EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
by and among
IMPERIAL BANCORP,
COMERICA INCORPORATED
and
COMERICA HOLDINGS INCORPORATED
Dated as of October 31, 2000
TABLE OF CONTENTS
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Page
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AGREEMENT AND PLAN OF MERGER
ARTICLE I
THE MERGER
1.1 The Merger................................................................. 1
1.2 Effective Time............................................................. 2
1.3 Effects of the Merger...................................................... 2
1.4 Conversion of Stock........................................................ 2
1.5 Company Options............................................................ 3
1.6 Articles of Incorporation.................................................. 3
1.7 Bylaws..................................................................... 3
1.8 Tax and Accounting Consequences............................................ 3
1.9 Board of Directors of Surviving Corporation................................ 3
1.10 Dissenters' Rights......................................................... 4
ARTICLE II
EXCHANGE OF SHARES
2.1 Exchange of Company Share Certificates for Parent Stock Certificates....... 4
2.2 Exchange Procedures........................................................ 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Corporate Organization..................................................... 6
3.2 Capitalization............................................................. 6
3.3 Authority; No Violation.................................................... 7
3.4 Consents and Approvals..................................................... 8
3.5 Regulatory Compliance...................................................... 9
3.6 Financial Statements....................................................... 10
3.7 Broker's Fees.............................................................. 10
3.8 Absence of Certain Changes or Events....................................... 10
3.9 Legal Proceedings.......................................................... 11
3.10 Taxes and Tax Returns...................................................... 11
3.11 Employee Benefit Plans..................................................... 12
3.12 SEC Reports................................................................ 14
3.13 Compliance with Applicable Law............................................. 14
3.14 Certain Contracts.......................................................... 15
3.15 Undisclosed Liabilities.................................................... 15
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3.16 Insurance.................................................................. 15
3.17 Loans...................................................................... 16
3.18 Title to Property.......................................................... 16
3.19 Environmental Matters...................................................... 17
3.20 Interest Rate Risk Management Instruments.................................. 17
3.21 Intellectual Property...................................................... 17
3.22 Reorganization; Pooling of Interests....................................... 18
3.23 Regulatory Approvals....................................................... 18
3.24 Opinion.................................................................... 18
3.25 Company Information........................................................ 18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
4.1 Corporate Organization..................................................... 19
4.2 Capitalization............................................................. 19
4.3 Authority; No Violation.................................................... 20
4.4 Consents and Approvals..................................................... 21
4.5 Regulatory Compliance...................................................... 21
4.6 Financial Statements....................................................... 22
4.7 Broker's Fees.............................................................. 22
4.8 Absence of Certain Changes or Events....................................... 22
4.9 Legal Proceedings.......................................................... 23
4.10 SEC Reports................................................................ 23
4.11 Compliance with Applicable Law............................................. 23
4.12 Undisclosed Liabilities.................................................... 23
4.13 Environmental Liability.................................................... 24
4.14 Interest Rate Risk Management Instruments.................................. 24
4.15 Reorganization; Pooling of Interests....................................... 24
4.16 Regulatory Approvals....................................................... 24
4.17 Parent Information......................................................... 24
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time.......................... 25
5.2 Company Forbearances....................................................... 25
5.3 Parent Forbearances........................................................ 27
5.4 Acquisition Proposals...................................................... 28
5.5 Board of Directors of Comercia Bank California............................. 28
ARTICLE VI
ADDITIONAL AGREEMENTS
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6.1 Regulatory Matters......................................................... 29
6.2 Access to Information...................................................... 30
6.3 Shareholders' Approvals.................................................... 30
6.4 Legal Conditions to Merger................................................. 31
6.5 Affiliates; Publication of Combined Financial Results...................... 31
6.6 Stock Exchange Listing..................................................... 31
6.7 Employee Benefit Plans..................................................... 31
6.8 Indemnification; Directors' and Officers' Insurance........................ 32
6.9 Additional Agreements...................................................... 33
6.10 Advice of Changes.......................................................... 33
6.12 Exemption from Liability under Section 16(b)............................... 33
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger................. 34
7.2 Conditions to Obligations of the Company................................... 35
7.3 Conditions to Obligations of Parent and Merger Sub......................... 35
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination................................................................ 36
8.2 Effect of Termination...................................................... 37
8.3 Amendment.................................................................. 37
8.4 Extension; Waiver.......................................................... 37
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing.................................................................... 38
9.2 Nonsurvival of Representations, Warranties and Agreements.................. 38
9.3 Expenses................................................................... 38
9.4 Notices.................................................................... 38
9.5 Interpretation............................................................. 39
9.6 Counterparts............................................................... 39
9.7 Entire Agreement........................................................... 39
9.8 Governing Law.............................................................. 40
9.9 Publicity.................................................................. 40
9.10 Assignment; Third Party Beneficiaries...................................... 40
Exhibit A - Option Agreement
Exhibit 6.5(a)(1) - Form of Affiliate Letter Addressed to Parent
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Exhibit 6.5(a)(2) - Form of Affiliate Letter Addressed to the Company
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INDEX OF DEFINED TERMS
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Defined Term Page
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Acquisition Proposal.......................................... 28
Agreement..................................................... 1
BHC Act....................................................... 6
California Agreement.......................................... 2
California Secretary.......................................... 2
CGCL.......................................................... 1
Closing....................................................... 38
Closing Date.................................................. 38
Code.......................................................... 3
Company....................................................... 1
Company 10-K.................................................. 10
Company Articles.............................................. 6
Company Benefit Plans......................................... 13
Company Bylaws................................................ 6
Company Capital Shares........................................ 7
Company Common Share.......................................... 2
Company Contract.............................................. 15
Company Disclosure Schedule................................... 6
Company ERISA Affiliate....................................... 13
Company Insiders.............................................. 34
Company Option................................................ 3
Company Preferred Shares...................................... 7
Company Regulatory Agreement.................................. 9
Company Reports............................................... 14
Company Rights................................................ 7
Company Share Certificates.................................... 4
Company Stock Plan............................................ 7
Confidentiality Agreements.................................... 30
Covered Employees............................................. 31
Delaware Certificate.......................................... 2
Delaware Secretary............................................ 2
DGCL.......................................................... 1
Dissenting Shareholder........................................ 4
Dissenting Shares............................................. 4
DPC Shares.................................................... 2
Effective Time................................................ 2
Employees..................................................... 32
Employer Securities........................................... 14
Environmental Laws............................................ 17
ERISA......................................................... 12
ESOP.......................................................... 14
Exchange Act.................................................. 10
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Exchange Agent................................................ 4
Exchange Ratio................................................ 2
Federal Reserve Board......................................... 8
Financial Advisor............................................. 10
GAAP.......................................................... 3
Governmental Entity........................................... 9
HSR Act....................................................... 8
Indemnified Parties........................................... 32
Intellectual Property......................................... 18
IRS........................................................... 11
Liens......................................................... 8
Loan.......................................................... 14
Material Adverse Effect....................................... 6
Maximum Amount................................................ 33
Merger........................................................ 1
Merger Consideration.......................................... 2
Merger Sub.................................................... 1
Merger Sub Bylaws............................................. 19
Merger Sub Certificate........................................ 19
Merger Sub Common Stock....................................... 3
Non-Subsidiary Affiliate...................................... 7
OCC........................................................... 9
Option Agreement.............................................. 1
Parent........................................................ 1
Parent 10-K................................................... 22
Parent Bylaws................................................. 19
Parent Capital Stock.......................................... 19
Parent Certificate............................................ 19
Parent Common Stock........................................... 2
Parent Disclosure Schedule.................................... 19
Parent Preferred Stock........................................ 19
Parent Regulatory Agreement................................... 22
Parent Reports................................................ 23
Parent Rights................................................. 20
Parent Stock Certificates..................................... 4
Parent Stock Plans............................................ 19
Person........................................................ 28
Proxy Statement............................................... 8
Regulatory Agencies........................................... 9
Requisite Regulatory Approvals................................ 34
S-4........................................................... 8
SEC........................................................... 8
Section 16 Information........................................ 33
Securities Act................................................ 14
SRO........................................................... 8
State Approvals............................................... 8
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State Regulator............................................... 9
Subsidiary.................................................... 6
Surviving Corporation......................................... 1
Tax........................................................... 12
Taxes......................................................... 12
Trust Account Shares.......................................... 2
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 31, 2000 (this
"Agreement"), by and among IMPERIAL BANCORP, a California corporation (the
"Company"), COMERICA INCORPORATED, a Delaware corporation ("Parent"), and
COMERICA HOLDINGS INCORPORATED, a Delaware corporation and a wholly owned
subsidiary of Parent ("Merger Sub").
W I T N E S S E T H :
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WHEREAS, the Boards of Directors of each of the Company, Parent and Merger
Sub have determined that it is in the best interests of their respective
companies and their shareholders to consummate the strategic business
combination transaction provided for herein in which the Company will, subject
to the terms and conditions set forth herein, merge with and into the Merger Sub
(the "Merger"), so that Merger Sub is the surviving corporation (hereinafter
sometimes referred to in such capacity as the "Surviving Corporation") in the
Merger; and
WHEREAS, as a condition to, and immediately after, the execution of this
Agreement, Parent and the Company are entering into a stock option agreement
with the Company as issuer, and Parent as grantee, of the stock option
contemplated thereby (the "Option Agreement") in the form attached hereto as
Exhibit A; and
WHEREAS, as a condition to, and simultaneously with, the execution of this
Agreement, the persons set forth on Exhibit B-1 are entering into support
agreements in the form set forth on Exhibit B-2; and
WHEREAS, it is the intention of the parties that the Merger be accounted
for as a "pooling of interests" under generally accepted accounting principles
and constitute a reorganization under Section 368(a) of the Code; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. (a) Subject to the terms and conditions of this Agreement,
in accordance with the General Corporation Law of the State of Delaware (the
"DGCL") and the General Corporation Law of the State of California (the "CGCL"),
at the Effective Time, the Company shall merge with and into Merger Sub. Merger
Sub shall be the Surviving Corporation in the
Merger, and shall continue its corporate existence under the laws of the State
of Delaware. Upon consummation of the Merger, the separate corporate existence
of the Company shall terminate.
(b) Parent may at any time change the method of effecting the combination
of the Company and Parent (including without limitation the provisions of this
Article I) if and to the extent it deems such change to be desirable; provided,
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however, that no such change shall (A) alter or change the amount of
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consideration to be provided to holders of Company Common Shares provided for in
this Agreement (the "Merger Consideration"), (B) adversely affect the tax
treatment of shareholders as a result of receiving the Merger Consideration or
(C) materially impede or delay consummation of the transactions contemplated by
this Agreement.
1.2 Effective Time. The Merger shall become effective as set forth in the
certificate of merger (the "Delaware Certificate") that shall be filed with the
Secretary of State of the State of Delaware (the "Delaware Secretary"), and in
the agreement of merger (the "California Agreement") that shall be filed with
the Secretary of State of the State of California (the "California Secretary"),
in each case as of the Closing Date. The term "Effective Time" shall be the date
and time when the Merger becomes effective, as set forth in the Delaware
Certificate and the California Agreement.
1.3 Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in the DGCL and CGCL.
1.4 Conversion of Stock. At the Effective Time, by virtue of the Merger
and without any action on the part of the Company, Parent, Merger Sub or the
holder of any of the following securities:
(a) Subject to Section 2.2, each Common Share of the Company ("Company
Common Share") issued and outstanding immediately prior to the Effective Time,
except for (i) Company Common Shares owned, directly or indirectly, by the
Company, Parent or Merger Sub or any of their respective wholly owned
Subsidiaries (other than (A) Company Common Shares held, directly or indirectly,
in trust accounts, managed accounts and the like, or otherwise held in a
fiduciary capacity, that are beneficially owned by third parties (any such
Company Common Shares, whether held directly or indirectly by the Company,
Parent or Merger Sub or any of their respective Subsidiaries, being referred to
as "Trust Account Shares") and (B) Company Common Shares held by the Company,
Parent or Merger Sub or any of their respective Subsidiaries in respect of a
debt previously contracted (any such Company Common Shares that are similarly
held, whether held directly or indirectly by the Company, Parent or Merger Sub
or any of their respective Subsidiaries, being herein referred to as "DPC
Shares")) and (ii) Dissenting Shares, shall be converted into 0.46 of a share
(the "Exchange Ratio") of Common Stock, par value $5.00 per share, of Parent
("Parent Common Stock").
(b) All Company Common Shares that are owned, directly or indirectly, by
the Company, Parent or Merger Sub or any of their respective wholly owned
Subsidiaries (other than Trust Account Shares and DPC Shares) shall be canceled
and shall cease to exist and no consideration shall be delivered in exchange
therefor.
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(c) Each share of Common Stock, par value $0.01 per share, of Merger Sub
("Merger Sub Common Stock") issued and outstanding immediately prior to the
Effective Time, shall remain issued and outstanding and unaffected by the
Merger.
