EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
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dated as of July 24th, 1998
by and among
Western Bancorp,
Portola Merger Sub
and
Peninsula Bank of San Diego
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TABLE OF CONTENTS
PAGE
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I Certain Definitions
1.01 CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II The Merger
2.01 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.02 EFFECTIVE DATE AND EFFECTIVE TIME. . . . . . . . . . . . . . . . . . 7
ARTICLE III Consideration; Exchange Procedures
3.01 MERGER CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . 8
3.02 RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS. . . . . . . . . . . . . . . 9
3.03 FRACTIONAL SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.04 EXCHANGE PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . . .10
3.05 ANTI-DILUTION PROVISIONS . . . . . . . . . . . . . . . . . . . . . .11
ARTICLE IV Actions Pending Acquisition
4.01 FORBEARANCES OF PENINSULA. . . . . . . . . . . . . . . . . . . . . .12
4.02 FORBEARANCES OF WESTERN. . . . . . . . . . . . . . . . . . . . . . .14
ARTICLE V Representations and Warranties
5.01 DISCLOSURE SCHEDULE. . . . . . . . . . . . . . . . . . . . . . . . .15
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5.02 STANDARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
5.03 REPRESENTATIONS AND WARRANTIES OF PENINSULA. . . . . . . . . . . . .15
5.04 REPRESENTATIONS AND WARRANTIES OF WESTERN. . . . . . . . . . . . . .25
ARTICLE VI Covenants
6.01 REASONABLE BEST EFFORTS. . . . . . . . . . . . . . . . . . . . . . .29
6.02 SHAREHOLDER APPROVAL . . . . . . . . . . . . . . . . . . . . . . . .29
6.03 REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . . .29
6.04 PRESS RELEASES . . . . . . . . . . . . . . . . . . . . . . . . . . .30
6.05 ACCESS; INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . .30
6.06 ACQUISITION PROPOSALS. . . . . . . . . . . . . . . . . . . . . . . .31
6.07 AFFILIATE AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . .32
6.08 BOARD ATTENDANCE . . . . . . . . . . . . . . . . . . . . . . . . . .32
6.09 CERTAIN POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . .32
6.10 NASDAQ LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . .32
6.11 REGULATORY APPLICATIONS. . . . . . . . . . . . . . . . . . . . . . .32
6.12 INDEMNIFICATION; DIRECTOR AND OFFICERS' INSURANCE. . . . . . . . . .33
6.13 BENEFIT PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
6.14 ACCOUNTANTS' LETTERS . . . . . . . . . . . . . . . . . . . . . . . .35
6.15 NOTIFICATION OF CERTAIN MATTERS. . . . . . . . . . . . . . . . . . .35
6.16 SHAREHOLDER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . .35
6.17 PENINSULA NAME . . . . . . . . . . . . . . . . . . . . . . . . . . .35
6.18 EMPLOYEE AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . .36
ARTICLE VII Conditions to Consummation of the Merger
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER . . . . .36
7.02 CONDITIONS TO OBLIGATION OF PENINSULA. . . . . . . . . . . . . . . .37
7.03 CONDITIONS TO OBLIGATION OF WESTERN. . . . . . . . . . . . . . . . .38
ARTICLE VIII Termination
8.01 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
8.02 EFFECT OF TERMINATION AND ABANDONMENT. . . . . . . . . . . . . . . .41
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8.03 TERMINATION FEE. . . . . . . . . . . . . . . . . . . . . . . . . . .41
ARTICLE IX Miscellaneous
9.01 SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
9.02 WAIVER; AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . .42
9.03 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
9.04 GOVERNING LAW; WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . .42
9.05 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
9.06 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES . . . . . . . . .43
9.08 INTERPRETATION; EFFECT . . . . . . . . . . . . . . . . . . . . . . .44
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PAGE
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EXHIBIT A Form of Affiliate Agreement
EXHIBIT B Form of Directors' Shareholder Agreement
EXHIBIT C Form of Officers' Shareholder Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of July 24, 1998 (this
"AGREEMENT"), by and among Peninsula Bank of San Diego ("PENINSULA"), Western
Bancorp ("WESTERN") and Portola Merger Sub ("Merger Sub").
RECITALS
A. PENINSULA BANK OF SAN DIEGO. Peninsula is a California
corporation, having its principal place of business in San Diego, California.
B. WESTERN BANCORP. Western is a California corporation,
having its principal place of business in Newport Beach, California.
C. PORTOLA MERGER SUB. Merger Sub is a California corporation
and a wholly owned subsidiary of Western.
D. STOCK OPTION AGREEMENT. Concurrently herewith, Peninsula
and Western are entering into a stock option agreement (the "STOCK OPTION
AGREEMENT"), to be dated the date hereof, whereby Peninsula will grant to
Western the option to purchase up to 19.9% of the outstanding shares of the
Peninsula 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 Peninsula have determined that it is in the best interests of their
respective companies and their shareholders to consummate the strategic business
combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. The following terms are used in this
Agreement with the meanings set forth below:
"ACQUISITION PROPOSAL" means any tender or exchange offer, proposal
for a merger, consolidation or other business combination involving
Peninsula 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, Peninsula or any of its Subsidiaries, other than
the transactions contemplated by this Agreement.
"AGREEMENT" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"AVERAGE PRICE" has the meaning set forth in Section 3.01(a).
"BENEFIT PLANS" has the meaning set forth in Section 5.03(m).
"BUSINESS COMBINATION" has the meaning set forth in Section 3.05.
"BKX INDEX PERCENTAGE" has the meaning set forth in Section 8.01(f).
"CGCL" means the California General Corporation law.
"CALIFORNIA SECRETARY" means the California Secretary of State.
"CODE" has the meaning set forth in the recitals.
"COMMISSIONER" means the California Commissioner of Financial
Institutions.
"COMPUTER SYSTEM" has the meaning set forth in Section 5.03(o).
"COSTS" has the meaning set forth in Section 6.12(a).
"DAILY TRADES" has the meaning set forth in Section 3.01(a).
"DETERMINATION PERIOD" has the meaning set forth in Section 3.01(a).
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 5.01.
"DISSENTERS' SHARES" means shares of Peninsula Common Stock with
respect to which the holder or holders thereof perfect their rights to
dissent under Chapter 13 of the CGCL.
"DISSENTING SHAREHOLDERS" means holders of shares of Peninsula Common
Stock who perfect their rights to dissent under Chapter 13 of the CGCL.
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"EFFECTIVE DATE" means the date on which the Effective Time occurs.
"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(p).
"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.
"EXECUTIVES" has the meaning set forth in Section 6.18.
"FDIC" means the Federal Deposit Insurance Corporation.
"FEDERAL RESERVE" means the Board of Governors of the Federal Reserve
System.
"GAAP" has the meaning set forth in Section 5.03(g).
"GOVERNMENTAL AUTHORITY" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"HAZARDOUS SUBSTANCE" has the meaning set forth in Section 5.03(p).
"INDEMNIFIED PARTIES" has the meaning set forth in Section 6.12(a).
"INSURANCE POLICIES" has the meaning set forth in Section 5.03(t).
"LIENS" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance.
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"LOAN PROPERTY" has the meaning set forth in Section 5.03(p).
"MATERIAL ADVERSE EFFECT" means, with respect to Western or Peninsula,
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 Peninsula and its Subsidiaries taken as a whole, respectively,
or (ii) would materially impair the ability of either Western or Peninsula
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.
"MERGER SUB" has the meaning set forth in the preamble to this
Agreement.
"MERGER SUB COMMON STOCK" means the common stock, par value $.01 per
share, of Merger Sub.
