1
EXHIBIT 2.(a)
AMENDED AND RESTATED
AGREEMENT
AND
PLAN OF REORGANIZATION
By and Among
CU BANCORP;
CALIFORNIA UNITED BANK, NATIONAL ASSOCIATION;
and
CORPORATE BANK
OCTOBER 11, 1995
1
2
AGREEMENT AND PLAN OF REORGANIZATION
This Amended and Restated Agreement and Plan of Reorganization
("Agreement") is made and entered into as of October 11, 1995 by and among CU
Bancorp, a California corporation ("Bancorp"); California United Bank, National
Association, a national banking association and a wholly-owned subsidiary of
Bancorp ("CUB"); and Corporate Bank, a California state chartered bank
("CorpBank"), replacing, amending and restating that certain Agreement and Plan
of Reorganization dated as of March 27, 1995 by and among the same parties.
RECITALS
This Agreement provides for the acquisition of CorpBank by Bancorp by
means of a merger ("Merger") of CorpBank with and into CUB, all in accordance
with the terms of this Agreement and an agreement of merger to be entered into
by and among Bancorp, CorpBank and CUB substantially in the form of Exhibit A
hereto ("Agreement of Merger"). The parties hereto have previously entered into
an Agreement and Plan of Reorganization dated March 27, 1995, which is hereby
replaced, amended and restated in its entirety by the following.
In consideration of the mutual covenants, agreements and representations
contained herein, the parties hereto agree as follows:
1. THE MERGER AND RELATED MATTERS
1.1 The Merger. The Merger shall become effective upon the filing of the
Agreement of Merger with the Office of the Comptroller of the Currency ("OCC")
and the Secretary of State of the State of California, in accordance with the
provisions of the National Banking Act, the California Corporations Code and the
California Financial Code. The date and time of the filing with the OCC is
referred to herein as the "Effective Time of the Merger." At the Effective Time
of the Merger the following transactions will be deemed to have occurred
simultaneously:
(a) Merger of CorpBank Into CUB. CorpBank shall be merged with and into
CUB (the "Bank Merger"), and the separate corporate existence of CorpBank shall
cease. CUB as the entity surviving the Merger is sometimes referred to herein as
the "Surviving Association."
1
3
(b) Purchase Price / Conversion of Shares. At the Effective Time of the
Merger:
(i) Purchase Price. The Purchase Price shall be equal to
CorpBank's Shareholders' Equity, (as defined in Subsection (v) below) as of
November 30, 1995 (the "Audit Date"), plus or minus, as the case may be, an
amount equal to the pro rata net income or net loss from operations for the
eleven month period prior to the Audit Date (the "Audit Period") (which pro rata
net income shall not include extraordinary gains which for purposes of this
measurement shall include, but not be limited to, any recovery from the Bond
Claim, as defined below) for the period from the Audit Date to the Calculation
Date (the "Applicable Period"). There shall be added to the Purchase Price the
amount of any net recovery under the Bond Claim during the Applicable Period
(after taxes, expenses and retention), all as determined by Xxxxxx Xxxxxxxx LLP
("AA") as set forth below. To the extent that the Closing Date is scheduled at a
time which is more than seventy-five (75) days after the Audit Date, AA shall
conduct an additional review of the period from November 30, 1995 through the
month end prior to such Closing Date, and any adjustments to Corporate's
internally prepared financial statements for such period which are required by
AA as a result thereof, shall be included in the Purchase Price as if they
occurred prior to the Audit Date.
(ii) Subject to Sections 1.2, 1.4 and clause (iv) of this Section
1.1 (b), each outstanding share of CorpBank Stock (as defined in Section 3.2)
will be converted into the right to receive: (A) a number of shares of Bancorp
common stock, without par value ("Bancorp Common"), equal to the "Conversion
Ratio" plus an amount of cash set forth below. The Conversion Ratio shall be a
fraction of which the numerator shall be not less than seventy five percent
(75%) and not more than ninety percent (90%) (hereinafter referred to as the
"Elected Stock Percentage") of the Purchase Price Per Share and the denominator
("Denominator") shall be $8.00 ("Bancorp Stock Value"); and (B) cash in an
amount equal to not more than twenty-five percent (25%) and not less than ten
percent (10%) (hereinafter referred to as the "Elected Cash Percentage") of the
Purchase Price Per Share.
(iii) Purchase Price Per Share shall be a fraction of which the
numerator is the Purchase Price and the Denominator is the number of outstanding
shares of CorpBank on the Calculation Date on a fully diluted basis. Dissenting
Shares, as defined in Section 1.4 below, shall be considered outstanding in
calculating the number of outstanding shares on the Calculation Date.
(iv) The Elected Stock Percentage shall be not less than
seventy-five percent (75%) and not more than ninety percent (90%) and the
Elected Cash
2
4
Percentage shall not be less than ten percent (10%) and not more than twenty
five percent (25%). The Elected Stock Percentage plus the Elected Cash
Percentage shall equal one hundred percent (100%), and shall both be determined
by Bancorp, in its sole discretion, no later than the Closing Date. The
Elected Stock Percentage and the Elected Cash Percentage shall collectively be
referred to herein as the "Elected Percentage".
(v) Except as specifically set forth in this Agreement to the
contrary, Shareholders' Equity shall be defined pursuant to Generally Accepted
Accounting Principles, consistently applied ("GAAP") as set forth in CorpBank's
audited financial statements as of the Audit Date. Xxxxxx Xxxxxxxx, LLP ("AA")
shall perform an audit of the CorpBank financial statements and results of
operations for the Audit Period (or such later date as the parties shall agree
to, in writing) and as of the Audit Date. The examination shall be accompanied
by AA's unqualified opinion as to the financial statements. The determination of
AA as to CorpBank's shareholders' equity, net income (loss) (which shall for the
purposes set forth herein include all expenses and legal fees of the transaction
contemplated herein, (including, due inquiry into expenses which can be
ascertained, whether or not yet billed) and the net after tax effect of any sale
or recovery of the "Bond Claim" as defined below (whether or not it occurs prior
to the Audit Date or during the Applicable Period) shall be binding on both
parties, subject to Section 8.1 herein. To the extent that the Closing Date is
scheduled at a time which is more than seventy-five (75) days after November 30,
1995, an additional review shall be conducted by AA and the determination of AA
as to appropriate adjustments to CorpBank's internally prepared financial
statements as a result of such review shall be binding on both parties, subject
to Section 8.1 herein.
(vi) Audits
(A) The audit to be conducted by AA shall include a review of
the loan and lease portfolio with the scope equal to: all loans in principal
amount in excess of $10,000 classified: doubtful, substandard or "especially
mentioned" (or a similar rating); non accrual loans and loans past due 30 days
or more, in principal amount in excess of $25,000; all loans in excess of
$100,000; all construction loans; all REO; and such sampling of other loans such
that 65% of the aggregate principal dollar amount of the total loan and lease
portfolio should be reviewed.
(B) In addition, CorpBank shall cause Xxxxxxx and Associates
to conduct a review of the loan and lease portfolio of similar scope to that
required in Subsection (vi)(A) above, as of October 12, 1995 (to be completed by
November 30, 1995). To the extent the Closing is scheduled to take place more
than forty-five (45) days after November 30, 1995, Xxxxxxx and Associates shall
be required to update their review to the extent of all new credits, all credits
which in the interim
3
5
are reclassified or which are 60 days or more delinquent and such other matters
as may be agreed to among the parties.
(vii) The Calculation Date shall be the last business day of the
week preceding the Closing Date or such other date as may be mutually agreed
upon. The Calculation Date shall not be more than five (5) business days prior
to the Closing Date, except pursuant to the mutual agreement of the parties
hereto.
(c) Exception for Shares Held by Bancorp or CorpBank. Each share of
CorpBank Stock which immediately prior to the Effective Time of the Merger is
owned by CorpBank or Bancorp or their wholly-owned subsidiaries (other than
shares held in a fiduciary capacity) shall, at the Effective Time of the Merger,
be canceled and retired and cease to exist, without the payment of any
consideration therefor or any conversion thereof into Bancorp Common. For
purposes of this Agreement, a Bank shall be deemed wholly-owned by CorpBank or
Bancorp if all of such Bank's stock is owned directly by CorpBank or Bancorp (as
applicable) or indirectly through one or more other wholly-owned subsidiaries.
(d) Effect on CorpBank Stock Options. In accordance with Section 5.12
and prior to the Closing Date (as defined in Section 2.1), CorpBank shall make
arrangements satisfactory to Bancorp and CUB for the exercise, surrender or
cancellation of all outstanding options to purchase CorpBank Stock, such
cancellation to become effective at the Effective Time of the Merger. Any
exercise of options must take place prior to the Calculation Date.
(e) Effect on CorpBank Fixed Rate, Non-Convertible 8.5% Subordinated
Capital Notes Maturing June 30, 1997. In accordance with the provisions of the
capital notes (the "Capital Notes"), CUB will assume the Capital Notes.
1.2 No Fractional Shares. No fractional shares of Bancorp Stock shall be
issued. Bancorp will pay or cause to be paid cash in lieu of fractional shares
of Bancorp Stock which would otherwise be issuable pursuant to Section 1.1.
1.3 Conversion of CorpBank Stock / Exchange of Certificates.
(a) Election Procedures. Subject to the terms of this Agreement, each
record holder of shares of CorpBank Stock will have the right to specify such
holder's election to have his shares of CorpBank Stock converted into Bancorp
Common or cash, or to specify that such holder has no election, in accordance
with the following procedures:
(i) Not later than the Closing Date, a form of letter of
transmittal
4
6
and election statement providing for such a specification of election and for
the tender to the Exchange Agent (as defined in Section 1.3 (c) herein) of the
related share certificates (an "Election Statement") will be mailed to the
holders of record of CorpBank Stock as of a date determined by Bancorp and
CorpBank. CorpBank will also provide forms of the Election Statement to all
persons who become holders of record of CorpBank Stock during the period
between such record date and the Election Deadline (as defined in subsection
(iv) below) and will make such forms available at its executive offices and
such other places as Bancorp and CorpBank deem appropriate.
(ii) Any record holder of CorpBank Stock may specify, in an
Election Statement meeting the requirements of this SubArticle that, as to all
shares of CorpBank Stock covered by such Election Statement:
(A) All such shares shall be converted to Bancorp Common
("Stock Election Shares");
(B) All shares shall be converted to cash ("Cash Election
Shares"); or
(C) A designated portion of such shares shall be converted
to cash as Cash Election Shares and a portion of such shares shall be converted
to Bancorp Common as Stock Election Shares; or
(D) The shareholder has no preference and accordingly makes
no election.
(iii) Any record holder of CorpBank Stock who is holding such
shares for a beneficial owner, or as a nominee for one or more beneficial
owners, may submit an Election Statement on behalf of any such beneficial
owners. Any beneficial owner of CorpBank Stock on whose behalf a record owner of
CorpBank Stock has submitted an Election Statement in accordance with this
SubArticle, will be considered a separate holder of CorpBank Stock for purposes
of this Agreement.
(iv) An Election Statement will be effective only if a properly
completed and signed copy thereof accompanied by stock certificates for the
shares of CorpBank Stock which such Election Statement covers, shall have been
actually received by the Exchange Agent no later than 5:00 P.M., Pacific Time,
on the business day mutually selected by Bancorp and CorpBank (such time and day
being herein referred to as the "Election Deadline"). If no such day is mutually
agree to, the Election Deadline shall be the date fifteen (15) days following
the mailing of the form of letter of transmittal and election statement to the
CorpBank shareholders. An Election Statement which meets the requirements of
this provision is hereinafter referred to as an "Effective Election Statement."
5
7
(v) Shares of CorpBank Stock as to which a record holder makes
no election pursuant to an Effective Election Statement, or as to which no
Effective Election Statement is filed, are hereinafter referred to as "No
Election Shares".
(vi) Any record holder of CorpBank Stock who has submitted an
Effective Election Statement may at any time until the Election Deadline amend
such Election Statement if the Exchange Agent actually receives, no later than
the Election Deadline, a later-dated, properly completed and signed, amended
Effective Election Statement.
(vii) Any record holder of CorpBank Stock may at any time prior to
the Election Deadline revoke his Election Statement and withdraw certificates
for shares of CorpBank Stock deposited therewith by written notice actually
received by the Exchange Agent no later than the Election Deadline. Any notice
of withdrawal shall be effective only if it is executed and specifies the record
holder of the shares to be withdrawn and the serial numbers shown on the
certificates representing the shares to be withdrawn. All Election Statements
shall automatically be revoked if the Merger is abandoned for any reason,
whereupon the certificates (or guarantees of delivery, as the case may be) for
the shares of CorpBank Stock to which each Election Statement relates shall be
promptly returned to the person submitting the same. The stock transfer books of
CorpBank will be closed and no share transfers will be permitted after the
Election Deadline unless the Merger is subsequently abandoned by the parties.
(viii) Bancorp and CorpBank will have the right to make rules, not
inconsistent with the terms of this Agreement, governing the form, terms and
contents of Election Statements, the validity and effectiveness of Election
Statements and the manner and extent to which they are to be taken into account
in making the determination prescribed by Section 1.3 (b) herein, the issuance
and delivery of certificates evidencing Bancorp's Common and cash into which
shares of CorpBank Stock are converted in the Merger pursuant to SubArticles
1.1(b) (ii) and (iv) and the payment for fractional interests as prescribed by
Section 1.2 herein.
(b) Allocation Procedures. The allocation among holders of CorpBank
Stock of Bancorp Common or cash pursuant to this Section 1.3 shall be effected
as follows:
(i) Not less than the Elected Percentage of the CorpBank Shares
issued and outstanding at the Effective Time of the Merger (including dissenting
Shares) will be converted into Bancorp Common (the "Stock Conversion Number").
6
8
(ii) If less than the Elected Percentage of CorpBank Stock issued
and outstanding at the Effective Time of the Merger (including Dissenting
Shares) are Stock Election Shares, allocation of Bancorp Common and cash will be
made as follows:
(A) First, all Stock Election Shares shall be converted into
Bancorp Common;
(B) Second, the Exchange Agent shall convert all No Election
Shares to Stock Election Shares ("Additional Stock Election Shares") in the
event that the aggregate No Election Shares so converted, when added to shares
converted into Bancorp Common pursuant to clause (ii) (A) above, are equal to or
less than the Stock Conversion Number;
(C) Third, in the event that conversion of all No Election
Shares to Additional Stock Election Shares pursuant to clause (ii) (B) would
result in the issuance of a number of shares of Bancorp Common, when added to
the shares of Bancorp Common to be issued in respect of the Stock Election
Shares, in excess of the Stock Conversion Number, the number of No Election
Shares converted to Additional Stock Election Shares shall be reduced so that
the aggregate number of shares of Bancorp Common to be issued as a result of the
Merger does not exceed the Stock Conversion Number; and the aggregate Additional
Stock Election Shares created upon the conversion of No Election Shares shall
then be allocated pro rata to each holder of No Election Shares in the
proportion the total No Election Shares of such holder bears to the total number
of No Election Shares of all shareholders;
(D) Fourth, in the event that conversion of all No Election
Shares to Additional Stock Election Shares pursuant to clause (ii) (B) would
result in the issuance of a number of shares of Bancorp Common to be issued in
respect of the Stock Election, which is less than the Stock Conversion Number,
in addition to all No Election Shares, the Exchange Agent shall convert an
aggregate number of Cash Election Shares to Additional Stock Election Shares,
such that the aggregate number of Stock Election Shares and all Additional Stock
Election Shares shall equal the Stock Conversion Number; and the aggregate
Additional Stock Election Shares to be created upon the conversion of Cash
Election Shares shall then be allocated pro rata to each holder of Cash Election
Shares in the proportion that the total Cash Election Shares of such holder bear
to the total number of Cash Election Shares of all shareholders; and
(E) Fifth, after the allocation in clauses (ii) (A) through
(D) have been made, all remaining shares of CorpBank Stock shall be converted
into cash.
(iii) If more than the Elected Percentage of the total number of
shares of CorpBank Stock issued and outstanding at the Effective Time of the
Merger (including Dissenting Shares) are Stock Election Shares, allocation of
Bancorp Common and cash will be made as follows:
7
9
(A) First, all Cash Election Shares and No Election Shares
shall be converted into cash;
(B) Second, the Exchange Agent shall convert an aggregate
number of Stock Election Shares to Cash Election Shares ("Additional Cash
Shares") so that the aggregate number of shares to be converted into cash as a
result of the Merger equals the total number of shares of CorpBank Stock
immediately prior to the Effective Time of the Merger minus the Stock Conversion
Number; and the aggregate Additional Cash Election Shares created upon
conversion of Stock Election Shares shall then be allocated pro rata to each
holder of Stock Election Shares in the proportion that the total Stock Election
Shares of such holder have to the total number of Stock Election Shares of all
shareholders; and
(C) Any Stock Election Shares not converted to Additional
Cash Election Shares pursuant to clause (iii) (B) above shall be converted into
Bancorp Common.
(c) Exchange Procedures.
(i) On or before the Effective Time of the Merger, Bancorp will
(i) promptly deliver to a financial institution designated by it to serve as
exchange agent (the "Exchange Agent") certificates, registered in the name of
the Exchange Agent in its capacity as exchange agent, representing the Bancorp
Common issuable in the Merger and cause the Exchange Agent to distribute shares
of Bancorp Common in accordance with this Section 1.3, (ii) provide to the
Exchange Agent on a timely basis funds necessary to pay cash payable pursuant to
Section 1.1 and any cash payable in lieu of fractional shares of Bancorp Common
as provided in Section 1.2 and cause the Exchange Agent to distribute such funds
in accordance with paragraph (a) of this Section 1.3 and (iii) cause the
Exchange Agent to distribute funds on account of dividends and other
distributions in accordance with paragraph (b) of this Section 1.3.
(ii) Bancorp and the Exchange Agent shall agree that the Exchange
Agent shall, with respect to any matter on which the holders of record of
Bancorp Common determined as of a record date after the day on which the
Effective Time of the Merger occurred shall be entitled to vote or consent, (A)
request instructions from the holders of record immediately prior to the
Effective Time of the Merger of certificates which immediately prior to the
Effective Time of the Merger represented shares of CorpBank Stock and which have
not yet been surrendered to the Exchange Agent in exchange for Bancorp Common as
to how or whether to vote or consent with respect to the shares of Bancorp
Common to which such holders are entitled and which are then held by the
Exchange Agent and (B) vote or express consent in writing with respect to any
shares of Bancorp
8
10
Common held by it from time to time hereunder only in accordance with such
instructions. Bancorp and the Exchange Agent shall further agree that the
Exchange Agent shall receive and hold all dividends and other distributions
paid with respect to such shares for the account of the persons entitled
thereto.
(iii) As soon as practicable after the Election Deadline, the
Exchange Agent will implement the procedures set forth in Section 1.3(b) and
send written notice to each record holder of certificates representing shares of
CorpBank Stock converted pursuant to Section 1.3(b) of the results thereof.
(iv) Upon surrender for cancellation to the Exchange Agent
(either prior to the Election Deadline or otherwise duly surrendered after the
Election Deadline) of one or more certificates for shares of CorpBank Stock
("Old Certificates"), accompanied by a duly executed letter of transmittal in
proper form, the Exchange Agent shall, promptly after the Effective Time of the
Merger, in the case of Old Certificates surrendered prior to the Election
Deadline, and as promptly as practical in the case of Old Certificates
surrendered after the Election Deadline, deliver to each holder of such
surrendered Old Certificates new certificates representing the appropriate
number of shares of Bancorp Common ("New Certificates") or checks for the
appropriate amount of cash, as applicable, together with checks for payment of
cash in lieu of fractional interests to be issued in respect of the Old
Certificates. No holder of any Old Certificate shall have any rights as a holder
of Bancorp Common until such Old Certificate is surrendered for exchange as
provided herein. The holder of an Old Certificate(s) shall have no rights with
respect to such shares other than to surrender such certificate or certificates
pursuant to this Section 1.3 or to perfect the right of appraisal which such
holder may have pursuant to Section 1300 et. seq. of the California Corporations
Code ("Section 1300") and 12 U.S.C. Section 215a ("Section 215a").
(v) Unless and until any Old Certificate shall have been
surrendered and exchanged as herein provided for New Certificates, each
outstanding Old Certificate shall represent, on and after the Effective Time of
the Merger, the right to receive the shares of Bancorp Common and/or the cash
into which the shares of CorpBank Stock shown thereon have been converted. No
dividend or other distribution payable to the holders of record of Bancorp
Common as of any time subsequent to the Effective Time of the Merger shall be
paid to the holder of any Old Certificate prior to such exchange, but upon such
surrender of any Old Certificate there shall be paid to the record holder of the
Old Certificate, the amount of dividends or other distributions which
theretofore became payable with respect to the number of shares of Bancorp Stock
represented by the certificate or certificates so issued in exchange.
9
11
(vi) No transfer taxes shall be payable by any shareholder in
respect of the issuance of Certificates for Bancorp Common, except that if any
certificates for Bancorp Common is to be issued in a name other than that in
which the CorpBank Certificate surrendered shall have been registered, it shall
be a condition of such issuance that the that the person requesting such
issuance shall properly endorse the certificate or certificates and shall pay to
Bancorp any transfer taxes payable by reason thereof, or any prior transfer of
such surrendered certificate or establish to the satisfaction of Bancorp that
such taxes have been paid or are not payable.
(vii) Notwithstanding anything to the contrary set forth herein,
if the holder of CorpBank Stock shall be unable to surrender his certificates
because such certificates have been lost or destroyed, such holder may deliver
in lieu thereof an indemnity bond in form and substance and with surety
satisfactory to Bancorp.
1.4 Dissenting Shares. Notwithstanding anything to the contrary contained in
this Agreement, shares of CorpBank Stock which are issued and outstanding
immediately prior to the Effective Time of the Merger and which are held by
shareholders who have not voted such shares in favor of adoption and approval of
this Agreement and the Agreement to Merge and have properly exercised their
dissenters' rights under Section 1300 and Section 215a ("Dissenting Shares")
shall not be converted into or be exchangeable for the right to receive shares
of Bancorp Stock and cash or cash in lieu of fractional shares provided for in
Section 1.2 herein, but shall be entitled to receive such consideration as shall
be determined pursuant to Section 1300 and 215a; provided, however, that if any
holder of such shares shall have failed to perfect or shall have effectively
withdrawn or lost the holder's right to dissent and receive payment under
Section 1300 and 215a, such holder's shares shall thereupon be deemed to have
been converted into and to have become exchangeable for, at the Effective Time
of the Merger, the right to receive shares of Bancorp Common and cash and cash
in lieu of fractional shares pursuant to Section 1.2 herein, without any
interest thereon. No payment for Dissenting Shares may be made prior to the
Calculation Date.
1.5 Effect of the Merger. By virtue of the Merger and at the Effective Time
of the Merger, all of the rights, privileges, powers and franchises and all
property and assets of every kind and description of CorpBank shall be vested in
and be held and enjoyed by the Surviving Association, without further act or
deed, and all the estates and interests of every kind of CorpBank, including all
debts due to it, shall be as effectively the property of the Surviving
Association as they were of CorpBank, and the title to any real estate vested by
deed or otherwise in CorpBank shall not revert or be in any way impaired by
reason of the Merger; and all rights of creditors and liens upon any property of
CorpBank shall be preserved unimpaired
10
12
and all debts, liabilities and duties of CorpBank shall be debts, liabilities
and duties of the Surviving Association and may be enforced against it to the
same extent as if such debts, liabilities and duties had been incurred or
contracted by it, and none of such debts, liabilities or duties shall be
expanded, increased, broadened or enlarged by reason of the Merger.
