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AGREEMENT AND PLAN OF REORGANIZATION
AMONG
PBOC HOLDINGS, INC.,
PEOPLE'S BANK OF CALIFORNIA,
BYL BANCORP
AND
BYL BANK GROUP
DATED AS OF NOVEMBER 1, 2000
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AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS............................................................................................1
ARTICLE II THE MERGER.............................................................................................6
2.1 The Merger.............................................................................................6
2.2 Effect of the Merger...................................................................................6
2.3 Articles of Incorporation and Bylaws...................................................................7
2.4 Directors and Officers.................................................................................7
2.5 Effective Time.........................................................................................7
2.6 Effect on Outstanding Shares...........................................................................7
2.7 Shareholder Rights; Stock Transfers....................................................................9
2.8 Dissenting Shares......................................................................................9
2.9 Exchange Procedures....................................................................................9
2.10 Options...............................................................................................11
2.11 Withholding Rights....................................................................................11
2.12 Additional Actions....................................................................................11
2.13 Interim Shares........................................................................................12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BYL AND BYL BANK....................................................12
3.1 Capital Structure of BYL and BYL Bank.................................................................12
3.2 Organization, Standing and Authority of BYL...........................................................13
3.3 Subsidiaries..........................................................................................13
3.4 Reserved..............................................................................................13
3.5 Authorized and Effective Agreement; Consents and Approvals............................................13
3.6 Securities Documents and Regulatory Reports...........................................................15
3.7 Financial Statements..................................................................................15
3.8 Material Adverse Change...............................................................................16
3.9 Environmental Matters.................................................................................16
3.10 Tax Matters...........................................................................................17
3.11 Legal Proceedings.....................................................................................18
3.12 Compliance with Laws..................................................................................18
3.13 Certain Information...................................................................................18
3.14 Employee Benefit Plans................................................................................19
3.15 Certain Contracts.....................................................................................20
3.16 Brokers and Finders...................................................................................21
3.17 Insurance.............................................................................................21
3.18 Properties............................................................................................21
3.19 Labor.................................................................................................22
3.20 Transactions with Affiliates..........................................................................22
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3.21 Nonperforming and Classified Assets...................................................................22
3.22 Required Vote; Inapplicability of Antitakeover Statutes;Fairness Opinion..............................23
3.23 Proposed Transaction with CNL Commercial Finance, Inc.................................................23
3.24 Disclosures...........................................................................................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PBOC AND THE BANK...................................................25
4.1 Organization, Standing and Authority of PBOC..........................................................25
4.2 Organization, Standing, Authority and Ownership of the
PBOC Subsidiaries...................................................................................25
4.3 Authorized and Effective Agreement; Consents and Approvals............................................25
4.4 Securities Documents..................................................................................27
4.5 Financial Statements..................................................................................27
4.6 Access to Funds.......................................................................................28
4.7 Legal Proceedings.....................................................................................28
4.8 Certain Information...................................................................................28
4.9 Disclosures...........................................................................................28
ARTICLE V COVENANTS.............................................................................................29
5.1 Reasonable Best Efforts...............................................................................29
5.2 Shareholder Meeting...................................................................................29
5.3 Regulatory Matters....................................................................................29
5.4 Investigation and Confidentiality.....................................................................30
5.5 Press Releases........................................................................................30
5.6 Business of BYL and the Bank......................................................................... 31
5.7 Current Information...................................................................................34
5.8 Benefit Plans and Arrangements........................................................................35
5.9 Indemnification; Insurance............................................................................35
5.10 Disclosure Supplements................................................................................36
5.11 Failure to Fulfill Conditions.........................................................................36
ARTICLE VI CONDITIONS PRECEDENT..................................................................................37
6.1 Conditions Precedent - All Parties....................................................................37
6.2 Conditions Precedent - BYL and BYL Bank...............................................................37
6.3 Conditions Precedent - PBOC and the Bank..............................................................38
ARTICLE VII TERMINATION, WAIVER AND AMENDMENT.....................................................................40
7.1 Termination...........................................................................................40
7.2 Effect of Termination.................................................................................41
7.3 Survival of Representations, Warranties and Covenants.................................................41
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7.4 Waiver................................................................................................41
7.5 Amendment or Supplement...............................................................................41
ARTICLE VIII MISCELLANEOUS.........................................................................................42
8.1 Expenses; Termination Fee.............................................................................42
8.2 Entire Agreement......................................................................................44
8.3 Assignment; Successors................................................................................44
8.4 Notices...............................................................................................45
8.5 Alternative Structure.................................................................................46
8.6 Interpretation........................................................................................46
8.7 Counterparts..........................................................................................46
8.8 Governing Law.........................................................................................46
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Exhibit A Form of Stockholder Agreement
Exhibit B Form of Agreement of Merger
Exhibit C Form of Agreement of Merger and Liquidation
Exhibit D Form of Articles of Combination and Agreement of Merger
Exhibit E Matters to be covered by opinion of counsel to PBOC
Exhibit F Intentionally Omitted
Exhibit G Matters to be covered by opinion of counsel to BYL
Exhibit H Form of Stock Option Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of November 1, 2000
("Agreement") among PBOC Holdings, Inc. ("PBOC"), a Delaware corporation,
People's Bank of California (the "Bank"), a federally-chartered savings bank and
wholly-owned subsidiary of PBOC, BYL Bancorp ("BYL"), a California corporation
and BYL Bank Group ("BYL Bank"), a California- chartered commercial bank and
wholly-owned subsidiary of BYL.
W I T N E S S E T H:
WHEREAS, the Boards of Directors of PBOC, the Bank, BYL and BYL Bank
have determined that it is in the best interests of their respective companies
and their shareholders to consummate the business combination transactions
provided for herein; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby; and
WHEREAS, as a condition and inducement to PBOC's willingness to enter
into this Agreement, certain stockholders of BYL are concurrently entering into
a Stockholder Agreement with PBOC (the "Stockholder Agreement"), in
substantially the form attached hereto as Exhibit A, pursuant to which, among
other things, such stockholders agree to vote their shares of BYL Common Stock
in favor of this Agreement and the Agreement of Merger (as defined herein) and
the transactions contemplated hereby and thereby.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
"Acquisition Transaction" shall have the meaning set forth in Section
5.6(b) hereof.
"Affiliate" shall have the meaning set forth in Section 3.20 hereof.
"Agreement of Merger" shall mean the agreement of merger between BYL
and Interim, the form of which is attached hereto as Exhibit B.
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"Agreement and Plan of Merger and Liquidation" shall mean the agreement
between BYL and PBOC, the form of which is attached hereto as Exhibit C.
"Articles of Combination and Agreement of Merger" shall mean the
agreement between BYL Bank and People's Bank of California, the form of which is
attached hereto as Exhibit D.
"Bank" shall mean People's Bank of California.
"BYL" shall mean BYL Bancorp.
"BYL Bank" shall mean BYL Bank Group.
"BYL Common Stock" shall mean the common stock of BYL.
"BYL Financial Statements" shall mean (i) the consolidated statements
of financial condition (including related notes and schedules, if any) of BYL as
of December 31, 1999 and 1998 and the consolidated statements of income, changes
in shareholders' equity and cash flows (including related notes and schedules,
if any) of BYL for each of the three years ended December 31, 1999, 1998 and
1997, as well as the unaudited consolidated statement of financial condition of
BYL as of June 30, 2000 and the unaudited consolidated statements of income,
changes in shareholders' equity and cash flows for the six months ended June 30,
2000 and 1999 and (ii) the consolidated statements of financial condition of BYL
(including related notes and schedules, if any) and the consolidated statements
of income (including related notes and schedules, if any) of BYL included in the
Security Documents filed by BYL with respect to the quarterly and annual periods
ended subsequent to June 30, 2000 and delivered to PBOC pursuant to Section 5.7
hereof.
"BYL Option Plan" shall mean the BYL Stock Option Plan.
"BYL Options" shall mean options to purchase shares of BYL Common Stock
granted pursuant to the BYL Option Plan.
"BYL Preferred Stock" shall mean the preferred stock of BYL.
"CGCL" shall mean the California General Corporation Law.
"CNL Transaction Agreements" shall mean the Agreement Pertaining to the
Ownership and Operation of CNL Commercial Finance, LLC by and between CNL
Commercial Funding LP, BYL, BYL Bank and CNL Commercial Finance LLC dated July
12, 2000; the First Amendment thereto dated August 15, 2000, with CNL Commercial
Finance, Inc ("CCF") as successor to CNL Commercial Finance, LLC (collectively,
the "CNL Operations Agreement"); the Stockholders' Agreement of CNL Commercial
Finance, Inc. between CNL Commercial Funding, LP, CCF and BYL, dated August 16,
2000; and each of the additional agreements referred to therein.
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"Closing" shall have the meaning set forth in Section 2.5 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"Confidentiality Agreement" shall have the meaning set forth in Section
5.4(b) hereof.
"CRA" shall mean the Community Reinvestment Act of 1977, as amended.
"Department" shall mean the State of California Department of Financial
Institutions.
"DGCL" shall mean the General Corporation Law of Delaware.
"Dissenting Shares" shall have the meaning set forth in Section 2.8
hereof.
"DOJ" shall mean the United States Department of Justice.
"Effective Time" shall mean the time specified pursuant to Section 2.5
hereof as the effective time of the Merger.
"Environmental Claim" means any written notice from any governmental
authority or third party alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on, or resulting from the
presence, or release into the environment, of any Materials of Environmental
Concern.
"Environmental Laws" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any
governmental entity relating to (1) the protection, preservation or
restoration of the environment (including, without limitation, air, water
vapor, surface water, groundwater, drinking water supply, surface or
subsurface soil, plant and animal life or any other natural resource), and/or
(2) the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of Materials
of Environmental Concern. The term Environmental Laws includes without
limitation (1) the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. Section 9601, et seq; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 2901, et seq;
the Clean Air Act, as amended, 42 U.S.C. Section 7401, et seq; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. Section 1251, et seq; the
Toxic Substances Control Act, as amended, 15 U.S.C. Section 9601, et seq; the
Emergency Planning and Community Right to Know Act, 42 U.S.C. Section 11001,
et seq; the Safe Drinking Water Act, 42 U.S.C. Section 300f, et seq; (2) all
comparable state and local laws including but not limited to, the Air Quality
Monitoring Devices Act (California Health and Safety Code Section 42700 et
seq.); the Porter-Cologne Water Control Act (California Water Code Section
13200 et seq.); the
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Carpenter-Presley-Tanner Hazardous Substance Control Act (California Health
and Safety Code Section 25300 et seq.); the Clean Waters Act (California
Fish and Game Code Section 5650 et seq.); and the Hazard Communications Act
(8 CCR 5194) and any similar, implementing or successor law, and any
amendment, rule, regulation, order, or directive issued thereunder; and (3)
any common law (including without limitation common law that may impose
strict liability) that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of or exposure to
any Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation, or any
successor thereto.
"FRB" means the Board of Governors of the Federal Reserve System.
"Governmental Entity" shall mean any federal or state court,
administrative agency or commission or other governmental authority or
instrumentality.
"HOLA" shall mean the Home Owner's Loan Act, as amended.
"Interim" shall have the meaning set forth in Section 2.1 hereof.
"Material Adverse Effect" shall mean any effect that (i) is material
and adverse to the financial condition, results of operations or business of BYL
and BYL Bank, either individually or considered as one enterprise or (ii)
materially impairs the ability of BYL and/or BYL Bank to consummate the
transactions contemplated by this Agreement and the Agreement of Merger,
provided, however, that Material Adverse Effect shall not be deemed to include
(i) the impact of changes in (a) laws, regulations, or policies of any
Government Entity or interpretations thereof; or (b) generally accepted
accounting principles, that in each case are generally applicable to the banking
industry, or (ii) actions taken or to be taken by BYL upon the written request
of PBOC pursuant to this Agreement or the Agreement of Merger.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"Merger" shall have the meaning set forth in Section 2.1 hereof.
"Merger Consideration" shall have the meaning set forth in Section
2.6(c) hereof.
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"OTS" shall mean the Office of Thrift Supervision of the U.S.
Department of the Treasury, or any successor thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PBOC Financial Statements" shall mean (i) the consolidated statements
of financial condition (including related notes and schedules, if any) of PBOC
as of December 31, 1999 and 1998 and the consolidated statements of income,
shareholders' equity and cash flows (including related notes and schedules, if
any) of PBOC for each of the three years ended December 31, 1999, 1998 and 1997,
as well as the unaudited consolidated statement of financial condition as of
June 30, 2000 and the unaudited consolidated statements of income, shareholders'
equity and cash flows for the six months ended June 30, 2000 and 1999 and (ii)
the consolidated balance sheets of PBOC (including related notes and schedules,
if any) and the consolidated statements of income, shareholders' equity and cash
flows (including related notes and schedules, if any) of PBOC included in the
Securities Documents filed by PBOC with respect to the quarterly and annual
periods subsequent to June 30, 2000, 1999 and delivered to BYL pursuant to
Section 5.7 hereof.
"Previously Disclosed" shall mean disclosed in (i) a letter dated the
date hereof delivered from the disclosing party to the other party specifically
referring to the appropriate section of this Agreement and describing in
reasonable detail the matters contained therein or (ii) a letter dated after the
date hereof from the disclosing party specifically referring to this Agreement
and describing in reasonable detail the matters contained therein and delivered
by the other party pursuant to Section 5.10 hereof. The inclusion of any matter
in information Previously Disclosed shall not be deemed an admission or
otherwise to imply that any such matter is material for purposes of this
Agreement.
"Proxy Statement" shall mean the proxy statement to be delivered by BYL
to its shareholders in connection with the solicitation of their approval of
this Agreement and the Agreement of Merger and the transactions contemplated
hereby and thereby, including any amendment or supplement thereto.
"Rights" shall mean warrants, options, rights, convertible securities
and other arrangements or commitments which obligate an entity to issue or
dispose of any of its capital stock or other ownership interests.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, offering circulars,
proxy statements, registration statements and all similar documents filed, or
required to be filed, pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act, the Exchange Act and
the rules and regulations of the Commission promulgated thereunder.
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"Stockholder Agreement" means the agreement dated the date hereof
between certain of the stockholders of BYL and PBOC, the form of which is
attached hereto as Exhibit A.
"Stock Option Agreement" means the agreement dated the date hereof
between PBOC and BYL, the form of which is attached hereto as Exhibit H.
"Subsidiary" and "Significant Subsidiary" shall have the meanings set
forth in Rule 1-02 of Regulation S-X of the Commission.
Other terms used herein are defined in the preamble and elsewhere in
this Agreement.
