.
III.6 OPTIONS. All outstanding options to purchase shares of BKLA
Common Stock under the BKLA Stock Plan (each, a "BKLA STOCK OPTION") shall be
governed by Section 10 of such BKLA Stock Plan, and no other provision for BKLA
Stock Options shall be made hereunder.
III.7 WARRANTS. At the Effective Time, each outstanding warrant to
purchase shares of BKLA Common Stock under the BKLA Warrant Agreement (each, a
"BKLA WARRANT"), shall be converted into a warrant to acquire, on the same
terms and conditions as were applicable under such BKLA Warrant Agreement, the
number of shares of Western Common Stock equal to (a) the number of shares of
BKLA Common Stock subject to the BKLA Warrant, multiplied by (b) the Exchange
Ratio (such product rounded down to the nearest whole number) (a "REPLACEMENT
WARRANT"), at an exercise price per share (rounded up to the nearest whole cent)
equal to (y) the aggregate exercise price for the shares of BKLA Common Stock
which were purchasable pursuant to such BKLA Warrant divided by (z) the number
of full shares of Western Common Stock subject to such Replacement Warrant in
accordance with the foregoing. At or prior to the Effective Time, BKLA shall
take all action, if any, necessary with respect to the BKLA Warrant Agreement to
permit the replacement of the outstanding BKLA Warrants by Western pursuant to
this Section 3.07. At the Effective Time, Western shall assume the BKLA Warrant
Agreement; PROVIDED, that such assumption shall be only in respect of the
Replacement Warrants and that Western shall have no obligation with respect to
any awards under the BKLA Warrant Agreement other than the Replacement Warrants
and shall have no obligation to make any additional grants or awards under such
assumed BKLA Warrant Agreement.
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ARTICLE IV
ACTIONS PENDING ACQUISITION
IV.1 FOREBEARANCES OF BKLA. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without the
prior written consent of Western, BKLA will not, and will cause each of its
Subsidiaries not to:
(a) ORDINARY COURSE. Conduct the business of BKLA and its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable best efforts to preserve intact their business organizations and
assets and maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, take any action that
would adversely affect or delay the ability of BKLA, Western or any of their
Subsidiaries to perform any of their obligations on a timely basis under this
Agreement, or take any action that is reasonably likely to have a Material
Adverse Effect on BKLA or its Subsidiaries, taken as a whole.
(b) CAPITAL STOCK. Other than pursuant to Rights Previously
Disclosed and outstanding on the date hereof, (i) issue, sell or otherwise
permit to become outstanding, or authorize the creation of, any additional
shares of BKLA Common Stock or any Rights or issue any shares of preferred
stock, (ii) enter into any agreement with respect to the foregoing or (iii)
permit any additional shares of BKLA Common Stock to become subject to new
grants of employee or director stock options, other Rights or similar
stock-based employee rights.
(c) DIVIDENDS, ETC. (a) Make, declare, pay or set aside for
payment any dividend on or in respect of, or declare or make any distribution on
any shares of BKLA Common Stock or (b) directly or indirectly adjust, split,
combine, redeem, reclassify, purchase or otherwise acquire, any shares of its
capital stock.
(d) COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Enter into or amend
or renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of BKLA or its Subsidiaries,
or grant any salary or wage increase or increase any employee benefit (including
incentive or bonus payments), except (i) for normal individual increases in
compensation to employees in the ordinary course of business consistent with
past practice, (ii) for other changes that are required by applicable law, (iii)
to satisfy Previously Disclosed contractual obligations existing as of the date
hereof or (iv) for grants of awards to newly hired employees consistent with
past practice.
(e) BENEFIT PLANS. Enter into, establish, adopt or amend (except
(i) as may be required by applicable law or (ii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof) any pension, retirement,
stock option, stock purchase, savings, profit
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sharing, deferred compensation, consulting, bonus, group insurance or other
employee benefit, incentive or welfare contract, plan or arrangement, or any
trust agreement (or similar arrangement) related thereto, in respect of any
director, officer or employee of BKLA or its Subsidiaries, or take any action to
accelerate the vesting or exercisability of stock options, restricted stock or
other compensation or benefits payable thereunder.
(f) DISPOSITIONS. Except as Previously Disclosed, sell, transfer,
mortgage, encumber or otherwise dispose of or discontinue any of its assets,
deposits, business or properties except in the ordinary course of business and
in a transaction that is not material to it and its Subsidiaries taken as a
whole.
(g) ACQUISITIONS. Except as Previously Disclosed, acquire (other
than by way of foreclosures or acquisitions of control in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in good faith, in
each case in the ordinary and usual course of business consistent with past
practice) all or any portion of, the assets, business, deposits or properties of
any other entity except in the ordinary course of business consistent with past
practice and in a transaction that is not material to the BKLA and its
Subsidiaries, taken as a whole.
(h) CAPITAL EXPENDITURES. Except as Previously Disclosed, make
any capital expenditures other than capital expenditures in the ordinary course
of business consistent with past practice in amounts not exceeding $10,000
individually or $50,000 in the aggregate.
(i) GOVERNING DOCUMENTS. Amend the BKLA Articles, BKLA By-Laws or
the articles of incorporation or by-laws (or similar governing documents) of any
of BKLA's Subsidiaries.
(j) ACCOUNTING METHODS. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required by
generally accepted accounting principles.
(k) CONTRACTS. Except in the ordinary course of business
consistent with past practice, enter into or terminate any material contract (as
defined in Section 5.03(k)) or amend or modify in any material respect any of
its existing material contracts.
(l) CLAIMS. Except in the ordinary course of business consistent
with past practice, settle any claim, action or proceeding, except for any
claim, action or proceeding involving solely money damages in an amount,
individually or in the aggregate for all such settlements, that is not material
to BKLA and its Subsidiaries, taken as a whole.
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(m) ADVERSE ACTIONS. (a) Take any action which BKLA either knows
or reasonably should know that such action would, or would be reasonably likely
to, prevent or impede the Merger from qualifying (i) for "pooling of interests"
accounting treatment or (ii) as a reorganization within the meaning of Section
368 of the Code; or (b) knowingly take any action that is intended or is
reasonably likely to result in (i) any of its representations and warranties set
forth in this Agreement being or becoming untrue in any material respect at any
time at or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a violation of any
provision of this Agreement except, in each case, as may be required by
applicable law or regulation.
(n) RISK MANAGEMENT. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest rate and
other risk management policies, procedures or practices; (ii) fail to follow its
existing policies or practices with respect to managing its exposure to interest
rate and other risk; or (iii) fail to use commercially reasonable means to avoid
any material increase in its aggregate exposure to interest rate risk.
(o) INDEBTEDNESS. Incur any indebtedness for borrowed money other
than in the ordinary course of business consistent with past practice.
(p) LOANS. Make any loan, loan commitment or renewal or extension
thereof to any person which would, when aggregated with all outstanding loans,
commitments for loans or renewals or extensions thereof made by BKLA to such
person and any affiliate or immediate family member of such person, exceed
$500,000 without submitting loan package information to the chief credit officer
of Western for review with a right of comment at least one full business day
prior to taking such action.
(q) COMMITMENTS. Agree or commit to do any of the foregoing.
IV.2 FOREBEARANCES OF WESTERN. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without the
prior written consent of BKLA, Western will not, and will cause each of its
Subsidiaries not to:
(a) ORDINARY COURSE. Take any action that would adversely affect
or delay the ability of BKLA or Western to perform any of their obligations on a
timely basis under this Agreement, or take any action that is reasonably likely
to have a Material Adverse Effect on Western or its Subsidiaries, taken as a
whole.
(b) ADVERSE ACTIONS. (i) Take any action which Western either
knows or reasonably should know that such action would, or would be reasonably
likely to, prevent or impede the Merger from qualifying (A) for "pooling of
interests" accounting treatment or (B) as a reorganization within the meaning of
Section 368 of the Code; or (ii) knowingly take any action
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that is intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time at or prior to the Effective Time,
(B) any of the conditions to the Merger set forth in Article VII not being
satisfied or (C) a violation of any provision of this Agreement except, in each
case, as may be required by applicable law or regulation.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
V.1 DISCLOSURE SCHEDULES. On or prior to the date hereof, each of
BKLA and Western has delivered to the other a schedule (a "DISCLOSURE SCHEDULE")
setting forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement contained in
a provision hereof, or items which are an exception to one or more
representations or warranties contained in Section 5.03 or Section 5.04;
PROVIDED, that (a) no such item is required to be set forth in a Disclosure
Schedule as an exception to a representation or warranty if its absence would
not be reasonably likely to result in the related representation or warranty
being deemed untrue or incorrect under the standard established by Section 5.02,
and (b) the mere inclusion of an item in a Disclosure Schedule as an exception
to a representation or warranty shall not be deemed an admission by a party that
such item represents a material exception or fact, event or circumstance or that
such item is reasonably likely to result in a Material Adverse Effect.
