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Title: |
Agreement to Merge and Plan of Reorganization |
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Date: |
2001 |
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$58 |
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AGREEMENT TO MERGE
AND PLAN OF REORGANIZATION
DATED AS OF APRIL 9, 2001
BY AND AMONG
MID-STATE BANK,
MID-STATE BANCSHARES,
AMERICORP,
AND
AMERICAN COMMERCIAL BANK
<PAGE>
AGREEMENT TO MERGE
AND PLAN OF REORGANIZATION
THIS AGREEMENT TO MERGE AND PLAN OF REORGANIZATION
("AGREEMENT") is entered into as of April 9, 2001, among Mid-State Bank, a
banking company organized under the laws of California ("BANK"), being
located in Arroyo Grande, California, Mid-State Bancshares, a corporation and
registered bank holding company organized under the laws of California
("ACQUIROR") located in Arroyo Grande, California, Americorp, a corporation
and registered bank holding company organized under the laws of California
("TARGET") located in Ventura, California, and American Commercial Bank, a
banking company organized under the laws of California ("TARGET BANK"),
located in Ventura, California.
R E C I T A L S:
A. Bank is a wholly owned subsidiary of Acquiror and Target Bank
is a wholly owned subsidiary of Target.
B. Acquiror and Target believe that it would be in their
respective best interests and in the best interests of their respective
shareholders for (i) Target to merge with and into Acquiror (the "Merger"), (ii)
for the shareholders of Target to become shareholders of Acquiror, and (iii)
Target Bank to merge with and into Bank ("Bank Merger"), all in accordance with
the terms set forth in this Agreement and applicable law.
C. The respective Boards of Directors of Acquiror, Bank, Target
and Target Bank have adopted by at least majority vote resolutions approving and
authorizing the Merger, the Bank Merger, this Agreement and the transactions
contemplated herein.
D. Acquiror, Bank, Target and Target Bank desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated by this Agreement.
E. Concurrently herewith, Acquiror and Target are entering into a
stock option agreement (the "Stock Option Agreement"), to be dated the date
hereof, whereby Target will grant to Acquiror the option to purchase up to 19.9%
of the outstanding shares of Target's common stock upon the occurrence of
certain events.
F. It is the intention of the parties to this Agreement that the
business combination contemplated hereby be accounted for under the "pooling of
interests" accounting method and be
1
<PAGE>
created as a "reorganization" under Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code").
A G R E E M E N T
IN CONSIDERATION of the premises and mutual covenants hereinafter
contained, Bank, Acquiror, Target and Target Bank agree as follows:
ARTICLE 1
DEFINITIONS AND DETERMINATIONS
1.1 DEFINITIONS. Capitalized terms used in this Agreement shall have the
meanings set forth below:
"Agreement of Merger" means the Agreement of Merger substantially in
the form attached hereto as Exhibit A.
"Agreement of Bank Merger" means the Agreement of Merger substantially
in the form attached as Exhibit B.
"Affiliate" means a person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the person specified.
"Acquiror" shall have the meaning given such term in the introductory
clause.
"Acquiror Benefit Arrangement" means the Benefit Arrangements
maintained or otherwise contributed to by Acquiror or Bank.
"Acquiror Corporate Governance Changes" shall have the meaning given
such term in Section 2.1(c).
"Acquiror Property" shall have the meaning given such term in Section
3.10.
"Acquiror Stock" means the common stock, no par value, of Acquiror.
"Acquiror Stock Option" means any option issued pursuant to the
Acquiror's Stock Option Plan.
"Acquiror Stock Option Plan" means the Acquiror 1996 Stock Option Plan,
as amended.
"Average Closing Price" means the average of the daily closing price of
a share of Acquiror's Stock reported over NASDAQ National Market during the
twenty (20) consecutive
2
<PAGE>
trading days that Acquiror's Stock trades ending at the end of the fifth
trading day immediately preceding the Effective Day.
"Bank" shall have the meaning given such term in the introductory
clause.