ARTICLE II
THE MERGER
2.1 THE MERGER
Subject to the terms and conditions of this Agreement and subject to
and in accordance with an Agreement of Merger, the form of which is attached
hereto as Exhibit B (the "Agreement of Merger"), between BYL and PBOC
Acquisition Corp., a California corporation and wholly-owned subsidiary of PBOC
("Interim") to be formed in connection with the transactions contemplated
hereby, at the Effective Time (as defined in Section 2.5 hereof), Interim shall
be merged with and into BYL in accordance with Section 1100 et seq. of the CGCL
(the "Merger"), with BYL as the surviving corporation (hereinafter sometimes
called the "Surviving Corporation"). Simultaneously with or as soon as
practicable after the Merger, the Surviving Corporation shall be merged with and
liquidated into PBOC (the "Liquidation") in accordance with an Agreement and
Plan of Merger and Liquidation, the form of which is attached hereto as Exhibit
C.
2.2 EFFECT OF THE MERGER
(a) As of the Effective Time (as defined in Section 2.5 hereof), the
Surviving Corporation shall be considered the same business and corporate entity
as each of BYL and Interim and thereupon and thereafter, all the property,
rights, powers and franchises of each of BYL and Interim shall vest in the
Surviving Corporation and the Surviving Corporation shall be subject to and be
deemed to have assumed all of the debts, liabilities, obligations and duties of
each of BYL and Interim and shall have succeeded to all of each of their
relationships, fiduciary or otherwise, as fully and to the same extent as if
such property rights, privileges, powers, franchises, debts, obligations, duties
and relationships had been originally acquired, incurred or entered into by the
Surviving Corporation. In addition, any reference to either of BYL and Interim
in any contract or document, whether executed or taking effect before or after
the Effective Time, shall be considered a reference to the Surviving Corporation
if not inconsistent with the other provisions of the contract or document; and
any pending action or other judicial proceeding to which either of BYL and
Interim
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is a party, shall not be deemed to have abated or to have discontinued by reason
of the Merger, but may be prosecuted to final judgment, order or decree in the
same manner as if the Merger had not been made; or the Surviving Corporation may
be substituted as a party to such action or proceeding, and any judgment, order
or decree may be rendered for or against it that might have been rendered for or
against either of BYL and Interim if the Merger had not occurred. At the
Effective Time, the directors and officers of the Surviving Corporation shall be
the persons designated in Section 2.4.
(b) Following consummation of the Liquidation, PBOC shall cause BYL
Bank to merge with and into the Bank, with the Bank as the resulting institution
in accordance with the terms of the Articles of Combination and Agreement of
Merger, the form of which is attached hereto as Exhibit D.
2.3 ARTICLES OF INCORPORATION AND BYLAWS
As of the Effective Time, the Article of Incorporation and Bylaws of
BYL shall be the Articles of Incorporation and Bylaws of the Surviving
Corporation until otherwise amended as provided by law.
2.4 DIRECTORS AND OFFICERS
As of the Effective Time, the directors and officers of Interim shall
become the directors and officers of the Surviving Corporation.
2.5 EFFECTIVE TIME
The Merger shall become effective upon the occurrence of the filing of
an Agreement of Merger with the Secretary of State of the State of California,
unless a later date and time is specified as the effective time in such
Agreement of Merger ("Effective Time"). A closing (the "Closing") shall take
place immediately prior to the Effective Time at 10:00 a.m., on the fifth
business day following the receipt of all necessary regulatory or governmental
approvals and consents and the expiration of all statutory waiting periods in
respect thereof and the satisfaction or waiver, to the extent permitted
hereunder, of the conditions to the consummation of the Merger specified in
Article VI of this Agreement (other than the delivery of certificates and other
instruments and documents to be delivered at the Closing), at the offices of
PBOC or at such other place, at such other time, or on such other date as the
parties may mutually agree upon. At the Closing, there shall be delivered to the
parties hereto the certificates and other documents required to be delivered
under Article VI hereof.
2.6 EFFECT ON OUTSTANDING SHARES
Subject to the provisions of this Agreement, at the Effective Time,
automatically by virtue of the Merger and without any action on the part of a
holder of shares of BYL Common Stock:
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(a) each share of BYL Common Stock issued and outstanding
at the Effective Time (other than (i) Dissenting Shares and (ii) shares of BYL
Common Stock owned by BYL or PBOC or any of its wholly-owned subsidiaries, other
than shares held in a fiduciary capacity or in satisfaction of a debt previously
contracted) shall become and be converted into the right to receive in cash
without interest the Merger Consideration, determined in accordance with
Sections 2.6(c) and (d) hereof ; and
(b) each share of BYL Common Stock owned by BYL, PBOC or
any of PBOC's wholly-owned Subsidiaries at the Effective Time (other than shares
held in a fiduciary capacity or in satisfaction of a debt previously contracted)
shall be canceled and retired and shall not represent capital stock of the
Surviving Corporation, and no exchange or payment shall be made with respect
thereto.
(c) Subject to Section 2.6(d), the Merger Consideration for
purposes of Section 2.6(a) shall be $15.00; provided, however, that if the
Closing occurs (i) in the period commencing March 6, 2001 to and including June
15, 2001, the Merger Consideration shall be increased by an amount for each day
subsequent to March 6, 2001 to and including the Closing Date which is
equivalent to 8.0% per annum on the aggregate $15.00 per share Merger
Consideration (the "Additional Merger Consideration"). Notwithstanding the
foregoing, for purposes of computing the amount of Additional Merger
Consideration, if any, which PBOC is obligated to pay hereunder, no Additional
Merger Consideration shall be due on the date which is five days after the date
that PBOC provides BYL with written notice that it has satisfied all conditions
for Closing and is prepared to close the transactions contemplated by this
Agreement.
(d)(i) To the extent that the SBA Commencement Assets (as
defined in the CNL Operations Agreement) have not been purchased by CCF by
December 31, 2000, PBOC and the Bank acknowledge that BYL and BYL Bank shall
liquidate for cash the Second Residual Interest (as defined in the CNL
Operations Agreement) and not consummate the transactions contemplated by the
CNL Transaction Agreements. Under such circumstances, notwithstanding anything
herein to the contrary, the aggregate Merger Consideration shall be reduced by
the after tax cost (utilizing BYL's applicable tax rate) of the difference
between $2,104,002 and the sum of (i) the cash price received for the Second
Residual Interest, plus (ii) cash payments received by BYL on the Second
Residual Interest after the date of this Agreement, plus (iii) interest earned
at the rate of 5.0% per annum on the amounts set forth in clause (ii) of this
sentence from the date of receipt to the date of sale of such Second Residual
Interest, as evidenced by a payment schedule which shall be satisfactory to
PBOC. To the extent that the Second Residual Interest has not been liquidated by
the date of PBOC's receipt of the last required regulatory approval of the
transactions contemplated by this Agreement, then for purposes of clause (i) in
the immediately preceding sentence, the cash price received for the Second
Residual Interest shall be deemed to be zero.
(ii) To the extent that the SBA Commencement Assets (as
defined in the CNL Operations Agreement) have been purchased by CCF by December
31, 2000, but, as part of the closing of the transactions contemplated by the
CNL Transaction Agreements, BYL and BYL
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Bank has had to cause CCF to acquire through purchase a license providing for
Small Business Administration ("SBA") accreditation as a non-bank participating
lender, then under such circumstances and notwithstanding anything herein to the
contrary, the Merger Consideration shall be reduced by the after tax cost
(utilizing BYL's applicable tax rate) to BYL of the acquisition by CCF of the
SBA license.
2.7 SHAREHOLDER RIGHTS; STOCK TRANSFERS
Except as provided in Section 2.8 hereof, at the Effective Time,
holders of BYL Common Stock shall cease to be and shall have no rights as
shareholders of BYL, other than to receive the aggregate Merger Consideration to
which such holders are entitled pursuant to Section 2.6 hereof. After the
Effective Time, there shall be no transfers on the stock transfer books of BYL
or the Surviving Corporation of shares of BYL Common Stock.
2.8 DISSENTING SHARES
Each outstanding share of BYL Common Stock the holder of which has
perfected his right to dissent under Section 1300 et seq. of the CGCL and has
not effectively withdrawn or lost such right as of the Effective Time (the
"Dissenting Shares") shall not be converted into or represent a right to receive
the Merger Consideration specified in Section 2.6 hereof, and the holder thereof
shall be entitled only to such rights as are granted by Section 1301 of the
CGCL. If any holder of Dissenting Shares shall fail to perfect or shall have
effectively withdrawn or lost the right to dissent, the Dissenting Shares held
by such holder shall thereupon be treated as though such Dissenting Shares had
been converted into the right to receive the aggregate Merger Consideration to
which such holder would be entitled pursuant to Section 2.6 hereof. BYL shall
give PBOC prompt notice upon receipt by BYL of any such written demands for
payment of the fair value of shares of BYL Common Stock and of withdrawals of
such demands and any other instruments provided pursuant to Section 1301 of the
CGCL. Any payments made in respect of Dissenting Shares shall be made by the
Surviving Corporation.
2.9 EXCHANGE PROCEDURES
(a) At and after the Effective Time, each certificate (each a
"Certificate") previously representing shares of BYL Common Stock, other than
Dissenting Shares, shall represent only the right to receive the aggregate
Merger Consideration specified in Section 2.6 hereof.
(b) As of the Effective Time, PBOC shall deposit, or shall cause to
be deposited, with such bank or trust company reasonably acceptable to BYL as
PBOC may select (the "Exchange Agent"), the aggregate Merger Consideration to be
paid to the holders of shares of BYL Common Stock pursuant to Section 2.6 hereof
in exchange for outstanding shares of BYL Common Stock.
(c) Within five business days after the Effective Time, PBOC shall
cause the Exchange Agent to mail to each holder of record of a Certificate or
Certificates the following: (i) a letter of
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transmittal specifying that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates to
the Exchange Agent, which shall be in a form and contain any other provisions as
PBOC and BYL may determine; and (ii) instructions for use in effecting the
surrender of Certificates in exchange for the aggregate Merger Consideration to
which such holder is entitled pursuant to Section 2.6 hereof. Upon the proper
surrender of a Certificate to the Exchange Agent, together with a properly
completed and duly executed letter of transmittal, the holder of such
Certificate shall be entitled to receive in exchange therefor a check
representing the aggregate Merger Consideration which such holder has the right
to receive in respect of the Certificate surrendered pursuant to Section 2.6
hereof, and the Certificate so surrendered shall forthwith be canceled. No
interest will be paid or accrued on the Merger Consideration. In the event of a
transfer of ownership of any shares of BYL Common Stock not registered in the
transfer records of BYL, a check for the aggregate Merger Consideration to which
the holder thereof is entitled pursuant to Section 2.6 hereof may be issued to
the holder if the Certificate representing such BYL Common Stock is presented to
the Exchange Agent, accompanied by documents sufficient, in the reasonable
discretion of PBOC and the Exchange Agent, (i) to evidence and effect such
transfer and (ii) to evidence that all applicable stock transfer taxes have been
paid.
(d) Any portion of the aggregate Merger Consideration or the proceeds
of any investments thereof that remains unclaimed by the shareholders of BYL for
six months after the Effective Time shall be repaid by the Exchange Agent to
PBOC. Any shareholders of BYL who have not theretofore complied with this
Section 2.9 shall thereafter look only to PBOC for payment of the Merger
Consideration deliverable in respect of each share of BYL Common Stock such
shareholder holds as determined pursuant to Section 2.6 of this Agreement
without any interest thereon. If outstanding Certificates are not surrendered or
the payments for them are not claimed prior to the date on which such payments
would otherwise escheat to or become the property of any Governmental Entity,
the unclaimed items shall, to the extent permitted by abandoned property and any
other applicable law, become the property of PBOC (and to the extent not in its
possession shall be paid over to it), free and clear of all claims or interest
of any person previously entitled to such claims. Notwithstanding the foregoing,
none of PBOC, the Surviving Corporation, the Exchange Agent or any other person
shall be liable to any former holder of BYL Common Stock for any amount
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(e) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by PBOC or the
Exchange Agent, the posting by such person of a bond in such amount as the
Exchange Agent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the aggregate Merger
Consideration deliverable in respect thereof pursuant to Section 2.3 of this
Agreement.
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2.10 OPTIONS
At the Effective Time, each BYL Option which is outstanding and
unexercised immediately prior to the Effective Time shall be terminated and each
grantee thereof shall be entitled to receive, in lieu of each share of BYL
Common Stock that would otherwise have been issuable upon the exercise thereof,
an amount in cash computed by multiplying (i) the difference between (x) the
Merger Consideration and (y) the per share exercise price applicable to such BYL
Option by (ii) the number of such shares of BYL Common Stock subject to such BYL
Option. BYL agrees to take or cause to be taken all action necessary to provide
for such termination and payment effective at or before the Effective Time. BYL
agrees to provide each holder of a BYL Option granted pursuant to a BYL Option
Plan with any applicable notice and otherwise to take such actions as may be
required to ensure that outstanding BYL Options are terminated in the manner set
forth in this Section 2.10.
2.11 WITHHOLDING RIGHTS
PBOC (through the Exchange Agent, if applicable) shall be entitled to
deduct and withhold from any amounts otherwise payable pursuant to this
Agreement to any holder of BYL Common Stock or BYL Options such amounts as PBOC
is required under the Code or any provision of state, local or foreign tax law
to deduct and withhold with respect to the making of such payment. Any amounts
so withheld and paid to the applicable taxing authority shall be treated for all
purposes of this Agreement as having been paid to the holder of BYL Common Stock
or BYL Options, as applicable, in respect of which such deduction and
withholding was made by PBOC.
2.12 ADDITIONAL ACTIONS
If, at any time after the Effective Time, the Surviving Corporation
shall consider that any further assignments or assurances in law or any other
acts are necessary or desirable to (i) vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its rights, title or interest in, to or
under any of the rights, properties or assets of BYL acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with, the Merger,
or (ii) otherwise carry out the purposes of this Agreement, each of the BYL and
its proper officers and directors shall be deemed to have granted to the
Surviving Corporation an irrevocable power of attorney to execute and deliver
all such proper deeds, assignments and assurances in law and to do all acts
necessary or proper to vest, perfect or confirm title to and possession of such
rights, properties or assets in the Surviving Corporation and otherwise to carry
out the purposes of this Agreement; and the proper officers and directors of the
Surviving Corporation are fully authorized in the name of BYL or otherwise to
take any and all such action.
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2.13 INTERIM SHARES
Each outstanding share of common stock of Interim, $.01 par value per
share ("Interim Common Stock"), on the Effective Time shall be converted
automatically and without any action on the part of the holder thereof into an
equal number of shares of the Surviving Corporation, which shall constitute all
of the outstanding common stock of the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BYL AND BYL BANK
Except as Previously Disclosed, BYL and BYL Bank represent and warrant
to PBOC and the Bank as follows:
3.1 CAPITAL STRUCTURE OF BYL AND BYL BANK
The authorized capital stock of BYL consists of 50,000,000 shares of
BYL Common Stock and 25,000,000 shares of Preferred Stock. As of the date
hereof, (i) there are 2,542,568 shares of BYL Common Stock issued and
outstanding, no shares of BYL Preferred Stock issued and outstanding and no
shares of BYL Common Stock are held as treasury shares. All outstanding shares
of BYL Common Stock have been duly authorized and validly issued and are fully
paid and nonassessable and none of the outstanding shares of BYL Common Stock
has been issued in violation of the preemptive rights of any person, firm or
entity. BYL has Previously Disclosed each BYL Option outstanding as of the date
hereof, including the number of shares covered by each such BYL Option and the
exercise price thereof. Except for the option to purchase BYL Common Stock
granted to PBOC pursuant to the Stock Option Agreement and BYL Options to
purchase 377,203 shares of BYL Common Stock as of the date hereof, there are no
Rights authorized, issued or outstanding with respect to the BYL Common Stock.
