Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
dated as of September 13, 2005
by and between
First Community Bancorp
and
Cedars Bank
TABLE OF CONTENTS
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AGREEMENT AND PLAN OF
MERGER , dated as of
September 13, 2005 (this “ Agreement ”), by and
between Cedars Bank, a California state-chartered bank (the “
Company ”), and First Community Bancorp, a California
corporation (“ Parent ”).
RECITALS
A.
The Company
. The Company is a California
corporation, having its principal place of business in Los Angeles,
California.
B.
Parent . Parent is a California corporation,
having its principal place of business in Rancho Santa Fe,
California.
C.
Merger Subsidiary
. Following the execution of
this Agreement, Parent shall form, or shall cause one of its wholly
owned subsidiaries to form, a merger subsidiary (“ Merger
Subsidiary ”), all of the issued and outstanding capital
stock of which shall be owned by Parent or one of its wholly owned
subsidiaries, as the case may be.
D.
Consideration
. The parties to this Agreement
desire that, upon the terms and subject to the conditions set forth
in this Agreement, Parent acquire the Company for an aggregate
consideration of $120,000,000.
E.
Board Action
. The respective Boards of
Directors of Parent and the Company have determined that it is in
the best interests of their respective companies and their
shareholders to consummate the merger of the Company with the
Merger Subsidiary (the “ Merger ”).
F.
Shareholder Agreements
. As a condition to, and
simultaneously with, the execution of this Agreement, each
Shareholder (as defined herein) identified on Exhibit D hereto is
entering into an agreement, in the form of Exhibit A hereto
(collectively, the “ Shareholder Agreements ”),
pursuant to which each Shareholder has agreed, among other things,
to vote his or her shares in favor of the principal terms of the
Merger and to approve and adopt this Agreement.
G.
Non-Solicitation
Agreements . As a
condition to, and simultaneously with, the execution of this
Agreement, each of the individuals identified as a Director on
Exhibit D hereto (the “ Directors ”) or an
Executive on Exhibit D hereto (the “ Executives
”) is entering into a non-solicitation agreement with Parent
in the form of Exhibit B hereto (collectively, the “
Non-Solicitation Agreements ”).
NOW, THEREFORE
, in consideration of the premises
and of the mutual covenants, representations, warranties and
agreements contained herein the parties agree as
follows:
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ARTICLE I
CERTAIN DEFINITIONS
1.01.
Certain
Definitions. The following terms are used in this Agreement
with the meanings set forth below:
“ 401(k) Plan ”
has the meaning set forth in Section 6.19.
“ Acknowledgement and
Waiver ” has the meaning set forth in Section
6.18.
“ Acquisition Proposal
” has the meaning set forth in Section 6.05.
“ Adjusted
Shareholders’ Equity ” has the meaning set forth in
Section 7.03(d).
“ Agreement ”
means this Agreement, as amended or modified from time to time in
accordance with Section 9.02.
“ Agreement of Merger
” means the agreement of merger complying with Section 1101
of the CCC, substantially in the form attached hereto as Exhibit
C.
“ ALL ” has the
meaning set forth in Section 5.02(t).
“ Bank Insurance Fund
” means the Bank Insurance Fund maintained by the
FDIC.
“ Bank Secrecy Act
” means the Currency and Foreign Transaction Reporting Act
(31 U.S.C. Section 5311 et seq.), as amended.
“ Benefit Plans ”
has the meaning set forth in Section 5.02(m).
“ BOLI ” has the
meaning set forth in Section 6.20.
“ Business Day ”
means Monday through Friday of each week, except a legal holiday
recognized as such by the U.S. Government or any day on which
banking institutions in the State of California are authorized or
obligated to close.
“ CCC ” means the
California Corporations Code.
“ Certificate ”
has the meaning set forth in Section 3.01(b).
“ CFC ” means the
California Financial Code.
“ Closing ” has
the meaning set forth in Section 6.17.
“ Closing Financial
Statements ” has the meaning set forth in Section
7.03(e).
“ Code ” means
the Internal Revenue Code of 1986, as amended.
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“ Commissioner ”
means the California Commissioner of Financial
Institutions.
“ Community Reinvestment
Act ” means the Community Reinvestment Act of 1977 (12
U.S.C. 2901 et seq.), as amended.
“ Company ” has
the meaning set forth in the preamble to this Agreement.
“ Company Articles
” means the Articles of Incorporation of the Company, as
amended.
“ Company Board ”
means the Board of Directors of the Company.
“ Company By-Laws
” means the By-Laws of the Company.
“ Company Common Stock
” means the common stock, no par value per share, of the
Company.
“ Company Financial
Statements ” has the meaning set forth in Section
5.02(g).
“ Company Intellectual
Property Rights ” has the meaning set forth in Section
5.02(y).
“ Company Loan Property
” has the meaning set forth in Section 5.02(o).
“ Company Meeting
” has the meaning set forth in Section 6.02(a).
“ Company Shareholder
Approval ” has the meaning set forth in Section
5.02(f).
“ Company Stock Options
” means the issued and outstanding options to acquire Company
Common Stock, whether granted pursuant to the Company Stock Option
Plan or otherwise.
“ Company Stock Option
Plan ” means, collectively, the Company’s Amended
and Restated 1995 Company Stock Option Plan and the Company’s
2002 Employee Stock Option Plan, each as amended to
date.
“ Confidentiality
Agreement ” has the meaning set forth in Section
6.04(e).
“ Costs ” has the
meaning set forth in Section 6.08(a).
“ Derivatives Contract
” has the meaning set forth in Section 5.02(q).
“ DFI ” means the
California Department of Financial Institutions.
“ Directors ” has
the meaning set forth in the Recitals to this Agreement.
“Disclosure
Schedule ” has the
meaning set forth in Section 5.01.
“ Dissenters’
Shares ” has the meaning set forth in Section
3.01(c).
“ Dissenting
Shareholder ” means any holder of Dissenters’
Shares.
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“ Effective Date
” has the meaning set forth in Section 2.02.
“ Effective Time
” has the meaning set forth in Section 2.02.
“ Employees ” has
the meaning set forth in Section 5.02(m).
“ Environmental Laws
” has the meaning set forth in Section 5.02(o).
“ Equal Credit Opportunity
Act ” means the Equal Credit Opportunity Act (15 U.S.C.
