Exhibit 2.1
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SECOND AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 16, 1998
BY AND AMONG
WESTERN BANCORP
SANTA ▇▇▇▇▇▇ BANK
AND
BANK OF LOS ANGELES
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TABLE OF CONTENTS
RECITALS
PAGE
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ARTICLE I
Certain Definitions
1.01 CERTAIN DEFINITIONS................................................................................ 1
ARTICLE II
The Merger
2.01 THE MERGER......................................................................................... 4
2.02 EFFECTIVE DATE AND EFFECTIVE TIME.................................................................. 5
ARTICLE III
Consideration; Exchange Procedures
3.01 MERGER CONSIDERATION............................................................................... 5
3.02 RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS............................................................ 5
3.03 FRACTIONAL SHARES.................................................................................. 6
3.04 EXCHANGE PROCEDURES................................................................................ 6
3.05 ANTI-DILUTION PROVISIONS........................................................................... 7
3.06 OPTIONS............................................................................................ 7
3.07 WARRANTS........................................................................................... 8
ARTICLE IV
Actions Pending Acquisition
4.01 FOREBEARANCES OF BKLA.............................................................................. 8
4.02 FOREBEARANCES OF WESTERN........................................................................... 10
ARTICLE V
Representations and Warranties
5.01 DISCLOSURE SCHEDULES............................................................................... 10
5.02 STANDARD........................................................................................... 10
5.03 REPRESENTATIONS AND WARRANTIES OF BKLA............................................................. 11
5.04 REPRESENTATIONS AND WARRANTIES OF WESTERN.......................................................... 17
ARTICLE VI
Covenants
6.01 REASONABLE BEST EFFORTS............................................................................ 20
6.02 SHAREHOLDER APPROVAL............................................................................... 20
6.03 REGISTRATION STATEMENT............................................................................. 20
6.04 PRESS RELEASES..................................................................................... 21
6.05 ACCESS; INFORMATION................................................................................ 21
6.06 ACQUISITION PROPOSALS.............................................................................. 22
6.07 AFFILIATE AGREEMENTS............................................................................... 22
6.08 TAKEOVER LAWS...................................................................................... 22
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6.09 CERTAIN POLICIES................................................................................... 22
6.10 NASDAQ LISTING..................................................................................... 22
6.11 REGULATORY APPLICATIONS............................................................................ 22
6.12 INDEMNIFICATION; DIRECTOR AND OFFICERS' INSURANCE.................................................. 23
6.13 BENEFIT PLANS...................................................................................... 24
6.14 ACCOUNTANTS' LETTERS............................................................................... 24
6.15 NOTIFICATION OF CERTAIN MATTERS.................................................................... 24
6.16 SHAREHOLDER AGREEMENTS............................................................................. 24
ARTICLE VII
Conditions to Consummation of the Merger
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER......................................... 24
7.02 CONDITIONS TO OBLIGATION OF BKLA................................................................... 25
7.03 CONDITIONS TO OBLIGATION OF WESTERN................................................................ 25
ARTICLE VIII
Termination
8.01 TERMINATION........................................................................................ 26
8.02 EFFECT OF TERMINATION AND ABANDONMENT.............................................................. 27
8.03 TERMINATION FEE.................................................................................... 27
ARTICLE IX
Miscellaneous
9.01 SURVIVAL........................................................................................... 28
9.02 WAIVER; AMENDMENT.................................................................................. 28
9.03 COUNTERPARTS....................................................................................... 28
9.04 GOVERNING LAW; WAIVER OF JURY TRIAL................................................................ 28
9.05 EXPENSES........................................................................................... 28
9.06 NOTICES............................................................................................ 29
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES................................................. 29
9.08 INTERPRETATION; EFFECT............................................................................. 29
EXHIBIT A Form of Affiliate Agreement
EXHIBIT B Form of Shareholder's Agreement
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SECOND AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of July
16, 1998 (this "Agreement"), by and among Bank of Los Angeles ("BKLA"), Western
Bancorp ("Western") and Santa ▇▇▇▇▇▇ Bank.
RECITALS
A. BKLA. BKLA is a California corporation, having its principal place of
business in West Hollywood, California.
B. WESTERN. Western is a California corporation, having its principal
place of business in Newport Beach, California.
C. SANTA ▇▇▇▇▇▇ BANK. Santa ▇▇▇▇▇▇ Bank is a California corporation having
its principal place of business in Santa Monica, California.
D. STOCK OPTION AGREEMENT. Concurrently herewith, BKLA and Western are
entering into a stock option agreement (the "STOCK OPTION AGREEMENT"), to be
dated the date hereof, whereby BKLA will grant to Western the option to purchase
up to 19.9% of the outstanding shares of the BKLA Common Stock upon the
occurrence of certain events.
E. INTENTIONS OF THE PARTIES. It is the intention of the parties to this
Agreement that the business combination contemplated hereby be accounted for
under the "pooling-of-interests" accounting method and be treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986 as
amended (the "CODE").
F. BOARD ACTION. The respective Boards of Directors of each of Western and
BKLA have determined that it is in the best interests of their respective
companies and their stockholders to consummate the strategic business
combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. The following terms are used in this Agreement
with the meanings set forth below:
"ACQUISITION PROPOSAL" means any tender or exchange offer, proposal for
a merger, consolidation or other business combination involving BKLA or any
of its Subsidiaries or any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets or
deposits of, BKLA or any of its Subsidiaries, other than the transactions
contemplated by this Agreement.
"AFFILIATE AGREEMENTS" has the meaning set forth in Section 6.07(b).
"AGREEMENT" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"BENEFIT PLANS" has the meaning set forth in Section 5.03(m).
"BKLA" has the meaning set forth in the preamble to this Agreement.
"BKLA AFFILIATE" has the meaning set forth in Section 6.07(a).
"BKLA ARTICLES" means the Articles of Incorporation of BKLA.
"BKLA BOARD" means the Board of Directors of BKLA.
"BKLA BY-LAWS" means the By-laws of BKLA.
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"BKLA COMMON STOCK" means the common stock, no par value per share, of
BKLA.
"BKLA MEETING" has the meaning set forth in Section 6.02.
"BKLA STOCK OPTION" has the meaning set forth in Section 3.06.
"BKLA STOCK PLAN" means BKLA's 1988 Stock Option Plan (as amended).
"BKLA WARRANT" has the meaning set forth in Section 3.07.
"BKLA WARRANT AGREEMENT" has the meaning set forth in Section 3.07.
"BUSINESS COMBINATION" has the meaning set forth in Section 3.05.
"CGCL" means the California General Corporation law.
"CALIFORNIA SECRETARY" means the California Secretary of State.
"CODE" has the meaning set forth in the recitals.
"COMMISSIONER" means the California Commissioner of Financial
Institutions.
"COSTS" has the meaning set forth in Section 6.12(a).
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 5.01.
"EFFECTIVE DATE" means the date on which the Effective Time occurs, as
provided for in Section 2.02.
"EFFECTIVE TIME" means the effective time of the Merger, as provided for
in Section 2.02.
"EMPLOYEES" has the meaning set forth in Section 5.03(m).
"ENVIRONMENTAL LAW" has the meaning set forth in Section 5.03(o).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" has the meaning set forth in Section 5.03(m).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"EXCHANGE AGENT" has the meaning set forth in Section 3.04.
"EXCHANGE FUND" has the meaning set forth in Section 3.04.
"EXCHANGE RATIO" has the meaning set forth in Section 3.01(a).
"FDIC" means the Federal Deposit Insurance Corporation.
"FEDERAL RESERVE" means the Board of Governors of the Federal Reserve
System.
"GOVERNMENTAL AUTHORITY" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality, or any Regulatory Authority.
"HAZARDOUS SUBSTANCE" has the meaning set forth in Section 5.03(o).
"INDEMNIFIED PARTY" has the meaning set forth in Section 6.12(a).
"INSURANCE POLICY" has the meaning set forth in Section 5.03(s).
"LIENS" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance.
"LOAN PROPERTY" has the meaning set forth in Subsection 5.03(o).
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"MATERIAL ADVERSE EFFECT" means, with respect to Western or BKLA, any
effect that (i) is material and adverse to the financial position, results
of operations or business of Western and its Subsidiaries taken as a whole
or BKLA and its Subsidiaries taken as a whole, respectively, or (ii) would
materially impair the ability of either Western or BKLA to perform its
obligations under this Agreement or otherwise materially threaten or
materially impede the consummation of the Merger and the other transactions
contemplated by this Agreement; PROVIDED, HOWEVER, that Material Adverse
Effect shall not be deemed to include the impact of (a) changes in banking
and similar laws of general applicability or interpretations thereof by
courts or governmental authorities, (b) changes in generally accepted
accounting principles or regulatory accounting requirements applicable to
banks and their holding companies generally and (c) any modifications or
changes to valuation policies and practices in connection with the Merger or
restructuring charges taken in connection with the Merger, in each case in
accordance with generally accepted accounting principles.
"MAXIMUM AMOUNT" has the meaning set forth in Section 6.12(c).
"MERGER" has the meaning set forth in Section 2.01.
"MERGER CONSIDERATION" has the meaning set forth in Section 2.01.
"MULTIEMPLOYER PLANS" has the meaning set forth in Section 5.03(m).
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market.
"NEW CERTIFICATE" has the meaning set forth in Section 3.04.
"OLD CERTIFICATE" has the meaning set forth in Section 3.04.
"PERSON" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated
organization.
"PENSION PLAN" has the meaning set forth in Section 5.03(m).
"PLANS" has the meaning set forth in Section 5.03(m).
"PREVIOUSLY DISCLOSED" by a party shall mean information set forth in
its Disclosure Schedule.
"PROXY STATEMENT" has the meaning set forth in Section 6.03.
"REGISTRATION STATEMENT" has the meaning set forth in Section 6.03.
"REGULATORY AUTHORITY" has the meaning set forth in Section 5.03(i).
"REGULATORY DOCUMENTS" means documents filed with the SEC or the FDIC,
as applicable, of the types referred to in Section 5.03(g) and Section
5.04(f).
"REPLACEMENT WARRANT" has the meaning set forth in Section 3.07.
"REPRESENTATIVES" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"RIGHTS" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person
any right to subscribe for or acquire, or any options, calls or commitments
relating to, or any stock appreciation right or other instrument the value
of which is determined in whole or in part by reference to the market price
or value of, shares of capital stock of such Person.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and rules
and regulations thereunder.
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"SHAREHOLDER AGREEMENTS" has the meaning set forth in Section 6.16.
"STOCK OPTION AGREEMENT" has the meaning set forth in the Recitals.
"SUBSIDIARY" and "SIGNIFICANT SUBSIDIARY" have the meanings ascribed to
them in Rule 1-02 of Regulation S-X of the SEC.
"SURVIVING CORPORATION" has the meaning set forth in Section 2.01.
"TAKEOVER LAWS" means any "moratorium", "control share", "fair price",
"affiliate transaction", "business combination" or other antitakeover laws
and regulations of the state of California.
"TAX" and "TAXES" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts,
sales, use, ad valorem, goods and services, capital, production, transfer,
franchise, windfall profits, license, withholding, payroll, employment,
disability, employer health, excise, estimated, severance, stamp,
occupation, property, environmental, unemployment or other taxes, custom
duties, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority whether arising before, on or after the
Effective Date.