1.6 Name of Surviving Association. The name of the Surviving Association
shall be "California United Bank, National Association".
1.7 Articles of Association and Bylaws of Surviving Association. The
Articles of Association and Bylaws of CUB as in effect immediately prior to the
Effective Time of the Merger shall continue to be the Articles of Association
and Bylaws of the Surviving Association.
1.8 Directors and Officers of Surviving Association. The directors of CUB
immediately prior to the Effective Time of the Merger shall be the directors of
the Surviving Association until their successors have been chosen and qualified
in accordance with the Certificate of Incorporation and Bylaws of the Surviving
Association. The officers of CUB immediately prior to the Effective Time of the
Merger shall be the officers of the Surviving Association until they resign or
are replaced or terminated by the Board of Directors of the Surviving
Association or otherwise in accordance with the Surviving Association's Articles
of Association or Bylaws.
1.9 Special Agreements. Pursuant to Section 6.2(i), not later than five (5)
business days after the Execution Date, as a condition subsequent to Bancorp and
CUB entering into this Agreement and as a material inducement for Bancorp and
CUB to enter into this Agreement, all directors of CorpBank, and all
Shareholders of CorpBank holding more than 5% of the outstanding shares of
CorpBank Stock (the "Shareholders") shall each enter into separate agreements
with Bancorp and CUB substantially in the form attached hereto as Exhibit B
pursuant to which each of the Shareholders shall agree to vote or cause to be
voted all such shares of CorpBank Stock with respect to which each such
Shareholder has voting power on the date hereof or hereafter to approve the
transactions contemplated hereby and all requisite matters related thereto and
pursuant to which each of the Shareholders shall make certain representations
and warranties to Bancorp and CUB. Additionally, each director of CorpBank shall
agree not to sell Bancorp stock received pursuant to the transactions
contemplated in the Agreement for a period of two full calendar quarters,
following the quarter in which the Effective Date occurs. Further each director
of CorpBank shall agree to either (i) designate his shares as Stock Election
Shares or (ii) designate his shares as part Stock Election Shares and Cash
Election Shares in no less than the proportion the Elected Stock
11
13
Percentage bears to the Elected Cash Percentage.
1.10 Adjustment to Shareholders' Equity /Bond Claim / Additional Payment.
(a) Bond Claim. CorpBank filed a Bond Claim approximately September 29,
1995 to demand reimbursement under its Bankers' Blanket Bond Policy (Carrier -
Chubb and Policy Number 81193606-H) for losses incurred in connection with the
actions of former officers as detailed in that certain report and exhibits
prepared by The Audit Group and dated July 12, 1995 and supplemented in a letter
from CorpBank's counsel (the "Bond Claim").
(b) In the event a recovery under the Bond Claim is received prior to
the Calculation Date, the balance, net of taxes, costs, expenses and retention,
shall be treated as required by GAAP, as if such recovery occurred prior to the
Audit Date. AA shall prepare a calculation of Shareholders' Equity including the
effect of the Bond Claim recovery, if any. For purposes of this provision, a
recovery shall have been deemed to occur in the event the Carrier makes a
payment or payments to CorpBank or CorpBank receives consideration from some
third party for the assignment and sale of the Bond Claim. This provision shall
be deemed to provide a waiver from provisions below restricting CorpBank's
ability to sell assets other than in the ordinary course of business, for the
sale of the Bond Claim in any manner deemed prudent and appropriate by CorpBank,
and in accordance with such principals of law and regulation as may be
applicable thereto.
(c) Additional Payment. In the event that there is no recovery from the
Bond Claim prior to the Calculation Date, the Purchase Price shall be increased
by $200,000.
(d) Sale to third party. In the event of an assignment and sale of the
Bond Claim to a third party, whether or not related to CorpBank or an affiliate
of CorpBank, CorpBank shall provide CUB and Bancorp with the following:
(i) The assignment and sale is in accordance and compliance with
all provisions of applicable law, including but not limited to the California
Financial Code and California Corporations Code;
(ii) CorpBank has received the non disapproval of all necessary
governmental or regulatory agencies, including but not limited to California
Superintendent of Banks and the Federal Deposit Insurance Corporation, if
required;
(iii) CUB shall have received an opinion of counsel to CorpBank as
to compliance with subsections (i) and (ii) above.
12
14
(e) Indemnity. In the event of a sale and assignment of the Bond Claim,
CUB and Bancorp shall be indemnified and held harmless by the Purchaser, against
any damage, costs, expenses, actions, claims or other matter relative to the
Bond Claim. Such indemnity shall include reimbursement for costs and expenses,
including outside legal fees incurred in connection with any claim against CUB
or Bancorp in connection with the Bond Claim or requests for documents,
testimony or other action on the part of CUB or Bancorp.
1.11 Other Agreements
(a) All prior agreements between Bancorp and CUB on the one hand and
Corporate and / or its affiliates (as "affiliates" are defined under Federal
Securities Laws and Regulations, including but not limited to the Securities and
Exchange Act of 1934, as amended) are hereby terminated in their entirety,
except to the extent that confirmations in the form of Exhibit 1.11 herein, as
applicable are received from affiliates within five (5) days of execution of
this Amended and Restated Agreement and Plan of Reorganization.
(b) All parties intend that this transaction qualify as a tax-free
reorganization under Internal Revenue Code Section 368(a)(1)(A) and
368(a)(2)(D), (the forward triangular merger provision), and corresponding state
provisions. AA will review all tests for qualification as a tax-free
reorganization immediately prior to the Closing Date. If, based on the review of
these tests, the parties to the Agreement believe there is a significant risk of
the transaction disqualifying as a tax-free reorganization, the parties will
amend the Agreement to reduce such risks.
2. THE CLOSING
2.1 Closing Date; Transactions Contemplated by this Agreement.
(a) Date of Closing. Consummation of the transactions contemplated by
this Agreement ("Closing") shall, unless another date or place is agreed in
writing by the parties hereto, take place at the offices of CUB, 00000 Xxxxxxx
Xxxxxxxxx, Xxxxxx, Xxxxxxxxxx 00000, on the first Friday following the business
week in which the following occurred: the last to occur of (i) the receipt of
all approvals and consents and expiration of all waiting periods specified in
Sections 6.1(a) and (c) hereof and (ii) satisfaction of the conditions precedent
set forth in Section 6.2(t) or written waiver of such conditions by Bancorp and
CUB in their sole discretion (the "Closing Date").
(b) Transactions Contemplated. The transactions contemplated by this
13
15
Agreement include, without limitation, the Bank Merger (as defined in Section
1.1 (a).
14
16
2.2 Execution of Agreement of Merger. Prior to the Closing Date, and as
soon as practicable after adoption and approval of this Agreement by the
shareholders of CorpBank and the shareholder of CUB, the Agreement of Merger (as
amended, if necessary, to conform to any requirements of any regulatory
authority having authority over the Merger) shall be executed by Bancorp, CUB
and CorpBank. On the Closing Date, the Agreement of Merger, together with all
requisite certificates, shall be duly filed with the OCC in accordance with
applicable laws and regulations and with the California Secretary of State.
2.3 Documents to be Delivered. At the Closing, the parties shall deliver,
or cause to be delivered, such documents or certificates as may be necessary, in
the reasonable opinion of counsel for any of the parties, to effectuate the
transactions called for in this Agreement. If, at any time after the Effective
Time of the Merger, Bancorp or the Surviving Association or its successors or
assigns shall determine that any further conveyance, assignment or other
documents or any further action is necessary or desirable to further effectuate
the transactions set forth herein or contemplated hereby, the officers and
directors of the parties hereto shall execute and deliver, or cause to be
executed and delivered, all such documents as may be reasonably required to
effectuate such transactions.
3. REPRESENTATIONS AND WARRANTIES OF CORPBANK AND CORPBANK SUBSIDIARIES
CorpBank and CorpBank Subsidiaries (as defined in Section 3.3) represent and
warrant to Bancorp and CUB as follows (exceptions to the representations and
warranties set forth below and reflected in a Schedule shall be clearly labeled
to identify the Schedule to which they apply and shall only be necessary at
inception of the Agreement to the extent that the schedules as of August 1, 1995
previously provided shall require updating, thereafter schedules shall be
updated as required herein):
3.1 Organization, Standing and Power. CorpBank is a California corporation,
duly chartered as a California state chartered bank, duly organized, validly
existing and in good standing under the laws of the state of California.
CorpBank has all requisite corporate power and authority to own, lease and
operate its properties and assets and to carry on its business as presently
conducted. CorpBank is duly qualified and in good standing as a foreign
corporation, and is authorized to do business, in all states or other
jurisdictions (all of which are listed in Schedule 3.1(a)) in which such
qualification or authorization is necessary, and there has not been any claim by
any other state or jurisdiction to the effect that CorpBank is required to
qualify or otherwise be authorized to do business as a foreign corporation
therein. Schedule 3.1(b) contains true and correct copies of CorpBank's Articles
of
15
17
Incorporation and Bylaws, as amended and in effect as of the date hereof.
3.2 Capitalization. As of the date of this Agreement, the authorized
capitalization of CorpBank consists solely of Five Million (5,000,000) shares of
common stock, without par value ("CorpBank Stock"), of which Five Hundred
Thousand (500,000) shares are issued and outstanding and One Million Dollars
($1,000,000) in principal amount of capital notes due June 30, 1997 ("Capital
Notes"). All outstanding shares of capital stock of CorpBank are duly authorized
and validly issued and are fully paid and nonassessable except, as provided for
in Section 662 of the California Financial Code. The capital notes are validly
issued and are held by eleven (11) holders. Except for stock options covering
not more than 92,500 shares of CorpBank Stock granted pursuant to CorpBank's
1991 Employee Stock Option Plan, there are no outstanding options, warrants,
commitments, agreements or other rights in or with respect to the unissued
shares of CorpBank Stock, CorpBank Preferred Stock, or stock of any CorpBank
Subsidiary or any other securities convertible into CorpBank Stock, CorpBank
Preferred Stock, or stock of any CorpBank Subsidiary. 92,500 shares of CorpBank
Stock are reserved for exercise of outstanding stock options under the 1991
Employee Stock Option Plan. Schedule 3.2(b) sets forth the name of each holder
of a CorpBank Stock option, the number of shares of CorpBank Stock covered by
each such holder's option, the exercise price per share and the expiration date
of each such holder's option. Immediately prior to the Effective Time of the
Merger, all issued and outstanding CorpBank Stock will have been either
outstanding on the date of this Agreement, or issued upon exercise of stock
options outstanding pursuant to the 1991 Employee Stock Option Plan.
3.3 Subsidiaries. CorpBank does not own, directly or indirectly (except as
pledgee pursuant to loans which are not in default), any equity position or
other voting interest in any corporation, partnership, joint venture or other
entity, except as set forth on Schedule 3.3. Schedule 3.3 correctly lists each
Subsidiary of CorpBank (individually "CorpBank Subsidiary" or collectively
"CorpBank Subsidiaries"). Each CorpBank Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation as stated in Schedule 3.3 and has the corporate
power and authority to carry on its business as it is now conducted and to own,
lease and operate its properties. Each CorpBank Subsidiary is duly qualified and
in good standing as a foreign corporation, and is authorized to do business, in
all states or other jurisdictions (all of which are listed in Schedule 3.3) in
which such qualification or authorization is necessary, and there has not been
any claim by any other state or jurisdiction to the effect that an CorpBank
Subsidiary is required to qualify or otherwise be authorized to do business as a
foreign corporation therein. Except as set forth in Schedule 3.3, CorpBank owns
of record and beneficially 100% of each class of the
16
18
outstanding capital stock of each CorpBank Subsidiary free and clear of any
lien, encumbrance or security interest and of any adverse claim of any kind.
3.4 Corporate Bank. CorpBank is authorized by the California Superintendent
of Banks (the "Superintendent") to conduct a general banking business. CorpBank
is not a member of the Federal Reserve System. CorpBank's deposits are insured
by the Federal Deposit Insurance Corporation ("FDIC") in the manner and to the
full extent provided by law.
3.5 Reports and Financial Statements. CorpBank has previously furnished to
CUB true and complete copies of its (i) Annual Report to Shareholders for the
years ended December 31, 1994, 1993 and 1992, (ii) Quarterly Call Reports for
the calendar quarters ended March 31, and June 30, 1995 (iii) proxy statements
relating to all meetings of shareholders (whether special or annual) during
1995, 1994, 1993 and 1992, and (iv) all other reports, registration statements
or filings made by CorpBank with the Superintendent, the FDIC or the Securities
and Exchange Commission ("SEC") since January 1, 1992 (collectively the
"CorpBank Filings"). As of their respective dates, the CorpBank Filings and any
other materials distributed to shareholders, including but not limited to proxy
statements for annual shareholder meetings in 1992, 1993, 1994, and 1995, were
in compliance, in all material respects, with the requirements of their
respective forms and were true and complete in all material respects and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. CorpBank
has also furnished to CUB its audited consolidated financial statements for the
years ended December 31, 1992 and 1993, certified by Xxxxx Xxxxxxxx ("GT"). The
audited consolidated financial statements of CorpBank provided to CUB or to be
provided in the future and the unaudited consolidated interim financial
statements previously furnished to CUB or included in the CorpBank Filings
(collectively the "CorpBank Financial Statements") were (or will be) prepared in
accordance with generally accepted accounting principles applied on a consistent
basis ("GAAP") and except as disclosed in the CorpBank Financial Statements or
the notes thereto and present fairly the consolidated financial position of
CorpBank and the CorpBank Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flow for the periods then
ended, subject, in the case of the unaudited consolidated interim financial
statements, to normal recurring adjustments. Neither the financial statements
referred to above nor any report (including, without limitation, annual reports
to shareholders, prospectus or definitive proxy statement), or any amendment or
supplement thereto, filed, or to be filed, prior to the Effective Time of the
Merger with the Superintendent, FDIC, OCC, or SEC by or on behalf of CorpBank
contains (or will contain when furnished or filed) any untrue statement
17
19
of a material fact or omits (or will omit when furnished or filed) to state a
material fact necessary in order to make the statements contained therein not
misleading.
3.6 CorpBank's and CorpBank Subsidiaries' Authority. The execution and
delivery by CorpBank and CorpBank Subsidiaries of this Agreement and the
Agreement of Merger and, subject to the requisite approval of the shareholders
of CorpBank, the consummation of the transactions contemplated hereunder or
thereunder have been duly and validly authorized by all necessary corporate
action on the part of CorpBank and CorpBank Subsidiaries, and this Agreement is,
and the Agreement of Merger will be upon due certification, execution,
acknowledgment and filing thereof in accordance with applicable law, a valid and
binding obligation of CorpBank and CorpBank Subsidiaries, enforceable in
accordance with their terms, except as the enforceability hereof or thereof may
be limited by bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors generally and by general equitable principles. Except as
set forth in Schedule 3.6, neither the execution and delivery by CorpBank and
CorpBank Subsidiaries of this Agreement or the Agreement of Merger, nor the
consummation of the transactions contemplated herein or therein, nor compliance
by CorpBank and CorpBank Subsidiaries with the provisions hereof or thereof,
will (i) conflict with or result in a breach of any provision of their
respective Articles of Incorporation or Bylaws; (ii) constitute a breach of, or
result in a default (or give rise to any rights of termination, cancellation or
acceleration, or any right to acquire any securities or assets) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
franchise, license, permit, agreement or other instrument or obligation to which
CorpBank or any CorpBank Subsidiary is a party, or by which CorpBank or any
CorpBank Subsidiary or any of their respective properties or assets are bound,
except where such breach or default would not have a material adverse effect on
the consolidated financial condition, results of operations or prospects of
CorpBank; (iii) constitute a breach of, or result in a default (or give rise to
any rights of termination, acceleration or cancellation, or any right to acquire
any securities or assets) under any material agreement to which CorpBank or any
CorpBank Subsidiary or any of their respective properties or assets are bound;
or (iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to CorpBank or any CorpBank Subsidiary. No consent or approval of,
notice to or filing with any governmental authority having jurisdiction over any
aspect of the business or assets of CorpBank or any CorpBank Subsidiary, and
except as set forth in Schedule 3.6 no consent or approval of or notice to or
filing with any other person or entity, is required in connection with the
execution and delivery by CorpBank and CorpBank Subsidiaries of this Agreement
or the Agreement of Merger or the consummation by CorpBank and CorpBank
Subsidiaries of the transactions contemplated hereunder or thereunder, except
approval of the Merger by the
18
20
shareholders of CorpBank, and such approvals as may be required by the OCC
pursuant to Sections 215a and 1828(c) of Title 12 of the United States Code or
any successor statutes ("Merger Statutes") or the Superintendent pursuant to
California Financial Code Section 2071 or otherwise with respect to the Merger,
or other applicable law; and the declaration by the SEC and state securities
law regulatory authorities that the Registration Statement (as defined in
Section 5.11) is effective and that Bancorp Stock to be issued in connection
with the Merger is qualified under applicable state securities laws.
3.7 Insurance. Except as set forth in Schedule 3.7, CorpBank and the
CorpBank Subsidiaries have, and at all times within five years of the date of
this Agreement have had, in full force and effect policies of insurance and
bonds (including, without limitation, bankers' blanket bond, fidelity coverage,
director and officer liability, fire, third party liability, use and occupancy)
with respect to their respective assets and businesses and against casualties
and contingencies which in the judgment of CorpBank and the CorpBank
Subsidiaries are adequate and appropriate to cover their respective assets and
businesses and are in amounts and coverages customarily provided for by similar
institutions. Set forth in Schedule 3.7 is a schedule of all policies of
insurance and bonds (other than title or credit insurance) carried and owned by
CorpBank and the CorpBank Subsidiaries, showing the name of the insurance or
bonding company, a summary of the coverage, the amounts, the deductible feature,
the annual premiums and the expiration dates. If any such policy or bond is
changed, terminated or modified following the date of this Agreement, such
termination, change or modification shall be promptly disclosed to Bancorp and
CUB in writing. Neither CorpBank nor any CorpBank Subsidiary is in default under
any such policy of insurance or bond such that it could be canceled and all
material claims thereunder have been filed in timely fashion. CorpBank and each
CorpBank Subsidiary have filed claims with or given notice of claim to their
respective insurers or bonding companies with respect to all material matters
and occurrences for which they believe they have coverage.
3.8 Proxy Statement. The Proxy Statement required pursuant to Section 5.11
and any other documents to be filed with the Superintendent, OCC, FDIC, the SEC
or any regulatory authority in connection with the transactions contemplated by
this Agreement with respect to all information set forth therein relating to
CorpBank and the CorpBank Subsidiaries, the Merger and in respect to this
Agreement and the Agreement of Merger will, at the respective times such
documents are filed or become effective, and with respect to the Proxy
Statement, at the time of mailing to shareholders, and at the time of the
shareholders' meeting:
(a) comply in all material respects with the provisions of all
applicable
19
21
regulations issued by the SEC or the OCC pursuant to the Securities Exchange
Act of 1934, as amended ("1934 Act"), and all other applicable laws and
regulations; and
(b) not contain any statement which, at the time and in light of the
circumstances under which it is made, is false or misleading with respect to any
material fact or omit any material fact necessary in order to make the
statements therein not false or misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of a proxy for the
same meeting or subject matter which have become false or misleading.
3.9 Books and Records.
(a) The minute books of CorpBank and the CorpBank Subsidiaries contain
(i) true, accurate and complete records of all meetings and actions taken by the
respective Boards of Directors, Board committees and shareholders of CorpBank
and the CorpBank Subsidiaries and (ii) true and complete copies of their
respective charter documents and bylaws and all amendments thereto. The books
and records of CorpBank and the CorpBank Subsidiaries accurately reflect in all
material aspects their respective businesses and affairs.
(b) CorpBank and each of the CorpBank Subsidiaries have records which
accurately and validly reflect, in all material respects, their respective
transactions and accounting controls sufficient to insure that such transactions
are (i) in all material respects, executed in accordance with management's
general or specific authorization, and (ii) recorded in conformity with GAAP;
such records, to the extent they contain important information pertaining to
CorpBank or any CorpBank Subsidiary which is not easily and readily available
elsewhere, have been duplicated, and such duplicates are stored safely and
securely pursuant to procedures and techniques reasonably adequate for companies
of the sizes of CorpBank and the CorpBank Subsidiaries and in the respective
businesses in which CorpBank and the CorpBank Subsidiaries are engaged; and the
data processing equipment, data transmission equipment, related peripheral
equipment and software used by CorpBank and the CorpBank Subsidiaries in the
operations of their respective businesses (including any disaster recovery
facility) to generate and retrieve such records are reasonably adequate for
companies of the sizes of CorpBank and the CorpBank Subsidiaries and in the
respective businesses in which CorpBank and the CorpBank Subsidiaries are
engaged.
3.10 Title to Assets. CorpBank and the CorpBank Subsidiaries have good and
marketable title to all material properties and assets, other than real
property, owned or purported to be owned by CorpBank and CorpBank Subsidiaries
free
20
22
and clear of all mortgages, liens, encumbrances, pledges or charges of any kind
or nature, except for (i) liens for current taxes not yet due and payable; (ii)
liens incurred in the ordinary course of business and which do not materially
impair the business of CorpBank or any CorpBank Subsidiary or materially
detract from the usefulness of the properties subject thereto; or (iii) such
liens as are disclosed in the CorpBank Financial Statements of December 31,
1994 or in Schedule 3.10.
3.11 Real Estate.
(a) Schedule 3.11(a) contains a list of all real property, including
leaseholds, owned by CorpBank and CorpBank Subsidiaries. True, correct and
complete copies of all such leases are included in Schedule 3.11(a). Schedule
3.11(b) contains, among other things, an accurate summary of all material
commitments which CorpBank or any CorpBank Subsidiary has to improve real estate
owned by it. Schedule 3.11(c) contains a list of other real estate owned
("OREO") by CorpBank and CorpBank Subsidiaries. CorpBank and CorpBank
Subsidiaries have good and marketable title to all the real property and valid
leasehold interests in the leaseholds described in Schedules 3.11(a), (b) and
(c), free and clear of all mortgages, covenants, conditions, restrictions,
easements, liens, security interests, charges, claims, assessments and
encumbrances, except for (i) rights of lessors, co-lessees or sublessees in such
matters which are reflected in the leases; (ii) current taxes not yet due and
payable; (iii) such as are described in any title policies delivered pursuant to
this Section 3.11; (iv) such imperfections of title and encumbrances, if any, as
do not in the aggregate materially and adversely detract from the value of or
materially and adversely interfere with the present use of such property; and
(v) as described in Schedule 3.11(d). True, correct and complete copies of title
policies for properties described in Schedules 3.11(a) and (c) as owned by
CorpBank or any CorpBank Subsidiary are included therein. To the best knowledge
of CorpBank and CorpBank Subsidiaries, the activities of CorpBank and CorpBank
Subsidiaries with respect to all real property and leaseholds owned by any of
them for use in connection with their respective operations are in all material
respects permitted and authorized by applicable zoning laws, ordinances and
regulations and all laws and regulations of any governmental department or
agency relative to environmental matters affecting such properties, except as
otherwise disclosed in Schedule 3.11(e). CorpBank and CorpBank Subsidiaries
enjoy peaceful and undisturbed possession under all material leases to which
they are parties, and all of such leases are valid and in full force and effect.