"MULTIEMPLOYER PLANS" has the meaning set forth in Section 5.03(m).
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market.
"NEW CERTIFICATES" has the meaning set forth in Section 3.04.
"OLD CERTIFICATES" has the meaning set forth in Section 3.04.
"PENINSULA" has the meaning set forth in the preamble to this
Agreement.
"PENINSULA AFFILIATE" has the meaning set forth in Section 6.07(a).
"PENINSULA ARTICLES" means the Articles of Incorporation of Peninsula.
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"PENINSULA BOARD" means the Board of Directors of Peninsula.
"PENINSULA BY-LAWS" means the By-laws of Peninsula.
"PENINSULA COMMON STOCK" means the common stock, no par value per
share, of Peninsula.
"PENINSULA MEETING" has the meaning set forth in Section 6.02.
"PENINSULA STOCK DIVIDEND" means the Previously Disclosed 5% dividend
on Peninsula Common Stock, declared by the Peninsula Board on June 23rd,
1998, payable on or about July 24, 1998.
"PENSION PLAN" has the meaning set forth in Section 5.03(m).
"PERSON" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated
organization.
"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 AGENCIES" has the meaning set forth in Section 5.03(g).
"REGULATORY APPROVAL DATE" means the date which is the later to occur
of approval by (i) the FDIC pursuant to the Bank Merger Act, and (ii) the
Commissioner pursuant to Section 700 ET. SEQ. of the California Financial
Code.
"REGULATORY AUTHORITY" has the meaning set forth in Section
5.03(g)(2).
"REGULATORY DOCUMENTS" means documents filed with the SEC of the types
referred to in Section 5.04(g).
"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.
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"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.
"SURVIVING CORPORATION" has the meaning set forth in Section 2.01.
"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.
"TEN DAY AVERAGE ▇▇▇▇▇ BANK INDEX" has the meaning set forth in
Section 8.01(f).
"TEN DAY AVERAGE PRICE" has the meaning set forth in Section 8.01(f).
"TEN DAY PERIOD" has the meaning set forth in Section 8.01(f).
"TRADING DAY" has the meaning set forth in Section 3.01(a).
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"TREASURY STOCK" shall mean shares of Peninsula Common Stock held by
Peninsula or any of its 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 COMMON STOCK PRICE PERCENTAGE" has the meaning set forth in
Section 8.01(f).
"YEAR 2000 COMPLIANT" has the meaning set forth in Section 5.03(o).
ARTICLE II
THE MERGER
2.01 THE MERGER. (a) At the Effective Time, Merger Sub shall merge
with and into Peninsula (the "MERGER"), the separate corporate existence of
Merger Sub shall cease and Peninsula shall survive and continue to exist as a
California corporation (Peninsula, 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 Peninsula (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
Peninsula Common Stock as provided for in this Agreement (the "MERGER
CONSIDERATION"), (ii) adversely affect the tax treatment of Peninsula's
shareholders as a result of receiving the Merger Consideration 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 Peninsula immediately after the Merger, including
without limitation the name of Peninsula, shall be those of Peninsula as in
effect immediately prior to the Effective Time.
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(d) DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. At the
Effective Time, the directors of Merger Sub immediately prior to such Effective
Time shall be the directors of the Surviving Corporation and the officers of
Peninsula immediately prior to such Effective Time shall be the officers of the
Surviving Corporation, in each case, until such time as their successors shall
be duly elected or appointed and qualified.
2.02 EFFECTIVE DATE AND EFFECTIVE TIME. On such date as Western
selects (and promptly provides notice thereof to Peninsula), which shall be
within ten days after the last to occur of the expiration of all applicable
waiting periods in connection with approvals of governmental authorities and the
receipt of all approvals of governmental authorities and all conditions to the
consummation of the Merger are satisfied or waived (or, at the election of
Western, on the last business day of the month in which such tenth day occurs
or, if such tenth day occurs on one of the last five business days of such
month, on the last business day of the succeeding month), or on such earlier or
later date as may be agreed in writing by the parties, an agreement of merger
shall be executed in accordance with all appropriate legal requirements and
shall be filed as required by law, and the Merger provided for herein shall
become effective upon such filing or on such date as may be specified in such
agreement of merger. The date of such filing or such later effective date is
herein called the "Effective Date". The "Effective Time" of the Merger shall be
the time of such filing or as set forth in such agreement of merger.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 MERGER CONSIDERATION. Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the Merger and
without any action on the part of any Person:
(a) OUTSTANDING PENINSULA COMMON STOCK. Each share, excluding
Treasury Stock and Dissenters' Shares, of Peninsula Common Stock issued and
outstanding immediately prior to the Effective Time (which shall, at such
time, include shares of Peninsula Common Stock issued pursuant to the
Peninsula Stock Dividend) shall become and be converted into that number of
shares of Western Common Stock, equal to the quotient obtained by dividing
(i) $45.75 by (ii) the Average Price (the "EXCHANGE RATIO"). As used
herein, "AVERAGE PRICE" shall mean the volume weighted average sales price
per share of Western Common Stock for each of the twenty (20) consecutive
days (the "DETERMINATION PERIOD") on which shares of Western Common Stock
are actually traded (each, a "TRADING DAY") immediately preceding the
fourth Trading Day prior to the Effective Date; PROVIDED, HOWEVER, that if
the Average Price as so computed would be less than $38.813, then the
Average Price shall be $38.813; and PROVIDED, FURTHER, that if the Average
Price as so computed would be greater
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than $47.438, then the Average Price shall be $47.438. The Exchange Ratio
shall be subject to adjustment as set forth in Section 3.05. For purposes
of determining the "volume weighted average", the aggregate of the Daily
Sales for each of the twenty (20) consecutive Trading Days used in the
determination of Average Price shall be divided by the aggregate number of
shares traded during such twenty (20) consecutive Trading Days. As used
herein, "DAILY SALES" means the reported sales prices of Western Common
Stock traded on Nasdaq on a particular Trading Day.
(b) OUTSTANDING WESTERN COMMON STOCK. Each share of Western
Common Stock issued and outstanding immediately prior to the Effective Time
shall remain issued and outstanding and unaffected by the Merger.
(c) OUTSTANDING MERGER SUB COMMON STOCK. Each share of Merger
Sub Common Stock issued and outstanding immediately prior to the Effective
Time shall become and be converted into one share of Peninsula Common
Stock.
(d) TREASURY SHARES. Each share of Peninsula 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.
(e) DISSENTING SHAREHOLDERS. Any Dissenting Shareholder who
shall be entitled to be paid the "fair value" of his or her Dissenters'
Shares, as provided in Chapter 13 of the CGCL, shall not be entitled to the
Merger Consideration as set forth in Section 3.01 in respect thereof unless
and until such Dissenting Shareholder shall have failed to perfect or shall
have effectively withdrawn or lost such Dissenting Shareholder's right to
dissent from the Merger under the CGCL, and shall be entitled to receive
only the payment provided for by Chapter 13 of the CGCL with respect to
such Dissenters' Shares. Upon the payment by the Surviving Corporation of
the "fair value" of any Dissenters' Shares in accordance with Chapter 13 of
the CGCL, such Dissenters' Shares shall be canceled and retired and shall
cease to exist, and no exchange or further payment shall be made with
respect thereto. If any Dissenting Shareholder shall fail to perfect or
shall have effectively withdrawn or lost such right to dissent, the
Dissenters' Shares held by such Dissenting Shareholder shall thereupon be
treated as though such Dissenters' Shares had been converted into the right
to receive the Merger Consideration as set forth in Section 3.01(a)
pursuant to such Section 3.01(a).
