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EXHIBIT 2
AGREEMENT
AND
PLAN OF REORGANIZATION
BY AND AMONG
FIRST COASTAL BANCSHARES,
FIRST COASTAL BANK, N.A.
AND
AMERICAN INDEPENDENT BANK, N.A.
AUGUST 3, 1998
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TABLE OF CONTENTS
ARTICLE I Page No.
THE CONSOLIDATION AND RELATED TRANSACTIONS.....................................1
1.1 Creation of FCB Interim.................................................1
1.2 Consolidation...........................................................1
(a) Consolidation of FCB Interim and AIB.............................1
(b) Effect on FCB Interim Shares.....................................2
(c) Effect on AIB Shares.............................................2
1.3 The Merger..............................................................2
(a) Merger of Consolidated Bank into FCB.............................2
(b) Effect on FCB Shares.............................................2
(c) Effect on Consolidated Bank Stock................................2
1.4 Dissenting Shares.......................................................3
1.5 Aggregate Purchase Price and Per Share Purchase Price...................3
1.6 Delivery of Cash........................................................3
1.7 Effect of the Consolidation.............................................4
1.8 Effect of the Merger....................................................4
1.9 Name of Consolidated Bank...............................................4
1.10 Articles of Association and Bylaws of Consolidated Bank.................4
1.11 Directors and Officers of Consolidated Bank.............................4
1.12 Name of Surviving Bank..................................................5
1.13 Articles of Association and Bylaws of Surviving Bank....................5
1.14 Directors and Officers of Surviving Bank................................5
1.15 Directors' Agreements...................................................5
1.16 Cooperation; Best Efforts...............................................5
ARTICLE II
THE CLOSING....................................................................6
2.1 Closing Date............................................................6
2.2 Execution of Consolidation Agreement and Merger
Agreement...............................................................6
2.3 Documents to be Delivered...............................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AIB..........................................6
3.1 Organization, Standing and Power of AIB.................................6
3.2 Capitalization..........................................................7
3.3 Subsidiaries............................................................7
3.4 AIB Financial Statements................................................7
3.5 Authority...............................................................8
3.6 Insurance...............................................................9
3.7 Books and Records.......................................................9
3.8 Title to Assets........................................................10
3.9 Environmental Liabilities..............................................10
3.10 Litigation.............................................................12
3.11 Taxes..................................................................12
3.12 Compliance with Laws and Regulations...................................13
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3.13 Performance of Obligations.............................................13
3.14 Employees..............................................................14
3.15 Brokers and Finders....................................................14
3.16 Material Understandings................................................14
3.17 Absence of Certain Changes.............................................15
3.18 Licenses and Permits...................................................17
3.19 Loans..................................................................17
3.20 Employee Benefit Plans and Employment and Labor
Contracts..............................................................17
3.21 Investments............................................................20
3.22 Operational Losses.....................................................20
3.23 Powers of Attorney.....................................................20
3.24 Loan Servicing Portfolio...............................................20
3.25 Proxy Statement........................................................20
3.26 Accuracy of Information Furnished......................................21
3.27 Effective Date of Representation and Warranties........................21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCORP AND FCB.............................21
4.1 Organization, Standing and Power of Bancorp............................21
4.2 Capitalization of Bancorp..............................................21
4.3 Organization, Standing and Power of FCB................................21
4.4 Capitalization of FCB..................................................22
4.5 Financial Statements...................................................22
4.6 Authority..............................................................22
4.7 Information Furnished by Bancorp.......................................23
4.8 Accuracy of Information Furnished......................................23
4.9 Effective Date of Representations and Warranties.......................24
4.10 Compliance With Laws and Regulations...................................24
4.11 Performance of Obligations.............................................24
4.12 Absence of Certain Changes.............................................24
4.13 Licenses and Permits...................................................24
4.14 Capital Raising........................................................25
4.15 .......................................................................25
ARTICLE V
CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE TIME OF
CONSOLIDATION.................................................................25
5.2 Affirmative Conduct of AIB Prior to the Effective
Time of the Consolidation..............................................28
5.3 Access to Information..................................................30
5.4 Review by Accountants..................................................30
5.5 Termination of AIB Stock Option Plan...................................31
5.6 Termination of AIB Employee Plans......................................31
5.7 Shareholders' Meeting..................................................31
5.8 Affirmative Conduct of Bancorp and FCB.................................31
(a) Satisfaction of Conditions......................................31
(b) Notice of Changes...............................................31
(d) Regulatory Applications.........................................32
(e) Additional FCB Financial Statements.............................32
(f) Raising Capital to Consummate the Consolidation.................32
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5.9 Corporate Action.......................................................32
5.10 Necessary Consents.....................................................32
5.11 Environmental Assessment Report........................................32
5.12 Access to Information..................................................33
ARTICLE VI
CONDITIONS PRECEDENT TO THE TRANSACTIONS......................................33
6.1 General Conditions.....................................................33
(a) Shareholder Approval............................................33
(b) No Proceedings..................................................33
(c) Regulatory Approvals............................................33
6.2 Conditions to Obligations of Bancorp and FCB...........................33
(a) Representations and Warranties; Performance of
Covenants.......................................................33
(b) Authorization of Merger.........................................33
(c) Regulatory Approvals............................................34
(d) Third Party Consents............................................34
(e) Absence of Material Adverse Changes.............................34
(f) Termination of Stock Option Plans...............................34
(g) Shareholders' Agreements........................................34
(h) Officers' Certificate...........................................34
(i) Tax Matters.....................................................34
(j) Validity of Transactions........................................34
6.3 Conditions to Obligations of AIB.......................................35
(a) Representations and Warranties; Performance of
Covenants.......................................................35
(b) Authorization of Merger.........................................35
(c) Officers' Certificate...........................................35
(d) Validity of Transactions........................................35
(e) Necessary Capital...............................................35
ARTICLE VII
EMPLOYEE BENEFITS.............................................................35
7.1 Surviving Bank Employee Benefits.......................................35
7.2 Employees of AIB.......................................................35
7.3 Chief Executive of AIB.................................................36
ARTICLE VIII
TERMINATION...................................................................36
8.1 Termination of this Agreement..........................................36
8.2 Immaterial Breach......................................................38
8.3 Effect of Termination..................................................38
ARTICLE IX
GENERAL PROVISIONS............................................................38
9.1 .......................................................................38
(a) Compensation to Bancorp and FCB.................................38
9.2 Expenses...............................................................39
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9.3 Notices................................................................39
9.4 Successors and Assigns.................................................40
9.5 Effect of Representations and Warranties...............................40
9.6 Third Party Beneficiaries..............................................40
9.7 Counterparts...........................................................40
9.8 Governing Law..........................................................40
9.9 Captions...............................................................40
9.10 Waiver and Modification................................................41
9.11 Knowledge..............................................................41
9.12 Attorneys' Fees........................................................41
9.13 Entire Agreement.......................................................41
9.14 Severability...........................................................41
9.15 Effect of Disclosure...................................................41
9.16 Publicity..............................................................42
Exhibits
"A" - Agreement of Consolidation
"B" - Agreement of Merger
"C" - Shareholders' Agreement
"D" - First Amendment to Executive's Employment Contract
Schedules
3.1 - AIB's Articles of Incorporation and Bylaws
3.2 - Capitalization
3.3 - Subsidiaries
3.4 - AIB Financial Statements
3.5 - Authority
3.6 - Insurance
3.8 - Title to Assets
3.9 - Environmental Liabilities
3.10 - Litigation
3.11 - Taxes
3.12 - Compliance with Laws and Regulations
3.13 - Performance of Obligations
3.14 - Employees
3.15 - Brokers and Finders
3.16 - Material Understandings
3.17 - Absence of Certain Changes
3.19 - Loans
3.20 - Employee Benefit Plans
3.21 - Investments
3.22 - Operational Losses
3.23 - Powers of Attorney
3.24 - Loan Servicing Portfolio
4.1 - Bancorp's Article of Incorporation and Bylaws
4.3 - FCB's Articles of Association and Bylaws
4.6 - Authority
4.10 - Compliance with Laws and Regulations
4.11 - Performance of Obligations
4.12 - Absence of Certain Changes
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (this "Agreement") is made and
entered into as of August 3, 1998 by and among FIRST COASTAL BANCSHARES, a
California corporation ("Bancorp"); FIRST COASTAL BANK, NATIONAL ASSOCIATION, a
national banking association ("FCB"); and AMERICAN INDEPENDENT BANK, N.A., a
national banking association ("AIB").
R E C I T A L S
A. Bancorp, FCB and AIB desire to enter into this Agreement which
contemplates the acquisition of AIB by FCB.
B. This Agreement provides for the completion of the acquisition of AIB
by FCB through the merger (the "Consolidation") of AIB with an interim national
bank which shall be a wholly-owned subsidiary of FCB ("FCB Interim"), to be
followed immediately by the merger (the "Merger") of the survivor thereof with
and into FCB (both the Consolidation and the Merger are sometimes hereinafter
referred to collectively as the "Acquisition"), under the applicable laws of the
State of California and the United States and in accordance with the agreement
of consolidation ("Consolidation Agreement") to be entered into by and between
FCB Interim and AIB and the agreement of merger ("Merger Agreement") to be
entered into by and among AIB, FCB and Bancorp substantially in the form of
Exhibits "A" and "B" hereto, respectively.
In consideration of the mutual covenants, agreements, representations
and warranties contained herein, and intending to be legally bound, the parties
hereto agree as follows:
ARTICLE I
THE CONSOLIDATION AND RELATED TRANSACTIONS
1.1 CREATION OF FCB INTERIM. As soon as practicable, FCB shall organize
FCB Interim as an interim national bank wholly owned by FCB.
1.2 CONSOLIDATION. The Consolidation shall become effective (the
"Effective Time of the Consolidation") on the date and time specified in a
certificate to be issued by the Office of the Comptroller of the Currency
("OCC") approving the Acquisition. At the Effective Time of the Consolidation
and pursuant to the terms of this Agreement and the Consolidation Agreement, the
following transactions will be deemed to have occurred simultaneously:
(a) CONSOLIDATION OF FCB INTERIM AND AIB. FCB Interim and AIB
will merge, and the separate corporate existence of FCB Interim shall cease. AIB
as the bank surviving the consolidation is sometimes referred to herein as the
"Consolidated Bank."
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(b) EFFECT ON FCB INTERIM SHARES. Each share of the common stock
of FCB Interim ("FCB Interim Stock") issued and outstanding immediately prior to
the Effective Time of the Consolidation, on and after the Effective Time of the
Consolidation, pursuant to the Consolidation Agreement and without any further
action on the part of FCB or FCB Interim, shall be converted into one share of
common stock of the Consolidated Bank (the "Consolidated Bank Stock"). Each
outstanding stock certificate which prior to the Effective Time of the
Consolidation represented shares of FCB Interim Stock automatically and for all
purposes shall be deemed to represent the number of shares of Consolidated Bank
Stock into which the shares of FCB Interim Stock represented by such certificate
have been converted as provided in this Subarticle 1.2(b).
(c) EFFECT ON AIB SHARES. Each share of the common stock of AIB
("AIB Stock") issued and outstanding immediately prior to the Effective Time of
the Consolidation, except for Dissenting Shares (as defined in Subarticle 1.4
hereof), on and after the Effective Time of the Consolidation, pursuant to the
Consolidation Agreement and without any further action on the part of AIB or the
holders of AIB Stock, automatically shall be canceled and cease to be an issued
and outstanding share of AIB Stock and shall be converted into the right to
receive the Per Share Purchase Price (as defined in Subarticle 1.5 hereof).
Certificates formerly evidencing shares of AIB Stock shall be surrendered for
payment to the Exchange Agent (as defined in Subarticle 1.6 hereof) in
accordance with Subarticle 1.6.
1.3 THE MERGER. The Merger shall become effective (the "Effective
Time of the Merger") on the date and time specified in a certificate to be
issued by the OCC approving the Acquisition. At the Effective Time of the
Merger, and pursuant to this Agreement and the Merger Agreement, the following
transactions will be deemed to have occurred simultaneously:
(a) MERGER OF CONSOLIDATED BANK INTO FCB. AIB, as the
Consolidated Bank, shall be merged with and into FCB, and the separate corporate
existence of the Consolidated Bank shall cease. FCB as the bank surviving the
Merger is sometimes referred to herein as the "Surviving Bank."
(b) EFFECT ON FCB SHARES. Each share of common stock of FCB
("FCB Stock") issued and outstanding immediately prior to the Effective Time of
the Merger shall, on and after the Effective Time of the Merger remain issued
and outstanding and shall automatically and for all purposes be deemed to
represent one share of common stock of the Surviving Bank ("Surviving Bank
Stock").
(c) EFFECT ON CONSOLIDATED BANK STOCK. Subject to Subarticle 1.4
hereof, each share of Consolidated Bank Stock outstanding immediately prior to
the Effective Time of the Merger, pursuant to the Merger Agreement and without
further action on the part of Bancorp, FCB, AIB or the former holders of AIB
Stock, automatically shall be canceled and cease to be an issued and outstanding
share of Consolidated Bank Stock.