V.2 STANDARD. No representation or warranty of BKLA, Western or
Santa ▇▇▇▇▇▇ Bank contained in Section 5.03 or 5.04 shall be deemed untrue or
incorrect, and no party hereto shall be deemed to have breached a representation
or warranty, as a consequence of the existence of any fact, event or
circumstance unless such fact, circumstance or event, individually or taken
together with all other facts, events or circumstances inconsistent with any
representation or warranty contained in Section 5.03 or 5.04 has had or is
reasonably likely to have a Material Adverse Effect on the party making such
representation or warranty.
V.3 REPRESENTATIONS AND WARRANTIES OF BKLA. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed in its Disclosure Schedule
corresponding to the relevant paragraph below, BKLA hereby represents and
warrants to Western:
(a) ORGANIZATION, STANDING AND AUTHORITY. BKLA is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California. BKLA is duly qualified to do business and is in good
standing in the State of California and any foreign jurisdictions where its
ownership or leasing of property or assets or the conduct of its business
requires it to be so qualified. BKLA is duly licensed by the Commissioner as a
commercial bank
-15-
and its deposits are insured by the FDIC through the Bank Insurance Fund in the
manner and to the fullest extent provided by law.
(b) BKLA CAPITAL STOCK. As of the date hereof, the authorized
capital stock of BKLA consists solely of (i) 75,000,000 shares of BKLA Common
Stock, of which no more than 4,762,100 shares were outstanding as of the date
hereof and (ii) 25,000,000 shares of preferred stock, of which no shares were
outstanding as of the date hereof. As of the date hereof, no shares of BKLA
Common Stock were held in treasury by BKLA or otherwise owned by BKLA or its
Subsidiaries. The outstanding shares of BKLA Common Stock have been duly
authorized and are validly issued and outstanding, fully paid and nonassessable,
and subject to no preemptive rights (and were not issued in violation of any
preemptive rights). As of the date hereof, there are no shares of BKLA Common
Stock authorized and reserved for issuance, BKLA does not have any Rights issued
or outstanding with respect to BKLA Common Stock, and BKLA does not have any
commitment to authorize, issue or sell any BKLA Common Stock or Rights, except
pursuant to this Agreement, any BKLA Stock Option, the BKLA Stock Plan, any BKLA
Warrant and the BKLA Warrant Agreement. The number of shares of BKLA Common
Stock which are issuable and reserved for issuance upon exercise of BKLA Stock
Options as of the date hereof are Previously Disclosed in BKLA's Disclosure
Schedule. The number of shares of BKLA Common Stock which are issuable and
reserved for issuance upon exercise of BKLA Warrants as of the date hereof are
Previously Disclosed in BKLA's Disclosure Schedule.
(c) SUBSIDIARIES. (i)(A) BKLA has Previously Disclosed a list of
all of its Subsidiaries together with the jurisdiction of organization of each
such Subsidiary, (B) BKLA owns, directly or indirectly, all the issued and
outstanding equity securities of each of its Subsidiaries, (C) no equity
securities of any of its Subsidiaries are or may become required to be issued
(other than to it or its wholly-owned Subsidiaries) by reason of any Right or
otherwise, (D) there are no contracts, commitments, understandings or
arrangements by which any of such Subsidiaries is or may be bound to sell or
otherwise transfer any equity securities of any such Subsidiaries (other than to
it or its wholly-owned Subsidiaries), (E) there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote or to dispose of
such securities and (F) all the equity securities of each Subsidiary held by
BKLA or its Subsidiaries are fully paid and nonassessable and are owned by BKLA
or its Subsidiaries free and clear of any Liens.
(ii) BKLA does not own beneficially, directly or indirectly, any
equity securities or similar interests of any Person, or any interest in a
partnership or joint venture of any kind, other than its Subsidiaries.
(iii) Each of BKLA's Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization, and is duly
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qualified to do business and in good standing in the jurisdictions where its
ownership or leasing of property or the conduct of its business requires it to
be so qualified.
(d) CORPORATE POWER. BKLA and each of its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and BKLA has the corporate
power and authority to execute, deliver and perform its obligations under this
Agreement and the Stock Option Agreement and to consummate the transactions
contemplated hereby and thereby.
(e) CORPORATE AUTHORITY. Subject in the case of this Agreement to
receipt of the requisite approval of the principal terms of the agreement of
merger set forth in this Agreement by the holders of a majority of the
outstanding shares of BKLA Common Stock entitled to vote thereon (which is the
only shareholder vote required thereon), this Agreement, the Stock Option
Agreement and the transactions contemplated hereby and thereby have been
authorized by all necessary corporate action of BKLA and the BKLA Board on or
prior to the date hereof. This Agreement is a valid and legally binding
obligation of BKLA, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles). The BKLA Board has received the written opinion of Wedbush ▇▇▇▇▇▇
Securities to the effect that as of the date hereof the consideration to be
received by the holders of BKLA Common Stock in the Merger is fair to the
holders of BKLA Common Stock from a financial point of view.
(f) REGULATORY APPROVALS; NO DEFAULTS. (i) No consents or
approvals of, or filings or registrations with, any Governmental Authority or
with any third party are required to be made or obtained by BKLA or any of its
Subsidiaries in connection with the execution, delivery or performance by BKLA
of this Agreement, the Stock Option Agreement, the BKLA Warrant Agreement, or to
consummate the Merger except for (A) filings of applications or notices with the
Commissioner, the FDIC and the Federal Reserve, as required, (B) filings with
the SEC and state securities authorities and the approval of this Agreement by
the shareholders of BKLA, (C) the filing of an agreement of merger with the
California Secretary pursuant to the CGCL and with the Commissioner pursuant to
the California Financial Code. As of the date hereof, BKLA is not aware of any
reason why the approvals set forth in Section 7.01(b) will not be received
without the imposition of a condition, restriction or requirement of the type
described in Section 7.01(b).
(ii) Subject to receipt of the approvals referred to in the
preceding paragraph, and the expiration of related waiting periods, and required
filings under federal and state securities laws, the execution, delivery and
performance of this Agreement and the Stock Option Agreement and the
consummation of the transactions contemplated hereby and thereby do not and will
not (A) constitute a breach or violation of, or a default under, or give rise to
any Lien,
-17-
any acceleration of remedies or any right of termination under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of BKLA or of any of its Subsidiaries or to
which BKLA or any of its Subsidiaries or properties is subject or bound,
(B) constitute a breach or violation of, or a default under, the BKLA Articles
or the BKLA By-Laws, or (C) require any consent or approval under any such law,
rule, regulation, judgment, decree, order, governmental permit or license,
agreement, indenture or instrument.
(g) FINANCIAL REPORTS AND REGULATORY DOCUMENTS. (i) BKLA's (or
its predecessors') Annual Reports on Form 10-K for the fiscal years ended
December 31, 1995, 1996 and 1997, and all other reports, registration
statements, definitive proxy statements or information statements filed or to be
filed by it or any of its Subsidiaries subsequent to December 31, 1995 under the
Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
or under the securities regulations of the FDIC, in the form filed or to be
filed (collectively, BKLA's "REGULATORY DOCUMENTS") with the FDIC as of the date
filed, (A) complied or will comply in all material respects as to form with the
applicable requirements under the Securities Act, the Exchange Act or the
securities regulations of the FDIC, as the case may be, and (B) did not and will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
and each of the balance sheets contained in or incorporated by reference into
any such Regulatory Document (including the related notes and schedules thereto)
fairly presents, or will fairly present, the financial position of BKLA and its
Subsidiaries as of its date, and each of the statements of income and changes in
shareholders' equity and cash flows or equivalent statements in such Regulatory
Documents (including any related notes and schedules thereto) fairly presents,
or will fairly present, the results of operations, changes in shareholders'
equity and cash flows, as the case may be, of BKLA and its Subsidiaries for the
periods to which they relate, in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved, except
in each case as may be noted therein, subject to normal year-end audit
adjustments in the case of unaudited statements.
(ii) Since December 31, 1997, BKLA and its Subsidiaries have not
incurred any liability other than in the ordinary course of business consistent
with past practice.