Section 1691 et seq.) as amended.
“ ERISA ” means
the Employee Retirement Income Security Act of 1974, as
amended.
“ ERISA Affiliate
” has the meaning set forth in Section 5.02(m).
“ Exchange Act ”
means the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.
“ Exchange Agent
” means U.S. Stock Transfer Corporation or such other
exchange agent as shall be mutually agreed upon in writing by the
parties hereto.
“ Exchange Fund ”
has the meaning set forth in Section 3.03(a).
“ Executives ”
has the meaning set forth in the Recitals to this
Agreement.
“ Fair Housing Act
” means the Fair Housing Act (420 U.S.C. Section 3601 et
seq.), as amended.
“ FDIC ” means
the Federal Deposit Insurance Corporation.
“ Federal Reserve Act
” means the Federal Reserve Act, as amended.
“ Federal Reserve Board
” means the Board of Governors of the Federal Reserve
System.
“ GAAP ” means
United States generally accepted accounting principles.
“ Governmental
Authority ” means any court, administrative agency or
commission or other federal, state or local governmental authority
or instrumentality.
“ Hazardous Substance
” has the meaning set forth in Section 5.02(o).
“ Home Mortgage Disclosure
Act ” means the Home Mortgage Disclosure Act (12 U.S.C.
Section 2801 et seq.), as amended.
“ In-the-Money Company
Stock Option ” has the meaning set forth in Section
3.01(b).
“ Indemnified Party
” has the meaning set forth in Section 6.08(a).
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“ Insurance Amount
” has the meaning set forth in Section 6.08(b).
“ Insurance Policies
” has the meaning set forth in Section 5.02(s).
“ IRS ” means the
Internal Revenue Service.
“ Knowledge ” of
the Company or Parent, as the case may be, means the actual
knowledge after reasonable investigation of any director or any
officer with the title of Senior Vice President or above of the
Company or Parent, as the case may be, and Yervant Demirjian and
Theresa Baker, in the case of the Company.
“ Lien ” means
any charge, mortgage, pledge, security interest, restriction,
claim, lien or encumbrance.
“ Material Adverse
Effect ” means any effect, circumstance, occurrence or
change that (i) with respect to the Company, is material and
adverse to the financial position, results of operations, business,
assets, deposit liabilities, properties or prospects of the
Company, or (ii) with respect to the Company or Parent, would
materially impair the ability of either Parent or the Company,
respectively, to perform its obligations under this Agreement or
otherwise materially threaten or materially impede the consummation
of the Merger and the other transactions contemplated by this
Agreement; provided, however , that a Material Adverse
Effect shall not be deemed to include the impact of (a) changes in
banking and similar laws of general applicability or
interpretations thereof applicable to banks and their holding
companies by Governmental Authorities, (b) changes in GAAP or
regulatory accounting requirements applicable to banks and their
holding companies generally, (c) changes in general economic
conditions affecting banks and their holding companies generally,
except to the extent that such changes disproportionately affect
Parent or the Company, as the case may be, and (d) changes agreed
to in writing by Parent and the Company.
“ Merger ” has
the meaning set forth in the Recitals to this Agreement.
“ Merger Consideration
” has the meaning set forth in Section 3.01(b).
“ Merger Subsidiary
” has the meaning set forth in the Recitals to this
Agreement.
“ National Labor Relations
Act ” means the National Labor Relations Act, as
amended.
“ Non-Solicitation
Agreement ” has the meaning set forth in the Recitals to
this Agreement.
“ OCC ” means the
Office of the Comptroller of the Currency.
“ Option Consideration
” has the meaning set forth in Section 3.05.
“ Option Spread ”
has the meaning set forth in Section 3.05.
“ Parent ” has
the meaning set forth in the preamble to the Agreement.
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“ Parent Board ”
means the Board of Directors of Parent.
“ Parent Common Stock
” means the common stock, no par value per share, of
Parent.
“ Pension Plan ”
has the meaning set forth in Section 5.02(m).
“ Person ” means
any individual, bank, corporation, partnership, association,
joint-stock company, business trust, limited liability company or
unincorporated organization.
“ Proxy Statement
” has the meaning set forth in Section 6.02(b).
“ Regulatory
Authorities ” has the meaning set forth in Section
5.02(i).
“ Regulatory Filings
” has the meaning set forth in Section 5.02(g).
“ Rights ” means,
with respect to any Person, the stock options, stock appreciation
rights, warrants and any other securities or obligations
convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire, or any options, calls
or commitments relating to, or any other instrument the value of
which is determined in whole or in part by reference to the market
price or value of, the capital stock of such Person.
“ SEC ” means the
United States Securities and Exchange Commission.
“ Section 6.05 Date
” has the meaning set forth in Section 6.05.
“ Shareholder ”
means each of the individuals identified on Exhibit D
hereto.
“ Shareholder
Agreements ” has the meaning set forth in the Recitals to
this Agreement.
“ Shareholders’
Equity Measuring Date ” has the meaning set forth in
Section 7.03(d).
“ Subsidiary ”
and “ Significant Subsidiary ” have the meanings
ascribed to those terms in Rule 1-02 of Regulation S-X of the
SEC.
“ Superior Proposal
” has the meaning set forth in Section 6.05.
“ Surviving Bank
” has the meaning set forth in Section 2.01.
“ Tax ” and
“ Taxes ” mean all federal, state, local or
foreign taxes, charges, fees, levies or other assessments, however
denominated, including, without limitation, all net income, gross
income, gains, gross receipts, sales, use, ad valorem, goods and
services, capital, production, transfer, franchise, windfall
profits, license, withholding, payroll, employment, disability,
employer health, excise, estimated, severance, stamp, occupation,
property, environmental, unemployment or other taxes, custom
duties, fees, assessments or charges of any kind whatsoever,
imposed by any taxing authority whether arising before, on or after
the Effective Date, together with any interest, additions or
penalties thereto and any interest in respect of such interest and
penalties.
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“ Tax Returns ”
means any return, amended return or other report (including
elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with any taxing authority
with respect to any Taxes including, without limitation, any
documentation required to be filed with any taxing authority or to
be retained by the Company in respect of information reporting
requirements imposed by the Code or any similar foreign, state or
local law.
“ Termination Fee
” has the meaning set forth in Section 8.02(b).