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1.4 DISSENTING SHARES. Each outstanding share of AIB Stock whose holder
has lawfully dissented from the Consolidation in accordance with Section 215(a)
of The National Bank Act, or any other applicable statutes, shall be entitled to
such per share compensation as provided by applicable law.
1.5 AGGREGATE PURCHASE PRICE AND PER SHARE PURCHASE PRICE. The aggregate
amount payable in cash pursuant to Subarticle 1.2(c) for all of the outstanding
shares of AIB Stock shall be equal to $6,616,000 plus or minus the dollar amount
of any increase or decrease in AIB's shareholders equity to the end of the month
immediately preceding the Closing as measured against AIB's shareholders equity
on March 31, 1998. For purposes of this Agreement, AIB's shareholders equity
shall be increased or decreased in accordance with generally accepted accounting
principles, taking into account net earnings or losses and including expenses
related to any commissions due to Xxx Xxxxxx and/or Brookstreet Securities
arising out of, or in connection with the transactions contemplated herein, and
including only the after-tax impact, on the Surviving Bank, from the payment of
monies necessary to cancel outstanding stock options as required under Article
5.5 hereof and to cancel any outstanding warrants but excluding up to $16,000
for the cost of a "peace of mind" policy for the benefit of AIB's directors and
the cost of any legal and/or accounting services needed in connection with the
termination of AIB's 401(K) plan should the parties decide to terminate the
401(K) plan (the "Aggregate Purchase Price"). The amount payable pursuant to
Subarticle 1.2(c) for each outstanding share of AIB Stock (the "Per Share
Purchase Price") shall be equal to the quotient obtained by dividing (i) the
Aggregate Purchase Price, by (ii) the total number of shares of AIB Stock
outstanding immediately prior to the Effective Time of the Consolidation
(including Dissenting Shares).
1.6 DELIVERY OF CASH. Immediately prior to the Effective Time of the
Consolidation, FCB shall deliver or cause to be delivered to U.S. Stock Transfer
(the "Exchange Agent"), an amount of cash equal to the Aggregate Purchase Price.
Delivery to the holders of AIB Stock of the cash to which they are entitled will
subsequently be promptly made by the Exchange Agent against delivery of share
certificates formerly evidencing AIB Stock (duly executed and in proper form for
transfer) to the Exchange Agent in accordance with this Subarticle 1.6 and the
terms and conditions of an agreement to be entered into by and between FCB and
the Exchange Agent (the "Exchange Agent Agreement"). A copy of the Exchange
Agent Agreement will be provided to AIB and its counsel for approval prior to
consummation of the Merger, which approval shall not be unreasonably withheld.
As soon as practicable after the Effective Time of the Consolidation,
the Exchange Agent will send a notice and transmittal form to each holder of a
certificate previously representing shares of AIB Stock advising such holders of
the applicable terms of the conversion effected by the Consolidation and the
procedure for surrendering to the Exchange Agent such certificate for conversion
into cash. Each holder of such certificates, upon surrender of the same to the
Exchange Agent in accordance with such transmittal form, shall be entitled to
receive the consideration provided for in Subarticle 1.2(c) hereof, with the
exception of holders of Dissenting Shares. If the consideration for shares of
AIB Stock provided
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for in Subarticle 1.2(c) is to be delivered to any person other than the
registered holder of said shares surrendered for exchange, the amount of any
stock transfer tax or similar taxes (whether imposed on the registered holder or
such person) payable on account of the transfer to such person shall be paid to
the Exchange Agent by such person, or the Exchange Agent may refuse to make such
exchange unless satisfactory evidence of the payment of such taxes or exemption
therefrom is submitted.
1.7 EFFECT OF THE CONSOLIDATION. By virtue of the Consolidation and at
the Effective Time of the Consolidation, all of the rights, privileges, powers
and franchises and all property and assets of every kind and description of FCB
Interim and AIB shall be vested in and be held and enjoyed by the Consolidated
Bank, without further act or deed, and all the estates and interests of every
kind of FCB Interim and AIB, including all debts due to either of them, shall be
as effectively the property of the Consolidated Bank as they were of FCB Interim
and AIB, and the title to any real estate vested by deed or otherwise in either
FCB Interim or AIB shall not revert or be in any way impaired by reason of the
Consolidation; and all rights of creditors and liens upon any property of FCB
Interim and AIB shall be preserved unimpaired, and all debts, liabilities and
duties of FCB Interim and AIB shall be debts, liabilities and duties of the
Consolidated Bank 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 Consolidation.
1.8 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 the Consolidated Bank and
FCB shall be vested in and be held and enjoyed by the Surviving Bank, without
further act or deed, and all the estates and interests of every kind of the
Consolidated Bank and FCB, including all debts due to either of them, shall be
as effectively the property of the Surviving Bank as they were of the
Consolidated Bank and FCB, and the title to any real estate vested by deed or
otherwise in either the Consolidated Bank or FCB 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 the Consolidated Bank and FCB shall be preserved unimpaired, and
all debts, liabilities and duties of the Consolidated Bank and FCB shall be
debts, liabilities and duties of the Surviving Bank 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.
1.9 NAME OF CONSOLIDATED BANK. The name of the Consolidated Bank shall
be "American Independent Bank N.A."
1.10 ARTICLES OF ASSOCIATION AND BYLAWS OF CONSOLIDATED BANK. The
Articles of Association and Bylaws of FCB Interim as in effect immediately prior
to the Effective Time of the Consolidation shall be the Articles of Association
and Bylaws of the Consolidated Bank.
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1.11 DIRECTORS AND OFFICERS OF CONSOLIDATED BANK. The directors of FCB
Interim at the Effective Time of the Consolidation and Xxxxxxx X. Xxxxxx shall
be the directors of the Consolidated Bank until heir successors have been chosen
and qualified in accordance with the Articles of Association and the Bylaws of
the Consolidated Bank. The officers of FCB Interim at the Effective Time of the
Consolidation together with Xxxxxxx X. Xxxxxx shall be the officers of the
Consolidated Bank until they resign or are replaced or terminated by the Board
of Directors of the Consolidated Bank or otherwise in accordance with the
Consolidated Bank's Articles of Association or Bylaws.
1.12 NAME OF SURVIVING BANK. The name of the Surviving Bank shall be
"First Coastal Bank, National Association."
1.13 ARTICLES OF ASSOCIATION AND BYLAWS OF SURVIVING BANK. The Articles
of Association set forth on Attachment "A" to the Merger Agreement shall be the
Articles of Association of the Surviving Bank. The Bylaws of FCB as in effect
immediately prior to the Effective Time of the Merger shall continue to be the
Bylaws of the Surviving Bank.
1.14 DIRECTORS AND OFFICERS OF SURVIVING BANK. The directors of FCB at
the Effective Time of the Merger and Xxxxxxx X. Xxxxxx, as Vice Chairman of the
Board, shall be the directors of the Surviving Bank until their successors have
been chosen and qualified in accordance with the Articles of Association and
Bylaws of the Surviving Bank. The officers of FCB at the Effective Time of the
Merger together with Xxxxxxx X. Xxxxxx shall be the officers of the Surviving
Bank until they resign or are replaced or terminated by the Board of Directors
of the Surviving Bank or otherwise in accordance with the Surviving Bank's
Articles of Association or Bylaws.
1.15 DIRECTORS' AGREEMENTS. Concurrently with the execution of this
Agreement, AIB shall cause each of its directors to enter into an agreement
substantially in the form of Exhibit "C" hereto, pursuant to which each director
shall agree to vote or cause to be voted all shares of AIB Stock with respect to
which such director has voting power on the date hereof or hereafter acquired to
approve the transactions contemplated hereby and all requisite matters related
thereto.
1.16 COOPERATION; BEST EFFORTS. Each of the parties, consistent with the
fiduciary duties of the directors to such party, will use its best efforts to
consummate the transactions contemplated by this Agreement and cooperate in any
action necessary or advisable to facilitate such consummation including, without
limitation, making all filings required in order to obtain any necessary
consents or comply with law and providing any information required in connection
therewith. Should the structure of the transactions contemplated by this
Agreement result in the recognition of any gain or loss to Bancorp, FCB or AIB
(but excluding AIB's shareholders) the parties will cooperate fully to
restructure the transaction so as to avoid such tax consequence, provided that
the economic benefit to AIB's shareholders remains unchanged.
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ARTICLE II
THE CLOSING
2.1 CLOSING DATE. The consummation of the transactions contemplated by
this Agreement (the "Closing"), unless another date or place is agreed in
writing by the parties hereto, shall take place at the main office of First
Coastal Bank, N.A., 000 Xxxx Xxxxxx, Xx Xxxxxxx, Xxxxxxxxxx 00000, within
fifteen (15) days following the last to occur of (i) the receipt of all
approvals and consents specified in Articles V and VI hereof, (ii) the
expiration of the applicable waiting period under the Bank Merger Act, and (iii)
the date on which all conditions specified in Article VI hereof have been
satisfied (the "Closing Date"); provided, however, that if the parties cannot
agree on the Closing Date, the Closing Date shall be the last business day in
such fifteen (15) day period.
2.2 EXECUTION OF CONSOLIDATION AGREEMENT AND MERGER AGREEMENT. Prior to
the Closing Date, and as soon as practicable after execution of this Agreement,
the Consolidation Agreement and the Merger Agreement shall be executed by the
parties thereto (both such agreements as amended, if necessary, to conform to
any requirements of any regulatory authority having authority over the
Consolidation and the Merger) and, together with all requisite certificates as
are required by applicable law, shall be submitted to the appropriate bank
regulatory authorities.
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 contemplated by this Agreement. If, at any time after the Effective
Time of the Consolidation, the Consolidated Bank or the Surviving Bank or their
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.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AIB
AIB represents and warrants to Bancorp and FCB as follows:
3.1 ORGANIZATION, STANDING AND POWER OF AIB. AIB is a national banking
association, duly organized and existing in good standing under the laws of the
United States of America, and is authorized by the Office of the Comptroller of
the Currency to conduct a general banking business. AIB is a member of the
Federal Reserve System and its deposits are insured by the Federal Deposit
Insurance Corporation ("FDIC") in the manner and to the extent provided by law.
AIB 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.
Neither the scope of the
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business of AIB nor the location of any of its properties requires that it be
licensed to do business in any jurisdiction other than the State of California.
Schedule 3.1 sets forth true and correct copies of AIB's Articles of Association
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 AIB consists of Six Million, Five Hundred Thousand (6,500,000)
shares of common stock, $1.00 par value. As of the date of this Agreement, there
are 910,289 shares of Common Stock issued and outstanding. All of the
outstanding shares of AIB Stock are validly issued, fully paid and nonassessable
(except as provided for in 12 USC 55). Except for employee stock options
covering 139,012 shares of AIB Stock granted pursuant to AIB's Stock Option Plan
and warrants to purchase 43,177 shares of AIB stock, there are no outstanding
options, warrants, commitments, agreements or other rights in or with respect to
the unissued shares of, or any other securities convertible into, AIB Stock
(collectively, "Stock Equivalents"). Schedule 3.2 sets forth the name of each
holder of a AIB employee stock option, the number of shares of AIB Stock covered
by each such holder's option, the name of each warrant holder, the number of
shares of AIB stock entitled to be purchased by each warrant holder, the
exercise price per share and the expiration date of each such holder's option or
warrant.
3.3 SUBSIDIARIES. Except as set forth on Schedule 3.3, AIB does not own,
directly or indirectly (except as pledgee pursuant to loans which are not in
default), the outstanding stock or other voting interests in any corporation,
partnership, joint venture or other entity.
3.4 AIB FINANCIAL STATEMENTS. AIB has delivered to Bancorp and FCB (to
the extent they are available) audited balance sheets of AIB as of December 31,
1997, 1996 and 1995 the related statements of operations, changes in
shareholders' equity and statements of cash flow for the periods then ended, and
the related notes and related accountant's opinions thereon (the "AIB Financial
Statements"). The AIB Financial Statements (i) present fairly the financial
condition of AIB as of the respective dates indicated and the results of
operations, the changes in stockholders' equity and cash flows for the
respective periods indicated; (ii) have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with past
practices; (iii) contain and reflect reserves for all material accrued
liabilities and for all reasonably anticipated losses, including but not limited
to adequate reserves for loan and lease losses; and (iv) are based on the books
and records of AIB. AIB is not subject to any liability (whether accrued,
absolute, contingent or otherwise), except as reflected in the AIB Financial
Statements or as otherwise disclosed in writing to FCB prior to the execution of
this Agreement. AIB does not know of any basis for the assertion against it of
any liability, obligation or claim (including, without limitation, that of any
regulatory authority) that might result in or cause a Material Adverse Change in
the Business Condition of AIB (as that term is defined below) which is not
fairly reflected in the AIB Financial Statements delivered to Bancorp and FCB or
otherwise disclosed on Schedule 3.4.
