Exhibit 4
---------
AGREEMENT AND PLAN OF MERGER
by and among
FIRST BANKS, INC.,
a Missouri corporation,
FIRST BANKS AMERICA, INC.,
a Delaware corporation,
REDWOOD BANK,
a California banking corporation,
THE SAN FRANCISCO COMPANY,
a Delaware corporation
and
BANK OF SAN FRANCISCO,
a California banking corporation
September 22, 2000
TABLE OF CONTENTS
Page
----
ARTICLE I TERMS OF THE MERGER & CLOSING; CONVERSION OF SHARES.................................................. 1
Section 1.01. The Merger................................................................................ 1
Section 1.02. Effects of the Merger..................................................................... 1
Section 1.03. Conversion of Shares...................................................................... 2
Section 1.04. The Closing............................................................................... 3
Section 1.05. The Closing Date.......................................................................... 3
Section 1.06. Actions At Closing........................................................................ 3
Section 1.07. Deposit of Merger Consideration........................................................... 4
Section 1.08. Exchange of Certificates.................................................................. 4
ARTICLE II REPRESENTATIONS AND WARRANTIES OF BANCORP AND BANK OF SAN FRANCISCO................................. 5
Section 2.01. Organization and Capital Stock; Standing and Authority.................................... 5
Section 2.02. Authorization; No Defaults................................................................ 6
Section 2.03. Subsidiaries.............................................................................. 7
Section 2.04. Financial Information..................................................................... 7
Section 2.05. Absence of Changes........................................................................ 8
Section 2.06. Regulatory Enforcement Matters............................................................ 8
Section 2.07. Tax Matters............................................................................... 8
Section 2.08. Litigation................................................................................ 9
Section 2.09. Properties, Contracts, Employee Benefit Plans and Other Agreements........................ 9
Section 2.10. Reports................................................................................... 10
Section 2.11. Investment Portfolio...................................................................... 10
Section 2.12. Loan Portfolio............................................................................ 10
Section 2.13. Employee Matters and ERISA................................................................ 11
Section 2.14. Title to Properties; Licenses; Insurance.................................................. 12
Section 2.15. Environmental Matters..................................................................... 13
Section 2.16. Compliance with Laws and Regulations...................................................... 13
Section 2.17. Brokerage................................................................................. 13
Section 2.18. No Undisclosed Liabilities................................................................ 14
Section 2.19. Statements True and Correct............................................................... 14
Section 2.20. Commitments and Contracts................................................................. 14
Section 2.21. Material Interest of Certain Persons...................................................... 14
Section 2.22. Conduct to Date........................................................................... 15
Section 2.23. Irrevocable Proxy......................................................................... 16
i
ARTICLE III REPRESENTATIONS AND WARRANTIES OF FIRST BANKS, FBA AND REDWOOD..................................... 16
Section 3.01. Organization.............................................................................. 16
Section 3.02. Authorization............................................................................. 16
Section 3.03. Litigation................................................................................ 17
Section 3.04. Statements True and Correct............................................................... 17
Section 3.05. Financial Information..................................................................... 17
Section 3.06. Absence of Changes........................................................................ 17
Section 3.07. Ability to Consummate the Merger.......................................................... 18
ARTICLE IV AGREEMENTS OF BANCORP AND BANK OF SAN FRANCISCO..................................................... 18
Section 4.01. Business in Ordinary Course............................................................... 18
Section 4.02. Breaches.................................................................................. 21
Section 4.03. Written Consent........................................................................... 21
Section 4.04. Consummation of Agreement................................................................. 21
Section 4.05. Environmental Reports..................................................................... 21
Section 4.06. Access to Information..................................................................... 22
Section 4.07. Consents of Third Parties................................................................. 22
Section 4.08. Subsequent Financial Statements........................................................... 22
Section 4.09. Merger of Banks........................................................................... 22
ARTICLE V AGREEMENTS OF FIRST BANKS, FBA AND REDWOOD........................................................... 23
Section 5.01. Regulatory Approvals...................................................................... 23
Section 5.02. Breaches.................................................................................. 23
Section 5.03. Consummation of Agreement................................................................. 23
Section 5.04. Employee Benefits......................................................................... 24
Section 5.05. Indemnification........................................................................... 24
Section 5.06. Completion of Financing................................................................... 25
ARTICLE VI CONDITIONS PRECEDENT TO THE MERGER.................................................................. 25
Section 6.01. Conditions to the Obligations of First Banks, FBA and Redwood............................. 25
Section 6.02. Conditions to the Obligations of Bancorp and Bank of San Francisco........................ 26
ARTICLE VII TERMINATION........................................................................................ 27
Section 7.01. Mutual Agreement.......................................................................... 27
Section 7.02. Breach of Agreements...................................................................... 27
Section 7.03. Failure of Conditions..................................................................... 27
Section 7.04. Denial of Regulatory Approval............................................................. 27
Section 7.05. Environmental Reports..................................................................... 28
Section 7.06. Regulatory Enforcement Matters............................................................ 28
Section 7.07. Unilateral Termination.................................................................... 28
ii
ARTICLE VIII GENERAL PROVISIONS................................................................................ 28
Section 8.01. Confidential Information.................................................................. 28
Section 8.02. Publicity................................................................................. 29
Section 8.03. Return of Documents....................................................................... 29
Section 8.04. Notices................................................................................... 29
Section 8.05. Nonsurvival of Representations, Warranties and Agreements................................. 31
Section 8.06. Costs and Expenses........................................................................ 31
Section 8.07. Entire Agreement.......................................................................... 31
Section 8.08. Headings and Captions..................................................................... 31
Section 8.09. Waiver, Amendment or Modification......................................................... 31
Section 8.10. Rules of Construction..................................................................... 31
Section 8.11. Counterparts.............................................................................. 31
Section 8.12. Successors and Assigns.................................................................... 31
Section 8.13. Governing Law............................................................................. 31
SIGNATURES..................................................................................................... 32
iii
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of September 22, 2000, is
by and among First Banks, Inc., a bank holding company organized as a Missouri
corporation ("First Banks"), First Banks America, Inc., a bank holding company
organized as a Delaware corporation which is a majority-owned subsidiary of
First Banks ("FBA"), Redwood Bank, a California banking corporation which is a
wholly-owned subsidiary of FBA ("Redwood"), The San Francisco Company, a bank
holding company organized as a Delaware corporation ("Bancorp"), and Bank of San
Francisco, a California banking corporation which is a wholly-owned subsidiary
of Bancorp ("Bank of San Francisco"). This Agreement and Plan of Merger is
hereinafter referred to as the "Agreement."
In consideration of the mutual representations, warranties, agreements
and covenants contained herein, First Banks, FBA, Redwood, Bancorp and Bank of
San Francisco hereby agree as follows:
ARTICLE I
TERMS OF THE MERGER & CLOSING; CONVERSION
OF SHARES
Section 1.01. The Merger. FBA will organize an interim subsidiary ("Newco")
and, subject to the receipt of required regulatory approvals and the
satisfaction or waiver of the conditions set forth in Article VI of this
Agreement, FBA will cause Newco to merge with and into Bancorp (the "Merger")
pursuant to the Delaware General Corporation Law ("Corporate Law"). This
Agreement also contemplates that, immediately following the Effective Time (as
defined in Section 1.05 hereof), the Bank Merger (as such term is defined in
Section 4.09) will occur.
Section 1.02. Effects of the Merger.
(a) The Merger shall have all of the effects provided by Corporate Law and
this Agreement, and the separate corporate existence of Newco shall cease on
consummation of the Merger and be combined in Bancorp.
(b) The Certificate of Incorporation of Bancorp from and after the Effective
Time shall be amended as set forth on Exhibit A attached hereto.
(c) The Bylaws of Bancorp from and after the Effective Time shall be the same
as the Bylaws of Newco immediately prior to the Effective Time, except for the
corporate name which shall continue to be "The San Francisco Company."
(d) The directors and officers of Bancorp from and after the Effective Time
shall be the persons serving as the directors and officers of Newco immediately
prior to the Effective Time.
1
Section 1.03. Conversion of Shares.
(a) At the Effective Time, each share of Class A Common Stock, $.01 par value,
of Bancorp ("Bancorp Common") issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive $1.95 (the "Common
Share Merger Price"), and each share of 8% Series B Convertible Preferred Stock,
$.01 par value, of Bancorp ("Bancorp Preferred") issued and outstanding
immediately prior to the Effective Time shall be converted into the right to
receive $7.00 plus, in the case of Bancorp Preferred, any then outstanding
accumulated and unpaid dividends (the "Preferred Share Merger Price" and,
together with the Common Share Merger Price, the "Merger Consideration");
provided, however, that shares of Bancorp Common and Bancorp Preferred held in
the treasury of Bancorp or by any direct or indirect subsidiary of Bancorp
immediately prior to the Effective Time shall be canceled. The Common Share
Merger Price may be adjusted by virtue of the provisions of Section 7.05 of this
Agreement, in which case all references herein to the amount of consideration to
be paid by FBA pursuant to the Merger shall be deemed to reflect the amount of
any adjustment duly made in accordance with such Section.
(b) The stock transfer books of Bancorp shall be closed, and no share
transfers will be permitted after the Effective Time. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders thereof,
all of the shares of Bancorp Common and Bancorp Preferred (collectively, the
"Bancorp Stock") shall cease to be outstanding and be canceled. Each
certificate previously representing shares of Bancorp Stock (a "Certificate")
shall thereafter only represent the right to receive the cash into which the
shares of Bancorp Stock represented by such Certificate have been converted
pursuant to this Section 1.03.
(c) If holders of Bancorp Stock are entitled to require appraisal of their
shares under applicable Corporate Law, shares held by a dissenting holder who
has perfected the right to obtain an appraisal of his shares shall not be
converted as described in this Section 1.03, but from and after the Effective
Time shall represent only the right to receive such consideration as may be
determined pursuant to applicable Corporate Law; provided, however, that each
share of Bancorp Stock outstanding immediately prior to the Effective Time and
held by a dissenting holder who after the Effective Time shall withdraw his
demand for appraisal or lose his right of appraisal shall thereafter have only
such rights as are provided under applicable Corporate Law.
(d) Any options to purchase shares of Bancorp Common ("Bancorp Options") which
are outstanding immediately prior to the Effective Time and then exercisable at
a price less than the Common Share Merger Price may be surrendered to Bancorp as
of the Effective Time. FBA shall pay for each share of Bancorp Common covered
by a Bancorp Option exercised or surrendered pursuant to this Section 1.03(d) an
amount equal to the difference between the Common Share Merger Price and the
exercise price per share of the options surrendered. All Bancorp Options that
are not exercised or surrendered in accordance with the preceding sentence shall
be canceled as of the Effective Time.
(e) At the Effective Time, the outstanding shares of common stock of Newco
shall be converted into an equal number of shares of Bancorp Common, so that
immediately following the Effective Time, the number of outstanding shares of
common stock of Bancorp shall be equal
2
to the number of outstanding shares of common stock of Newco immediately prior
to the Merger.
Section 1.04. The Closing. The closing of the Merger (the "Closing")
shall take place at the location mutually agreeable to the parties hereto at
10:00 a.m. local time on the Closing Date described in Section 1.05 of this
Agreement.
Section 1.05. The Closing Date. At FBA's option, the Closing shall take
place on either the last business day of the month during which each of the
conditions in Sections 6.01 and 6.02 is satisfied or waived by the appropriate
party or the first business day of the succeeding month, or on such other date
as Bancorp and FBA may agree (the "Closing Date"). The Merger shall be effective
upon the filing of a Certificate of Merger with the Secretary of State of the
State of Delaware or at a later time specified in the Certificate of Merger (the
"Effective Time").
Section 1.06. Actions At Closing.
