Exhibit 2
MERGER AGREEMENT AND PLAN OF REORGANIZATION
THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION ("Agreement"), is made and
entered into by and among IMPERIAL THRIFT AND LOAN ASSOCIATION, a California
licensed industrial loan company ("Imperial"), ITLA CORP., a California business
corporation and ITLA CAPITAL CORPORATION, a Delaware business corporation
("Holding"), effective as of the date executed by all of the parties.
WITNESSETH:
WHEREAS, Imperial is an industrial loan company duly organized and validly
existing under the laws of the State of California, with authorized capital
stock consisting of twenty million (20,000,000) shares of common stock, no par
value ("Thrift Stock"), of which 7,820,500 shares are issued and outstanding and
five million (5,000,000) shares of preferred stock, no par value, none of which
are outstanding;
WHEREAS, ITLA Corp. is a corporation duly organized and validly existing
under the laws of the State of California, which is proposed to be a subsidiary
of Holding and to have authorized capital stock consisting of 100 shares of
common stock, par value $.01 per share ("ITLA Stock");
WHEREAS, Holding is a capital stock corporation duly organized and validly
existing under the laws of Delaware, with authorized capital stock consisting of
twenty million (20,000,000) shares of common stock, par value $.01 per share
("Holding Stock") and five million (5,000,000) shares of preferred stock, par
value $.01 per share;
WHEREAS, Holding proposes to issue one share of its common stock to its
incorporator for a purchase price of $10.00 and to purchase one share of the
common stock of ITLA Corp. for $10.00;
WHEREAS, it is the desire of the parties to this Agreement to adopt a plan
of reorganization providing for the formation of a holding company for Imperial;
and
WHEREAS, a majority of the respective Boards of Directors of Imperial, ITLA
Corp., and Holding have approved and authorized the execution of this Agreement
pursuant to which the plan of reorganization, including the merger of ITLA Corp.
into Imperial, will be implemented.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and in order to prescribe the plan of
reorganization and merger, including its terms and conditions, the mode of
carrying the same into effect, the manner and basis of converting Thrift Stock
into Holding Stock and such other details and provisions as are deemed necessary
or proper, the parties hereby agree as follows:
ARTICLE I
MERGER AND REORGANIZATION
1.1 Subject to the conditions hereinafter set forth, ITLA Corp. shall
be merged into Imperial under the Articles of Incorporation of Imperial at the
Effective Date (as defined in Article XI hereof) of the merger (the "Merger").
The Merger shall be effected pursuant to the provisions of, and with the effect
provided in, the applicable provisions of the laws of the State of California
and the federal laws of the United States and the requirements of the California
Department of Corporations ("DOC") and the Federal Deposit Insurance Corporation
(the "FDIC").
1.2 On the Effective Date, the resulting entity in the Merger shall
be Imperial (hereinafter referred to as the "Surviving Institution" whenever
reference is made to it as of the Effective Date of the Merger or thereafter)
which will continue to operate under its present name as "Imperial Thrift and
Loan Association." The Articles of Incorporation and Bylaws of Imperial in
effect on the Effective Date shall be the Articles of Incorporation and Bylaws
of the Surviving Institution. The established offices and facilities of
Imperial immediately prior to the Merger shall become the established offices
and facilities of the Surviving Institution.
1.3 On the Effective Date of the Merger, ITLA Corp. shall cease to
exist separately and shall be merged with and into Imperial in accordance with
the provisions of this Agreement and in accordance with the provisions of
applicable laws, rules and regulations, and all of the assets and property of
every kind and character, real, personal and mixed, tangible and intangible,
chooses in action, rights and credits then owned by ITLA Corp. or which would
inure to it, shall immediately, by operation of law and without any conveyance
or transfer and without any further act or deed, be vested in and become the
property of the Surviving Institution, which shall have, hold and enjoy the same
in its own right as fully and to the same extent as the same were possessed,
held and enjoyed by ITLA Corp. prior to such Merger. The Surviving Institution
shall be deemed to be and shall be a continuation of the entity and identity of
ITLA Corp. and Imperial and all of the rights and obligations of ITLA Corp. and
Imperial shall remain unimpaired and the Surviving Institution, on the Effective
Date of such Merger, shall succeed to all such rights and obligations and the
duties and liabilities connected therewith on such Effective Date.
