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AGREEMENT AND PLAN OF MERGER
DATED AS OF THE 30TH DAY OF JULY, 1997
AND AMENDED AND RESTATED
ON THE 29TH DAY OF SEPTEMBER, 1997
BY AND AMONG
WESTERN BANCORP,
WESTERN BANK
AND
SANTA ▇▇▇▇▇▇ BANK
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TABLE OF CONTENTS
PAGE
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RECITALS.................................................................................................. A-1
ARTICLE I. THE MERGERS
SECTION 1.1. Structure of the Merger................................................................ A-2
SECTION 1.2. Effect on Outstanding Shares........................................................... A-2
SECTION 1.3. Election Procedures; Allocation........................................................ A-3
SECTION 1.4. Exchange Procedures.................................................................... A-4
SECTION 1.5. Options................................................................................ A-6
ARTICLE II. CONDUCT PENDING THE MERGER
SECTION 2.1 Conduct of Business Prior to the Effective Time........................................ A-6
SECTION 2.2 Forbearance............................................................................ A-6
SECTION 2.3 Cooperation............................................................................ A-8
ARTICLE III. REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of the Company.......................................... A-8
SECTION 3.2 Representations and Warranties of Western.............................................. A-17
ARTICLE IV. COVENANTS
SECTION 4.1 Acquisition Proposals.................................................................. A-25
SECTION 4.2 Certain Policies of the Company........................................................ A-26
SECTION 4.3 Employee Benefits...................................................................... A-26
SECTION 4.4 Access and Information................................................................. A-26
SECTION 4.5 Certain Filings, Consents and Arrangements............................................. A-27
SECTION 4.6 Indemnification; Directors' and Officers' Insurance.................................... A-27
SECTION 4.7 Additional Agreements.................................................................. A-28
SECTION 4.8...... Publicity.............................................................................. A-28
SECTION 4.9 Registration Statement................................................................. A-28
SECTION 4.10 Shareholders' Meetings................................................................. A-29
SECTION 4.11 Notification of Certain Matters........................................................ A-29
SECTION 4.12 No Acquisitions of Company Common Stock................................................ A-29
SECTION 4.13 Securities Act......................................................................... A-29
SECTION 4.14 Tax-Free Reorganization Treatment...................................................... A-30
SECTION 4.15 Shareholder Agreements................................................................. A-30
SECTION 4.16 Director and Officer Resignations...................................................... A-30
ARTICLE V. CONDITIONS TO CONSUMMATION
SECTION 5.1 Conditions to All Parties' Obligations................................................. A-30
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PAGE
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SECTION 5.2 Conditions to the Obligations of Western............................................... A-31
SECTION 5.3 Conditions to the Obligation of the Company............................................ A-32
ARTICLE VI. TERMINATION
SECTION 6.1 Termination............................................................................ A-32
SECTION 6.2 Effect of Termination.................................................................. A-33
ARTICLE VII. EFFECTIVE DATE AND EFFECTIVE TIME
SECTION 7.1 Effective Date and Effective Time...................................................... A-34
ARTICLE VIII. OTHER MATTERS
SECTION 8.1 Certain Definitions; Interpretation.................................................... A-34
SECTION 8.2 Survival............................................................................... A-34
SECTION 8.3 Waiver................................................................................. A-35
SECTION 8.4 Counterparts........................................................................... A-35
SECTION 8.5 Governing Law.......................................................................... A-35
SECTION 8.6 WAIVER OF JURY TRIAL................................................................... A-35
SECTION 8.7 Expenses............................................................................... A-35
SECTION 8.8 Notices................................................................................ A-35
SECTION 8.9 Entire Agreement; Etc.................................................................. A-36
SECTION 8.10 Assignment............................................................................. A-36
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AGREEMENT AND PLAN OF MERGER, dated as of the 30th day of July, 1997, and
amended and restated on the 29th day of September, 1997 (this "Plan"), by and
among Western Bancorp, a California corporation ("Western"), Western Bank, a
California banking corporation ("Western Bank"), and Santa ▇▇▇▇▇▇ Bank, a
California banking corporation (the "Company").
RECITALS:
A. WESTERN. Western is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of California, with its
principal executive offices located in Newport Beach, California. As of the date
hereof, Western has (i) 100 million authorized shares of common stock, no par
value ("Western Common Stock"), of which no more than 7,514,155 shares were
outstanding as of the date hereof (including 444,044 shares to be issued upon
the completion of the exercise of certain options and warrants), (ii) 5 million
authorized shares of preferred stock, none of which were outstanding, and (iii)
no other class of capital stock authorized. Western is a bank holding company
duly registered with the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") under the Bank Holding Company Act of 1956, as amended
(the "BHC Act").
B. WESTERN RIGHTS, ETC. Western does not have any shares of its capital
stock reserved for issuance, any outstanding option, call or commitment relating
to shares of its capital stock or any outstanding securities, obligations or
agreements convertible into or exchangeable for, or giving any person any right
(including, without limitation, preemptive rights) to subscribe for or acquire
from it, any shares of its capital stock (collectively, "Western Rights"),
except pursuant to the options, warrants, awards and other rights described on
Annex 1 (which includes details on the terms and conditions of any such Western
Rights, including the grantee, vesting periods and exercise prices of any
options and the exercise price of any warrants).
C. WESTERN BANK. Western Bank is a banking corporation duly incorporated,
validly existing and in good standing under the laws of the State of California,
with its principal executive offices located in Los Angeles, California. As of
the date hereof, Western owns all of the issued and outstanding common stock, no
par value, of Western Bank ("Western Bank Common Stock"), of which there were no
shares to be issued upon the completion of the exercise of options, warrants and
awards. Western Bank is a bank licensed by the California Commissioner of
Financial Institutions (the "Commissioner").
D. WESTERN BANK RIGHTS, ETC. Western Bank does not have any shares of its
capital stock reserved for issuance, any outstanding option, call or commitment
relating to shares of its capital stock or any outstanding securities,
obligations or agreements convertible into or exchangeable for, or giving any
person any right (including, without limitation, preemptive rights) to subscribe
for or acquire from it, any shares of its capital stock.
E. THE COMPANY. The Company is a banking corporation duly incorporated,
validly existing and in good standing under the laws of the State of California,
with its principal executive offices located in Santa Monica, California. As of
the date hereof, the Company has (i) 50,000,000 authorized shares of common
stock, par value $3.00 per share ("Company Common Stock"), of which no more than
7,077,332 shares were outstanding as of the date hereof (including 16,224 shares
to be issued upon the completion of the exercise of certain options, warrants
and awards) and (ii) no other class of capital stock authorized. The Company is
a bank licensed by the Commissioner.
F. COMPANY RIGHTS, ETC. The Company does not have any shares of its
capital stock reserved for issuance, any outstanding option, call or commitment
relating to shares of its capital stock or any outstanding securities,
obligations or agreements convertible into or exchangeable for, or giving any
person any right (including, without limitation, preemptive rights) to subscribe
for or acquire from it, any shares of its capital stock (collectively, "Company
Rights"), except pursuant to the options, warrants, awards and other rights
described on Annex 2 (which includes details on the terms and conditions of any
Company Rights, including the grantee, vesting periods and exercise prices of
any options).
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G. BOARD APPROVALS. The respective Boards of Directors of Western, Western
Bank and the Company have duly approved this Plan and have duly authorized its
execution and delivery.
H. INTENTION OF THE PARTIES. Except under the circumstances described in
Section 1.3(c)(iii) of this Plan, it is the intention of the parties to this
Plan that the Merger (as hereinafter defined) for federal income tax purposes
shall qualify as a "reorganization" within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code").
In consideration of their mutual promises and obligations hereunder, the
parties hereto adopt and make this Plan and prescribe the terms and conditions
hereof and the manner and basis of carrying it into effect, which shall be as
follows:
ARTICLE I. THE MERGERS
SECTION 1.1. STRUCTURE OF THE MERGER. (a) On the Effective Date (as
defined in Section 7.1), the Company will merge (the "Merger", which term shall
include the merger identified in Section 1.3(c)(iii)(B) unless the context
otherwise requires) with and into Western Bank, with Western Bank being the
surviving corporation (the "Surviving Corporation"), pursuant to the provisions
of, and with the effect provided in, the California General Corporation Law
("CGCL").
(b) At the Effective Time (as defined in Section 7.1), unless the merger
identified in Section 1.3(c)(iii)(B) occurs, the articles of incorporation and
by-laws of the Surviving Corporation shall be the articles of incorporation and
by-laws of Western Bank in effect immediately prior to the Effective Time,
except that the articles of incorporation shall provide that the name of the
Surviving Corporation shall be Santa ▇▇▇▇▇▇ Bank. At the Effective Time, if the
merger identified in Section 1.3(c)(iii)(B) occurs, then the articles of
incorporation and by-laws of the Surviving Corporation shall be the articles of
incorporation and by-laws of the Company in effect immediately prior to the
Effective Time and the parties shall cause the articles of incorporation and
bylaws of the corporation resulting from the subsequent combination of the
Surviving Corporation and Western Bank (as contemplated in Section 1.3(c)(iii))
to be the articles of incorporation and by-laws of Western Bank immediately
prior to the Effective Time, except that the articles of incorporation shall
provide that the name of such resulting corporation shall be Santa ▇▇▇▇▇▇ Bank.
(c) At the Effective Time, the directors and officers of the Surviving
Corporation shall be the directors and officers of Western Bank except that
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be elected to the board of directors and shall be named
the Chairman, President and Chief Executive Officer of the Surviving
Corporation.
SECTION 1.2. EFFECT ON OUTSTANDING SHARES. (a) (i) By virtue of the
Merger, automatically and without any action on the part of the holder thereof,
each share of Company Common Stock issued and outstanding at the Effective Time
(other than (x) shares the holder of which, pursuant to any applicable law
providing for dissenters' or appraisal rights, is entitled to receive payment in
accordance with the provisions of any such law, such holder to have only the
rights provided in any such law (the "Dissenters' Shares"), and (y) shares held
directly or indirectly by Western, other than shares held in a fiduciary
capacity or in satisfaction of a debt previously contracted) (the aggregate
number of all such shares being hereinafter referred to as the "Outstanding
Company Share Number") shall become and be converted into the right to receive,
at the election of each holder thereof, but subject to the election and
allocation procedures of this Section 1.2(a), the other provisions of this
Section 1.2 and Section 1.3, either:
(A) $28 in cash without interest (the "Cash Consideration"), or
(B) 0.875 shares of Western Common Stock (the "Conversion Number")
(as it may be increased as described in this Section 1.2(a), the "Stock
Consideration");
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provided that, subject to Section 1.3(c)(iv), no more than 50% of the
outstanding shares of Company Common Stock shall be converted into the right
to receive Stock Consideration (such number of shares of Company Common
Stock, the "Stock Number"), and provided further that, at any time prior to
the Company's Meeting, Western, at its sole option, may increase the Stock
Consideration, and thereafter in the event that the condition set forth in
Section 5.1(g) is not fulfilled or waived, Western, at its sole option, may
increase the Stock Consideration to the extent necessary to permit such
condition to be fulfilled.
(b) As of the Effective Time, each share of Company Common Stock held
directly or indirectly by Western, other than shares held in a fiduciary
capacity or in satisfaction of a debt previously contracted, shall be canceled
and retired and cease to exist, and no exchange or payment shall be made with
respect thereto. If Western effects a stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares or similar
transaction, after the date hereof and before the Effective Time, the Conversion
Number shall be appropriately adjusted.
(c) No fractional shares of Western Common Stock shall be issued pursuant
hereto. In lieu of the issuance of any fractional share of Western Common Stock
pursuant to Section 1.2(a), a cash adjustment will be paid to holders in respect
of any fractional share of Western Common Stock that would otherwise be
issuable. The amount of such cash adjustment (the "Cash In Lieu") shall be equal
to such fractional proportion of the price of a share of Western Common Stock as
of the close of business on the day immediately prior to the Effective Time (the
"Value Date").
(d) The shares of Western Bank Common Stock issued and outstanding
immediately prior to the Effective Time shall remain outstanding and unchanged
after the Merger and shall thereafter constitute all of the issued and
outstanding shares of the capital stock of the Surviving Corporation.
SECTION 1.3. ELECTION PROCEDURES; ALLOCATION. (a) Subject to allocation
and proration in accordance with the provisions of this Section 1.3, each record
holder of shares of the Company Common Stock (other than Dissenters' Shares and
shares of Company Common Stock to be canceled in accordance with Section 1.2(b))
immediately prior to the Election Deadline (as defined below) will be entitled
to elect to receive Cash Consideration in respect of all or some of the shares
of Company Common Stock ("Cash Election Shares") formerly held by such record
holder. All such elections (each, an "Election") shall be made on a form
designed for that purpose by Western and reasonably acceptable to the Company
(an "Election Form"). Any shares of Company Common Stock (other than Dissenters'
Shares and shares of Company Common Stock to be canceled in accordance with
Section 1.2(b)) with respect to which the record holder thereof shall not, as of
the Election Deadline, have properly submitted to the Exchange Agent (as defined
below) a properly completed Election Form shall be deemed to be shares with
respect to which such holder has elected to receive the Stock Consideration
("Stock Election Shares"). A record holder acting in different capacities or
acting on behalf of other persons in any way shall be entitled to submit an
Election Form for each capacity in which such record holder so acts with respect
to each person for which it so acts.
(b) Not later than the 35th calendar day prior to the anticipated Effective
Date or such other date as the Parties may agree in writing (the "Mailing
Date"), Western shall mail an Election Form, together with appropriate
transmittal materials, to each holder of record of Company Common Stock
immediately prior to the Mailing Date. To be effective, an Election Form must be
properly completed, signed and actually received by the Exchange Agent not later
than 5:00 p.m., California time, on the 30th calendar day after the Mailing Date
(or such other time and date as Western and the Company may mutually agree)(the
"Election Deadline"), and accompanied by the certificates formerly representing
all the shares of Company Common Stock ("Certificates") as to which the Election
is being made (or an appropriate guarantee of delivery by an eligible
organization). Such bank or trust company as Western shall elect (which may be a
subsidiary of Western) shall act as exchange agent (the "Exchange Agent").
Western shall have reasonable discretion, which it may delegate in whole or in
part to the Exchange Agent, to determine whether Election
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Forms have been properly completed, signed and timely submitted or to disregard
defects in Election Forms; such decisions of Western (or of the Exchange Agent)
shall be conclusive and binding. Neither Western nor the Exchange Agent shall be
under any obligation to notify any person of any defect in an Election Form
submitted to the Exchange Agent. The Exchange Agent and Western shall also make
all computations contemplated by this Section 1.3, and all such computations
shall be conclusive and binding on the former holders of Company Common Stock
absent manifest error. Shares of Company Common Stock covered by an Election
Form which is not effective shall be treated as Stock Election Shares. Any
Election may be revoked or changed by the person submitting such Election Form
to the Exchange Agent by written notice to the Exchange Agent only if such
notice is actually received by the Exchange Agent on or prior to the Election
Deadline.
