EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
AMONG
CATHAY GENERAL BANCORP
CATHAY BANK
AND
GREAT EASTERN BANK
DATED AS OF FEBRUARY 16, 2006
TABLE OF CONTENTS
PAGE
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ARTICLE I THE OFFER AND THE MERGER............................................................. 1
1.1 Definitions..................................................................... 1
1.2 The Offer....................................................................... 1
1.3 The Merger...................................................................... 4
1.4 Merger Closing; Merger Effective Time........................................... 4
1.5 Effects of the Merger........................................................... 5
1.6 Conversion of Company Common Stock.............................................. 5
1.7 Cathay Capital Stock; Buyer Capital Stock....................................... 6
1.8 Articles of Incorporation....................................................... 6
1.9 Bylaws.......................................................................... 6
1.10 Directors and Officers.......................................................... 7
ARTICLE II Delivery of Offer Consideration and Merger Consideration............................. 7
2.1 Surrender of Company Common Stock............................................... 7
2.2 Election and Allocation Procedures.............................................. 8
2.3 Further Transfers of Company Common Stock....................................... 13
2.4 Dissenting Shares............................................................... 13
2.5 Alternative Method.............................................................. 13
ARTICLE III Disclosure Schedules; Representations and Warranties of the Company and Cathay....... 13
3.1 Disclosure Schedule............................................................. 13
ARTICLE IV Representations and Warranties of the Company........................................ 14
4.1 Corporate Organization.......................................................... 14
4.2 Capitalization.................................................................. 14
4.3 Authority; No Violation......................................................... 15
4.4 Consents and Approvals.......................................................... 15
4.5 Regulatory Reports.............................................................. 16
4.6 Financial Statements; Methods of Accounting..................................... 17
4.7 Broker's Fees................................................................... 17
4.8 Absence of Certain Changes or Events............................................ 17
4.9 Legal Proceedings............................................................... 19
4.10 Taxes........................................................................... 19
4.11 Employee Benefit Plans.......................................................... 20
4.12 Disclosure Controls and Procedures.............................................. 21
4.13 Company Information............................................................. 21
4.14 Compliance with Applicable Law.................................................. 22
4.15 Contracts....................................................................... 23
4.16 Environmental Matters........................................................... 24
4.17 Derivative Transactions......................................................... 24
4.18 Opinion......................................................................... 24
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4.19 Approvals....................................................................... 25
4.20 Loans and Deposits.............................................................. 25
4.21 Property........................................................................ 26
4.22 Labor Matters................................................................... 27
4.23 Insurance....................................................................... 27
4.24 Absence of Undisclosed Liabilities.............................................. 27
4.25 Qualification as Reorganization................................................. 28
4.26 Full Disclosure................................................................. 28
ARTICLE V Representations and Warranties of Cathay and Buyer................................... 28
5.1 Corporate Organization.......................................................... 28
5.2 Authority; No Violation......................................................... 29
5.3 Consents and Approvals.......................................................... 30
5.4 Broker's Fees................................................................... 30
5.5 Cathay Information.............................................................. 30
5.6 Access to Funds................................................................. 30
5.7 Approvals....................................................................... 30
5.8 Legal Proceedings............................................................... 30
5.9 Compliance with Applicable Law.................................................. 30
5.10 Regulatory Reports.............................................................. 31
5.11 Full Disclosure................................................................. 32
5.12 Capitalization.................................................................. 32
5.13 Financial Statements............................................................ 33
5.14 Absence of Certain Changes or Events............................................ 33
5.15 Taxes........................................................................... 33
5.16 Disclosure Controls and Procedures.............................................. 34
5.17 Absence of Undisclosed Liabilities.............................................. 34
5.18 Qualification as Reorganization................................................. 34
ARTICLE VI Covenants Relating to Conduct of Business............................................ 35
6.1 Covenants of the Company........................................................ 35
6.2 Covenants of Cathay............................................................. 38
6.3 Covenants of Both the Company and Cathay........................................ 38
ARTICLE VII Additional Agreements................................................................ 39
7.1 Regulatory Matters.............................................................. 39
7.2 No Solicitation by the Company.................................................. 42
7.3 Access to Information........................................................... 43
7.4 Confidentiality................................................................. 44
7.5 Notification of Certain Matters................................................. 44
7.6 Employee Benefit Plans.......................................................... 44
7.7 Indemnification................................................................. 45
7.8 Reasonable Efforts; Additional Agreements....................................... 46
7.9 Environmental/ Undisclosed Liabilities Pool..................................... 47
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ARTICLE VIII Conditions Precedent................................................................. 47
8.1 Conditions to Each Party's Obligation To Effect the Merger...................... 47
8.2 Conditions to Obligations of Cathay and Buyer................................... 48
8.3 Conditions to Obligations of the Company........................................ 49
8.4 Frustration of Closing Conditions............................................... 50
ARTICLE IX Termination and Amendment............................................................ 50
9.1 Termination..................................................................... 50
9.2 Effect of Termination........................................................... 52
9.3 Amendment....................................................................... 53
9.4 Extension; Waiver............................................................... 53
ARTICLE X General Provisions................................................................... 53
10.1 Nonsurvival of Representations, Warranties and Agreements....................... 53
10.2 Expenses........................................................................ 53
10.3 Notices......................................................................... 53
10.4 Interpretation.................................................................. 54
10.5 Counterparts.................................................................... 54
10.6 Entire Agreement................................................................ 55
10.7 Governing Law................................................................... 55
10.8 Enforcement of Agreement........................................................ 55
10.9 Severability.................................................................... 55
10.10 Publicity....................................................................... 55
10.11 Assignment; No Third Party Beneficiaries........................................ 56
10.12 Fax Signatures.................................................................. 56
ANNEX I Conditions to the Offer
APPENDIX I -- Definitions I-1
EXHIBIT A -- Form of Plan and Agreement of Merger
EXHIBIT B -- Form of California Certificates
EXHIBIT C -- Form of New York Certificates
EXHIBIT D -- Form of Affiliate Agreement
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of February 16,
2006 (this "Agreement"), is entered into by and among Cathay General Bancorp, a
Delaware corporation, registered under the Bank Holding Company Act of 1956, as
amended ("Cathay"), Cathay Bank, a California state-chartered bank and a wholly
owned subsidiary of Cathay ("Buyer"), and Great Eastern Bank, a New York
state-chartered bank (the "Company").
WHEREAS, the Boards of Directors of Cathay, Buyer and the
Company have determined that it is in the best interests of their respective
companies and their shareholders to consummate the business combination
transaction provided for herein in which Cathay will, subject to the terms and
conditions set forth herein, make a tender offer (the "Offer") for all of the
issued and outstanding shares of Company Common Stock (as defined below) and
following the consummation or expiration of the Offer the Company will merge
with and into Buyer, with Buyer being the surviving entity (the "Merger");
WHEREAS, the aggregate consideration to be offered to
shareholders of the Company pursuant to the Offer and to be paid to shareholders
of the Company in the Merger would consist of a combination of cash and shares
of Cathay Common Stock with a value of $58.44 for each share of Company Common
Stock acquired in the Offer or converted in the Merger;
WHEREAS, the parties intend for the Offer and the Merger,
taken together (or if the Offer is not consummated, the Merger) to constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and the regulations thereunder;
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Offer and the Merger and also
to prescribe certain conditions to the Offer and the Merger; and
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE OFFER AND THE MERGER
1.1 Definitions. The defined terms used in this Agreement have
the meanings set forth on Appendix I hereto.
1.2 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Article IX and after the date hereof and prior to the
commencement of the Offer none of the conditions set forth in Annex I hereto
(the "Tender Offer Conditions") shall be incapable of being satisfied prior to
the Offer Closing Date, as promptly as practicable, but not later than 10
Business Days following the date hereof, Cathay shall (i) commence an offer to
purchase any and all outstanding shares of Company Common Stock for a per share
consideration of either (A) an amount in cash, without interest, equal to $58.44
(the "Per Share Cash Consideration") or (B) that number of shares of Cathay
Common Stock equal to the Exchange Ratio (collectively with the Per Share Cash
Consideration, the "Offer Consideration"), subject to the provisions of Section
2.2(d) with respect to the aggregate number of shares of Cathay Common Stock
issued and the aggregate amount of cash paid, (ii) cause the Offer to remain
open for 20 Business Days, (iii) take the actions set forth in Section 1.2(d)
below and (iv) take all other actions as required by law. The obligation of
Cathay to accept for payment or pay for any shares of Company Common Stock
tendered pursuant thereto will be subject only to the satisfaction or waiver of
the Tender Offer Conditions.
(b) Without the prior written consent of the Company, Cathay shall
not (i) impose conditions to the Offer in addition to the Tender Offer
Conditions, (ii) modify or amend the Tender Offer Conditions or any other term
of the Offer in a manner adverse to the holders of shares of Company Common
Stock, (iii) reduce the number of shares of Company Common Stock subject to the
Offer, (iv) reduce the Offer Consideration, (v) except as provided in the
following sentence, extend the Offer if all of the Tender Offer Conditions are
satisfied or waived, or (vi) change the form of consideration payable in the
Offer. Notwithstanding the foregoing, Cathay may, in accordance with applicable
law, at its sole discretion, and without the consent of the Company, extend the
Offer at any time, and from time to time, (x) if at the then-scheduled
expiration date of the Offer, any of the Tender Offer Conditions shall not have
been satisfied or waived, and (y) for any period required by any rule,
regulation, interpretation or position of the United States Securities and
Exchange Commission or its staff applicable to the Offer; provided further, that
if the Minimum Condition has been satisfied, Cathay may at its option and to the
extent permitted by applicable law, accept the tendered shares for payment and
extend the Offer pursuant to a subsequent offering period for an aggregate
period of not more than 20 Business Days (for all such extensions).
(c) In connection with the Offer, the Company will promptly
furnish Cathay with mailing labels, security position listings, any
non-objecting beneficial owner lists and any available listing containing the
names and addresses of the record holders of shares of Company Common Stock as
of the most recent practicable date and shall furnish Cathay with such
additional information (including, but not limited to, updated lists of holders
of shares of Company Common Stock and their addresses, mailing labels and lists
of security positions and non-objecting beneficial owner lists) and such other
assistance as Cathay or its agents may reasonably request in communicating the
Offer to the Company's record and beneficial shareholders.
(d) Provided that this Agreement shall not have been terminated in
accordance with Article IX and after the date hereof and prior to the
commencement of the Offer none of the Tender Offer Conditions shall be incapable
of being satisfied prior to the Offer Closing Date, as promptly as practicable,
but no later than 10 Business Days following the date hereof, Cathay shall mail
to the holders of shares of Company Common Stock (i) an offer to purchase, (ii)
forms of the related letter of transmittal to be completed, signed and returned
to the Exchange Agent by each such holder, (iii) a Tender Election Form (which
may be incorporated into the letter of transmittal) to be completed, signed and
returned to the Exchange Agent by each such holder,
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(iv) appropriate and necessary documentation enabling such holder to establish,
if applicable, that such holder is an Accredited Investor, (v) appropriate and
necessary documentation enabling such holder to establish, if applicable, an
exemption from tax withholding in connection with payment of the Offer
Consideration to each such holder, (vi) instructions regarding the documentation
described in clauses (i) through (v) above for use in effecting the surrender of
the Certificates and (vii) any related documents (all such forms and documents,
together with all supplements or amendments thereto, collectively, the "Offer
Documents"). The instructions with respect to the Tender Election Forms shall
specify that the materials specified in clauses (ii), (iii) and (v) above,
properly completed and duly executed, are required to be returned to the
Exchange Agent, accompanied by one or more Certificates (or customary affidavits
and indemnification regarding the loss or destruction of such Certificates or
the guaranteed delivery of such Certificates) representing all shares of Company
Common Stock covered by the Tender Election Form submitted by such holder, and
(z) delivery of the Certificates shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent. Cathay agrees that the Company and its counsel shall be given an
opportunity to review and comment on the Offer Documents and any amendments or
supplements thereto before they are mailed.
(e) The Company represents that the Board of Directors of the
Company, at meetings duly called and held, has (i) determined by unanimous vote
of the Directors voting, that the Offer and the Merger are fair to, advisable
and in the best interests of the Company and its shareholders, (ii) approved the
Offer, the Merger and this Agreement and the transactions contemplated hereby in
accordance with applicable law, and (iii) resolved to recommend acceptance of
the Offer and approval of the Merger by the Company's shareholders. The Company
shall mail to the holders of shares of Company Common Stock, on the date of the
mailing by Cathay of the Offer Documents (as defined below), a
Solicitation/Recommendation Statement (together with any amendments or
supplements thereto, the "Company Response"), which will set forth the
determination, approval and recommendation of the Board of Directors of the
Company described in this Section 1.2(e). The Company hereby consents to the
inclusion in the Offer Documents of the recommendation of the Board of Directors
of the Company described in this Section 1.2(e). The Company agrees that Cathay
and its counsel shall be given an opportunity to review and comment on the
Company Response and any amendments or supplements thereto before they are
mailed.
(f) Subject to the terms and conditions of this Agreement,
promptly following the expiration of the Offer, if the Tender Offer Conditions
have been satisfied (or to the extent permitted by applicable law, waived by
Cathay), Cathay shall accept all of the tendered shares of Company Common Stock
for payment. The date on which Cathay accepts such shares for payment shall be
referred to herein as the "Offer Closing Date". For the avoidance of doubt and
without limiting Cathay's obligations hereunder with respect to the Merger, if
on the expiration of the Offer, the Tender Offer Conditions are not satisfied or
waived, Cathay shall not be obligated to consummate the Offer or purchase any
shares of Company Common Stock pursuant thereto.
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(g) Notwithstanding any other provision hereof, no fractional
shares of Cathay Common Stock shall be issued to holders of Company Common Stock
pursuant to the Offer. In lieu thereof, each such holder otherwise entitled to a
fraction of a share of Cathay Common Stock shall receive, at the time of
Cathay's payment for the shares of Company Common Stock, an amount in cash,
rounded to the nearest penny, equal to the product of (i) the Per Share Cash
Consideration multiplied by (ii) the fraction of a share of Cathay Common Stock
to which such holder otherwise would be entitled. No such holder shall be
entitled to dividends, voting rights, interest on the value of, or any other
rights in respect of a fractional share, except as expressly provided herein.
(h) Subject to the satisfaction or waiver of the Tender Offer
Conditions and Section 1.2(b), Cathay shall accept for payment and acquire the
shares of Company Common Stock tendered pursuant the Offer promptly following
the expiration of the Offer.
1.3 The Merger. Subject to the terms and conditions of this
Agreement, in accordance with applicable provisions of the NYBL, the NYBCL, the
CFC, the CGCL and the Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 (the "Interstate Act"), at the Merger Effective Time, the Company
shall merge with and into Buyer. Buyer shall be the surviving corporation
(hereinafter sometimes called the "Surviving Corporation") in the Merger and
shall continue its corporate existence under the laws of the State of
California. The name of the Surviving Corporation shall be "Cathay Bank." Upon
consummation of the Merger, the separate corporate existence of the Company
shall terminate. The parties hereto hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Code Section 368 and the regulations
thereunder.
1.4 Merger Closing; Merger Effective Time.
(a) Merger Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Merger Closing") will take place at
10:00 a.m. on the fifth (5th) Business Day after the satisfaction or waiver
(subject to applicable law) of the latest to occur of the conditions set forth
in Article VIII hereof (other than those conditions which relate to actions to
be taken at the Merger Closing) (the "Merger Closing Date"), at the offices of
Wachtell, Lipton, Rosen & Katz, New York, NY 10019 unless another time, date or
place is agreed to in writing by the parties hereto.
(b) Merger Effective Time. Subject to the provisions of this
Agreement, a plan and agreement of merger complying with the applicable
provisions of Section 1101 of the CGCL and Articles III-A, 5-C and XIII of the
NYBL (the "Plan and Agreement of Merger"), officers' certificates complying with
Section 1103 of the CGCL and Section 4800 et seq. of the CFC (the "California
Certificates") and officers' certificates complying with Article XIII of the
NYBL (the "New York Certificates"), in substantially the forms attached hereto
as Exhibit A, Exhibit B and Exhibit C, respectively, shall be duly executed and
filed with the New York Superintendent of Banks, the Secretary of State of the
State of California (the "California Secretary") and in the offices of such
officials of the State of New York and its political subdivisions as may be
necessary or proper to effect and evidence the Merger, including the Secretary
of State of the State of New York (the "New York Filing Officers") and with the
Commissioner of Financial Institutions of the State of California (the
"California Commissioner") on the Merger Closing Date by the Company and Buyer.
The Merger shall become effective at such time as the filings with the
California Secretary and the New York Filing Officers of the Plan and Agreement
of Merger become effective and a copy of the Plan and Agreement of Merger as
certified by the California Secretary with the approval of the California
Commissioner endorsed thereon is filed in the office of the California
Commissioner pursuant to Section 4887 of the CFC (the "Merger Effective Time").
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1.5 Effects of the Merger. At and after the Merger Effective Time,
the Merger shall have the effects set forth in Section 1107 of the CGCL, Section
602 of the NYBL and Section 4800 et seq. of the CFC.
1.6 Conversion of Company Common Stock.
(a) At the Merger Effective Time, subject to the exceptions and
limitations set forth in Article II hereof, each share of Company Common Stock
issued and outstanding immediately prior to the Merger Effective Time (other
than (y) any shares of Company Common Stock held directly or indirectly by the
Company or Cathay (except for Trust Account Shares and DPC Shares) and (z)
Dissenting Shares), shall, by virtue of this Agreement and without any action on
the part of the holder thereof, be cancelled and cease to exist and be converted
into the right to receive (A) if the Offer has been consummated, an amount in
cash, without interest, equal to the Per Share Cash Consideration or (B) if the
Offer has not been consummated, at the election of the holder thereof as
provided in Section 2.2 hereof, either (i) that number of shares of Cathay
Common Stock equal to the Exchange Ratio or (ii) an amount in cash, without
interest, equal to the Per Share Cash Consideration (collectively, the "Merger
Consideration"), subject to the limitations set forth in Section 2.2(d) on the
aggregate number of shares of Cathay Common Stock issued and the aggregate
amount of cash paid in exchange for all shares of Company Common Stock.
(b) Notwithstanding any other provision hereof, no fractional
shares of Cathay Common Stock shall be issued to holders of Company Common Stock
in the Merger. In lieu thereof, each such holder otherwise entitled to a
fraction of a share of Cathay Common Stock shall receive, at the time of
surrender of the Certificate or Certificates, an amount in cash, rounded to the
nearest penny, equal to the product of (i) the Per Share Cash Consideration
multiplied by (ii) the fraction of a share of Cathay Common Stock to which such
holder otherwise would be entitled. No such holder shall be entitled to
dividends, voting rights, interest on the value of, or any other rights in
respect of a fractional share, except as expressly provided herein.
(c) At the Merger Effective Time, all shares of Company Common
Stock that are owned directly or indirectly by the Company or Cathay (other than
owned directly or indirectly by any of Cathay's Subsidiaries) (other than shares
of Company Common Stock (i) held directly or indirectly in trust accounts,
managed accounts and the like or otherwise held in a fiduciary capacity for the
benefit of third parties (any such shares and shares of Company Common Stock
which are similarly held being referred to herein as "Trust Account Shares") or
(ii) in respect of a debt previously contracted (any such shares of Company
Common Stock, and shares of Cathay Common Stock which are similarly held, being
referred to herein as "DPC Shares")) shall be cancelled and shall cease to exist
and no cash or other consideration shall be delivered in exchange therefor. At
the Merger Effective Time, each share of Company Common Stock that is owned
directly or indirectly by any of Cathay's Subsidiaries shall, by virtue of this
Agreement and without any action on the part of the holder thereof, be cancelled
and cease to exist and be converted into that number of shares of Cathay Common
Stock equal to the Exchange Ratio.
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(d) Notwithstanding anything in this Agreement to the contrary,
shares of Company Common Stock which are outstanding immediately prior to the
Merger Effective Time and as to which shareholders have given notice of their
intention to assert dissenters rights in accordance with Section 6022 of the
NYBL (such shares being referred to herein as "Dissenting Shares") shall not be
converted into the right to receive the Merger Consideration but, instead, the
holders thereof shall be entitled to receive payment of the fair market value of
such Dissenting Shares in accordance with the provisions of Sections 604 and
6022 of the NYBL; provided, however, that (i) if any holder of Dissenting Shares
shall subsequently withdraw, with the consent of the Surviving Corporation, his
demand for payment for such shares, or (ii) if any holder of Dissenting Shares
fails to establish or otherwise loses his entitlement to payment of the fair
market value of such shares as provided in Sections 604 and 6022 of the NYBL,
such holder or holders (as the case may be) shall not be entitled to receive
payment of the fair market value of such shares of Company Common Stock as
contemplated by Sections 604 and 6022 of the NYBL, and each of such shares shall
thereupon cease to be Dissenting Shares and shall be deemed to have been
converted into the right to receive, as of the Merger Effective Time, the Merger
Consideration without any interest thereon, as provided in Section 1.6(a) and
Article II hereof, as Undesignated Shares. Prior to the earlier of the
consummation of the Offer and the Merger Effective Time, the Company shall give
Cathay prompt notice of any demands for payment for shares of Company Common
Stock pursuant to Section 6022 of the NYBL received by the Company, withdrawals
of any such demands and any other documents or instruments received by the
Company in connection therewith. Cathay shall have the right to participate in
and direct all negotiations and proceedings with respect to any such demands.
Prior to the earlier of the consummation of the Offer and the Merger Effective
Time, the Company shall not, except with the prior written consent of Cathay,
which consent shall not unreasonably be withheld or delayed, make any payment
with respect to, or settle or offer to settle, any such demands, or agree to do
any of the foregoing.
1.7 Cathay Capital Stock; Buyer Capital Stock. Each share of the
capital stock of Buyer issued and outstanding immediately prior to the Merger
Effective Time shall remain outstanding and shall not be converted or otherwise
affected by the Merger, and such shares shall thereafter constitute all of the
issued and outstanding shares of the Surviving Corporation. Each share of Cathay
Capital Stock issued and outstanding immediately prior to the Merger Effective
Time shall remain outstanding and shall not be converted or otherwise affected
by the Merger.
1.8 Articles of Incorporation. At the Merger Effective Time, the
Articles of Incorporation of Buyer, as in effect at the Merger Effective Time,
shall be the Articles of Incorporation of the Surviving Corporation.
1.9 Bylaws. At the Merger Effective Time, the Bylaws of Buyer, as
in effect immediately prior to the Merger Effective Time, shall be the Bylaws of
the Surviving Corporation until thereafter amended in accordance with applicable
law.
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1.10 Directors and Officers.
(a) No later than the fifth Business Day following the
commencement of the Offer, the directors of the Company shall submit their
resignations conditioned upon and effective only on the Offer having been
consummated and the Minimum Condition having been satisfied, and the Company and
its directors shall take all such actions necessary to cause those persons
designated by Cathay to be nominated as their replacements.