"Bank Corporate Governance Changes" shall have the meaning given such
term in Section 2.1(b).
"Bank Merger" shall have the meaning given such term in the Recitals.
"Bank Stock" means the common stock, no par value, of Bank.
"Benefit Arrangement" means any plan or arrangement maintained or
contributed to by a Party, including an "employee benefit plan" within the
meaning of ERISA, (but exclusive of base salary and base wages) which provides
for any form of current or deferred compensation, bonus, stock option, profit
sharing, benefit, retirement, incentive, group health or insurance, welfare or
similar plan or arrangement for the benefit of any employee, officer or director
or class of employee, officer or director, whether active or retired, of a
Party.
"BHC Act" means the Bank Holding Company Act of 1956, as amended.
"Business Day" means any day other than a Saturday, Sunday or day on
which commercial banks in California are authorized or required to be closed.
"Certificates" shall have the meaning given such term in
Section 2.5(b).
"CFC" means the California Financial Code.
"CGCL" means the California General Corporation Law.
"Change in Control" shall mean (x) a merger or consolidation, or any
similar transaction, involving Acquiror or Bank in which Acquiror or Bank, as
the case may be, is not the surviving corporation, (y) a purchase, lease or
other acquisition of all or substantially all of the assets of or assumption of
all or substantially all the deposits of Acquiror or Bank or (z) a purchase or
other acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 51% or more of the voting power of
Acquiror.
"Charter Documents" means, with respect to any business organization,
any certificate or articles of incorporation and any bylaws, each as amended to
date, that regulate the basic organization of the business organization and its
internal relations.
"Closing" means the consummation of the Merger on the Effective Day at
the main office of Target Bank or at such other place as may be agreed upon by
the Parties.
3
<PAGE>
"Code" means the United States Internal Revenue Code of 1986, as
amended, and all regulations thereunder.
"Commissioner" means the Commissioner of Financial Institutions, State
of California.
"Competing Transaction" shall have the meaning given such term in
Section 6.12.
"Confidential Information" means all information exchanged heretofore
or hereafter between Target, and Target Bank, their affiliates and agents, on
the one hand, and Acquiror and Bank, their affiliates and agents, on the other
hand, which is information related to the business, financial position or
operations of the Person responsible for furnishing the information or an
Affiliate of such Person (such information to include, by way of example only
and not of limitation, client lists, company manuals, internal memoranda,
strategic plans, budgets, forecasts/ projections, computer models, marketing
plans, files relating to loans originated by such Person, loans and loan
participation purchased by such Person from others, investments, deposits,
leases, contracts, employment records, minutes of board of directors meetings
(and committees thereof) and stockholder meetings, legal proceedings, reports of
examination by any Governmental Entity, and such other records or documents such
Person may supply to the other Party pursuant to the terms of this Agreement or
as contemplated hereby). Notwithstanding the foregoing, "Confidential
Information" shall not include any information that (i) at the time of
disclosure or thereafter is generally available to and known by the public
(other than as a result of a disclosure directly or indirectly by the recipients
or any of their officers, directors, employees or other representatives or
agents), (ii) was available to the recipients on a nonconfidential basis from a
source other than Persons responsible for furnishing the information, PROVIDED
that such source is not and was not bound by a confidentiality agreement with
respect to the information, or (iii) has been independently acquired or
developed by the recipients without violating any obligations under this
Agreement.
"Consents" means every required consent, approval, absence of
disapproval, waiver or authorization from, or notice to, or registration or
filing with, any Person.
"Disclosure Letter" means a disclosure letter from the Party making the
disclosure and delivered to the other Party.
"DPC Property" means voting securities, other personal property and
real property acquired by foreclosure or otherwise, in the ordinary course of
collecting a debt previously contracted for in good faith, retained with the
object of sale for any applicable statutory holding period, and recorded in the
holder's business records as such.
"Effective Day" means the day on which the Effective Time occurs.
"Effective Time" shall have the meaning given such term in Section 2.2.