(a) At the Closing, Bancorp shall deliver to FBA:
(i) certified copies of the Certificate of Incorporation and Bylaws of
Bancorp and the Articles or Certificate of Incorporation and Bylaws of each
of its subsidiaries;
(ii) certificates signed by the Chief Executive Officers of Bancorp and
Bank of San Francisco on behalf of such entities stating that (A) each of
the representations and warranties contained in Article II is true and
correct in all material respects at the time of the Closing with the same
force and effect as if such representations and warranties had been made at
the Closing (except to the extent any representation or warranty expressly
speaks as of an earlier date), and (B) all of the conditions set forth in
Section 6.01 have been satisfied or waived as provided therein;
(iii) certified copies of resolutions of the Boards of Directors of
Bancorp and Bank of San Francisco and of the shareholders of Bancorp,
establishing the requisite approvals under applicable Corporate Law of this
Agreement, the Merger and the other transactions contemplated hereby;
(iv) tax clearance certificates issued by the Franchise Tax Board of the
State of California with respect to Bancorp and each of its subsidiaries,
dated a recent date, stating that all taxes imposed under the Bank and
Corporation Tax Law on such corporations have been paid or adequately
secured;
(v) a legal opinion from counsel for Bancorp and Bank of San Francisco
(which counsel shall be reasonably acceptable to FBA) with respect to the
matters listed in Exhibit 1.06(a) hereto, in form reasonably satisfactory
to FBA and its counsel; and
(vi) evidence of the receipt of all required consents and approvals from
federal and state regulatory agencies and other governmental bodies, if
any, with respect to the consummation of the Merger, the Bank Merger and
each of the transactions contemplated herein.
3
(b) At the Closing, FBA shall deliver to Bancorp:
(i) certificates signed by the Presidents of First Banks, FBA and Redwood
on behalf of such entities stating that (A) each of the representations and
warranties contained in Article III is true and correct in all material
respects at the time of the Closing with the same force and effect as if
such representations and warranties had been made at the Closing (except to
the extent any representation or warranty expressly speaks as of an earlier
date), and (B) all of the conditions set forth in Section 6.02 have been
satisfied or waived as provided therein;
(ii) certified copies of resolutions of the Boards of Directors of First
Banks, FBA and Redwood, establishing the requisite approvals under
applicable Corporate Law of this Agreement, the Merger and the other
transactions contemplated hereby;
(iii) a legal opinion from Xxxx X. Xxxxxxx, counsel for FBA and Redwood,
with respect to the matters listed in Exhibit 1.06(b) hereto, in form
reasonably satisfactory to Bancorp and the Trustee and their respective
counsel; and
(iv) evidence of the receipt of all required consents and approvals from
federal and state regulatory agencies and other governmental bodies, if
any, with respect to the consummation of the Merger, the Bank Merger and
each of the transactions contemplated herein.
Section 1.07. Deposit of Merger Consideration. At or prior to the
Effective Time, FBA shall deposit or cause to be deposited with First Bank, a
Missouri banking corporation which is a wholly-owned subsidiary of First Banks,
or another bank or trust company (which may be an affiliate of FBA) selected by
FBA and reasonably satisfactory to Bancorp (the "Exchange Agent"), for exchange
in accordance with Section 1.08, the requisite amount of cash to be paid
pursuant to Section 1.03 in exchange for the outstanding shares of Bancorp Stock
and the Bancorp Options exercised or surrendered pursuant to this Agreement
(such amount being referred to as the "Exchange Fund").
Section 1.08. Exchange of Certificates.
(a) As soon as reasonably practicable after the Effective Time, FBA shall
cause the Exchange Agent to mail to each record holder of shares of Bancorp
Stock a form letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to certificates shall pass, only upon
proper delivery of the certificates to the Exchange Agent) and instructions for
surrendering certificates evidencing shares of Bancorp stock in exchange for the
amount of cash into which such shares shall have been converted pursuant to
Section 1.03. The letter of transmittal shall be in such form and have such
other provisions as FBA may reasonably specify (subject to the right of Bancorp
to review both the letter of transmittal and the instructions prior to the
Effective Time and provide reasonable comments thereon). Upon surrender to the
Exchange Agent of such a certificate for exchange and cancellation, together
with a duly executed letter of transmittal (both in proper form), the holder of
such certificate shall be entitled to receive in exchange therefor a check
representing the amount of cash which
4
such holder has the right to receive in respect of the certificate or
certificates so surrendered, without interest, and the certificate or
certificate so surrendered shall be canceled.
(b) Notwithstanding subsection (a), FBA shall cooperate in making arrangement
for payment to the Trustee (as defined in Section 2.23) at the Closing by wire
transfer of immediately available funds to an account in the United States
designated by the Trustee, against delivery of certificates representing Bancorp
Stock registered in the Trustee's name.
(c) If any payment for shares of Bancorp Stock is to be made in a name other
than that in which the certificate surrendered in exchange therefor is
registered, it shall be a condition of such payment that the certificate so
surrendered shall be properly endorsed or accompanied by an appropriate
instrument of transfer and otherwise in proper form for transfer, and that the
person requesting such exchange shall pay to the Exchange Agent in advance any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of the certificate surrendered, or required for any other
reason, or shall establish to the satisfaction of the Exchange Agent that such
taxes have been paid or are not payable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of Bancorp of any shares of Bancorp Stock.
(e) At any time following six months after the Effective Time, FBA shall be
entitled to terminate the Exchange Agent relationship and assume the duties of
the Exchange Agent provided in Section 1.07, and thereafter holders of
certificates evidencing shares of Bancorp Stock shall be entitled to look only
to FBA (subject to abandoned property, escheat or other similar laws) with
respect to the surrender and exchange of certificates.
(f) In the event any certificate shall have been lost, stolen or destroyed,
upon the presentation to the Exchange Agent of an affidavit of that fact by the
person claiming the same and, if required by FBA, the posting by such person of
a bond in such amount as FBA may direct as indemnity against any claim that may
be made against it with respect to such certificate, the Exchange Agent will
issue in exchange for such certificate a check for the amount of cash payable in
respect of the shares represented by such certificate.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF BANCORP AND BANK OF SAN FRANCISCO
Except as otherwise disclosed in that section of the disclosure
schedule executed by the parties to this Agreement concurrently with the
execution hereof (the "Disclosure Schedule") corresponding to a particular
representation or warranty, Bancorp and Bank of San Francisco each represent and
warrant to First Banks, FBA and Redwood as follows:
Section 2.01. Organization and Capital Stock; Standing and Authority.
(a) Bancorp is a corporation, and Bank of San Francisco is a banking
corporation, and both of such corporations are duly organized, validly existing
and in good standing under the laws of Delaware and California, respectively.
Each of such corporations has the power to own
5
all of its property and assets, to incur all of its liabilities and to carry on
its business as now conducted.
(b) As of the date hereof, the authorized capital stock of Bancorp consists of
100,000,000 shares of Bancorp Common, of which 29,320,725 are outstanding, and
5,000,000 shares of Bancorp Preferred, of which 15,869 are outstanding. All of
the outstanding shares of Bancorp Stock are duly and validly issued, fully paid
and non-assessable.
(c) As of the date hereof, the authorized capital stock of Bank of San
Francisco consists of 4,200,000 shares of common stock, $3.50 par value ("Bank
Common"), of which 285,814 are outstanding, duly and validly issued, fully paid
and non-assessable. None of the outstanding shares of Bancorp Common, Bancorp
Preferred or Bank Common has been issued in violation of any preemptive rights.
(d) Except as described above or disclosed in Section 2.01(d) of the
Disclosure Schedule, there are no shares of capital stock or other equity
securities of Bancorp or Bank of San Francisco issued or outstanding and no
outstanding options, warrants, rights to subscribe for, calls or commitments of
any character whatsoever relating to, or securities or rights convertible into
or exchangeable for, shares of capital stock of Bancorp or Bank of San Francisco
or contracts, commitments, understandings or arrangements by which either of
them is or may be obligated to issue additional shares of capital stock.
(e) Bank of San Francisco holds a current valid license to engage in the
commercial banking business at its banking offices in California, and Bancorp
and Bank of San Francisco are in material compliance with all agreements,
understandings and orders of the Federal Reserve Board, the Federal Deposit
Insurance Corporation ("FDIC") and other regulatory authorities having
jurisdiction over their business, assets and properties. Neither the scope of
the business of Bank of San Francisco nor the location of its properties
requires it to be licensed to do business in any jurisdiction other than the
State of California. The deposits of Bank of San Francisco are insured by the
FDIC to the maximum extent permitted by applicable laws and regulations.
Bancorp is a bank holding company registered pursuant to the Bank Holding
Company Act, as amended.
Section 2.02. Authorization; No Defaults. The Boards of Directors of Bancorp
and Bank of San Francisco have by all requisite action approved this Agreement,
the Merger and the Bank Merger and, in the case of Bancorp, the Proxy, and they
have authorized the execution and delivery hereof on behalf of such corporations
by duly authorized officers and the performance of their respective obligations
thereunder. Bancorp, in its capacity as the sole holder of outstanding capital
stock of Bank of San Francisco, has approved this Agreement, the Merger and the
Bank Merger. Nothing in the Certificate of Incorporation or Bylaws of Bancorp,
the Articles of Incorporation or Bylaws of Bank of San Francisco or any other
agreement, instrument, decree, proceeding, law or regulation (except as
specifically referred to in or contemplated by this Agreement) by or to which
either entity is bound or subject would prohibit either of such corporations
from consummating this Agreement, the Merger and the Bank Merger on the terms
and conditions herein contained. This Agreement has been duly and validly
executed and delivered by Bancorp and Bank of San Francisco and constitutes a
legal, valid and binding obligation of each of them, enforceable against them in
accordance with its terms.
6
Neither Bancorp nor Bank of San Francisco is in default under nor in violation
of any provision of its Certificate or Articles of Incorporation, as the case
may be, Bylaws or, in any material respect, any promissory note, indenture or
any evidence of indebtedness or security therefor, lease, contract, purchase or
other material commitment or agreement.
Section 2.03. Subsidiaries. Each of Bancorp's direct and indirect
subsidiaries (hereinafter referred to singly as a "Bancorp Subsidiary" and
collectively as the "Bancorp Subsidiaries"), the names and jurisdictions of
incorporation of which are disclosed in Section 2.03 of the Disclosure Schedule,
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and each of the Bancorp Subsidiaries has the
corporate power to own its properties and assets, to incur its liabilities and
to carry on its business as now being conducted. The number of issued and
outstanding shares of capital stock of each Bancorp Subsidiary and the ownership
of such shares is set forth in Section 2.03 of the Disclosure Schedule, and all
of such shares are owned by Bancorp or a Bancorp Subsidiary, free and clear of
all liens, encumbrances, rights of first refusal, options or other restrictions
of any nature whatsoever, except as disclosed in Section 2.03 of the Disclosure
Schedule. Except as disclosed in Section 2.03 of the Disclosure Schedule, there
are no options, warrants or rights outstanding to acquire any capital stock of
any Bancorp Subsidiary, and no person or entity has any other right to purchase
or acquire any unissued shares of stock of any Bancorp Subsidiary, nor does any
Bancorp Subsidiary have any obligation of any nature with respect to its
unissued shares of stock. Except as disclosed in Section 2.03 of the Disclosure
Schedule, neither Bancorp nor any Bancorp Subsidiary is a party to any
partnership or joint venture or owns an equity interest in any other business or
enterprise.