(b) The directors and officers of Buyer immediately prior to the
Merger Effective Time shall be the directors and officers of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and Bylaws of the Buyer until their respective successors are duly
elected or appointed and qualified.
ARTICLE II
DELIVERY OF OFFER CONSIDERATION AND MERGER CONSIDERATION
2.1 Surrender of Company Common Stock.
(a) Prior to the Offer Closing Date, Cathay shall appoint American
Stock Transfer & Trust Co., or its successor, or any other bank or trust company
mutually acceptable to Cathay and the Company, as paying agent and exchange
agent (the "Exchange Agent") for the purpose of exchanging Certificates
representing shares of Company Common Stock pursuant to the Offer and the
Merger. At or prior to the Offer Closing Date, Cathay shall deposit with the
Exchange Agent (i) such number of certificates of Cathay Common Stock
representing the shares of Cathay Common Stock issuable pursuant to the Offer
and (ii) immediately available funds in an amount representing the cash payable
pursuant to the Offer. At or prior to the Merger Closing Date, Cathay shall
deposit with the Exchange Agent (i) if the Offer has not been consummated, such
number of certificates of Cathay Common Stock representing the shares of Cathay
Common Stock issuable pursuant to the Merger and (ii) immediately available
funds in an amount representing the cash payable pursuant to the Merger.
(b) Cathay shall direct the Exchange Agent to mail on the Mailing
Date (if the Offer has not been consummated) or promptly following the Merger
Closing Date (if the Offer has been consummated) to each holder of record of a
certificate or certificates representing any such shares of Company Common Stock
(each, a "Certificate"): (i) a letter of transmittal to be completed, signed and
returned to the Exchange Agent by each such holder, (ii) if the Offer has not
been consummated, a Merger Election Form to be completed, signed and returned to
the Exchange Agent by each such holder, (iii) appropriate and necessary
documentation enabling such holder to establish, if applicable, an exemption
from tax withholding in connection with payment of the Merger Consideration to
each such holder, and (iv) instructions regarding the documentation described in
clauses (i) through (iii) above for use in effecting the surrender of the
Certificates. The instructions shall specify that (w) Merger Election Forms,
properly completed and duly executed, are required to be returned to the
Exchange Agent by the Election Deadline (if the Offer has not been consummated),
(x) the materials specified in clauses (i) and (iii) above, properly completed
and duly executed, are required to be returned to the Exchange Agent,
accompanied by one or more Certificates (or customary affidavits and
indemnification regarding the loss or destruction of such Certificates or the
guaranteed delivery of such Certificates) representing all shares of Company
Common Stock covered by the Merger Election Form submitted by such holder, (y)
delivery of the Certificates 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 (z) upon surrendering a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by Cathay,
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration (subject to the provisions of Section 2.2), and the Certificate so
surrendered shall forthwith be canceled.
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(c) If any payment of the Merger Consideration or the Offer
Consideration for shares of Company Common Stock is to be made in a name other
than that in which the Certificate surrendered in exchange therefor is
registered, it shall be conditions of such payment that the Certificate be
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect the transfer of ownership thereof, and that the person
requesting such payment shall pay to the Exchange Agent in advance any transfer
costs and expenses, including taxes, required by reason of the payment of the
Merger Consideration or the Offer Consideration to a person other than the
registered holder of the Certificate surrendered, or required for any other
reason, or shall establish to the satisfaction of the Exchange Agent that such
transfer costs and expenses have been paid or are not payable.
(d) Until surrendered as contemplated by this Section 2.1 and
except as otherwise provided herein, each Certificate shall be deemed at any
time after the Merger Effective Time to represent only the right to receive upon
such surrender the Merger Consideration. Notwithstanding anything to the
contrary set forth herein, if any holder of shares of Company Common Stock
should be unable to surrender the Certificates representing such shares, because
the Certificates have been lost or destroyed, upon the making of an affidavit of
that fact by the person claiming such Certificates to be lost, stolen or
destroyed and, if required by Cathay, the posting by such person of a bond in
such amount as may be determined to be adequate by Cathay as indemnity against
any claim that may be made against it with respect to such Certificates, such
holder shall be entitled to receive the Merger Consideration. No interest shall
be paid on the Merger Consideration.
2.2 Election and Allocation Procedures.
(a) In accordance with Section 2.1(b) hereof, if the Offer has not
been consummated, an election form ("Merger Election Form" and together with the
Tender Election Form, the "Election Forms") and the other materials specified in
Section 2.1(b)(i)-(iv) hereof, as well as other appropriate and customary
transmittal materials, in such form as Cathay and the Company shall mutually
agree shall be mailed no less than thirty-five (35) days prior to the
anticipated Merger Effective Time or on such other date as the Company and
Cathay shall mutually agree ("Mailing Date") to each holder of record of Company
Common Stock as of a date no earlier than five (5) Business Days prior to the
Mailing Date ("Merger Election Form Record Date"). Cathay shall make available
one or more Merger Election Forms as may be reasonably requested by all persons
who become holders (or beneficial owners) of Company Common Stock after the
Merger Election Form Record Date and prior to the Election Deadline, and the
Company shall provide to the Exchange Agent all information reasonably necessary
for it to perform its obligations as specified herein. If the Offer has been
consummated, this Section 2.2 shall not apply to the Merger.
8
(b) Each Election Form shall permit the holder (or the beneficial
owner through appropriate and customary documentation and instructions) to elect
(an "Election") to receive either (i) Cathay Common Stock (a "Stock Election")
with respect to all of such holder's Company Common Stock, (ii) cash (a "Cash
Election") with respect to all of such holder's Company Common Stock or (iii)
Cathay Common Stock with respect to a percentage of such holder's Company Common
Stock (a "Combination Stock Election") and cash with respect to the remainder of
such holder's Company Common Stock (a "Combination Cash Election"), subject to
the provisions contained in this Agreement; provided, in the case of a Tender
Election Form, such holder may only make a valid Stock Election or a valid
Combination Stock Election and Combination Cash Election on the express
condition that such holder has provided Cathay with the necessary documentation
to establish that such holder is an Accredited Investor. Any Company Common
Stock (other than Dissenting Shares) with respect to which the holder (or the
beneficial owner, as the case may be) shall not have submitted to the Exchange
Agent, an effective, properly completed Tender Election Form prior to the
expiration of the Offer or a Merger Election Form prior to the Election Deadline
shall be deemed to be "Undesignated Shares" hereunder.
(c) Any Election shall have been properly made and effective with
respect to the Offer only if the Exchange Agent shall have actually received a
properly completed Tender Election Form prior to the expiration of the Offer and
with respect to the Merger only if the Exchange Agent shall have actually
received a properly completed Merger Election Form by 5:00 p.m. California time
on or before the thirtieth (30th) day following the Mailing Date, or such other
time and date as Cathay and the Company may mutually agree (the "Election
Deadline"). Each Election Form shall only be deemed properly completed to the
extent an Election is indicated for shares of Company Common Stock covered by
such Election Form. Any Election Form may be revoked or changed by the person
submitting such Election Form at or prior to the applicable Election Deadline.
In the event an Election Form is revoked prior to the applicable Election
Deadline, the shares of Company Common Stock represented by such Election Form
shall automatically become Undesignated Shares unless and until a new Election
Form is properly completed and made with respect to such shares on or before the
Election Deadline, and, if such revoked Election Form was delivered to the
Exchange Agent accompanied by Certificates represented by such Election Form,
Cathay shall cause such Certificates to be promptly returned without charge to
the person submitting the revoked Election Form upon written request to that
effect from the holder who submitted such Election Form. Subject to the terms of
this Agreement and of the Election Form, the Exchange Agent shall have
reasonable discretion to determine whether any election, revocation, withdrawal
or change has been properly or timely made and to disregard immaterial defects
in the Election Forms, and any decisions of Cathay and the Company required by
the Exchange Agent and made in good faith in determining such matters shall be
binding and conclusive. Neither Cathay nor the Exchange Agent shall be under any
obligation to notify any person of any defect in any Election Form.
(d) For purposes of the Offer (if it is consummated) and the
Merger, the allocation among the holders of shares of Company Common Stock of
rights to receive the Per Share Stock Consideration or the Per Share Cash
Consideration will be made as follows:
(i) Number of Stock Elections is Less Than the Minimum
Stock Conversion Number. If the aggregate number of Stock Election
Shares (on the basis of valid Election Forms received by the applicable
Election Deadline) is less than the Minimum Stock Conversion Number,
then
9
(A) each Stock Election Share will, in the case
of the Offer, be acquired by Cathay for the Per Share Stock
Consideration and, in the case of the Merger, as of the Merger
Effective Time, be converted into the Per Share Stock
Consideration,
(B) the Exchange Agent will allocate from among
the Undesignated Shares, pro rata to the holders of
Undesignated Shares in accordance with their respective
numbers of Undesignated Shares, a sufficient number of
Undesignated Shares so that the sum of such number and the
number of Stock Election Shares equals as closely as
practicable the Minimum Stock Conversion Number, and each such
allocated Undesignated Share (each, a "Stock-Selected
Undesignated Share") will, in the case of the Offer, be
acquired by Cathay for the Per Share Stock Consideration and,
in the case of the Merger, as of the Merger Effective Time, be
converted into the Per Share Stock Consideration; provided
that if the sum of all Undesignated Shares and Stock Election
Shares is equal to or less than the Minimum Stock Conversion
Number, all Undesignated Shares will be Stock-Selected
Undesignated Shares; and provided further that, in the case of
the Offer, the allocation described in this Section
2.2(d)(i)(B) shall be made only from among Undesignated Shares
held by Accredited Investors,
(C) if the sum of Stock Election Shares and
Undesignated Shares is less than the Minimum Stock Conversion
Number, the Exchange Agent will allocate from among the Cash
Election Shares (other than any shares of Company Common Stock
owned by Cathay or any of its Subsidiaries), pro rata to the
holders of Cash Election Shares in accordance with their
respective numbers of Cash Election Shares, a sufficient
number of Cash Election Shares so that the sum of such number,
the number of all Stock Election Shares and the number of all
Undesignated Shares equals as closely as practicable the
Minimum Stock Conversion Number, and each such allocated Cash
Election Share (each, a "Converted Cash Election Share") will,
in the case of the Offer, be acquired by Cathay for the Per
Share Stock Consideration and, in the case of the Merger, as
of the Merger Effective Time, be converted into the Per Share
Stock Consideration; provided that, in the case of the Offer,
the allocation described in this Section 2.2(d)(i)(C) shall be
made only from among Cash Election Shares held by Accredited
Investors, and
(D) each Undesignated Share that is not a
Stock-Selected Undesignated Share and each Cash Election Share
that is not a Converted Cash Election Share will, in the case
of the Offer, be acquired by Cathay for the Per Share Cash
Consideration and, in the case of the Merger, as of the Merger
Effective Time, be converted into the right to receive the Per
Share Cash Consideration.
10
Nothing in this Section 2.2(d)(i) shall be deemed to require Cathay to
waive the Accredited Investor Condition.
(ii) Number of Stock Elections is Greater Than the Maximum
Stock Conversion Number. If the aggregate number of Stock Election
Shares (on the basis of valid Election Forms received by the Election
Deadline) is greater than the Maximum Stock Conversion Number, then
(A) each Cash Election Share and Undesignated
Share will, in the case of the Offer, be acquired by Cathay
for the Per Share Cash Consideration and, in the case of the
Merger, as of the Merger Effective Time, be converted into the
right to receive the Per Share Cash Consideration,
(B) the Exchange Agent will allocate from among
the Stock Election Shares, pro rata to the holders of Stock
Election Shares in accordance with their respective numbers of
Stock Election Shares, a sufficient number of Stock Election
Shares ("Converted Stock Election Shares") so that the
difference of (x) the number of Stock Election Shares less (y)
the number of Converted Stock Election Shares equals as
closely as practicable the Maximum Stock Conversion Number,
and each Converted Stock Election Share will, in the case of
the Offer, be acquired by Cathay for the Per Share Cash
Consideration and, in the case of the Merger, as of the Merger
Effective Time, be converted into the right to receive the Per
Share Cash Consideration, and
(C) each Stock Election Share that is not a
Converted Stock Election Share will in the case of the Offer,
be acquired by Cathay for the Per Share Stock Consideration
and, in the case of the Merger, as of the Merger Effective
Time, be converted into the Per Share Stock Consideration.
(iii) Number of Stock Elections is Greater than or Equal to
the Minimum Stock Conversion Number and Less than or Equal to the
Maximum Stock Conversion Number. If the aggregate number of Stock
Election Shares (on the basis of valid Election Forms received by the
Election Deadline) is greater than or equal to the Minimum Stock
Conversion Number and less than or equal to the Maximum Stock
Conversion Number, then
(A) each Stock Election Share will, in the case
of the Offer, be acquired by Cathay for the Per Share Stock
Consideration and, in the case of the Merger, as of the Merger
Effective Time, be converted into the Per Share Stock
Consideration, and
(B) each Cash Election Share and Undesignated
Share will, in the case of the Offer, be acquired by Cathay
for the Per Share Cash Consideration and, in the case of the
Merger, as of the Merger Effective Time, be converted into the
right to receive the Per Share Cash Consideration.
11
(iv) Notwithstanding any other provision of this
Agreement, after application of the allocation rules set forth in the
preceding subsections of this Section 2.2(d), Cathay shall be
authorized to reallocate cash and shares of Cathay Common Stock among
the holders of the Company Common Stock in good faith and in such a
manner as Cathay reasonably determines to be fair and equitable, or to
vary the number of shares of Cathay Common Stock to be issued in the
Offer or, if the Offer is not consummated, the Merger, if and to the
extent necessary in Cathay's reasonable discretion to secure the tax
opinions described in Section 8.2(i) and Section 8.3(e) below.
(v) Notwithstanding any other provision of this Agreement
(other than Section 2.2(d)(iii) hereof), all shares of Company Common
Stock which are outstanding immediately prior to the Merger Effective
Time and that have ceased to be Dissenting Shares shall be deemed
"Undesignated Shares."
(e) In the case of the Merger, the calculations required by
Section 2.2(d) above shall be prepared by Cathay prior to the Merger Effective
Time and shall be set forth in a certificate executed by the Chief Financial
Officer of Cathay and furnished to the Company at least two (2) Business Days
prior to the Merger Effective Time showing the manner of calculation in
reasonable detail. Any calculation of a portion of a share of Cathay Common
Stock shall be rounded to the nearest ten-thousandth of a share, and any cash
payment shall be rounded to the nearest cent.
(f) In the case of the Merger, no dividends or other distributions
of any kind which are declared payable to holders of record of Cathay Common
Stock after the Merger Effective Time will be paid to persons entitled to
receive certificates representing such Cathay Common Stock until such persons
surrender their Certificates. Upon surrender of such Certificates, the holders
thereof shall be paid, without interest, any dividends or other distributions
with respect to shares of Cathay Common Stock as to which the record date and
payment date occurred after the Merger Effective Time and on or before the date
of surrender.
(g) All dividends or distributions, and any cash to be paid
pursuant to Section 1.6(b) hereof in lieu of fractional shares, held by the
Exchange Agent for payment or delivery to the holders of unsurrendered
Certificates and unclaimed at the end of one year from the date of the Merger
Effective Time, shall (together with any interest earned thereon) at such time
be paid or redelivered by the Exchange Agent to the Surviving Corporation, and
after such time any holder of a Certificate who has not surrendered such
Certificate to the Exchange Agent shall, subject to applicable law, only have
the rights of a general creditor of the Surviving Corporation for payment or
delivery by the Surviving Corporation of such dividends or distributions or
cash, as the case may be. Cathay, Buyer, the Company or the Exchange Agent shall
be entitled to deduct and withhold from the Merger Consideration otherwise
payable pursuant to this Agreement such cash amounts as Cathay, Buyer, the
Company or the Exchange Agent are required to deduct and withhold under the
Code, or any provision of state, local or foreign law with respect to the making
of such payment. To the extent the amounts are so withheld by Cathay, Buyer, the
Company or the Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of shares of the
Company Common Stock in respect of whom such deduction and withholding was made
by Cathay, Buyer, the Company or the Exchange Agent.
12
2.3 Further Transfers of Company Common Stock. From and after the
Merger Effective Time, the stock transfer books of the Company shall be closed
and no transfer of shares of Company Common Stock theretofore outstanding shall
thereafter be made. If, after the Merger Effective Time, Certificates
representing such shares are presented for transfer to the Surviving Corporation
or the Exchange Agent, they shall be cancelled and exchanged for the Merger
Consideration as provided in this Article II.
2.4 Dissenting Shares. Any Dissenting Shares of Company Common
Stock held by persons who have perfected their rights with respect to such
dissenting shares under Section 6022 of the NYBL shall not be converted pursuant
to this Agreement, but the holders thereof shall be entitled to such rights as
are granted them by Sections 604 and 6022 of the NYBL. Each holder of Dissenting
Shares who is entitled to payment for such holder's shares of Company Common
Stock pursuant to Sections 604 and 6022 of the NYBL shall only receive payment
from the Surviving Corporation in an amount as determined pursuant to the
procedures set forth in Section 6022 of the NYBL.
2.5 Alternative Method. Subject to Section 1.2(b), but
notwithstanding any other provision of this Agreement to the contrary, upon
written notice to the Company, Cathay may, at any time prior to the Merger
Effective Time, to the extent permitted by law without a further vote of the
shareholders of the Company, change the method of effecting the Merger, the
Offer or the making of Merger Consideration or the Offer Consideration available
to the Company's shareholders if, and to the extent, it deems such change to be
necessary, appropriate or desirable; provided, however, that no such change
shall alter or change the Offer Consideration or the Merger Consideration or the
status of the Offer and the Merger, taken together (or if the Offer is not
consummated, the Merger), as a "reorganization" within the meaning of section
368(a) of the Code.
ARTICLE III
DISCLOSURE SCHEDULES; REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND CATHAY
3.1 Disclosure Schedule. Prior to the execution and delivery of
this Agreement, the Company has delivered to Cathay, and Cathay has delivered to
the Company, a schedule (in the case of the Company, the "Company Disclosure
Schedule," and in the case of Cathay, the "Cathay 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 of such party's
representations or warranties contained in Article IV, in the case of the
Company, or Article V, in the case of Cathay, or to one or more of such party's
covenants contained in Article VI.
13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedule, the Company
hereby represents and warrants to Cathay, as of the date hereof and as of the
Offer Closing Date and, if the Offer is not consummated, the Merger Closing
Date, as follows:
4.1 Corporate Organization.
(a) The Company is a banking corporation duly organized, duly
licensed, validly existing and in good standing under the corporate and banking
laws of the State of New York, and is a New York state-chartered bank. The
Company is a member of the FRB. The deposit accounts of the Company are insured
by the FDIC through the Bank Insurance Fund to the fullest extent permitted by
law, and all premiums and assessments required to be paid in connection
therewith have been paid when due. True and correct copies of the Organization
Certificate and Bylaws of the Company as in effect on the date of this Agreement
have previously been made available to Cathay.
(b) The Company (i) has all requisite corporate power and
authority to engage in the business of commercial banking and to own or lease
all of its properties and assets and to carry on its business as it is now being
conducted, and (ii) is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary.
(c) The Company does not have any Subsidiaries.
(d) The minute books of the Company contain true, correct,
complete and accurate records of all meetings and other corporate actions held
or taken since the Company's incorporation of its shareholders and Board of
Directors (including committees of its Board of Directors).
(e) For purposes of assessment of FDIC premiums, the Company's
category is 1A.
4.2 Capitalization. The authorized capital stock of the Company
consists of 3,500,000 shares of Company Capital Stock. As of December 31, 2005,
there are (i) 1,728,333 shares of Company Common Stock outstanding, (ii) no
shares of Company preferred stock outstanding, (iii) 3,125 shares of Company
Capital Stock held as treasury stock by the Company, and (iv) no shares of
Company Capital Stock reserved for issuance upon exercise of outstanding stock
options or otherwise. All of the issued and outstanding shares of Company Common
Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. The Company does not have and is not bound
by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of Company Capital Stock or any other equity security of the Company or any
securities representing the right to purchase or otherwise receive any shares of
Company Capital Stock or any other equity security of the Company. Cathay
General Bancorp ("Cathay") has issued a press release dated September 6, 2005
indicating that Cathay has entered into option agreements with shareholders of
the Company giving Cathay the right to purchase approximately 41% of the
outstanding shares of the Company (the "Cathay Options"); none of the Cathay
Options was entered into with the approval or consent of the Company. True,
correct and complete copies of the share journal and stock transfer ledger of
the Company as of the date of this Agreement have been made available to Cathay
concurrently with the execution of this Agreement, and such documents accurately
reflect the shareholders of record of the Company.
14
4.3 Authority; No Violation.
(a) The Company has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of the Company. Except for the approval of the shareholders
of the Company at a meeting to be convened to consider and act upon this
Agreement and the transactions contemplated hereby (collectively, the
"Consents"), no other corporate proceedings on the part of the Company are
necessary to approve this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Company, and (assuming due authorization, execution and
delivery by Cathay and Buyer) this Agreement constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(b) Neither the execution and delivery of this Agreement by the
Company, nor the consummation by the Company of the transactions contemplated
hereby, nor compliance by the Company with any of the terms or provisions
hereof, will (i) violate any provision of the Organization Certificate or Bylaws
of the Company, or (ii) assuming that the Consents and the consents and
approvals referred to in Section 4.4 hereof are duly obtained, (x) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to the Company or to any of its properties or assets, or
(y) violate, conflict with, result in a breach of any provision of or the loss
of any benefit under, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate the
performance required by, or result in the creation of any lien, pledge, security
interest, charge or other encumbrance (a "Lien") upon any of the properties or
assets of the Company under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, contract,
agreement or other instrument or obligation to which the Company is a party, or
by which the Company or any of its properties or assets may be bound or
affected.
15
4.4 Consents and Approvals.
(a) Except for (i) the filing by Cathay of any necessary
application with the FRB under the Bank Holding Company Act of 1956, as amended
(the "FRB Application"), and approval or waiver of such application, (ii) the
filing of an application with the FDIC under the Bank Merger Act and the
Interstate Act (the "FDIC Application") and approval of such application, (iii)
the filing of applications and/or notices, as applicable, with the CADFI, the
NYSBD and/or the New York Banking Board, and, if required by law, the Federal
Reserve System (the "State Banking Approvals and Notices"), (iv) the filing, if
required by law in connection with the Merger, by Cathay of the S-4 Registration
Statement with the SEC and effectiveness of the S-4 Registration Statement, (v)
the filing of the Plan and Agreement of Merger, California Certificates and New
York Certificates and other required filings with the New York Filing Officers,
the California Secretary and the California Commissioner, and (vi) such filings,
authorizations or approvals as may be set forth in Section 4.4 of the Company
Disclosure Schedule, no consents or approvals of or filings or registrations
with any court, administrative agency or commission or other governmental
authority or instrumentality (each, a "Governmental Entity") or with any third
party are necessary in connection with the execution and delivery by the Company
of this Agreement or the consummation by the Company of the Offer, the Merger
and the other transactions contemplated hereby.