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For purposes of this Agreement, "Material Adverse Change in the Business
Condition of AIB" shall mean a reduction of ten percent (10%) or more in AIB's
stockholders' equity from the amount of stockholders' equity of AIB which
existed as of March 31, 1998, except that the following fees and costs shall not
be included in the calculation of shareholders' equity for purposes of this
paragraph: (i) any and all costs and expenses relating to this transaction,
including legal and accounting fees and costs, financial advisory and investment
banking fees and costs, fees and costs of consultants, and costs of proxy
statements and shareholder action on the Merger, (ii) any costs associated with
year 2000 safety and soundness issues, and (iii) payment of, or accrued
liabilities for, the amounts necessary to cause the cancellation of any
outstanding stock options pursuant to Article 5.5 hereof. For purposes of this
paragraph, such Material Adverse Change in the Business Condition of AIB may
result from, among other things, threatened or pending litigation, a substantial
deterioration in AIB's loan portfolio, or regulatory enforcement proceedings,
order or directives that are materially burdensome to AIB, except that the
Agreement between AIB and the Office of the Comptroller of the Currency
regarding Year 2000 safety and soundness issues dated July 28, 1998 is not and
will not be deemed to be a Material Adverse Change in the Business Condition of
AIB.
For purposes of this Agreement, AIB's financial statements, including
allowance for loan and lease losses and stockholders' equity, shall have been,
or shall be, prepared in all material respects in accordance with Generally
Accepted Accounting Principals ("GAAP"). If the parties disagree on whether
AIB's financial statements, including its allowance for loan and lease losses
and stockholders' equity, are or were prepared in accordance with GAAP, the
parties shall attempt to hire an independent "Big Six" Accounting firm, or other
independent expert agreed to between the parties, to resolve any remaining items
that have not been agreed upon, and the opinion of such accounting firm or other
expert shall be binding on the parties for purposes of this Agreement. The
parties shall cooperate fully with each other and the accounting firms or other
expert, and the partes will equally split the cost.
3.5 AUTHORITY. The execution and delivery by AIB of this Agreement and
the Consolidation Agreement and, subject to the requisite approval of the
shareholders of AIB, the consummation of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
action on the part of AIB. This Agreement is, and the Consolidation Agreement
will be upon the due execution and delivery, valid and binding obligations of
AIB, enforceable in accordance with their respective terms, except as the
enforceability 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 on Schedule 3.5, neither the execution
and delivery by AIB of this Agreement or the Consolidation Agreement, nor the
consummation of the transactions contemplated herein or therein, nor compliance
by AIB with any of the provisions hereof or thereof, will (i) conflict with or
result in a breach of any provision of its 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
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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 or other Understanding (as that term is defined below)
to which AIB is a party, or by which AIB or any of its properties or assets is
bound, except where such breach or default, individually or in the aggregate,
would not cause a Material Adverse Change in the Business Condition of AIB; or
(iii) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to AIB or any of its properties or assets, except where such
violation, individually or in the aggregate, would not cause a Material Adverse
Change in the Business Condition of AIB. As used herein, the term
"Understanding" means any contract, agreement, understanding, commitment or
offer, whether written or oral, which is binding upon or may become binding upon
a party if accepted by another person. No consent or approval of, notice to or
filing with any governmental authority having jurisdiction over any aspect of
the business or assets of AIB, and no consent or approval of or notice to any
other person or entity, is required in connection with the execution and
delivery by AIB of this Agreement or the Consolidation Agreement or the
consummation by AIB of the transactions contemplated hereby or thereby, except
(a) approval of this Agreement and the Consolidation Agreement by the
shareholders of AIB and FCB Interim, (b) such approvals of this Agreement, the
Consolidation Agreement, the Merger Agreement and the transactions contemplated
herein as may be required by the OCC pursuant to the applicable requirements of
the National Bank Act and the Bank Merger Act and/or the Board of Governors of
the Federal Reserve System (the "FRB") as may be required under the Bank Holding
Company Act of 1956, as amended; and (c) as set forth on Schedule 3.5.
3.6 INSURANCE. AIB has in full force and effect policies of insurance
(including, without limitation, a banker's blanket bond, fire, third party
liability, use and occupancy) with respect to its assets and business and
against casualties and contingencies and of such amounts, types and forms as are
adequate and appropriate to cover such assets and businesses and as are usual
and customary in the banking industry or other industries of which AIB is a part
or as are required by any agreement, contract or other Understanding to which
AIB is subject. Except for expirations in the ordinary course, all such policies
and bonds will remain in full force and effect through and after the Effective
Time of the Consolidation. To the best of AIB's knowledge, AIB is not in default
under any policy of insurance or bond such that it might be canceled. Set forth
on Schedule 3.6 is a summary of all policies of insurance (other than title or
credit insurance) carried and owned by AIB showing the name of the insurance
company, a description of the coverage, the amounts, the deductible feature, the
annual premiums and the expiration dates. If any such policy is changed,
terminated or modified following the date of this Agreement, such termination,
change or modification shall be promptly disclosed to Bancorp and FCB in
writing.
3.7 BOOKS AND RECORDS. The minute books of AIB accurately reflect, in
all material aspects, all actions duly taken by the shareholders of AIB, boards
of directors of AIB and committees thereof, and true and correct copies of its
Articles of Association Bylaws and all amendments thereto. AIB is not conducting
any business which has not been properly
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authorized by the Board of Directors of AIB where such activity would require
Board approval in accordance with AIB's Articles of Association or Bylaws or any
applicable law, rule, regulation or published interpretative opinion.
3.8 TITLE TO ASSETS.
(a) AIB has good and marketable title to all material properties
and assets, owned or purported to be owned by it, free and clear of all
mortgages, liens, encumbrances, pledges, charges or restrictions of any kind or
nature, except for (i) mortgages, liens, encumbrances, pledges, charges or
restrictions reflected on the AIB Financial Statements; (ii) liens for current
taxes not yet due and payable; (iii) liens incurred or assets sold or
transferred in the ordinary course of business since the date of the most recent
AIB Financial Statements and which do not materially impair the business of AIB
or materially detract from the usefulness of the properties subject thereto;
(iv) restrictions imposed by laws or regulations; (v) easements or restrictions
which are neither individually or in the aggregate material to AIB; or (vi) such
matters as are disclosed on Schedule 3.8.
(b) Schedule 3.8 contains a list of all real property and all
material interests in real property (other than mortgages or deeds of trust on
properties securing loans made by AIB in the ordinary course of its business)
owned by AIB, including without limitation, all leaseholds, options to purchase
real property and leases under which AIB is the lessor. Schedule 3.8 also
contains true, correct and complete copies of all leases to which AIB is a party
and an accurate summary of all material commitments which AIB has to improve
real estate owned by it. Schedule 3.8 also contains true, correct and complete
copies of title policies for all properties described as owned by AIB. AIB
enjoys peaceful and undisturbed possession under all material leases to which it
is a party, and all of such leases are valid and in full force and effect. To
the best knowledge of AIB, none of such leases contain any unusual provision
which now or in the future may cause a Material Adverse Change on the Business
Condition of AIB.
3.9 ENVIRONMENTAL LIABILITIES.
(a) Except as set forth on Schedule 3.9(a), to the best of its
knowledge AIB is conducting and has conducted its business, and has used and is
using its properties, whether currently owned, operated or leased, or owned,
operated or leased by AIB at any time in the past, and all properties in which
AIB has a security interest have been used and are being used, in compliance
with all applicable Environmental Laws (as that term is defined below).
For purposes of this Agreement, "Environmental Law" shall mean
any federal, state, county, or local statute, law, ordinance, rule, regulation,
common law, order, consent, decree, permit, 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: (i) pollution or
protection of the environment, including natural resources; (ii) exposure of
persons, including employees,
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to Hazardous Substances (as that term is defined below) or other products,
materials or chemicals; (iii) 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
(iv) 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 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 applicable 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.
(b) To the best of its knowledge, neither AIB nor any property
currently owned, operated or leased by AIB or which has been in the past owned,
operated or leased by AIB, or in which AIB has a security interest or any entity
in which AIB has participated in management, is subject to any existing, pending
or, to the best of AIB's knowledge, threatened investigation, action or
proceeding, including any notice of violation, by any governmental authority
regarding contamination of any part of the property or infractions of or
liability under any Environmental Law.
(c) Except as set forth on Schedule 3.9(c), to the best of AIB's
knowledge there are no Hazardous Substances (as that term is defined below)
presently located on, under or about any property which is currently owned,
operated or leased by AIB, or has been owned, operated or leased by AIB, or in
which AIB has a security interest. There has not been any generation, use,
handling, transportation, treatment or disposal of any Hazardous Substances in
connection with the conduct of the business of AIB that has or might result in
any liability under any Environmental Law.
(d) Except as set forth in Schedule 3.9(d), to the best of AIB's
knowledge no property owned or operated by AIB contains or has contained any
asbestos, underground storage tanks or lead-based paint or plumbing products and
has not been used in the past as a gas station, automotive service center or dry
cleaning facility.
For purposes of this Agreement, "Hazardous Substances" 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,"
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"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 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 individuals or
entities 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, any lead paint,
plumbing or any other substance which is or may be regulated under any
Environmental Law.
3.10 LITIGATION. Except as set forth on Schedule 3.10, there is no
private or governmental suit, claim, action or proceeding pending nor, to the
best of AIB's knowledge, any private or governmental suit, claim, action or
proceeding threatened or which reasonably should be expected to be threatened,
against AIB or against any of its respective directors, officers or employees
relating to the performance of their duties in such capacities or against or
affecting any properties of AIB. Additionally, except as provided on Schedule
3.10(a), there are no judgments, decrees, stipulations or orders against AIB
enjoining it or any of its 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 or affecting in any manner
AIB's ability to consummate the transactions contemplated by this Agreement.
Schedule 3.10(b) contains summary reports of AIB's attorneys on all pending
litigation to which AIB is a party and which names AIB as a defendant or
cross-defendant. Schedule 3.10(c) contains a true, correct and complete list of
all litigation in which AIB is a named party based upon reasonable investigation
of the records of the Superior Courts of the Counties of Los Angeles, Orange,
Riverside, San Bernardino and San Diego and the U.S. District Court for the
Central and Southern Districts of California.
3.11 TAXES.
(a) For purposes of this Agreement, the following
terms shall have the respective meanings set forth below:
(i) "Tax" (including with correlative meaning, the term "Taxes"
and "Taxable") means, with respect to AIB, any federal, state, local, foreign or
other material tax or governmental charge together with any interest and any
penalty, addition to Tax or additional amount imposed by any Taxing Authority
(as that term is defined below) due from or allocable under any applicable law
or agreement to AIB.
(ii) "Taxable Year" means, with respect to any Tax of AIB, the
calendar or fiscal year, or shorter period, for which the Tax is computed and
the Return (as that term is defined below) for such Tax is made.
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(iii) "Taxing Authority" means any governmental
authority (domestic or foreign) responsible for the imposition of any such Tax.
(iv) "Short Period" means, with respect to any Taxable
Year of AIB which begins before the Closing Date and ends thereafter, the
portion thereof beginning with the first day of such year and ending on the
Closing Date.
(b) Except as set forth on Schedule 3.11 hereto, (i) all Tax
returns, reports, statements or other material forms (collectively "Returns")
which have been required to be filed with any Taxing Authority by or on behalf
of AIB have been filed in accordance with all applicable laws; (ii) the Returns
were prepared in accordance with the appropriate books of account and correctly
reflect the facts regarding the income, business, assets, operations, activities
and status of AIB and any other information required to be shown therein; (iii)
all Taxes have been paid in a timely manner; (iv) AIB has made provision on the
AIB Financial Statements for all Taxes payable for any Taxable Year which has
ended for which no Return has yet been filed; (v) the charges, accruals and
reserves for Taxes reflected on the books of AIB and the AIB Financial
Statements are adequate to cover the Tax liabilities accruing or payable in
respect of Taxable Years ending on or before the Closing Date and any Short
Period; (vi) all Returns with respect to federal income taxes filed with respect
to Taxable Years of AIB through the Taxable Year ended December 31, 1993 have
been examined and closed or are Returns with respect to which the period during
which any Tax due may be properly assessed under applicable law has expired
without extension or waiver; (vii) AIB is not delinquent in the payment of any
Tax or has requested any extension of time within which to file any Return,
which Return has not since been filed; (viii) no deficiency for any Tax or claim
for additional Taxes by any Taxing Authority has been proposed, asserted or
assessed in writing against AIB for which AIB could be liable; (ix) AIB has not
granted any extension or waiver of the limitation period applicable to any
Returns, which extension or waiver is currently in effect; (x) there is no
audit, action, suit, proceeding or, to the best knowledge of AIB, any
investigation now pending against or with respect to AIB in respect of any Tax
or assessment; and (xi) there are no liens for Taxes upon the assets of AIB
except liens for current Taxes not yet due.
(c) AIB (i) is not a party to any agreement providing for the
allocation or sharing of any Tax; (ii) is not required to include in income any
adjustment pursuant to Section 481(a) of the United States Internal Revenue of
1986, as amended, and any regulations promulgated thereunder (the "Code"), by
reason of a voluntary change in accounting method initiated by AIB (nor does AIB
have any knowledge that the Internal Revenue Service has proposed any such
adjustment or change of accounting method) or (iii) has not filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.