Section 2.04. Financial Information. The audited consolidated balance sheets
of Bancorp and its subsidiaries as of December 31, 1999 and related consolidated
income statements and statements of changes in shareholders' equity and of cash
flows for the three years ended December 31, 1999, together with the notes
thereto, included in Bancorp's Annual Report on Form 10-K for the year ended
December 31, 1999 as currently on file with the Securities and Exchange
Commission (the "SEC"); the unaudited consolidated balance sheets of Bancorp and
its subsidiaries as of June 30, 2000 and related consolidated income statements
and statements of changes in shareholders' equity and of cash flows for the
three and six months ended June 30, 2000, together with the notes thereto,
included in Bancorp's Quarterly Report on Form 10-Q for the quarter ended June
30, 2000 as currently on file with the SEC; and the year-end and quarter-end
Reports of Condition and Reports of Income of Bank of San Francisco for 1999 and
for the three month periods ended March 31, 2000 and June 30, 2000,
respectively, as filed with the Federal Deposit Insurance Corporation (the
"FDIC") (such financial statements and notes collectively referred to herein as
the "Bancorp Financial Statements"), have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as may be disclosed therein and except
for regulatory reporting differences required in Bank of San Francisco's
reports) and fairly present the consolidated financial position and the
consolidated results of operations, changes in shareholders' equity and cash
flows of the respective entity and its respective consolidated subsidiaries as
of the dates and for the periods indicated subject, in the case of any such
statements which are unaudited, to normal year-end adjustments of accruals and
the absence of footnotes and other normal presentational items.
7
Section 2.05. Absence of Changes. Since December 31, 1999 there has not been
any material adverse change in the financial condition, the results of
operations or the business or prospects of Bancorp and its subsidiaries taken as
a whole, nor have there been any events or transactions having such a material
adverse effect which should be disclosed in order to make the Bancorp Financial
Statements not misleading. Since June 30, 1999, the date of the most recent
examination of Bank of San Francisco by the Department of Financial Institutions
of the State of California (the "Financial Institutions Department"), there has
been no material adverse change in the financial condition, the results of
operations or the business of Bank of San Francisco except for any such changes
as may be disclosed in Bank of San Francisco's Reports of Condition and Income
filed since such date.
Section 2.06. Regulatory Enforcement Matters. Except as disclosed in Section
2.06 of the Disclosure Schedule, neither Bancorp nor any Bancorp Subsidiary is
subject to, or has been informed by any federal or state agency charged with the
supervision or regulation of banks or bank holding companies or engaged in the
insurance of bank deposits that it may become subject to, any order, agreement,
memorandum of understanding or other regulatory enforcement action or proceeding
of such agency.
Section 2.07. Tax Matters.
(a) Bancorp and the Bancorp Subsidiaries have filed all federal, state, local
and foreign income, franchise, excise, sales, use, real and personal property
and other tax returns required to be filed. All such returns fairly reflect the
information required to be presented therein. All provisions for accrued but
unpaid taxes contained in the Bancorp Financial Statements were made in
accordance with generally accepted accounting principles and in the aggregate do
not materially fail to provide for potential tax liabilities.
(b) Except as disclosed in Section 2.07 of the Disclosure Schedule, Bancorp
has not (i) executed an extension or waiver that is currently in effect with
respect to any statute of limitations on the assessment or collection of any
tax; (ii) entered into any tax sharing or tax allocation agreement or been a
part of a consolidated group filing a consolidated tax return (other than a
group of which Bancorp was the parent); (iii) become liable for a tax of any
other person or entity pursuant to Treasury Regulation 1.1502-6 (or any similar
provision of state, local or foreign laws) as a transferee or successor or by
contract or otherwise; or (iv) made any payment, become obligated to make any
payment or been party to a contract or agreement that would obligate it to make
any payment that would be disallowed as a deduction under Section 280G or 162(m)
of the Internal Revenue Code.
(c) Except as disclosed in Section 2.07 of the Disclosure Schedule, there has
not occurred during or after any taxable period in which Bancorp incurred a net
operating loss that carries over to any taxable period ending after 1999 either
(i) a direct ownership change of Bancorp as defined in Section 382(g) of the
Internal Revenue Code or (ii) to the knowledge of Bancorp, an ownership change
in any entity owning Bancorp Stock that would cause there to have been an
ownership change of Bancorp as defined in such section.
(d) All material elections with respect to taxes affecting Bancorp have been
and will be timely made.
8
Section 2.08. Litigation. Except as disclosed in Section 2.08 of the
Disclosure Schedule, there is no litigation, claim or other proceeding pending
or, to the knowledge of Bancorp, threatened against Bancorp or any of the
Bancorp Subsidiaries, or of which the property of Bancorp or any of the Bancorp
Subsidiaries is or would be subject.
Section 2.09. Properties, Contracts, Employee Benefit Plans and Other
Agreements. Section 2.09 of the Disclosure Schedule specifically identifies the
following:
(a) each lease of real property to which Bancorp or any Bancorp Subsidiary
is a party, identifying the parties thereto, the annual rental payable, the
expiration date thereof and a brief description of the property covered;
(b) all loan and credit agreements, conditional sales contracts or other
title retention agreements or security agreements relating to money borrowed by
Bancorp or a Bancorp Subsidiary and involving more than $10,000 individually or
$25,000 in the aggregate, exclusive of deposit agreements with customers of Bank
of San Francisco entered into in the ordinary course of business, agreements for
the purchase of federal funds and repurchase agreements;
(c) all agreements, loans, contracts, leases, guaranties, letters of
credit, lines of credit or commitments of Bancorp or any Bancorp Subsidiary not
referred to elsewhere in this Section 2.09 which:
(i) involve payment by Bancorp or any Bancorp Subsidiary of more than
$150,000 (other than loans, loan commitments or letters of credit);
(ii) involve payments based on profits of Bancorp or any Bancorp
Subsidiary;
(iii) relate to the future purchase of goods or services in excess of the
requirements of its respective business at current levels or for normal
operating purposes;
(iv) were not made in the ordinary course of business;
(v) materially affect the business or financial condition of Bancorp or
any Bancorp Subsidiary; or
(vi) require the consent or approval of any third party for the Merger
and the Bank Merger to be consummated.
(d) all contracts, agreements, plans and arrangements by which any profit
sharing, group insurance, hospitalization, stock option, pension, retirement,
bonus, deferred compensation, stock bonus, stock purchase, collective bargaining
agreements, contracts or arrangements under which pensions, deferred
compensation or other retirement benefits is being paid, or plans or
arrangements established or maintained, sponsored or undertaken by Bancorp or
any Bancorp Subsidiary for the benefit of officers, directors or employees,
including each trust or other agreement with any custodian or any trustee for
funds held under any such agreement, plan or arrangement, and in respect to any
of them, the latest reports or forms, if any, filed with the Department of Labor
and Pension Benefit Guaranty Corporation under ERISA (as defined
9
below), any current financial or actuarial reports and any currently effective
IRS private ruling or determination letters obtained by or for the benefit of
Bancorp or any Bancorp Subsidiary;
(e) all leases, subleases or licenses with respect to real or personal
property, whether as lessor, lessee, licensor or licensee, with annual rental or
other payments due thereunder in excess of $100,000;
(f) all agreements for the employment, retention, engagement or
indemnification, or with respect to the severance, of any officer, employee,
agent, consultant or other person or entity which by its terms is not terminable
by Bancorp or a Bancorp Subsidiary on thirty (30) days written notice or less
without any payment by reason of such termination; and
(g) the name and annual salary as of January 1, 2000 of each director or
employee of Bancorp or any Bancorp Subsidiary with a salary in excess of
$100,000.
Copies of each document, plan or contract identified in Section 2.09 of
the Disclosure Schedule are appended to such Schedule and are hereby
incorporated in and constitute a part of the Disclosure Schedule.
Section 2.10. Reports. Bancorp and the Bancorp Subsidiaries have filed all
reports and statements, together with any amendments required to be made with
respect thereto, required to be filed with the SEC, the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board"), the Financial
Institutions Department, the FDIC or any other governmental authority with
jurisdiction over Bancorp or any Bancorp Subsidiary. As of the dates indicated
thereon, each of such reports and documents, including any financial statements,
exhibits and schedules thereto, complied in all material respects with the
relevant statutes, rules and regulations enforced or promulgated by the
regulatory authority with which they were filed, and did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein.
Section 2.11. Investment Portfolio. All United States Treasury securities,
obligations of other United States Government agencies and corporations,
obligations of States and political subdivisions of the United States and other
investment securities held by Bancorp or any Bancorp Subsidiary, as reflected in
the latest consolidated balance sheet of Bancorp included in the Bancorp
Financial Statements, are carried in accordance with generally accepted
accounting principles.
Section 2.12. Loan Portfolio. Except as disclosed in Section 2.12 of the
Disclosure Schedule,
(a) all loans and discounts reflected in the Bancorp Financial Statements as
of March 31, 2000 or which were or will be entered into after March 31, 2000 but
before the Closing Date were and will be made in all material respects for good,
valuable and adequate consideration in the ordinary course of the business of
Bancorp and the Bancorp Subsidiaries, in accordance with sound lending practices
(as would be followed by a reasonably prudent commercial bank), and they are not
subject to any known defenses, setoffs or counterclaims, including without
limitation any such as are afforded by usury or truth in lending laws, except as
may be provided by bankruptcy, insolvency or similar laws or by general
principles of equity;
10
(b) the notes and other evidences of indebtedness evidencing such loans and
all forms of pledges, mortgages and other collateral documents and security
agreements are and will be in all material respects enforceable, valid, true and
genuine and what they purport to be;
(c) Bancorp and the Bancorp Subsidiaries have complied and will through the
Closing Date comply with all laws and regulations relating to such loans, or to
the extent there has not been such compliance, such failure to comply will not
materially interfere with the collection of loans in an amount material to the
loan portfolio of Bank of San Francisco. All loans and loan commitments
extended by Bank of San Francisco and any extensions, renewals or continuations
of such loans and loan commitments were made in accordance with its customary
lending standards in the ordinary course of business. Such loans are evidenced
by appropriate and sufficient documentation based upon customary and ordinary
past practices of Bank of San Francisco; and
(d) the reserve for loan losses reflected in the Bancorp Financial Statements
as of June 30, 2000 was determined as of such date by Bancorp and Bank of San
Francisco in accordance with the requirements of generally accepted accounting
principles to be adequate to provide for losses on loans outstanding as of June
30, 2000.
Section 2.13. Employee Matters and ERISA. (a) Except as disclosed in
Section 2.13 (a) of the Disclosure Schedule, neither Bancorp nor any Bancorp
Subsidiary has entered into any collective bargaining agreement with any labor
organization with respect to any group of employees of Bancorp or any Bancorp
Subsidiary, and there is no present effort nor existing proposal to attempt to
unionize any group of employees of Bancorp or any Bancorp Subsidiary.
(b) (i) Bancorp and the Bancorp Subsidiaries have been and are in compliance
in all material respects with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, any laws respecting employment discrimination and
occupational safety and health requirements, and neither Bancorp nor any Bancorp
Subsidiary is engaged in any unfair labor practice; (ii) there is no unfair
labor practice complaint against Bancorp or any Bancorp Subsidiary pending or,
to the knowledge of Bancorp or Bank of San Francisco, threatened before the
National Labor Relations Board; (iii) there is no labor dispute, strike,
slowdown or stoppage actually pending or, to the knowledge of Bancorp or Bank of
San Francisco, threatened against or directly affecting Bancorp or any Bancorp
Subsidiary; and (iv) neither Bancorp nor any Bancorp Subsidiary has experienced
any work stoppage or other material labor difficulty during the past five years.
(c) Except as disclosed in Section 2.13(c) of the Disclosure Schedule, neither
Bancorp nor any Bancorp Subsidiary maintains, contributes to or participates in
or has any liability under any employee benefit plans, as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended("ERISA"), or any nonqualified employee benefit plans or deferred
compensation, bonus, stock or incentive plans, or other employee benefit or
fringe benefit programs for the benefit of former or current employees of
Bancorp or any Bancorp Subsidiary (collectively, the "Employee Plans"). No
present or former employee of Bancorp or any Bancorp Subsidiary has been charged
with breaching nor has breached a fiduciary duty under any Employee Plan.