3.02 RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS. At the Effective Time,
holders of Peninsula Common Stock shall cease to be, and shall have no rights
as, shareholders of Peninsula, other than to receive any dividend or other
distribution with respect to such Peninsula 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 Peninsula or the Surviving Corporation of shares of Peninsula
Common Stock.
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3.03 FRACTIONAL SHARES. Notwithstanding any other provision hereof,
no fractional shares of Western Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the Merger;
instead, Western shall pay to each holder of Peninsula Common Stock who would
otherwise be entitled to a fractional share of Western Common Stock (after
taking into account all Old Certificates delivered by such holder) an amount in
cash (without interest) determined by multiplying such fraction by the average
of the closing prices of Western Common Stock, as reported on Nasdaq (as
reported in THE WALL STREET JOURNAL or, if not reported therein, in another
authoritative source), for the five Nasdaq trading days immediately preceding
the Effective Date.
3.04 EXCHANGE PROCEDURES. (a) At or prior to the Effective Time,
Western shall deposit, or shall cause to be deposited, with such bank or trust
company as Western shall elect (which may include a subsidiary of Western) (in
such capacity, the "EXCHANGE AGENT"), for the benefit of the holders of
certificates formerly representing shares of Peninsula 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 thereto (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 Peninsula
Common Stock.
(b) As soon as practicable after the Effective Date, Western
shall send or cause to be sent to each former holder of record of shares of
Peninsula Common Stock immediately prior to the Effective Time transmittal
materials for use in exchanging such shareholder's Old Certificates for the
consideration set forth in this Article III, which transmittal materials
Peninsula shall have had the opportunity to review prior to the Effective Date.
Western shall cause the New Certificates into which shares of a shareholder's
Peninsula 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 Peninsula 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
Peninsula Common Stock not registered in the transfer records of Peninsula, 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 Peninsula Common Stock is
presented to the Exchange Agent, accompanied by documents sufficient, in the
discretion of
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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 Peninsula
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 Peninsula 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 Peninsula 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 Peninsula for six months after the Effective Time shall be
returned by the Exchange Agent to Western. Any shareholders of Peninsula 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 Peninsula Common Stock such
shareholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon.
3.05 ANTI-DILUTION PROVISIONS. In the event Western changes (or
establishes a record date for changing) the number of shares of Western Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding Western Common Stock and the record date therefor shall be prior
to the Effective Date, the Exchange Ratio shall be proportionately adjusted.
If, between the date hereof and the Effective Time, Western shall merge, be
acquired or consolidate with, by or into any other corporation (a "BUSINESS
COMBINATION") and the terms thereof shall
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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 shareholders of Peninsula 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 (provided that
nothing herein shall be construed so as to release the acquiring entity in any
such Business Combination from its obligations under this Agreement as the
successor to Western).
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 FORBEARANCES OF PENINSULA. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without the
prior written consent of Western, Peninsula will not, and will cause each of its
Subsidiaries not to:
(a) ORDINARY COURSE. Conduct the business of Peninsula 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 Peninsula or any of its
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 Peninsula or its Subsidiaries, taken as a whole.
(b) CAPITAL STOCK. Other than the payment of the Previously
Disclosed Peninsula Common Stock dividend (i) issue, sell or otherwise
permit to become outstanding, or authorize the creation of, any additional
shares of Peninsula Common Stock or any Rights or (ii) enter into any
agreement with respect to the foregoing.
(c) DIVIDENDS, ETC. (a) Other than the payment of the Peninsula
Stock Dividend and the declaration and payment of regular quarterly cash
dividends of $0.08 per share of Peninsula Common Stock, having declaration,
record and payment dates consistent with past practice, 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 Peninsula Common Stock or (b)
directly or indirectly adjust, split, combine, redeem, reclassify, purchase
or otherwise acquire, any shares of its capital stock.
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(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 Peninsula 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 purchase, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement (or similar arrangement) related thereto, in respect of any
director, officer or employee of Peninsula or its Subsidiaries, or take any
action to accelerate the vesting or exercisability of any 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 Peninsula 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
$50,000 individually or $100,000 in the aggregate.
(i) GOVERNING DOCUMENTS. Amend the Peninsula Articles,
Peninsula By-Laws or the articles of incorporation or by-laws (or similar
governing documents) of any of Peninsula's Subsidiaries.
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(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 Peninsula and its Subsidiaries, taken as a whole.
(m) ADVERSE ACTIONS. (a) Take any action while knowing that such
action would, or is 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 including, but not limited to,
any action which would reasonably be expected to adversely affect or delay
the ability of Western, Peninsula or Merger Sub to obtain any necessary
approvals, consents or waivers of any Regulatory Agencies required for the
transactions contemplated by this Agreement or (iii) a material 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) COMMITMENTS. Agree or commit to do any of the foregoing.
4.02 FORBEARANCES OF WESTERN. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without
the prior written consent of Peninsula, Western will not, and will cause
each of its Subsidiaries not to:
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(a) ORDINARY COURSE. Take any action that would adversely
affect or delay the ability of Peninsula 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. (a) Take any action while knowing that
such action would, or is 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 including, but not limited to,
any action which would reasonably be expected to adversely affect or delay
the ability of Western, Peninsula or Merger Sub to obtain any necessary
approvals, consents or waivers of any Regulatory Agencies required for the
transactions contemplated by this Agreement or (iii) a material violation
of any provision of this Agreement, except, in each case, as may be
required by applicable law or regulation.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 DISCLOSURE SCHEDULE. On or prior to the date hereof, Peninsula
has delivered to Western and Western has delivered to Peninsula a schedule
(respectively, its "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 as an
exception to one or more representations or warranties contained in Section 5.03
or 5.04; PROVIDED, that (a) no such item is required to be set forth in a
Disclosure Schedule as an exception to a representation or warranty if its
absence would not be reasonably likely to result in the related representation
or warranty being deemed untrue or incorrect under the standard established by
Section 5.02, and (b) the mere inclusion of an item in a Disclosure Schedule as
an exception to a representation or warranty shall not be deemed an admission by
a party that such item represents a material exception or fact, event or
circumstance or that such item is reasonably likely to result in a Material
Adverse Effect.
5.02 STANDARD. No representation or warranty of Peninsula or Western
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
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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.
5.03 REPRESENTATIONS AND WARRANTIES OF PENINSULA. Subject to
Sections 5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding to the relevant paragraph below, Peninsula
hereby represents and warrants to Western:
(a) ORGANIZATION, STANDING AND AUTHORITY. Peninsula is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California. Peninsula is duly qualified to do
business and is in good standing in the states of the United States 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.
(b) PENINSULA COMMON STOCK. As of the date hereof, the
authorized capital stock of Peninsula consists solely of 10,000,000 shares
of Peninsula Common Stock, of which no more than 2,487,087 shares after
giving effect to the Previously Disclosed Peninsula Stock Dividend shares
were outstanding as of the date hereof. As of the date hereof, no shares
of Peninsula Common Stock were held in treasury by Peninsula or otherwise
beneficially owned by Peninsula or its Subsidiaries. The outstanding
shares of Peninsula Common Stock have been duly authorized and are validly
issued and outstanding, fully paid and nonassessable, 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 Peninsula Common
Stock authorized and reserved for issuance, Peninsula does not have any
Rights issued or outstanding with respect to Peninsula Common Stock, and
Peninsula does not have any commitment to authorize, issue or sell any
Peninsula Common Stock or Rights, except pursuant to this Agreement and the
Stock Option Agreement.