"TAX RETURNS" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with respect to any Tax.
"TREASURY STOCK" shall mean shares of BKLA Common Stock held by any of
BKLA's Subsidiaries or by Western or any of its Subsidiaries, in each case
other than in a fiduciary (including custodial or agency) capacity or as a
result of debts previously contracted in good faith.
"WESTERN" has the meaning set forth in the preamble to this Agreement.
"WESTERN BOARD" means the Board of Directors of Western.
"WESTERN COMMON STOCK" means the common stock, no par value per share,
of Western.
"WESTERN PREFERRED STOCK" means the preferred, no par or stated value
per share, of Western.
ARTICLE II
THE MERGER
2.01 THE MERGER. (a) At the Effective Time, BKLA shall merge with and into
Santa ▇▇▇▇▇▇ Bank (the "Merger"), the separate corporate existence of BKLA shall
cease and Santa ▇▇▇▇▇▇ Bank shall survive and continue to exist as a California
corporation (Santa ▇▇▇▇▇▇ Bank, as the surviving corporation in the Merger,
sometimes being referred to herein as the "SURVIVING CORPORATION"). Western may
at any time prior to the Effective Time change the method of effecting the
combination with BKLA (including, without limitation, the provisions of this
Article II) if and to the extent it deems such change to be necessary,
appropriate or desirable; PROVIDED, HOWEVER, that no such change shall (i) alter
or change the amount or kind of consideration to be issued to holders of BKLA
Common Stock as provided for in this Agreement (the "MERGER CONSIDERATION"),
(ii) cause the transaction to be treated as anything other than a tax-free
reorganization to the shareholders of BKLA or (iii) materially impede or delay
consummation of the transactions contemplated by this Agreement.
(b) Subject to the satisfaction or waiver of the conditions set forth in
Article VII, the Merger shall become effective upon the occurrence of the filing
in the office of the Commissioner in accordance with the California Financial
Code after the filing with the California Secretary of an agreement of merger in
accordance with the CGCL or such later date and time as may be set forth in such
agreement. The Merger shall have the effects prescribed in the CGCL.
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(c) ARTICLES OF INCORPORATION AND BY-LAWS. The articles of incorporation and
by-laws of Santa ▇▇▇▇▇▇ Bank immediately after the Merger shall be those of
Santa ▇▇▇▇▇▇ Bank as in effect immediately prior to the Effective Time.
(d) DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors and
officers of Santa ▇▇▇▇▇▇ Bank immediately after the Merger shall be the
directors and officers of Santa ▇▇▇▇▇▇ Bank immediately prior to the Effective
Time, until such time as their successors shall be duly elected and qualified.
(e) DIRECTORS AND OFFICERS OF WESTERN. The directors and officers of Western
immediately after the Merger shall be the directors and officers of Western
immediately prior to the Effective Time, until such time as their successors
shall be duly elected and qualified. Notwithstanding the foregoing, at the
Effective Time a director of BKLA's election to be mutually agreed upon prior to
the date of the initial filing of any application with a Regulatory Authority
shall be appointed to the board of directors of Western.
2.02 EFFECTIVE DATE AND EFFECTIVE TIME. On such date as Western selects
(and promptly provides notice thereof to BKLA), which shall be within ten days
after the last to occur of the expiration of all applicable waiting periods in
connection with approvals of governmental authorities and the receipt of all
approvals of governmental authorities and all conditions to the consummation of
the Merger are satisfied or waived (or, at the election of Western, on the last
business day of the month in which such tenth day occurs or, if such tenth day
occurs on one of the last five business days of such month, on the last business
day of the succeeding month), or on such earlier or later date as may be agreed
in writing by the parties, an agreement of merger shall be executed in
accordance with all appropriate legal requirements and shall be filed as
required by law, and the Merger provided for herein shall become effective upon
such filing or on such date as may be specified in such agreement of merger. The
date of such filing or such later effective date is herein called the "EFFECTIVE
DATE." The "EFFECTIVE TIME" of the Merger shall be the time of such filing or as
set forth in such agreement of merger.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 MERGER CONSIDERATION. Subject to the provisions of this Agreement, at
the Effective Time, automatically by virtue of the Merger and without any action
on the part of any Person:
(a) OUTSTANDING BKLA COMMON STOCK. Each share, excluding Treasury Stock,
of BKLA Common Stock issued and outstanding immediately prior to the
Effective Time shall become and be converted into 0.4224 of a share of
Western Common Stock (the "EXCHANGE RATIO"). The Exchange Ratio shall be
subject to adjustment as set forth in Section 3.05.
(b) OUTSTANDING WESTERN COMMON STOCK. Each share of Western Common Stock
and each share of Santa ▇▇▇▇▇▇ Bank Common Stock, in each case as issued and
outstanding immediately prior to the Effective Time, shall remain issued and
outstanding and unaffected by the Merger.
(c) TREASURY SHARES. Each share of BKLA Common Stock held as Treasury
Stock immediately prior to the Effective Time shall be canceled and retired
at the Effective Time and no consideration shall be issued in exchange
therefor.
(d) DISSENTING SHAREHOLDERS. Any shares of BKLA Common Stock held by
persons who have satisfied the requirements of Chapter 13 of the California
General Corporation Law ("Chapter 13"), and have not effectively withdrawn
or lost their dissenters' rights under Section 1309 of the California
General Corporation Law, shall not be converted pursuant to Section 3.01(a),
but the holders thereof shall be entitled only to such consideration
determined pursuant to Chapter 13.
3.02 RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS. At the Effective Time,
holders of BKLA Common Stock shall cease to be, and shall have no rights as,
shareholders of BKLA (except as provided for in Section 3.01(d)), other than to
receive any dividend or other distribution with respect to such BKLA
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Common Stock with a record date occurring prior to the Effective Time and the
consideration provided under this Article III. After the Effective Time, there
shall be no transfers on the stock transfer books of BKLA or the Surviving
Corporation of shares of BKLA Common Stock.
3.03 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of Western Common Stock and no certificates or scrip therefor,
or other evidence of ownership thereof, will be issued in the Merger; instead,
Western shall pay to each holder of BKLA Common Stock who would otherwise be
entitled to a fractional share of Western Common Stock (after taking into
account all Old Certificates delivered by such holder) an amount in cash
(without interest) determined by multiplying such fraction by the average of the
closing prices of Western Common Stock, as reported on NASDAQ (as reported in
THE WALL STREET JOURNAL or, if not reported therein, in another authoritative
source), for the five NASDAQ trading days immediately preceding the Effective
Date.
3.04 EXCHANGE PROCEDURES. (a) At or prior to the Effective Time, Western
shall deposit, or shall cause to be deposited, with U.S. Stock Transfer or with
such other unaffiliated exchange agent as Western shall reasonably elect (in
such capacity, the "EXCHANGE AGENT"), for the benefit of the holders of
certificates formerly representing shares of BKLA Common Stock ("OLD
CERTIFICATES"), for exchange in accordance with this Article III, certificates
representing the shares of Western Common Stock ("NEW CERTIFICATES") and an
estimated amount of cash (such cash and New Certificates, together with any
dividends or distributions with a record date occurring after the Effective Date
with respect to the New Certificates (without any interest on any such cash,
dividends or distributions), being hereinafter referred to as the "EXCHANGE
FUND") to be paid pursuant to this Article III in exchange for outstanding
shares of BKLA Common Stock.
(b) As soon as practicable, but no later than five (5) business days after
the Effective Date, Western shall send or cause to be sent to each former holder
of record of shares of BKLA Common Stock immediately prior to the Effective Time
transmittal materials for use in exchanging such stockholder's Old Certificates
for the consideration set forth in this Article III. Western shall cause the New
Certificates into which shares of a shareholder's BKLA Common Stock are
converted on the Effective Date and/or any check in respect of any fractional
share interests or dividends or distributions which such person shall be
entitled to receive to be delivered to such shareholder upon delivery to the
Exchange Agent of Old Certificates representing such shares of BKLA Common Stock
(or an affidavit of lost certificate and, if required by the Exchange Agent,
indemnity reasonably satisfactory to Western and the Exchange Agent, if any of
such certificates are lost, stolen or destroyed) owned by such shareholder. No
interest will be paid on any such cash to be paid in lieu of fractional share
interests or in respect of dividends or distributions which any such person
shall be entitled to receive pursuant to this Article III upon such delivery. In
the event of a transfer of ownership of any shares of BKLA Common Stock not
registered in the transfer records of BKLA, the exchange described in this
Section 3.04(b) may nonetheless be effected and a check for the cash to be paid
in lieu of fractional shares may be issued to the transferee if the Old
Certificate representing such BKLA Common Stock is presented to the Exchange
Agent, accompanied by documents sufficient, in the discretion of Western and the
Exchange Agent, (i) to evidence and effect such transfer but for the provisions
of Section 3.02 hereof and (ii) to evidence that all applicable stock transfer
taxes have been paid.
(c) If Old Certificates are not surrendered or the consideration therefor is
not claimed prior to the date on which such consideration would otherwise
escheat to or become the property of any governmental unit or agency, the
unclaimed consideration shall, to the extent permitted by abandoned property and
any other applicable law, become the property of the Surviving Corporation (and
to the extent not in its possession shall be paid over to the Surviving
Corporation), free and clear of all claims or interest of any person previously
entitled to such claims. Notwithstanding the foregoing, neither the Exchange
Agent nor any party hereto shall be liable to any former holder of BKLA Common
Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
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(d) At the election of Western, no dividends or other distributions with
respect to Western Common Stock with a record date occurring after the Effective
Time shall be paid to the holder of any unsurrendered Old Certificate
representing shares of BKLA Common Stock converted in the Merger into the right
to receive shares of such Western Common Stock until the holder thereof shall be
entitled to receive New Certificates in exchange therefor in accordance with the
procedures set forth in this Section 3.04, and no such shares of BKLA Common
Stock shall be eligible to vote until the holder of Old Certificates is entitled
to receive New Certificates in accordance with the procedures set forth in this
Section 3.04. After becoming so entitled in accordance with this Section 3.04,
the record holder thereof also shall be entitled to receive any such dividends
or other distributions, without any interest thereon, which theretofore had
become payable with respect to shares of Western Common Stock such holder had
the right to receive upon surrender of the Old Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of BKLA for six months after the Effective Time shall be returned
by the Exchange Agent to Western at the election of Western. Any shareholders of
BKLA who have not theretofore complied with this Article III shall thereafter
look only to Western for payment of the shares of Western Common Stock, cash in
lieu of any fractional shares and unpaid dividends and distributions on Western
Common Stock deliverable in respect of each share of BKLA Common Stock such
shareholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon.
3.05 ANTI-DILUTION PROVISIONS. In the event Western changes (or
establishes a record date for changing) the number of shares of Western Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding Western Common Stock and the record date therefor shall be prior
to the Effective Date, the Exchange Ratio shall be proportionately adjusted. If,
between the date hereof and the Effective Time, Western shall consolidate with
or into any other corporation (a "BUSINESS COMBINATION") and the terms thereof
shall provide that Western Common Stock shall be converted into or exchanged for
the shares of any other corporation or entity, then provision shall be made as
part of the terms of such Business Combination so that (i) shareholders of BKLA
who would be entitled to receive shares of Western Common Stock pursuant to this
Agreement shall be entitled to receive, in lieu of each share of Western Common
Stock issuable to such shareholders as provided herein, the same kind and amount
of securities or assets as shall be distributable upon such Business Combination
with respect to one share of Western Common Stock.