“ Third-Party Intellectual
Property Rights ” has the meaning set forth in Section
5.02(y).
“ Treasury Shares
” has the meaning set forth in Section 3.01(d).
“ USA Patriot Act
” means the USA Patriot Act (Pub. L. No. 107 56).
ARTICLE
II
THE MERGER
2.01.
The Combination
. (a) Upon the terms and
subject to the conditions set forth in this Agreement, at the
Effective Time, Merger Subsidiary shall merge with and into the
Company to consummate the Merger and the separate corporate
existence of Merger Subsidiary shall cease. The Company shall
be the surviving corporation in the Merger, and shall continue to
exist as a California state-chartered bank (sometimes hereinafter
referred to as the “ Surviving Bank ”) with all
its rights, privileges, immunities, powers and franchises
continuing unaffected by the Merger. Immediately after the
Merger, the Surviving Bank will be merged with and into Pacific
Western National Bank, a national banking association, all of the
outstanding capital stock of which is directly owned by Parent, or
another wholly-owned direct Subsidiary of Parent. Parent may,
at any time prior to the Effective Time (including, to the extent
permitted by applicable law, after the Company Shareholder
Approval) change the method of effecting the combination of Merger
Subsidiary with the Company (including, without limitation, the
provisions of this Article II ) if and to the extent it deems such
change to be necessary, appropriate or desirable; provided,
however , that no such change shall (i) alter or change the
amount or kind of consideration to be paid to holders of Company
Common Stock as provided for in this Agreement, (ii) prevent,
materially impede or materially delay consummation of the Merger or
the other transactions contemplated by this Agreement or (iii)
otherwise be prejudicial to the interests of the shareholders of
the Company.
(b)
Articles of
Incorporation and By-Laws . The articles of
incorporation and by-laws of the Surviving Bank immediately after
the Effective Time shall be the articles of incorporation and
by-laws of the Company as in effect immediately prior to the
Effective Time.
(c)
Directors and
Officers of Parent . The directors and
officers of the Surviving Bank immediately after the Effective Time
shall be the directors and officers of Merger Subsidiary
immediately prior to the Effective Time, until such time as their
successors shall be duly elected and qualified.
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(d)
Effect of the
Merger . At the Effective
Time, the effect of the Merger shall be as provided in CCC
§1107, including any regulations or rules promulgated
thereunder. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the property,
rights, privileges, powers and franchises of the Merger Subsidiary
shall vest in the Surviving Bank and all debts, liabilities,
obligations, restrictions, disabilities and duties of the Merger
Subsidiary shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving
Bank.
2.02.
Effective Date and Effective
Time . Subject to
the satisfaction or waiver of the conditions set forth in Article
VII (other than those conditions that by their nature are to be
satisfied at the consummation of the Merger, but subject to the
fulfillment or waiver of those conditions), on the date which is no
earlier than January 3, 2006, but in any event at least two (2)
Business Days following the date on which all of the approvals of
Governmental Authorities have been obtained, the Agreement of
Merger shall be filed with the California Secretary of State, in
accordance with all appropriate legal requirements together with
such certificates or other documents executed as may be required by
law, and the Merger provided for herein shall become effective upon
such filing; provided , however , that if such timing
would cause the filing date to be later than the 24th of the month
(or the 20th of a month which is the end of a quarter), then the
filing date shall be extended by the minimum amount of time to
ensure that the filing date occurs on the 1 st Business
Day of the subsequent month. Notwithstanding the foregoing or
anything herein to the contrary, the filing date may be set on any
other date on which the parties may mutually agree. The date
of such filing is herein called the “ Effective Date
.” The “ Effective Time ” of the
Merger shall be the time of such filing.
ARTICLE
III
CONSIDERATION; EXCHANGE PROCEDURES
3.01.
Effect on Capital
Stock . Subject to
the other provisions of this Article III, at the Effective Time, by
virtue of the Merger and without any additional action on the part
of the holders of shares of Parent Common Stock, the holders of
Company Common Stock or the sole shareholder of the Merger
Subsidiary:
(a)
Parent Common
Stock . Each share of Parent
Common Stock issued and outstanding immediately prior to the
Effective Time shall remain an issued and outstanding share of
common stock of Parent, and shall not be affected by the
Merger;
(b)
Company Common
Stock . Each share of Company
Common Stock, issued and outstanding immediately prior to the
Effective Time (other than Dissenters’ Shares and Treasury
Shares, as defined below), shall be converted into the right to
receive, in cash and without interest, the Merger Consideration (as
defined below). At the Effective Time, all shares of Company
Common Stock shall no longer be outstanding and shall automatically
be cancelled and retired and shall cease to exist, and each holder
of a certificate that immediately prior to the Effective Time
represented any shares of Company Common Stock (a “
Certificate ”) shall cease to have any rights with
respect thereto, except the right to receive the Merger
Consideration.
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“ Merger
Consideration ” shall be calculated immediately prior to
the Effective Time by Parent shall mean an amount equal to (i) the
sum of (x) $120,000,000 plus (y) the aggregate exercise price of
all In-the-Money Company Stock Options (as defined below)
outstanding immediately prior to the Effective Time divided by (ii)
the sum of (x) the total number of shares of Company Common Stock
outstanding immediately prior to the Effective Time, plus (y) the
total number of shares of Company Common Stock subject to such
In-the-Money Company Stock Options outstanding immediately prior to
the Effective Time. For the avoidance of doubt, the aggregate
consideration for all of the Company Common Stock and Company Stock
Options, in each case outstanding immediately prior to the
Effective Time, shall be $120,000,000. “
In-the-Money Company Stock Options ” shall mean those
Company Stock Options having an exercise price of less than $130.76
per share;
(c)
Dissenters’
Shares . All shares of Company
Common Stock that are “dissenting shares” within the
meaning of CCC §1300 (“ Dissenters’ Shares
”) shall not be converted into or represent a right to
receive the Merger Consideration hereunder unless and until such
shares have lost their status as dissenting shares under CCC
§1300, at which time such shares shall be converted into the
right to receive the Merger Consideration pursuant to Section
3.04;
(d)
Cancellation
of Certain Shares . Any shares of Company
Common Stock held directly or indirectly by Parent or the Company,
other than those held on behalf of a Company shareholder (other
than Parent or the Company) in trust accounts, managed accounts or
otherwise in a fiduciary capacity or as a result of debts
previously contracted (collectively, “ Treasury Shares
”), shall be cancelled and retired at the Effective Time and
no consideration shall be issued in exchange therefor;
and
(e)
Merger
Subsidiary Common Stock . Each share of Common
Stock of the Merger Subsidiary issued and outstanding immediately
prior to the Effective Time shall be converted into one issued and
outstanding share of Common Stock of the Surviving
Bank.