(b) Except for the filings identified above in Section 4.4(a)
above, the Company has taken all action required to be taken by it in order to
exempt this Agreement and the transactions contemplated hereby from, and this
Agreement and the transactions contemplated hereby are exempt from, the
requirements of any applicable "moratorium," "control share," "fair price,"
"affiliate transaction," "business combination" or other anti-takeover laws and
regulations of any state (collectively, "Takeover Laws"). The Company has taken
all action required to be taken by it in order to make this Agreement and the
transactions contemplated hereby comply with, and this Agreement and the
transactions contemplated hereby do comply with, the requirements of any
provision in its Organization Certificate or Bylaws concerning "business
combination," "fair price," "voting requirement," "constituency requirement" or
other related provisions (collectively, "Takeover Provisions").
4.5 Regulatory Reports.
(a) The Company has timely filed all reports, registrations and
statements, together with any amendments required to be made with respect
thereto, that it was required to file since December 31, 2001 with (i) the FRB
and the FDIC and (ii) the NYSBD and any other state banking commission or any
other state regulatory authority (each a "Regulatory Agency") and has paid all
fees and assessments due and payable in connection therewith. Except for normal
examinations conducted by a Regulatory Agency in the regular course of the
business of the Company and, except as disclosed on Schedule 4.5(a), no
Regulatory Agency has initiated any proceeding or, to the knowledge of the
Company, any investigation into the business or operations of the Company since
December 31, 2001. There is no unresolved violation, criticism, or exception by
any Regulatory Agency with respect to any report or statement relating to any
examinations of the Company.
(b) Schedule 4.5(b) sets forth each communication mailed by the
Company to its shareholders since December 31, 2001, copies of which the Company
has previously made available to Cathay, and no such communication (when mailed)
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading. The Company has not registered any capital stock or transactions
with the SEC under the Securities Act, and the Company is not required to file
any reports with the SEC under Sections 13 or 15 of the Exchange Act. No
enforcement action has been initiated against the Company by the SEC or the FRB
relating to disclosures contained in any communication to the Company's
shareholders.
16
4.6 Financial Statements; Methods of Accounting. The Company has
previously made available to Cathay copies of the balance sheets of the Company
as of December 31 for the fiscal years 2001 through 2004 and the related
statements of income, statement of changes in shareholders' equity and statement
of cash flows for the fiscal years 2001 through 2004, in each case accompanied
by the audit report of the Company's independent public accountants or
independent registered public accountants, as applicable. The December 31, 2004
consolidated balance sheet of the Company (including the related notes, where
applicable) fairly presents the financial position of the Company as of the date
thereof, and the other financial statements referred to in this Section 4.6
(including the related notes, where applicable) fairly present (subject, in the
case of the unaudited statements, to recurring audit adjustments normal in
nature and amount) the results of the operations and financial position of the
Company for the respective fiscal periods or as of the respective dates therein
set forth; each of such statements, (including the related notes, where
applicable) complies, and any financial statements of the Company to be provided
by the Company for inclusion in the S-4 Registration Statement will comply, with
applicable accounting requirements; and each of such statements (including the
related notes, where applicable) has been prepared in accordance with GAAP
consistently applied during the periods involved, except as indicated in the
notes thereto. The books and records of the Company have been, and are being,
maintained in accordance with GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions. The non-audited,
Company-prepared financial statements of the Company as of June 30, 2005 fairly
present the financial condition of the Company as of that date (subject, in the
case of the unaudited statements, to recurring audit adjustments normal in
nature and amount). The Company has not changed its methods of accounting in
effect at December 31, 2004, except as required by changes in GAAP or regulatory
accounting principles as concurred to by the Company's independent registered
public accountants.
4.7 Broker's Fees. Neither the Company nor any of its officers or
directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any of the
transactions contemplated by this Agreement, except that the Company has
engaged, and will pay a single fee or commission to, either Raymond James
Financial, Inc. or The Advest Group, Inc. ("Company Advisor") in accordance with
the terms of an agreement dated September 8, 2005 between The Advest Group, Inc.
and the Company, a true and correct and complete copy of which has been
previously delivered by the Company to Cathay.
4.8 Absence of Certain Changes or Events.
(a) Since December 31, 2004, there has been no change or
development or combination of changes or developments which, individually or in
the aggregate, has had or is reasonably likely to have a Material Adverse Effect
on the Company.
(b) Without limiting the generality of Section 4.8(a) hereof,
except as set forth on the Company Disclosure Schedule, since December 31, 2004,
the Company has conducted its business only in the ordinary course of business
consistent with past practice and there has not been any:
17
(i) change in the Company's authorized or issued capital
stock; grant by the Company of any stock option or right to purchase
shares of Company Capital Stock; issuance of any security convertible
into shares of Company Capital Stock; grant of any registration rights;
purchase, redemption, retirement, or other acquisition by the Company
of any shares of Company Capital Stock; or declaration or payment of
any dividend or other distribution or payment in respect of shares of
Company Capital Stock;
(ii) amendment to the Organization Certificate or Bylaws
of the Company;
(iii) increase in the wages, salaries, compensation,
pension, or other fringe benefits or perquisites payable to any
employee, stockholder, officer or director from the amount thereof in
effect as of December 31, 2004 (except for increases which have been
previously disclosed to Cathay), grant of any severance or termination
pay, entry into any contract to make or grant any severance or
termination pay, or payment of any bonus (except for salary increases
and bonus payments made in the ordinary course of business consistent
with past practice);
(iv) adoption of, or increase in the payments to or
benefits under, any profit-sharing, bonus, deferred compensation,
savings, insurance, pension, retirement, or other employee benefit plan
for or with any employees of the Company;
(v) damage to or destruction or loss of any asset or
property of the Company, whether or not covered by insurance,
materially and adversely affecting the business, results of operations
or financial condition of the Company;
(vi) entry into, termination of, or receipt of notice of
termination of (I) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (II)
any contract or transaction involving a total remaining commitment by
or to the Company of at least $50,000;
(vii) sale (other than sales of inventory in the ordinary
course of business consistent with past practice), lease, or other
disposition of any asset or property of the Company or mortgage,
pledge, or imposition of any lien or other encumbrance on any material
asset or property of the Company;
(viii) cancellation or waiver of any claims or rights with a
value to the Company in excess of $50,000;
(ix) strike, work stoppage, slow-down or other labor
disturbance, or union organizing activities;
(x) entry into a collective bargaining agreement,
contract or other agreement or understanding with a labor union or
organization; or
18
(xi) agreement, whether oral or written, by the Company to
do or assist with any of the foregoing.
4.9 Legal Proceedings.
(a) The Company is not a party to any, and there are no pending
or, to the Company's knowledge, threatened legal, administrative, arbitral or
other proceedings, claims, actions or governmental or regulatory investigations
of any nature against the Company which, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on the Company, or
challenging the validity or propriety of the transactions contemplated by this
Agreement.
(b) There is no injunction, order, judgment, decree or regulatory
restriction imposed upon the Company or any of its assets which is material to
the Company and which is not of general application to banks like the Company.
4.10 Taxes.
(a) All Tax Returns that are required to be filed (taking into
account any extensions of time within which to file) by or with respect to the
Company have been duly and timely filed, and all such Tax Returns are complete
and accurate in all material respects, (b) all Taxes shown to be due on the Tax
Returns referred to in clause (a) or that are otherwise due and payable have
been paid in full, (c) all Taxes that the Company is obligated to withhold from
amounts owing to any employee, creditor or third party have been paid over to
the proper Governmental Entity in a timely manner, to the extent due and
payable, and (d) no extensions or waivers of statutes of limitation have been
given by or requested with respect to any Taxes of the Company. No deficiencies
for any Taxes have been proposed or assessed in writing with respect to the
Company. There is no audit of any Tax Return of the Company in progress, and no
Governmental Entity has notified the Company that it intends to audit any Tax
Return of the Company. There are no matters under discussion with any
Governmental Entity with respect to Taxes that could result in an additional
amount of Taxes, and, to the knowledge of the Company, there is no threatened
action, suit, proceeding, investigation, audit, or claim for or relating to
Taxes. No Liens for Taxes exist with respect to any of the Company's assets or
properties except for statutory Liens for Taxes not yet due and payable.
(b) The Company has paid in full or made adequate provision in the
financial statements of the Company (in accordance with GAAP) for all Taxes, and
the charges, accruals, and reserves with respect to Taxes on the books of the
Company are adequate (as determined in accordance with GAAP) and are at least
equal to the Company's liability for Taxes. There exists no proposed tax
assessment against the Company. All Taxes that the Company is or was required by
law to withhold or collect have been duly withheld or collected and, to the
extent required, have been paid to the proper Governmental Entity. When required
to do so, the Company has properly withheld Taxes on all non-resident deposit
accounts.
(c) The transaction contemplated herein, either by itself or in
conjunction with any other transaction that the Company may have entered into or
agreed to, will not give rise to any liability for Taxes under Section 355(e) of
the Code for which the Company may in any way be held liable. The Company has
not participated in any transaction that will make it in any way liable for any
liability for Taxes under Section 355(e) of the Code.
19
(d) The Company has not made or become obligated to make, nor will
Cathay, Buyer or the Company, as a result of any event connected with any
transaction contemplated herein and/or any termination of employment related to
such transaction, make or become obligated to make, any "excess parachute
payment," as defined in Section 280G of the Code (without regard to subsection
(b)(4) thereof) (or any corresponding provision of state, local or foreign law).
(e) The Company is not now and has never been a member of any
affiliated, combined, unitary or similar group filing a consolidated, combined,
unitary or similar federal or state income Tax Return (other than a group the
common parent of which was the Company) and the Company has no liability for the
Taxes of any person or entity (other than the Company) under Treasury
Regulations Section 1.1502-6 (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract, or otherwise. There
exists no tax sharing agreement that will require any payment by the Company
after the date of this Agreement.
4.11 Employee Benefit Plans.
(a) Section 4.11(a) of the Company Disclosure Schedule sets forth
a true and correct and complete list of: (i) each incentive compensation plan,
deferred compensation plan and equity compensation plan; (ii) each "welfare"
plan, fund or program (within the meaning of Section 3(1) of ERISA); (iii) each
"pension" plan, fund or program (within the meaning of Section 3(2) of ERISA);
and (iv) each employment, termination or severance agreement as well as each
other employee benefit plan, fund, program, agreement or benefit arrangement
(collectively, the "Plans"), which is sponsored or maintained, or to which
contributions are made or required to be made, by the Company, or by any trade
or business (whether incorporated or not) which is a member of a controlled
group of corporations with the Company as defined in Section 414(b) or (c) of
the Code, or an affiliated service group with the Company as defined in Section
414(m) or (o) of the Code (an "ERISA Affiliate"), for the benefit of any current
or former employee, director or consultant of the Company or an ERISA Affiliate.
(b) The Company has heretofore provided or made available to
Cathay true and correct and complete copies of each of the Company's Plans (or,
with respect to any Plan that is unwritten, a detailed written description of
such Plan) and each of the following documents, if applicable: (i) the actuarial
report for each such Plan for each of the last three (3) years, (ii) the most
recent determination letter from the Internal Revenue Service for each such
Plan, (iii) a copy of the most recent summary plan description required for each
such Plan under ERISA, (iv) a copy of the Form 5500 (with attachments) filed
with the Internal Revenue Service for each such Plan for each of the last three
years, (v) the most recent summary annual report for each Plan, (vi) all trust
agreements, insurance contracts, or funding instruments related to each Plan,
(vii) all rulings, no-action letters, or advisory opinions from any governmental
authority with respect to any Plan, and (viii) all summary material
modifications and employee handbooks regarding the Plans.
20
(c) Unless set forth on Section 4.11(c) of the Disclosure
Schedules to the extent required, each of the Company's Plans is in compliance
in all material respects with the applicable provisions of the Code and ERISA
(including, but not limited to the Health Insurance Portability and
Accountability Act of 1996, the Uruguay Round Agreements Act, the Small Business
Job Protection Act of 1996, the Uniformed Services Employment, Reemployment
Rights Act of 1994, the Taxpayer Relief Act of 1997, the Internal Revenue
Service Restructuring and Reform Act of 1998, the Community Renewal Tax Relief
Act of 2000, the Economic Growth and Tax Relief Reconciliation Act of 2001, and
the American Jobs Creation Act of 2004); each of the Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code, or the prototype
plan on which any such Plan is based, has received a favorable determination
letter from the IRS; no Plan has a material accumulated or waived funding
deficiency within the meaning of Section 412 of the Code; neither the Company
nor any ERISA Affiliate has incurred, directly or indirectly, any material
liability to or on account of a Plan pursuant to Title IV of ERISA (other than
Pension Benefit Guaranty Corporation premiums); no proceedings have been
instituted by the Pension Benefit Guaranty Corporation to terminate any Plan
that is subject to Title IV of ERISA; no material "reportable event," as such
term is defined in Section 4043(c) of ERISA, has occurred with respect to any
Plan (other than a reportable event with respect to which the thirty (30) -day
notice period has been waived within the 60-month period preceding the date of
this Agreement); and no condition exists that presents a material risk to the
Company of incurring a liability to or on account of a Plan pursuant to Title IV
of ERISA; no Plan is a multiemployer plan (within the meaning of Section
4001(a)(3) of ERISA and no Plan is a multiple employer plan as defined in
Section 413 of the Code; and there are no pending or, to the knowledge of the
Company, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Plans or any trusts related
thereto. All contributions (including all employer contributions and employee
contributions) that have been required to have been paid with respect to each
Plan have been paid within the time required by such Plan or the Code. Except as
required by the Code, the consummation of the transactions contemplated by this
Agreement will not accelerate the time of vesting or the time of payment, or
increase the amount, of compensation due to any employee, or director of the
Company, under any Plan. No Plan provides for any payment or funding for the
continuation of medical, dental, life or disability coverage for any employee or
former employee of the Company for any period of time beyond the end of the
current plan year (except to the extent of coverage required under the
Comprehensive Omnibus Budget Reconciliation Act of 1986, as amended.
4.12 Disclosure Controls and Procedures. None of the Company's
records, systems, controls, data or information are recorded, stored,
maintained, operated or otherwise wholly or partly dependent on or held by any
means (including any electronic, mechanical or photographic process, whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the exclusive ownership and direct control of the Company or its
accountants, except as would not reasonably be expected to have a materially
adverse effect on the system of internal accounting controls described in the
next sentence. The Company has devised and maintained systems of internal
accounting controls sufficient to provide reasonable assurances regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP.
4.13 Company Information. The information relating to the Company
that is provided to Cathay by the Company or its representatives for inclusion
in any document filed with any Governmental Entity in connection herewith will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances in
which they are made, not misleading.
21
4.14 Compliance with Applicable Law. The Company:
(a) is in compliance in all material respects, in the conduct of
its business, with all applicable federal, state, local and foreign statutes,
laws, regulations, ordinances, permits, licenses, franchises, certificates of
authority, rules, judgments, orders or decrees applicable thereto or to the
employees conducting such businesses, including, if and to the extent
applicable, the Sarbanes-Oxley Act of 2002, the Bank Holding Company Act of
1956, as amended, the Equal Credit Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act, the Home Mortgage Disclosure Act, the Bank Secrecy
Act, the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (the "USA PATRIOT
Act"), and all other applicable fair lending and fair housing laws or other laws
relating to discrimination (including, without limitation, anti-redlining, equal
credit opportunity and fair credit reporting), truth-in-lending, real estate
settlement procedures, adjustable rate mortgages disclosures or consumer credit
(including, without limitation, the federal Consumer Credit Protection Act, the
federal Truth-in Lending Act and Regulation Z thereunder, the federal Real
Estate Settlement Procedures Act of 1974 and Regulation X thereunder, and the
federal Equal Credit Opportunity Act and Regulation B thereunder) or with
respect to the Flood Disaster Protection Act, and, as of the date hereof, the
Company has a Community Reinvestment Act rating of "satisfactory" or better;
(b) has all permits, licenses, franchises, certificates, orders,
and approvals of, and has made all filings, applications, and registrations
with, Governmental Entities that are required in order to permit the Company to
carry on its business as currently conducted;
(c) except as set forth in the Company Disclosure Schedule, has,
since December 31, 2001, received no notification or communication from any
Governmental Entity (i) asserting that the Company is not in compliance with any
statutes, regulations or ordinances, (ii) threatening to revoke any permit,
license, franchise, certificate of authority or other governmental
authorization, or (iii) threatening or contemplating revocation or limitation
of, or which would have the effect of revoking or limiting, the Company's FDIC
deposit insurance; and
(d) except as set forth in the Company Disclosure Schedule, is not
a party to or subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter, supervisory
letter, resolution of the Company's Board of Directors, or similar submission
to, any Governmental Entity charged with the supervision or regulation of
depository institutions or depository institution holding companies or engaged
in the insurance of deposits (including, the FDIC and SNYBD) or the supervision
or regulation of the Company, and the Company has not been advised in writing by
any such Governmental Entity that such Governmental Entity 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.
22
4.15 Contracts.
(a) Except as set forth in the Company Disclosure Schedule and
except for agreements relating to Loans and deposits entered into in the
ordinary course of business, the Company is not a party to or bound by any
contract, arrangement, commitment or understanding (whether written or oral) (i)
with respect to the employment of any directors, officers, employees or
consultants, (ii) which, upon the consummation of the transactions contemplated
by this Agreement, will (either alone or upon the occurrence of any additional
acts or events) result in (x) any payment or benefits (whether of severance pay
or otherwise) becoming due, or any increase in the amount of or acceleration or
vesting of any rights to any payment or benefits, from Cathay, any of its
Subsidiaries, or the Company, to any director, officer, employee or consultant
thereof (other than payment of the Merger Consideration or the Offer
Consideration with respect to their shares of Company Common Stock) or (y) the
invalidity, unenforceability or discontinuation of any such contract,
arrangement, commitment or understanding, whether in whole or in part, (iii)
which is not terminable without cause on sixty (60) days or less notice or
involves the payment of more than $25,000 per annum, (iv) which materially
restricts the conduct of any line of business by the Company, or (v) provides
recourse to the Company or any former Subsidiary of the Company in connection
with the sale of any loan or other extension of credit (excluding customary
short-term rights of recourse for fraudulent application statements in
connection with the sale of conforming residential mortgage loans). Each
contract, arrangement, commitment or understanding of the type described in this
Section 4.15(a) (excluding agreements relating to Loans and deposits entered
into in the ordinary course of business), whether or not set forth in Section
4.15(a) of the Company Disclosure Schedule, is referred to herein as a "Company
Contract." The Company has previously delivered or made available to Cathay true
and correct and complete copies of each Company Contract.
(b) (i) Each Company Contract is a valid and binding obligation of
the Company and is in full force and effect, (ii) the Company has performed all
obligations required to be performed by it to date under each Company Contract,
(iii) no event or condition exists which constitutes, or after notice or lapse
of time or both would constitute, a default on the part of the Company under any
Company Contract, and (iv) no other party to such Company Contract is, to the
knowledge of the Company, in default in any respect thereunder.
(c) Except as set forth in the Company Disclosure Schedule, the
Company has not entered into a confidentiality agreement or other similar
agreement with any third party (other than Buyer) pursuant to which the Company
has contemplated the disclosure of confidential information of the Company.
(d) The Agreement and Plan of Merger among UCBH Holdings, Inc.,
United Commercial Bank, and the Company, dated as of October 13, 2005 and each
of the shareholder voting agreements between UCBH Holdings, Inc., United
Commercial Bank, and each executive officer and director and certain
shareholders of the Company have been terminated in accordance with their
respective terms and are of no further force and effect. Except for the Cathay
Options, to the Company's knowledge, there are not any (i) shareholder
agreements, voting trusts, proxies or other agreements or understandings
relating to the voting of any shares of the Company or (ii) agreements or
understandings relating to the sale or transfer (including agreements imposing
transfer restrictions) of any shares of the Company.
23
4.16 Environmental Matters. Subject to Section 7.9 hereof:
(a) Except as set forth in the Company Disclosure Schedule, the
Company and each of the Participation Facilities and the Loan Properties is and
has been in compliance in all material respects with all applicable federal,
state and local laws, including common law, regulations and ordinances, and with
all applicable decrees, orders and contractual obligations relating to pollution
or the discharge of or exposure to Hazardous Materials in the environment or
workplace (collectively, "Environmental Laws"), such that any violations
thereof, individually or in the aggregate, have not had and would not be
reasonably likely to have a Material Adverse Effect on the Company.
(b) Except as set forth in the Company Disclosure Schedule, there
is no suit, claim, action or proceeding pending or, to the knowledge of the
Company, threatened, before any Governmental Entity or other forum in which the
Company, any of the Company's former Subsidiaries, any Participation Facility or
any Loan Property, has been or, with respect to threatened proceedings, may be,
named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Laws or (ii) relating to the release,
threatened release or exposure of any Hazardous Material, whether or not
occurring at or on a site owned, leased or operated by the Company, any of the
Company's former Subsidiaries, any Participation Facility or any Loan Property.
(c) Except as set forth in the Company Disclosure Schedule, to the
knowledge of the Company, during the period of (i) the Company's or any of its
former Subsidiaries' ownership or operation of any of its current or former
properties, (ii) the Company's or any of its former Subsidiaries' participation
in the management of any Participation Facility, or (iii) the Company's or any
of its former Subsidiaries' interest in a Loan Property, there has been no
release of Hazardous Materials in, on, under or affecting any such property. To
the knowledge of the Company, prior to the period of (x) the Company's or any of
its former Subsidiaries' ownership or operation of any of its current or former
properties, (y) the Company's or any of its former Subsidiaries' participation
in the management of any Participation Facility, or (z) the Company's or any of
former its Subsidiaries' interest in a Loan Property, there was no release or
threatened release of Hazardous Materials in, on, under or affecting any such
property, Participation Facility or Loan Property.
4.17 Derivative Transactions. Except as set forth in the Company
Disclosure Schedule, as of the date hereof, the Company does not have any
outstanding Derivative Transaction for its own account or for the account of any
of its customers.
4.18 Opinion. Prior to the execution of this Agreement, the Company
has received, and provided to Cathay a copy of, a written opinion from the
Company Advisor to the effect that, as of the date thereof, and based upon and
subject to the matters set forth in such written opinion, the Merger
Consideration and the Offer Consideration to be received by the shareholders of
the Company is fair to such shareholders from a financial point of view. Such
opinion has not been amended or rescinded as of the date of this Agreement.
24
4.19 Approvals. As of the date of this Agreement, the Company knows
of no reason why all regulatory approvals applicable to it from any Governmental
Entity required for the consummation of the transactions contemplated by this
Agreement should not be obtained.
4.20 Loans and Deposits.
(a) Except as set forth in the Company Disclosure Schedule, as of
June 30, 2005, the Company is not a party to any written or oral (i) loan, loan
agreement, note or borrowing arrangement (including, without limitation, leases,
credit enhancements, commitments, guarantees and interest-bearing assets)
(collectively, "Loans") over ninety (90) days delinquent in payment of principal
or interest or in violation of a material non-monetary covenant or obligation,
or (ii) Loan with any director, executive officer or five percent (5%) or
greater shareholder of the Company or any person, corporation or enterprise
controlling, controlled by or under common control with any of the foregoing.