(c) Within 5 days after the Election Deadline, unless the Effective Time has
not yet occurred, in which case as soon thereafter as practicable, Western shall
cause the Exchange Agent to effect the allocation among the holders of Company
Common Stock of rights to receive Stock Consideration or Cash Consideration in
the Merger in accordance with the Election Forms as follows:
(i) If the number of Stock Election Shares (on the basis of Election
Forms received as of the Election Deadline) is less than the Stock Number,
subject to Section 1.3(c)(iii) below, (A) each Stock Election Share shall be
deemed to be converted into the right to receive the Stock Consideration and
(B) each Cash Election Share shall be deemed to be converted into the right
to receive the Cash Consideration.
(ii) Subject to Section 1.3(c)(iv) below, if the number of Stock
Election Shares is greater than the Stock Number, then (A) each Cash
Election Share shall be deemed to be converted into the right to receive
Cash Consideration and (B) Stock Election Shares shall be deemed converted
into Cash Election Shares, on a pro-rata basis for each record holder of
Company Common Stock with respect to those shares, if any, of such record
holder that are Stock Election Shares, so that the number of Stock Election
Shares not so converted shall equal as closely as practicable the Stock
Number; each such Stock Election Share so converted into a Cash Election
Share shall be deemed to be converted into the right to receive the Cash
Consideration and each Stock Election Share not so converted shall be deemed
to be converted into the right to receive the Stock Consideration.
(iii) Notwithstanding the foregoing, if the aggregate amount of Cash
Consideration to be paid in the Merger according to the allocation
procedures set forth above plus (i) the amount of Cash in Lieu distributed
to former holders of Company Common Stock in the Merger and (ii) amounts
paid or payable with respect to any Dissenters' Shares (the "Cash Amount")
would exceed 60% of the sum of the Cash Amount and the aggregate value of
the Stock Consideration (determined by reference to the closing price per
share of Western Common Stock, as reported on the NASDAQ National Market, on
the Value Date) to be delivered in the Merger, and Western does not elect to
increase the Stock Consideration to permit the condition set forth in
Section 5.1(g) to be fulfilled, such condition shall be waived and each
share of Company Common Stock shall be deemed to be converted into the right
to receive the Cash Consideration. In such event, (A) the covenant in
Section 4.14 shall be deemed waived by all parties hereto, (B) the Merger
shall be effected by the merger of a DE NOVO wholly-owned Subsidiary of
Western into the Company, with the Company being the Surviving Corporation
for all purposes herein, (C) the Effective Time shall be not later than 10
business days after the Election Deadline and (D) the agreement of merger to
be executed and filed on the Effective Date pursuant to Section 7.1 shall
reflect the foregoing. Promptly after such merger, the Surviving Corporation
shall combine with Western Bank, under the name Santa ▇▇▇▇▇▇ Bank.
(iv) At the sole discretion of Western, the number of Stock Election
Shares may be greater than the Stock Number.
SECTION 1.4. EXCHANGE PROCEDURES. (a) As of the Effective Time, Western
shall deposit, or shall cause to be deposited, with the Exchange Agent, for the
benefit of the holders of shares of Company
A-4
Common Stock, for exchange in accordance with Section 1.3 and this Section 1.4,
the Cash Consideration, the Stock Consideration and the Cash In Lieu (such Cash
Consideration, Stock Consideration and Cash in Lieu, together with any dividends
or distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund") to be paid pursuant to Sections 1.2 and 1.3 and deposited
pursuant to this Section 1.4 in exchange for outstanding shares of Company
Common Stock.
(b) The letter of transmittal which accompanies the Election Form (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent) shall be in a form and contain any other provisions as Western may
reasonably determine. Upon the proper surrender of a Certificate to the Exchange
Agent, together with a properly completed and duly executed letter of
transmittal, the holder of such Certificate shall be entitled to receive in
exchange therefor the Cash Consideration, Stock Consideration and/or Cash in
Lieu as provided herein and unpaid dividends and distributions, if any, which
such holder has the right to receive in respect of the Certificate surrendered
pursuant to the provisions hereof, and the Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on the Cash
Consideration or the Cash In Lieu and unpaid dividends and distributions, if
any, payable to holders of Certificates. In the event of a transfer of ownership
of any shares of Company Common Stock not registered in the transfer records of
the Company, a certificate representing the proper number of shares of Western
Common Stock and/or a check for the Cash Consideration or Cash In Lieu, may be
issued to the transferee if the Certificate representing such Company Common
Stock is presented to the Exchange Agent, accompanied by documents sufficient,
in the discretion of Western, (i) to evidence and effect such transfer and (ii)
to evidence that all applicable stock transfer taxes have been paid.
(c) Whenever a dividend or other distribution is declared by Western on
Western Common Stock, the record date for which is after the Effective Time, the
declaration shall include dividends or other distributions on all shares
issuable pursuant to this Plan; PROVIDED that no dividend or other distribution
declared or made on Western Common Stock shall be paid to the holder of any
Certificate with respect to the shares of Western Common Stock represented
thereby until the holder of such Certificate shall duly surrender such
Certificate in accordance with this Section 1.4. Following such surrender of any
such Certificate, there shall be paid to the holder of the certificates
representing whole shares of Western Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of dividends or
other distributions, having a record date after the Effective Time and a payment
date prior to surrender, payable with respect to such whole shares of Western
Common Stock and not yet paid and (ii) at the appropriate payment date, the
amount of dividends or other distributions, having a record date after the
Effective Time but prior to surrender, and a payment date subsequent to
surrender payable with respect to such whole shares of Western Common Stock.
(d) From and after the Effective Time, there shall be no transfers on the
stock transfer records of the Company of any shares of Company Common Stock that
were outstanding immediately prior to the Effective Time. If Certificates are
presented to Western or the Surviving Corporation after the Effective Time, they
shall be canceled and exchanged for the Stock Consideration, Cash Consideration
and/or Cash in Lieu as provided for in this Article I.
(e) Any portion of the Exchange Fund (including the proceeds of any
investments thereof and any Western Common Stock) that remains unclaimed by the
shareholders of the Company for six months after the Effective Time shall be
repaid by the Exchange Agent to Western. Any shareholders of the Company who
have not theretofore complied with this Section 1.3 shall thereafter look only
to Western for payment of the Cash Consideration, Stock Consideration, Cash In
Lieu and any unpaid dividends and distributions on the Western Common Stock
deliverable in respect of each share of Company Common Stock such stockholder
holds as determined pursuant to this Plan, in each case, without any interest
thereon. If outstanding certificates for shares of Company Common Stock are not
surrendered or the payment for them not claimed prior to the date on which such
payments would otherwise escheat to or become the property of any governmental
unit or agency, the unclaimed items shall, to the extent permitted by
A-5
abandoned property and any other applicable law, become the property of Western
(and to the extent not in its possession shall be paid over to it), free and
clear of all claims or interest of any person previously entitled to such
claims. Notwithstanding the foregoing, none of Western, Western Bank, the
Exchange Agent or any other person shall be liable to any former holder of
Company Common Stock for any amount delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(f) In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by Western, the
posting by such person of a bond in such amount as Western may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Cash Consideration, the Stock Consideration and the
Cash In Lieu deliverable (and any unpaid dividends and distributions) in respect
thereof pursuant to this Plan.
SECTION 1.5. OPTIONS. At the Effective Time, each option granted by the
Company to purchase shares of Company Common Stock, which is outstanding and
unexercised immediately prior to the Effective Time, shall be adjusted so as to
entitle the grantee thereof to receive, in lieu of the share of Company Common
Stock that would otherwise have been issuable upon the exercise thereof, an
amount in cash computed by multiplying (i) the difference between (x) the Cash
Consideration and (y) the per share exercise price applicable to such option by
(ii) the number of such shares of Company Common Stock subject to such option.
The Company agrees to take or cause to be taken all action necessary under its
Stock Option Plan (the "Company Stock Option Plan") to provide for such
adjustment. As soon as practicable after the Effective Time (but in any event
prior to the seventh day after the Effective Time), Western will make the
payments required to be made to grantees of options under this Section 1.5.
ARTICLE II. CONDUCT PENDING THE MERGER
SECTION 2.1 CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME. Except as
expressly provided in this Plan, during the period from the date of this Plan to
the Effective Time, each of Western, Western Bank and the Company shall, and
shall cause each of its respective Subsidiaries to, (i) conduct its business in
the usual, regular and ordinary course of business consistent with past
practice, (ii) use its reasonable best efforts to maintain and preserve intact
its business organization, properties, leases, employees and advantageous
business relationships and retain the services of its officers and key
employees, (iii) take no action which would adversely affect or delay the
ability of Western, Western Bank or the Company to obtain any necessary
approvals, consents or waivers of any governmental authority required for the
transactions contemplated hereby or to perform its covenants and agreements on a
timely basis under this Plan and (iv) take no action that is reasonably likely
to have a Material Adverse Effect (as defined in Section 8.1 hereof) on either
Western, Western Bank or the Company.
SECTION 2.2 FORBEARANCE. During the period from the date of this Plan to
the Effective Time, the Company shall not, except in the ordinary course of
business consistent with past practices and in conformity with all applicable
policies and procedures and except as listed in the Company Disclosure Letter
(as defined in Section 3.1 hereof), without the prior consent of Western (it
being understood that, except as otherwise specified herein, for purposes of
this Section 2.2, a consent shall be deemed given if, within 3 business days
after a request for any such consent is made by the Company in the manner
prescribed by Section 8.8 hereof, Western does not object to the action for
which the consent is requested):
(a) incur any indebtedness for borrowed money (other than Federal Funds
borrowings) or assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other person;
(b) except as contemplated in Schedule 2.2(b) hereto, adjust, split, combine
or reclassify any capital stock; make, declare or pay any dividend or make any
other distribution on, or directly or indirectly redeem, purchase or otherwise
acquire, any shares of its capital stock or any securities or obligations
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convertible into or exchangeable for any shares of its capital stock, or grant
any stock appreciation rights or grant, sell or issue to any individual,
corporation or other person any right or option to acquire, or securities
evidencing a right to convert into or acquire, any shares of its capital stock,
or issue any additional shares of capital stock except pursuant to the exercise
of stock options, warrants, awards and other rights outstanding as of the date
hereof as set forth on Annex 2 and on the terms in effect on the date hereof;
(c) sell, transfer, mortgage, encumber or otherwise dispose of any of its
properties, leases or assets to any person, or cancel, release or assign any
indebtedness of any such person, except (i) pursuant to contracts or agreements
in force as of the date of this Plan or (ii) any such action or series of
related actions which result in a pre-tax loss of not more than $250,000;
(d) make any capital expenditures in amounts exceeding $200,000 individually
or $250,000 in the aggregate;
(e) (i) increase in any manner the compensation or fringe benefits of any of
its employees or directors, or create or institute, or make any payments
pursuant to, any severance plan or package, or pay any pension or retirement
allowance not required by any existing plan or agreement to any such employees
or directors, or become a party to, amend or commit itself to or fund or
otherwise establish any trust or account related to any Employee Plan (as
defined in Section 3.1(p) hereof), with or for the benefit of any employee,
other than (A) general increases in compensation for employees, (B) bonuses
which have been accrued on the 1997 financial statements or (C) any amendment
required by applicable law (provided that any such amendment shall provide the
least increase to cost permitted under such applicable law), or (ii) voluntarily
accelerate the vesting of any stock options or other compensation or benefit;
(f) (i) other than in individual amounts not to exceed $250,000 or in
securities transactions as provided in (f)(ii) below, make any investment either
by contributions to capital, property transfers, or purchases of any property or
assets of any person, PROVIDED that the Company shall not make any acquisition
of business operations without Western's prior consent, or
(ii) other than purchases of direct obligations of the United States of
America or obligations of U.S. government agencies which are entitled to the
full faith and credit of the United States of America, in any case with a
remaining maturity at the time of purchase of three years or less, purchase
or acquire securities of any type; PROVIDED, HOWEVER, that, in the case of
investment securities, the Company may purchase investment securities in an
aggregate amount in excess of $250,000 only if, within one business day
after the Company requests that Western consent to the making of any such
purchase, Western has consented to the amount of such purchase in excess of
$250,000;
(g) enter into or terminate any contract or agreement, or make any change in
any of its leases or contracts, other than with respect to those involving
aggregate payments of less than, or the provision of goods or services with a
market value of less than, $250,000;
(h) settle any claim, action or proceeding involving any liability of the
Company for money damages in excess of $250,000 or material restrictions upon
the operations of the Company;
(i) in amounts more than $250,000, waive or release any material right or
collateral or cancel or compromise any extension of credit or other debt or
claim; PROVIDED, HOWEVER, that the Company may take any such action if, within
two business days after it requests in writing (which request shall include
information and analyses sufficient for Western to assess the proposed action)
that Western consent to the taking of such action, Western has approved such
request in writing or has not responded in writing to such request;
(j) make, renegotiate, renew, increase, extend or purchase any loan, lease
(credit equivalent), advance, credit enhancement or other extension of credit,
or make any commitment in respect of any of the foregoing, except any loans or
advances (provided that the Company shall seek authorization for any
A-7
loan or advance in excess of $3,000,000) as to which the Company has a legally
binding obligation to make such loan or advance as of the date hereof and a
description of which has been provided by the Company in writing to Western
prior to the execution of this Plan;
(k) except as contemplated by Section 4.2 hereof, change its method of
accounting as in effect at December 31, 1996, except as required by changes in
generally accepted accounting principles as concurred in by the Company's
independent auditors;
(l) subject to the provisions of Section 6.1(f), engage in any merger,
consolidation or other similar transaction with, or acquire a significant
portion of the capital stock or assets of, any other corporate or other entity
except in connection with foreclosures and collections on secured interests;
(m) amend its articles of incorporation or its by-laws; or
(n) agree to, or make any commitment to, take any of the actions prohibited
by this Section 2.2.
SECTION 2.3. COOPERATION. (a) Each of Western, Western Bank and the
Company shall cooperate with each other in completing the transactions
contemplated hereby and shall not take, cause to be taken or agree or make any
commitment to take any action: (i) that would cause any of the representations
or warranties of it that are set forth in Article III hereof not to be true and
correct, or (ii) that is inconsistent with or prohibited by Sections 2.1 or 2.2.