3.02.
Rights as Shareholders; Stock
Transfers . At the
Effective Time, holders of Company Common Stock shall cease to be,
and shall have no rights as, shareholders of the Company other than
to receive the Merger Consideration. After the Effective
Time, there shall be no transfers on the stock transfer books of
the Company of shares of Company Common Stock.
3.03.
Exchange Procedures
. (a) Exchange
Agent . Immediately prior to the Effective Time, Parent
shall deposit, or shall cause to be deposited, with the Exchange
Agent, for the benefit of the holders of Shares an amount that
constitutes the aggregate amount of the Merger Consideration
payable in respect of shares of Company Common Stock pursuant to
Section 3.01(b) upon surrender of Certificates (the “
Exchange Fund ”), it being understood that any and all
interest or income earned on funds made available to the Exchange
Agent pursuant to this Agreement shall belong to Parent. At
the six-month anniversary of the Effective Time, any such cash
remaining in the possession of the Exchange Agent (together with
any dividends or earnings in respect thereof) shall be returned to
Parent. Any former holders of Company Common Stock who have
not theretofore exchanged their Certificates for the Merger
Consideration pursuant to this Article III shall thereafter be
entitled to look exclusively to Parent, and only as general
creditors thereof, to which they are entitled to upon exchange of
their Certificates pursuant to this Article III, without any
interest thereon.
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(b)
Exchange of
Certificates . As soon as
practicable after the Effective Date, but in no event later than
five (5) Business Days thereafter, Parent shall cause the Exchange
Agent to mail to each former holder of record of shares of Company
Common Stock immediately prior to the Effective Time transmittal
materials for use in exchanging such shareholder’s
Certificates for the Merger Consideration set forth in this Article
III. If practicable, Parent shall make available such
transmittal materials to the Company prior to the Effective
Time. Upon surrender of a Certificate (or indemnity
reasonably satisfactory to Parent and the Exchange Agent, if any of
such certificates are lost, stolen or destroyed) for cancellation
to the Exchange Agent together with the transmittal materials duly
completed and validly executed in accordance with the instructions
thereto and such other documents as may reasonably be required by
the Exchange Agent, the record holder of such Certificate shall be
entitled to receive in exchange therefor the Merger Consideration
(after giving effect to any required Tax deductions and
withholdings in accordance with Section 3.03(d)), which, if
practicable, shall be paid within five (5) Business Days of the
later of receipt of such materials or the Effective Time, and the
Certificates so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on any amount payable upon due
surrender of the Certificates. In the event of a transfer of
ownership of shares of Company Common Stock that is not registered
in the transfer records of the Company, the proper amount of the
Merger Consideration may be paid in exchange therefor to a Person
other than the Person in whose name the Certificate so delivered is
registered if the Certificate formerly representing such shares is
presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and to evidence that
any applicable Taxes have been paid.
(c)
No
Liability . Notwithstanding the
foregoing, neither the Exchange Agent nor any party hereto shall be
liable to any former holder of Company Common Stock for any amount
properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(d)
Withholding
Rights . Parent or the
Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any
holder of shares of Company Common Stock such amounts as Parent or
the Exchange Agent is required to deduct and withhold with respect
to the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts
are so withheld by Parent or the Exchange Agent, such withheld
amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Company Common
Stock in respect of which such deduction and withholding was made
by Parent or the Exchange Agent.
3.04.
Dissenters’
Rights . (a)
Any Dissenting Shareholder who shall be entitled to be paid the
value of such shareholder’s shares of Company Common Stock,
as provided in Sections 1300 through 1312 of the CCC, shall not be
entitled to the Merger Consideration in respect thereof provided
for under Section 3.01(b) unless and until such Dissenting
Shareholder shall
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have failed to perfect or shall have effectively
withdrawn or lost such Dissenting Shareholder’s right to
dissent from the Merger under the CCC, and shall be entitled to
receive only the payment provided for by Sections 1300 through 1312
of the CCC with respect to such Dissenters’
Shares.
(b)
If any Dissenting
Shareholder shall fail to perfect or shall have effectively
withdrawn or lost such right to dissent, each share of Company
Common Stock of such Dissenting Shareholder shall be deemed not to
be a Dissenters’ Share and shall be converted into the right
to receive the Merger Consideration.
(c)
The Company shall
give Parent (i) prompt notice of any written demands for appraisal,
attempted withdrawals of such demands and any other instruments
served pursuant to applicable law received by the Company relating
to shareholders’ rights of appraisal and (ii) the opportunity
to (x) approve the form and content of the notice to holders
pursuant to § 1301 of the CCC and (y) direct all negotiations
and proceedings with respect to demands for appraisal. The
Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for
appraisal of Dissenters’ Shares, offer to settle or settle
any such demands or approve any withdrawal of any such
demands.
3.05.
Company Stock Options
. Immediately prior to the
Effective Time, each outstanding Company Stock Option, whether
vested or unvested immediately prior to the Effective Time, will be
cancelled and terminated by the Company in exchange for an amount
of cash, without interest, equal to the number of shares of Company
Common Stock subject to such Company Stock Option multiplied by the
Option Spread less applicable Taxes required to be withheld with
respect to such payment (the “ Option Consideration
”). The “ Option Spread ” for a
Company Stock Option will be equal to the arithmetic difference
between (y) the Merger Consideration and (z) the per share exercise
price of the Company Stock Option. Any Company Stock Option
for which the per share exercise price exceeds the Merger
Consideration shall be cancelled as of the Effective Time without
the payment of any consideration therefor.
ARTICLE
IV
ACTIONS PENDING ACQUISITION
4.01.