Section 4.20(a) of the Company Disclosure Schedule sets forth (x) all of the
Loans of the Company that as of June 30, 2005 were classified by any internal or
external examiner as "Other Loans Specially Mentioned," "Special Mention,"
"Substandard," "Doubtful," "Loss," "Classified," "Criticized," "Credit Risk
Assets," "Concerned Loans," "Watch List" or words of similar import, together
with the principal amount of and accrued and unpaid interest on each such Loan
and the identity of the borrower thereunder, (y) by category of Loan (i.e.,
commercial, consumer, etc.) all of the Loans of the Company which were
classified as of June 30, 2005, and (z) each asset of the Company that as of
December 31, 2004, was classified as "Other Real Estate Owned" and the book
value thereof.
(b) Each Loan (i) is evidenced by notes, written agreements or
other written evidences of indebtedness that are true, correct, complete and
what they purport to be, (ii) to the extent secured, has been secured by valid
Liens which have been perfected, and (iii) is the legal, valid and binding
obligation of the obligor named therein, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent conveyance and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles.
(c) Deposits in the Company of shareholders, directors and
executive officers of the Company amount to no more than $5,000,000, and such
deposits earn interest at rates comparable to those on other deposits of
comparable size and maturity. Within seven (7) calendar days of the date of this
Agreement, the Company will provide Cathay with verification of the accuracy of
the foregoing figure as of the date of this Agreement, including a list of such
accounts and deposits as of the date of this Agreement.
(d) Schedule 4.20(d)-1 sets forth a true and accurate list as of
December 31, 2005 of all of the Company's Loans in excess of $1 million together
with the principal amount of and accrued and unpaid interest on each such Loan,
the identity of the borrower thereunder (including a brief description of the
nature of the business conducted by such borrower), and the category of Loan
(i.e., commercial, consumer, etc.). Schedule 4.20(d)-2 sets forth a true and
accurate list as of December 31, 2005 of all of the Company's depositors with
deposits in excess of $500,000 million together with the amount thereof and the
identity of the depositor (including a brief description of the nature of the
business conducted by such borrower).
25
4.21 Property.
(a) Except as set forth in the Company Disclosure Schedule, the
Company owns, with good and marketable title in the case of real property (other
than real property classified as "Other Real Estate Owned"), subject only to the
matters permitted by the following sentence, all the properties and assets
(whether real, personal, or mixed and whether tangible or intangible) located in
the facilities owned or operated by the Company and reflected as owned in the
books and records of the Company, including all of the properties and assets
reflected in the balance sheet of the Company as of December 31, 2004 and
interim unaudited balance sheets that have been delivered to Cathay prior to the
date of this Agreement (except for assets held under capitalized leases
identified in the Company Disclosure Schedule and personal property sold since
December 31, 2004 in the ordinary course of the Company's business consistent
with past practice), and all of the properties and assets purchased or otherwise
acquired by the Company since December 31, 2004 (except for personal property
acquired and sold since such date in the ordinary course of the Company's
business consistent with past practice). All material properties and assets
(other than property classified as "Other Real Estate Owned") reflected in the
balance sheet of the Company as of December 31, 2004 and interim unaudited
balance sheets that have been delivered to Cathay prior to the date of this
Agreement are free and clear of all Liens and are not, in the case of real
property, subject to any rights of way, building use restrictions, exceptions,
variances, reservations, or limitations of any nature except, with respect to
all such properties and assets, (i) mortgages or security interests shown on the
consolidated balance sheet of the Company as of December 31, 2004 and interim
unaudited balance sheets as securing specified liabilities or obligations, with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists, (ii) mortgages or security interests
incurred in connection with the purchase of property or assets after December
31, 2004 (such mortgages and security interests being limited to the property or
assets so acquired), with respect to which no default (or event that, with
notice or lapse of time or both, would constitute a default) exists, (iii) Liens
for Taxes not yet due, and (iv) with respect to real property, (A) minor
imperfections of title, if any, none of which is substantial in amount,
materially detracts from the value or impairs the use of the property subject
thereto, or impairs the operations of the Company, and (B) zoning laws and other
land use restrictions that do not impair the present or anticipated use of the
property subject thereto. Except with respect to property classified as "Other
Real Estate Owned," all buildings, plants, and structures owned by the Company
lie wholly within the boundaries of the real property owned by the Company and
do not encroach upon the property of, or otherwise conflict with the property
rights of, any other person. All leases pursuant to which the Company, as
lessee, leases real or personal property are valid and enforceable in accordance
with their respective terms, and neither the Company nor, to the knowledge of
the Company, any other party thereto is in default thereunder.
(b) The buildings, plants, structures and equipment of the Company
used in the conduct of its business are structurally sound, are in good
operating condition and repair, and are adequate for the uses to which they are
being put, and none of such buildings, plants, structures, or equipment is in
need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost. The building, plants,
structures, and equipment of the Company are sufficient for the continued
conduct of the Company's business after the Merger Effective Time in
substantially the same manner as conducted prior to the Merger Effective Time.
26
4.22 Labor Matters.
(a) There is no application or petition for certification of a
collective bargaining agent or for union representation pending or, to the
knowledge of the Company, threatened in writing against the Company, and none of
the Company's employees are or have been since December 31, 2004 represented by
any union or other bargaining representative. To the knowledge of the Company,
since December 31, 2004, no union has attempted to organize any group of the
employees of the Company, and no group of the Company's employees has sought at
any time during the last three (3) years to organize themselves into a union or
similar organization for the purpose of collective bargaining. To the knowledge
of the Company, there are no pending or threatened strikes, slowdowns, pickets
or work stoppage by any employees of the Company.
(b) There are no pending or, to the knowledge of the Company,
threatened material unfair labor practice charges or employee grievance charges
with the National Labor Relations Board or any comparable state or local agency
against the Company.
(c) With respect to the Company's business, there have not been in
the past five (5) years any investigations, inspections or material citations
for violations of OSHA, any of the regulations promulgated pursuant to OSHA, or
any other statute, ordinance, rule or regulations establishing standards of
workplace safety, and no such investigations, inspections or citations are
pending or, to the knowledge of the Company, threatened.
4.23 Insurance. The Company is and continuously since its inception
has been, insured with reputable insurers against all risks normally insured
against by banks. Schedule 4.23 of the Company Disclosure Schedule lists and
describes each insurance policy maintained by or on behalf of the Company with
respect to its properties, assets and business, together with a claims history
for the past two (2) years. In the best judgment of the management of the
Company, such insurance coverage is adequate for the Company, and all material
claims under the policies listed on Schedule 4.23 of the Company Disclosure
Schedule have been filed in due and timely fashion. All of such insurance
policies are in full force and effect, and the Company has not, since January 1,
2003, been (i) in default with respect to its obligations under any such
insurance policies or (ii) denied insurance coverage. Since December 31, 2004,
there has not been any damage to, destruction of, or loss of any assets of the
Company not covered by insurance that could have a Material Adverse Effect on
the Company. Except as set forth on Schedule 4.23, the Company does not have any
self-insurance or co-insurance programs, and the reserves set forth on the
consolidated balance sheet of the Company as of December 31, 2004 are adequate
to cover all anticipated liabilities with respect to any such self-insurance or
co-insurance programs.
4.24 Absence of Undisclosed Liabilities. Subject to Section 7.10
hereof:
Except for items for which reserves have been established in the
Company's most recent audited balance sheets and interim unaudited balance
sheets, which have been delivered to Cathay and which do not reflect any
overstated assets, the Company has not incurred, and is not legally obligated
with respect to, any indebtedness, liability (including, without limitation, a
liability arising out of an indemnification, guarantee, hold harmless or similar
arrangement) or obligation (accrued or contingent, whether due or to become due,
and whether or not subordinated to the claims of its general creditors), other
than as a result of operations in the ordinary course of business after such
date.
27
No agreement pursuant to which any loans or other assets have been or will be
sold by the Company entitles the buyer of such loans or other assets, unless
there is a material breach of a representation or covenant by the Company, to
cause the Company to repurchase such loan or other asset or to pursue any other
form of recourse against the Company (other than customary short term rights of
recourse for fraudulent application statements in connection with the sale of
conforming residential mortgage loans). The Company has not knowingly made and
shall not make any representation or covenant in any such agreement that
contained or shall contain any untrue statement of a material fact or omitted or
shall omit to state a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which such
representations and/or covenants were made or shall be made, not misleading.
Other than any regular annual dividend by the Company, no cash, stock or other
dividend or any other distribution with respect to Company Capital Stock has
been declared, set aside or paid, nor has any of the Company Capital Stock been
repurchased, redeemed or otherwise acquired, directly or indirectly, by the
Company since December 31, 2004.
4.25 Qualification as Reorganization. The Company has not taken or
agreed to take any action or failed to take any action that would reasonably be
expected to prevent the Offer and the Merger, taken together, from qualifying as
a reorganization within the meaning of Section 368(a) of the Code. The Company
is not aware of any fact, condition or other circumstance that would reasonably
be expected to prevent the Offer and the Merger, taken together (or, if the
Offer is not consummated, the Merger), from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
4.26 Full Disclosure. The representations and warranties contained
in this Article IV do not contain any untrue statement of any material fact or
omit to state any material fact necessary in order to make the statements and
information contained in this Article IV not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CATHAY AND BUYER
Except as set forth in the Cathay Disclosure Schedule, Cathay and Buyer
hereby jointly and severally represent and warrant to the Company, as of the
date hereof and as of the Offer Closing Date and, if the Offer has not been
consummated, the Merger Closing Date, as follows:
5.1 Corporate Organization. Cathay is a corporation duly
organized, validly existing and in good standing under the laws of Delaware, and
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of California. Buyer is a California state-chartered
non-member commercial bank supervised by the CADFI and the FDIC. Buyer is not a
member of the FRB. Each of Cathay and Buyer (i) has all requisite corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and (ii) is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not (i) prevent or
delay Cathay or Buyer from performing its obligations hereunder, (ii) adversely
affect the ability of Cathay or Buyer to consummate the transactions
contemplated hereby or (iii) have a Material Adverse Effect on Cathay or Buyer.
Cathay is supervised by the FRB as a bank holding company under the Bank Holding
Company Act of 1956, as amended. True and correct copies of the Certificate of
Incorporation of Cathay, the Articles of Incorporation of Buyer and the Bylaws
of each of Cathay and Buyer, in each case as in effect as of the date of this
Agreement, have previously been made available to the Company.
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5.2 Authority; No Violation.
(a) Each of Cathay and Buyer has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Cathay and Buyer and by Cathay in
its capacity as the sole shareholder of Buyer pursuant to applicable law, and no
other corporate proceedings on the part of Cathay for Buyer are necessary to
approve this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Cathay and
Buyer and (assuming due authorization, execution and delivery by the Company)
this Agreement constitutes a valid and binding obligation of Cathay and Buyer,
enforceable against Cathay and Buyer in accordance with its terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by applicable bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(b) Neither the execution and delivery of this Agreement by Cathay
and Buyer nor the consummation by Cathay and Buyer of the transactions
contemplated hereby, nor compliance by Cathay and Buyer with any of the terms or
provisions hereof, will (i) violate any provision of the Certificate of
Incorporation or Bylaws of Cathay or the organizational documents of any of
Cathay's Subsidiaries, or (ii) assuming that the consents and approvals referred
to in Section 5.3 are duly obtained, (x) violate any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable to
Cathay or Buyer or any of their respective properties or assets, or (y) violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon, any of the respective properties or
assets of Cathay or any of its Subsidiaries under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, contract, agreement or other instrument or obligation to which Cathay or
any of its Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected except (in the case of clause (y)
above) for such violations, conflicts, breaches or defaults which either
individually or in the aggregate would not (i) prevent or delay Cathay or Buyer
from performing its obligations hereunder or (ii) adversely affect the ability
of Cathay or Buyer to consummate the transactions contemplated hereby.
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5.3 Consents and Approvals. Except for (a) the filing of the FDIC
Application and FRB Application and approval or waivers of such applications,
(b) the filing of the State Banking Approvals and Notices, (c) the filing of the
Plan and Agreement of Merger, California Certificates and New York Certificates,
and other required filings with the New York Filing Officers, the California
Secretary and the California Commissioner, and (d) if required by law, the
Securities Laws Filings and Approvals, no consents or approvals of or filings or
registrations with any Governmental Entity or with any third party are necessary
in connection with the execution and delivery by Cathay or Buyer of this
Agreement or the consummation by Buyer of the Merger and the other transactions
contemplated hereby. No vote of any shareholders of Cathay is required to
approve this Agreement or to consummate the transactions contemplated hereby.
Cathay has prior to the date hereof received the approval of the Board of
Governors of the Federal Reserve System and the approval of the New York State
Banking Department to acquire 100% of the outstanding shares of the Company
(including pursuant to the Offer) on the terms and conditions set forth in this
Agreement, which approval remains in full force and effect as of the date
hereof.
5.4 Broker's Fees. Neither Cathay nor any of its Subsidiaries, nor
any of their respective officers or directors, has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement which are
or would be an obligation of the Company or any of its Subsidiaries.
5.5 Cathay Information. The information relating to Cathay and its
Subsidiaries, including Buyer, to be contained in any document filed with any
other Governmental Entity, including but not limited to the SEC, or provided to
the Company's shareholders in connection herewith (including, without
limitation, the Proxy Statement) will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances in which they are made, not misleading.
5.6 Access to Funds. Cathay has, and on the Offer Closing Date and
the Merger Closing Date will have, sufficient funds and available shares of
Cathay Common Stock authorized to enable it to consummate the Offer and the
Merger, as the case may be, and to pay the aggregate Offer Consideration and
Merger Consideration, as the case may be, pursuant to the terms of this
Agreement.
5.7 Approvals. As of the date of this Agreement, Cathay knows of
no reason applicable to it why all regulatory approvals from any Governmental
Entity required for the consummation of the transactions contemplated hereby
(including, without limitation, the Merger and the Offer) should not be obtained
on a timely basis.
5.8 Legal Proceedings. Neither Cathay nor Buyer is a party to any,
and there are no pending or, to Cathay's knowledge, threatened legal,
administrative, or arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature that, individually or in
the aggregate, would (i) delay or prevent Cathay or Buyer from performing their
respective obligations hereunder or (ii) adversely affect the ability of Cathay
or Buyer to consummate the transactions contemplated hereby.
5.9 Compliance with Applicable Law. Cathay and each of its
Subsidiaries, including Buyer, except as disclosed in any Cathay Reports filed
prior to the date of this Agreement:
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(a) is in compliance in all material respects, in the conduct of
its business, with all applicable federal, state, local and foreign statutes,
laws, regulations, ordinances, permits, licenses, franchises, certificates of
authority, rules, judgments, orders or decrees applicable thereto or to the
employees conducting such businesses, including, if and to the extent
applicable, the Sarbanes-Oxley Act of 2002, the Bank Holding Company Act of
1956, as amended, the Equal Credit Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act, the Home Mortgage Disclosure Act, the Bank Secrecy
Act, the USA PATRIOT Act, and all other applicable fair lending and fair housing
laws or other laws relating to discrimination (including, without limitation,
anti-redlining, equal credit opportunity and fair credit reporting),
truth-in-lending, real estate settlement procedures, adjustable rate mortgages
disclosures or consumer credit (including, without limitation, the federal
Consumer Credit Protection Act, the federal Truth-in Lending Act and Regulation
Z thereunder, the federal Real Estate Settlement Procedures Act of 1974 and
Regulation X thereunder, and the federal Equal Credit Opportunity Act and
Regulation B thereunder) or with respect to the Flood Disaster Protection Act,
and, as of the date hereof, Buyer has a Community Reinvestment Act rating of
"satisfactory" or better;
(b) has all permits, licenses, franchises, certificates, orders,
and approvals of, and has made all filings, applications, and registrations
with, Governmental Entities that are required in order to permit Cathay and each
of its Subsidiaries to carry on its business as currently conducted;
(c) has, since December 31, 2002, received no notification or
communication from any Governmental Entity (i) asserting that Cathay or any of
its Subsidiaries, including Buyer, is not in compliance with any statutes,
regulations or ordinances, (ii) threatening to revoke any permit, license,
franchise, certificate of authority or other governmental authorization, or
(iii) threatening or contemplating revocation or limitation of, or which would
have the effect of revoking or limiting, Buyer's FDIC deposit insurance; and
(d) is not a party to or subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a commitment letter,
supervisory letter, resolution of the Board of Directors of Cathay or any of its
Subsidiaries, or similar submission to, any Governmental Entity charged with the
supervision or regulation of depository institutions or engaged in the insurance
of deposits (including, the FDIC) or the supervision or regulation of Cathay or
any of its Subsidiaries, including Buyer, and neither Cathay nor any of its
Subsidiaries has been advised in writing by any such Governmental Entity that
such Governmental Entity 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.
5.10 Regulatory Reports. Cathay and each of its Subsidiaries,
including Buyer, 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 any Regulatory Agency
(collectively, the "Cathay Reports") and have paid all fees and assessments due
and payable in connection therewith. Except for normal examinations conducted by
a Regulatory Agency in the regular course of the business of Cathay and its
Subsidiaries, no Regulatory Agency has initiated any proceeding or, to the
knowledge of Cathay, investigation into the business or operations of Cathay or
any of its Subsidiaries, including Buyer, since December 31, 2002. There is no
unresolved material violation, criticism, or exception by any Regulatory Agency
with respect to any report or statement relating to any examinations of Cathay
or any of its Subsidiaries.
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5.11 Full Disclosure. The representations and warranties contained
in this Article V do not contain any untrue statement of any fact or omit to
state any fact necessary in order to make the statements and information
contained in this Article V not misleading.
5.12 Capitalization.
(a) The authorized capital stock of Cathay consists of 100,000,000
shares of Cathay Common Stock and 10,000,000 shares of Cathay Preferred Stock.
As of December 31, 2005, there were (i) 50,191,089 shares of Cathay Common Stock
issued and outstanding, (ii) no shares of Cathay Preferred Stock outstanding,
and (iii) 2,885,508 shares of Cathay Common Stock reserved for issuance pursuant
to Cathay stock option plans ("Cathay Option Plans"). All of the issued and
outstanding shares of Cathay Common Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. The shares of Cathay
Common Stock issuable pursuant to the Merger and the Offer have been duly
authorized and, when issued in accordance with this Agreement, such shares will
be validly issued and fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. Except as
disclosed in Cathay's Annual Report for the fiscal year ending December 31, 2004
on Form 10-K (including exercise rights disclosed therein), Cathay does not have
and is not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of Cathay Capital Stock or any other equity security of Cathay or
any securities representing the right to purchase or otherwise receive any
shares of Cathay Capital Stock or any other equity security of Cathay other than
the Rights Agreement dated as of November 16, 2000 between Cathay and American
Stock Transfer and Trust Company, pursuant to which Rights Agreement Cathay
granted the right to holders of certain shares of Cathay Common Stock to
purchase one one-thousandth (1/1000) of a share of Series A Participating
Preferred Stock of Cathay having the rights, powers and preferences set forth in
the form of Certificate of Designation, Preferences and Rights attached to such
Rights Agreement as Exhibit A.
(b) The authorized capital stock of Buyer consists of 20,000,000
shares of common stock and 1,000,000 shares of preferred stock of which 500,000
shares are designated as adjustable rate Noncumulative Preferred Stock, Series
A. As of the date hereof, there are 6,149,173 shares of common stock of Buyer
outstanding. All of the issued and outstanding shares of common stock of Buyer
are owned by Cathay. All of the issued and outstanding shares of common stock of
Buyer have been duly authorized and validly issued and are fully paid and
nonassessable. Buyer does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock of
Buyer or any other equity security of Buyer or any securities representing the
right to purchase or otherwise receive any shares of capital stock of Buyer or
any other equity security of Buyer.
32
5.13 Financial Statements. Cathay has previously made available to
Company copies of the consolidated balance sheets of Cathay as of December 31
for the fiscal years 2001 through 2004, inclusive, and the related consolidated
statements of operations, changes in shareholders' equity and comprehensive
income and cash flows for the fiscal years 2002 through 2004, inclusive, as
reported in Cathay's Annual Reports on Form 10-K for the fiscal years ended
December 31, 2003 and 2004 filed with the SEC under the Exchange Act, in each
case accompanied by the audit report of Cathay's independent public accountants
or independent registered public accountants, as applicable. The December 31,
2004 balance sheet of Cathay (including the related notes, where applicable)
fairly presents the financial position of Cathay as of the date thereof, the
other financial statements referred to in this Section 5.14 (including the
related notes, where applicable) fairly present, the financial statements filed
by Cathay with SEC after December 31, 2004 fairly present, and the financial
statements to be filed by Cathay with the SEC after the date of this Agreement
will fairly present (subject, in the case of the unaudited statements, to audit
adjustments normal in nature and amount), the results of the operations and
financial position of Cathay for the respective fiscal periods or as of the
respective dates therein set forth, other than as may be affected by such
relevant items as have been disclosed in any Cathay Report.
5.14 Absence of Certain Changes or Events.
(a) Except as disclosed in any Cathay Reports filed prior to the
date of this Agreement, since December 31, 2004, there has been no change or
development or combination of changes or developments which, individually or in
the aggregate, has had or is reasonably likely to have a Material Adverse Effect
on Cathay or Buyer.
(b) Except as disclosed in any Cathay Report, since December 31,
2004, each of Cathay and Buyer has carried on its business only in the ordinary
and usual course consistent with its past practice.
5.15 Taxes.
(a) Cathay and Buyer have (i) duly and timely filed (including
applicable extensions granted without penalty) all material Tax Returns required
to be filed at or prior to the Merger Effective Time, and such Tax Returns are
true and correct and complete in all material respects, and (ii) paid in full or
made adequate provision in the financial statements of Cathay (in accordance
with GAAP) for all Taxes, with such provisions being based on estimates made by
Cathay or Buyer in good faith. No deficiencies for any Taxes have been proposed
or assessed in writing with respect to Cathay or Buyer, other than amounts which
have been otherwise provided for or which are immaterial to the financial
statements of Cathay; provided, however, Cathay has pending a corporate income
tax audit by the State of California that may result in an assessment of taxes
that in the aggregate would not be material to Cathay and Buyer (collectively,
the "Audit"). There are no Liens for Taxes upon the assets of Cathay except for
Liens that may result from the Audit and except for statutory liens for current
Taxes not yet due. Neither Cathay nor Buyer has requested any extension of time
within which to file any Tax Returns in respect of any fiscal year which have
not since been filed and no request for waivers of the time to assess any Taxes
are pending or outstanding. Neither Cathay nor Buyer is a party to any agreement
providing for the allocation or sharing of Taxes (other than such an agreement
exclusively between or among Cathay and its Subsidiaries).
33
(b) To the knowledge of Cathay, when required to do so, Buyer has
properly withheld Taxes on all non-resident deposit accounts.