3.12 COMPLIANCE WITH LAWS AND REGULATIONS. Except as set forth on
Schedule 3.12, AIB is not in default under or in breach of any law, ordinance,
regulation, order, judgment or decree applicable to it which has been
promulgated by any governmental agency having authority over it or any
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of its material assets where such default or breach would or could cause a
Material Adverse Change in the Business Condition of AIB.
3.13 PERFORMANCE OF OBLIGATIONS. Except as set forth on Schedule 3.13,
AIB has performed in all material respects all of the obligations required to
be performed by it to date, and it is not in default under or in breach of any
term or provision of any agreement, contract, lease, indenture, covenant or any
other Understanding to which it 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, except where such breach
or default would or could not cause a Material Adverse Change in the Business
Condition of AIB. No party with whom AIB has an agreement or other Understanding
which is of material importance to AIB is in default thereunder, except as set
forth on Schedule 3.13.
3.14 EMPLOYEES. Except as set forth on Schedule 3.14, there are no
material controversies pending or, to the best knowledge of AIB, threatened
between AIB and any of its current or former employees. Except as disclosed in
the AIB Financial Statements or on Schedule 3.14 or Schedule 3.20, all sums due
for employee compensation and benefits have been duly and adequately paid or
accrued. Except as set forth on Schedule 3.14 or Schedule 3.20, the consummation
of the transactions contemplated by this Agreement will not (either alone or
upon the occurrence of any additional or further acts or events) result in any
payment (whether of severance pay, golden parachute or similar payment, or
otherwise) becoming due to any AIB officer or employee. AIB is not a party to
any collective bargaining agreement with respect to any of its employees or any
labor organization to which its employees or any of them belong. To the best
knowledge of AIB, no union is attempting to represent any employees of AIB as a
collective bargaining agent.
3.15 BROKERS AND FINDERS. Except as set forth in Schedule 3.15, AIB is
not a party to any agreement or other Understanding with any broker or finder
relating to the transactions contemplated hereby, and neither the execution of
this Agreement nor the consummation of the transactions contemplated hereby will
result in any liability to any broker or finder acting on behalf of AIB.
3.16 MATERIAL UNDERSTANDINGS. Schedule 3.16 sets forth true, correct and
complete copies or lists or descriptions of the following agreements and other
Understandings of AIB as of the date hereof:
(a) Every agreement, contract or other Understanding (other than
agreements with respect to deposits or loans or leases) of AIB which is to be
performed in whole or in part at or after the date of this Agreement, which is
not cancelable by AIB without penalty on not more than thirty (30) days' notice,
and which (i) involves aggregate future payments by or to AIB of more than
$25,000; (ii) involves material obligations to be performed later than one year
from the date hereof; (iii) otherwise materially affects AIB; or (iv) was not
entered into in the ordinary course of business;
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(b) Any loan, agreement, letter of credit, pledge, security
agreement, lease (excluding leases of real property listed on Schedule 3.8),
guarantee, commitment or subordination agreement or other similar or related
type of Understanding involving an amount in excess of $25,000 as to which AIB
is a debtor, pledgor, lessee, guarantor or obligor;
(c) Any Understanding dealing with advertising, brokerage,
licensing, dealership, representative or agency relationships in excess of
$25,000;
(d) Any written correspondent banking contracts;
(e) Any Understanding (other than this Agreement) for the sale
of its assets in excess of $25,000 in amount, or with recourse or for the grant
of any preferential right to purchase any of its assets, properties or rights in
excess of $25,000 in amount, or any Understanding which requires the consent of
any third party to the transfer and assignment of any assets, properties or
rights in excess of $25,000 in amount;
(f) Any Understanding which has a value in excess of $25,000 to
purchase, sell or provide services, materials, supplies, merchandise, facilities
or equipment and which is not terminable without penalty on not more than thirty
(30) days' notice;
(g) Any Understanding for any one capital expenditure or series
of capital expenditures in excess of $25,000 in amount;
(h) Any Understanding to make, renew or extend the term of a
loan (not fully disbursed or funded as of June 30, 1998) 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, would exceed $100,000;
(i) Any Understanding of any kind, except for deposit
relationships, with any director or officer of AIB 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 for the employment of any officer or
employee of AIB which is not terminable by AIB without liability on not more
than thirty (30) days' notice;
(k) Any Understanding which would be terminable other than by
AIB as a result of the consummation of the transactions contemplated by this
Agreement; or
(l) Any contract of participation with any other bank or lender
in any loan in excess of $25,000.
3.17 ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule 3.17,
since December 31, 1997 the business of AIB has been
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conducted diligently and only in the ordinary course, in the same manner as
theretofore conducted, and there has not been:
(a) Any adverse circumstance or development which could
reasonably be seen to create a risk of a Material Adverse Change in the Business
Condition of AIB;
(b) Any damage, destruction or loss to property (whether or not
covered by insurance) individually or in the aggregate which would reasonably be
seen to create a risk of a Material Adverse Change in the Business Condition of
AIB;
(c) Any material agreement, contract or other Understanding
which AIB has entered into or to which it is or was a party which has been
terminated or amended other than in the ordinary course of business;
(d) Any capital expenditure exceeding individually or in the
aggregate $10,000;
(e) Any labor trouble, dispute or problem of any character
involving employees of AIB;
(f) Any change in accounting methods or practices by AIB;
(g) Any material revaluation by AIB of any of its assets;
(h) Any increase in the salary schedule, compensation, rate,
fees or commissions, or the declaration, payment, commitment or obligation of
any kind directly or indirectly for the payment by AIB of a bonus or other
additional salary, compensation, fee or commission to any person, except for
additional sums or increases paid in accordance with employment agreements or
other Understandings disclosed on Schedule 3.16 or 3.20 or paid in a manner
consistent with past practice in accordance with policies disclosed to FCB in
writing prior to the date hereof;
(i) Any sale, assignment or transfer of any asset except in the
usual and ordinary course of business;
(j) Any mortgage, pledge or encumbrance of any asset of AIB
other than liens for taxes not yet due, and except as set forth on Schedule 3.8;
(k) Any waiver or release of any right or claim of AIB except in
the usual and ordinary course of business;
(l) Any declaration, setting aside or payment of any dividend or
distribution with respect to AIB Stock, the issuance of any shares of AIB Stock
(including by means of the exercise of employee stock options) or Stock
Equivalents of AIB, or any contract, agreement or other
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Understanding obligating AIB to issue or sell any AIB Stock or Stock
Equivalents;
(m) Any material change in the composition of AIB's deposits,
including, but not limited to, a material increase in the level of brokered
deposits;
(n) Any material increase in AIB's non-deposit liabilities,
including, but not limited to, a material increase in federal funds purchased;
or
(o) Any agreement, contract or other Understanding, other than
this Agreement, by which AIB will or could be obligated to take or engage in any
action described in (a) through (n) above.
3.18 LICENSES AND PERMITS. AIB has all licenses and permits which are
necessary for the conduct of its businesses, and such licenses and permits are
in full force and effect. The properties and operations of AIB are and have been
maintained and conducted, in all material respects, in compliance with all
applicable laws and regulations.
3.19 LOANS. All loans of AIB are in all material respects legal,
enforceable and authorized under applicable federal and state laws and
regulations. Except as set forth on Schedule 3.19, no loans held by AIB were, at
June 30, 1998, (i) more than sixty (60) days past due with respect to any
scheduled payment of principal or interest; (ii) classified as "Loss,"
"Doubtful," "Substandard" or "Special Mention" by federal banking regulators or
are required to be so classified by AIB in accordance with applicable bank
regulatory standards; (iii) on a non-accrual status in accordance with AIB's
loan review procedures; and (iv) "troubled debt restructurings" as that term is
defined in Financial Accounting Standard No. 15. Schedule 3.19 contains true,
correct and complete copies of past due loan reports of AIB for the period
January 1, 1997 through June 30, 1998 and also contains the current past due
loan report of AIB. To the best knowledge of AIB, such reports accurately and
completely describe all delinquent or past due loans during said period. Except
as described on Schedule 3.19, AIB has not been, during 1997 or 1998, advised in
writing or, to the best of AIB's knowledge, orally, by the OCC, the FDIC, any
other regulatory agency or any external auditor engaged by AIB that any of its
assets have been improperly classified or that any other asset of AIB may be
required to be adversely classified or designated.
3.20 EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AND LABOR CONTRACTS.
(a) Schedule 3.20 sets forth a list of and briefly describes all
employee benefit plans and employment agreements in which AIB participates, or
by which it is bound, including, without limitation, (i) any profit sharing,
deferred compensation, bonus, stock option, stock purchase, pension, retainer
consulting, retirement, welfare or incentive plan or agreement whether legally
binding or not; (ii) any plan providing for "fringe benefits" to its employees,
including but not limited to vacation, sick leave, medical, hospitalization,
life insurance and other
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insurance plans, and related benefits; (iii) any written employment agreement
and any other employment agreement not terminable at will; or (iv) any other
"employee benefit plan" (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA")) (the plans and agreements
referred to in the preceding clauses (i) to (iv) are hereinafter referred to
collectively as "Employee Plans"). Except as set forth on Schedule 3.20, to the
best of AIB's knowledge (w) there are no negotiations, demands, or proposals
that are pending or threatened that concern matters now covered, or that would
be covered, by any employment agreements or employee benefit plans; (x) AIB is
in compliance with the material reporting and disclosure requirements of Part 1
of Subtitle IB of ERISA and the corresponding provisions of the Code to the
extent applicable to the Employee Plans; (y) AIB has performed all of its
obligations under all Employee Plans required to be performed heretofore; and
(z) there are no actions, suits or claims (other than routine claims for
benefits) pending or, to the best knowledge of AIB, threatened against any
Employee Plan or the assets of such Plan, and to the best knowledge of AIB, no
facts exist which could give rise to any actions, suits or claims (other than
routine claims for benefits) against such Plans or the assets of such Plans.
(b) Each Employee Plan that is an "employee pension benefit
plan" (within the meaning of Section 3(2) of ERISA) ("Pension Plan") described
on Schedule 3.20 has been duly authorized by the Board of Directors of AIB. Each
Pension Plan and associated trust intended to be qualified under Section 401(a)
and to be exempt from tax under Section 501(a) of the Code, respectively, has
either received a favorable determination letter from the Internal Revenue
Service, has applied for such a determination letter or will apply for such a
determination letter before the expiration of the remedial amendment period set
forth in Section 401(b) of the Code, as the Internal Revenue Service may extend
such period, and, to the best knowledge of AIB, no event has occurred that will
or could give rise to disqualification of any Pension Plan which is intended to
be qualified under Section 401(a) of the Code or loss of the exemption from tax
of any such trust which is intended to be exempt from tax under Section 501(a)
of the Code. No event has occurred that will or could subject any Pension Plan
to tax under Section 511 of the Code. No Pension Plan has engaged in a merger or
consolidation with any other employee pension benefit plan or received a
transfer of assets or liabilities from any other plan. No prohibited transaction
(within the meaning of Section 409 or 502(i) of ERISA or Section 4975 of the
Code) or party-in-interest transaction (within the meanings of Section 406 of
ERISA) has occurred with respect to any Employee Plan which could subject AIB to
an excise tax or penalty. To the best knowledge of AIB, no employee of AIB has
engaged in any transactions which could require AIB to indemnify such person
against liability. All costs of Employee Plans have been provided for on the
basis of consistent methods in accordance with sound actuarial assumptions and
practices. No Pension Plan has incurred any "accumulated funding deficiency" (as
defined in Section 302(2) of ERISA), whether or not waived, taking into account
contributions made within the period described in Section 412(c)(10) of the
Code; nor are there any unfunded amounts under any Pension Plan which is
required to be funded under Part 3 of Subtitle IB of ERISA and Section 412 of
the Code; nor has AIB failed to make any contributions or pay any amount due and
owing as required by law or the terms of any Employee Plan.
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(c) AIB does not sponsor or participate in, and has not
sponsored or participated in, any Pension Plan to which Section 4021 of ERISA
applies that would create a liability to AIB under Title IV of ERISA.
(d) AIB does not sponsor or participate in, and has not
sponsored or participated in, any Pension Plan that is a "multiemployer plan"
(within the meaning of Section 3(37) of ERISA) that would subject AIB to any
liability with respect to any such Plan.
(e) To the knowledge of AIB, all group health plans of AIB
(including any plans of affiliates of AIB that must be taken into account under
Section 162(i) or (k) of the Code as in effect immediately prior to the
Technical and Miscellaneous Revenue Act of 1988 and Section 4980B of the Code)
have been operated in compliance with the group health plan continuation
coverage requirements of Section 4980B of the Code to the extent such
requirements are applicable.
(f) To the knowledge of AIB, there have been no acts or
omissions by AIB that have given rise to or may give rise to fines, penalties,
taxes, or related charges under Sections 502(c) or (i) or 4071 of ERISA or
Chapter 43 of the Code which could be imposed on AIB.