Forbearances of the
Company . From the
date hereof until the Effective Time, except as expressly
contemplated by this Agreement, without the prior written consent
of Parent, the Company will not:
(a)
Ordinary
Course . Conduct the business
of the Company other than in the ordinary and usual course or fail
to use its best efforts to preserve intact its business
organizations and assets and maintain its rights, franchises and
existing goodwill and relations with customers, suppliers,
creditors, lessors, lessees, employees and business associates,
take any action that would adversely affect or delay the ability of
the Company, Parent or any Subsidiaries of Parent to perform any of
their obligations on a timely basis under this Agreement, or take
any action that could be expected to have a Material Adverse Effect
on the Company.
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(b)
Capital
Stock . Other than pursuant
to the Rights set forth in Schedule 4.01(b) of the Disclosure
Schedule and outstanding on the date hereof (i) issue, sell,
pledge, dispose of, encumber, or otherwise permit to become
outstanding, or authorize the creation of, any additional shares of
stock (including restricted stock) or any Rights, (ii) enter into
any agreement with respect to the foregoing or (iii) permit any
additional shares of stock to become subject to grants of employee
or director stock options, restricted stock, other Rights or
similar stock-based employee rights.
(c)
Dividends;
Etc . (i) Make, declare,
pay or set aside for payment any dividend on or in respect of, or
declare or make any distribution on any shares of stock or (ii)
directly or indirectly adjust, split, combine, redeem, reclassify,
purchase or otherwise acquire, any shares of its capital
stock.
(d)
Compensation;
Employment Agreements; Etc . Enter into, renew or
allow to renew automatically, make any new grants of awards under,
amend or otherwise modify any employment, consulting, transition,
termination, severance or similar agreements or arrangements with
any director, officer, employee or consultant of the Company or
grant any salary or wage increase or increase any employee benefit
(including incentive or bonus payments), except (i) for normal
individual increases in compensation to employees in the ordinary
course of business consistent with past practice, provided that no
such increase shall result in an annual adjustment of more than 5%,
(ii) for other changes that are required by applicable law, (iii)
to satisfy contractual obligations existing as of the date hereof
and set forth in Schedule 4.01(d) of the Disclosure Schedule or
(iv) make such changes, grants or amendments as are agreed in
writing by the Company and Parent in consultation with one
another.
(e)
Hiring
. Hire any
person as an employee of the Company or promote any employee,
except (i) to satisfy contractual obligations existing as of the
date hereof and set forth in Schedule 4.01(e) of the Disclosure
Schedule and (ii) persons hired to fill any vacancies arising after
the date hereof and whose employment is terminable at the will of
the Company, other than any person to be hired who would have a
base salary, including any guaranteed bonus or any similar bonus,
considered on an annual basis of more than $50,000.
(f)
Benefit
Plans . Except (i) as may be
required by applicable law, (ii) to satisfy contractual obligations
existing as of the date hereof and set forth in Schedule 4.01(f) of
the Disclosure Schedule, or (iii) as otherwise required by this
Agreement, enter into, terminate, establish, adopt or amend any
pension, retirement, stock option, stock purchase, restricted
stock, savings, profit sharing, deferred compensation, consulting,
bonus, group insurance or other employee benefit, incentive or
welfare contract, plan, policy or arrangement, or any trust
agreement (or similar arrangement) related thereto, in respect of
any current or former director, officer, consultant or employee of
the Company or any of its former Subsidiaries or take any action to
accelerate the vesting, accrual or exercisability of stock options,
restricted stock, or other equity-based awards or other
compensation or benefits payable thereunder. Without limiting
the generality of the foregoing, the Company shall not amend or
modify the Company Stock Option Plan or enter into, amend or modify
any option agreement under the Company Stock Option Plan or take
any other action which has the effect of increasing the
Company’s
12
obligations or liabilities
pursuant to the Company Stock Option Plan; provided however
that this will not preclude the Company Board or the compensation
committee of the Company from taking action necessary under the
Stock Option Plan or the agreements thereunder to cause any Company
Stock Options to be treated as provided in Section
3.05.
(g)
Dispositions
. Sell,
transfer, lease, license, guarantee, mortgage, pledge, encumber or
otherwise create any Lien on, dispose of or discontinue any of its
assets, deposits, business or properties (other than sales of loans
and loan participations made in the ordinary and usual course of
business consistent with past practice and pursuant to Section
4.01(q)) except in the ordinary and usual course of business
consistent with past practice and in a transaction that, together
with all other such transactions, is not material to the
Company.
(h)
Acquisitions
. Acquire
(other than by way of foreclosures or acquisitions of control in a
bona fide fiduciary capacity or in satisfaction of indebtedness
previously contracted in good faith, in each case in the ordinary
and usual course of business consistent with past practice) all or
any portion of the assets, deposits, business or properties of any
other Person (other than purchases of loans and loan participations
made in the ordinary and usual course of business consistent with
past practice and pursuant to Section 4.01(q)) except in the
ordinary and usual course of business consistent with past practice
and in a transaction that, together with all other such
transactions, is not material to the Company.
(i)
Capital
Expenditures . Except as set forth
in Schedule 4.01(i) of the Disclosure Schedule, make any capital
expenditures other than capital expenditures in the ordinary course
of business consistent with past practice in amounts not exceeding
$25,000 individually or $150,000 in the aggregate.
(j)
Governing
Documents . Amend the Company
Articles or Company By-Laws.
(k)
Accounting
Methods . Implement or adopt
any change in its accounting principles, practices or methods,
other than as may be required by GAAP or any Regulatory
Authority.
(l)
Contracts
. Except as
set forth in Schedule 4.01(l) of the Disclosure Schedule enter
into, renew or allow to renew automatically, modify, amend or
terminate, or make any payment not then required under or waive,
release or assign any material right or claims under, any contract
or agreement that calls for aggregate annual payments of $25,000 or
more and which is not terminable at will or with 30 days or less
notice without payment of a premium or penalty, other than loans
and loan participations made in the ordinary and usual course of
the banking business consistent with past practice.
(m)
Claims
. Enter
into any settlement, compromise or similar agreement with respect
to, or take any other significant action with respect to the
conduct of, any litigation, action, suit, proceeding, order or
investigation to which the Company is or becomes a party on or
after the date of this Agreement, which settlement, compromise,
agreement or action involves payment by the Company of an amount,
individually or for all such settlements, that exceeds $50,000
and/or would impose any material restriction on the business of the
Company or Parent or its Subsidiaries or create precedent for
claims that are reasonably likely to be material to the
Company.