Neither Bancorp nor any Bancorp Subsidiary participates in, nor has it in the
past five years participated in, nor has it any present or future
11
obligation or liability under, any multiemployer plan (as defined at Section
3(37) of ERISA). Except as separately disclosed in Section 2.13(c) of the
Disclosure Schedule, neither Bancorp nor any Bancorp Subsidiary maintains,
contributes to, or participates in any plan that provides health, major medical,
disability, life insurance, severance, salary continuation or other benefits to
one or more former employees or consultants.
(d) All liabilities of the Employee Plans have been funded on the basis of
consistent methods in accordance with sound actuarial assumptions and practices,
and no Employee Plan, at the end of any plan year, or at March 31, 2000 had an
accumulated funding deficiency. No actuarial assumptions have been changed
since the last written report of actuaries on the Employee Plans. All insurance
premiums (including premiums to the Pension Benefit Guaranty Corporation) have
been paid in full, subject only to normal retrospective adjustments in the
ordinary course. Except as reflected in the Bancorp Financial Statements,
Bancorp and the Bancorp Subsidiaries have no contingent or actual liabilities
under Title IV of ERISA. No accumulated funding deficiency (within the meaning
of Section 302 of ERISA or Section 412 of the Internal Revenue Code of 1986, as
amended (the "Code")) has been incurred with respect to any Employee Plan,
whether or not waived. No reportable event (as defined in Section 4043 of
ERISA) has occurred with respect to any Employee Plan as to which a notice would
be required to be filed with the Pension Benefit Guaranty Corporation. No claim
is pending or, to the knowledge of Bancorp or Bank of San Francisco, threatened
or imminent with respect to any Employee Plan (other than a routine claim for
benefits for which plan administrative review procedures have not been
exhausted) for which Bancorp or any Bancorp Subsidiary would be liable, except
as is reflected in the Bancorp Financial Statements. Bancorp and the Bancorp
Subsidiaries have no liability for excise taxes under Sections 4971, 4975, 4976,
4977, 4979 or 4980B of the Code or for a fine under Section 502 of ERISA with
respect to any Employee Plan. All Employee Plans have in all material respects
been operated, administered and maintained in accordance with the terms thereof
and in compliance with the requirements of all applicable laws, including,
without limitation, ERISA.
Section 2.14. Title to Properties; Licenses; Insurance (a) Neither Bancorp
nor any Bancorp Subsidiary owns any real property;
(b) all leasehold interests for real property and any material personal
property used by Bancorp or a Bancorp Subsidiary in its business are held
pursuant to lease agreements which are valid and enforceable in accordance with
their terms, subject to the provisions of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws affecting the
enforceability of creditors' rights generally from time to time in effect, and
equitable principles relating to the granting of specific performance and other
equitable remedies as a matter of judicial discretion;
(c) all such properties comply in all material respects with all applicable
private agreements, zoning requirements and other governmental laws and
regulations relating thereto, and there are no condemnation proceedings pending
or, to the knowledge of Bancorp or Bank of San Francisco, threatened with
respect to any of such properties;
(d) Bancorp and the Bancorp Subsidiaries have valid title or other ownership
rights under licenses to all material intangible personal or intellectual
property used by Bancorp or any
12
Bancorp Subsidiary in its business, free and clear of any material claim,
defense or right of any other person or entity, subject only to rights of the
licensors pursuant to applicable license agreements, which rights do not
materially and adversely interfere with the current use of such property; and
(e) all material insurable properties owned or held by Bancorp or a Bancorp
Subsidiary are insured under effective insurance policies in such amounts and
against fire, earthquake and other risks insured against by extended coverage
and public liability insurance, in amounts and on terms customary with bank
holding companies of similar size.
Section 2.15. Environmental Matters. As used in this Agreement,
"Environmental Laws" means all local, state and federal environmental, health
and safety laws and regulations in all jurisdictions in which Bancorp or any
Bancorp Subsidiary has done business or owned, leased or operated property,
including, without limitation, the Federal Resource Conservation and Recovery
Act, the Federal Comprehensive Environmental Response, Compensation and
Liability Act, the Federal Clean Water Act, the Federal Clean Air Act, and the
Federal Occupational Safety and Health Act.
Neither the conduct nor operation of Bancorp or any Bancorp Subsidiary
nor any condition of any property presently or previously owned, leased or
operated by any of them on their own behalf or in a fiduciary capacity violates
or violated any Environmental Law in any respect material to the business of
Bancorp and the Bancorp Subsidiaries, taken as a whole, and no condition or
event has occurred with respect to any of them or any property that, with notice
or the passage of time, or both, would constitute a violation material to the
business of Bancorp and the Bancorp Subsidiaries, taken as a whole, of any
Environmental Law or obligate (or potentially obligate) Bancorp or any Bancorp
Subsidiary to remedy, stabilize, neutralize or otherwise alter the environmental
condition of any property, where the aggregate cost of such actions would be
material to Bancorp and the Bancorp Subsidiaries, taken as a whole. Neither
Bancorp nor any Bancorp Subsidiary has received notice from any person or entity
that Bancorp or any Bancorp Subsidiary, or the operation or condition of any
property ever owned, leased or operated by any of them on their own behalf or in
a fiduciary capacity, are or were in violation of any Environmental Law, or that
Bancorp or any Bancorp Subsidiary is responsible (or potentially responsible)
for remedying, or the cleanup of, any pollutants, contaminants, or hazardous or
toxic wastes, substances or materials at, on or beneath any such property.
Section 2.16. Compliance with Laws and Regulations. Bancorp and the Bancorp
Subsidiaries have all licenses, franchises, permits and other governmental
authorizations that are necessary to enable them to conduct their respective
businesses, are qualified to conduct business in every jurisdiction in which
such qualification is legally required and are in compliance in all material
respects with all applicable laws, ordinances and regulations.
Section 2.17. Brokerage. Except for fees payable by Bancorp to Xxxx Xxxxxxxx
Xxxxxxx, which are described in Section 2.17 of the Disclosure Schedule, there
are no existing claims or agreements for brokerage commissions, investment
banking fees, financial advisory fees, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement payable by
Bancorp or any Bancorp Subsidiary.
13
Section 2.18. No Undisclosed Liabilities. Neither Bancorp nor any Bancorp
Subsidiary has any material liability, whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, and whether due or to become due (and, to the knowledge of Bancorp
and Bank of San Francisco, there is no past or present fact, situation,
circumstance, condition or other basis for any present or future action, suit or
proceeding, hearing, charge, complaint, claim or demand against Bancorp or any
Bancorp Subsidiary giving rise to any such liability), except (i) liabilities
reflected in the Bancorp Financial Statements and (ii) liabilities incurred in
the ordinary course of business since June 30, 2000.
Section 2.19. Statements True and Correct. None of the information supplied
or to be supplied by Bancorp for inclusion in any document to be filed with the
SEC or any banking or other regulatory authority in connection with the
transactions contemplated hereby, at the respective times such documents are
filed, and, in the case of the Information Statement (as defined in Section
4.03), when such documents are first mailed to the stockholders of Bancorp, will
be false or misleading with respect to any material fact, omit to state any
material fact necessary in order to make the statements therein not misleading
or omit to state any material fact required to be stated in order to correct any
statement in any earlier communication with respect to the Information
Statement. All documents that Bancorp is responsible for filing with the SEC or
any banking or other regulatory authority in connection with the transactions
contemplated hereby will comply in all material respects with the provisions of
applicable law and the applicable rules and regulations thereunder.
Section 2.20. Commitments and Contracts. Neither Bancorp nor any Bancorp
Subsidiary is a party or subject to any of the following (whether written or
oral, express or implied):
(i) any agreement, arrangement or commitment not made in the ordinary
course of business;
(ii) any agreement, indenture or other instrument not reflected in the
Bancorp Financial Statements relating to the borrowing of money by Bancorp
or a Bancorp Subsidiary or the guarantee by Bancorp or a Bancorp Subsidiary
of any obligation (except trade payables or instruments related to
transactions entered into in the ordinary course of business by Bancorp or
a Bancorp Subsidiary, such as deposits, federal funds borrowings and
repurchase agreements), other than agreements, indentures or instruments
providing for annual payments of less than $100,000; or
(iii) any contract containing covenants which limit the ability of Bancorp
or any Bancorp Subsidiary to compete in any line of business or with any
person or containing any restriction of the geographical area in which, or
method by which, Bancorp or any Bancorp Subsidiary may carry on its
business.
Section 2.21. Material Interest of Certain Persons. (a) No officer or
director of Bancorp or Bank of San Francisco or any "associate" (as such term is
defined in Rule 14a-1 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of any such officer or director has any material interest in
any material contract or property (real or personal,
14
tangible or intangible), used in or pertaining to the business of Bancorp or any
Bancorp Subsidiary.
(b) All outstanding loans from Bancorp or any Bancorp Subsidiary to any
present officer, director, employee or any associate or related interest of any
person referred to in subsection (a) were approved by or reported to the Board
of Directors of the applicable entity in accordance with all applicable laws and
regulations.
Section 2.22. Conduct to Date. From and after December 31, 1999 through
the date of this Agreement, except as disclosed in Section 2.22 of the
Disclosure Schedule, neither Bancorp nor any Bancorp Subsidiary has done the
following:
(i) failed to conduct its business in the ordinary and usual course
consistent with past practices;
(ii) issued, sold, granted, conferred or awarded any common or other
stock, or any corporate debt securities properly classified under generally
accepted accounting principles applied on a consistent basis as long-term
debt on the balance sheets of Bancorp or Bank of San Francisco;
(iii) effected any stock split or adjusted, combined, reclassified or
otherwise changed its capitalization;
(iv) except for semi-annual dividends on shares of Bancorp Preferred
which Bancorp is required to declare and pay pursuant to its Certificate of
Incorporation, declared, set aside or paid any cash or stock dividend or
other distribution in respect of its capital stock, or purchased, redeemed,
retired, repurchased, or exchanged, or otherwise directly or indirectly
acquired or disposed of any of its capital stock;
(v) incurred any material obligation or liability (absolute or
contingent), except normal trade or business obligations or liabilities
incurred in the ordinary course of business, or subjected to lien any of
its assets or properties other than in the ordinary course of business
consistent with past practice;
(vi) discharged or satisfied any material lien or paid any material
obligation or liability (absolute or contingent), other than in accordance
with its terms in the ordinary course of business;
(vii) sold, assigned, transferred, leased, exchanged, or otherwise
disposed of any of its properties or assets other than for a fair
consideration in the ordinary course of business;
(viii) except as required by contract, (A) increased the rate of
compensation of, or paid any bonus to, any of its directors, officers, or
other employees, except for merit or promotion increases consistent with
past practice and in accordance with existing policy or established
incentive programs; (B) entered into any new, or amended or supplemented
any existing, employment, management, consulting, deferred compensation,
retention, severance, indemnification or other similar contract,(C) entered
15
into, terminated or substantially modified any of the Employee Plans or (D)
agreed to do any of the foregoing;
(ix) suffered any material damage, destruction or loss, whether as the
result of fire, explosion, earthquake, accident, casualty, labor trouble,
taking of property by any governmental authority, flood, windstorm,
embargo, riot, act of God, act of war or other casualty or event, whether
or not covered by insurance;
(x) canceled or compromised any debt, except for debts charged off or
compromised in accordance with past practice;
(xi) entered into any material transaction, contract or commitment
outside the ordinary course of its business; or
(xii) made or guaranteed any loan to any of the Employee Plans.