(g) Except as described in Subarticle 3.20(j), AIB does not
maintain any Employee Plan pursuant to which any benefit or other payment will
be required to be made by AIB pursuant to which any other benefit will accrue or
vest in any director, officer or employee of AIB, or pursuant to which any
payment or benefit will be accelerated or increased in either case as a result
of the consummation of the transactions contemplated by the Agreement.
(h) No "reportable event," as defined in Section 4043 of ERISA,
has occurred with respect to any of the Pension Plans.
(i) AIB does not have any obligation for retiree health and life
benefits under any Employee Plan, except as set forth on Schedule 3.20. AIB may
amend or terminate any such Employee Plan at any time without incurring any
liability thereunder.
(j) All amendments required to bring each of the Employee Plans
into conformity with all of the provisions of ERISA and the Code and all other
applicable laws, rules and regulations have been made, or will be made before
the expiration of the applicable remedial amendment period set forth under
Section 401(b) of the Code, as such period may be extended by the Internal
Revenue Service.
(k) AIB has delivered to Bancorp a list setting forth the name
of each director, officer, employee, agent or representative of AIB and every
other person entitled to receive any benefit or any payment of any amount under
any existing employment agreement, severance plan or other Employee Plan or
Understanding as a result of the consummation of any transaction contemplated by
this Agreement, and with respect to such person, the nature of such benefit or
the amount of such payment, the event triggering the benefit or payment, and the
date of, and parties to, such
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employment agreement, severance or other Employee Plan or Understanding. AIB had
delivered to Bancorp true and correct copies of all documents with respect to
the Employee Plans referred to in this Subarticle 3.20, including all amendments
and supplements thereto, and all related summary plan descriptions. AIB has
delivered to Bancorp true and correct copies, with respect to each Employee Plan
(to the extent applicable), of (i) a copy of the Form 5500 which was filed in
each of the three most recent plan years, including without limitation, all
schedules thereto, and all financial statements with attached opinions of
independent accountants to the extent required; (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; and (iv) the
statement of changes in fund balance and in financial position or the statement
of changes in net assets available for benefits under each of said plans for the
most recently ended plan year. The documents referred to in subdivisions (iii)
and (iv) fully present the financial condition of each of said plans as of and
at such dates and the results of operations of each such plans, all in
accordance with generally accepted accounting principles or on the cash method
of accounting applied on a consistent basis.
3.21 INVESTMENTS. Except for investments that have matured or been sold,
Schedule 3.21 sets forth all of the investments reflected on the balance sheet
of AIB dated December 31, 1997 contained in the AIB Financial Statements and all
of the investments made since December 31, 1997. Except as set forth on Schedule
3.21, all such investments are legal investments under applicable laws, rules
and regulations and none of such investments is subject to any contractual,
statutory or other restriction 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, or state securities
laws.
3.22 OPERATIONAL LOSSES. Except as set forth on Schedule 3.22, since
December 31, 1997, to the best knowledge of AIB, no event has occurred, and no
action has been taken or omitted to be taken by any employee of AIB that has
resulted in the incurrence by AIB of an Operational Loss (as that term is
defined below) or, to the best knowledge of AIB, that reasonably might be
expected to result in the incurrence by AIB of an Operational Loss after
December 31, 1997, which, net of any insurance proceeds payable in respect
thereof, would exceed $5,000 by itself or $10,000 when aggregated with all other
Operational Losses during such period. For purposes of this Agreement,
"Operational Loss" means any loss exceeding $5,000 resulting from cash
shortages, lost or misposted items, disputed clerical and accounting errors,
forged checks, payment of checks over stop payment orders, counterfeit money,
wire transfers made in error, theft, robberies, defalcations, check kiting,
fraudulent use of credit cards or electronic teller machines, civil money
penalties, fines, litigation, claims, arbitration awards or other similar acts
or occurrences.
3.23 POWERS OF ATTORNEY. Except as set forth on Schedule 3.23, AIB has
not granted any person a power of attorney or similar authorization that is
presently in effect or outstanding.
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3.24 LOAN SERVICING PORTFOLIO. Except as set forth on Schedule 3.24,
AIB services no loans owned in whole or in part by other persons, except for
collection services undertaken for customers who otherwise have a banking
relationship with AIB.
3.25 PROXY STATEMENT. The proxy statement and/or any other materials or
documents (collectively, the "Proxy Materials"), to be used in connection with
the shareholders' meeting required pursuant to Subarticle 5.7 hereof, with
respect to all information set forth therein relating to AIB, the Consolidation
and the Merger and in respect to this Agreement, the Consolidation Agreement and
the Merger Agreement, at the time of mailing to shareholders and at the time of
the shareholders' meeting, shall:
(a) comply in all material respects with the provisions of all
applicable laws and regulations; and
(b) except with respect to any information regarding Bancorp or
FCB supplied to AIB by FCB for inclusion in the Proxy Materials, 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 not omit to
state any material fact necessary in order to make the statements therein not
false or misleading.
3.26 ACCURACY OF INFORMATION FURNISHED. To the best of AIB's knowledge,
no statement, representation or warranty made by AIB in this Agreement or any
certificate, agreement, schedule or other document furnished or to be furnished
in connection with the transactions contemplated by this Agreement contains or
will contain any untrue statement of a material fact nor omits to state any
material fact necessary in order to make such representation, warranty or
statement not misleading.
3.27 EFFECTIVE DATE OF REPRESENTATION AND WARRANTIES. Each
representation and warranty of AIB set forth in this Agreement shall be deemed
to be made on and as of the date hereof and (as updated as required by
Subarticle 5.2(n) hereof) as of the Effective Time of the Consolidation unless
the parties hereto agree in writing to a different effective date of any such
representation or warranty.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCORP AND FCB
Bancorp and FCB represent and warrant to AIB as follows:
4.1 ORGANIZATION, STANDING AND POWER OF BANCORP. Bancorp is duly
organized and existing in good standing as a corporation under the laws of the
State of California and is authorized to be a bank holding company. Bancorp 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.
Neither the scope of the business of Bancorp nor the location of any of its
properties requires that it be licensed to do business in any
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jurisdiction other than the State of California. Schedule 4.1 sets forth true
and correct copies of Bancorp's Articles of Incorporation and Bylaws.
4.2 CAPITALIZATION OF BANCORP. As of the date of this Agreement, the
authorized capital of Bancorp consists of 5,000,000 shares of common stock, no
par value, and 5,000,000 shares of serial preferred stock. 3,323,857 shares of
Bancorp's common stock and 423,500 shares of Bancorp's preferred stock is
currently outstanding. Except for employee stock options covering 300,000 shares
of Bancorp's common stock there are no outstanding options or warrants covering
Bancorp's common stock. No shares of Bancorp stock, either common or preferred,
are currently issued or outstanding.
4.3 ORGANIZATION, STANDING AND POWER OF FCB. FCB is a national
association, duly organized and existing in good standing as an association
under the laws of the United States, and is authorized by the OCC to conduct a
general banking business. FCB is a member of the Federal Reserve System, and its
deposits are insured by the FDIC in the manner and to the extent provided by
law. FCB 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. Neither the scope of the business of FCB, nor the location of any of
its properties requires that it be licensed to do business in any jurisdiction
other than the State of California. Schedule 4.3 sets forth true and correct
copies of FCB's Articles of Association and Bylaws, as amended and in effect as
of the date hereof.
4.4 CAPITALIZATION OF FCB. As of the date of this Agreement, the
authorized capitalization of FCB consists of 10,000,000 shares of common stock,
$1.00 par value, and 5,000,000 shares of preferred stock. As of the date of this
Agreement, 100,000 shares of common and no shares of preferred are issued and
outstanding (the "FCB Stock"). All of the outstanding shares of FCB Stock are
validly issued, fully paid and nonassessable (except as provided for in 12
U.S.C. Section 55).
4.5 FINANCIAL STATEMENTS. FCB has delivered to AIB audited balance
sheets of FCB (to the extent they are available) as of December 31, 1997, 1996,
1995, and 1994, the related statements of operations, changes in shareholders'
equity and statements of cash flow for the periods then ended, and the related
notes and related accountants opinions thereon (the "FCB Financial Statements").
The FCB Financial Statements (i) present fairly the financial condition of FCB
as of the respective dates indicated and the results of operations, the changes
in shareholders' equity and cash flows for the respective periods indicated;
(ii) have been prepared in accordance with generally accepted accounting
principles applied on a basis consistent with past practices; (iii) contain and
reflect reserves for all material accrued liabilities and for all reasonably
anticipated losses, including but not limited to adequate reserves for loan and
lease losses; and (iv) are based on the books and records of FCB. Bancorp has
delivered to AIB audited balance sheets of Bancorp (to the extent they are
available) as of December 31, 1997, and 1996, the related statements of
operations, changes in shareholders' equity and statements of cash flow for the
periods then ended and the related notes and related accountants opinions
thereon
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(the "Bancorp Financial Statements"). The Bancorp Financial Statements (i)
present fairly the financial condition of Bancorp as of the respective dates
indicated and the results of operations, the changes in shareholders' equity and
cash flows for the respective periods indicated; (ii) have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with past practices; (iii) contain and reflect reserves for all
material accrued liabilities and for all reasonably anticipated losses,
including but not limited to adequate reserves for loan and lease losses; and
(iv) are based on the books and records of Bancorp.
4.6 AUTHORITY. The execution and delivery by Bancorp and FCB of this
Agreement and the execution and delivery of the Consolidation Agreement and the
Merger Agreement by FCB Interim and FCB, respectively, and, subject to any
requisite approval of the shareholders of FCB and FCB Interim, the consummation
of the transactions contemplated hereby and thereby have been or will be duly
and validly authorized by all necessary corporate action on the part of Bancorp,
FCB and FCB Interim. This Agreement is, and the Consolidation and Merger
Agreements will be upon the due execution and delivery thereof, valid and
binding obligations of Bancorp, FCB and FCB Interim, enforceable in accordance
with their terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the rights of
creditors generally and by general equitable principles. Neither the execution
and delivery by Bancorp or FCB of this Agreement, nor the execution and delivery
of the Consolidation Agreement or the Merger Agreement by FCB Interim and FCB,
respectively, nor the consummation of the transactions contemplated herein or
therein, nor compliance by Bancorp, FCB or FCB Interim with any of the
provisions hereof or thereof, will (i) conflict with or result in a breach of
any provision of the Articles of Incorporation or Bylaws of Bancorp or the
Articles of Association or Bylaws of FCB or FCB Interim; (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 or other Understanding to which Bancorp or FCB is a party, or by
which Bancorp, FCB or any of their respective properties or assets is bound,
except where such breach or default, individually or in the aggregate, would not
have a material adverse effect on the financial condition or results of
operations of Bancorp or FCB taken as a whole; or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Bancorp, FCB or
any of their respective properties or assets, except where such violation,
individually or in the aggregate, would not have a material adverse effect on
the financial condition or results of operations of Bancorp or FCB taken as a
whole. 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 FCB, 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 or
FCB of this Agreement, or the execution and delivery of the Consolidation
Agreement and the Merger Agreement by FCB Interim and FCB, respectively, or the
consummation by Bancorp, FCB or FCB Interim of the transactions contemplated
hereby or thereby, except (a) approval of this Agreement, the Consolidation
Agreement and the Merger Agreement by the shareholders of AIB,
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FCB and FCB Interim, (b) such approvals of this Agreement, the Consolidation
Agreement, the Merger Agreement and the transactions contemplated herein as may
be required by the OCC pursuant to the applicable requirements of the National
Bank Act and the Bank Merger Act, (c) such approvals of the FRB as may be
required of Bancorp, and (d) as set forth on Schedule 4.6.
4.7 INFORMATION FURNISHED BY BANCORP. No information relating to Bancorp
or FCB furnished to AIB by Bancorp or FCB for inclusion in the Proxy Statement
referred to in Subarticle 3.25 of this Agreement, or any amendment or supplement
thereto, or the applications referred to in Subarticle 5.8(d), 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.
4.8 ACCURACY OF INFORMATION FURNISHED. No statement, representation or
warranty by Bancorp or FCB in this Agreement or any certificate, agreement,
schedule or other document furnished or to be furnished in connection with the
transactions contemplated by this Agreement contains or will contain any untrue
statement of a material fact nor omits to state any material fact necessary in
order to make such representation, warranty or statement not misleading. There
is no fact that Bancorp or FCB has not disclosed in writing to AIB that can
reasonably be expected to adversely affect the ability of Bancorp or FCB to
fully perform under this Agreement or the transactions contemplated hereby.
4.9 EFFECTIVE DATE OF REPRESENTATIONS AND WARRANTIES. Each
representation and warranty of Bancorp and FCB set forth in this Agreement shall
be deemed to be made on and as of the date hereof (unless expressly stated in
any such representation or warranty to the contrary) and (as updated by Bancorp
or FCB on or before the Effective Time of the Consolidation) as of the Effective
Time of the Consolidation, unless the parties agree in writing to a different
effective date of any such representation or warranty.