1.4 On the Effective Date of the Merger, there will be no holders of
investment certificates issued by ITLA Corp. Holders of investment certificates
of Imperial as of the Effective Date of the Merger shall continue to be holders
of the same interest of the Surviving Institution without change as to
withdrawal value or other rights. No existing holder of any investment
certificate shall have any of his rights impaired by virtue of the Merger
contemplated hereby.
1.5 The directors and officers of the Surviving Institution on the
Effective Date shall be those persons who are directors and officers,
respectively, of Imperial immediately before the Effective Date. The committees
of the Board of Directors of the Surviving Institution on the Effective Date
shall be the same as, and shall be composed of the same persons who were serving
on, committees appointed by the Board of Directors of Imperial as they exist
immediately before the Effective Date. The committees, if any, of officers of
the Surviving Institution on the
Effective Date shall be the same as, and shall be composed of the same officers
who were serving on, the committees of officers of Imperial as they exist
immediately before the Effective Date.
1.6 Except as expressly prohibited by applicable laws, all corporate
acts, plans, policies, applications, agreements, orders, registrations,
licenses, approvals and authorizations of Imperial and ITLA Corp., their
respective stockholders, Boards of Directors, committees elected or appointed by
their Boards of Directors, and their respective officers and agents, which were
valid and effective immediately before the Effective Date, shall be taken for
all purposes at and after the Effective Date as the acts, plans and policies,
applications, agreements, orders, registrations, licenses, approvals and
authorizations of the Surviving Institution and shall be as effective and
binding thereon as the same were with respect to Imperial and ITLA Corp.
immediately before the Effective Date.
1.7 On and after the Effective Date, the 1995 Employee Stock
Incentive Plan and the 1995 Stock Option Plan for Non-Employee Directors of
Imperial (the "Option Plans"), the Recognition and Retention Plan (the "RRP")
and the Voluntary Retainer Stock and Deferred Compensation Plan for Outside
Directors (the "Outside Director Plan") shall be assumed by Holding and shares
and options for shares awarded under the Option Plans, and shares awarded under
the RRP and the Outside Director Plan shall be shares of Holding Stock.
ARTICLE II
CONVERSION, EXCHANGE AND CANCELLATION OF SHARES
2.1 The manner and basis of converting and exchanging the issued and
outstanding shares of Thrift Stock into shares of Holding Stock and related
transactions concerning ITLA Corp., shall be as hereinafter provided in this
Article II.
2.2 On the Effective Date:
(a) Each share of Thrift Stock outstanding on the Effective Date
shall, without any action on the part of the holder thereof or
Imperial or Holding, be converted into and exchangeable for one share
of Holding Stock;
(b) The outstanding share of ITLA Stock issued to Holding shall
be cancelled and converted into the same number of shares of Thrift
Stock issued and outstanding on the Effective Date; and
(c) The share of Holding Stock previously issued to the
incorporator and outstanding shall be cancelled for a redemption price
of $10.00.
2.3 On and after the Effective Date, each holder of a certificate or
certificates which prior thereto represented outstanding shares of Thrift Stock
shall be entitled, upon surrender of such certificate or certificates for
cancellation to Holding, to receive as soon as practicable a new certificate
representing the number of shares of Holding Stock into which such holder's
shares of Thrift Stock were converted as a result of the Merger. Until so
surrendered, each certificate
theretofore evidencing Thrift Stock shall not be transferable on the books of
the parties hereto, but shall be deemed to evidence ownership of the number of
shares of Holding Stock into which such shares of Thrift Stock have been
converted by virtue of the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HOLDING
Holding hereby represents and warrants as follows:
3.1 Holding is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. At the Effective Date,
Holding will have corporate power to carry on its business as then to be
conducted and will be qualified to do business in every jurisdiction in which
the character and location of the assets to be owned by it or the nature of the
business to be transacted by it require qualification.