(b) Without limiting the generality of the foregoing, each of Western and
the Company shall have the right to have one of its representatives present at
all loan committee meetings or meetings of similar purpose of the other party or
the other party's Subsidiaries, and each party shall give notice to the other
party of any such meeting at least one business day prior to such meeting. In
addition, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall have the right to attend all meetings of the
board of directors of Western and Western Bank, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or his
designee shall have the right to attend all meetings of the Company's board of
directors, and each party shall give notice to the other party of any such
meeting at least one business day prior to such meeting.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Western and Western Bank that, except as to the
matters disclosed in a letter of the Company delivered to Western and Western
Bank on or prior to the date hereof, which disclosures shall be deemed to be
made with respect to any applicable representation notwithstanding the specific
section references therein (the "Company Disclosure Letter"):
(a) RECITALS TRUE. The facts set forth in the Recitals of this Plan with
respect to the Company are true and correct.
(b) CAPITAL STOCK. All outstanding shares of capital stock of the Company
have been duly authorized and validly issued, are fully paid and (subject to
applicable California Law) non-assessable and are not subject to any preemptive
rights.
(c) DUE ORGANIZATION AND QUALIFICATION. The Company is duly organized,
validly existing and in good standing under the laws of State of California, is
a member of the Bank Insurance Fund ("BIF") of the Federal Deposit Insurance
Corporation (the "FDIC") and all of its deposits are subject to assessment by
the BIF.
(d) CORPORATE AUTHORITY. The Company has the corporate power and
authority, and is duly qualified in all jurisdictions (except for such
qualifications the absence of which, in the aggregate, would not have a Material
Adverse Effect on the Company) where such qualification is required, to carry on
its business as it is now being conducted and to own all its properties and
assets, and it has all federal, state, local and
A-8
foreign governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as it is now being conducted.
(e) SUBSIDIARIES; SIGNIFICANT INVESTMENTS. The only Subsidiary of the
Company is SMB Development Company, an inactive California corporation in good
standing. The Company does not own any equity securities, any security
convertible or exchangeable into an equity security or any rights to acquire any
equity security, except as received in satisfaction of a debt previously
contracted in good faith.
(f) SHAREHOLDER APPROVALS.
(i) Subject to the receipt of required shareholder approval of the
principal terms of this Plan, this Plan and the transactions contemplated
herein have been duly authorized by all necessary corporate action of the
Company. In addition, the Company has received the oral opinion of
▇▇▇▇▇▇▇▇▇▇ Securities to the effect that the consideration to be received by
the shareholders of the Company in the Merger is fair to such shareholders
from a financial point of view and will receive a written opinion to that
effect, true and complete copies of which will be furnished to Western.
Subject to receipt of such shareholder approval, this Plan is a valid and
binding agreement of the Company enforceable against it in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
(ii) The affirmative vote approving the principal terms of this Plan by
a majority of the outstanding shares of Company Common Stock entitled to
vote on this Plan is the only shareholder vote required by the Company for
approval of the Plan and consummation of the Merger and the other
transactions contemplated hereby.
(g) NO VIOLATIONS. The execution, delivery and performance of this Plan by
the Company do not, and the consummation of the transactions contemplated hereby
by the Company will not, constitute (i) a breach or violation of, or a default
under, any law, rule or regulation or any judgment, decree, order, governmental
permit or license to which the Company (or any of its properties) is subject, or
enable any person to enjoin the Merger or the other transactions contemplated
hereby, (ii) a breach or violation of, or a default under, the articles of
incorporation or by-laws or similar organizational documents of the Company or
(iii) a breach or violation of, or a default under (or an event which with due
notice or lapse of time or both would constitute a default under), or result in
the termination of, accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other encumbrance
upon any of the properties or assets of the Company under, any of the terms,
conditions or provisions of any note, bond, indenture, deed of trust, loan
agreement or other agreement, instrument or obligation to which the Company is a
party, or to which its properties or assets may be bound or affected; PROVIDED,
HOWEVER, that this clause (iii) shall not apply to any breach, violation or
default of any such agreement, instrument or obligation which involves payments
to or by the Company of an amount not exceeding $250,000 per year; and the
consummation of the transactions contemplated hereby will not require any
approval, consent or waiver under any such law, rule, regulation, judgment,
decree, order, governmental permit or license or the approval, consent or waiver
of any other party to any such agreement, indenture or instrument, other than
(i) the required approvals, consents and waivers of governmental authorities
referred to in Section 5.1(b) hereof, (ii) any such approval, consent or waiver
that already has been obtained, (iii) the FDIC, (iv) the Commissioner and (v)
any other approvals, consents or waivers the absence of which, individually or
in the aggregate, would not result in a Material Adverse Effect on the Company
or enable any person to enjoin the Merger.
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(h) COMPANY REPORTS.
(i) As of their respective dates, neither the Company's Annual Report on
Form F-2 for the fiscal year ended December 31, 1996, nor any other document
filed by the Company subsequent to December 31, 1996 under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act"), each in the form (including exhibits) filed with
the FDIC (collectively, the "Company Reports"), contained or will contain
any untrue statement of a Material fact or omitted or will omit to state a
Material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. Each of the consolidated balance sheets contained or
incorporated by reference in the Company Reports (including in each case any
related notes and schedules) fairly presented in all Material respects the
financial position of the entity or entities to which it relates as of its
date and each of the consolidated statements of income, consolidated
statements of shareholders' equity and consolidated statement of cash flows
contained or incorporated by reference in the Company Reports (including in
each case any related notes and schedules) fairly presented in all Material
respects the results of operations, shareholders' equity and cash flows, as
the case may be, of the entity or entities to which it relates for the
periods set forth therein (subject, in the case of unaudited interim
statements, to normal year-end audit adjustments that are not Material in
amount or effect), in each case in accordance with GAAP during the periods
involved, except as may be noted therein.
(ii) The Company has timely filed all reports, registrations and
statements, together with any amendments required to be made with respect
thereto, if any, that they were required to file since December 31, 1996
with (i) the Securities and Exchange Commission (the "SEC"), (ii) the FDIC,
(iii) the BIF, (iv) any state banking commission or other regulatory
authority (each, a "State Regulator") (such entities collectively, the
"Regulatory Agencies"), (v) the American Stock Exchange and (vi) any other
self-regulatory organization (an "SRO"), and all other Material reports and
statements required to be filed by them since December 31, 1996, including,
without limitation, any report or statement required to be filed pursuant to
the laws, rules or regulations of the United States, the FDIC, the BIF, any
State Regulator or any SRO, and have paid all fees and assessments due and
payable in connection therewith.
(i) ABSENCE OF UNDISCLOSED LIABILITIES AND CERTAIN CHANGES OR
EVENTS. Except as disclosed in the Company Reports, since December 31, 1996,
the Company has not incurred any Material liability, except in the ordinary
course of its business consistent with past practice. Since December 31, 1996,
there has not been any change in the business, assets, financial condition,
properties, results of operations or prospects (other than changes affecting
Southern California community banks in general) of the Company which,
individually or in the aggregate, has had, or is reasonably likely to have, a
Material Adverse Effect on the Company (other than changes in (i) banking laws
or regulations, or interpretations thereof, that affect the banking industry
generally, (ii) the general level of interest rates or (iii) GAAP).
(j) GUARANTEES; SURETYSHIPS; CONTINGENT LIABILITIES. The Company
Disclosure Letter lists and briefly describes all guarantees, matters of
suretyship and similar contingent liabilities, other than loan commitments and
letters of credit issued in the ordinary course of business, of the Company.
(k) TAXES. All federal, state, local and foreign tax returns (including
information returns) required to be filed by or on behalf of the Company have
been timely filed or requests for extensions have been timely filed and any such
extension shall have been granted and not have expired, and all such filed
returns are complete and accurate in all Material respects. All taxes shown on
such returns have been paid in full and adequate provision has been made for any
taxes for which returns have not yet been filed (in accordance with GAAP) on the
Company's balance sheets set forth in the Company Reports. There is no pending
audit examination, assessment or proposed assessment of a deficiency, or refund
litigation with respect to any taxes of the Company. All taxes, interest,
additions, and penalties due with respect to completed and settled examinations
or concluded litigation relating to it have been paid in full or adequate
A-10
provision has been made for any such taxes (in accordance with generally
accepted accounting principles) on the Company's balance sheet as set forth in
the Company Reports. The Company has not executed an extension or waiver of any
statute of limitations on the assessment or collection of any tax due that is
currently in effect.
No liens or other security interests have been imposed on any assets of the
Company in connection with any failure (or alleged failure) to pay any tax. The
Company has timely withheld, and paid over to the relevant governmental
authority or other appropriate payee, all taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other person. The Company is not a party
to any tax allocation or sharing agreement, is not and has not been a member of
an affiliated group filing consolidated or combined tax returns and otherwise
has no liability for the taxes of any person (other than the Company). For
purposes of this paragraph (k), "taxes" includes all federal, state, local or
foreign income, gross receipts, windfall profits, severance, property,
production, sales, use, license, excise, franchise, employment, withholding or
similar taxes imposed on the income, properties or operations of the Company,
together with any interest additions or penalties with respect thereto and any
interest in respect of such additions or penalties.
(l) ABSENCE OF CLAIMS. As of the date hereof, there is no pending
litigation, controversy, claim, action or proceeding against the Company before
any court or governmental agency, and, to the best of the Company's knowledge
after reasonable inquiry, no such litigation, proceeding, controversy, claim or
action has been threatened or is contemplated. As of the Effective Time and
except as disclosed in the Company Disclosure Letter, there is no pending
litigation, controversy, claim, action or proceeding against the Company before
any court or governmental agency, which is reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect on the Company or to hinder or
delay consummation of the transactions contemplated hereby and, to the best of
the Company's knowledge after reasonable inquiry, no such litigation,
proceeding, controversy, claim or action has been threatened or is contemplated.
(m) ABSENCE OF REGULATORY ACTIONS. The Company is not a party to any cease
and desist order, written agreement or memorandum of understanding with, nor a
party to any commitment letter or similar undertaking to, nor is the Company
subject to any order or directive by, or a recipient of any extraordinary
supervisory letter from, nor has the Company adopted any board resolutions at
the request of, federal or state governmental authorities charged with the
supervision or regulation of depository institutions or depositary institution
holding companies or engaged in the insurance of bank and/or savings and loan
deposits ("Government Regulators") nor has it been the recipient of any advice
from any Government Regulator that such Government Regulator is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, directive, written agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter, board
resolutions or similar undertaking.
(n) AGREEMENTS.
(i) Except for this Plan (and agreements entered into in connection with
the transactions contemplated hereby or those agreements copies of which
have been previously furnished to Western) and arrangements made in the
ordinary course of business, the Company is not bound by any material
contract (as defined in Item 601(b)(10) of Regulation S-K) to be performed
after the date hereof that has not been filed with or incorporated by
reference in the Company Reports. Except as disclosed in the Company Reports
filed prior to the date of this Plan, the Company is not a party to any oral
or written (A) consulting agreement (other than data processing, software
programming and licensing contracts entered into in the ordinary course of
business) not terminable on 30 days' or less notice involving the payment of
more than $200,000 per annum, in the case of any such agreement with an
individual, or $250,000 per annum, in the case of any other such agreement,
(B) agreement with any executive officer or other key employee of the
Company the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving the
Company of
A-11
the nature contemplated by this Plan and which provides for the payment of
in excess of $250,000, (C) agreement with respect to any executive officer
of the Company providing any term of employment or compensation guarantee
extending for a period longer than six months and for the payment of in
excess of $250,000 per annum, (D) agreement or plan, including any stock
option plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Plan or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Plan or (E) agreement containing covenants that limit
the ability of the Company to compete in any line of business or with any
person, or that involve any restriction on the geographic area in which, or
method by which, the Company (including any successor thereof) may carry on
its business (other than as may be required by law or any regulatory
agency).
(ii) The Company is not in default under or in violation of any
provision of any note, bond, indenture, mortgage, deed of trust, loan
agreement or other agreement to which it is a party or by which it is bound
or to which any of its respective properties or assets is subject.
(o) LABOR MATTERS. The Company is not a party to, nor is it bound by, any
collective bargaining agreement, contract, or other agreement or understanding
with a labor union or labor organization, nor is the Company the subject of any
proceeding asserting that it has committed an unfair labor practice or seeking
to compel it to bargain with any labor organization as to wages and conditions
of employment, nor is there any strike, other labor dispute or organizational
effort involving the Company pending or threatened.