"Employment Agreement" shall have the meaning given such term in
Section 4.18(d).
4
<PAGE>
"Encumbrances" means any option, pledge, security interest, lien,
charge, encumbrance, mortgage, assessment, claim or restriction (whether on
voting, disposition or otherwise), whether imposed by agreement, understanding,
law or otherwise.
"Environmental Laws" shall have the meaning given such term in Section
3.10.
"Equity Securities" means capital stock or any options, rights,
warrants or other rights to subscribe for or purchase capital stock, or any
plans, contracts or commitments that are exercisable in such capital stock or
that provide for the issuance of, or grant the right to acquire, or are
convertible into, or exchangeable for, such capital stock.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all regulations thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" means ChaseMellon Shareholder Services or such other
financial institution appointed by Acquiror to reflect the exchange contemplated
by Section 2.5 hereof.
"Exchange Fund" shall have the meaning given such term in Section 2.5.
"Exchange Ratio" means the number of shares of Acquiror Stock into
which a share of Target Stock shall be converted which shall be equal to the
amount (to the nearest ten thousandth) as set forth herein below:
(i) If the Average Closing Price is not less than $15.15 and
is not more than $17.61, the Exchange Ratio shall be calculated by dividing
$28.75 by the Average Closing Price;
(ii) If the Average Closing Price is more than $17.61, but not
more than $18.42, the Exchange Ratio shall be 1.6335;
(iii) If the Average Closing Price is more than $18.42, the
Exchange Ratio shall be calculated by dividing $30.09 by the Average Closing
Price; provided, however, that if Acquiror shall have entered into a definitive
agreement for a Change of Control (which definitive agreement shall not have
terminated at the Effective Time) and the Average Closing Price is more than
$18.42, the Exchange Ratio shall be 1.6335;
(iv) If the Average Closing Price is less than $15.15 but not
less than $14.33, the Exchange Ratio shall be 1.8977;
(v) If the Average Closing Price is less than $14.33, the
Exchange Ratio shall be calculated by dividing $27.19 by the Average Closing
Price subject to Acquiror's right to terminate the Agreement as set forth in
Section 10.1(g).
5
<PAGE>
The Exchange Ratio shall be adjusted for any Litigation Expenses
incurred in resolving the Litigation Contingencies if the total amount of
Litigation Expenses is in excess of $250,000; provided, however, that the amount
of Litigation Expenses shall be reduced by the amount of any insurance proceeds
actually received or certain, in the reasonable judgment of Acquiror and Target
Bank, to be received from an insurer of Target or Target Bank. "Litigation
Expenses" includes the pre-tax amounts of each and every cost and expense
incurred by Target or Target Bank from the date hereof until the Effective Time
in connection with the resolution or final disposition of the Litigation
Contingencies, including the amounts of any judgments, damages of all kinds,
settlements, legal fees, court costs, costs of mediators, arbitrators and
experts, reimbursements to third parties (including any insurer of Target or
Target Bank) and all other expenses of or relating to the Litigation
Contingencies. To the extent that an item related to a Litigation Expense shall
have already been booked and expensed by Target and Target Bank as of the date
hereof, no further adjustment shall be made as a result thereof. In the event of
an adjustment to the Exchange Ratio resulting from Litigation Expenses, the
Exchange Ratio shall be calculated (to the nearest ten thousandth) according to
the following:
(V) If the Average Closing Price is not less than $15.15 and
is not more than $17.61, the Exchange Ratio shall be calculated according to the
following formula:
$28.75 - X
----------
Average Closing Price;
(W) If the Average Closing Price is more than $17.61, but not
more than $18.42, the Exchange Ratio shall be calculated according to the
following formula;
$28.75 - X
----------
$17.61
(X) If the Average Closing Price is more than $18.42, the
Exchange Ratio shall be calculated according to the following formula:
$30.09 - X
----------
Average Closing Price
provided, however, that if Acquiror shall have entered into a definitive
agreement for a Change of Control (which definitive agreement shall not have
terminated at the Effective Time) and the Average Closing Price is more than
$18.42, the Exchange Ratio shall be as calculated in (W), above;
(Y) If the Average Closing Price is less than $15.15 but not
less than $14.33, the Exchange Ratio shall be calculated according to the
following formula;
$28.15 - X
----------
$15.15
6
<PAGE>
(Z) If the Average Closing Price is less than $14.33, the
Exchange Ratio shall be calculated according to the following formula:
$27.19 - X
----------
Average Closing Price
subject to Acquiror's right to terminate the Agreement as set forth in Section
10.1(g).