The authorized capital stock of BYL Bank consists of 6,666,666 shares
of common stock and 1,000,000 shares of preferred stock. As of the date hereof,
(i) there are 100 shares of BYL Bank common stock issued and outstanding, no
shares of BYL Bank preferred stock issued and outstanding and no shares of BYL
Bank common stock are held as treasury shares. All outstanding shares of BYL
Bank common stock have been duly authorized and validly issued and are fully
paid and nonassessable and are owned by BYL.
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3.2 ORGANIZATION, STANDING AND AUTHORITY OF BYL
BYL is a corporation duly organized, validly existing and in good
standing under the laws of the State of California. BYL has the 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 is duly licensed or qualified to
do business and is in good standing 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, qualified or in good standing would
not have a Material Adverse Effect. BYL is registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended. BYL has heretofore
delivered to PBOC true and complete copies of the Articles of Incorporation and
Bylaws of BYL as in effect as of the date hereof.
3.3 SUBSIDIARIES
The only direct or indirect subsidiary of BYL is BYL Bank. BYL Bank (i)
is duly organized and is validly existing under the laws of the State of
California, (ii) has the corporate power and authority to own or lease all of
its properties and assets and to conduct its business as it is now being
conducted, and (iii) is duly licensed or qualified to do business and is in good
standing 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, qualified or in good standing would not have a Material Adverse
Effect. Except as Previously Disclosed, each of BYL and BYL Bank has satisfied
in all material respects all commitments, financial or otherwise, as may have
been agreed upon with their appropriate bank regulatory agencies. Except as
Previously Disclosed, BYL and/or BYL Bank do not own or have the right to
acquire, directly or indirectly, any outstanding capital stock or other voting
securities or ownership interests of any corporation, bank, savings association,
partnership, joint venture or other organization.
3.4 Reserved.
3.5 AUTHORIZED AND EFFECTIVE AGREEMENT; CONSENTS AND APPROVALS
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(a) BYL and BYL Bank have all requisite corporate power and
authority to enter into this Agreement and (subject to receipt of all
necessary governmental approvals and the approval of BYL's shareholders of
this Agreement) to perform all of their obligations under this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action in respect thereof on the part of BYL and BYL
Bank, except for the approval of this Agreement by BYL's shareholders. This
Agreement has been duly and validly executed and delivered by BYL and BYL
Bank and constitutes legal, valid and binding obligations of BYL and BYL Bank
which are enforceable against BYL and BYL Bank in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally, and
except that the availability of equitable remedies (including, without
limitation, specific performance) is within the discretion of the appropriate
court.
(b) Subject to the approval of this Agreement by the stockholders of
BYL, BYL has full corporate power and authority to execute and deliver the
Agreement of Merger and to consummate the transactions contemplated thereby in
accordance with the terms thereof. The execution and delivery of the Agreement
of Merger by BYL and the consummation of the transactions contemplated thereby
have been duly and validly approved by the Board of Directors of BYL. The
Agreement of Merger, upon its execution and delivery by BYL, will constitute a
valid and binding obligation of BYL, enforceable against it in accordance with
and subject to its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally, and except that the availability of equitable
remedies (including, without limitation, specific performance) is within the
discretion of the appropriate court.
(c) None of the execution and delivery of this Agreement by BYL and
BYL Bank, the execution and delivery of the Agreement of Merger by BYL, the
consummation by BYL and BYL Bank of the transactions contemplated hereby in
accordance with the terms hereof, the consummation by BYL of the transactions
contemplated by the Agreement of Merger in accordance with the terms thereof,
compliance by BYL and BYL Bank with any of the terms or provisions hereof or
compliance by BYL with any terms or provisions of the Agreement of Merger, will
(i) violate any provision of the Articles of Incorporation or Bylaws of BYL or
BYL Bank; (ii) assuming that the consents and approvals set forth herein are
duly obtained, violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to BYL or BYL Bank or any of their
respective properties or assets, or (iii) violate, conflict with, result in a
breach of any provisions of, 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, accelerate the performance required by, or result in the
creation of any lien, security interest, charge or other encumbrance upon any of
the properties or assets of BYL or BYL Bank under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which BYL or BYL Bank are
a party, or by which any of their respective properties or assets may be bound
or affected, except, with respect to (ii) and (iii) above, such as individually
or in the aggregate will not have a Material Adverse Effect and which will not
prevent or delay the consummation of the transactions contemplated hereby.
Except for consents and approvals of or
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filings or registrations with or notices to the FRB, the FDIC, the Department,
the OTS, the Secretary of State of the State of Delaware, the Secretary of State
of the State of California and the stockholders of BYL, no consents or approvals
of or filings or registrations with or notices to any Governmental Entity are
required on behalf of BYL or BYL Bank in connection with (a) the execution and
delivery of this Agreement by BYL and BYL Bank or the execution and delivery of
the Agreement of Merger by BYL, and (b) the completion by BYL and BYL Bank of
the transactions contemplated hereby or the completion by BYL of the
transactions contemplated by the Agreement of Merger.
(d) Except as Previously Disclosed, as of the date hereof, neither
BYL nor BYL Bank is aware of any reasons relating to BYL or BYL Bank why all
consents and approvals shall not be procured from all regulatory agencies having
jurisdiction over the transactions contemplated by this Agreement as shall be
necessary for consummation of the transactions contemplated by this Agreement.
3.6 SECURITIES DOCUMENTS AND REGULATORY REPORTS
(a) BYL has previously delivered or made available to PBOC a complete
copy of all Securities Documents filed by BYL pursuant to the Securities Laws or
mailed by BYL to its shareholders as a class since January 1, 1995. BYL has
timely filed with the Commission all Securities Documents required by the
Securities Laws and such Securities Documents complied in all material respects
with the Securities Laws and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, provided that information as of a
later date shall be deemed to modify information as of an earlier date.
(b) Since January 1, 1995, BYL and BYL Bank have duly filed with the
appropriate regulatory authorities, in correct form the monthly, quarterly and
annual reports required to be filed under applicable laws and regulations and
such reports were in all material respects complete and accurate and in
compliance with the requirements of applicable laws and regulations, and BYL and
BYL Bank have previously delivered or made available to PBOC accurate and
complete copies of all such reports. In connection with the most recent
examinations of BYL and BYL Bank by the appropriate regulatory authorities,
neither BYL nor BYL Bank were required to correct or change any action,
procedure or proceeding which BYL and BYL Bank believe in good faith has not
been now corrected or changed, other than corrections or changes which, if not
made, either individually or in the aggregate, would not have a Material Adverse
Effect. The most recent regulatory rating given to BYL Bank as to compliance
with the CRA is "satisfactory." To the best knowledge of BYL and BYL Bank, since
its last regulatory examination of CRA compliance, BYL Bank has not received any
complaints as to CRA compliance.
3.7 FINANCIAL STATEMENTS
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(a) BYL has previously delivered or made available to PBOC accurate
and complete copies of the BYL Financial Statements for all periods ended prior
to the date hereof, which in the case of the consolidated statement of financial
condition of BYL as of December 31, 1999 and 1998 and the consolidated
statements of income, changes in shareholders' equity and cash flows for each of
the years ended December 31, 1999, 1998 and 1997 are accompanied by the audit
report of Vavrinek, Trine, Day & Co., independent public accountants with
respect to BYL, as well as the unaudited consolidated statement of financial
condition of BYL as of June 30, 2000 and the unaudited consolidated statements
of income, changes in shareholders' equity and cash flows for the six months
ended June 30, 2000 and 1999. The BYL Financial Statements referred to herein,
as well as the BYL Financial Statements to be delivered pursuant to Section 5.7
hereof, fairly present or will fairly present, as the case may be, the
consolidated financial condition of BYL as of the respective dates set forth
therein, and the consolidated results of operations, changes in shareholders'
equity and cash flows of BYL for the respective periods or as of the respective
dates set forth therein.
(b) Each of the BYL Financial Statements has been or will be, as the
case may be, prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as stated
therein, and except that unaudited BYL Financial Statements may not include all
footnote disclosures required by generally accepted accounting principles. The
audits of BYL have been conducted in accordance with generally accepted auditing
standards. The books and records of BYL and BYL Bank are being maintained in
material compliance with applicable legal and accounting requirements, and such
books and records accurately reflect in all material respects all dealings and
transactions in respect of the business, assets, liabilities and affairs of BYL
and BYL Bank.
(c) Except to the extent (i) reflected, disclosed or provided for in
the consolidated statement of financial condition of BYL as of June 30, 2000
(including related notes) and (ii) of liabilities incurred since such date in
the ordinary course of business, BYL and BYL Bank have no liabilities, whether
absolute, accrued, contingent or otherwise, material to the financial condition,
results of operations or business of BYL and BYL Bank.
3.8 MATERIAL ADVERSE CHANGE
Since June 30, 2000, (i) BYL and BYL Bank have conducted their
businesses in the ordinary and usual course and (ii) no event has occurred or
circumstances arisen that, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect.
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3.9 ENVIRONMENTAL MATTERS
(a) To the knowledge of BYL and BYL Bank, BYL and BYL Bank are in
compliance with all Environmental Laws, except for any violations of any
Environmental Law which would not, individually or in the aggregate, have a
Material Adverse Effect. Neither BYL nor BYL Bank have received any
communication alleging that BYL and/or BYL Bank is not in such compliance and,
to the knowledge of BYL and BYL Bank, there are no present circumstances that
would prevent or interfere with the continuation of such compliance.
(b) To the knowledge of BYL and BYL Bank, none of the properties
owned, leased or operated by BYL and BYL Bank has been or is in violation of or
liable under any Environmental Law, except any such violations or liabilities
which would not individually or in the aggregate have a Material Adverse Effect.
(c) To the knowledge of BYL and BYL Bank, there are no past or
present actions, activities, circumstances, conditions, events or incidents that
could reasonably form the basis of any Environmental Claim or other claim or
action or governmental investigation that could result in the imposition of any
liability arising under any Environmental Law against BYL or BYL Bank or against
any person or entity whose liability for any Environmental Claim BYL or BYL Bank
has or may have retained or assumed either contractually or by operation of law,
except such which would not, individually or in the aggregate, have a Material
Adverse Effect.
(d) BYL and BYL Bank have Previously Disclosed any environmental
studies conducted by it with respect to any properties directly or indirectly
owned or leased by it as of the date hereof.
3.10 TAX MATTERS
(a) BYL and BYL Bank have timely filed all federal, state and local
(and, if applicable, foreign) income, franchise, bank, excise, real property,
personal property and other tax returns required by applicable law to be filed
by them (including, without limitation, estimated tax returns, income tax
returns, information returns and withholding and employment tax returns) and
have paid, or where payment is not required to have been made, have set up an
adequate reserve or accrual for the payment of, all taxes required to be paid in
respect of the periods covered by such returns and, as of the Effective Time,
will have paid, or where payment is not required to have been made, will have
set up an adequate reserve or accrual for the payment of, all taxes for any
subsequent periods ending on or prior to the Effective Time. Neither BYL nor BYL
Bank will have any material liability for any such taxes in excess of the
amounts so paid or reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign)
income, franchise, bank, excise, real property, personal property and other tax
returns filed by BYL and BYL Bank are complete and accurate in all material
respects. Neither BYL nor BYL Bank are delinquent in the payment of any material
tax, assessment or governmental charge, and has not requested any extension of
time within which to file any tax returns in respect of any fiscal year or
portion thereof
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which have not since been filed. Except as Previously Disclosed, the federal,
state and local income tax returns of BYL and BYL Bank have been examined by the
applicable tax authorities (or are closed to examination due to the expiration
of the applicable statute of limitations) and no deficiencies for any tax,
assessment or governmental charge have been proposed, asserted or assessed
(tentatively or otherwise) against BYL or BYL Bank as a result of such
examinations or otherwise which have not been settled and paid. There are
currently no agreements in effect with respect to BYL or BYL Bank to extend the
period of limitations for the assessment or collection of any tax. As of the
date hereof, no audit, examination or deficiency or refund litigation with
respect to any such return is pending or, to the knowledge of BYL or BYL Bank,
threatened.
(c) BYL (i) is not a party to any agreement providing for the
allocation or sharing of taxes, (ii) is not required to include in income any
adjustment pursuant to Section 481(a) of the Code by reason of a voluntary
change in accounting method initiated by it (nor does BYL or BYL Bank have any
knowledge that the Internal Revenue Service has proposed any such adjustment or
change of accounting method) and (iii) has not filed a consent pursuant to
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply.
3.11 LEGAL PROCEEDINGS
BYL and BYL Bank have Previously Disclosed all existing or, to the
knowledge of BYL and BYL Bank, threatened, legal, administrative, arbitral or
other proceedings, claims, actions, controversies or governmental investigations
of any nature against or involving BYL, BYL Bank or their respective officers,
directors, employees or agents. Neither BYL nor BYL Bank is a party to any
order, judgment or decree which has or could reasonably be expected to have a
Material Adverse Effect.
3.12 COMPLIANCE WITH LAWS
(a) BYL and BYL Bank have all permits, licenses, certificates of
authority, orders and approvals of, and has made all filings, applications and
registrations with, federal, state, local and foreign governmental or regulatory
bodies that are necessary in order to permit them to carry on their business as
it is presently being conducted and the absence of which could reasonably be
expected to have a Material Adverse Effect; all such permits, licenses,
certificates of authority, orders and approvals are in full force and effect;
and to the knowledge of BYL and BYL Bank, no suspension or cancellation of any
of the same is threatened.
(b) Except as Previously Disclosed, neither BYL nor BYL Bank is in
violation of its Articles of Incorporation or Bylaws, or of any applicable
federal, state or local law or ordinance or any order, rule or regulation of any
federal, state, local or other Governmental Entity (including, without
limitation, all banking, securities, municipal securities, safety, health,
environmental, zoning, anti-discrimination, antitrust, and wage and hour laws,
ordinances, orders, rules and regulations), or in default with respect to any
order, writ, injunction or decree of any court, or in default under any order,
license, regulation or demand of any Governmental Entity, any of which
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violations or defaults could reasonably be expected to have a Material Adverse
Effect; and neither BYL nor BYL Bank has received any notice or communication
from any Governmental Entity asserting that either BYL or BYL Bank is in
violation of any of the foregoing which could reasonably be expected to have a
Material Adverse Effect. Except as Previously Disclosed, neither BYL nor BYL
Bank is subject to any regulatory or supervisory cease and desist order,
agreement, written directive, memorandum of understanding or written commitment,
and neither BYL nor BYL Bank has received any written communication from a
Governmental Entity requesting that it enter into any of the foregoing.