(p) EMPLOYEE BENEFIT PLANS. The Company Disclosure Letter contains a
complete list of all pension, retirement, stock option, stock purchase, stock
ownership, savings, stock appreciation right, profit sharing, deferred
compensation, consulting, bonus, group insurance, severance and other benefit
plans, contracts, agreements, policies and arrangements, including, but not
limited to, "employee benefit plans", as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and all trust
agreements related thereto in respect to any present or former directors,
officers, or other employees of the Company (hereinafter referred to
collectively as the "Company Employee Plans"). (i) All of the Company Employee
Plans comply in all material respects with all applicable requirements of ERISA,
the Code and other applicable laws; the Company has not engaged in a "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
with respect to any Company Employee Plan which could subject the Company to a
material tax or penalty under Section 4975 of the Code or Section 502(i) of
ERISA; and all contributions required to be made under the terms of any Company
Employee Plan have been timely made or have been reflected on the Company's
balance sheet; (ii) no liability to the Pension Benefit Guaranty Corporation
(the "PBGC") has been or is expected by the Company to be incurred with respect
to any Company Employee Plan which is subject to Title IV of ERISA (a "Company
Pension Plan"), or with respect to any "single-employer plan" (as defined in
Section 4001(a)(15) of ERISA) currently or formerly maintained by the Company or
any entity (a "Company ERISA Affiliate") which is considered one employer with
the Company under Section 4001 of ERISA or Section 414 of the Code (a "Company
ERISA Affiliate Plan"); and no proceedings have been instituted to terminate any
Company Pension Plan or Company ERISA Affiliate Plan and no condition exists
that presents a material risk of the institution of such proceedings; (iii) no
Company Pension Plan or Company ERISA Affiliate Plan had an "accumulated funding
deficiency" (as defined in Section 302 of ERISA (whether or not waived)) as of
the last day of the end of the most recent plan year ending prior to the date
hereof; the fair market value of the assets of each Company Pension Plan and
Company ERISA Affiliate Plan exceeds the present value of the "benefit
liabilities" (as defined in Section 4001(a)(16) of ERISA) under such Company
Pension Plan or Company ERISA Affiliate Plan as of the end of the most recent
plan year with respect to the respective Company Pension Plan or Company ERISA
Affiliate Plan ending prior to the date hereof, calculated on the basis of the
actuarial assumptions used in the most recent actuarial valuation for such
Company
A-12
Pension Plan or Company ERISA Affiliate Plan prior to the date hereof, and there
has been no material change in the financial condition of any such Company
Pension Plan or Company ERISA Affiliate Plan since the last day of the most
recent plan year; and no notice of a "reportable event" (as defined in Section
4043 of ERISA) for which the 30-day reporting requirement has not been waived
has been required to be filed for any Company Pension Plan or Company ERISA
Affiliate Plan within the 12-month period ending on the date hereof; (iv) the
Company has not provided and is not required to provide, security to any Company
Pension Plan or to any Company ERISA Affiliate Plan pursuant to Section
401(a)(29) of the Code; (v) neither the Company nor any Company ERISA Affiliate
has contributed to any "multiemployer plan", as defined in Section 3(37) of
ERISA, on or after September 26, 1980; (vi) each Company Employee Plan which is
an "employee pension benefit plan" (as defined in Section 3(2) of ERISA) has
received a favorable determination letter from the Internal Revenue Service
deeming such plan to be qualified (a "Qualified Plan"), under Section 401(a) of
the Code, or has requested such a determination letter within the applicable
remedial amendment period under Section 401(b) of the Code; and the Company is
not aware of any circumstances likely to result in revocation of any such
favorable determination letter; (vii) each Qualified Plan which is an "employee
stock ownership plan" (as defined in Section 4975(e)(7) of the Code) has
satisfied all of the applicable requirements of Sections 409 and 4975(e)(7) of
the Code and the regulations thereunder; all Company Employee Plans covering
foreign participants comply in all material respects with applicable local law,
and there are no material unfunded liabilities with respect to any Company
Employee Plan which covers foreign employees; (viii) there is no pending or, to
the Company's knowledge, threatened litigation, administrative action or
proceeding relating to any Company Employee Plan other than claims for benefits
for which the plan administrative procedures have not been exhausted and
"qualified domestic relations orders" as defined in Section 414(p) of the Code;
(ix) there has been no announcement or commitment by the Company to create an
additional Company Employee Plan, or to amend a Company Employee Plan except for
amendments required by applicable law which do not increase the cost of such
Company Employee Plan; and the Company does not have any obligations for retiree
health and life benefits under any Company Employee Plan except as set forth in
the Company Disclosure Letter; (x) with respect to the Company, except as
specifically identified in the Company Disclosure Letter, the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not result in any payment or series of payments by the Company to
any person which is an "excess parachute payment" (as defined in Section 280G of
the Code) under any Company Employee Plan, increase or secure (by way of a trust
or other vehicle) any benefits payable under any Company Employee Plan, or
accelerate the time of payment or vesting of any such benefit, and (xi) with
respect to each Company Employee Plan, the Company has supplied to Western a
true and correct copy, if applicable, of (A) the two most recent annual reports
on the applicable form of the Form 5500 series filed with the Internal Revenue
Service (the "IRS"), (B) such Company Employee Plan, including amendments
thereto, (C) each trust agreement and insurance contract relating to such
Company Employee Plan, including amendments thereto, (D) the most recent summary
plan description for such Company Employee Plan, including amendments thereto,
if the Company Employee Plan is subject to Title I of ERISA, (E) the most recent
actuarial report or valuation if such Company Employee Plan is a Company Pension
Plan, (F) the most recent determination letter issued by the IRS if such Company
Employee Plan is a Qualified Plan and (G) the most recent financial statements
and auditor's report.
(q) REAL PROPERTY. (i) The Company Disclosure Letter contains a complete
and correct list of (A) all real property or premises owned on the date hereof,
in whole or in part by the Company and all indebtedness secured by any
encumbrance thereon, and (B) all real property or premises leased in whole or in
part by the Company and together with a list of all applicable leases and the
name of the lessor. None of such premises or properties have been condemned or
otherwise taken by any public authority and no condemnation or taking is
threatened or contemplated and none thereof is subject to any claim, contract or
law which might affect its use or value for the purposes now made of it. None of
the premises or properties of the Company is subject to any current or potential
interests of third parties or other
A-13
restrictions or limitations that would impair or be inconsistent in any material
respect with the current use of such property by the Company.
(ii) Each of the leases referred to in the Company Disclosure Letter is
valid and existing and in full force and effect, and no party thereto is in
default and no notice of a claim of default by any party has been delivered
to the Company or is now pending, and there does not exist any event that
with notice or the passing of time, or both, would constitute a default or
excuse performance by any party thereto, provided that with respect to
matters relating to any party other than the Company the foregoing
representation is based on the knowledge of the Company.
(r) TITLE. The Company has good title to its properties and assets (other
than (i) property as to which it is lessee and (ii) real estate owned as a
result of foreclosure, transfer in lieu of foreclosure or other transfer in
satisfaction of a debtor's obligation previously contracted) except (1)
statutory liens not yet delinquent which are being contested in good faith by
appropriate proceedings, and liens for taxes not yet due, (2) pledges of assets
in the ordinary course of business to secure public deposits, (3) for those
assets and properties disposed of for fair value in the ordinary course of
business since the date of the Company's Annual Report on Form F-2 for the year
ended December 31, 1996 and (4) defects and irregularities of title and
encumbrances that do not materially impair the use thereof for the purposes for
which they are held.
(s) KNOWLEDGE AS TO CONDITIONS. As of the date hereof, the Company knows
of no reason why the approvals, consents and waivers of governmental authorities
referred to in Section 5.1(b) should not be obtained without the imposition of
any condition of the type referred to in the provisos thereto.
(t) COMPLIANCE WITH LAWS. Since December 31, 1994, the Company has
complied in all Material respects with all applicable laws except for any
noncompliance with any such laws which, individually or in the aggregate, would
not have a Material Adverse Effect on the Company or enable any Person to enjoin
the Merger. Except such as would not have a Material Adverse Effect on the
Company, the Company has all permits, licenses, certificates of authority,
orders and approvals of, and has made all filings, applications and
registrations with, federal, state, local and foreign governmental or regulatory
bodies that are required in order to permit it to carry on its business as it is
presently conducted. All such permits, licenses, certificates of authority,
orders and approvals are in full force and effect, and, to the knowledge of the
Company, no suspension or cancellation of any of them is threatened.
(u) FEES. Other than in respect of financial advisory services performed
for the Company by ▇▇▇▇▇▇▇▇▇▇ Securities and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, in amounts and
pursuant to an agreement previously disclosed to Western, none of the Company or
any of its officers, directors, employees or agents, has employed any broker or
finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions, or finder's fees, and no broker or finder has acted directly
or indirectly for the Company, in connection with the Plan or the transactions
contemplated hereby.
(v) ENVIRONMENTAL MATTERS. (i) the Company has complied in all material
respects at all times with all applicable Environmental Laws; (ii) none of the
properties (including buildings or any other structures) currently owned or
operated by the Company ("Company Properties") have been contaminated with, or
have had any release of, any Hazardous Substance (as defined below); (iii) to
the Company's knowledge, none of the properties formerly owned or operated by
the Company have been contaminated with Hazardous Substances during such period
of ownership or operation; (iv) to the Company's knowledge, the Company is not
subject to liability for any Hazardous Substance disposal or contamination on
any third party property; (v) the Company has not received any notice, demand
letter, claim or request for information alleging that the Company may be in
violation of or subject to liability under any Environmental Law (as defined
below); (vi) the Company is not subject to any orders, decrees, injunctions or
other agreements with any governmental authority or any third party relating to
Hazardous Substances or any Environmental Law; (vii) there are no circumstances
or conditions involving the Company that could reasonably be expected to result
in any claims, liability, investigations, suits or costs or result in
restrictions
A-14
on the ownership, use, or transfer of any Company Property pursuant to any
Environmental Law; (viii) none of the Company Properties contain any underground
storage tanks, asbestos-containing material, lead products, or polychlorinated
biphenyls; (ix) to the knowledge of the Company none of the Company Properties
have ever been operated in the past as a gas station, automotive repair or
supply business, metalworking operation, industrial facility or as a drycleaner;
(x) the Company has not engaged in any activity involving the generation, use,
handling or disposal of any Hazardous Substances other than ordinary and routine
office operations and maintenance; (xi) the Company has not participated in the
management of any borrower or other third party, including entities in which it
may hold a security, fiduciary or other interest, that, to the Company's
knowledge, engages in activities involving Hazardous Substances to an extent
that it could be deemed an "owner" or "operator" of such entity under any
Environmental Law; and (xii) to the Company's knowledge, the Company has
delivered to Western copies of all environmental reports, studies, sampling
data, permits, government filings and other environmental information in its
possession relating to the Company or any of its current or former properties or
operations.
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, pollution, contamination or any injury or threat of
injury to persons or property.
As used herein, 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 government authority pursuant to any
Environmental Law.
(w) ALLOWANCE. The allowance for possible loan and lease losses shown on
the Company's unaudited balance sheet as of June 30, 1997 was, and the allowance
for possible loan losses shown on the balance sheets in Company Reports for
periods ending after the date of this Plan will be, adequate, as of the date
thereof, under generally accepted accounting principles applicable to banks. The
Company has disclosed to Western in writing prior to the date hereof the amounts
of all loans, leases, advances, credit enhancements, other extensions of credit,
commitments and interest-bearing assets of the Company that as of June 30, 1997
have been classified as "Other Assets Specially Mentioned," "Substandard,"
"Doubtful," "Loss," "Classified," "Criticized," "Credit Risk Assets" or words of
similar import. The Other Real Estate Owned ("OREO") included in any
non-performing assets of the Company is carried net of reserves at the lower of
cost or market value, less applicable selling costs, based on independent
appraisals consistent with applicable regulatory requirements.
(x) MATERIAL INTERESTS OF CERTAIN PERSONS. Except as disclosed in the
Company's Quarterly Report on Form F-4 for the quarter ended June 30, 1997 or
the Company's Annual Report on Form F-2 for the year ended December 31, 1996, no
officer or director of the Company, or any "associate" (as such term is defined
in Rule 12b-2 under the Securities Exchange Act) of any such officer or
director, has any Material interest in any Material contract or property (real
or personal), tangible or intangible, used in or pertaining to the business of
the Company.
(y) INSURANCE. The Company is currently insured, and since December 31,
1994, has been insured, for reasonable amounts with financially sound and
reputable insurance companies, against such risks as companies engaged in a
similar business would, in accordance with good business practice, customarily
be insured. All of the insurance policies and bonds maintained by the Company
are in full force and effect, the Company is not in default thereunder and all
Material claims thereunder have been filed in due and timely fashion. Since
December 31, 1994, no claim by the Company on or in respect of an insurance
policy or bond has been declined or refused by the relevant insurer or insurers.
In the best judgment of the
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Company's management, such insurance coverage is adequate and will be available
in the future under terms and conditions substantially similar to those in
effect on the date hereof. Between the date hereof and the Effective Time, the
Company will maintain the levels of insurance coverage in effect on the date
hereof and will submit all potential claims existing prior to the Effective Time
to its insurance carrier on or before the Effective Time. The Company Disclosure
Letter lists all insurance policies maintained by or for the benefit of the
Company or its directors, officers, employees or agents, specifying the (i) type
of policy, (ii) policy limits and (iii) self insurance amounts.
(z) INVESTMENT SECURITIES. Except for pledges to secure public and trust
deposits and reverse repurchase agreements entered into in arm's-length
transactions pursuant to normal commercial terms and conditions and other
pledges required by law, none of the investments reflected in the consolidated
balance sheet of the Company included in the Company's Report on Form F-4 for
the quarter ended June 30, 1997, and none of the Material investments made by it
since December 31, 1996, is subject to any restriction (contractual, statutory
or otherwise) that would materially impair the ability of the entity holding
such investment freely to dispose of such investment at any time.
(aa) DERIVATIVES. The Company is not currently a party to any interest
rate swap, cap, floor, option agreement, other interest rate risk management
arrangement or agreement or derivative-type security or derivative arrangement
or agreement.
(bb) REGISTRATION OBLIGATIONS. The Company is not under any obligation,
contingent or otherwise, to register any of its securities under the Securities
Act of 1933, as amended (the "Securities Act").
(cc) BOOKS AND RECORDS. The books and records of the Company have been,
and are being, maintained in accordance with applicable legal and accounting
requirements and reflect in all Material respects the substance of events and
transactions that should be included therein.
(dd) CORPORATE DOCUMENTS. The Company has delivered to Western true and
complete copies of its amended articles of incorporation and amended by-laws.
(ee) COMPANY ACTION. The Board of Directors of the Company has adopted
resolutions recommending that the principal terms of this Plan be approved by
the shareholders of the Company and directing that this Plan be submitted for
consideration by the Company's shareholders at the Company's Meeting (as defined
below).
(ff) INDEMNIFICATION. The Company is not a party to any indemnification
agreement with any of its present or future directors, officers, employees,
individual agents or other individuals who serve or served in any other capacity
with any other enterprise at the request of the Company (a "Covered Person"),
and to the knowledge of the Company, there are no claims for which any Covered
Person would be entitled to indemnification under Section 4.6 hereof if such
provisions were deemed to be in effect.
(gg) LOANS. Each loan reflected as an asset on the Company's consolidated
balance sheet as of June 30, 1997 and each balance sheet date subsequent thereto
(i) is evidenced by notes, agreements or other evidences of indebtedness which
are true, genuine and what they purport to be, (ii) is the legal, valid and
binding obligation of the obligor named therein, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent conveyance and other
laws of general applicability relating to or affecting creditors' rights and to
general equity principles, and (iii) to the knowledge of the Company, will not
be subject to any defenses which may be asserted against the Company. All loans
and extensions of credit that have been made by the Company and that are subject
to Sections 22(h), 23A and 23B of the Federal Reserve Act comply therewith.
(hh) FAIR LENDING; COMMUNITY REINVESTMENT ACT. As of the date hereof, with
the exception of routine investigation of consumer complaints, the Company has
not been advised that it is or may be in violation of the Equal Credit
Opportunity Act or the Fair Housing Act or any similar federal or state statute.
The Company received a CRA rating of "satisfactory" in its most recent CRA
examination.
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(ii) TRUST BUSINESS. Except as set forth in the Company Disclosure Letter
or such violations which individually or in the aggregate would not give rise to
a Material Adverse Effect, to the knowledge of the Company (i) each of the
relationships between the Company and another Person which constitute part of
the business conducted by the Trust Department of the Company (whether the
Company acts or has acted as trustee, agent, fiscal agent, escrow agent,
custodian or in another similar capacity) (the "Trust Relationships") is
governed by a written agreement, contract, indenture, instrument of trust or
other similar document (the "Trust Instruments") and all of the Trust
Instruments that are presently in effect are in the possession of the Company
and have been made, or are, available to Western and no Trust Instrument has
been amended except by an instrument in writing; (ii) each Trust Relationship
has been conducted, operated and managed by the Company in accordance with the
terms of the governing Trust Instrument and applicable law.