13
(n)
Adverse
Actions . Knowingly take any
action or omit to take any action that is intended or is reasonably
likely to result in (i) any of its representations and warranties
set forth in this Agreement being or becoming untrue in any
material respect at any time at or prior to the Effective Time,
(ii) any of the conditions to the Merger set forth in Article VII
not being satisfied or (iii) a material violation of any provision
of this Agreement except as may be required by applicable law or
regulation.
(o)
Risk
Management . Except as required by
applicable law or regulation or the FDIC or DFI, (i) implement or
adopt any material change in its interest rate and other risk
management policies, procedures or practices, (ii) fail to follow
its existing policies or practices with respect to managing its
exposure to interest rate and other risk or (iii) fail to use
commercially reasonable means to avoid any material increase in its
aggregate exposure to interest rate risk.
(p)
Indebtedness
. Incur or
modify any indebtedness for borrowed money or other liability
(other than deposits, federal funds borrowings and borrowings from
the Federal Home Loan Bank of San Francisco) or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the
obligations of any other Person.
(q)
Loans . Make any loan, loan
commitment or renewal or extension thereof to any Person which
would, when aggregated with all outstanding loans, commitments for
loans or renewals or extensions thereof made to such Person and any
affiliate or immediate family member of such Person, exceed
$3,000,000 without submitting complete loan package information
customarily submitted to the Company Board or the Company’s
loan committee in connection with obtaining approval of such action
to the chief credit officer of Parent for review with a right of
comment at least three (3) full Business Days prior to taking such
action; provided , that, if Parent objects in writing to
such loan or loan commitment or renewal or extension thereof prior
to the end of such second Business Day, the Company shall obtain
the approval of a majority of the members of the Company Board or
the loan committee, as the case may be, prior to making such loan
or loan commitment or renewal or extension thereof. For the
sake of clarity, the issuance of or the commitment to issue a
letter of credit by the Company on behalf of or for the benefit of
a third party shall constitute a loan or loan commitment under this
clause.
(r)
Investments
. (i) Other
than in securities transactions as provided in (ii) below, make any
investment either by contributions to capital, property transfers
or purchase of any property or assets of any Person and (ii) other
than purchases of (x) direct obligations of, or obligations secured
by the full faith and credit of, the United States of America with
a remaining maturity at the time of purchase of one year or less,
(y) federal funds, or (z) certificates of deposits of any
commercial bank, purchase or acquire securities of any type;
provided, however , that in the case of investment
securities, the Company may purchase investment securities if,
within five (5) Business Days after the Company requests in writing
(which request shall
14
describe in detail the
investment securities to be purchased and the price thereof) that
Parent consent to the making of any such purchase, Parent has
approved such request in writing or has not responded in writing to
such request.
(s)
Taxes . Settle any audit,
make or change any tax election, file any amended Tax Return, take
any action which is reasonably likely to have a Material Adverse
Effect on the tax position of the Company or Parent after the
Merger, change any of its methods of reporting income or deductions
for Tax purposes or take any other action with respect to Taxes
that is outside the ordinary course of business or inconsistent
with past practice.
(t)
Bank Secrecy
Act . Take any action or
omit to take any action that may result, individually or in the
aggregate with any other actions or omissions, in a material
violation of the Bank Secrecy Act, the anti-money laundering laws
and regulations or the Company’s policies and procedures with
respect to the foregoing.
(u)
Commitments
. Agree or
commit to do any of the foregoing.
Except with respect to clauses (a),
(b), (c), (g), (i), (j), (n) and (t) above (and (u), with respect
to agreements or commitments relating to such clauses), if after
the tenth Business Day following a request in writing by the
Company that Parent consent to the taking of any prohibited action,
Parent has not responded to such request, the Company may take such
action, provided that the action (i) is believed in good
faith by the Company to be in the best interests of the Company and
necessary for preserving intact its business organizations and
assets and maintaining its rights, franchises and existing goodwill
and relations with customers, suppliers, employees and business
associates and (ii) taking such action would not violate any other
clause under this Section 4.01.
4.02.
Forbearances of Parent
. From the date hereof until
the Effective Time, except as expressly contemplated by this
Agreement, without the prior written consent of the Company, Parent
will not, and will cause each of its Subsidiaries not
to:
(a)
Ordinary
Course . Take any action
reasonably likely to have an adverse effect on Parent’s
ability to perform any of its material obligations on a timely
basis under this Agreement.
(b)
Adverse
Actions . Knowingly take any
action that is intended or is reasonably likely to result in (i)
any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any
time at or prior to the Effective Time, (ii) the conditions to the
Merger set forth in Article VII not being satisfied or (iii) a
material violation of any provision of this Agreement, except as
may be required by applicable law or regulation.
(c)
Commitments
. Agree or
commit to do any of the foregoing.
15
ARTICLE
V
REPRESENTATIONS AND WARRANTIES
5.01.
Disclosure Schedules
. At least three (3) Business
Days prior to the date hereof, the Company shall have delivered to
Parent a schedule (the “ Disclosure Schedule ”)
setting forth, among other things, items the disclosure of which is
necessary or appropriate either in response to an express
disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained in
Section 5.02, to one or more of its covenants contained in Article
IV or as required by Section 6.09; provided that the mere
inclusion of an item in the Disclosure Schedule as an exception to
a representation or warranty shall not be deemed to be an admission
to any third party that such item represents a material exception
or fact, event or circumstance or that such item is reasonably
likely to result in a Material Adverse Effect.
5.02.
Representations and Warranties of
the Company .
Subject to Section 5.01 and except as set forth in the
corresponding sections or subsections of the Disclosure Schedule,
the Company hereby represents and warrants to Parent:
(a)
Organization,
Standing and Authority . The Company is a
corporation duly organized and validly existing under the laws of
the state of California, is a California state chartered bank and
is duly licensed by the Commissioner as a commercial bank, is not a
member of the Federal Reserve System and its deposits are insured
by the FDIC through the Bank Insurance Fund in the manner and to
the fullest extent provided by law. The Company is duly
qualified to do business and is in good standing in the State of
California and any foreign jurisdictions where its ownership or
leasing of property or assets or the conduct of its business
requires it to be so qualified. The Company has made
available to Parent a complete and correct copy of the Company
Articles, Company By-laws or other governing documents, each as
amended to date, and which are in full force and
effect.
