EXHIBIT 10.17
================================================================================
AGREEMENT AND PLAN OF BUSINESS COMBINATION
DATED AS OF MAY 16, 2003
AMONG
NARA BANCORP, INC.,
NARA BANK, N.A., AND
ASIANA BANK
================================================================================
TABLE OF CONTENTS
PAGE NO.
--------
ARTICLE 1 DEFINITIONS................................................................................2
ARTICLE 2 THE MERGER.................................................................................8
Section 2.1. The Merger........................................................................8
Section 2.2. Conversion of Asiana Common Stock; Exchange Procedures............................9
Section 2.3. Treatment of Asiana Stock Options................................................11
Section 2.4. Treatment of Asiana Warrants.....................................................11
Section 2.5. The Closing......................................................................11
Section 2.6. Revision of Transaction..........................................................12
Section 2.7. Intent to Qualify as Reorganization; No Representations by the Bank..............12
Section 2.8. Additional Actions...............................................................12
ARTICLE 3 REPRESENTATION AND WARRANTIES OF ASIANA BANK..............................................13
Section 3.1. Organization, Standing and Power.................................................13
Section 3.2. Capital Structure................................................................13
Section 3.3. Interests in Other Entities......................................................14
Section 3.4. Authority and Related Matters....................................................14
Section 3.5. Voting and Warrant Termination Agreement.........................................14
Section 3.6. Conflicts........................................................................15
Section 3.7. Consents.........................................................................15
Section 3.8. Financial Statements.............................................................15
Section 3.9. Regulatory Filings and Agreements................................................15
Section 3.10. Undisclosed Liabilities..........................................................16
Section 3.11. Loans, Classified and OLEM Assets, Reserves and Certain Other Assets.............16
Section 3.12. Investment Securities; Derivatives...............................................17
Section 3.13. Absence of Certain Changes or Events.............................................18
Section 3.14. Compliance with Applicable Laws..................................................18
Section 3.15. Litigation and Other Disputes....................................................18
Section 3.16. Administration of Fiduciary Accounts.............................................18
Section 3.17. Taxes............................................................................19
Section 3.18. Certain Agreements...............................................................22
Section 3.19. Employees and Employee Benefit Plans.............................................23
Section 3.20. Properties.......................................................................25
Section 3.21. Environmental....................................................................25
Section 3.22. Intellectual Property............................................................26
Section 3.23. Capitalization...................................................................26
Section 3.24. CRA..............................................................................26
Section 3.25. Fairness Opinion.................................................................26
Section 3.26. Tax Free Reorganization..........................................................26
Section 3.27. Brokers..........................................................................26
i
Section 3.28. Hearing Notice, Information Statement and Registration Statement.................26
Section 3.29. Disclosure of All Material Matters...............................................27
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE BANK AND PARENT.....................................28
Section 4.1. Organization, Standing and Power.................................................28
Section 4.2. Authority and Related Matters....................................................28
Section 4.3. Conflicts........................................................................29
Section 4.4. Consents.........................................................................29
Section 4.5. SEC Documents; Parent Financial Statements.......................................30
Section 4.6. Regulatory Filings and Agreements................................................30
Section 4.7. Absence of Certain Changes or Events.............................................31
Section 4.8. Hearing Notice and Information Statement; Registration Statement.................31
Section 4.9. Tax Free Reorganization..........................................................31
ARTICLE 5 ADDITIONAL AGREEMENTS.....................................................................31
Section 5.1. Discussions with Third Parties...................................................31
Section 5.2. Shareholder Approval by Asiana...................................................33
Section 5.3. Access and Confidentiality.......................................................33
Section 5.4. Prosecution of Regulatory Filings; Cooperation...................................36
Section 5.5. Advice of Changes................................................................36
Section 5.6. Interim and Annual Financial Statements..........................................37
Section 5.7. Conduct of Business..............................................................37
Section 5.8. Certain Operating Covenants......................................................38
Section 5.9. Conforming Accounting and Reserve Policies; Restructuring Matters................40
Section 5.10. Covenants Regarding Employees, Directors and Officers............................40
Section 5.11. Tax-Free Reorganization..........................................................41
Section 5.12. Fairness Hearing and Permit; Registration Statement..............................41
Section 5.13. Nasdaq Listing...................................................................42
Section 5.14. Indemnification of Directors and Officers........................................43
Section 5.15. Appointment to Board of Directors................................................43
ARTICLE 6 CONDITIONS TO CLOSING.....................................................................43
Section 6.1. Conditions to Obligations of all Parties.........................................43
Section 6.2. Conditions to the Obligations of Parent and Bank.................................44
Section 6.3. Conditions to the Obligations of Asiana..........................................46
ARTICLE 7 TERMINATION; TERMINATION FEE..............................................................46
Section 7.1. By Mutual Agreement..............................................................47
Section 7.2. Regulatory Impediment............................................................47
Section 7.3. By the Bank and Parent...........................................................47
ii
Section 7.4. By Asiana........................................................................47
Section 7.5. Termination Fee..................................................................48
Section 7.6. Effect of Termination; Remedies..................................................48
ARTICLE 8 MISCELLANEOUS.............................................................................48
Section 8.1. Rules of Construction............................................................48
Section 8.2. Publicity........................................................................49
Section 8.3. Notices..........................................................................50
Section 8.4. Entire Agreement.................................................................50
Section 8.5. Benefits; Binding Effect; Assignment and Designation.............................50
Section 8.6. Waiver...........................................................................50
Section 8.7. No Third Party Beneficiary.......................................................50
Section 8.8. Severability.....................................................................51
Section 8.9. Counterparts.....................................................................51
Section 8.10. Applicable Law; Consent to Jurisdiction..........................................51
Section 8.11. Waiver of Jury Trial.............................................................51
EXHIBITS
Exhibit A Form of Voting and Warrant Termination Agreement
Exhibit B Form of Severance Waiver Agreement (Seong-Hoon Hong)
Exhibit C Form of Affiliate Agreement
Exhibit 6.2(g) Form of Noncompetition and Nonsolicitation Agreement
Exhibit 6.2(j) Matters to be covered in legal opinion of Xxxxxxx XxXxxxxxx LLP
iii
AGREEMENT AND PLAN OF BUSINESS COMBINATION
THIS AGREEMENT AND PLAN OF BUSINESS COMBINATION, dated as of May 16,
2003, is made by and among Nara Bancorp, a Delaware corporation ("Parent"), Nara
Bank, N.A., a national banking association and wholly-owned subsidiary of Parent
(the "Bank"), and Asiana Bank, a
California banking corporation ("Asiana").
RECITALS
A. The respective Boards of Directors of the Parties have each
unanimously approved this Agreement and believe it is in the best interests of
their respective corporations and shareholders that the Bank acquire Asiana
through a two-stage transaction involving the merger of a newly-formed
subsidiary of the Bank into Asiana, followed by the merger of Asiana with and
into the Bank (as more fully defined in Section 2.1, the "Merger"). The Board of
Directors of Asiana has received a fairness opinion from Xxx-Xxxx, Xxxxxx Inc.
relating to the Merger.
B. For federal income tax purposes, it is intended that the Merger
shall qualify as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and, with respect to the
Merger, this Agreement shall constitute a plan of reorganization pursuant to
Section 368 of the Code.
C. Pursuant to the Merger, among other things, and subject to the terms
and conditions of this Agreement, all of the issued and outstanding shares of
capital stock of Asiana shall be converted into the right to receive shares of
Parent Common Stock valued at $8,000,000 in the aggregate (subject to adjustment
as set forth herein).
D. The Parties intend that Xx. Xxxxx-Xxxx Xxx will be appointed,
effective upon completion of the Merger or as soon as reasonably practicable
thereafter, as a director of Parent and Chairman of its Board of Directors.
E. Concurrently with the execution of this Agreement, (i) Messrs.
Chong-Xxxx Xxx and certain directors of Asiana have entered into agreements to
vote their respective shares of Asiana in favor of the Merger and the
transactions contemplated by this Agreement, and certain other agreements, in
the form attached hereto as Exhibit A (the "Voting and Warrant Termination
Agreement") and (ii) Xx. Xxxxx-Hoon Hong shall have entered into an agreement in
the form attached hereto as Exhibit B pursuant to which he will agree to waive
receipt of any severance or similar compensation or benefits, or other
consideration owing to him as a result of the acceleration of any stock option,
previously vested stock option, or other equity incentive grant, arising out of
or resulting from the Merger or any of the transactions contemplated by this
Agreement.
F. The Parties intend that (i) the total amount payable to current or
former directors, employees or consultants of Asiana arising as a result of the
Merger or the transactions contemplated under this Agreement (payable at any
time, whether before, at or after the Closing), including without limitation
severance or termination pay, acceleration of amounts owing under any employment
contract, arrangement or bonus, or payments to be made due to
1
acceleration or termination of any stock option, restricted stock grant or stock
appreciation right, and (ii) the reasonable estimated cost of closing Asiana's
branch office located in Sunnyvale,
California following the Merger, including
termination of the associated lease and writedown of equipment and property used
in the facility (all such amounts are referred to herein as the "Closing Costs")
will not exceed $700,000 in the aggregate, and if the Closing Costs exceed such
amount the excess will be a deduction from the Aggregate Merger Consideration.
G. The Parties intend that the legal, accounting, consulting and
investment banking fees and expenses (including those relating to issuance of a
fairness opinion) incurred by Asiana in connection with the Merger and the
transactions contemplated under this Agreement (all such amounts are referred to
herein as the "Closing Expenses") will not exceed $200,000 in the aggregate, and
if the Closing Expenses exceed such amount the excess will be a deduction from
the Aggregate Merger Consideration.
H. The Parties desire to make certain representations, warranties,
covenants and agreements in connection with the Merger and also to prescribe
various conditions to the Merger.
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and other agreements set forth herein,
and intending to be legally bound hereby, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms contained in this Agreement and not defined in the
preamble or the recitals above shall have the meanings set forth in this Article
1:
"Aggregate Merger Consideration" shall mean $8,000,000 (a) plus cash
received by Asiana after the date of this Agreement upon exercise of any Asiana
Stock Option or warrant exercisable for Asiana Common Stock which is outstanding
on the date of this Agreement, (b) less any amounts paid by Asiana after the
date of this Agreement in consideration of the cancellation or surrender of
warrants exercisable for Asiana Common Stock (but not stock options), (c) less
the amount by which the estimate of Closing Costs exceeds $700,000 as of the
Closing Date as set forth in the Closing Schedule delivered pursuant to Section
6.2(h), and (d) less the amount by which the estimate of Closing Expenses
exceeds $200,000 as of the Closing Date as set forth in the Closing Schedule
delivered pursuant to Section 6.2(h).
"Agreement" means this Agreement and Plan of Business Combination,
including the Disclosure Schedule and all Exhibits hereto, as the same may be
hereafter amended.
"Asiana" means Asiana including, unless the context clearly indicates
otherwise, all direct and indirect subsidiaries of Asiana as of the applicable
time.
"Asiana Common Stock" means the common stock of Asiana, no par value
per share.
"Asiana Governmental Approvals" means the approvals listed on
Disclosure Schedule Section 3.7.
2
"Asiana 2002 Financial Statements" means Asiana's audited balance
sheet, income statement, cash flow statement and statement of shareholders'
equity, with footnotes, prepared in accordance with GAAP, as at December 31,
2002 and for the year then ended, as audited by Asiana's independent auditors.
"Asiana Interim Balance Sheet" means Asiana's unaudited balance sheet,
prepared in accordance with GAAP, as at March 31, 2003.
"Asiana Interim Financial Statements" means Asiana's unaudited balance
sheet, income statement and cash flow statement, prepared in accordance with
GAAP, as at March 31, 2003 and for the three months then ended.
"Asiana Shareholder" means a holder of Asiana Common Stock as of the
relevant time.
"Asiana Stock Option Plan" shall mean the Asiana 2002 Stock Incentive
Plan.
"Asiana Stock Options" shall mean options to acquire Asiana Common
Stock issued under the Asiana Stock Option Plan.
"Average Parent Closing Price" shall mean the average of the closing
trading prices of Parent's Common Stock on the Nasdaq National Market System for
the twenty (20) consecutive trading days ending two (2) trading days prior to
the Effective Time, with such average to be determined on a daily
volume-weighted average basis.
"Balance Sheet Date" means March 31, 2003.
"Bank" means Nara Bank, N.A., a national banking association.
"Bank Governmental Approvals" means the approvals listed on Disclosure
Schedule Section 4.4.
"Bank Regulators" means any and all Federal or state Governmental
Entities charged with the supervision or regulation of banks, bank holding
companies or industrial loan companies, or engaged in the insurance of bank
deposits.
"Benefit Plan" means any employee benefit plan (including any "employee
benefit plan" as defined in Section 3(3) of ERISA) maintained or contributed to
by the applicable entity.
"Borrower Group Obligations" means all loans from Asiana to, and other
obligations to Asiana of, (a) the applicable borrower, (b) all guarantors of
such borrower, and (c) all affiliates and associates of such borrower and
guarantors.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday or
Friday that banks in Los Angeles,
California are not required by Law to be
closed.
3
"Classified Asset" means (a) any loan or lease asset that is classified
on the books and records of the applicable entity as "Substandard", "Doubtful"
or "Loss", and (b) any property classified on the books and records of the
applicable entity as OREO.
"Closing" means the closing of the Interim Merger, to be held on the
Closing Date at a location fixed pursuant to Section 2.2.
"Closing Costs" shall have the meaning given that term in Recital "F"
to this Agreement.
"Closing Date" means the date as of which the Closing of the Interim
Merger occurs, as the same may be fixed pursuant to Section 2.2.
"Closing Expenses" shall have the meaning given that term in Recital
"G" to this Agreement.
"Closing Schedule" shall have the meaning given that term in Section
6.2(h).
"Consent Order" means, collectively, (a) that certain Consent Order,
FDIC-02-B, dated May 3, 2002, between Asiana and the FDIC, and (b) that certain
Final Order (Financial Code Section 1913) dated May 13, 2002, between Asiana and
the
California Commissioner of Financial Institutions.
"Criticized Asset" means any Classified Asset and any other loan or
lease asset of the applicable Party classified on the books and records of the
applicable Party as "Other Loans Especially Mentioned", "Special Mention",
"Classified", Criticized", "Credit Risk Assets", "Concerned Loans" or by words
of similar import.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Disclosure Schedule" means, collectively, the two schedules delivered
prior to the execution of this Agreement by, respectively, Asiana and the Bank
to one another, as supplemented hereafter from time to time by the applicable
Party in accordance with Section 5.5.
"Dissenting Asiana Shares" means all shares of Asiana Common Stock
whose holders have perfected dissenters' rights under Section 1300 et seq. of
the
California Corporations Code or, if applicable, 12 USC Section 215a.
"Effective Time" means the time as of which the Interim Merger is
deemed to have become effective.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" means U.S. Stock Transfer Corporation, or another
banking institution, corporate trust company or entity regularly engaged in a
stock transfer business that Parent shall appoint, after consultation with
Asiana, to act as exchange agent hereunder.
4
"Exchange Ratio" shall mean a number equal to the quotient obtained by
dividing (x) the Aggregate Merger Consideration divided by (y) the product of
the Average Parent Closing Price and the number of outstanding shares of Asiana
Common Stock at the Effective Time.
"Excluded Shares" means each share of Asiana Common Stock or any other
capital stock of Asiana which, as of the Effective Time, is (i) owned by Bank or
any subsidiary or parent of Bank, or Asiana or any subsidiary of Asiana, other
than shares owned in a fiduciary capacity or as a result of debts previously
contracted; or (ii) held in the treasury of Asiana.
"Expenses" means all legal, accounting, consulting, investment banking
and other fees and expenses incurred by the applicable Party in connection with
the Merger (including expenses incurred in connection with the preparation of
this Agreement and all negotiations, due diligence and other activities
conducted prior hereto, and including all broker's, finder's and similar fees
and expenses).
"FDIC" means the Federal Deposit Insurance Corporation.
"Final Approval Date" means the later of (a) the first date on which
all Governmental Approvals have been received, and (b) the date on which the
Asiana Shareholders approve the Merger.
"GAAP" means Generally Accepted Accounting Principles as in effect in
the United States, consistently applied.
"Governmental Approval" means the approval of, or effectiveness of a
filing or registration with, a Governmental Entity necessary or desirable for
the consummation of the Merger (including the expiration of any waiting period
imposed thereby), including the Asiana Governmental Approvals and the Bank
Governmental Approvals.
"Governmental Entity" means any administrative agency, commission,
court or other governmental authority or instrumentality, domestic or foreign,
including any government-sponsored corporation having regulatory authority under
law.
"Group" means, individually and collectively, (i) Asiana, and (ii) any
individual, trust, corporation, partnership or any other entity as to which
Asiana is liable for Taxes incurred by such individual or entity either as a
transferee, or pursuant to Treasury Regulations Section 1.1502-6, or pursuant to
any other provision of federal, territorial, state, local or foreign law or
regulations.
"Hazardous Material" means any pollutant, contaminant, waste or
hazardous or toxic substance regulated by Law as such, and petroleum or
petroleum products.
"Interim Merger" means the Merger of Merger Sub with and into Asiana,
as more particularly described in Section 2.1.
5
"IRS" means the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Law" means any statute, law, ordinance, rule or regulation of any
Governmental Entity that is applicable to the referenced Person.
"Material Adverse Effect" means, with respect to any Person, a material
adverse effect on the business, properties, assets, liabilities, results of
operations or financial condition of such Person (including such an effect
caused indirectly through any of its subsidiaries), or on the ability of such
Person to consummate the Merger on the terms hereof; provided, however, that a
Material Adverse Effect does not include a change with respect to, or effect on,
such Person resulting from a change in Law, GAAP, RAP, or a change with respect
to, or effect on, such Person resulting from any other matter having a
comparable effect on financial institutions or their holding companies
generally.