3.2 Holding has no subsidiaries other than ITLA Corp. at the date of
this Agreement. Between the date hereof and the Effective Date, Holding will not
create or acquire any subsidiaries, other than ITLA Corp., without the consent
of Imperial.
3.3 The authorized capital stock of Holding consists on the date
hereof of twenty million (20,000,000) shares of common stock, par value $.01 per
share, and five million (5,000,000) shares of preferred stock, par value $.01
per share. Except as set forth above or as contemplated by this Agreement or
necessary for the effectuation of the Merger, as of the date hereof, Holding
does not have any shares of its capital stock issued or outstanding and does not
have any outstanding subscriptions, options or other agreements or commitments
obligating it to issue shares of its capital stock.
3.4 Compliance with the terms and provisions of this Agreement by
Holding will not conflict with or result in a breach of any of the terms,
conditions or provisions of any judgment, order, injunction, decree or ruling of
any court or governmental authority, domestic or foreign, or of any agreement or
instrument to which Holding is a party, or constitute a default thereunder.
3.5 The execution, delivery and performance of this Agreement have
been duly authorized by the Board of Directors of Holding and has been approved
by the incorporator as the sole stockholder of Holding.
3.6 Holding has complete and unrestricted power to enter into and to
consummate the transactions contemplated by this Agreement, subject to approval
of this Agreement by the incorporator as sole stockholder of Holding and the
provisions of Section 7.3 hereof.
3.7 On or prior to the Effective Date, Holding will make available
for issuance and delivery that number of shares of Holding Stock into which the
outstanding Thrift Stock is to be converted and exchanged pursuant to the Merger
as provided herein. All such shares of Holding Stock, when delivered in exchange
for Thrift Stock, will be duly authorized, validly issued and outstanding, fully
paid and non-assessable, and will be voting stock of Holding.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IMPERIAL
Imperial hereby represents and warrants as follows:
4.1 Imperial is an industrial loan company duly organized, validly
existing and in good standing under the laws of the State of California, and is
duly authorized to carry on its business as it is now being conducted.
4.2 The authorized capital stock of Imperial consists on the date
hereof of twenty million (20,000,000) shares of common stock, no par value, of
which 7,820,500 shares are issued and outstanding, and five million (5,000,000)
shares of preferred stock, no par value, none of which are issued and
outstanding.
4.3 Compliance with the terms and provisions of this Agreement by
Imperial will not conflict with, constitute a default under or result in a
breach of any of the terms, conditions or provisions of any judgment, order,
injunction, decree or ruling of any court or governmental authority, domestic or
foreign, or of any agreement or instrument to which Imperial is a party.
4.4 The execution, delivery and performance of this Agreement have
been duly authorized by the Board of Directors of Imperial.
4.5 Imperial has complete and unrestricted power to enter into and to
consummate the transactions contemplated by this Agreement, subject to the
provisions of Sections 7.2 and 7.3 hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ITLA CORP.
ITLA Corp. hereby represents and warrants as follows:
5.1 ITLA Corp. is duly organized, validly existing and in good
standing under the laws of the State of California.
5.2 The authorized capital stock of ITLA Corp. consists of 100 shares
of common stock, par value $.01 per share. Except for the share of ITLA Corp.
stock issued to Holding for the effectuation of the Merger, prior to the Merger,
ITLA Corp. will not have any shares of its stock issued and outstanding. There
are no outstanding subscriptions, options or other arrangements or commitments
obligating ITLA Corp. to issue any shares of its capital stock.
5.3 Compliance with the terms and provisions of this Agreement by
ITLA Corp. will not conflict with, constitute a default under or result in a
breach of any of the terms, conditions or provisions of any judgment, order,
injunction, decree or ruling of any court or governmental authority, domestic or
foreign, or of any agreement or instrument to which ITLA Corp. is, or will be, a
party.