3.06 OPTIONS. At the Effective Time, all outstanding options to purchase
shares of BKLA Common Stock under the BKLA Stock Plan (each, a "BKLA STOCK
OPTION"), unless otherwise exercised pursuant to Section 10 of the BKLA Stock
Plan, shall be converted into the right to receive for each share of BKLA Common
Stock otherwise issuable upon exercise thereof a number of shares of Western
Common Stock equal to the quotient obtained by dividing the Spread by $42.61
("Replacement Shares"). As used herein, "Spread" means the difference, if
positive, obtained by subtracting the exercise price of such BKLA Stock Option
from $18.00. After accumulating all such Replacement Shares issuable to any
holder of BKLA Stock Options, any fractional Replacement Shares issuable to any
holder of BKLA Stock Options of .2 or above shall be rounded upwards. Each
person who is a BKLA Affiliate as described in Section 6.07 hereby consents that
the Replacement Shares and/or Western Common Stock to be received by such person
on exercise of such persons BKLA Stock Option (collectively, the "Escrow
Shares"), as applicable, shall be placed, at Western's sole discretion, in an
escrow account until such time as the sale of such shares shall be permitted
pursuant to the Affiliate Agreement and applicable securities laws, at which
time the appropriate number of shares of Western Common Stock necessary to
satisfy any withholding tax obligation shall be sold, unless provided for
otherwise by such BKLA Affiliate, and applied to payment of such obligation,
with the balance of the shares of Western Common Stock of such BKLA Affiliate
transferred promptly to such BKLA Affiliate. Notwithstanding the foregoing, each
BKLA Affiliate shall have any and all rights to any dividends and voting rights
applicable to such BKLA Affiliate's Escrow Shares.
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3.07 WARRANTS. At the Effective Time, each outstanding warrant to purchase
shares of BKLA Common Stock under the BKLA Warrant Agreement (each, a "BKLA
WARRANT"), shall be converted into a warrant to acquire, on the same terms and
conditions as were applicable under such BKLA Warrant Agreement, the number of
shares of Western Common Stock equal to (a) the number of shares of BKLA Common
Stock subject to the BKLA Warrant, multiplied by (b) the Exchange Ratio (such
product rounded down to the nearest whole number) (a "REPLACEMENT WARRANT"), at
an exercise price per share (rounded up to the nearest whole cent) equal to (y)
the aggregate exercise price for the shares of BKLA Common Stock which were
purchasable pursuant to such BKLA Warrant divided by (z) the number of full
shares of Western Common Stock subject to such Replacement Warrant in accordance
with the foregoing. At or prior to the Effective Time, BKLA shall take all
action, if any, necessary with respect to the BKLA Warrant Agreement to permit
the replacement of the outstanding BKLA Warrants by Western pursuant to this
Section 3.07. At the Effective Time, Western shall assume the BKLA Warrant
Agreement; PROVIDED, that such assumption shall be only in respect of the
Replacement Warrants and that Western shall have no obligation with respect to
any awards under the BKLA Warrant Agreement other than the Replacement Warrants
and shall have no obligation to make any additional grants or awards under such
assumed BKLA Warrant Agreement.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 FOREBEARANCES OF BKLA. From the date hereof until the Effective Time,
except as expressly contemplated by this Agreement, without the prior written
consent of Western, BKLA will not, and will cause each of its Subsidiaries not
to:
(a) ORDINARY COURSE. Conduct the business of BKLA and its Subsidiaries
other than in the ordinary and usual course or fail to use reasonable best
efforts to preserve intact their business organizations and assets and
maintain their rights, franchises and existing relations with customers,
suppliers, employees and business associates, take any action that would
adversely affect or delay the ability of BKLA, Western or any of their
Subsidiaries to perform any of their obligations on a timely basis under
this Agreement, or take any action that is reasonably likely to have a
Material Adverse Effect on BKLA or its Subsidiaries, taken as a whole.
(b) CAPITAL STOCK. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (i) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of
BKLA Common Stock or any Rights or issue any shares of preferred stock, (ii)
enter into any agreement with respect to the foregoing or (iii) permit any
additional shares of BKLA Common Stock to become subject to new grants of
employee or director stock options, other Rights or similar stock-based
employee rights.
(c) DIVIDENDS, ETC. (a) Make, declare, pay or set aside for payment
any dividend on or in respect of, or declare or make any distribution on any
shares of BKLA Common Stock or (b) directly or indirectly adjust, split,
combine, redeem, reclassify, purchase or otherwise acquire, any shares of
its capital stock.
(d) COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of BKLA or its
Subsidiaries, or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments), except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice, (ii) for other changes that are
required by applicable law, (iii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof or (iv) for grants of
awards to newly hired employees consistent with past practice.
8
(e) BENEFIT PLANS. Enter into, establish, adopt or amend (except (i)
as may be required by applicable law or (ii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof) any pension,
retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
(or similar arrangement) related thereto, in respect of any director,
officer or employee of BKLA or its Subsidiaries, or take any action to
accelerate the vesting or exercisability of stock options, restricted stock
or other compensation or benefits payable thereunder.
(f) DISPOSITIONS. Except as Previously Disclosed, sell, transfer,
mortgage, encumber or otherwise dispose of or discontinue any of its assets,
deposits, business or properties except in the ordinary course of business
and in a transaction that is not material to it and its Subsidiaries taken
as a whole.
(g) ACQUISITIONS. Except as Previously Disclosed, acquire (other than
by way of foreclosures or acquisitions of control in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in good faith, in
each case in the ordinary and usual course of business consistent with past
practice) all or any portion of, the assets, business, deposits or
properties of any other entity except in the ordinary course of business
consistent with past practice and in a transaction that is not material to
the BKLA and its Subsidiaries, taken as a whole.
(h) CAPITAL EXPENDITURES. Except as Previously Disclosed, make any
capital expenditures other than capital expenditures in the ordinary course
of business consistent with past practice in amounts not exceeding $10,000
individually or $50,000 in the aggregate.
(i) GOVERNING DOCUMENTS. Amend the BKLA Articles, BKLA By-Laws or the
articles of incorporation or by-laws (or similar governing documents) of any
of BKLA's Subsidiaries.
(j) ACCOUNTING METHODS. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(k) CONTRACTS. Except in the ordinary course of business consistent
with past practice, enter into or terminate any material contract (as
defined in Section 5.03(k)) or amend or modify in any material respect any
of its existing material contracts.
(l) CLAIMS. Except in the ordinary course of business consistent with
past practice, settle any claim, action or proceeding, except for any claim,
action or proceeding involving solely money damages in an amount,
individually or in the aggregate for all such settlements, that is not
material to BKLA and its Subsidiaries, taken as a whole.
(m) ADVERSE ACTIONS. (a) Take any action which BKLA either knows or
reasonably should know that such action would, or would be reasonably likely
to, prevent or impede the Merger from qualifying (i) for "pooling of
interests" accounting treatment or (ii) as a reorganization within the
meaning of Section 368 of the Code; or (b) knowingly take any action that is
intended or is reasonably likely to result in (i) any of its representations
and warranties set forth in this Agreement being or becoming untrue in any
material respect at any time at or prior to the Effective Time, (ii) any of
the conditions to the Merger set forth in Article VII not being satisfied or
(iii) a violation of any provision of this Agreement except, in each case,
as may be required by applicable law or regulation.
(n) RISK MANAGEMENT. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its interest rate
and other risk management policies, procedures or practices; (ii) fail to
follow its existing policies or practices with respect to managing its
exposure to interest rate and other risk; or (iii) fail to use commercially
reasonable means to avoid any material increase in its aggregate exposure to
interest rate risk.
(o) INDEBTEDNESS. Incur any indebtedness for borrowed money other than
in the ordinary course of business consistent with past practice.
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(p) LOANS. Make any loan, loan commitment or renewal or extension
thereof to any person which would, when aggregated with all outstanding
loans, commitments for loans or renewals or extensions thereof made by BKLA
to such person and any affiliate or immediate family member of such person,
exceed $500,000 without submitting loan package information to the chief
credit officer of Western for review with a right of comment at least one
full business day prior to taking such action.
(q) COMMITMENTS. Agree or commit to do any of the foregoing.
4.02 FOREBEARANCES OF WESTERN. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of BKLA, Western will not, and will cause each of its
Subsidiaries not to:
(a) ORDINARY COURSE. Take any action that would adversely affect or
delay the ability of BKLA or Western to perform any of their obligations on
a timely basis under this Agreement, or take any action that is reasonably
likely to have a Material Adverse Effect on Western or its Subsidiaries,
taken as a whole.
(b) ADVERSE ACTIONS. (i) Take any action which Western either knows or
reasonably should know that such action would, or would be reasonably likely
to, prevent or impede the Merger from qualifying (A) for "pooling of
interests" accounting treatment or (B) as a reorganization within the
meaning of Section 368 of the Code; or (ii) knowingly take any action that
is intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time at or prior to the Effective
Time, (B) any of the conditions to the Merger set forth in Article VII not
being satisfied or (C) a violation of any provision of this Agreement
except, in each case, as may be required by applicable law or regulation.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 DISCLOSURE SCHEDULES. On or prior to the date hereof, each of BKLA
and Western has delivered to the other a schedule (a "DISCLOSURE SCHEDULE")
setting forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement contained in
a provision hereof, or items which are an exception to one or more
representations or warranties contained in Section 5.03 or Section 5.04;
PROVIDED, that (a) no such item is required to be set forth in a Disclosure
Schedule as an exception to a representation or warranty if its absence would
not be reasonably likely to result in the related representation or warranty
being deemed untrue or incorrect under the standard established by Section 5.02,
and (b) the mere inclusion of an item in a Disclosure Schedule as an exception
to a representation or warranty shall not be deemed an admission by a party that
such item represents a material exception or fact, event or circumstance or that
such item is reasonably likely to result in a Material Adverse Effect.
5.02 STANDARD. No representation or warranty of BKLA, Western or Santa
▇▇▇▇▇▇ Bank contained in Section 5.03 or 5.04 shall be deemed untrue or
incorrect, and no party hereto shall be deemed to have breached a representation
or warranty, as a consequence of the existence of any fact, event or
circumstance unless such fact, circumstance or event, individually or taken
together with all other facts, events or circumstances inconsistent with any
representation or warranty contained in Section 5.03 or 5.04 has had or is
reasonably likely to have a Material Adverse Effect on the party making such
representation or warranty.
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5.03 REPRESENTATIONS AND WARRANTIES OF BKLA. Subject to Sections 5.01 and
5.02 and except as Previously Disclosed in its Disclosure Schedule corresponding
to the relevant paragraph below, BKLA hereby represents and warrants to Western:
(a) ORGANIZATION, STANDING AND AUTHORITY. BKLA is a corporation duly
organized, validly existing and in good standing under the laws of the State
of California. BKLA is duly qualified to do business and is in good standing
in the State of California and any foreign jurisdictions where its ownership
or leasing of property or assets or the conduct of its business requires it
to be so qualified. BKLA is duly licensed by the Commissioner as a
commercial bank and its deposits are insured by the FDIC through the Bank
Insurance Fund in the manner and to the fullest extent provided by law.