"Merger" means the merger of Asiana with and into Bank, as more
particularly described in Section 2.1. Reference to the Merger includes
reference to the Interim Merger, unless the context otherwise requires.
"Monthly Financial Statements" shall have the meaning given that term
in Section 5.6.
"Merger Sub" means a wholly-owned subsidiary of the Bank formed for the
purpose of effecting the Merger.
"OLEM Asset" means any loan or lease asset of the applicable entity
classified on the books and records of the applicable entity as "Other Loans
Especially Mentioned", "Special Mention", "Criticized", "Credit Risk Assets",
"Concerned Loans" or by words of similar import.
"OREO" means real property (i) acquired by the applicable entity, in
the ordinary course of the applicable entity's banking business, through
purchase at a foreclosure sale conducted on a lien in favor of the applicable
entity (or a comparable sale by a trustee under a deed of trust) or by
acceptance of a deed in lieu of foreclosure or (ii) any asset of the applicable
entity classified as "in-substance foreclosure" on the books and records of the
applicable entity.
"Parent" means Nara Bancorp, Inc.
"Parent Common Stock" means the voting common stock, $.001 par value
per share, of Parent.
"Party" or "Parties" means Parent, the Bank and Asiana.
"Per Share Merger Consideration" shall have the meaning given that term
in Section 2.2(a).
"Person" means any natural person, corporation, limited liability
company, general or limited partnership, limited liability partnership, joint
venture, joint stock company, trust,
6
unincorporated organization, association, sole proprietorship, governmental
body, or agency or political subdivision of any government.
"Post-Closing Period" means any taxable period (or portion thereof)
beginning after the close of business on the Closing Date.
"Pre-Closing Period" means any taxable period ending on or before the
close of business on the Closing Date or, in the case of any taxable period
which includes, but does not end on, the Closing Date, the portion of such
period up to and including the Closing Date.
"Principal Shareholder" means a holder of five percent (5%) or more of
the outstanding common stock of the referenced entity.
"Qualifying Strategic Transaction Proposal" shall have the meaning
given that term in Section 5.1(b).
"RAP" means Regulatory Accounting Principles, as interpreted by the
applicable entity's principal Federal Bank Regulator.
"Records" means all books, records and original documents in Asiana's
possession which pertain to and are utilized by Asiana or any of its
subsidiaries to administer, reflect, monitor, evidence or record information
respecting its business and operations, including but not limited to all books,
records and documents relating to (a) corporate, regulatory, supervisory and
litigation matters, (b) tax planning and payment of taxes, (c) personnel and
employment matters, and (d) the business or conduct of the business of Asiana or
any of its subsidiaries.
"Registration Statement" shall have the meaning given that term in
Section 5.12(b).
"Regulatory Agreement" means any regulatory agreement, memorandum of
understanding or similar agreement with, any cease and desist or similar order
or directive entered or issued by, commitment letter or similar undertaking to,
any extraordinary supervisory letter from, any Bank Regulator.
"Representatives" means each of the applicable Person's directors,
officers, employees, agents, representatives and advisors.
"Returns" means all reports, estimates, declarations of estimated Tax,
information statements and returns relating to, or required to be filed in
connection with, any Taxes, including information returns or reports with
respect to backup withholding and other payments to third parties.
"SEC" means the Securities and Exchange Commission.
"SEC Documents", with respect to a Party, means each report, schedule,
form, statement or other document filed with the SEC by such Party pursuant to
Section 12 or 13(a) of the Exchange Act and the rules and regulations
thereunder.
7
"Securities Act" means the Securities Act of 1933, as amended.
"Strategic Transaction" means any acquisition or purchase of all or a
significant (i.e., more than 20%) portion of the assets of, or a more than 20%
equity interest in, Asiana, or any merger or other business combination
involving Asiana or any recapitalization involving Asiana resulting in an
extraordinary dividend or distribution to Asiana Shareholders or a self-tender
for or the redemption of some or all of the Asiana Common Stock.
"Strategic Transaction Proposal" means any proposal regarding a
Strategic Transaction.
"Tax" or "Taxes" means, except where the context otherwise requires,
all taxes, however, denominated, including any interest, penalties or other
additions to tax that may become payable in respect thereof, imposed by any
federal, territorial, state or local government or any agency or political
subdivision of any such government, which taxes shall include, without limiting
the generality of the foregoing, all income or profits taxes (including, but not
limited to, federal income taxes and state income taxes), payroll and employee
withholding taxes, unemployment insurance, social security taxes, sales and use
taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes,
business license taxes, occupation taxes, real and personal property taxes,
stamp taxes, environmental taxes, transfer taxes, workers' compensation, Pension
Benefit Guaranty Corporation premiums and other governmental charges, and other
obligations of the same or of a similar nature to any of the foregoing, which
are required to be paid, withheld or collected.
"Treasury Regulations" means the temporary and final regulations issued
by the U.S. Treasury Department under the Code.
"Violation" means a conflict with, violation of, default under,
creation of a right of termination under, cancellation of, acceleration of any
obligation under, loss of a material benefit under, or creation of any lien,
pledge, security interest, charge or other encumbrance on assets under, the
referenced Law, organic document, agreement or other instrument, in each case
with or without notice or lapse of time, or both.
ARTICLE 2
THE MERGER
Section 2.1. The Merger.
(a) Subject to the terms and conditions of this Agreement, at
the Effective Time, Merger Sub shall be merged with and into Asiana in
accordance with Section 1108 of the
California Corporation Code by the filing
with the Secretary of State of
California of an Agreement of Merger (the
'Short-Form
Merger Agreement") in form and substance reasonably acceptable to
the Parties and their counsel (the "Interim Merger"). Upon effectiveness of the
Interim Merger, (i) the corporate existence of Merger Sub shall be merged into
Asiana, and Asiana shall be the surviving corporation and shall continue its
corporate existence under the laws of the State of
California, (ii) each share
of Merger Sub Common Stock which is outstanding immediately prior to such time
shall be converted into one share of Asiana Common
8
Stock, in accordance with such statute and each share of Asiana Common Stock
shall be converted into the right to receive the consideration described in
Section 2.2(a), and (iii) the Articles of Incorporation and By-laws of Asiana,
as in effect immediately prior to the Effective Time, shall remain the Articles
of Incorporation and By-laws of Asiana, as the surviving corporation of the
Interim Merger, until thereafter amended in accordance with applicable law.
(b) As soon as practicable following the Interim Merger,
Asiana shall be merged with and into the Bank in accordance with Section 215a of
Title 12 of the United States Code by the filing with the Comptroller of the
Currency an Agreement of Merger in form and substance reasonably acceptable to
the Parties and their counsel (together with the Interim Merger, the "Merger").
Upon effectiveness of such filing, (i) the corporate existence of Asiana shall
be merged into the Bank, and the Bank shall be the surviving corporation and
shall continue its corporate existence under the laws of the United States of
America, (ii) each share of Asiana Common Stock which is outstanding immediately
prior to such time shall be converted into one share of Bank Common Stock, and
(iii) the Articles of Association and By-laws of the Bank, as in effect
immediately prior to the Effective Time, shall remain the Articles of
Association and By-laws of the Bank, as the surviving corporation of the Merger,
until thereafter amended in accordance with applicable law.
Section 2.2. Conversion of Asiana Common Stock; Exchange Procedures.
(a) Conversion of Asiana Common Stock. At the Effective Time,
each share of Asiana Common Stock issued and outstanding immediately prior to
the Effective Time, excluding Dissenting Asiana Shares and Excluded Shares,
shall, by virtue of the Interim Merger and without any action on the part of the
holder thereof, be converted into the right to receive, upon surrender of the
certificate formerly representing such share of Asiana Common Stock, that number
of shares of Parent Common Stock equal to the Exchange Ratio (the "Per Share
Merger Consideration"). Neither certificates nor scrip for fractional shares of
Parent Common Stock shall be issued, and each Asiana Shareholder who otherwise
would have been entitled to a fraction of a share of Parent Common Stock at the
Effective Time shall receive in lieu thereof cash (without interest) in an
amount determined by multiplying the fractional share interest to which such
Asiana Shareholder would otherwise be entitled to receive by the Average Parent
Closing Price. No such holder shall be entitled to dividends, voting rights or
any other rights in respect of any fractional share interest.
(b) Reservation of Shares. Prior to the Effective Time, the
Board of Directors of Parent shall reserve for issuance a sufficient number of
shares of Parent Common Stock for the purpose of issuing its shares to Asiana
shareholders in accordance herewith.
(c) Cancellation of Shares. All shares of Asiana Common Stock
converted into the right to receive the Per Share Merger Consideration shall, as
of the Effective Time, no longer be outstanding and shall automatically be
cancelled and shall cease to exist, and each certificate previously representing
any such shares shall thereafter represent only the right to receive the Per
Share Merger Consideration into which the shares of Asiana Common Stock
represented by such certificate have been converted. As of the Effective Time,
all Excluded
9
Shares shall cease to exist and the certificates for such shares shall, as
promptly as practicable thereafter, be cancelled and no payments shall be made
in consideration therefor.
(d) Dissenting Asiana Shares. Notwithstanding anything in this
Agreement to the contrary, Dissenting Asiana Shares shall not be converted into
the right to receive, or be exchangeable for, the Per Share Merger Consideration
provided for in Section 2.2(a) hereof, but, instead, the holders thereof shall
be entitled to payment, by the Bank on behalf of Asiana, of the value of such
Dissenting Asiana Shares as agreed upon or determined in accordance with the
provisions of Section 1300 et seq. of the
California Corporations Code or 12 USC
Section 215a to the extent applicable.
(e) Exchange Procedures.
(i) As soon as practicable after the Effective Time
but in no event later than five (5) Business Days after the Effective Time,
Parent will send, or will cause the Exchange Agent to send, to each holder of
Asiana Common Stock at the Effective Time a letter of transmittal for use in
exchanging shares of Asiana Common Stock for the Per Share Merger Consideration.
Such letter of transmittal shall specify that risk of loss and title to
Certificates shall pass only upon acceptance of such Certificates by the
Exchange Agent. After the Effective Time, each holder of a certificate of shares
of Asiana Common Stock (a "Certificate") that surrenders such Certificate to the
Exchange Agent will, upon acceptance thereof by the Exchange Agent, be entitled
to the Per Share Merger Consideration payable in respect of the shares
represented thereby as determined under Section 2.2(a).
(ii) The Exchange Agent shall accept Certificates
upon compliance with such reasonable terms and conditions as the
Exchange Agent or Parent may impose to effect an orderly exchange
thereof in accordance with customary exchange practices. Certificates
shall be appropriately endorsed or accompanied by such instruments of
transfer as the Exchange Agent or Parent may reasonably require.
(iii) Each outstanding Certificate, other than those
representing Dissenting Shares, shall until duly surrendered to the Exchange
Agent be deemed to evidence the right to receive the Per Share Merger
Consideration payable in respect of the shares represented thereby.
(iv) At the Effective Time, Asiana shall deliver a
certified copy of a list of its shareholders to the Exchange Agent. After the
Effective Time, there shall be no further transfer of Certificates on the
records of Asiana and, if such Certificates are presented to Asiana for
transfer, they shall be canceled against delivery of the Per Share Merger
Consideration. Parent shall not be obligated to deliver any merger consideration
to any holder of Asiana Common Stock until such holder surrenders the
Certificates as provided herein. No dividends declared will be remitted, nor any
voting rights granted, to any person entitled to receive Parent Common Stock
under this Agreement until such person surrenders the Certificate representing
the right to receive such Parent Common Stock, at which time such dividends on
whole shares of Parent Common Stock with a record date on or after the Effective
Time shall be remitted to such person, without interest and less any taxes that
may have been imposed thereon, and voting
10
rights will be restored. Neither the Exchange Agent nor any party to this
Agreement nor any affiliate thereof shall be liable to any holder of Asiana
Common Stock represented by any Certificate for any merger consideration paid to
a public official pursuant to applicable abandoned property, escheat or similar
laws. Parent and the Exchange Agent shall be entitled to rely upon the stock
transfer books of Asiana to establish the identity of those persons entitled to
receive merger consideration specified in this Agreement, which books shall be
conclusive with respect thereto. In the event of a dispute with respect to
ownership of stock represented by any Certificate, Parent or the Exchange Agent
shall be entitled to deposit any merger consideration in respect thereof in
escrow with an independent third party and thereafter be relieved with respect
to any claims thereto.
(v) If any merger consideration is to be issued to a
person other than a person in whose name a surrendered Certificate is
registered, it shall be a condition of issuance that the surrendered Certificate
shall be properly endorsed or otherwise in proper form for transfer and that the
person requesting such issuance shall pay to Parent or the Exchange Agent any
required transfer or other taxes or establish to the satisfaction of Parent or
the Exchange Agent that such tax has been paid or is not applicable.
(vi) In the event any Certificate shall have been
lost, stolen or destroyed, the owner of such lost, stolen or destroyed
Certificate shall deliver to Parent or the Exchange Agent an affidavit stating
such fact, in form reasonably satisfactory to Parent, and, at Parent's
discretion, a bond in such reasonable sum as Parent or the Exchange Agent may
direct as indemnity against any claim that may be made against Parent or Asiana
or its successor or any other party with respect to the Certificate alleged to
have been lost, stolen or destroyed. Upon such delivery, the owner shall have
the right to receive the Per Share Merger Consideration with respect to the
shares represented by the lost, stolen or destroyed Certificate.
Section 2.3. Treatment of Asiana Stock Options. As soon as practicable
following the date of this Agreement, Asiana, its Board of Directors or, if
appropriate, any committee of the Board of Directors of Asiana administering the
Asiana Stock Option Plan shall take such action, and Asiana shall obtain all
such agreements and consents, if any, as may be required to effect the
provisions of this Section 2.3 so that as of the Effective Time each outstanding
Asiana Stock Option shall be cancelled and the value thereof paid out in cash to
the holders, except as may otherwise be provided in separate agreements entered
into by any holder of options under the Asiana Stock Option Plan.
Section 2.4. Treatment of Asiana Warrants. Asiana represents that all
warrants to purchase Asiana Common Stock issued by it have expired by their
terms before the date of this Agreement, will have expired before July 1, 2003,
or will have been canceled or surrendered by their holders before Closing.
Asiana shall cause any warrants outstanding on the date of this Agreement and
not expired before the Closing to be canceled or surrendered before the Closing.
Section 2.5. The Closing. Unless the Parties shall mutually fix another
date, the Closing Date shall be on such Business Day as the Bank shall select
that is not more than five Business Days after the Final Approval Date or such
later date on which the latest to occur of the conditions set forth in Section
6.1 is satisfied. Subject to the fulfillment or waiver of those
11
conditions and the other conditions set forth in Article 6, the Closing of the
Merger shall take place at the offices of Bank's counsel in Los Angeles,
California as of the close of business on the Closing Date. Except as otherwise
provided herein, all proceedings to be taken and all documents to be executed at
the Closing shall be deemed to have been taken, delivered and executed
simultaneously as of the Effective Time, and no proceeding shall be deemed taken
nor documents deemed executed or delivered until all have been taken, delivered
and executed.
Section 2.6. Revision of Transaction. After consultation with Asiana
and with Asiana's consent, which consent shall not unreasonably be delayed,
conditioned or withheld, the Bank shall have the right to change the method of
effecting the Merger (including without limitation the provisions of this
Article 2), to the extent permitted by applicable law and to the extent it deems
such change to be desirable, provided, however, that no such change shall (a)
alter or change the amount or kind of the Aggregate Merger Consideration or Per
Share Merger Consideration, (b) diminish the benefits to be received by the
directors, officers or employees of Asiana as set forth in this Agreement or in
any agreements involving the Parties made in connection with this Agreement, (c)
materially impede or delay the consummation of the Merger, or increase the risk
that it will be consummated or diminish the likelihood that Governmental
Approvals will be received, or (d) adversely affect the tax treatment of Asiana
shareholders as a result of receiving the Per Share Merger Consideration;
provided further, that the Bank agrees that it will pay any and all additional
transaction costs associated with such change. The Bank may exercise this right
of revision (after consulting with Asiana and obtaining Asiana's consent) by
giving written notice thereof in the manner provided in Section 8.3 of this
Agreement.
Section 2.7. Intent to Qualify as Reorganization; No Representations by
the Bank. Section 2.8. The Parties intend to adopt this Agreement and the Merger
as a reorganization under Section 368(a) of the Code. However (unless required
by applicable law in connection with the Registration Statement), none of the
Bank, Parent, or any attorney, accountant or other advisor of the Bank or Parent
(including without limitation Xxxxxxxx & Xxxxxxxx LLP) has made, or makes, any
representations or warranties to Asiana, any holder of Asiana stock, options,
warrants or indebtedness or any other Person regarding the Tax treatment of the
Merger and any other transactions contemplated by this Agreement, whether the
Merger will qualify as reorganization under Section 368(a) of the Code, or any
of the Tax consequences to any Person of this Agreement, the Merger or any of
the transactions contemplated hereby or thereby, and Asiana acknowledges that it
is relying solely on its own tax advisors in connection with this Agreement and
the transactions contemplated by this Agreement. Asiana understands that it and
each other Person (and not the Bank) shall be responsible for such Person's Tax
liability that may arise as a result of the Merger or the transactions
contemplated by this Agreement.