Except as set forth in Schedule 3.11 (g) neither CorpBank or any CorpBank
Subsidiary are engaged in real estate development or in any business other than
commercial banking, and have not been so engaged since August 1, 1991.
21
23
(b) Except as set forth in Schedule 3.11(f), there has not been any
generation, use, handling, transportation, treatment, storage, release or
disposal of any Hazardous Substance in connection with the conduct of the
business of CorpBank or any CorpBank Subsidiary that has or might result in any
liability under any Environmental Law and there has never been a use of any of
the real property owned by CorpBank or any CorpBank Subsidiary, that has or
might result in any liability under any Environmental Law; no underground
storage tanks or surface impoundments are on or in the real property owned by
CorpBank or any CorpBank Subsidiary; and no asbestos or polychlorinated
biphenyls are contained or located on any of the real property owned by CorpBank
or any Corp Bank Subsidiary.
The term "Hazardous Substances" as used herein shall mean (i)
substances that are defined or listed in, or otherwise classified pursuant to,
or the use or disposal of which are regulated by, any Environmental Law as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity;" (ii) oil, petroleum or petroleum derived from substances and drilling
fluids, produced waters, and other wastes associated with the exploration,
development, or production of crude oil, natural gas, or geothermal resources;
(iii) any flammable substances or explosives, any radioactive materials, any
hazardous wastes or substances, any toxic wastes or substances or any other
materials or pollutants which pose a hazard to any property or to Persons on or
about such property; and (iv) asbestos in any form or electrical equipment which
contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of 50 parts per million.
The term "Environmental Law" as used herein shall mean any federal,
state, provincial or local statute, law, ordinance, rule, regulation, order,
consent, decree, judicial or administrative decision or directive of the United
States or other jurisdiction whether now existing or as hereinafter promulgated,
issued or enacted relating to: (A) pollution or protection of the environment,
including natural resources; (B) exposure of persons, including employees, to
Hazardous Substances or other products, materials or chemicals; (C) protection
of the public health or welfare from the effects of products, by-products,
wastes, emissions, discharges or releases of chemical or other substances from
industrial or commercial activities; or (D) regulation of the manufacture, use
or introduction into commerce of substances, including, without limitation,
their manufacture, formulation, packaging, labeling, distribution,
transportation, handling, storage and disposal. For the purposes of this
definition the term "Environmental Law" shall include, without limiting the
foregoing, the following statutes, as amended from time to time: (1) the Clean
Air Act, as amended, 42 U.S.C. Section 7401 et seq.; (2) the Federal Water
Pollution
22
24
Control Act, as amended, 33 U.S.C. Section 1251 et seq.; (3) the Resource
Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et
seq., (4) the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended (including the Superfund Amendments and Reauthorization
Act of 1986), 42 U.S.C. Section 2601 et seq.; (5) the Toxic Substances Control
Act, as amended, 15 U.S.C. Section 2601 et seq.; (6) the Occupational Safety
and Health Act, as amended, 29 U.S.C. Section 651; (7) the Emergency Planning
and Community Right-To-Know Act of 1986, 42 U.S.C. Section 1101 et seq.; (8)
the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et
seq.; (9) the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; and (10)
all comparable state and local laws, laws of other jurisdictions or orders and
regulations including, but not limited to, the Xxxxxxxxx-Xxxxxxx-Xxxxxx
Hazardous Substance Account Act, Cal. Health & Safety Code Section 25300 et
seq.
3.12 Legal Proceedings; Agreements with Banking Authorities.
(a) Except as set forth on Schedule 3.12(a), there is no private or
governmental suit, claim, action, arbitration or proceeding pending, nor any
private or governmental suit, claim, action, arbitration or proceeding to
CorpBank's or any CorpBank Subsidiary's knowledge threatened, nor does CorpBank
or any CorpBank Subsidiary know of any facts or circumstances which would form a
basis for any such suit, claim, action, arbitration or proceeding against
CorpBank or any CorpBank Subsidiary or against any of their respective
directors, officers or employees relating to the performance of their duties in
such capacities or against or affecting any properties of CorpBank or any
CorpBank Subsidiary. Also, except as provided on Schedule 3.12(a), there are no
judgments, decrees, stipulations or orders against CorpBank or any CorpBank
Subsidiary enjoining it or any of its respective directors, officers or
employees in respect of, or the effect of which is to prohibit, any business
practice or the acquisition of any property or the conduct of business in any
area. Schedule 3.12(b) contains summary reports of CorpBank's and CorpBank
Subsidiaries' attorneys on all pending litigation to which CorpBank or any
CorpBank Subsidiary is a party and which names CorpBank or any CorpBank
Subsidiary as a defendant or cross-defendant. Schedule 3.12(c) contains a true,
correct and complete list of all pending litigation in which CorpBank or any
CorpBank Subsidiary is a named party.
(b) Except as set forth on Schedule 3.12(d), neither CorpBank nor any
CorpBank Subsidiary is a party to any agreement or memorandum of understanding
with any federal, state or foreign governmental or regulatory authority charged
with the supervision or regulation of banks or bank holding companies or engaged
in the insurance of bank deposits that restricts the conduct of its business, or
in any manner relates to its capital adequacy, its credit or investment policies
or its management.
23
25
3.13 Taxes. Except as set forth on Schedule 3.13, (i) all federal income tax
returns, all state tax returns, and all real and personal property, sales, use
and other tax returns and reports that are required by law to be filed by or on
behalf of CorpBank or any CorpBank Subsidiary have been duly prepared and filed;
(ii) all taxes shown to be due and payable by CorpBank or any CorpBank
Subsidiary on those returns, or which are otherwise due and payable, whether
disputed or not, have been paid or the liability therefor is reflected in the
CorpBank Financial Statements; (iii) CorpBank and CorpBank Subsidiaries have
paid or deposited all taxes, tax penalties or interest owed by them or which
they are obligated to withhold and deposit from amounts paid to any employee,
creditor, depositor or third party; and (iv) CorpBank and CorpBank Subsidiaries
have complied with all reporting requirements of the Internal Revenue Code of
1986 or its predecessor statutes as applicable (the "Code") including, but not
limited to, obtaining taxpayer identification numbers. The current status of any
audits of those returns by the Internal Revenue Service or other applicable
agencies is as set forth in Schedule 3.13. There are no agreements by CorpBank
or any CorpBank Subsidiary waiving a statute of limitations or extending the
time for assessment or payment of any taxes payable by any of them.
3.14 Compliance with Laws and Regulations.
(a) Except as set forth on Schedule 3.14, neither CorpBank nor any
CorpBank Subsidiary is in default under or in breach of any law, ordinance,
rule, regulation, order, judgment or decree applicable to it promulgated by any
governmental agency having authority over it, where such default or breach would
have the lesser of: (I)a material adverse effect on the consolidated financial
condition, results of operations, business or prospects of CorpBank; or (ii) a
$15,000 cost or penalty.
(b) CorpBank and each of the CorpBank Subsidiaries have conducted their
businesses in accordance with all applicable federal, foreign, state and local
laws, regulations and orders including, without limitation, disclosure, usury,
equal credit opportunity, truth in lending, equal employment, fair credit
reporting, antitrust, licensing and other laws, regulations and orders, and the
forms, procedures and practices used by CorpBank and each of the CorpBank
Subsidiaries are in compliance with such laws, regulations and orders except for
such violations or non-compliance as will not have a material adverse effect on
the consolidated financial condition, results of operations, business or
prospects of CorpBank.
3.15 Performance of Obligations. Except as set forth on Schedule 3.15,
CorpBank and CorpBank Subsidiaries have performed in all respects all of the
24
26
obligations required to be performed by them to date and are not in default
under or in breach of any term or provision of any covenant, contract, lease,
indenture or any other covenant to which CorpBank or any CorpBank Subsidiary is
a party or is subject or is otherwise bound, and no event has occurred which,
with the giving of notice or the passage of time or both, would constitute such
default or breach, where such default or breach would have a material adverse
effect on the consolidated financial condition, results of operations, business
or prospects of CorpBank. No party with whom CorpBank or any CorpBank
Subsidiary has an agreement which is material to the consolidated financial
condition, results of operations or prospects of CorpBank is in default
thereunder, except for certain loans made by the Bank which have been
identified to Bancorp and CUB.
3.16 Employees. Except as set forth in Schedule 3.16(a), there are no
understandings for the employment of any officer or employee of CorpBank or any
CorpBank Subsidiary which are not terminable by CorpBank or any CorpBank
Subsidiary without liability on not more than 30 days' notice. Except as set
forth in Schedule 3.16(b), there are no material controversies pending or
threatened between (i) CorpBank or any CorpBank Subsidiary and (ii) any of their
respective current or former employees. Except as disclosed in the CorpBank
Financial Statements at December 31, 1993 or 1994 or on Schedule 3.16(c), all
material sums due for employee compensation and benefits (including vacation and
sick leave ) have been duly and adequately paid or provided for and all deferred
compensation obligations are fully funded. Neither CorpBank nor any CorpBank
Subsidiary is a party to any collective bargaining agreement with respect to any
of their respective employees or any labor organization to which their employees
or any of them belong. Except as set forth on Schedule 3.16(c), no director,
officer or employee of CorpBank or any CorpBank Subsidiary is entitled to
receive any payment of any amount under any existing employment agreement,
severance plan or other benefit plan as a result of the consummation of any
transaction contemplated by this Agreement.
3.17 Brokers and Finders. Neither CorpBank nor any CorpBank Subsidiary is a
party to any agreement with any investment banker, broker or finder relating to
the transactions contemplated hereby, and neither the execution of this
Agreement nor the consummation of the transactions provided for or contemplated
herein will result in any liability to any such investment banker, broker or
finder. CorpBank agrees to indemnify and hold Bancorp and CUB harmless from and
against any and all claims, liabilities or obligations with respect to any fees,
commissions or expenses asserted by any person on the basis of any act,
statement, agreement or commitment alleged to have been made by CorpBank or any
CorpBank Subsidiaries or affiliates relating to the employment of any such
investment broker, broker or finder relating to the execution of this Agreement
or the consummation
25
27
of the transactions contemplated hereby.
3.18 Material Contracts. Except as set forth on Schedule 3.18 or excepted
below, neither CorpBank nor any CorpBank Subsidiary is a party to any material
contract, agreement, understanding, commitment or offer, whether written or
oral, which may become a binding obligation if accepted by another person
(collectively referred to as an "Understanding") including the following:
(a) Any loan, letter of credit, pledge, security agreement, lease
(excluding leases of real property listed on Schedule 3.11(a)), guarantee,
commitment or subordination agreement or other similar or related type of
Understanding as to which CorpBank or any CorpBank Subsidiary is a debtor,
pledgor, lessee or obligor;
(b) Any Understanding dealing with advertising, brokerage, licensing,
dealership, representative or agency relationships providing for an aggregate
annual payment in excess of $5,000;
(c) Any profit-sharing, group insurance, bonus, deferred compensation,
stock option, severance pay, pension, retirement or other employee benefit plan;
(d) Any written correspondent banking contracts;
(e) Any Understanding (other than this Agreement) for the sale of their
respective assets other than in the ordinary course of business or for the grant
of any preferential right to purchase any of their respective assets, properties
or rights, or any Understanding which requires the consent of any third party to
the transfer and assignment of any assets, properties or rights;
(f) Any Understanding which provides for an annual payment in excess of
$5,000 in the aggregate to purchase, sell or provide services, materials,
supplies, merchandise, facilities or equipment and which is not terminable
without penalty on not more than 30 days' notice;
(g) Any Understanding for any one capital expenditure or series of
capital expenditures which is in excess of $5,000 individually or $10,000 in the
aggregate;
(h) Any Understanding to make, renew or extend the term of a loan (not
fully disbursed or funded as of DECEMBER 31, 1994) to any person or to any
affiliate of such person, which undisbursed or unfunded amounts, when aggregated
with all outstanding indebtedness of such person or any affiliate of such person
to
26
28
CorpBank or any CorpBank Subsidiary, would exceed $25,000. The term "person" as
used herein and throughout this Agreement shall mean any individual,
corporation, association, partnership, joint venture or other entity or any
government or governmental department or agency. The term "affiliate of" or a
person "affiliated with" a specific person as used herein and throughout this
Agreement shall mean a person that directly or indirectly through one or more
intermediaries controls or is controlled by or under common control with the
persons specified;
(i) Any Understanding of any kind, except for deposit relationships,
with any director or officer of CorpBank or any CorpBank Subsidiary or with any
affiliate or any member of the immediate family of any such director or officer.
Such understandings shall include, but not be limited to, any director or
officer indemnification agreements. The term "immediate family" as used herein
and throughout this Agreement shall mean a person's spouse, parents, in-laws,
children and siblings;
(j) Any Understanding which would be terminable other than by CorpBank
or any CorpBank Subsidiary as a result of the consummation of the transactions
contemplated by this Agreement;
(k) Any contract of participation with any other bank in any loan
entered into by CorpBank or any CorpBank Subsidiary subsequent to December 31,
1994 in excess of $100,000 or any sales of assets of CorpBank or any CorpBank
Subsidiary with recourse of any kind to CorpBank or any CorpBank Subsidiary
except the sale of mortgage loans, servicing rights, repurchase or reverse
repurchase agreements, securities or other financial transactions in the
ordinary course of business;
(l) Any Understanding of any kind that binds CorpBank or any CorpBank
Subsidiary and contains a covenant not to compete or restricts in any other
manner the ability of CorpBank to engage in or conduct any activity; or
(m) Any Understanding not otherwise disclosed or excepted pursuant to
this Section 3.18 which is material to the consolidated financial condition,
results of operations, assets or business of CorpBank.
True and correct copies of all documents relating to the foregoing
Understandings are attached as Schedule 3.18.
3.19 Absence of Certain Changes. Except as set forth on Schedule 3.19, since
JUNE 30, 1995 the businesses of CorpBank and CorpBank Subsidiaries have been
27
29
conducted diligently and only in the ordinary course, in the same manner as
theretofore conducted, and there has not been any:
(a) Material adverse change in, or development which is likely to
result in a material adverse change in or affect, the business, prospects,
financial position, management, shareholders' equity or results of operations of
CorpBank on a consolidated basis;
(b) Damage, destruction or loss to property (whether or not covered by
insurance) individually or in the aggregate that materially and adversely
affects the financial condition, property, business or prospects of CorpBank on
a consolidated basis;
(c) Material contract, agreement, license or understanding which
CorpBank or any CorpBank Subsidiary has entered into or to which CorpBank or any
CorpBank Subsidiary is a party which has been terminated or amended other than
in the ordinary course of business;
(d) Capital expenditure exceeding $5,000 individually or $25,000 in the
aggregate;
(e) Labor trouble, dispute or problem of any character involving
employees having a material adverse effect upon the financial condition,
property, business or prospects of CorpBank on a consolidated basis;
(f) Change in accounting policies or practices;
(g) Material revaluation by CorpBank on a consolidated basis of any of
its assets except as required by GAAP;
(h) Increase in the salary schedule, compensation, rate, fees or
commissions, or the declaration, payment, commitment or obligation of any kind
directly or indirectly through the payment by CorpBank or any CorpBank
Subsidiary of a bonus or other additional salary, compensation, fee or
commission to any person, except for additional sums for increases paid in
accordance with employment contracts disclosed in Schedule 3.18 or paid in a
manner consistent with past practice in accordance with policies of CorpBank and
CorpBank Subsidiaries disclosed to Bancorp and CUB in writing prior to the date
hereof;
(i) Sale, assignment or transfer of any asset of CorpBank or any
CorpBank Subsidiary except in the usual and ordinary course of business;
28
30
(j) Mortgage, pledge or encumbrance of any asset of CorpBank or any
CorpBank Subsidiary other than liens for taxes not yet due, pledges or security
interests given in connection with the acceptance of repurchase agreements or
government deposits, and as set forth in Sections 3.10 and 3.11;
(k) Declaration, setting aside or payment of any interest or dividend
with respect to any CorpBank security;
(l) Waiver or release of any right or claim of CorpBank or any CorpBank
Subsidiary except in the usual and ordinary course of business; or
(m) Declaration, setting aside or payment of any dividend or
distribution with respect to CorpBank Stock, or the stock of any CorpBank
Subsidiary or the issuance of any shares of, or options to purchase, CorpBank
Stock, or any other securities of CorpBank or any securities of any CorpBank
Subsidiary, or the direct or indirect redemption, acquisitions, repurchase or
other acquisition of securities of CorpBank or any CorpBank subsidiary by
CorpBank or any CorpBank subsidiary.
3.20 Licenses and Permits. CorpBank and CorpBank Subsidiaries have all
licenses and permits which are necessary for the conduct of their respective
businesses and such licenses are in full force and effect. The properties and
operations of CorpBank and CorpBank Subsidiaries are and have been maintained
and conducted, in all material respects, in compliance with all applicable laws
and regulations.
3.21 Undisclosed Liabilities. Neither CorpBank nor any CorpBank Subsidiaries
have any liabilities or obligations, either accrued or contingent, which are
material to CorpBank on a consolidated basis and which have not been either (i)
reflected or disclosed in the CorpBank Financial Statements as of December 31,
1994 or as of June 30, 1995; (ii) incurred subsequent to December 31, 1994 in
the ordinary course of business; or (iii) disclosed in Schedule 3.21. CorpBank
knows of no basis for the assertion against it or any CorpBank Subsidiary of any
liability, obligation or claim (including, without limitation, that of any
regulatory authority or Environmental Law or Hazardous Substance) that might
result in or cause material adverse change in the consolidated financial
condition, results of operations or prospects of CorpBank which is not fairly
reflected in the CorpBank Financial Statements or otherwise disclosed in the
Schedules to this Agreement.
3.22 Loans and Investments. All loans and investments of CorpBank and
CorpBank Subsidiaries are in all material respects legal, enforceable and
authorized under applicable federal and state laws and regulations except as the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium or
29
31
other similar laws affecting the rights of creditors generally and by general
equitable principles. Except as set forth in Schedule 3.22, no loans or
investments held by CorpBank or CorpBank Subsidiaries are, at June 30, 1995 (i)
more than 60 days past due with respect to any scheduled payment of principal
or interest; (ii) classified as "loss," "doubtful," "substandard," "special
mention" or "criticized" by federal or state banking regulators; or (iii) on a
non-accrual status in accordance with CorpBank and CorpBank Subsidiaries' loan
review procedures. None of such investments are subject to any restriction,
contractual, statutory or other, that would materially impair the ability of
the entity holding such investment to dispose freely of any such investment at
any time, except restrictions on the public distribution or transfer of such
investments under the Securities Act of 1933, as amended ("Securities Act"),
and the regulations thereunder, or state securities laws.
(a) As to the loans made by CorpBank and each of them, except as set
forth on Schedule 3.22(a):
(i) CorpBank is the sole owner and holder of each such loan and
the documents related thereto;
(ii) CorpBank has full right and authority to sell, assign and
transfer such Loan, in the event such a sale is desired;
(iii) No participation has been sold in such loan;
(iv) Such loan complied, as of its date of origination with, or
is exempt from, applicable state or federal laws, regulations and other
requirements pertaining to usury, any and all other requirements of any federal,
state or local laws, including, without limitation, truth in lending, real
estate settlement procedures, equal credit opportunity or disclosure laws, all
laws applicable to such loans have been complied with since the date of origin
of such loan;
(v) The origination, servicing and collection practices used by
CorpBank with respect to each Loan have been in all respects legal, proper and
prudent and have met customary standards utilized by lenders in their relevant
lending business;
(vi) Each of the related note and other agreements executed in
connection therewith with regard to any loan, is the legal, valid and binding
obligation of the maker thereof, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting he enforcement of creditors'
rights generally, and by general principles of equity, and there is no offset,
defense, counterclaim or right
30
32
to rescission with respect to the note, any guaranty, pledge or other
agreements;
(vii) The loan or any of the terms or conditions thereof have not
been waived, modified, altered, satisfied, canceled or subordinated in any
respect or rescinded and no collateral for the loan has been released in whole
or in any part, except as set forth in the written loan records of CorpBank;
(viii) There is no default, breach, violation or event of
acceleration existing under the Loan or the related documents or note, and no
event (other than payments due but not yet delinquent) has occurred which, with
the passage of time or with notice and the expiration of any grace or cure
period, would, constitute a default, breach, violation or event of acceleration
which is not set forth in the books and records of CorpBank; CorpBank has not
waived any material default, breach, violation or event of acceleration of any
of the foregoing, except as set forth in the books and records of CorpBank; and
(ix) The related note and other agreements contain customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization of the benefits of any security or
collateral.
3.23 Employee Benefit Plans.
(a) Neither CorpBank nor any CorpBank Subsidiary has, or contributes
to, any pension, profit-sharing, option, other incentive plan, or any other type
of Employee Benefit Plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974 ("ERISA"), or has any obligation or customary
arrangement with employees for bonuses, incentive compensation, vacations,
severance pay, insurance, or other benefits, except as set forth in Schedule
3.23(a). Attached as Schedule 3.23(b) are true and correct copies signed by the
Chief Executive Officer and Chief Financial Officer of CorpBank of all documents
evidencing plans, obligations or arrangements referred to in Schedule 3.23(a)
(or true and correct written summaries as initialed of such plans, obligations
or arrangements to the extent not evidenced by documents) and true and correct
copies of all documents evidencing trusts related to any such plans. The
documents attached to Schedule 3.23(a) shall include: (i) the Form 5500 which
was filed in each of the three most recent plan years or such shorter period of
time during which each of the plans was in existence, including without
limitation all schedules thereto; (ii) the most recent determination letter from
the Internal Revenue Service; (iii) the statement of assets and liabilities as
of the most recent valuation date for each of the defined benefit pension plans;
(iv) the most recent plan document, together with all amendments; (v) the most
recent summary plan description for each plan, to the extent it is required by
law, and (vi) the most
31
33
recent trust agreement for each plan, to the extent required by law, together
with all amendments.
(b) If any Employee Benefit Plan of CorpBank or any CorpBank Subsidiary
were to be terminated not later than the day prior to the date of the Closing,
(i) no liability under Title IV of ERISA would be incurred by CorpBank or any
CorpBank Subsidiary and (ii) all benefits accrued to such day prior to the
Closing Date (whether or not vested) under any defined benefit plan would be
fully funded in accordance with the assumptions contained in the regulations of
the Pension Benefit Guaranty Corporation governing the funding of terminated
defined benefit plans. All accrued liabilities (for contributions or otherwise)
of CorpBank or any CorpBank Subsidiary as of the Closing Date to each Employee
Benefit Plan and with respect to each obligation to or customary arrangement
with employees for bonuses, incentive compensation, vacations, severance pay,
insurance or other benefits have been paid and no payment to any such Employee
Benefit Plan or with respect to any such obligation or arrangement since
December 31, 1994 has been disproportionately large compared to prior payments.
For purposes of the preceding sentence, accrued liabilities shall include a pro
rata contribution to each Employee Benefit Plan or with respect to each such
obligation or arrangement for that portion of a plan year or other applicable
period which precedes the Closing Date, and accrued liabilities for any portion
of a plan year or other applicable period shall be determined by multiplying the
liability for the entire such year or period by a fraction, the numerator of
which is the number of days preceding the date of the Closing Date in such year
or period and the denominator of which is the number of days in such year or
period, as the case may be.