(b) BKLA CAPITAL STOCK. As of the date hereof, the authorized capital
stock of BKLA consists solely of (i) 75,000,000 shares of BKLA Common Stock,
of which no more than 4,762,100 shares were outstanding as of the date
hereof and (ii) 25,000,000 shares of preferred stock, of which no shares
were outstanding as of the date hereof. As of the date hereof, no shares of
BKLA Common Stock were held in treasury by BKLA or otherwise owned by BKLA
or its Subsidiaries. The outstanding shares of BKLA Common Stock have been
duly authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued in
violation of any preemptive rights). As of the date hereof, there are no
shares of BKLA Common Stock authorized and reserved for issuance, BKLA does
not have any Rights issued or outstanding with respect to BKLA Common Stock,
and BKLA does not have any commitment to authorize, issue or sell any BKLA
Common Stock or Rights, except pursuant to this Agreement, any BKLA Stock
Option, the BKLA Stock Plan, any BKLA Warrant and the BKLA Warrant
Agreement. The number of shares of BKLA Common Stock which are issuable and
reserved for issuance upon exercise of BKLA Stock Options as of the date
hereof are Previously Disclosed in BKLA's Disclosure Schedule. The number of
shares of BKLA Common Stock which are issuable and reserved for issuance
upon exercise of BKLA Warrants as of the date hereof are Previously
Disclosed in BKLA's Disclosure Schedule.
(c) SUBSIDIARIES. (i)(A) BKLA has Previously Disclosed a list of all
of its Subsidiaries together with the jurisdiction of organization of each
such Subsidiary, (B) BKLA owns, directly or indirectly, all the issued and
outstanding equity securities of each of its Subsidiaries, (C) no equity
securities of any of its Subsidiaries are or may become required to be
issued (other than to it or its wholly-owned Subsidiaries) by reason of any
Right or otherwise, (D) there are no contracts, commitments, understandings
or arrangements by which any of such Subsidiaries is or may be bound to sell
or otherwise transfer any equity securities of any such Subsidiaries (other
than to it or its wholly-owned Subsidiaries), (E) there are no contracts,
commitments, understandings, or arrangements relating to its rights to vote
or to dispose of such securities and (F) all the equity securities of each
Subsidiary held by BKLA or its Subsidiaries are fully paid and nonassessable
and are owned by BKLA or its Subsidiaries free and clear of any Liens.
(ii) BKLA does not own beneficially, directly or indirectly, any equity
securities or similar interests of any Person, or any interest in a
partnership or joint venture of any kind, other than its Subsidiaries.
(iii) Each of BKLA's Subsidiaries has been duly organized and is validly
existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and in good standing in
the jurisdictions where its ownership or leasing of property or the conduct
of its business requires it to be so qualified.
(d) CORPORATE POWER. BKLA and each of its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and BKLA has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated hereby and thereby.
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(e) CORPORATE AUTHORITY. Subject in the case of this Agreement to
receipt of the requisite approval of the principal terms of the agreement of
merger set forth in this Agreement by the holders of a majority of the
outstanding shares of BKLA Common Stock entitled to vote thereon (which is
the only shareholder vote required thereon), this Agreement, the Stock
Option Agreement and the transactions contemplated hereby and thereby have
been authorized by all necessary corporate action of BKLA and the BKLA Board
on or prior to the date hereof. This Agreement is a valid and legally
binding obligation of BKLA, enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles). The BKLA Board has received the written opinion of
Wedbush ▇▇▇▇▇▇ Securities to the effect that as of the date hereof the
consideration to be received by the holders of BKLA Common Stock in the
Merger is fair to the holders of BKLA Common Stock from a financial point of
view.
(f) REGULATORY APPROVALS; NO DEFAULTS. (i) No consents or approvals
of, or filings or registrations with, any Governmental Authority or with any
third party are required to be made or obtained by BKLA or any of its
Subsidiaries in connection with the execution, delivery or performance by
BKLA of this Agreement, the Stock Option Agreement, the BKLA Warrant
Agreement, or to consummate the Merger except for (A) filings of
applications or notices with the Commissioner, the FDIC and the Federal
Reserve, as required, (B) filings with the SEC and state securities
authorities and the approval of this Agreement by the shareholders of BKLA,
(C) the filing of an agreement of merger with the California Secretary
pursuant to the CGCL and with the Commissioner pursuant to the California
Financial Code. As of the date hereof, BKLA is not aware of any reason why
the approvals set forth in Section 7.01(b) will not be received without the
imposition of a condition, restriction or requirement of the type described
in Section 7.01(b).
(ii) Subject to receipt of the approvals referred to in the preceding
paragraph, and the expiration of related waiting periods, and required
filings under federal and state securities laws, the execution, delivery and
performance of this Agreement and the Stock Option Agreement and the
consummation of the transactions contemplated hereby and thereby do not and
will not (A) constitute a breach or violation of, or a default under, or
give rise to any Lien, any acceleration of remedies or any right of
termination under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or instrument
of BKLA or of any of its Subsidiaries or to which BKLA or any of its
Subsidiaries or properties is subject or bound, (B) constitute a breach or
violation of, or a default under, the BKLA Articles or the BKLA By-Laws, or
(C) require any consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental permit or license, agreement,
indenture or instrument.
(g) FINANCIAL REPORTS AND REGULATORY DOCUMENTS. (i) BKLA's (or its
predecessors') Annual Reports on Form 10-K for the fiscal years ended
December 31, 1995, 1996 and 1997, and all other reports, registration
statements, definitive proxy statements or information statements filed or
to be filed by it or any of its Subsidiaries subsequent to December 31, 1995
under the Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act or under the securities regulations of the FDIC, in the form
filed or to be filed (collectively, BKLA's "REGULATORY DOCUMENTS") with the
FDIC as of the date filed, (A) complied or will comply in all material
respects as to form with the applicable requirements under the Securities
Act, the Exchange Act or the securities regulations of the FDIC, as the case
may be, and (B) did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any such
Regulatory Document (including the related notes and schedules thereto)
fairly presents, or will fairly present, the financial position of BKLA and
its Subsidiaries as of its date, and each of the statements of income and
changes in shareholders' equity and cash flows or equivalent statements in
such Regulatory Documents (including any related notes and schedules
thereto) fairly presents, or will fairly present, the results of
12
operations, changes in shareholders' equity and cash flows, as the case may
be, of BKLA and its Subsidiaries for the periods to which they relate, in
each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as may
be noted therein, subject to normal year-end audit adjustments in the case
of unaudited statements.
(ii) Since December 31, 1997, BKLA and its Subsidiaries have not
incurred any liability other than in the ordinary course of business
consistent with past practice.
(iii) Since December 31, 1997, (A) BKLA and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of expenses related
to this Agreement and the transactions contemplated hereby) and (B) no event
has occurred or circumstance arisen that, individually or taken together
with all other facts, circumstances and events (described in any paragraph
of this Section 5.03 or otherwise), is reasonably likely to have a Material
Adverse Effect with respect to BKLA.
(h) LITIGATION. No litigation, claim or other proceeding before any
court or governmental agency is pending against BKLA or any of its
Subsidiaries and, to BKLA's knowledge, no such litigation, claim or other
proceeding has been threatened and there are no facts which could reasonably
give rise to such litigation, claim or other proceeding.
(i) REGULATORY MATTERS. (i) Neither BKLA nor any of its Subsidiaries
or any of their properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary supervisory
letter from, any federal or state governmental agency or authority charged
with the supervision or regulation of financial institutions or issuers of
securities or engaged in the insurance of deposits (including, without
limitation, the Commissioner and the FDIC) or the supervision or regulation
of it or any of its Subsidiaries (collectively, the "REGULATORY
AUTHORITIES").
(ii) Neither BKLA nor any of its Subsidiaries has been advised by, nor
has any knowledge of facts which could give rise to an advisory notice by,
any Regulatory Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(j) COMPLIANCE WITH LAWS. BKLA and each of its Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders
or decrees applicable thereto or to the employees conducting such
businesses, including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the Home
Mortgage Disclosure Act and all other applicable fair lending laws and
other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own
or lease their properties and to conduct their businesses as presently
conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to BKLA's knowledge, no
suspension or cancellation of any of them is threatened; and
(iii) has received, since December 31, 1996, no notification or
communication from any Governmental Authority (A) asserting that BKLA or
any of its Subsidiaries is not in compliance with any of the statutes,
regulations or ordinances which such Governmental Authority enforces or
(B) threatening to revoke any license, franchise, permit or governmental
authorization (nor, to BKLA's knowledge, do any grounds for any of the
foregoing exist).
(k) MATERIAL CONTRACTS; DEFAULTS. Except for those agreements and
other documents filed as exhibits to its Regulatory Documents, neither it
nor any of its Subsidiaries is a party to, bound by or
13
subject to any agreement, contract, arrangement, commitment or understanding
(whether written or oral) (i) that is a "material contract" within the
meaning of Item 601(b)(10) of the SEC's Regulation S-K or (ii) that
materially restricts the conduct of business by it or any of its
Subsidiaries. Neither BKLA nor any of its Subsidiaries is in default under
any contract, agreement, commitment, arrangement, lease, insurance policy or
other instrument to which it is a party, by which its respective assets,
business, or operations may be bound or affected, or under which it or its
respective assets, business, or operations receives benefits, and there has
not occurred any event that, with the lapse of time or the giving of notice
or both, would constitute such a default.
(l) NO BROKERS. No action has been taken by BKLA that would give rise
to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, excluding Previously Disclosed fees to be
paid to Wedbush ▇▇▇▇▇▇ Securities and GBS Financial.
(m) EMPLOYEE BENEFIT PLANS.
(i) All benefit and compensation plans, contracts, policies or
arrangements covering current employees or former employees of BKLA and its
subsidiaries (the "EMPLOYEES") and current or former directors of BKLA,
including, but not limited to, "employee benefit plans" within the meaning
of Section 3(3) of ERISA, and deferred compensation, stock option, stock
purchase, stock appreciation rights, stock based, incentive and bonus plans
(the "BENEFIT PLANS"), are Previously Disclosed in the Disclosure Schedule.
True and complete copies of all Benefit Plans, including, but not limited
to, any trust instruments and insurance contracts forming a part of any
Benefit Plans, and all amendments thereto have been provided or made
available to BKLA.
(ii) All employee benefit plans, other than "multiemployer plans" within
the meaning of Section 3(37) of ERISA, covering Employees (the "PLANS"), to
the extent subject to ERISA, are in substantial compliance with ERISA. BKLA
is not a party to any "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA ("PENSION PLAN") and which is intended to be qualified
under Section 401(a) of the Code. There is no material pending or threatened
litigation relating to the Plans. Neither BKLA nor any of its Subsidiaries
has engaged in a transaction with respect to any Plan that, assuming the
taxable period of such transaction expired as of the date hereof, could
subject BKLA or any Subsidiary to a tax or penalty imposed by either Section
4975 of the Code or Section 502(i) of ERISA in an amount which would be
material.