Section 2.23. Irrevocable Proxy. Bancorp has delivered to FBA
concurrently with the execution of this Agreement the irrevocable proxy of the
Trustee named in a Voting Trust (the "Trustee") dated November 30, 1998 (the
"Voting Trust"). To the best of Bancorp's knowledge, the Trustee has the
exclusive right to vote the shares of Bancorp Stock which are the subject of the
written consent referred to in Section 4.03 and the Proxy, and such written
consent and the Proxy are legal, valid and binding obligations of the Trustee,
enforceable in accordance with their respective terms.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF FIRST BANKS, FBA AND REDWOOD
First Banks, FBA and Redwood each represents and warrants to Bancorp
and Bank of San Francisco as follows:
Section 3.01. Organization. First Banks, FBA and Redwood are corporations
duly organized, validly existing and in good standing under the laws of the
States of Missouri, Delaware and California, respectively. Each of such
corporations has the power to own all of its property and assets, to incur all
of its liabilities and to carry on its business as now conducted. Immediately
prior to the Effective Time, Newco will be duly organized, validly existing and
in good standing under the laws of Delaware and will have all requisite power
and authority to own al of its properties and assets, to incur all of its
liabilities, to carry on its business and to consummate the Merger and the other
transactions contemplated by this Agreement.
Section 3.02. Authorization. The Boards of Directors of First Banks, FBA
and Redwood have, and as of the Closing the Board of Directors of Newco will
have, by all requisite action approved this Agreement, the Merger and the Bank
Merger and authorized the execution hereof on behalf of each corporation by duly
authorized officers and the performance of their respective obligations
hereunder. FBA, in its capacity as the sole holder of outstanding capital stock
of Redwood, has approved this Agreement, the Merger and the Bank Merger. Nothing
in the Certificates of Incorporation of FBA or Newco, the Articles of
Incorporation of First Banks
16
or Redwood, or the Bylaws of any of such entities or any other agreement,
instrument, decree, proceeding, law or regulation (except as specifically
referred to in this Agreement) by or to which First Banks, FBA, Redwood or Newco
is or will be bound or subject prohibits (or in the case of Newco, will
prohibit) any of them from consummating this Agreement, the Merger and the Bank
Merger on the terms and conditions herein contained. This Agreement has been
duly and validly executed and delivered by First Banks, FBA and Redwood and
constitutes a legal, valid and binding obligation of each of them, enforceable
against them in accordance with its terms.
Section 3.03. Litigation. There is no litigation, claim or other proceeding
pending or, to the best of the knowledge of First Banks, FBA or Redwood,
threatened that would prohibit any of them or Newco from consummating the
transactions contemplated by this Agreement.
Section 3.04. Statements True and Correct. None of the filings made or the
information supplied or to be supplied by First Banks, FBA, Redwood or Newco for
inclusion in any document to be filed with any regulatory authority in
connection with the transactions contemplated hereby will, at the respective
times such documents are filed and, in the case of the Information Statement,
when it is first mailed to the stockholders of Bancorp, be false or misleading
with respect to any material fact, or omit to state any material fact necessary
in order to make the statements therein not misleading. All documents filed by
First Banks or any of its subsidiaries with any other regulatory authority in
connection with the transactions contemplated hereby will comply with applicable
laws, rules and regulations.
Section 3.05. Financial Information. The audited consolidated balance sheets
of First Banks and its subsidiaries as of December 31, 1999 and related
consolidated income statements and statements of changes in shareholders' equity
and of cash flows for the three years ended December 31, 1999, together with the
notes thereto, included in First Banks' Annual Report on Form 10-K for the year
ended December 31, 1999 as currently on file with the SEC; the unaudited
consolidated balance sheets of First Banks and its subsidiaries as of June 30,
2000 and related consolidated income statements and statements of changes in
shareholders' equity and of cash flows for the three and six months ended June
30, 2000, together with the notes thereto, included in First Banks' Quarterly
Report on Form 10-Q for the quarter ended June 30, 2000 as currently on file
with the SEC; and the year-end and quarter-end Reports of Condition and Reports
of Income of Redwood for 1999 and for the three month periods ended March 31,
2000 and June 30, 2000, respectively, as filed with the FDIC (such financial
statements and notes collectively referred to herein as the "First Banks
Financial Statements"), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be disclosed
therein and except for regulatory reporting differences required in Redwood's
reports) and fairly present the consolidated financial position and the
consolidated results of operations, changes in shareholders' equity and cash
flows of the respective entity and its respective consolidated subsidiaries as
of the dates and for the periods indicated subject, in the case of any such
statements which are unaudited, to normal year-end adjustments of accruals and
the absence of footnotes and other normal presentational items.
Section 3.06. Absence of Changes. Since December 31, 1999 there has not been
any material adverse change in the financial condition, the results of
operations or the business or prospects of First Banks and its subsidiaries
taken as a whole, nor have there been any events or
17
transactions having such a material adverse effect which should be disclosed in
order to make the First Banks Financial Statements not misleading.
Section 3.07. Ability to Consummate the Merger. Each of First Banks, FBA
and Redwood believes, on a reasonable basis and in good faith, that (i) each of
First Banks, FBA, Newco and Redwood will be able to obtain the approvals,
consents and authorizations required by law for the consummation of the Merger,
including all legally required regulatory approvals, (ii) First Banks will be
able to consummate a public offering of Trust Preferred securities so as to
satisfy the condition set forth in Section 6.01(h), and (iii) each of First
Banks, FBA, Newco and Redwood will be able otherwise to satisfy all conditions
necessary for it to consummate the transactions contemplated by this Agreement
in accordance with its terms, in each case not later than the date which is 180
days after the date of this Agreement. Neither First Banks, FBA nor Redwood has
any reason to believe that it will be unable to consummate the transactions
contemplated by this Agreement on or before such date.
ARTICLE IV
AGREEMENTS OF BANCORP AND BANK OF SAN FRANCISCO
Section 4.01. Business in Ordinary Course. Bancorp and Bank of San
Francisco agree that, from the date of this Agreement until the earlier of the
Closing Date or the termination of this Agreement in accordance with its terms:
(a) Bancorp and the Bancorp Subsidiaries shall continue to carry on their
business and the discharge or incurrence of obligations and liabilities only in
the usual, regular and ordinary course of business, as heretofore conducted, and
by way of amplification and not limitation, Bancorp and each Bancorp Subsidiary
will not:
(i) except for semi-annual dividends payable on shares of Bancorp
Preferred which Bancorp is required to declare and pay pursuant to its
Certificate of Incorporation, declare or pay any dividend or make any other
distribution to shareholders, whether in cash, stock or other property; or
(ii) issue any capital stock or any options, warrants, or other rights to
subscribe for or purchase capital stock or any securities convertible into
or exchangeable for any capital stock (except for the issuance of Bancorp
Common pursuant to the convertible securities, exchangeable securities or
Bancorp Stock Options described in Section 2.01(d) of the Disclosure
Schedule); or
(iii) directly or indirectly redeem, purchase or otherwise acquire any
capital stock of Bancorp or any Bancorp Subsidiary; or
(iv) effect a reclassification, recapitalization, splitup, exchange of
shares, readjustment or other similar change in or to any capital stock, or
otherwise reorganize or recapitalize; or
(v) except as contemplated in Section 1.02, change its Certificate or
Articles of Incorporation or association, as the case may be, or Bylaws,
nor enter into any agreement
18
to merge or consolidate with, or sell a significant portion of its assets
to, any person or entity.
(b) Bancorp and each Bancorp Subsidiary will not, without the prior
written consent of FBA (which consent shall not be unreasonably withheld or
delayed):
(i) Except as disclosed in Section 4.01(b) of the Disclosure Schedule,
grant any increase (other than ordinary and normal increases consistent
with past practices) in the compensation payable or to become payable to
officers or salaried employees, grant any stock options or, except as
required by law, adopt or make any change in any employment, bonus,
insurance, pension, salary continuation, retention, indemnification or
other Employee Plan, agreement, payment or arrangement made to, for or with
any of such officers or employees;
(ii) borrow or agree to borrow any amount of funds except in the ordinary
course of business, or directly or indirectly guarantee or agree to
guarantee any obligations of others;
(iii) make or commit to make any new loan or letter of credit or any new
or additional discretionary advance under any existing line of credit, in
principal amounts in excess of $1,000,000 or that would increase the
aggregate credit outstanding to any one borrower (or group of affiliated
borrowers) to more than $1,500,000 (excluding for this purpose any accrued
interest or overdrafts);
(iv) purchase or otherwise acquire any investment security for its own
account having an average remaining life to maturity greater than five
years or any asset-backed securities other than those issued or guaranteed
by the Federal Home Loan Bank Board, the Government National Mortgage
Association, the Federal National Mortgage Association or the Federal Home
Loan Mortgage Corporation;
(v) enter into any agreement, contract or commitment having a term in
excess of six (6) months other than, in the ordinary course of business:
letters of credit, loan agreements, credit and deposit agreements and
documents, renewals with current market rates and terms of expiring
subleases of office space located at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx (all current subleases scheduled to expire prior to March 31,
2001 being identified in Section 4.01(b) of the Disclosure Schedule) and
renewals or replacements of insurance policies (in either case for terms
not exceeding one year) on terms substantially similar to existing Bancorp
and Bank of San Francisco policies;
(vi) except in the ordinary course of business, place on any of its
assets or properties any mortgage, pledge, lien, charge, or other
encumbrance;
(vii) except in the ordinary course of business, cancel or accelerate any
material indebtedness owing to Bancorp or a Bancorp Subsidiary or any claim
which Bancorp or any Bancorp Subsidiary may possess, or waive any material
rights of substantial value;
19
(viii) sell or otherwise dispose of any real property or any material
amount of any tangible or intangible personal property, other than
properties acquired in foreclosure or otherwise in the ordinary collection
of indebtedness;
(ix) foreclose upon or otherwise take title to or possession or control
of any real property without first obtaining a phase one environmental
report thereon which indicates that the property is free of pollutants,
contaminants or hazardous or toxic waste materials; provided, however, that
a report shall not be required with respect to single family, non-
agricultural residential property of one acre or less to be foreclosed upon
unless the entity proposing to acquire the property has reason to believe
that such property might contain any such waste materials or otherwise
might be contaminated;
(x) commit any act or fail to do any act which will cause a breach of
any agreement, contract or commitment and which will have a material
adverse effect on the business, financial condition or earnings of Bancorp
or a Bancorp Subsidiary;
(xi) violate any law, statute, rule, governmental regulation or order,
which violation would have a material adverse effect on the business,
financial condition, or earnings of Bancorp or a Bancorp Subsidiary;
(xii) purchase any real or personal property or make any other capital
expenditure where the amount paid or committed therefor is in excess of
$75,000; or
(xiii) increase or decrease the rate of interest paid on time deposits,
except in the ordinary course of business in a manner consistent with past
practices.
(c) Bancorp and the Bancorp Subsidiaries shall not, without the prior
written consent of FBA, engage in any transaction or take any action that would
render untrue in any material respect any of the representations and warranties
of Bancorp or Bank of San Francisco contained in Article II hereof, if such
representations and warranties were given immediately following such transaction
or action.
(d) Bancorp shall promptly notify FBA of the occurrence of any matter
or event known to and directly involving Bancorp or Bank of San Francisco that
has or would be reasonably expected to have a material adverse effect on the
business, operations, properties, assets, or condition (financial or otherwise)
of Bancorp and the Bancorp Subsidiaries, taken as a whole, or that would
otherwise materially and adversely affect the ability of Bancorp or Bank of San
Francisco to consummate the transactions contemplated by this Agreement.
(e) Bancorp shall not solicit or encourage, or, except to the extent
otherwise required by applicable Corporate Law or applicable directors'
fiduciary principles, hold discussions or negotiations with or provide
information to any person or entity in connection with any proposal for the
acquisition of all or a substantial portion of the business, assets, shares of
Bancorp Common or other securities or assets of Bancorp or any Bancorp
Subsidiary. Bancorp shall promptly advise FBA of its receipt of any such
proposal or inquiry and the substance thereof.