5.4 Prior to the Merger, the execution, delivery and performance of
this Agreement will be duly authorized by the Board of Directors of ITLA Corp.
and will be approved by Holding as the sole stockholder of ITLA Corp.
5.5 ITLA Corp. has complete and unrestricted power to enter into and
to consummate the transaction contemplated by this Agreement, subject to the
approval of this Agreement and the Merger by Holding as sole stockholder of ITLA
Corp. and the provisions of Section 7.3 hereof.
ARTICLE VI
OBLIGATIONS OF THE PARTIES PENDING THE EFFECTIVE DATE
6.1 Prior to the Effective Date, (i) ITLA Corp. shall complete its
organization and have directors who shall be duly elected and qualified, (ii)
Holding shall complete its organization and have directors who shall be duly
elected and qualified, and (iii) this Agreement shall be duly submitted to the
stockholders of Imperial for the purpose of considering and acting upon this
Agreement in the manner required by law. Each party shall use its best efforts
to obtain the requisite approvals of this Agreement and the transactions
contemplated herein and, after obtaining such approval, the parties through
their respective officers and directors, shall execute and file with the
appropriate regulatory authorities all documents and papers, and the parties
shall take every reasonable action, necessary to comply with and to secure such
approval of this Agreement and the transactions contemplated herein as may be
required by all applicable statutes, rules and regulations.
ARTICLE VII
CONDITIONS PRECEDENT TO THE CONSUMMATION OF
THE MERGER AND REORGANIZATION
The obligations of the parties hereto to consummate the Merger and the
reorganization contemplated hereby shall be subject to the conditions that on or
before the Effective Date:
7.1 Each of the parties hereto shall have performed and complied with
all of its obligations hereunder which are to be complied with or performed on
or before the Effective Date.
7.2 This Agreement and related transactions contemplated hereby shall
have been duly and validly authorized, approved and adopted at a meeting of
stockholders duly and properly called for such purpose by Imperial by an
affirmative vote of at least 50 percent of the outstanding voting stock of
Imperial plus one affirmative vote, all in accordance with applicable law.
7.3 Orders, consents and approvals, in form and substance reasonably
satisfactory to all the parties hereto, shall have been entered by the DOC and
the FDIC (or there shall have been received satisfactory assurance that such
orders, consents or approvals are not required), granting
the authority necessary for consummation of the transactions contemplated by
this Agreement pursuant to the provisions of the requirements of the DOC and the
FDIC, all other requirements prescribed by law and the rules and regulations of
any other regulatory authority having jurisdiction over the transactions
contemplated herein shall have been satisfied.
7.4 There shall have been received from Silver, Xxxxxxxx & Xxxx,
L.L.P., Washington, D.C., special counsel to Imperial, an opinion to the effect
that:
1. The Merger will constitute a reorganization within the
meaning of Section 368(a)(1(A) and 368(a)(2)E) of the Internal Revenue
Code of 1986 (the "Code"). The reorganization will not be disqualified
by reason of the fact that stock of Holding is used in the transaction
(Section 368(a)(2)(E) of the Code). It will also not be disqualified
by the substitution of Holding stock options for Thrift Stock options
as discussed above (Rev. Rul. 70-269, 1970-1 C.B. 81). Holding, ITLA
Corp. and Imperial will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code.
2. No gain or loss will be recognized to ITLA Corp. on the
transfer of substantially all of its assets to Imperial (Section
361(a) of the Code).
3. No gain or loss will be recognized to Imperial on the receipt
by Imperial of substantially all of the assets of ITLA Corp. in
exchange for Thrift Stock (Section 1032(a) of the Code).
4. Imperial's basis in each ITLA Corp. asset received in the
transaction will be the same as the basis of those assets in the hands
of ITLA Corp. immediately prior to the transaction (Section 362(b) of
the Code).
5. Imperial's holding period in each ITLA Corp. asset will
include the period during which ITLA Corp. held such asset (Section
1223(2) of the Code).
6. No gain or loss will be recognized by Holding upon the
receipt of Thrift Stock (Section 354(a)(1) of the Code).