(jj) NO OMISSION OF MATERIAL FACT. No representation or warranty by the
Company in this Plan, including the Annexes hereto, the disclosure letters and
schedules to be delivered herewith or the Proxy Statement filed in connection
with the Meeting, contains any untrue statement of Material fact, or omits to
state a Material fact necessary to make the statements or facts contained herein
or therein not misleading. None of the information regarding the Company or the
transactions contemplated hereby supplied or to be supplied by the Company for
inclusion in any documents or filings to be filed with any regulatory authority
in connection with the transactions contemplated hereby will contain any untrue
statement of Material fact, or omit to state a Material fact necessary to make
the statements or facts contained therein not misleading.
SECTION 3.2. REPRESENTATIONS AND WARRANTIES OF WESTERN. Western represents
and warrants to the Company that, except as to the matters disclosed in a letter
of Western delivered to the Company on or prior to the date hereof, which
disclosures shall be deemed to be made with respect to any applicable
representation notwithstanding the specific section references therein (the
"Western Disclosure Letter"):
(a) RECITALS TRUE. The facts set forth in the Recitals of this Plan with
respect to Western and Western Bank are true and correct.
(b) CAPITAL STOCK. All outstanding shares of capital stock of Western and
its Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X) have
been duly authorized and validly issued, are fully paid and (subject to 12
U.S.C. Section55 in the case of a national bank Subsidiary and any similar state
statute in the case of a Subsidiary that is a state-chartered bank)
non-assessable and are not subject to any preemptive rights.
(c) OMITTED.
(d) CORPORATE AUTHORITY. Each of Western and its Significant Subsidiaries
has the corporate power and authority, and is duly qualified in all
jurisdictions (except for such qualifications the absence of which, in the
aggregate, would not have a Material Adverse Effect on Western) where such
qualification is required, to carry on its business as it is now being conducted
and to own all its properties and assets, and it has 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 being conducted.
(e) SHAREHOLDER APPROVALS.
(i) Subject to the receipt of required shareholder approval of the
principal terms of this Plan, this Plan and the transactions contemplated
herein have been duly authorized by all necessary corporate action of
Western and Western Bank. Subject to receipt of such shareholder approval,
this Plan is and will be a valid and binding agreement of Western and
Western Bank enforceable against each of them in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
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(ii) The affirmative vote approving the principal terms of this Plan by
a majority of the outstanding shares of Western Common Stock entitled to
vote on this Plan and the affirmative vote approving the principal terms of
this Plan by a majority of the outstanding shares of Western Bank Common
Stock entitled to vote on this plan are the only shareholder votes required
by Western and Western Bank for approval of this Plan and consummation of
the Merger and the other transactions contemplated hereby.
(f) NO VIOLATIONS. The execution, delivery and performance of this Plan by
Western and Western Bank do not, and the consummation of the transactions
contemplated hereby by Western and Western Bank will not, constitute (i) a
breach or violation of, or a default under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license to which Western or any
of its Subsidiaries (or any of their respective properties) is subject, which
breach, violation or default would have a Material Adverse Effect on Western or
Western Bank, or enable any person to enjoin the Merger or the other
transactions contemplated hereby, (ii) a breach or violation of, or a default
under, the articles of incorporation or by-laws or similar organizational
documents of Western or any of its Subsidiaries or (iii) a breach or violation
of, or a default under (or an event which with due notice or lapse of time or
both would constitute a default under), or result in the termination of,
accelerate the performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of the
properties or assets of Western or any of its Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, indenture, deed of trust,
loan agreement or other agreement, instrument or obligation to which Western or
any of its Subsidiaries is a party, or to which any of their respective
properties or assets may be bound or affected, PROVIDED, HOWEVER, that this
clause (iii) shall not apply to any breach, violation or default of any such
agreement, instrument or obligation which involves payments to or by Western or
any of its Subsidiaries of any amount not exceeding $250,000 per year; and the
consummation of the transactions contemplated hereby will not require any
approval, consent or waiver under any such law, rule, regulation, judgment,
decree, order, governmental permit or license or the approval, consent or waiver
of any other party to any such agreement, indenture or instrument, other than
(i) the required approvals, consents and waivers of governmental authorities
referred to in Section 5.1(b) hereof, (ii) any such approval, consent or waiver
that already has been obtained, (iii) the FDIC, (iv) the Commissioner and (v)
any other approvals, consents or waivers the absence of which, individually or
in the aggregate, would not result in a Material Adverse Effect on Western or
enable any person to enjoin the Merger.
(g) WESTERN REPORTS.
(i) As of their respective dates, neither Western's Annual Report on
Form 10-KSB/A for the fiscal year ended December 31, 1996, nor any other
document filed by Western subsequent to December 31, 1996 under Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act, each in the form
(including exhibits) filed with the SEC (collectively, the "Western
Reports"), contained or will contain any untrue statement of a Material fact
or omitted or will omit to state a Material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. Each of the
consolidated balance sheets or statements of condition contained or
incorporated by reference in Western Reports (including in each case any
related notes and schedules) fairly presented in all Material respects the
financial position of the entity or entities to which it relates as of its
date and each of the consolidated statements of income, consolidated
statements of changes in shareholders' equity and consolidated statements of
cash flows contained or incorporated by reference in Western Reports
(including in each case any related notes and schedules) fairly presented in
all Material respects the results of operations, shareholders' equity and
cash flows, as the case may be, of the entity or entities to which it
relates for the periods set forth therein (subject, in the case of unaudited
interim statements, to normal year-end audit adjustments that are not
Material in amount or effect), in each case in accordance with GAAP during
the periods involved, except as may be noted therein.
A-18
(ii) Western and each of its Subsidiaries have each timely filed all
reports, registrations and statements, together with any amendments required
to be made with respect thereto, if any, that they were required to file
since December 31, 1996 with the Regulatory Agencies, the National
Association of Securities Dealers, Inc. and any other SRO, and all other
Material reports and statements required to be filed by them since December
31, 1996, including, without limitation, any report or statement required to
be filed pursuant to the laws, rules or regulations of the United States,
the Federal Reserve Board, the FDIC, the BIF, the OCC, any State Regulator
or any SRO, and have paid all fees and assessments due and payable in
connection therewith.
(h) ABSENCE OF CERTAIN UNDISCLOSED LIABILITIES AND CERTAIN CHANGES OR
EVENTS. Except as disclosed in the Western Reports, since December 31, 1996,
neither Western nor any of its Significant Subsidiaries has incurred any
Material liability, except in the ordinary course of its business consistent
with past practice. Since June 30, 1997, there has not been any change in the
business, assets, financial condition, properties, results of operations or
prospects (other than changes affecting Southern California community banks in
general) of Western or any of its Significant Subsidiaries which, individually
or in the aggregate, has had, or is reasonably likely to have, a Material
Adverse Effect on Western (other than changes in (i) banking laws or
regulations, or interpretations thereof, that affect the banking industry
generally, (ii) the general level of interest rates or (iii) GAAP).
(i) GUARANTEES; SURETYSHIPS; CONTINGENT LIABILITIES. The Western
Disclosure Letter lists and briefly describes all guarantees, matters of
suretyship and similar contingent liabilities, other than loan commitments and
letters of credit issued in the ordinary course of business, of Western and its
Subsidiaries.
(j) TAXES. All federal, state, local, and foreign tax returns (including
information returns) required to be filed by or on behalf of Western or any of
its Subsidiaries have been timely filed or requests for extensions have been
timely filed and any such extension shall have been granted and not have
expired, and all such filed returns are complete and accurate in all Material
respects. All taxes shown on such returns have been paid in full and adequate
provision has been made for any taxes for which returns have not yet been filed
(in accordance with GAAP) on Western's balance sheets set forth in Western
Reports. There is no pending audit examination, assessment or proposed
assessment of a deficiency, or refund litigation with respect to any taxes of
Western or any of its Subsidiaries. All taxes, interest, additions, and
penalties due with respect to completed and settled examinations or concluded
litigation relating to it have been paid in full or adequate provision has been
made for any such taxes (in accordance with generally accepted accounting
principles) on Western's balance sheet as set forth in the Western Reports.
Neither Western nor any of its Subsidiaries has executed an extension or waiver
of any statute of limitations on the assessment or collection of any tax due
that is currently in effect.
No liens or other security interests have been imposed on any assets of
Western or any of its Subsidiaries in connection with any failure (or alleged
failure) to pay any tax. Western and each of its Subsidiaries have timely
withheld, and paid over to the relevant governmental authority or other
appropriate payee, all taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other person. Neither Western nor any Subsidiary 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 Western) or otherwise has any liability for
the taxes of any person (other than Western or any of its Subsidiaries). For
purposes of this paragraph (j), "taxes" includes all federal, state, local or
foreign income, gross receipts, windfall profits, severance, property,
production, sales, use, license, excise, franchise, employment, withholding or
similar taxes imposed on the income, properties or operations of Western or any
of its Subsidiaries, together with any interest additions or penalties with
respect thereto and any interest in respect of such additions or penalties.
(k) ABSENCE OF CLAIMS. As of the date hereof, there is no pending
litigation, controversy, claim, action or proceeding against Western or any of
its Subsidiaries before any court or governmental agency,
A-19
and, to the best of Western's knowledge after reasonable inquiry, no such
litigation, proceeding, controversy, claim or action has been threatened or is
contemplated. As of the Effective Time and except as disclosed in the Western
Disclosure Letter, there is no pending litigation, controversy, claim, action or
proceeding against Western or any of its Subsidiaries before any court or
governmental agency, which is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on Western or to hinder or delay
consummation of the transactions contemplated hereby and, to the best of
Western's knowledge after reasonable inquiry, no such litigation, proceeding,
controversy, claim or action has been threatened or is contemplated.
(l) ABSENCE OF REGULATORY ACTIONS. Neither Western nor any of its
Subsidiaries is a party to any cease and desist order, written agreement or
memorandum of understanding with, or a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any board resolutions
at the request of, Government Regulators nor has it been the recipient of any
advice from any Government Regulator that such Government Regulator is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, directive, written agreement, memorandum
of understanding, extraordinary supervisory letter, commitment letter, board
resolutions or similar undertaking.
(m) AGREEMENTS.
(i) Except for this Plan (and agreements entered into in connection with
the transactions contemplated hereby or those agreements copies of which
have been previously furnished to Company) and arrangements made in the
ordinary course of business, Western and its Subsidiaries are not bound by
any Material contract (as defined in Item 601(b)(10) of Regulation S-K) to
be performed after the date hereof that has not been filed with or
incorporated by reference in the Western Reports. Except as disclosed in the
Western Reports filed prior to the date of this Plan, neither Western nor
any of its Subsidiaries is a party to an oral or written (A) consulting
agreement (other than data processing, software programming and licensing
contracts entered into in the ordinary course of business) not terminable on
30 days' or less notice involving the payment of more than $200,000 per
annum, in the case of any such agreement with an individual, or $250,000 per
annum, in the case of any other such agreement, (B) agreement with any
executive officer or other key employee of Western or any of its
Subsidiaries the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Western
or any of its Subsidiaries of the nature contemplated by this Plan and which
provides for the payment of in excess of $250,000, (C) agreement with
respect to any executive officer of Western or any of its Subsidiaries
providing any term of employment or compensation guarantee extending for a
period longer than six months and for the payment of in excess of $250,000
per annum, (D) agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any
of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Plan or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Plan or (E) agreement containing covenants that limit the ability of Western
or any of its Subsidiaries to compete in any line of business or with any
person, or that involve any restriction on the geographic area in which, or
method by which, Western (including any successor thereof) or any of its
Subsidiaries may carry on its business (other than as may be required by law
or any regulatory agency).
(ii) Neither Western nor any of its Subsidiaries is in default under or
in violation of any provision of any note, bond, indenture, mortgage, deed
of trust, loan agreement or other agreement to which it is a party or by
which it is bound or to which any of its respective properties or assets is
subject.
(n) LABOR MATTERS. Neither Western 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
Western or any of its Subsidiaries the subject of any proceeding asserting that
it has
A-20
committed an unfair labor practice or seeking to compel it or any such
Subsidiary to bargain with any labor organization as to wages and conditions of
employment, nor is there any strike, other labor dispute or organizational
effort involving Western or any of its Subsidiaries pending or threatened.
(o) EMPLOYEE BENEFIT PLANS. The Western Disclosure Letter contains a
complete list of all pension, retirement, stock option, stock purchase, stock
ownership, savings, stock appreciation right, profit sharing, deferred
compensation, consulting, bonus, group insurance, severance and other benefit
plans, contracts, agreements, policies and arrangements, including, but not
limited to, "employee benefit plans", as defined in Section 3(3) of ERISA and
all trust agreements related thereto in respect to any present or former
directors, officers, or other employees of Western or any of its Subsidiaries
(hereinafter referred to collectively as the "Western Employee Plans"). (i) All
of the Western Employee Plans comply in all material respects with all
applicable requirements of ERISA, the Code and other applicable laws; neither
Western nor any of its Subsidiaries has engaged in a "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code) with respect to
any Western Employee Plan which could subject Western or any Subsidiary to a
material tax or penalty under Section 4975 of the Code or Section 502(i) of
ERISA; and all contributions required to be made under the terms of any Western
Employee Plan have been timely made or have been reflected on Western's balance
sheet; (ii) no liability to the PBGC has been or is expected by Western or any
of its Subsidiaries to be incurred with respect to any Western Employee Plan
which is subject to Title IV of ERISA (a "Western Pension Plan"), or with
respect to any "single-employer plan" (as defined in Section 4001(a)(15) of
ERISA) currently or formerly maintained by Western or any entity (a "Western
ERISA Affiliate") which is considered one employer with Western under Section
4001 of ERISA or Section 414 of the Code (an "Western ERISA Affiliate Plan");
and no proceedings have been instituted to terminate any Western Pension Plan or
Western ERISA Affiliate Plan and no condition exists that presents a material
risk of the institution of such proceedings; (iii) no Western Pension Plan or
Western ERISA Affiliate Plan had an "accumulated funding deficiency" (as defined
in Section 302 of ERISA (whether or not waived)) as of the last day of the end
of the most recent plan year ending prior to the date hereof; the fair market
value of the assets of each Western Pension Plan and Western ERISA Affiliate
Plan exceeds the present value of the "benefit liabilities" (as defined in
Section 4001(a)(16) of ERISA) under such Western Pension Plan or Western ERISA
Affiliate Plan as of the end of the most recent plan year with respect to the
respective Western Pension Plan or Western ERISA Affiliate Plan ending prior to
the date hereof, calculated on the basis of the actuarial assumptions used in
the most recent actuarial valuation for such Western Pension Plan or Western
ERISA Affiliate Plan prior to the date hereof, and there has been no material
change in the financial condition of any such Western Pension Plan or Western
ERISA Affiliate Plan since the last day of the most recent plan year; and no
notice of a "reportable event" (as defined in Section 4043 of ERISA) for which
the 30-day reporting requirement has not been waived has been required to be
filed for any Western Pension Plan or Western ERISA Affiliate Plan within the
12-month period ending on the date hereof; (iv) neither Western nor any
Subsidiary of Western has provided or is required to provide, security to any
Western Pension Plan or to any Western ERISA Affiliate Plan pursuant to Section
401(a)(29) of the Code; (v) neither Western, its Subsidiaries, nor any Western
ERISA Affiliate has contributed to any "multiemployer plan", as defined in
Section 3(37) of ERISA, on or after September 26, 1980; (vi) each Employee Plan
of Western or any of its Subsidiaries which is an "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) has received a favorable
determination letter from the Internal Revenue Service deeming such plan to be a
Qualified Plan or has requested such a determination letter within the
applicable remedial amendment period under Section 401(b) of the Code; and
neither Western nor its Subsidiaries are aware of any circumstances likely to
result in revocation of any such favorable determination letter; (vii) each
Qualified Plan which is an "employee stock ownership plan" (as defined in
Section 4975(e)(7) of the Code) has satisfied all of the applicable requirements
of Sections 409 and 4975(e)(7) of the Code and the regulations thereunder; all
Western Employee Plans covering foreign participants comply in all material
respects with applicable local law, and there are no material unfunded
liabilities with respect to any Western Employee Plan which covers foreign
employees; (viii) there is no pending or, to Western's knowledge, threatened
litigation,
A-21
administrative action or proceeding relating to any Western Employee Plan; (ix)
there has been no announcement or commitment by Western or any Subsidiary of
Western to create an additional Western Employee Plan, or to amend a Western
Employee Plan except for amendments required by applicable law which do not
increase the cost of such Western Employee Plan; and Western and its
Subsidiaries do not have any obligations for retiree health and life benefits
under any Western Employee Plan except as set forth in the Western Disclosure
Letter, and there are no such Western Employee Plans that cannot be amended or
terminated without incurring any liability thereunder; (x) with respect to
Western or any of its Subsidiaries, except as specifically identified in the
Western Disclosure Letter, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in any
payment or series of payments by Western or any Subsidiary of Western to any
person which is an "excess parachute payment" (as defined in Section 280G of the
Code) under any Western Employee Plan, increase or secure (by way of a trust or
other vehicle) any benefits payable under any Western Employee Plan, or
accelerate the time of payment or vesting of any such benefit, and (xi) with
respect to each Western Employee Plan, Western has supplied to the Company a
true and correct copy, if applicable, of (A) the two most recent annual reports
on the applicable form of the Form 5500 series filed with the IRS, (B) such
Western Employee Plan, including amendments thereto, (C) each trust agreement
and insurance contract relating to such Western Employee Plan, including
amendments thereto, (D) the most recent summary plan description for such
Western Employee Plan, including amendments thereto, if the Western Employee
Plan is subject to Title I of ERISA, (E) the most recent actuarial report or
valuation if such Western Employee Plan is a Western Pension Plan, (F) the most
recent determination letter issued by the IRS if such Western Employee Plan is a
Qualified Plan and (G) the most recent financial statements and auditor's
report.