3.13 CERTAIN INFORMATION
The Proxy Statement, as of the date such Proxy Statement is mailed to
shareholders of BYL and up to and including the date of the meeting of
shareholders to which such Proxy Statement relates, 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 under which they were
made, not misleading (excluding any information relating specifically to PBOC
which is expressly provided by PBOC to BYL for inclusion therein).
3.14 EMPLOYEE BENEFIT PLANS
(a) BYL and BYL Bank have Previously Disclosed all stock option,
employee stock purchase and stock bonus plans, qualified pension or
profit-sharing plans, any deferred compensation, bonus or group insurance
contract or any other incentive, welfare or employee benefit plan, as defined in
Section 3(3) of ERISA, or agreement, understanding, practice or commitment,
formal or informal, sponsored, maintained or contributed to by BYL or BYL Bank
for the benefit of the current or former directors, officers, employees or
independent contractors of BYL and BYL Bank (the "BYL Employee Plans"). BYL and
BYL Bank have previously furnished or made available to PBOC accurate and
complete copies of the BYL Employee Plans together with (i) the most recent
actuarial and financial reports prepared with respect to any such plans that are
qualified plans, (ii) the most recent annual reports filed with any Governmental
Entity with respect to each such plan and (iii) all rulings and determination
letters and any open requests for rulings or letters that pertain to any such
plan that is a qualified plan.
(b) None of BYL, BYL Bank, any pension plan maintained by them and
qualified under Section 401 of the Code or, to the knowledge of BYL and BYL
Bank, any fiduciary of such plan has incurred any liability to the PBGC, the
Department of Labor or the Internal Revenue Service with respect to the coverage
of any employees of BYL and BYL Bank under any BYL Employee Plan that has not
been satisfied in full and that would have a Material Adverse Effect. To the
knowledge of BYL and BYL Bank, no reportable event under Section 4043(b) of
ERISA has occurred with respect to any BYL Employee Plan that is a pension plan.
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(c) BYL and BYL Bank do not participate in nor has BYL or BYL Bank
incurred any liability under Section 4201 of ERISA for a complete or partial
withdrawal from a multi-employer plan (as such term is defined in ERISA).
(d) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each BYL Employee Plan that is an "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) (a "BYL Pension
Plan") which is intended to qualify under Section 401 of the Code to the effect
that (i) such plan is qualified under Section 401 of the Code and (ii) the trust
associated with such employee pension plan is tax exempt under Section 501 of
the Code. No such letter has been revoked or, to the knowledge of BYL and BYL
Bank, is threatened to be revoked and BYL does not know of any ground on which
such revocation may be based. Neither BYL nor BYL Bank has any material
liability under any such plan that is not reflected on the balance sheet of BYL
at December 31, 1999 included in the BYL Financial Statements, other than
liabilities incurred in the ordinary course of business in connection therewith
subsequent to the date thereof.
(e) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA or
Section 4975 of the Code) has occurred with respect to any BYL Employee Plan
which would result in the imposition, directly or indirectly, of a material
excise tax on BYL under Section 4975 of the Code or otherwise have a Material
Adverse Effect.
(f) Full payment has been made (or proper accruals have been
established to the extent required by generally accepted accounting principles)
of all contributions which are required for periods prior to the date hereof,
and full payment will be so made (or proper accruals will be so established to
the extent required by generally accepted accounting principles) of all
contributions which are due and payable after the date hereof and prior to the
Effective Time, under the terms of each BYL Employee Plan or ERISA; no
accumulated funding deficiency (as defined in Section 302 of ERISA or Section
412 of the Code), whether or not waived, exists with respect to any BYL Pension
Plan, and there is no "unfunded current liability" (as defined in Section 412 of
the Code) with respect to any BYL Pension Plan.
(g) The BYL Employee Plans have been operated in compliance in all
material respects with the applicable provisions of ERISA, the Code, all
regulations, rulings and announcements promulgated or issued thereunder and all
other applicable governmental laws and regulations.
(h) There are no pending or, to the knowledge of BYL and BYL Bank,
threatened claims (other than routine claims for benefits) by, on behalf of or
against any of the BYL Employee Plans or any trust related thereto or any
fiduciary thereof.
3.15 CERTAIN CONTRACTS
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(a) Except as Previously Disclosed, neither BYL nor BYL Bank is a
party to, is bound or affected by, receives or is obligated to pay, benefits
under (i) any agreement, arrangement or commitment, including without limitation
any agreement, indenture or other instrument, relating to the borrowing of money
by BYL or BYL Bank (other than in the case of deposits, federal funds purchased
and securities sold under agreements to repurchase in the ordinary course of
business) or the guarantee by BYL or BYL Bank of any obligation; (ii) any
agreement, arrangement or commitment relating to the employment of a consultant
or the employment, election or retention in office of any present or former
director, officer or employee of BYL or BYL Bank, other than any agreement,
arrangement or commitment terminable at will and without the payment of any
penalty by BYL or BYL Bank, or the termination of which otherwise would not have
a Material Adverse Effect; (iii) any agreement, arrangement or understanding
pursuant to which any payment (whether of severance pay or otherwise) became or
may become due to any director, officer or employee of BYL or BYL Bank upon
execution of this Agreement or upon or following consummation of the
transactions contemplated by this Agreement (either alone or in connection with
the occurrence of any additional acts or events); (iv) any agreement,
arrangement or understanding pursuant to which BYL or BYL Bank is obligated to
indemnify any director, officer, employee or agent of BYL or BYL Bank; (v) any
agreement, arrangement or understanding to which BYL or BYL Bank is a party or
by which either of the same is bound which limits the freedom of BYL or BYL Bank
to compete in any line of business or with any person or entity; (vi) any
supervisory agreement, memorandum of understanding, consent order, cease and
desist order or condition of any regulatory order or decree with or by an
applicable federal or state regulatory agency; (vii) any lease of real or
personal property requiring payments of annual rental in excess of $5,000,
whether as lessor or lessee; or (viii) any other agreement, arrangement or
understanding which involves an annual payment of more than $5,000. A copy of
each such agreement, arrangement or understanding has been made available to
PBOC or, if oral, has been described in writing and Previously Disclosed.
(b) Neither BYL nor BYL Bank is in default or in non-compliance, which
default or non-compliance could reasonably be expected to have a Material
Adverse Effect, under any contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which they are a party or by which their
assets, business or operations may be bound or affected, whether entered into in
the ordinary course of business or otherwise and whether written or oral, and
there has not occurred any event that with the lapse of time or the giving of
notice, or both, would constitute such a default or non-compliance.
3.16 BROKERS AND FINDERS
Except as Previously Disclosed, neither BYL, BYL Bank nor any of their
directors, officers, employees or agents, has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage fees,
commissions or finder's fees, and no broker or finder has acted directly or
indirectly for BYL or BYL Bank in connection with this Agreement or the
transactions contemplated hereby.
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3.17 INSURANCE
BYL and BYL Bank believe that each of BYL and BYL Bank is insured, and
during each of the past three calendar years has been insured, for reasonable
amounts with financially sound and reputable insurance companies against such
risks as companies engaged in a similar business would, in accordance with good
business practice, customarily be insured and has maintained all insurance
required by applicable laws and regulations. BYL and BYL Bank has Previously
Disclosed to PBOC a list identifying all insurance policies maintained by it as
of the date hereof and any claims pending thereunder. All of the policies and
bonds maintained by BYL and BYL Bank are in full force and effect and all claims
thereunder have been filed in a due and timely manner and no such claim has been
denied.
3.18 PROPERTIES
All real and personal property owned by BYL and BYL Bank or presently
used by them in their business are in condition (ordinary wear and tear
excepted) sufficient to carry on the business of BYL and BYL Bank in the
ordinary course of business consistent with their past practices. BYL and BYL
Bank have good and marketable title free and clear of all liens, encumbrances,
charges, defaults or equities (other than equities of redemption under
applicable foreclosure laws or of lessors respecting any leased property) to all
of the material properties and assets, real and personal, reflected on the
balance sheet as of December 31, 1999 included in the BYL Financial Statements
or acquired after such date, other than properties sold by BYL or BYL Bank in
the ordinary course of business, except (i) liens for current taxes not yet due
or payable, (ii) pledges to secure deposits and other liens incurred in the
ordinary course of its banking business and (iii) such imperfections of title,
easements and encumbrances, if any, as are not material in character, amount or
extent. All real and personal property which is material to BYL and BYL Bank
business and leased or licensed by BYL and BYL Bank are held pursuant to leases
or licenses which are valid and enforceable in accordance with their respective
terms and such leases will not terminate or lapse prior to the Effective Time.
BYL and BYL Bank have Previously Disclosed a description of each real property
owned or leased by BYL and BYL Bank and used in the conduct of their business.
3.19 LABOR
No work stoppage involving BYL and BYL Bank is pending or, to the
knowledge of BYL and BYL Bank, threatened. Neither BYL nor BYL Bank is involved
in, or to the knowledge of BYL and BYL Bank threatened with or affected by, any
labor dispute, arbitration, lawsuit or administrative proceeding involving the
employees of BYL or BYL Bank which could reasonably be expected to have a
Material Adverse Effect. Employees of BYL and BYL Bank are not represented by
any labor union nor are any collective bargaining agreements otherwise in effect
with respect to such employees, and to the knowledge of BYL and BYL Bank, there
have been no efforts to unionize or organize any employees of BYL or BYL Bank.
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3.20 TRANSACTIONS WITH AFFILIATES
Except as Previously Disclosed, there are no existing or pending
transactions, nor are there any agreements or understandings, with any
directors, officers or employees of BYL or BYL Bank or any person or entity
affiliated with it (collectively, "Affiliates"), relating to, arising from or
affecting BYL and BYL Bank, including, without limitation, any transactions,
arrangements or understandings relating to the purchase or sale of goods or
services, the lending of monies or the sale, lease or use of any assets of BYL
or BYL Bank.
3.21 NONPERFORMING AND CLASSIFIED ASSETS
(a) Each loan on the books and records of BYL Bank, including unfunded
portions of outstanding lines of credit and loan commitments, was made and has
been serviced in all material respects in accordance with customary lending
standards in the ordinary course of business, is evidenced in all material
respects by appropriate and sufficient documentation and, to the knowledge of
BYL and BYL Bank, constitutes the legal, valid and binding obligation of the
obligor named therein, subject to bankruptcy, insolvency, fraudulent conveyance
and other laws of general applicability relating to or affecting creditor's
rights and to general equity principles.
(b) BYL and BYL Bank have Previously Disclosed as of September 30,
2000: (i) any written or, to BYL's and BYL Bank's knowledge, oral loan or
similar agreement under the terms of which the obligor is 60 or more days
delinquent in payment of principal or interest, or to the knowledge of BYL and
BYL Bank, in default of any other provision thereof; (ii) each loan or similar
agreement which has been classified as "substandard," "doubtful" or "loss" or
designated "special mention" by BYL Bank or an applicable regulatory authority;
and (iii) a listing of the real estate owned or acquired by BYL Bank by
foreclosure or by deed-in-lieu thereof.
3.22 REQUIRED VOTE; INAPPLICABILITY OF ANTITAKEOVER STATUTES; FAIRNESS
OPINION
(a) This Agreement and the transactions contemplated hereby are
required to be approved on behalf of BYL by the affirmative vote of the holders
of at least a majority of the outstanding shares of the BYL Common Stock.
(b) No "control share acquisition," "business combination moratorium,"
"fair price" or other form of antitakeover statute or regulation is applicable
to this Agreement and the transactions contemplated hereby.
(c) BYL has received a written opinion of Sutro & Co., dated the date
hereof with respect to the fairness of the Merger Consideration to be received
by the shareholders of BYL pursuant to this Agreement from a financial point of
view.
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3.23 PROPOSED TRANSACTION WITH CNL COMMERCIAL FINANCE, INC.
(a) BYL and BYL Bank have executed the CNL Transaction Agreements. BYL
and BYL Bank had all requisite corporate power and authority to enter into the
CNL Transaction Agreements and (subject to receipt of all necessary governmental
approvals) to perform all of their obligations under the CNL Transaction
Agreements. The execution and delivery of the CNL Transaction Agreements and the
consummation of the transactions contemplated thereby have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
BYL and BYL Bank. The CNL Transaction Agreements have been duly and validly
executed and delivered by BYL and BYL Bank and constitute legal, valid and
binding obligations of BYL and BYL Bank which are enforceable against BYL and
BYL Bank in accordance with their terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, and except that the availability of
equitable remedies (including, without limitation, specific performance) is
within the discretion of the appropriate court.
(b) None of the execution and delivery of the CNL Transaction
Agreements by BYL and BYL Bank, the consummation by BYL and BYL Bank of the
transactions contemplated thereby in accordance with the terms thereof, nor
compliance by BYL and BYL Bank with any of the terms or provisions thereof, will
(i) violate any provision of the Articles of Incorporation or Bylaws of BYL or
BYL Bank; (ii) assuming that the consents and approvals set forth therein are
duly obtained, violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to BYL or BYL Bank or any of their
respective properties or assets, or (iii) violate, conflict with, result in a
breach of any provisions of, 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, accelerate the performance required by, or result in the
creation of any lien, security interest, charge or other encumbrance upon any of
the properties or assets of BYL or BYL Bank under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which BYL or BYL Bank are
a party, or by which any of their respective properties or assets may be bound
or affected, except, with respect to (ii) and (iii) above, such as individually
or in the aggregate will not have a Material Adverse Effect and which will not
prevent or delay the consummation of the transactions contemplated hereby.
Except for consents and approvals of or filings or registrations with or notices
to the Government Entities referred to in the CNL Transaction Agreements, no
consents or approvals of or filings or registrations with or notices to any
Governmental Entity are required on behalf of BYL or BYL Bank in connection with
(a) the execution and delivery of the CNL Transaction Agreements by BYL and BYL
Bank and (b) the completion by BYL and BYL Bank of the transactions contemplated
thereby.
(c) The representations and warranties of BYL and BYL Bank set forth
in the CNL Transaction Agreements shall be true and correct as of the date which
is the month end prior to the date of this Agreement and as of the date which is
the month end prior to the date of the Effective Time as though made on and as
of the Effective Time (or on the date when made in the case of any
representation and warranty which specifically relates to an earlier date).
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(d) Any release obtained by BYL or BYL Bank from an employee in
connection with the Commencement Date (as defined in the CNL Transaction
Agreements) remain in full force and effect and no action has been taken by such
employees to rescind such agreements.