Section 2.8. Additional Actions. If, at any time after the Effective
Time, the Bank shall consider or be advised that any further deeds, assignments
or assurances or any other acts are necessary or desirable to (a) vest, perfect
or confirm, of record or otherwise, in the Bank its right, title or interest in,
to or under any of the rights, properties or assets of Asiana or (b) otherwise
carry out the purposes of this Agreement, Asiana hereby grants to the Bank an
irrevocable power of attorney, to be effective following the Effective Time, to
execute and deliver all such deeds, assignments or assurances and to do all acts
necessary or desirable to vest,
12
perfect or confirm title and possession to such rights, properties or assets in
the Bank and otherwise carry out the purposes of this Agreement, and the
officers and directors of the Bank are authorized in the name of Asiana to take
any and all such action.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF ASIANA BANK
Asiana represents and warrants as follows, except as specifically
disclosed in the Disclosure Schedule:
Section 3.1. Organization, Standing and Power. Asiana is a banking
corporation duly organized, validly existing and in good standing under the laws
of the State of California. The deposit accounts of Asiana are insured by the
FDIC through the Bank Insurance Fund, and all premiums and assessments required
in connection therewith have been paid by Asiana as the same have become due,
and Asiana has no current or future liability (whether contingent or fixed) to
the FDIC Savings Association Insurance Fund or any predecessor thereto for "exit
fees" or otherwise, and no current or future liability (whether contingent or
fixed) to the Bank Insurance Fund for "entrance fees." Asiana has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified and in good standing to
do business in each jurisdiction in which a failure to be so qualified could
reasonably be expected to have a Material Adverse Effect on Asiana. Copies of
the Articles of Incorporation and By-Laws of Asiana, including all amendments
thereto as of the date of this Agreement, have been delivered to the Bank and
are complete and correct. The minute books of Asiana accurately reflect in all
material respects all corporate actions held or taken by Asiana Shareholders and
Asiana's Board of Directors, including all committees of such Board of
Directors.
Section 3.2. Capital Structure.
(a) Capital Stock of Asiana. As of the date hereof, the
authorized capital stock of Asiana consists of 20,000,000 shares of Asiana
Common Stock, no par value, of which 958,108 shares are issued and outstanding,
and 20,000,000 shares of preferred stock, no par value, none of which are issued
or outstanding. No shares are held in treasury by Asiana, and no shares are
reserved for future issuance. All outstanding shares of Asiana Common Stock have
been duly authorized and validly issued and are fully paid and nonassessable and
are not subject to preemptive rights. All of the issued and outstanding shares
of Asiana Common Stock have been offered, issued and sold by Asiana in
compliance with applicable federal and state securities laws and regulations and
in compliance with any preemptive right held by any Person. There are no
dividends which have accrued or been declared but are unpaid on the Asiana
Common Stock. Asiana has no contractual obligation to register any shares of
Asiana Common Stock under the Securities Act. Asiana has delivered to the Bank a
true and correct list of all holders of Asiana Common Stock as of April 21,
2003.
(b) Other Securities. As of the date hereof, (i) 300,000
shares of Asiana Common Stock are reserved for issuance under the Asiana Stock
Option Plan, of which 246,297
13
shares of Asiana Common Stock are issuable upon the exercise of options granted
thereunder, and (ii) 314,376 shares of Asiana Common Stock are or were issuable
upon the exercise of warrants, subject to prior expiration of warrants and to
Asiana's obligations under Section 2.4. Except as set forth in the immediately
preceding sentence, there are no options, warrants, calls, rights, commitments
or agreements of any character, including any stock option or equity incentive
plan, outstanding or in existence as of the date hereof to which Asiana is a
party or by which Asiana is bound obligating it to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other securities of Asiana or obligating Asiana to grant, extend or enter into
any such option, warrant, call, right, commitment or agreement. There are no
outstanding contractual obligations of Asiana to repurchase, redeem or otherwise
acquire any shares of capital stock of Asiana. There are no bonds, debentures,
notes or other instruments evidencing indebtedness of Asiana issued or
outstanding that entitle the holders thereof to vote on any matters on which
Asiana Shareholders may vote.
Section 3.3. Interests in Other Entities. Asiana has no subsidiaries
and does not otherwise hold more than 1% of the outstanding equity securities of
any corporation or other entity, is not a member of any partnership, joint
venture or similar entity or collectivity, and is not a party to any partnership
agreement or joint venture agreement, however named. Asiana does not hold any
"Acquisition, Development and Construction" loans, as that term is used under
GAAP. Asiana holds no shares of Parent Common Stock, other than any Parent
Common Stock owned in a fiduciary capacity or as a result of debts previously
contracted.
Section 3.4. Authority and Related Matters. Subject only to the
approvals of the holders of Asiana Common Stock as specified in the immediately
following sentence and the receipt of all required Governmental Approvals,
Asiana (a) has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby (including the
Merger), and (b) has duly authorized the execution and delivery of this
Agreement and the consummation of such transactions (including the Merger) by
all necessary corporate action on the part of Asiana's Board of Directors. The
only vote of the holders of any class or series of Asiana's securities necessary
to approve this Agreement or the consummation of the Merger is the affirmative
vote of the holders of a majority (two-thirds if 12 USC Section 215a is
determined to be applicable) of the outstanding shares of Asiana Common Stock
entitled to vote thereon approving the Merger. No other corporate proceedings on
the part of Asiana not heretofore taken are necessary to approve this Agreement
or to consummate the Merger. This Agreement has been duly executed and delivered
by Asiana and, subject to such approval by the Asiana Shareholders and all
required Governmental Approvals, and assuming due authorization, execution and
delivery by the Bank and Parent, constitutes the valid and binding obligation of
Asiana, enforceable in accordance with its terms subject only to laws regarding
conservatorship, receivership, bankruptcy, insolvency, reorganization,
moratorium or otherwise affecting creditors' rights generally, and to the
application of general principles of equity (whether considered in a proceeding
in law or at equity).
Section 3.5. Voting and Warrant Termination Agreement. Each Director of
Asiana has executed and delivered to the Bank, and Asiana has executed and
delivered to the Bank, a valid and binding Voting and Warrant Termination
Agreement in the form of Exhibit A, whereby each such Person has, among other
things, irrevocably agreed to vote all shares of Asiana Common
14
Stock directly or beneficially owned by such Person (including shares held as
community property) or over which such Person has voting control, in favor of
the Merger.
Section 3.6. Conflicts. The execution and delivery of this Agreement
does not, and the consummation of the Merger will not, result in any conflict
with or violation of any provision of the Articles of Incorporation or By-laws
of Asiana. Except as set forth on Disclosure Schedule Section 3.6 and assuming
that Asiana will obtain or make the consents, approvals, orders, authorizations,
registrations, declarations and filings included among the Asiana Governmental
Approvals, the execution and delivery of this Agreement does not, and the
consummation of the Merger will not result in any violation, conflict, default,
creation of a right of termination, cancellation, acceleration, or loss of a
material benefit under any Law or under any loan or credit agreement, note,
mortgage, indenture, lease, employee benefit plan or other agreement,
obligation, instrument, permit, concession, franchise or license, or any
judgment, order or decree, applicable to Asiana or its properties or assets
which violation, conflict, default, creation of a right of termination,
cancellation, acceleration, or loss of a material benefit could reasonably be
expected to have a Material Adverse Effect on Asiana.
Section 3.7. Consents. Except as disclosed on Disclosure Schedule
Section 3.7 (collectively, the "Asiana Governmental Approvals"), no consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required in connection with Asiana's execution
and delivery of this Agreement or its consummation of the Merger, as to which
the failure to obtain the same could reasonably be expected to have a Material
Adverse Effect on Asiana or materially interfere with Asiana's ability to
consummate the Merger.
Section 3.8. Financial Statements. Asiana has provided to the Bank the
Asiana Interim Financial Statements, the Asiana 2002 Financial Statements,
audited by Xxxxx-Xxxxx LLP, as well as audited financial statements for Asiana
for the years ended December 31, 2001 and December 31, 2000. The Asiana Interim
Financial Statements, the Asiana 2002 Financial Statements and the prior two
years' audited financial statements comply, in all material respects, with
applicable accounting requirements and have been prepared in accordance with
GAAP subject, in the case of the Asiana Interim Financial Statements, to
recurring audit adjustments normal in nature and amount, comply with the
applicable accounting requirements and fairly present the financial position of
Asiana (consolidated with any subsidiaries then in existence) as of the dates
thereof and the results of its operations and cash flows for the periods then
ended. The Records of Asiana have been, and are being, maintained in all
material respects in accordance with GAAP and reflect only actual transactions.
Asiana has not since its inception been required to file any report, schedule,
registration statement or proxy with the FDIC pursuant to the Exchange Act.
Section 3.9. Regulatory Filings and Agreements. Asiana has timely filed
all reports, registrations and statements, together with any amendments required
to be made with respect thereto, that it was required to file since December 31,
2001 with any Bank Regulator as to which a failure to file the same could
reasonably be expected to have a Material Adverse Effect on Asiana, including
any such report or statement required to be filed pursuant to the Laws of the
United States (including regulations of the FDIC and the Board of Governors of
the Federal
15
Reserve) or the State of California (including the California Department of
Financial Institutions), and has paid all fees and assessments due and payable
in connection therewith. Except as set forth on Disclosure Schedule Section 3.9,
and except for normal examinations conducted by a Bank Regulator in the regular
course of the business of Asiana, no Bank Regulator has initiated any proceeding
or investigation or, to the best knowledge of Asiana, has threatened to initiate
any proceeding or investigation, into the business or operations of Asiana.
Except as set forth on Disclosure Schedule Section 3.9 and with the exception of
the Consent Order, Asiana is not a party to or subject to, and has not been a
party to or subject to, any Regulatory Agreement with or from, and has not
adopted any board resolutions at the request of, any Bank Regulator that
restricts the conduct of Asiana's business or in any manner relates to its
business or financial condition, including without limitation its capital
adequacy, credit policies, loan origination practices, Bank Secrecy Act
compliance, or management. To the knowledge of Asiana, no Bank Regulator is
contemplating issuing or requesting (or considering the appropriateness of
issuing or requesting) any such Regulatory Agreement. With the exception of the
matters referenced in the Consent Order, there is no material unresolved
violation, criticism, or exception by any Bank Regulator with respect to any
report or statement relating to any examination of Asiana. Asiana has not
received written notice from either the FDIC or California Department of
Financial Institutions that it has failed to comply in any material respect with
any of its obligations under the Consent Order and is not aware of any instances
of such non-compliance.
Section 3.10. Undisclosed Liabilities. Except as and to the extent
reflected on the Asiana Interim Balance Sheet, Asiana does not have any material
liabilities, commitments or obligations of any nature, whether absolute,
accrued, contingent or otherwise, and whether due or to become due, including,
without limitation, liabilities that may become known or arise after the date
hereof and which relate to transactions entered into, or any state of facts
existing, on or before the Balance Sheet Date and which would be required under
GAAP to be shown in such balance sheet or referenced in the notes thereto, other
than (a) obligations (including guarantees and letters of credit) not required
by GAAP to be reflected, reserved against or disclosed in the Asiana Interim
Financial Statements, all of which are set forth on Disclosure Schedule Section
3.10 and none of which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on Asiana and (b) those incurred in
the ordinary course of business consistent with past practice since the Balance
Sheet Date.
Section 3.11. Loans, Classified and OLEM Assets, Reserves and Certain
Other Assets.
(a) All currently outstanding loans of, or current extensions
of credit by, Asiana (individually, a "Loan," and collectively, the "Loans")
were solicited, originated and currently exist in material compliance with all
applicable requirements of federal and state law and regulations promulgated
thereunder and applicable loan policies of Asiana, except (i) for such changes
to the circumstances of the obligor thereunder or the collateral occurring
subsequent to the origination thereof or (ii) where the failure to so comply
would not result in a Material Adverse Effect on Asiana. To Asiana's knowledge
(which shall include the actual knowledge of each loan officer responsible for a
Loan), the Loans are adequately documented and each note evidencing a Loan or
loan or credit agreement or security instrument related to the Loans constitutes
a valid, legal and binding obligation of the obligor thereunder, enforceable in
16
accordance with the terms thereof, except that enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting enforcement of creditors' rights generally and except that
enforcement thereof may be subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding of law or in equity) and
the availability of equitable remedies. To Asiana's knowledge (which shall
include the actual knowledge of each loan officer responsible for a Loan), there
are no oral modifications or amendments or additional agreements related to the
Loans that are not reflected in the Records of Asiana. No claims of defense as
to the enforcement of any Loan have been asserted against Asiana for which there
is a reasonable possibility of an adverse determination, and Asiana is aware of
no acts or omissions which would give rise to any claim or right of rescission,
set-off, counterclaim or defense for which there is a reasonable possibility of
an adverse determination to Asiana. None of the Loans are presently serviced by
third parties and there is no obligation which could result in any Loan becoming
subject to any third party servicing.
(b) As of the Balance Sheet Date, the only assets of Asiana
that were (a) Classified Assets or OLEM Assets on Asiana's Records, or (b) over
90 days delinquent in payment of principal or interest whether or not the same
are Classified Assets or OLEM Assets, are those listed on Disclosure Schedule
Section 3.11(b) hereto (which Disclosure Schedule Section identifies the asset
by loan number or other designation and sets forth the original principal
amount, the current book balance, the amount of any reserve (or portion of the
general reserve) allocated thereto, and the loan classification). The loan and
other asset classification procedures utilized by Asiana are in accordance with
RAP, and are consistently applied. Disclosure Schedule Section 3.11(b) hereto
further sets forth all loans of Asiana outstanding as of the date hereof
(whether or not they are Classified Assets, OLEM Assets or are otherwise in
default) to any director, executive officer or Principal Shareholder of Asiana,
or to Asiana's knowledge, any person, corporation or enterprise controlling,
controlled by or under common control with any of the foregoing.
(c) Asiana currently maintains, and shall continue to
maintain, an allowance for loan losses allocable to the Loans which complies in
all material respects with all applicable loan loss reserve requirements
established in accordance with GAAP and by any Governmental Authority having
jurisdiction with respect to Asiana.
Section 3.12. Investment Securities; Derivatives. Disclosure Schedule
Section 3.12 describes all of the investment securities (including mortgage
backed securities) owned by Asiana as of March 31, 2003. Since December 31,
1999, Asiana has not engaged in any transaction in or involving forwards,
futures, options on futures, swaps or other derivative instruments. To the
knowledge of Asiana, none of the counterparties to any contract or agreement
with respect to any such instrument is in default with respect to such contract
or agreement and no such contract or agreement, were it to be a loan held by
Asiana, would be a Classified Asset or OLEM Asset. The financial position of
Asiana under or with respect to each such instrument has been reflected in the
Records of Asiana in accordance with GAAP, and each such derivative security was
entered into as a hedge against financial risks then inherent in Asiana's
assets, liabilities and commitments.
17
Section 3.13. Absence of Certain Changes or Events. Since December 31,
2002, (a) Asiana has not suffered or undergone any Material Adverse Effect, and
(b) Asiana has carried on its business in the ordinary and usual course
consistent with its past practices. Except as disclosed on Disclosure Schedule
Section 3.13 or as permitted by Section 5.8(j), between December 31, 2002 and
the date hereof, Asiana has not increased the wages, salaries, compensation,
pension, or other fringe benefits or perquisites payable to any executive
officer, employee, or director, granted any severance or termination pay,
entered into any employment contract, salary continuation (or similar) contract
or any contract to make or grant any severance or termination pay, or paid any
bonus, in each case except for normal increases and payments for or to persons
other than directors or senior officers of Asiana in the ordinary course of
business consistent with past practice or except as required by applicable law.
Section 3.14. Compliance with Applicable Laws. Except as described in
the Consent Order, the business of Asiana is, and at all times been, conducted
in compliance with all Laws (including those relating to equal credit, fair
lending, fair housing and community reinvestment), except where a failure to so
comply individually or in the aggregate could not reasonably be expected to have
a Material Adverse Effect on Asiana, and (b) Asiana holds all permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities that
are material to the operation of the business of Asiana, and is in compliance
with the terms of the same except where the failure so to comply individually or
in the aggregate could not reasonably be expected to have a Material Adverse
Effect on Asiana. No investigation by any Governmental Entity with respect to
Asiana is pending or, to Asiana's knowledge, contemplated, other than (i) normal
examinations conducted by a Bank Regulator in the regular course of the business
of Asiana and (ii) investigations and examinations in connection with the
Consent Order.
Section 3.15. Litigation and Other Disputes. Except as disclosed on
Disclosure Schedule Section 3.15, (a) there is no suit, action, or proceeding
(including any cross- or counter-claim) pending or, to the knowledge of Asiana,
threatened (either in writing or verbally, formally or informally), against or
affecting Asiana or any of its assets, nor is there (except for the Consent
Order) any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against Asiana the obligations under which have
not heretofore been fully performed, in each case which, if determined adversely
to Asiana, would be reasonably likely to have a Material Adverse Effect on
Asiana; (b) Asiana has not accrued nor set aside any reserves relating to any
suit, action, or proceeding (including any cross- or counter-claim) pending or,
to the knowledge of Asiana, threatened (either in writing or verbally, formally
or informally), against or affecting Asiana or any of its assets; and (c) Asiana
is not a defendant, either directly or as defendant-in-counterclaim or
cross-claim, in any litigation in which any "lender liability" cause of action
was asserted against Asiana which, if determined adversely to Asiana, would be
reasonably likely to have a Material Adverse Effect on Asiana.
Section 3.16. Administration of Fiduciary Accounts. Asiana has properly
administered in all material respects all accounts for which it acts as a
fiduciary (including but not limited to accounts for which it serves as a
trustee, agent, custodian, personal representative, guardian, conservator or
investment advisor) in accordance with the terms of the governing documents and
applicable Law, including state and federal common law. To the knowledge of
Asiana, neither Asiana nor any of its directors, officers or employees has
committed any breach of trust with
18
respect to any such fiduciary account which has had or could reasonably be
expected to have a Material Adverse Effect on Asiana, and the accounting for
each such fiduciary account are true and correct in all material respects and
accurately reflect the assets of such fiduciary account.
Section 3.17. Taxes.