20
Section 4.02. Breaches. Bancorp and Bank of San Francisco shall, in the
event either has knowledge of the occurrence, or impending or threatened
occurrence, of any event or condition which would cause or constitute a breach
(or would have caused or constituted a breach had such event occurred or been
known prior to the date hereof) of any of its representations or agreements
contained or referred to herein, give prompt written notice thereof to FBA and
use their best efforts to prevent or promptly remedy the same.
Section 4.03. Written Consent. Concurrently with the execution of this
Agreement, Bancorp has delivered to FBA a true copy of a written consent
executed by the Trustee and delivered to Bancorp approving the Merger and the
other transactions contemplated by this Agreement. As soon as reasonably
practicable and within applicable time limitations, Bancorp shall (i) prepare
and file with the SEC an Information Statement (the "Information Statement")
with respect to the Merger and the other transactions contemplated by this
Agreement, (ii) cause such Information Statement to be mailed to all Bancorp
stockholders and (iii) perform all other actions required by Section 14 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder.
Section 4.04. Consummation of Agreement. Bancorp and Bank of San Francisco
shall use their best efforts to perform and fulfill all conditions and
obligations on their respective parts to be performed or fulfilled pursuant to
this Agreement and to effect the Merger within 180 days after the date hereof
and cooperate in causing the Bank Merger in accordance with the terms and
provisions hereof. Bancorp and Bank of San Francisco shall furnish to FBA in a
timely manner all information, data and documents reasonably requested by FBA
and shall cooperate fully with First Banks, FBA and Redwood in seeking such
approvals, consents and authorizations as are required for the Merger and in
consummating the transactions contemplated by this Agreement. Neither Bancorp
nor Bank of San Francisco shall take, or permit any of its affiliates to take,
any action that is intended, or would reasonably be expected, to result in (i)
any of its representations or warranties in this Agreement to become untrue in
any material respect at any time prior to the Effective Time, (ii) any of the
conditions to the Merger set forth in Article VI not to be satisfied, or (iii)
any provision of this Agreement to be violated in any material respect.
Section 4.05. Environmental Reports. Bancorp shall provide to FBA, as soon
as reasonably practicable and not later than 45 days after the date hereof, a
report of a phase one environmental investigation on the real property leased
and operated by Bancorp and Bank of San Francisco located at 000 Xxxxxxxxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx. In addition, within ten (10) days after the
acquisition or lease of any real property acquired or leased by Bancorp or any
Bancorp Subsidiary after the date hereof (other than space in retail and similar
establishments leased or operated for automatic teller machines), except as
otherwise provided in Section 4.01(b)(ix), Bancorp and Bank of San Francisco
shall provide to FBA a report of a phase one environmental investigation on such
real property. If required by the phase one investigation, in FBA's reasonable
opinion, and subject to the consent of the lessor of any such property if
legally required (which consent Bancorp and Bank of San Francisco shall use
their best efforts to obtain), FBA may obtain a report of a phase two
investigation or other appropriate environmental investigation on properties
requiring such additional investigation, and Bancorp and Bank of San Francisco
will cooperate with FBA in obtaining the same. FBA shall have fifteen (15) days
from the receipt of any such report or investigation to notify Bancorp in
writing of the estimated costs, in excess of $600,000 (for all affected
properties), of taking such remedial
21
and corrective actions and measures as are required by applicable law or
recommended by such report or investigation in light of serious life, health or
safety concerns (the "Estimated Environmental Costs").
Section 4.06. Access to Information. Bancorp and Bank of San Francisco shall
permit FBA reasonable access, in a manner which will avoid undue disruption or
interference with their normal operations, to their properties and shall cause
the Bancorp Subsidiaries to provide to FBA comparable access to their
properties. Bancorp and Bank of San Francisco shall disclose and make available
to FBA all books, documents, papers and records relating to the assets, stock
ownership, properties, operations, obligations and liabilities of Bancorp and
the Bancorp Subsidiaries including, but not limited to, all books of account
(including the general ledger), tax records, minute books of directors' and
shareholders' meetings, organizational documents, material contracts and
agreements, loan files, filings with any regulatory authority, accountants'
workpapers (if available and subject to the respective independent accountants'
consent), litigation files, plans affecting employees, and any other business
activities or prospects in which FBA may have a reasonable and legitimate
interest in furtherance of the transactions contemplated by this Agreement. FBA
will hold any such information which is nonpublic in confidence in accordance
with the provisions of Section 8.01 hereof.
Section 4.07. Consents of Third Parties. Bancorp and Bank of San Francisco
shall use their best efforts to obtain all consents of third parties necessary
for the consummation of the transactions contemplated by this Agreement,
including without limitation the consent of the lessor (to the extent required)
under the current lease of the office premises located at 000 Xxxxxxxxxx Xxxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx.
Section 4.08. Subsequent Financial Statements. As soon as available after
the date hereof, Bancorp shall deliver to FBA the monthly unaudited consolidated
balance sheets and profit and loss statements of Bancorp prepared for its
internal use, the Report of Condition and Income of Bank of San Francisco for
each quarterly period completed prior to the Closing, and all other financial
reports or statements submitted to regulatory authorities after the date hereof,
to the extent permitted by law (collectively, the "Subsequent Bancorp Financial
Statements"). The Subsequent Bancorp Financial Statements shall be prepared on a
basis consistent with past accounting practices, shall fairly present the
financial condition and results of operations for the dates and periods
presented and shall not include any material assets or omit to state any
material liabilities, absolute or contingent, or other facts, which inclusion or
omission would render such financial statements misleading in any material
respect.
Section 4.09. Merger of Banks. Bancorp and Bank of San Francisco shall
cooperate with FBA and shall execute such documents as may be required in order
to enable Bank of San Francisco to enter into and consummate a merger with
Redwood Bank (or a successor thereto) (the "Bank Merger"), to be effective
immediately following the Effective Time or as soon thereafter as practicable.
22
ARTICLE V
AGREEMENTS OF FIRST BANKS, FBA AND REDWOOD
Section 5.01. Regulatory Approvals. First Banks shall use its best efforts
to obtain the necessary approvals, consents and authorizations required by law
for the consummation of the Merger, including all legally required regulatory
approvals. First Banks, FBA and Redwood shall file all regulatory applications
required in order to consummate the Merger and the Bank Merger, including but
not limited to the necessary applications for the prior approval of the Federal
Reserve Board. Any required application shall be filed by First Banks or FBA
with the appropriate regulatory or governing authority as soon as reasonably
practicable, but in no event later than six calendar weeks after the date
hereof. FBA shall keep Bancorp reasonably informed as to the status of such
applications and provide to Bancorp and the Trustee, promptly after filing,
copies of such applications and any supplementally filed materials.
Section 5.02. Breaches. First Banks, FBA and Redwood shall, in the event any
of them has knowledge of the occurrence, or impending or threatened occurrence,
of any event or condition which would cause or constitute a breach (or would
have caused or constituted a breach had such event occurred or been known prior
to the date hereof) of any of its representations or agreements contained or
referred to herein, give prompt written notice thereof to Bancorp and use their
best efforts to prevent or promptly remedy the same.
Section 5.03. Consummation of Agreement.
(a) First Banks, FBA and Redwood shall use their best efforts to perform and
fulfill all conditions and obligations on their parts and on the part of Newco
to be performed or fulfilled under this Agreement, to effect the Merger within
180 days after the date hereof (subject to FBA's right as set forth in Section
1.05 to schedule the Closing at the end of a month or the first day of the
following month, even if the effect of doing so is to cause the Merger to be
effective more than 180 days from the date hereof) and to effect the Bank Merger
in accordance with the terms and conditions of this Agreement. First Banks, FBA
and Redwood shall furnish to Bancorp in a timely manner all information, data
and documents reasonably requested by Bancorp and shall cooperate fully with
Bancorp and Bank of San Francisco in seeking such approvals, consents and
authorizations as are required for the Merger and the other transactions
contemplated by this Agreement. Neither First Banks, FBA nor Redwood shall take,
or permit any of its affiliates to take, any action that is intended, or would
reasonably be expected, to result in (i) any of its representations or
warranties in this Agreement to become untrue in any material respect at any
time prior to the Effective Time, (ii) any of the conditions to the Merger set
forth in Article VI not to be satisfied, or (iii) any provision of this
Agreement to be violated in any material respect.
(b) First Banks, FBA and Redwood shall not, without the prior written consent
of Bancorp, engage in any transaction or take any action that would render
untrue in any material respect any of the representations and warranties of
First Banks, FBA or Redwood contained in Article III hereof, if such
representations and warranties were given immediately following such transaction
or action.
23
(c) FBA shall promptly notify Bancorp of the occurrence of any matter or event
known to or directly involving First Banks or FBA that has or would be
reasonably expected to have a material adverse effect on the business,
operations, properties, assets, or condition (financial or otherwise) of First
Banks or FBA and their respective subsidiaries, taken as a whole or that would
otherwise materially and adversely affect the ability of First Banks, FBA,
Redwood or Newco to consummate the transactions contemplated by this Agreement.
Section 5.04. Employee Benefits. FBA shall provide the benefits described in
this Section 5.04 with respect to each person who remains an employee of Bancorp
or a Bancorp Subsidiary following the Closing Date (each a "Continued
Employee"). Subject to FBA's ongoing right to adopt subsequent amendments or
modifications of any plan referred to in this Section 5.04 or to terminate any
such plan, in FBA's sole discretion, each Continued Employee shall be entitled,
as an employee of a subsidiary of FBA, to participate in such employee benefit
plans, as defined in Section 3(3) of ERISA, or any non-qualified employee
benefit plans or deferred compensation, stock option, bonus or incentive plans,
or other employee benefit or fringe benefit programs as may be in effect
generally for employees of all of FBA's banking subsidiaries (the "FBA Plans"),
if and as a Continued Employee shall be eligible and, if required, selected for
participation therein under the terms thereof and otherwise shall not be
participating in a similar plan which is maintained by Bancorp after the
Effective Time. Bancorp employees shall participate therein on the same basis as
similarly situated employees of other subsidiaries of FBA. All such
participation shall be subject to the terms of such plans as may be in effect
from time to time, and this Section 5.04 is not intended to give Continued
Employees any rights or privileges superior to those of other employees of
subsidiaries of FBA. FBA may terminate or modify all Employee Plans, and FBA's
obligation under this Section 5.04 shall not be deemed or construed so as to
provide duplication of similar benefits but, subject to that qualification, FBA
shall credit each Continued Employee with his or her term of service with
Bancorp, for purposes of vesting and any age or period of service requirements
for commencement of participation with respect to any FBA Plan in which
Continued Employees may participate. Nothing in this Agreement shall obligate
FBA, Bancorp or any other entity to employ any person or to continue to employ
any person for any period of time.
Section 5.05. Indemnification.
(a) For four years after the Closing Date, FBA shall cause Bancorp to
indemnify, defend and hold harmless the present and former officers, directors,
employees and agents of Bancorp and the Bancorp Subsidiaries (each, an
"Indemnified Party") against all losses, expenses, claims, damages or
liabilities arising out of actions or omissions related to their positions at
Bancorp or a Bancorp Subsidiary occurring on or prior to the Closing Date
(including, without limitation, the transactions contemplated by this Agreement)
to the extent permitted by applicable corporate laws and required by Bancorp's
Certificate of Incorporation as in effect on March 31, 2000. The Indemnification
Agreements specifically identified in Section 2.09 of the Disclosure Schedule,
as amended as contemplated in Section 6.01(i), shall remain in effect.
(b) If after the Closing Date Bancorp or its successors or assigns (i) shall
consolidate with or merge into any other corporation or entity and shall not be
the continuing or surviving entity of such consolidation or merger, or (ii)
shall transfer all or substantially all of its properties
24
and assets to any individual, corporation or other entity (including as a result
of the Bank Merger), then and in each such case, FBA shall cause Bancorp's
successors and assigns to assume any remaining obligations set forth in this
Section 5.05. If Bancorp shall liquidate, dissolve or otherwise wind up its
business, then FBA shall indemnify, defend and hold harmless each Indemnified
Party to the same extent and on the same terms that Bancorp was so obligated
pursuant to this Section 5.05.