(b)
Company
Capital Stock . The authorized
capital stock of the Company consists solely of 10,000,000 shares
of Company Common Stock, of which 872,991 shares are issued and
outstanding and, of the issued and outstanding shares of Company
Common Stock, 9,250 shares are restricted stock granted under the
Company’s 2004 Restricted Stock Plan for Directors. No
shares of the Company Stock are held in treasury by the Company or
otherwise owned directly or indirectly by the Company. The
outstanding shares of Company Common Stock have been duly
authorized and are validly issued, fully paid and nonassessable,
and subject to no preemptive rights (and were not issued in
violation of any preemptive rights). No more than 69,900
shares of Company Common Stock are issuable upon exercise of
Company Stock Options. Schedule 5.02(b) of the Disclosure
Schedule sets forth for each Company Stock Option, the name of the
grantee or holder, the date of the grant, the expiration date of
such Company Stock Option, the type of grant, the status of the
option grant as an incentive stock option or non-qualified stock
option under Section 422 of the Code, the number of shares of
Company Common Stock subject to such Company Stock Option, the
number and type of shares subject to such Company Stock Option that
are currently exercisable and the exercise price per
16
share. Schedule
5.02(b) of the Disclosure Schedule sets forth for each grant of
restricted stock, the name of the holder, the date of the grant,
the number of shares of restricted stock granted, and the number of
shares that are currently vested. Except as set forth above,
there are no shares of Company Common Stock authorized and reserved
for issuance, the Company does not have any other Rights issued or
outstanding with respect to Company Common Stock, and the Company
does not have any commitment to authorize, issue or sell any
Company Common Stock or Rights, except pursuant to this
Agreement. The Company is not a party to any voting agreement
with respect to shares of its capital stock, equity or voting
interests and, to the Knowledge of the Company, other than the
Shareholder Agreements, there are no proxies, voting agreements,
voting trusts, rights plans, anti-takeover plans or registration
rights agreements with respect to any shares of the capital stock,
equity or voting interests in the Company.
(c)
Subsidiaries
. The
Company has no Subsidiaries. Except as set forth in Schedule
5.02(c), the Company does not own or beneficially own, directly or
indirectly, any equity securities or similar interests of any
Person or any interests of any Person or any interest in a
partnership or joint venture of any kind.
(d)
Corporate
Power . The Company has all
corporate power and authority to carry on its business as it is now
being conducted and to own, lease or operate all its properties and
assets; and the Company has all corporate power and authority and
has taken all corporate action necessary to execute, deliver and
perform its obligations under this Agreement, other than the
consummation of the Merger which is subject to receipt of the
Company Shareholder Approval.
(e)
Corporate
Authority . The Company Board, by
resolutions duly adopted at a meeting duly called and held, has
duly (i) determined that this Agreement, the Merger and the
transactions contemplated hereby are advisable and fair to and in
the best interests of the Company and its shareholders, (ii)
approved this Agreement, the Merger and the transactions
contemplated by this Agreement, and (iii) recommended that its
shareholders approve this Agreement and the principal terms of the
Merger and that such matter be submitted for consideration by its
shareholders at a meeting of its shareholders. The Company
has duly authorized, executed and delivered this Agreement and,
assuming the due authorization, execution and delivery of this
Agreement by Parent, this Agreement is a valid and legally binding
obligation of the Company, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting
creditors’ rights or by general equity
principles).
(f)
Regulatory
Approvals; No Violations . (i) No
consents, approvals, permits, authorizations of, or waivers by, or
notices, reports, filings or registrations with, any Governmental
Authority or with any third party are required to be made or
obtained by the Company in connection with the execution, delivery
or performance by the Company of this Agreement or to consummate
the Merger and the other transactions contemplated hereby except
for (A) filings of applications or notices with, and approvals or
waivers by, the FDIC, the OCC, and the DFI (B) the filing of the
Proxy Statement with, and the approval of the Proxy Statement by,
the DFI, (C) Company Shareholder Approval and (D) the filing of the
executed Agreement
17
of Merger with the
California Secretary of State pursuant to the CCC. As of the
date hereof, the Company is not aware of any reason why the
approvals set forth in this Section 5.02(f) will not be received
without the imposition of a condition, restriction or requirement
of the type described in Section 7.01(b).
(ii)
Subject to
receipt of the approvals referred to in the preceding paragraph,
and the expiration of related waiting periods and, except as set
forth on Schedule 5.02(k)(iii) of the Disclosure Schedule, the
execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated
hereby and thereby do not and will not (A) constitute or result in
a breach or violation of, or a default under, or give rise to any
Lien, any acceleration of remedies or any right of termination
under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license, contract, agreement, indenture,
arrangement or instrument or other obligation the Company or to
which the Company or any of its properties are subject or bound,
(B) constitute or result in a breach or violation of, or a default
under, the articles of incorporation or by-laws (or similar
governing documents) of the Company or (C) require any consent or
approval under any such law, rule or regulation or any judgment,
decree, order, governmental permit or license, contract, agreement,
indenture, arrangement or instrument or other obligation the
Company or to which the Company or any of their respective
properties are subject or bound.
(iii)
The affirmative
vote of the holders of a majority of the outstanding shares of
Company Common Stock is the only vote of the holders of capital
stock of the Company necessary to adopt and approve this Agreement,
approve the principal terms of the Merger and approve the
transactions contemplated hereby (the “ Company
Shareholder Approval ”).
(g)
Financial
Reports; Material Adverse Effect . (i) The
balance sheet of the Company as of December 31, 2004 and the
related statements of income, cash flows and changes in
shareholders’ equity position for the three years ended
December 31, 2004, which was audited by KPMG LLP, and the unaudited
balance sheet of the Company as of June 30, 2005 and the related
statements of income, cash flows and changes in shareholders’
equity position for the six months ended June 30, 2005 (such
balance sheets and the related statements of income, cash flows and
changes in shareholders’ equity (including any related notes
and schedules thereto) are collectively referred to herein as the
“ Company Financial Statements ”) fairly present
(subject, in the case of unaudited statements, to recurring
period-end audit adjustments, normal in nature and amount, none of
which, individually or in the aggregate, are expected to be
material to the Company) the financial position, the results of
operations, cash flows and changes in shareholders’ equity of
the Company for the respective fiscal periods or as of the
respective dates therein set forth, in each case in accordance with
GAAP consistently applied during the periods involved, except in
each case as may be noted therein. The books and records
underlying the Company Financial Statements have been, and are
being, maintained in accordance with GAAP or, to the extent
inconsistent with GAAP, in accordance with any other applicable
legal and accounting requirements. The Company is not a party
to, or has any commitment to become a party to, any joint venture,
off-balance sheet partnership or any similar contract or
arrangement
18
relating to any transaction
or relationship between or among the Company, on the one hand, and
any unconsolidated affiliate, including any structured finance,
special purpose or limited purpose Person, on the other hand, or
any “off-balance sheet arrangements” (as defined in
Item 303(a) of Regulation S-K of the SEC).