(e) To the extent that the regulatory approvals required by Section
4.01 of the CNL Operations Agreement are not obtained by the Regulatory Approval
Deadline, as defined therein, the sole recourse of the parties thereto against
BYL, BYL Bank or any successor to BYL's interest shall be as set forth in
Section 4.04 of the CNL Operations Agreement.
3.24 DISCLOSURES
None of the representations and warranties of BYL or BYL Bank or any of
the written information or documents which are furnished by BYL or BYL Bank to
PBOC pursuant to this Agreement or in connection with the transactions
contemplated hereby, when considered as a whole, contains or will contain any
untrue statement of a material fact, or omits or will omit to state any material
fact required to be stated or necessary to make any such information or
document, at the time and in light of the circumstances (including without
limitation the nature and scope of the information described in the
representation, warranty, information or document), not misleading. Copies of
all documents Previously Disclosed or made available to PBOC pursuant to this
Article III are true, correct and complete copies thereof and include all
amendments, supplements and modifications thereto and all waivers thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PBOC AND THE BANK
PBOC and the Bank represents and warrants to BYL and BYL Bank as
follows:
4.1 ORGANIZATION, STANDING AND AUTHORITY OF PBOC
PBOC is a corporation duly organized and validly existing under the
laws of the State of Delaware with full corporate power and authority to own or
lease all of its properties and assets and to carry on its business as now
conducted and is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which its ownership or leasing of property or
the conduct of its business requires such licensing or qualification, except
where the failure to be so licensed, qualified or in good standing would not
have a material adverse effect on the ability of PBOC to consummate the
transactions contemplated hereby. PBOC is duly registered as a savings and loan
holding company under the HOLA and the regulations of the OTS thereunder.
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4.2 ORGANIZATION, STANDING, AUTHORITY AND OWNERSHIP OF THE PBOC
SUBSIDIARIES
(a) Each PBOC Subsidiary which is a Significant Subsidiary (i) is duly
organized and validly existing under the laws of the jurisdiction of its
incorporation; (ii) except as Previously Disclosed, has full power and authority
to own or lease all of its properties and assets and to carry on its business as
now conducted; and (iii) is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which its ownership or leasing of property
or the conduct of its business requires such qualification, except where the
failure to be so licensed, qualified or in good standing would not have a
material adverse effect on the ability of the PBOC and the Bank to consummate
the transactions contemplated by this Agreement.
(b) Interim will be at the Effective Time an interim stock corporation
duly organized, validly existing and in good standing under the laws of the
State of California. Interim will not engage in any business other than in
connection with the transactions contemplated by this Agreement and the
Agreement of Merger and Interim will have no material obligations or liabilities
other than its obligations hereunder.
4.3 AUTHORIZED AND EFFECTIVE AGREEMENT; CONSENTS AND APPROVALS
(a) PBOC and the Bank have all requisite corporate power and authority
to enter into this Agreement and (subject to receipt of all necessary
governmental approvals) to perform all of their obligations under this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action in respect thereof on the part of PBOC and the
Bank. This Agreement has been duly and validly executed and delivered by PBOC
and the Bank and constitutes legal, valid and binding obligations of PBOC and
the Bank which are enforceable against PBOC and the Bank in accordance with its
terms, except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally, and
except that the availability of equitable remedies (including, without
limitation, specific performance) is within the discretion of the appropriate
court.
(b) At the Effective Time, Interim will have full corporate power and
authority to execute and deliver the Agreement of Merger and to consummate the
transactions contemplated thereby in accordance with the terms thereof. At the
Effective Time, the execution and delivery of the Agreement of Merger by Interim
and the consummation of the transactions contemplated thereby will have been
duly and validly approved by the Board of Directors of Interim and by PBOC as
the sole stockholder of Interim, and no other corporate proceedings on the part
of Interim are necessary to consummate the transactions so contemplated. The
Agreement of Merger, upon its execution and delivery by Interim, will constitute
a valid and binding obligation of Interim, enforceable against it in accordance
with and subject to its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally, and except that the availability of equitable
remedies (including, without limitation, specific performance) is within the
discretion of the appropriate court.
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(c) None of the execution and delivery of this Agreement by PBOC and
the Bank, the execution and delivery of the Agreement of Merger by Interim, the
consummation by PBOC and the Bank of the transactions contemplated hereby in
accordance with the terms hereof, the consummation by Interim of the
transactions contemplated by the Agreement of Merger, compliance by PBOC or the
Bank with any of terms or provisions hereof or compliance by Interim with any
terms or provisions of the Agreement of Merger, will (i) violate any provision
of the Certificate of Incorporation or other governing instrument or Bylaws of
PBOC, the Bank or Interim, (ii) assuming that the consents and approvals set
forth herein are duly obtained, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to PBOC, the
Bank or Interim or any of their respective properties or assets, or (iii)
violate, conflict with, result in a breach of any provisions of, 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, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the respective properties or
assets of PBOC, the Bank or Interim under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which PBOC, the Bank or
Interim is a party, or by which any of their respective properties or assets may
be bound or affected except as Previously Disclosed, except, with respect to
(ii) and (iii) above, such as individually or in the aggregate will not have a
material adverse effect on the business, operations, assets or financial
condition of PBOC and the Bank taken as a whole and which will not prevent or
delay the consummation of the transactions contemplated hereby. Except as
Previously Disclosed and except for consents and approvals of or filings or
registrations with or notices to the Secretary of State of the State of
Delaware, the Secretary of State of the State of California, the Department, the
FRB and the OTS, no consents or approvals of or filings or registrations with or
notices to any federal, state, municipal or other governmental or regulatory
commission, board, agency or non-governmental third party are required on behalf
of PBOC, the Bank and Interim in connection with (a) the execution and delivery
of this Agreement by PBOC and the Bank or the execution and delivery of the
Agreement of Merger by Interim and (b) the completion by PBOC and the Bank of
the transactions contemplated hereby or the completion by Interim of the
transactions contemplated by the Agreement of Merger.
(d) As of the date hereof, neither PBOC nor the Bank is aware of any
reasons relating to PBOC or the Bank why all consents and approvals shall not be
procured from all regulatory agencies having jurisdiction over the transactions
contemplated by this Agreement as shall be necessary for consummation of the
transactions contemplated by this Agreement.
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4.4 SECURITIES DOCUMENTS
PBOC has previously delivered or made available to BYL a complete copy
of all Securities Documents filed by PBOC pursuant to the Securities Laws or
mailed by PBOC to its shareholders as a class since May 31, 1998. PBOC has
timely filed with the Commission all Securities Documents required by the
Securities Laws and such Securities Documents complied in all material respects
with the Securities Laws and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, at the time and in light of
the circumstances under which they were made, not misleading.
4.5 FINANCIAL STATEMENTS
PBOC has previously delivered or made available to BYL accurate and
complete copies of the PBOC Financial Statements for all periods ended prior to
the date hereof, which in the case of the consolidated statement of financial
condition of PBOC as of December 31, 1999 and 1998 and the consolidated
statements of income, shareholders' equity and cash flows for each of the years
ended December 31, 1999, 1998 and 1997 are accompanied by the audit report of
KPMG Peat Marwick LLP, independent public accountants with respect to PBOC, as
well as the unaudited consolidated statement of financial condition as of June
30, 2000 and the unaudited consolidated statements of income, shareholders'
equity and cash flows for the six months ended June 30, 2000 and 1999. The PBOC
Financial Statements fairly present or will fairly present, as the case may be,
the consolidated financial condition of PBOC as of the respective dates set
forth therein, and the consolidated results of operations, shareholders' equity
and cash flows of PBOC for the respective periods or as of the respective dates
set forth therein. Each of the PBOC Financial Statements has been or will be, as
the case may be, prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as stated
therein. Except to the extent (i) reflected, disclosed or provided for in the
consolidated balance sheet of PBOC as of June 30, 2000 (including related notes)
and (ii) of liabilities incurred since such date in the ordinary course of
business, neither PBOC nor any PBOC Subsidiary has any liabilities, whether
absolute, accrued, contingent or otherwise, which would have a material adverse
effect on the ability of PBOC to fulfill its obligations to pay for shares of
BYL Common Stock in accordance with the terms of Section 2.6 hereof.
4.6 ACCESS TO FUNDS
PBOC has, or on the date of the Closing will have, all funds necessary
to consummate the Merger and pay the aggregate Merger Consideration to holders
of BYL Common Stock pursuant to Section 2.6 hereof.
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4.7 LEGAL PROCEEDINGS
There are no existing or, to the best knowledge of PBOC, threatened,
legal, administrative, arbitral or other proceedings, claims, actions,
controversies or governmental investigations of any nature against or involving
PBOC or any PBOC Subsidiary which could reasonably be expected to have a
material adverse effect on the ability of PBOC to consummate the transactions
contemplated by this Agreement.
4.8 CERTAIN INFORMATION
None of the information relating to PBOC supplied or to be supplied by
PBOC to BYL expressly for inclusion in the Proxy Statement, as of the date such
Proxy Statement is mailed to shareholders of BYL and up to and including the
date of the meeting of shareholders to which such Proxy Statement relates, will
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 under
which they were made, not misleading.
4.9 DISCLOSURES
None of the representations and warranties of PBOC or any of the
written information or documents furnished by PBOC to BYL pursuant to this
Agreement or in connection with the transactions contemplated hereby, when
considered as a whole, contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact required to be
stated or necessary to make any such information or document, at the time and in
light of the circumstances (including without limitation the nature and scope of
the information described in the representation, warranty, information or
document), not misleading.
ARTICLE V
COVENANTS
5.1 REASONABLE BEST EFFORTS
Subject to the terms and conditions of this Agreement, each party to
this Agreement shall use its reasonable best efforts in good faith to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary or advisable under applicable laws and regulations so as to permit
consummation of the Merger (including, without limitation, satisfaction of the
conditions to consummation of the Merger specified in Article VI of this
Agreement) on or before November 30, 2000 or, in the event that requisite
regulatory and other approvals have not yet been obtained, as promptly as
practicable thereafter, and to otherwise enable consummation of the transactions
contemplated hereby, and shall cooperate fully with the other party or parties
hereto to that end.
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5.2 SHAREHOLDER MEETING
BYL shall take all action necessary to have its shareholders consider
this Agreement and the transactions contemplated hereby at a special meeting of
shareholders which is called for the purpose as promptly as practicable after
the date hereof. Except to the extent legally required for the discharge by the
Board of Directors of its fiduciary duties, as advised by counsel, the Board of
Directors of BYL will recommend that the shareholders of BYL approve this
Agreement and the transactions contemplated hereby. The parties hereto shall
promptly cooperate with each other in the preparation of the Proxy Statement,
which shall contain such information as is mutually agreeable to the parties.
5.3 REGULATORY MATTERS
(a) The parties hereto shall cooperate with each other and use their
best 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
Governmental Entities and third parties which are necessary or advisable to
consummate the transactions contemplated by this Agreement. PBOC and BYL shall
have the right to review in advance, and to the extent practicable each will
consult with the other on, in each case subject to applicable laws relating to
the exchange of information, all the information which 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. 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 and 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 completion of the transactions contemplated herein.
(b) PBOC and BYL shall, upon request, furnish each other with all
information concerning themselves, their directors, officers and shareholders
and such other matters as may be reasonably necessary or advisable in connection
with the Proxy Statement or any other statement, filing, notice or application
made by or on behalf of PBOC, or BYL to any Governmental Entity in connection
with the transactions contemplated by this Agreement.
(c) PBOC and BYL shall promptly furnish each other with copies of
written communications received by, PBOC or BYL, as the case may be, from or
delivered by any of the foregoing to, any Governmental Entity in respect of the
transactions contemplated by this Agreement.
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5.4 INVESTIGATION AND CONFIDENTIALITY
(a) BYL and BYL Bank shall permit PBOC and its representatives
reasonable access to the properties and personnel, and shall disclose and make
available to PBOC all books, papers and records relating to the assets, stock
ownership, properties, operations, obligations and liabilities of BYL and BYL
Bank including, but not limited to, all books of account (including the general
ledger), tax records, minute books of meetings of boards of directors (and any
committees thereof) and shareholders, organizational documents, bylaws, material
contracts and agreements, filings with any regulatory authority, accountants'
work papers, litigation files, loan files, plans affecting employees, and any
other business activities or prospects in which PBOC may have a reasonable
interest, provided that such access shall be reasonably related to the
transactions contemplated hereby and not unduly interfere with normal
operations, shall not violate any law or agreement or constitute the waiver of
any privilege. In the event that either BYL or BYL Bank is prohibited by law or
agreement from providing any of the access referred to in the preceding sentence
to PBOC, it shall use its reasonable best efforts to obtain promptly waivers
thereof so as to permit such access. BYL and BYL Bank shall make each of their
directors, officers, employees and agents and authorized representatives
(including counsel and independent public accountants) available to confer with
PBOC and its representatives, provided that such access shall be reasonably
related to the transactions contemplated by this Agreement and not unduly
interfere with normal operations.
(b) All information furnished to PBOC or its representatives by BYL or
BYL Bank previously in connection with the transactions contemplated by this
Agreement or pursuant hereto shall be held in confidence to the extent required
by, and in accordance with, the confidentiality agreement, dated January 6,
2000, between BYL and PBOC (the "Confidentiality Agreement").
5.5 PRESS RELEASES
PBOC and BYL shall agree with each other as to the form and substance
of any press release related to this Agreement or the transactions contemplated
hereby, and consult with each other as to the form and substance of other public
disclosures which may relate to the transactions contemplated by this Agreement,
provided, however, that nothing contained herein shall prohibit either party,
following notification to the other party, from making any disclosure which it
determines in good faith is required by law or regulation.
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5.6 BUSINESS OF BYL AND THE BANK
(a) During the period from the date of this Agreement and continuing
until the Effective Time, except as expressly contemplated or permitted by this
Agreement or with the prior written consent of PBOC, BYL and BYL Bank shall
carry on their respective businesses in the ordinary course consistent with past
practice, (including but not limited to the amount and types of loans originated
as of the date hereof in the case of BYL Bank). BYL and BYL Bank shall use all
reasonable efforts to (x) preserve their respective business organizations
intact, (y) keep available to itself and PBOC and the Bank the present services
of the employees of BYL and BYL Bank and (z) preserve for itself and PBOC and
the Bank the goodwill of the customers of BYL and BYL Bank and others with whom
business relationships exist. Without limiting the generality of the foregoing,
except with the prior written consent of PBOC or as expressly contemplated
hereby, between the date hereof and the Effective Time, BYL and BYL Bank shall
not (to the extent applicable):
(i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of the BYL Common Stock;
(ii) issue any shares of its capital stock (except upon the
exercise of BYL Options presently outstanding), or issue, grant, modify
or authorize any Rights or effect any recapitalization,
reclassification, stock dividend, stock split or like change in
capitalization;
(iii) amend its Articles of Incorporation or Bylaws or
equivalent documents; impose, or suffer the imposition, on any share of
stock held by BYL of any material lien, charge or encumbrance or permit
any such lien to exist; or waive or release any material right or
cancel or compromise any material debt or claim;
(iv) increase the rate of compensation of any of its
directors, executive officers or employees, or pay or agree to pay any
bonus or severance to, or provide any other new employee benefit or
incentive to, any of its directors, officers or employees, except as
may be required pursuant to binding commitments existing on the date
hereof and Previously Disclosed, and except as otherwise Previously
Disclosed; provided, however, that no increases shall be made to
contract officers, and that merit salary increases only may otherwise
be paid up to a maximum of 4 percent of base salary, which shall
exclude overtime, shift differential, bonus, commissions, car allowance
and any other payments which may be included in overall compensation.