(c) There has been no violation of the reporting and disclosure
requirements imposed either under ERISA or the Code for which a penalty has been
or may be imposed with respect to any such Employee Benefit Plan of CorpBank or
any CorpBank Subsidiary. No such Employee Benefit Plan or related trust has any
liability of any nature, accrued or contingent, including without limitation
liabilities for federal, state, local or foreign taxes, other than for routine
payments to be made in due course to participants and beneficiaries, except as
set forth in Schedule 3.23(c). There is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal) or investigation pending,
or to the knowledge of CorpBank or any CorpBank Subsidiary, threatened (or any
basis therefor known to CorpBank or any CorpBank Subsidiary) with respect to any
such Employee Benefit Plan or related trust or with respect to any fiduciary, or
to the knowledge of CorpBank or any CorpBank Subsidiary, administrator or
sponsor (in its capacity as such) of any such Employee Benefit Plan. No such
Employee Benefit Plan or related trust and no obligation or arrangement is in
violation of, or in default
32
34
with respect to, any law, rule, regulation, order, judgment or decree nor is
CorpBank or any CorpBank Subsidiary or any such Employee Benefit Plan or any
related trust required to take any action in order to avoid violation or
default. No event has occurred or (to the knowledge of CorpBank and CorpBank
Subsidiaries) is threatened or about to occur which would constitute a
prohibited transaction under Section 406 of ERISA.
(d) The Internal Revenue Service has issued determinative letters to
the effect that each Pension Plan (as defined in Section 3(2) of ERISA)
maintained for the employees of CorpBank or any CorpBank Subsidiary that is
intended by CorpBank to be a qualified plan under Section 401(a) of the Code and
any related trust is an exempt trust under Section 501 of the Code. and nothing
has occurred that would jeopardize the tax qualified status of such Pension Plan
or the tax exempt status of its associated trust. No event has occurred that
will subject any such Pension Plan to a material amount of tax under Section 511
of the code. Any such Pension Plan which has engaged in a merger, consolidation
with any other plan or transfer of assets or liabilities from any other plan,
has done so incompliance with applicable law in all material respects. Each such
Pension Plan has been operated in accordance with its terms. To the best
knowledge of CorpBank and CorpBank Subsidiaries, no investigation or review by
the Internal Revenue Service is currently pending or is contemplated in which
the Internal Revenue Service has asserted or may assert that any such Pension
Plan which is intended by CorpBank to be qualified is not qualified under
Section 401(a) of the Code or that any related trust is not exempt under Section
501 of the Code. No assessment of any federal income taxes has been made or (to
the knowledge of CorpBank and CorpBank Subsidiaries) is contemplated against any
CorpBank- or any CorpBank Subsidiary-related trust or any Pension Plan or the
basis of a failure of such qualification or exemption. Form 5500's have been
timely filed with respect to all such Pension Plans to the extent required under
applicable law. No event has occurred or (to the knowledge of CorpBank and
CorpBank Subsidiaries) is threatened or about to occur which would constitute a
reportable event within the meaning of Section 4043(b) of ERISA. No notice of
termination has been filed by the plan administrator pursuant to Section 4041 of
ERISA or issued by the Pension Benefit Guaranty Corporation pursuant to Section
4042 of ERISA with respect to any such Pension Plan.
(e) Neither CorpBank nor any CorpBank Subsidiary contributes to any
multi-employer Pension Plan within the meaning of Section 3(37) of ERISA.
(f) Each Pension Plan maintained by CorpBank or to which CorpBank
contributes has been amended to comply with the requirements of the Tax Reform
Act of 1986 and later legislation on a timely basis and has been submitted or
will be
33
35
submitted to the Internal Revenue Service for a determination on such Pension
Plan's qualifies status prior to the expiration of the remedial amendment
period set forth under Section 401(b) of the Code.
(g) Neither CorpBank nor any CorpBank subsidiary sponsor or participate
in, and has not sponsored or participated in, any employee benefit pension plan
to which Section 4021 of ERISA applies that would create a material amount of
liability to CorpBank or any CorpBank Subsidiary under Title IV of ERISA.
(h) All group health plans of CorpBank have been operated in compliance
with the group health plan continuation coverage requirements of Section 4980B
of the Code in all material respects, to the extent such requirements are
applicable.
(i) Except as referred to on Schedule 3.23(a) CorpBank does not
maintain any employee benefit plan or employment agreement pursuant to which any
material benefit or other payment will be required to be made by CorpBank or
pursuant to which any other material benefit will accrue on or vest in any
director, officer or employee of CorpBank, in either case solely as a result of
consummation of the transactions contemplated in this Agreement.
3.24 Loan Servicing Portfolio. Except as set forth on Schedule 3.24, neither
CorpBank nor any CorpBank Subsidiary services loans owned in whole or in part by
other persons.
3.25 Filings. Since January 1, 1995, CorpBank and each CorpBank Subsidiary
have filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that were required to be
filed with (a) the Superintendent (b) the Federal Reserve Bank of San Francisco
("Fed") or any Federal Reserve Bank, (c) the FDIC, and (d) any other applicable
federal, foreign, state or local governmental or regulatory authorities. Since
January 1, 1993, CorpBank and each CorpBank Subsidiary have filed all required
call reports of condition and income with all appropriate bank regulatory
agencies. All such reports, registrations and filings are collectively referred
to as the "CorpBank Regulatory Filings." Upon request by CUB and subject to
applicable legal restrictions, CorpBank will promptly provide to CUB all
CorpBank Regulatory Filings filed by CorpBank or any CorpBank Subsidiary since
January 1, 1993 together with copies of any orders or other administrative
actions taken in connection with such CorpBank Regulatory Filings. As of their
respective dates, each of the past CorpBank Regulatory Filings (a) was true and
complete in all material respects (or was amended so as to be so promptly
following discovery of any discrepancy); and (b) complied in all material
respects with all of the statutes, rules and
34
36
regulations enforced or promulgated by the governmental or regulatory authority
with which it was filed (or was amended so as to be so promptly following
discovery of any such noncompliance) and none contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Any financial
statement contained in any of such Filings that was intended to present the
financial position of the entities or entity to which it related fairly
presented the financial position of such entities or entity and was prepared in
accordance with GAAP or applicable banking regulations consistently applied
except as stated therein during the periods involved.
3.26 Powers of Attorney. No material power of attorney or similar
authorization given by CorpBank or any CorpBank Subsidiary is presently in
effect or outstanding other than powers of attorney given in the ordinary course
of business with respect to routine matters.
3.27 Accuracy and Current Status of Information Furnished. The
representations and warranties made by CorpBank and CorpBank Subsidiaries hereby
or in the Schedules attached hereto and or the schedule previously delivered as
of August 1, 1995 (which are incorporated herein by reference and which fully
disclose any exceptions to CorpBank warranties for the period from December 31,
1994 to August 1, 1995, as if required and set forth herein), contain no
statements of fact which are untrue or misleading, or omit any material fact
which is necessary under the circumstances to prevent the statements contained
herein or in such Schedules from being misleading. CorpBank and CorpBank
Subsidiaries hereby covenant that they shall, not later than the 15th day of
each calendar month between the date hereof and the Closing Date, amend or
supplement the Schedules prepared and delivered pursuant to this Article 3 to
ensure that the information set forth in such Schedules accurately reflects the
then-current status of CorpBank and all CorpBank Subsidiaries. CorpBank and
CorpBank Subsidiaries shall further amend or supplement the Schedules as of the
Closing Date if necessary to reflect any additional changes in the status of
CorpBank or any CorpBank Subsidiary.
3.28 Effective Date of Representations, Warranties, Covenants and
Agreements. Each representation, warranty, covenant and agreement of CorpBank
and CorpBank Subsidiaries set forth in this Agreement shall be deemed to be made
on and as of the date hereof (unless otherwise set forth in the Schedules
hereto) and as of the Closing Date. The representations, warranties, covenants
and agreements of CorpBank set forth in the Schedules previously delivered as of
August 1, 1995, shall be deemed to made on and as of the date hereof (unless
otherwise set forth in the Schedules hereto) and of the Closing Date.
35
37
3.29 Sale of Real Estate Development Subsidiary. The sale of Corporate
Investment Company by CorpBank was a sale of all the outstanding shares and
interests held by CorpBank in such entity. Such sale was without recourse and
all representations or warranties made by CorpBank in connection with such
transaction have been terminated. CorpBank has no indemnity obligations to any
party for breaches of representations, warranties, covenants or any agreements
in connection with such sale.
3.30 Information furnished by CorpBank and CorpBank Subsidiaries. No
information relating to CorpBank or CorpBank Subsidiaries furnished to CUB or
Bancorp for the Registration Statement referred to in Section 5.11, including al
amendments and supplements thereto, will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading. In the event
of any occurrence prior to the effective date of the Registration Statement
which would cause any material information relating to CorpBank or CorpBank
subsidiaries to be untrue or misleading, CorpBank shall so notify CUB and
Bancorp and shall furnish CUB and Bancorp with such information as may be
necessary to correct any such deficiencies.
4. REPRESENTATIONS AND WARRANTIES OF BANCORP AND CUB
Bancorp and CUB represent and warrant to CorpBank as follows (exceptions to
the representations and warranties herein shall be listed on schedules as listed
below and shall be necessary only to the extent of changes from those schedules
previously delivered to CorpBank by Bancorp and CUB):
4.1 Organization, Standing and Power. Bancorp is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and has all requisite corporate power and authority to own, lease and
operate its properties and assets and to carry on its business as presently
conducted. CUB is a national banking association, duly organized and validly
existing and in good standing under the laws of the United States of America and
has all requisite corporate power and authority to own, lease and operate its
properties and assets and to carry on its business as presently conducted.
4.2 Bancorp Capital Stock. The authorized capital stock of Bancorp at
December 31, 1994 consisted of 20,000,000 shares of Bancorp Stock, without par
value ("Bancorp Common Stock"), of which there were 4,467,318 issued and
outstanding, and 10,000,000 shares of preferred stock, without par value
("Bancorp Preferred Stock"), of which there were none issued and outstanding.
All of the outstanding shares of Bancorp Stock are duly authorized, validly
issued and are fully
36
38
paid and nonassessable. When issued, Bancorp Stock to be issued pursuant to
the Merger will have been duly and validly authorized, issued and outstanding
and will be fully paid and nonassessable.
4.3 Subsidiaries. With the exception of CUB, Bancorp does not own, directly
or indirectly (except as pledgee pursuant to loans which are not in default),
any equity position or other voting interest in any corporation, partnership,
joint venture or other entity. Bancorp owns of record and beneficially 100% of
each class of the outstanding capital stock of CUB free and clear of any lien,
encumbrance or security interest and of any adverse claim of any kind.
4.4 California United Bank, National Association. CUB is authorized by the
OCC to conduct a general banking business. CUB is a member of the Federal
Reserve System. CUB's deposits are insured by the Federal Deposit Insurance
Corporation ("FDIC") in the manner and to the full extent provided by law. The
authorized capital stock of CUB at December 31, 1994, consisted of 540,000
shares of CUB Common Stock, $5.00 par value, of which there were 472,973 issued
and outstanding. All of the outstanding shares of CUB Stock are validly issued,
fully paid and nonassessable, except as provided for in Section 55 of Title 12
of the United States Code.
4.5 Bancorp Reports. Bancorp has previously furnished to CorpBank true and
complete copies of its (i) Annual Report on Form 10-K for the years ended
December 31, 1994, 1993 and 1992, (ii) Quarterly Reports on Form 10-Q for the
calendar quarters ended March 31, and June 30, 1995, (iii) proxy statements
relating to all meetings of shareholders (whether special or annual) during 1994
and 1995, and (iv) all other reports, registration statements or filings made by
Bancorp with the SEC since January 1, 1993. Such reports, registration
statements and other filings, together with any amendments thereof, are
collectively referred to as the "Bancorp SEC Filings". As of their respective
dates, the Bancorp SEC Filings were (or will be when filed) in compliance, in
all material respects, with the requirements of their respective forms and were
(or will be when filed) true and complete in all material respects and did not
(or will not when filed) contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited financial statements and the unaudited interim
financial statements included in the Bancorp SEC Filings were (or will be)
prepared in accordance with GAAP and present (or will present) fairly the
consolidated financial position of Bancorp and its subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flow for the
periods then ended, subject, in the case of the unaudited interim financial
statements, to normal recurring adjustments. Neither the financial statements
37
39
referred to above nor any report (including, without limitation, Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K),
prospectus, or any amendment or supplement thereto, filed, or to be filed,
prior to the Effective Time of the Merger with the SEC by or on behalf of
Bancorp contained (or will contain when furnished or filed) any untrue
statement of a material fact or omitted (or will omit when furnished or filed)
to state a material fact necessary in order to make the statements contained
therein not misleading.
4.6 Bancorp's and Bancorp Subsidiaries' Authority. The execution and
delivery by Bancorp and CUB of this Agreement and the Agreement of Merger and,
subject to the requisite approval of the shareholder of CUB, the consummation of
the transactions contemplated hereunder or thereunder, have been duly and
validly authorized by all necessary corporate action on the part of Bancorp and
CUB, and this Agreement is, and the Agreement of Merger will be upon due
certification, execution, acknowledgment and filing thereof in accordance with
applicable law, a valid and binding obligation of Bancorp and CUB, enforceable
in accordance with their terms, except as the enforceability hereof or thereof
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting the rights of creditors generally and by general equitable principles.
Except as set forth in Schedule 4.6, neither the execution and delivery by
Bancorp and CUB of this Agreement or the Agreement of Merger, nor the
consummation of the transactions contemplated herein or therein, nor compliance
by Bancorp and CUB with the provisions hereof or thereof, will (i) conflict with
or result in a breach of any provision of their respective Articles of
Incorporation, Articles of Association or Bylaws; (ii) constitute a breach of,
or result in a default (or give rise to any rights of termination, cancellation
or acceleration, or any right to acquire any securities or assets) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
franchise, license, permit, agreement or other instrument or obligation to which
Bancorp CUB is a party, or by which Bancorp or CUB or any of their respective
properties or assets are bound, except where such breach or default would not
have a material adverse effect on the consolidated financial condition, results
of operations or prospects of Bancorp; (iii) constitute a breach of, or result
in a default (or give rise to any rights of termination, acceleration or
cancellation, or any right to acquire any securities or assets) under any
material agreement to which Bancorp or CUB or any of their respective properties
or assets are bound; or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Bancorp or CUB. No consent or approval
of, notice to or filing with any governmental authority having jurisdiction over
any aspect of the business or assets of Bancorp or CUB, and except as set forth
in Schedule 4.6 no consent or approval of or notice to or filing with any other
person or entity, is required in connection with the execution and delivery by
Bancorp and CUB of this Agreement or the Agreement of Merger or the consummation
by Bancorp and CUB of the
38
40
transactions contemplated hereunder or thereunder, except approval of the
Merger by the shareholder of CUB, and such approvals as may be required by the
OCC pursuant to Sections 215a and 1828(c) of Title 12 of the United States Code
or any successor statutes ("Merger Statutes") with respect to the Bank Merger;
such approvals as may be required by the Federal Reserve Board with respect to
the transactions contemplated herein and in the Merger Agreement, such
approvals by the Superintendent as may be required and the declaration by the
SEC and state securities law regulatory authorities that the Registration
Statement (as defined in Section 5.11) is effective and that Bancorp Stock to
be issued in connection with the Merger is qualified under applicable state
securities laws.
4.7 Insurance. Except as set forth in Schedule 4.7, Bancorp and CUB have,
and at all times within two years of the date of this Agreement have had, in
full force and effect policies of insurance and bonds (including, without
limitation, bankers' blanket bond, fidelity coverage, director and officer
liability, fire, third party liability, use and occupancy) with respect to their
respective assets and businesses and against casualties and contingencies which
in the judgment of Bancorp and CUB are adequate and appropriate to cover their
respective assets and businesses and are in amounts and coverages customarily
provided for by similar institutions. Set forth in Schedule 4.7 is a schedule of
all policies of insurance and bonds (other than title or credit insurance)
carried and owned by Bancorp and CUB, showing the name of the insurance or
bonding company, a summary of the coverage, the amounts, the deductible feature,
the annual premiums and the expiration dates. Neither Bancorp nor CUB is in
default under any such policy of insurance or bond such that it could be
canceled and all material claims thereunder have been filed in timely fashion.
Bancorp and CUB have filed claims with or given notice of claim to their
respective insurers or bonding companies with respect to all material matters
and occurrences for which they believe they have coverage.
4.8 Registration Statement. The Registration Statement required pursuant to
Section 5.11 and any other documents to be filed with the OCC, the SEC or any
regulatory authority in connection with the transactions contemplated by this
Agreement with respect to all information set forth therein relating to Bancorp
and CUB, the Merger and in respect to this Agreement and the Agreement of Merger
will, at the respective times such documents are filed or become effective, and
with respect to the Proxy Statement, at the time of mailing to shareholders, and
at the time of the shareholders' meeting:
(a) comply in all material respects with the provisions of all
applicable regulations issued by the SEC or the OCC pursuant to the Securities
Exchange Act of 1934, as amended ("1934 Act"), and all other applicable laws and
regulations;
39
41
and
(b) do not contain any statement which, at the time and in light of the
circumstances under which it is made, is false or misleading with respect to any
material fact or omit any material fact necessary in order to make the
statements therein not false or misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of a proxy for the
same meeting or subject matter which have become false or misleading.
4.9 Books and Records.
(a) The minute books of Bancorp and CUB contain (i) true, accurate and
complete records of all meetings and actions taken by the respective Boards of
Directors, Board committees and shareholders of Bancorp and CUB and (ii) true
and complete copies of their respective charter documents and bylaws and all
amendments thereto. The books and records of Bancorp and CUB accurately reflect
in all material aspects their respective businesses and affairs.
(b) Bancorp and CUB have records which accurately and validly reflect,
in all material respects, their respective transactions and accounting controls
sufficient to insure that such transactions are (i) in all material respects,
executed in accordance with management's general or specific authorization, and
(ii) recorded in conformity with GAAP; such records, to the extent they contain
important information pertaining to Bancorp or CUB which is not easily and
readily available elsewhere, have been duplicated, and such duplicates are
stored safely and securely pursuant to procedures and techniques reasonably
adequate for companies of the sizes of Bancorp and CUB and in the respective
businesses in which Bancorp and CUB are engaged; and the data processing
equipment, data transmission equipment, related peripheral equipment and
software used by Bancorp and CUB in the operations of their respective
businesses (including any disaster recovery facility) to generate and retrieve
such records are reasonably adequate for companies of the sizes of Bancorp and
CUB and in the respective businesses in which Bancorp and CUB are engaged.
4.10 Title to Assets. Bancorp and CUB have good and marketable title to all
material properties and assets, other than real property, owned or purported to
be owned by Bancorp and CUB free and clear of all mortgages, liens,
encumbrances, pledges or charges of any kind or nature, except for (i) liens for
current taxes not yet due and payable; (ii) liens incurred in the ordinary
course of business and which do not materially impair the business of Bancorp or
CUB or materially detract from the usefulness of the properties subject thereto;
or (iii) such liens as are disclosed in the Bancorp Financial Statements of
December 31, 1994 or in Schedule 4.10.
40
42
4.11 Real Estate. Schedule 4.11(a) contains a list of all real property,
including leaseholds, owned by Bancorp and CUB. True, correct and complete
copies of all such leases are included in Schedule 4.11(a). Schedule 4.11(b)
contains, among other things, an accurate summary of all material commitments
which Bancorp or CUB has to improve real estate owned by it. Schedule 4.11(c)
contains a list of other real estate owned ("OREO") by Bancorp and CUB. Bancorp
and CUB have good and marketable title to all the real property and valid
leasehold interests in the leaseholds described in Schedules 4.11(a), (b) and
(c), free and clear of all mortgages, covenants, conditions, restrictions,
easements, liens, security interests, charges, claims, assessments and
encumbrances, except for (i) rights of lessors, co-lessees or sublessees in such
matters which are reflected in the leases; (ii) current taxes not yet due and
payable; (iii) such as are described in any title policies delivered pursuant to
this Section 4.11; (iv) such imperfections of title and encumbrances, if any, as
do not in the aggregate materially and adversely detract from the value of or
materially and adversely interfere with the present use of such property; and
(v) as described in Schedule 4.11(d). True, correct and complete copies of title
policies for properties described in Schedules 4.11(a) and (c) as owned by
Bancorp or any Bancorp Subsidiary are included therein. To the best knowledge of
Bancorp and CUB, the activities of Bancorp and CUB with respect to all real
property and leaseholds owned by any of them for use in connection with their
respective operations are in all material respects permitted and authorized by
applicable zoning laws, ordinances and regulations and all laws and regulations
of any governmental department or agency relative to environmental matters
affecting such properties, except as otherwise disclosed in Schedule 4.11(e).
Bancorp and CUB enjoy peaceful and undisturbed possession under all material
leases to which they are parties, and all of such leases are valid and in full
force and effect.
4.12 Legal Proceedings; Agreements with Banking Authorities.
(a) Except as set forth on Schedule 4.12(a), there is no private or
governmental suit, claim, action, arbitration or proceeding pending, nor any
private or governmental suit, claim, action, arbitration or proceeding to
Bancorp's or CUB's knowledge threatened, nor does Bancorp or CUB know of any
facts or circumstances which would form a basis for any such suit, claim,
action, arbitration or proceeding against Bancorp or CUB or against any of their
respective directors, officers or employees relating to the performance of their
duties in such capacities or against or affecting any properties of Bancorp or
CUB which individually, or in the aggregate, could have a material adverse
effect upon the consolidated financial condition, business or results of
operations of Bancorp or the transactions contemplated hereunder. Also, except
as provided on Schedule 4.12(a), there are no judgments, decrees, stipulations
or orders against Bancorp or CUB enjoining it or
41
43
any of its respective directors, officers or employees in respect of, or the
effect of which is to prohibit, any business practice or the acquisition of any
property or the conduct of business in any area. Schedule 4.12(b) contains
summary reports of Bancorp's and CUB' attorneys on all pending litigation to
which Bancorp or CUB is a party and which names Bancorp or CUB as a defendant
or cross-defendant. Schedule 4.12(c) contains a true, correct and complete
list of all pending litigation in which Bancorp or CUB is a named party.
(b) Neither Bancorp nor CUB is a party to any agreement or memorandum
of understanding with any federal, state or foreign governmental or regulatory
authority charged with the supervision or regulation of banks or bank holding
companies or engaged in the insurance of bank deposits that restricts the
conduct of its business, or in any manner relates to its capital adequacy, its
credit or investment policies or its management.
4.13 Taxes. Except as set forth on Schedule 4.13, (i) all federal income tax
returns, all state tax returns, and all real and personal property, sales, use
and other tax returns and reports that are required by law to be filed by or on
behalf of Bancorp or CUB have been duly prepared and filed; (ii) all taxes shown
to be due and payable by Bancorp or CUB on those returns, or which are otherwise
due and payable, whether disputed or not, have been paid or the liability
therefor is reflected in the Bancorp Financial Statements; (iii) Bancorp and CUB
have paid or deposited all taxes, tax penalties or interest owed by them or
which they are obligated to withhold and deposit from amounts paid to any
employee, creditor, depositor or third party; and (iv) Bancorp and CUB have
complied with all reporting requirements of the Internal Revenue Code of 1986 or
its predecessor statutes as applicable (the "Code") including, but not limited
to, obtaining taxpayer identification numbers. The current status of any audits
of those returns by the Internal Revenue Service or other applicable agencies is
as set forth in Schedule 4.13. There are no agreements by Bancorp or CUB waiving
a statute of limitations or extending the time for assessment or payment of any
taxes payable by any of them.