(a) All material Returns required to be filed by or on behalf
of the Group have been duly filed on a timely basis and such Returns are true,
complete and correct. All material Taxes shown to be payable on the Returns or
on subsequent assessments with respect thereto have been paid in full on a
timely basis, and, to Asiana's knowledge no other Taxes are payable by the Group
with respect to items or periods covered by such Returns (whether or not shown
on or reportable on such Returns) or with respect to any period prior to the
Closing Date. To Asiana's knowledge the Group has withheld and paid over all
Taxes required to have been withheld and paid over, and complied with all
information reporting and backup withholding requirements, including maintenance
of required records with respect thereto, in connection with amounts paid or
owing to any employee, creditor, independent contractor, or other third party.
There are no liens on any of the assets of any member of the Group with respect
to Taxes, other than liens for Taxes not yet due and payable or for Taxes that a
member of the Group is contesting in good faith through appropriate proceedings
and for which appropriate reserves have been established. The Group has timely
filed a due and proper application for extension of time to file its Returns for
2002.
(b) The amount of the Group's liability for unpaid Taxes for
all periods ending on or before December 31, 2002 does not, in the aggregate,
exceed the amount of the current liability accruals for Taxes (excluding
reserves for deferred Taxes), reflected on the Asiana 2002 Financial Statements,
and the amount of the Group's liability for unpaid Taxes for all periods ending
on or before the Closing Date shall not, in the aggregate, exceed the amount of
the current liability accruals for Taxes (excluding reserves for deferred
Taxes), as such accruals are reflected on the Asiana 2002 Financial Statements,
as adjusted for operations and transactions in the ordinary course of business
since December 31, 2002 in accordance with past custom and practice. There are
no contracts, agreements, arrangements, commitments or undertakings relating to
any prior audit of the Group, and there are no contracts, agreements,
arrangements, commitments or undertakings with the IRS or any other Governmental
Entity that have or are reasonably likely to have a material and adverse impact
on the Group's Taxes that are not reflected in the Asiana 2002 Financial
Statements.
(c) The Bank has been furnished by Asiana true and complete
copies of (i) relevant portions of income tax audit reports, statements of
deficiencies, closing or other agreements received by the Group or on behalf of
the Group relating to Taxes, and (ii) all federal and state income or franchise
tax returns for the Group for all periods ending on and after 1999. No member of
the Group does business in or derives income from any state, local, territorial
or foreign taxing jurisdiction other than those for which all Returns have been
furnished to the Bank.
(d) The Returns of the Group have never been audited by a
Governmental Entity, nor is any such audit in process, pending or threatened
(either in writing or verbally,
19
formally or informally). No deficiencies exist or have been asserted (either in
writing or verbally, formally or informally) or are expected to be asserted with
respect to Taxes of the Group, and no member of the Group has received notice
(either in writing or verbally, formally or informally) or expects to receive
notice that it has not filed a Return or paid Taxes required to be filed or paid
by it. The Group is neither a party to any action or proceeding for assessment
or collection of Taxes, nor has such event been asserted or threatened (either
in writing or verbally, formally or informally) against the Group or any of its
assets. No waiver or extension of any statute of limitations is in effect with
respect to Taxes or Returns of the Group. Each member of the Group has disclosed
on its federal income tax returns all positions taken therein that could give
rise to a substantial understatement penalty within the meaning of Code Section
6662.
(e) No member of the Group is (or has it ever been) a party to
any Tax sharing agreement or Tax indemnity agreement and has not assumed the Tax
liability of any other person under contract. No member of the Group is or has
ever been a member of an affiliated group filing a consolidated federal income
tax Return, except a group in which Asiana is the common parent, and no member
of the Group has any liability for the Taxes of any individual or entity under
Section 1.1502-6 of the Treasury Regulations (or any similar provision of state,
local or foreign law) as a transferee or successor, by contract or otherwise.
(f) The Group has not agreed to make or is required to make
any adjustment under Section 481 of the Code by reason of a change in accounting
method. The Group is not a "consenting corporation" within the meaning of
Section 341(f)(1) of the Code. The Group has not made and will not make a
consent dividend election under Section 565 of the Code. The Group has not made
an election, or is required, to treat any asset as owned by another person
pursuant to the provisions of former Section 168(f)(8) of the Code or as
"tax-exempt use property" within the meaning of Section 168 of the Code. None of
the assets of the Group directly or indirectly secures any debt the interest on
which is tax-exempt under Section 103(a) of the Code. Asiana is not nor has it
been a "United States real property holding corporation," within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code and neither the Bank or Parent is required to
withhold tax pursuant to the Merger by reason of Section 1445 of the Code. No
member of the Group has entered into any compensatory agreements with respect to
the performance of services which payment thereunder would result in a
nondeductible expense to the Group pursuant to Sections 162(m) or 280G of the
Code or an excise tax to the recipient of such payment pursuant to Section 4999
of the Code. The Group has not been the "distributing corporation" (within the
meaning of Section 355(c)(2) of the Code) with respect to a transaction
described in Section 355 of the Code within the 3-year period ending as of the
date of this Agreement. No member of the Group has participated in an
international boycott as defined in Code Section 999. No member of the Group has
a "permanent establishment" in any foreign country, as defined in any applicable
Tax treaty or convention between the United States of America and such foreign
country. No member of the Group is a party to any joint venture, partnership or
other agreement, contract or arrangement (either in writing or verbally,
formally or informally) which could be treated as a partnership for federal
income tax purposes. The Group is in compliance with the terms and conditions of
any applicable Tax exemptions, Tax agreements or Tax orders of any government to
which it may be subject or which it may have claimed, and the transactions
contemplated by this Agreement will not have any adverse effect on such
compliance. No
20
member of the Group has ever claimed to be an S corporation for federal income
tax purposes. No indebtedness of the Group is "corporate acquisition
indebtedness" within the meaning of Section 279(b) of the Code. The Group has
not disposed of any property in a transaction accounted for under the
installment method pursuant to Section 453 of the Code. All options of employees
of the Group that have been treated as incentive stock options under Section 421
of the Code meet the requirements of Section 422 of the Code. Each member of the
Group has made timely and valid tax identification of any and all hedge
transactions, including the hedged assets and/or liabilities. Each member of the
Group has made timely and valid tax identification of any securities held for
sale in its capacity as a dealer in securities as defined in Section 475 of the
Code.
(g) The Group has not received a tax opinion with respect to
any transaction other than a transaction in the ordinary course of business. The
Group is not (nor has it ever been) the direct or indirect beneficiary of a
guaranty of Tax benefits or any other arrangement that has the same economic
effect or tax opinion relating to it. The Group is not a party to an
understanding or arrangement described in Section 6111(d) or Section
6662(d)(2)(C)(iii) of the Code. The Group is not a party to a lease arrangement
involving a defeasance of rent, interest or principal. The Group has not engaged
in a "reportable transaction," within the meaning of Section 1.6011-4 of the
Treasury Regulations as in effect on January 1, 2003, regardless of whether such
transaction was in fact reported to the IRS or occurred prior to such date.
(h) The Group does not have any deferred income or gains
reportable for Tax purposes in a Post-Closing Period ending after the Closing
Date but that is attributable to a transaction occurring in, or resulting from a
change in accounting method for a Pre-Closing Period.
(i) Entering into or completing the transactions contemplated
by this Agreement shall not cause the Group to become subject to, or to become
liable for the payment of, any Tax, or cause any of the Group's assets to be
reassessed or revalued by any Governmental Entity
(j) The Group's tax basis in its assets for purposes of
determining its future amortization, depreciation and other federal income tax
deductions is accurately reflected on Asiana's Tax books and records provided to
the Bank. To its knowledge, the Group has no net operating losses or other tax
attributes presently subject to limitation under Code Sections 382, 383 or 384,
or the federal consolidated return regulations.
(k) The Group has filed all reports and has created and/or
retained all records required under Section 6038A of the Code with respect to
its ownership by and transactions with related parties. To its knowledge, each
related foreign person required to maintain records under Code Section 6038A
with respect to transactions between the Group and the related foreign person
has maintained such records. All documents that are required to be created
and/or preserved by the related foreign person with respect to transactions with
the Group are either maintained in the United States, or the Group is exempt
from the record maintenance requirements of Section 6038A with respect to such
transactions under Treasury Regulation Section 1.6038A-1. The Group is not a
party to any record maintenance agreement with the IRS
21
with respect to Code Section 6038A. Each related foreign person that has engaged
in transactions with the Group has authorized the Group to act as its limited
agent solely for purposes of Sections 7602, 7603, and 7604 of the Code with
respect to any request by the IRS to examine records or produce testimony
related to any transaction with the Group, and each such authorization remains
in full force and effect.
(l) All of Asiana's currently-outstanding financial positions
that it has ever treated as indebtedness of Asiana for federal income tax
purposes (by deducting interest or otherwise) are properly classified as
indebtedness rather than equity for such purposes.
Section 3.18. Certain Agreements. Except as disclosed on Disclosure
Schedule Section 3.18, Asiana is not party to (nor are any of its assets bound
by) any oral or written contract, lease or other agreement of any name or
nature, in effect as of the date hereof:
(a) that would be required to be filed as an exhibit to an
annual report on Form 10-K filed with the FDIC or SEC if Asiana was subject to
the periodic reporting requirements of the Exchange Act,
(b) the benefits of which (to either party) will accrue or be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of the Merger (either alone or upon the occurrence of any additional
acts or events), or the value of any of the benefits of which will be calculated
on the basis of the Merger or any portion or aspect thereof (including any
so-called retention or similar bonuses),
(c) relating to employment, salary continuation, severance,
consulting, collective bargaining or otherwise relating to the provision of
personal services or payment therefor (including data processing, software
programming and licensing contracts),
(d) which, upon the consummation of the Merger, will result in
any payment (whether of severance pay or otherwise) becoming due from Asiana or
the Bank to any officer or employee of Asiana,
(e) relating to non-competition or secrecy,
(f) that materially restricts the conduct of any line of
business by Asiana, or
(g) that was entered into in connection with the consummation
of an acquisition of the stock or one or more branches of a depository
institution pursuant to which Asiana is entitled to receive indemnification from
any Person.
Asiana is not materially in default under, conflict with,
violation of, nor has Asiana, to its knowledge, through any act or omission
created a material right of termination under, cancellation of, acceleration of
any obligation under, loss of material benefit under, or created any material
lien, pledge, security interest or other encumbrance on its assets under any
material contract, lease or other agreement described by any of the foregoing
clauses (a) through (g), and to its knowledge, no other party to any such
contract, lease or other agreement has
22
committed (by act or omission) any such material default or violation of the
same. Asiana has previously delivered to the Bank true and correct copies of all
employment, consulting and deferred compensation agreements in effect as of the
date hereof that are in writing to which Asiana is a party, and has delivered to
the Bank complete and accurate summaries of all employment, consulting and
deferred compensation agreements in effect as of the date hereof that are not in
writing to which Asiana is a party. Except as disclosed on Disclosure Schedule
Section 3.18, Asiana is not a party to, and since December 31, 1999 has not been
a party to (nor are any of its assets bound by), any oral or written contract,
lease or other agreement of any name or nature with a Person who was, as of or
within one year prior to the date of such agreement, a director, officer or
Principal Shareholder of Asiana.
Section 3.19. Employees and Employee Benefit Plans.
(a) Section 3.19 of the Disclosure Schedule sets forth a true
and complete list of all Benefit Plans in effect as of the date hereof that
Asiana maintains or to which it contributes for the benefit of its employees.
With respect to each such Benefit Plan, Asiana has delivered to the Bank an
accurate and complete copy thereof (or, to the extent any Benefit Plan has not
been reduced to writing, an accurate description thereof) and, to the extent
applicable, an accurate and complete copy of each of (i) any related trust
agreement, annuity contract or other funding instrument, (ii) the most recent
determination letter with respect to the Benefit Plan and any summary plan
description and other written communication by Asiana to the employees
concerning the extent of the benefits provided under such Benefit Plan, and
(iii) Forms 5500 and attached schedules, audited financial statements, actuarial
valuation reports and attorneys' responses to any auditor's request for
information filed or prepared since December 31, 1999.
(b) Each Benefit Plan has been established and administered in
all material respects in accordance with its terms, and in material compliance
with the applicable provisions of the Code, ERISA and other applicable Laws.
Each Benefit Plan which is intended to be qualified within the meaning of
Section 401(a), 401(k), 408, 409 or 4975(e)(7) of the Code is so qualified and
has received a favorable determination letter as to its qualification and
nothing has occurred, whether by action or failure to act, which would cause the
loss of such qualification. With respect to each Benefit Plan, no action, suit
or claim (other than ordinary and usual claims for benefits) is pending or, to
the knowledge of Asiana, threatened (either in writing or verbally, formally or
informally), and no fact or circumstance exists which could give rise to any
such action, suit or claim. No Person has engaged in any prohibited transaction,
as such term is defined under Section 4975 of the Code or Section 406 of ERISA,
or otherwise breached any fiduciary duty or failed to satisfy Section 412 of
ERISA, which would subject Asiana or the Bank to any taxes, penalties or
liabilities or obligations under Section 4975 of the Code or Part 4 or 5 of
Title I (including Sections 409 and 502(i) and (l)) of ERISA. No event has
occurred and no condition exists that would subject Asiana or the Bank to any
tax, fine or penalty imposed by the Code, ERISA or other applicable Laws. To the
knowledge of Asiana, each Benefit Plan may be amended or terminated in
accordance with its terms, to the extent such terms provide for amendment or
termination, without obligation or liability (other than (i) those obligations
and liabilities for which specific and sufficient assets have been set aside in
a trust or other funding vehicle or reserved for on the Asiana Interim Balance
Sheet, and (ii) those obligations and
23
liabilities reflected by the terms of the Benefit Plan documents). Asiana has
made all payments and contributions due to each Benefit Plan.
(c) Asiana has no Benefit Plan which is subject to Title IV of
ERISA or Section 302 of ERISA or Section 412 of the Code. No Asiana Benefit Plan
which is a pension plan as described in Section 3(1) of ERISA has been
terminated in a manner which has resulted or may result in any liability to the
Pension Benefit Guaranty Corporation or any other Person. There exists no
condition or set of circumstances which present a material risk of termination
or partial termination of any Asiana Benefit Plan which could result in any
liability on the part of Asiana or the Bank, and there is no existing or
anticipated material liability under ERISA with respect to a Benefit Plan.
Neither Asiana, nor any entity which may be or in the past may have been treated
as a single employer with Asiana under Section 414 of the Code, contributes to,
has ever contributed to or has ever had an obligation to contribute to, a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
(d) Each Asiana Benefit Plan which is intended to meet the
requirements for tax-favored treatment under Subchapter B of Chapter 1 of
Subtitle A of the Code meets such requirements in all material respects. Asiana
has received a favorable determination from the Internal Revenue Service with
respect to any trust intended to be qualified within the meaning of Section
501(c)(9) of the Code. There is no unfunded obligation under any Benefit Plan
providing benefits after termination of employment to any employee of Asiana,
and Asiana has made no other commitment to employees, former employees or their
beneficiaries under which it is or would be obligated to provide any benefit or
payment which is not adequately funded through a trust or other funding
arrangement or reserved for on the Asiana Interim Balance Sheet. Asiana has no
"accumulated post-retirement benefit obligation," as defined in FAS 106, in
respect to post-retirement health and life benefits for employees. No Benefit
Plan exists which could result in the payment to any employee of any money or
other property or right, or accelerate or provide any other right or benefit, to
any employee as a result of any transaction explicitly contemplated by this
Agreement.
(e) With respect to the Asiana Benefit Plans, individually and
in the aggregate, to the knowledge of Asiana, no event has occurred and there
exists no condition or set of circumstances in connection with which Asiana
could be subject to any liability that could reasonably be expected to have a
Material Adverse Effect on Asiana (except liability for benefits claims and
funding obligations payable in the ordinary course) under ERISA, the Code or any
other applicable Law.
(f) There are no material disputes, employee grievances, or
disciplinary actions pending or, to the knowledge of Asiana, threatened (either
in writing or verbally, formally or informally) by or between any of Asiana's
employees and Asiana. Asiana has complied in all material respects with all Laws
relating to the employment of labor and has no liability for any arrears of
wages or employment-related taxes, or penalties for failure to comply with any
such Law, or for any severance or termination payments of any type. No election
or proceeding relating to Asiana's labor relations is pending or, to Asiana's
knowledge, contemplated. To the knowledge of Asiana, Asiana has had no union
activity or any material
24
labor trouble (including any strike, work stoppage, slow-down, or similar
disturbance) of any kind, nature or description at any time.
Section 3.20. Properties. Except as disclosed on Disclosure Schedule
Section 3.20, as of the date of this Agreement Asiana does not hold title to or
a beneficial interest in any real property other than OREO. Disclosed on
Disclosure Schedule Section 3.20 are the only real properties leased by,
otherwise occupied by, or in the possession of Asiana, as of the date of this
Agreement (excluding OREO and property occupied only as lender in possession, in
each case provided that Asiana is conducting no business in such property).
Except for assets disposed of in the ordinary course of business consistent with
past practice since the Balance Sheet Date, Asiana has good and valid title to
all of the tangible personal property and assets which are used in and material
to the operation of its business and which it owns or purports to own, including
all material assets reflected as owned by Asiana on the Asiana Interim Balance
Sheet, and has good and valid title to all of the leasehold interests in all
leases of real or personal property which it leases or purports to lease (in
each case, as lessee), including all assets reflected as leased by Asiana on the
Asiana Interim Balance Sheet, in each case free and clear of any liens,
encumbrances or other imperfections of title other than such liens, encumbrances
or imperfections as (a) are set forth on Disclosure Schedule Section 3.20 or are
fully reserved against on the Asiana Interim Balance Sheet, (b) arise out of
Taxes not yet due or payable, or (c) relate to immaterial properties or assets
or otherwise could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on Asiana. Asiana enjoys peaceful and
undisturbed possession of the applicable leased asset under all leases of real
or personal property under which it is operating or to which it is a party
excepting only those properties noted on Disclosure Schedule Section 3.20 as
subleased to third parties, as to which Asiana's sublessee enjoys peaceful and
undisturbed possession. All of such leases are valid, subsisting and in full
force and effect and there are no existing defaults or events which, with the
passage of time or the giving of notice, or both, would constitute defaults by
Asiana or, to the knowledge of Asiana, by any other party thereto, except for
such defaults, if any, which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Asiana. All items of
real or personal property owned or used by Asiana and material to its business
have been properly maintained and, to Asiana's knowledge, are in good operating
order and repair.