(c) FBA shall have the option of purchasing insurance in the form of an
extension of coverage under Bancorp's existing insurance policy Number
F0019780Y002 issued by Lloyds of London (First City), insuring the Indemnified
Parties against such losses, expenses, claims, damages or liabilities, on terms
acceptable to FBA.
Section 5.06. Completion of Financing. Each of First Banks and its
subsidiaries will use its best efforts to complete a Financing (as defined in
Section 6.01) necessary to satisfy the conditions set forth in Section 6.01 as
soon as practicable and shall periodically keep Bancorp and the Trustee
reasonably informed of the status of the Financing, including providing copies
of non-confidential documents related to the Financing.
ARTICLE VI
CONDITIONS PRECEDENT TO THE MERGER
Section 6.01. Conditions to the Obligations of First Banks, FBA and Redwood.
The obligations of First Banks, FBA and Redwood to effect the Merger and the
other transactions contemplated by this Agreement shall be subject to the
satisfaction (or waiver by such parties) prior to or on the Closing Date of the
following conditions:
(a) the representations and warranties made by Bancorp and Bank of San
Francisco in this Agreement shall be true in all material respects on and as of
the Closing Date with the same effect as though such representations and
warranties had been made or given on and as of the Closing Date (except to the
extent any representation or warranty expressly speaks as of an earlier date);
(b) Bancorp and Bank of San Francisco shall each have performed and complied
in all material respects with all of its obligations and agreements required to
be performed prior to the Closing Date;
(c) no temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction preventing the
consummation of the Merger or the Bank Merger, or other legal restraint or
prohibition preventing the consummation of the Merger, shall be in effect, nor
shall any proceeding by any regulatory authority or other person seeking any of
the foregoing be pending. There shall not be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to the
Merger or the Bank Merger which makes the consummation thereof illegal;
(d) all necessary approvals, consents and authorizations required by law for
consummation of the Merger, including the requisite approvals of the
shareholders of Bancorp
25
and all legally required regulatory approvals, shall have been obtained, and all
waiting periods required by law shall have expired;
(e) FBA shall have received the environmental reports required by Section 4.05
hereof and shall not have elected pursuant to Section 7.05 hereof to terminate
this Agreement;
(f) FBA shall have received all documents required to be received from
Bancorp, including without limitation the consents referred to in Section 4.07,
on or prior to the Closing Date, all in form and substance reasonably
satisfactory to FBA;
(g) stockholders of Bancorp Common owning no more than fifteen percent (15%)
of the outstanding Bancorp Common shall have perfected the right to dissent from
the Merger;
(h) First Banks or one of its subsidiaries shall have completed an offering of
Trust Preferred securities in the aggregate principal amount of at least
$30,000,000 with customary terms and at a dividend rate no higher than twelve
and one-half percent (12 1/2%) or an alternative financing arrangement on
substantially similar terms (the "Financing"); provided, that if First Banks and
its subsidiaries have complied in all material respects with their obligations
under Section 5.07 but have been unable to complete a Financing by December 31,
2000, unless completion of such a transaction is then imminent, then FBA shall
either (i) terminate this Agreement effective January 1, 2001 by written notice
to Bancorp on or before such date, or (ii) as of January 1, 2001, this paragraph
(h) shall be void and of no further force and effect. Notwithstanding the
foregoing, if, as of December 31, 2000, First Banks, FBA or Redwood is in
material breach of any of their representations, warranties or agreements set
forth herein, and such breach has not been cured within the applicable cure
period after delivery of written notice with respect to the breach, then FBA
shall not have the option of terminating this Agreement pursuant to the above
clause (i) of this subsection (h) and, in such event this subsection (h) shall
automatically terminate and be of no further force and effect on and as of
January 1, 2001; and
(i) each of the Indemnification Agreements identified in Section 2.09 of the
Disclosure Schedule shall have been amended by removing Sections 5(d) and 8
therefrom, in a manner reasonably acceptable to FBA.
Section 6.02. Conditions to the Obligations of Bancorp and Bank of San
Francisco. The obligations of Bancorp and Bank of San Francisco to effect the
Merger and the other transactions contemplated by this Agreement shall be
subject to the satisfaction (or waiver by Bancorp and Bank of San Francisco)
prior to or on the Closing Date of the following conditions:
(a) the representations and warranties made by First Banks, FBA and Redwood in
this Agreement shall be true in all material respects on and as of the Closing
Date with the same effect as though such representations and warranties had been
made or given on the Closing Date (except to the extent any representation or
warranty expressly speaks as of an earlier date);
(b) First Banks, FBA and Redwood shall each have performed and complied in all
material respects with all of its obligations and agreements required to be
performed prior to the Closing Date;
26
(c) no temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger or the Bank
Merger shall be in effect, nor shall any proceeding by any bank regulatory
authority or other person seeking any of the foregoing be pending. There shall
not be any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Merger or the Bank Merger which
makes the consummation thereof illegal;
(d) all necessary approvals, consents and authorizations required by law for
consummation of the Merger, including the requisite approvals of the
shareholders of Bancorp and all legally required regulatory approvals, shall
have been obtained, and all waiting periods required by law shall have expired;
and
(e) Bancorp shall have received all documents required to be received from FBA
on or prior to the Closing Date, all in form and substance reasonably
satisfactory to Bancorp.
ARTICLE VII
TERMINATION
Section 7.01. Mutual Agreement. This Agreement may be terminated by the
mutual written agreement of the parties at any time prior to the Closing Date,
regardless of whether approval of this Agreement and the Merger by the
shareholders of Bancorp shall have been previously obtained.
Section 7.02. Breach of Agreements. In the event that there is a material
breach of any of the representations and warranties or agreements of First
Banks, FBA or Redwood, on one hand, or Bancorp or Bank of San Francisco, on the
other hand, which breach is not cured within thirty days after delivery of
written notice to cure such breach is given to the breaching party by the non-
breaching party, then the non-breaching parties, regardless of whether approval
of this Agreement and the Merger by the shareholders of Bancorp shall have been
previously obtained, may terminate and cancel this Agreement by providing
written notice of such action to the other parties hereto.
Section 7.03. Failure of Conditions. In the event that any of the conditions
to the obligations of a party are not satisfied or waived on or prior to the
Closing Date, and if any applicable cure period provided in Section 7.02 hereof
has lapsed, then such party may, regardless of whether approval of the
transactions contemplated by this Agreement by the shareholders of Bancorp shall
have been previously obtained, terminate and cancel this Agreement by delivery
of written notice of such action to the other parties.
Section 7.04. Denial of Regulatory Approval. If any regulatory application
the approval of which is required in order for the transactions contemplated by
this Agreement be consummated should be finally denied or disapproved by a
regulatory authority, then this Agreement thereupon shall be deemed terminated
and canceled; provided, however, that a request for additional information or
undertaking by First Banks, FBA, Redwood or Newco as a condition for approval,
shall not be deemed to be a denial or disapproval so long as such parties
27
diligently provide the requested information or undertaking. In the event an
application is denied pending an appeal, petition for review or similar such act
on the part of First Banks, FBA, Redwood or Newco (hereinafter referred to as
the "Appeal"), then the application will be deemed denied unless such party or
parties prepares and timely files and continues to pursue an Appeal seeking the
necessary approval.
Section 7.05. Environmental Reports.
(a) In the event that the Estimated Environmental Costs as set forth in
the notification provided by FBA to Bancorp pursuant to Section 4.05 are less
than or equal to $5,000,000, then the Common Share Merger Price shall be reduced
by an amount per share equal to the result obtained by dividing the Estimated
Environmental Costs by the aggregate of the number of shares of Bancorp Common
outstanding as of the Closing Date plus the number of shares of Bancorp Common
that would be issued upon the exercise of the Bancorp Options outstanding on the
Closing Date.
(b) In the event that the Estimated Environmental Costs are greater than
$5,000,000, FBA shall have the right for a period of fifteen (15) days following
delivery of notice, as provided in Section 4.05, to terminate this Agreement by
giving written notice thereof to Bancorp.
Section 7.06. Regulatory Enforcement Matters. In the event that Bancorp or
any Bancorp Subsidiary shall become a party or subject to any written agreement,
memorandum of understanding, cease and desist order, imposition of civil money
penalties or other regulatory enforcement action or proceeding of any bank or
bank holding company regulatory authority after the date of this Agreement and
based upon safety and soundness considerations, then FBA may terminate this
Agreement by giving written notice of such termination to Bancorp.
Section 7.07. Unilateral Termination. If the Closing Date shall not have
occurred on or prior to the day which is 210 days after the date of this
Agreement, then this Agreement may be terminated by any party by giving written
notice to the other parties; provided, however, that a party shall not be
entitled to terminate this Agreement pursuant to this Section 7.07 if such party
is in breach of this Agreement and such breach has contributed materially to the
failure of the Closing to have occurred on or prior to the date on which such
party proposed to terminate this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. Confidential Information. The parties acknowledge the
confidential and proprietary nature of the "Information" (as herein defined)
which has heretofore been exchanged and which will be received from each other
hereunder and agree to hold and keep the same confidential. Such Information
will include any and all financial, technical, commercial, marketing, customer
or other information concerning the business, operations and affairs of a party
that may be provided to the others, irrespective of the form of the
communications, by such party's employees or agents. Such Information shall not
include information which is or becomes
28
generally available to the public other than as a result of a disclosure by a
party or its representatives in violation of this Agreement. The parties agree
that the Information will be used solely for the purposes contemplated by this
Agreement and that such Information will not be disclosed to any person other
than employees and agents of a party who are directly involved in implementing
the Merger, who shall be informed of the confidential nature of the Information
and directed individually to abide by the restrictions set forth in this Section
8.01. The Information shall not be used in any way detrimental to a party,
including use directly or indirectly in the conduct of the other party's
business or any business or enterprise in which such party may have an interest,
now or in the future, and whether or not now in competition with such other
party. Neither FBA nor Bancorp will purchase or sell any security issued by the
other party for so long as this Agreement remains in effect.
Section 8.02. Publicity. First Banks, FBA and Bancorp shall cooperate with
each other and with the Trustee in the development and distribution of all news
releases and other public disclosures concerning this Agreement and the Merger.
No party shall issue any news release or make any other public disclosure
without the prior consent of the other parties, unless such is required by law
upon the written advice of counsel or is in response to published newspaper or
other mass media reports regarding the transactions contemplated hereby, in
which latter events the parties shall consult with each other to the extent
practicable regarding such responsive disclosure.
Section 8.03. Return of Documents. Upon termination of this Agreement
without the Merger becoming effective, each party shall deliver to the others
originals and all copies of all Information made available to such party and
will not retain any copies, extracts or other reproductions, in whole or in
part, of such Information.
Section 8.04. Notices. Any notice or other communication shall be in
writing and shall be deemed to have been given or made on the date of delivery,
in the case of hand delivery, or upon return of a signed receipt in regular form
if sent by the United States Registered or Certified Mail, postage prepaid, or
upon receipt if transmitted by facsimile telecopy or any other means, addressed
(in any case) as follows:
(a) if to First Banks: First Banks, Inc.
00000 Xxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxx
Facsimile:
(000) 000-0000
(b) if to FBA: First Banks America, Inc.
00000 Xxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
(c) if to Redwood: Redwood Bank
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
29
Attention: Xx. Xxxxxxxx XxXxxxxx
Facsimile: (000) 000-0000
with a copy to: Xxxx X. Xxxxxxx
Attorney at Law
0000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
if to Bancorp or Bank of San The San Francisco Company
Francisco: 000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
Bank of San Francisco
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to: Pillsbury Madison & Sutro LLP
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
with additional copies to: Squire, Xxxxxxx & Xxxxxxx, L.L.P.