If, prior to the Effective Time, the outstanding Company Common Shares or
outstanding shares of Parent Common Stock shall have been increased, decreased,
changed into or exchanged for a different number or kind of shares or securities
as a result of a reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, or other similar change in
capitalization, an appropriate and proportionate adjustment shall be made to the
Exchange Ratio.
1.5 Company Options. (a) At the Effective Time, without any action on the
part of any holder of any such option, each option to purchase Company Common
Shares (each, a "Company Option") that is outstanding and unexercised
immediately prior thereto shall vest and shall cease to represent a right to
acquire Company Common Shares and shall be converted automatically into an
option to purchase shares of Parent Common Stock in an amount and at an exercise
price determined as provided below (and otherwise subject to the terms of the
Company Stock Plans and the agreements evidencing grants thereunder):
(i) The number of shares of Parent Common Stock to be subject to the
new option shall be equal to the product of the number of Company Common
Shares purchasable upon exercise of the original Company Option and the
Exchange Ratio, the product being rounded, if necessary, up or down, to the
nearest whole share; and
(ii) The exercise price per share of Parent Common Stock under the new
option shall be equal to the exercise price per Company Common Shares under
the original Company Option divided by the Exchange Ratio, provided that
such exercise price shall be rounded to the nearest whole cent.
(b) The adjustment provided in Section 1.5(a) with respect to any
options that are "incentive stock options" (as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code")) shall be and is intended
to be effected in a manner that is consistent with Section 424(a) of the Code.
The duration and other terms of the new option shall be the same as the original
option.
1.6 Articles of Incorporation. At the Effective Time, the Merger Sub
Certificate shall be the articles of incorporation of the Surviving Corporation.
1.7 Bylaws. At the Effective Time, the Merger Sub Bylaws shall be the
bylaws of the Surviving Corporation.
1.8 Tax and Accounting Consequences. It is intended that the Merger
shall constitute a "reorganization" within the meaning of Section 368(a) of the
Code, that this Agreement shall constitute a "plan of reorganization" for the
purposes of Sections 354 and 361 of the Code and that the Merger shall be
accounted for as a "pooling of interests" under generally accepted accounting
principles ("GAAP").
1.9 Board of Directors of Surviving Corporation. At the Effective Time,
the directors of the Surviving Corporation shall be comprised of the directors
of Merger Sub.
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1.10 Dissenters Rights., If any record holder of Company Common Shares
which are "dissenting shares" (as defined in Section 1300(b) of the CGCL) (any
such Company Common Shares, "Dissenting Shares," and any such record holder, a
"Dissenting Shareholder") shall be entitled to require the Company or the
Surviving Corporation to purchase such Dissenting Shares pursuant to Chapter 13
of the CGCL, the Company shall give Parent notice thereof and Parent shall have
the right to control all negotiations and proceedings with respect thereto.
Neither the Company nor the Surviving Corporation shall, except with the prior
written consent of Parent, voluntarily make any payment with respect to, or
settle or offer to settle, any demand pursuant to Section 1301 of the CGCL. If
any Dissenting Shareholders shall fail to perfect or shall have effectively
withdrawn or lost the right to require the Company or the Surviving Corporation
to purchase his or her Dissenting Shares, the Dissenting Shares held by such
Dissenting Shareholder shall thereupon be treated as though such Dissenting
Shares had been converted into shares of Parent Common Stock pursuant to Section
1.4(a).
ARTICLE II
EXCHANGE OF SHARES
2.1 Exchange of Company Share Certificates for Parent Stock Certificates.
From the Effective Time until the end of the six-month period following the
Effective Time, Parent shall make available to an exchange agent (which may be a
subsidiary bank of Parent) appointed prior to the Effective Time by Parent (and
not reasonably objected to by the Company) on behalf of the Surviving
Corporation (the "Exchange Agent") certificates representing shares of Parent
Common Stock ("Parent Stock Certificates") and cash in amounts sufficient to
allow the Exchange Agent to make all deliveries of Parent Stock Certificates and
payments that may be required in exchange for certificates representing Company
Common Shares ("Company Share Certificates") pursuant to this Article II. At the
end of such six-month period, any such Parent Stock Certificates and cash
remaining in the possession of the Exchange Agent (together with any dividends
or earnings in respect thereof) shall be returned to Parent. Any former holders
of Company Share Certificates who have not theretofore exchanged their Company
Share Certificates for Parent Stock Certificates and cash pursuant to this
Article II shall thereafter be entitled to look exclusively to Parent, and only
as general creditors thereof, for the shares of Parent Common Stock and any cash
to which they become entitled upon exchange of their Company Share Certificates
pursuant to this Article II.
2.2 Exchange Procedures. Promptly after the Effective Time, Parent
shall cause the Exchange Agent to mail or deliver to each person who was,
immediately prior to the Effective Time, a holder of record of Company Common
Shares, a form (mutually agreed upon by the Company and Parent) of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates shall pass, only upon delivery of the
certificates to the Exchange Agent) containing instructions for use in effecting
the surrender of Company Share Certificates in exchange for Parent Stock
Certificates and any payments pursuant to this Article II. Upon surrender to
the Exchange Agent of a Company Share Certificate for cancellation together with
such letter of transmittal, duly executed and completed in accordance with the
instructions thereto, the holder of such Company Share Certificate shall be
entitled to receive in exchange therefor a Parent Stock Certificate representing
the shares of Parent Common Stock,
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and a check in the amount, if any, to which such holder is entitled pursuant to
this Article II, and the Company Share Certificate so surrendered shall
forthwith be canceled. No interest will be paid or will accrue on any amount
payable upon surrender of Company Share Certificates.
(a) No dividends or other distributions declared with respect to Parent
Common Stock shall be paid to the holder of any unsurrendered Company Share
Certificate until the holder thereof shall surrender such Company Share
Certificate in accordance with this Article II. After the surrender of a Company
Share Certificate in accordance with this Article II, the record holder thereof
shall be entitled to receive any such dividends or other distributions, without
any interest thereon, that theretofore had become payable with respect to shares
of Parent Common Stock represented by such Company Share Certificate.
(b) After the Effective Time, there shall be no transfers on the stock
transfer books of the Company of Company Common Shares that were issued and
outstanding immediately prior to the Effective Time.
(c) If any Parent Stock Certificate or cash payment is to be issued or
made in a name other than that in which the Company Certificate surrendered in
exchange therefor is registered, it shall be a condition of such exchange that
the Company Share Certificate so surrendered shall be properly endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise in proper
form for transfer, and that the person requesting such exchange shall pay to the
Exchange Agent in advance any transfer or other taxes required by reason of the
issuance of such Parent Stock Certificate or the making of such cash payment in
a name other than that of the registered holder of the Company Share Certificate
surrendered, or shall establish to the satisfaction of Parent that any such
taxes have been paid or are not applicable.
(d) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Parent Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Parent Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a shareholder of
Parent.
(e) In the event any Company Share Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Company Share Certificate to be lost, stolen or destroyed and, if
reasonably required by Parent, the posting by such person of a bond in such
amount as Parent may determine is reasonably necessary as indemnity against any
claim that may be made against it with respect to such Company Share
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Company Share Certificate the shares of Parent Common Stock and any
cash in lieu of fractional shares deliverable in respect thereof pursuant to
this Agreement.
(f) Upon giving effect to the conversion and exchange described in
Section 1.4, the resulting number of shares of Parent Common Stock of each
registered holder of Company Common Shares shall be rounded down to the nearest
whole number and each such registered holder shall be entitled to receive from
Parent in lieu of any fractional share of Parent Common Stock prior to such
rounding down an amount in cash (without interest) equal to the product obtained
by multiplying (a) the fraction of a share of Parent Common Stock to which such
holder
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would otherwise be entitled and (b) the average of the closing price per share
of Parent Common Stock for the ten trading days most recently preceding the
Closing Date as reported on the NYSE Composite Transactions reporting system.
Notwithstanding the foregoing, fractional shares of Parent Common Stock that
would be issued into the ESOP prior to the Effective Time shall be issued within
such plan as a fractional share of Parent Common Stock at the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in the corresponding sections or subsections of the
Company disclosure schedule delivered to Parent concurrently herewith (the
"Company Disclosure Schedule"), the Company hereby represents and warrants to
Parent as follows:
3.1 Corporate Organization. (a) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. The Company has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not, either individually or in the aggregate, have a Material Adverse
Effect on the Company. As used in this Agreement, the term "Material Adverse
Effect" means, with respect to the Company, Parent or Merger Sub, as the case
may be, a material adverse effect on (i) the business, results of operations or
financial condition of such party and its Subsidiaries taken as a whole, except
to the extent such effect is attributable to the execution of this Agreement and
the announcement thereof, or (ii) the ability of such party to timely consummate
the transactions contemplated hereby. As used in this Agreement, the word
"Subsidiary" means, with respect to the Company or Parent or any entity, an
entity that is consolidated with such party for financial reporting purposes.
The Company is duly registered as a bank holding company and has become a
financial holding company under the Bank Holding Company Act of 1956, as amended
(the "BHC Act"), and meets the requirements of Section 4(l) of the BHC Act. True
and complete copies of the Restated Articles of Incorporation of the Company, as
heretofore amended (the "Company Articles"), and the Bylaws of the Company as in
effect as of the date of this Agreement (the "Company Bylaws"), have previously
been made available to Parent.
(b) Each Subsidiary of the Company (i) is duly organized and validly
existing under the laws of its jurisdiction of organization, (ii) is duly
qualified to do business and in good standing in all jurisdictions (whether
federal, state, local or foreign) where its ownership or leasing of property or
the conduct of its business requires it to be so qualified and in which the
failure to be so qualified would have a Material Adverse Effect on the Company
and (iii) has all requisite corporate power and authority to own or lease its
properties and assets and to carry on its business as now conducted.
3.2 Capitalization. (a) The authorized capital stock of the Company
consists of (i) 50,000,000 Company Common Shares, of which, as of October 16,
2000, 43,462,036 shares were issued and outstanding, and (ii) 5,000,000
Preferred Shares (the "Company Preferred
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Shares" and, together with the Company Common Shares, the "Company Capital
Shares"), no shares of which are issued and outstanding. All of the issued and
outstanding Company Common Shares have been duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. As of the date of this
Agreement, except (i) pursuant to the terms of the Option Agreement and (ii)
options and stock issued pursuant to the Company's 1986 Stock Option Plan (the
"Company Stock Plan") or purchased pursuant to the Company's Employee Stock
Ownership Plan, the Company does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of Company Capital
Shares or any other equity securities of the Company or any securities
representing the right to purchase or otherwise receive any shares of Company
Capital Shares (collectively, including the items contemplated by clauses (i)
and (ii) of this sentence, the "Company Rights"). As of October 16, 2000, no
shares of Company Capital Shares were reserved for issuance except for 4,390,356
shares of Company Common Shares reserved for issuance pursuant to the Company
Stock Plan. Since October 16, 2000, the Company has not issued any shares of its
capital stock or any securities convertible into or exercisable for any shares
of its capital stock, other than as expressly permitted by Section 5.2 hereof or
pursuant to the exercise of employee stock options granted prior to such date or
pursuant to the Company Stock Plan and the Option Agreement. Set forth in the
Company Disclosure Schedule is a list containing the name of each holder of an
option to purchase Company Common Shares, the date of each option to purchase
Company Common Shares held by such person, the number of shares subject to each
such option, the expiration date of each such option and the price at which each
such option may be exercised under the applicable stock plan.
(b) The Company owns, directly or indirectly, all of the issued and
outstanding shares of capital stock or other ownership interests of each of its
Subsidiaries, free and clear of any Liens (as defined below), and all of such
shares or other ownership interests are duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. No Subsidiary of the Company has
or is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of capital stock or any other equity security of such Subsidiary
or any securities representing the right to purchase or otherwise receive any
shares of capital stock or any other equity security of such Subsidiary. The
Company Disclosure Schedule sets forth a list of the material investments of the
Company in corporations, joint ventures, partnerships, limited liability
companies and other entities other than its Subsidiaries (each of such entities,
a "Non-Subsidiary Affiliate").
3.3 Authority; No Violation. (a) The Company has full corporate power and
authority to execute and deliver this Agreement and the Option Agreement and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly approved
by the Board of Directors of the Company. The Board of Directors of the Company
has directed that this Agreement and the transactions contemplated hereby be
submitted to the Company's shareholders for approval at a meeting of such
shareholders and, except for the approval of this Agreement and the transactions
contemplated hereby by the affirmative vote of a majority of the outstanding
Company Common Shares entitled to vote, no corporate proceedings on the part of
the Company are necessary to approve this Agreement or
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the Option Agreement or to consummate the transactions contemplated hereby and
thereby. This Agreement has been duly and validly executed and delivered by the
Company and (assuming due authorization, execution and delivery by Parent and
Merger Sub) constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms (except as may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the rights of creditors generally and the availability of equitable
remedies).