Section 3.21. Environmental. Asiana and all real property (including
OREO) in the possession of Asiana or over which Asiana exercises control are,
and at all times while in the possession or control of Asiana each property at
any time owned, possessed or controlled by Asiana has been, in compliance with
all applicable Laws relating to pollution or protection of human health or the
environment (including Laws relating to emissions, discharges, releases or
threatened releases of Hazardous Material or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Material), except for any violations of Law
that, either individually or in the aggregate, have not had and cannot
reasonably be expected to have a Material Adverse Effect on Asiana. There has
not occurred any release of Hazardous Material on, under or affecting any real
property during the period of Asiana's ownership, possession or operation of
such property (including its participation in the management of any business
located on such property) or during any prior period except for releases that,
individually or in the aggregate, have not had and cannot reasonably be expected
to have a Material Adverse Effect on Asiana. To the knowledge of
25
Asiana, neither Asiana nor any property now or heretofore in its possession is
or has ever been a defendant in or the subject of any suit, claim, action,
proceeding, investigation or notice before any Governmental Entity or other
forum relating to an alleged violation (including by any predecessor) of any
environmental Law or any Law relating to the release or threatened release into
the environment of any Hazardous Material, whether or not occurring at or on a
site owned, leased or operated by Asiana.
Section 3.22. Intellectual Property. Asiana owns, or possesses valid
and binding licenses and other rights to use without payment (other than
payments for software licenses incurred in the ordinary course of business), all
material trademarks, trade names, servicemarks, copyrights, trade secrets and
patents used in its businesses, and Asiana has not received any challenge of the
same by any Person or any notice of alleged conflict between the same and the
rights of any other Person. Asiana has, in all material respects, performed all
of its obligations under, is not materially in default under, and has not
created any right of termination under, cancellation of, acceleration of any
obligation under, or loss of a material benefit under, any contract, agreement,
arrangement or commitment relating to any of the foregoing.
Section 3.23. Capitalization. As of the date hereof, without giving
effect to the transactions contemplated hereby or to the effect of the Consent
Order, Asiana (a) is "well capitalized", as defined in applicable Federal
regulations, and (b) meets all capital requirements, standards and ratios
required by each Bank Regulator with jurisdiction over Asiana, including without
limitation, any such higher requirement, standard or ratio as shall apply to
institutions engaging in the acquisition of insured institution deposits, assets
or branches, and no such Bank Regulator has indicated that it will condition any
of the regulatory approvals upon an increase in Asiana's capital or compliance
with any special capital requirement, standard or ratio.
Section 3.24. CRA. Asiana was rated "Satisfactory" following its most
recent Community Reinvestment Act examination by the FDIC. Asiana has not
received any notice of and Asiana has no knowledge of any planned or threatened
objection by any community group to the transactions contemplated hereby.
Section 3.25. Fairness Opinion. Asiana has received an opinion from
Xxx-Xxxx, Xxxxxx Inc., addressed to Asiana's Board of Directors, which opinion
shall not have been withdrawn prior to the Closing, to the effect that as of the
date of this Agreement the Per Share Merger Consideration is fair, from a
financial point of view, to the holders of the Asiana Common Stock.
Section 3.26. Tax Free Reorganization. As of the date hereof, Asiana
has no reason to believe that the Merger will not qualify as a reorganization
within the meaning of Section 368 of the Code.
Section 3.27. Brokers. Asiana has not employed any broker, finder or
similar Person in connection with the Merger, and has not incurred and will not
incur any broker's, finder's or similar fees, commissions or expenses in
connection with the Merger or the transactions contemplated under this
Agreement.
Section 3.28. Hearing Notice, Information Statement and Registration
Statement.
26
(a) The information relating to Asiana supplied by Asiana to
Parent for inclusion in (i) the Hearing Notice, (ii) the Permit Application and
(iii) the Information Statement (each term as defined below) will not, at the
time the such documents are mailed to the Commissioner and to shareholders of
Asiana and at all times subsequent thereto (through and including the Effective
Date), contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) The information relating to Asiana supplied by Asiana to
Parent for inclusion in the Registration Statement (as defined below) shall not,
at the time the Registration Statement (including any amendments or supplements
thereto) is declared effective by the SEC and at all times subsequent thereto,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(c) The information relating to Asiana included in any proxy
statement or information statement (other than those documents referred to in
paragraphs (a) or (b) above) to be sent to shareholders of Asiana in connection
with a meeting of Asiana's shareholders (if any) to consider the Merger (the
"Asiana Shareholders Meeting") (such proxy statement or information statement,
as amended or supplemented, is referred to herein as the "Proxy Statement")
shall not, on the date the Proxy Statement is first mailed to Asiana
shareholders, at the time of the Asiana Shareholders Meeting and at the
Effective Time, contain any statement which, at such time, is false or
misleading with respect to any material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they are made, not false or misleading; or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Asiana
Shareholders Meeting which has become false or misleading.
(d) If, at any time prior to the Effective Time, any event or
information should be discovered by Asiana which should be set forth in an
amendment to the Hearing Notice, Permit Application, Information Statement or
Proxy Statement, Asiana shall promptly inform Parent. Notwithstanding the
foregoing, Asiana makes no representation, warranty or covenant with respect to
any information relating to Parent which is contained in any of the foregoing
referenced documents.
Section 3.29. Disclosure of All Material Matters. No statement of fact
set forth in (a) this Agreement (including all information in the Disclosure
Schedules and Exhibits hereto), (b) Asiana's Reports of Condition and Reports of
Income previously filed with the FDIC or filed with the FDIC between the date
hereof and the Closing Date (when the same are filed), or (c) Asiana's Monthly
Financial Statements (when the same are delivered), including in each case the
financial statements included therein and other exhibits thereto, is or will be
false or misleading in any material respect; nor does or will this Agreement
(including all information in the Disclosure Schedules and Exhibits hereto,
taken as a whole) or the above-referenced items omit to state any material fact
necessary in order to make the statements made or information
27
disclosed, in the light of the circumstances under which they were made or
disclosed, not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE BANK AND PARENT
Each of the Bank and Parent represents and warrants as follows, except
as specifically disclosed in the Disclosure Schedule:
Section 4.1. Organization, Standing and Power.
(a) The Bank is a national banking association duly organized,
validly existing and in good standing under the laws of the United States. The
Bank has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, and is duly
qualified and in good standing to do business in each jurisdiction in which a
failure to be so qualified could reasonably be expected to have a Material
Adverse Effect on the Bank. Copies of the Articles of Association and By-Laws of
the Bank, including all amendments thereto as of the date of this Agreement,
have been delivered to Asiana and are complete and correct. The minute books of
the Bank accurately reflect in all material respects all corporate actions held
or taken by the Bank's shareholders and Board of Directors, including all
committees of such Board of Directors.
(b) Parent is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Parent has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which a failure to be so
qualified could reasonably be expected to have a Material Adverse Effect on
Parent. Complete and correct copies of the Certificate of Incorporation and
By-Laws of Parent, including all amendments thereto as of the date of this
Agreement, have been made available publicly in Parent's periodic filings with
the SEC pursuant to the Exchange Act. The minute books of Parent accurately
reflect in all material respects all corporate actions held or taken by Parent's
stockholders and Board of Directors, including all committees of such Board of
Directors.
(c) Merger Sub will be, upon its formation and at Closing, a
corporation duly organized, validly existing and in good standing under the laws
of the State of California. Copies of the Articles of Incorporation and By-Laws
of Merger Sub will be delivered to Asiana prior to Closing and will be complete
and correct.
Section 4.2. Authority and Related Matters.
(a) Each of the Bank and Parent has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby (including the Merger), and has duly authorized
the execution and delivery of this Agreement and the consummation of such
transactions (including the Merger) by all necessary corporate action on the
part of their respective Boards of Directors. No vote of the holders of any
class or
28
series of Parent's securities is necessary to approve this Agreement or the
consummation of the Merger. The vote of Parent, as sole shareholder of the Bank,
in favor of the Merger will be obtained prior to Closing. This Agreement has
been duly executed and delivered by the Bank and Parent and (assuming due
authorization, execution and delivery by Asiana) constitutes the valid and
binding obligation of each of the Bank and Parent, enforceable in accordance
with its terms, subject only to laws regarding receivership, conservatorship,
bankruptcy, insolvency, reorganization, moratorium or otherwise affecting
creditors' rights generally, and to the application of general principles of
equity (whether considered in a proceeding in law or at equity).
(b) Merger Sub will have at Closing all requisite corporate
power and authority to consummate the transactions contemplated hereby
(including the Merger) and will have duly authorized the consummation of such
transactions (including the Merger) by all necessary corporate action on the
part of Merger Sub's Board of Directors. The only vote of the holders of any
class or series of Merger Sub's securities necessary to approve this Agreement
or the consummation of the Merger is the affirmative vote of the holders of a
majority of the outstanding shares of Merger Sub Common Stock entitled to vote
thereon approving the Merger, all of which will be held by the Bank at the
Closing and voted in favor of the Merger by written consent.
Section 4.3. Conflicts. The execution and delivery of this Agreement
does not, and the consummation of the Merger will not, result in any conflict
with or violation of any provision of the Articles of Association or By-laws of
the Bank or the Certificate of Incorporation or By-laws of Parent. Subject only
to obtaining or making the consents, approvals, orders, authorizations,
registrations, declarations and filings included among the Bank Governmental
Approvals, the execution and delivery of this Agreement does not, and the
consummation of the Merger will not, result in any violation, conflict, default,
creation of a right of termination, cancellation, acceleration, or loss of a
material benefit under any Law or under any loan or credit agreement, note,
mortgage, indenture, lease, employee benefit plan or other agreement,
obligation, instrument, permit, concession, franchise or license, or any
judgment, order or decree, applicable to the Bank or Parent, or any of their
respective properties or assets, which violation, conflict, default, creation of
a right of termination, cancellation, acceleration, or loss of a material
benefit could reasonably be expected to have a Material Adverse Effect on the
Bank.
Section 4.4. Consents. Except as disclosed on Disclosure Schedule
Section 4.4 (collectively, the "Bank Governmental Approvals"), no consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required in connection with the execution and
delivery of this Agreement by either the Bank or Parent, or the consummation of
the Merger by either of them, as to which the failure to obtain the same could
reasonably be expected to have a Material Adverse Effect on the Bank or Parent
or materially interfere with either of their ability to consummate the Merger.
29
Section 4.5. SEC Documents; Parent Financial Statements.
(a) Parent has filed all reports, schedules, registration
statements and proxy statements required to be filed by it with the SEC since
December 31, 2001 pursuant to the Exchange Act. As of their respective filing
dates, all SEC Documents filed by Parent since December 31, 2001 and all SEC
Documents filed by Parent after the date hereof but before the Closing complied
or will comply in all material respects with the requirements of the Exchange
Act and the rules and regulations of the SEC thereunder, as the case may be, and
none of the SEC Documents contained or will contain any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
in which they were made, not misleading, except to the extent such SEC Documents
are corrected, updated or superseded by a document subsequently filed with the
SEC.
(b) The financial statements of Parent included in its Report
on Form 10-K for the year ended December 31, 2002, including the notes thereto
(the "Parent Financial Statements"), comply in all material respects with
applicable accounting requirements and have been prepared in accordance with
GAAP (except as may be indicated in the notes thereto) and fairly present the
financial position of Parent (consolidated with its subsidiaries then in
existence) as of the dates indicated therein and the results of its operations
and cash flows for the periods then ended. The Records of Parent have been, and
are being, maintained in all material respects in accordance with GAAP and
reflect only actual transactions.
Section 4.6. Regulatory Filings and Agreements. Each of Parent and the
Bank has timely filed all reports, registrations and statements, together with
any amendments required to be made with respect thereto, that it was required to
file since December 31, 2001 with any Bank Regulator as to which a failure to
file the same could reasonably be expected to have a Material Adverse Effect on
Parent or Bank, including any such report or statement required to be filed
pursuant to the Laws of the United States (including regulations of the OCC and
the Federal Reserve Board), and has paid all fees and assessments due and
payable in connection therewith. Except for that certain "Stipulation and
Consent to the Issuance of a Consent Order dated as of February 20, 2002"
entered into between the Bank and the OCC, and except for normal examinations
conducted by a Bank Regulator in the regular course of the business of Parent
and Bank, no Bank Regulator has initiated any proceeding or investigation or, to
the best knowledge of Parent or Bank, has threatened to initiate any proceeding
or investigation into the business or operations of Parent or Bank. Except for
such "Stipulation and Consent", neither Parent or the Bank is a party to or
subject to, and has not been a party to or subject to, any Regulatory Agreement
with or from, and has not adopted any board resolutions at the request of, any
Bank Regulator that restricts the conduct of either of their businesses or in
any manner relates to either of their business or financial condition, including
without limitation capital adequacy, credit policies, loan origination
practices, Bank Secrecy Act compliance, or management. To the knowledge of
Parent or Bank, no Bank Regulator is contemplating issuing or requesting (or
considering the appropriateness of issuing or requesting) any such Regulatory
Agreement. There is no material unresolved violation, criticism, or exception by
any Bank Regulator with respect to any report or statement relating to any
examination of Parent or the Bank.
30
Section 4.7. Absence of Certain Changes or Events. Since December 31,
2002 (a) there has been no material adverse change in the business, property,
assets (including loan and servicing portfolios), liabilities (whether absolute,
contingent or otherwise), operations, liquidity, income or condition (financial
or otherwise) of Parent or Bank (other than as a result of changes in banking
laws or regulations of general applicability or interpretation thereof), and (b)
each of Parent and the Bank has carried on its business in the ordinary and
usual course consistent with its past practices.
Section 4.8. Hearing Notice and Information Statement; Registration
Statement.
(a) The information relating to Parent or Bank included in (i)
the Hearing Notice, (ii) the Permit Application and (iii) the Information
Statement will not, at the time the Hearing Notice is mailed to shareholders of
Asiana, at the time the Information Statement is mailed to shareholders of
Asiana and at all times subsequent thereto (through and including the Effective
Date), contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) The information relating to Parent or Bank included in the
Registration Statement will not, at the time the Registration Statement
(including any amendments or supplements thereto) is declared effective by the
SEC and at all times subsequent thereto, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) The information relating to Parent or the Bank supplied by
either of them to Asiana for inclusion in the Proxy Statement will not, on the
date the Proxy Statement is first mailed to Asiana shareholders, at the time of
the Asiana Shareholders Meeting and at the Effective Time, contain any statement
which, at such time, is false or misleading with respect to any material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they are made, not false or
misleading.
(d) Notwithstanding the foregoing, neither Parent or Bank
makes any representation, warranty or covenant with respect to any information
relating to Asiana which is contained in any of the foregoing referenced
documents.
Section 4.9. Tax Free Reorganization. As of the date hereof, Parent has
no reason to believe that the Merger will not qualify as a reorganization within
the meaning of Section 368 of the Code.
ARTICLE 5
ADDITIONAL AGREEMENTS
Section 5.1. Discussions with Third Parties.
(a) Asiana (a) shall not, and shall instruct and cause each of
its
31
Representatives not to, solicit or encourage, directly or indirectly, inquiries
or proposals with respect to any Strategic Transaction Proposal, and, (b) except
as expressly permitted by Section 5.1(b), shall not, and shall instruct and
cause each of its Representatives not to, furnish any non-public information
relating to or participate in any negotiations, discussions or other activities
concerning, any Strategic Transaction with any Person other than the Bank.
Asiana shall notify the Bank promptly (and in any event within 24 hours) after
any Strategic Transaction Proposal is received by, or any negotiations or
discussions regarding a Strategic Transaction Proposal are sought to be
initiated with, directly or indirectly, Asiana or any of its Representatives,
and shall disclose to the Bank the identity of the third party making or seeking
to make such Strategic Transaction Proposal, the terms and conditions thereof
and such other information as the Bank reasonably may request; provided,
however, that if Asiana receives a Strategic Transaction Proposal and the
foregoing disclosure of such Strategic Transaction Proposal to the Bank would
violate a confidentiality agreement by which Asiana is bound, Asiana shall make
the foregoing disclosure only to the maximum extent permissible under such
confidentiality agreement. Asiana represents and warrants to the Bank that
Asiana is not subject to any such confidentiality agreement.
(b) Notwithstanding Section 5.1(a), following receipt of a
Qualifying Strategic Transaction Proposal, neither Asiana nor any of its
Representatives shall be prohibited from (a) engaging in discussions or
negotiations with a third party which has made a proposal that satisfies the
requirements of a Qualifying Strategic Transaction Proposal and thereafter
providing to such third party information previously provided or made available
to the Bank, provided the third party shall have entered into a confidentiality
agreement substantially similar to the confidentiality provisions of Section
5.3(b) hereof, (b) making disclosure of the Qualifying Strategic Transaction
Proposal to its shareholders, or (c) subject to the terms of Article 7 of this
Agreement, terminating this Agreement. A "Qualifying Strategic Transaction
Proposal" shall mean a bona fide written Strategic Transaction Proposal with
respect to which the Board of Directors shall have determined, after
consultation with Asiana's counsel, that the action by Asiana contemplated under
either clause (a), (b) or (c), as applicable, of the immediately preceding
sentence is required under the fiduciary duties owed by the Board of Directors
to the Asiana Shareholders, which determination has been made acting in good
faith and on the basis of a written opinion from a financial advisor retained by
Asiana to the effect that the financial terms of such Strategic Transaction
Proposal are, from such shareholders' perspective, financially superior to the
Per Share Merger Consideration.