000 Xxxxxx Xxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxx
Facsimile: (000) 000-0000
Xxxx Xxxxx, Trustee
00000 Xxxxxxx Xxxxxx
Xxx Xxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Xxxxxxx, Phleger & Xxxxxxxx, LLP
Xxx Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: J. Xxxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
or to such other address as any party may from time to time designate by notice
to the others.
30
Section 8.05. Nonsurvival of Representations, Warranties and Agreements.
Except for the agreements set forth in Sections 5.04, 5.05, 8.01, 8.03 and 8.06
hereof, no representation, warranty or agreement contained in this Agreement
shall survive the Closing. In the event that this Agreement is terminated prior
to Closing, the representations, warranties and agreements set forth herein
shall survive such termination.
Section 8.06. Costs and Expenses. Except as may be otherwise provided
herein, each party shall pay its own costs and expenses incurred in connection
with this Agreement and the matters contemplated hereby, including without
limitation all fees and expenses of attorneys, accountants, brokers, financial
advisors and other professionals.
Section 8.07. Entire Agreement. This Agreement, together with the Proxy,
constitutes the entire agreement among the parties and supersedes and cancels
any and all prior discussions, negotiations, undertakings, agreements in
principle and other agreements among the parties relating to the subject matter
hereof.
Section 8.08. Headings and Captions. The captions of Articles and Sections
hereof are for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
Section 8.09. Waiver, Amendment or Modification. The conditions of this
Agreement which may be waived may only be waived by a written instrument
delivered to the other party. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. This Agreement may not be amended or
modified except by a written document duly executed by the parties hereto.
Section 8.10. Rules of Construction. Unless the context otherwise
requires: (a) a term has the meaning assigned to it; (b) an accounting term not
otherwise defined has the meaning assigned to it in accordance with generally
accepted accounting principles; (c) "or" is not exclusive; and (d) words in the
singular may include the plural and in the plural include the singular.
Section 8.11. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which shall
be deemed one and the same instrument.
Section 8.12. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns. Except as contemplated in Section 1.03 and except for the persons
defined as Indemnified Parties in Section 5.05, there shall be no third party
beneficiaries hereof.
Section 8.13. Governing Law. This Agreement shall be governed by the laws
of the State of California, the corporation law of the State of Delaware and any
applicable federal laws and regulations.
31
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
FIRST BANKS, INC.
By:___________________________
Its:__________________________
FIRST BANKS AMERICA, INC.
By:___________________________
Its:__________________________
REDWOOD BANK
By:___________________________
Its:__________________________
THE SAN FRANCISCO COMPANY
By:___________________________
Its:__________________________
BANK OF SAN FRANCISCO
By:___________________________
Its:__________________________
32
EXHIBIT 1.06(a)
Legal Opinion Matters
The San Francisco Company and Bank of San Francisco (the "SF Parties")
1. The due incorporation, valid existence and good standing of each of
the SF Parties under the laws of their respective states of incorporation, their
power and authority to own and operate their respective properties and to carry
on their respective businesses as now conducted, and their power and authority
to enter into the Agreement and to consummate the transactions contemplated by
the Agreement.
2. With respect to each of the SF Parties: (i) the number of authorized,
issued and outstanding shares of capital stock of such entity immediately prior
to the Closing, (ii) the nonexistence of any violation of the preemptive or
subscription rights of any person known to such counsel, (iii) the nonexistence
of any outstanding options, warrants, or other rights to acquire, or securities
convertible into, any equity security of such entity known to such counsel,
except as set forth in Section 2.01 of the Agreement and (iv) the nonexistence
of any obligation, contingent or otherwise, known to such counsel, to reacquire
any shares of capital stock of such entity.
3. The due and proper performance of all corporate acts and other
proceedings necessary or required to be taken by the SF Parties to authorize the
execution, delivery and performance of the Agreement, the due execution and
delivery of the Agreement by the SF Parties, and the Agreement as the valid and
binding obligations of each of the SF Parties, enforceable against them in
accordance with its terms (subject to the provisions of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws affecting the
enforceability of creditors' rights generally from time to time in effect, and
equitable principles relating to the granting of specific performance and other
equitable remedies as a matter of judicial discretion, and other customary
assumptions and exceptions).
4. The execution of the Agreement by each of the SF Parties and the
consummation of the transactions contemplated thereby do not violate or cause a
default under their respective Certificate of Incorporation and Articles of
Incorporation or Bylaws, any statute, regulation or rule applicable to either of
the SF Parties or any judgment, order or decree known to counsel against, or any
material agreement known to counsel and binding upon, either of the SF Parties.
5. The receipt of all material required consents, approvals, orders and
authorizations of, and registrations, declaration and filings with and notices
to, any court, administrative agency and commission and other governmental
authority and instrumentality, domestic and foreign, and third parties required
to be obtained or made by either of the SF Parties in connection with the
execution and delivery of the Agreement by such party, the performance of its
obligations thereunder and the consummation of the transactions contemplated
therein.
6. The nonexistence of any material actions, suits, proceedings, orders,
investigations or claims pending or threatened against or affecting either of
the SF Parties and known to such counsel which, if adversely determined, would
have a material adverse effect upon their respective properties or assets or the
consummation of the Merger.
1
7. The right of a successor corporation to Bank of San Francisco to
succeed to the rights and benefits of Bank of San Francisco under the lease
pursuant to which Bank of San Francisco currently occupies the premises located
at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx.
2
EXHIBIT 1.06(b)
Legal Opinion Matters
FBA and Redwood (the "FBA Parties")
1. The due incorporation, valid existence and good standing of each of
the FBA Parties under the laws of their respective jurisdictions of
incorporation, their power and authority to own and operate their respective
properties and to carry on their respective businesses as now conducted, and
their power and authority to enter into the Agreement and to consummate the
transactions contemplated by the Agreement.
2. The due and proper performance of all corporate acts and other
proceedings necessary or required to be taken by the FBA Parties to authorize
the execution, delivery and performance of the Agreement, the due execution and
delivery of the Agreement by the FBA Parties, and the Agreement as the valid and
binding obligation of each of the FBA Parties, enforceable against them in
accordance with its respective terms (subject to the provisions of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
affecting the enforceability of creditors' rights generally from time to time in
effect, and equitable principles relating to the granting of specific
performance and other equitable remedies as a matter of judicial discretion and
other customary assumptions and exceptions).
3. The execution of the Agreement by each of the FBA Parties, and the
consummation of the transactions contemplated thereby do not violate or cause a
default under their respective Certificate of Incorporation, Articles of
Incorporation or Bylaws, any statute, regulation or rule applicable to either of
the FBA Parties or any judgment, order or decree known to counsel against, or
any material agreement known to counsel and binding upon, either of the FBA
Parties.
4. The receipt of all material required consents, approvals, orders and
authorizations of, and registrations, declaration and filings with and notices
to, any court, administrative agency and commission and other governmental
authority and instrumentality, domestic and foreign, and third parties required
to be obtained or made by either of the FBA Parties in connection with the
execution and delivery of the Agreement by such party, the performance of its
obligations thereunder or the consummation of the transactions contemplated
therein.
5. The nonexistence of any material actions, suits, proceedings, orders,
investigations or claims pending or threatened against or affecting either of
the FBA Parties and known to such counsel which, if adversely determined, would
have a material adverse effect upon the consummation of the Merger.
1
Exhibit B
Section 262 of the DGCL
Section 262. Appraisal Rights.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to section 228
of this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's share of stock under the circumstances described
in subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member or record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to section 251 (other than a merger effected pursuant to
section 251(g) of this title), section 252, section 254, section 257, section
258, section 263 or section 264 of this title:
(a) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of
stock, which stock, or depository receipts in respect thereof, at
the record date fixed to determine the stockholders entitled to
receive notice of and to vote at the meeting of stockholders to
act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a
national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or
(ii) held of record by more than 2,000 holders; and further
provided that no appraisal rights shall be available for any
shares of stock of the constituent corporation surviving a merger
if the merger did not require for its approval the vote of the
stockholders of the surviving corporation as provided in
subsection (f) of section 251 of this title.
(b) Notwithstanding paragraph (1) of this subsection, appraisal
rights under this section shall be available for the shares of
any class or series of stock of a constituent corporation if the
holders thereof are required by the terms of an agreement of
merger or consolidation pursuant to sections 251, 252, 254, 257,
258, 263 and 264 of this title to accept for such stock anything
except:
1
(1) Shares of stock of the corporation surviving or resulting
from such a merger or consolidation, or depository receipts
in respect thereof;
(2) Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository
receipts at the effective date of the merger or
consolidation will be either listed on a national securities
exchange or designated as a national market system security
on an interedealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by
more than 2000 holders;
(3) Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b.
of this paragraph; or
(4) Any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs
a., b. and c. of this paragraph.
(c) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under section 253 of this
title is not owned by the parent corporation immediately prior to
the merger, appraisal rights shall be available for the shares of
the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(d) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval
at a meeting of stockholders, the corporation, not less than 20
days prior to the meeting, shall notify each of its stockholders
who was such on the record date for such meeting with respect to
shares for which appraisal rights are available pursuant to
subsection (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and
shall include in such notice a copy of this section. Each
stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the
taking of the vote on the merger or consolidation, a written
demand for appraisal of such stockholder's shares.
2
Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such
stockholder's shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder
electing to take such action must do so by separate written
demand as herein provided. Within 10 days after the effective
date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of
the date that the merger or consolidation has become effective;
or
(e) If the merger or consolidation was approved pursuant to section
228 or section 253 of this title, each constituent corporation,
either before the effective date of the merger or consolidation
or within ten days thereafter, shall notify each of the holder of
any class or series of stock of such constituent corporation who
are entitled to appraisal rights of the approval of the merger or
consolidation and that appraisal rights are available for any or
all shares of such class or series of stock of such constituent
corporation, and shall include in such notice a copy of this
section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall
be given by the surviving or resulting corporation to all such
holders of any class or series of stock of a constituent
corporation that are entitled to appraisal rights. Such notice
may, and, if given on or after the effective date of the merger
or consolidation, shall, also notify such stockholder of the
effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date
of mailing of such notice, demand in writing from the surviving
or resulting corporation the appraisal of such holder'' shares.
Such demand will be sufficient if it reasonably informs the
corporation of the identify of the stockholder and that the
stockholder intends thereby to demand the appraisal of such
holder's shares. If such notice did not notify stockholders of
the effective date of the merger or consolidation, either (i)
each such constituent corporation shall send a second notice
before the effective date of the merger or consolidation
notifying each of the holders of any class or series of stock of
such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or
(ii) the surviving or resulting corporation shall send such a
second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first notice,
such second notice need only be sent to each stockholder who is
entitled to appraisal rights and who has demanded appraisal of
such holder's shares in accordance with this subsection. An
affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of
fraud, be prima facie evidence of the facts stated therein.
3
For purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance,
a record date that shall be not more than 10 days prior to the
date the notice is given, provided, that if the notice is given
on or after the effective date of the merger or consolidation,
the record date shall be such effective date. If no record date
is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next
preceding the day on which the notice it given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time with 60 days after the effective date
of the merger or consolidation, any stockholder shall have the right to withdraw
such stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation.
Within 120 days after the effective date of the merger or
consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demand for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and address of all stockholders who have demanded payment for their shares
and with whom agreements as to the value of their shares have not been reached
by the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so order by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery
4
for notation thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Court may dismiss the
proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair
rate of interest, the Court may consider all relevant factors, including the
rate of interest which the surviving or resulting corporation would have had to
pay to borrow money during pendency of the proceedings. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discover
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificated upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court Chancery may be enforced, whether such surviving or
resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceedings may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceedings, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the
Court of Chancery shall be dismissed as to any stockholder without the
5
approval of the Court, and such approval may be conditioned upon such terms as
the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
6