5.16 Disclosure Controls and Procedures. None of Cathay's or
Buyer's records, systems, controls, data or information are recorded, stored,
maintained, operated or otherwise wholly or partly dependent on or held by any
means (including any electronic, mechanical or photographic process, whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the exclusive ownership and direct control of Cathay or Buyer or
their accountants, except as would not reasonably be expected to have a
materially adverse effect on the system of internal accounting controls
described in the next sentence. Cathay and Buyer have devised and maintained
systems of internal accounting controls sufficient to provide reasonable
assurances regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP.
5.17 Absence of Undisclosed Liabilities. To the knowledge of
Cathay, and except for items for which reserves have been established in
Cathay's and Buyer's most recent audited balance sheets and interim unaudited
balance sheets, which have been delivered to the Company and which do not
reflect any overstated assets, neither Cathay nor Buyer has incurred, or is
legally obligated with respect to, any material indebtedness, liability
(including, without limitation, a liability arising out of an indemnification,
guarantee, hold harmless or similar arrangement) or obligation (accrued or
contingent, whether due or to become due, and whether or not subordinated to the
claims of its general creditors), other than as a result of operations in the
ordinary course of business after such date. Neither Cathay nor Buyer has
knowingly made nor shall make any representation or covenant in any agreement
pursuant to which any loans or other assets have been or will be sold by Cathay
or Buyer that contained or shall contain any untrue statement of a material fact
or omitted or shall omit to state a material fact necessary in order to make the
statements contained therein, in light of the circumstances under which such
representations and/or covenants were made or shall be made, not misleading.
Other than any regular quarterly dividend by Cathay, no cash, stock or other
dividend or any other distribution with respect to Cathay Capital Stock has been
declared, set aside or paid, nor has any of the Cathay Capital Stock been
repurchased, redeemed or otherwise acquired, directly or indirectly, by Cathay
since March 31, 2005.
5.18 Qualification as Reorganization. Neither Cathay nor any of its
Subsidiaries has taken or agreed to take any action or failed to take any action
that would reasonably be expected to prevent the Offer and the Merger, taken
together, from qualifying as a reorganization within the meaning of Section
368(a) of the Code. Neither Cathay nor any of its Subsidiaries is aware of any
fact, condition or other circumstance that would reasonably be expected to
prevent the Offer and the Merger, taken together (or, if the Offer is not
consummated, the Merger), from qualifying as a reorganization within the meaning
of Section 368(a) of the Code.
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ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Covenants of the Company. During the period from the date of
this Agreement and continuing until the Offer Closing Date or, if the Offer is
not consummated, the Merger Closing Date, except as expressly contemplated or
permitted by this Agreement or with the prior written consent of Cathay, the
Company shall carry on its business in the ordinary course consistent with past
practice and, to the extent consistent therewith, the Company will use its
reasonable efforts to (i) preserve intact the business organization of the
Company, (ii) keep available to itself and Cathay the present services of the
current officers and employees of the Company, (iii) preserve for itself and
Cathay the goodwill of the customers of the Company and others with whom
business relationships exist, and (iv) maintain and expand the deposits of the
Company. Without limiting the generality of any of the foregoing, and except as
set forth in Section 6.1 of the Company Disclosure Schedule or as otherwise
contemplated by this Agreement or consented to in writing by Cathay, the Company
shall not:
(a) declare or pay any dividends on, or make other distributions
in respect of, any shares of Company Capital Stock;
(b) (i) split, combine or reclassify any shares of Company Capital
Stock or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of Company Capital Stock;
(ii) repurchase, redeem or otherwise acquire any of shares of Company Capital
Stock, or any securities convertible into or exercisable for any shares of
Company Capital Stock; or (iii) issue, deliver, sell, pledge or otherwise
encumber or subject to any Lien or authorize or propose the issuance, delivery,
sale, pledge or encumbrance of or the imposition of any Lien on, any shares of
Company Capital Stock or any securities convertible into or exercisable for, or
any rights, warrants or options to acquire, any shares of Company Capital Stock,
or enter into any agreement with respect to any of the foregoing;
(c) amend its Organization Certificate, Bylaws or other similar
governing documents;
(d) make any capital expenditures other than those which (i) are
made in the ordinary course of business or are necessary to maintain existing
assets in good repair and (ii) in any event are in an amount of no more than
$25,000 individually or $150,000 in the aggregate;
(e) enter into any new line of business;
(f) (i) acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire any assets, including without limitation any loan portfolios
or pools, which would be material, individually or in the aggregate, to the
Company, other than in connection with foreclosures, settlements in lieu of
foreclosure or troubled loan or debt restructurings in the ordinary course of
business consistent with past practice; or (ii) open, close, sell or acquire any
branches;
35
(g) except as set forth in the Company Disclosure Schedule, incur
any indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise become responsible for the obligations of any
person, or pledge or otherwise encumber or dispose of any assets of the Company,
except in the ordinary course of business consistent with past practice;
provided, however, that in no event shall any such indebtedness or obligations
(excluding, however, Company deposits) be for a period exceeding six (6) months;
(h) take any action or fail to take any action that is intended or
may reasonably be expected to result in any of the conditions to the Merger set
forth in Article VIII or the Tender Offer Conditions not being satisfied;
(i) change its methods of accounting in effect at December 31,
2004, including without limitation its methods of accounting for any expense,
asset, transaction, gain, income, tax, loss, deposits or any other item that may
be properly taken into account in calculating Company net worth, loan and lease
losses and core deposits, except as required by changes in GAAP or regulatory
accounting principles as concurred to by the Company's independent auditors;
(j) (i) except as required by applicable law or as required to
maintain qualification pursuant to the Code, adopt, amend, renew or terminate
any employee benefit plan (including, without limitation, any Plan) or any
agreement, arrangement, plan or policy between the Company and any of its
current or former directors, officers or employees; (ii) except for normal
increases in the ordinary course of business consistent with past practice,
except as required by applicable law and except as set forth in the Company
Disclosure Schedule, increase in any manner the compensation or fringe benefits
of any director, officer or employee or pay any benefit not required by any Plan
or agreement as in effect as of the date hereof, and in any event not more than
the lesser of $5,000 or 5.0% of annual compensation; or (iii) make any equity or
equity-based grants or allocations under any Plan (including, without
limitation, the granting of stock options, stock appreciation rights, restricted
stock, restricted stock units or performance units or shares);
(k) purchase, acquire, sell, license, lease, encumber, assign or
otherwise dispose of, or agree to sell, license, lease, encumber, assign or
otherwise dispose of, or abandon or fail to maintain, any loans, loan pools,
loan portfolios, participation or other interests in loans, or any of its
material assets, properties or other material rights or agreements other than in
the ordinary course of business consistent with past practice;
(l) file any application to establish, relocate or terminate the
operations of any banking office of the Company;
(m) create, renew, amend or terminate, fail to perform any
material obligations under, waive or release any material rights under or give
notice of a proposed renewal, amendment, waiver, release or termination of, any
material contract, agreement or lease for office space to which it is a party or
by which it or its properties is bound, other than the renewal in the ordinary
course of business of any lease the term of which expires prior to the Offer
Closing Date;
36
(n) except pursuant to written agreements in effect on the date
hereof and previously provided to Cathay, pay, loan or advance any amount to, or
sell, transfer or lease any properties or assets (real, personal or mixed,
tangible or intangible) to, or enter into any agreement or arrangement with, any
of its officers or directors or any of their immediate family members or any
affiliates or associates (as such terms are defined under the Exchange Act) of
any of its officers or directors other than compensation in the ordinary course
of business consistent with past practice;
(o) make or change any material election concerning Taxes (other
than an election that is required by law to be made periodically and is made
consistent with past practice and that does not materially increase any
liability for Taxes), file any amended Tax Return, enter into any closing
agreement with respect to a material amount of Taxes, settle any material Tax
claim or assessment, surrender any right to claim a refund of a material amount
of Taxes, obtain any Tax ruling or consent to any waiver or extension of the
statute of limitations for the assessment of Taxes;
(p) take any action, or omit to take any action, the taking or
omission of which would reasonably be expected to prevent the Offer and the
Merger, taken together (or, if the Offer is not consummated, the Merger), from
constituting a reorganization within the meaning of Section 368(a) of the Code;
(q) pay, discharge, settle, compromise or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), including taking any action to settle or compromise
any material litigation, other than the payment, discharge, settlement,
compromise or satisfaction, in the ordinary course of business consistent with
past practice or in accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, its most recent consolidated financial
statements (or the notes thereto), or incurred since December 31, 2004 in the
ordinary course of business consistent with past practice;
(r) enter into any transaction outside the ordinary course of
business consistent with past practice, including (i) the purchase of
certificates of deposit from brokers or other third parties, (ii) the offering
or payment of rates of interest on deposit accounts materially different than
the Company's past practice or current market rates, (iii) the entry into any
material contracts, and (iv) the purchase or sale of investment securities
unless such transaction (A) is prudent, necessary, consistent with the Company's
written investment policies and its 2005 budget, duly approved by senior
management of the Company, and, if involving a purchase, is limited to
investment-grade securities, (B) does not cause the weighted average duration of
the Company's investment securities portfolio to exceed that portfolio's
weighted average duration as of June 30, 2005, and (C) will not cause the
balance of the Company's investment securities portfolio to exceed the Company's
June 30, 2005 reforecast for the month of the Merger Closing;
(s) except as required by law, disclose confidential information
of the Company to a third party without requiring such third party to be bound
by customary confidentiality obligations; or
(t) authorize, commit or agree to do any of the foregoing actions.
37
6.2 Covenants of Cathay. Except as otherwise contemplated by this
Agreement or consented to in writing by the Company, during the period from the
date of this Agreement to the Offer Closing Date, or if the Offer is not
consummated, the Merger Closing Date, Cathay shall not, and shall not permit
Buyer or any of Cathay's other Subsidiaries to:
(a) take any action or fail to take any action that is intended or
may reasonably be expected to result in any of its representations and
warranties set forth in this Agreement being or becoming untrue in any material
respect, or in any of the conditions to the Merger set forth in Article VIII or
any of the Tender Offer Conditions not being satisfied;
(b) take any action or enter into any agreement that could
reasonably be expected to jeopardize or materially delay the receipt of any
Requisite Regulatory Approvals or the consummation of the Merger or the Offer;
(c) purchase any of the shares subject to the Cathay Options other
than with the consent of the applicable option grantor;
(d) take any action, or omit to take any action, the taking or
omission of which would reasonably be expected to prevent the Offer and the
Merger, taken together (or, if the Offer is not consummated, the Merger), from
constituting a reorganization within the meaning of Section 368(a) of the Code;
or
(e) authorize, or commit or agree to do any of the foregoing.
6.3 Covenants of Both the Company and Cathay.
(a) The Company and Cathay agree that they will report in their
respective federal income Tax Returns for the taxable period including the
Merger Closing Date that the Offer and the Merger, taken together (or, if the
Offer is not consummated, the Merger), qualified as a reorganization under
Section 368(a) of the Code, and will properly file with their federal income Tax
Returns all information required by Treasury Regulations Section 1.368-3. No
party hereto, unless required by law, will take any Tax reporting position
inconsistent with the characterization of the Offer and the Merger, taken
together (or, if the Offer is not consummated, the Merger), as a reorganization
under Section 368(a) of the Code.
(b) No party will take any action that would cause the
transactions contemplated by this Agreement to be subject to requirements
imposed by any Takeover Law and each of them will take all necessary steps
within its control to exempt (or ensure the continued exemption of) those
transactions from, or if necessary challenge the validity or applicability of,
any applicable Takeover Law, as now or hereafter in effect. No party will take
any action that would cause the transactions contemplated by this Agreement not
to comply with any Takeover Provisions and each of them will take all necessary
steps within its control to make those transactions comply with (or continue to
comply with) the Takeover Provisions.
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ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters.
(a) Cathay shall prepare and file as promptly as practicable after
the date hereof such regulatory filings as are applicable to the Merger and the
Offer. To the extent required by applicable law, the Company shall take, in
accordance with applicable law and its Organization Certificate and Bylaws, each
as may be amended, all action necessary to convene an appropriate meeting of
shareholders of the Company to consider and vote upon the approval of this
Agreement and any other matters required to be approved by the Company's
shareholders for consummation of the Merger (including any adjournment or
postponement, the "Company Meeting"), as promptly as practicable after the
consummation or expiration of the Offer and, in the case in which the Offer is
not consummated, after SEC review of the S-4 Registration Statement has been
completed and the S-4 Registration Statement has been declared effective. The
Company's Board of Directors shall recommend such approval, and the Company
shall take all reasonable lawful action to solicit such approval by its
shareholders, subject to the Board's fiduciary duties under applicable law.
(b) If the Offer expires without having been consummated, each of
the Company and Cathay shall cooperate and shall instruct their respective
agents, attorneys and accountants to cooperate in the preparation and filing
with the SEC within twenty (20) days after the expiration of the Offer a
registration statement on Form S-4 in order to register under the Securities Act
the shares of Cathay Common Stock to be issued in the Merger (the "S-4
Registration Statement"). If the Offer is consummated, Cathay shall and shall
instruct their agents, attorneys and accountants to prepare and file with the
SEC within twenty (20) days after the Offer Closing Date a registration
statement on an appropriate form in order to register under the Securities Act
the shares of Cathay Common Stock that have been issued to Accredited Investors
pursuant to the Offer (the "Subsequent Registration Statement").
(c) The Company and Cathay shall use reasonable efforts to obtain
all necessary state securities law or "Blue Sky" permits and approvals required
to carry out the transactions contemplated by this Agreement.
(d) (i) If the Offer expires without having been consummated,
then within fifteen (15) days of the expiration of the Offer, the Company shall
prepare, and Cathay shall reasonably assist in such preparation of, a Company
proxy statement for the purposes of submitting to the Company's shareholders the
principal terms of the Merger and this Agreement and any other matters required
to be approved by the Company's shareholders for consummation of the Merger and
soliciting such approval (together with other proxy solicitation materials of
the Company constituting a part thereof, the "Proxy Statement"). Description of
Cathay and of the terms and conditions of this Agreement contained in such Proxy
Statement shall be subject to consultation with Cathay. The Company shall
distribute the Proxy Statement to its shareholders not more than two (2)
Business Days after the S-4 Registration Statement becomes effective (the "Proxy
Distribution Date").
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(ii) If the Offer is consummated and a vote of the Company
shareholders is required by applicable law with respect to the Merger,
then within fifteen (15) days of the Offer Closing Date, the Company
shall prepare and distribute to the Company's shareholders, and Cathay
shall reasonably assist in such preparation of, a Company proxy
statement for the purposes of submitting to the Company's shareholders
the principal terms of the Merger and this Agreement and any other
matters required to be approved by the Company's shareholders for
consummation of the Merger and soliciting such approval (together with
other proxy solicitation materials of the Company constituting a part
thereof, the "Subsequent Proxy Statement"). Description of Cathay and
of the terms and conditions of this Agreement contained in such Proxy
Statement shall be subject to consultation with Cathay.
(e) Each of the Company and Cathay agrees, as to itself and its
Subsidiaries, if any, that none of the information supplied or to be supplied by
it for inclusion or incorporation by reference in (i) the S-4 Registration
Statement and the Proxy Statement will, at the time the S-4 Registration
Statement and each amendment thereto, if any, becomes effective or any
supplement thereto is provided to Company's shareholders, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and (ii) the Proxy Statement or the Subsequent Proxy Statement,
as the case may be, and any supplement thereto will, at the date of mailing to
the Company's shareholders and at the time of the Company Meeting, contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
such statement is made, not misleading. Each of the Company and Cathay further
agrees that if it shall become aware prior to the Merger Effective Time of any
information that would cause any of the statements in the S-4 Registration
Statement or the Proxy Statement or the Subsequent Proxy Statement to be false
or misleading with respect to any material fact, or to omit to state any
material fact necessary to make the statements therein not false or misleading,
to promptly inform the other party thereof and to take the necessary steps to
correct the S-4 Registration Statement or the Proxy Statement or the Subsequent
Proxy Statement.
(f) Cathay will advise the Company, promptly after Cathay receives
notice thereof, of the time when the S-4 Registration Statement has been
declared effective, of the issuance of any stop order or the suspension of a
qualification of the Cathay Common Stock for offering or sale in any
jurisdiction or of the S-4 Registration Statement, of the initiation or threat
of any proceeding for any such purpose, or of any request by the SEC for the
amendment or supplement of the S-4 Registration Statement or for additional
information.
(g) Without limiting the foregoing, the parties hereto shall
cooperate with each other and use their reasonable efforts to promptly prepare
and file all necessary documentation, to effect all applications, notices,
petitions and filings and to obtain as promptly as practicable all permits,
consents, approvals and authorizations of all third parties or Governmental
Entities that are necessary or advisable to consummate the transactions
contemplated by this Agreement and to comply with the terms and conditions
thereof. The Company and Cathay shall have the right to review in advance, and
to the extent practicable each will consult the other on, in each case subject
to applicable laws relating to the exchange of information and the right of each
party to withhold information its Board of Directors reasonably determines in
good faith should be withheld for reasons of privacy, confidentiality or
fiduciary duty, all the information relating to the Company, Cathay or Cathay's
Subsidiaries, including Buyer, that appears in any filing made with, or written
materials submitted to, any third party or any Governmental Entity in connection
with the transactions contemplated by this Agreement.
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In exercising the foregoing right, each of the parties hereto shall act
reasonably and as promptly as practicable. The parties hereto agree that they
will consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties or Governmental
Entities necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other apprised of the status of
matters relating to consummation of the transactions contemplated hereby.
(h) Each of Cathay and the Company shall, upon request, subject to
applicable laws relating to the exchange of information and the right of each
party to withhold information its Board of Directors reasonably determines in
good faith should be withheld for reasons of privacy, confidentiality or
fiduciary duty, furnish each other with all information concerning itself and
its Subsidiaries, if any, directors, officers and shareholders and such other
matters as may be reasonably necessary or advisable in connection with the S-4
Registration Statement, the Proxy Statement, the Subsequent Proxy Statement or
any other statement, filing, notice or application made by or on behalf of
Cathay, the Company or any of Cathay's Subsidiaries to any Governmental Entity
in connection with the Merger, the Offer and the other transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, the Company
shall from time to time make available to Cathay, upon reasonable request, a
list of the Company's shareholders and their addresses and such other
information as Cathay shall reasonably request regarding the ownership of the
Company Capital Stock.
(i) Cathay and the Company shall promptly furnish each other with
copies of non-confidential written communications received by Cathay or the
Company, as the case may be, or any of Cathay's Subsidiaries, from, or delivered
by any of the foregoing to, any Governmental Entity in respect of the
transactions contemplated by this Agreement.
(j) Other than with respect to the Subsequent Registration
Statement, Cathay has no obligation to file a registration statement with the
SEC with respect to the resale of the shares of Cathay Common Stock to be issued
hereunder by any person.
(k) If the Offer is not consummated, not later than the tenth
Business Day following expiration of the Offer, the Company shall deliver to
Cathay a schedule of each person that, to the best of the Company's knowledge,
is or is reasonably likely to be, as of the date of the Company Meeting, deemed
to be an "affiliate" of the Company (each, a "Company Affiliate") as that term
is used in Rule 145 under the Securities Act. The Company shall use its
reasonable efforts to cause each Company Affiliate to execute and deliver to
Cathay and the Company on or before the Merger Effective Time an affiliate
agreement in substantially the form attached hereto as Exhibit D.
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(l) Certificates representing the shares of Cathay Common Stock to
be issued to Company Affiliates pursuant to the Merger may be subject to stop
transfer orders and a restrictive legend which confirm and state that such
certificates representing such shares have been issued or transferred to the
registered holder as the result of a transaction to which Rule 145 under the
Securities Act applies, and that such shares may not be sold, hypothecated,
transferred or assigned, and the issuer or its transfer agent shall not be
required to give effect to any attempted sale, hypothecation, transfer or
assignment, except (i) pursuant to a then current effective registration
statement under the Securities Act, (ii) in a transaction permitted by Rule 145,
or (iii) in a transaction which, in an opinion of such holder's counsel in form
and substance reasonably satisfactory to Cathay, or as described in a "no
action" or interpretive letter from the staff of the SEC, is not required to be
registered under the Securities Act.
(m) Certificates representing the shares of Cathay Common Stock to
be issued pursuant to the Offer will be subject to stop transfer orders and a
restrictive legend which confirm and state that such certificates representing
such shares have been issued or transferred to the registered holder as the
result of the Offer, and that such shares may not be sold, hypothecated,
transferred or assigned, and the issuer or its transfer agent shall not be
required to give effect to any attempted sale, hypothecation, transfer or
assignment, except (i) pursuant to a then current effective registration
statement under the Securities Act, (ii) in a transaction permitted by Rule 144,
or (iii) in a transaction which, in an opinion of such holder's counsel in form
and substance reasonably satisfactory to Cathay, or as described in a "no
action" or interpretive letter from the staff of the SEC, is not required to be
registered under the Securities Act.
7.2 No Solicitation by the Company.
(a) The Company shall, and the Company shall direct and use its
reasonable efforts to cause the Company's affiliates, directors, officers,
employees, agents and representatives (including without limitation any
investment banker, financial advisor, attorney, accountant or other
representative retained by the Company) to, immediately cease any discussions or
negotiations with any other parties that may be ongoing with respect to the
possibility or consideration of any Acquisition Proposal. From the date of this
Agreement through the Merger Effective Time or the earlier termination of this
Agreement, the Company shall not, nor shall it authorize or permit any of the
Company's directors, officers or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it to,
directly or indirectly through another person, (i) solicit, initiate or
encourage (including by way of furnishing information or assistance), or take
any other action designed to facilitate or that is likely to result in, any
inquiries or the making of any proposal that constitutes, or is reasonably
likely to lead to, any Acquisition Proposal, (ii) except in accordance with
Section 9.1(f) hereof, enter into any agreement with respect to an Acquisition
Proposal, (iii) participate in any discussions or negotiations regarding any
Acquisition Proposal, or (iv) make or authorize any statement, recommendation or
solicitation in support of any Acquisition Proposal; provided, however, that
prior to the twentieth (20th) day after the Proxy Distribution Date, if, and
only to the extent that, the Board of Directors of the Company determines in
good faith, after consultation with its outside legal and financial advisors,
that the failure to do so would reasonably be expected to breach the Board's
fiduciary duties under applicable law, the Company may, in response to a bona
fide written Acquisition Proposal not solicited in violation of this Section
7.2(a) that the Board of Directors of the Company believes in good faith
constitutes a Superior Proposal, subject to providing forty-eight (48) hours
prior written notice to Cathay of the Board's decision to take such action and
identifying the person making the proposal and all the material terms and
conditions of such proposal (the "Company Notice") and compliance with Section
7.2(b) hereof, following delivery of the Company Notice, (1) furnish information
with respect to the Company to any person making such a Superior Proposal
pursuant to a customary confidentiality agreement (as determined by the Company
after consultation with its outside counsel) on terms no more favorable to such
person than the terms contained in any such agreement between the Company and
Cathay, and (2) participate in discussions or negotiations regarding such a
Superior Proposal.