(iii) Since December 31, 1997, (A) BKLA and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of expenses related to
this Agreement and the transactions contemplated hereby) and (B) no event has
occurred or circumstance arisen that, individually or taken together with all
other facts, circumstances and events (described in any paragraph of this
Section 5.03 or otherwise), is reasonably likely to have a Material Adverse
Effect with respect to BKLA.
-18-
(h) LITIGATION. No litigation, claim or other proceeding before
any court or governmental agency is pending against BKLA or any of its
Subsidiaries and, to BKLA's knowledge, no such litigation, claim or other
proceeding has been threatened and there are no facts which could reasonably
give rise to such litigation, claim or other proceeding.
(i) REGULATORY MATTERS. (i) Neither BKLA nor any of its
Subsidiaries or any of their properties is a party to or is subject to any
order, decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, or extraordinary
supervisory letter from, any federal or state governmental agency or authority
charged with the supervision or regulation of financial institutions or issuers
of securities or engaged in the insurance of deposits (including, without
limitation, the Commissioner and the FDIC) or the supervision or regulation of
it or any of its Subsidiaries (collectively, the "REGULATORY AUTHORITIES").
(ii) Neither BKLA nor any of its Subsidiaries has been advised
by, nor has any knowledge of facts which could give rise to an advisory notice
by, any Regulatory Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(j) COMPLIANCE WITH LAWS. BKLA and each of its Subsidiaries:
(i) is in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act
and all other applicable fair lending laws and other laws relating to
discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own or
lease their properties and to conduct their businesses as presently conducted;
all such permits, licenses, certificates of authority, orders and approvals are
in full force and effect and, to BKLA's knowledge, no suspension or cancellation
of any of them is threatened; and
(iii) has received, since December 31, 1996, no notification or
communication from any Governmental Authority (A) asserting that BKLA or any of
its Subsidiaries is not in compliance with any of the statutes, regulations or
ordinances which such Governmental
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Authority enforces or (B) threatening to revoke any license, franchise, permit
or governmental authorization (nor, to BKLA's knowledge, do any grounds for any
of the foregoing exist).
(k) MATERIAL CONTRACTS; DEFAULTS. Except for those agreements and
other documents filed as exhibits to its Regulatory Documents, neither it nor
any of its Subsidiaries is a party to, bound by or subject to any agreement,
contract, arrangement, commitment or understanding (whether written or oral)
(i) that is a "material contract" within the meaning of Item 601(b)(10) of the
SEC's Regulation S-K or (ii) that materially restricts the conduct of business
by it or any of its Subsidiaries. Neither BKLA nor any of its Subsidiaries is
in default under any contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party, by which its
respective assets, business, or operations may be bound or affected, or under
which it or its respective assets, business, or operations receives benefits,
and there has not occurred any event that, with the lapse of time or the giving
of notice or both, would constitute such a default.
(l) NO BROKERS. No action has been taken by BKLA that would give
rise to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions contemplated
by this Agreement, excluding Previously Disclosed fees to be paid to Wedbush
▇▇▇▇▇▇ Securities and GBS Financial.
(m) EMPLOYEE BENEFIT PLANS.
(i) All benefit and compensation plans, contracts, policies or
arrangements covering current employees or former employees of BKLA and its
subsidiaries (the "EMPLOYEES") and current or former directors of BKLA,
including, but not limited to, "employee benefit plans" within the meaning of
Section 3(3) of ERISA, and deferred compensation, stock option, stock purchase,
stock appreciation rights, stock based, incentive and bonus plans (the "BENEFIT
PLANS"), are Previously Disclosed in the Disclosure Schedule. True and complete
copies of all Benefit Plans, including, but not limited to, any trust
instruments and insurance contracts forming a part of any Benefit Plans, and all
amendments thereto have been provided or made available to BKLA.
(ii) All employee benefit plans, other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA, covering Employees (the "PLANS"),
to the extent subject to ERISA, are in substantial compliance with ERISA. BKLA
is not a party to any "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA ("PENSION PLAN") and which is intended to be qualified
under Section 401(a) of the Code. There is no material pending or threatened
litigation relating to the Plans. Neither BKLA nor any of its Subsidiaries has
engaged in a transaction with respect to any Plan that, assuming the taxable
period of such transaction expired as of the date hereof, could subject BKLA or
any Subsidiary to a tax or penalty imposed
-20-
by either Section 4975 of the Code or Section 502(i) of ERISA in an amount which
would be material.
(iii) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by BKLA or any of its Subsidiaries with
respect to any ongoing, frozen or terminated "single-employer plan", within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any
of them, or the single-employer plan of any entity which is considered one
employer with BKLA under Section 4001 of ERISA or Section 414 of the Code (an
"ERISA AFFILIATE"). Neither BKLA, any of its Subsidiaries nor an ERISA
Affiliate has contributed to a "multiemployer plan", within the meaning of
Section 3(37) of ERISA, at any time on or after September 26, 1980. No notice
of a "reportable event," within the meaning of Section 4043 of ERISA for which
the 30-day reporting requirement has not been waived, has been required to be
filed for any Pension Plan or by any ERISA Affiliate within the 12-month period
ending on the date hereof or will be required to be filed in connection with the
transactions contemplated by this Plan.
(iv) All contributions required to be made under the terms of any
Plan have been timely made or have been reflected on the consolidated financial
statements of BKLA included in the Regulatory Documents. Neither any Pension
Plan nor any single-employer plan of an ERISA Affiliate has an "accumulated
funding deficiency" (whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA and no ERISA Affiliate has an outstanding
funding waiver. Neither BKLA nor any of its Subsidiaries has provided, or is
required to provide, security to any Pension Plan or to any single-employer plan
of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(v) Under each Pension Plan which is a single-employer plan, as of
the last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities," within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Plan's most recent actuarial valuation),
did not exceed the then current value of the assets of such Plan, and there has
been no material change in the financial condition of such Plan since the last
day of the most recent plan year.
(vi) Neither BKLA nor any of its Subsidiaries has any obligations
for retiree health and life benefits under any Benefit Plan. BKLA or its
Subsidiaries may amend or terminate any such Benefit Plan at any time without
incurring any liability thereunder.
(vii) The consummation of the transactions contemplated by this
Agreement will not (A) entitle any employees of BKLA or any of its Subsidiaries
to severance pay, (B) accelerate the time of payment or vesting or trigger any
payment of compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any of
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the Benefit Plans or (C) result in any breach or violation of, or a default
under, any of the Benefit Plans. Without limiting the foregoing, as a result of
the consummation of the transactions contemplated by this Agreement, none of
Western, BKLA, or any of its Subsidiaries will be obligated to make a payment to
an individual that would be a "parachute payment" to a "disqualified individual"
as those terms are defined in Section 280G of the Code, without regard to
whether such payment is reasonable compensation for personal services performed
or to be performed in the future.
(n) LABOR MATTERS. Neither BKLA nor any of its Subsidiaries is a
party to or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is BKLA
or any of its Subsidiaries the subject of a proceeding asserting that it or any
such Subsidiary has committed an unfair labor practice (within the meaning of
the National Labor Relations Act) or seeking to compel BKLA or any such
Subsidiary to bargain with any labor organization as to wages or conditions of
employment, nor is there any strike or other labor dispute involving it or any
of its Subsidiaries pending or, to BKLA's knowledge, threatened, nor is BKLA
aware of any activity involving its or any of its Subsidiaries' employees
seeking to certify a collective bargaining unit or engaging in other
organizational activity.
(o) ENVIRONMENTAL MATTERS.
(i) BKLA and each of its Subsidiaries has complied at all times
with applicable Environmental Laws; (ii) no real property (including buildings
or other structures) currently or formerly owned or operated by BKLA or any of
its Subsidiaries, or any property in which BKLA or any of its Subsidiaries has
held a security interest, lien or a fiduciary or management role ("LOAN
PROPERTY"), has been contaminated with, or has had any release of, any Hazardous
Substance; (iii) neither BKLA nor any of its Subsidiaries could be deemed the
owner or operator of any Loan Property under any Environmental Law which such
Loan Property has been contaminated with, or has had any release of, any
Hazardous Substance; (iv) neither BKLA nor any of its Subsidiaries is subject to
liability for any Hazardous Substance disposal or contamination on any third
party property; (v) neither BKLA nor any of its Subsidiaries has received any
notice, demand letter, claim or request for information alleging any violation
of, or liability under, any Environmental Law; (vi) neither BKLA nor any of its
Subsidiaries is subject to any order, decree, injunction or other agreement with
any Governmental Authority or any third party relating to any Environmental Law;
(vii) to the best of BKLA's knowledge, there are no circumstances or conditions
(including the presence of asbestos, underground storage tanks, lead products,
polychlorinated biphenyls, prior manufacturing operations, dry-cleaning, or
automotive services) involving BKLA or any of its Subsidiaries, any currently or
formerly owned or operated property, or any Loan Property, that could reasonably
be expected to result in any claims, liability or investigations against BKLA or
any of its Subsidiaries, result in any restrictions on the ownership, use, or
transfer of any property pursuant to any Environmental
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Law, or adversely affect the value of any Loan Property, and (viii) BKLA has
delivered to Western copies of all environmental reports, studies, sampling
data, correspondence, filings and other environmental information in its
possession or reasonably available to it relating to BKLA, any Subsidiary of
BKLA, any currently or formerly owned or operated property or any Loan Property.