For purposes of the preceding sentence, any and all merit salary
increases must be paid in accordance with BYL's or BYL Bank's normal
and customary practices consistently applied over time; provided,
however, notwithstanding the foregoing, the Mortgage Division employees
only shall be eligible for a review and merit salary increases on or
before December 31, 2000. For purposes of this provision, no bonuses or
commissions shall be paid by BYL or BYL Bank except those to which BYL
or BYL Bank are contractually obligated and which have been Previously
Disclosed;
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(v) enter into or, except as may be required by law, modify
any pension, retirement, stock option, stock purchase, stock
appreciation right, savings, profit sharing, deferred compensation,
supplemental retirement, consulting, bonus, group insurance or other
employee benefit, incentive or welfare contract, plan or arrangement,
or any trust agreement related thereto, in respect of any of its
directors, officers or employees; or make any contributions to BYL's
Employee Plans, except as required pursuant to binding commitments with
respect to qualified benefit plans, as determined by the BYL Board of
Directors up to a 4% maximum contribution;
(vi) enter into (w) any agreement, arrangement or commitment
not made in the ordinary course of business, except as provided in this
Section 5.6(a)(xviii), (x) any agreement, indenture or other instrument
relating to the borrowing of money (other than in the case of deposits,
federal funds purchased and securities sold under agreements to
repurchase in the ordinary course of business) or guarantee of any such
obligation, (y) any agreement, arrangement or commitment relating to
the employment of, or severance of, an officer, employee or consultant
or amend any such existing agreement, except that an individual may be
employed in the ordinary course of business if the employment of such
employee is terminable at will without liability, other than as
required by law, or (z) any contract, agreement or understanding with a
labor union;
(vii) change its method of accounting in effect for the year
ended December 31, 1999, except as required by changes in laws or
regulations or generally accepted accounting principles concurred in by
its and PBOC's independent public accountants, or change any of its
methods of reporting income and deductions for federal income tax
purposes from those employed in the preparation of its federal income
tax return for the year ended December 31, 1999, except as required by
changes in laws or regulations;
(viii) purchase or otherwise acquire, or , except as provided
in this Section 5.6(a)(xviii), sell or otherwise dispose of, any assets
or incur any liabilities other than in the ordinary course of business
consistent with past practice and policies;
(ix) make any capital expenditures, other than pursuant to
binding commitments existing on the date hereof and which are
Previously Disclosed and other than expenditures necessary to maintain
existing assets in good repair, provided that in no event may capital
expenditures exceed $40,000 in the aggregate;
(x) file any applications or make any contract with respect
to branching, site location or relocation or closing of a branch;
(xi) acquire in any manner whatsoever (other than to realize
upon collateral for a defaulted loan) any business or entity;
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(xii) engage in any transaction with an Affiliate, other than
transactions in the ordinary course of business consistent with past
practice and which are in compliance with the requirements of
applicable laws and regulations;
(xiii) enter into any futures contract, option contract,
interest rate caps, interest rate floors, interest rate exchange
agreement or other agreement for purposes of hedging the exposure of
its interest-earning assets and interest-bearing liabilities to changes
in market rates of interest;
(xiv) discharge or satisfy any material lien or encumbrance
or pay any material obligation or liability (absolute or contingent)
other than at scheduled maturity or in the ordinary course of business;
(xv) enter or agree to enter into any agreement or
arrangement granting any preferential right to purchase any of its
assets or, except as provided in this Section 5.6(a)(xviii), rights or
requiring the consent of any party to the transfer and assignment of
any such assets or rights;
(xvi) invest in any investment securities other than United
States government agencies with a term of one (1) year or less or
federal funds;
(xvii) make any loan which, pursuant to the Underwriting
Guidelines of BYL Bank, would have a Quality Grade rated C or worse,
except pursuant to outstanding commitments as of the date of this
Agreement which have been Previously Disclosed;
(xviii)take any action that would result in any of the
representations and warranties contained in this Agreement not to be
true and correct in any material respect at the Effective Time or that
could reasonably result in any material delay in consummation of the
transactions contemplated hereby; or
(xix) agree to do any of the foregoing.
(b) BYL and BYL Bank shall not authorize or permit any of their
respective directors, officers, employees or agents to directly or indirectly
solicit, initiate or encourage any inquiries relating to, or the making of any
proposal which constitutes, an Acquisition Transaction (as defined below), or,
except to the extent legally required for the discharge of the fiduciary duties
of the Board of Directors of BYL, as advised by counsel, (i) recommend or
endorse an Acquisition Transaction, (ii) participate in any discussions or
negotiations regarding an Acquisition Transaction or (iii) provide any third
party (other than PBOC or the Bank) with any nonpublic information in connection
with any inquiry or proposal relating to an Acquisition Transaction. BYL will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations previously conducted with any parties other than
PBOC or the Bank with respect to any of the foregoing, and will take all actions
necessary or advisable to inform the appropriate individuals or entities
referred to in the first
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sentence hereof of the obligations undertaken in this Section 5.6(b). BYL will
notify PBOC immediately if any inquiries or proposals relating to an Acquisition
Transaction are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with, BYL or
BYL Bank, and BYL will promptly inform PBOC in writing of all of the relevant
details with respect to the foregoing. As used in this Agreement, "Acquisition
Transaction" shall mean (i) a merger or consolidation, or any similar
transaction, involving BYL or BYL Bank, (ii) a purchase, lease or other
acquisition of a substantial portion of the assets or liabilities of BYL or BYL
Bank or (iii) a purchase or other acquisition (including by way of share
exchange, tender offer, exchange offer or otherwise) of more than 10% of any
class or series of equity securities of BYL or BYL Bank.
5.7 CURRENT INFORMATION
(a) During the period from the date of this Agreement to the Effective
Time, BYL and BYL Bank shall, upon the request of PBOC, cause one or more of its
designated representatives to confer on a monthly or more frequent basis with
representatives of PBOC regarding its financial condition, operations, business
and prospects and matters relating to the completion of the transactions
contemplated by this Agreement. Concurrently with the filing thereof, BYL will
deliver to PBOC copies of the regular and periodic reports filed by BYL and BYL
Bank with their banking regulators. As soon as reasonably available, but in no
event more than 25 days after the end of each calendar quarter ending after the
date of this Agreement (other than the last quarter of each calendar year ending
December 31), BYL will deliver to PBOC an unaudited consolidated statement of
financial condition and a consolidated statement of income for such quarter and
the same quarter in the preceding year prepared in accordance with generally
accepted accounting principles, and, as soon as reasonably available, but in no
event more than 90 days after the end of each calendar year, BYL will deliver to
PBOC audited consolidated financial statements which are comparable in nature
and scope to the audited BYL Financial Statements.
(b) As soon as reasonably available, but in no event more than 25 days
after the end of each calendar quarter ending after the date of this Agreement
(other than the last quarter of each calendar year ending December 31), PBOC
will deliver to BYL an unaudited consolidated statement of financial condition
and a consolidated statement of income for such quarter and the same quarter in
the preceding year prepared in accordance with generally accepted accounting
principles, and, as soon as reasonably available, but in no event more than 90
days after the end of each calendar year, PBOC will deliver to BYL audited
consolidated financial statements which are comparable in nature and scope to
the audited PBOC Financial Statements.
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5.8 BENEFIT PLANS AND ARRANGEMENTS
(a) As soon as administratively practicable after the Effective Time,
PBOC shall take all reasonable action so that employees of BYL and BYL Bank who
are retained by PBOC and become Bank employees shall be entitled to participate
in the PBOC employee benefit plans of general applicability. For purposes of
determining eligibility to participate in and the vesting of benefits under the
PBOC employee benefit plans (other than PBOC's defined benefit pension plan),
PBOC shall recognize years of service with BYL and BYL Bank prior to the
Effective Time.
(b) PBOC and the Bank, as appropriate, shall assume: (i) the
employment agreements Previously Disclosed with Mr. Barry J. Moore, Ms. Gloria
Van Kampen, Mr. Michael Mullarky and Mr. Gary Strachn; (ii) the Executive Salary
Continuation Agreements Previously Disclosed with Mr. Robert Ucciferri, Mr.
Barry J. Moore, Mr. Michael Mullarky and Ms. Gloria Van Kampen and (iii) the
consulting agreement with Mr. Robert Ucciferri set forth in Schedule 5.8(b)
hereto.
(c) PBOC anticipates that most employees of BYL and BYL Bank as of the
Effective Time shall become employees of the Bank as of the Effective Time,
provided that PBOC shall have no obligation to continue the employment of any
BYL or BYL Bank employee and nothing contained in this Agreement shall give any
employee of BYL or BYL Bank a right to continuing employment with PBOC or the
Bank after the Effective Time. Except for BYL or BYL Bank officers who are
listed in Section 5.8(b) hereof, any BYL or BYL Bank employee shall be entitled
to receive one week severance payment of each year of service at BYL or BYL
Bank. All of such BYL or BYL Bank employees shall become subject to PBOC's
severance policies with respect to employment services performed after the
Effective Time for PBOC or the Bank.
5.9 INDEMNIFICATION; INSURANCE
(a) From and after the Effective Time through the fourth anniversary
of the Effective Time, PBOC and the Bank (each an "Indemnifying Party" and
together the "Indemnifying Parties"), agrees to indemnify and hold harmless each
present director, officer or employee of BYL or BYL Bank, determined as of the
Effective Time (the "Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, only and to the fullest extent to which BYL or BYL Bank is or was required
by law or their respective Bylaws to indemnify such Indemnified Parties and in
the manner to which it could indemnify such parties under the Bylaws of BYL and
BYL Bank, in each case as in effect on the date hereof, provided, however, that
all rights to indemnification in respect of any claim asserted or made within
such period shall continue until the final disposition of such claim.
(b) Any Indemnified Party wishing to claim indemnification under
Section 5.9(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the
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appropriate Indemnifying Party thereof, but the failure to so notify shall not
relieve the Indemnifying Party of any liability it may have to such Indemnified
Party if such failure does not materially prejudice the Indemnifying Party. In
the event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) the Indemnifying Party shall
have the right to assume the defense thereof and the Indemnifying Party shall
not be liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, except that if the Indemnifying Party
elects not to assume such defense or counsel for the Indemnified Parties advises
that there are issues which raise conflicts of interest between the Indemnifying
Party and the Indemnified Parties, the Indemnified Parties may retain counsel
which is reasonably satisfactory to the Indemnifying Party, and the Indemnifying
Party shall pay, promptly as statements therefor are received, the reasonable
fees and expenses of such counsel for the Indemnified Parties (which may not
exceed one firm in any jurisdiction); (ii) the Indemnified Parties will
cooperate in the defense of any such matter; (iii) the Indemnifying Party shall
not be liable for any settlement effected without its prior written consent; and
(iv) the Indemnifying Party shall have no obligation hereunder in the event that
a federal or state banking agency or a court of competent jurisdiction shall
determine that indemnification of an Indemnified Party in the manner
contemplated hereby is prohibited by applicable laws and regulations.
(c) BYL shall be permitted to maintain up to $3.0 million in aggregate
directors' and officers' liability insurance coverage for acts or omissions
occurring prior to the Effective Time by persons who are currently covered by
the directors' and officers' liability insurance policy maintained by BYL and to
purchase an extension of the claims reporting period for the policy providing
such coverage for a period of four years following the Effective Date. The total
premium for the four-year extension of the claims reporting period shall not
exceed $31,000.
5.10 DISCLOSURE SUPPLEMENTS
From time to time prior to the Effective Time, each party shall
promptly supplement or amend any materials Previously Disclosed and delivered to
the other party pursuant hereto with respect to any matter hereafter arising
which, if existing, occurring or known at the date of this Agreement, would have
been required to be set forth or described in materials Previously Disclosed to
the other party or which is necessary to correct any information in such
materials which has been rendered inaccurate thereby; no such supplement or
amendment to such materials shall be deemed to have modified the
representations, warranties and covenants of a party for the purposes of
determining whether the conditions set forth in Article VI hereof have been
satisfied.
5.11 FAILURE TO FULFILL CONDITIONS
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In the event that any of the parties hereto determines that a condition
to its respective obligations to consummate the transactions contemplated hereby
cannot be fulfilled on or prior to the termination of this Agreement pursuant to
Section 7.1, it will promptly notify the other party or parties. Each party will
promptly inform the other party or parties of any facts applicable to it that
would be likely to prevent or materially delay approval of the Merger and the
transactions contemplated hereby by any Governmental Entity or third party or
which would otherwise prevent or materially delay completion of the Merger and
the transactions contemplated hereby.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS PRECEDENT - ALL PARTIES
The respective obligations of all of the parties hereto to effect the
transactions contemplated by this Agreement shall be subject to satisfaction of
the following conditions at or prior to the Effective Time.
(a) All corporate action necessary to authorize the execution and
delivery of this Agreement and consummation of the transactions contemplated
hereby and thereby shall have been duly and validly taken by all of the parties
hereto, including approval by the requisite vote of the shareholders of BYL of
this Agreement.
(b) All approvals, consents and waivers from any Governmental Entity
the approval, consent or waiver of which is required for the consummation of the
transactions contemplated by this Agreement shall have been received and all
statutory waiting periods in respect thereof shall have expired, provided,
however, that no approval, consent or waiver referred to in this Section 6.1(b)
shall be deemed to have been received if it shall include any condition or
requirement that, individually or in the aggregate, would so materially reduce
the economic or business benefits of the transactions contemplated by this
Agreement to PBOC and the Bank that had such condition or requirement been
known, PBOC and the Bank, in their reasonable judgment, would not have entered
into this Agreement.
(c) None of the parties hereto shall be subject to any statute, rule,
regulation, order, injunction or decree which shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits, restricts or
makes illegal consummation of the transactions contemplated by this Agreement
and the Agreement of Merger.
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6.2 CONDITIONS PRECEDENT - BYL AND BYL BANK
The obligations of BYL and BYL Bank to effect the transactions
contemplated by this Agreement shall be subject to satisfaction of the following
conditions at or prior to the Effective Time unless waived by BYL and BYL Bank
pursuant to Section 7.4 hereof.