(b) Neither the execution and delivery of this Agreement or the Option
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby or thereby, nor compliance by the Company with any of the
terms or provisions hereof or thereof, will (i) violate any provision of the
Company Articles or Company Bylaws or (ii) assuming that the consents and
approvals referred to in Section 3.4 are duly obtained, (x) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to the Company, any of its Subsidiaries or its Non-Subsidiary
Affiliates or any of their respective properties or assets or (y) violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event that, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or
result in the creation of any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance (collectively, "Liens") upon any of the
respective properties or assets of the Company, any of its Subsidiaries or Non-
Subsidiary Affiliates under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Company, any of its Subsidiaries or
its Non-Subsidiary Affiliates is a party, or by which they or any of their
respective properties or assets may be bound or affected, except (in the case of
clause (y) above) for such violations, conflicts, breaches or defaults that,
either individually or in the aggregate, will not have a Material Adverse Effect
on the Company.
3.4 Consents and Approvals. Except for (i) the filing of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act and approval of such
applications and notices, (ii) the pre-merger notification requirements of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (iii) the filing of any required applications or notices with any state
banking agencies and approval of such applications and notices (the "State
Approvals"), (iv) the filing with the Securities and Exchange Commission (the
"SEC") of a proxy statement in definitive form relating to the meeting of the
Company's shareholders to be held in connection with this Agreement and the
transactions contemplated hereby (the "Proxy Statement"), and of the
registration statement on Form S-4 (the "S-4") in which the Proxy Statement will
be included as a prospectus and any filings under the Securities Act required in
connection with the issuance of Company Common Shares pursuant to the Option
Agreement, (v) the filing of the Delaware Certificate with the Delaware
Secretary pursuant to the DGCL, (vi) the filing of the California Agreement and
required officers' certificates with the California Secretary pursuant to the
CGCL, (vii) any consents, authorizations, approvals, filings or exemptions in
connection with compliance with the applicable provisions of federal and state
securities laws relating to the regulation of broker-dealers, insurance
companies and agents, investment advisers or transfer agents, and federal
commodities laws relating to the regulation of futures commission merchants and
the rules and regulations thereunder and of any applicable industry self-
regulatory organization ("SRO"), and the rules of the NYSE, or that are required
under consumer finance, mortgage
-8-
banking and other similar laws and (viii) such filings and approvals as are
required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of shares of Parent Common Stock
pursuant to this Agreement or the resale of shares of Company Common Shares as
contemplated by the Option Agreement, no consents or approvals of or filings or
registrations with any court, administrative agency or commission or other
governmental authority or instrumentality (each a "Governmental Entity") are
necessary in connection with (A) the execution and delivery by the Company of
this Agreement and the Option Agreement and (B) the consummation by the Company
of the transactions contemplated hereby and thereby, except to the extent that
the absence of any such consent, authorization, approval, filing or exemption
would not, either individually or in the aggregate, have a Material Adverse
Effect on the Company.
3.5 Regulatory Compliance. (a) Except for normal examinations conducted by
a Regulatory Agency (as defined below) in the ordinary course of the business of
the Company and its Subsidiaries, no Regulatory Agency has initiated any
proceeding or, to the best knowledge of the Company, investigation into the
business or operations of the Company or any of its Subsidiaries since January
1, 1998, except where such proceedings or investigation is not reasonably
likely, either individually or in the aggregate, to have a Material Adverse
Effect on the Company. There is no unresolved violation, criticism or exception
by any Regulatory Agency with respect to any report or statement relating to any
examinations of the Company or any of its Subsidiaries that, in the reasonable
judgment of the Company, is reasonably likely, either individually or in the
aggregate, to have a Material Adverse Effect on the Company. The term
"Regulatory Agencies" means (i) the Federal Reserve Board, (ii) the Federal
Deposit Insurance Corporation, (iii) any state regulatory authority (each a
"State Regulator"), (iv) the Office of the Comptroller of the Currency (the
"OCC"), (v) the SEC and (vi) any SRO.
(b) Neither the Company nor any of its Subsidiaries is subject to any
cease-and-desist or other order issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a party
to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or has been since January 1, 1998, a recipient of any
supervisory letter from, or since January 1, 1998, has adopted any board
resolutions at the request of any Regulatory Agency or other Governmental Entity
that currently restricts in any material respect the conduct of its business or
that in any material manner relates to its capital adequacy, its credit
policies, its management or its business (each, whether or not set forth in the
Company Disclosure Schedule, a "Company Regulatory Agreement"), nor has the
Company or any of its Subsidiaries been advised since January 1, 1998, by any
Regulatory Agency or other Governmental Entity that it is considering issuing or
requesting any such Company Regulatory Agreement.
(c) The Company and its Subsidiaries have timely filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that they were required to file since January 1, 1998 with
all Regulatory Agencies, and have paid all fees and assessments due and payable
in connection therewith, except where the failure to file such report,
registration, statement or amendment or to pay such fees and assessments is not
reasonably likely, either individually or in the aggregate, to have a Material
Adverse Effect on the Company.
-9-
3.6 Financial Statements. Copies of the consolidated balance sheets of the
Company and its Subsidiaries as of December 31, for the fiscal years 1998 and
1999, and the related consolidated statement of income, consolidated statement
of changes in shareholders' shareholders' equity and comprehensive income and
consolidated statement of cash flows for the fiscal years 1998 through 1999,
inclusive, as reported in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999 (the "Company 10-K") filed with the SEC
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in
each case accompanied by the audit report of KPMG LLP, independent accountants
with respect to the Company, have previously been made available to Parent. The
December 31, 1999 consolidated balance sheet of the Company (including the
related notes, where applicable) fairly presents in all material respects the
consolidated financial position of the Company and its Subsidiaries as of the
date thereof, and the other financial statements referred to in this Section 3.6
(including the related notes, where applicable) fairly present in all material
respects the results of the consolidated operations and changes in shareholders'
equity and consolidated financial position of the Company and its Subsidiaries
for the respective fiscal periods or as of the respective dates therein set
forth; each of such statements (including the related notes, where applicable)
complies in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto; and
each of such statements (including the related notes, where applicable) has been
prepared in all material respects in accordance with GAAP consistently applied
during the periods involved, except, in each case, as indicated in such
statements or in the notes thereto. The books and records of the Company and its
Subsidiaries have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements.
3.7 Broker's Fees. Except for ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation or its successors in interest (the "Financial Advisor"), the fees
and expenses of which will be as set forth in the Company Disclosure Schedule,
none of the Company, any of its Subsidiaries or any of their respective officers
or directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with the Merger or
related transactions contemplated by this Agreement or the Option Agreement.
3.8 Absence of Certain Changes or Events. (a) Except as publicly disclosed
in Company Reports filed prior to the date hereof, since December 31, 1999, no
event or events have occurred that have had, either individually or in the
aggregate, a material adverse effect on the business, results of operations or
financial condition of the Company and its subsidiaries taken as a whole, other
than any event or events attributable to (i) the execution of this Agreement and
the announcement thereof, (ii) any change in law, rule or regulation or GAAP or
any interpretation thereof, or (iii) any change in economic or business
conditions generally (including, without limitation, changes in interest rates)
or in the banking industry specifically and not disproportionately affecting the
Company or its Subsidiaries.
(b) Except as publicly disclosed in Company Reports filed prior to the
date hereof, since December 31, 1999, the Company and its Subsidiaries have
carried on their respective businesses in all material respects in the ordinary
course.
(c) Since December 31, 1999, neither the Company nor any of its
Subsidiaries has (i) except for normal increases for employees (other than
directors and officers subject to the re-
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porting requirements of Section 16(a) of the Exchange Act) made in the ordinary
course of business consistent with past practice or as required by applicable
law, increased the wages, salaries, compensation, pension, or other fringe
benefits or perquisites payable to any executive officer, employee, or director
from the amount thereof in effect as of December 31, 1999, granted any severance
or termination pay (except payments made in the ordinary course of business
consistent with past practice under a previously disclosed severance plan or
policy), entered into any contract to make or grant any severance or termination
pay, or paid any bonus other than the customary year-end bonuses for fiscal 2000
and 1999 in amounts consistent with past practice, (ii) granted any stock
appreciation rights or granted any rights to acquire any shares of its capital
stock to any executive officer, director or employee other than grants to
employees (other than directors and officers subject to the reporting
requirements of Section 16(a) of the Exchange Act) made in the ordinary course
of business consistent with past practice under the Company Stock Plans and
except as permitted by Section 5.2(b)(iii), or (iii) suffered any strike, work
stoppage, slow-down, or other labor disturbance.
3.9 Legal Proceedings. (a) Neither the Company nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of the
Company's knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against the Company or any of its Subsidiaries or challenging the
validity or propriety of the transactions contemplated by this Agreement or the
Option Agreement as to which, in any such case, there is a reasonable
probability of an adverse determination and that, if adversely determined, will,
either individually or in the aggregate, have a Material Adverse Effect on the
Company.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply generally to financial holding
companies, bank holding companies or banks) imposed upon the Company, any of its
Subsidiaries or the assets of the Company or any of its Subsidiaries that has
had, or will have, either individually or in the aggregate, a Material Adverse
Effect on the Company or the Surviving Corporation.
3.10 Taxes and Tax Returns. (a) Each of the Company and its Subsidiaries
has duly filed all federal, state, foreign and local information returns and tax
returns required to be filed by it on or prior to the date hereof (all such
returns being accurate and complete in all material respects) and has duly paid
or made provisions for the payment of all Taxes and other governmental charges
that have been incurred or are due or claimed to be due from it by federal,
state, foreign or local taxing authorities on or prior to the date of this
Agreement (including, without limitation, if and to the extent applicable, those
due in respect of its properties, income, business, capital stock, deposits,
franchises, licenses, sales and payrolls) other than (i) Taxes or other charges
that are not yet delinquent or are being contested in good faith and have not
been finally determined, or (ii) information returns, tax returns, Taxes or
other governmental charges as to which the failure to file, pay or make
provision for will not, either individually or in the aggregate, have a Material
Adverse Effect on the Company. The federal and material state income tax returns
of the Company and its Subsidiaries have been examined by the Internal Revenue
Service (the "IRS") or the relevant state taxing authorities, as the case may
be, for all complete tax years, and any liability with respect thereto has been
satisfied or any liability with respect to any deficiencies asserted as a result
of any such examinations is covered by reserves made in accordance with GAAP, or
the period for assessment of the Taxes in respect of which such returns were re-
-11-
quired to be filed has expired. There are no material disputes pending, or
claims asserted for, Taxes or assessments upon the Company or any of its
Subsidiaries for which the Company has not established reserves in accordance
with GAAP. In addition, (A) proper and accurate amounts have been withheld by
the Company and its Subsidiaries from their employees for all prior periods in
compliance in all material respects with the tax withholding provisions of
applicable federal, state and local laws, except where failure to do so will
not, either individually or in the aggregate, have a Material Adverse Effect on
the Company, (B) federal, state, and local returns that are accurate and
complete in all material respects have been filed by the Company and its
Subsidiaries for all periods for which returns were due with respect to income
tax withholding, Social Security and unemployment taxes, except where failure to
do so will not, either individually or in the aggregate, have a Material Adverse
Effect on the Company, (C) the amounts shown on such federal, state or local
returns to be due and payable have been paid in full or provision therefor has
been included by the Company in its consolidated financial statements in
accordance with GAAP, except where failure to do so will not, either
individually or in the aggregate, have a Material Adverse Effect on the Company
and (D) there are no Tax liens upon any property or assets of the Company or its
Subsidiaries except liens for current Taxes not yet due or liens that will not,
either individually or in the aggregate, have a Material Adverse Effect on the
Company. Neither the Company nor any of its Subsidiaries has been required to
include in income any adjustment pursuant to Section 481 of the Code by reason
of a voluntary change in accounting method initiated by the Company or any of
its Subsidiaries, and the IRS has not initiated or proposed in writing any such
adjustment or change in accounting method, in either case that has had or will
have, either individually or in the aggregate, a Material Adverse Effect on the
Company. Except as set forth in the financial statements described in Section
3.6 (including the related notes, where applicable), neither the Company nor any
of its Subsidiaries has entered into a transaction that is being accounted for
as an installment obligation under Section 453 of the Code, that will have,
either individually or in the aggregate, a Material Adverse Effect on the
Company.
(b) As used in this Agreement, the term "Tax" or "Taxes" means all
federal, state, local, and foreign income, excise, gross receipts, gross income,
ad valorem, profits, gains, property, capital, sales, transfer, use, payroll,
-- -------
employment, severance, withholding, duties, intangibles, franchise, backup
withholding, and other taxes, charges, levies or like assessments together with
all penalties and additions to tax and interest thereon.
(c) No deduction has been disallowed under Section 162(m) of the Code
for employee remuneration of any amount paid or payable by the Company or any
Subsidiary of the Company under any contract, plan, program, arrangement or
understanding, except for such disallowed deductions that will not, either
individually or in the aggregate, have a Material Adverse Effect on the Company.