(iii) No liability under Subtitle C or D of Title IV of ERISA has been or
is expected to be incurred by BKLA or any of its Subsidiaries with respect
to any ongoing, frozen or terminated "single-employer plan", within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered
one employer with BKLA under Section 4001 of ERISA or Section 414 of the
Code (an "ERISA AFFILIATE"). Neither BKLA, any of its Subsidiaries nor an
ERISA Affiliate has contributed to a "multiemployer plan", within the
meaning of Section 3(37) of ERISA, at any time on or after September 26,
1980. No notice of a "reportable event," within the meaning of Section 4043
of ERISA for which the 30-day reporting requirement has not been waived, has
been required to be filed for any Pension Plan or by any ERISA Affiliate
within the 12-month period ending on the date hereof or will be required to
be filed in connection with the transactions contemplated by this Plan.
(iv) All contributions required to be made under the terms of any Plan
have been timely made or have been reflected on the consolidated financial
statements of BKLA included in the Regulatory Documents. Neither any Pension
Plan nor any single-employer plan of an ERISA Affiliate has an "accumulated
funding deficiency" (whether or not waived) within the meaning of Section
412 of the Code or Section 302 of ERISA and no ERISA Affiliate has an
outstanding funding waiver. Neither BKLA nor any of its Subsidiaries has
provided, or is required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of
the Code.
14
(v) Under each Pension Plan which is a single-employer plan, as of the
last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities," within
the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of
the actuarial assumptions contained in the Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such
Plan, and there has been no material change in the financial condition of
such Plan since the last day of the most recent plan year.
(vi) Neither BKLA nor any of its Subsidiaries has any obligations for
retiree health and life benefits under any Benefit Plan. BKLA or its
Subsidiaries may amend or terminate any such Benefit Plan at any time
without incurring any liability thereunder.
(vii) The consummation of the transactions contemplated by this Agreement
will not (A) entitle any employees of BKLA or any of its Subsidiaries to
severance pay, (B) accelerate the time of payment or vesting or trigger any
payment of compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any of the Benefit Plans
or (C) result in any breach or violation of, or a default under, any of the
Benefit Plans. Without limiting the foregoing, as a result of the
consummation of the transactions contemplated by this Agreement, none of
Western, BKLA, or any of its Subsidiaries will be obligated to make a
payment to an individual that would be a "parachute payment" to a
"disqualified individual" as those terms are defined in Section 280G of the
Code, without regard to whether such payment is reasonable compensation for
personal services performed or to be performed in the future.
(n) LABOR MATTERS. Neither BKLA nor any of its Subsidiaries is a party
to or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is
BKLA or any of its Subsidiaries the subject of a proceeding asserting that
it or any such Subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel BKLA or
any such Subsidiary to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other labor dispute
involving it or any of its Subsidiaries pending or, to BKLA's knowledge,
threatened, nor is BKLA aware of any activity involving its or any of its
Subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in other organizational activity.
(o) ENVIRONMENTAL MATTERS.
(i) BKLA and each of its Subsidiaries has complied at all times with
applicable Environmental Laws; (ii) no real property (including buildings or
other structures) currently or formerly owned or operated by BKLA or any of
its Subsidiaries, or any property in which BKLA or any of its Subsidiaries
has held a security interest, lien or a fiduciary or management role ("LOAN
PROPERTY"), has been contaminated with, or has had any release of, any
Hazardous Substance; (iii) neither BKLA nor any of its Subsidiaries could be
deemed the owner or operator of any Loan Property under any Environmental
Law which such Loan Property has been contaminated with, or has had any
release of, any Hazardous Substance; (iv) neither BKLA nor any of its
Subsidiaries is subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (v) neither BKLA nor any of its
Subsidiaries has received any notice, demand letter, claim or request for
information alleging any violation of, or liability under, any Environmental
Law; (vi) neither BKLA nor any of its Subsidiaries is subject to any order,
decree, injunction or other agreement with any Governmental Authority or any
third party relating to any Environmental Law; (vii) to the best of BKLA's
knowledge, there are no circumstances or conditions (including the presence
of asbestos, underground storage tanks, lead products, polychlorinated
biphenyls, prior manufacturing operations, dry-cleaning, or automotive
services) involving BKLA or any of its Subsidiaries, any currently or
formerly owned or operated property, or any Loan Property, that could
reasonably be expected to result in any claims, liability or investigations
against BKLA or any of its Subsidiaries, result in any restrictions on the
ownership, use, or transfer of any property pursuant to any Environmental
Law, or adversely affect the value of any Loan Property, and (viii) BKLA has
delivered to Western copies of all environmental
15
reports, studies, sampling data, correspondence, filings and other
environmental information in its possession or reasonably available to it
relating to BKLA, any Subsidiary of BKLA, any currently or formerly owned or
operated property or any Loan Property.
As used herein, the term "ENVIRONMENTAL LAW" means any federal, state or
local law, regulation, order, decree, permit, authorization, opinion, common
law or agency requirement relating to: (A) the protection or restoration of
the environment, health, safety, or natural resources, (B) the handling,
use, presence, disposal, release or threatened release of any Hazardous
Substance or (C) noise, odor, wetlands, indoor air, pollution, contamination
or any injury or threat of injury to persons or property in connection with
any Hazardous Substance and the term "HAZARDOUS SUBSTANCE" means any
substance in any concentration that is: (A) listed, classified or regulated
pursuant to any Environmental Law; (B) any petroleum product or by-product,
asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon; or (C) any other
substance which is or may be the subject of regulatory action by any
Governmental Authority in connection with any Environmental Law.
(p) TAX MATTERS. (i) (A) All Tax Returns that are required to be filed
(taking into account any extensions of time within which to file) by or with
respect to BKLA and its Subsidiaries have been duly filed, (B) all Taxes
shown to be due on the Tax Returns referred to in clause (A) have been paid
in full, (C) the Tax Returns referred to in clause (A) have been examined by
the Internal Revenue Service or the appropriate Tax authority or the period
for assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired, (D) all deficiencies asserted or
assessments made as a result of such examinations have been paid in full,
(E) no issues that have been raised by the relevant taxing authority in
connection with the examination of any of the Tax Returns referred to in
clause (A) are currently pending, and (F) no waivers of statutes of
limitation have been given by or requested with respect to any Taxes of BKLA
or its Subsidiaries. BKLA has made available to Western true and correct
copies of the United States federal income Tax Returns filed by BKLA and its
Subsidiaries for each of the three most recent fiscal years ended on or
before December 31, 1996. Neither BKLA nor any of its Subsidiaries has any
liability with respect to income, franchise or similar Taxes that accrued on
or before the end of the most recent period covered by BKLA's Regulatory
Documents filed prior to the date hereof in excess of the amounts accrued
with respect thereto that are reflected in the financial statements included
in BKLA's Regulatory Documents filed on or prior to the date hereof. Neither
BKLA nor any of its Subsidiaries is a party to any Tax allocation or sharing
agreement, is or has been a member of an affiliated group filing
consolidated or combined Tax returns (other than a group the common parent
of which is or was BKLA) or otherwise has any liability for the Taxes of any
person (other than BKLA and its Subsidiaries). As of the date hereof,
neither BKLA nor any of its Subsidiaries has any reason to believe that any
conditions exist that might prevent or impede the Merger from qualifying as
a reorganization within the meaning of Section 368 of the Code.
(ii) No Tax is required to be withheld pursuant to Section 1445 of the
Code as a result of the transfer contemplated by this Agreement.
(q) RISK MANAGEMENT INSTRUMENTS. All interest rate swaps, caps,
floors, option agreements, futures and forward contracts and other similar
risk management arrangements, whether entered into for BKLA's own account,
or for the account of one or more of BKLA's Subsidiaries or their customers
(all of which are listed on BKLA's Disclosure Schedule), if any, were
entered into (i) in accordance with prudent business practices and all
applicable laws, rules, regulations and regulatory policies and (ii) with
counter parties believed to be financially responsible; and each of them
constitutes the valid and legally binding obligation of BKLA or one of its
Subsidiaries, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles), and are in full force and effect. Neither BKLA nor its
16
Subsidiaries, nor to BKLA's knowledge, any other party thereto, is in breach
of any of its obligations under any such agreement or arrangement.
(r) BOOKS AND RECORDS. The books and records of BKLA and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein, and they fairly present the
financial position of BKLA and its Subsidiaries.
(s) INSURANCE. BKLA has Previously Disclosed all of the insurance
policies, binders, or bonds maintained by BKLA or its Subsidiaries
("INSURANCE POLICIES"). BKLA and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as the management of BKLA
reasonably has determined to be prudent in accordance with industry
practices. All the Insurance Policies are in full force and effect; BKLA and
its Subsidiaries are not in material default thereunder; and all claims
thereunder have been filed in due and timely fashion.
(t) ACCOUNTING TREATMENT. As of the date hereof, BKLA is not aware of
any reason with respect to it why the Merger will fail to qualify for
"pooling of interests" accounting treatment.
5.04 REPRESENTATIONS AND WARRANTIES OF WESTERN. Subject to Sections 5.01
and 5.02 and except as Previously Disclosed in its Disclosure Schedule
corresponding to the relevant paragraph below, Western hereby represents and
warrants to BKLA:
(a) ORGANIZATION, STANDING AND AUTHORITY. Each of Western and Santa
▇▇▇▇▇▇ Bank is duly organized, validly existing and in good standing under
the laws of the State of California. Each of Western and Santa ▇▇▇▇▇▇ Bank
is duly qualified to do business and is in good standing in the states of
the United States and foreign jurisdictions where its ownership or leasing
of property or assets or the conduct of its business requires it to be so
qualified. Western and Santa ▇▇▇▇▇▇ Bank have in effect all federal, state,
local, and foreign governmental authorizations necessary for them to own or
lease their respective properties and assets and to carry on their
respective business as it is now conducted.
(b) WESTERN CAPITAL STOCK. As of the date hereof, the authorized
capital stock of Western consists solely of 100,000,000 shares of Western
Common Stock, of which no more than 15,704,000 shares were outstanding as of
the date hereof and 5,000,000 shares of Western Preferred Stock, of which no
shares were outstanding as of the date hereof.
(c) SANTA ▇▇▇▇▇▇ BANK CAPITAL STOCK. As of the date hereof, the
authorized capital stock of Santa ▇▇▇▇▇▇ Bank consists solely of 50,000,000
shares of Santa ▇▇▇▇▇▇ Bank common stock, of which one share was outstanding
as of the date hereof.
(d) CORPORATE POWER. Western and each of its Significant Subsidiaries
has the corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and each of
Western and Santa ▇▇▇▇▇▇ Bank has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby.
(e) CORPORATE AUTHORITY. This Agreement and the transactions
contemplated hereby have been authorized by all necessary corporate action
of each of Western and Santa ▇▇▇▇▇▇ Bank and their respective board of
directors. This Agreement is a valid and legally binding agreement of each
of Western and Santa ▇▇▇▇▇▇ Bank, as the case may be, enforceable in
accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles).