In each of the foregoing, "x" represents the dollar amount of Litigation
Expenses in excess of $250,000 divided by the outstanding shares of Target Stock
(determined as of the day on which the Average Closing Price is determined.
"Expenses" shall have the meaning given such term in Section 11.1.
"Executive Officer" means with respect to any company a natural Person
who participates or has the authority to participate (other than solely in the
capacity of a director) in major policy making functions of the company, whether
or not such Person has a title or is serving with salary or compensation.
"FDIC" means the Federal Deposit Insurance Corporation.
"Financial Statements of Acquiror" means the audited consolidated
financial statements and notes thereto of Acquiror and the related opinions
thereon for the years ended December 31, 1998, 1999 and 2000.
"Financial Statements of Target" means the audited consolidated
financial statements and notes thereto of Target and the related opinions
thereon for the years ended December 31, 1998, 1999 and 2000.
"FRB" shall mean the Board of Governors of the Federal Reserve System.
"GAAP" means generally accepted accounting principles.
"Governmental Entity" means any court or tribunal in any jurisdiction
or any United States federal, state, district, domestic, or other administrative
agency, department, commission, board, bureau or other governmental authority or
instrumentality.
"Hazardous Materials" shall have the meaning given such term in
Section 3.10.
"Immediate Family" shall mean a Person's spouse, parents, in-laws,
children and siblings.
"IRS" shall mean the Internal Revenue Service.
7
<PAGE>
"Investment Securities" means any equity security or debt security
as defined in Statement of Financial Accounting Standard No. 115.
"Litigation Contingencies" means the unresolved litigation matters
set forth on Target's and Target Bank's Disclosure Letter in response to
Section 4.9.
"Litigation Expenses" shall have the meaning given such term in the
definition of "Exchange Ratio."
"Merger" shall have the meaning given such term in the Recitals.
"Operating Loss" shall have the meaning given such term in Section
4.24.
"Party" means any of Acquiror, Bank, Target or Target Bank.
"Permit" means any United States federal, foreign, state, local or
other license, permit, franchise, certificate of authority, order of approval
necessary or appropriate under applicable Rules.
"Person" means any natural person, corporation, trust, association,
unincorporated body, partnership, joint venture, Governmental Entity,
statutorily or regulatory sanctioned unit or any other person or organization.
"Proxy Statement" means the proxy statement that is included as part
of the S-4 and used to solicit proxies for the Target Shareholders' Meeting
and to offer and sell the shares of Acquiror Stock to be issued in connection
with the Merger.
"Related Group of Persons" means Affiliates, members of an Immediate
Family or Persons the obligation of whom would be attributed to another
Person pursuant to the regulations promulgated by the SEC.
"Rule" means any statute or law or any judgment, decree, injunction,
order, regulation or rule of any Governmental Entity.
"S-4" means the registration statement on Form S-4, and such
amendments thereto, that is filed with the SEC to register the shares of
Acquiror Stock to be issued in the Merger under the Securities Act and
includes the Proxy Statement which will be used to solicit proxies for the
Target Shareholders' Meeting.
"SEC" means the Securities and Exchange Commission.
"SEC Reports" mean all reports filed by a Party hereto pursuant to
the Exchange Act with the SEC or other Governmental Entity.
8
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Option Agreement" shall have the meaning given such term in
the Recitals and in the certain Stock Option Agreement entered into by the
Parties concurrently with this Agreement.