(c) SUBSIDIARIES. (i)(A)Peninsula has Previously Disclosed a
list of all of its Subsidiaries together with the jurisdiction of
organization of each such Subsidiary,(B) Peninsula 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
Peninsula or its Subsidiaries are fully paid and nonassessable and are
owned by Peninsula or its Subsidiaries free and clear of any Liens.
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(ii) Peninsula 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 Peninsula's Subsidiaries has been duly organized and
is validly existing in good standing under the laws of the jurisdiction of
its organization, and is duly qualified to do business and in good standing
in the jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified.
(d) CORPORATE POWER. Peninsula 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 Peninsula 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 agreement of merger set forth
in this Agreement by the holders of a majority of the outstanding shares of
Peninsula 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 Peninsula and the Peninsula
Board on or prior to the date hereof. This Agreement is a valid and
legally binding obligation of Peninsula, enforceable in accordance with its
terms (except as enforceability may be limited by 12 U.S.C. 1818(b)(6)(D)
or 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
Peninsula Board has received the written opinion of NationsBanc ▇▇▇▇▇▇▇▇▇▇
Securities LLC to the effect that as of the date hereof the consideration
to be received by the holders of Peninsula Common Stock in the Merger is
fair to the holders of Peninsula 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 Peninsula or
any of its Subsidiaries in connection with the execution, delivery or
performance by Peninsula of this Agreement or the Stock Option Agreement or
to consummate the Merger except for (A) filings of applications or notices
with the Commissioner, the FDIC and the Federal Reserve, (B) filings with
the SEC and state securities authorities and the approval of this Agreement
by the shareholders of Peninsula, (C) the filing of an agreement of merger
with the California Secretary pursuant to the CGCL and (D) the permit
required under Section 691 of the California Financial Code with respect to
the Stock Option Agreement. As of the date hereof, Peninsula is not aware
of any reason
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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 the expiration of related waiting periods,
and required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the Stock Option
Agreement and the consummation of the transactions contemplated hereby and
thereby do not and will not (A) constitute a breach or violation of, or a
default under, or give rise to any Lien, any acceleration of remedies or
any right of termination under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or agreement,
indenture or instrument of Peninsula or of any of its Subsidiaries or to
which Peninsula or any of its Subsidiaries or properties is subject or
bound, (B) constitute a breach or violation of, or a default under, the
Peninsula Articles or the Peninsula 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) The
balance sheet of Peninsula as of December 31, 1997, and the related
statements of income, cash flow and changes in financial position of
Peninsula for the year then ended, audited by Deloitte & Touche LLP, and
the call report of Peninsula as of March 31, 1998 and for the three months
then ended, fairly present, subject in the case of the call report to
recurring year-end audit adjustments normal in nature and amount, the
financial position of Peninsula as of such dates and the results of the
operations of Peninsula for the periods then ended, all in accordance with
generally accepted accounting principles ("GAAP") consistently applied. The
call reports to be filed by Peninsula with the FDIC after the date hereof
will comply with applicable accounting requirements and with the published
rules and regulations of the FDIC with respect thereto; and each of such
statements will be prepared in accordance with GAAP consistently applied
during the periods involved, except as indicated in the notes thereto or as
permitted by the call report forms. The books and records of Peninsula have
been, and are being, maintained in accordance with GAAP and any other
applicable legal and accounting requirements.
(ii) Peninsula has timely filed all reports, registrations and
statements, together with any amendments required to be made with respect
thereto, that they were required to file since December 31, 1996 with (A)
the Federal Reserve, (B) the FDIC, (C) the State of California and (D) the
Commissioner (collectively, the "REGULATORY AGENCIES"), and all other
material reports and statements required to be filed by it since December
31, 1996, including, without limitation, any report or statement required
to be filed pursuant to the laws of the United States or the State of
California and the rules and regulations of the Federal Reserve, the FDIC
or the Commissioner, and has paid all fees and assessments due and payable
in connection therewith. As of their respective dates, such reports,
registrations and statements
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complied in all material respects with all the laws, rules and regulations
of the applicable Regulatory Agency with which they were filed.
(iii) Since December 31, 1997, Peninsula and its Subsidiaries have
not incurred any liability other than in the ordinary course of business
consistent with past practice.
(iv) Since December 31, 1997, (A) Peninsula 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 Section 5.03 or otherwise), is reasonably likely to have a
Material Adverse Effect with respect to Peninsula.
(v) Peninsula is not, and since December 31, 1996 was not,
required to register the Peninsula Common Stock with the FDIC pursuant to
Section 12 of the Exchange Act.
(h) LITIGATION. No litigation, claim or other proceeding before
any court or governmental agency is pending against Peninsula or any of its
Subsidiaries and, to Peninsula's knowledge, no such litigation, claim or other
proceeding has been threatened.
(i) REGULATORY MATTERS. (i) Neither Peninsula 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.
(ii) Neither Peninsula nor any of its Subsidiaries has been
advised 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. Peninsula 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
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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 Peninsula's knowledge, no suspension or cancellation of
any of them is threatened; and
(iii) has received, since December 31, 1995, no notification
or communication from any Governmental Authority (A) asserting that
Peninsula or any of its Subsidiaries is not in compliance with any of
the statutes, regulations or ordinances which such Governmental
Authority enforces or (B) threatening to revoke any license,
franchise, permit or governmental authorization (nor, to Peninsula's
knowledge, do any grounds for any of the foregoing exist).
(k) MATERIAL CONTRACTS; DEFAULTS. Neither Peninsula 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 Peninsula 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 Peninsula 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 to be paid to NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC.
(m) EMPLOYEE BENEFIT PLANS.
(i) All benefit and compensation plans, contracts, policies or
arrangements covering current employees or former employees of
Peninsula and its subsidiaries (the "EMPLOYEES") and current or former
directors of Peninsula, 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. True and
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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 Western.
(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. Peninsula 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 Peninsula 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 Peninsula or any Subsidiary to a tax or
penalty imposed by either Section 4975 of the Code or Section 502(i)
of ERISA in an amount which would be material.
(iii) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by Peninsula 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 Peninsula under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA AFFILIATE"). Neither Peninsula, any of its Subsidiaries
nor an ERISA Affiliate has contributed to a "multiemployer plan",
within the meaning of Section 3(37) of ERISA. 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 Agreement.
(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 Peninsula 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 Peninsula 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
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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 Peninsula nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Benefit
Plan. Peninsula 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 (x) entitle any employees of Peninsula or any
of its Subsidiaries to severance pay, (y) accelerate the time of
payment or vesting or trigger any payment of compensation or benefits
under, increase the amount payable or trigger any other material
obligation pursuant to, any of the Benefit Plans or (z) 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, neither Peninsula nor 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 Peninsula 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 Peninsula 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 Peninsula 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 Peninsula's knowledge, threatened,
nor is Peninsula 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) YEAR 2000 COMPLIANCE. Except as Previously Disclosed, (i)
Peninsula's computer software and related hardware (the "COMPUTER SYSTEM")
used for the storage and processing of data are or will be prior to the
year 2000 Year 2000 Compliant; (ii) none of Peninsula's Computer System,
operations or business functions of Peninsula will be materially adversely
affected by any third party's failure to be Year 2000 Compliant; to the
best of Peninsula's knowledge after due inquiry, all of its suppliers,
customers and third party providers are, or will be prior to year 2000,
Year 2000 Compliant; and (iii) Peninsula is taking or has taken, all
necessary and appropriate action to address and remedy any deficiencies in
its Computer System which would keep it from becoming Year 2000 Compliant.