3.11 Employee Benefit Plans. (a) The Company Disclosure Schedule
sets forth a true and complete list of each employee, consultant or director
benefit plan, arrangement or agreement, whether or not written, including
without limitation any employee welfare benefit plan within the meaning of
Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), any employee pension benefit plan within the meaning of Section 3(2)
of ERISA (whether or not such plan is subject to ERISA) and any bonus,
incentive, deferred compensation, stock purchase, stock option, severance,
employment, change of control or
-12-
material fringe benefit plan, program or agreement (the "Company Benefit Plans")
that is or has been sponsored, maintained or contributed to by the Company or
any of its Subsidiaries or by any trade or business, whether or not incorporated
(a "Company ERISA Affiliate"), all of which together with the Company would be
deemed a "single employer" within the meaning of Section 4001 of ERISA.
(b) True and complete copies of each of the Company Benefit Plans and
certain related documents (including but not limited to (i) the actuarial
reports for such Company Benefit Plan (if applicable) for each of the two most
recent fiscal years and (ii) the most recent determination letter from the IRS
(if applicable) for such Company Benefit Plan) have previously been made
available to Parent. The copies of the Company Benefit Plans filed as exhibits
to the Company 10-K are true and complete copies thereof.
(c) (i) Each of the Company Benefit Plans has been operated and
administered in all material respects in compliance with applicable laws,
including, but not limited to, ERISA and the Code, (ii) each of the Company
Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code has received a favorable determination letter from the IRS, and, to the
knowledge of the Company, there are no existing circumstances or any events that
have occurred that will adversely affect the qualified status of any such
Company Benefit Plan, (iii) with respect to each Company Benefit Plan that is
subject to Title IV of ERISA, the present value of accrued benefits under such
Company Benefit Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such Company Benefit
Plan's actuary with respect to such Company Benefit Plan, did not, as of its
latest valuation date, exceed the then-current value of the assets of such
Company Benefit Plan allocable to such accrued benefits, (iv) no Company Benefit
Plan provides benefits, including, without limitation, death or medical benefits
(whether or not insured), with respect to current or former employees or
directors of the Company or its Subsidiaries beyond their retirement or other
termination of service, other than (A) coverage mandated by applicable law, (B)
death benefits or retirement benefits under any "employee pension plan" (as such
term is defined in Section 3(2) of ERISA), (C) deferred compensation benefits
accrued as liabilities on the books of the Company or its Subsidiaries or (D)
benefits the full cost of which is borne by the current or former employee or
director (or his or her beneficiary), (v) no material liability under Title IV
of ERISA has been incurred by the Company, its Subsidiaries or any Company ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a material risk to the Company, its Subsidiaries or any Company ERISA
Affiliate of incurring a material liability thereunder, (vi) no Company Benefit
Plan is a "multiemployer pension plan" (as such term is defined in Section 3(37)
of ERISA), (vii) all contributions or other amounts payable by the Company or
its Subsidiaries as of the Effective Time with respect to each Company Benefit
Plan in respect of current or prior plan years have been paid or accrued in
accordance with GAAP and Section 412 of the Code, (viii) none of the Company,
its Subsidiaries or any other person, including any fiduciary, has engaged in a
transaction in connection with which the Company, its Subsidiaries or any
Company Benefit Plan will be subject to either a material civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a material tax imposed pursuant to
Section 4975 or 4976 of the Code, and (ix) to the best knowledge of the Company
there are no pending, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against any of the Company Benefit
Plans or any trusts related thereto that could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect on the
Company.
-13-
(d) Neither the execution and delivery of this Agreement nor the
shareholder approval or consummation of the transactions contemplated hereby
will (either alone or in conjunction with any other event) (i) result (either
alone or upon the occurrence of any additional acts or events) in any payment
(including, without limitation, severance, unemployment compensation, "excess
parachute payment" (within the meaning of Section 280G of the Code), forgiveness
of indebtedness or otherwise) becoming due to any director or any employee of
the Company or any of its affiliates from the Company or any of its affiliates
under any Company Benefit Plan or otherwise, (ii) increase or affect the
calculation of the amount of any benefits otherwise payable under any Company
Benefit Plan, (iii) result in any acceleration of the time of payment or vesting
of any such benefits, (iv) require the funding of any trust or other funding
vehicle or (v) limit or prohibit the ability to amend, merge, terminate, or
receive a reversion of assets from, any Company Benefit Plan or related trust.
(e) The Company's Salary Investment, Profit-Sharing and Employee Stock
Ownership Plan (the "ESOP") is an "employee stock ownership plan" within the
meaning of Section 4987(e)(7) of the Code. The Disclosure Schedule identifies
(i) each loan under which the ESOP is a borrower (each, a "Loan"), (ii) the
lender and guarantor (if any) of each Loan, and (iii) the securities of the
Company that were acquired with such Loan (the "Employer Securities"). Each loan
meets the requirements of Section 4987(d)(3) of the Code. The Employer
Securities are in each case pledged as collateral for the Loan with which they
were acquired, except to the extent they have been released from such pledge and
allocated to the accounts of participants in the ESOP in accordance with the
requirements of Treasury Regulations Sections 54.4985-7 and 54.4975-11.
3.12 SEC Reports. An accurate and complete copy of each (a) final
registration statement, prospectus, report, schedule and definitive proxy
statement filed since January 1, 1997 by the Company with the SEC pursuant to
the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
Act (the "Company Reports") and prior to the date hereof and (b) communication
mailed by the Company to its shareholders since January 1, 1997 and prior to the
date hereof, has previously been made available to Parent, and no such Company
Report or communication, as of the date thereof, contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that information
as of a later date (but before the date hereof) shall be deemed to modify
information as of an earlier date. Since January 1, 1997, as of their
respective dates, all Company Reports filed under the Securities Act and the
Exchange Act complied in all material respects with the published rules and
regulations of the SEC with respect thereto.
3.13 Compliance with Applicable Law. The Company and each of its
Subsidiaries hold all licenses, franchises, permits and authorizations necessary
for the lawful conduct of their respective businesses under and pursuant to
each, and have complied in all respects with and are not in default in any
respect under any, applicable law, statute, order, rule, regulation, policy
and/or guideline of any Governmental Entity relating to the Company or any of
its Subsidiaries, except where the failure to hold such license, franchise,
permit or authorization or such noncompliance or default will not, either
individually or in the aggregate, have a Material Adverse Effect on the Company.
-14-
3.14 Certain Contracts. (a) Neither the Company nor any of its
Subsidiaries is a party to or bound by any contract, arrangement, commitment or
understanding (whether written or oral) (i) with respect to the employment of
any directors, officers or employees, other than in the ordinary course of
business consistent with past practice, (ii) that is a "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of this Agreement that has not been filed or
incorporated by reference in the Company Reports, (iii) that restricts the
conduct of any line of business by the Company or any of its Subsidiaries or
upon consummation of the Merger will restrict the ability of Parent or the
Surviving Corporation to engage in any line of business in which a financial
holding company or bank holding company may lawfully engage or (iv) with or to a
labor union or guild (including any collective bargaining agreement). Each
contract, arrangement, commitment or understanding of the type described in this
Section 3.14(a) and in Section 3.11(a), whether or not set forth in the Company
Disclosure Schedule, is referred to herein as a "Company Contract," and neither
the Company nor any of its Subsidiaries knows of, or has received notice of, any
violation of the above by any of the other parties thereto that will have,
either individually or in the aggregate, a Material Adverse Effect on the
Company.
(b) (i) Each Company Contract is valid and binding on the Company or
any of its Subsidiaries, as applicable, and in full force and effect, (ii) the
Company and each of its Subsidiaries has in all material respects performed all
obligations required to be performed by it to date under each Company Contract,
except where such noncompliance, either individually or in the aggregate, will
not have a Material Adverse Effect on the Company, and (iii) no event or
condition exists that constitutes or, after notice or lapse of time or both,
will constitute, a material default on the part of the Company or any of its
Subsidiaries under any such Company Contract, except where such default, either
individually or in the aggregate, will not have a Material Adverse Effect on the
Company.
3.15 Undisclosed Liabilities. Except for those liabilities that are
fully reflected or reserved against on the consolidated balance sheet of the
Company included in the Company December 31, 1999 Form 10-K and for liabilities
incurred in the ordinary course of business consistent with past practice, since
December 31, 1999, neither the Company nor any of its Subsidiaries has incurred
any liability of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) that, either individually or in the
aggregate, has had or could be reasonably expected to have a Material Adverse
Effect on the Company.
3.16 Insurance. The Company and its Subsidiaries have in effect
insurance coverage with reputable insurers that in respect of amounts, premiums,
types and risks insured, constitutes reasonably adequate coverage against all
risks customarily insured against by bank holding companies and their
subsidiaries comparable in size and operations to the Company and its
Subsidiaries. The Company and its Subsidiaries have given timely notice to
their insurers with respect to any covered claim exceeding any applicable
deductible or retention with respect to such claim by in excess of $250,000, and
the excess over applicable deductibles and retentions for all covered claims for
which the Company and its Subsidiaries have not given timely notice to their
insurers does not, in the aggregate, exceed $500,000.
-15-
3.17 Loans. Except as previously disclosed to Parent, as of September
30, 2000, neither the Company nor any its Subsidiaries is a party to any (i)
loan agreement, note or borrowing arrangement, other than loans the unpaid
balance of which does not exceed $250,000 per loan, under the terms of which the
obligor is more than 90 days delinquent in payment of principal or interest or,
to the knowledge of the Chief Financial Officer and Chief Credit Officer of the
Company, in default of any other material provisions as of the dates shown
thereon; (ii) loan agreement, note or borrowing arrangement which has been
classified as "substandard," "doubtful," "loss," "other loans especially
mentioned," or any comparable classification by the Company or any of its
Subsidiaries; (iii) loan agreement, note or borrowing arrangement, including any
loan guarantee, with any director, executive officer or ten percent shareholder
of the Company, or to the knowledge of the Company, any person controlling,
controlled by or under common control with any of the foregoing; or (iv) to the
knowledge of the Company, loan agreement, note or borrowing arrangement in
violation of any law, regulation or rule of any Governmental Entity where such
violation could have a Material Adverse Effect on the Company.
3.18 Title to Property.
(a) Real Property. Except as disclosed in the Company Disclosure
Schedule or as has not had and would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on the Company, the
Company and its Subsidiaries have good, valid and marketable title to all real
property owned by them free and clear of all mortgages, liens, pledges, charges
or encumbrances of any nature whatsoever, except liens for current taxes not yet
due and payable and other standard exceptions commonly found in title policies
in the jurisdiction where such real property is located, and such encumbrances
and imperfections of title, if any, as do not materially detract from the value
of the properties and do not materially interfere with the present or proposed
use of such properties or otherwise materially impair such operations. Except
as has not had and would not reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect on the Company, all real property
and fixtures of the Company and its Subsidiaries are in good condition and
repair, ordinary wear and tear excepted.
(b) Personal Property. The Company and its Subsidiaries have good,
valid and marketable title to all tangible personal property owned by them on
the date hereof, free and clear of all liens, pledges, charges or encumbrances
of any nature whatsoever except as publicly disclosed in the Company Reports
filed prior to the date hereof or as have not had and would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect on the Company. With respect to personal property used in the business
of the Company and its Subsidiaries which is leased rather than owned, neither
the Company nor any Subsidiary thereof is in default under the terms of any such
lease the loss of which would have a Material Adverse Effect on the Company.
(c) Leased Property. Except as has not had and would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect on the Company, all leases of real property and all other leases that are
material to the Company and its Subsidiaries and under which the Company or any
of its Subsidiaries, as lessee, leases real or personal property, are valid and
binding on the Company or its applicable Subsidiary, as the case may be, in
accordance with their respective terms, there is not under such lease any
material existing default
-16-
by the Company or such Subsidiary or any event which with notice or lapse of
time would constitute such a default.
3.19 Environmental Matters. There are no legal, administrative,
arbitral or other proceedings, claims, actions, causes of action, remediation
activities or, to the knowledge of the Company, any private environmental
investigations or governmental investigations of any nature seeking to impose,
or that could reasonably result in the imposition, on the Company or any of its
Subsidiaries of any liability or obligation arising under common law relating to
any exposure to any hazardous material or under any local, state or federal
environmental statute, regulation or ordinance enacted for the protection of the
environment including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("Environmental
Laws"), pending or threatened against the Company or any of its Subsidiaries,
which liability or obligation will, either individually or in the aggregate,
have a Material Adverse Effect on the Company. To the knowledge of the Company,
there is no reasonable basis for any proceeding, claim, action or governmental
investigation that would impose any liability or obligation under any
Environmental Law that will, either individually or in the aggregate, have a
Material Adverse Effect on the Company. The Company is not subject to any
order, judgment, decree, letter or memorandum by or with any Governmental
Authority imposing any liability or obligation with respect to any Environmental
Law that will have, either individually or in the aggregate, a Material Adverse
Effect on the Company. Notwithstanding any other representation and warranty in
this Article III, the representations and warranties contained in this Section
3.19 constitute the sole representations and warranties of the Company with
respect to any Environmental law or any hazardous material.