42
(b) In addition to the obligations of the Company set forth in
Section 7.2(a) hereof, the Company shall promptly advise Cathay orally and in
writing of any Acquisition Proposal (or any inquiry which could lead to an
Acquisition Proposal) and keep Cathay informed, on a current basis, of the
continuing status thereof and shall contemporaneously provide to Cathay all
materials provided to or made available to any third party by the Company which
were not previously provided to Cathay.
(c) Notwithstanding anything herein to the contrary, the Company
and its Board of Directors shall be permitted to comply with Rule 14d-9 and Rule
14e-2 promulgated under the Exchange Act.
7.3 Access to Information.
(a) Upon reasonable notice and subject to applicable laws relating
to the exchange of information, the Company shall afford to the officers,
employees, accountants, counsel and other representatives of Cathay, access,
during normal business hours during the period commencing on the date hereof and
prior to the Merger Effective Time, to all of the Company's properties, books,
contracts, loan files, commitments, records, officers, employees, accountants,
counsel and other representatives, and, during such period, the Company shall
make available to Cathay all information concerning the Company's businesses,
properties and personnel as Cathay may reasonably request and shall provide
Cathay with such assistance as Cathay may reasonably request in planning and
implementing transition arrangements (including with respect to the retention of
officers and employees). The Company shall not be required to provide access to
or to disclose information where such access or disclosure would violate or
prejudice the rights of the Company's customers, jeopardize any attorney-client
privilege or contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement, provided that the Company delivers to Cathay a written log notifying
Cathay of the existence of, and the basis for the Company's withholding of, such
information. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
(b) From and after the date hereof until the earlier of the Offer
Closing Date and the Merger Effective Time or the earlier termination of this
Agreement, the Company shall (i) invite a suitable representative of Cathay, at
Cathay's sole expense, to observe all non-confidential portions of the Company's
Board of Directors (and audit committee thereof) and shareholders meetings (and
shall provide such representative notice of such meetings and, subject to the
restrictions set forth in Section 7.3(a), copies of any materials distributed to
directors, committee members and shareholders relating to non-confidential
portions of such meetings) and, subject to the prior written consent of any
applicable regulatory authority, any regulatory examination exit briefings, and
43
(ii) cause one or more of its designated representatives to confer on a regular
and frequent basis with representatives of Cathay and to report the general
status of the ongoing operations of the Company. In connection therewith, Cathay
shall have the right of full review on any new loan extended by the Company in a
principal amount in excess of $1,000,000. Cathay and the Company, as the case
may be, will promptly notify the other party of any material change in the
normal course of business or in the operation of their respective properties and
of the existence or progress in resolution of any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated), or the institution or the threat of significant litigation
involving them, and will keep the other party fully informed of such events,
including without limitation, the exit briefing at the conclusion of any
regulatory examination.
(c) No investigation by Cathay or its representatives shall affect
the representations, warranties, covenants or agreements of the Company set
forth herein.
(d) Notwithstanding anything contained in this Agreement to the
contrary, the Company and Cathay (and each of their respective employees,
representatives, or other agents) may disclose to any and all persons, without
limitation of any kind, the tax treatment and any facts that may be relevant to
the tax structure of the transactions contemplated by this Agreement; provided,
however, that neither the Company nor Cathay (nor any of their respective
employees, representatives or other agents thereof) may disclose any other
information that is not relevant to understanding the tax treatment and tax
structure of the transactions contemplated by this Agreement, or any other
information to the extent that such disclosure could result in a violation of
any federal or state securities law.
7.4 Confidentiality. All confidential information furnished to the
parties in connection with the transactions contemplated hereby shall be subject
to that certain Confidentiality Agreement by and among Cathay and the Company
dated as of January 17, 2006 (the "Confidentiality Agreement"), and the
recipient of such information shall hold all such information in strictest
confidence.
7.5 Notification of Certain Matters. Each of Cathay and the
Company shall give prompt notice to the other (and subsequently keep the other
party informed on a current basis) upon its becoming aware of the occurrence or
existence of any fact, event or circumstance that (i) is reasonably likely to
result in any Material Adverse Effect with respect to it, or (ii) would cause or
constitute a material breach of any of its representations, warranties,
covenants or agreements contained herein; provided, however, that the delivery
of any notice pursuant to this Section 7.5 shall not have any effect for the
purpose of determining the satisfaction of the conditions set forth in Article
VIII of this Agreement and the Tender Offer Conditions or otherwise limit or
affect the remedies available to any such party hereunder.
7.6 Employee Benefit Plans. As soon as practicable after the
Merger Closing, employees of the Company shall become eligible to participate in
Cathay's Plans. Cathay will:
(a) waive all pre-existing condition requirements, evidence of
insurability provisions, waiting period requirements or any similar provisions
under any Plan (which is a welfare plan under ERISA Section 3(1)) for such
employees after the Merger Closing Date to the extent such employees would not
have been subject to such requirements or provisions under the Company's Plans;
44
(b) use commercially reasonable efforts to cause its insurers to
apply toward any deductible requirements and out-of-pocket maximum limits under
its Plans any similar amounts paid (or accrued) by each employee under the
Company's Plans during the current plan year;
(c) recognize for purpose of participation, eligibility and
vesting (but not for purposes of benefit accrual) under its pension Plans the
service of any employee with the Company prior to the Merger Closing Date; and
(d) be responsible for satisfying obligations under ERISA Section
601 et seq. and Code Section 4980B to provide continuation coverage to any
employee with respect to any qualifying event which occurs on or after the
Merger Closing Date.
7.7 Indemnification.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior to
the date of this Agreement, or who becomes prior to the Offer Closing Date, or
if the Offer is not consummated, the Merger Effective Time, a director or
officer of the Company (the "Indemnified Parties") is, or is threatened to be,
made a party based in whole or in part on, or arising in whole or in part out
of, or pertaining to (i) the fact that he is or was a director or officer of the
Company or any of their predecessors or affiliates, or (ii) this Agreement or
any of the transactions contemplated hereby, whether in any case asserted or
arising before or after the Offer Closing Date, or if the Offer is not
consummated, the Merger Effective Time, the parties hereto agree to cooperate
and use their best efforts to defend against and respond thereto. It is
understood and agreed that after the Offer Closing Date, or if the Offer is not
consummated, the Merger Effective Time, Cathay shall indemnify and hold
harmless, as and to the fullest extent permitted by law, each such Indemnified
Party against any losses, claims, damages, liabilities, costs, expenses
(including reasonable attorney's fees and expenses in advance of the final
disposition of any claim, suit, proceeding or investigation to each Indemnified
Party to the fullest extent permitted by law upon receipt of any undertaking
required by applicable law), judgments, fines and amounts paid in settlement in
connection with any such threatened or actual claim, action, suit, proceeding or
investigation, and in the event of any such threatened or actual claim, action,
suit, proceeding or investigation (whether asserted or arising before or after
the Offer Closing Date, or if the Offer is not consummated, the Merger Effective
Time), the Indemnified Parties may retain counsel reasonably satisfactory to
them after consultation with Cathay; provided, however, that (1) Cathay shall
have the right to assume the defense thereof and upon such assumption Cathay
shall not be liable to any Indemnified Party for any legal expenses of other
counsel or any other expenses subsequently incurred by any Indemnified Party in
connection with the defense thereof, except that if Cathay elects not to assume
such defense or counsel for the Indemnified Parties reasonably advises Cathay
that there are issues which raise conflicts of interest between Cathay and the
Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with Cathay, and Cathay shall pay the
reasonable fees and expenses of such counsel for the Indemnified Parties, (2)
Cathay shall advance funds and in all cases be obligated pursuant to this
paragraph to pay for only one firm of counsel for all Indemnified Parties,
45
(3) Cathay shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld), and (4)
Cathay shall have no obligation hereunder to any Indemnified Party when and if a
court of competent jurisdiction shall ultimately determine, and such
determination shall have become final and nonappealable, that indemnification of
such Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. Any Indemnified Party wishing to claim Indemnification under
this Section 7.7, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Cathay thereof, provided that the failure
to so notify shall not affect the obligations of Cathay under this Section 7.7
except to the extent such failure to notify prejudices Cathay. Cathay's
obligations under this Section 7.7 shall continue in full force and effect for
an unlimited period of time following the Offer Closing Date, or if the Offer is
not consummated, the Merger Effective Time.
(b) Cathay shall cause the persons serving as officers and
directors of the Company immediately prior to the Offer Closing Date, or if the
Offer is not consummated, the Merger Effective Time to be covered for a period
of five (5) years from the Merger Effective Time by the directors' and officers'
liability insurance policy maintained by the Company (provided that Cathay may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are not less advantageous than such
policy) with respect to acts or omissions occurring prior to the Offer Closing
Date, or if the Offer is not consummated, the Merger Effective Time which were
committed by such officers and directors in their capacity as such; provided,
however, that in no event shall Cathay be required to expend on an annual basis
more than two hundred percent (200%) of the amount currently expended by the
Company (the "Insurance Amount") to maintain or procure insurance coverage, and
provided further that if Cathay is unable to maintain or obtain the insurance
called for by this Section 7.7(b), Cathay shall use all reasonable efforts to
obtain as much comparable insurance as is available for the Insurance Amount.
(c) In the event Cathay or Buyer or any of their respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Cathay assume the obligations set forth in this Section 7.7.
(d) The provisions of this Section 7.7 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
7.8 Reasonable Efforts; Additional Agreements.
(a) Subject to the terms and conditions of this Agreement, each of
Cathay and the Company agrees to cooperate fully with each other and to use its
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective, at the time and in the manner contemplated by this Agreement,
the Offer, the Merger and the other transactions contemplated by this Agreement,
including using reasonable efforts to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the Offer, the Merger and the other transactions contemplated by
this Agreement.
46
(b) The Company agrees to use its reasonable efforts from the date
of this Agreement to the Merger Closing to assist Cathay and Buyer in retaining
all employees and customers of the Company.
(c) In case at any time after the Offer Closing Date, or if the
Offer is not consummated, the Merger Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
the Surviving Corporation with full title to all properties, assets, rights,
approvals, immunities and franchises of any of the parties to the Merger, the
officers and directors of each party to this Agreement and their respective
Subsidiaries, if any, shall take all such necessary action as may be reasonably
requested by Cathay.
(d) Immediately following the execution and delivery of this
Agreement by the Company, the Company shall use its reasonable best efforts to
obtain shareholder voting agreements, in the form previously provided to the
Company by Cathay, from each executive officer and director of the Company and
from certain shareholders of the Company who collectively own in excess of 33
1/3% of the Company Common Stock.
7.9 Environmental/Undisclosed Liabilities Pool. Notwithstanding
anything herein to the contrary, to the extent that the representations and
warranties in Sections 4.16 and 4.24, as qualified by the Company Disclosure
Schedule, contain any untrue statements, and the potential liability of the
Company (or, following the Merger, Buyer or Cathay) based on the subject of such
untrue statements is not reasonably likely to exceed $250,000 in the aggregate,
such representations and warranties shall be deemed to be true and correct and
the Company shall not be deemed to have breached them. This Section 7.10 shall
apply for all purposes of this Agreement, including for purposes of Section
8.1(a), Article IX and the Tender Offer Conditions.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation To Effect the Merger.
The respective obligations of each party to consummate the Merger shall be
subject to the satisfaction at or prior to the Merger Effective Time of the
following conditions:
(a) Shareholder Approval. To the extent required by applicable
law, this Agreement shall have been approved and adopted by the holders of not
less than two-thirds (2/3) of the outstanding shares of Company Capital Stock.
(b) Regulatory Approvals. All regulatory approvals and the
Securities Laws Filings and Approvals required to consummate the Merger or other
transactions contemplated hereby shall have been obtained and shall remain in
full force and effect, and all statutory waiting periods in respect thereof
shall have expired (all such approvals and the expiration of all such waiting
periods being referred to herein as the "Requisite Regulatory Approvals").
47
(c) No Injunctions or Restraints; Illegality. No judgment, order,
injunction or decree issued by any court or agency of competent jurisdiction or
other legal restraint or prohibition (an "Injunction") preventing the
consummation of the Merger or other transactions contemplated hereby shall be in
effect. No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated or enforced by any Governmental Entity that
prohibits, restricts or makes illegal the consummation of the Merger or the
other transactions contemplated hereby.
(d) Completion of the Offer. The Offer shall have either (a) been
consummated and Cathay shall have accepted all tendered shares of Company Common
Stock for payment or exchange or (b) expired in accordance with its terms
without having been consummated.
8.2 Conditions to Obligations of Cathay and Buyer. The obligation
of Cathay and Buyer to consummate the Merger is also subject to the satisfaction
or waiver by Cathay at or prior to the Merger Effective Time of the following
conditions:
(a) Representations and Warranties. If the Offer is not
consummated, the representations and warranties of the Company set forth in this
Agreement shall be true and correct as of the date of this Agreement and as of
the Merger Effective Time as though made at and as of the Merger Effective Time
(except that representations and warranties that by their terms speak
specifically as of the date of this Agreement or some other date shall be true
and correct as of such date), and Cathay shall have received a certificate,
dated the Merger Closing Date, signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company to such effect.
(b) Performance of Obligations of the Company. If the Offer is not
consummated, the Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Merger Closing Date, and Cathay shall have received a certificate signed on
behalf of the Company by the Chief Executive Officer and the Chief Financial
Officer of the Company to such effect.
(c) Consents Under Agreements. All consents and approvals of all
persons (other than the Governmental Entities) required for consummation of the
Merger and the other transactions contemplated hereby shall have been obtained
and shall be in full force and effect, unless the failure to obtain any such
consent or approval would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company or Cathay.
(d) List of Properties. If the Offer is not consummated, the
Company shall have delivered to Cathay separate lists of all of Company's
properties and assets, real and personal, tangible or intangible, used in the
conduct of its business which are reflected on a balance sheet of the Company as
of the end of the month preceding the Merger Closing Date, prepared in
accordance with GAAP.
48
(e) Company Net Worth. If the Offer is not consummated, at the
Merger Closing, the net worth of the Company shall be not less than the Company
Closing Net Worth. For purposes of this condition, the net worth of the Company
shall exclude (i) the after-tax effect of any expense related to this Agreement
and the transactions contemplated hereby, including payments to Company Advisor
under Section 4.7 hereof and payments to the Company's attorneys and
accountants, not to exceed $1,800,000 in the aggregate (pre-tax), (ii) the
after-tax effect of any gain or loss from the sale of assets by the Company in
2005 or 2006 in the ordinary course of business consistent with its past
practices, and (iii) any change in the "Accumulated Other Comprehensive Income
(Loss), Net of Tax" line on the Company's balance sheet after June 30, 2005, all
as set forth in a balance sheet of the Company as of the end of the month
preceding the Merger Closing Date, prepared in accordance with GAAP, and the
format of such balance sheet of the Company to be delivered as of the end of the
month preceding the Merger Closing Date is attached hereto as Schedule 8.2(e).
(f) Allowance for Loan Loss. If the Offer is not consummated, at
the Merger Closing, the Company's allowance for loan and lease losses shall be
not less than the Company Closing Loan Loss Reserve, and the ratio of the
Company's allowance for loan and lease losses to the aggregate amount of loans
in the Company's portfolio of loan assets, as set forth in the balance sheet of
the Company as of the end of the month preceding the Merger Closing Date,
prepared in accordance with GAAP, shall not be materially lower than the ratio
of the Company's allowance for loan and lease losses to the aggregate amount of
loans in the Company's portfolio of loan assets, as set forth in the balance
sheet of the Company as of December 31, 2005, prepared in accordance with GAAP.
(g) Core Deposits. If the Offer is not consummated, the balance of
core deposits with the Company shall be not less than $76,000,000 on
non-interest bearing core accounts, and $180,000,000 in the aggregate on all
core accounts.
(h) Tax Opinion. Cathay shall have received from its counsel,
Wachtell, Lipton, Rosen & Katz, an opinion dated as of the Merger Closing Date
and addressed to Cathay's board of directors, in form and substance reasonably
satisfactory to Cathay, to the effect that, on the basis of the facts,
representations and assumptions set forth or referred to in such opinion, the
Offer and the Merger, taken together (or if the Offer is not consummated, the
Merger) will constitute a "reorganization" within the meaning of Section 368(a)
of the Code, and each of Cathay, Buyer and the Company will be a "party to a
reorganization" within the meaning of 368(b) of the Code. The parties to this
Agreement agree to execute and deliver to such counsel representation letters
containing such reasonable representations as may be requested by such counsel
for the purpose of rendering such opinion, and the receipt of such
representation letters by such counsel shall be a condition to the issuance of
its opinion.
(i) No Pending Governmental Actions. No proceeding initiated by
any Governmental Entity seeking an Injunction preventing the consummation of the
Merger or other transactions contemplated hereby shall be pending.
8.3 Conditions to Obligations of the Company. The obligation of
the Company to consummate the Merger is also subject to the satisfaction or
waiver by the Company at or prior to the Merger Effective Time of the following
conditions:
(a) Representations and Warranties. If the Offer is not
consummated, the representations and warranties of Cathay set forth in this
Agreement shall be true and correct as of the date of this Agreement and as of
the Merger Effective Time as though made at and as of the Merger Effective Time
(except that representations and warranties that by their terms speak
specifically as of the date of this Agreement or some other date shall be true
and correct as of such date), and the Company shall have received a certificate,
dated the Merger Closing Date, signed on behalf of Cathay by the Chief Executive
Officer and the Chief Financial Officer of Cathay to such effect.
49
(b) Performance of Obligations of Cathay. If the Offer is not
consummated, Cathay shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Merger Closing Date, and the Company shall have received a certificate
signed on behalf of Cathay by the Chief Executive Officer and the Chief
Financial Officer of Cathay to such effect.
(c) Consents Under Agreements. All consents and approvals of all
persons (other than the Governmental Entities) required for consummation of the
Merger and the other transactions contemplated hereby shall have been obtained
and shall be in full force and effect, unless the failure to obtain any such
consent or approval would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company or Cathay.
(d) No Pending Governmental Actions. No proceeding initiated by
any Governmental Entity seeking an Injunction preventing the consummation of the
Merger or other transactions contemplated hereby shall be pending.
(e) Tax Opinion. The Company shall have received from its counsel,
Schiff Hardin LLP, an opinion dated as of the Merger Closing Date and addressed
to the Company's board of directors, in form and substance reasonably
satisfactory to the Company, to the effect that, on the basis of the facts,
representations and assumptions set forth or referred to in such opinion, the
Offer and the Merger, taken together (or if the Offer is not consummated, the
Merger) will constitute a "reorganization" within the meaning of Section 368(a)
of the Code, and each of Cathay, Buyer and the Company will be a "party to a
reorganization" within the meaning of 368(b) of the Code. The parties to this
Agreement agree to execute and deliver to such counsel representation letters
containing such reasonable representations as may be requested by such counsel
for the purpose of rendering such opinion, and the receipt of such
representation letters by such counsel shall be a condition to the issuance of
its opinion.
8.4 Frustration of Merger Closing Conditions. Neither Cathay nor
the Company may rely on the failure of any condition set forth in Section 8.1,
8.2 or 8.3, as the case may be, to be satisfied if such failure was caused by
such party's failure to use its reasonable efforts to consummate the Offer, the
Merger or the other transactions contemplated by this Agreement, as required by
and subject to Section 7.8(a).
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination. This Agreement may be terminated at any time
prior to the Merger Effective Time, whether before or after approval by the
shareholders of the Company of the matters presented in connection with the
Merger:
(a) by mutual consent of Cathay and the Company;
50
(b) by either Cathay or the Company upon written notice to the
other party (i) thirty (30) days after the date on which any request or
application for a Requisite Regulatory Approval shall have been denied or
withdrawn at the request or recommendation of the Governmental Entity which must
grant such Requisite Regulatory Approval, unless within the thirty (30)-day
period following such denial or withdrawal a petition for rehearing or an
amended application has been filed with the applicable Governmental Entity, (ii)
after Cathay and the Company have performed their respective obligations under
Section 7.1 of this Agreement with respect to the Securities Laws Filings and
Approvals and, if Cathay is required to file the S-4 Registration Statement, the
SEC informs Cathay that the SEC will not declare effective the S-4 Registration
Statement, or (iii) any Governmental Entity of competent jurisdiction shall have
issued a final nonappealable order enjoining or otherwise prohibiting the
Merger; provided, however, that no party shall have the right to terminate this
Agreement pursuant to this Section 9.1(b) if such denial, request,
recommendation for withdrawal, SEC position, order, injunction or prohibition
shall be due to the failure of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such party set forth herein.
(c) by either Cathay or the Company if the Merger shall not have
been consummated on or before the Final Date, unless the failure of the Merger
Closing to occur by such date shall be due to the failure of the party seeking
to terminate this Agreement to perform or observe the covenants and agreements
of such party set forth herein;
(d) by either Cathay or the Company (provided that the terminating
party is not then in material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have been a material breach
of any of the representations or warranties set forth in this Agreement by the
other party, which breach is not cured within thirty (30) days following written
notice to the party committing such breach, or which breach, by its nature,
cannot be cured prior to the Merger Closing; provided, however, that neither
Cathay nor the Company shall have the right to terminate this Agreement pursuant
to this Section 9.1(d) unless the breach of representation or warranty, together
with all other such breaches, would entitle the party receiving such
representation not to consummate the transactions contemplated hereby under
Section 8.2(a) (in the case of a breach of a representation or warranty by the
Company) or Section 8.3(a) (in the case of a breach of a representation or
warranty by Cathay);
(e) by either Cathay or the Company (provided that the terminating
party is not then in material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have been a material breach
of any of the covenants or agreements set forth in this Agreement on the part of
the non-terminating party, which breach shall not have been cured within thirty
(30) days following receipt by the breaching party of written notice of such
breach from the other party hereto, or which breach, by its nature, cannot be
cured prior to the Merger Closing; or
51
(f) by the Company prior to the earlier of the Offer Closing Date
and the twenty-fifth (25th) calendar day following the Proxy Statement
Distribution Date in the event that the Board of Directors of the Company
determines in good faith, after consultation with outside counsel, that in light
of a Superior Proposal it is necessary to terminate this Agreement in order to
comply with its fiduciary duties to the Company and to the Company's
shareholders under applicable law; provided, however, that the Board of
Directors of the Company may terminate this Agreement pursuant to this Section
9.1(f) solely to concurrently enter into a definitive acquisition agreement or
other similar agreement related to a Superior Proposal; and provided further,
however, that this Agreement may be terminated pursuant to this Section 9.1(f)
only after the fifth (5th) day following Cathay's receipt of written notice
advising Cathay that the Board of Directors of the Company is prepared to accept
a Superior Proposal, and only if, during such five (5)-day period, if Cathay so
elects, the Company and its advisors shall have negotiated in good faith with
Cathay to make such adjustments in the terms and conditions of this Agreement as
would enable Cathay to proceed with the transactions contemplated herein on such
adjusted terms.