4.10 COMPLIANCE WITH LAWS AND REGULATIONS. Except as set forth on
Schedule 4.10, neither FCB nor Bancorp is in default under or in breach of any
law, ordinance, regulation, order, judgment or decree applicable to it which has
been promulgated by any governmental agency having authority over it or any of
its material assets where such default or breach would or could result in a
reduction of ten percent (10.0%) or more in their respective shareholders'
equity from the amount of shareholders' equity as of March 31, 1998 (such
reduction is hereinafter referred to "Material Adverse Change in the Business
Condition of FCB or Bancorp" or both, as applicable.)
4.11 PERFORMANCE OF OBLIGATIONS. Except as set forth on Schedule 4.11,
both FCB and Bancorp have performed in all material respects all of the
obligations required to be performed by it to date, and it is not in default
under or in breach of any term or provision of any agreement, contract, lease,
indenture, covenant or any other Understanding to which it 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 con-
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stitute such default or breach, except where such breach or default would or
could not cause a Material Adverse Change in the Business Condition of FCB or
Bancorp. No party with whom either FCB or Bancorp has an agreement or other
Understanding which is of material importance to FCB or Bancorp is in default
thereunder, except as set forth on Schedule 4.11.
4.12 ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule 4.12,
since December 31, 1997, the business of FCB and the business of Bancorp have
been conducted diligently, and only in the ordinary course, and there has not
been any adverse circumstance or development which could reasonably be seen to
create a risk of a Material Adverse Change in the Business Condition of either
FCB or Bancorp.
4.13 LICENSES AND PERMITS. Both FCB and Bancorp have all licenses and
permits which are necessary for the conduct of their respective businesses, and
such licenses and permits are in full force and effect. The properties and
operations of both FCB and Bancorp are and have been maintained and conducted,
in all material respects, in compliance with all applicable laws and
regulations.
4.14 CAPITAL RAISING. FCB and Bancorp will proceed promptly and
diligently to raise any capital necessary to consummate the Consolidation.
4.15 REGULATORY APPROVALS. To the best knowledge of Bancorp and/or FCB,
Bancorp and/or FCB has no reason to believe that it would not receive all
required approvals from the OCC and/or FRB of any application to consummate the
transactions contemplated by this Agreement without the imposition of a
materially burdensome condition in connection with the approval of any such
application.
ARTICLE V
CONDUCT AND TRANSACTIONS PRIOR TO
EFFECTIVE TIME OF CONSOLIDATION
5.1 LIMITATION ON AIB'S CONDUCT PRIOR TO THE EFFECTIVE TIME OF THE
CONSOLIDATION. Between the date hereof and the Effective Time of the
Consolidation, AIB agrees to conduct its business only in its normal and
customary manner and in accordance with sound banking or other customary
practices, and AIB shall not, without prior written consent of either Bancorp or
FCB (which consent shall not be unreasonably withheld):
(a) Declare, set aside or pay any dividend or make any other
distribution upon, or purchase or redeem any shares of, AIB Stock;
(b) Except as may be required to effectuate the transactions
contemplated herein, change its charter documents or other governing
instruments;
(c) Except as otherwise expressly provided for in this
Agreement, adopt, amend or terminate any Employee Plan, employment contract,
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agency or correspondent agreement, or any other Understanding of any such type;
(d) Make any loan, loan commitment or renewal or extension
thereof ("Loan"), to any borrower which would, when aggregated with all
outstanding loans, commitments for loans or renewals or extensions thereof made
by AIB to such person and any affiliate or immediate family member of such
person, exceed $150,000. For the purposes of this Subarticle 5.1(d)(i), no prior
written approval of FCB will be required, if FCB's representative is in
attendance at any Loan Committee Meeting of AIB where such loan is reviewed or
approved and FCB's representative does not voice an objection to such loan. The
parties agree that AIB shall give notice of all loan committee meetings to FCB
and FCB will use its best efforts to have a representative present at all such
loan committee meetings;
(e) Directly or indirectly, entertain, solicit or encourage or
participate in any discussions or negotiations with, or provide any information
(other than publicly available information) to, any person or other entity or
group (other than Bancorp, FCB and either of its representatives) concerning any
Acquisition Proposal (as that term is defined below) other than the Acquisition
Proposal set forth in this Agreement, or authorize or knowingly permit any of
its representatives to do so, except such actions that a majority of the Board
of Directors of AIB, upon the written opinion of AIB's counsel, determines to be
required by applicable law or necessary to fulfill the fiduciary duties of its
directors with respect to an unsolicited bona fide written offer from a third
party. AIB shall notify Bancorp and FCB immediately by telephone with written
confirmation if any such inquiry or Acquisition Proposal is received by AIB,
including the terms thereof. For purposes of this Subarticle 5.1(e),
"Acquisition Proposal" means: (i) any proposal pursuant to which any person or
other entity or group, other than Bancorp, FCB or FCB Interim, would acquire or
participate in a merger or other business combination involving AIB; (ii) any
proposal by which any person or other entity or group, other than Bancorp, FCB
or FCB Interim, would acquire the right to vote nine and nine-tenths percent
(9.9%) or more of the capital stock of AIB entitled to vote thereon for the
election of directors, other than persons designated as proxy holders by the
Board of Directors of AIB; (iii) any proposal to acquire, or acquisition of,
the assets of AIB other than in the ordinary course of business; or (iv) any
proposal to acquire, or acquisition of, five percent (5%) or more of the
outstanding capital stock of AIB other than as contemplated by this Agreement;
(f) Make any investment in the stock or equity of any business
entity, except as it relates to a foreclosure or realization upon any security
interest in the usual and ordinary course of its business;
(g) Sell or dispose of any of its assets in excess of $25,000 in
value, except in the usual and ordinary course of its business;
(h) Make any one capital expenditure or series of capital
expenditures, the aggregate amount of which is, in excess of $25,000;
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(i) Issue or sell or obligate itself to issue or sell any shares
of AIB Stock or any other securities, including without limitation any capital
notes, or any Stock Equivalent;
(j) File, withdraw or fail to renew any applications for
additional branches or to relocate operations from existing locations;
(k) Create or incur any liabilities in excess of $25,000 other
than liabilities incurred in the ordinary course of business or as contemplated
or permitted by or in connection with the creation or performance of this
Agreement;
(l) Create or incur or suffer to exist any mortgage, lien,
pledge, security interest, charge, encumbrance or restriction of any kind
against or in respect of any property or right of AIB securing any obligation in
excess of $25,000, except for pledges or security interests given in connection
with the acceptance of repurchase agreements or government deposits or to
secure borrowings from the Federal Reserve Bank;
(m) Make or become a party to any contract, commitment or other
Understanding in excess of $25,000, or renew, extend, amend or modify any
contract, commitment or other Understanding in excess of $25,000, except in the
usual and ordinary course of business or as otherwise contemplated or permitted
by this Agreement;
(n) Discharge or satisfy any mortgage, lien, charge or
encumbrance other than as a result of the payment of liabilities in accordance
with the terms thereof, or except in the ordinary course of business, if the
cost to AIB to discharge or satisfy any such mortgage, lien, charge or
encumbrance is in excess of $25,000;
(o) Pay any obligation or liability, absolute or contingent, in
excess of $25,000, except liabilities reflected on the AIB Financial Statements,
or obligations or liabilities arising in the ordinary course of business since
the date of the most recent AIB Financial Statements, or in connection with the
transactions contemplated hereunder;
(p) Institute, settle or agree to settle any claim, action or
proceeding involving an expenditure by AIB in excess of $25,000 before any
court, arbitrator or governmental body;
(q) Invest in any real estate;
(r) Enter into or amend any continuing contract or other
Understanding or series of related contracts or Understandings in excess of
$25,000 for the purchase of materials, supplies, equipment or services which
cannot be terminated upon delivery of not more than thirty (30) days' written
notice without cause and without payment of any amount as a penalty, bonus,
premium or other compensation for such termination;
(s) Enter into or amend any contract, agreement or other
Understanding with any officer or other employee, director or prin-
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cipal shareholder of AIB or any affiliate of such person, including but not
limited to an Understanding regarding an increase in salary or compensation;
(t) Change any of its basic policies and practices with respect
to liquidity management and cash flow planning, marketing, deposit origination,
lending, budgeting, profit and tax planning, personnel practices, accounting or
any other material aspect of its business or operations, except such change as
may be required in the reasonable opinion of AIB's management to respond to
economic or market conditions or as may be required by the rules of the American
Institute of Certified Public Accountants or Financial Accounting Standards
Board or by applicable governmental authorities;
(u) Knowingly default in any material respect under any
Understanding to which AIB is a party, and which, individually or together with
other Understandings with respect to which a default by AIB exists, would or
could cause a Material Adverse Change in Business Condition of AIB;
(v) Issue or permit to be issued to any shareholder of AIB Stock
a new certificate representing shares of AIB Stock because such certificate has
been lost or stolen unless such shareholder obtains an indemnity bond in form
and substance and with a surety satisfactory to AIB and FCB;
(w) Breach or violate any applicable law, rule or regulation
pertaining to the conduct of its business or its assets or any covenant,
contract, debenture or Understanding to which it is a party where such breach or
violation would or could cause a Material Adverse Change in the Business
Condition of AIB;
(x) Make any investment (i) in excess of $100,000, with the
exception of federal funds sold; and (ii) which has a maturity greater than one
year from the date of purchase; or
(y) Enter into any Understanding which would or could result in
the taking of any action or the occurrence of any event described in clauses (a)
through (x) above.
Bancorp and FCB shall be deemed to have given its consent to any action
or event described in this Subarticle 5.1, if within five (5) business days (or
two (2) business days in the case of matters described in clause (d) above) of
Bancorp's or FCB's receipt of written notice of a request for prior written
consent, AIB shall not have received written notice of objection from either
Bancorp or FCB.
5.2 AFFIRMATIVE CONDUCT OF AIB PRIOR TO THE EFFECTIVE TIME OF THE
CONSOLIDATION. Between the date hereof and the Effective Time of the
Consolidation, AIB shall:
(a) Use its best efforts, or cooperate with others, to
expeditiously bring about the satisfaction of the conditions specified in
Article VI hereof;
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(b) Use and devote its best efforts consistent with this
Agreement to maintain and preserve intact its present business organization and
to maintain and preserve its relationships and goodwill with account holders,
borrowers, employees and others having business relationships with it;
(c) Advise Bancorp and FCB promptly in writing of any Material
Adverse Change in the Business Condition of AIB which becomes known to AIB, or
of any matter which would make the representations and warranties set forth in
Article III hereof not true and correct in all material respects at any time up
to and including the Effective Time of the Consolidation;
(d) Use its best efforts to keep in full force and effect all of
the existing permits and licenses of AIB;
(e) Use its best efforts to maintain insurance coverage at least
equal to that now in effect on all its properties, on all properties for which
it is responsible and on its business operations, and carry the same coverage
for public liability, personal injury and property damage and all risks covered
by its banker's blanket bond and notify Bancorp and FCB in writing promptly of
any facts or circumstances which could affect the ability of AIB or the
Surviving Bank to maintain such insurance coverage that is now in effect;
(f) Perform its material contractual obligations and not become
in material default on any thereof;
(g) Duly observe and materially conform to all lawful
requirements applicable to its business;
(h) Carefully prepare and file all federal, state and local tax
returns regarding AIB if required to be filed by it between the date hereof and
the Effective Time of the Consolidation and furnish copies thereof to Bancorp
and FCB;
(i) Furnish Bancorp and FCB with such financial and other
information with respect to AIB and its respective properties, business and
operations as in the reasonable opinion of Bancorp and FCB, counsel for Bancorp
and FCB and counsel for AIB shall be necessary in order to prepare the
applications for and to obtain the approvals, consents and authorizations
referred to in Articles V and VI hereof; such information will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the information not misleading;
(j) Maintain its assets and properties in good condition and
repair, normal wear and tear excepted;
(k) Promptly advise Bancorp and FCB in writing of any event
or any other transaction within AIB's knowledge whereby any person or related
group of persons acquires, directly or indirectly, record or beneficial
ownership or control of five percent (5%) or more of the
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outstanding AIB Stock prior to the record date fixed for the AIB's shareholders'
meeting or any adjourned meeting thereof to approve this Agreement;
(l) Furnish to Bancorp and FCB monthly unaudited balance sheets
and income statements and loan delinquency reports of AIB, identical to those
provided to the Board of Directors of AIB, within five (5) days after each
meeting of the Board of Directors of AIB, which unaudited balance sheets and
income statements shall in all respects satisfy the requirements hereunder with
respect to the AIB Financial Statements;
(m) Furnish to Bancorp and FCB all information and documents
regarding AIB which are provided to members of AIB's Board of Directors or any
committee thereof within five (5) days after each meeting of the Board of
Directors of AIB, subject to rights of privacy, fiduciary obligations and
material subject to the attorney-client privilege;
(n) No later than the 15th day of each calendar month between
the date hereof and the Effective Time of the Consolidation, amend or supplement
the Schedules prepared and delivered pursuant to Article III to ensure that the
information set forth in such Schedules accurately reflects the then-current
status of AIB. AIB shall further amend or supplement the Schedules on the
Closing Date if necessary to reflect any additional changes in the status of
AIB;
(o) Charge off all loans, receivables and other assets, to the
extent such are deemed uncollectible in accordance with generally accepted
accounting principles, applicable law or regulation, or charge off such portion
of loans classified as "loss," "doubtful" or "substandard" as directed by any
regulatory authority; and maintain the reserve for loan and lease losses at a
level which is adequate to provide for all known and reasonably expected losses
on loans outstanding and other inherent risks in AIB's loan portfolio;
(p) As soon as available, deliver to Bancorp and FCB any AIB
Financial Statements not previously delivered pursuant to Subarticle 3.4 hereof;
and
(q) Without limiting the generality of any of the foregoing,
furnish to Bancorp and FCB copies of the written results of any external audit
or other review of AIB, within five (5) days after receipt of the same by AIB.