As used herein, the term "ENVIRONMENTAL LAW" means any federal, state
or local law, regulation, order, decree, permit, authorization, opinion, common
law or agency requirement relating to: (A) the protection or restoration of the
environment, health, safety, or natural resources, (B) the handling, use,
presence, disposal, release or threatened release of any Hazardous Substance or
(C) noise, odor, wetlands, indoor air, pollution, contamination or any injury or
threat of injury to persons or property in connection with any Hazardous
Substance and the term "HAZARDOUS SUBSTANCE" means any substance in any
concentration that is: (A) listed, classified or regulated pursuant to any
Environmental Law; (B) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (C) any other substance which is or may be
the subject of regulatory action by any Governmental Authority in connection
with any Environmental Law.
(p) TAX MATTERS. (i) (A) All Tax Returns that are required to be
filed (taking into account any extensions of time within which to file) by or
with respect to BKLA and its Subsidiaries have been duly filed, (B) all Taxes
shown to be due on the Tax Returns referred to in clause (A) have been paid in
full, (C) the Tax Returns referred to in clause (A) have been examined by the
Internal Revenue Service or the appropriate Tax authority or the period for
assessment of the Taxes in respect of which such Tax Returns were required to be
filed has expired, (D) all deficiencies asserted or assessments made as a result
of such examinations have been paid in full, (E) no issues that have been raised
by the relevant taxing authority in connection with the examination of any of
the Tax Returns referred to in clause (A) are currently pending, and (F) no
waivers of statutes of limitation have been given by or requested with respect
to any Taxes of BKLA or its Subsidiaries. BKLA has made available to Western
true and correct copies of the United States federal income Tax Returns filed by
BKLA and its Subsidiaries for each of the three most recent fiscal years ended
on or before December 31, 1996. Neither BKLA nor any of its Subsidiaries has
any liability with respect to income, franchise or similar Taxes that accrued on
or before the end of the most recent period covered by BKLA's Regulatory
Documents filed prior to the date hereof in excess of the amounts accrued with
respect thereto that are reflected in the financial statements included in
BKLA's Regulatory Documents filed on or prior to the date hereof. Neither BKLA
nor any of its Subsidiaries is a party to any Tax allocation or sharing
agreement, is or has been a member of an affiliated group filing consolidated or
combined Tax returns (other than a group the common parent of which is or was
BKLA) or otherwise has any liability for the Taxes of any person (other than
BKLA and its Subsidiaries). As of the date hereof, neither BKLA nor any of its
Subsidiaries has any reason
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to believe that any conditions exist that might prevent or impede the Merger
from qualifying as a reorganization within the meaning of Section 368 of the
Code.
(ii) No Tax is required to be withheld pursuant to Section 1445 of
the Code as a result of the transfer contemplated by this Agreement.
(q) RISK MANAGEMENT INSTRUMENTS. All interest rate swaps, caps,
floors, option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for BKLA's own account, or for the
account of one or more of BKLA's Subsidiaries or their customers (all of which
are listed on BKLA's Disclosure Schedule), if any, were entered into (i) in
accordance with prudent business practices and all applicable laws, rules,
regulations and regulatory policies and (ii) with counter parties believed to be
financially responsible; and each of them constitutes the valid and legally
binding obligation of BKLA or one of its Subsidiaries, enforceable in accordance
with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors' rights
or by general equity principles), and are in full force and effect. Neither
BKLA nor its Subsidiaries, nor to BKLA's knowledge, any other party thereto, is
in breach of any of its obligations under any such agreement or arrangement.
(r) BOOKS AND RECORDS. The books and records of BKLA and its
Subsidiaries have been fully, properly and accurately maintained in all material
respects, and there are no material inaccuracies or discrepancies of any kind
contained or reflected therein, and they fairly present the financial position
of BKLA and its Subsidiaries.
(s) INSURANCE. BKLA has Previously Disclosed all of the insurance
policies, binders, or bonds maintained by BKLA or its Subsidiaries ("INSURANCE
POLICIES"). BKLA and its Subsidiaries are insured with reputable insurers
against such risks and in such amounts as the management of BKLA reasonably has
determined to be prudent in accordance with industry practices. All the
Insurance Policies are in full force and effect; BKLA and its Subsidiaries are
not in material default thereunder; and all claims thereunder have been filed in
due and timely fashion.
(t) ACCOUNTING TREATMENT. As of the date hereof, BKLA is not
aware of any reason with respect to it why the Merger will fail to qualify for
"pooling of interests" accounting treatment.
V.4 REPRESENTATIONS AND WARRANTIES OF WESTERN. Subject to
Sections 5.01 and 5.02 and except as Previously Disclosed in its Disclosure
Schedule corresponding to the relevant paragraph below, Western hereby
represents and warrants to BKLA:
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(a) ORGANIZATION, STANDING AND AUTHORITY. Each of Western and
Santa ▇▇▇▇▇▇ Bank is duly organized, validly existing and in good standing under
the laws of the State of California. Each of Western and Santa ▇▇▇▇▇▇ Bank is
duly qualified to do business and is in good standing in the states of the
United States and foreign jurisdictions where its ownership or leasing of
property or assets or the conduct of its business requires it to be so
qualified. Western and Santa ▇▇▇▇▇▇ Bank have in effect all federal, state,
local, and foreign governmental authorizations necessary for them to own or
lease their respective properties and assets and to carry on their respective
business as it is now conducted.
(b) WESTERN CAPITAL STOCK. As of the date hereof, the authorized
capital stock of Western consists solely of 100,000,000 shares of Western Common
Stock, of which no more than 15,693,000 shares were outstanding as of the date
hereof and 5,000,000 shares of Western Preferred Stock, of which no shares were
outstanding as of the date hereof.
(c) SANTA ▇▇▇▇▇▇ BANK CAPITAL STOCK. As of the date hereof, the
authorized capital stock of Santa ▇▇▇▇▇▇ Bank consists solely of 50,000,000
shares of Santa ▇▇▇▇▇▇ Bank common stock, of which one share was outstanding as
of the date hereof.
(d) CORPORATE POWER. Western and each of its Significant
Subsidiaries has the corporate power and authority to carry on its business as
it is now being conducted and to own all its properties and assets; and each of
Western and Santa ▇▇▇▇▇▇ Bank has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby.
(e) CORPORATE AUTHORITY. This Agreement and the transactions
contemplated hereby have been authorized by all necessary corporate action of
each of Western and Santa ▇▇▇▇▇▇ Bank and their respective board of directors.
This Agreement is a valid and legally binding agreement of each of Western and
Santa ▇▇▇▇▇▇ Bank, as the case may be, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles).
(f) REGULATORY APPROVALS; NO DEFAULTS. (i) No consents or
approvals of, or filings or registrations with, any court, administrative agency
or commission or other governmental authority or instrumentality or with any
third party are required to be made or obtained by Western or any of its
Subsidiaries in connection with the execution, delivery or performance by either
Western or Santa ▇▇▇▇▇▇ Bank of this Agreement or to consummate the Merger
except for (A) the filing of applications and notices, as applicable, with
federal and state banking Governmental Authorities; (B) approval of the listing
on the NASDAQ of Western Common Stock to be issued in the Merger; (C) the filing
and declaration of effectiveness of the Registration Statement; (D) the filing
of an agreement of merger with the California Secretary
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pursuant to the CGCL; (E) filing of an agreement of merger with the Commissioner
pursuant to the California Financial Code; (F) such filings as are required to
be made or approvals as are required to be obtained under the securities or
"Blue Sky" laws of various states in connection with the issuance of Western
Common Stock in the Merger; and (G) receipt of the approvals set forth in
Section 7.01(b). As of the date hereof, Western is not aware of any reason why
the approvals set forth in Section 7.01(b) will not be received without the
imposition of a condition, restriction or requirement of the type described in
Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to in
the preceding paragraph and expiration of the related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (A) constitute a breach or
violation of, or a default under, or give rise to any Lien, any acceleration of
remedies or any right of termination under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or agreement, indenture
or instrument of Western or of any of its Subsidiaries or to which Western or
any of its Subsidiaries or properties is subject or bound, (B) constitute a
breach or violation of, or a default under, the articles of incorporation or
by-laws (or similar governing documents) of Western or any of its Significant
Subsidiaries, or (C) require any consent or approval under any such law, rule,
regulation, judgment, decree, order, governmental permit or license, agreement,
indenture or instrument.