As used herein, "YEAR
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2000 COMPLIANT" shall mean the ability of a Computer System to provide the
following functions, without human intervention, individually and in
combination with other products or systems: (i) consistently handle,
record, store, process and present dates and date-related information
before, during and after January 1, 2000, including but not limited to
accepting date input, performing calculations on dates or portion of dates,
and providing date output; (ii) function accurately in accordance with the
published specifications and without undue interruption, before, during,
and after January 1, 2000 (including leap year computations) without any
adverse change in operation associated with the advent of the year 2000;
(iii) respond to two-digit or four-digit dates and date-related input in a
way that resolves any ambiguity as to the year 2000 in a disclosed, defined
and predetermined manner, and store and provide output of dates and
date-related information in ways that are unambiguous as to the year 2000;
and (iv) suitably interact with other software and related hardware in a
way which does not compromise its year 2000 compliance capability.
(p) ENVIRONMENTAL MATTERS.
(i) Peninsula 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 Peninsula or any of its Subsidiaries, or any property
in which Peninsula 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 Peninsula 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
Peninsula nor any of its Subsidiaries is subject to liability for any
Hazardous Substance disposal or contamination on any third party
property; (v) neither Peninsula 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 Peninsula 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 Peninsula'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 Peninsula
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
Peninsula or any of its Subsidiaries or result in any restrictions on
the ownership, use, or transfer of any property pursuant to any
Environmental Law; and (viii) Peninsula has delivered to Western
copies of all environmental reports, studies, sampling data,
correspondence, filings and other environmental information in its
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possession or reasonably available to it relating to Peninsula, any
Subsidiary of Peninsula, 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.
(q) 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 Peninsula and its Subsidiaries have been duly filed,
(B) all Taxes due 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 Peninsula or its Subsidiaries. Peninsula has made
available to Western true and correct copies of the United States federal
income Tax Returns filed by Peninsula and its Subsidiaries for each of the
three most recent fiscal years ended on or before December 31, 1997.
Neither Peninsula 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 Peninsula'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
Peninsula's Regulatory Documents filed on or prior to the date hereof.
Neither Peninsula 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 Peninsula) or otherwise has any liability
for the Taxes of any person (other than Peninsula and its Subsidiaries).
As of the date hereof, neither Peninsula nor any of its Subsidiaries has
any reason to believe that any conditions exist that
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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.
(r) 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 Peninsula's own
account, or for the account of one or more of Peninsula's Subsidiaries or
their customers (all of which are listed on Peninsula'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 counterparties believed to be financially
responsible at the time; and each of them constitutes the valid and legally
binding obligation of Peninsula 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 Peninsula nor its Subsidiaries, nor to Peninsula's
knowledge, any other party thereto, is in breach of any of its obligations
under any such agreement or arrangement.
(s) BOOKS AND RECORDS. The books and records of Peninsula 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 Peninsula and its Subsidiaries.
(t) INSURANCE. Peninsula has Previously Disclosed all of the
insurance policies, binders, or bonds maintained by Peninsula or its
Subsidiaries ("INSURANCE POLICIES"). Peninsula and its Subsidiaries are
insured with reputable insurers against such risks and in such amounts as
the management of Peninsula reasonably has determined to be prudent for its
business, operations, properties and assets. All the Insurance Policies
are in full force and effect; Peninsula and its Subsidiaries are not in
material default thereunder; and all claims thereunder have been filed in
due and timely fashion.
(u) ACCOUNTING TREATMENT. As of the date hereof, Peninsula is
not aware of any reason why the Merger will fail to qualify for
"pooling-of-interests" accounting treatment.
(v) TRUST BUSINESS. Peninsula neither acts as trustee, agent,
fiscal agent, escrow agent, custodian or in another similar capacity for any
other person, nor otherwise performs any fiduciary or trust functions.
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5.04 REPRESENTATIONS AND WARRANTIES OF WESTERN. Subject to
Sections 5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding to the relevant paragraph below, Western
hereby represents and warrants to Peninsula as follows:
(a) ORGANIZATION, STANDING AND AUTHORITY; SUBSIDIARIES. Each of
Western and Merger Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of California. Each of
Western and Merger Sub 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. Each of Western and Merger Sub
has in effect all federal, state, local, and foreign governmental
authorizations necessary for it to own or lease its properties and assets
and to carry on its business as it is now conducted. Each of Western's
Significant Subsidiaries has been duly organized and is validly existing in
good standing under the laws of the jurisdiction of its organization, and
is duly qualified to do business and in good standing in the jurisdictions
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified.
(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 15,705,000 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) MERGER SUB CAPITAL STOCK. As of the date hereof, the
authorized capital stock of Merger Sub consists solely of 100 shares of
Merger Sub 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 Merger Sub 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 Merger Sub and their respective Boards of Directors.
This Agreement is a valid and legally binding agreement of each of Western
and Merger Sub enforceable in accordance with its terms (except as
enforceability may be limited by 12 U.S.C. 1818(b)(6)(D) or applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors'
rights or by general equity principles).
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(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 Merger Sub of this Agreement or to
consummate the Merger except for (A) the filing of applications and
notices, as applicable, with the Regulatory Authorities; (B) approval of
the listing on the Nasdaq of Western Common Stock to be issued in the
Merger; (C) the filing and declaration of effectiveness of the Registration
Statement; (D) the filing of an agreement of merger with the California
Secretary pursuant to the CGCL; (E) filing of an agreement of merger with
the Commissioner pursuant to the California Financial Code; (F) such
filings as are required to be made or approvals as are required to be
obtained under the securities or "Blue Sky" laws of various states in
connection with the issuance of Western Common Stock in the Merger; and (F)
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 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 Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and all other reports, registration statements, or
definitive proxy statements filed or to be filed by it or any of its
Significant Subsidiaries subsequent to December 31, 1997 under the
Securities Act, or under Sections 13(a), 13(d), 14 or 15(d) of the Exchange
Act, in the form filed or to be filed (collectively, the "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
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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 changes in 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 GAAP consistently applied during the periods involved,
except in each case as may be noted therein, subject to normal year-end
audit adjustments in the case of unaudited statements.
(ii) Since December 31, 1997, no event has occurred or
circumstance arisen that, individually or taken together with all other
facts, circumstances and events (described in any paragraph of Section 5.04
or otherwise), is reasonably likely to have a Material Adverse Effect with
respect to it.
(iii) Western has timely filed all reports, registrations and
statements, together with any amendments required to be made with respect
thereto, that they were required to file since December 31, 1996 with the
Regulatory Agencies, and all other material reports and statements required
to be filed by it since December 31, 1996, including, without limitation,
any report or statement required to be filed pursuant to the laws of the
United States or the State of California and the rules and regulations of
the Federal Reserve, the FDIC or the Commissioner, and has paid all fees
and assessments due and payable in connection therewith. As of their
respective dates, such reports, registrations and statements complied in
all material respects with all the laws, rules and regulations of the
applicable Regulatory Agency with which they were filed.
(h) COMPLIANCE WITH LAWS. Western and each of 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, 1995, no notification
or communication from any Governmental Authority (A) asserting that
Western or any of its Subsidiaries is not in compliance with any of
the statutes, regulations or ordinances which such Governmental
Authority enforces or (B) threatening to revoke any license,
franchise, permit or governmental authorization (nor, to Western's
knowledge, do any grounds for any of the foregoing exist).
(i) 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 Previously
Disclosed fees payable to ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. and Belle Plaine
Partners, Inc.
(j) ACCOUNTING TREATMENT; TAX MATTERS. As of the date hereof,
Western is aware of no reason 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.