"Surviving Bank" means the Bank as the California state-chartered
bank surviving the Bank Merger of Target Bank with and into Bank.
"Tank" shall have the meaning given such term in Section 3.10.
"Third Party Consent" shall have the meaning given such term in
subsection (b) of Section 5.7.
"Target" shall have the meaning given such term in the introductory
clause.
"Target Bank" shall have the meaning given such term in the
introductory clause.
"Target Bank Stock" means the common stock, $1.25 par value of
Target Bank.
"Target Benefit Arrangement" shall have the meaning given such term
in Section 4.18.
"Target's Directors Agreement" shall mean an agreement,
substantially in the form attached as Exhibit 2.6.
"Target Dissenting Shares" means shares of Target Stock held by
"dissenting shareholders" within the meaning of Chapter 13 of the CGCL.
"Target Perfected Dissenting Shares" means Dissenting Shares which
the holders thereof have not withdrawn or caused to lose their status as
Target Dissenting Shares.
"Target Property" shall have the meaning given such term in Section
4.25.
"Target Scheduled Contracts" shall have the meaning given such term
in Section 4.30.
"Target Shareholders' Meeting" shall have the meaning given such
term in Section 6.6.
"Target Stock" means the common stock, $0.50 par value, of Target.
"Target Stock Options" shall have the meaning given such term in
Section 4.2.
"Target Stock Option Plan" means Target's 1994 and 1998 stock option
plans.
"To the knowledge" shall have the meaning given such term in Section
11.13.
9
<PAGE>
ARTICLE 2
CONSUMMATION OF THE MERGER AND THE BANK MERGER
2.1 THE MERGER; THE BANK MERGER; PLAN OF REORGANIZATION.
(a) Subject to the terms and conditions of this Agreement and
the Agreement of Merger, at the Effective Time, Target shall merge with and
into Acquiror in accordance with the procedures specified in the CGCL with
Acquiror as the survivor. Simultaneous with the Effective Time, pursuant to
the Agreement of Bank Merger to be executed by Bank and Target Bank, Target
Bank will be merged into Bank in accordance with the procedures specified in
the CFC. Bank will be the Surviving Bank in the Bank Merger.
(b) The Charter Documents of Bank as in effect immediately
prior to the Effective Time shall continue in effect after the Bank Merger
until thereafter amended in accordance with applicable law and the members of
the Board of Directors and the Executive Officers of Bank immediately prior
to the Bank Merger shall continue in their respective positions after the
Bank Merger and be the Board of Directors and Executive Officers of the
Surviving Bank; except that Bank shall have taken prior to the Effective Time
all necessary steps so that at the Effective Time (i) the number of
authorized directors of Bank shall be expanded by one and (ii) one of the
current directors of Target (who shall be mutually selected by Acquiror and
Target) shall be added to the Board of Directors of Bank and shall serve
until the earlier of his resignation or removal or until his successor is
duly elected and qualified (clause (i) and (ii) being hereinafter
collectively referred to as the "Bank Corporate Governance Changes").
(c) The Charter Document of Acquiror as in effect immediately
prior to the Effective Time shall continue in effect after the Merger until
thereafter amended in accordance with applicable law, the members of the
Board of Directors and the Executive Officers of Acquiror immediately prior
to the Merger shall continue in their respective positions after the Merger
and be the Board of Directors and Executive Officers of Acquiror and the
operations of Acquiror shall continue in effect after the Merger; except that
Acquiror shall have taken prior to the Effective Time all necessary steps so
that at the Effective Time (i) the number of authorized directors of Acquiror
shall be expanded by one and (ii) one of the current directors of Target (who
shall be mutually selected by Acquiror and Target) shall be added to the
Board of Directors of Acquiror and shall serve until the earlier of his
resignation or removal or until his respective successor is duly elected and
qualified (clauses (i) and (ii) being hereinafter collectively referred to as
the "Acquiror Corporate Governance Changes").