4.14 Compliance with Laws and Regulations.
(a) Except as set forth on Schedule 4.14, neither Bancorp nor CUB is in
default under or in breach of any law, ordinance, rule, regulation, order,
judgment or decree applicable to it promulgated by any governmental agency
having authority over it, where such default or breach would have a material
adverse effect on the consolidated financial condition, results of operations,
business or prospects of Bancorp.
42
44
(b) Bancorp and CUB have conducted their businesses in accordance with
all applicable federal, foreign, state and local laws, regulations and orders
including, without limitation, disclosure, usury, equal credit opportunity,
equal employment, fair credit reporting, antitrust, licensing and other laws,
regulations and orders, and the forms, procedures and practices used by Bancorp
and CUB are in compliance with such laws, regulations and orders except for such
violations or non-compliance as will not have a material adverse effect on the
consolidated financial condition, results of operations, business or prospects
of Bancorp.
4.15 Performance of Obligations. Except as set forth on Schedule 4.15,
Bancorp and CUB have performed in all respects all of the obligations required
to be performed by them to date and are not in default under or in breach of any
term or provision of any covenant, contract, lease, indenture or any other
covenant to which Bancorp or CUB is a party or is subject or is otherwise bound,
and no event has occurred which, with the giving of notice or the passage of
time or both, would constitute such default or breach, where such default or
breach would have a material adverse effect on the consolidated financial
condition, results of operations, business or prospects of Bancorp. No party
with whom Bancorp or CUB has an agreement which is material to the consolidated
financial condition, results of operations or prospects of Bancorp is in default
thereunder, except for certain loans made by the Bank which have been identified
to Bancorp and CUB.
4.16 Employees. Except as set forth in Schedule 4.16(a), there are no
understandings for the employment of any officer or employee of Bancorp or CUB
which are not terminable by Bancorp or CUB without liability on not more than 30
days' notice. Except as set forth in Schedule 4.16(b), there are no material
controversies pending or threatened between (i) Bancorp or CUB and (ii) any of
their respective employees. Except as disclosed in the Bancorp Financial
Statements at December 31, 1994 or on Schedule 4.16(c), all material sums due
for employee compensation and benefits have been duly and adequately paid or
provided for and all deferred compensation obligations are fully funded. Neither
Bancorp nor CUB is a party to any collective bargaining agreement with respect
to any of their respective employees or any labor organization to which their
employees or any of them belong. Except as set forth on Schedule 4.16(c), no
director, officer or employee of Bancorp or CUB is entitled to receive any
payment of any amount under any existing employment agreement, severance plan or
other benefit plan as a result of the consummation of any transaction
contemplated by this Agreement.
4.17 Brokers and Finders. Neither Bancorp nor CUB is a party to any
agreement with any investment banker, broker or finder relating to the
transactions contemplated hereby, and neither the execution of this Agreement
nor the consummation of the transactions provided for or contemplated herein
will result
43
45
in any liability to any such investment banker, broker or finder. Bancorp
agrees to indemnify and hold CorpBank harmless from and against any and all
claims, liabilities or obligations with respect to any fees, commissions or
expenses asserted by any person on the basis of any act, statement, agreement
or commitment alleged to have been made by Bancorp or CUB relating to the
employment of any such investment broker, broker or finder relating to the
execution of this Agreement or the consummation of the transactions
contemplated hereby.
4.18 Material Contracts. Except as set forth on Schedule 4.18 or excepted
below, neither Bancorp nor CUB is a party to any material contract, agreement,
understanding, commitment or offer, whether written or oral, which may become a
binding obligation if accepted by another person (collectively referred to as an
"Understanding") including the following:
(a) Any loan, letter of credit, pledge, security agreement, lease
(excluding transactions in the ordinary course of the banking business and
leases of real property listed on Schedule 4.11(a)), guarantee, commitment or
subordination agreement or other similar or related type of Understanding as to
which Bancorp or CUB is a debtor, pledgor, lessee or obligor;
(b) Any Understanding dealing with advertising, brokerage, licensing,
dealership, representative or agency relationships providing for an aggregate
annual payment in excess of $25,000;
(c) Any profit-sharing, group insurance, bonus, deferred compensation,
stock option, severance pay, pension, retirement or other employee benefit plan;
(d) Any written correspondent banking contracts;
(e) Any Understanding (other than this Agreement) for the sale of their
respective assets other than in the ordinary course of business or for the grant
of any preferential right to purchase any of their respective assets, properties
or rights, or any Understanding which requires the consent of any third party to
the transfer and assignment of any assets, properties or rights. For purposes of
this provisions sales of CUB's mortgage servicing portfolio shall be considered
to be in the ordinary course of business;
(f) Any Understanding which provides for an annual payment in excess of
$250,000 in the aggregate to purchase, sell or provide services, materials,
supplies, merchandise, facilities or equipment and which is not terminable
without penalty on not more than 30 days' notice;
44
46
(g) Any Understanding for any one capital expenditure or series of
capital expenditures which is in excess of $200,000 individually or $500,000 in
the aggregate;
(h) Any Understanding to make, renew or extend the term of a loan (not
fully disbursed or funded as of December 31, 1994) to any person or to any
affiliate of such person, which undisbursed or unfunded amounts, when aggregated
with all outstanding indebtedness of such person or any affiliate of such person
to Bancorp or CUB, would exceed $2,500,000. The term "person" as used herein and
throughout this Agreement shall mean any individual, corporation, association,
partnership, joint venture or other entity or any government or governmental
department or agency. The term "affiliate of" or a person "affiliated with" a
specific person as used herein and throughout this Agreement shall mean a person
that directly or indirectly through one or more intermediaries controls or is
controlled by or under common control with the persons specified;
(i) Any Understanding of any kind, except for deposit relationships,
and overdraft lines of credit or credit cards not exceeding $25,000
individually, with any director or officer of Bancorp or CUB or with any
affiliate or any member of the immediate family of any such director or officer.
The term "immediate family" as used herein and throughout this Agreement shall
mean a person's spouse, parents, in-laws, children and siblings;
(j) Any Understanding which would be terminable other than by Bancorp
or CUB as a result of the consummation of the transactions contemplated by this
Agreement;
(k) Any contract of participation with any other bank in any loan
entered into by Bancorp or CUB subsequent to December 31, 1994 in excess of
$2,500,000 or any sales of assets of Bancorp or CUB with recourse of any kind to
Bancorp or CUB except the sale of mortgage loans, servicing rights, repurchase
or reverse repurchase agreements, securities or other financial transactions in
the ordinary course of business;
(l) Any Understanding of any kind that binds Bancorp or CUB and
contains a covenant not to compete; or
(m) Any Understanding not otherwise disclosed or excepted pursuant to
this Section 4.18 which is material to the consolidated financial condition,
results of operations, assets or business of Bancorp.
True and correct copies of all documents relating to the foregoing Under-
45
47
standings are attached as Schedule 4.18.
4.19 Absence of Certain Changes. Except as set forth on Schedule 4.19, since
December 31, 1994 the businesses of Bancorp and CUB have been conducted
diligently and only in the ordinary course, in the same manner as theretofore
conducted, and there has not been any:
(a) Material adverse change in, or development which is likely to
result in a material adverse change in or affect, the business, prospects,
financial position, management, shareholders' equity or results of operations of
Bancorp on a consolidated basis;
(b) Damage, destruction or loss to property (whether or not covered by
insurance) individually or in the aggregate that materially and adversely
affects the financial condition, property, business or prospects of Bancorp on a
consolidated basis;
(c) Material contract, agreement, license or understanding which
Bancorp or CUB has entered into or to which Bancorp or CUB is a party which has
been terminated or amended other than in the ordinary course of business;
(d) Capital expenditure exceeding $200,000 individually or $500,000 in
the aggregate;
(e) Labor trouble, dispute or problem of any character involving
employees having a material adverse effect upon the financial condition,
property, business or prospects of Bancorp on a consolidated basis;
(f) Change in accounting policies or practices;
(g) Material revaluation by Bancorp on a consolidated basis of any of
its assets except as required by GAAP;
(h) Increase in the salary schedule, compensation, rate, fees or
commissions, or the declaration, payment, commitment or obligation of any kind
directly or indirectly through the payment by Bancorp or CUB of a bonus or other
additional salary, compensation, fee or commission to any person, except for
additional sums for increases paid in accordance with employment contracts
disclosed in Schedule 4.18 or paid in the ordinary course of business in a
manner consistent with past practice (which provides for annual performance
reviews during the first quarter of each year and which may result in salary
increases and/or bonuses at such time);
46
48
(i) Sale, assignment or transfer of any asset of Bancorp or CUB except
in the usual and ordinary course of business;
(j) Mortgage, pledge or encumbrance of any asset of Bancorp or CUB
other than liens for taxes not yet due, pledges or security interests given in
connection with the acceptance of repurchase agreements or government deposits;
(k) Waiver or release of any right or claim of Bancorp or CUB except in
the usual and ordinary course of business; or
(l) Declaration, setting aside or payment of any dividend or
distribution with respect to Bancorp Stock, or the stock of Bancorp or the
issuance of any shares of, or options to purchase, Bancorp Stock, or any other
securities of Bancorp or any securities of Bancorp with the exception of not
more than $.02 per share dividend per quarter, $90,000 dividends to the
shareholder of CUB per quarter and the issuance of stock options to employees
and directors and set forth in respective stock option plans and in accordance
with the ordinary conduct of their respective businesses.
4.20 Licenses and Permits. Bancorp and CUB have all licenses and permits
which are necessary for the conduct of their respective businesses and such
licenses are in full force and effect. The properties and operations of Bancorp
and CUB are and have been maintained and conducted, in all material respects, in
compliance with all applicable laws and regulations.
4.21 Undisclosed Liabilities. Neither Bancorp nor CUB have any liabilities
or obligations, either accrued or contingent, which are material to Bancorp on a
consolidated basis and which have not been either (i) reflected or disclosed in
the Bancorp Financial Statements as of December 31, 1994; (ii) incurred
subsequent to December 31, 1994 in the ordinary course of business; or (iii)
disclosed in Schedule 4.21. Bancorp knows of no basis for the assertion against
it or CUB of any liability, obligation or claim (including, without limitation,
that of any regulatory authority) that might result in or cause material adverse
change in the consolidated financial condition, results of operations or
prospects of Bancorp which is not fairly reflected in the Bancorp Financial
Statements or otherwise disclosed in the Schedules to this Agreement.
4.22 Loans and Investments. All loans and investments of Bancorp and CUB are
in all material respects legal, enforceable and authorized under applicable
federal and state laws and regulations except as the enforceability thereof may
be limited by bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of
47
49
creditors generally and by general equitable principles. Except as set forth
in Schedule 4.22, no loans or investments held by Bancorp or CUB are, at
December 31, 1994 (i) more than 90 days past due with respect to any scheduled
payment of principal or interest; (ii) classified as "loss," "doubtful,"
"substandard," "special mention" or "criticized" by federal banking regulators;
or (iii) on a non-accrual status in accordance with Bancorp and CUB' loan
review procedures. None of such investments are subject to any restriction,
contractual, statutory or other, that would materially impair the ability of
the entity holding such investment to dispose freely of any such investment at
any time, except restrictions on the public distribution or transfer of such
investments under the Securities Act of 1933, as amended ("Securities Act"),
and the regulations thereunder, or state securities laws.
4.23 Employee Benefit Plans.
(a) Neither Bancorp nor CUB has, or contributes to, any pension,
profit-sharing, option, other incentive plan, or any other type of Employee
Benefit Plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), or has any obligation or customary arrangement
with employees for bonuses, incentive compensation, vacations, severance pay,
insurance, or other benefits, except as set forth in Schedule 4.23(a). Attached
as Schedule 4.23(b) are true and correct copies signed by the Chief Executive
Officer and Chief Financial Officer of Bancorp of all documents evidencing
plans, obligations or arrangements referred to in Schedule 4.23(a) (or true and
correct written summaries as initialed of such plans, obligations or
arrangements to the extent not evidenced by documents) and true and correct
copies of all documents evidencing trusts related to any such plans.
(b) There has been no material violation of the reporting and
disclosure requirements imposed either under ERISA or the Code for which a
material penalty has been or may be imposed with respect to any such Employee
Benefit Plan of Bancorp or CUB. No such Employee Benefit Plan or related trust
has any material liability of any nature, accrued or contingent, including
without limitation liabilities for federal, state, local or foreign taxes, other
than for routine payments to be made in due course to participants and
beneficiaries, except as set forth in Schedule 4.23(c). There is no litigation,
arbitration, claim, governmental or other proceeding (formal or informal) or
investigation pending, or to the knowledge of Bancorp or CUB, threatened (or any
basis therefor known to Bancorp or CUB) with respect to any such Employee
Benefit Plan or related trust or with respect to any fiduciary, or to the
knowledge of Bancorp or CUB, administrator or sponsor (in its capacity as such)
of any such Employee Benefit Plan. No such Employee Benefit Plan or related
trust and no obligation or arrangement is in material violation of, or in
default with respect to, any law, rule, regulation, order, judgment or decree
nor
48
50
is Bancorp or CUB or any such Employee Benefit Plan or any related trust
required to take any action in order to avoid violation or default. No event
has occurred or (to the knowledge of Bancorp and CUB) is threatened or about to
occur which would constitute a prohibited transaction under Section 406 of
ERISA.
(c) The Internal Revenue Service has issued determinative letters to
the effect that each Pension Plan (as defined in Section 3(2) of ERISA)
maintained for the employees of Bancorp or CUB that is intended by Bancorp to be
a qualified plan under Section 401(a) of the Code and any related trust is an
exempt trust under Section 501 of the Code. Each such Pension Plan has been
operated materially in accordance with its terms. To the best knowledge of
Bancorp and CUB, no investigation or review by the Internal Revenue Service is
currently pending or is contemplated in which the Internal Revenue Service has
asserted or may assert that any such Pension Plan which is intended by Bancorp
to be qualified is not qualified under Section 401(a) of the Code or that any
related trust is not exempt under Section 501 of the Code. No assessment of any
federal income taxes has been made or (to the knowledge of Bancorp and CUB) is
contemplated against any Bancorp- or CUB-related trust or any Pension Plan or
the basis of a failure of such qualification or exemption. Form 5500's have been
timely filed with respect to all such Pension Plans to the extent required under
applicable law. No event has occurred or (to the knowledge of Bancorp and CUB)
is threatened or about to occur which would constitute a reportable event within
the meaning of Section 4043(b) of ERISA. No notice of termination has been filed
by the plan administrator pursuant to Section 4041 of ERISA or issued by the
Pension Benefit Guaranty Corporation pursuant to Section 4042 of ERISA with
respect to any such Pension Plan.
(d) Neither Bancorp nor CUB contributes to any multi-employer Pension
Plan within the meaning of Section 3(37) of ERISA.
4.24 Loan Servicing Portfolio. Except as set forth on Schedule 4.24, neither
Bancorp nor CUB services loans owned in whole or in part by other persons.
4.25 Filings. Since January 1, 1994, Bancorp and CUB have filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that were required to be filed with (a) the Office of the
Comptroller of the Currency (b) the Federal Reserve Bank of San Francisco
("Fed") or any Federal Reserve Bank, (c) the FDIC, (d) the Securities and
Exchange Commission and; (e) any other applicable federal, foreign, state or
local governmental or regulatory authorities. Since January 1, 1994, Bancorp and
each Bancorp Subsidiary have filed all required call reports of condition and
income with all appropriate regulatory agencies. All such reports, registrations
and filings are
49
51
collectively referred to as the "Bancorp Regulatory Filings." Upon request by
CorpBank and subject to applicable legal restrictions, Bancorp will promptly
provide to CorpBank all Bancorp Regulatory Filings filed by Bancorp or CUB
since January 1, 1990 together with copies of any orders or other
administrative actions taken in connection with such Bancorp Regulatory
Filings. As of their respective dates, each of the past Bancorp Regulatory
Filings (a) was true and complete in all material respects (or was amended so
as to be so promptly following discovery of any discrepancy); and (b) complied
in all material respects with all of the statutes, rules and regulations
enforced or promulgated by the governmental or regulatory authority with which
it was filed (or was amended so as to be so promptly following discovery of any
such noncompliance) and none contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. Any financial statement contained in any of such
Filings that was intended to present the financial position of the entities or
entity to which it related fairly presented the financial position of such
entities or entity and was prepared in accordance with GAAP or applicable
banking regulations consistently applied except as stated therein during the
periods involved.
4.26 Powers of Attorney. No material power of attorney or similar
authorization given by Bancorp or CUB is presently in effect or outstanding
other than powers of attorney given in the ordinary course of business with
respect to routine matters.
4.27 Accuracy and Current Status of Information Furnished. The
representations and warranties made by Bancorp and CUB hereby or in the
Schedules attached hereto contain no statements of fact which are untrue or
misleading, or omit any material fact which is necessary under the circumstances
to prevent the statements contained herein or in such Schedules from being
misleading. Bancorp and CUB hereby covenant that they shall, not later than the
15th day of each calendar quarter between the date hereof and the Closing Date,
amend or supplement the Schedules prepared and delivered pursuant to this
Article 4 to ensure that the information set forth in such Schedules accurately
reflects the then-current status of Bancorp and CUB. Bancorp and CUB shall
further amend or supplement the Schedules as of the Closing Date if necessary to
reflect any additional changes in the status of Bancorp or CUB.
4.28 Effective Date of Representations, Warranties, Covenants and
Agreements. Each representation, warranty, covenant and agreement of Bancorp and
CUB set forth in this Agreement shall be deemed to be made on and as of the date
hereof (unless otherwise set forth in the Schedules hereto) and as of the
Closing Date.
50
52
4.29 Bancorp's and CUB's Authority. The execution and delivery by Bancorp
and CUB of this Agreement and the Agreement of Merger and the consummation of
the transactions contemplated hereunder or thereunder have been duly and validly
authorized by all necessary corporate action on the part of Bancorp and CUB, and
this Agreement is, and the Agreement of Merger will be upon due certification,
execution, acknowledgment and filing thereof in accordance with applicable
provisions of the National Banking Act and the Bank Merger Act, a valid and
binding obligation of Bancorp and CUB, enforceable in accordance with their
terms, except as the enforceability hereof or thereof may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the rights of
creditors generally and by general equitable principles. Except as set forth in
Schedule 4.29, neither the execution and delivery by Bancorp and CUB of this
Agreement or the Agreement of Merger, nor the consummation of the transactions
contemplated herein or therein, nor compliance by Bancorp and CUB with the
provisions hereof or thereof, will (i) conflict with or result in a breach of
any provision of their respective Certificates of Incorporation, Certificate of
Association or Bylaws; (ii) constitute a breach of, or result in a default (or
give rise to any rights of termination, cancellation or acceleration, or any
right to acquire any securities or assets) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, franchise, license,
permit, agreement or other instrument or obligation to which Bancorp or CUB is a
party, or by which Bancorp or CUB or any of their properties or assets is bound;
or (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Bancorp or CUB. No consent or approval of, notice to or
filing with any governmental authority having jurisdiction over any aspect of
the business or assets of Bancorp or CUB, and no consent or approval of or
notice to any other person or entity, is required in connection with the
execution and delivery by Bancorp and CUB of this Agreement or the Agreement of
Merger or the consummation by Bancorp and CUB of the transactions contemplated
hereunder or thereunder, except such approvals as may be required by Bancorp as
the sole shareholder of Bank; the Fed pursuant to the applicable requirements of
the BHCA; the OCC pursuant to the Merger Statutes with respect to the Bank
Merger (as defined in Section 1.1(a); the filing of the Agreement of Merger with
the OCC; and the declaration by the SEC and state securities law regulatory
authorities that the Registration Statement (as defined in Section 5.11) is
effective and that Bancorp Stock to be issued in connection with the Merger is
qualified under applicable state securities law.
4.30 No Material Change. There has been no material adverse change in the
financial condition, results of operation or prospects of Bancorp since December
31, 1994. There are no facts or circumstances that, individually or in the
aggregate, materially and adversely has affected or is so affecting, or, may
reasonably be
51
53
expected in the future to affect the financial condition or results of
operations or prospects of Bancorp that have not been disclosed in the Bancorp
SEC Filings, excluding changes in laws or regulations or economic conditions
which affect banking institutions generally.
4.31 Accuracy of Information Furnished. The representations and warranties
made by Bancorp and CUB hereunder or in the Schedules hereto contain no material
statements of fact which are untrue or misleading, or omit any material fact
which is necessary under the circumstances to prevent the statements contained
herein or in such Schedules from being misleading.
4.32 Registration Statement. The Registration Statement required pursuant to
Section 5.8 and any other documents to be filed with the SEC or any regulatory
authority in connection with the transactions contemplated by this Agreement
with respect to all information set forth therein relating to Bancorp, the
Merger and in respect to this Agreement and the Agreement of Merger will, at the
respective times such documents are filed or become effective:
(a) comply in all material respects with the provisions of the
Securities Act and the regulations thereunder, and all other applicable laws and
regulations; and
(b) (except with regard to information furnished by CorpBank) not
contain any untrue statement of a material fact and will not omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.33 Information Furnished by Bancorp and CUB. No information relating to
Bancorp or CUB furnished to CorpBank by Bancorp and CUB for inclusion in the
Proxy Statement or the applications referred to in Section 5.11, including all
amendments and supplements thereto, will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading. In the event
of any occurrence prior to the CorpBank shareholders' meeting which would cause
any material information relating to Bancorp and CUB included in the Proxy
Statement to be untrue or misleading, Bancorp or CUB shall so notify CorpBank
and shall furnish CorpBank such information as may be necessary to correct any
such deficiencies.
52
54
ARTICLE 5.
CONDUCT AND TRANSACTIONS PRIOR TO
EFFECTIVE TIME OF MERGER
5.1 Access.
(a) Bancorp and CUB and CorpBank, respectively, shall have the right,
on reasonable notice and during ordinary business hours, to examine through
their agents, auditors or attorneys all of the books, records and properties of
the respective party, including, but not limited to, all loan, investment,
accounting, property and legal records and files. Such examination shall be made
in a manner that will not unreasonably interfere with the conduct of the
business. CUB and CorpBank shall provide adequate space and facilities, to the
end that such examination shall be completed expeditiously, completely and
accurately. All parties shall retain in strict confidence all information gained
thereby, and shall not reveal it to anyone except as may be necessary for the
accomplishment of the purposes of such examination and the consummation of the
transactions provided for hereby. In the event the Merger provided for hereby is
not consummated for any reason, Bancorp and CUB and CorpBank, respectively,
shall not, directly or indirectly: (i) utilize for their own benefit any
Proprietary Information (as hereinafter defined) or (ii) disclose to any person
any Proprietary Information, except as such disclosure may be required in
connection with this Agreement or by law. "Proprietary Information" shall mean
all confidential business information concerning the pricing, costs, profits and
plans for the future development of any party's business and the identity,
requirements, preferences, practices and methods of doing business of specific
customers of any party or otherwise relating to the business and affairs of any
party, other than information which (i) was lawfully in the possession of a
party prior to January 1, 1995; (ii) is obtained by any party after the date
hereof from a source other than a party hereto not under an obligation of
confidentiality; or (iii) is in the public domain when received or thereafter
enters the public domain through no action of the other party. In the event the
Merger is not consummated for any reason, each party shall return to the other
all copies, notes and records obtained in the course of such examination.