(k) YEAR 2000 COMPLIANCE. Except as Previously Disclosed, (i)
Western's Computer System used for the storage and processing of data are
or will be prior to the year 2000 Year 2000 Compliant; (ii) none of
Western's Computer System, operations or business functions of Western will
be materially adversely affected by any third party's failure to be Year
2000 Compliant; to the best of Western's knowledge after due inquiry, all
of its suppliers, customers and third party providers are, or will be prior
to year 2000, Year 2000 Compliant; and (iii) Western is taking or has
taken, all necessary and appropriate action to address and remedy any
deficiencies in its Computer System which would keep it from becoming Year
2000 Compliant.
(l) LITIGATION. Other than as set forth in Western's Regulatory
Documents filed on or before the date hereof, no litigation, claim or other
proceeding before any court or governmental agency is pending against
Western or any of its Significant Subsidiaries and, to Western's knowledge,
no such litigation, claim or other proceeding has been threatened.
ARTICLE VI
COVENANTS
6.01 REASONABLE BEST EFFORTS. Subject to the terms and conditions
of this Agreement, each of Peninsula, Western and Merger Sub agrees to cooperate
with the other parties hereto and
29
to use its reasonable best efforts in good faith to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby and shall cooperate fully with the other
party hereto to that end.
6.02 SHAREHOLDER APPROVAL. Peninsula agrees to take, in accordance
with applicable law and the Peninsula Articles and the Peninsula 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 Peninsula's shareholders for consummation of
the Merger (including any adjournment or postponement, the "PENINSULA 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 Peninsula Board of its fiduciary duties as advised by counsel to the
Peninsula Board, the Peninsula Board shall recommend such approval, and
Peninsula shall take all reasonable, lawful action to solicit such approval by
its shareholders.
6.03 REGISTRATION STATEMENT. (a) Western agrees to prepare a
registration statement on Form S-4 or other applicable form (the "REGISTRATION
STATEMENT") to be filed by Western with the SEC in connection with the issuance
of Western Common Stock in the Merger (including the proxy statement and
prospectus and other proxy solicitation materials of Peninsula constituting a
part thereof (the "PROXY STATEMENT") and all related documents). Peninsula
shall have the right to review such Registration Statement and Peninsula 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. Peninsula agrees to file the Proxy Statement in
preliminary form with such of the Regulatory Authorities as may be required as
soon as reasonably practicable, and Western agrees to file the Registration
Statement with the SEC as soon as reasonably practicable. Each of Peninsula 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.
Peninsula agrees to furnish to Western all information concerning Peninsula, its
Subsidiaries, officers, directors and shareholders as may be reasonably
requested in connection with the foregoing.
(b) Each of Peninsula 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
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amendment or supplement thereto will, at the date of mailing to shareholders
and at the time of the Peninsula 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 Peninsula 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 Peninsula, promptly after Western
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of Western Common Stock for
offering or sale in any jurisdiction, of the initiation or threat of any
proceeding for any such purpose, or of any request by the SEC for the amendment
or supplement of the Registration Statement or for additional information.
6.04 PRESS RELEASES. Each of Peninsula and Western agrees that it
will not, without the prior approval of the other party, issue any press release
or written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or Nasdaq rules (provided that the issuing party shall nevertheless
provide the other party with notice of, and the opportunity to review, any such
press release or written statement).
6.05 ACCESS; INFORMATION. (a) Each of Peninsula and Western agrees
that upon reasonable notice and subject to applicable laws relating to the
exchange of information, each party shall afford the other party and the other
party's officers, employees, counsel, accountants and other authorized
representatives, such access during normal business hours throughout the period
prior to the Effective Time to the books, records (including, without
limitation, tax returns and work papers of independent auditors), properties,
personnel and to such other information as the requesting party may reasonably
request and, during such period, the providing party shall furnish promptly to
the requesting party (i) a copy of each material report, schedule and other
document filed by it pursuant to the requirements of federal or state securities
or banking laws, and (ii) all other information concerning the business,
properties and personnel of it as the requesting party may reasonably request.
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(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. 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.
6.06 ACQUISITION PROPOSALS. Peninsula agrees that it shall not, and
shall cause its Subsidiaries 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 Peninsula Board of its fiduciary duties as advised by counsel
to the Peninsula Board. Peninsula 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.
Peninsula shall promptly (within 24 hours) advise Western following the receipt
by Peninsula of any Acquisition Proposal and the substance thereof (including
the identity of the person making such Acquisition Proposal), and advise Western
of any developments with respect to such Acquisition Proposal immediately upon
the occurrence thereof.
6.07 AFFILIATE AGREEMENTS. (a) Not later than the 15th day prior to
the mailing of the Proxy Statement, Peninsula shall deliver to Western a
schedule of each person that, to the best of its knowledge, is or is reasonably
likely to be, as of the date of the Peninsula Meeting, deemed to be an
"affiliate" of Peninsula (each, a "PENINSULA AFFILIATE") as that term is used in
Rule 145 under the Securities Act or SEC Accounting Series Releases 130 and 135.
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(b) Peninsula shall use its reasonable best efforts to cause
each person who may be deemed to be a Peninsula 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.
6.08 BOARD ATTENDANCE. ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. or in his absence another
representative of Peninsula selected by him, shall be invited by Western to
attend all regular and special meetings of the Western Board and the Executive
Committee of the Western Board from the date hereof until the Effective Date.
Western shall, to the extent reasonably practicable, inform Peninsula of each
such meeting at least two business days in advance of each such meeting;
PROVIDED, HOWEVER, that the attendance of ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. shall not be
permitted at any meeting, or portion thereof, for the purpose of discussing
transactions contemplated by this Agreement or the obligations of Western or
Merger Sub under this Agreement. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or in his absence another
representative of Peninsula selected by him, shall be invited by Peninsula to
attend all regular and special meetings of the Peninsula Board and the Executive
Committee of the Peninsula Board from the date hereof until the Effective Date.
Peninsula shall, to the extent reasonably practicable, inform Western of each
such meeting at least two business days in advance of each such meeting;
PROVIDED, HOWEVER, that the attendance of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall not be
permitted at any meeting, or portion thereof, for the purpose of discussing
transactions contemplated by this Agreement or the obligations of Western under
this Agreement.
6.09 CERTAIN POLICIES. On or after the Regulatory Approval Date,
Peninsula shall, consistent with GAAP and on a basis mutually satisfactory to it
and Western, modify and change its loan, litigation and real estate valuation
policies and practices (including loan classifications and levels of reserves)
so as to be applied on a basis that is consistent with that of Western.
6.10 NASDAQ LISTING. Western agrees to use its reasonable best
efforts to list, prior to the Effective Date, on the Nasdaq, subject to official
notice of issuance, the shares of Western Common Stock to be issued to the
holders of Peninsula Common Stock in the Merger.
6.11 REGULATORY APPLICATIONS. (a) Western and Peninsula 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 Peninsula shall use their reasonable best
efforts to make all required bank regulatory filings, including the appropriate
filing with the Regulatory Authorities. Each of Western and Peninsula 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
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parties hereto agrees to act reasonably and as promptly as practicable. Each
party hereto agrees that it will consult with the other party hereto with
respect to the obtaining of all material permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary or
advisable to consummate the transactions contemplated by this Agreement and
each party will keep the other party appraised of the status of material
matters relating to completion of the transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other party
with all information concerning itself, its Subsidiaries, directors, officers
and shareholders and such other matters as may be reasonably necessary or
advisable in connection with any filing, notice or application made by or on
behalf of such other party or any of its Subsidiaries to any third party or
Governmental Authority.