(a) The representations and warranties of PBOC and the Bank set forth
in Article IV hereof shall be true and correct as of the date of this Agreement
and as of the Effective Time as though made on and as of the Effective Time (or
on the date when made in the case of any representation and warranty which
specifically relates to an earlier date), provided, however, that
notwithstanding anything herein to the contrary, this Section 6.2(a) shall be
deemed to have been satisfied even if such representations and warranties are
not true and correct unless the failure of any of the representations and
warranties to be so true and correct would have, or could reasonably be expected
to have, individually or in the aggregate, a material adverse effect on the
ability of PBOC or the Bank to consummate the transactions contemplated by this
Agreement.
(b) PBOC and the Bank shall have performed all material obligations
and covenants required to be performed by it on or prior to the Effective Time,
provided that to the extent that the OTS or any regulatory agency having
jurisdiction over PBOC and/or the Bank, in connection with their review of the
applications filed in connection with the transactions contemplated by this
Agreement, disapproves or fails to approve or consent (as applicable) to the
assumption of the agreements set forth in Section 5.8(b) hereof, the parties
hereto recognize that PBOC or the Bank, as the case may be, shall be under no
obligation to honor such agreements so long as PBOC or the Bank is prohibited
from doing so by such regulatory agencies and agree that such actions shall not
be a basis for BYL or BYL Bank to terminate the transactions contemplated by
this Agreement.
(c) PBOC and the Bank shall have delivered to BYL and BYL Bank a
certificate, dated the date of the Closing and signed by its Chief Executive
Officer and Chief Financial Officer, to the effect that the conditions set forth
in Sections 6.2(a) and 6.2(b) have been satisfied.
(d) BYL and BYL Bank shall have received an opinion of Elias, Matz,
Tiernan & Herrick L.L.P., Washington, D.C., dated the date of the Closing, that
collectively address the matters set forth in Exhibit E hereto.
(e) There shall not be pending any proceeding initiated by any
Governmental Entity to seek an order, injunction or decree which prevents
consummation of the transactions contemplated by this Agreement.
(f) PBOC and the Bank shall have furnished BYL and BYL Bank with such
certificates of its respective officers or others and such other documents to
evidence fulfillment of the conditions set forth in Sections 6.1 and 6.2 as such
conditions relate to PBOC as BYL may reasonably request.
6.3 CONDITIONS PRECEDENT - PBOC AND THE BANK
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The obligations of PBOC and the Bank to effect the transactions
contemplated by this Agreement shall be subject to satisfaction of the following
conditions at or prior to the Effective Time unless waived by PBOC and the Bank
pursuant to Section 7.4 hereof.
(a) The representations and warranties of BYL and BYL Bank set forth
in Article III hereof shall be true and correct as of the date of this Agreement
and as of the Effective Time as though made on and as of the Effective Time (or
on the date when made in the case of any representation and warranty which
specifically relates to an earlier date), provided, however, that
notwithstanding anything herein to the contrary, this Section 6.3(a) shall be
deemed to have been satisfied even if such representations and warranties are
not true and correct unless the failure of any of the representations and
warranties to be so true and correct would have, or could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect or on the
ability of the parties hereto to consummate the transactions contemplated by
this Agreement.
(b) BYL and BYL Bank shall have performed all material obligations and
covenants required to be performed by it on or prior to the Effective Time.
(c) Intentionally Omitted.
(d) BYL and BYL Bank shall have delivered to PBOC a certificate, dated
the date of the Closing and signed by its Chief Executive Officer and Chief
Financial Officer, to the effect that the conditions set forth in Sections
6.3(a) and 6.3(b) have been satisfied.
(e) PBOC and the Bank shall have received an opinion of Knecht &
Hansen, dated the date of the Closing, that collectively address the matters set
forth in Exhibit G hereto.
(f) The consent, approval or waiver of each person (other than the
Governmental Entities referred to in Section 6.1(b) hereof) whose consent,
approval or waiver shall be required in connection with the transactions
contemplated by this Agreement under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument to which
BYL and BYL Bank is a party or is otherwise bound shall have been obtained,
except those consents or approvals for which failure to obtain would not,
individually or in the aggregate, have a Material Adverse Effect or materially
adversely affect the ability of PBOC and the Bank to consummate the transactions
contemplated by this Agreement.
(g) There shall not be pending any proceeding initiated by any
Governmental Entity to seek an order, injunction or decree which prevents
consummation of the transactions contemplated by this Agreement.
(h) Holders of a number of shares of outstanding BYL Common Stock
which represents 10.0% or more of the BYL Common Stock shall not have elected to
exercise dissenters' or appraisal rights under Section 1301 of the CGCL.
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(i) BYL and BYL Bank shall have furnished PBOC and the Bank with such
certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in Sections 6.1 and 6.3 as such
conditions relate to BYL and BYL Bank as PBOC and the Bank may reasonably
request.
(j) Not later than in connection with the Closing, the FDIC shall have
terminated the Order to Cease and Desist dated as of June 29, 2000 and the FRB
shall have terminated the Memorandum of Understanding dated as of August 10,
2000, in each instance, or the FDIC and/or the FRB, as the case may be, shall
have otherwise provided assurances with respect to the termination of such
agreements which are acceptable to PBOC and the Bank in their reasonable sole
discretion.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 TERMINATION
This Agreement may be terminated:
(a) at any time on or prior to the Effective Time, by the mutual
consent in writing of the parties hereto;
(b) at any time on or prior to the Effective Time, by PBOC and the
Bank in writing if BYL and BYL Bank have, or by BYL and BYL Bank in writing if
PBOC or the Bank has, in any material respect, breached (i) any material
covenant or undertaking contained herein, or (ii) any representation or warranty
contained herein which in the case of BYL and BYL Bank would have, or could
reasonably be expected to have, a Material Adverse Effect and in the case of
PBOC and the Bank would have, or could reasonably be expected to have, a
material adverse effect on the ability of PBOC and the Bank, as applicable, to
consummate the transactions contemplated by this Agreement, in any case if such
breach has not been cured following written notice of such breach by the earlier
of 30 days after the date on which such written notice of such breach is given
to the party committing such breach or the Effective Time;
(c) at any time, by any party hereto in writing, if any of the
applications for prior approval referred to in Section 5.3 hereof are denied or
are approved in a manner which does not satisfy the requirements of Section
6.1(b) hereof, and the time period for appeals and requests for reconsideration
has run, unless the failure of such occurrence shall be due to the failure of
the party seeking to terminate to perform or observe in any material respect its
agreements set forth herein to be performed or observed by such party at or
before the Effective Time;
(d) at any time, by any party hereto in writing, if the shareholders
of BYL do not approve this Agreement in the required manner by a vote taken
thereon at a meeting duly called for such
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purpose (including any adjournments thereof) unless the failure of such
occurrence shall be due to the failure of the party seeking to terminate to
perform or observe in any material respect its agreements set forth herein to be
performed or observed by such party at or before such meeting of shareholders;
and
(e) by any party hereto in writing, if the Effective Time has not
occurred by the close of business on May 1, 2001 (which may be extended by PBOC
in its sole discretion until July 1, 2001), provided that this right to
terminate shall not be available to any party whose failure to perform an
obligation under this Agreement has been the cause of, or resulted in, the
failure of the transactions contemplated by this Agreement and the Agreement of
Merger to be consummated by such date.
7.2 EFFECT OF TERMINATION
In the event that this Agreement is terminated pursuant to Section 7.1
hereof, this Agreement shall become void and have no effect, except that (i)
Section 8.1 hereof shall survive any such termination and (ii) a termination
pursuant to Section 7.1(b), (c), (d) or (e) hereof shall not relieve the
breaching party from liability for willful breach of any covenant, undertaking,
representation or warranty giving rise to such termination.
7.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
All representations, warranties and covenants in this Agreement or in
any instrument delivered pursuant hereto shall expire on, and be terminated and
extinguished at, the Effective Time other than covenants that by their terms are
to be performed after the Effective Time, provided that no such representations,
warranties or covenants shall be deemed to be terminated or extinguished so as
to deprive the parties hereto (or any director, officer or controlling person
thereof) of any defense at law or in equity which otherwise would be available
against the claims of any person, including, without limitation, any shareholder
or former shareholder of either PBOC or BYL.
7.4 WAIVER
Each party hereto by written instrument signed by an executive officer
of such party, may at any time (whether before or after approval of this
Agreement by the shareholders of BYL) extend the time for the performance of any
of the obligations or other acts of the other party hereto and may waive (i) any
inaccuracies of the other party in the representations or warranties contained
in this Agreement or any document delivered pursuant hereto, (ii) compliance
with any of the covenants, undertakings or agreements of the other party or, to
the extent permitted by law, satisfaction of any of the conditions precedent to
its obligations contained herein or (iii) the performance by the other party of
any of its obligations set forth herein, provided that any such waiver granted,
or any amendment or supplement pursuant to Section 7.5 hereof executed, after
shareholders of BYL have approved this Agreement shall not modify either the
amount or form of the Merger Consideration or otherwise materially adversely
affect any of such shareholders without the approval of the shareholders.
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7.5 AMENDMENT OR SUPPLEMENT
This Agreement may be amended or supplemented at any time by mutual
agreement of the parties hereto, subject to the proviso to Section 7.4 hereof.
Any such amendment or supplement must be in writing and approved by all of the
parties' respective Boards of Directors.
ARTICLE VIII
MISCELLANEOUS
8.1 EXPENSES; TERMINATION FEE
(a) (i) Each party hereto shall bear and pay all costs and
expenses incurred by it in connection with the transactions contemplated by this
Agreement, including fees and expenses of its own financial consultants,
accountants and counsel, provided that in the event of a termination of this
Agreement resulting from a breach of a representation, warranty, covenant or
undertaking, the party committing such breach shall be liable for $2.0 million
to the other party, plus the expenses of the other party without prejudice to
any other rights or remedies as may be available to the non- breaching party,
including without limitation any rights under Section 8.1(b) hereof.
(ii) PBOC shall pay BYL $2.0 million plus its expenses to the
extent that PBOC has elected to extend the date for termination of the
transaction to July 1, 2001 pursuant to Section 7.1(e) hereof and the
transaction has not closed by such date, for any reason other than a breach of
any representation, warranty, covenant or undertaking by BYL or BYL Bank, a
failure of BYL or BYL Bank to secure any required regulatory approvals or
consents or to the extent the failure to close the transaction is due to BYL or
BYL Bank's actions or failure to take certain actions pursuant to the terms of
this Agreement.
(b) Notwithstanding any provision in this Agreement to the contrary, in
order to induce PBOC and the Bank to enter into this Agreement and as a means of
compensating PBOC and the Bank for the substantial direct and indirect monetary
and other damages and costs incurred and to be incurred in connection with this
Agreement in the event the transactions contemplated hereby do not occur as a
result of a Termination Event (as defined herein), BYL agrees to pay PBOC, and
PBOC shall be entitled to payment of, a fee (the "Fee") of $2.0 million upon the
occurrence of a Termination Event so long as the Termination Event occurs prior
to a Fee Termination Event (as defined herein). The parties hereto acknowledge
that the actual amount of such damages and costs would be impracticable or
extremely difficult to determine, and that the sum of $2.0 million constitutes a
reasonable estimate by the parties under the circumstance existing as of the
date of this Agreement of such damages and costs. Such payment shall be made to
PBOC in immediately available funds within five business days after the
occurrence of a Termination Event. A Fee Termination Event shall be the first to
occur of the following: (i) the Effective Time, (ii) 15 months after termination
of this Agreement in accordance with its terms following the first occurrence of
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a Preliminary Termination Event (as defined herein), (iii) termination of this
Agreement in accordance with the terms hereof prior to the occurrence of a
Termination Event or a Preliminary Termination Event (other than a termination
of this Agreement by PBOC pursuant to Section 7.1(b) hereof as a result of a
willful breach of any representation, warranty, covenant or agreement of BYL or
BYL Bank) or (iv) 15 months after the termination of this Agreement by PBOC
pursuant to Section 7.1(b) hereof as a result of a willful breach of any
representation, warranty, covenant or agreement of BYL or BYL Bank.
(c) For purposes of this Agreement, a "Termination Event" shall mean
any of the following events:
(i) BYL, without having received PBOC's prior written
consent, shall have entered into an agreement to engage in an
Acquisition Transaction with any person (the term "person" for purposes
of this Agreement having the meaning assigned thereto in Sections
3(a)(9) and 13(d)(3) of the Exchange Act, and the rules and regulations
thereunder), other than PBOC or a Subsidiary of PBOC, or the Board of
Directors of BYL shall have recommended that the shareholders of BYL
approve or accept any Acquisition Transaction with any person other
than PBOC or a Subsidiary of PBOC;
(ii) any person, other than PBOC or the Bank, shall have
acquired beneficial ownership (as such term is defined in Rule 13d-3
promulgated under the Exchange Act) of or the right to acquire
beneficial ownership, or any "group" (as such term is defined in
Section 13(d)(3) of the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of,
25% or more of the aggregate voting power represented by the
outstanding BYL Common Stock; or
(iii) one or more BYL shareholders shall have breached his or
her obligations pursuant to the Shareholder Agreement in a manner which
materially adversely affects the ability of BYL to obtain the approval
of the holders of BYL Common Stock of this Agreement or otherwise
materially adversely affects the ability of the parties hereto to
consummate the transactions contemplated hereby.
(d) For purposes of this Agreement, a "Preliminary Termination Event"
shall mean any of the following events:
(i) any person (other than PBOC or Subsidiary of PBOC) shall
have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act), or shall have filed a registration statement under the
Securities Act with respect to, a tender offer or exchange offer to
purchase any shares of BYL Common Stock such that, upon consummation of
such offer, such person would own or control 10% or more of BYL Common
Stock outstanding (such an offer being referred to herein as a "Tender
Offer" and an "Exchange Offer," respectively);
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(ii) (A) the holders of BYL Common Stock shall not have
approved this Agreement at the meeting of such shareholders held for
the purpose of voting on this Agreement, (B) such meeting shall not
have been held or shall have been canceled prior to termination of the
Agreement or (C) BYL's Board of Directors shall have withdrawn or
modified in a manner adverse to PBOC the recommendation of BYL's Board
of Directors ith respect to the Agreement, in each case after any
person (other than PBOC or the Bank) shall have (x) made, or disclosed
an intention to make, a bona fide proposal to BYL or its shareholders
to engage in an Acquisition Transaction, (y) commenced a tender offer
or filed a registration statement under the Securities Act with respect
to an exchange offer or (z) filed an application or given notice,
whether in draft or final form, with the appropriate regulatory
authorities for approval to engage in an Acquisition Transaction; or
(iii) BYL or BYL Bank shall have breached any representation,
warranty, covenant or obligation contained in this Agreement and such
breach would entitle PBOC to terminate this Agreement under Section
7.1(b) hereof (without regard to the cure period provided for therein
unless such cure is promptly effected without jeopardizing consummation
of the Merger pursuant to the terms of this Agreement) after any person
(other than PBOC or the Bank) shall have (x) made, or disclosed an
intention to make, a bona fide proposal to BYL or its shareholders to
engage in an Acquisition Transaction, (y) commenced a tender offer or
filed a registration statement under the Securities Act with respect to
an exchange offer or (z) filed an application or given notice, whether
in draft or final form, with the appropriate regulatory authorities for
approval to engage in an Acquisition Transaction.