(b) CorpBank agrees that on and after the date that all requisite
regulatory approvals are obtained, CUB, acting through its agents, employees and
representatives, may, at CUB's option and at CUB's own expense, on notice to
CorpBank and in a manner reasonably calculated to avoid undue interruption of
any operations of CorpBank, have reasonable access to the premises of the Bank
for the purposes of (i) training CorpBank's employees in the procedures,
techniques,
53
55
methods or other banking practices of CUB; (ii) (subject to CUB's obligation to
bear the expense of removal and restoration should this Agreement be
terminated) installing telecommunications equipment, lines and facilities,
including, without limitation, telephones, branch terminal systems and
telecopiers; and (iii) (subject to CUB's obligation to bear the expense of
removal and restoration should this Agreement be terminated) installing
automated teller machines and comparable customer service equipment.
5.2 Limitation on Conduct of CorpBank and CorpBank Subsidiaries Prior to
Closing. Between the date hereof and the Effective Time of the Merger:
(a) CorpBank agrees to conduct its business and to cause the CorpBank
Subsidiaries to conduct their respective businesses only in the normal and
customary manner and in accordance with sound business practices and with
respect to CorpBank, in accordance with safe and sound banking practices;
(b) CorpBank shall not, without the prior written consent of CUB and
Bancorp (which consent shall not be unreasonably withheld and which consent
shall be deemed granted if within five (5) business days of receipt of notice by
CUB written notice of objection is not received by CorpBank) take any of the
following actions or allow any CorpBank Subsidiary to take any of the following
actions:
(i) carry on its business except in substantially the same
manner as heretofore conducted or introduce any new method of management or
operation in respect of its business and properties, except in a manner
consistent with prior practice and in the ordinary course of business;
(ii) amend, modify, or, except as they may be terminated in
accordance with their terms, terminate any Understanding or materially default
in the performance of any of its obligations under any Understanding where such
action would have a material adverse effect on the consolidated financial
condition, results of operations or prospects of CorpBank;
(iii) terminate or unilaterally fail to renew any existing
insurance or bonding coverage;
(iv) amend, modify, terminate or fail to renew or preserve its
business organization, material rights, franchises, permits and licenses, or
take any action which would jeopardize the continuance of the goodwill of its
customers where such action would have a material adverse effect on the
consolidated financial condition, results of operations or prospects of
CorpBank;
54
56
(v) enter into any Understanding, except (A) deposits incurred,
and short-term debt securities (obligations maturing within one year) issued, in
the ordinary course of business and consistent with prior practice, and
liabilities arising out of, incurred in connection with, or related to the
consummation of this Agreement, (B) commitments to make loans or other
extensions of credit in compliance with clauses (vii) or (xii) of this
subsection (b) and (C) loan sales in the ordinary course of business, without
any recourse except to a reserve account funded by an interest rate spread
otherwise payable to the servicer of the loans sold, provided that no commitment
to sell loans shall extend beyond the Effective Time of the Merger;
(vi) enter into any new leases (regardless of dollar amount) or
contracts requiring annual payments of more than $1,000, or having a term in
excess of six months without prior approval of CUB, which approval shall not be
unreasonably withheld or enter into any leases or contracts requiring annual
payments of more than $10,000, which are not new, without the prior approval of
CUB, which approval shall not be unreasonably withheld;
(vii) make any loan or other extension of credit, or enter into
any commitment to make any loan or other extension of credit or enter into any
agreement, with or to any CorpBank or CorpBank Subsidiary director, officer or
employee or 5% shareholder, except in accordance with existing practice or
policy;
(viii) except as required by any existing contract, grant any
general or uniform increase in the rates of pay of employees or employee
benefits or any increase in salary or employee benefits of any officer, employee
or agent or pay any bonus to any person;
(ix) sell, transfer, mortgage, encumber or otherwise dispose of
any assets or any liabilities except in the ordinary course of business and
consistent with prior practice or as required by any existing contract or for
ordinary repairs, renewals or replacements or as contemplated by this Agreement;
(x) except pursuant to the exercise of outstanding stock
options, issue, sell, redeem or acquire for value, or agree to do so, any debt
securities or any shares of the capital stock or other ownership interests, or
securities convertible into or options, rights or warrants exercisable for such
shares or interests, of CorpBank or any CorpBank Subsidiary or declare, issue or
pay any dividend or other distribution of assets, whether consisting of money,
CorpBank Stock, CorpBank Preferred Stock, other personal property, real property
or other things of value, to CorpBank's shareholders or with respect to the
Bank's stock or the stock of any other CorpBank
55
57
Subsidiary that is not directly or indirectly wholly owned by CorpBank, or
split, subdivide combine or reclassify any shares of its stock or other equity
security;
(xi) change or amend its charter documents or bylaws;
(xii) make its credit underwriting policies, standards or
practices relating to the making of loans and other extensions of credit, or
commitments to make loans and other extensions of credit, less stringent than
those in effect on June 30, 1995;
(xiii) make any capital expenditures, or commitments with respect
thereto, except those in the ordinary course of business which do not exceed
$5,000 individually or $10,000 in aggregate;
(xiv) make special or extraordinary payments to any person or
enter into any agreement which could result in such special or extraordinary
payments other than $20,000 payments to each of the President and Vice Chairman
/ Executive Vice President and $15,000 to the Chief Financial Officer of
CorpBank as of the Closing, or as contemplated, or as disclosed, in this
Agreement as of the date hereof;
(xv) except for transactions in the ordinary course of business,
make any material investments, by purchase of stock or securities, contributions
to capital, property transfers, purchases of any property or assets or
otherwise, in any other individual, corporation or other entity;
(xvi) compromise or otherwise settle or adjust any assertion or
claim of a deficiency in taxes (or interest thereon or penalties in connection
therewith) or file any appeal from an asserted deficiency except in a form
previously approved by CUB in writing or file or amend any federal, foreign or
state tax return or report or make any tax election or change any method or
period of accounting unless required by GAAP or applicable law;
(xvii) except as contemplated in this Agreement, terminate any
plan or enter into any new employment agreement or other employee benefit
arrangement, or modify any employment agreement or other employee benefit
arrangement in effect on the date of this Agreement to which CorpBank or any
CorpBank Subsidiary is a party; or
(xviii) agree to take or make any commitment to take any actions
prohibited by this Section 5.2.
56
58
5.3 Limitation on Conduct of Bancorp and CUB Prior to Closing. Between the
date hereof and the Effective Time of the Merger:
(a) Bancorp agrees to conduct its business and to cause the Bancorp
Subsidiaries to conduct their respective businesses only in the normal and
customary manner and in accordance with sound business practices and with
respect to the CUB, in accordance with safe and sound banking practices;
(b) Bancorp shall not, without the prior written consent of CorpBank
(which consent shall not be unreasonably withheld and which consent shall be
deemed granted if within five (5) business days of receipt of notice by CorpBank
written notice of objection is not received by Bancorp) take any of the
following actions or allow any Bancorp Subsidiary to take any of the following
actions:
(i) carry on its business except in substantially the same
manner as heretofore conducted or introduce any new method of management or
operation in respect of its business and properties, except in a manner
consistent with prior practice and in the ordinary course of business.
Acquisition of additional banking offices or banking assets or mergers or
combinations with other BIF insured banking institutions shall be deemed to be
in the ordinary course of business;
(ii) amend, modify, or, except as they may be terminated in
accordance with their terms, terminate any Understanding or materially default
in the performance of any of its obligations under any Understanding where such
action would have a material adverse effect on the consolidated financial
condition, results of operations or prospects of Bancorp;
(iii) terminate or unilaterally fail to renew any existing
insurance or bonding coverage, providing however, that CUB may change carriers
and coverage relative to any insurance or bonding coverage, and no notice need
be given unless the amount of coverage is materially less than that held by CUB
at the date of this Agreement;
(iv) amend, modify, terminate or fail to renew or preserve its
business organization, material rights, franchises, permits and licenses, or
take any action which would jeopardize the continuance of the goodwill of its
customers where such action would have a material adverse effect on the
consolidated financial condition, results of operations or prospects of Bancorp;
(v) make any loan or other extension of credit, or enter into
any commitment to make any loan or other extension of credit, to any Bancorp or
CUB Subsidiary director, officer or employee or 5% shareholder, except in
accordance
57
59
with existing practice or policy;
(vi) except in the ordinary course of business and consistent
with prior practice or as required by any existing contract, grant any general
or uniform increase in the rates of pay of employees or employee benefits or any
increase in salary or employee benefits of any officer, employee or agent or pay
any bonus to any person;
(vii) sell, transfer, mortgage, encumber or otherwise dispose of
any assets or any liabilities except in the ordinary course of business and
consistent with prior practice or as required by any existing contract or for
ordinary repairs, renewals or replacements or as contemplated by this Agreement;
(viii) make any capital expenditures, or commitments with respect
thereto, except those in the ordinary course of business which do not exceed
$200,000 individually or $500,000 in aggregate;
(ix) make special or extraordinary payments to any person other
than as contemplated, or as disclosed, in this Agreement as of the date hereof;
(x) compromise or otherwise settle or adjust any material
assertion or claim of a material deficiency in taxes (or interest thereon or
penalties in connection therewith) or file any appeal from an asserted material
deficiency except in a form previously approved by CorpBank in writing or file
or amend in any material manner, any federal, foreign or state tax return or
report or make any material tax election or change any material method or period
of accounting unless required by GAAP or applicable law; or
(xi) agree to take or make any commitment to take any actions
prohibited by this Section 5.3.
5.4 Certain Loans and Other Extensions of Credit.
(a) CorpBank will promptly inform CUB of the amounts and categories of
any loans, leases or other extensions of credit that have been classified by any
bank regulatory authority or by any unit of CorpBank as "Criticized," "Specially
Mentioned," "Substandard," "Doubtful," "Loss" or any comparable classification
("Classified Credits"). CorpBank will furnish to CUB, as soon as practicable,
and in any event within fifteen days after the end of each calendar month,
schedules including the following: (a) Classified Credits (including with
respect to each credit in an amount equal to or greater than $25,000, its
classification category, its type, and the originating unit), and by type and
originating unit, the aggregate dollar
58
60
amount of classified credits of less than $25,000; (b) nonaccrual credits
(including, with respect to each credit in an amount equal to or greater than
$25,000, its type and the originating unit), and by type and originating unit,
the aggregate dollar amount of nonaccrual credits of less than $25,000; (c)
accrual exception credits that are delinquent 90 or more days and have not been
placed on nonaccrual status (including with respect to each accrual exception
credit in an amount equal to or greater than $25,000, its type and the
originating unit), and by type and originating unit, the aggregate dollar
amount of such accrual exception credits of less than $25,000; (d) delinquent
credits (including with respect to each delinquent credit in an amount equal to
or greater than $25,000, its type and the originating unit), including an aging
into 30-59, 60-89, 90-119, and 120+ day categories, and by type and originating
unit, the aggregate dollar amount of delinquent credits of less than $25,000;
(e) participating loans and leases, stating, with respect to each, whether it
is purchased or sold, the loan or lease type, and the originating unit; (f)
loans or leases (including any commitments) by CorpBank or any CorpBank
Subsidiary to any CorpBank or CorpBank Subsidiary director, officer, employee,
or shareholder holding 10% or more of the capital stock of CorpBank, including
with respect to each such loan or lease the identity and, to the best knowledge
of CorpBank, the relation of the borrower to CorpBank or any CorpBank
Subsidiary, the loan or lease type and the outstanding and undrawn amounts; (g)
letters of credit (including with respect to each letter of credit in a face
amount equal to or greater than $25,000, the type and originating unit), and by
type and originating unit, the aggregate dollar amount of all letters of credit
of less than $25,000; (h) loans or leases charged off during the previous month
(including with respect to each such loan or lease, its type and the
originating unit), and by type and originating unit, the aggregate dollar
amount of such loans or leases less than $25,000; (i) loans or leases written
down during the previous month, including with respect to each the original
amount, the write off amount, its type and originating unit; and (j) other real
estate or assets owned, stating with respect to each its type.
(b) CUB will promptly inform CorpBank of the amounts and categories of
any loans, leases or other extensions of credit that have been classified by any
bank regulatory authority or by CUB as "Criticized," "Specially Mentioned,"
"Substandard," "Doubtful," "Loss" or any comparable classification ("Classified
Credits"). CUB will furnish to CorpBank, as soon as practicable, and in any
event within fifteen days after the end of each calendar month, schedules
including the following: (a) Classified Credits (including with respect to each
credit in an amount equal to or greater than $25,000, its classification
category), and the aggregate dollar amount of classified credits of less than
$25,000; (b) nonaccrual credits (including, with respect to each credit in an
amount equal to or greater than $25,000, its classification category, and the
aggregate dollar amount of nonaccrual credits of less than $25,000); (c) accrual
exception credits that are delinquent 90
59
61
or more days and have not been placed on nonaccrual status (including with
respect to each accrual exception credit in an amount equal to or greater than
$25,000, its classification category), and the aggregate dollar amount of such
accrual exception credits of less than $25,000; (d) delinquent credits
(including with respect to each delinquent credit in an amount equal to or
greater than $25,000, its classification category ), including an aging into
30-59, 60-89, 90-119, and 120+ day categories, and the aggregate dollar amount
of delinquent credits of less than $25,000; (e) participating loans and leases,
stating, with respect to each, whether it is purchased or sold, the loan or
lease type, and the originating unit; (f) loans or leases (including any
commitments) by CUB to any Bancorp or CUB Subsidiary director, officer,
employee, or shareholder holding 10% or more of the capital stock of Bancorp,
including with respect to each such loan or lease the identity and, to the best
knowledge of CUB, the relation of the borrower to Bancorp or CUB, the loan or
lease type and the outstanding and undrawn amounts; (g) letters of credit
(including with respect to each letter of credit in a face amount equal to or
greater than $25,000, the classification category), and by type classification
category, the aggregate dollar amount of all letters of credit of less than
$25,000; (h) loans or leases charged off during the previous month (including
with respect to each such loan or lease, its classification category), and by
classification category, the aggregate dollar amount of such loans or leases
less than $25,000; (i) loans or leases written down during the previous month,
including with respect to each the original amount, the write off amount, its
classification category; and (j) other real estate or assets owned, stating
with respect to each its type.
5.5 Negotiations With Other Parties.
(a) CorpBank shall not, nor shall it authorize or knowingly permit any
of its representatives or CorpBank Subsidiaries, directly or indirectly, to,
entertain, solicit or encourage or participate in any discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Bancorp, CUB and their
representatives) concerning any Acquisition Proposal (as hereinafter defined)
other than the Acquisition Proposal set forth in this Agreement. CorpBank shall
notify CUB immediately in the manner set forth in Section 9.3 if any such
inquiry or Acquisition Proposal is received by CorpBank or any CorpBank
Subsidiary, including the terms thereof. For purposes of this Agreement,
"Acquisition Proposal" means any (i) proposal pursuant to which any corporation,
partnership, person or other entity or group, other than Bancorp or CUB, would
acquire or participate in a merger or other business combination involving
CorpBank or any CorpBank Subsidiary; (ii) proposal by which any corporation,
partnership, person or other entity or group, other than Bancorp or CUB, would
acquire the right to vote 5% or more of the capital stock of CorpBank or any
CorpBank Subsidiary entitled to vote thereon for the election of directors,
60
62
other than persons designated as proxy holders by the Board of Directors of
CorpBank or any CorpBank Subsidiary; (iii) acquisition of the assets of
CorpBank or any CorpBank Subsidiary other than in the ordinary course of
business; or (iv) acquisition in excess of five percent (5%) of the outstanding
capital stock of CorpBank or any CorpBank Subsidiary, other than as
contemplated by this Agreement.
5.6 Affirmative Conduct of CorpBank Prior to Closing. Between the date
hereof and the Effective Time of the Merger, CorpBank shall do the following and
shall cause the CorpBank Subsidiaries to do the following:
(a) Use their respective commercially reasonable best efforts, or
cooperate with others, to expeditiously bring about the satisfaction of the
conditions specified in Article 6 hereof;
(b) Use and devote their respective commercially reasonable efforts
consistent with this Agreement to maintain and preserve intact their respective
present business organizations and to maintain and preserve their relationships
and goodwill with account holders, borrowers, employees and others having
business relationships with them;
(c) Advise CUB promptly in writing of any material adverse change known
to CorpBank or any CorpBank Subsidiary in the capital structure, financial
condition or business prospects of CorpBank or any CorpBank Subsidiary, or of
any other materially adverse change known to CorpBank respecting the business
and operations of CorpBank on a consolidated basis, or of any matter which would
make the representations and warranties set forth in Article 3 hereof not true
and correct in any material respect at the Closing, or which make the conditions
or other transactions contemplated in this Agreement impossible to perform or
substantially unlikely to be complied with;
(d) Keep in full force and effect all of the existing permits and
licenses of CorpBank and CorpBank Subsidiaries;
(e) Use their respective commercially reasonable best efforts to
maintain insurance or bonding coverage on all properties for which they are
responsible and on their respective business operations, and carry not less than
the same coverage for fidelity, director and officer liability, public
liability, personal injury, property damage and other risks equal to that which
is now in effect; and notify CUB in writing promptly of any facts or
circumstances which could affect CorpBank's or any CorpBank Subsidiary's ability
to maintain such insurance or bonding coverage;
61
63
(f) Perform their respective material contractual obligations and not
become in material default on any of such obligations;
(g) Duly observe and conform to all legal requirements applicable to
their respective businesses;
(h) Duly and timely file all reports and returns required to be filed
with any federal, state or local governmental authority, unless any extensions
have been duly granted by such authority;
(i) Maintain their respective assets and properties in good condition
and repair, normal wear and tear excepted;
(j) Promptly advise CUB in writing of any event or any other
transaction within CorpBank's or any CorpBank Subsidiary's knowledge whereby any
person or related group of persons acquires, directly or indirectly, record or
beneficial ownership (as defined in Rule 13d-3 promulgated by the SEC pursuant
to the 0000 Xxx) or control of 5% or more of the outstanding shares of CorpBank
Stock prior to the record date fixed for the CorpBank shareholders' meeting or
any adjourned meeting thereof to approve the transactions contemplated herein;
(k) Promptly notify CUB of any event of which CorpBank obtains
knowledge which may materially and adversely affect the financial condition,
results of operations, or business prospects of CorpBank or any CorpBank
Subsidiary, or in the event it determines that the Merger will not be
consummated because of any inability to meet the conditions to the performance
of CUB set forth in Sections 6.2;
(l) Charge off all loans, receivables and other assets, or portions
thereof, deemed uncollectible in accordance with GAAP, applicable law or
regulation, or classified as "loss" or as directed by any regulatory authority;
and maintain the allowance for credit losses of CorpBank at a level which is
adequate to provide for all known and reasonably expected losses on assets
outstanding and other inherent risks in CorpBank's loan portfolio;
(m) Furnish to CUB, as soon as practicable, and in any event within ten
days after it is prepared, (i) a copy of any report submitted to the board of
directors of CorpBank or any CorpBank Subsidiary and access to the working
papers related thereto and copies of other operating or financial reports
prepared for management of any of their businesses and access to the working
papers thereto, provided, however, that CorpBank need not furnish CUB
communications of CorpBank's legal counsel regarding CorpBank's rights against
and obligations to
62
64
CUB or its affiliates under this Agreement, (ii) copies of all reports,
renewals, filings, certificates, statements and other documents filed with or
received from the Superintendent, SEC, Fed, any Federal Reserve Bank, FDIC, or
any other governmental or regulatory body, (iii) separate consolidated monthly
unaudited statements of condition and statements of operations for CorpBank,
consolidated monthly statements of changes in consolidated shareholders' equity
for CorpBank, and separate quarterly unaudited consolidated and consolidating
statements of condition and statements of operations for CorpBank and
statements of changes in consolidated shareholders' equity for CorpBank, in
each case prepared in a manner consistent with past practice, and (iv) such
other reports as CUB may reasonably request relating to CorpBank. Each of the
financial statements delivered pursuant to this subsection (m), except as
stated therein, shall be prepared in accordance with GAAP, except that such
financial statements may omit statements of cash flow and footnote disclosures
required by GAAP. Each of the financial statements of CorpBank or any CorpBank
Subsidiary delivered pursuant to this subsection (m) shall be accompanied by a
certificate of each of the Chief Executive Officer and the Chief Financial
Officer of CorpBank to the effect that such financial statements fairly present
the financial condition and results of operations of CorpBank or the CorpBank
Subsidiary, as appropriate, for the periods covered, and reflect all
adjustments (which consist only of normal recurring adjustments) necessary for
a fair presentation;
(n) CorpBank agrees that through the Effective Time of the Merger, as
of their respective dates, (i) each of the CorpBank Filings will be true and
complete in all material respects; and (ii) each of the CorpBank Filings will
comply in all material respects with all of the statutes, rules and regulations
enforced or promulgated by the governmental or regulatory authority with which
it will be filed and none will contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they will
be made, not misleading. Any financial statement contained in any of such
CorpBank Filings that is intended to present the financial position of the
entities or entity to which it relates will fairly present the financial
position of such entities or entity and will be prepared in accordance with GAAP
or applicable banking regulations consistently applied, except as stated
therein, during the periods involved;
(o) Maintain proper reserves for contingent liabilities in accordance
with GAAP;
(p) Promptly notify CUB of the filing of any litigation, governmental
or regulatory action, or similar proceeding or notice of any claims against
CorpBank or any CorpBank Subsidiary or any of their assets;
63
65
(q) At any time within 60 days of the day on which the Effective Time
of the Merger is expected to occur, at the written request of CUB and on CUB's
certification that it knows of no circumstance that would entitle it to
terminate this Agreement, (i) give, or cause to be given, any written notice to
the employees of CorpBank that CUB reasonably deems necessary or appropriate
under the Worker Adjustment and Retraining Notification Act ("WARN") ; (ii) take
such other actions, as CUB shall reasonably deem necessary or appropriate, to
comply with WARN; and (iii) give notice to its data processing vendors of
termination of the data processing contract at the end of the minimum notice
period provided for therein.
(r) Forward to CUB, not later than the 15th day of each calendar
quarter, CorpBank's list of holders of CorpBank Stock, certified by CorpBank's
transfer agent;
(s) Cooperate with CUB to enable the transactions contemplated by this
Agreement to qualify for the accounting treatment desired by CUB.
(t) Give three business days prior written notice to CUB prior to
approving any loans or leases in excess of $100,000, subsequent to the Execution
Date. Such notice must include copies of the description of the loan utilized
for consideration of the loan by CorpBank and copies of relevant financial
statements and other financial documents utilized by CorpBank in its review.
Notwithstanding the above, CorpBank is not required to obtain CUB's prior "non
disapproval" of any renewals of existing loans, regardless of amount, and is not
required to obtain CUB's prior approval of automobile secured loans, whether or
not such loans are part of a borrowing relationship in excess of $100,000.
CorpBank shall give CUB notice of all loans made, (including renewals) in excess
of $100,000 within ten (10) days of approval thereof. To the extent that CUB
does not "non disapprove" a loan which CorpBank is obligated to submit
hereunder, CUB reserves the right to place a 100% reserve against such loan,
without explanation, as part of its final due diligence provided for herein.