(d) At the Effective Time, the corporate existence of Target
shall be merged and continued in Acquiror. All assets, rights, franchises,
titles and interests of Target and Acquiror, in and to every type of property
(real, personal and mixed, including all the right, title and interest to
Target's and Target Bank's names, trade names, service marks and the like)
and chooses in action shall be transferred to and vested in Acquiror by
virtue of the Merger without
10
<PAGE>
any deed or other transfer, and Acquiror, without any order or action on the
part of any court or otherwise, shall hold and enjoy all rights of property,
franchises and interests in the same manner and to the same extent that such
rights, franchises and interests were held by Target and Acquiror at the
Effective Time. At the Effective Time, Acquiror shall be liable for all
liabilities of Target and Acquiror and all debts, liabilities, obligations
and contracts of Target and Acquiror, matured or unmatured, whether accrued,
absolute, contingent or otherwise, and whether or not reflected or reserved
against on balance sheets, books of accounts or records of Target and
Acquiror, shall be those of Acquiror; and all rights of creditors or other
obligees and all liens on property of Target and Acquiror shall be preserved
unimpaired.
(e) At the effective time of the Bank Merger, the corporate
existence of Target Bank shall be merged and continued in Bank under Bank's
certificate of authority. All assets, rights, franchises, titles and
interests of Target Bank and Bank, in and to every type of property (real,
personal and mixed, including all the right, title and interest to Target
Bank's names, trade names, service marks and the like) and chooses in action
shall be transferred to and vested in Bank by virtue of the Bank Merger
without any deed or other transfer, and Bank, without order or action on the
part of any court or otherwise, shall hold and enjoy all rights of property,
franchises and interests in the same manner and to the same extent that such
rights, franchises and interests were held by Target Bank and Bank at the
effective time of the Bank Merger. At the effective time of the Bank Merger,
Bank shall be liable for all liabilities of Target Bank and Bank, matured or
unmatured, whether debts, liabilities, obligations and contracts of Target
Bank and Bank, whether accrued, absolute, contingent or otherwise, and
whether or not reflected or reserved against on balance sheets, books of
accounts or records of Target Bank and Bank, shall be those of Bank; and all
rights of creditors or other obligees and all liens on property of Target
Bank and Bank shall be preserved unimpaired.
2.2 EFFECTIVE TIME. The Closing shall take place as soon as
practicable following (i) the satisfaction or waiver of the conditions set
forth in Sections 8.1, 8.2 and 8.3, (ii) receipt of approval of all required
Governmental Entities for the Merger and the Bank Merger, (iii) the
expiration of all required waiting periods, and (iv) the expiration of the 30
day period following the mailing by Target to its shareholders of a notice of
approval of the Merger by the outstanding shares pursuant to Section 1301 of
the CGCL, or such other time and date as to which the Parties may agree. The
Merger shall be effective upon the filing by the California Secretary of
State of the Agreement of Merger as specified in the CGCL. Such time is
referred to herein as the "Effective Time."
2.3 CONVERSION OF SHARES. At the Effective Time and pursuant to
the Agreement of Merger:
(a) Subject to the exceptions and limitations in
Section 2.4, each outstanding share of Target Stock shall, without any
further action on the part of Target or the holders of any of such shares, be
converted into shares of Acquiror Stock in accordance with the Exchange Ratio.
11
<PAGE>
(b) Each outstanding share of Acquiror Stock shall
remain outstanding and shall not be converted or otherwise affected by the
Merger.
2.4 CERTAIN EXCEPTIONS AND LIMITATIONS. (A) Any shares of
Target Stock held by Acquiror or any subsidiary of Acquiror (other than
shares held in a fiduciary capacity or as DPC Property) will be canceled at
the Effective Time; (B) Target Perfected Dissenting Shares shall not be
converted into shares of Acquiror Stock, but shall, after the Effective Time,
be entitled only to such rights as are granted them by Chapter 13 of the CGCL
(each dissenting shareholder who is entitled to payment for his shares of
Target Stock shall receive such payment in an amount as determined pursuant
to Chapter 13 of CGCL), and (C) no fractional shares of Acquiror Stock shall
be issued in the Merger and, in lieu thereof, each holder of Target Stock who
would otherwise be entitled to receive a fractional share shall receive an
amount in cash equal to the product (calculated to the nearest hundredth)
obtained by multiplying such fractional share interest by the Average Closing
Price.