3.20 Interest Rate Risk Management Instruments. All derivative
instruments, as such term is used in Statement of Financial Accounting Standards
No. 133 (including without limitation interest rate swaps, caps, floors and
option agreements and other interest rate risk management arrangements), whether
entered into for the account of the Company or for the account of a customer of
the Company or one of its Subsidiaries, were entered into in the ordinary course
of business consistent with past practice and in accordance with prudent banking
practice and applicable rules, regulations and policies of any Regulatory
Authority and with counterparties believed to be financially responsible at the
time and are legal, valid and binding obligations of the Company or one of its
Subsidiaries enforceable in accordance with their terms (except as may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the rights of creditors generally and the availability of equitable
remedies), and are in full force and effect. The Company and each of its
Subsidiaries have duly performed in all material respects all of their material
obligations thereunder to the extent that such obligations to perform have
accrued; and to the Company's knowledge, there are no material breaches,
violations or defaults or allegations or assertions of such by any party
thereunder.
3.21 Intellectual Property. Except as would not reasonably be
expected to have a Material Adverse Effect on the Company, to the knowledge of
the Company: (a) the Company and each of its Subsidiaries owns, or is licensed
to use (in each case, free and clear of any liens), all Intellectual Property
(as defined below) used in or necessary for the conduct of its business as
currently conducted; (b) the use of any Intellectual Property by the Company and
its Subsidiaries does not infringe on or otherwise violate the rights of any
person and is in accordance with any applicable license pursuant to which the
Company or any Subsidiary acquired the right to use
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any Intellectual Property; (c) no Person is challenging, infringing on or
otherwise violating any right of the Company or any of its Subsidiaries with
respect to any Intellectual Property owned by and/or licensed to the Company or
its Subsidiaries; and (d) neither the Company nor any of its Subsidiaries has
received any written notice of any pending claim with respect to any
Intellectual Property used by the Company and its Subsidiaries and no
Intellectual Property owned and/or licensed by the Company or its Subsidiaries
is being used or enforced in a manner that would result in the abandonment,
cancellation or unenforceability of such Intellectual Property. For purposes of
this Agreement, "Intellectual Property" shall mean trademarks, service marks,
brand names, certification marks, trade dress and other indications of origin,
the goodwill associated with the foregoing and registrations in any jurisdiction
of, and applications in any jurisdiction to register, the foregoing, including
any extension, modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not, in any
jurisdiction; patents, applications for patents (including, without limitation,
divisions, continuations, continuations in part and renewal applications), and
any renewals, extensions or reissues thereof, in any jurisdiction; nonpublic
information, trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any person; writings and
other works, whether copyrightable or not, in any jurisdiction; and
registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; any similar intellectual
property or proprietary rights.
3.22 Reorganization; Pooling of Interests. As of the date of this
Agreement, the Company has no reason to believe that the Merger will not qualify
as a "reorganization" within the meaning of Section 368(a) of the Code and as a
"pooling of interests" for accounting purposes.
3.23 Regulatory Approvals. The Company has no reason to believe that
any required regulatory approvals in connection with the transactions
contemplated hereby will not be obtained on a timely basis.
3.24 Opinion. Prior to the execution of this Agreement, the Company
has received an opinion from the Financial Advisor to the effect that as of the
date thereof and based upon and subject to the matters set forth therein, the
Exchange Ratio is fair to the shareholders of the Company from a financial point
of view. Such opinion has not been amended or rescinded as of the date of this
Agreement.
3.25 Company Information. The information relating to the Company and
its Subsidiaries which is provided by the Company or its representatives for
inclusion in the Proxy Statement and the S-4, or in any other document filed
with any Regulatory Agency in connection herewith, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances in which they are made,
not misleading. The Proxy Statement (except for such portions thereof that
relate only to Parent or any of its Subsidiaries) will comply with the
provisions of the Exchange Act and the rules and regulations thereunder.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Except as disclosed in the corresponding sections or subsections of the
Parent disclosure schedule delivered to the Company concurrently herewith (the
"Parent Disclosure Schedule"), Parent and Merger Sub hereby jointly and
severally represent and warrant to the Company as follows:
4.1 Corporate Organization. (a) Each of Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not, either individually or in the aggregate, have a Material Adverse
Effect on either Parent or Merger Sub. Each of Parent and Merger Sub is duly
registered as a bank holding company under the BHC Act. True and complete
copies of the Restated Certificate of Incorporation of Parent (the "Parent
Certificate") and the Amended and Restated Bylaws of Parent (the "Parent
Bylaws"), as in effect as of the date of this Agreement, have been previously
made available by Parent to the Company. True and complete copies of the
Certificate of Incorporation of Merger Sub (the "Merger Sub Certificate") and
the Bylaws of Merger Sub (the "Merger Sub Bylaws"), as in effect as of the date
of this Agreement, have been previously made available by Merger Sub to the
Company.
(b) Each Parent Subsidiary (i) is duly organized and validly existing
under the laws of its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether federal, state,
local or foreign) where its ownership or leasing of property or the conduct of
its business requires it to be so qualified and in which the failure to be so
qualified would have a Material Adverse Effect on Parent, and (iii) has all
requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
4.2 Capitalization. (a) The authorized capital stock of Parent
consists of 250,000,000 shares of Parent Common Stock, of which, as of October
27, 2000, 156,718,434 shares were issued and outstanding and 514,673 shares were
held in treasury, and 10,000,000 shares of preferred stock, no par value per
share (the "Parent Preferred Stock" and, together with the Parent Common Stock,
the "Parent Capital Stock"), of which, as of October 27, 2000, 5,000,000 shares
of Fixed/Adjustable Rate Noncumulative Series E Preferred Stock were issued and
outstanding. All of the issued and outstanding shares of Parent Capital Stock
have been duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. As of the date of this Agreement, except options and stock
issued pursuant to Parent's Amended and Restated 1997 Long-Term Incentive Plan,
Amended and Restated Management Incentive Plan and Amended and Restated Stock
Option Plan for Non-Employee Directors (the "Parent Stock Plans"), Parent does
not have and is not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of Parent Capital Stock or any
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other equity securities of Parent or any securities representing the right to
purchase or otherwise receive any shares of Parent Capital Stock (collectively,
the "Parent Rights"). As of October 27, 2000, no shares of Parent Capital Stock
were reserved for issuance.
(b) The authorized capital stock of Merger Sub consists of 3,000 shares
of Merger Sub Common Stock, of which, as of the date of this Agreement, 3,000
shares were issued and outstanding and beneficially owned by Parent. All of the
issued and outstanding shares of Merger Sub Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, Merger Sub does not have and is not
bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of Merger Sub Common Stock or any other equity securities of Merger Sub or any
securities representing the right to purchase or otherwise receive any shares of
Merger Sub Common Stock. As of October 31, 2000, no shares of Merger Sub Common
Stock were reserved for issuance.
4.3 Authority; No Violation. (a) Each of Parent and Merger Sub has
full corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. Parent has full corporate
power and authority to execute and deliver the Option Agreement and to
consummate the transactions contemplated thereby. The execution and delivery of
this Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly approved by the Board
of Directors of Parent. No other corporate proceedings on the part of Parent are
necessary to approve the Agreement or the Option Agreement or to consummate the
transactions contemplated hereby or thereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly approved by the Board of Directors of Merger Sub and by Parent
as the sole stockholder of Merger Sub. No other corporate proceedings on the
part of Merger Sub are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Merger Sub and (assuming due
authorization, execution and delivery by the Company) constitutes the valid and
binding obligation of Parent and Merger Sub, enforceable against each of Parent
and Merger Sub in accordance with its terms (except as may be limited by
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
rights of creditors generally and the availability of equitable remedies).
(b) Neither the execution and delivery of this Agreement by Parent and
Merger Sub, nor the consummation by Parent and Merger Sub of the transactions
contemplated hereby, nor compliance by Parent and Merger Sub with any of the
terms or provisions hereof, will (i) violate any provision of the Parent
Certificate, Parent Bylaws, Merger Sub Certificate or Merger Sub Bylaws, or (ii)
assuming that the consents and approvals referred to in Section 4.4 are duly
obtained, (x) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to Parent or Merger Sub, any of the
Subsidiaries or Non-Subsidiary Affiliates of Parent or any of their respective
properties or assets or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
that, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any Lien
upon any of the respective properties or assets of Parent,
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Merger Sub or any of the Subsidiaries or Non-Subsidiary Affiliates of Parent
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Parent, Merger Sub or any of the Subsidiaries or Non-
Subsidiary Affiliates of Parent is a party, or by which they or any of their
respective properties or assets may be bound or affected, except (in the case of
clause (y) above) for such violations, conflicts, breaches or defaults that
either individually or in the aggregate will not have a Material Adverse Effect
on Parent.
4.4 Consents and Approvals. Except for (i) the filing of applications and
notices, as applicable, with the Federal Reserve Board under the BHC Act and
approval of such applications and notices, (ii) the pre-merger notification
requirements of the HSR Act, (iii) the State Approvals, (iv) the filing with the
SEC of the Proxy Statement and the S-4 and any filings under the Securities Act
required in connection with the issuance of Company Common Shares pursuant to
the Option Agreement, (v) the filing of the Delaware Certificate with the
Delaware Secretary pursuant to the DGCL, (vi) the filing of the California
Agreement with the California Secretary pursuant to the CGCL, (vii) any
consents, authorizations, approvals, filings or exemptions in connection with
compliance with the applicable provisions of federal and state securities laws
relating to the regulation of broker-dealers, insurance companies and agents,
investment advisers or transfer agents, and federal commodities laws relating to
the regulation of futures commission merchants and the rules and regulations
thereunder and of any applicable SRO, and the rules of the NYSE, or that are
required under consumer finance, mortgage banking and other similar laws and
(viii) such filings and approvals as are required to be made or obtained under
the securities or "Blue Sky" laws of various states in connection with the
resale of shares of Company Common Shares as contemplated by the Option
Agreement, no consents or approvals of or filings or registrations with any
Governmental Entity are necessary in connection with (A) the execution and
delivery by Parent and Merger Sub of this Agreement and (B) the consummation by
Parent and Merger Sub of the transactions contemplated hereby, except to the
extent that the absence of any such consent, authorization, approval, filing or
exemption would not, either individually or in the aggregate, have a Material
Adverse Effect on Parent or Merger Sub.
4.5 Regulatory Compliance. (a) Except for normal examinations conducted by
a Regulatory Agency in the ordinary course of the business of Parent and its
Subsidiaries, no Regulatory Agency has initiated any proceeding or, to the best
knowledge of Parent, investigation into the business or operations of Parent or
any of its Subsidiaries since January 1, 1998, except where such proceedings or
investigation is not reasonably likely, either individually or in the aggregate,
to have a Material Adverse Effect on Parent. There is no unresolved violation,
criticism or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of the Parent or any of its Subsidiaries
that, in the reasonable judgment of the Parent, is reasonably likely, either
individually or in the aggregate, to have a Material Adverse Effect on the
Parent.
(b) Neither Parent nor any of its Subsidiaries is subject to any cease-
and-desist or other order issued by, or is a party to any written agreement,
consent agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any order or
directive by, or has been since January 1, 1998, a recipient of any supervisory
letter from, or since January 1, 1998, has adopted any board resolutions at the
request of
-21-
any Regulatory Agency or other Governmental Entity that currently restricts in
any material respect the conduct of its business or that in any material manner
relates to its capital adequacy, its credit policies, its management or its
business (each, whether or not set forth in the Parent Disclosure Schedule, a
"Parent Regulatory Agreement"), nor has Parent or any of its Subsidiaries been
advised since January 1, 1998, by any Regulatory Agency or other Governmental
Entity that it is considering issuing or requesting any such Regulatory
Agreement.
(c) Parent and its Subsidiaries have timely filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that they were required to file since January 1, 1998 with
all Regulatory Agencies, and have paid all fees and assessments due and payable
in connection therewith, except where the failure to file such report,
registration, statement or amendment or to pay such fees and assessments is not
reasonably likely, either individually or in the aggregate, to have a Material
Adverse Effect on Parent.