(c) In the event that Asiana receives a Qualifying Strategic
Transaction Proposal, it shall, within ten (10) Business Days of its receipt
thereof, give notice to the Bank either (i) reaffirming Asiana's intent to
proceed under this Agreement and to consummate the Merger, or (ii) terminating
this Agreement pursuant to Section 7. If Asiana does not, within such ten (10)
Business Day-period, either expressly reaffirm its intent to proceed under this
Agreement or terminate this Agreement pursuant to Section 7, the Bank may at any
time within thirty (30) days thereafter terminate this Agreement pursuant to
Section 7.
32
Section 5.2. Shareholder Approval by Asiana.
(a) Because of the two-step structure involved in the Interim
Merger and Merger, Asiana and Parent have not conclusively determined whether 12
USC Section 215a, which applies to the merger of a state bank with and into a
national bank, applies to the approval by Asiana and its shareholders of the
Interim Merger of Merger Sub with and into Asiana. Asiana and Parent will
cooperate in communicating with the OCC to determine whether the requirements of
12 USC Section 215a (including mailing requirements, publication requirement,
and procedure for dissenters' rights of appraisal) apply to the Interim Merger
or Merger.
(b) Parent and Asiana shall jointly prepare the Proxy
Statement and seek the approval of any governmental authority with jurisdiction
over the Proxy Statement, including to the extent applicable the Commissioner in
connection with the Hearing, the California Department of Financial Institutions
and the SEC in connection with the Registration Statement. Following receipt of
required approvals from the Commissioner and the California Department of
Financial Institutions or an order of the SEC declaring the Registration
Statement effective, and subject to any conditions of those approvals, Asiana
shall promptly call the Asiana Shareholders Meeting for the purpose of approving
this Agreement and the principal terms of the transactions that are the subject
of this Agreement.
(c) Asiana will provide notice of the Asiana Shareholders
Meeting and the Proxy Statement to its shareholders as required by the
California Corporations Code, the California Financial Code and 12 USC Section
215a (which requires mailing by certified or registered mail), in each case as
Asiana and Parent jointly determine to be applicable. Asiana will publish notice
of the Asiana Shareholders Meeting as required by 12 USC Section 215a as Asiana
and Parent jointly determine to be applicable.
(d) Following receipt of shareholder approval, Asiana and
Parent shall provide to any shareholders who may be entitled to exercise
dissenters' right of appraisal such notices if any to which they are entitled
under laws jointly determined by Asiana and Parent to be applicable.
Section 5.3. Access and Confidentiality.
(a) Access. Asiana shall make available to the Bank and Parent
all information regarding itself that each of them reasonably may request, and
shall authorize all commercially reasonable visits to its premises with such
staff, consultants and experts as the Bank reasonably may request. Without
limiting the generality of the foregoing, Asiana shall afford the Bank and
Parent, and their accountants, counsel and other representatives, upon
reasonable notice and subject to the confidentiality provisions below,
reasonable access during normal business hours during the period prior to the
Effective Time to (i) all of Asiana's and its subsidiaries' properties, books,
contracts, commitments and records, and (ii) all other information concerning
the business, properties and personnel of Asiana and its subsidiaries as the
Bank or Parent may reasonably request. Asiana shall provide to the Bank and its
accountants, counsel and other representatives copies of internal financial
statements promptly upon request. The Bank agrees to coordinate closely all of
the foregoing activities with Asiana's
33
President or Chief Financial Officer and to conduct any such inquiries with
appropriate discretion and sensitivity to Asiana's relationships with its
employees, customers and suppliers.
(b) Current Information. During the period from the date of
this Agreement to the Closing Date, Asiana will cause one or more of its
designated representatives to confer on a regular and frequent basis (not less
than bi-weekly) with representatives of the Bank and to report the general
status of its ongoing operations. Asiana will promptly notify the Bank of any
material change in the normal course of its business or in the operation of its
properties and of any governmental complaint, investigation or hearing (or
communications indicating that the same may be contemplated), or the institution
or the threat of significant litigation involving it, and will keep the Bank
fully informed of such events. Asiana will keep the Bank fully informed of the
status of, and the action proposed to be taken with respect to, Classified
Assets that, individually or in combination with one or more other loans to the
same borrower thereunder, have an aggregate carry value of $50,000 or more.
Asiana will provide to the Bank copies of the minutes (or consents in lieu of
meeting) of its loan committee, its Board of Directors and all committees
thereof promptly following each such meeting; provided, however, that Asiana may
omit therefrom any portion of such minutes that it determines, with the
concurrence of its counsel, relates to (a) Asiana's compliance or non-compliance
with the terms of this Agreement, or (b) any Strategic Transaction or Strategic
Transaction Proposal other than the Merger.
(c) Tax Returns. Asiana shall provide Bank and its
accountants, counsel and other representatives reasonable access, during normal
business hours during the period prior to the Effective Time, to all of Asiana's
and its Subsidiaries' Tax Returns and other records and workpapers relating to
Taxes and shall provide the following information to Bank and its
representatives promptly upon any request therefor: (i) a list of the types of
Tax Returns being filed by Asiana and each of its Subsidiaries in each taxing
jurisdiction, including the year of the commencement of the filing of each such
type of Tax Return and all closed years with respect to each such type of Tax
Return filed in each jurisdiction, (ii) a list of all material Tax elections
filed in each jurisdiction by Asiana and each of its Subsidiaries, (iii) a
schedule of any deferred intercompany gain with respect to transactions to which
Asiana or any of its Subsidiaries has been a party, and (iv) receipts for any
Taxes paid to foreign Tax Authorities.
(d) No Effect on Representations or Warranties. No information
or knowledge obtained by the Bank or Parent in any investigation pursuant to
this Section 5.3 shall affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties to
consummate the Merger.
(e) Mutual Confidentiality. Each Party acknowledges that
certain of the information made available to it pursuant to this Section 5.3 and
certain other information made available to it in connection with the Merger
(including during due diligence investigation of the other Parties) may be
confidential, proprietary or otherwise nonpublic, and each Party agrees, for
itself and for each of its Representatives, and subject to the other terms of
this Agreement, that it (i) shall hold in confidence all such confidential
information received by it (the "Confidential Information"), (ii) shall disclose
such Confidential Information only to those of its Representatives having a need
to know the same for purposes of evaluating, negotiating or implementing the
Merger, and (iii) shall inform each Representative to whom Confidential
34
Information is disclosed that such information is confidential and direct such
Representative not to disclose the same. Each Party shall remain responsible for
any disclosure of Confidential Information by any of its Representatives. Each
Party further agrees that, upon the request of another Party given following any
termination of this Agreement, it and each of its Representatives either shall
return to the requesting Party all Confidential Information received by it and
its Representatives (including all compilations, analyses or other documents
prepared by it that contain Confidential Information) or shall certify that the
same has been destroyed. As used herein, Confidential Information shall not
include (i) information that is or becomes generally available to the public
other than as a result of a breach of this Agreement, (ii) information that a
Party demonstrates was known to it on a non-confidential basis prior to
receiving such information from another Party, (iii) information that a Party
develops independently without relying on Confidential Information, and (iv)
information that becomes available to a Party on a non-confidential basis from
another source if the source was not known to or not reasonably believed by such
Party to be subject to any prohibition against disclosing such information.
(f) Requests for Confidential Information. In the event that
any Party or any of its Representatives (each, a "Receiving Party") is requested
pursuant to, or required by, applicable law or regulation or by legal process to
disclose any Confidential Information concerning another Party (the "Disclosing
Party"), the Receiving Party shall provide the Disclosing Party with prompt
notice of such request or requirement in order to enable the Disclosing Party
(i) to seek an appropriate protective order or other remedy, (ii) to consult
with the Receiving Party with respect to steps the Disclosing Party may take to
resist or narrow the scope of such request or legal process or (iii) to waive
compliance, in whole or in part, with the terms of Section 5.3(e). In the event
that such protective order or other remedy is not obtained, or the Disclosing
Party waives compliance, in whole or in part, with the terms of Section 5.3(e),
the Receiving Party or its Representative shall use commercially reasonable
efforts to disclose only that portion of the Confidential Information which is
legally required to be disclosed and to ensure that all Confidential Information
that is so disclosed will be accorded confidential treatment to the extent it is
available. In the event that the Receiving Party or its Representatives shall
have complied fully with the provisions of this paragraph, such disclosure may
be made by the Receiving Party or its Representatives without any liability
hereunder.
(g) Certain Exceptions. Notwithstanding anything to the
contrary set forth herein or in any other written or oral understanding or
agreement to which the Parties are bound, the Parties acknowledge and agree that
(i) any obligations of confidentiality contained herein and therein do not apply
and have not applied from the commencement of discussions between the Parties to
the tax treatment and tax structure of the Merger (and any related transactions
or arrangements), and (ii) each Party (and each of its employees,
representatives, or other agents) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the Merger and
all materials of any kind (including opinions or other tax analyses) that are
provided to such Party relating to such tax treatment and tax structure, all
within the meaning of Treasury Regulations Section 1.6011-4; provided, however,
that each Party recognizes that the privilege each has to maintain, in its sole
discretion, the confidentiality of a communication relating to the Merger,
including a confidential communication with its attorney or a confidential
communication with a federally authorized tax practitioner under Section 7525
35
of the Code, is not intended to be affected by the foregoing. The provisions of
this Section 5.3(f) shall survive the Closing, or in the event that the Closing
does not occur, the termination of this Agreement.
Section 5.4. Prosecution of Regulatory Filings; Cooperation. The
Parties shall cooperate with each other and use all commercially reasonable
efforts to prepare and file promptly all necessary documentation, to effect all
applications, notices, petitions and filings, and to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to consummate
the Merger. The Parties agree that they will consult with each other with
respect to the obtaining of all permits, consents, approvals and authorizations
of all third parties and Governmental Entities necessary or advisable to
consummate the Merger and each Party will keep the other apprised of the status
of matters relating to completion of the Merger. In the event that the
appearance of any officers, directors or employees, or counsel, of any Party is
requested at any hearing before a Governmental Entity, the party whose
representative is so requested to appear shall make commercially reasonable
efforts to arrange for those appearances. Each Party shall, upon request,
furnish the other Party with all information concerning itself as may be
reasonably necessary or advisable in connection with any filing or application
made by or on behalf of such Party to any Governmental Entity in connection with
the Merger. Each Party shall promptly advise the other Party upon receiving any
communication from any Governmental Entity whose consent or approval is required
for consummation of the Merger which causes such Party to believe that there is
a reasonable likelihood that any required Governmental Approval will not be
obtained or that the receipt of any such Governmental Approval will be
materially delayed. Asiana will cooperate with the Bank in identifying material
contracts of Asiana that are scheduled for renewal between the date of this
Agreement and the Effective Time to provide appropriate notice of non-renewal if
the Bank informs Asiana that it does not intend to continue the contractual
relationship following the Effective Time; provided, however, such notice of
non-renewal shall not be given if, in the reasonable judgment of Asiana, the
notice would impair the ability of Asiana to conduct its business in the event
that this Agreement is terminated. Subject to the terms and conditions herein
provided, each of the Parties hereto agrees to use all reasonable efforts to, as
promptly as practicable, take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement or to vest the Bank, through Merger Sub, with
full title to all properties, assets, rights, approvals, immunities and
franchises of Asiana. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement or
to vest the Bank with full title to all properties, assets, rights, approvals,
immunities and franchises of Asiana, the proper officers and directors of each
party to this Agreement shall take all such necessary action.
Section 5.5. Advice of Changes. Each Party shall promptly advise the
other Party of any change or event having a Material Adverse Effect on it or
which it believes would or may be reasonably likely to cause or constitute a
material breach of any of its representations, warranties or covenants contained
herein or to preclude the satisfaction of one or more of the conditions set
forth in Article 6. From time to time prior to the Closing Date, each Party will
promptly supplement or amend the Disclosure Schedules delivered by it in
connection with the execution of this Agreement to reflect any matter which, if
existing, occurring or known at the date of this
36
Agreement, would have been required to be set forth or described in such
Disclosure Schedules, or which is necessary to correct any information in such
Disclosure Schedules which has been rendered inaccurate thereby; provided,
however, that no such supplement or amendment to the Disclosure Schedules shall
have any effect for the purpose of determining the accuracy of any
representation or warranty when made, for determining satisfaction of the
conditions set forth in Article 6, or for determining the compliance by any
Party with any other provision of this Agreement.
Section 5.6. Interim and Annual Financial Statements. As soon as
reasonably available, but in no event more than 45 days after the end of each
fiscal quarter ending on or after March 31, 2003 and prior to the Closing Date
(excepting the quarter ending December 31, 2003, if applicable), Asiana will
deliver to the Bank its quarterly unaudited balance sheet, income statement and
cash flow statement, prepared in accordance with GAAP. As soon as reasonably
available, but in no event more than 90 days after the end of each fiscal year
ending after the date of execution of this Agreement and prior to the Closing
Date, provided that the Closing has not yet occurred and the Agreement has not
theretofore been terminated, Asiana will deliver to the Bank its audited balance
sheet, income statement and cash flow statement, prepared in accordance with
GAAP. Following the date of execution of this Agreement, Asiana will deliver to
the Bank monthly financial statements (the "Monthly Financial Statements")
prepared in accordance with GAAP (excepting only by the absence of footnotes and
other presentation items and subject to normal year-end adjustments) and
otherwise in the form delivered to the members of Asiana's Board of Directors,
no later than the time at which such financial statements are delivered to such
Directors but in no event later than the twenty-first calendar day of the month
immediately following the month to which such financial statements relate.
Section 5.7. Conduct of Business. Asiana shall (a) conduct its business
in the usual, regular and ordinary course of business consistent with the past
practice (except as required by applicable Law or as required by this
Agreement), (b) use all commercially reasonable efforts to maintain and preserve
intact its business organization, employees and advantageous business
relationships and retain the services of its officers and key employees
(including by causing its current insurance policies not to be cancelled or
terminated or any of the coverage thereunder to lapse, unless simultaneously
with such event replacement policies providing substantially similar coverage
for substantially similar (or lesser) premiums are in full force and effect),
(c) conduct relations with its employees only in the ordinary course of business
and consistent with past practice (provided that Asiana may hire a new employee
only with the Bank's consent), and (d) take no action which would adversely
affect or delay the ability of Asiana to obtain any necessary approvals of any
Governmental Entity required for the Merger or for the transactions contemplated
in connection therewith, or to perform its covenants and agreements under this
Agreement. Through the Effective Time, Asiana will maintain the Records in the
same manner and with the same care that the Records have been maintained prior
to the execution of this Agreement. The Bank may, at its own expense, make such
copies of and excerpts from the Records as it may deem desirable. All Records,
whether held by the Bank or Asiana, shall be maintained for such periods as are
required by law, unless the parties shall, applicable law permitting, agree in
writing to a different period.