5.3 ACCESS TO INFORMATION. AIB shall afford Bancorp, FCB and their
respective representatives, counsel, accountants, agents and employees access
during normal business hours to all of AIB's business, operations, properties,
books, files and records and will do everything reasonably necessary to enable
Bancorp, FCB and their respective representatives, counsel, accountants, agents
and employees to make a complete examination of the financial statements,
business, assets and properties of AIB and the condition thereof and to update
such examination at such intervals as FCB shall deem appropriate. Such access
shall include reasonable access by FCB's accountants to auditors' work papers
with respect
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to the business and properties of AIB, other than books, records and documents
covered by the attorney-client privilege, or which are attorneys' work product.
Such examination shall be conducted in cooperation with the officers of AIB and
in such a manner as to minimize, to the extent possible consistent with the
conducting of a comprehensive examination, any disruption of, or interference
with, the normal business operations of AIB. No such examination, however, shall
constitute a waiver or relinquishment on the part of Bancorp or FCB to rely upon
the representations and warranties made by AIB herein or pursuant hereto;
provided, that Bancorp and FCB shall promptly disclose to AIB any fact or
circumstance either may discover which either of them believes renders any
representation or warranty made by AIB hereunder incorrect in any respect.
Bancorp, FCB and their respective agents will hold in strict confidence all
documents and information concerning AIB so obtained except to the extent that
such documents or information are a matter of public record or require
disclosure in the Proxy Materials or any of the applications required to be
filed with any governmental or regulatory agency to obtain the approvals and
consents specified in Article VI hereof and, if the transactions contemplated
herein are not consummated, such confidence shall be maintained and all such
documents shall be returned to AIB.
5.4 REVIEW BY ACCOUNTANTS. Promptly upon request of Bancorp or FCB, AIB
will request its accountants to permit FCB's accountants to review and examine
the work papers of AIB's accountants relating to AIB, the AIB Financial
Statements or other financial statements delivered to Bancorp and FCB hereunder,
and any tax return filed by AIB with any tax agency and to review and examine
the work papers of AIB's accountants relating to any future audits or reviews of
AIB.
5.5 TERMINATION OF AIB STOCK OPTION PLAN. AIB shall take all steps
necessary to cause the AIB Stock Option Plan and all options granted thereunder,
including paying the optionee for the economic value of such options based upon
Per Share Purchase Price, to be terminated as of or prior to the Effective Time
of the Consolidation and will grant no additional options under such plan prior
to the Effective Time of the Consolidation.
5.6 TERMINATION OF AIB EMPLOYEE PLANS. Unless otherwise agreed to
between the parties, AIB shall take all steps necessary to cause the termination
of all AIB Employee Plans without any liability (accrued, contingent or
otherwise) to the Consolidated Bank, Bancorp or the Surviving Bank.
5.7 SHAREHOLDERS' MEETING. AIB shall, as soon as practicable after
execution of this Agreement, cause a meeting of its shareholders to be duly held
upon requisite notice for the purpose of:
(a) approving the Consolidation, the Consolidation Agreement,
the transactions contemplated therein and requisite matters incident thereto;
and
(b) conducting such other business as its Board of Directors
deems advisable and proper in connection therewith.
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AIB, through its Board of Directors, shall recommend that its
shareholders approve the Consolidation, the Consolidation Agreement, the
transactions contemplated therein and all requisite matters incident thereto,
and it will, subject to the fiduciary duty of its directors, use its best
efforts to obtain the affirmative vote of the holders of the largest possible
percentage of its outstanding common stock.
5.8 AFFIRMATIVE CONDUCT OF BANCORP AND FCB. Between the date hereof and
the Closing Date:
(a) SATISFACTION OF CONDITIONS. Bancorp and FCB shall use and
shall cause FCB Interim to use its best efforts, or cooperate with others, to
expeditiously bring about the satisfaction of the conditions specified in
Article VI hereof.
(b) NOTICE OF CHANGES. Bancorp or FCB shall advise AIB promptly,
plans for raising capital, in writing of any change known to Bancorp or FCB in
the capital structure, financial condition or business prospects of FCB or
Bancorp taken as a whole or of any other change known to Bancorp or FCB
respecting the financial condition of Bancorp and FCB taken as a whole that
could in either case reasonably be expected to materially adversely affect
Bancorp's or FCB's ability to consummate the Acquisition, or of any matter which
would make the representations and warranties set forth in Article IV hereof not
true and correct in any material respect on the Closing Date.
(c) FCB INTERIM. FCB shall cause FCB Interim to be duly
organized as an interim national bank, with all necessary power to own, lease
and operate its properties and assets, if any, and to carry on any business it
then may conduct. FCB shall also cause FCB Interim to obtain shareholder
approval of the Consolidation. As soon as reasonably practicable following the
execution of this Agreement, FCB shall cause FCB Interim to execute the
Consolidation Agreement in the form and having the substance of Exhibit "A"
hereto.
(d) REGULATORY APPLICATIONS. Bancorp and FCB shall proceed
expeditiously in making application for all necessary regulatory approvals
required as a condition precedent to the consummation of the Acquisition,
including the approval of the OCC. AIB agrees to cooperate fully in the
preparation of such applications.
(e) ADDITIONAL FCB FINANCIAL STATEMENTS. As soon as available,
FCB and Bancorp shall deliver to AIB any FCB Financial Statements not previously
delivered pursuant to Subarticle 4.5 hereof.
(f) RAISING CAPITAL TO CONSUMMATE THE CONSOLIDATION. FCB shall
raise or receive additional equity capital in such amounts as are necessary to
consummate the consolidation.
5.9 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, the Consolidation Agreement and the Merger
Agreement.
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5.10 NECESSARY CONSENTS. In addition to the regulatory approvals
referred to in Subarticle 5.8 hereof, 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 transactions contemplated hereby,
including, without limitation, the written consent of any lessors of real and
personal property which property cannot be assigned without the written consent
of such lessors.
5.11 ENVIRONMENTAL ASSESSMENT REPORT. Within sixty (60) days of the date
of this Agreement, AIB shall deliver to Bancorp and FCB a Phase I environmental
assessment report (the "Phase I Report") on each parcel of real property owned
or leased by AIB, with the exception of any real property for which AIB is a
lessee and the lessor (who shall be credit-worthy) fully indemnified AIB for any
claims or losses relating to Hazardous Substances on such premises or breaches
of any applicable Environmental Law pursuant to an agreement in form and
substance reasonably satisfactory to FCB. Each Phase I Report shall be current
within 60 days of its delivery and in form and substance reasonably satisfactory
to Bancorp. Bancorp and FCB shall promptly review each Phase I Report and within
five (5) business days of receipt thereof, will give written notice to AIB if
Bancorp and FCB determine that the findings of the Phase I Report constitute a
material breach by AIB of any of its representations, warranties, commitments or
agreements under this Agreement. The failure of Bancorp or FCB to give such
notice shall be deemed acceptance of the Phase I Report by Bancorp and FCB.
5.12 ACCESS TO INFORMATION. Bancorp and FCB shall afford AIB and its
representatives, counsel, accountants, agents and employees access, during
normal business hours, to such books and records of FCB and Bancorp as AIB shall
request in order for AIB to monitor the progress being made by FCB and /or
Bancorp to consummate the transactions contemplated by this Agreement as well as
FCB's and Bancorp's ability to consummate such transactions.
ARTICLE VI
CONDITIONS PRECEDENT TO THE 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 respective parties shall have
received all requisite approvals of the shareholders of FCB, FCB Interim and
AIB.
(b) NO PROCEEDINGS. No legal, administrative, arbitration,
investigatory or other proceeding by any governmental authority shall have been
instituted or threatened and, at what would otherwise have been the Effective
Time of the Consolidation, remain pending by or before a court or any
governmental authority to restrain or prohibit the transactions contemplated
hereby.
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(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 and the FRB shall have been
obtained or made for the transactions contemplated hereby and the applicable
waiting period under 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.
6.2 CONDITIONS TO OBLIGATIONS OF BANCORP AND FCB. The obligations of
Bancorp and FCB to effect the transactions contemplated hereby shall be subject
to the following conditions, any of which may be waived in writing by either
Bancorp or FCB:
(a) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF COVENANTS.
Each of the representations and warranties of AIB set forth herein (or as
updated in accordance with Subarticle 5.2(n)) shall be true and correct as of
the Effective Time of the Consolidation in all material respects, as if made on
such date; and AIB shall have performed in all material respects all of the
covenants to be performed by it on or prior to the Effective Time of the
Consolidation.
(b) AUTHORIZATION OF MERGER. All action necessary to authorize
the execution, delivery and performance of this Agreement, the Consolidation
Agreement and the Merger Agreement by AIB and the consummation of the
transactions contemplated hereby and thereby shall have been duly and validly
taken by the Board of Directors and shareholders of AIB, including, without
limitation, approval by a vote of the holders of at least a majority of the AIB
Stock, and AIB shall have full power and right to consolidate with FCB Interim
pursuant to the Consolidation Agreement and to merge with FCB pursuant to the
Merger Agreement.
(c) REGULATORY APPROVALS. Any governmental approvals referred to
in Subarticle 6.1(c) and any other subarticle of this Agreement shall have been
granted without the imposition of conditions that either Bancorp or FCB
reasonably and in good faith concludes would be materially burdensome.
(d) THIRD PARTY CONSENTS. Bancorp, FCB, FCB Interim and AIB
shall have obtained all consents of other parties to its 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 MATERIAL ADVERSE CHANGES. As of the Closing Date
there shall not exist any Material Adverse Change in the Business Condition of
AIB.
(f) TERMINATION OF STOCK OPTION PLANS. AIB shall have caused the
AIB Stock Option Plans to be terminated as of the Effective Time of the
Consolidation and shall have obtained the consents or agreements and otherwise
shall have complied with the terms of Subarticles 5.5 and 5.6 hereof.
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(g) SHAREHOLDERS' AGREEMENTS. Each of the directors of AIB shall
have entered into a Shareholders' Agreement in substantially the form attached
hereto as Exhibit "C" in all cases concurrently with the execution of this
Agreement, and each such director shall have performed in all material respects
the obligations to be performed by him under such agreements.
(h) OFFICERS' CERTIFICATE. There shall have been delivered to
Bancorp and FCB on the Closing Date a certificate executed by the President and
Chief Executive Officer and by the Chief Financial Officer of AIB certifying, to
the best of their knowledge, compliance with all of the provisions of
Subarticles 6.2(a), (b), (d), (e), (f) and (g).
(i) TAX MATTERS. Bancorp and FCB shall have received an opinion
from a law firm mutually acceptable to AIB and FCB as of the Effective Time of
the Consolidation, or a ruling from the Internal Revenue Service substantially
to the effect that, under the Code, the Acquisition will not result in the
recognition of any gain or loss to Bancorp, FCB or AIB (but excluding AIB's
shareholders).
(j) 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 or FCB hereunder, shall be subject to the approval, to be reasonably
exercised, of Horgan, Rosen, Beckham & Coren, L.L.P., counsel for Bancorp and
FCB.
(k) PHASE I REPORTS. AIB shall have delivered Phase I Reports to
Bancorp and FCB in accordance with Section 5.11.
6.3 CONDITIONS TO OBLIGATIONS OF AIB. The obligations of AIB to effect
the transactions contemplated hereby shall be subject to the following
conditions, any of which may be waived in writing by AIB:
(a) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF COVENANTS.
Each of the representations and warranties of Bancorp and FCB set forth herein
shall be true and correct as of the Effective Time of the Consolidation in all
material respects, as if made on such date; and Bancorp and FCB 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 Consolidation.
(b) AUTHORIZATION OF MERGER. All actions necessary to authorize
the execution, delivery and performance of this Agreement, the Consolidation
Agreement and the Merger Agreement by Bancorp, FCB and FCB Interim and the
consummation of the transactions contemplated hereby and thereby shall have been
duly and validly taken by the Boards of Directors of Bancorp, FCB and FCB
Interim and the shareholders of FCB and FCB Interim, and FCB Interim shall have
full power and right to consolidate with AIB pursuant to the Consolidation
Agreement.
(c) OFFICERS' CERTIFICATE. There shall have been delivered to
AIB on the Closing Date a certificate executed by the Chief Executive Officer
and the Chief Financial Officer of both Bancorp and FCB
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certifying, to the best of their knowledge, compliance with all of the
provisions of Sections 6.3(a) and (b).