4.6 Financial Statements. Copies of the consolidated balance sheets
of Parent and its Subsidiaries as of December 31, for the fiscal years 1998 and
1999, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for the fiscal years 1998 through 1999,
inclusive, as reported in Parent's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999 filed with the SEC under the Exchange Act (the
"Parent 10-K(C)(C)"), in each case accompanied by the audit report of Ernst &
Young LLP, independent accountants with respect to Parent, have previously been
made available to the Company. The December 31, 1999 consolidated balance sheet
of Parent (including the related notes, where applicable) fairly presents in all
material respects the consolidated financial position of Parent and its
Subsidiaries as of the date thereof, and the other financial statements referred
to in this Section 4.6 (including the related notes, where applicable) fairly
present in all material respects the results of the consolidated operations and
changes in shareholders' equity and consolidated financial position of Parent
and its Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth; each of such statements (including the related notes,
where applicable) complies in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto; and each of such statements (including the related notes, where
applicable) has been prepared in all material respects in accordance with GAAP
consistently applied during the periods involved, except, in each case, as
indicated in such statements or in the notes thereto. The books and records of
Parent and its Subsidiaries have been, and are being, maintained in all material
respects in accordance with GAAP and any other applicable legal and accounting
requirements.
4.7 Broker's Fees. None of Parent nor any of its Subsidiaries nor
any of their respective officers or directors has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by this
Agreement or the Option Agreement.
4.8 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in Parent Reports filed prior to the date hereof, since December 31,
1999, no event or events have occurred that have had, either individually or in
the aggregate, a material adverse effect on the business, results of operations
or financial condition of Parent and its subsidiaries taken as a whole, other
than any event or events attributable to (i) the execution of this Agreement and
the announcement thereof, (ii) any change in law, rule or regulation or GAAP or
any interpretation thereof, or
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(iii) any change in economic or business conditions generally (including,
without limitation, changes in interest rates) or in the banking industry
specifically and not disproportionately affecting Parent or its Subsidiaries.
(b) Except as publicly disclosed in Parent Reports filed prior to the
date hereof, since December 31, 1999, Parent and its Subsidiaries have carried
on their respective businesses in all material respects in the ordinary course.
4.9 Legal Proceedings. (a) Neither Parent nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of
Parent's knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature against Parent or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement or the Option
Agreement as to which, in any such case, there is a reasonable probability of an
adverse determination and that, if adversely determined, will have, either
individually or in the aggregate, a Material Adverse Effect on Parent.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply generally to financial holding
companies, bank holding companies or banks) imposed upon Parent, any of its
Subsidiaries or the assets of Parent or any of its Subsidiaries that has had or
will have, either individually or in the aggregate, a Material Adverse Effect on
Parent or the Surviving Corporation.
4.10 SEC Reports. An accurate and complete copy of each (a) final
registration statement, prospectus, report, schedule and definitive proxy
statement filed since January 1, 1997 by Parent with the SEC pursuant to the
Securities Act or the Exchange Act (the "Parent Reports") and prior to the date
hereof and (b) communication mailed by Parent to its shareholders since January
1, 1997 and prior to the date hereof, has previously been made available to the
Company, and no such Parent Report or communication, as of the date thereof,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading, except that information as of a later date (but before the date
hereof) shall be deemed to modify information as of an earlier date. Since
January 1, 1997, as of their respective dates, all Parent Reports filed under
the Securities Act and the Exchange Act complied in all material respects with
the published rules and regulations of the SEC with respect thereto.
4.11 Compliance with Applicable Law. Parent and each of its Subsidiaries
hold all licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses under and pursuant to each, and
have complied in all respects with and are not in default in any respect under
any, applicable law, statute, order, rule, regulation, policy and/or guideline
of any Governmental Entity relating to Parent or any of its Subsidiaries, except
where the failure to hold such license, franchise, permit or authorization or
such noncompliance or default will not, either individually or in the aggregate,
have a Material Adverse Effect on Parent.
4.12 Undisclosed Liabilities. Except for those liabilities that are
fully reflected or reserved against on the consolidated balance sheet of Parent
included in the Parent December 31, 1999 Form 10-K and for liabilities incurred
in the ordinary course of business consistent with
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past practice, since December 31, 1999, neither Parent nor any of its
Subsidiaries has incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due)
that, either individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect on Parent.
4.13 Environmental Liability. There are no legal, administrative,
arbitral or other proceedings, claims, actions, causes of action, private
environmental investigations or remediation activities or governmental
investigations of any nature seeking to impose, or that could reasonably result
in the imposition, on Parent or any of its Subsidiaries of any liability or
obligation arising under common law or under any local, state or federal
environmental statute, regulation or ordinance including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, pending or threatened against Parent or any of its
Subsidiaries, which liability or obligation will, either individually or in the
aggregate, have a Material Adverse Effect on Parent. To the knowledge of
Parent, there is no reasonable basis for any such proceeding, claim, action or
governmental investigation that would impose any liability or obligation that
will, either individually or in the aggregate, have a Material Adverse Effect on
Parent. Parent is not subject to any agreement, order, judgment, decree, letter
or memorandum by or with any Governmental Authority or third party imposing any
liability or obligation with respect to the foregoing that will have, either
individually or in the aggregate, a Material Adverse Effect on Parent.
4.14 Interest Rate Risk Management Instruments. All derivative
instruments, as such term is used in Statement of Financial Accounting Standards
No. 133 (including without limitation interest rate swaps, caps, floors and
option agreements and other interest rate risk management arrangements), whether
entered into for the account of Parent or for the account of a customer of
Parent or one of its Subsidiaries, were entered into in the ordinary course of
business consistent with past practice and in accordance with prudent banking
practice and applicable rules, regulations and policies of any Regulatory
Authority and with counterparties believed to be financially responsible at the
time and are legal, valid and binding obligations of Parent or one of its
Subsidiaries enforceable in accordance with their terms (except as may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the rights of creditors generally and the availability of equitable
remedies), and are in full force and effect. Parent and each of its Subsidiaries
have duly performed in all material respects all of their material obligations
thereunder to the extent that such obligations to perform have accrued; and to
Parent's knowledge, there are no material breaches, violations or defaults or
allegations or assertions of such by any party thereunder.
4.15 Reorganization; Pooling of Interests As of the date of this
Agreement, Parent has no reason to believe that the Merger will not qualify as a
"reorganization" within the meaning of Section 368(a) of the Code and as a
"pooling of interests" for accounting purposes.
4.16 Regulatory Approvals. Parent has no reason to believe that any
required regulatory approvals in connection with the transactions contemplated
hereby will not be obtained on a timely basis.
4.17 Parent Information. The information relating to Parent and its
Subsidiaries to be contained in the Proxy Statement and the S-4, or the
information relating to Parent and its Sub-
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sidiaries that is provided by Parent or its representatives for inclusion in any
other document filed with any Regulatory Agency in connection herewith, will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances in which
they are made, not misleading. The Proxy Statement (except for such portions
thereof that relate only to the Company or any of its Subsidiaries) will comply
with the provisions of the Exchange Act and the rules and regulations
thereunder. The S-4 will comply with the provisions of the Securities Act and
the rules and regulations thereunder.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time. During the
period from the date of this Agreement to the Effective Time, except as
expressly contemplated or permitted by this Agreement (including the Company
Disclosure Schedule and the Parent Disclosure Schedule) or the Option Agreement,
the Company shall, and shall cause each of its Subsidiaries to, (a) conduct its
business in the ordinary course, (b) use reasonable best efforts to maintain and
preserve intact its business organization, employees and advantageous business
relationships and (c) take no action that would adversely affect or delay the
ability of the Company or Parent to obtain any necessary approvals of any
Regulatory Agency or other Governmental Entity required for the transactions
contemplated hereby or to perform its covenants and agreements under this
Agreement or the Option Agreement or to consummate the transactions contemplated
hereby or thereby.
5.2 Company Forbearances. During the period from the date of this
Agreement to the Effective Time, except as set forth in the Company Disclosure
Schedule and, except as expressly contemplated or permitted by this Agreement or
the Option Agreement or as otherwise indicated in this Section 5.2, the Company
shall not, and the Company shall not permit any of its Subsidiaries to, without
the prior written consent of Parent (such consent not to be unreasonably
withheld or delayed):
(a) other than in the ordinary course of business, incur any
indebtedness for borrowed money in amounts aggregating more than $500,000 (other
than short-term indebtedness incurred to refinance short-term indebtedness (it
being understood that for purposes of this Section 5.2(a) "short-term" shall
mean maturities of six months or less) and indebtedness of the Company or any of
its Subsidiaries to the Company or any of its wholly-owned Subsidiaries),
assume, guarantee, endorse or otherwise as an accommodation become responsible
for the obligations of any other individual, corporation or other entity, or
make any loan or advance (it being understood and agreed that incurrence of
indebtedness in the ordinary course of business shall include, without
limitation, the creation of deposit liabilities, purchases of Federal funds,
sales of certificates of deposit and entering into repurchase agreements);
(b) (i) adjust, split, combine or reclassify any capital stock;
(ii) make, declare or pay any dividend, or make any other distribution
on, or directly or indirectly redeem, purchase or otherwise acquire, any
shares of its capital stock or any securities or obligations convertible
(whether currently convertible or con-
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vertible only after the passage of time or the occurrence of certain
events) into or exchangeable for any shares of its capital stock (except
dividends paid by any of the Subsidiaries of the Company to the Company or
any of its wholly owned Subsidiaries);
(iii) grant any stock appreciation rights or similar rights the value
or payment of which is based upon the price of any shares of its capital
stock, or grant any individual, corporation or other entity any option to
acquire any shares of its capital stock, any warrants to acquire any shares
of its capital stock, any security convertible into shares of its capital
stock or other right to acquire any Company Capital Shares; or
(iv) issue any additional shares of capital stock except pursuant to
(A) the exercise of stock options or warrants outstanding as of the date
hereof or (B) the Option Agreement;
(c) sell, transfer, mortgage, encumber or otherwise dispose of any part
of its business or any of its properties or assets, in any case that is material
to the Company or to the line of business in which such part of its business,
properties or assets relates, to any individual, corporation or other entity
other than a Subsidiary, or cancel, release or assign any indebtedness to any
such person or any claims held by any such person, except in the ordinary course
of business or pursuant to contracts or agreements in force at the date of this
Agreement (which existing contracts and agreements are set forth in the Company
Disclosure Schedule);
(d) except for transactions in the ordinary course of business or
pursuant to contracts or agreements in force at the date of or permitted by this
Agreement (which existing contracts and agreements are set forth in the Company
Disclosure Schedule), make any investment (either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of any
property or assets) in any other individual, corporation or other entity other
than a wholly-owned Subsidiary thereof that is material to the Company or the
line of business to which such investment relates;
(e) except for transactions in the ordinary course of business,
terminate, or waive any material provision of, any Company Contract or make any
change in any instrument or agreement governing the terms of any of its
securities, or material lease or contract, other than normal renewals of
contracts and leases without material adverse changes of terms;
(f) (i) except for normal increases for employees (other than those
officers and directors subject to the reporting requirements of Section 16 under
the Exchange Act) made in the ordinary course of business consistent with past
practice or as required by agreements and plans as in effect as of the date
hereof and set forth in the Company Disclosure Schedule, increase in any manner
the compensation or fringe benefits of any of its employees or directors or (ii)
pay any pension or retirement allowance not required by any existing plan or
agreement to any such employees or directors or (iii) become a party to, amend
or commit itself to any pension, retirement, profit-sharing, consulting, change
of control, severance or welfare benefit plan or agreement (or any individual
agreements evidencing grants or awards thereunder) or employment agreement with
or for the benefit of any employee or director, or (iv) accelerate the vesting
of, or the lapsing of restrictions with respect to, any benefits, rights to
payment, stock options or other stock-based compensation;
-26-
(g) settle any material claim, action or proceeding involving money
damages, except in the ordinary course of business, or involving any restriction
on the conduct of its business;
(h) knowingly take any action that would 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(a) of the Code;
(i) amend the Company Articles or Company Bylaws;
(j) other than in consultation with Parent, materially restructure or
change its investment securities portfolio or its gap position, through
purchases, sales or otherwise, or the manner in which the portfolio is
classified or reported;
(k) take any action that is intended or that would reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect or in any of the
conditions to the Merger set forth in Article VII not being satisfied or in a
violation of any provision of this Agreement, except, in every case, as may be
required by applicable law;
(l) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP or regulatory
guidelines;
(m) file or amend any tax return except in the ordinary course of
business and consistent with past practice, settle or compromise any material
tax liability, make, change or revoke any material tax election, or change any
method of tax accounting except as required by applicable law; or
(n) agree to take, make any commitment to take, or adopt any resolutions
of its board of directors in support of, any of the actions prohibited to it by
this Section 5.2.