(g) FINANCIAL REPORTS AND REGULATORY DOCUMENTS; MATERIAL ADVERSE
EFFECT. (i) Western's Regulatory Documents, as of the date filed, (A) complied
or will comply in all material respects as to form with the applicable
requirements under the Securities Act or the Exchange Act, as the case may be,
and (B) did not and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; and each of the balance sheets contained in or
incorporated by reference into any such Regulatory Document (including the
related notes and schedules thereto) fairly presents, or will fairly present,
the financial position of Western and its Subsidiaries as of its date, and each
of the statements of income and changes in shareholders' equity and cash flows
or equivalent statements in such Regulatory Documents (including any related
notes and schedules thereto) fairly presents, or will fairly present, the
results of operations, changes in shareholders' equity and cash flows, as the
case may be, of Western and its Subsidiaries for the periods to which they
relate, in each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as may be
noted therein, subject to normal year-end audit adjustments in the case of
unaudited statements.
(ii) Since December 31, 1997, no event has occurred or circumstance
arisen that, individually or taken together with all other facts, circumstances
and events (described in
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any paragraph of this Section 5.04 or otherwise), is reasonably likely to have a
Material Adverse Effect with respect to it.
(h) NO BROKERS. No action has been taken by Western that would
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, excluding a Previously Disclosed fee payable to
Belle Plaine Partners, Inc.
(i) ACCOUNTING TREATMENT; TAX MATTERS. As of the date hereof,
Western is aware of no reason with respect to it why the Merger will fail to
qualify for "pooling of interests" accounting treatment. As of the date hereof,
neither Western nor any of its Subsidiaries has any reason to believe that any
conditions exist that might prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368 of the Code.
(j) REGULATORY MATTERS. (i) Neither Western nor any of its
Significant Subsidiaries or any of its properties is a party to or is subject to
any order, decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, or extraordinary
supervisory letter from, any Regulatory Authorities.
(ii) Neither Western nor any of its Significant Subsidiaries has
been advised by, nor has any knowledge of facts which could give rise to an
advisory notice by, any Regulatory Authority that such Regulatory Authority is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar submission.
(k) COMPLIANCE WITH LAWS. Each of Western and its Significant
Subsidiaries:
(i) is in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act
and all other applicable fair lending laws and other laws relating to
discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own or
lease their properties and to conduct their businesses as presently conducted;
all such permits, licenses, certificates of authority, orders and approvals are
in full force and effect and, to Western's knowledge, no suspension or
cancellation of any of them is threatened; and
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(iii) has received, since December 31, 1996, no notification or
communication from any Governmental Authority (A) asserting that Western or any
of its Significant Subsidiaries is not in compliance with any of the statutes,
regulations or ordinances which such Governmental Authority enforces or (B)
threatening to revoke any license, franchise, permit or governmental
authorization (nor, to Western's knowledge, do any grounds for any of the
foregoing exist).
(l) BOOKS AND RECORDS. The books and records of each of Western
and its Significant Subsidiaries have been fully, properly and accurately
maintained in all material respects, and there are no material inaccuracies or
discrepancies of any kind contained or reflected therein, and they fairly
present the financial position of Western and its Significant Subsidiaries.
(m) ENVIRONMENTAL MATTERS.
(i) Each of Western and its Significant Subsidiaries has complied
at all times with applicable Environmental Laws; (ii) no real property
(including buildings or other structures) currently or formerly owned or
operated by Western or its Significant Subsidiaries, or any Loan Property, has
been contaminated with, or has had any release of, any Hazardous Substance;
(iii) neither Western nor any of its Significant Subsidiaries could be deemed
the owner or operator of any Loan Property under any Environmental Law which
such Loan Property has been contaminated with, or has had any release of, any
Hazardous Substance; (iv) neither Western nor any of its Significant
Subsidiaries is subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (v) neither Western nor any of its
Significant Subsidiaries has received any notice, demand letter, claim or
request for information alleging any violation of, or liability under, any
Environmental Law; (vi) neither Western nor any of its Significant Subsidiaries
is subject to any order, decree, injunction or other agreement with any
Governmental Authority or any third party relating to any Environmental Law;
(vii) to the best of Western's knowledge, there are no circumstances or
conditions (including the presence of asbestos, underground storage tanks, lead
products, polychlorinated biphenyls, prior manufacturing operations,
dry-cleaning, or automotive services) involving Western or its Significant
Subsidiaries, any currently or formerly owned or operated property, or any Loan
Property, that could reasonably be expected to result in any claims, liability
or investigations against Western or its Significant Subsidiaries, result in any
restrictions on the ownership, use, or transfer of any property pursuant to any
Environmental Law, or adversely affect the value of any Loan Property, and
(viii) each of Western and its Significant Subsidiaries has made available to
BKLA copies of all environmental reports, studies, sampling data,
correspondence, filings and other environmental information in its possession or
reasonably available to it, if any, relating to each of Western and its
Significant Subsidiaries, any currently or formerly owned or operated property
or any Loan Property.
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ARTICLE VI
COVENANTS
VI.1 REASONABLE BEST EFFORTS. Subject to the terms and conditions
of this Agreement, each of BKLA, Western and Santa ▇▇▇▇▇▇ Bank agrees to use its
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby and shall cooperate fully with the other
party hereto to that end.
VI.2 SHAREHOLDER APPROVAL. BKLA agrees to take, in accordance with
applicable law and the BKLA Articles and the BKLA By-Laws, all action necessary
to convene an appropriate meeting of its shareholders to consider and vote upon
the approval and adoption of this Agreement and any other matters required to be
approved by BKLA's shareholders for consummation of the Merger (including any
adjournment or postponement, the "BKLA MEETING"), in each case as promptly as
practicable after the Registration Statement is declared effective. Except to
the extent legally required for the discharge by the BKLA Board of its fiduciary
duties as advised by counsel to the BKLA Board, the BKLA Board shall recommend
such approval, and BKLA shall take all reasonable, lawful action to solicit such
approval by its shareholders.
VI.3 REGISTRATION STATEMENT. (a) Western agrees to prepare a
registration statement on Form S-4 or other applicable form (the "REGISTRATION
STATEMENT") to be filed by Western with the SEC in connection with the issuance
of Western Common Stock in the Merger (including the proxy statement and
prospectus and other proxy solicitation materials of BKLA constituting a part
thereof (the "PROXY STATEMENT") and all related documents). BKLA agrees to
cooperate, and to cause its Subsidiaries to cooperate, with Western, its counsel
and its accountants, in preparation of the Registration Statement and the Proxy
Statement. BKLA agrees to file the Proxy Statement in preliminary form with the
FDIC as soon as reasonably practicable on a confidential basis, and Western
agrees to file the Registration Statement with the SEC as soon as reasonably
practicable on a confidential basis, after any SEC comments with respect to the
preliminary Proxy Statement are resolved. Each of BKLA and Western agrees to
use all reasonable efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as reasonably practicable after
filing thereof. Western also agrees to use all reasonable efforts to obtain all
necessary state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement. BKLA agrees to
furnish to Western all information concerning BKLA, its Subsidiaries, officers,
directors and shareholders as may be reasonably requested in connection with the
foregoing.
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(b) Each of BKLA and Western agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time the Registration Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (ii) the
Proxy Statement and any amendment or supplement thereto will, at the date of
mailing to shareholders and at the time of the BKLA Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading or any
statement which, in the light of the circumstances under which such statement is
made, will be false or misleading with respect to any material fact, or which
will omit to state any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier statement in the Proxy Statement or any amendment or supplement thereto.
Each of BKLA and Western further agrees that if it shall become aware prior to
the Effective Date of any information furnished by it that would cause any of
the statements in the Proxy Statement to be false or misleading with respect to
any material fact, or to omit to state any material fact necessary to make the
statements therein not false or misleading, promptly to inform the other party
thereof and to take the necessary steps to correct the Proxy Statement.