9.2 Effect of Termination.
(a) In the event of termination of this Agreement by any party as
provided in Section 9.1, this Agreement shall forthwith become null and void and
have no effect except that (i) Sections 7.4, 9.2 and 10.3 hereof shall survive
any termination of this Agreement, and (ii) notwithstanding anything to the
contrary contained in this Agreement, no party shall be relieved or released
from any liabilities or damages arising out of its willful breach of any
provision of this Agreement.
(b) (i) If (x) the Company terminates this Agreement pursuant
to Section 9.1(f) hereof, or (y) Cathay terminates this Agreement under Section
9.1(d) or 9.1(e) hereof for a willful material breach of this Agreement by the
Company, and Cathay is not itself in material breach of this Agreement, the
Company shall pay to Cathay a termination fee equal to $5,000,000 by wire
transfer of same day immediately available funds on the date of such
termination. The Company and Cathay agree that the agreement contained in this
Section 9.2(b)(i) is an integral part of the transactions contemplated by this
Agreement and constitutes liquidated damages and not a penalty.
(ii) If this Agreement shall not have been approved and
adopted by at least two-thirds (2/3) of the outstanding shares of Company Common
Stock under applicable law prior to the Final Date and within eighteen months of
any such termination the Company shall consummate an Acquisition Transaction or
enter into a written agreement with respect to an Acquisition Transaction, the
Company shall pay to Cathay a termination fee equal to $4,500,000 by wire
transfer of same day immediately available funds on the earlier of the
consummation of such Acquisition Transaction or execution of such written
agreement. The Company and Cathay agree that the agreement contained in this
Section 9.2(b)(ii) is an integral part of the transactions contemplated by this
Agreement and constitutes liquidated damages and not a penalty.
(c) If Cathay or the Company terminates this Agreement pursuant to
(i) Section 9.1(b) or (ii) pursuant to Section 9.1(c) and on the Final Date the
Requisite Regulatory Approvals shall not have been obtained, then promptly
following the date of such termination Cathay shall purchase and the Company
shall sell 85,558 fully paid and non-assessable shares of Company Common Stock
at a price of $58.44 per share (or $5,000,009 in the aggregate). Cathay and the
Company shall in connection with such purchase execute such further documents,
agreements and instruments, and take all other actions as may be reasonably
necessary to carry out the purposes of this Section 9.2(c).
52
9.3 Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto; provided, however, that after
any approval of the transactions contemplated by this Agreement by the Company's
shareholders, there may not be, without further approval of such shareholders,
any amendment of this Agreement which reduces the amount or changes the form of
the consideration to be delivered to the Company shareholders hereunder other
than as contemplated by this Agreement. This Agreement may not be amended except
by an instrument in writing signed by duly authorized representatives on behalf
of each of the parties hereto.
9.4 Extension; Waiver. At any time prior to the Merger Effective
Time, each of the parties hereto, by action taken or authorized by its Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(b) waive any inaccuracies in the representations and warranties of the other
party contained herein or in any document delivered pursuant hereto, and (c)
waive compliance by the other party with any of its agreements contained herein,
or waive compliance with any of the conditions to its obligations hereunder. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed by duly authorized
representatives on behalf of such party, but such extension or waiver or failure
to insist on strict compliance with an obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
ARTICLE X
GENERAL PROVISIONS
10.1 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties, covenants and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Merger Effective Time, except for those covenants and agreements
contained herein and therein which by their terms apply in whole or in part
after the Merger Effective Time.
10.2 Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense.
10.3 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(with confirmation), mailed by registered or certified mail (return receipt
requested) or delivered by an express courier (with confirmation) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Cathay, to:
Cathay General Bancorp
777 N. Broadway
Los Angeles, CA 90012
Attention: Corporate Secretary
with copies (which shall not constitute notice to Cathay) to:
53
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Edward D. Herlihy, Esq.
Craig M. Wasserman, Esq.
(b) if to the Company, to:
Great Eastern Bank
235 Fifth Avenue
New York, NY 10016
Attention: William J. Laraia, President and Chief Executive
Officer
with copies (which shall not constitute notice to the Company)
to:
Schiff Hardin LLP
623 Fifth Avenue
New York, NY 10022
Attention: Harold S. Nathan
and
the Company Advisor
at the address provided by the Company to Cathay
Attention: Michael Mayes
10.4 Interpretation. Whenever the term "person" is used in this
Agreement, it shall be construed broadly to include any person or entity of any
kind. Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." Whenever the term "knowledge" is used in this Agreement, it means
the actual knowledge of such party after reasonable inquiry. The terms,
"Section," "Schedule" and "Exhibit" refer to sections and schedules exhibits
attached to, this Agreement, respectively. The terms "hereof," "herein" and
"hereunder" and words of similar import refer to this Agreement as a whole,
including all exhibits and schedules hereto. The phrases "the date of this
Agreement," "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to the date set forth in the
introductory paragraph of this Agreement. Terms defined in the singular have a
comparable meaning when used in the plural and vice versa. The and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. The parties have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
10.5 Counterparts. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party hereto and delivered
to the other party, it being understood that all parties need not sign the same
counterpart.
54
10.6 Entire Agreement. This Agreement, together with all exhibits,
schedules and other attachments hereto (including the documents and the
instruments referred to herein and therein) and the Confidentiality Agreement,
constitute the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof. Notwithstanding the foregoing, any provision of any other
document or instrument referred to herein that conflicts with any provision of
this Agreement shall be superseded by the provisions hereof.
10.7 Governing Law. The formation, construction, and performance of
this Agreement, including the rights and duties of the parties hereunder, shall
be construed, interpreted, governed, applied and enforced in accordance with the
laws of the State of California applicable to agreements entered into and
performed entirely in the State of California by residents thereof, without
regard to any provisions thereof relating to conflicts of laws among different
jurisdictions. Each of the parties consents that all such service of process may
be made by delivery of the summons and complaint by certified or registered
mail, return receipt requested, or by messenger, directed to it at the address
of its agent set forth herein, and that service so made shall be deemed to have
been made as of the date of the receipt indicated in the certification, signed
and returned postal receipt, or other proof of service applicable to the method
of service employed.
10.8 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that the provisions contained in
Section 7.4 of this Agreement were not performed in accordance with its specific
terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches of Section
7.4 of this Agreement and to enforce specifically the terms and provisions
thereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
10.9 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
10.10 Publicity. Except as otherwise required by law or by the rules
of the Nasdaq Stock Market's National Market, so long as this Agreement is in
effect, neither Cathay nor the Company shall, nor shall Cathay or the Company
permit any of their respective Subsidiaries, if any, to, issue or cause the
publication of any press release or other public announcement with respect to,
or otherwise make any public statement concerning, the transactions contemplated
by this Agreement without the consent of the other parties hereto, which consent
shall not be unreasonably withheld, delayed or conditioned.
55
10.11 Assignment; No Third Party Beneficiaries. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns. Except
as otherwise expressly provided herein, this Agreement (including the documents
and instruments referred to herein) is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.
10.12 Fax Signatures. Any signature page hereto delivered by a fax
machine or telecopy machine shall be binding to the same extent as an original
signature page, with regard to any agreement subject to the terms hereof or any
amendment thereto. Any party who delivers such a signature page agrees to later
deliver an original counterpart to any party that requests it.
[remainder of page intentionally left blank]
56
IN WITNESS WHEREOF, Cathay, Buyer and the Company have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
CATHAY GENERAL BANCORP
By: /s/ Dunson K. Cheng
------------------------
Name: Dunson K. Cheng
Title: Chairman, President and
Chief Executive Officer
CATHAY BANK
By: /s/ Dunson K. Cheng
------------------------
Name: Dunson K. Cheng
Title: Chairman, President and
Chief Executive Officer
GREAT EASTERN BANK
By: /s/ William J. Laraia
------------------------
Name: William J. Laraia
Title: President and
Chief Executive Officer
[Signature Page to Agreement and Plan of Merger]
APPENDIX I
DEFINITIONS
As used in this Agreement, the following terms shall have the definitions set
forth herein:
(a) "Accredited Investor" has the meaning ascribed to such term in
Regulation D of the Securities Act of 1933, as amended.
(b) "Accredited Investor Condition" has the meaning ascribed to
such term in Annex I hereto.
(c) "Acquisition Proposal" means any inquiry, proposal or offer,
filing of any regulatory application or notice (whether in draft or final form)
or disclosure of an intention to do any of the foregoing from any person
relating to any (i) direct or indirect acquisition or purchase of a business
that constitutes a substantial portion of the net revenues, net income or assets
of the Company, (ii) direct or indirect acquisition or purchase of any class of
equity securities representing ten percent (10%) or more of the voting power of
the Company, (iii) tender offer or exchange offer that if consummated would
result in any person beneficially owning a substantial interest in any class of
equity securities of the Company, or (iv) merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company, other than the transactions contemplated by this
Agreement. For the avoidance of doubt, the Cathay Options are deemed to be an
Acquisition Proposal.
(d) "Acquisition Transaction" means a (i) direct or indirect
acquisition or purchase of a business that constitutes a substantial portion of
the net revenues, net income or assets of the Company, (ii) direct or indirect
acquisition or purchase of any class of equity securities representing ten
percent (10%) or more of the voting power of the Company, (iii) tender offer or
exchange offer that if consummated would result in any person beneficially
owning a substantial interest in any class of equity securities of the Company,
or (iv) merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company, other
than the transactions contemplated by this Agreement.
(e) "Audit" has the meaning given such term in Section 5.15(a)
hereof.
(f) "Average Closing Price" means the average of the daily closing
price of a share of Cathay Common Stock as reported on the Nasdaq National
Market during the ten (10) consecutive trading days preceding the fifth (5th)
Business Day prior to the Offer Closing Date or, if the Offer is not
consummated, the Merger Closing Date, as the case may be.
(g) "Business Day" means any day on which banks are required to be
open for business in New York and California.
(h) "Buyer" means Cathay Bank.
(i) "CADFI" means the California Department of Financial
Institutions.
(j) "California Certificates" has the meaning given such term in
Section 1.4(b) hereof.
Appendix I-1
(k) "California Commissioner" has the meaning given such term in
Section 1.4(b) hereof.
(l) "Cash Election Shares" means shares of Company Common Stock
with respect to which a Cash Election or Combination Cash Election has been made
and any shares of Company Common Stock owned by Cathay or any of its
Subsidiaries immediately prior to the Offer Closing Date or Merger Effective
Time, as the case may be.
(m) "Cash Election" has the meaning given such term in Section
2.2(b) hereof.
(n) "Cathay" means Cathay General Bancorp, a Delaware corporation.
(o) "Cathay Capital Stock" means Cathay Common Stock and Cathay
Preferred Stock, collectively.
(p) "Cathay Common Stock" means common stock of Cathay, par value
$0.01 per share.
(q) "Cathay Disclosure Schedule" has the meaning given such term
in Section 3.1 hereof.
(r) "Cathay Options" has the meaning given such term in Section
4.2 hereof.
(s) "Cathay Option Plans" has the meaning given such terms in
Section 5.12 hereof.
(t) "Cathay Preferred Stock" means preferred stock of Cathay, par
value $0.01 per share.
(u) "Cathay Reports" has the meaning given such term in Section
5.10 hereof.
(v) "Certificate" has the meaning given such term in Section
2.1(b) hereof.
(w) "CFC" means the California Financial Code.
(x) "CGCL" means the California General Corporation Law.
(y) "Code" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.
(z) "Combination Cash Election" has the meaning given such term in
Section 2.2(b) hereof.
(aa) "Combination Stock Election" has the meaning given such term
in Section 2.2(b) hereof.
(bb) "Company Advisor" has the meaning given such term in Section
4.7 hereof.
(cc) "Company Affiliate" has the meaning given such term in Section
7.1(k) hereof.
(dd) "Company Capital Stock" means the capital stock of the
Company, par value $5.00.
Appendix I-2
(ee) "Company Closing Loan Loss Reserve" means the amount of the
Company's allowance for loan and lease losses as set forth in the balance sheet
of the Company as of December 31, 2005, prepared in accordance with GAAP.
(ff) "Company Closing Net Worth" means, $26,750,000 plus an
additional $100,000 for each month after December 31, 2005, calculated as of the
first day of such month, until the Offer Closing Date or the Merger Closing
Date, as the case may be, has occurred.
(gg) "Company Contract" has the meaning given such term in Section
4.15(a) hereof.
(hh) "Company Disclosure Schedule" has the meaning given such term
in Section 3.1 hereof.
(ii) "Company Meeting" has the meaning given such term in Section
7.1(a) hereof.
(jj) "Company Notice" has the meaning given such term in Section
7.2(a).
(kk) "Company Response" has the meaning given such term in Section
1.2(e).
(ll) "Confidentiality Agreement" has the meaning given such term in
Section 7.4.
(mm) "Consents" has the meaning given such term in Section 4.3(a).
(nn) "Converted Cash Election Share" has the meaning given such
term in Section 2.2(d)(i)(C) hereof.
(oo) "Converted Stock Election Shares" has the meaning given such
term in Section 2.2(d)(ii)(B) hereof.
(pp) "Derivative Transaction" means any transaction involving a
derivative instrument within the scope of Financial Accounting Standards Board
Statement 133, including without limitation any swap transaction, option,
warrant, forward purchase or sale transaction, futures transaction, cap
transaction, floor transaction or collar transaction relating to one or more
currencies, commodities, bonds, equity securities, loans, interest rates,
catastrophe events, weather-related events, credit-related events or conditions
or any indexes, or any other similar transaction (including any option with
respect to any of these transactions) or combination of any of these
transactions, including collateralized mortgage obligations or other similar
instruments or any debt or equity instruments evidencing or embedding any such
types of transactions, and any related credit support, collateral or other
similar arrangements related to such transactions.
(qq) "Dissenting Shares" has the meaning given such term in Section
1.6(d) hereof.
(rr) "DPC Shares" has the meaning given such term in Section 1.6(c)
hereof.
(ss) "Election" shall have the meaning given such term in Section
2.2(b) hereof.
Appendix I-3
(tt) "Election Deadline" shall have the meaning given such term in
Section 2.2(c) hereof.
(uu) "Election Form" shall have the meaning given such term in
Section 2.2(a) hereof.
(vv) "Environmental Laws" has the meaning given such term in
Section 4.16(a) hereof.
(ww) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(xx) "ERISA Affiliate" has the meaning given such term in Section
4.11(a) hereof.
(yy) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(zz) "Exchange Agent" has the meaning given such term in Section
2.1(a).
(aaa) "Exchange Ratio" means that number of shares of Cathay Common
Stock as shall be obtained by dividing $58.44 by the Average Closing Price,
rounded to the nearest one-ten-thousandth (1/10,000).
(bbb) "FDIC" means the Federal Deposit Insurance Corporation.
(ccc) "FDIC Application" has the meaning given such term in Section
4.4 hereof.
(ddd) "Final Date" means June 30, 2006; provided, however, that if
the Requisite Regulatory approvals have not been obtained by June 30, 2006 or
the S-4 Registration Statement has not become effective forty-five (45) days
prior to June 30, 2006, "Final Date" shall mean September 30, 2006.
(eee) "FRB" means the Federal Reserve Board.
(fff) "FRB Application" has the meaning given such term in Section
4.4 hereof.
(ggg) "GAAP" means generally accepted accounting principles.
(hhh) "Governmental Entity" has the meaning given such term in
Section 4.4 hereof.
(iii) "Hazardous Materials" means any chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum or other regulated substances
or materials.
(jjj) "Indemnified Parties" has the meaning given such term in
Section 7.7(a) hereof.
(kkk) "Injunction" has the meaning given such term in Section 8.1(c)
hereof.
(lll) "Insurance Amount has the meaning given such term in Section
7.7(b) hereof.
(mmm) "Interstate Act" has the meaning given such term in Section
1.3 hereof.
Appendix I-4
(nnn) "Lien" has the meaning given such term in Section 4.3(b)
hereof.
(ooo) "Loan Property" means any property with respect to which the
Company holds a security interest (as defined in 42 U.S.C. Sections.
9601(20)(G)(vi)), as collateral for a loan or other extension of credit, and,
where required by the context, said term means the owner or operator of such
property.
(ppp) "Loans" has the meaning given such term in Section 4.20(a)
hereof.
(qqq) "Mailing Date" has the meaning given such term in Section
2.2(a) hereof.
(rrr) "Material Adverse Effect" means with respect to a person, an
effect which (i) is materially adverse to the business, results of operations or
financial condition of such person and its Subsidiaries (if any) taken as a
whole, other than any such effect attributable to or resulting from (A) any
change in banking or similar laws, rules, regulations or policies of general
applicability or interpretations thereof by courts or governmental authorities,
(B) any change in GAAP or regulatory accounting principles, in each case which
affects banks, thrifts or their holding companies generally, (C) events,
conditions or trends in economic, business or financial conditions generally or
affecting banks, thrifts or their holding companies specifically (including
changes in the prevailing level of interest rates), or (D) in the case of the
Company, any action or omission of the Company taken with the prior written
consent of Cathay, and in the case of Cathay, any action or omission of Cathay
taken with the prior written consent of the Company; or (ii) materially impairs
the ability of such person to consummate the transactions contemplated hereby.
(sss) "Maximum Stock Conversion Number" means the product of .60 and
the number of outstanding shares of Company Common Stock immediately prior to
the expiration of the Offer, in the case of the Offer, or the Merger Effective
Time, in the case of the Merger; provided, however, if the Average Closing Price
is less than $31.86, then the Maximum Stock Conversion Number shall mean the
product of .45 and the number of outstanding shares of Company Common Stock
immediately prior to the expiration of the Offer, in the case of the Offer, or
the Merger Effective Time, in the case of the Merger Effective Time.
(ttt) "Merger" has the meaning given such term in the recitals.
(uuu) "Merger Closing" has the meaning given such term in Section
1.4(a) hereof.
(vvv) "Merger Closing Date" has the meaning given such term in
Section 1.4(a) hereof.
(www) "Merger Consideration" has the meaning given such term in
Section 1.6(a) hereof.
(xxx) "Merger Effective Time" has the meaning given such term in
Section 1.4(b) hereof.
(yyy) "Merger Election Form" shall have the meaning given such term
in Section 2.2(a) hereof.
Appendix I-5
(zzz) "Merger Election Form Record Date" shall have the meaning
given such term in Section 2.2(a) hereof.
(aaaa) "Minimum Condition" shall have the meaning given such term in
Annex I hereof.
(bbbb) "Minimum Stock Conversion Number" means the product of .45 and
the number of outstanding shares of Company Common Stock immediately prior to
the expiration of the Offer in the case of the Offer and the Merger Effective
Time in the case of the Merger.
(cccc) "New York Certificates" has the meaning given such term in
Section 1.4(b) hereof.
(dddd) "New York Filing Officers" has the meaning given such term in
Section 1.4(b) hereof.
(eeee) "NYBCL" means the New York Business Corporation Law.
(ffff) "NYBL" means the New York Banking Law, Chapter 2 of the New
York State Consolidated Laws.
(gggg) "NYSBD" means the New York State Banking Department.
(hhhh) "Offer" has the meaning given such term in the recitals.
(iiii) "Offer Closing Date" has the meaning given such term in
Section 1.2(f) hereof.
(jjjj) "Offer Consideration" has the meaning given such term in
Section 1.2(a).
(kkkk) "Offer Documents " has the meaning given such term in Section
1.2(d).
(llll) "OSHA" means the Occupational Safety and Health Act of 1970,
29 U.S.C. Section 651 et seq.
(mmmm) "Participation Facility" means any property with respect to
which either (i) Company has "foreclosed" on a security interest held by it, or
(ii) has been or may be deemed to have "participated in the management" of such
property as such terms are defined respectively in 42 U.S.C. Sections.
9601(20)(E)(ii) and 42 U.S.C. Sections. 9601(20)(F).
(nnnn) "Per Share Cash Consideration" has the meaning given such term
in Section 1.2(a).
(oooo) "Per Share Stock Consideration" means that number of shares of
Cathay Common Stock equal to the Exchange Ratio.
(pppp) "Plan and Agreement of Merger" has the meaning given such term
in Section 1.4(b) hereof.
(qqqq) "Plans" has the meaning given such term in Section 4.11(a)
hereof.
(rrrr) "Proxy Statement" has the meaning given such term in Section
7.1(d) hereof.
Appendix I-6
(ssss) Proxy Statement Distribution Date" has the meaning given such
term in Section 7.1(d).
(tttt) "Regulatory Agency" has the meaning given such term in Section
4.5(a) hereof.
(uuuu) "Requisite Regulatory Approvals" has the meaning given such
term in Section 8.1(b) hereof.
(vvvv) "S-4 Registration Statement" has the meaning given such term
in Section 7.1(b) hereof.
(wwww) "SEC" means the U.S. Securities and Exchange Commission.
(xxxx) "Securities Act" means the Securities Act of 1933, as amended.
(yyyy) "SRO" means self-regulatory organization.
(zzzz) "Securities Laws Filing and Approvals" means all filings to be
made with, hearings to be conducted before, approvals to be provided by, permits
to be issued by, and/or registrations to be made with the SEC in accordance with
and pursuant to the provisions of Section 7.1 of this Agreement.
(aaaaa) "SNYBD" means the State of New York Banking Department.
(bbbbb) "State Banking Approvals and Notices" has the meaning given
such term in Section 4.4 hereof.
(ccccc) "Stock Election" has the meaning given such term in Section
2.2(b) hereof.
(ddddd) "Stock Election Shares" means shares of Company Common Stock
with respect to which a Stock Election or Combination Stock Election has been
made.
(eeeee) "Stock-Selected Undesignated Share" has the meaning given such
term in Section 2.2(d)(i)(B) hereof.
(fffff) "Subsequent Proxy Statement" shall have the meaning given to
such term in Section 7.1(d) hereof.
(ggggg) "Subsequent Registration Statement" shall have the meaning
given to such term in Section 7.1(b) hereof.
(hhhhh) "Subsidiary" means, with respect to any party, any corporation
or other entity of which a majority of the capital stock or other ownership
interests having ordinary voting power to elect a majority of the Board of
Directors or other persons performing similar functions are at the time,
directly or indirectly, owned by such party.
(iiiii) "Superior Proposal" means any bona fide written proposal made
by a third party to acquire, directly or indirectly, including pursuant to a
tender offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, one hundred percent (100%)
of the combined voting power of the shares of capital stock of the Company then
outstanding or all or substantially all of the assets of the Company and
otherwise
Appendix I-7
(i) on terms and conditions that the Board of Directors of the Company
determines in its good faith judgment, following consultation with the Company
Advisor, to be more favorable from a financial point of view to the Company's
shareholders than the Merger and which would result in the receipt by the
Company's shareholders of merger consideration with an aggregate value that is
materially higher than such shareholders are to receive in the Merger, (ii) that
constitutes a transaction that, in such Board of Directors' good faith judgment,
is reasonably likely to be consummated on the terms set forth, taking into
account all legal, financial, regulatory and other aspects of such proposal, and
(iii) for which financing, to the extent required, is then committed or which,
in the good faith judgment of the Board of Directors of the Company, is highly
likely to be obtained by such third party.