5.3 Parent Forbearances. During the period from the date of this
Agreement to the Effective Time, except as set forth in the Parent Disclosure
Schedule and, except as expressly contemplated or permitted by this Agreement or
the Option Agreement or as otherwise indicated in this Section 5.3, Parent shall
not, and Parent shall not permit any of its Subsidiaries to, without the prior
written consent of the Company (such consent not to be unreasonably withheld or
delayed):
(a) knowingly take any action that would prevent or impede the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of the
Code; provided, however, that nothing contained herein shall limit the ability
-------- -------
of Parent to exercise its rights under the Option Agreement;
(b) amend its certificate of incorporation or its bylaws in a manner
that would adversely affect the economic benefits of the Merger to the
shareholders of the Company;
(c) take any action that is intended or that would reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect or in any of the
conditions to the Merger set forth in Article VII not being
-27-
satisfied on a timely basis or in a violation of any provision of this
Agreement, except, in every case, as may be required by applicable law;
(d) take any action that would adversely affect or delay the ability of
the Company or Parent to obtain any necessary approvals of any Regulatory Agency
or other Governmental Entity required for the transactions contemplated hereby
or to perform its covenants and agreements under this Agreement or to consummate
the transactions contemplated hereby; or
(e) agree to take, make any commitment to take, or adopt any resolutions
of its board of directors in support of, any of the actions prohibited to it by
this Section 5.3.
5.4 Acquisition Proposals. The Company agrees that neither it nor
any Subsidiary of the Company nor any of their respective officers or directors
shall, and that it shall direct and use its reasonable best efforts to cause its
and such Subsidiaries' employees, agents and representatives not to, directly or
indirectly, initiate, solicit, encourage or otherwise facilitate any inquiries
or the making of any proposal or offer with respect to a merger, reorganization,
share exchange, consolidation or similar transaction involving, or any purchase
of all or substantially all of the assets, or more than 9.9% of the outstanding
equity securities, of the Company or any Subsidiary of the Company (any such
proposal or offer being hereinafter referred to as an "Acquisition Proposal").
The Company further agrees that neither the Company nor any Subsidiary of the
Company nor any of the officers and directors of the Company or any Subsidiary
of the Company shall, and that it shall direct and use its reasonable best
efforts to cause its and the Company's Subsidiaries' employees, agents and
representatives not to, directly or indirectly, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any individual, corporation, general or limited partnership or
limited liability company (a "Person") relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal; provided, however, that nothing contained in this Agreement shall
-------- -------
prevent the Company or its Board of Directors from (A) complying with its
disclosure obligations under federal or state law; (B) providing information in
response to a request therefor by a Person who has made an unsolicited bona fide
written Acquisition Proposal if the Board of Directors of the Company receives
from the Person so requesting such information an executed confidentiality
agreement on terms substantially similar to those contained in the
Confidentiality Agreements; (C) engaging in any negotiations or discussions with
any Person who has made an unsolicited bona fide written Acquisition Proposal;
or (D) recommending such an Acquisition Proposal to the shareholders of the
Company, if and only to the extent that, in each such case referred to in clause
(B), (C) or (D) above, the Board of Directors of the Company determines in good
faith (after consultation with outside legal counsel) that such action would, in
the absence of the foregoing proscriptions, be required in order for its
directors to comply with their respective fiduciary duties under applicable law.
The Company represents and warrants that it has ceased and caused to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any Acquisition Proposals. The Company
agrees that it will notify Parent immediately if any such inquiries, proposals
or offers are received by, any such information is requested from, or any such
discussions or negotiations are sought to be initiated or continued with, any of
its representatives.
5.5 Board of Directors of Comercia Bank--California. At or prior to
the Effective Time Parent shall take all action necessary such that (i) ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇. shall be
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elected non-executive Chairman of the Board of Directors of Comercia Bank--
California, and (ii) ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ shall be elected a director of the
Board of Directors of Comercia Bank--California.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters. (a) The Company shall promptly prepare and
file with the SEC the Proxy Statement and Parent shall promptly prepare and file
with the SEC the S-4. Each of the Company and Parent shall use their reasonable
best efforts to have the S-4 declared effective under the Securities Act as
promptly as practicable after such filing, and the Company shall thereafter mail
or deliver the Proxy Statement to its shareholders. Parent shall also use its
reasonable best efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions contemplated
by this Agreement, and the Company shall furnish all information concerning the
Company and the holders of Company Common Shares as may be reasonably requested
in connection with any such action.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities that are necessary
or advisable to consummate the transactions contemplated by this Agreement
(including, without limitation, the Merger) and the Option Agreement, and to
comply with the terms and conditions of all such permits, consents, approvals
and authorizations of all such Governmental Entities. The Company and Parent
shall have the right to review in advance, and, to the extent practicable, each
will consult the other on, in each case subject to applicable laws relating to
the exchange of information, all the information relating to the Company, Parent
or Merger Sub, as the case may be, and any of their respective Subsidiaries,
that appears in any filing made with, or written materials submitted to, any
third party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing rights of review
and consultation, each of the parties hereto shall act reasonably and as
promptly as practicable. The parties hereto agree that they will consult with
each other with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and the
Option Agreement and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated herein.
(c) The Company and Parent shall, upon request, promptly furnish each
other with all information concerning themselves, their Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable in connection with the Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of the Company or
Parent or any of their respective Subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement.
(d) The Company and Parent shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for con-
-29-
summation of the transactions contemplated by this Agreement or the Option
Agreement that causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval will not be obtained or that
the receipt of any such approval will be materially delayed.
6.2 Access to Information. (a) Upon reasonable notice and subject
to applicable laws relating to the exchange of information, each of the Company
and Parent, for the purposes of verifying the representations and warranties of
the other and preparing for the Merger and the other matters contemplated by
this Agreement, shall, and shall cause each of their respective Subsidiaries to,
afford to the officers, employees, accountants, counsel and other
representatives of the other parties, access, during normal business hours
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, each of Parent and
Merger Sub shall, and shall cause their respective Subsidiaries to, make
available to the other party (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of federal securities laws or federal or state banking laws
(other than reports or documents that Parent or Merger Sub, as the case may be,
is not permitted to disclose under applicable law) and (ii) all other
information concerning its business, properties and personnel as such party may
reasonably request. Neither Parent nor Merger Sub nor any of their respective
Subsidiaries shall be required to provide such access or to disclose such
information where such access or disclosure would violate or prejudice the
rights of Parent's or Merger Sub's, as the case may be, customers, jeopardize
the attorney-client privilege of the institution in possession or control of
such information or contravene any law, rule, regulation, order, judgment,
decree, fiduciary duty or binding agreement entered into prior to the date of
this Agreement. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
(b) Each of the Company and Parent shall hold all information furnished
by or on behalf of the other party or any of such party's Subsidiaries or
representatives pursuant to Section 6.2(a) in confidence to the extent required
by, and in accordance with, the provisions of confidentiality agreements, dated
October 20, 2000, between the Company and Parent (the "Confidentiality
Agreements").
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
6.3 Shareholders' Approval. The Company shall call a meeting of its
shareholders to be held as soon as reasonably practicable for the purpose of
voting upon the requisite shareholder approval required in connection with this
Agreement and the transactions contemplated hereby, and shall use its reasonable
best efforts to cause such meeting to occur as soon as reasonably practicable.
The Board of Directors of the Company shall use its reasonable best efforts to
cause this Agreement to be approved by the affirmative vote of a majority of the
outstanding Company Common Shares entitled to vote; provided, however, that the
-------- -------
use of such reasonable best efforts shall not be deemed to require the Board of
Directors of the Company to maintain in place a recommendation that the
shareholders of the Company approve this Agreement or approve the transactions
contemplated hereby to the extent that the Board of Directors of the Company
determines in good faith (after consultation with outside legal counsel) such
action would violate the fiduciary duties of the Board of Directors of the
Company under applicable law.
-30-
6.4 Legal Conditions to Merger. Each of the Company, Parent and Merger Sub
shall, and shall cause its Subsidiaries to, use their reasonable best efforts
(a) to take, or cause to be taken, all actions necessary, proper or advisable to
comply promptly with all legal requirements that may be imposed on such party or
its Subsidiaries with respect to the Merger and, subject to the conditions set
forth in Article VII hereof, to consummate the transactions contemplated by this
Agreement, and (b) to obtain (and to cooperate with the other party to obtain)
any material consent, authorization, order or approval of, or any exemption by,
any Governmental Entity and any other third party that is required to be
obtained by the Company, Parent or Merger Sub or any of their respective
Subsidiaries in connection with the Merger and the other transactions
contemplated by this Agreement. Without limiting the foregoing, the Company
shall promptly take (or has taken prior to the date hereof) any and all action
with respect to any Company Benefit Plan (including the Company Stock Plan) and
any award agreements thereunder to the extent such action is reasonably
necessary in order for the Merger to qualify for "pooling of interests"
accounting treatment.
6.5 Affiliates; Publication of Combined Financial Results. (a) Each
of the Company and Parent shall use its reasonable best efforts to cause each
director, executive officer and other person who is an "affiliate" (as
applicable, for purposes of Rule 145 under the Securities Act and for purposes
of qualifying the Merger for "pooling of interests" accounting treatment) of
such party to deliver to the other party hereto, as soon as practicable after
the date of this Agreement, and prior to the date of the shareholders' meeting
called by the Company to approve this Agreement, a written agreement in the form
of Exhibit 6.5(a)(1) or (2), as applicable, hereto.
(b) Parent shall use its best efforts to publish as promptly as
reasonably practical, but in no event later than 90 days after the end of the
first month after the Effective Time in which there are at least 30 days of
post-Merger combined operations (which month may be the month in which the
Effective Time occurs), combined sales and net income figures as contemplated by
and in accordance with the terms of SEC Accounting Series Release No. 135.
6.6 Stock Exchange Listing. Parent shall cause the shares of Parent
Common Stock to be issued in the Merger to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the Effective Time.
6.7 Employee Benefit Plans. (a) Parent agrees that, commencing at
the Effective Time, the benefit plans and programs applicable to the employees
of the Company and its Subsidiaries as of the Effective Time (the "Covered
Employees") will be the benefit plans and programs provided to similarly
situated employees of Parent. Covered Employees who are terminated during the
period commencing at the Effective Time and ending on the 18-month anniversary
thereof shall be entitled to receive severance benefits in the amount of the
better of either (i) the severance benefits such Covered Employee would have
been eligible to receive under the Company's applicable benefit severance plan
as in effect immediately prior to the date hereof or (ii) the severance benefits
such Covered Employee would be eligible to receive under any applicable Parent
severance plan applicable to such employee in effect as of the date of
termination of employment, in all cases taking into account such Covered
Employee's service with the Company and Parent. From and after the Effective
Time, the Surviving Corporation will recognize the prior service with the
Company or its Subsidiaries of each employee of the Company or any of its
subsidiaries as of the Effective Time (the "Employees") in connection with all
employee benefit
-31-
plans in which such Employees are eligible to participate following the
Effective Time, for purposes of eligibility, vesting and levels of benefits (but
not for purposes of benefit accruals under any defined benefit pension plan).
From and after the Effective Time, Parent and the Surviving Corporation will (i)
cause any pre-existing conditions or limitations and eligibility waiting periods
under any group health plans of Surviving Corporation to be waived with respect
to the Employees and their eligible dependents (to the extent such conditions,
limitations or waiting periods have been otherwise satisfied under the
applicable Company Benefit Plan) and (ii) give each Employee credit for the plan
year in which the Effective Time occurs towards applicable deductibles and
annual out-of-pocket limits for eligible expenses incurred under the applicable
Company Benefit Plan prior to the Effective Time.
(b) The foregoing notwithstanding, Parent agrees to honor in accordance
with their terms all benefits vested as of the Effective Time under the Company
Benefit Plans, including change-of-control benefits related to the Merger as
required by plans and agreements as in effect on the date hereof.
(c) Nothing in this Section 6.7 shall be interpreted as preventing the
Surviving Corporation from amending, modifying or terminating any Company
Benefit Plans or other contracts, arrangements, commitments or understandings,
in accordance with their terms and applicable law.
6.8 Indemnification; Directors' and Officers' Insurance. (a) In the
event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, including, without
limitation, any such claim, action, suit, proceeding or investigation in which
any individual who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or officer or
employee of the Company or any of its Subsidiaries, (the "Indemnified Parties"),
is, or is threatened to be, made a party based in whole or in part on, or
arising in whole or in part out of, or pertaining to (i) the fact that he or she
is or was a director, officer or employee of the Company or any of its
subsidiaries or any of its predecessors or (ii) this Agreement, the Option
Agreement or any of the transactions contemplated hereby or thereby, whether in
any case asserted or arising before or after the Effective Time, the parties
hereto agree to cooperate and use their best efforts to defend against and
respond thereto. It is understood and agreed that after the Effective Time,
Parent shall indemnify and hold harmless, as and to the fullest extent permitted
by law, each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorney's fees and expenses
in advance of the final disposition of any claim, suit, proceeding or
investigation, as and to the fullest extent permitted by law) to each
Indemnified Party, judgments, fines and amounts paid in settlement in connection
with any such threatened or actual claim, action, suit, proceeding or
investigation.