(f) REGULATORY APPROVALS; NO DEFAULTS. (i) No consents or approvals
of, or filings or registrations with, any court, administrative agency or
commission or other governmental authority or instrumentality or with any
third party are required to be made or obtained by Western or any of its
17
Subsidiaries in connection with the execution, delivery or performance by
either Western or Santa ▇▇▇▇▇▇ Bank of this Agreement or to consummate the
Merger except for (A) the filing of applications and notices, as applicable,
with federal and state banking Governmental Authorities; (B) approval of the
listing on the NASDAQ of Western Common Stock to be issued in the Merger;
(C) the filing and declaration of effectiveness of the Registration
Statement; (D) the filing of an agreement of merger with the California
Secretary pursuant to the CGCL; (E) filing of an agreement of merger with
the Commissioner pursuant to the California Financial Code; (F) such filings
as are required to be made or approvals as are required to be obtained under
the securities or "Blue Sky" laws of various states in connection with the
issuance of Western Common Stock in the Merger; and (G) receipt of the
approvals set forth in Section 7.01(b). As of the date hereof, Western is
not aware of any reason why the approvals set forth in Section 7.01(b) will
not be received without the imposition of a condition, restriction or
requirement of the type described in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph and expiration of the related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (A) constitute a breach
or violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license,
or agreement, indenture or instrument of Western or of any of its
Subsidiaries or to which Western or any of its Subsidiaries or properties is
subject or bound, (B) constitute a breach or violation of, or a default
under, the articles of incorporation or by-laws (or similar governing
documents) of Western or any of its Significant Subsidiaries, or (C) require
any consent or approval under any such law, rule, regulation, judgment,
decree, order, governmental permit or license, agreement, indenture or
instrument.
(g) FINANCIAL REPORTS AND REGULATORY DOCUMENTS; MATERIAL ADVERSE
EFFECT. (i) Western's Regulatory Documents, as of the date filed, (A)
complied or will comply in all material respects as to form with the
applicable requirements under the Securities Act or the Exchange Act, as the
case may be, and (B) did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any such
Regulatory Document (including the related notes and schedules thereto)
fairly presents, or will fairly present, the financial position of Western
and its Subsidiaries as of its date, and each of the statements of income
and changes in shareholders' equity and cash flows or equivalent statements
in such Regulatory Documents (including any related notes and schedules
thereto) fairly presents, or will fairly present, the results of operations,
changes in shareholders' equity and cash flows, as the case may be, of
Western and its Subsidiaries for the periods to which they relate, in each
case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as may
be noted therein, subject to normal year-end audit adjustments in the case
of unaudited statements.
(ii) Since December 31, 1997, no event has occurred or circumstance
arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of this Section 5.04 or
otherwise), is reasonably likely to have a Material Adverse Effect with
respect to it.
(h) NO BROKERS. No action has been taken by Western that would give
rise to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, excluding a Previously Disclosed fee payable
to Belle Plaine Partners, Inc.
(i) ACCOUNTING TREATMENT; TAX MATTERS. As of the date hereof, Western
is aware of no reason with respect to it why the Merger will fail to qualify
for "pooling of interests" accounting treatment. As of the date hereof,
neither Western nor any of its Subsidiaries has any reason to believe that
any
18
conditions exist that might prevent or impede the Merger from qualifying as
a reorganization within the meaning of Section 368 of the Code.
(j) REGULATORY MATTERS. (i) Neither Western nor any of its Significant
Subsidiaries or any of its properties is a party to or is subject to any
order, decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, or extraordinary
supervisory letter from, any Regulatory Authorities.
(ii) Neither Western nor any of its Significant Subsidiaries has been
advised by, nor has any knowledge of facts which could give rise to an
advisory notice by, any Regulatory Authority that such Regulatory Authority
is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter, supervisory letter or
similar submission.
(k) COMPLIANCE WITH LAWS. Each of Western and its Significant
Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders
or decrees applicable thereto or to the employees conducting such
businesses, including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the Home
Mortgage Disclosure Act and all other applicable fair lending laws and
other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own
or lease their properties and to conduct their businesses as presently
conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to Western's knowledge,
no suspension or cancellation of any of them is threatened; and
(iii) has received, since December 31, 1996, no notification or
communication from any Governmental Authority (A) asserting that Western
or any of its Significant Subsidiaries is not in compliance with any of
the statutes, regulations or ordinances which such Governmental Authority
enforces or (B) threatening to revoke any license, franchise, permit or
governmental authorization (nor, to Western's knowledge, do any grounds
for any of the foregoing exist).
(l) BOOKS AND RECORDS. The books and records of each of Western and
its Significant Subsidiaries have been fully, properly and accurately
maintained in all material respects, and there are no material inaccuracies
or discrepancies of any kind contained or reflected therein, and they fairly
present the financial position of Western and its Significant Subsidiaries.
(m) ENVIRONMENTAL MATTERS.
(i) Each of Western and its Significant Subsidiaries has complied at all
times with applicable Environmental Laws; (ii) no real property (including
buildings or other structures) currently or formerly owned or operated by
Western or its Significant Subsidiaries, or any Loan Property, has been
contaminated with, or has had any release of, any Hazardous Substance; (iii)
neither Western nor any of its Significant Subsidiaries could be deemed the
owner or operator of any Loan Property under any Environmental Law which
such Loan Property has been contaminated with, or has had any release of,
any Hazardous Substance; (iv) neither Western nor any of its Significant
Subsidiaries is subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (v) neither Western nor any of
its Significant Subsidiaries has received any notice, demand letter, claim
or request for information alleging any violation of, or liability under,
any Environmental Law; (vi) neither Western nor any of its Significant
Subsidiaries is subject to any order, decree, injunction or other agreement
with any Governmental Authority or any third party relating to any
Environmental Law; (vii) to the best of Western's knowledge, there are no
circumstances or conditions (including the presence of asbestos, underground
storage tanks, lead products, polychlorinated biphenyls, prior
19
manufacturing operations, dry-cleaning, or automotive services) involving
Western or its Significant Subsidiaries, any currently or formerly owned or
operated property, or any Loan Property, that could reasonably be expected
to result in any claims, liability or investigations against Western or its
Significant Subsidiaries, result in any restrictions on the ownership, use,
or transfer of any property pursuant to any Environmental Law, or adversely
affect the value of any Loan Property, and (viii) each of Western and its
Significant Subsidiaries has made available to BKLA copies of all
environmental reports, studies, sampling data, correspondence, filings and
other environmental information in its possession or reasonably available to
it, if any, relating to each of Western and its Significant Subsidiaries,
any currently or formerly owned or operated property or any Loan Property.
ARTICLE VI
COVENANTS
6.01 REASONABLE BEST EFFORTS. Subject to the terms and conditions of this
Agreement, each of BKLA, Western and Santa ▇▇▇▇▇▇ Bank agrees to use its
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby and shall cooperate fully with the other
party hereto to that end.
6.02 SHAREHOLDER APPROVAL. BKLA agrees to take, in accordance with
applicable law and the BKLA Articles and the BKLA By-Laws, all action necessary
to convene an appropriate meeting of its shareholders to consider and vote upon
the approval and adoption of this Agreement and any other matters required to be
approved by BKLA's shareholders for consummation of the Merger (including any
adjournment or postponement, the "BKLA MEETING"), in each case as promptly as
practicable after the Registration Statement is declared effective. Except to
the extent legally required for the discharge by the BKLA Board of its fiduciary
duties as advised by counsel to the BKLA Board, the BKLA Board shall recommend
such approval, and BKLA shall take all reasonable, lawful action to solicit such
approval by its shareholders.
6.03 REGISTRATION STATEMENT. (a) Western agrees to prepare a registration
statement on Form S-4 or other applicable form (the "REGISTRATION STATEMENT") to
be filed by Western with the SEC in connection with the issuance of Western
Common Stock in the Merger (including the proxy statement and prospectus and
other proxy solicitation materials of BKLA constituting a part thereof (the
"PROXY STATEMENT") and all related documents). BKLA agrees to cooperate, and to
cause its Subsidiaries to cooperate, with Western, its counsel and its
accountants, in preparation of the Registration Statement and the Proxy
Statement. BKLA agrees to file the Proxy Statement in preliminary form with the
FDIC as soon as reasonably practicable on a confidential basis, and Western
agrees to file the Registration Statement with the SEC as soon as reasonably
practicable on a confidential basis, after any SEC comments with respect to the
preliminary Proxy Statement are resolved. Each of BKLA and Western agrees to use
all reasonable efforts to cause the Registration Statement to be declared
effective under the Securities Act as promptly as reasonably practicable after
filing thereof. Western also agrees to use all reasonable efforts to obtain all
necessary state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement. BKLA agrees to
furnish to Western all information concerning BKLA, its Subsidiaries, officers,
directors and shareholders as may be reasonably requested in connection with the
foregoing.
(b) Each of BKLA and Western agrees, as to itself and its Subsidiaries, that
none of the information supplied or to be supplied by it for inclusion or
incorporation by reference in (i) the Registration Statement will, at the time
the Registration Statement and each amendment or supplement thereto, if any,
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) the Proxy
Statement and any amendment or supplement thereto will, at the date of mailing
to shareholders and at the time of the BKLA Meeting, contain any untrue
statement of a material fact or
20
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or any statement which, in the light
of the circumstances under which such statement is made, will be false or
misleading with respect to any material fact, or which will omit to state any
material fact necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier statement in the
Proxy Statement or any amendment or supplement thereto. Each of BKLA and Western
further agrees that if it shall become aware prior to the Effective Date of any
information furnished by it that would cause any of the statements in the Proxy
Statement to be false or misleading with respect to any material fact, or to
omit to state any material fact necessary to make the statements therein not
false or misleading, promptly to inform the other party thereof and to take the
necessary steps to correct the Proxy Statement.
(c) Western agrees to advise BKLA, promptly after Western receives notice
thereof, of the time when the Registration Statement has become effective or any
supplement or amendment has been filed, of the issuance of any stop order or the
suspension of the qualification of Western Common Stock for offering or sale in
any jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
6.04 PRESS RELEASES. Each of BKLA and Western agrees that it will not,
without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NASDAQ rules (provided that the issuing party shall nevertheless
provide the other party with notice of, and the opportunity to review, any such
press release or written statement).
6.05 ACCESS; INFORMATION. (a) Each of BKLA and Western agrees that upon
reasonable notice and subject to applicable laws relating to the exchange of
information, each party shall afford the other party and the other party's
officers, employees, counsel, accountants and other authorized representatives,
such access during normal business hours throughout the period prior to the
Effective Time to the books, records (including, without limitation, tax returns
and work papers of independent auditors), properties, personnel and to such
other information as the requesting party may reasonably request and, during
such period, the providing party shall furnish promptly to the requesting party
(i) a copy of each material report, schedule and other document filed by it
pursuant to the requirements of federal or state securities or banking laws, and
(ii) all other information concerning the business, properties and personnel of
it as the requesting party may reasonably request.
(b) Each party agrees that it will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 6.05 (as well as
any other information obtained prior to the date hereof in connection with the
entering into of this Agreement) for any purpose unrelated to the consummation
of the transactions contemplated by this Agreement or the Stock Option
Agreement. Subject to the requirements of law, each party will keep
confidential, and will cause its representatives to keep confidential, all
information and documents obtained pursuant to this Section 6.05 (as well as any
other information obtained prior to the date hereof in connection with the
entering into of this Agreement) unless such information (i) was already known
to such party, (ii) becomes available to such party from other sources not known
by such party to be bound by a confidentiality obligation, (iii) is disclosed
with the prior written approval of the providing party or (iv) is or becomes
readily ascertainable from published information or trade sources. In the event
that this Agreement is terminated or the transactions contemplated by this
Agreement shall otherwise fail to be consummated, each party shall promptly
cause all copies of documents or extracts thereof containing information and
data as to the other party to be returned to the other party. No investigation
by either party of the business and affairs of the other party shall affect or
be deemed to modify or waive any representation, warranty, covenant or agreement
in this Agreement, or the conditions to either party's obligation to consummate
the transactions contemplated by this Agreement.