(jjjjj) "Surviving Corporation" has the meaning given such term in
Section 1.3 hereof.
(kkkkk) "Takeover Laws" has the meaning given such term in Section
4.4(b) hereof.
(lllll) "Takeover Provisions" has the meaning given such term in
Section 4.4(b) hereof.
(mmmmm) "Tax Return" means any return, report, information return or
other document (including any related or supporting information) with respect to
Taxes.
(nnnnn) "Taxes" means all taxes, charges, fees, levies, penalties or
other assessments imposed by any United States federal, state, local or foreign
taxing authority, including, but not limited to, income, excise, property,
sales, transfer, franchise, payroll, withholding, social security or other
taxes, including any interest, penalties or additions attributable thereto.
(ooooo) "Trust Account Shares" has the meaning given such term in
Section 1.6(c) hereof.
(ppppp) "Undesignated Shares" means those shares deemed to be
Undesignated Shares under Sections 2.2(b) and 2.2(d)(v) hereof.
(qqqqq) "USA PATRIOT Act" has the meaning given such term in Section
4.14(a) hereof.
Appendix I-8
EXHIBIT A
PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER, dated as of , 2006 (this "Merger
Agreement"), is made and entered into by and among Great Eastern Bank, a New
York state-chartered bank ("GEB"), Cathay Bank, a California state-chartered
bank ("Buyer"), and Cathay General Bancorp, a Delaware corporation registered
under the Bank Holding Company Act of 1956, as amended, and the parent of
Buyer("Cathay").
A. The Boards of Directors of GEB and Buyer have approved and
deemed it advisable and in the best interests of GEB and Buyer and their
respective shareholders that GEB and Buyer consummate the business transaction
provided for herein, in which GEB would merge with and into Buyer (the
"Merger").
B. GEB, Buyer and Cathay have entered into an Agreement and
Plan of Merger dated as of February 16, 2006 (the "Agreement"), providing, among
other things, for the execution and filing of this Merger Agreement and the
consummation of the Merger.
In consideration of the promises and mutual agreements contained in
this Merger Agreement and the Agreement, the parties to this Merger Agreement
hereby agree that GEB shall be merged with and into Buyer in accordance with the
provisions of the laws of the State of California and the State of New York, and
upon the terms and subject to the conditions set forth as follows:
1. The Merger
(a) The Merger shall be pursuant to the provisions
of, and with the effect provided in, the California General
Corporation Law and the New York Banking Law, and the Merger
shall become effective on the date this Merger Agreement is
accepted for filing by the Secretary of State of the State of
California (the "Effective Time of the Merger").
(b) At the Effective Time of the Merger, GEB shall be
merged with and into Buyer, and Buyer shall be the surviving
corporation (the "Surviving Corporation"). Buyer shall
thereupon succeed, without other transfer, to all rights and
properties, and shall be subject to all the debts and
liabilities, of GEB, and the separate existence of Buyer as a
California corporation, with all of its purposes, objects,
rights, powers, privileges, liabilities, obligations and
franchises, shall continue unaffected and unimpaired by the
Merger.
2. Corporate Governance.
(a) From and after the Effective Time of the Merger
and until thereafter amended as provided by law, (i) the
Articles of Incorporation of Buyer as in effect immediately
prior to the Effective Time of the Merger shall be and
continue to be the Articles of Incorporation of the Surviving
Corporation; and (ii) the Bylaws of Buyer as in effect
immediately prior to the Effective Time of the Merger shall be
and continue to be the Bylaws of the Surviving Corporation.
Exhibit A - 1
(b) At the Effective Time of the Merger, the
directors and officers of the Surviving Corporation shall be
those persons who are the directors and officers of Buyer at
the Effective Time of the Merger, and they shall continue to
hold office from and after the Effective Time of the Merger
until they shall have resigned or shall have been legally
removed or until their respective successors shall have been
elected and qualified.
(c) The Surviving Corporation intends to continue to
operate the following offices of GEB, which constitute all of
the offices of GEB, for the foreseeable future following the
Effective Time:
ADDRESS OWNED/LEASED
Midtown Manhattan -- Main Office (New York County) Owned
235 Fifth Avenue
New York, NY 10016
Flushing (Queens County) Owned
41-48 Main Street
Flushing, NY 11354
Flushing North (Queens County) Leased
36-54 Main Street
Flushing, NY 11355
Chinatown (New York County) Leased
16-18 East Broadway
New York, NY 10002
Brooklyn (Kings County) Leased
55-01 Eighth Avenue
Brooklyn, NY 11220
3. Effect of Merger on Outstanding Shares.
In and by virtue of the Merger and at the Effective Time of the Merger,
the shares of the common stock of Buyer ("Buyer Stock") and the shares of the
capital stock of GEB ("GEB Stock") outstanding at the Effective Time of the
Merger shall be affected as follows:
(a) Effect on Buyer Stock. Each share of Buyer Stock
issued and outstanding immediately prior to the Effective Time of the
Merger shall remain unchanged.
[(b) Effect on GEB Stock. Each share of GEB Stock issued
and outstanding immediately prior to the Effective Time of the Merger
shall be converted into the right to receive (i) shares of Cathay
common stock, par value $0.01 with a value of $58.44 (valued at the
Average Closing Price), (ii) $58.44 in cash, or (iii) a combination of
such shares and cash. Notwithstanding any other provision hereof, no
fractional shares of Cathay common stock shall be issued to holders of
GEB Stock. In lieu thereof, each such holder otherwise entitled to a
fraction of a share of Cathay common stock shall receive, at the time
of surrender of certificates representing any such share of GEB Stock,
an amount in cash equal to the product $58.44 multiplied by the
fraction of a share of Cathay common stock to which such holder
otherwise would be entitled, rounded to the nearest cent.][If the Offer
is not consummated]
Exhibit A - 2
[(b) Effect on GEB Stock. Each share of GEB Stock issued
and outstanding immediately prior to the Effective Time of the Merger
shall be converted into the right to receive $58.44 in cash.][If the
Offer is consummated]
[(c) Allocation of Cathay Stock and Cash. Shares of GEB
Stock shall be converted into shares of Cathay Stock, cash or a
combination of such shares and cash in accordance with the elections of
the holders of GEB Stock, provided that the aggregate number of shares
of Cathay Stock issued in the Merger shall not exceed the Maximum Stock
Conversion Number or be less than the Minimum Stock Conversion Number.
(d) Certain Definitions. For purposes of this Section 3:
(i) "Average Closing Price" means the average of
the daily closing price of a share of Cathay common
stock as reported on the Nasdaq National Market
during the ten (10) consecutive trading days
preceding the fifth (5th) business day prior to the
Effective Time of the Merger.
(ii) "Maximum Stock Conversion Number" means the
product of .60 and the number of outstanding shares
of Company Capital Stock immediately prior to the
Effective Time; provided, however, if the Average
Closing Price is less than $31.86, then the Maximum
Stock Conversion Number shall mean the product of .45
and the number of outstanding shares of GEB capital
stock immediately prior to the Effective Time of the
Merger.
(iii) "Minimum Stock Conversion Number" means the
product of .45 and the number of outstanding shares
of GEB capital stock immediately prior to the
Effective Time of the Merger. ] [If the Offer is not
consummated]
4. General Provisions.
(a) Amendment. This Merger Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
(b) Successors and Assigns. This Merger Agreement shall be binding upon
and enforceable by the parties hereto and their respective successors, assigns
and transferees, but this Merger Agreement may not be assigned by any party
hereto without the written consent of the other.
Exhibit A - 3
(c) Governing Law. This Merger Agreement has been executed in the State
of California, and the laws of the State of California shall govern the validity
and interpretation hereof and the performance by the parties hereto, without
giving effect to any choice or conflict of law provision or rule.
[remainder of page intentionally left blank]
Exhibit A - 4
IN WITNESS WHEREOF, the parties have duly executed this Plan and Merger
Agreement as of the date first written above.
GREAT EASTERN BANK
By:
------------------------
Name: William J. Laraia
Title President
By:
------------------------
Name: Ming-Hsiung Chuang
Title: Secretary
CATHAY BANK
By:
------------------------
Name:
Title:
By:
------------------------
Name:
Title:
CATHAY GENERAL BANCORP
By:
------------------------
Name:
Title:
By:
------------------------
Name:
Title:
Exhibit A - 5
CERTIFICATE OF APPROVAL
OF
AGREEMENT OF MERGER
[ ] and [ ] certify that:
1. They are the [ ] and the [ ], respectively, of Cathay Bank, a
California corporation (the "Corporation").
2. The Plan and Agreement of Merger in the form attached hereto was duly
approved by the Board of Directors of the Corporation by a majority
vote of all the members thereof.
3. No vote of the shareholders of the Corporation was required pursuant to
California Corporations Code Section 1201.
4. No vote of the shareholders of Cathay General Bancorp, the parent of
the Corporation, was required.
We further declare under penalty of perjury under the laws of the State of
California and under the laws of the State of New York that the matters set
forth in this certificate are true and correct of our own knowledge.
Dated: ___________, 2006
------------------------
Name:
Title:
------------------------
Name:
Title:
Exhibit B - 1
CERTIFICATE OF APPROVAL
OF
AGREEMENT OF MERGER
William J. Laraia and Ming-Hsiung Chuang certify that:
1. They are the President and the Secretary, respectively, of Great
Eastern Bank, a New York corporation (the "Corporation").
2. The Plan and Agreement of Merger in the form attached hereto was duly
approved by the Board of Directors of the Corporation by a majority
vote of all the members thereof.
3. The Plan and Agreement of Merger was submitted to the stockholders of
the Corporation at a meeting thereof held upon notice of at least
fifteen days, specifying the time, place and object of such meeting and
addressed to each stockholder at the address appearing upon the books
of the Corporation and published at least once a week for two
successive weeks in one newspaper in each county in which any of the
merging corporations has its principal place of business.
4. Such Plan and Agreement of Merger was approved at such meeting by
stockholders owning at least two-thirds in amount of a the stock of the
Corporation. The number of shares voting in favor of the merger equaled
or exceeded the vote required. The percentage vote required was more
than 66.67%.
5. There is one (1) class of voting stock, and the number of shares of
such class outstanding is 1,728,333.
We further declare under penalty of perjury under the laws of the State of
California and under the laws of the State of New York that the matters set
forth in this certificate are true and correct of our own knowledge.
Dated: ______________, 2006
------------------------
Name: William J. Laraia
Title: President
------------------------
Name: Ming-Hsiung Chuang
Title: Secretary
Exhibit C - 1
GREAT EASTERN BANK
AFFILIATE AGREEMENT
Ladies and Gentlemen:
The undersigned, a holder of __________ shares of common stock
("Company Common Stock") of Great Eastern Bank, a New York state-chartered bank
(the "Company"), is entitled to receive ___________ shares of common stock, par
value $0.01 per share ("Cathay Common Stock"), of Cathay General Bancorp, a
Delaware corporation registered under the Bank Holding Company Act of 1956, as
amended ("Cathay"), in connection with the merger (the "Merger") of the Company
and with and into Cathay's wholly owned subsidiary Cathay Bank ("Cathay Bank")
pursuant to and in compliance with that certain Agreement and Plan of Merger by
and among Cathay, Cathay Bank and the Company dated as of February 16, 2006 (the
"Merger Agreement"). The undersigned acknowledges that the undersigned may be
deemed an "affiliate" of the Company within the meaning of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
by the Securities and Exchange Commission (the "SEC"), although nothing
contained herein should be construed as an admission of such fact, nor as a
waiver of any right the undersigned may have to object to any claim that the
undersigned is such an affiliate on or after date of this letter agreement.
If, in fact, the undersigned were such an affiliate under the
Securities Act, the undersigned's ability to sell, assign or transfer the shares
of Cathay Common Stock received by the undersigned in the Merger may be
restricted unless such transaction is registered under the Securities Act or an
exemption from such registration is available. The undersigned understands that
such exemptions are limited and, to the extent the undersigned felt or feels it
necessary, the undersigned has obtained or will obtain advice of counsel as to
the nature and conditions of such exemptions, including information with respect
to the applicability to the sale of such securities of Rules 144 and 145(d)
promulgated under the Securities Act.
The undersigned hereby represents to and covenants with Cathay that the
undersigned will not sell, assign, transfer or otherwise dispose of publicly or
privately any of the shares of Cathay Common Stock received by the undersigned
in the Merger pursuant to the Merger Agreement except (i) pursuant to an
effective registration statement under the Securities Act, (ii) in conformity
with the volume and other limitations of Rule 145(d) under the Securities Act,
or (iii) in a transaction which, in the opinion of the general counsel of
Cathay, or other counsel reasonably satisfactory to Cathay, or as described in a
"no-action" or interpretive letter from the staff of the SEC specifically issued
with respect to a transaction to be engaged in by the undersigned, is not
required to be registered under the Securities Act.
In the event of a sale or other disposition by the undersigned of
shares of Cathay Common Stock pursuant to Rule 145(d), the undersigned will
supply Cathay with evidence of compliance with such rule, in the form of a
letter in form and substance reasonably satisfactory to Cathay and, to the
extent required by the preceding paragraph, the opinion of counsel or no-action
letter referred to in such paragraph. The undersigned understands that if Cathay
has reasons to believe that the undersigned has not complied with Rule 145(d),
it may instruct its transfer agent to withhold the transfer of any shares of
Cathay Common Stock disposed of by the undersigned, but that upon receipt of
such evidence of compliance, of which a legal opinion from legal counsel of
Cathay or other counsel reasonably satisfactory to Cathay shall be conclusive,
Cathay shall cause the transfer agent to effectuate the transfer of shares of
Cathay Common Stock sold as indicated in such letter. Notwithstanding the
foregoing, Cathay shall revoke the stop transfer instructions with respect to
any shares of Cathay Common Stock held by the undersigned or a transferee of the
undersigned as to which the legend referred to below has been removed.
Exhibit D - 1
The undersigned acknowledges and agrees that the legend set forth below
will be placed on certificates representing any shares of Cathay Common Stock
received by the undersigned in connection with the Merger pursuant to the Merger
Agreement or held by a transferee thereof, which legend will be removed by
delivery of substitute certificates (i) upon the transfer by the undersigned of
shares of Cathay Common Stock in a sale made in conformity within the provisions
of Rule 145(d) or pursuant to an effective registration statement under the
Securities Act, or (ii) upon receipt of an opinion in form and substance
reasonably satisfactory to Cathay from independent counsel reasonably
satisfactory to Cathay to the effect that such legends are no longer required
for purposes of the Securities Act.
There will be placed on certificates for shares of Cathay Common Stock
issued to the undersigned, or, except as otherwise provided herein, any
substitutions therefore, a legend stating in substance:
The shares' represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933, as amended (the "Act"), applies. The shares may not be sold,
pledged or otherwise disposed of except pursuant to a registration
statement under, or in accordance with an exemption from the
registration requirements of, the Act.
It is understood and agreed that certificates with the legend set forth
in the preceding paragraph will be substituted by delivery of certificates
without such legend if:
(i) One year shall have elapsed from the date the undersigned
acquired the shares of Cathay Common stock received in the Merger
pursuant to the Merger Agreement and the provisions of Rule 145(d)(2)
are then available to the undersigned;
(ii) two years shall have elapsed from the date the
undersigned acquired the shares of Cathay Common Stock received in the
Merger pursuant to the Merger Agreement and the provisions of Rule
145(d)(3) are then applicable to the undersigned;
(iii) Cathay has received either an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to Cathay, or a
"no action" letter obtained by the undersigned from the staff of the
SEC, to the effect that the restrictions imposed by Rule 145 under the
Securities Act no longer apply to the undersigned; or
(iv) Any registration statement registering the resale of the
shares of Cathay Common Stock issued to the undersigned is declared
effective by the SEC or automatically becomes effective.
Exhibit D - 2
For so long as and to the extent necessary to permit the undersigned to
sell its shares of Cathay Common Stock pursuant to Rule 145 and, to the extent
applicable, Rule 144 under the Securities Act, Cathay shall take all such
actions as reasonably available to file, on a timely basis, all reports and data
required to be filed with the SEC by it pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), referred to in paragraph
(c)(1) of Rule 144 (or, if applicable, Cathay shall use reasonable efforts to
make publicly available the information regarding itself referred to in
paragraph (c)(2) of Rule 144), furnish to the undersigned upon request a written
statement as to whether Cathay has complied with such reporting requirements
during the twelve months preceding any proposed sale under Rule 145, and
otherwise take all such actions as reasonably available to permit such sales
pursuant to Rule 145 and Rule 144. Cathay has filed, on a timely basis, all
reports required to be filed with the SEC under Section 13 of the Exchange Act
during the preceding twelve months.
The undersigned acknowledges that the undersigned has carefully read
this letter agreement and understands and agrees to the requirements hereof and
the limitations imposed upon the distribution, sale, transfer or other
disposition of shares of Cathay Common Stock.
Very truly yours,
Signature:
---------------------
Dated: ______________, 2006 Type Name:
---------------------
Exhibit D - 3
ANNEX I
-------
CONDITIONS TO THE OFFER
-----------------------
THE CAPITALIZED TERMS USED HEREIN HAVE THE MEANINGS SET FORTH IN THE
AGREEMENT AND PLAN OF MERGER (THE "MERGER AGREEMENT") TO WHICH THIS ANNEX I IS
ATTACHED.
Notwithstanding any other provisions of the Offer, Cathay shall be
required to accept for payment and pay for shares of Company Common Stock only
if each of the following conditions is satisfied or waived prior to the
acceptance for payment of such shares of Company Common Stock (and remains so
satisfied or waived at the time of such acceptance), and, to the extent any of
the conditions are not so satisfied, Cathay may delay the acceptance for payment
of the shares of Company Common Stock and may terminate or, subject to the terms
of the Merger Agreement, amend the Offer:
(a) Regulatory Approvals. All regulatory approvals and the
Securities Laws Filings and Approvals required to consummate the Offer and the
other transactions contemplated hereby shall have been obtained and shall remain
in full force and effect, and all statutory waiting periods in respect thereof
shall have expired.
(b) No Injunctions or Restraints; Illegality. No Injunction
preventing the consummation of the Offer or the other transactions contemplated
hereby shall be in effect. No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced by any
Governmental Entity that prohibits, restricts or makes illegal the consummation
of the Offer or the other transactions contemplated hereby.
(c) Representations and Warranties. The representations and
warranties of the Company set forth in the Merger Agreement shall be true and
correct as of the date of the Merger Agreement and as of the Offer Closing Date
as though made at and as of the Offer Closing Date (except that representations
and warranties that by their terms speak specifically as of the date of the
Merger Agreement or some other date shall be true and correct as of such date),
and Cathay shall have received a certificate, dated the Offer Closing Date,
signed on behalf of the Company by the Chief Executive Officer and the Chief
Financial Officer of the Company to such effect.
(d) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be performed
by it under the Merger Agreement at or prior to the Offer Closing Date, and
Cathay shall have received a certificate signed on behalf of the Company by the
Chief Executive Officer and the Chief Financial Officer of the Company to such
effect.
(e) Consents Under Agreements. All consents and approvals of all
persons (other than the Governmental Entities) required for consummation of the
Offer and the other transactions contemplated hereby shall have been obtained
and shall be in full force and effect, unless the failure to obtain any such
consent or approval would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company or Cathay.
Annex I - 1
(f) List of Properties. The Company shall have delivered to Cathay
separate lists of all of Company's properties and assets, real and personal,
tangible or intangible, used in the conduct of its business which are reflected
on a balance sheet of the Company as of the end of the month preceding the Offer
Closing Date, prepared in accordance with GAAP.
(g) Company Net Worth. On the Offer Closing Date, the net worth of
the Company shall be not less than the Company Closing Net Worth. For purposes
of this condition, the net worth of the Company shall exclude (i) the after-tax
effect of any expense related to the Merger Agreement and the transactions
contemplated hereby, including payments to Company Advisor under Section 4.7
hereof and payments to the Company's attorneys and accountants, not to exceed
$1,800,000 in the aggregate (pre-tax), (ii) the after-tax effect of any gain or
loss from the sale of assets by the Company in 2005 or 2006 in the ordinary
course of business consistent with its past practices, and (iii) any change in
the "Accumulated Other Comprehensive Income (Loss), Net of Tax" line on the
Company's balance sheet after June 30, 2005, all as set forth in a balance sheet
of the Company as of the end of the month preceding the Offer Closing Date,
prepared in accordance with GAAP, and the format of such balance sheet of the
Company to be delivered as of the end of the month preceding the Offer Closing
Date is attached hereto as Schedule 8.2(e).
(h) Allowance for Loan Loss. On the Offer Closing Date, the
Company's allowance for loan and lease losses shall be not less than the Company
Closing Loan Loss Reserve, and the ratio of the Company's allowance for loan and
lease losses to the aggregate amount of loans in the Company's portfolio of loan
assets, as set forth in the balance sheet of the Company as of the end of the
month preceding the Offer Closing Date, prepared in accordance with GAAP, shall
not be materially lower than the ratio of the Company's allowance for loan and
lease losses to the aggregate amount of loans in the Company's portfolio of loan
assets, as set forth in the balance sheet of the Company as of December 31,
2005, prepared in accordance with GAAP.
(i) Core Deposits. The balance of core deposits with the Company
shall be not less than $76,000,000 on non-interest bearing core accounts, and
$180,000,000 in the aggregate on all core accounts.
(j) No Pending Governmental Actions. No proceeding initiated by
any Governmental Entity seeking an Injunction preventing the consummation of the
Offer or other transactions contemplated hereby shall be pending.
(k) Minimum Condition. Holders of more than 66 2/3% of the
outstanding shares of Company Common Stock shall have validly tendered such
shares into the Offer and not withdrawn their shares of Company Common Stock
(the "Minimum Condition").
(l) Accredited Investor Condition. Holders of shares of Company
Common Stock representing more than the Minimum Stock Conversion Number shall
have (i) validly tendered such shares into the Offer and not withdrawn their
shares of Company Common Stock, (ii) provided Cathay with the necessary
documentation to establish that each such holder is an Accredited Investor, and
(iii) validly elected to receive shares of Cathay Common Stock pursuant to the
Offer (the "Accredited Investor Condition").
Annex I - 2
The parties acknowledge that the Tender Offer Conditions set forth
above in this Annex I are for the sole benefit of Cathay, that Cathay may assert
the failure of any of the Tender Offer Conditions to be satisfied regardless of
the circumstances (other than any circumstance arising solely by any action or
inaction by Cathay) giving rise to any such failure, that the Company shall not
assert the failure of, or waive, any such condition without the prior written
consent of Cathay, and that if Cathay elects to waive any such condition to the
Offer (which Cathay may do in whole or in part at any time and from time to
time), the Company shall cooperate and comply with such election. The failure by
Cathay at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right, and each such right shall be deemed an ongoing right
that may be asserted at any time and from time to time. Should the Offer be
terminated pursuant to any of the foregoing provisions, all tendered shares of
Company Common Stock not theretofore accepted for payment shall forthwith be
returned to the tendering shareholders.
Annex I - 3