7. No gain or loss will be recognized by the shareholders of
Imperial on the exchange of their Thrift Stock solely for an identical
number of shares of Holding Stock (Section 354(a)(1) of the Code).
8. Each Imperial shareholder's basis in the Holding Stock
received in the transaction will be the same as the basis in the
Thrift Stock surrendered in the transaction (Section 358(a)(1) of the
Code).
9. The holding period of the Holding Stock to be received by
Imperial shareholders includes the period during which the Thrift
Stock surrendered in exchange therefor was held provided that the
Thrift Stock was held as a capital asset in the hands of Imperial
shareholders on the date of the exchange (Section 1223(1) of the
Code).
10. The net operating losses of Imperial, if any, will not be
reduced or eliminated by reason of the proposed reorganization under
Section 382 of the Code.
7.5 No action, suit or proceeding shall have been instituted or shall
have been threatened before any court or other governmental body or by any
public authority to restrain, enjoin or prohibit the Merger and reorganization
contemplated herein, or which might restrict the operation of the business of
the Surviving Institution or the ownership of the capital stock of the Surviving
Institution or the exercise of any rights with respect thereto by Holding, or
subject any of the parties hereto or any of their directors or officers to any
liability, fine, forfeiture, or penalty on the grounds that the transactions
contemplated hereby, the parties hereto or their directors or officers, have
breached or will breach any applicable law or regulation, or have otherwise
acted improperly in connection with the transactions contemplated hereby, and
with respect to which the parties hereto have been advised by counsel that, in
the opinion of such counsel, such action, suit or proceeding raises substantial
questions of law or fact which could reasonably be decided adversely to any
party hereto or its directors or officers.
ARTICLE VIII
ADDITIONAL CONDITIONS PRECEDENT
8.1 Each obligation of Holding and ITLA to be performed on or prior
to the Effective Date shall be subject to the satisfaction, on or before the
Effective Date, of the following additional conditions:
(a) The representations and warranties made by the Imperial in
this Agreement shall be true as though such representations and
warranties had been made or given on and as of the Effective Date; and
(b) This Agreement and the transactions contemplated hereby shall
have been duly and validly authorized, approved and adopted by
Imperial.
8.2 Each obligation of Imperial to performed on or prior to the
Effective Date shall be subject to the satisfaction, on or before the Effective
Date, of the following additional conditions:
(a) The representations and warranties made by Holding and by
ITLA contained in this Agreement shall be true as though such
representations and warranties had been made or given on and as of the
Effective Date;
(b) This Agreement and the transactions contemplated hereby shall
have been duly and validly authorized, approved and adopted by Holding
and by ITLA; and
(c) The shares of Holding Stock to be issued in the Merger shall
have been approved for quotation on the National Association of
Securities Dealers National Market System or accepted for trading on a
national securities exchange.
ARTICLE IX
AMENDMENTS
Imperial, Holding and ITLA Corp., by mutual consent of their
respective Boards of Directors or incorporators, as the case may be, to the
extent permitted by law, may amend, modify, supplement and interpret this
Agreement in such manner as may be mutually agreed upon by them in writing at
any time before or after the approval and adoption thereof by the stockholders
of Imperial, provided, however, that no such amendment, modification, supplement
or interpretation shall have a materially adverse impact on Imperial or its
stockholders except with the approval of the stockholders of Imperial.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated and the Merger and
reorganization abandoned at any time (whether before or after the approval and
adoption thereof by the stockholders of Imperial) prior to the Effective Date:
(a) By mutual consent of the parties hereto;
(b) By Holding or ITLA Corp., if any condition set forth in
Sections 7.1 through 7.5 of Article VII or Section 8.1 of Article VIII
has not been met or has not been validly waived or if; or
(c) By Imperial, if any condition set forth in Sections 7.1
through 7.5 of Article VII or Section 8.2 of Article VIII has not been
met or has not been validly waived.