21
6.06 ACQUISITION PROPOSALS. BKLA agrees that it shall not, and shall cause
its Subsidiaries and its and its Subsidiaries' officers, directors, agents,
advisors and affiliates not to, solicit or encourage inquiries or proposals with
respect to, or engage in any negotiations concerning, or provide any
confidential information to, or have any discussions with, any person relating
to, any Acquisition Proposal, except to the extent legally required for the
discharge by the BKLA Board of its fiduciary duties as advised by counsel to the
BKLA Board. BKLA shall immediately cease and cause to be terminated any
activities, discussions or negotiations conducted prior to the date of this
Agreement with any parties other than Western with respect to any of the
foregoing and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to an Acquisition Proposal. BKLA
shall promptly (within 24 hours) advise Western following the receipt by BKLA of
any Acquisition Proposal and the substance thereof (including the identity of
the person making such Acquisition Proposal), and advise Western of any
developments with respect to such Acquisition Proposal immediately upon the
occurrence thereof.
6.07 AFFILIATE AGREEMENTS. (a) Not later than the 15th day prior to the
mailing of the Proxy Statement, BKLA shall deliver to Western a schedule of each
person that, to the best of its knowledge, is or is reasonably likely to be, as
of the date of the BKLA Meeting, deemed to be an "affiliate" of BKLA (each, a
"BKLA AFFILIATE") as that term is used in Rule 145 under the Securities Act or
SEC Accounting Series Releases 130 and 135.
(b) BKLA shall use its reasonable best efforts to cause each person who may
be deemed to be a BKLA Affiliate to execute and deliver to Western on or before
the date of mailing of the Proxy Statement an agreement in the form attached
hereto as EXHIBIT A (the "Affiliate Agreements").
6.08 TAKEOVER LAWS. No party hereto shall take any action that would cause
the transactions contemplated by this Agreement or the Stock Option Agreement to
be subject to requirements imposed by any Takeover Law and each of them shall
take all necessary steps within its control to exempt (or ensure the continued
exemption of) the transactions contemplated by this Agreement from, or if
necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect.
6.09 CERTAIN POLICIES. Prior to the Effective Date, BKLA shall, consistent
with generally accepted accounting principles and on a basis mutually
satisfactory to it and Western, modify and change its loan, litigation and real
estate valuation policies and practices (including loan classifications and
levels of reserves) so as to be applied on a basis that is consistent with that
of Western.
6.10 NASDAQ LISTING. Western agrees to use its reasonable best efforts to
list, prior to the Effective Date, on the NASDAQ, subject to official notice of
issuance, the shares of Western Common Stock to be issued to the holders of BKLA
Common Stock in the Merger.
6.11 REGULATORY APPLICATIONS. (a) Western and BKLA and their respective
Subsidiaries shall cooperate and use their respective reasonable best efforts to
prepare all documentation, to effect all filings and to obtain all permits,
consents, approvals and authorizations of all third parties and Governmental
Authorities necessary to consummate the transactions contemplated by this
Agreement. Western and BKLA shall use their reasonable best efforts to make all
required bank regulatory filings, including the appropriate filings with the
Commissioner, the FDIC and the Federal Reserve. Each of Western and BKLA shall
have the right to review in advance, and to the extent practicable each will
consult with the other, in each case subject to applicable laws relating to the
exchange of information, with respect to all material written information
submitted to any third party or any Governmental Authority in connection with
the transactions contemplated by this Agreement. In exercising the foregoing
right, each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party hereto agrees that it will consult with the other party
hereto with respect to the obtaining of all material permits, consents,
approvals and authorizations of all third parties and Governmental Authorities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other party appraised of the status of
material matters relating to completion of the transactions contemplated hereby.
22
(b) Each party agrees, upon request, to furnish the other party with all
information concerning itself, its Subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries to any third party or Governmental
Authority.
6.12 INDEMNIFICATION; DIRECTOR AND OFFICERS' INSURANCE. (a) From and after
the Effective Time through the sixth anniversary of the Effective Date, Western
agrees to indemnify and hold harmless each present and former director and
officer of BKLA or any Subsidiary of BKLA determined as of the Effective Time
(the "INDEMNIFIED PARTIES"), against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "COSTS") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or prior to the
Effective Time (including with respect to this Agreement or any of the
transactions contemplated hereby) (but excluding any Costs arising out of any
violation or alleged violation of the Exchange Act or the rules and regulations
thereunder with respect to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇), whether asserted, claimed or
arising prior to, at or after the Effective Time, to the extent to which such
Indemnified Parties were entitled under California law and the BKLA Articles or
the BKLA By-Laws in effect on the date hereof, and Western shall also advance
expenses as incurred to the extent permitted under California law, the Western
Articles and the Western By-Laws and, with respect to any Indemnified Party, any
indemnification agreement to which such person is a party.
(b) Any Indemnified Party wishing to claim indemnification under Section
6.12(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall as promptly as possible notify Western thereof, but the
failure to so notify shall not relieve Western of any liability it may have to
such Indemnified Party if such failure does not materially prejudice Western. In
the event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) Western shall have the right to
assume the defense thereof and Western shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection with the defense
thereof, except that if Western elects not to assume such defense or counsel for
the Indemnified Parties advises in writing that there are issues which raise
conflicts of interest between Western and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them, and Western shall
pay the reasonable fees and expenses of one such counsel for the Indemnified
Parties in any jurisdiction promptly as statements thereof are received, (ii)
the Indemnified Parties will cooperate in the defense of any such matter and
(iii) Western shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld); and
PROVIDED, FURTHER, that Western shall not have any obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and nonappealable,
that the indemnification of such Indemnified Party in the manner contemplated
hereby is not permitted or is prohibited by applicable law.
(c) For a period of six years after the Effective Time, Western shall use
its reasonable best efforts to cause to be maintained in effect at a minimum the
current policies of directors' and officers' liability insurance maintained by
BKLA (provided that Western may substitute therefor policies of comparable
coverage with respect to claims arising from facts or events which occurred
before the Effective Time); PROVIDED, HOWEVER, that in no event shall Western be
obligated to expend, in order to maintain or provide insurance coverage pursuant
to this Section 6.12(c), any amount per annum in excess of 125% of the amount of
the annual premiums paid as of the date hereof by BKLA for such insurance (the
"MAXIMUM AMOUNT"). If the amount of the annual premiums necessary to maintain or
procure such insurance coverage exceeds the Maximum Amount, Western shall use
all reasonable efforts to maintain the most advantageous policies of directors'
and officers' insurance obtainable for an annual premium equal to the Maximum
Amount. Notwithstanding the foregoing, prior to the Effective Time, Western may
request BKLA to, and BKLA shall, purchase insurance coverage, on such terms and
conditions as shall be acceptable to Western, extending for a period of six
years BKLA's directors' and officers' liability insurance
23
coverage in effect as of the date hereof (covering past or future claims with
respect to periods before the Effective Time) and such coverage shall satisfy
Western's obligations under this Section 6.12(c).
(d) If Western or any of its successors or assigns (i) shall consolidate
with or merge into any other corporation or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) shall transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then and in each such case, proper
provision shall be made so that the successors and assigns of Western shall
assume the obligations set forth in this Section 6.12.
6.13 BENEFIT PLANS. BKLA consents and covenants that from and after the
Effective Date BKLA's Benefits Plans will be governed, managed and/or terminated
by Western, all within Western's sole discretion.
6.14 ACCOUNTANTS' LETTERS. Each of BKLA and Western shall use its
reasonable best efforts to cause to be delivered to the other party, and to
Western's directors and officers who sign the Registration Statement, a letter
of their respective independent auditors, dated (i) the date on which the
Registration Statement shall become effective and (ii) a date shortly prior to
the Effective Date, and addressed to such directors and officers, in form and
substance customary for "comfort" letters delivered by independent accountants
in accordance with Statement of Accounting Standards No. 72.
6.15 NOTIFICATION OF CERTAIN MATTERS. Each of BKLA and Western shall give
prompt notice to the other of any fact, event or circumstance known to it that
(i) is reasonably likely, individually or taken together with all other facts,
events and circumstances known to it, to result in any Material Adverse Effect
with respect to it or (ii) would cause or constitute a material breach of any of
its representations, warranties, covenants or agreements contained herein.
6.16 SHAREHOLDER AGREEMENTS. The directors and certain officers and
shareholders of BKLA, in their capacities as shareholders, in exchange for good
and valuable consideration, have executed and delivered to Western shareholder
agreements substantially in the form of EXHIBIT B hereto (the "SHAREHOLDER
AGREEMENTS"), committing such persons, among other things, (i) to vote their
shares of BKLA Common Stock in favor of the Agreement at the BKLA Meeting and
(ii) to certain representations concerning the ownership of BKLA Common Stock
and Western Common Stock to be received in the Merger.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each of Western and BKLA to consummate the Merger is
subject to the fulfillment or written waiver by Western and BKLA prior to the
Effective Time of each of the following conditions:
(a) SHAREHOLDER APPROVALS. This Agreement and the Merger shall have
been duly adopted by the requisite vote of the shareholders of BKLA.
(b) REGULATORY APPROVALS. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain any
conditions, restrictions or requirements which the Western Board reasonably
determines would (i) following the Effective Time, have a Material Adverse
Effect on the Surviving Corporation and its Subsidiaries taken as a whole or
(ii) reduce the benefits of the transactions contemplated hereby to such a
degree that Western would not have entered into this Agreement had such
conditions, restrictions or requirements been known at the date hereof.
(c) NO INJUNCTION. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or
24
other order (whether temporary, preliminary or permanent) which is in effect
and prohibits consummation of the transactions contemplated by this
Agreement.
(d) REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) BLUE SKY APPROVALS. All permits and other authorizations under
state securities laws necessary to consummate the transactions contemplated
hereby and to issue the shares of Western Common Stock to be issued in the
Merger shall have been received and be in full force and effect.
(f) LISTING. The shares of Western Common Stock to be issued in the
Merger shall have been approved for listing on the NASDAQ, subject to
official notice of issuance.
7.02 CONDITIONS TO OBLIGATION OF BKLA. The obligation of BKLA to
consummate the Merger is also subject to the fulfillment or written waiver by
BKLA prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Western set forth in this Agreement (subject to the standard set forth in
Section 5.02) shall be true and correct as of the date of this Agreement and
as of the Effective Date as though made on and as of the Effective Date
(except that representations and warranties that by their terms speak only
as of the date of this Agreement or some other date shall be true and
correct as of such date), and BKLA shall have received a certificate, dated
the Effective Date, signed on behalf of Western by the Chief Executive
Officer and the Chief Financial Officer of Western to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF WESTERN. Western shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and BKLA shall
have received a certificate, dated the Effective Date, signed on behalf of
Western by the Chief Executive Officer and the Chief Financial Officer of
Western to such effect.
(c) ACCOUNTANTS' LETTERS. BKLA shall have received the letters
referred to in Section 6.14 from Western's independent auditors.