6.12 INDEMNIFICATION; DIRECTOR AND OFFICERS' INSURANCE. (a) From and
after the Effective Time through the sixth anniversary of the Effective Date,
Western agrees to indemnify and hold harmless each present and former director
and officer of Peninsula or any Subsidiary of Peninsula 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
Peninsula Articles or the Peninsula By-Laws in effect on the date hereof, and
Western shall also advance expenses as incurred to the extent permitted under
California law and the Peninsula Articles and the Peninsula By-Laws.
(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
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counsel for the Indemnified Parties in any jurisdiction promptly as statements
thereof are received, (ii) the Indemnified Parties will cooperate in the
defense of any such matter and (iii) Western shall not be liable for any
settlement effected without its prior written consent (which consent shall not
be unreasonably withheld); and PROVIDED, FURTHER, that Western shall not have
any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final and nonappealable, that the indemnification of such
Indemnified Party in the manner contemplated hereby is not permitted or is
prohibited by applicable law.
(c) For a period of six years after the Effective Time, Western
shall use its reasonable best efforts to cause to be maintained in effect the
current policies of directors' and officers' liability insurance maintained by
Peninsula (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 Peninsula 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 Peninsula to, and Peninsula shall, purchase insurance
coverage, on such terms and conditions as shall be acceptable to Western,
extending for a period of six years Peninsula'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 Subsection (c).
(d) If Western or any of its successors or assigns (i) shall
consolidate with or merge into any other corporation or entity and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then and in each such
case, proper provision shall be made so that the successors and assigns of
Western shall assume the obligations set forth in this Section 6.12
6.13 BENEFIT PLAN. Western shall, from and after the Effective Time,
(i) provide former employees of Peninsula who remain as employees of Western or
any of its Significant Subsidiaries with employee benefit plans no less
favorable in the aggregate than those provided to similarly situated employees
of Western or its Significant Subsidiaries, including, but not limited to,
allowing such employees to participate in Western's stock option plan in
accordance with the policies of Western with respect to such stock option plan,
and (ii) with respect to former employees of Peninsula who remain as employees
of Western or any of its Significant
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Subsidiaries, cause each employee benefit plan of Western or its Significant
Subsidiaries in which such employees are eligible to participate to take into
account for purposes of eligibility and vesting thereunder the service of such
employees with Peninsula as if such service were with Western or its
Significant Subsidiaries, to the same extent such service was credited under a
comparable plan of Peninsula. Western agrees that all accrued bonuses for 1998
will be paid to former employees of Peninsula in accordance with Peninsula's
past practices. Notwithstanding the foregoing, Peninsula consents and
covenants that from and after the Effective Date, Peninsula's Benefit Plans
will be governed, managed and/or terminated by Western, all within Western's
sole discretion.
6.14 ACCOUNTANTS' LETTERS. Each of Peninsula 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 other party, and such directors and
officers, in form and substance customary for "comfort" letters delivered by
independent accountants in accordance with Statement of Accounting Standards No.
72.
6.15 NOTIFICATION OF CERTAIN MATTERS. Each of Peninsula and Western
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) is reasonably likely, individually or taken together with all
other facts, events and circumstances known to it, to result in any Material
Adverse Effect with respect to it or (ii) would cause or constitute a material
breach of any of its representations, warranties, covenants or agreements
contained herein.
6.16 SHAREHOLDER AGREEMENTS. Certain directors and certain officers
who are shareholders of Peninsula, 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 and
EXHIBIT C hereto (the "SHAREHOLDER AGREEMENTS"), committing such persons, among
other things, (i) to vote their shares of Peninsula Common Stock in favor of the
Agreement at the Peninsula Meeting and (ii) to certain representations
concerning the ownership of Peninsula Common Stock and Western Common Stock to
be received in the Merger.
6.17 PENINSULA NAME. Except as set forth in the proviso to this
Section 6.17, for a period of two years following the Effective Date, Western
agrees to operate the business currently operated by Peninsula as a separate
division or business unit under the name of Peninsula; PROVIDED, HOWEVER, that
this covenant shall terminate automatically upon Western's merger, acquisition
or consolidation with, by or into any other Person.
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6.18 EMPLOYEE AGREEMENTS. Peninsula will use its reasonable best
efforts to enter into employment agreements with each of ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, (together the
"Executives"), on terms and conditions mutually satisfactory to Western and the
Executives. Negotiations with respect to such agreements shall commence not
later than 30 calendar days after the date hereof and shall be concluded as soon
thereafter as practicable and in any event not later than 60 calendar days after
the date hereof. In the event that any of the Executives do not enter into the
employment agreements contemplated by this Section 6.18, then such Executive's
existing employment agreement shall govern. Western acknowledges and agrees
that after the consummation of the Merger, the Surviving Corporation will
continue to be obligated to perform its obligations under the employment
agreements and the supplemental executive retirement pay agreements with each
such Executive. In accordance with the respective terms thereof, including the
provisions relating to a Change in Control as defined therein, except as such
existing employment agreements are modified in the letter agreement executed by
each of the Executives on the date hereof.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each of Western and Peninsula to consummate the Merger
is subject to the fulfillment or written waiver by Western and Peninsula prior
to the Effective Time of each of the following conditions:
(a) SHAREHOLDER APPROVAL. This Agreement and the Merger shall
have been duly adopted by the requisite vote of the shareholders of
Peninsula.
(b) REGULATORY APPROVALS. All regulatory approvals or waivers
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
or waivers shall contain any conditions, restrictions or requirements which
the Western Board reasonably determines would (i) following the Effective
Time, have a Material Adverse Effect on the Surviving Corporation and its
Subsidiaries taken as a whole or (ii) reduce the benefits of the
transactions contemplated hereby to such a degree that Western would not
have entered into this Agreement had such conditions, restrictions or
requirements been known at the date hereof.
(c) NO INJUNCTION. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, judgment,
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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.
7.02 CONDITIONS TO OBLIGATION OF PENINSULA. The obligation of
Peninsula to consummate the Merger is also subject to the fulfillment or written
waiver by Peninsula 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 Peninsula 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 Peninsula
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) TAX OPINION. Peninsula shall have received an opinion of
Deloitte & Touche LLP, dated the Effective Date, to the effect that, on the
basis of facts, representations and assumptions set forth in such opinion,
(i) the Merger constitutes a "reorganization" within the meaning of
Section 368 of the Code and (ii) no gain or loss will be recognized by
shareholders of Peninsula who receive shares of Western Common Stock in
exchange for shares of Peninsula Common Stock, except with respect to cash
received in lieu of fractional
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share interests. In rendering its opinion, Deloitte & Touche LLP may
require and rely upon representations contained in letters from Peninsula,
Western and shareholders of Peninsula.
(d) ACCOUNTANTS' LETTERS. Peninsula shall have received the
letters referred to in Section 6.14 from Western's independent auditors.
(e) ACCOUNTING TREATMENT. Peninsula shall have received from
Peninsula'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.
(f) DIRECTOR. Western shall have adopted resolutions sufficient to
appoint ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. as a director of Western as of the Effective
Time and shall have caused ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. to be appointed as a
director of Peninsula as of the Effective Time, or if such person is unable
to serve, such other current director of Peninsula as shall be mutually
satisfactory to Western and Peninsula.
(g) FAIRNESS OPINION. Peninsula shall have received the written
opinion of NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC to the effect that, as of
a date within five days of the mailing of the Proxy Statement to the
shareholders of Peninsula in connection with the Peninsula Meeting, the
consideration to be received by the holders of the Peninsula Company Stock
in the Merger is fair to the holders of the Peninsula Common Stock from a
financial point of view.