10.2 An election by a party hereto to terminate this Agreement and
abandon the Merger and plan of reorganization as provided in Section 10.1 shall
be exercised on behalf of such corporation by its Board of Directors or
incorporators, as may be the case.
10.3 In the event of the termination of this Agreement pursuant to
the provisions of Section 10.1 hereof, this Agreement shall become void and have
no effect and create no liability on the part of any of the parties hereto or
their respective incorporators, directors, officers or stockholders in respect
to this Agreement.
10.4 Any of the terms or conditions of this Agreement (other than the
necessary approvals of stockholders and government authorities) may be waived at
any time by the party which is entitled to the benefit thereof, by action taken
by its Board of Directors; provided, however, that such action shall be taken
only if, in the judgment of the Board of Directors taking the action, such
waiver will not have a materially adverse effect on the benefits intended under
this Agreement to be afforded to the stockholders of Imperial.
ARTICLE XI
EFFECTIVE DATE
The effective date of the Merger ("Effective Date") shall be the last
day of the calendar month during which the last to occur of the following events
takes place: (i) the Merger is approved by the DOC and the FDIC and the
California Secretary of State certifies a copy of this Agreement, (ii) all other
required regulatory approvals have been obtained, and (iii) all other conditions
to the Merger herein set forth have been met. The Boards of Directors of
Imperial, ITLA Corp. and Holding each specifically and expressly delegate to
their respective chief executive officers the authority to change, by mutual
consent of such officers, the Effective Date of the Merger if necessary to
properly and efficiently accomplish the Merger.
ARTICLE XII
TERMINATION OF REPRESENTATIONS AND
WARRANTIES AND CERTAIN AGREEMENTS
The respective representations, warranties, covenants and agreements
of the parties hereto in Articles III, IV and V hereof shall expire with, and be
terminated and extinguished by, the Merger and reorganization pursuant to this
Agreement at the time of the consummation thereof on the Effective Date. None of
the parties shall be under any liability whatsoever with respect to any such
representation, warranty, covenant or agreement which does not survive the
Merger and reorganization, it being intended that the sole remedy of the parties
for a breach of any such representation, warranty, covenant or agreement shall
be to elect not to proceed with the Merger and reorganization if such breach has
resulted in the failure to satisfy a condition precedent to such party's
obligation to consummate the transactions contemplated hereby.
ARTICLE XIII
MISCELLANEOUS
13.1 This Agreement embodies the entire agreement among the parties
and there have been and are no agreements, representations or warranties among
the parties other than those set forth or provided for herein.
13.2 Any number of counterparts hereof may be executed and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one instrument.
13.3 Any notice or waiver to be given to any party shall be in
writing and shall be deemed to have been duly given if delivered, mailed, or
sent by prepaid telegram, addressed to such party at 000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000.
13.4 The captions contained in this Agreement are solely for
convenient reference and shall not be deemed to affect the meaning or
interpretation of any paragraph hereof.
13.5 Imperial will pay all fees and expenses incurred in connection
with the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, Imperial, ITLA Corp. and Holding each under the
authority of its Board of Directors have caused this Agreement to be executed
with the intent to be legally bound hereby.
IMPERIAL THRIFT AND
LOAN ASSOCIATION
ATTEST:
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxxxxx
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Xxxxxxx X. Xxxxx, Secretary Xxxxxx X. Xxxxxxxxxx
Chairman, President and Chief
Executive Officer
Date: May 3, 1996 Date: May 3, 1996
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ITLA CORP.
ATTEST:
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxxxxx
------------------------------ --------------------------------
Xxxxxxx X. Xxxxx, Secretary Xxxxxx X. Xxxxxxxxxx
Chairman, President and Chief
Executive Officer
Date: May 3, 1996 Date: May 3, 1996
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ATTEST: ITLA CAPITAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxxxxx
------------------------------ --------------------------------
Xxxxxxx X. Xxxxx, Secretary Xxxxxx X. Xxxxxxxxxx
Chairman, President and Chief
Executive Officer
Date: May 3, 1996 Date: May 3, 1996
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