2.5 EXCHANGE PROCEDURES.
(a) As of the Effective Time, Acquiror shall have deposited
with the Exchange Agent for the benefit of the holders of shares of Target
Stock, for exchange in accordance with this Section 2.5 through the Exchange
Agent, certificates representing the shares of Acquiror Stock issuable
pursuant to Section 2.3 in exchange for shares of Target Stock outstanding
immediately prior to the Effective Time, and funds in an amount not less than
the amount of cash payable in lieu of fractional shares of Acquiror Stock
which would otherwise be payable in connection with Section 2.3 hereof, but
for the operation of Section 2.4 of this Agreement (collectively, the
"Exchange Fund").
(b) Acquiror shall direct the Exchange Agent to mail promptly
after the Effective Time, to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Target Stock (the "Certificates") whose shares were
converted into the right to receive shares of Acquiror Stock pursuant to
Section 2.3 hereof: (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent),
and (ii) instructions for use in effecting the surrender of the Certificates
in exchange for certificates representing shares of Acquiror Stock. Upon
surrendering of a Certificate for cancellation to the Exchange Agent or to
such other agent or agents as may be appointed by Acquiror, together with
such letters of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor that amount of cash and a
certificate representing that number of whole shares of Acquiror Stock which
such holder has the right to receive pursuant to the provisions of Sections
2.3 and 2.4 hereof, and the Certificate so surrendered shall forthwith be
canceled. In the event a Certificate is surrendered representing Target
Stock, the transfer of ownership which is not registered in the transfer
records of Target, a certificate representing the proper number of shares of
Acquiror Stock may be issued to a transferee if the Certificate representing
such Target Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that
any applicable
12
<PAGE>
stock transfer taxes have been paid. Until surrendered as contemplated by
this Section 2.5 and except as provided in subsection (g) hereof, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the certificate representing
shares of Acquiror Stock and cash in lieu of any fractional shares of stock
as contemplated by this Section 2.5. Notwithstanding anything to the contrary
set forth herein, if any holder of shares of Target should be unable to
surrender the Certificates for such shares, because they have been lost or
destroyed, such holder may deliver in lieu thereof, in the discretion of
Acquiror, such bond in form and substance and with surety reasonably
satisfactory to Acquiror and shall be entitled to receive the certificate
representing the proper number of shares of Acquiror Stock and cash in lieu
of fractional shares in accordance with Sections 2.3 and 2.4 hereof.
(c) No dividends or other distributions declared or made after
the Effective Time with respect to Acquiror Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Acquiror Stock represented thereby
and no cash payment in lieu of fractional shares shall be paid to any such
holder pursuant to Section 2.4 until the holder of record of such Certificate
shall surrender such Certificate. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the
record holder of the certificates representing whole shares of Acquiror Stock
issued in exchange thereof, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share of
Acquiror Stock to which such holder is entitled pursuant to Section 2.4 and
the amount of dividends or other distribution with a record date after the
Effective Time theretofore paid with respect to such whole shares of Acquiror
Stock, and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole shares of Acquiror Stock.
(d) All shares of Acquiror Stock issued upon the surrender for
exchange of Target Stock in accordance with the terms hereof (including any
cash paid pursuant to Section 2.4) shall be deemed to have been issued in
full satisfaction of all rights pertaining to such shares of Target Stock,
and there shall be no further registration of transfers on the stock transfer
books of Target or Acquiror of the shares of Target Stock which were
outstanding immediately prior to the Effective Time. If after the Effective
Time, Certificates are presented to Acquiror for any reason, they shall be
canceled and exchanged as provided in this Agreement.