(c) Western agrees to advise BKLA, promptly after Western receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop order
or the suspension of the qualification of Western Common Stock for offering or
sale in any jurisdiction, of the initiation or threat of any proceeding for any
such purpose, or of any request by the SEC for the amendment or supplement of
the Registration Statement or for additional information.
VI.4 PRESS RELEASES. Each of BKLA and Western agrees that it will
not, without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NASDAQ rules (provided that the issuing party shall nevertheless
provide the other party with notice of, and the opportunity to review, any such
press release or written statement).
VI.5 ACCESS; INFORMATION. (a) Each of BKLA and Western agrees
that upon reasonable notice and subject to applicable laws relating to the
exchange of information, each party shall afford the other party and the other
party's officers, employees, counsel, accountants and other authorized
representatives, such access during normal business hours throughout the period
prior to the Effective Time to the books, records (including, without
limitation, tax returns and work papers of independent auditors), properties,
personnel and to such other information as the requesting party may reasonably
request and, during such period, the providing party shall
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furnish promptly to the requesting party (i) a copy of each material report,
schedule and other document filed by it pursuant to the requirements of federal
or state securities or banking laws, and (ii) all other information concerning
the business, properties and personnel of it as the requesting party may
reasonably request.
(b) Each party agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this Section
6.05 (as well as any other information obtained prior to the date hereof in
connection with the entering into of this Agreement) for any purpose unrelated
to the consummation of the transactions contemplated by this Agreement or the
Stock Option Agreement. Subject to the requirements of law, each party will
keep confidential, and will cause its representatives to keep confidential, all
information and documents obtained pursuant to this Section 6.05 (as well as any
other information obtained prior to the date hereof in connection with the
entering into of this Agreement) unless such information (i) was already known
to such party, (ii) becomes available to such party from other sources not known
by such party to be bound by a confidentiality obligation, (iii) is disclosed
with the prior written approval of the providing party or (iv) is or becomes
readily ascertainable from published information or trade sources. In the event
that this Agreement is terminated or the transactions contemplated by this
Agreement shall otherwise fail to be consummated, each party shall promptly
cause all copies of documents or extracts thereof containing information and
data as to the other party to be returned to the other party. No investigation
by either party of the business and affairs of the other party shall affect or
be deemed to modify or waive any representation, warranty, covenant or agreement
in this Agreement, or the conditions to either party's obligation to consummate
the transactions contemplated by this Agreement.
VI.6 ACQUISITION PROPOSALS. BKLA agrees that it shall not, and
shall cause its Subsidiaries and its and its Subsidiaries' officers, directors,
agents, advisors and affiliates not to, solicit or encourage inquiries or
proposals with respect to, or engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any person
relating to, any Acquisition Proposal, except to the extent legally required for
the discharge by the BKLA Board of its fiduciary duties as advised by counsel to
the BKLA Board. BKLA shall immediately cease and cause to be terminated any
activities, discussions or negotiations conducted prior to the date of this
Agreement with any parties other than Western with respect to any of the
foregoing and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to an Acquisition Proposal. BKLA
shall promptly (within 24 hours) advise Western following the receipt by BKLA of
any Acquisition Proposal and the substance thereof (including the identity of
the person making such Acquisition Proposal), and advise Western of any
developments with respect to such Acquisition Proposal immediately upon the
occurrence thereof.
VI.7 AFFILIATE AGREEMENTS. (a Not later than the 15th day prior
to the mailing of the Proxy Statement, BKLA shall deliver to Western a schedule
of each person that, to the
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best of its knowledge, is or is reasonably likely to be, as of the date of the
BKLA Meeting, deemed to be an "affiliate" of BKLA (each, a "BKLA AFFILIATE") as
that term is used in Rule 145 under the Securities Act or SEC Accounting Series
Releases 130 and 135.
(b) BKLA shall use its reasonable best efforts to cause each person
who may be deemed to be a BKLA Affiliate to execute and deliver to Western on or
before the date of mailing of the Proxy Statement an agreement in the form
attached hereto as EXHIBIT A (the "Affiliate Agreements").
VI.8 TAKEOVER LAWS. No party hereto shall take any action that
would cause the transactions contemplated by this Agreement or the Stock Option
Agreement to be subject to requirements imposed by any Takeover Law and each of
them shall take all necessary steps within its control to exempt (or ensure the
continued exemption of) the transactions contemplated by this Agreement from, or
if necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect.
VI.9 CERTAIN POLICIES. Prior to the Effective Date, BKLA shall,
consistent with generally accepted accounting principles and on a basis mutually
satisfactory to it and Western, modify and change its loan, litigation and real
estate valuation policies and practices (including loan classifications and
levels of reserves) so as to be applied on a basis that is consistent with that
of Western.
VI.10 NASDAQ LISTING. Western agrees to use its reasonable best
efforts to list, prior to the Effective Date, on the NASDAQ, subject to official
notice of issuance, the shares of Western Common Stock to be issued to the
holders of BKLA Common Stock in the Merger.
VI.11 REGULATORY APPLICATIONS. (a) Western and BKLA and their
respective Subsidiaries shall cooperate and use their respective reasonable
best efforts to prepare all documentation, to effect all filings and to
obtain all permits, consents, approvals and authorizations of all third
parties and Governmental Authorities necessary to consummate the transactions
contemplated by this Agreement. Western and BKLA shall use their reasonable
best efforts to make all required bank regulatory filings, including the
appropriate filings with the Commissioner, the FDIC and the Federal Reserve.
Each of Western and BKLA shall have the right to review in advance, and to
the extent practicable each will consult with the other, in each case subject
to applicable laws relating to the exchange of information, with respect to
all material written information submitted to any third party or any
Governmental Authority in connection with the transactions contemplated by
this Agreement. In exercising the foregoing right, each of the parties
hereto agrees to act reasonably and as promptly as practicable. Each party
hereto agrees that it will consult with the other party hereto with respect
to the obtaining of all material permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary or
advisable to consummate the transactions contemplated by this
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Agreement and each party will keep the other party appraised of the status of
material matters relating to completion of the transactions contemplated
hereby.
(b Each party agrees, upon request, to furnish the other party
with all information concerning itself, its Subsidiaries, directors, officers
and shareholders and such other matters as may be reasonably necessary or
advisable in connection with any filing, notice or application made by or on
behalf of such other party or any of its Subsidiaries to any third party or
Governmental Authority.
VI.12 INDEMNIFICATION; DIRECTOR AND OFFICERS' INSURANCE. (a) From
and after the Effective Time through the sixth anniversary of the Effective
Date, Western agrees to indemnify and hold harmless each present and former
director and officer of BKLA or any Subsidiary of BKLA determined as of the
Effective Time (the "INDEMNIFIED PARTIES"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "COSTS") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time (including with respect to this Agreement or any
of the transactions contemplated hereby) (but excluding any Costs arising out of
any violation or alleged violation of the Exchange Act or the rules and
regulations thereunder with respect to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇), whether asserted,
claimed or arising prior to, at or after the Effective Time, to the extent to
which such Indemnified Parties were entitled under California law and the BKLA
Articles or the BKLA By-Laws in effect on the date hereof, and Western shall
also advance expenses as incurred to the extent permitted under California law,
the Western Articles and the Western By-Laws and, with respect to any
Indemnified Party, any indemnification agreement to which such person is a
party.
(b Any Indemnified Party wishing to claim indemnification under
Section 6.12(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall as promptly as possible notify Western thereof, but the
failure to so notify shall not relieve Western of any liability it may have to
such Indemnified Party if such failure does not materially prejudice Western.
In the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (i) Western shall have the
right to assume the defense thereof and Western shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if Western elects not to assume such defense or
counsel for the Indemnified Parties advises in writing that there are issues
which raise conflicts of interest between Western and the Indemnified Parties,
the Indemnified Parties may retain counsel satisfactory to them, and Western
shall pay the reasonable fees and expenses of one such counsel for the
Indemnified Parties in any jurisdiction promptly as statements thereof are
received, (ii) the Indemnified Parties will cooperate in the defense of any such
matter and (iii) Western shall not be liable for any settlement effected without
its prior written consent (which
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consent shall not be unreasonably withheld); and PROVIDED, FURTHER, that Western
shall not have any obligation hereunder to any Indemnified Party when and if a
court of competent jurisdiction shall ultimately determine, and such
determination shall have become final and nonappealable, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
not permitted or is prohibited by applicable law.