(p) REAL PROPERTY.
(i) The Western Disclosure Letter contains a complete and correct list
of (A) all real property or premises owned on the date hereof, in whole or
in part by Western or any of its Subsidiaries and all indebtedness secured
by any encumbrance thereon, and (B) all real property or premises leased in
whole or in part by Western or any of its Subsidiaries, together with a list
of all applicable leases and the name of the lessor. None of such premises
or properties have been condemned or otherwise taken by any public authority
and no condemnation or taking is threatened or contemplated and none thereof
is subject to any claim, contract or law which might affect its use or value
for the purposes now made of it. None of the premises or properties of
Western or any of its Subsidiaries is subject to any current or potential
interests of third parties or other restrictions or limitations that would
impair or be inconsistent in any material respect with the current use of
such property by Western or any of its Subsidiaries.
(ii) Each of the leases referred to in the Western Disclosure Letter is
valid and existing and in full force and effect, and no party thereto is in
default and no notice of a claim of default by any party has been delivered
to Western or any of its Subsidiaries or is now pending, and there does not
exist any event that with notice or the passing of time, or both, would
constitute a default or excuse performance by any party thereto, provided
that with respect to matters relating to any party other than Western the
foregoing representation is based on the knowledge of Western.
(q) TITLE. Each of Western and its Subsidiaries has good title to its
properties and assets (other than (i) property as to which it is lessee and (ii)
real estate owned as a result of foreclosure, transfer in lieu of foreclosure or
other transfer in satisfaction of a debtor's obligation previously contracted)
except (1) statutory liens not yet delinquent which are being contested in good
faith by appropriate proceedings, and liens for taxes not yet due, (2) pledges
of assets in the ordinary course of business to secure public deposits, (3) for
those assets and properties disposed of for fair value in the ordinary course of
business since the date of Western's Annual Report on Form 10-KSB/A for the year
ended December 31, 1996 and (4) defects and irregularities of title and
encumbrances that do not materially impair the use thereof for the purposes for
which they are held.
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(r) KNOWLEDGE AS TO CONDITIONS. As of the date hereof, Western knows of no
reason why the approvals, consents and waivers of governmental authorities
referred to in Section 5.1(b) should not be obtained without the imposition of
any condition of the type referred to in the provisos thereto.
(s) COMPLIANCE WITH LAWS. Since December 31, 1994, Western and each of its
Subsidiaries have complied in all Material respects with all applicable laws,
except for any noncompliance with any such laws which, individually or in the
aggregate, would not have a Material Adverse Effect on Western or enable any
Person to enjoin the Merger. Except as would not have a Material Adverse Effect
on Western, each of Western and its Subsidiaries has all permits, licenses,
certificates of authority, orders and approvals of, and has made all filings,
applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit it to
carry on its business as it is presently conducted. All such permits, licenses,
certificates of authority, orders and approvals are in full force and effect,
and, to the knowledge of Western, no suspension or cancellation of any of them
is threatened.
(t) FEES. Other than in respect of financial advisory services performed
for Western by Belle Plaine Financial Partners, Inc. and/or other qualified
financial advisors, in amounts and pursuant to arrangements previously disclosed
to the Company, neither Western nor any of its Subsidiaries, nor any of their
respective officers, directors, employees or agents, has employed any broker or
finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions, or finder's fees, and no broker or finder has acted directly
or indirectly for Western or any Subsidiary of Western, in connection with the
Plan or the transactions contemplated hereby.
(u) ENVIRONMENTAL MATTERS. (i) Western and each Subsidiary has complied in
all material respects at all times with all applicable Environmental Laws; (ii)
none of the properties (including buildings or any other structures) currently
owned or operated by Western or any Subsidiary ("Western Properties") has been
contaminated with, or has had any release of, any Hazardous Substance; (iii) to
Western's knowledge, none of the properties formerly owned or operated by it or
any Subsidiary has been contaminated with Hazardous Substances during such
period of ownership or operation; (iv) to Western's knowledge, neither it nor
any Subsidiary is subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (v) neither Western nor any
Subsidiary has received any notice, demand letter, claim or request for
information alleging that Western or any Subsidiary may be in violation of or
subject to liability under any Environmental Law; (vi) neither Western nor any
of its Subsidiaries is subject to any orders, decrees, injunctions or other
agreements with any governmental authority or any third party relating to
Hazardous Substances or any Environmental Law; (vii) there are no circumstances
or conditions involving Western or any of its Subsidiaries that could reasonably
be expected to result in any claims, liability, investigations, suits or costs
or result in restrictions on the ownership, use, or transfer of any Western
Property pursuant to any Environmental Law, (viii) none of the Western
Properties contain any underground storage tanks, asbestos-containing material,
lead products, or polychlorinated biphenyls; (ix) to the knowledge of Western
none of the Western Properties have ever been operated in the past as a gas
station, automotive repair or supply business, metalworking operation,
industrial facility or as a drycleaner; (x) neither Western nor any Subsidiary
has engaged in any activity involving the generation, use, handling or disposal
of any Hazardous Substances other than ordinary and routine office operations
and maintenance, (xi) neither Western nor any Subsidiary has participated in the
management of any borrower or other third party, including entities in which it
may hold a security, fiduciary or other interest, that, to Western's knowledge,
engages in activities involving Hazardous Substances to an extent that it could
be deemed an "owner" or "operator" of such entity under any Environmental Law,
and (xii) to Western's knowledge, it has delivered to the Company copies of all
environmental reports, studies, sampling data, permits, government filings and
other environmental information in its possession relating to Western or its
Subsidiaries or any of their current or former properties or operations.
(v) ALLOWANCE. The allowance for possible loan and lease losses shown on
Western's unaudited balance sheet as of June 30, 1997 was, and the allowance for
possible loan losses shown on the balance sheets in Western Reports for periods
ending after the date of this Plan will be, adequate, as of the date
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thereof, under generally accepted accounting principles applicable to banks and
bank holding companies. Western has disclosed to the Company in writing prior to
the date hereof the amounts of all loans, leases, advances, credit enhancements,
other extensions of credit, commitments and interest-bearing assets of Western
and its Subsidiaries that as of June 30, 1997 have been classified as "Other
Assets Specially Mentioned," "Substandard," "Doubtful," "Loss," "Classified,"
"Criticized," "Credit Risk Assets" or words of similar import. The OREO included
in any non-performing assets of Western or any of its Subsidiaries is carried
net of reserves at the lower of cost or market value; less applicable selling
costs, based on independent appraisals consistent with applicable regulatory
requirements.
(w) MATERIAL INTERESTS OF CERTAIN PERSONS. Except as disclosed in
Western's Quarterly Report on Form 10-QSB for the quarter ended March 31, 1997
or Western's Annual Report on Form 10-KSB/A for the year ended December 31,
1996, no officer or director of Western, or any "associate" (as such term is
defined in Rule 12b-2 under the Securities Exchange Act) of any such officer or
director, has any Material interest in any Material contract or property (real
or personal), tangible or intangible, used in or pertaining to the business of
Western or any of its Subsidiaries.
(x) INSURANCE. Western and its Subsidiaries are currently insured, and
since December 31, 1994, have been insured, for reasonable amounts with
financially sound and reputable insurance companies, against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. All of the insurance policies and bonds
maintained by Western and its Subsidiaries are in full force and effect, Western
and its Subsidiaries are not in default thereunder and all Material claims
thereunder have been filed in due and timely fashion. Since December 31, 1994,
no claim by Western or any of its Subsidiaries on or in respect of an insurance
policy or bond has been declined or refused by the relevant insurer or insurers.
In the best judgment of Western's management, such insurance coverage is
adequate and will be available in the future under terms and conditions
substantially similar to those in effect on the date hereof. Between the date
hereof and the Effective Time, Western and its Subsidiaries will maintain the
levels of insurance coverage in effect on the date hereof and will submit all
potential claims existing prior to the Effective Time to its insurance carrier
on or before the Effective Time. The Western Disclosure Letter lists all
insurance policies maintained by or for the benefit of Western, its Subsidiaries
or its directors, officers, employees or agents, specifying the (i) type of
policy, (ii) policy limits and (iii) self insurance amounts.
(y) INVESTMENT SECURITIES. Except for pledges to secure public and trust
deposits and reverse repurchase agreements entered into in arm's-length
transactions pursuant to normal commercial terms and conditions and other
pledges required by law, none of the investments reflected in the consolidated
balance sheet of Western for the quarter ended June 30, 1997, and none of the
Material investments made by it or any of its Subsidiaries since December 31,
1996, is subject to any restriction (contractual, statutory or otherwise) that
would materially impair the ability of the entity holding such investment freely
to dispose of such investment at any time.
(z) DERIVATIVES. Neither Western nor any of its Subsidiaries is currently
a party to any interest rate swap, cap, floor, option agreement, other interest
rate risk management arrangement or agreement or derivative-type security or
derivative arrangement or agreement.
(aa) REGISTRATION OBLIGATIONS. Neither Western nor any of its Subsidiaries
is under any obligation, contingent or otherwise, to register any of its
securities under the Securities Act except as contemplated by this Plan.
(bb) BOOKS AND RECORDS. The books and records of Western and its
Subsidiaries have been, and are being, maintained in accordance with applicable
legal and accounting requirements and reflect in all Material respects the
substance of events and transactions that should be included therein.
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(cc) CORPORATE DOCUMENTS. Western has delivered to the Company true and
complete copies of (i) its amended articles of incorporation and amended by-laws
and (ii) the articles of incorporation and by-laws of Western Bank.
(dd) COMPANY ACTION. The Board of Directors of Western has adopted
resolutions recommending that the principal terms of this Plan be approved by
the shareholders of Western and directing that this Plan be submitted for
consideration by Western's shareholders at Western's Meeting. Western, as the
sole shareholder of Western Bank, has approved the principal terms of this Plan.
(ee) LOANS. Each loan reflected as an asset on Western's consolidated
balance sheet as of June 30, 1997 and each balance sheet date subsequent thereto
(i) is evidenced by notes, agreements or other evidences of indebtedness which
are true, genuine and what they purport to be, (ii) is the legal, valid and
binding obligation of the obligor named therein, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent conveyance and other
laws of general applicability relating to or affecting creditors' rights and to
general equity principles, and (iii) to the knowledge of Western, will not be
subject to any defenses which may be asserted against Western's bank
Subsidiaries. All loans and extensions of credit that have been made by Western
Bank or any other bank Subsidiaries of Western and that are subject to Sections
22(h), 23A and 23B of the Federal Reserve Act comply therewith.
(ff) FAIR LENDING; COMMUNITY REINVESTMENT ACT. As of the date hereof, with
the exception of routine investigation of consumer complaints, neither Western
nor any of its Subsidiaries has been advised that it is or may be in violation
of the Equal Credit Opportunity Act or the Fair Housing Act or any similar
federal or state statute. Western Bank received a CRA rating of "outstanding" in
its most recent CRA examination. Each of Western's bank Subsidiaries received a
CRA rating of "satisfactory" or better in its most recent CRA examination.
(gg) NO OMISSION OF MATERIAL FACT. No representation or warranty by
Western in this Plan, including the Annexes hereto, the disclosure letters and
the schedules to be delivered herewith or the Proxy Statement filed in
connection with the Meeting, contains any untrue statement of Material fact, or
omits to state a Material fact necessary to make the statements or facts
contained herein or therein not misleading. None of the information regarding
Western or any of its Subsidiaries or the transactions contemplated hereby
supplied or to be supplied by Western or any of its Subsidiaries for inclusion
in any documents or filings to be filed with any regulatory authority in
connection with the transactions contemplated hereby will contain any untrue
statement of Material fact, or omit to state a Material fact necessary to make
the statements or facts contained therein not misleading.
(hh) WESTERN COMMON STOCK. The shares of Western Common Stock to be issued
pursuant to this Plan, when issued in accordance with the terms of this Plan,
will be duly authorized, validly issued, fully paid and non-assessable.