(ii)
The Company has
timely filed all reports, registrations and statements, together
with any amendments required to be made with respect thereto, that
they were required to file since December 31, 2002 with (A) the
DFI, (B) the FDIC and (C) any other Regulatory Authority
(collectively, the “ Regulatory Filings ”), and
all other reports, registrations and statements required to be
filed by them since December 31, 2002, including, without
limitation, any report, registration or statement required to be
filed pursuant to the laws of the United States or the State of
California and the rules and regulations of the FDIC, DFI or any
other Regulatory Authority, and have paid all fees and assessments
due and payable in connection therewith. As of their
respective dates, such reports, registrations and statements
complied in all material respects with all the laws, rules and
regulations of the applicable Regulatory Agency with which they
were filed and did not and will not contain any untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(iii)
Since December
31, 2004, the Company has not incurred any obligations or
liabilities (whether or not accrued, contingent or otherwise and
whether or not required to be disclosed, including those related to
environmental and occupational safety and health matters) other
than in the ordinary course of business consistent with past
practice.
(iv)
Since December
31, 2004, (A) the Company has conducted its business only in the
ordinary and usual course consistent with past practice (excluding
the incurrence of expenses related to this Agreement, the execution
of this Agreement and the transactions contemplated hereby) and (B)
no event has occurred or circumstance arisen that, individually or
taken together with all other facts, circumstances and events
(described in any paragraph of this Section 5.02 or otherwise), has
had or could be reasonably likely to have a Material Adverse Effect
with respect to the Company.
(v)
Except as set
forth in Schedule 5.02(g)(v) of the Disclosure Schedule, since
December 31, 2004, there has not been (A) any material damage,
destruction or other casualty loss with respect to any material
asset or property owned, leased or otherwise used by the Company,
whether or not covered by insurance, (B) any declaration, setting
aside or payment of any dividend or other distribution in cash,
stock or property in respect of the capital stock of the Company,
(C) any change by the Company in accounting principles, practices,
procedures or methods or (D) any increase in the compensation
payable or that could become payable by the Company to directors,
officers or employees or any amendment of any Benefit Plans other
than increases or amendments in the ordinary and usual course of
business consistent with past practice.
19
(vi)
No securities of
the Company are registered under the Exchange Act, and the Company
is not required to register any such securities.
(vii)
The Company
maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP
and to maintain asset accountability, (iii) access to assets
is permitted only in accordance with the management’s general
or specific authorization and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences. Neither the Company nor, to the Company’s
Knowledge, the Company’s independent auditors or any Employee
of the Company has identified or been made aware of (A) any fraud,
whether or not material, that involves the Company’s
management or other Employees who have a role in the preparation of
financial statements or the internal controls utilized by the
Company or (B) any claim or allegation regarding any of the
foregoing.
(h)
Litigation
. Except as
set forth in Schedule 5.02(h) of the Disclosure Schedule, no
litigation, claim, action, suit, hearing, investigation,
arbitration or other proceeding before any court or Governmental
Authority or arbitrator is pending against the Company and, to the
Company’s Knowledge, no such litigation, claim, action, suit,
hearing, investigation, arbitration or other proceeding has been
threatened and, to the Company’s Knowledge, there are no
facts or circumstances which could reasonably give rise to such
litigation, claim or other proceeding.
(i)
Regulatory
Matters . (i) Except as
set forth in Schedule 5.02(i) of the Disclosure Schedule, the
Company is not a party to, nor is subject to, any order, decree,
agreement, memorandum of understanding or similar arrangement with,
or a commitment letter or similar submission to, or extraordinary
supervisory letter from, any federal or state Governmental
Authority charged with the supervision or regulation of financial
institutions or issuers of securities or engaged in the insurance
of deposits or the supervision or regulation of it (collectively,
the “ Regulatory Authorities ”). The
Company has paid all assessments made or imposed by any Regulatory
Authority.
(ii)
The Company has
not been advised by, and does not have any Knowledge of facts which
could give rise to an advisory notice by, any Regulatory Authority
that such Regulatory Authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar
submission.
(j)
Compliance
With Laws . The
Company:
(i)
is in compliance
in all material respects with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees
conducting such businesses, including, without limitation, the
Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act, the Bank
Secrecy Act, and all other fair lending laws and other laws
relating to discriminatory business practices;
20
(ii)
has adopted such
procedures and policies as are, in the reasonable judgment of
Company management, necessary or appropriate to comply with Title
III of the USA Patriot Act and, to the Knowledge of the Company, is
in such compliance;
(iii)
has all permits,
licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, all Governmental
Authorities that are required in order to permit it to own, lease
or operate its assets and properties and to conduct its businesses
as presently conducted; all such permits, licenses, certificates of
authority, orders, authorizations and approvals are in full force
and effect and, to the Company’s Knowledge, no suspension or
cancellation of any of them is threatened; and
(iv)
no investigation
or review by any Governmental Authority with respect to the Company
is pending or, to the Knowledge of the Company, threatened, nor has
the Company received any, since December 31, 2002, notification or
communication from any Governmental Authority (A) asserting that
the Company is not in compliance, in any material respect, with any
of the laws, statutes, regulations or ordinances which such
Governmental Authority enforces or (B) threatening to revoke any
license, franchise, permit or governmental authorization (nor, to
the Company’s Knowledge, do any grounds for any of the
foregoing exist).
(k)
Material
Contracts; Defaults . Except as set forth
on Schedule 5.02(k) of the Disclosure Schedule, the
Compa
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