(d) OPINION OF BKLA'S INDEPENDENT AUDITORS; ACCOUNTING TREATMENT. BKLA
shall have received from Vavrinek, Trine, Day & Co., LLP, its independent
auditors, (i) an opinion dated the Effective Date, to the effect that, on
the basis of facts, representations and assumptions set forth in such
opinion, (A) the Merger constitutes a "reorganization" within the meaning of
Section 368 of the Code and (B) no gain or loss will be recognized by
shareholders of BKLA who receive shares of Western Common Stock in exchange
for shares of BKLA Common Stock, except with respect to cash received in
lieu of fractional share interests, and (ii) letters, dated the date of or
shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment. In rendering its opinion,
Vavrinek, Trine, Day & Co., LLP may require and rely upon representations
contained in letters from BKLA, Western and shareholders of BKLA.
(e) DIRECTOR. Western shall have elected as a director, the individual
agreed in accordance with Section 2.01 hereof, effective immediately after
the Effective Time.
7.03 CONDITIONS TO OBLIGATION OF WESTERN. The obligation of Western to
consummate the Merger is also subject to the fulfillment or written waiver by
Western prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of BKLA set forth in this Agreement (subject to the standard set forth in
Section 5.02) shall be true and correct as of the date of this Agreement and
as of the Effective Date as though made on and as of the Effective Date
25
(except that representations and warranties that by their terms speak only
as of the date of this Agreement or some other date shall be true and
correct as of such date) and Western shall have received a certificate,
dated the Effective Date, signed on behalf of BKLA by the Chief Executive
Officer and the Chief Financial Officer of BKLA to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF BKLA. BKLA shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Effective Time, and Western shall have
received a certificate, dated the Effective Date, signed on behalf of BKLA
by the Chief Executive Officer and the Chief Financial Officer of BKLA to
such effect.
(c) OPINION OF WESTERN'S COUNSEL. Western shall have received an
opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel to Western, dated the
Effective Date, to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion, the Merger constitutes a
reorganization under Section 368 of the Code. In rendering its opinion,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ may require and rely upon representations contained in
letters from BKLA, Western and shareholders of BKLA.
(d) ACCOUNTANTS' LETTERS. Western shall have received the letters
referred to in Section 6.14 from BKLA's independent auditors.
(e) ACCOUNTING TREATMENT. Western shall have received from KPMG Peat
Marwick LLP, Western's independent auditors, letters, dated the date of or
shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
ARTICLE VIII
TERMINATION
8.01 TERMINATION. This Agreement may be terminated, and the Acquisition
may be abandoned:
(a) MUTUAL CONSENT. At any time prior to the Effective Time, by the
mutual consent of Western and BKLA, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b) BREACH. At any time prior to the Effective Time, by Western or
BKLA, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event of either: (i) a breach by the
other party of any representation or warranty contained herein (subject to
the standard set forth in Section 5.02), which breach cannot be or has not
been cured within 30 days after the giving of written notice to the
breaching party of such breach; or (ii) a breach by the other party of any
of the covenants or agreements contained herein, which breach cannot be or
has not been cured within 30 days after the giving of written notice to the
breaching party of such breach, provided that such breach (whether under (i)
or (ii)) would be reasonably likely, individually or in the aggregate with
other breaches, to result in a Material Adverse Effect.
(c) DELAY. At any time prior to the Effective Time, by Western or
BKLA, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Merger is not consummated
by December 31, 1998.
(d) NO APPROVAL. By BKLA or Western in the event (i) the approval of
any Governmental Authority required for consummation of the Merger and the
other transactions contemplated by this Agreement shall have been denied by
final nonappealable action of such Governmental Authority or (ii) the
shareholder approval required by Section 7.01(a) herein is not obtained at
the BKLA Meeting.
(e) FAILURE TO RECOMMEND, ETC. At any time prior to the BKLA Meeting,
by Western if the BKLA Board shall have failed to make its recommendation
referred to in Section 6.02, withdrawn
26
such recommendation or modified or changed such recommendation in a manner
adverse in any respect to the interests of Western.
(f) TERMINATION BY WESTERN. This Agreement may be terminated and the
Merger may be abandoned by Western by the giving of notice to BKLA at any
time prior to 5 p.m. on April 29, 1998, if Western determines in its sole
discretion, upon completion of its due diligence review of BKLA, to so
terminate.
(g) WESTERN COMMON STOCK. This Agreement may be terminated by BKLA in
the event that, with respect to any Ten Day Period (as defined below), both
(i)(A) the Ten Day Average Price (as defined below) shall be less that
$35.37 per share and (B) the Western Common Stock Price Percentage (as
defined below) shall be less than the BKX Index Percentage (as defined
below) and (ii) BKLA has delivered written notice to Western of its
intention to terminate this Agreement within forty-eight (48) hours
following the date of such event (it being understood that, if the
circumstances set forth in clause (i) shall have occurred and BKLA fails to
timely deliver the notice referred to in this clause (ii), BKLA shall have
the right to terminate if any such event subsequently occurs and BKLA timely
delivers such notice); PROVIDED, HOWEVER, that, if Western effects a stock
dividend, reclassification, recapitalization, stock split, combination,
exchange of shares or similar transaction after the date hereof and prior to
the Effective Time, the provisions of this Section 8.01(g) shall be
appropriately adjusted;
As used in this Section 8.01(g), (w) "Western Common Stock Price
Percentage" means the percentage determined by dividing the Ten Day Average
Price by $42.61 (as such amount may be adjusted pursuant to the paragraph
above); (x) "BKX Index Percentage " means the percentage determined by
dividing (i) the product of (A) the ▇▇▇▇▇ Bank Index as of the date of
determination times (B) .66 by (ii) the ▇▇▇▇▇ Bank Index as of the date
hereof; (y) "Ten Day Average Price" means the average sales price per share
of Western Common Stock for a Ten Day Period determined by averaging the
last reported sales price on each trading day, and (z) "Ten Day Period"
means any period of ten (10) consecutive trading days.
(h) ACQUISITION PROPOSAL. This Agreement may be terminated by BKLA by
written notice to Western if BKLA receives an Acquisition Proposal on terms
and conditions which the BKLA Board determines, after receiving the advice
of its outside counsel that to proceed with the Merger will violate the
fiduciary duties of the BKLA Board to BKLA's shareholders in light of such
Acquisition Proposal, to accept such proposal; provided, however, that BKLA
shall not be entitled to terminate this Agreement pursuant to this Section
8.01(h) unless it shall have provided Western with written notice of such a
possible determination (which written notice will inform Western of the
material terms and conditions of the proposal, including the identity of the
proponent) not less than two business days prior to such determination.
8.02 EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination of
this Agreement and the abandonment of the Merger pursuant to Section 8.01, no
party to this Agreement shall have any liability or further obligation to any
other party hereunder except as set forth in Section 8.03 and Section 9.01.
8.03 TERMINATION FEE.
(a) MATERIAL BREACH BY WESTERN. Should BKLA terminate this Agreement
pursuant to Section 8.01(b) (unless such breach under Section 8.01(b) shall
result from no act or omission of Western), Western shall promptly, if so
requested by BKLA, but in no event later than five business days after the date
of such request, pay BKLA a fee equal to BKLA's out-of-pocket expenses in
connection with this Agreement and the transactions contemplated hereby, up to a
maximum of $500,000, which amount shall be payable in same day funds, provided
however that no fee shall be paid pursuant to this Section 8.03(a) if BKLA shall
27
be in material breach of its obligations hereunder and Western shall owe no
further duty or liability on account of this Agreement to BKLA.
(b) MATERIAL BREACH BY BKLA; ENTERING ACQUISITION PROPOSAL. Should Western
terminate this Agreement pursuant to either Section 8.01(e) or 8.01(b) (unless
such breach under Section 8.01(b) shall result from no act or omission of BKLA),
BKLA shall promptly, if so requested by Western, but in no event later than five
business days after the date of such request, pay Western a fee equal to
Western's out-of-pocket expenses in connection with this Agreement and the
transactions contemplated hereby, up to a maximum of $500,000, which amount
shall be payable in same day funds, provided however that no fee shall be paid
pursuant to this Section 8.03 if Western shall be in material breach of its
obligations hereunder and BKLA and the shareholders who are parties to the
Shareholder Agreements shall owe no further duty or liability on account of this
Agreement or the Shareholders Agreement to either Western or Santa ▇▇▇▇▇▇ Bank.
In the event that there is a termination as a result of BKLA entering into an
Acquisition Proposal pursuant to Section 8.01(h), BKLA shall pay Western up to
$500,000 to cover out-of-pocket expenses in addition to Western's rights under
the Stock Option Agreement and BKLA and the shareholders who are parties to the
Shareholder Agreements shall owe no further duty or liability on account of this
Agreement to either Western or Santa ▇▇▇▇▇▇ Bank except under the Stock Option
Agreement.
ARTICLE IX
MISCELLANEOUS
9.01 SURVIVAL. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than
Sections 3.01, 3.03, 3.04, 3.07, 6.12 and this Article IX which shall survive
the Effective Time) or the termination of this Agreement if this Agreement is
terminated prior to the Effective Time (other than Sections 6.03(b), 6.05(b),
8.02, 8.03 and this Article IX which shall survive such termination).
9.02 WAIVER; AMENDMENT. Prior to the Effective Time, any provision of this
Agreement may be (i) waived by the party benefitted by the provision, or (ii)
amended or modified at any time, by an agreement in writing between the parties
hereto executed in the same manner as this Agreement, except that after the BKLA
Meeting, this Agreement may not be amended if it would violate the CGCL or
reduce the consideration to be received by BKLA shareholders in the Merger.
9.03 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 GOVERNING LAW; WAIVER OF JURY TRIAL. This Agreement shall be governed
by, and interpreted in accordance with, the laws of the State of California
applicable to contracts made and to be performed entirely within such State.
Each of the parties hereto hereby irrevocably waives any and all right to trial
by jury in any legal proceeding arising out of or related to this Agreement or
the transactions contemplated hereby.
9.05 EXPENSES. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby, except
as provided in Section 8.02.
28
9.06 NOTICES. All notices, requests and other communications hereunder to
a party shall be in writing and shall be deemed given if personally delivered,
telecopied (with machine-generated confirmation) or mailed by registered or
certified mail (return receipt requested) to such party at its address set forth
below or such other address as such party may specify by notice to the parties
hereto.
If to, to:
Bank of Los Angeles
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Horgan, Rosen, Beckham & Coren
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Western or Santa ▇▇▇▇▇▇ Bank, to:
Western Bancorp
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Agreement,
the Stock Option Agreement, the Affiliate Agreements and the Shareholder
Agreements represent the entire understanding of the parties hereto with
reference to the transactions contemplated hereby and thereby and this Agreement
supersedes any and all other oral or written agreements heretofore made (other
than any such Stock Option Agreement, Affiliate Agreements or Shareholder
Agreements). Nothing in this Agreement expressed or implied, is intended to
confer upon any person, other than the parties hereto or their respective
successors, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
9.08 INTERPRETATION; EFFECT. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." No provision of this Agreement shall
be construed to require BKLA, Western or any of their respective Subsidiaries,
affiliates or directors to take any action which would violate applicable law
(whether statutory or common law), rule or regulation.
* * *
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
BANK OF LOS ANGELES
By: /s/ ▇. ▇▇▇▇▇
-----------------------------------------
Name:
Title:
WESTERN BANCORP
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Name:
Title:
SANTA ▇▇▇▇▇▇ BANK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Name:
Title:
30