37
Section 5.8. Certain Operating Covenants. Without the Bank's prior
written consent, except as required to comply with other terms of this
Agreement, Asiana shall not:
(a) declare or make any payment or distribution with respect
to its capital stock or other securities, whether by way of payment of interest
or principal, redemption, dividend or otherwise;
(b) (i) create, authorize, issue, sell or deliver any of its
capital stock, bonds or other of its securities (whether authorized and unissued
or held in treasury) or any instrument convertible into any of them; (ii) grant
or otherwise issue any options, warrants or other rights with respect thereto;
(iii) amend the terms of any rights with regard to the Asiana securities; or
(iv) split up, combine or reclassify any of its outstanding stock;
(c) acquire, by merging or consolidating with, by purchasing
an equity interest in or a portion of the assets of, or by any other manner, any
business, including any corporation, partnership, association or other business
organization or division thereof;
(d) (i) create, renew, amend or terminate, or give notice of a
proposed renewal, amendment or termination of, any material contract, agreement
or lease for goods, services or office space to which the applicable Party is a
party or by which the applicable Party or any of its properties is bound,
excepting only contracts, agreements and leases under which the aggregate annual
payments by either party do not exceed $25,000, (ii) make any single capital
expenditure exceeding $25,000 or any capital expenditures exceeding $50,000 in
the aggregate, or (iii) relocate or terminate, or file any application to
relocate or terminate, the operations of any of its banking offices;
(e) enter into any new line of business;
(f) change its methods of accounting in effect at December 31,
2002, except as required by changes in GAAP or RAP as concurred with by the
applicable Party's independent auditors;
(g) commit any act or omission which constitutes a Violation
of any Law, Regulatory Agreement or any material contract or license to which
the applicable Party is a party or by which it or any of its properties is bound
which Violation, individually or in the aggregate, has or reasonably could be
expected to have a Material Adverse Effect on such Party;
(h) make any equity investment in any real estate or real
estate development project, other than in connection with foreclosures,
settlements in lieu of foreclosure or troubled loan or debt restructurings in
the ordinary course of business consistent with prudent banking practices;
(i) sell, lease, assign, transfer or otherwise dispose of any
property or asset, except for (i) investment portfolio transactions in the
ordinary course of business and substantially consistent with past practice; and
(ii) sales of assets having a gross book value not in excess of $50,000
individually or $100,000 in the aggregate;
38
(j) (i) enter into any agreement with any labor union or
association representing any employee, (ii) institute, amend or terminate any
Benefit Plan, (iii) pay any pension or retirement allowance to any Person not
required by an existing plan or agreement, (iv) increase in any manner the
compensation or fringe benefits of, or pay any bonus to, any officer or employee
other than customary annual (or less frequent) increases in the wages or
salaries of non-officer employees consistent with past practice or required of
any written employment agreement previously furnished to Bank, which increases
on an annualized basis do not increase the salary or wage of any individual
employee by more than 5% and in the aggregate do not increase personnel costs
for all non-officer employees by more than 2% over the levels in effect as of
December 31, 2002, (v) increase any other direct or indirect compensation or
employee benefit for or to any of its officers, directors or employees, or (vi)
purchase, enter into a new lease for, or extend or renew any lease for, any
automobile for any employee of Asiana;
(k) except for loans and commitments for loans that have been
duly approved prior to the date hereof, make, amend or compromise any loan or
advance (whether in cash or other property) to any officer, to any director, or
to any holder of record or beneficial owner of 3% or more of the Asiana Common
Stock, except advances made to employees in the usual, regular and ordinary
course of business consistent with the past practice;
(l) (i) make, amend or renew, or enter into any commitment to
make, amend or renew, any loan if, as a result of the disbursement of the
proceeds of such loan, the total Borrower Group Obligations (including accrued
and unpaid interest) of the borrower to the applicable Party would exceed
$100,000 with respect to unsecured loans, $500,000 with respect to loans secured
by real estate, and $100,000 with respect to loans secured by property other
than real estate, except that if the Bank does not grant or refuse its consent
or reasonably request additional information regarding such proposed loan within
five Business Days of the Bank's receipt of Asiana's request for consent, then
such the Bank shall be deemed to have granted its consent; or (ii) amend or
renew, or enter into any commitment to amend or renew, any Criticized Asset with
an unpaid balance (including accrued and unpaid interest) in excess of $250,000;
(m) incur any indebtedness for borrowed money, or assume,
guarantee, endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity, in each case
except in the usual, regular and ordinary course of business consistent with the
past practice, it being understood and agreed that the creation of deposit
liabilities, purchases of federal funds, sales of certificates of deposit and
entering into repurchase agreements shall be deemed to be in the ordinary course
of business so long as the maturity of such indebtedness does not exceed (i) 24
months in the case of retail certificates of deposit in amounts of $100,000 or
less, and (ii) 12 months in the case of all other such indebtedness;
(n) restructure or materially change its investment securities
portfolio through purchases, sales or otherwise, or the manner in which the
portfolio is classified or reported, it being understood and agreed that
investment portfolio transactions in the ordinary course of business and
substantially consistent with past practice shall be deemed to constitute a
material
39
change in a Party's investment portfolio only if the number and/or nature of
such transactions causes a material change in the makeup of the portfolio taken
as a whole;
(o) make or change a material election in respect of Taxes,
amend a Return, adopt or change any accounting method in respect of Taxes, enter
into any tax allocation agreement, tax sharing agreement, tax indemnity
agreement or closing agreement, settlement or compromise of any claim or
assessment in respect of Taxes, or consent to any extension or waiver of the
limitation period applicable to any claim or assessment in respect of Taxes with
any Governmental Entity or otherwise; or
(p) enter into any agreement or commitment to do any of the
foregoing.
Section 5.9. Conforming Accounting and Reserve Policies; Restructuring
Matters. Notwithstanding that Asiana believes that it has established all
reserves and taken all provisions for possible loan losses required by GAAP and
applicable laws, rules and regulations, Asiana recognizes that Parent or Bank
may have adopted different loan, accrual and reserve policies (including loan
classifications and levels of reserves for possible loan losses). At the request
of the Bank, Asiana agrees, immediately prior to or simultaneous with the
Closing and after satisfaction or waiver of the conditions to Closing set forth
herein, to establish and take such reserves and accruals as the Bank reasonably
shall request to conform Asiana's allowance for credit losses, accrual, reserve
and other accounting policies to the policies of the Bank, provided, however,
that (a) Asiana shall not be required to take such actions prior to the time
Bank agrees in writing that all of the conditions to its obligation to close as
set forth in Section 6.3 have been satisfied or waived and each of the
Governmental Approvals have been received, and (b) no such adjustment shall (i)
require any filing with any Governmental Entity, (ii) violate any law, rule or
regulation applicable to Asiana, (iii) constitute, or be deemed to constitute,
any breach, violation, modification or contradiction of any certification filed
with any Governmental Entity prior to such date by Asiana or any officer or
employee thereof and (c) such requested conforming adjustments shall not be
taken into account in determining whether Asiana has experienced a Material
Adverse Effect nor shall it constitute or be deemed to be a breach, violation of
or failure to satisfy any representation, warranty, covenant, condition or other
provision of this Agreement or otherwise be considered in determining whether
any such breach, violation or failure to satisfy shall have occurred.
Section 5.10. Covenants Regarding Employees, Directors and Officers.
(a) Employee Benefit Plans. The Bank agrees to provide the
employees of Asiana (the "Asiana Employees") who remain employed after the
Closing Date (collectively, the "Transferred Asiana Employees") with the types
and levels of employee benefits ordinarily maintained by the Bank for similarly
situated employees of the Bank. As soon as administratively practicable after
the Effective Time, the Bank shall permit the Transferred Asiana Employees to
participate in the Bank's group hospitalization, medical, life and disability
insurance plans, defined benefit pension plan, thrift plan, severance plan and
similar plans, on the same terms and conditions as ordinarily applicable to
comparable employees of the Bank (including the waiver of pre-existing
conditions, restrictions, exclusions or limitations), giving the Transferred
Asiana Employees full credit for all "years of service," as that term is defined
in
40
Section 411(a)(5) of the Code, with Asiana and its subsidiaries (to the extent
Asiana gave effect) as if such service were with the Bank, for purposes of
eligibility, vesting and calculation of benefits under vacation, severance and
other plans, but not for benefit accrual for any other purpose.
(b) Continuation of Plans. Notwithstanding anything to the
contrary contained herein, the Bank shall have sole discretion with respect to
the determination as to whether to terminate, merge or continue any employee
benefit plans and programs of Asiana to the extent permitted by and in
accordance with the terms of such plans and programs; provided, however, that
the Bank shall continue to maintain Asiana plans (other than stock based or
incentive plans) until Asiana Employees are permitted to participate in the
Bank's plans in accordance with this Section 5.10(b). Nothing in this Agreement
shall alter or limit the Bank's obligations, if any, under ERISA, as amended by
the Consolidated Omnibus Budget Reconciliation Act of 1985 and/or the Health
Insurance Portability and Accountability Act of 1996 with respect to the rights
of Asiana Employees and their qualified beneficiaries in connection with the
group health plan maintained by Asiana as of the Effective Time.
Section 5.11. Tax-Free Reorganization.
(a) Prior to the Effective Time, each Party shall use its
commercially reasonable efforts to cause the Merger to qualify as a
"reorganization" within the meaning of Section 368(a) of the Code, and will not
take any action that could cause the Merger not so to qualify. Parent shall not
take, or cause any of its direct or indirect subsidiaries to take, any action
after the Effective Time that could cause the Merger not to qualify as a
reorganization under Section 368(a) of the Code.
(b) Following the Merger, Parent will comply with
record-keeping and information filing requirements of Section 1.368-3 of the
Treasury Regulations with respect to the Merger.
Section 5.12. Fairness Hearing and Permit; Registration Statement.
(a) As promptly as practicable after the execution of this
Agreement, Parent, with the cooperation of Asiana, shall prepare and file with
the California Commissioner of Corporations (the "Commissioner") a (i) a notice
to the shareholders of Asiana pursuant to, and meeting the requirements of
Article 2 of Subchapter 1 of the California Administrative Code, Title 10,
Chapter 3, Subchapter 2, as amended (the "Hearing Notice"), concerning a hearing
to be held by the Commissioner to consider the terms, conditions and fairness of
the transactions contemplated hereby pursuant to Section 25142 of the California
Corporate Securities Law of 1968, as amended (the "Hearing"), (ii) an
application for permit in connection with the Hearing (the "Permit Application")
and (iii) an information statement to be mailed to shareholders of Asiana in
connection with the transactions contemplated hereby (the "Information
Statement"). As soon as permitted by the Commissioner, Asiana shall mail the
Hearing Notice to all shareholders of Asiana entitled to receive such notice
under California Law. Asiana and Parent will notify each other promptly of the
receipt of any comments from the Commissioner or its staff and of any request by
the Commissioner or its staff or any other government officials for amendments
or supplements to any of the documents filed therewith or any other filing or
for
41
additional information, and will supply each other with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the Commissioner, or its staff or any other government officials, on
the other hand, with respect to the filing. Whenever any event occurs that is
required to be set forth in an amendment or supplement to the Information
Statement or any other filing, each Party shall promptly inform the other of
such occurrence and cooperate in filing with the Commissioner or its staff or
any other government officials, and/or mailing to shareholders of Asiana, such
amendment or supplement. The Information Statement shall include the
recommendation of the Board of Directors of Asiana in favor of this Agreement,
the Short-Form
Merger Agreement and the Merger and the conclusion of the Board
of Directors of Asiana that the terms and conditions of the Merger are fair and
reasonable to the shareholders of Asiana. Anything to the contrary contained
herein notwithstanding, Asiana shall not include in the Information Statement
any information with respect to the Parent, the Bank or their affiliates or
associates, the form and content of which information shall not have been
approved by Parent or the Bank prior to such inclusion.
(b) If the Commissioner informs Parent or Asiana of its
determination not to (A) grant the Hearing, (B) permit the mailing of the Notice
of Hearing or (C) issue the Permit, Parent, with the cooperation of Asiana,
shall prepare and file with the SEC a registration statement on Form S-4 (or
such other or successor form as shall be appropriate) pursuant to which the
shares of Parent Common Stock to be issued in the Merger will be registered with
the SEC if the Permit is not issued (the "Registration Statement") and shall use
all reasonable efforts to cause the Registration Statement to become effective
as soon thereafter as practicable. Each party will notify the other promptly of
the receipt of any comments from the SEC or its staff and of any request by the
SEC or its staff or any other government officials for amendments or supplements
to the Registration Statement or any other filing or for additional information,
and will supply the other with copies of all correspondence between such party
or any of its representatives, on the one hand, and the SEC, or its staff or any
other government officials, on the other hand, with respect to the Registration
Statement or other filing. Whenever any event occurs that is required to be set
forth in an amendment or supplement to the Registration Statement or any other
filing, each party shall promptly inform the other party of such occurrence and
cooperate in filing with the SEC or its staff or any other government officials,
and/or mailing to shareholders of Asiana, such amendment or supplement.
Section 5.13. Nasdaq Listing. Parent agrees to use its commercially
reasonable efforts to cause and maintain the authorization for listing on the
Nasdaq National Market System of the shares of Parent Common Stock issuable in
connection with the transactions contemplated by this Agreement.
42
Section 5.14. Indemnification of Directors and Officers.
(a) For a period of six years following the Closing, the Bank
shall indemnify, defend and hold harmless the present and former directors and
officers of Asiana and persons who become any of the foregoing prior to the
Effective Time (the "Indemnified Parties") against all losses, claims, damages,
liabilities, costs, fees and expenses (including reasonable fees and
disbursements of counsel and judgments, fines, losses, claims, liabilities and
amounts paid in settlement (provided, that such settlement is effected with the
written consent of the Bank, which consent shall not unreasonably be withheld))
arising out of actions or omissions occurring at or prior to the Effective Time
to the full extent permissible under applicable Law and the terms of the
Articles of Incorporation and By-Laws of Asiana, provided, however, that in the
event any claim or claims are asserted or made within such six-year period, all
rights to indemnification in respect of any such claim or claims shall continue
until disposition of any and all such claims.
(b) The Bank may obtain so-called "tail insurance" with
respect to Asiana's directors and officers liability insurance policy for a
one-year period following the Effective Time so long as the premium therefor
does not exceed $15,000.
Section 5.15. Appointment to Board of Directors. Parent shall have Xx.
Xxxxx-Xxxx Xxx appointed, effective upon completion of the Merger or as soon as
reasonably practicable thereafter, as a director of Parent and Chairman of its
Board of Directors to serve until the next following annual meeting of
stockholders of Parent and until his successor is duly elected and qualified.
ARTICLE 6
CONDITIONS TO CLOSING
Section 6.1. Conditions to Obligations of all Parties. The obligations
of Parent, Bank, Parent and Asiana to consummate the Merger (including the
Interim Merger) are subject to the satisfaction of each of the following
conditions:
(a) Approval By Shareholders. The Merger shall have been
approved by the affirmative vote of the holders of a majority of all shares of
Asiana Common Stock entitled to vote thereon.
(b) Regulatory Approvals. All necessary approvals of any
Governmental Entity required for the consummation of the Merger (including the
Asiana Governmental Approvals and the Bank Governmental Approvals) shall have
been obtained and shall remain in full force and effect; all statutory or other
required waiting periods in respect thereof shall have expired; and no approval
of any Governmental Entity shall have imposed any condition or requirement
which, in the reasonable opinion of the Bank, would so materially adversely
affect the economic or business benefits to the Bank of the Merger so as to
render inadvisable the consummation thereof (an "Unreasonable Condition"). The
Parties agree that an Unreasonable Condition would exist if any Governmental
Entity with authority over Parent, Bank or the Merger (i) imposes a requirement
to its approval of the Merger that Parent or Bank enter into a consent order,
cease and desist order or memorandum of understanding (or similar order or
43
agreement) in connection with its approval of or non-objection to the Merger, or
(ii) indicates that it would likely impose such an order, memorandum or
agreement on Parent or Bank following the Merger if consummated, in any case
where the position of the Governmental Entity is due primarily to the fact that
Asiana is subject to the Consent Order.
(c) No Pending or Threatened Claims. There shall be no claim,
action, suit, investigation or other proceeding pending or overtly threatened
(either in writing or verbally, formally or informally) before any court or
other Governmental Entity that presents a substantial risk of restraint or
prohibition of the Merger, or the obtaining of material damages from Asiana or
the Bank or their respective officers or directors in connection therewith; and
no such restraint or prohibition shall be effective as of the Closing, whether
or not the action in which the same was entered shall remain pending.
Section 6.2. Conditions to the Obligations of Parent and Bank. The
obligations of Parent and Bank to consummate the Merger (including the Interim
Merger) are further subject to the satisfaction of, or their written waiver of,
each of the following conditions:
(a) Accuracy of Representations and Warranties; Compliance
With Covenants. Asiana's representations and warranties contained in this
Agreement shall have been true and correct as of the dates when made, and Asiana
shall have performed, satisfied and complied with, in all material respects,
each of its agreements and covenants contained in Articles 2 and 5 and elsewhere
in this Agreement.
(b) Bringdown of Representations and Warranties. Asiana's
representations and warranties contained in this Agreement remain true and
correct as of the Closing as though made at and as of the Closing, excepting
only representations and warranties which speak expressly as of an earlier
specified date.
(c) Dissenting Asiana Shares. The aggregate number of shares
of Asiana Common Stock owned by Persons who have made a demand for purchase
under Section 1301 of the California Corporation Code shall constitute less than
9.9% of all shares of Asiana Common Stock outstanding as of the date of the
meeting of the Asiana Shareholders called for the purpose of voting on the
Merger.
(d) Unsatisfactory Regulatory Review. With the exception of
matters specifically set forth in the Consent Order and not yet remedied, Asiana
shall not have received between the date of this Agreement and the Closing an
"unsatisfactory" rating in any supervisory, CRA or compliance exam conducted by
any Governmental Entity.
(e) Third Party Consents. The consent, approval or waiver of
each Person (other than the Governmental Entities referred to in Section 6.1(b))
whose consent, approval or waiver shall be required in order to permit the
consummation of the Merger or the preservation of the contractual rights of
Asiana with respect to its business shall have been obtained except where the
failure to obtain such consent, approval or waiver would not materially
adversely affect the economic or business benefits to the Bank of the Merger
contemplated by this
44
Agreement, so as to render inadvisable the consummation of the Merger in the
reasonable judgment of the Bank.
(f) Receipt of Officers' Certificates. Asiana shall have
delivered to the Bank (a) a certificate, executed by the President and Chief
Financial Officer of Asiana and dated as of the Closing Date, certifying to the
fulfillment of the conditions specified in Section 6.1 (with regard to Asiana
only) and Section 6.2 (with the exception of the conditions specified in
Sections 6.2(i) and 6.2(j)), including a certification that each representation
or warranty of Asiana contained in Article 3 is true and correct as of the
Closing Date (or, if such certification cannot be made, specifying the
exceptions thereto), excepting only representations and warranties which speak
expressly as of an earlier specified date, and (b) a certificate, executed by
the Chief Financial Officer of Asiana and dated as of a date not more than three
(3) Business Days prior to the Closing Date certifying to the accuracy of
Section 3.11(a) of this Agreement as of the date of such certificate.
(g) Noncompetition and Nonsolicitation Agreement. Each
director of Asiana that is not an employee of Asiana shall have executed and
delivered to the Bank a "Noncompetition and Nonsolicitation Agreement"
substantially in the form attached hereto as Exhibit 6.2(g).
(h) Estimate of Closing Costs and Closing Expenses. Asiana
shall have delivered a schedule (the "Closing Schedule") to Parent no later than
five (5) Business Days prior to the Closing Date containing its estimate of the
aggregate Closing Costs and Closing Expenses as of the Closing Date, including a
detailed itemization and description of each individual item in excess of
$5,000. Such schedule shall be a reasonable estimate of the Closing Costs and
Closing Expenses as of the Closing Date, and shall be materially consistent with
the internal estimates and information available to Asiana's management.
(i) Documents and Instruments In Satisfactory Form. All
corporate and other proceedings in connection with this Agreement and with the
Merger and all documents and instruments incidental to the Merger shall be
reasonably satisfactory in substance and form to the Bank and its counsel, and
the Bank and its counsel shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
(j) Legal Opinion. Parent shall have received a legal opinion
from Xxxxxxx XxXxxxxxx LLP, counsel to Asiana, covering the matters described in
Exhibit 6.2(j) and in form and substance reasonably acceptable to Parent and its
counsel.