(c For a period of six years after the Effective Time, Western
shall use its reasonable best efforts to cause to be maintained in effect at a
minimum the current policies of directors' and officers' liability insurance
maintained by BKLA (provided that Western may substitute therefor policies of
comparable coverage with respect to claims arising from facts or events which
occurred before the Effective Time); PROVIDED, HOWEVER, that in no event shall
Western be obligated to expend, in order to maintain or provide insurance
coverage pursuant to this Section 6.12(c), any amount per annum in excess of
125% of the amount of the annual premiums paid as of the date hereof by BKLA for
such insurance (the "MAXIMUM AMOUNT"). If the amount of the annual premiums
necessary to maintain or procure such insurance coverage exceeds the Maximum
Amount, Western shall use all reasonable efforts to maintain the most
advantageous policies of directors' and officers' insurance obtainable for an
annual premium equal to the Maximum Amount. Notwithstanding the foregoing,
prior to the Effective Time, Western may request BKLA to, and BKLA shall,
purchase insurance coverage, on such terms and conditions as shall be acceptable
to Western, extending for a period of six years BKLA's directors' and officers'
liability insurance coverage in effect as of the date hereof (covering past or
future claims with respect to periods before the Effective Time) and such
coverage shall satisfy Western's obligations under this Section 6.12(c).
(d If Western or any of its successors or assigns (i) shall
consolidate with or merge into any other corporation or entity and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then and in each such
case, proper provision shall be made so that the successors and assigns of
Western shall assume the obligations set forth in this Section 6.12.
VI.13 BENEFIT PLANS. BKLA consents and covenants that from and
after the Effective Date BKLA's Benefits Plans will be governed, managed and/or
terminated by Western, all within Western's sole discretion.
VI.14 ACCOUNTANTS' LETTERS. Each of BKLA and Western shall use its
reasonable best efforts to cause to be delivered to the other party, and to
Western's directors and officers who sign the Registration Statement, a letter
of their respective independent auditors, dated (i) the date on which the
Registration Statement shall become effective and (ii) a date shortly prior to
the Effective Date, and addressed to such directors and officers, in form and
substance
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customary for "comfort" letters delivered by independent accountants in
accordance with Statement of Accounting Standards No. 72.
VI.15 NOTIFICATION OF CERTAIN MATTERS. Each of BKLA and Western
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) is reasonably likely, individually or taken together with all
other facts, events and circumstances known to it, to result in any Material
Adverse Effect with respect to it or (ii) would cause or constitute a material
breach of any of its representations, warranties, covenants or agreements
contained herein.
VI.16 SHAREHOLDER AGREEMENTS. The directors and certain officers
and shareholders of BKLA, in their capacities as shareholders, in exchange for
good and valuable consideration, have executed and delivered to Western
shareholder agreements substantially in the form of EXHIBIT B hereto (the
"SHAREHOLDER AGREEMENTS"), committing such persons, among other things, (i) to
vote their shares of BKLA Common Stock in favor of the Agreement at the BKLA
Meeting and (ii) to certain representations concerning the ownership of BKLA
Common Stock and Western Common Stock to be received in the Merger.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
VII.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each of Western and BKLA to consummate the Merger
is subject to the fulfillment or written waiver by Western and BKLA prior to the
Effective Time of each of the following conditions:
(a SHAREHOLDER APPROVALS. This Agreement and the Merger shall
have been duly adopted by the requisite vote of the shareholders of BKLA.
(b REGULATORY APPROVALS. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain any
conditions, restrictions or requirements which the Western Board reasonably
determines would (i) following the Effective Time, have a Material Adverse
Effect on the Surviving Corporation and its Subsidiaries taken as a whole or
(ii) reduce the benefits of the transactions contemplated hereby to such a
degree that Western would not have entered into this Agreement had such
conditions, restrictions or requirements been known at the date hereof.
(c NO INJUNCTION. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation,
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judgment, decree, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and prohibits consummation of the transactions
contemplated by this Agreement.
(d REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
(e BLUE SKY APPROVALS. All permits and other authorizations
under state securities laws necessary to consummate the transactions
contemplated hereby and to issue the shares of Western Common Stock to be issued
in the Merger shall have been received and be in full force and effect.
(f LISTING. The shares of Western Common Stock to be issued in
the Merger shall have been approved for listing on the NASDAQ, subject to
official notice of issuance.
VII.2 CONDITIONS TO OBLIGATION OF BKLA. The obligation of BKLA to
consummate the Merger is also subject to the fulfillment or written waiver by
BKLA prior to the Effective Time of each of the following conditions:
(a REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Western set forth in this Agreement (subject to the standard set
forth in Section 5.02) shall be true and correct as of the date of this
Agreement and as of the Effective Date as though made on and as of the Effective
Date (except that representations and warranties that by their terms speak only
as of the date of this Agreement or some other date shall be true and correct as
of such date), and BKLA shall have received a certificate, dated the Effective
Date, signed on behalf of Western by the Chief Executive Officer and the Chief
Financial Officer of Western to such effect.
(b PERFORMANCE OF OBLIGATIONS OF WESTERN. Western shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and BKLA shall have
received a certificate, dated the Effective Date, signed on behalf of Western by
the Chief Executive Officer and the Chief Financial Officer of Western to such
effect.
(c ACCOUNTANTS' LETTERS. BKLA shall have received the letters
referred to in Section 6.14 from Western's independent auditors.
(d OPINION OF BKLA'S INDEPENDENT AUDITORS; ACCOUNTING TREATMENT.
BKLA shall have received from Vavrinek, Trine, Day & Co., LLP, its independent
auditors, (i)
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an opinion dated the Effective Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, (A) the Merger
constitutes a "reorganization" within the meaning of Section 368 of the Code and
(B) no gain or loss will be recognized by shareholders of BKLA who receive
shares of Western Common Stock in exchange for shares of BKLA Common Stock,
except with respect to cash received in lieu of fractional share interests, and
(ii) letters, dated the date of or shortly prior to each of the mailing date of
the Proxy Statement and the Effective Date, stating its opinion that the Merger
shall qualify for pooling-of-interests accounting treatment. In rendering its
opinion, Vavrinek, Trine, Day & Co., LLP may require and rely upon
representations contained in letters from BKLA, Western and shareholders of
BKLA.
(e DIRECTOR. Western shall have elected as a director, the
individual agreed in accordance with Section 2.01 hereof, effective immediately
after the Effective Time.
VII.3 CONDITIONS TO OBLIGATION OF WESTERN. The obligation of
Western to consummate the Merger is also subject to the fulfillment or written
waiver by Western prior to the Effective Time of each of the following
conditions:
(a REPRESENTATIONS AND WARRANTIES. The representations and
warranties of BKLA set forth in this Agreement (subject to the standard set
forth in Section 5.02) shall be true and correct as of the date of this
Agreement and as of the Effective Date as though made on and as of the Effective
Date (except that representations and warranties that by their terms speak only
as of the date of this Agreement or some other date shall be true and correct as
of such date) and Western shall have received a certificate, dated the Effective
Date, signed on behalf of BKLA by the Chief Executive Officer and the Chief
Financial Officer of BKLA to such effect.
(b PERFORMANCE OF OBLIGATIONS OF BKLA. BKLA shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Effective Time, and Western shall have
received a certificate, dated the Effective Date, signed on behalf of BKLA by
the Chief Executive Officer and the Chief Financial Officer of BKLA to such
effect.
(c OPINION OF WESTERN'S COUNSEL. Western shall have received an
opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel to Western, dated the Effective
Date, to the effect that, on the basis of facts, representations and assumptions
set forth in such opinion, the Merger constitutes a reorganization under Section
368 of the Code. In rendering its opinion, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ may require and
rely upon representations contained in letters from BKLA, Western and
shareholders of BKLA.
(d ACCOUNTANTS' LETTERS. Western shall have received the letters
referred to in Section 6.14 from BKLA's independent auditors.
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(e ACCOUNTING TREATMENT. Western shall have received from KPMG
Peat Marwick LLP, Western's independent auditors, letters, dated the date of or
shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
ARTICLE VIII
TERMINATION
VIII.1 TERMINATION. This Agreement may be terminated, and the
Acquisition may be abandoned:
(a MUTUAL CONSENT. At any time prior to the Effective Time, by
the mutual consent of Western and BKLA, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b BREACH. At any time prior to the Effective Time, by Western
or BKLA, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event of either: (i) a breach by the other
party of any representation or warranty contained herein (subject to the
standard set forth in Section 5.02), which breach cannot be or has not been
cured within 30 days after the giving of written notice to the breaching party
of such breach; or (ii) a breach by the other party of any of the covenants or
agreements contained herein, which breach cannot be or has not been cured within
30 days after the giving of written notice to the breaching party of such
breach, provided that such breach (whether under (i) or (ii)) would be
reasonably likely, individually or in the aggregate with other breaches, to
result in a Material Adverse Effect.