(d) 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 AIB
hereunder, shall be subject to the approval, to be reasonably exercised, of
Xxxxxx & Xxxxxx, counsel for AIB.
(e) NECESSARY CAPITAL. FCB shall have received or raised the
capital necessary to consummate the consolidation in accordance with Section
5.8(f) hereof on or before January 15, 1999.
ARTICLE VII
EMPLOYEE BENEFITS
7.1 SURVIVING BANK EMPLOYEE BENEFITS. All employee benefits and benefit
programs of Bancorp in effect at and as of the Effective Time of the
Consolidation shall become the sole employee benefits and benefit programs of
the Surviving Bank. AIB shall have terminated its Employee Plans prior to the
Effective Time of the Consolidation, and, no such employee plans shall become
plans of the Surviving Bank or Bancorp.
7.2 EMPLOYEES OF AIB. Bancorp and FCB covenant and agree that the
Surviving Bank shall, without obligation to employ, make a reasonable effort to
employ all officers and employees of AIB at the Effective Time of the
Consolidation. Any officer or employee of AIB at the Effective Time of the
Consolidation who is not either (i) employed by the Surviving Bank or (ii)
covered by an Employment Contract, shall be entitled to severance pay equal to
one month's salary, as that salary was in effect on March 31, 1998, (or portion
thereof) for each year (or portion thereof) of service with AIB but not to
exceed an amount equal to six (6) months' salary. At and as of the Effective
Time of the Consolidation, any persons who are officers or other employees of
AIB immediately prior to the Effective Time of the Consolidation and who become
officers and employees of the Surviving Bank shall be entitled, other than for
purposes of benefit accrual, to carry over to FCB service credit and seniority
for time employed by AIB, consistent with such service, to participate in all
employee benefits and benefit programs of the Surviving Bank in accordance with
the terms of such employee benefit programs. Such participation shall commence
at and as of the Effective Time of the Consolidation if permitted by the terms
of such employee benefit programs, or as soon thereafter as permitted by the
terms of such employee benefit programs; provided, however, that officers and
other employees of AIB who, immediately before the Effective Time of the
Consolidation, had not yet completed the waiting period or service requirement
for eligibility in AIB's employee welfare benefit plans (as such term is defined
in Section 3(1) of ERISA) shall not be entitled to participate in FCB's employee
welfare benefit plans until they would have completed such waiting period or
service requirement, taking into account their service with AIB before the
Effective Time of the Consolidation and their service with the Surviving Bank
after the Effective Time of the Consolidation.
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7.3 CHIEF EXECUTIVE OF AIB. Bancorp and FCB covenant and agree that the
Surviving Bank shall, effective immediately with the Merger, be bound by the
terms and conditions of the amended employment agreement between FCB and Xxxxxxx
X. Xxxxxx ("Executive"), a copy of which is attached hereto as Exhibit D,
providing for a three year term, at the same salary level as in effect on March
31, 1998, and other terms and conditions as set forth therein, including but not
limited to retirement compensation to begin on the later of Executive's 65th
birthday, or retirement from the bank and continuing for ten years with
retirement benefits equal to fifty percent (50%) of Executive's salary in effect
on March 31, 1998. In addition, the contract will provide for stock options
covering 40,000 shares (adjusted for any splits, reverse splits or stock
dividends effective after June 30, 1998) of Bancorp's common stock.
ARTICLE VIII
TERMINATION
8.1 TERMINATION OF THIS AGREEMENT.
(a) This Agreement may be terminated upon the occurrence of any
of the following:
(i) By Bancorp or FCB immediately upon the expiration
of thirty (30) days from the date that Bancorp or FCB has given notice to AIB of
a breach or default by AIB in the performance of any covenant, agreement,
representation, warranty, duty or obligation hereunder, which breach or default
causes a Material Adverse Change in the Business Condition of AIB or has a
material adverse effect upon the transactions contemplated hereby; provided,
however, that no such termination shall be effective if, within said 30-day
period, AIB shall have substantially corrected and cured the grounds for the
termination as set forth in said notice of termination;
(ii) By AIB immediately upon the expiration of thirty
(30) days from the date that AIB has given notice to Bancorp and FCB of a breach
or default by either Bancorp or FCB in the performance of any covenant,
agreement, representation, warranty, duty or obligation hereunder which breach
or default has a material adverse effect on Bancorp, FCB, their respective
financial conditions or on the transactions contemplated hereby; provided,
however, that no such termination shall be effective if, within said 30-day
period, Bancorp or FCB, as applicable, shall have substantially corrected and
cured the grounds for the termination as set forth in said notice of
termination;
(iii) By Bancorp, FCB or AIB upon the expiration of
thirty (30) days after the OCC, or any other applicable 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 unless, within said 30-day period, the parties hereto agree to
resubmit the application to the regulatory authority which has denied or refused
to grant such approval, consent, authorization or ruling, as the case may be;
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(iv) By any of Bancorp, FCB or AIB upon the failure to
satisfy any of the conditions specified in Subarticle 6.1;
(v) By Bancorp or FCB upon the failure to satisfy any
of the conditions specified in Subarticle 6.2 other than 6.2(i);
(vi) By AIB upon the failure to satisfy any of the
conditions specified in Subarticle 6.3;
(vii) By Bancorp or FCB at any time prior to the
Effective Time of the Consolidation, if (A) the Board of Directors of AIB
approves a transaction (or AIB executes a letter of intent or other
Understanding) pursuant to which any person or entity or related group of
persons or entities acquires, directly or indirectly, record or beneficial (as
defined in Rule 13d-3 promulgated pursuant to the Securities Exchange Act of
1934, as amended) ownership or control of 25% or more of the currently
outstanding shares of AIB Stock; or (B) any person or entity or related group of
persons or entities seeks to acquire 25% or more of the outstanding shares of
AIB Stock by tender offer or otherwise, and the Board of Directors of AIB does
not advise its shareholders that it does not support such tender offer or
acquisition and that it does support the Acquisition;
(viii) By Bancorp or FCB immediately upon the failure
of the shareholders of AIB to approve this Agreement and the Consolidation
Agreement;
(ix) By Bancorp, FCB and AIB, upon the mutual consent
of such parties; or
(x) By Bancorp or FCB upon the failure to satisfy the
condition of Subarticle 6.2(i).
(b) This Agreement shall be terminated if the Closing has not
occurred by February 28, 1999, unless mutually extended by the parties hereto.
8.2 IMMATERIAL BREACH. Notwithstanding anything to the contrary
contained herein, no party hereto shall have the right to terminate this
Agreement on account of its own breach or due to any immaterial breach by any
other party hereto of any covenant, agreement, representation, warranty, duty or
obligation hereunder.
8.3 EFFECT OF TERMINATION. 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 Subarticles 5.3
or 9.1 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; provided, however, that no party hereto shall be
liable for any immaterial breach as delineated in Subarticle 8.2 hereof, no
party shall be liable for the failure to obtain any required shareholder or
regulatory approvals, and
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no party hereto shall be liable for termination of this Agreement pursuant to
Subarticle 8.1(a)(i) or pursuant to Subarticle 8.1(a)(ii) solely with respect to
a material breach of a representation or warranty made pursuant to Article III
or Article IV, if such representation or warranty was accurate as of the date
hereof or as of the Closing Date.
ARTICLE IX
GENERAL PROVISIONS
9.1 (a) COMPENSATION TO BANCORP AND FCB. (i) In the event that this
Agreement is terminated by Bancorp or FCB pursuant to Subarticle 8.1(a)(i),
then AIB shall forthwith pay jointly to Bancorp and FCB, immediately upon
demand, the aggregate sum of $150,000, plus actual out-of-pocket costs incurred
by FCB or Bancorp in connection with the Merger but not to exceed $100,000, for
a total amount not to exceed $250,000, which amount the parties hereto agree and
stipulate is reasonable and full liquidated damages and reasonable compensation
to Bancorp and FCB for their involvement in the transactions contemplated by
this Agreement to the date of such notice of termination and is not a penalty or
forfeiture.
(ii) In the event that this Agreement is terminated by
Bancorp or FCB pursuant to Subarticle 8.1(a)(vii), then AIB shall forthwith pay
jointly to Bancorp and FCB, immediately upon demand, the aggregate sum of
$600,000, which amount the parties hereto agree and stipulate is reasonable and
full liquidated damages and reasonable compensation to Bancorp and FCB for their
involvement in the transactions contemplated by this Agreement to the date of
such notice of termination and is not a penalty or forfeiture.
(b) COMPENSATION TO AIB. (i) In the event that this Agreement is
terminated by AIB pursuant to Subarticle 8.1(a)(ii), then FCB shall forthwith
pay to AIB, immediately upon demand, the aggregate sum of $150,000, plus
action-of-pocket costs incurred by AIB in connection with the Merger but not to
exceed $100,000, for a total amount not to exceed $250,000, which amount the
parties hereto agree and stipulate is reasonable and full liquidated damages and
reasonable compensation to AIB for its involvement in the transactions
contemplated by this Agreement to the date of such notice of termination and is
not a penalty or forfeiture.
(ii) In the event that this Agreement is terminated by
Bancorp or FCB pursuant to Subarticle 8.1(a)(x), then FCB shall forthwith pay to
AIB, immediately upon demand, the aggregate sum of One Hundred Twenty-Five
Thousand Dollars ($125,000) which amount the parties hereto agree and stipulate
is reasonable and full liquidated damages and reasonable compensation to AIB or
its involvement in the transactions contemplated by this Agreement to the date
of such notice of termination and is not a penalty or forfeiture.
9.2 EXPENSES. Each party hereto shall pay its own costs and expenses,
including, without limitation, those of its attorneys and accountants, incurred
in connection with this Agreement, the Consolidation
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Agreement, the Merger Agreement and the transactions covered and contemplated
hereby and thereby.
9.3 NOTICES. All notices, demands or other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered in
person (professional courier acceptable) or by United States mail, certified or
registered, with return receipt requested, by facsimile (with written
confirmation of receipt), or otherwise actually delivered, as follows:
(a) If to Bancorp or FCB:
First Coastal Bank
000 Xxxx Xxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxx X. Xxxxxxxx
Chairman of the Board
With a copy to:
Horgan, Rosen, Beckham & Coren, L.L.P.
00000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
(b) If to AIB:
American Independent Bank N.A.
0000 X. Xxxxxxx Xxxxx Xxxx.
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
President and
Chief Executive Officer
With a copy to:
Xxxxxx & Xxxxxx
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
The persons or address to which mailings or deliveries shall be made may change
from time to time by notice given pursuant to the provisions of this Subarticle
9.3. Any notice, demand or other communication given pursuant to the provisions
of this Subarticle 9.3 shall be deemed to have been given on the date actually
delivered or three days following the date mailed or upon written confirmation
of receipt of facsimile transmission, as the case may be.
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.
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9.5 EFFECT OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in this Agreement or in any Schedule shall terminate
immediately after the Effective Time of the Consolidation.
9.6 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 AIB, Bancorp, FCB or FCB Interim
or any of them.
9.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
9.8 GOVERNING LAW. This Agreement is made and entered into in the State
of California, and the laws of that state, except to the extent superseded by
provisions of Title 12 of the United States Code, shall govern the validity and
interpretation hereof and the performance of the parties hereto of their
respective duties and obligations hereunder.
9.9 CAPTIONS. The captions contained in this Agreement are for
convenience of reference only and do not form a part of this Agreement.
9.10 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, the
Consolidation Agreement and the Merger Agreement, when duly executed and
delivered, may be modified or amended by action of the Boards of Directors of
Bancorp, FCB, FCB Interim or AIB to the extent permitted by law 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.
9.11 KNOWLEDGE. In all representations and warranties concerning the
knowledge or notice of AIB, Bancorp or FCB, wherever included herein, there
shall be imputed to AIB, Bancorp or FCB the knowledge and notice of their
respective executive officers and directors.
9.12 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 in whose favor final judgment is entered shall be entitled to
have and recover of and from the losing party 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).
9.13 ENTIRE AGREEMENT. The making, execution and delivery of this
Agreement by the parties hereto have been induced by no 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,
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written or oral, in effect among the parties relating to the subject matter
hereof, unless expressly referred to by reference herein.
9.14 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 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.
9.15 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.
9.16 PUBLICITY. The parties hereto agree that they will coordinate on
any publicity concerning this Agreement, and the transactions contemplated
hereby. 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.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
on the day and year first above written.
FIRST COASTAL BANCSHARES,
A CALIFORNIA CORPORATION
By: /s/ XXX X. XXXXXXXX
---------------------------------
Xxx X. Xxxxxxxx
Chairman of the Board
FIRST COASTAL BANK, N.A.
By: /s/ XXX X. XXXXXXXX
---------------------------------
Xxx X. Xxxxxxxx
Chairman of the Board
AMERICAN INDEPENDENT BANK N.A.
By: /s/ XXXXXXX X. XXXXXX
---------------------------------
Xxxxxxx X. Xxxxxx
Chairman, President and
Chief Executive Officer
By: /s/ XXXXXXX XXXXX
---------------------------------
Xxxxxxx Xxxxx
Assistant Secretary
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