(k) Affiliate Agreement. Parent shall have received from each
of the directors and executive officers of Asiana on the date hereof who own
shares of Asiana Common Stock on the date hereof an executed form of Affiliate
Agreement in the form attached hereto as Exhibit C.
(l) FIRPTA Certification. Asiana shall have furnished to the
Bank certification in the form required by Treasury Regulation Section
1.1445-2(c)(3) that the stock of Asiana is not a U.S. real property interest. In
addition, simultaneously with delivery of such
45
certification, Asiana shall have provided to the Bank, as agent for Asiana, a
form of notice to the IRS in accordance with the requirements of Treasury
Regulations Section 1.897-2(h)(2) along with written authorization for the Bank
to deliver such notice form to the IRS on behalf of Asiana upon the Closing of
the Merger.
Section 6.3. Conditions to the Obligations of Asiana. The obligations
of Asiana to consummate the Merger (including the Interim Merger) are further
subject to the satisfaction of, or Asiana's written waiver of, each of the
following conditions:
(a) Accuracy of Representations and Warranties; Compliance
With Covenants. The Bank's representations and warranties contained in this
Agreement shall have been true and correct as of the dates when made, and the
Bank shall have performed, satisfied and complied with, in all material
respects, each of its agreements and covenants contained in Articles 2 and 5 and
elsewhere in this Agreement.
(b) Bringdown of Representations and Warranties. The Bank's
representations and warranties contained in this Agreement remain true and
correct as of the Closing as though made at and as of the Closing, excepting
only representations and warranties which speak expressly as of an earlier
specified date.
(c) Receipt of Officers' Certificate. Asiana shall have
received from the Bank a certificate, executed by the President and Chief
Financial Officer of the Bank and dated as of the Closing Date, certifying to
the fulfillment of the conditions specified in Section 6.1 (with regard to the
Bank only) and Section 6.3 (with the exception of the conditions specified in
Section 6.3(d)), including a certification that each representation or warranty
of the Bank contained in Article 4 is true and correct as of the Closing Date
(or, if such certification cannot be made, specifying the exceptions thereto),
excepting only representations and warranties which speak expressly as of an
earlier specified date.
(d) Documents and Instruments In Satisfactory Form. All
corporate and other proceedings in connection with this Agreement and with the
Merger and all documents and instruments incidental to the Merger shall be
reasonably satisfactory in substance and form to Asiana and its counsel, and
Asiana and its counsel shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
(e) Registration of Shares of Exemption from Registration. The
offer and sale of Parent Common Stock pursuant to this Agreement shall have been
registered with the SEC under the Securities Act, or the offer and sale of the
Parent Common Stock pursuant to this Agreement shall be exempt from registration
under Section 3(a)(10) of the Securities Act.
ARTICLE 7
TERMINATION; TERMINATION FEE
This Agreement may be terminated, and the Merger abandoned, prior to
the Closing by the following means and with the following effects:
46
Section 7.1. By Mutual Agreement. The Bank, Parent and Asiana may
terminate this Agreement by mutual written consent at any time.
Section 7.2. Regulatory Impediment. Any of the Bank, Parent or Asiana
may unilaterally terminate this Agreement at any time prior to the Closing if
(a) a Bank Regulator shall have made a final determination denying an
application of such Party the granting of which is essential to the consummation
of the Merger, or (b) the occurrence of the Closing would violate any final
order, decree or judgment of any court having competent jurisdiction affecting
such Party.
Section 7.3. By the Bank and Parent. The Bank and Parent may
unilaterally terminate this Agreement:
(a) if Asiana has breached any representation or warranty
contained in this Agreement, or has failed to perform, satisfy or comply with in
any material respect any of its agreements and covenants contained in this
Agreement (other than as described in Section 7.3(b)), such termination to take
effect fifteen (15) Business Days following notice to Asiana identifying such
breach if such breach has not been cured prior to the expiration of such period
(it being understood that no cure period shall be required for a breach which by
its nature cannot be cured), in which case the Bank and Parent shall be entitled
to receive from Asiana their respective Expenses;
(b) upon notice to Asiana if (a) Asiana has not reaffirmed its
intent to proceed with the Merger pursuant to Section 5.1(c) following its
receipt of a Qualifying Strategic Transaction Proposal, or (b) its Board of
Directors fails to give its Recommendation of Approval to the holders of the
Asiana Common Stock or withdraws its Recommendation of Approval prior to the
affirmative vote of such shareholders, whether or not such failure or withdrawal
is permitted under Section 5.2, provided that in the case of a termination under
this Section 7.3(b), the Bank shall be entitled to receive from Asiana the
Termination Fee, which shall be the Bank's sole and exclusive remedy against
Asiana at law or in equity;
(c) upon notice to Asiana if any of the conditions to the
obligations of the Parent or Bank contained in Section 6.2 has not been
satisfied as of the Closing Date; or
(d) upon notice to Asiana at any time after 12:00 noon
(Pacific time) on December 31, 2003, if the Closing shall not have occurred
prior to such date and time, unless such failure results primarily from the Bank
breaching any of its representations, warranties, covenants or agreements
contained in this Agreement, provided, that if the basis for such termination is
Asiana's acceptance of an Acquisition Proposal, the Bank shall be entitled to
receive from Asiana the Termination Fee, which shall be the Bank's sole and
exclusive remedy against Asiana at law or in equity.
Section 7.4. By Asiana. Asiana may unilaterally terminate this
Agreement:
(a) if the Bank or Parent has breached any of their respective
representations or warranties contained in this Agreement, or has failed to
perform, satisfy or comply with in any
47
material respect any of their respective agreements and covenants contained in
this Agreement, such termination to take effect fifteen (15) Business Days
following notice to the Bank or Parent identifying such breach if such breach
has not been cured prior to the expiration of such period (it being understood
that no cure period shall be required for a breach which by its nature cannot be
cured), in which case Asiana shall be entitled to receive from the Bank its
Expenses;
(b) upon notice to the Bank if Asiana receives a Qualifying
Strategic Transaction Proposal; provided, however, that a condition to the
effectiveness of any termination pursuant to this Section 7.4(b) is the payment
of the Termination Fee to the Bank by Asiana;
(c) upon notice to the Bank if any of the conditions to the
obligations of Asiana contained in Section 6.3 has not been satisfied as of the
Closing Date; or
(d) upon notice to the Bank after 12:00 noon (Pacific time) on
December 31, 2003, if the Closing shall not have occurred prior to such date and
time, unless the failure results primarily from Asiana breaching any of its
representations, warranties, covenants or agreements contained in this
Agreement; provided, however, that if the basis for such termination is Asiana's
acceptance of an Acquisition Proposal, a condition to the effectiveness of such
termination is Asiana's payment of the Termination Fee.
Section 7.5. Termination Fee. The "Termination Fee" means Five Hundred
Thousand Dollars ($500,000) plus the Bank's and Parent's Expenses, in same day
funds.
Section 7.6. Effect of Termination; Remedies.
(a) General. In the event this Agreement is terminated
pursuant to this Article 7, this Agreement shall become void and of no effect
and neither Party shall have any liabilities or other obligations whatsoever
hereunder, except that (a) the provisions of Section 5.3 relating to
Confidential Information, Article 7 and Section 8.2 shall survive such
termination, and (b) notwithstanding anything else to the contrary contained
herein, neither Party shall be relieved of or released from any liability or
damages arising out of its breach of any provision of this Agreement prior to
such termination.
(b) Remedies Cumulative Generally. Except as expressly stated,
no remedy made available by any of the provisions of this Agreement is intended
to be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity.
ARTICLE 8
MISCELLANEOUS
Section 8.1. Rules of Construction. The following rules of construction
shall apply to the interpretation of this Agreement:
(a) Any reference to any event, change or effect being
"material" with respect to any Person means an event, change or effect which is
material in relation to the condition
48
(financial or otherwise), properties, assets, liabilities, businesses or
operations of such entity and its subsidiaries taken as a whole.
(b) Disclosure of any matter in the Disclosure Schedule hereto
shall not be deemed to imply that such matter is or is not material, unless
specifically indicated as material, and shall not constitute an admission or
raise any inference that such matter constitutes a violation of law or an
admission of liability or facts supporting liability.
(c) Whenever used in this Agreement, the word "including"
shall be non-exclusive and shall mean "including without limitation."
(d) All references to Sections, Articles and sections of the
Disclosure Schedule shall, unless another agreement is expressly referenced,
mean the applicable sections or articles of, or section of the Disclosure
Schedule to, this Agreement.
(e) The section titles and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of any provisions of this Agreement.
(f) The terms "herein", "hereunder", and terms of similar
import refer to this Agreement as a whole and not to the specific Section or
Article in which they are used.
(g) The phrase "to the knowledge" of a Party (and phrases of
similar import) shall mean, except as otherwise indicated, to the actual
knowledge, after reasonable inquiry, of the executive officers of the Bank and
Asiana, as applicable.
(h) This Agreement is the joint product of the Bank and
Asiana, and each provision hereof has been subject to the mutual consultation,
negotiation and agreement of such Parties, and shall not be construed for or
against any Party.
Section 8.2. Publicity. Promptly following the execution and delivery
of this Agreement, Asiana and the Bank shall issue a joint press release in a
form mutually to be agreed upon. In addition, Parent shall be permitted to make
such disclosure of this Agreement and the progress of completion of the Merger
as required to be disclosed by it under the rules and regulations of the SEC and
otherwise under the Exchange Act. Asiana and the Bank shall not, and shall
instruct their Representatives not to, issue or cause the publication of any
press release or other public announcement with respect to, or otherwise make
any public statement concerning, this Agreement or the Merger without the
consent of the other Party, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, in the event that either the Bank or Asiana
determines, based upon the advice of counsel, that a press release, disclosure
in a public filing, or other public disclosure of, or reference to, this
Agreement, the Merger or the Bank is required by law, such Party shall first
notify the other of the potential disclosure, afford the other Party a
reasonable opportunity to review and comment on the proposed disclosure, and
obtain the other Party's approval of such disclosure, which approval shall not
be withheld or delayed in any manner that is unreasonable under the
circumstances.
49
Section 8.3. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person or by electronic facsimile transmission
(with confirmation) or on the next business day after dispatch by an overnight
courier of national reputation to the respective Parties as follows:
If to the Bank or Parent, to it at: If to Asiana, to it at:
0000 Xxxxxxxx Xxxx. Asiana Bank
Suite 400 0000 Xxxx Xx Xxxxxx Xxxx
Xxx Xxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Hong Attention: Xx. Xxxxx-Hoon Hong
Telecopy No.: 000-000-0000 Telecopy No.: 000-000-0000
with a copy to: with copies to:
Xxxxxxxx & Xxxxxxxx LLP Xxxxxxx XxXxxxxxx, LLP
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000 0 Xxxxxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000-0000 Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq. Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopy No.: 000-000-0000 Telecopy No.: 415-393-2286
or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
Section 8.4. Entire Agreement. This Agreement constitutes the entire
agreement among the Parties and, supersedes all prior agreements,
understandings, negotiations and discussions, both written and oral, among the
Parties with respect to the subject matter hereof.
Section 8.5. Benefits; Binding Effect; Assignment and Designation. This
Agreement shall be for the benefit of and binding upon the Parties, their
respective successors and, where applicable, assigns. No Party may assign this
Agreement or any of its rights, interests or obligations hereunder without the
prior written consent of the other Party. Notwithstanding any assignment or
delegation of any Party's rights, interests or obligations, each Party shall
nonetheless remain responsible for the performance of all of its obligations
provided hereunder.
Section 8.6. Waiver. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly so provided.
Section 8.7. No Third Party Beneficiary. Nothing expressed or implied
in this Agreement is intended, or shall be construed, to confer upon or give any
Person other than the Parties and their respective successors and permitted
assigns any rights or remedies under or by reason of this Agreement.
50
Section 8.8. Severability. The invalidity of any one or more of the
words, phrases, sentences, clauses, Sections or Articles contained in this
Agreement shall not affect the enforceability of the remaining portions of the
Agreement or any part hereof, all of which are inserted conditionally on their
being valid in law. In the event any one or more of the words, phrases,
sentences, clauses, sections or subsections contained in this Agreement shall be
declared invalid, this Agreement shall be construed as if such invalid word or
words, phrase or phrases, sentence or sentences, clause or clauses, section or
sections, or subsection or subsections, had not been inserted; provided,
however, that if any provision is declared to be unenforceable because it is
determined to be overbroad, then, to the extent possible, in lieu of deletion
such provision shall be modified to the minimum extent necessary to render such
provision enforceable.
Section 8.9. Counterparts. This Agreement may be executed in any number
of counterparts and by the several Parties in separate counterparts, each of
which shall be deemed to be one and the same instrument.
Section 8.10. Applicable Law; Consent to Jurisdiction. THIS AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE UNITED STATES AND THE INTERNAL LAW OF THE
STATE OF CALIFORNIA (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS THEREOF)
AND ALL QUESTIONS CONCERNING THE VALIDITY AND CONSTRUCTION THEREOF SHALL BE
DETERMINED IN ACCORDANCE WITH THE LAWS OF SAID STATE. EACH PARTY HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE
COURTS SITTING IN THE STATE OF CALIFORNIA IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT AND HEREBY IRREVOCABLY AGREES, ON BEHALF OF
ITSELF AND ON BEHALF OF SUCH PARTY'S SUCCESSORS AND PERMITTED ASSIGNS, THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION SUCH PERSON MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
Section 8.11. Waiver of Jury Trial. THE PARTIES HERETO HEREBY WAIVE
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT, THE RELATED DOCUMENTS OR THE
RELATIONSHIP ESTABLISHED HEREUNDER.
[SIGNATURE PAGE IS NEXT PAGE]
51
IN WITNESS WHEREOF, the Parties have each executed and delivered this
Agreement as of the day and year first above written.
NARA BANCORP, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title: President and Chief Executive Officer
NARA BANK, N.A.
By:
-------------------------------------------
Name:
-----------------------------------------
Title: President and Chief Executive Officer
ASIANA BANK
By:
-------------------------------------------
Name:
-----------------------------------------
Title: President and Chief Executive Officer
52
EXHIBIT 6.2(g)
FORM OF
NONCOMPETITION AND NONSOLICITATION AGREEMENT
EXHIBIT 6.2(j)
MATTERS TO BE COVERED IN
LEGAL OPINION OF XXXXXXX XXXXXXXXX LLP
1. Asiana is a banking corporation duly incorporated, validly existing and
in good standing under the laws of the State of California, and has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on a commercial banking business.
2. Asiana has the corporate power and authority to execute and deliver,
and to perform and observe the provisions of, the
Merger Agreement.
3. The
Merger Agreement has been duly authorized, executed and delivered
by Asiana. The
Merger Agreement constitutes the valid and binding
obligation of Asiana enforceable against it in accordance with its
terms, subject to customary assumptions, qualifications and exceptions.
4. The authorized capital stock of Asiana consists of 20,000,000 shares,
no par value per share, of Common Stock, of which to the knowledge of
such counsel 958,108 shares are issued and outstanding; and 20,000,000
shares of Preferred Stock, none of which to the knowledge of such
counsel are issued or outstanding. To our knowledge, except as set
forth in the
Merger Agreement, there are no presently outstanding
options, warrants or other securities of Asiana which contain or create
the right to purchase any unissued shares of capital stock of Asiana.
5. The execution, delivery and performance of the
Merger Agreement by
Asiana or Bancshares will not (i) violate Asiana's charter or bylaws,
(ii) violate, breach or result in a default under any existing
obligation of Asiana known to such counsel, (iii) breach or otherwise
violate any existing obligation of Asiana under any order, judgment or
decree of any court or governmental entity binding on Asiana and known
to such counsel, or (iv) based on factual information known to such
counsel, result in the creation or imposition of any lien, charge,
claim or encumbrance upon any property or assets of Asiana, except,
with respect to (ii), (iii) and (iv) above, for breaches, violations,
defaults, liens, charges, claims or encumbrances that would not
reasonably be expected to have a material adverse effect on the assets,
business, operations, earnings, properties or condition of Asiana; and
6. To our knowledge and except as disclosed in the
Merger Agreement, there
is no litigation or proceeding pending (a) against Asiana which, if
determined adversely to Asiana, would be reasonably likely to have a
Material Adverse Effect on Asiana, or (b) against Asiana or any of its
principal shareholders which, if determined adversely to Asiana or such
shareholders, is likely to materially and adversely affect the ability
of Asiana or such shareholders to perform their respective obligations
under the
Merger Agreement or which seeks to prevent the consummation
of any of the transactions contemplated by the
Merger Agreement.
DISCLOSURE SCHEDULE SECTION 4.4
CONSENTS
(NARA BANK GOVERNMENTAL APPROVALS)
1 FORMATION OF MERGER SUB
Approval of OCC may be required to establish Merger Sub as an operating
subsidiary of Nara Bank.
2. INTERIM MERGER
a. FDIC: Prior notice to and approval of the FDIC under the Bank
Merger Act may be required to effect the Interim Merger.
b. CDFI: Prior notice to and approval of the California
Commissioner of Financial Institutions may be required to
effect the Interim Merger.
c. FEDERAL RESERVE: Prior notice to, and approval or waiver of,
the Board of Governors of the Federal Reserve System may be
required to effect the Interim Merger (since Nara Bank will be
the parent of Asiana for a short time).
3. MERGER OF ASIANA BANK INTO NARA BANK
a. OCC: The merger of Asiana into Nara Bank requires the approval
of the OCC under the BMA.
b. CDFI: Upon consummation of the merger of Asiana into Nara
Bank, Asiana's certificate of authority to conduct business is
required to be surrendered to the CDFI.