(c DELAY. At any time prior to the Effective Time, by Western or
BKLA, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Merger is not consummated by
December 31, 1998.
(d NO APPROVAL. By BKLA or Western in the event (i) the approval
of any Governmental Authority required for consummation of the Merger and the
other transactions contemplated by this Agreement shall have been denied by
final nonappealable action of such Governmental Authority or (ii) the
shareholder approval required by Section 7.01(a) herein is not obtained at the
BKLA Meeting.
(e FAILURE TO RECOMMEND, ETC. At any time prior to the BKLA
Meeting, by Western if the BKLA Board shall have failed to make its
recommendation referred to in Section
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6.02, withdrawn such recommendation or modified or changed such recommendation
in a manner adverse in any respect to the interests of Western.
(f TERMINATION BY WESTERN. This Agreement may be terminated and
the Merger may be abandoned by Western by the giving of notice to BKLA at any
time prior to 5 p.m. on April 29, 1998, if Western determines in its sole
discretion, upon completion of its due diligence review of BKLA, to so
terminate.
(g WESTERN COMMON STOCK. This Agreement may be terminated by
BKLA in the event that, with respect to any Ten Day Period (as defined below),
both (i)(A) the Ten Day Average Price (as defined below) shall be less that
$35.37 per share and (B) the Western Common Stock Price Percentage (as defined
below) shall be less than the BKX Index Percentage (as defined below) and (ii)
BKLA has delivered written notice to Western of its intention to terminate this
Agreement within forty-eight (48) hours following the date of such event (it
being understood that, if the circumstances set forth in clause (i) shall have
occurred and BKLA fails to timely deliver the notice referred to in this clause
(ii), BKLA shall have the right to terminate if any such event subsequently
occurs and BKLA timely delivers such notice); PROVIDED, HOWEVER, that, if
Western effects a stock dividend, reclassification, recapitalization, stock
split, combination, exchange of shares or similar transaction after the date
hereof and prior to the Effective Time, the provisions of this Section 8.01(g)
shall be appropriately adjusted;
As used in this Section 8.01(g), (w) "Western Common Stock Price
Percentage" means the percentage determined by dividing the Ten Day Average
Price by $42.61 (as such amount may be adjusted pursuant to the paragraph
above); (x) "BKX Index Percentage " means the percentage determined by dividing
(i) the product of (A) the ▇▇▇▇▇ Bank Index as of the date of determination
times (B) .66 by (ii) the ▇▇▇▇▇ Bank Index as of the date hereof; (y) "Ten Day
Average Price" means the average sales price per share of Western Common Stock
for a Ten Day Period determined by averaging the last reported sales price on
each trading day, and (z) "Ten Day Period" means any period of ten (10)
consecutive trading days.
(h) ACQUISITION PROPOSAL. This Agreement may be terminated by
BKLA by written notice to Western if BKLA receives an Acquisition Proposal on
terms and conditions which the BKLA Board determines, after receiving the advice
of its outside counsel that to proceed with the Merger will violate the
fiduciary duties of the BKLA Board to BKLA's shareholders in light of such
Acquisition Proposal, to accept such proposal; PROVIDED, HOWEVER, that BKLA
shall not be entitled to terminate this Agreement pursuant to this Section
8.01(h) unless it shall have provided Western with written notice of such a
possible determination (which written notice will inform Western of the material
terms and conditions of the proposal, including the identity of the proponent)
not less than two business days prior to such determination.
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VIII.2 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to
Section 8.01, no party to this Agreement shall have any liability or further
obligation to any other party hereunder except as set forth in Section 8.03 and
Section 9.01.
VIII.3 TERMINATION FEE.
(a MATERIAL BREACH BY WESTERN. Should BKLA terminate this
Agreement pursuant to Section 8.01(b) (unless such breach under Section 8.01(b)
shall result from no act or omission of Western), Western shall promptly, if so
requested by BKLA, but in no event later than five business days after the date
of such request, pay BKLA a fee equal to BKLA's out-of-pocket expenses in
connection with this Agreement and the transactions contemplated hereby, up to a
maximum of $500,000, which amount shall be payable in same day funds, provided
however that no fee shall be paid pursuant to this Section 8.03(a) if BKLA shall
be in material breach of its obligations hereunder and Western shall owe no
further duty or liability on account of this Agreement to BKLA.
(b MATERIAL BREACH BY BKLA; ENTERING ACQUISITION PROPOSAL.
Should Western terminate this Agreement pursuant to either Section 8.01(e) or
8.01(b) (unless such breach under Section 8.01(b) shall result from no act or
omission of BKLA), BKLA shall promptly, if so requested by Western, but in no
event later than five business days after the date of such request, pay Western
a fee equal to Western's out-of-pocket expenses in connection with this
Agreement and the transactions contemplated hereby, up to a maximum of $500,000,
which amount shall be payable in same day funds, provided however that no fee
shall be paid pursuant to this Section 8.03 if Western shall be in material
breach of its obligations hereunder and BKLA and the shareholders who are
parties to the Shareholder Agreements shall owe no further duty or liability on
account of this Agreement or the Shareholders Agreement to either Western or
Santa ▇▇▇▇▇▇ Bank. In the event that there is a termination as a result of BKLA
entering into an Acquisition Proposal pursuant to Section 8.01(h), BKLA shall
pay Western up to $500,000 to cover out-of-pocket expenses in addition to
Western's rights under the Stock Option Agreement and BKLA and the shareholders
who are parties to the Shareholder Agreements shall owe no further duty or
liability on account of this Agreement to either Western or Santa ▇▇▇▇▇▇ Bank
except under the Stock Option Agreement.
ARTICLE IX
MISCELLANEOUS
IX.1 SURVIVAL. No representations, warranties, agreements and
covenants contained in this Agreement shall survive the Effective Time (other
than Sections 3.01, 3.03,
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3.04, 3.07, 6.12 and this Article IX which shall survive the Effective Time) or
the termination of this Agreement if this Agreement is terminated prior to the
Effective Time (other than Sections 6.03(b), 6.05(b), 8.02, 8.03 and this
Article IX which shall survive such termination).
IX.2 WAIVER; AMENDMENT. Prior to the Effective Time, any provision
of this Agreement may be (i) waived by the party benefitted by the provision, or
(ii) amended or modified at any time, by an agreement in writing between the
parties hereto executed in the same manner as this Agreement, except that after
the BKLA Meeting, this Agreement may not be amended if it would violate the CGCL
or reduce the consideration to be received by BKLA shareholders in the Merger.
IX.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
IX.4 GOVERNING LAW; WAIVER OF JURY TRIAL. This Agreement shall be
governed by, and interpreted in accordance with, the laws of the State of
California applicable to contracts made and to be performed entirely within such
State. Each of the parties hereto hereby irrevocably waives any and all right
to trial by jury in any legal proceeding arising out of or related to this
Agreement or the transactions contemplated hereby.
IX.5 EXPENSES. Each party hereto will bear all expenses incurred
by it in connection with this Agreement and the transactions contemplated
hereby, except as provided in Section 8.02.
IX.6 NOTICES. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with machine-generated confirmation) or mailed by
registered or certified mail (return receipt requested) to such party at its
address set forth below or such other address as such party may specify by
notice to the parties hereto.
If to, to:
Bank of Los Angeles
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Horgan, Rosen, Beckham & Coren
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▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Western or Santa ▇▇▇▇▇▇ Bank, to:
Western Bancorp
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
IX.7 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This
Agreement, the Stock Option Agreement, the Affiliate Agreements and the
Shareholder Agreements represent the entire understanding of the parties hereto
with reference to the transactions contemplated hereby and thereby and this
Agreement supersedes any and all other oral or written agreements heretofore
made (other than any such Stock Option Agreement, Affiliate Agreements or
Shareholder Agreements). Nothing in this Agreement expressed or implied, is
intended to confer upon any person, other than the parties hereto or their
respective successors, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
IX.8 INTERPRETATION; EFFECT. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of, or Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." No provision
of this Agreement shall be construed to require BKLA, Western or any of their
respective Subsidiaries, affiliates or directors to take any action which would
violate applicable law (whether statutory or common law), rule or regulation.
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* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
BANK OF LOS ANGELES
By:
--------------------------------------------
Name:
Title:
WESTERN BANCORP
By:
--------------------------------------------
Name:
Title:
SANTA ▇▇▇▇▇▇ BANK
By:
--------------------------------------------
Name:
Title:
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