Notwithstanding anything herein to the contrary, CUB shall not have any power to
direct CorpBank to make particular loans or to refrain from making particular
loans and the effect of any comments on CorpBank loans in connection with this
provision shall be limited as set forth herein. CUB agrees that it will review
submitted loans promptly and will advise CorpBank of its determination regarding
any such loan within 3 business days of receipt of request therefore.
(u) Make its best efforts to obtain written general releases, in form
satisfactory to counsel for CUB, from all employees terminated for any reason
subsequent to March 1, 1995, including release of federal, state and common law
causes of action, with the exception of Xxxxxxx Xxxxx, Xxxx Xxxxxxx and
Xxxxxxxxx Xxxxxx.
64
66
(v) Settle or otherwise conclude all litigation as to which CorpBank or
any agent is a defendant and obtain general releases and dismissals with
prejudice in form and content satisfactory to counsel for CUB.
(w) Obtain all necessary consents and opinions from GT and AA to allow
three years audited financial statements with unqualified opinions to be
included in the Registration Statement, if determined to be necessary by
Bancorp.
(x) CorpBank shall purchase a three year tail on its Director and
Officer Liability Insurance, extending at least equivalent coverage to that
currently held by CorpBank to directors of CorpBank after the Merger, whether or
not they are directors of the Surviving Bank."
5.7 Affirmative Conduct of Bancorp Prior to Closing. Between the date
hereof and the Effective Time of the Merger, Bancorp shall do the following and
shall cause CUB to do the following:
(a) Use their respective commercially reasonable best efforts, or
cooperate with others, to expeditiously bring about the satisfaction of the
conditions specified in Article 6 hereof;
(b) Use and devote their respective commercially reasonable efforts
consistent with this Agreement to maintain and preserve intact their respective
present business organizations and to maintain and preserve their relationships
and goodwill with account holders, borrowers, employees and others having
business relationships with them;
(c) Advise CorpBank promptly in writing of any material adverse change
known to Bancorp or CUB in the capital structure, financial condition or
business prospects of Bancorp or CUB, or of any other materially adverse change
known to Bancorp respecting the business and operations of Bancorp on a
consolidated basis, or of any matter which would make the representations and
warranties set forth in Article 4 hereof not true and correct in any material
respect at the Closing;
(d) Keep in full force and effect all of the existing permits and
licenses of Bancorp and CUB;
(e) Use their respective commercially reasonable best efforts to
maintain insurance or bonding coverage on all properties for which they are
responsible and on their respective business operations, and carry not less than
the same coverage for fidelity, public liability, personal injury, property
damage and other risks equal
65
67
to that which is now in effect; and notify CorpBank in writing promptly of any
facts or circumstances which could affect Bancorp's or CUB's ability to
maintain such insurance or bonding coverage;
(f) Perform their respective material contractual obligations and not
become in material default on any of such obligations;
(g) Duly observe and conform to all legal requirements applicable to
their respective businesses;
(h) Duly and timely file all reports and returns required to be filed
with any federal, state or local governmental authority, unless any extensions
have been duly granted by such authority;
(i) Maintain their respective assets and properties in good condition
and repair, normal wear and tear excepted;
(j) Promptly notify CorpBank of any event of which Bancorp obtains
knowledge which may materially and adversely affect the financial condition,
results of operations, or business prospects of Bancorp or CUB, or in the event
it determines that the Merger will not be consummated because of any inability
to meet the conditions to the performance of CorpBank set forth in Sections
6.2(d), (g) and (l);
(k) Charge off all loans, receivables and other assets, or portions
thereof, deemed uncollectible in accordance with GAAP, applicable law or
regulation, or classified as "loss" or as directed by any regulatory authority;
and maintain the allowance for credit losses of CUB at a level which is adequate
to provide for all known and reasonably expected losses on assets outstanding
and other inherent risks in the Bancorp and CUB's loan portfolio;
(l) Furnish to CorpBank, as soon as practicable, and in any event
within ten days after it is prepared, (i) a copy of any report submitted to the
board of directors of Bancorp or CUB, provided, however, that CUB need not
furnish communications of CUB's legal counsel regarding CUB's rights against and
obligations to CorpBank or its affiliates under this Agreement, (ii) copies of
all reports, renewals, filings, certificates, statements and other documents
filed with or received from the SEC, OCC, Fed, any Federal Reserve Bank, FDIC,
or any other governmental or regulatory body (except that copies shall not be
provided of Reports of Examination), (iii) copies of monthly financial
statements provided to Bancorp and CUB's Boards of Directors, and (iv) such
other reports as CorpBank may reasonably request relating to Bancorp. Each of
the financial statements
66
68
delivered pursuant to this subsection (m), except as stated therein, shall be
prepared in accordance with GAAP, except that such financial statements may
omit statements of cash flow and footnote disclosures required by GAAP. Each
of the financial statements of Bancorp or CUB delivered pursuant to this
subsection (m) shall be accompanied by a certificate of each of the Chief
Executive Officer and the Chief Financial Officer of Bancorp to the effect that
such financial statements fairly present the financial condition and results of
operations of Bancorp or CUB, as appropriate, for the periods covered;
(m) Bancorp agrees that through the Effective Time of the Merger, as of
their respective dates, (i) each of the Bancorp Filings will be true and
complete in all material respects; and (ii) each of the Bancorp Filings will
comply in all material respects with all of the statutes, rules and regulations
enforced or promulgated by the governmental or regulatory authority with which
it will be filed and none will contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they will
be made, not misleading. Any financial statement contained in any of such
Bancorp Filings that is intended to present the financial position of the
entities or entity to which it relates will fairly present the financial
position of such entities or entity and will be prepared in accordance with GAAP
or applicable banking regulations consistently applied, except as stated
therein, during the periods involved;
(n) Maintain proper reserves for contingent liabilities in accordance
with GAAP; and
(o) Promptly notify CorpBank of the filing of any material litigation,
governmental or regulatory action, or similar proceeding or notice of any claims
against Bancorp or CUB or any of their assets;
(p) Registration Statement and Applications. Bancorp and CUB will use
commercially reasonable efforts to prepare and file or cause to be prepared and
filed: (i) with the SEC, the Registration Statement; (ii) with the Fed, an
application for approval of the Merger or related aspects thereof; (iii) with
the OCC, the required documents for approval of, and to effect, the change in
control of CorpBank and the Bank; and (iv) with the OCC, applications for
approval of the Bank Merger, except that Bancorp shall have no obligation to
file a new registration statement or a post-effective amendment to the
Registration Statement covering any reoffering of Bancorp Stock by CorpBank
Affiliates. Bancorp and CUB will cooperate with CorpBank in the preparation of
the Proxy Statement and covenant and agree that all information furnished by
Bancorp and CUB for inclusion in the Proxy Statement, all applications to
appropriate regulatory agencies for approval
67
69
of or consent to the Merger , and all information furnished by Bancorp and CUB
to CorpBank pursuant to this Agreement, will comply in all material respects
with the provisions of applicable law, including the Securities Act and the
1934 Act and the rules and regulations of the SEC thereunder, and will not
contain any untrue statement of a material fact and will not omit to state any
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made,
not misleading;
(q) Blue Sky. Bancorp covenants and agrees to use its commercially
reasonable best efforts to have the shares of Bancorp Stock qualified or
registered for offering and sale under the securities or Blue Sky laws of each
jurisdiction in which shareholders of CorpBank reside.
(r) Action of Sole Shareholder. Prior to the Effective Time of the
Merger, Bancorp, as sole shareholder of CUB, will take all action necessary or
advisable for the consummation of the Merger by CUB and the carrying out by CUB
of the transactions contemplated hereby;
(s) Stock Exchange Listing. Bancorp will use its commercially
reasonable best efforts to have the shares of Bancorp Stock to be issued
pursuant to the Merger duly listed, subject to official notice of issuance, on
the Nasdaq Stock Exchange.
5.8 CorpBank Accountants. Promptly upon request of CUB, CorpBank will
request its independent accountants to permit CUB or its representatives to
review and examine the work papers relating to CorpBank and CorpBank's audited
financial statements for the years ended December 31, 1992 and 1993, 1994 and
permit such independent accountants to discuss with CUB any matter relating to
the audits of CorpBank. In addition, CorpBank will make available to CUB copies
of each management letter or other letter delivered to CorpBank, or any CorpBank
Subsidiary by Xxxxx Xxxxxxxx or by AA in connection with such financial
statements or relating to any review of the internal controls of CorpBank, or
any CorpBank Subsidiary since January 1, 1992, and has instructed each of them
to make available to CUB for inspection by CUB or its representatives all
reports and working papers produced or developed by in connection with their
examination of such financial statements, as well as all such reports and
working papers for any periods for which any tax of CorpBank, or CorpBank
Subsidiary has not been finally determined or barred by applicable statutes of
limitation.
5.9 Bancorp Accountants. Bancorp will make available to CorpBank copies of
each management letter or other letter delivered to Bancorp by Xxxxxx Xxxxxxxx &
Co. ("AA") in connection with such financial statements or relating to any
review by AA of the internal controls of Bancorp or CUB since January 1, 1994.
68
70
5.10 Submission to Shareholders. Subject to satisfaction of applicable
federal and state securities laws, not later than December 15, 1995 (or such
earlier date as is reasonably possible), unless extended with the mutual written
consent of the parties, CorpBank shall hold a shareholder meeting for the
approval of its shareholders of the transactions contemplated herein and all
matters incident thereto. CorpBank hereby agrees that it shall unqualifiedly
recommend that its shareholders vote in favor of approval of the transactions
contemplated hereby.
5.11 Preparation of Registration Statement, Proxy Statement, Application for
Approval by Regulatory Authorities and Redemption Materials.
(a) CorpBank will cooperate with Bancorp in the preparation of a
registration statement (the "Registration Statement") to be filed with the SEC
under the Securities Act for the registration of the Bancorp Stock to be issued
in connection with the Merger, in connection with any listing application to be
filed with the Nasdaq Stock Exchange with respect to the Bancorp Stock, in the
preparation of a proxy statement to be filed with the SEC that will be used by
CorpBank to solicit proxies of its shareholders in connection with the approval
and adoption of the Agreement and the Agreement of Merger (the "Proxy
Statement") and in connection with any statements or applications to any
governmental body in connection with the transactions contemplated by this
Agreement. In connection therewith, CorpBank will furnish all financial or other
information, including accountant comfort letters relating thereto,
certificates, consents, and opinions of counsel concerning CorpBank and CorpBank
Subsidiaries reasonably deemed necessary by Bancorp for the filing or
preparation for filing of the Registration Statement and related matters.
(b) CorpBank will cooperate with Bancorp and provide such information
as may be necessary or advisable for Bancorp or CUB to make its applications
required for regulatory approvals and for any other consents or approvals or to
take any other action necessary or, in the reasonable judgment of Bancorp,
advisable to consummate the Merger and the Bank Merger.
(c) CorpBank covenants and agrees that all information furnished by
CorpBank or any CorpBank Subsidiary for inclusion in the Registration Statement,
the Proxy Statement, all applications to appropriate regulatory agencies for
approval of or consent to the Merger and the Bank Merger, and all information
furnished by CorpBank or any CorpBank Subsidiary to Bancorp or CUB pursuant to
this Agreement, will comply in all material respects with the provisions of
applicable law, including the Securities Act and the 1934 Act and the rules and
regulations of the SEC thereunder, and will not contain any untrue statement of
a material fact
69
71
and will not omit to state any material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(d) Bancorp will cooperate with CorpBank in the preparation of a proxy
statement to be filed with the Superintendent and the FDIC that will be used by
CorpBank to solicit proxies of its shareholders in connection with the approval
and adoption of the Agreement and the Agreement of Merger (the "Proxy
Statement") and in connection with any statements or applications to any
governmental body in connection with the transactions contemplated by this
Agreement. In connection therewith, Bancorp will furnish all financial or other
information, including accountant comfort letters relating thereto,
certificates, consents, and opinions of counsel concerning Bancorp and CUB
reasonably deemed necessary by CorpBank for the filing or preparation for filing
of the Proxy Statement and related matters.
(e) Bancorp covenants and agrees that all information furnished by
Bancorp or CUB for inclusion in the Registration Statement, the Proxy Statement,
all applications to appropriate regulatory agencies for approval of or consent
to the Merger and the Bank Merger, and all information furnished by Bancorp or
CUB to CorpBank pursuant to this Agreement, will comply in all material respects
with the provisions of applicable law, including the Securities Act and the 1934
Act and the rules and regulations of the SEC thereunder, and will not contain
any untrue statement of a material fact and will not omit to state any material
fact required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
5.12 Termination of CorpBank Employee Stock Option Plans. CorpBank will take
all steps necessary to cause its stock option plans to be terminated as of or
prior to the Effective Time of the Merger, will grant no additional options
under said plans prior to the Effective Time of the Merger, and will cause any
options outstanding thereunder (irrespective of their exercise price and whether
or not then presently exercisable or fully vested) to be exercised prior to the
Calculation Date or canceled prior to the Calculation Date together with a
release of all claims against CorpBank or Surviving Association related to such
options.
5.13 Agreement of CorpBank Affiliates. CorpBank agrees to use its best
efforts to cause each person who is a CorpBank "affiliate" as defined pursuant
to Rule 145 promulgated by the SEC under the Securities Act ("CorpBank
Affiliate"), at least 30 days prior to the Effective Time of the Merger, to
enter into an Affiliate Agreement, in the form attached hereto as Exhibit E,
which provides that, among other things: (i) the CorpBank Stock owned by the
CorpBank affiliate may not be sold or
70
72
transferred for a period of not less than 30 days prior to the Effective Time
of the Merger; (ii) the Bancorp Stock to be acquired by an CorpBank Affiliate
upon consummation of the Merger (such shares of Bancorp Stock being sometimes
referred to for purposes of this Section 5.13 as "Acquired Shares") will not be
acquired with a view to the sale or distribution thereof except as permitted by
Rule 145 promulgated by the SEC under the Securities Act ("Rule 145"); (iii)
the Acquired Shares will not be disposed of in such a manner as to violate the
Securities Act or the Affiliate Agreement and without Bancorp having first
received an opinion of counsel reasonably satisfactory to Bancorp to the
foregoing effect or other evidence of compliance with Rule 145 and the
Affiliate Agreement, in each case reasonably satisfactory to Bancorp; (iv) none
of the shares of CUB Common Stock received by the CorpBank Affiliate pursuant
to the Merger will be sold, transferred or otherwise disposed of and the
CorpBank Affiliate will not in any other way reduce their risk of ownership or
investment in any of the shares of CUB Common Stock so received until the later
of: (i) financial results covering a period of at least thirty (30) days of
combined operations of CUB and CorpBank following the Effective Time of the
Merger have been published by CUB (provided that the CorpBank Affiliate may
make bona fide gifts or distributions without consideration so long as the
recipients thereof agree not to sell, transfer or otherwise dispose of the CUB
Common Stock except as provided in the Affiliate Agreement);(v) the
certificates representing the Acquired Shares may bear a legend referring to
the foregoing restrictions on disposition, and Bancorp may issue to its
transfer agent appropriate stop transfer instructions with respect to the
Acquired Shares; and (vi) each CorpBank Affiliate will obtain an agreement, and
deliver a copy of such to Bancorp, from each transferee of Acquired Shares
which is substantially similar to an Affiliate Agreement, unless such
transferee may under the Securities Act dispose of the Acquired Shares
transferred to him without registration under the Securities Act.
Notwithstanding anything in this Section 5.13 to the contrary, in the event
that such affiliate is also a director of CorpBank, they shall enter into an
agreement in the form attached hereto as Xxxxxxx X0, which shall provide, inter
alia, that such person will not sell or transfer the Bancorp Stock to be
acquired upon consummation of the Merger for a period of not less than six
months following the publication of financial information for a mimimum of 30
days of combined operation of CUB and CorpBank.
5.14 Bank Merger. At CUB's request, CorpBank and each CorpBank Subsidiary
shall take all necessary corporate and other action including publication
required under the Merger Statutes to approve and to permit the consummation of
the Bank Merger, on the Closing Date. CorpBank agrees that it will execute,
deliver and, when appropriate, file, and will cause each CorpBank Subsidiary to
execute, deliver and, when appropriate, file, any and all agreements,
applications and instruments necessary or desirable to permit the consummation
of the Merger on
71
73
the Closing Date, including, but not limited to, agreements of merger relating
to the Merger, and will take, and will cause each CorpBank Subsidiary to take,
such other action as CUB may reasonably request to permit the consummation of
any transactions contemplated in connection with the Merger. CorpBank shall
not take any action or allow any CorpBank Subsidiary to take any action which
would prevent performance of agreements of merger or any transactions
contemplated in connection with the Merger.
5.15 Resignations. CorpBank shall obtain the resignations, to be effective
as of the Effective Time of the Merger, of the directors and officers of
CorpBank and the directors of all CorpBank Subsidiaries. Not less than ten (10)
days prior to the Closing, CUB shall provide CorpBank with a list of CorpBank
officers whose resignations will not be required.
5.16 Corporate Action. The parties shall each take or cause to be taken all
necessary corporate action required to carry out the transactions contemplated
in this Agreement and the Agreement of Merger.
5.17 Regulatory Approvals. Promptly following execution of this Agreement,
the parties hereto shall prepare, submit and file, or cause to be prepared,
submitted and filed, all applications for approvals and consents as may be
required of any of them, respectively, by applicable law and regulations with
respect to the transactions contemplated by this Agreement and by the Agreement
of Merger, including without limitation any and all applications required to be
filed with the OCC, the Fed and such other governmental or regulatory
authorities as Bancorp may reasonably believe necessary. Each party shall
cooperate with the others in the preparation of all of those applications and
will furnish promptly upon request all documents, information, financial
statements or other materials as may be required in order to complete said
applications. Each party hereto shall afford the others a reasonable opportunity
to review all such applications (except confidential portions thereof) and all
amendments and supplements thereto before filing.
5.18 Necessary Consents. In addition to the regulatory approvals referred to
in Section 5.17, the parties hereto shall each apply for and diligently seek to
obtain all other third party consents or approvals which may be necessary for
the consummation of the Merger, including, without limitation, the written
consent of any lessors of real and personal property which property cannot be
assigned without the written consent of the other such lessors.
5.19 Further Assurances. The parties agree that from time to time, whether
prior to, at or after the Effective Time of the Merger, they will execute and
deliver such
72
74
further instruments of conveyance and transfer and take such other action as
may reasonably be expected to consummate the transactions contemplated hereby.
Bancorp, CUB, CorpBank and CorpBank Subsidiaries each agree to take such
further action as may reasonably be requested by any other party in order to
consummate the transactions contemplated by this Agreement and that are not
inconsistent with the other provisions hereof.
ARTICLE 6.
CONDITIONS PRECEDENT TO CONTEMPLATED TRANSACTIONS
6.1 General Conditions. The obligations of each of the parties hereto to
consummate the transactions contemplated herein are further subject to the
satisfaction, on or before the Closing Date, of the following conditions
precedent:
(a) Shareholder Approval. The transactions contemplated hereby shall
have received all requisite approvals of the shareholders of CorpBank, Bancorp,
and CUB.
(b) No Proceedings. No legal, administrative, arbitration,
investigatory or other proceeding by any governmental authority shall have been
instituted and, at what would otherwise have been the Effective Time of the
Merger, remain pending by or before a court or any governmental authority to
restrain or prohibit the transactions contemplated hereby.
(c) Regulatory Approvals. To the extent required by applicable law or
regulation, all approvals or consents of any governmental authority, including
without limitation, those of the OCC, Fed and Superintendent shall have been
obtained or made for the transactions contemplated hereby, and the applicable
waiting period under the BHCA and the Bank Merger Act shall have expired. All
other statutory or regulatory requirements for the valid completion of the
transactions contemplated hereby shall have been satisfied.
(d) Stock Exchange Listing. The shares of Bancorp Stock deliverable
pursuant to this Agreement shall have been duly authorized for listing, subject
to official notice of issuance, on the Nasdaq Stock Exchange.
(e) Registration Statement and Proxy Statement. The Registration
Statement shall have become effective under the Securities Act and copies of the
Proxy Statement shall have been mailed to every shareholder of record of
CorpBank on the record date not less than 20 days prior to the date of the
shareholders' meeting called to act upon the Merger.
73
75
6.2 Conditions to Obligations of Bancorp and CUB. The obligations of
Bancorp and CUB to effect the transactions contemplated hereby shall be subject
to the following conditions, any of which may be waived in writing by Bancorp
and CUB:
(a) Representations and Warranties; Performance of Covenants. Each of
the representations and warranties of CorpBank and CorpBank Subsidiaries set
forth herein shall be true and correct as of the Effective Time of the Merger in
all material respects, as if made on such date; and CorpBank and CorpBank
Subsidiaries shall have performed in all material respects all of the covenants
to be performed by them on or prior to the Effective Time of the Merger.
(b) Opinion of Counsel for CorpBank. Bancorp and CUB shall have
received from Xxxxxx & Xxxxxx, counsel to CorpBank, an opinion dated the
Effective Time of the Merger in substantially the form attached hereto as
Exhibit F.
(c) Authorization of Merger. All action necessary to authorize the
execution, delivery and performance of this Agreement by CorpBank and the
CorpBank Subsidiaries and the consummation of the transactions contemplated
hereunder shall have been duly and validly taken by the Boards of Directors and
shareholders of CorpBank, and the CorpBank Subsidiaries including without
limitation approval by a vote of the holders of at least two thirds of the
outstanding shares of CorpBank Stock pursuant to the National Bank Act and the
California Corporations Code, and CorpBank shall have full power and right to
merge pursuant to the Agreement of Merger.
(d) Dissenters' Rights. Not more than 5% of the outstanding shares of
CorpBank Stock shall have been determined to be "dissenting shares" as defined
in the California Corporations Code, the National Banking Act and other
applicable law and regulation.
(e) Regulatory Approvals and Related Conditions. Any governmental and
regulatory approvals and consents referred to in Sections 6.1(c) and any other
section of this Agreement shall have been granted without the imposition of
conditions that are or would have become applicable to Bancorp, or the Surviving
Association and that Bancorp reasonably and in good faith concludes would
adversely affect the financial condition or operations of Bancorp, or the
Surviving Association, or otherwise would be burdensome.
(f) Third Party Consents. CorpBank shall have obtained all consents of
other parties to their material mortgages, notes, leases, franchises,
agreements, licenses and permits as may be necessary to permit the transactions
contemplated herein to be consummated, without default, acceleration, breach or
loss of rights
74
76
or benefits thereunder.
(g) Absence of Certain Changes. As of the Closing Date there shall not
exist any of the following: (i) any change(s) in the consolidated financial
condition, results of operation or prospects of CorpBank since June 30, 1995
which individually is or in the aggregate are materially adverse to CorpBank on
a consolidated basis; or (ii) any damage, destruction, loss or event materially
and adversely affecting the properties, business or prospects of CorpBank on a
consolidated basis.
(h) Termination of Stock Option Plans. CorpBank shall have caused its
stock option plans to be terminated as of the Calculation Date and shall have
obtained the consents or agreements specified in, and otherwise shall have
complied with the terms of, Section 5.12.
(i) Shareholders' Agreements. All directors of CorpBank and all
Shareholders specified in Section 1.9 shall have entered into agreements in
substantially the form attached hereto as Exhibit B concurrently with the
execution of this Agreement, and each of the persons executing such agreement
shall have performed in all material respects the obligations to be performed by
him under the agreement.