(b) Parent shall cause the individuals serving as officers and directors
of the Company and each of its subsidiaries immediately prior to the Effective
Time to be covered for a period of six years from the Effective Time (or the
period of the applicable statute of limitations, if longer) by the directors'
and officers' liability insurance policy maintained by Parent or the Surviving
Corporation (provided that Parent may substitute therefor policies of at least
the same coverage and amounts containing terms and conditions that are not less
advantageous than such policy) with respect to acts or omissions occurring prior
to the Effective Time that were com-
-32-
mitted by such officers and directors in their capacity as such; provided,
--------
however, that in no event shall Parent be obligated to expend, in order to
-------
maintain or provide insurance coverage pursuant to this Section 6.8(b), any
amount per annum in excess of 200% of the amount of the annual premiums paid as
of the date hereof by Company for such insurance (the "Maximum Amount"). If the
amount of the annual premiums necessary to maintain or procure such insurance
coverage exceeds the Maximum Amount, Parent 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.
(c) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Parent
assume the obligations set forth in this Section 6.8.
(d) The provisions of this Section 6.8 shall survive the Effective Time
and are intended to be for the benefit of, and shall be enforceable by, each
Indemnified Party and his or her heirs and representatives.
6.9 Additional Agreements. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement (including, without limitation, any merger between a Subsidiary
of the Company, on the one hand, and a Subsidiary of Parent, on the other hand)
or to vest the Surviving Corporation with full title to all properties, assets,
rights, approvals, immunities and franchises of the Company, the proper officers
and directors of each party to this Agreement and their respective Subsidiaries
shall take all such necessary action as may be reasonably requested by, and at
the sole expense of, Parent.
6.10 Advice of Changes. The Company, Parent and Merger Sub shall each
promptly advise the other parties of any change or event (i) having a Material
Adverse Effect on it or (ii) that it believes would or would be reasonably
likely to cause or constitute a breach of any of its representations, warranties
or covenants contained herein.
6.11 Exemption from Liability under Section 16(b). Assuming that the
Company delivers to Parent the Section 16 Information in a timely fashion prior
to the Effective Time, the Board of Directors of Parent, or a committee of Non-
Employee Directors thereof (as such term is defined for purposes of Rule 16b-
3(d) under the Exchange Act), shall reasonably promptly thereafter and in any
event prior to the Effective Time adopt a resolution providing in substance that
the receipt by the Company Insiders of Parent Common Stock in exchange for
Company Common Shares, and of options to purchase shares of Parent Common Stock
upon conversion of options to purchase Company Common Shares, in each case
pursuant to the transactions contemplated hereby and to the extent such
securities are listed in the Section 16 Information, are intended to be exempt
from liability pursuant to Section 16(b) under the Exchange Act such that any
such receipt shall be so exempt. "Section 16 Information" shall mean
information accurate in all respects regarding the Company Insiders, the number
of Company Common Shares held by each such Company Insider and expected to be
exchanged for Parent Common Stock in the Merger, and the number and description
of the options to purchase Company Common Shares
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held by each such Company Insider and expected to be converted into options to
purchase shares of Parent Common Stock in connection with the Merger. "Company
Insiders" shall mean those officers and directors of the Company who are subject
to the reporting requirements of Section 16(a) of the Exchange Act and who are
listed in the Section 16 Information.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of the parties to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved by the affirmative vote of a
majority of the outstanding Company Common Shares entitled to vote.
(b) NYSE Listing. The shares of Parent Common Stock that shall be
issued upon consummation of the Merger shall have been authorized for listing on
the NYSE, subject to official notice of issuance.
(c) Other 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 (all such approvals and the expiration of all such waiting
periods being referred to herein as the "Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the Securities Act
and no stop order suspending the effectiveness of the S-4 shall have been issued
and no proceedings for that purpose shall have been initiated or threatened by
the SEC.
(e) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger or any of the
other transactions contemplated by this Agreement shall be in effect. No
statute, rule, regulation, order, injunction or decree shall have been enacted,
entered, promulgated or enforced by any Governmental Entity that prohibits,
materially restricts or makes illegal consummation of the Merger.
(f) Federal Tax Opinion. The Company shall have received an opinion from
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, and Parent shall have received an opinion from Wachtell,
Lipton, ▇▇▇▇▇ & ▇▇▇▇, in form and substance reasonably satisfactory to the
Company and Parent, respectively, in each case dated the Closing Date,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in each such opinion that are consistent with the state of
facts existing at the Effective Time:
-34-
(i) The Merger will constitute a reorganization within the meaning
of Section 368(a) of the Code, and the Company, Parent and Merger Sub will
each be a party to the reorganization within the meaning of Section 368(b)
of the Code;
(ii) No gain or loss will be recognized by the Company, Parent or
Merger Sub as a result of the Merger other than ▇▇▇▇-to-market gains and
losses recognized upon the close of the Company's taxable year; and
(iii) No gain or loss will be recognized by shareholders who exchange
all of their Company Common Shares solely for shares of Parent Common Stock
pursuant to the Merger (except with respect to cash received in lieu of a
fractional share interest in Parent Common Stock).
In rendering such opinions, counsel may require and rely upon representations
contained in certificates of officers of the Company, Parent, Merger Sub and
others.
7.2 Conditions to Obligations of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction, or waiver by
the Company, at or prior to the Effective Time, of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Parent and Merger Sub set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date; provided,
--------
however, that for purposes of this paragraph, such representations and
-------
warranties (other than the representations set forth in Section 4.2(a), which
shall be true in all material respects) shall be deemed to be true and correct
unless the failure or failures of such representations and warranties to be so
true and correct, either individually or in the aggregate, and without giving
effect to any qualification as to materiality or Material Adverse Effect set
forth in such representations or warranties, has had or will have a Material
Adverse Effect on Parent or Merger Sub. The Company shall have received a
certificate signed on behalf of Parent by the Chief Executive Officer and the
Chief Financial Officer of Parent to the foregoing effect.
(b) Performance of Obligations of Parent and Merger Sub. Parent and
Merger Sub shall have performed in all material respects all obligations
required to be performed by each of them under this Agreement at or prior to the
Closing Date, and the Company shall have received a certificate signed on behalf
of Parent by the Chief Executive Officer and the Chief Financial Officer of
Parent to such effect.
7.3 Conditions to Obligations of Parent and Merger Sub. The obligations of
Parent and Merger Sub to effect the Merger is also subject to the satisfaction
or waiver by Parent at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date; provided, however,
-------- -------
that for purposes of this paragraph, such representations and warranties (other
than the rep-
-35-
resentations set forth in Section 3.2(a), which shall be true in all material
respects) shall be deemed to be true and correct unless the failure or failures
of such representations and warranties to be so true and correct, either
individually or in the aggregate, and without giving effect to any qualification
as to materiality set forth in such representations or warranties, has had or
will have a Material Adverse Effect on the Company. Parent shall have received a
certificate signed on behalf of the Company by the Chief Executive Officer and
the Chief Financial Officer of the Company to the foregoing effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Parent shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer and the Chief Financial Officer of the Company to such effect.
(c) Receipt of Third Party Consents. All consents, approvals, waivers
and authorizations (including without limitation waivers of termination rights)
of third parties (other than Governmental Entities) shall have been obtained
other than those the failure of which to obtain would not, and would not
reasonably be expected to, result in a Material Adverse Effect on the Company or
the Surviving Corporation.
(d) Pooling of Interests. The Company and Parent shall each have
received a letter from their respective independent accountants addressed to the
Company or Parent, as the case may be, to the effect that the Merger will
qualify for "pooling of interests" accounting treatment; provided, however, that
if Parent or any of its Subsidiaries shall have taken any action that prevents
such qualification, this paragraph (d) shall not be a condition to the
obligations of Parent and Merger Sub to effect the Merger.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of the matters presented
in connection with the Merger by the shareholders of the Company:
(a) by mutual consent of the Company and Parent in a written instrument,
if the Board of Directors of each so determines by a vote of a majority of the
members of its entire Board;
(b) by either the Board of Directors of the Company or the Board of
Directors of Parent if any Governmental Entity that must grant a Requisite
Regulatory Approval has denied approval of the Merger and such denial has become
final and nonappealable or any Governmental Entity of competent jurisdiction
shall have issued a final nonappealable order permanently enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this Agreement;
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(c) by either the Board of Directors of the Company or the Board of
Directors of Parent if the Merger shall not have been consummated on or before
the date that is nine months after the date of this Agreement, unless the
failure of the Closing to occur by such date shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe the covenants
and agreements of such party set forth herein; or
(d) by either the Board of Directors of the Company or the Board of
Directors of Parent (provided that the terminating party is not then in breach
--------
of any representation, warranty, covenant or other agreement contained herein)
if there shall have been a breach of any of the covenants or agreements or any
of the representations or warranties set forth in this Agreement on the part of
Parent, in the case of a termination by the Company, or the Company, in the case
of a termination by Parent, which breach, either individually or in the
aggregate, would constitute, if occurring or continuing on the Closing Date, the
failure of the conditions set forth in Section 7.2 or 7.3, as the case may be,
and that is not cured within 45 days following written notice to the party
committing such breach or by its nature or timing cannot be cured prior to the
Closing Date.
8.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect, and none of the
Company or Parent, any of their respective Subsidiaries or any of the officers
or directors of any of them shall have any liability of any nature whatsoever
hereunder, or in connection with the transactions contemplated hereby, except
that (i) Sections 6.2(b), 8.2, 9.2 and 9.3 shall survive any termination of this
Agreement, and (ii) notwithstanding anything to the contrary contained in this
Agreement, neither the Company nor Parent shall be relieved or released from any
liabilities or damages arising out of its willful breach of any provision of
this Agreement.
8.3 Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Merger by the shareholders of the
Company; provided, however, that after any approval of this Agreement and the
-------- -------
transactions contemplated hereby by the shareholders of the Company, there may
not be, without further approval of such shareholders, any amendment of this
Agreement that changes the amount or the form of the consideration to be
delivered hereunder to the holders of Company Common Shares, other than as
contemplated by this Agreement. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein; provided, however,
-------- -------
that after any approval of this Agreement and the transactions contemplated
hereby by the affirmative vote of a majority of the outstanding shares of
Company Common Shares entitled to vote, there may not be, without further
approval of such shareholders, any extension or waiver of this Agreement or any
portion thereof
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that reduces the amount or changes the form of the consideration to be delivered
to the holders of Company Common Shares hereunder, other than as contemplated by
this Agreement. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party, but such extension or waiver or failure to
insist on strict compliance with an obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") will take place at 10:00 a.m. on a
date and at a place to be specified by the parties, which shall be no later than
five business days after the satisfaction or waiver (subject to applicable law)
of the latest to occur of the conditions set forth in Article VII hereof, unless
extended by mutual agreement of the parties (the "Closing Date").
9.2 Nonsurvival of Representations, Warranties and Agreements. None
of the representations, warranties, covenants and agreements in this Agreement
or in any instrument delivered pursuant to this Agreement (other than the Option
Agreement and the Confidentiality Agreements, which shall terminate in
accordance with the terms thereof) shall survive the Effective Time, except for
Section 6.8 and for those other covenants and agreements contained herein and
therein that by their terms apply in whole or in part after the Effective Time.
9.3 Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense, provided, however, that the costs and expenses of
-------- -------
printing and mailing the Proxy Statement, and all filing and other fees paid to
the SEC in connection with the Merger, shall be borne equally by the Company and
Parent.
9.4 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to the Company, to:
IMPERIAL BANCORP
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Senior Vice President, General
Counsel and Secretary
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
and
(b) if to Parent or Merger Sub, to:
COMERICA INCORPORATED
Comerica Tower at Detroit Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Executive Vice President and
General Counsel
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇. ▇▇/▇▇/ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
9.5 Interpretation. 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 shall not affect in any way the meaning or interpretation 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." This Agreement shall not be interpreted or construed to require
any person to take any action, or fail to take any action, if to do so would
violate any applicable law or regulation.
9.6 Counterparts. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
9.7 Entire Agreement. This Agreement (including the documents and
the instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof other than the Option
Agreement and the Confidentiality Agreements.
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9.8 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of California, without regard to any
applicable conflicts of law principles.
9.9 Publicity. Except as otherwise required by applicable law or the
rules of the NYSE, neither the Company nor Parent shall, or shall permit any of
its Subsidiaries to, issue or cause the publication of any press release or
other public announcement with respect to, or otherwise make any public
statement concerning, the transactions contemplated by this Agreement without
the consent of Parent, in the case of a proposed announcement or statement by
the Company, or the Company, in the case of a proposed announcement or statement
by Parent, which consent shall not be unreasonably withheld.
9.10 Assignment; Third Party Beneficiaries. Neither this Agreement
nor any of the rights, interests or obligations shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. Except as otherwise
specifically provided in Section 6.8, this Agreement (including the documents
and instruments referred to herein) is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
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IN WITNESS WHEREOF, the Company, Parent and Merger Sub have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
IMPERIAL BANCORP
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
_____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
Chairman, President and Chief
Executive Officer
COMERICA INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
___________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman, President and Chief
Executive Officer
COMERICA HOLDINGS INCORPORATED
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
___________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice-President
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