(e) Any portion of the Exchange Fund which remains
undistributed to the shareholders of Target following the passage of six
months after the Effective Time shall be delivered to Acquiror, upon demand,
and any shareholders of Target who have not theretofore complied with this
Section 2.5 shall thereafter look only to Acquiror for payment of their claim
for Acquiror Stock, any cash in lieu of fractional shares of Acquiror Stock
and any dividends or distributions with respect to Acquiror Stock.
(f) Neither Acquiror nor Target shall be liable to any holder
of shares of Target Stock for such shares (or dividends or distributions with
respect thereto) or cash from the Exchange
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Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(g) The Exchange Agent shall not be entitled to vote or
exercise any rights of ownership with respect to the shares of Acquiror Stock
held by it from time to time hereunder, except that it shall receive and hold
all dividends or other distributions paid or distributed with respect to such
shares of Acquiror Stock for the account of the Persons entitled thereto.
Former shareholders of record of Target shall be entitled to vote after the
Effective Time at any meeting of Acquiror shareholders the number of whole
shares of Acquiror Stock into which their respective shares of Target Stock
are converted, regardless of whether such holders have exchanged their
Certificates for certificates representing Acquiror Stock in accordance with
the provisions of this Agreement.
2.6 DIRECTORS' AGREEMENTS. Concurrently with the execution of
this Agreement, Target shall cause each of its respective directors to enter
into a Target's Directors' Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND BANK
Acquiror and Bank represent and warrant to Target and Target Bank as
follows:
3.1 INCORPORATION, STANDING AND POWER. Acquiror has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the State of California and is registered as a bank holding
company under the BHC Act. Bank has been duly incorporated and is validly
existing as a banking company under the laws of California and is authorized
by the Commissioner to conduct a general banking business with trust powers.
Bank's deposits are insured by the FDIC in the manner and to the extent
provided by law. Acquiror and Bank have all requisite corporate power and
authority to own, lease and operate their respective properties and assets
and to carry on their respective businesses as presently conducted. Neither
the scope of the business of Acquiror or Bank nor the location of any of
their respective properties requires that Acquiror or Bank be licensed to do
business in any jurisdiction other than in California where the failure to be
so licensed would, individually or in the aggregate, have a materially
adverse effect on the financial condition, results of operation or business
of Acquiror on a consolidated basis.
3.2 CAPITALIZATION. As of the date of this Agreement, the
authorized capital stock of Acquiror consists of 50,000,000 shares of
Acquiror Stock, of which 10,957,940 shares are outstanding and 25,000,000
shares of Preferred Stock, of which no shares are outstanding. As of the date
of this Agreement, the authorized capital stock of Bank consists of
10,125,000 shares of Bank Stock, of which 100 shares are outstanding and are
owned by Acquiror without Encumbrance. All the outstanding shares of Acquiror
Stock and Bank Stock are duly authorized, validly issued, fully paid,
nonassessable and without preemptive rights. Except for Acquiror Stock
Options covering shares of Acquiror Stock granted pursuant to the Acquiror
Stock Option
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Plan and except as set forth in Acquiror's Disclosure Letter, there are no
outstanding options, warrants or other rights in or with respect to the
unissued shares of Acquiror Stock or Bank Stock or any other securities
convertible into such stock, and neither Acquiror nor Bank is obligated to
issue any additional shares of its capital stock or any options, warrants or
other rights in or with respect to the unissued shares of its capital stock
or any other securities convertible into such stock.
3.3 SUBSIDIARIES. Except as set forth in Acquiror's Disclosure
Letter, neither Acquiror nor Bank own, directly or indirectly, any outstanding
stock, Equity Securities or other voting interest in any corporation,
partnership, joint venture or other entity or Person, other than DPC Property.
3.4 FINANCIAL STATEMENTS. Acquiror has previously furnished to
Target a copy of the Financial Statements of Acquiror. The Financial Statements
of Acquiror: (a) present fairly the consolidated financial condition of Acquiror
as of the respective dates indicated and its consolidated results of operations
and cash flow for the respective periods indicated; and (b) have been prepared
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