(j) Officers' Certificate. There shall have been delivered to Bancorp
on the Closing Date a certificate executed by the Chairman of the Board, Vice
Chairman of the Board, Chief Executive Officer and the Chief Financial Officer
of CorpBank certifying, to the best of their knowledge, compliance with all of
the provisions of Sections 6.2(a), (c), (d), (f), (g), (h) and (i).
(k) Validity of Transactions. The validity of all transactions herein
contemplated, as well as the form and substance of all opinions, certificates,
instruments of transfer and other documents to be delivered to Bancorp and CUB
hereunder, shall be subject to the approval, to be reasonably exercised, of
counsel for Bancorp and CUB.
(l) Accountants' Letters.
(i) Bancorp shall have received from AA, letters, dated the date
of mailing of the Proxy Statement and the Effective Time of the Merger, in form
and substance satisfactory to Bancorp: (i) confirming that they are independent
public accountants with respect to CorpBank and CorpBank Subsidiaries within the
meaning of the Securities Act and the published rules and regulations
thereunder; (ii) stating that, in their opinion, the audited consolidated
financial statements of CorpBank and CorpBank Subsidiaries, examined by them and
included or
75
77
incorporated by reference in the Proxy Statement and Registration Statement and
reported therein by them, comply as to form in all material respects with the
applicable accounting requirements of the 1934 Act, the Securities Act and the
applicable published rules and regulations thereunder, as appropriate; (iii)
stating in effect that they have made a review of the unaudited consolidated
interim financial statements included or incorporated by reference in the proxy
statement or registration statement for periods subsequent to the most recent
audited consolidated financial statements included or incorporated by reference
in the Proxy Statement and the Registration Statement in accordance with
standards established by the American Institute of Certified Public Accountants
and nothing came to their attention that caused them to believe that such
unaudited consolidated financial statements do not comply as to form in all
material respects with the applicable accounting requirements of the 1934 Act
and the Securities Act, as appropriate, or are not presented in conformity with
generally accepted accounting principles applied on a basis consistent in all
material respects with that of the most recent audited consolidated financial
statements included or incorporated by reference in the Proxy Statement and the
Registration Statement; (iv) stating in effect that, on the basis of certain
procedures and inquiries including a reading of the latest available unaudited
consolidated interim financial statements of CorpBank and CorpBank
Subsidiaries, inquiries of officials of CorpBank and CorpBank Subsidiaries
responsible for financial and accounting matters, and a reading of the minutes
of the meetings of the Boards of Directors and shareholders of CorpBank and
CorpBank Subsidiaries (which procedures and inquiries do not constitute an
examination made in accordance with generally accepted auditing standards and
would not necessarily reveal material adverse changes in the consolidated
financial position or results of operations of CorpBank and CorpBank
Subsidiaries ), nothing came to their attention that caused them to believe
that (A) the unaudited consolidated financial statements of CorpBank and the
CorpBank Subsidiaries incorporated by reference in the Proxy Statement and the
Registration Statement do not comply as to form in all material respects with
the applicable accounting requirements of the 1934 Act and the Securities Act,
as appropriate, or that the unaudited consolidated financial statements are not
in conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated financial
statements or that at a specified date not more than five days prior to the
date of mailing of the Proxy Statement or Effective Date of the Registration
Statement and the Effective Time of the Merger, as applicable, there has been
any material change in the capital stock, other equity securities or other
ownership interests of CorpBank or any of the CorpBank Subsidiaries , or any
increase in consolidated long-term debt of CorpBank or any of the CorpBank
Subsidiaries, or any reduction in consolidated shareholders' equity (excluding
unrealized gain or loss on marketable equity securities) or other ownership
interests as compared with the amounts of
76
78
those items set out in the audited consolidated statement of condition at
December 31, 1994 and with any subsequent unaudited consolidated statement of
condition included or incorporated by reference in the Proxy Statement and
Registration Statement, except for changes and the amount of such reduction, if
any, which are described in such letter or are set forth in the Proxy Statement
and Registration Statement, or (B) since December 31, 1994 any dividends were
paid on the CorpBank Stock except as described in such letter; and (v) in
addition to the review referred to in clause (iii) above and the limited
procedures referred to in clause (iv) above, they have carried out certain
specified procedures, if any, not constituting an audit, with respect to
certain amounts or percentages and financial information which appear in the
Proxy Statement and Registration Statement and which have been reasonably
specified by Bancorp or CorpBank, as described in such letter.
(m) Covenants Not to Compete. Each director of CorpBank who is a
shareholder of CorpBank shall have entered into an "Agreement Not to Compete" in
substantially the form attached hereto as Exhibits G(1), and G(2)(Xxxxxxx
Xxxxxxxxx).
(n) Registration Statement. The Registration Statement shall have been
declared effective, no stop-order with respect to the Registration Statement
shall have been received by Bancorp and no proceeding for such purpose shall be
pending or threatened before the SEC.
(o) Blue Sky Qualification. The sale of the Bancorp Stock referred to
herein shall have been qualified or registered with the appropriate authorities
of all states in which qualification or registration is required under the state
securities or Blue Sky laws, and such qualifications or registrations shall not
have been suspended or revoked.
(p) Rule 145 Affiliate Agreements. CorpBank shall have delivered to
Bancorp not later than 30 days prior to the Effective Date, all of the executed
Affiliate Agreements specified in Section 5.13.
(q) Resignations. CorpBank shall have delivered the resignations
required by Section 5.15.
(r) Regulatory Approvals for Bank Merger. All approvals or consents of
any governmental authority shall have been obtained or made for the Bank Merger
and all applicable waiting periods shall have expired. All other statutory or
regulatory requirements for the valid completion of the Bank Merger shall have
been satisfied.
77
79
(s) General Releases. The general releases and dismissals of litigation
set forth in Section 5.6 (u) shall have been received and are acceptable to CUB.
(t) Xxxxxxxxx. Xxxxxxx Xxxxxxxxx shall agree that at the Closing he
will become an employee of CUB, on terms and conditions to be agreed upon by CUB
and Xxxxxxxxx. He will further agree that in the event CUB or Bancorp offers him
a position as a director of either or both companies, he will accept such
appointment.
6.3 Conditions to Obligations of CorpBank. The obligations of CorpBank to
effect the transactions contemplated hereunder shall be subject to the following
conditions, any of which may be waived in writing by CorpBank:
(a) Representations and Warranties; Performance of Covenants. Each of
the representations and warranties of Bancorp and CUB set forth herein shall be
true and correct as of the Effective Time of the Merger in all material
respects, as if made on such date; and Bancorp and CUB shall have performed in
all material respects all of the covenants to be performed by them on or prior
to the Effective Time of the Merger.
(b) Authorization of Merger. All actions necessary to authorize the
execution, delivery and performance of this Agreement by Bancorp and CUB and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken by the Board of Directors of each of Bancorp and CUB, and CUB
shall have full power and right to merge pursuant to the Agreement of Merger.
(c) Officers' Certificate. There shall have been delivered to CorpBank
on the Closing Date a certificate executed by the Chief Executive Officer and
the Chief Financial Officer of each of Bancorp and CUB certifying, to the best
of their knowledge, compliance with all of the provisions of Sections 6.3(a) and
(c).
(d) Third Party Consents. Bancorp and CorpBank shall have obtained all
consents of other parties to their material mortgages, notes, leases,
franchises, agreements, licenses and permits as may be necessary to permit the
transactions contemplated herein to be consummated, without default,
acceleration, breach or loss of rights or benefits thereunder.
(e) Absence of Certain Changes. As of the Closing Date there shall not
exist any of the following: (i) any change(s) in the consolidated financial
condition, results of operation or prospects of Bancorp since December 31, 1994
which individually is or in the aggregate are materially adverse to Bancorp on a
78
80
consolidated basis; or (ii) any damage, destruction, loss or event materially
and adversely affecting the properties, business or prospects of Bancorp on a
consolidated basis.
(f) Fairness Opinion. Within ten (10) days of the execution of this
Agreement, CorpBank shall have received a letter from The Xxxxxxx Group or such
other party as may be acceptable to the parties, substantially in the form
attached hereto as Schedule 6.3(f), to the effect that the transactions
contemplated by this Agreement are fair from a financial point of view to the
shareholders of CorpBank.
(g) Validity of Transactions. The validity of all transactions herein
contemplated, as well as the form and substance of all opinions, certificates,
instruments of transfer and other documents to be delivered to CorpBank
hereunder, shall be subject to the approval, to be reasonably exercised, of
counsel for CorpBank.
ARTICLE 7.
EMPLOYEE BENEFITS PLANS
7.1 Termination of CorpBank Employee Benefit Plans. Prior to the Effective
Time of the Merger, CorpBank will take, and will cause all CorpBank Subsidiaries
to take, all actions necessary to terminate their respective employee benefit
plans and pension plans as of the Effective Time of the Merger. Contributions
under the employee benefit plans and pension plans will be made at the rate
provided in those respective plans through the Effective Time of the Merger.
Except for amendments that are required by the Tax Reform Act of 1986 and later
legislation, no amendments to the employee benefit plans and pension plans shall
be made which increase the obligations of employers under any of the plans.
Distributions from the plans will be made to the participants as soon as
practicable after the termination of the plans in accordance with requirements
of ERISA and the Code.
79
81
ARTICLE 8.
TERMINATION
8.1 Termination of this Agreement.
(a) This Agreement may be terminated:
(i) By mutual agreement of the parties, in writing;
(ii) By (A) Bancorp immediately upon the expiration of 30 days
from the date that Bancorp has given notice to CorpBank of a material breach or
default by CorpBank or any CorpBank Subsidiary in the performance of any
covenant, agreement, representation, warranty, duty or obligation hereunder or
(B) CorpBank immediately upon the expiration of 30 days from the date that
CorpBank has given notice to Bancorp of a material breach or default by Bancorp
or CUB in the performance of any covenant, agreement, representation, warranty,
duty or obligation hereunder; provided, however, that no such termination shall
be effective if, within such 30-day period, the breaching or defaulting party
shall have substantially corrected and cured the grounds for the termination as
set forth in said notice of termination.
(iii) By Bancorp or CUB if any governmental or regulatory
authority denies or refuses to grant the approvals, consents or authorizations
required to be obtained in order to consummate the transactions covered and
contemplated by this Agreement, or if any such approval contains conditions
which, in the reasonable opinion of Bancorp or CUB, are materially burdensome to
its ongoing operations.
(iv) By CorpBank if any governmental or regulatory authority
denies or refuses to grant the approvals, consents or authorizations required to
be obtained in order to consummate the transactions covered and contemplated by
this Agreement other than the Merger.
(v) By Bancorp or CUB at any time prior to the Effective Time of
the Merger, if (A) the Board of Directors of CorpBank approves a transaction (or
CorpBank executes a letter of intent or other document) pursuant to which any
person or entity or related group of persons or entities acquires, directly or
indirectly, record or beneficial ownership (as defined in Rule 13d-3 promulgated
by the SEC pursuant to the 0000 Xxx) or control of 5% or more of the outstanding
shares of CorpBank Stock; (B) any person or entity or related group of persons
or entities seeks to acquire 5% or more of the outstanding shares of CorpBank
Stock by tender offer
80
82
or otherwise, and the Board of Directors of CorpBank does not advise CorpBank's
shareholders that the Board does not support such tender offer or acquisition
and that it does support the Merger; (C) if CorpBank violates its covenant
pursuant to Section 5.7(j); or (D) the Merger does not receive the requisite
approval of CorpBank shareholders.
(vi) By CUB in the event of any change)s) in the financial
condition, results of operation, business, property, assets (including loan
portfolios), prospects, operations, liquidity, income or condition (financial or
otherwise) or prospects of CorpBank since December 31, 1994 (except those events
related to the Audit Group Report dated June 12, 1995) which individually or in
the aggregate are materially adverse to CorpBank or any damage, destruction,
loss, or event materially and adversely affecting the properties, business or
prospects of CorpBank (a "material adverse change"). For purposes of this
section, only, and with regard only to matters the effect of which can be
reasonably quantified, an event, occurrence, or circumstances shall be deemed to
have occurred if the average Core Deposits for the three month period prior to
the end of the month just prior to the Closing, do not equal or exceed 85% of
the Core Deposits of CorpBank at December 31, 1994. For purposes of this
provision, Core Deposits shall include non interest bearing demand deposit
accounts, interest bearing demand deposit accounts, savings accounts and money
market accounts, but shall not include Certificate of Deposits. Additionally,
for purposes of this provision, CUB shall perform a review of CorpBank's loan
portfolio prior to Closing to determine if a material adverse change has
occurred in CorpBank's loan portfolio. A material adverse change will have
occurred if the reserves which need to be allocated in CUB's opinion and
pursuant to its loan grading and allowance for loan and lease losses policy,
uniformly applied, exceed CorpBank's allowance for loan and lease losses by
approximately 15%. CUB shall also conduct a legal audit prior to Closing to
determine if any legal matters or events constitute a material adverse change. A
material adverse change will also be deemed to have occurred if there is a 10%
negative change in any two or more of the factors affecting the business and
prospects of CorpBank, including but not limited to Core Deposits, allowance for
loan and lease losses or legal exposure.
(vii) By CorpBank in the event of any change(s) in the
consolidated financial condition, results of operation, business, property,
assets (including loan portfolios), prospects, operations, liquidity, income or
condition (financial or otherwise) or prospects of CUB since December 31, 1994,
which individually or in the aggregate are materially adverse to CUB or any
damage, destruction, loss, or event materially and adversely affecting the
properties, business or prospects of CUB on a consolidated basis (a "material
adverse change").
81
83
(viii) By CorpBank or CUB if either reasonably disapproves the
determinations of AA with regard to CorpBank shareholders' equity, net income
(loss), and the net after tax effect of any sale or distribution of the Bond
Claim, providing that the terminating party shall be required to set forth the
reasons for such disapproval in writing.
(b) This Agreement shall be terminated if any conditions specified in
Article VI have not been satisfied or waived in writing by the party authorized
to waive such conditions by February 28, 1996 unless mutually extended by the
parties hereto.
(c) This Agreement may be terminated by Bancorp or CUB if Schedules
provided by CorpBank disclose material contracts, liabilities or potential
liabilities not previously disclosed orally or in writing by CorpBank to CUB or
fail to disclose material contracts, liabilities or potential liabilities which
come to CUB's attention in any other manner.
8.2 Effect of Termination; Survival. No termination of this Agreement under
this Article VIII for any reason or in any manner shall release, or be construed
as so releasing, any party hereto from its obligations pursuant to Sections 5.1,
9.1 or 9.2 hereof or from any liability or damage to any other party hereto
arising out of, in connection with or otherwise relating to, directly or
indirectly, said party's material breach, default or failure in performance of
any of its covenants, agreements, duties or obligations arising hereunder, or
any breaches of any representation or warranty contained herein arising prior to
the date of termination of this Agreement.
ARTICLE 9.
GENERAL PROVISIONS
9.1 Indemnification.
(a) CorpBank agrees to defend, indemnify and hold harmless Bancorp and
CUB, their officers and directors, their attorneys, and each person who controls
Bancorp within the meaning of the Securities Act from and against any costs,
damages, liability and expenses of any nature, insofar as such costs, damages,
liabilities and expenses arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Proxy Statement
or in the Registration Statement or any amendments or supplements thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that CorpBank shall be
liable in any
82
84
such case only to the extent that any such cost, damage, liability or expense
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in said Proxy Statement or Registration
Statement or amendments or supplements thereto, in reliance upon and in
conformity with information with respect to CorpBank or CorpBank Subsidiaries
furnished to Bancorp by or on behalf of CorpBank specifically for use therein.
(b) Bancorp and CUB agree to defend, indemnify and hold harmless
CorpBank, its officers and directors, its attorneys, accountants and each person
who controls CorpBank within the meaning of the Securities Act from and against
any costs, damages, liabilities and expenses of any nature, insofar as any such
costs, damages, liabilities or expenses arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Proxy Statement or in the Registration Statement or any amendments or
supplements thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make statements therein not misleading; provided, however, that
neither Bancorp nor Bank will be liable in any such case to the extent that any
such cost, damage, liability or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in said Proxy Statement or Registration Statement, or amendments or
supplements thereto, in reliance upon and in conformity with information with
respect to CorpBank or CorpBank Subsidiaries furnished to Bancorp by or on
behalf of CorpBank specifically for use therein.
9.2 Expenses. Each party hereto shall pay its own costs and expenses,
including, but not limited to, those of its attorneys and accountants, in
connection with this Agreement and the transactions covered and contemplated
hereunder.
9.3 Notices. All notices, demands or other communications hereunder shall
be in writing or by telex or facsimile transmission and shall be deemed to have
been duly given on the date of service if delivered (i) in person or by telex or
facsimile transmission (provided that telexed or telecopied notices are also
mailed by first class, certified or registered mail, postage prepaid); or (ii)
72 hours after mailing by United States mail, first-class, certified or
registered, with return receipt requested and postage prepaid, and properly
addressed as follows:
(a) If to CorpBank:
Corporate Bank
0000 Xxxxx Xxxxx Xxxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
83
85
Attention:
Xxxxx Xxxxxx, Chairman
Xxxxxxx Xxxxxxxxx, Vice Chairman
With copies to:
Xxxxxxx Xxxxxx, Esq.
Xxxxxx & Xxxxxx
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
fax: (000) 000 0000
84
86
(b) If to Bancorp and CUB:
CU Bancorp and California United Bank, National Association
00000 Xxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx.
Chief Executive Officer
Telecopier Number (000) 000-0000
With copies to:
Xxxxx X. Xxxxxx, Esq.
General Counsel
California United Bank, N.A.
00000 Xxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Telecopier No. (000) 000-0000
The persons or addresses to which mailings or deliveries shall be made may
change from time to time by notice given pursuant to the provisions of this
Section 9.3.
9.4 Successors and Assigns. All terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective transferees, successors and assigns; provided, however, that, except
as otherwise contemplated herein, this Agreement and all rights, privileges,
duties and obligations of the parties hereto may not be assigned or delegated by
any party hereto without the prior written consent of the other parties to this
Agreement and any purported assignment in violation of this Section 9.4 shall be
null and void.
9.5 Third Party Beneficiaries. Each party hereto intends that this
Agreement shall not benefit, or create any right or cause of action in or on
behalf of, any person other than the parties hereto. As used in this Agreement,
the term "party" or "parties" shall refer only to Bancorp, CUB, CorpBank,
CorpBank Subsidiaries, the Surviving Association or any of them.
9.6 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
9.7 Governing Law. This Agreement is made and entered into in the State of
California and, except to the extent that the provisions of the National Banking
Act
85
87
are mandatorily applicable, the laws of the State of California shall govern
the validity and interpretation hereof and the performance of the parties
hereto of their respective duties and obligations hereunder. The parties
hereto agree to venue in the city of Los Angeles, State of California.
9.8 Captions. The captions contained in this Agreement are for convenience
of reference only and do not form a part of this Agreement.
9.9 Waiver and Modification. No waiver of any term, provision or condition
of this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver
of any such term, provision or condition of this Agreement. This Agreement and
the Agreement of Merger, when executed and delivered, may be modified or amended
by action of the Boards of Directors of Bancorp, CUB, CorpBank or CorpBank
Subsidiaries without action by their respective shareholders. This Agreement may
be modified or amended only by an instrument of equal formality signed by the
parties or their duly authorized agents.
9.10 Attorneys' Fees. In the event any of the parties to this Agreement
brings an action or suit against any other party by reason of any breach of any
covenant, agreement, representation, warranty or other provision hereof, or any
breach of any duty or obligation created hereunder by such other party, the
prevailing party, as determined by the court or other body having jurisdiction,
shall be entitled to have and recover of and from the losing party, as
determined by the court or other body having jurisdiction, all reasonable costs
and expenses incurred or sustained by such prevailing party in connection with
such suit or action, including, without limitation, legal fees and court costs
(whether or not taxable as such).
9.11 Jury Waiver. THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY MATTER
ARISING OUT OF THIS AGREEMENT OR RELATED TO THIS AGREEMENT OR IN CONNECTION WITH
ANY TRANSACTION OR MATTER CONTEMPLATED IN THIS AGREEMENT.
9.12 Entire Agreement. The making, execution and delivery of this Agreement
by the parties hereto have not been induced by any representations, statements,
warranties or agreements other than those herein expressed. This Agreement
embodies the entire understanding of the parties and there are no further or
other agreements or understandings, written or oral, in effect between the
parties relating to the subject matter hereof, unless expressly referred to by
reference herein.
9.13 Severability. Whenever possible, each provision of this Agreement and
every related document shall be interpreted in such manner as to be valid under
applicable law. However, if any provision of any of the foregoing shall be
invalid
86
88
or prohibited under said applicable law, it shall be construed, interpreted and
limited to effectuate its purpose to the maximum legally permissible extent.
If it cannot be so construed and interpreted so as to be valid under such law,
such provision shall be ineffective to the extent of such invalidity or
prohibition without invalidating the remainder of such provision or the
remaining provisions of this Agreement, and this Agreement shall be construed
to the maximum extent possible to carry out its terms without such invalid or
unenforceable provision or portion thereof.
9.14 Effect of Disclosure. Any list, statement, document, writing or other
information set forth in, referenced to or attached to any Schedule or Exhibit
delivered pursuant to any provision of this Agreement shall be deemed to
constitute disclosure for purposes of any other Schedule or Exhibit required to
be delivered pursuant to any other provision of this Agreement.
9.15 Publicity. The parties hereto agree that they will coordinate on any
publicity concerning this Agreement, and the transactions contemplated hereby.
Except as may be required by law, no party shall issue any press release,
publicity statement or other public notice relating in any way to this Agreement
or any of the transactions contemplated hereby without obtaining the prior
consent of the others, which consent shall not be unreasonably withheld.
9.16 Knowledge. Whenever any statement herein or in any schedule, exhibit,
certificate or other documents delivered to any party pursuant to this Agreement
is made "to the knowledge" or "to the best knowledge" of any party or other
person, such party or other person shall make such statement only after
conducting an investigation reasonable under the circumstances of the subject
matter thereof, and each such statement shall constitute a representation that
such investigation has been conducted.
9.17 Schedules. Notwithstanding anything to the contrary herein, Schedules
to this Reorganization Agreement may be submitted not more than ten (10)
business days following execution of this Reorganization Agreement. If a party
does not object to any Schedule within 3 business days of receipt thereof, it
shall be deemed acceptable.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day and year first above written.
87
89
Bancorp: CU BANCORP
By: /s/ XXXXXXX X. XXXXXXXXX
--------------------------------
Name: XXXXXXX X. XXXXXXXXX
Title: PRESIDENT
By: /s/ XXXXXXX XXXXXXX
--------------------------------
Name: XXXXXXX XXXXXXX
Title: CHIEF FINANCIAL OFFICER
CUB: CALIFORNIA UNITED BANK, NATIONAL
ASSOCIATION
By: /s/ XXXXXXX X. XXXXXXXXX
--------------------------------
Name: XXXXXXX X. XXXXXXXXX
Title: CHIEF EXECUTIVE OFFICER
By: /s/ XXXXX X. XXXXXX
--------------------------------
Name: XXXXX X. XXXXXX
Title: PRESIDENT
CorpBank: CORPORATE BANK
By: /s/ C. XXXXX XXXXXX
--------------------------------
Name: C. XXXXX XXXXXX
Title: PRESIDENT
By: /s/ XXXXX XXXXXX
--------------------------------
Name: XXXXX XXXXXX
Title: VICE PRESIDENT
88