ARTICLE IV. COVENANTS
SECTION 4.1. ACQUISITION PROPOSALS. The Company agrees that none of it or
any of its officers and directors shall, and the Company shall direct and use
its reasonable best efforts to cause its employees, agents and representatives
(including, without limitation, any investment banker, attorney or accountant
retained by it) not to, initiate, solicit or encourage, directly or indirectly,
any inquiries or the making of any proposal or offer (including, without
limitation, any proposal or offer to shareholders of the Company) with respect
to a merger, consolidation or similar transaction, other than pursuant to this
Plan, involving, or any purchase of all or any significant portion of the assets
or any equity securities of, the Company (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal") or, except to the extent
legally required for the discharge by the board of directors of its fiduciary
duties as advised in writing by such board's counsel, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal.
The Company will immediately cease
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and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing and
shall make all reasonable efforts to enforce any confidentiality agreements to
which it is a party. The Company will take the necessary steps to inform the
appropriate individuals or entities referred to in the first sentence hereof of
the obligations undertaken in this Section 4.1. The Company will notify Western
immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with the Company.
SECTION 4.2. CERTAIN POLICIES OF THE COMPANY. At or before the Effective
Time, the Company shall make such accounting entries or adjustments as Western
shall request in order to implement its plans for the Company following the
Merger or to reflect merger-related expenses and costs; PROVIDED, HOWEVER, that
(a) the Company shall not be required to take such action more than two days
prior to the Effective Time, (b) no such adjustment shall require, based upon
consultation with counsel and accountants for the Company, any filing with any
governmental agency, or violate any law, rule or regulation applicable to the
Company, (c) no such adjustment shall require any changes in net income or
shareholders' equity that will be required to be contained in any financial
statement required to be filed by the Company under the rules of the FDIC if the
Company reasonably believes that all of the conditions to closing set forth in
Article V will not be either satisfied or waived; and FURTHER PROVIDED, that in
any event no accrual or reserve made by the Company pursuant to this Section 4.2
shall constitute or be deemed to be a breach or violation of or failure to
satisfy any representation, warranty, covenant, condition or other provision of
this Plan or otherwise be considered in determining whether any such breach,
violation or failure to satisfy shall have occurred. The recording of such
adjustments shall not be deemed to imply any misstatement of previously
furnished financial statements or information and shall not be construed as
concurrence of the Company's management with any such adjustments.
SECTION 4.3. EMPLOYEE BENEFITS. (a) Western, Western Bank and the Company
agree that, unless otherwise mutually determined or as set forth in subsection
(b) below, the Company Employee Plans in effect at the date of this Plan (except
stock plans (other than the stock bonus plan, which will remain in effect for a
period to be agreed upon by the parties), including without limitation the
Company's stock option plans and the stock award plan) will remain in effect for
a period of at least six months after the Effective Time with respect to persons
covered by such plans at the Effective Time. Western is presently investigating,
with a consultant's assistance, the types of benefits which should be made
available to its employees and those of its Subsidiaries. Each person employed
by the Company prior to the Effective Time who remains an employee of the
Surviving Corporation following the Effective Time (each a "Continued Employee")
will be eligible to participate on the same basis as similarly situated
employees of Western or Western Bank in existing benefit plans of Western or
Western Bank as well as such other and additional benefit plans as shall be
determined by the board of the Surviving Corporation as a result of such
investigation and study. All such participation shall be subject to the terms of
Western's Benefit Plans as may be in effect from time to time. Western and
Western Bank shall, solely for purposes of time of service, vesting and
eligibility to participate in Western's Benefit Plans, recognize credit for each
Continued Employee's term of service with the Company.
(b) Western and Western Bank will honor, to the extent set forth in the
Company Disclosure Letter, all employment and severance agreements of the
Company, in accordance with their terms.
SECTION 4.4. ACCESS AND INFORMATION. Upon reasonable notice, each party
hereto shall (and shall cause its Subsidiaries to) afford to the other party and
its representatives (including, without limitation, directors, officers and
employees of such party and its affiliates, and counsel, accountants and other
advisors retained by such party and its affiliates) such access (including,
without limitation, for the purpose of conducting supplemental due diligence
reviews) during normal business hours throughout the period prior to the
Effective Time to the books, records (including, without limitation, loan and
credit files, tax returns and work papers of independent auditors), properties,
personnel and to such other information as the requesting party may reasonably
request; PROVIDED, HOWEVER, that no investigation pursuant to this
A-26
Section 4.4 shall affect or be deemed to modify any representation or warranty
made herein. Each party agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this Section
4.4 for any purpose unrelated to the consummation of the transactions
contemplated by this Plan. 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 4.4 and in
accordance with the Confidentiality Agreement between the Company and Western in
effect prior to the date hereof (the "Confidentiality Agreement"). In the event
that this Plan is terminated or the transactions contemplated by this Plan shall
otherwise fail to be consummated, each party shall promptly cause all copies of
documents or extracts thereof containing information and data as to another
party hereto (or an affiliate of any party hereto) to be returned to the party
which furnished the same. Except as otherwise specifically provided herein, the
terms of the Confidentiality Agreement shall remain in full force and effect.
SECTION 4.5. CERTAIN FILINGS, CONSENTS AND ARRANGEMENTS. Western, Western
Bank and the Company shall (a) as soon as practicable make any filings and
applications required to be filed in order to obtain all approvals, consents and
waivers of governmental authorities necessary or appropriate for the
consummation of the transactions contemplated hereby and use their reasonable
best efforts to cause the applications for the approvals described in Section
5.1(b) hereof to be initially filed on or before September 30, 1997; (b)
cooperate with one another (i) in promptly determining what filings are required
to be made or approvals, consents or waivers are required to be obtained under
any relevant federal, state or foreign law or regulation and (ii) in promptly
making any such filings, furnishing information required in connection therewith
and seeking timely to obtain any such approvals, consents or waivers; and (c)
deliver to the other copies of the publicly available portions of all such
filings and applications promptly after they are filed.
SECTION 4.6. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a) From
and for a period of six years after the Effective Time, Western and Western Bank
agree to indemnify and hold harmless each director and officer of the Company,
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 Plan or any of the transactions contemplated hereby), 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
Company's articles of incorporation or 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 Company's articles of incorporation and by-laws.
(b) Any Indemnified Party wishing to claim indemnification under Section
4.6(a) hereof, 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 that there are issues which raise conflicts
of interest between Western and the Indemnified Parties, the Indemnified Parties
may retain counsel satisfactory to them, and Western shall pay the reasonable
fees and expenses of one such counsel for the Indemnified Parties in any
jurisdiction promptly as statements thereof are received unless the use of one
counsel for such Indemnified Parties would present such counsel with a conflict
of interest, (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. Notwithstanding the foregoing, Western shall
A-27
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 the Company (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 Subsection 4.6(c), any amount per annum
in excess of 200% of the amount of the annual premiums paid as of the date
hereof by the Company 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 the Company to, and the Company shall, purchase
insurance coverage, on such terms and conditions as shall be acceptable to
Western, extending for a period of six years the Company'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 4.6.
(e) The provisions of this Section 4.6 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
SECTION 4.7. ADDITIONAL AGREEMENTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its reasonable best
efforts to take promptly, or cause to be taken promptly, all actions and to do
promptly, or cause to be done promptly, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Plan as soon as practicable, including
using efforts to obtain all necessary actions or non-actions, extensions,
waivers, consents and approvals from all applicable governmental entities,
effecting all necessary registrations, applications and filings (including,
without limitation, filings under any applicable state securities laws) and
obtaining any required contractual consents and regulatory approvals.
SECTION 4.8. PUBLICITY. The initial press release announcing this Plan
shall be a joint press release and thereafter Western and the Company shall
consult with each other in issuing any press releases or otherwise making public
statements with respect to the other or the transactions contemplated hereby and
in making any filings with any governmental entity or with any national
securities exchange with respect thereto.
SECTION 4.9. REGISTRATION STATEMENT. As soon as reasonably practicable
after the date hereof, Western and the Company shall jointly prepare a
registration statement, including a joint proxy statement in respect of the
Meetings (as defined herein) (the "Registration Statement"), for the purpose of
registering the Western Common Stock to be issued pursuant hereto, file the
Registration Statement with the SEC, respond to comments of the staff of the SEC
and promptly thereafter mail the Registration Statement to all holders of record
(as of the applicable record date) of shares of Company Common Stock and Western
Common Stock. The Company covenants that (a) all information supplied by it in
writing to Western expressly for use in the Registration Statement will be
accurate and complete in all Material
A-28
respects and (b) none of the information to be supplied by the Company will, in
the case of the proxy statement to be used by Western to solicit the approval of
its shareholders as contemplated by this Plan, when it is first mailed to
Western's shareholders, contain any untrue statement of a Material fact or omit
to state any Material fact necessary in order to make the statement made
therein, in light of the circumstances under which such statements are made, not
misleading. Western covenants that (a) all information supplied by it in writing
to the Company expressly for use in the Registration Statement will be accurate
and complete in all Material respects and (b) none of the information to be
supplied by Western will, in the case of the proxy statement to be used by the
Company to solicit the approval of its shareholders as contemplated by this
Plan, when it is first mailed to the Company's shareholders, contain any untrue
statement of a Material fact or omit to state any Material fact necessary in
order to make the statement made therein, in light of the circumstances under
which such statements are made, not misleading.
SECTION 4.10. SHAREHOLDERS' MEETINGS. Each of Western and the Company
shall take all action necessary, in accordance with applicable law and its
articles of incorporation and by-laws, to convene a meeting of the holders of
its common stock (each, a "Meeting") as mutually agreed for the purpose of
approving the principal terms of this Plan. Except to the extent legally
required for the discharge by such party's board of directors of its fiduciary
duties as advised in writing by such board's counsel, such party's board of
directors shall recommend at its Meeting that the principal terms of this Plan
be approved by its shareholders.
SECTION 4.11. NOTIFICATION OF CERTAIN MATTERS. Each of Western and the
Company shall give prompt notice to the other of: (a) any notice of, or other
communication relating to, a default or event that, with notice or lapse of time
or both, would become a default, received by it or any of its Subsidiaries
subsequent to the date of this Plan and prior to the Effective Time, under any
contract Material to the financial condition, properties, businesses or results
of operations of such party taken as a whole to which such party or any
Subsidiary is a party or is subject; and (b) any Material adverse change in the
condition (financial or other), properties, assets, business, results of
operations or prospects of it and its Subsidiaries taken as a whole or the
occurrence of any event which, so far as reasonably can be foreseen at the time
of its occurrence, is reasonably likely to result in any such change. Each of
the Company and Western shall give prompt notice to the other party of any
notice or other communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Plan.
SECTION 4.12. NO ACQUISITIONS OF COMPANY COMMON STOCK. Prior to the
earlier of (i) immediately prior to the Effective Time and (ii) the termination
of this Plan in accordance with Article VI hereof, Western shall not and shall
cause its affiliates not to, directly or indirectly, acquire any shares of
Company Common Stock, other than (i) up to 5% of such shares acquired during the
period commencing on the first business day after the release of the press
release announcing this Plan and (ii) shares acquired in a fiduciary or agency
capacity or in satisfaction of a debt or debts previously contracted.
SECTION 4.13. SECURITIES ACT. (a) As soon as practicable after the date of
the Company's Meeting, the Company shall identify to Western all persons who the
Company believes to be affiliates of the Company as that term is used in
paragraphs (c) and (d) of Rule 145 under the Securities Act ("Affiliates").
(b) The Company shall use its best efforts to obtain a written agreement
from each person identified as an Affiliate pursuant to clause 4.13(a) above
who is an officer or director of the Company providing that each such person
will agree not to sell, pledge, transfer or otherwise dispose of the shares
of Western Common Stock to be received by such person in the Merger except
in compliance with the applicable provisions of the Securities Act. The
Company shall cause forms of such written agreement to be delivered to each
other person who the Company believes may be or become an Affiliate of
Western for purposes of enabling such persons to comply with the exchange
procedures set forth in Section 1.4.
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SECTION 4.14. TAX-FREE REORGANIZATION TREATMENT. Except as contemplated by
Section 1.3(c)(iii), neither Western nor the Company shall take or cause to be
taken any action, whether before or after the Effective Time, which would
disqualify the Merger as a "reorganization" within the meaning of Section 368 of
the Code.
SECTION 4.15. SHAREHOLDER AGREEMENTS. Certain directors of the Company, 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 Annex 3 hereto ("the Shareholder Agreements").
SECTION 4.16. DIRECTOR AND OFFICER RESIGNATIONS. The Company shall cause
to be delivered to Western at the Effective Time the resignations of the members
of the board of directors of the Company and of such officers as are agreed to
by Western and the Company in advance of the Effective Time.
ARTICLE V. CONDITIONS TO CONSUMMATION
SECTION 5.1. CONDITIONS TO ALL PARTIES' OBLIGATIONS. The respective
obligations of Western, Western Bank and the Company to effect the Merger shall
be subject to the satisfaction or waiver by Western and the Company prior to the
Effective Time of the following conditions:
(a) The principal terms of this Plan shall have been approved by the
requisite vote of the respective shareholders of the Company and Western.
(b) Western, Western Bank and the Company shall have procured the approvals,
consents or waivers with respect to the Plan, the Merger and the other
transactions contemplated hereby by the Federal Reserve Board, and all
applicable statutory waiting periods shall have expired; and the parties shall
have procured all other regulatory approvals, consents or waivers of
governmental authorities or other persons that, in the opinion of counsel for
Western and the Company, are necessary or appropriate for the consummation of
the Merger and the other transactions contemplated hereby; PROVIDED, HOWEVER,
that no approval, consent or waiver referred to in this Section 5.1(b) shall be
deemed to have been received if it shall include any condition or requirement
(other than conditions or requirements that have been imposed on Western or
Western Bank in connection with previous acquisitions announced since 1995)
that, individually or in the aggregate, (i) would result in a Material Adverse
Effect on Western or the Company or (ii) would reduce the economic and business
benefits of the transactions contemplated by the Plan to Western or the Company
in so significant and adverse a manner that the party or parties so affected, in
its or their judgment, would not have entered into this Plan had such condition
or requirement been known at the date hereof.
(c) All other requirements prescribed by law which are necessary to the
consummation of the Merger and any transactions necessary to consummate the
Merger shall have been satisfied.
(d) No party hereto shall be subject to any order, decree or injunction of a
court or agency of competent jurisdiction which enjoins or prohibits the
consummation of the Merger or any transaction necessary to consummate the
Merger, and no litigation or proceeding shall be pending against the Company or
Western or any of its Subsidiaries brought by any governmental agency seeking to
prevent consummation of the Merger or any transaction necessary to consummate
the Merger.
(e) No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated, interpreted, applied or enforced by any
governmental authority which prohibits, restricts or makes illegal consummation
of the Merger or any other transaction contemplated by this Plan.
(f) The Registration Statement shall have become effective 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.