7.03 CONDITIONS TO OBLIGATION OF WESTERN. The obligation of Western
to consummate the Merger is also subject to the fulfillment or written waiver by
Western prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Peninsula 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
Peninsula by the Chief Executive Officer and the Chief [Financial] Officer
of Peninsula to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF PENINSULA. Peninsula 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
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Date, signed on behalf of Peninsula by the Chief Executive Officer and the
Chief Financial Officer of Peninsula 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 Peninsula, Western and shareholders of Peninsula.
(d) ACCOUNTANTS' LETTERS. Western shall have received the
letters referred to in Section 6.14 from Peninsula's independent auditors.
(e) ACCOUNTING TREATMENT. Western shall have received from KPMG
Peat Marwick LLP, Western's independent auditors, letters, dated the date
of or shortly prior to each of the mailing date of the Proxy Statement and
the Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
(f) PENINSULA FINANCIAL TESTS. As of the month end preceding the
Effective Time, but without giving effect to any costs related to the
Merger or any changes effected as a result of Section 6.09, Peninsula's
shareholders' equity and allowance for credit losses shall not be less than
the respective amounts set forth on Peninsula's call report as of June 30,
1998, and Western shall have received a certificate, dated the Effective
Date, signed on behalf of Peninsula by its Chief Financial Officer to such
effect.
(g) DIRECTOR RESIGNATIONS. Western shall have received the written
resignation of each director (in such director's capacity as director) of
Peninsula, effective as of the Effective Time.
ARTICLE VIII
TERMINATION
8.01 TERMINATION. This Agreement may be terminated, and the Merger
may be abandoned:
(a) MUTUAL CONSENT. At any time prior to the Effective Time, by
the mutual consent of Western and Peninsula, if the Board of Directors of
each so determines by vote of a majority of the members of its entire
Board.
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(b) BREACH. At any time prior to the Effective Time, by Western
or Peninsula, 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 Peninsula, 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 March 31, 1999, except to the extent that the failure of the
Merger then to be consummated arises out of or results from the knowing
action or inaction of the party seeking to terminate pursuant to this
Section 8.01(c).
(d) NO APPROVAL. By Peninsula or Western, if its Board of
Directors so determines by a vote of a majority of the members of its
entire Board, 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
Peninsula Meeting.
(e) FAILURE TO RECOMMEND, ETC. At any time prior to the
Peninsula Meeting, by Western if the Peninsula Board shall have failed to
make its recommendation referred to in Section 6.02, withdrawn such
recommendation or modified or changed such recommendation in a manner
adverse in any respect to the interests of Western.
(f) WESTERN STOCK. By Peninsula 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 than $36.656 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) Peninsula 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 an event set forth in clause (i) shall have
occurred and Peninsula fails to timely deliver the notice referred to in
this clause (ii), Peninsula shall have the right to terminate if any such
event subsequently occurs and Peninsula 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(f) shall be
appropriately adjusted.
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As used in this Section 8.01(f), (v) "WESTERN COMMON STOCK PRICE
PERCENTAGE" means the percentage determined by dividing the Ten Day Average
Price by $43.125 (as such amount may be adjusted pursuant to this clause
(f)); (w) "BKX INDEX PERCENTAGE" means the percentage determined by
dividing (i) the product of (A) the Ten Day Average ▇▇▇▇▇ Bank Index times
(B) 0.9 by (ii) the ▇▇▇▇▇ Bank Index as of the date hereof; (x) "TEN DAY
AVERAGE PRICE" means the volume weighted average sales price per share of
Western Common Stock for a Ten Day Period, which volume weighted average
shall be determined in a manner consistent with Section 3.01(a) hereof; (y)
"TEN DAY AVERAGE ▇▇▇▇▇ BANK INDEX" means the average of the ▇▇▇▇▇ Bank
Index for a Ten Day Period; and (z) "TEN DAY PERIOD" means any period of
ten (10) consecutive Trading Days occurring after the date hereof.
(g) ACQUISITION PROPOSAL. This Agreement may be terminated by
Peninsula by written notice to Western if Peninsula (i) receives an
Acquisition Proposal, (ii) receives the advice of its outside counsel that
to proceed with the Merger will violate the fiduciary duties of the
Peninsula Board to Peninsula's shareholders in light of such Acquisition
Proposal and (iii) after receiving such advice, determines to accept such
proposal; PROVIDED, HOWEVER, that Peninsula shall not be entitled to
terminate this Agreement pursuant to this Section 8.01(g) unless it shall
have provided Western with written notice of such a possible determination
(which written notice will inform Western of the material terms and
conditions of the proposal, including the identity of the proponent) not
less than two business days prior to such determination.
8.02 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, no party to this Agreement shall have any liability or further
obligation to any other party hereunder except (i) as set forth in Section 8.03
or Section 9.01 and (ii) that termination will not relieve a breaching party
from liability for any willful breach of this Agreement giving rise to such
termination.
8.03 TERMINATION FEE.
(a) MATERIAL BREACH BY WESTERN. Should Peninsula 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 Peninsula, but in no event later than five
business days after the date of such request, pay Peninsula a fee equal to
Peninsula'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 Peninsula shall be in
material breach of its obligations hereunder and Western shall owe no
further duty or liability on account of this Agreement to Peninsula.
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(b) MATERIAL BREACH BY PENINSULA; 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 Peninsula), Peninsula 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 Peninsula shall owe no further duty or liability on account of this
Agreement to Western. In the event that there is a termination as a result
of Peninsula entering into an Acquisition Proposal pursuant to Section
8.01(g), Peninsula 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 Peninsula shall owe no further duty or liability on account of this
Agreement to Western except under the Stock Option Agreement.
ARTICLE IX
MISCELLANEOUS
9.01 SURVIVAL. No representations, warranties, agreements and
covenants contained in this Agreement shall survive the Effective Time (other
than Sections 6.12 and 6.13 and this Article IX which shall survive the
Effective Time) or the termination of this Agreement if this Agreement is
terminated prior to the Effective Time (other than Sections 6.03(b), 6.05(b),
8.02, 8.03 and this Article IX which shall survive such termination).
9.02 WAIVER; AMENDMENT. Prior to the Effective Time, any provision
of this Agreement may be (i) waived by the party benefitted by the provision,
or (ii) amended or modified at any time, by an agreement in writing between the
parties hereto executed in the same manner as this Agreement, except that after
the Peninsula Meeting, this Agreement may not be amended if it would violate the
CGCL or reduce the consideration to be received by Peninsula shareholders in the
Merger.
9.03 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 GOVERNING LAW; WAIVER OF JURY TRIAL. This Agreement shall be
governed by, and interpreted in accordance with, the laws of the State of
California applicable to contracts made and to be performed entirely within such
State (except to the extent that mandatory provisions of Federal law are
applicable). Each of the parties hereto hereby irrevocably waives any and all
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right to trial by jury in any legal proceeding arising out of or related to this
Agreement or the transactions contemplated hereby.
9.05 EXPENSES. Each party hereto will bear all expenses incurred by
it in connection with this Agreement and the transactions contemplated hereby.
9.06 NOTICES. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with 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 Peninsula, to:
Peninsula Bank of San Diego
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Reitner & Stuart
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Barnet Reitner
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Western, to:
Western Bancorp
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This
Agreement and the Stock Option Agreement 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). Except
for Section 6.12, nothing in this Agreement expressed or implied, is intended to
confer upon any person, other than the parties hereto or their respective
successors, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
9.08 INTERPRETATION; EFFECT. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of, or Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." No provision
of this Agreement shall be construed to require Peninsula, 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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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.
PENINSULA BANK OF SAN DIEGO
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Chairman and
Chief Executive Officer
WESTERN BANCORP
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive
Officer
PORTOLA MERGER SUB
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
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