(g) Except if the failure to obtain such opinions is due solely to the
circumstances described in Section 1.3(c)(iii), Western and Western Bank shall
have received an opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ and
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the Company shall have received an opinion of Company Counsel, no later than
thirty (30) days from the date hereof, and confirmed immediately prior to the
Effective Time, substantially to the effect that the Merger will be a
reorganization within the meaning of Section 368(a) of the Code, and that
Western, Western Bank and the Company will each be a party to that
reorganization. Each such opinion may be based on, in addition to the review of
such matters of law and fact as counsel rendering the opinion considers
appropriate, (i) representations made at counsel's request by Western, Western
Bank, the Company, shareholders of Western or the Company, or any combination of
such persons, (ii) certificates provided at counsel's request by officers of
Western, Western Bank or the Company and other appropriate persons and (iii)
assumptions set forth in the opinion with the consent of Western (in the case of
the opinion to be delivered by ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇) or with the consent of the
Company (in the case of the opinion to be delivered by Company Counsel).
SECTION 5.2. CONDITIONS TO THE OBLIGATIONS OF WESTERN. The obligations of
Western and Western Bank to effect the Merger shall be subject to the
satisfaction or waiver by Western prior to the Effective Time of the following
additional conditions:
(a) Western shall have received from the Company's independent certified
public accountants a "cold comfort" letter or "specified procedures" letter,
dated (A) the date of the mailing of the Registration Statement, and (B) shortly
prior to the Effective Date, with respect to certain financial information
regarding the Company.
(b) Each of the representations and warranties of the Company contained in
this Plan shall have been true and correct on the date hereof and shall be true
and correct at the Effective Time (or on the date when made in the case of any
representation or warranty which specifically relates to an earlier date or
period); PROVIDED, HOWEVER, that for purposes of this Section 5.2(b) a
representation or warranty shall only fail to be true and correct at the
Effective Time if the failure of any such representation or warranty to be true
and correct has or constitutes, or is likely to have or constitute or relates
to, either individually or in the aggregate with other such representations or
warranties, a Material Adverse Effect on the Company; the Company shall have
performed, or shall have caused to be performed, in all Material respects, each
of its covenants and agreements contained in this Plan required to be performed
at or prior to the Effective Time; and Western shall have received a certificate
signed by the Chief Executive Officer and the Chief Financial Officer of the
Company, dated the Effective Date, as to the foregoing to the best of their
knowledge.
(c) Western shall have received the written resignation of each director (in
his/her capacity as director) of the Company, effective as of the Effective
Time, and such resignations of officers as may be agreed to by Western and the
Company pursuant to Section 4.16 hereof.
(d) The Company or Western shareholders voting against the principal terms
of this Plan or giving notice in writing to the Company or Western, as the case
may be, at or before the applicable Meeting that such shareholder dissents from
the principal terms of this Plan, in the aggregate, shall not hold more than
five percent of the Company Common Stock or Western Common Stock, as the case
may be (the condition set forth in this paragraph (d) being referred to herein
as the "Dissenters' Rights Condition"); PROVIDED, HOWEVER, that Western may, in
its sole discretion, at anytime, either before or after shareholder approval of
the principal terms of this Plan, waive the Dissenters' Rights Condition, either
in whole or in part.
(e) Prior to solicitation of shareholder approval, Western shall have
received an opinion confirming the fairness of the terms of the Merger to its
shareholders from a financial point of view.
(f) Western shall have received a conformed copy of a certificate of
satisfaction of the Franchise Tax Board of the State of California that all
taxes imposed by law on the Company have been paid or secured, as filed with the
Secretary of State for the State of California pursuant to Section 1103 of the
California Corporations Code.
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(g) As of December 31, 1997, (i) the Company Book Value shall not be less
than $77,900,000 and (ii) the Company's allowance for loan and lease losses
shall not be less than $7,992,000.
SECTION 5.3. CONDITIONS TO THE OBLIGATION OF THE COMPANY. The obligation
of the Company to effect the Merger shall be subject to the satisfaction or
waiver by the Company prior to the Effective Time of the following additional
conditions:
(a) The Company shall have received from Western's independent certified
public accountants a "cold comfort" letter or letters or "specified procedures"
letter or letters, dated (A) the date of the mailing of the Registration
Statement, and (B) shortly prior to the Effective Date, with respect to certain
financial information regarding Western.
(b) Each of the representations, warranties and covenants of Western
contained in this Plan shall have been true on the date hereof and shall be true
in all Material respects on the Effective Date as if made on such date (or on
the date when made in the case of any representation or warranty which
specifically relates to an earlier date or period), PROVIDED, HOWEVER, that for
purposes of this Section 5.3(b) a representation or warranty shall only fail to
be true and correct at the Effective Time if the failure of any such
representation or warranty to be true and correct has or constitutes or relates
to, or is likely to have or constitute or relate to, either individually or in
the aggregate with other such representations or warranties, a Material Adverse
Effect on Western; Western shall have performed, or shall have caused to be
performed, in all Material respects, each of its covenants and agreements
contained in this Plan required to be performed at or prior to the Effective
Time; and the Company shall have received certificates signed by the Chief
Executive Officer and the Chief Financial Officer of Western, dated the
Effective Date, as to the foregoing.
(c) The Company shall have received an opinion, dated the Effective Date,
from ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, to the effect that the Western Common Stock being
issued pursuant to this plan will be duly authorized, validly issued, fully paid
and non-assessable.
(d) As of the Effective Time, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be a member of the
board of directors of Western and the Surviving Corporation and shall be the
Chairman, President and Chief Executive Officer of the Surviving Corporation.
(e) Prior to the solicitation of shareholder approval and the Effective
Time, the Company shall have received an opinion confirming the fairness of the
terms of the Merger to its shareholders from a financial point of view.
ARTICLE VI. TERMINATION
SECTION 6.1. TERMINATION. This Plan may be terminated, and the Merger
abandoned, prior to the Effective Date, either before or after its approval by
the shareholders of the Company and Western:
(a) by the mutual consent of Western and the Company, if the board of
directors of each so determines by vote of a majority of the members of its
entire board;
(b) by either of Western or the Company, by written notice to the other, if
its board of directors so determines by vote of a majority of the members of its
entire board, in the event of (i) the failure of the shareholders of the Company
to approve the principal terms of this Plan at its Meeting, (ii) the failure of
the shareholders of Western to approve the principal terms of this Plan at its
Meeting, or (iii) a Material breach by the other party hereto of any
representation, warranty, covenant or agreement contained herein which is not
cured or not curable within 30 days after written notice of such breach is given
to the party committing such breach by the other party;
(c) by either of Western or the Company, by written notice to the other, if
either (i) any approval, consent or waiver of a governmental authority required
to permit consummation of the Merger or any transaction necessary to consummate
the Merger shall have been denied or (ii) any governmental authority
A-32
of competent jurisdiction shall have issued a final, unappealable order
enjoining or otherwise prohibiting consummation of the Merger or any transaction
necessary to consummate the Merger;
(d) by either of Western or the Company, by written notice to the other, 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 February 28,
1998, unless the failure so to consummate by such time is due to the breach of
any representation, warranty or covenant contained in this Plan by the party
seeking to terminate;
(e) by Western, by written notice to the Company, if the Company takes,
causes to be taken or allows to be taken any action that, without giving effect
to the exception contained in Section 4.1 hereof regarding the exercise by the
Company's board of directors of its fiduciary duties, would otherwise be
prohibited under Section 4.1 hereof; or
(f) by the Company, by written notice to Western prior to the approval by
the shareholders of the Company of the principal terms of this Plan, if the
Company receives an Acquisition Proposal on terms and conditions which the board
of directors determines, after receiving the written advice of its outside
counsel, (i) that to proceed with the Merger will violate the fiduciary duties
of the board of directors to the Company's shareholders and (ii) to accept such
proposal; PROVIDED, HOWEVER, that the Company shall not be entitled to terminate
this Plan pursuant to this clause (f) 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) two business days prior to such determination.
SECTION 6.2. EFFECT OF TERMINATION. (a) In the event of the termination of
this Plan by Western or the Company, as provided above, this Plan shall
thereafter become void and, subject to the provisions of Section 6.2(b) and (c)
and Section 8.2 hereof, there shall be no liability on the part of any party
hereto or their respective officers or directors, except that any such
termination shall be without prejudice to the rights of any party hereto arising
out of the willful breach by any other party of any covenant or willful
misrepresentation contained in this Plan.
(b) The parties agree and acknowledge that it is impractical to ascertain
the precise amount of damage to the Company as a result of a failure to
consummate the Merger and the other transactions contemplated hereby due to a
termination of this Plan by the Company pursuant to clause (iii) of Section
6.1(b) hereof. Accordingly, in the event of such termination, Western shall pay
to the Company $5 million plus all costs and expenses incurred by the Company in
connection with this Plan, up to $1 million, the parties agreeing that such
amount will represent a reasonable estimate of the minimum damage to the Company
and not a penalty. The fee payable pursuant to the foregoing sentence shall be
payable by Western to the Company by wire transfer to an account designated by
the Company in writing, on or before the seventh day after it becomes due.
Payment of such amount shall be in full satisfaction of damages to the Company
arising from any breach by Western of any of its representations, warranties,
covenants or agreements contained herein.
(c) The parties agree and acknowledge that it is impractical to ascertain
the precise amount of damage to Western and Western Bank as a result of a
failure to consummate the Merger and the other transactions contemplated hereby
due to a termination of this Plan by Western pursuant to clause (iii) of Section
6.1(b) or Section 6.1(e) hereof or by the Company pursuant to Section 6.1(f)
hereof. Accordingly, in the event of such termination pursuant to clause (iii)
of Section 6.1(b), the Company shall pay to Western $3 million, and in the event
of such termination pursuant to Section 6.1(e) or Section 6.1(f), the Company
shall pay to Western $10 million, in either case plus all costs and expenses
incurred by Western in connection with this Plan, up to $1 million, the parties
agreeing that such amounts will represent a reasonable estimate of the minimum
damage to Western and Western Bank and not a penalty. The fee payable pursuant
to the foregoing sentence shall be payable by the Company to Western by wire
transfer to an account designated by Western in writing, on or before the
seventh day after it becomes due. Payment of such amount shall be in full
satisfaction of damages to Western and Western Bank arising from any
A-33
breach by the Company of any of its representations, warranties, covenants or
agreements contained herein.
ARTICLE VII. EFFECTIVE DATE AND EFFECTIVE TIME
SECTION 7.1. EFFECTIVE DATE AND EFFECTIVE TIME. On such date as Western
selects after December 31, 1997, which shall, unless such 30 day period ends
prior to January 1, 1998, be within 30 days after the last to occur of the
expiration of all applicable waiting periods in connection with approvals of
governmental authorities, the receipt of all approvals of governmental
authorities and the satisfaction or waiver of all other conditions to the
consummation of the Merger, or on such earlier or later date as may be agreed in
writing by the parties, an agreement of merger and related documents, in
customary form, 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 and such time 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 VIII. OTHER MATTERS
SECTION 8.1. CERTAIN DEFINITIONS; INTERPRETATION. As used in this Plan,
the following terms shall have the meanings indicated:
"Company Book Value" means the shareholders' equity of the Company,
determined in accordance with GAAP.
"GAAP" means generally accepted accounting principles applicable to bank
holding companies, consistently applied.
"Material" means material to Western or the Company (as the case may be) and
their respective Subsidiaries, taken as a whole.
"Material Adverse Effect", with respect to a person, means any condition,
event, change or occurrence that is reasonably likely to have a Material
adverse effect upon (A) the condition (financial or other), properties,
assets, business, results of operations or prospects of such person and its
Subsidiaries, taken as a whole, or (B) the ability of such person to perform
its obligations under, and to consummate the transactions contemplated by,
this Plan.
"Person" includes an individual, corporation, partnership, association,
trust or unincorporated organization.
"Subsidiary", with respect to a person, means any other person controlled by
such person.
When a reference is made in this Plan to Sections or Annexes, such reference
shall be to a Section of, or Annex to, this Plan unless otherwise indicated. The
table of contents, index of defined terms and headings contained in this Plan
are for ease of reference only and shall not affect the meaning or
interpretation of this Plan. Whenever the words "include", "includes", or
"including" are used in this Plan, they shall be deemed followed by the words
"without limitation". Any singular term in this Plan shall be deemed to include
the plural, and any plural term the singular.
SECTION 8.2. SURVIVAL. Only those agreements and covenants of the parties
that are by their terms applicable in whole or in part after the Effective Time
shall survive the Effective Time. All other representations, warranties,
agreements and covenants shall be deemed to be conditions of the Plan and shall
not survive the Effective Time. If the Plan shall be terminated, the agreements
of the parties in Section 6.2, this Section 8.2, Section 8.6, Section 8.7 and
the last four sentences of Section 4.4 hereof shall survive such termination.
A-34
SECTION 8.3. WAIVER. Prior to the Effective Time, any provision of this
Plan may be: (i) waived by the party benefitted by the provision; or (ii)
amended or modified at any time (including the structure of the transaction) by
an agreement in writing between the parties hereto approved by their respective
boards of directors.
SECTION 8.4. COUNTERPARTS. This Plan may be executed in counterparts, each
of which shall be deemed to constitute an original, but all of which together
shall constitute one and the same instrument.
SECTION 8.5. GOVERNING LAW. This Plan shall be governed by, and
interpreted in accordance with, the laws of the State of California.
SECTION 8.6. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS PLAN OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 8.7. EXPENSES. Each party hereto will bear all expenses incurred
by it in connection with this Plan and the transactions contemplated hereby.
SECTION 8.8. NOTICES. All notices, requests, acknowledgments and other
communications hereunder to a party shall be in writing and shall be deemed to
have been duly given when delivered by hand, telecopy, telegram or telex
(confirmed in writing) to such party at its address set forth below or such
other address as such party may specify by notice to the other party hereto.
If to the Company, to:
Santa ▇▇▇▇▇▇ Bank
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
With copies to:
O'Melveny & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to Western or Western Bank, to:
Western Bancorp
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
A-35
With copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
SECTION 8.9. ENTIRE AGREEMENT; ETC. This Plan, together with the
Confidentiality Agreement and the Shareholder Agreements of even date herewith,
represents the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and supersedes any and all other oral or
written agreements heretofore made. All terms and provisions of the Plan shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Except as to Section 4.6 hereof, nothing in
this Plan is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Plan.
SECTION 8.10. ASSIGNMENT. This Plan may not be assigned by any party
hereto without the written consent of the other parties.
IN WITNESS WHEREOF, the parties hereto have caused this Plan to be executed
by their duly authorized officers as of the day and year first above written.
WESTERN BANCORP
By:
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
WESTERN BANK
By:
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
SANTA ▇▇▇▇▇▇ BANK
By:
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief
Executive Officer
A-36