(e) BYL shall promptly notify PBOC in writing of the occurrence of any
Preliminary Termination Event or Termination Event.
8.2 ENTIRE AGREEMENT
This Agreement (including the Stockholder Agreement and the Stock
Option Agreement) and the Confidentiality Agreement contains the entire
agreement among the parties with respect to the transactions contemplated hereby
and supersede all prior arrangements or understandings with respect thereto,
written or oral.
45
<PAGE>
8.3 ASSIGNMENT; SUCCESSORS
None of the parties hereto may assign any of its rights or obligations
under this Agreement to any other person without the prior written consent of
the other party or parties. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors. Except as provided in Section 5.9 hereof, nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors, any rights, remedies,
obligations or liabilities. In the event that PBOC or any of its successors, (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 all or substantially all of its properties and assets to any
person, then, and in each such case, proper provision shall be made so that the
successors shall assume the obligations set forth in Section 5.9 hereof, which
obligations are expressly intended to be for the irrevocable benefit of, and
shall be enforceable by, each person covered thereby.
8.4 NOTICES
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
overnight express or by registered or certified mail, postage prepaid, addressed
as follows:
If to PBOC or the Bank:
PBOC Holdings, Inc.
5900 Wilshire Boulevard, 16th Floor
Los Angeles, California 90036-5013
Attn: Rudolf P. Guenzel
President and Chief Executive Officer
With a required copy to:
Elias, Matz, Tiernan & Herrick L.L.P.
734 15th Street, N.W.
Washington, D.C. 20005
Attn: Norman B. Antin, Esq.
Jeffrey D. Haas, Esq.
46
<PAGE>
If to BYL or BYL Bank:
BYL Bancorp
1875 N. Tustin Avenue
Orange, California 92865
Attn: Robert Ucciferri
President and Chief Executive Officer
With a required copy to:
Knecht & Hansen
1301 Dove Street
Suite 900
Newport Beach, California 92660
Attn: Loren P. Hansen, Esq.
8.5 ALTERNATIVE STRUCTURE
Notwithstanding any provision of this Agreement to the contrary, PBOC
and the Bank may elect, subject to the filing of all necessary applications and
the receipt of all required regulatory approvals, to modify the structure of the
acquisition of BYL set forth herein, provided that (i) the consideration to be
paid to the holders of BYL Common Stock is not thereby changed in kind or
reduced in amount as a result of such modification or alters the taxation of any
amounts to be received by the holders of BYL Common Stock and (ii) such
modification will not materially delay or jeopardize receipt of any required
regulatory approvals or any other condition to PBOC's or the Bank's obligations
set forth in Sections 6.1 and 6.3 hereof.
8.6 INTERPRETATION
The table of contents 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 phrases "the date of this Agreement," "the
date hereof" and terms of similar import herein, unless the context otherwise
requires, shall be deemed to be the date first above written on page one (1)
hereof.
8.7 COUNTERPARTS
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
47
<PAGE>
8.8 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to agreements made and entirely to
be performed within such jurisdiction except to the extent federal law may be
applicable.
48
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
PBOC HOLDINGS, INC.
Attest:
/s/ J. MICHAEL HOLMES By: /s/ RUDOLF P. GUENZEL
------------------------------------- ------------------------------
Name: J. Michael Holmes Name: Rudolf P. Guenzel
Title: Senior Executive Vice President, Title: President and Chief Executive
Chief Financial Officer and Officer
Secretary
Attest: PEOPLE'S BANK OF CALIFORNIA
/s/ DOREEN J. BLAUSCHILD By: /s/ RUDOLF P. GUENZEL
------------------------------------- ------------------------------
Name: Doreen J. Blauschild Name: Rudolf P. Guenzel
Title: Senior Vice President, General Title: President and Chief Executive
Counsel and Secretary Officer
BYL BANCORP
Attest:
/s/ JOHN J. MYERS By: /s/ ROBERT UCCIFERRI
------------------------------------- ------------------------------
Name: John "Jack" Myers Name: Robert Ucciferri
Title: Secretary Title: President and Chief Executive
Officer
BYL BANK GROUP
Attest:
/s/ JOHN J. MYERS By: /s/ ROBERT UCCIFERRI
------------------------------------- ------------------------------
49
<PAGE>
Name: John "Jack" Myers Name: Robert Ucciferri
Title: Secretary Title: President and Chief Executive
Officer
50
<PAGE>
EXHIBIT A
November 1, 2000
PBOC Holdings, Inc.
5900 Wilshire Boulevard,
16th Floor
Los Angeles, CA 90036-5013
Gentlemen:
The undersigned director and/or executive officer of BYL Bancorp
("BYL") understands that PBOC Holdings, Inc. ("PBOC") and its wholly-owned
subsidiary, People's Bank of California (the "Bank") are about to enter into an
Agreement and Plan of Reorganization (the "Agreement") with BYL and BYL Bank
Group. The Agreement provides for the merger of BYL with and into PBOC (the
"Merger") and the conversion of outstanding shares of Common Stock of BYL into
cash in accordance with the terms therein set forth.
In order to induce PBOC and the Bank to enter into the Agreement, and
intending to be legally bound hereby, the undersigned represents, warrants and
agrees that at the meeting of BYL's shareholders contemplated by Section 5.2 of
the Agreement and any adjournment thereof the undersigned will, in person or by
proxy, vote or cause to be voted in favor of the Agreement the shares of BYL
Common Stock beneficially owned by the undersigned individually or, to the
extent of the undersigned's proportionate voting interest, jointly with other
persons, as well as (to the extent of the undersigned's proportionate voting
interest) any other shares of BYL Common Stock over which the undersigned may
hereafter acquire beneficial ownership (collectively, the "Shares"). Subject to
the final paragraph of this agreement, the undersigned further agrees that he
will use his best efforts to cause any other shares of BYL Common Stock over
which he has or shares voting power to be voted in favor of the Agreement.
The undersigned represents and warrants that he has or shares the
beneficial ownership of the number of shares of BYL Common Stock set forth
opposite his name on Schedule I hereto.
The undersigned further represents, warrants and agrees that until the
earlier of (i) the consummation of the transactions contemplated by the
Agreement or (ii) the termination of the Agreement in accordance with its terms,
the undersigned will not, directly or indirectly:
A-1
<PAGE>
(a) vote any of the Shares, or cause or permit any of the Shares to
be voted, in favor of any other merger, consolidation, plan of
liquidation, sale of assets, reclassification or other transaction
involving BYL which would have the effect of any person, other than
PBOC or an affiliate of PBOC, acquiring control over BYL or any
substantial portion of the assets of BYL. As used herein, the term
"control" means (1) the ability to direct the voting of 10% or more of
the outstanding voting securities of a person having ordinary voting
power in the election of directors or in the election of any other body
having similar functions or (2) the ability to direct the management
and policies of a person, whether through ownership of securities,
through any contract, arrangement or understanding or otherwise.
(b) sell or otherwise transfer any of the Shares, or cause or
permit any of the Shares to be sold or otherwise transferred (i)
pursuant to any tender offer, exchange offer or similar proposal made
by any person, other than PBOC or an affiliate of PBOC, (ii) to any
person known by the undersigned to be seeking to obtain control of BYL
or any substantial portion of the assets of BYL or to any other person,
other than PBOC or an affiliate of PBOC, under circumstances where such
sale or transfer may reasonably be expected to assist a person seeking
to obtain such control or (iii) for the principal purpose of avoiding
the obligations of the undersigned under this agreement.
It is understood and agreed that this agreement relates solely to the
capacity of the undersigned as a shareholder or other beneficial owner of the
Shares and is not in any way intended to affect the exercise by the undersigned
of the undersigned's responsibilities as a director or officer of BYL. It is
further understood and agreed that this agreement is not in any way intended to
affect the exercise by the undersigned of any fiduciary responsibility which the
undersigned may have in respect of any Shares as of the date hereof.
Use of the masculine gender herein shall be considered to represent the
masculine, feminine or neuter gender whenever appropriate.
Very truly yours
----------------------------
Name
Accepted and Agreed to:
PBOC HOLDINGS, INC.
By:
----------------------------------
Name: Rudolf P. Guenzel
A-2
<PAGE>
Title: President and Chief Executive Officer
A-3
<PAGE>
Schedule I
<TABLE>
<CAPTION>
Number of Shares Beneficially Owned
Name of Shareholder of BYL Common Stock (1)
-------------------------------------------------------------------------------
<S> <C>
Henry C. Cox II 117,088
Eddie R. Fisher 78,117
Neil F. Hatcher 108,576
H. Rhoads Martin, Jr. 7,549
Barry J. Moore 500
Michael H. Mullarky 14,999
John F. Myers 9,466
Robert Ucciferri 37,312
Gloria J. VanKampen 46,471
Brent W. Wahlberg 10,871
Gary Strachn 2,000
</TABLE>
----------
(1) Does not include options to purchase shares of BYL Common Stock.
A-4
<PAGE>
EXHIBIT B
AGREEMENT OF MERGER
AGREEMENT OF MERGER, dated as of ____ _____, 2001, by and between PBOC
Acquisition Corp. ("Interim"), a California corporation formed by PBOC Holdings,
Inc. ("Company"), a Delaware corporation, solely to facilitate the transactions
contemplated by the Reorganization Agreement, defined below, and BYL Bancorp
("BYL"), a California corporation. Interim and BYL are hereinafter sometimes
collectively referred to as the "Merging Corporations."
This Agreement of Merger is being entered into pursuant to an Agreement
and Plan of Reorganization, dated as of November 1, 2000 (the "Reorganization
Agreement") by and among the Company, People's Bank of California (the "Bank"),
BYL and BYL Bank Group ("BYL Bank").
In consideration of the premises, and the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
1.1 "BYL Common Stock" shall mean the common stock of BYL.
1.2 "Effective Time" shall mean the time at which the Merger
contemplated by this Plan of Merger becomes effective as provided in Section 2.5
of the Reorganization Agreement.
1.3 "Interim Common Stock" shall mean the common stock, par value
$.01 per share, of Interim owned by the Company.
1.4 The "Merger" shall refer to the merger of Interim with and into
BYL as provided in Section 2.1 of this Plan of Merger and Section 2.1 of the
Reorganization Agreement.
1.5 "Surviving Corporation" shall refer to BYL as the surviving
corporation of the Merger.
B-1
<PAGE>
ARTICLE II
TERMS OF THE MERGER
2.1 THE MERGER. Subject to the terms and conditions set forth in the
Reorganization Agreement, at the Effective Time, Interim shall be merged with
and into BYL pursuant and subject to the California Corporations Code. BYL shall
be the Surviving Corporation of the Merger and shall continue to be governed by
the laws of the State of California. At the Effective Time, the Surviving
Corporation shall be considered the same business and corporate entity as each
of the Merging Corporations and thereupon and thereafter, all the property,
rights, powers, and franchises of each of the Merging Corporations shall vest in
the Surviving Corporation and the Surviving Corporation shall be subject to and
be deemed to have assumed all of the debts, liabilities, obligations and duties
of each of the Merging Corporations and shall have succeeded to all of each of
their relationships, fiduciary or otherwise, as fully and to the same extent as
if such property, rights, privileges, powers, franchises, debts, obligations,
duties and relationships had been originally acquired, incurred or entered into
by the Surviving Corporation. In addition, any reference to either of the
Merging Corporations in any contract or document, whether executed or taking
effect before or after the Effective Time, shall be considered a reference to
the Surviving Corporation if not inconsistent with the other provisions of the
contract or document; and any pending action or other judicial proceeding to
which either of the Merging Corporations is a party, shall not be deemed to have
abated or to have discontinued by reason of the Merger, but may be prosecuted to
final judgment, order or decree in the same manner as if the Merger had not been
made; or the Surviving Corporation may be substituted as a party to such action
or proceeding, and any judgment, order or decree may be rendered for or against
it that might have been rendered for or against either of the Merging
Corporations if the Merger had not occurred.
2.2 ARTICLES OF INCORPORATION AND BYLAWS. As of the Effective Time,
the Articles of Incorporation and Bylaws of BYL shall be the Articles of
Incorporation and Bylaws of the Surviving Corporation until otherwise amended as
provided by law.
2.3 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors
and officers of Interim shall become the directors and officers of the Surviving
Corporation as of the Effective Time, each to hold office in accordance with the
Articles of Incorporation and Bylaws of the Surviving Corporation.
B-2
<PAGE>
ARTICLE III
CONVERSION OF SHARES
3.1 CONVERSION OF BYL COMMON STOCK.
As of the Effective Time, each share of BYL Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares held by
BYL (including treasury shares) or the Company or the Bank other than in a
fiduciary capacity, which shares shall be cancelled) shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into the right to receive the Merger Consideration as set forth in the
Reorganization Agreement.
3.2 EXCHANGE OF SHARES.
The obligations of the Company to effectuate the exchange of the
Merger Consideration for the shares of BYL Common Stock shall be as set forth in
Section 2.9 of the Reorganization Agreement.
3.3 INTERIM COMMON STOCK. Each share of Interim Common Stock which is
issued and outstanding immediately prior to the Effective Time shall be
converted automatically and without any action on the part of the holder thereof
into an equal number of issued and outstanding shares of common stock of the
Surviving Corporation.
ARTICLE IV
MISCELLANEOUS
4.1 CONDITIONS PRECEDENT. The respective obligations of each party
under this Plan of Merger shall be subject to the satisfaction, or waiver by the
party permitted to do so, of the conditions set forth in Article VI of the
Reorganization Agreement.
4.2 TERMINATION. This Plan of Merger shall be terminated upon the
termination of the Reorganization Agreement in accordance with Articles VII and
VIII thereof.
4.3 AMENDMENTS. To the extent permitted by law and the Reorganization
Agreement, this Plan of Merger may be amended by a subsequent writing signed by
all of the parties hereto upon the approval of the Board of Directors of each of
the parties hereto.
4.4 SUCCESSORS. This Plan of Merger shall be binding on the successors
of Interim and BYL.
B-3
<PAGE>
IN WITNESS WHEREOF, Interim and BYL have caused this Plan of Merger to
be executed by their duly authorized officers and their corporate seals to be
hereunto affixed as of the date first above written.
PBOC ACQUISITION CORP.
Attest:
By:
------------------------------------
Rudolf Guenzel
President and Chief Executive Officer
BYL BANCORP
Attest:
By:
------------------------------------
Robert Ucciferri
President and Chief Executive Officer
B-4
<PAGE>
EXHIBIT C
FORM OF
AGREEMENT AND PLAN OF MERGER AND LIQUIDATION OF
BYL BANCORP
BY PBOC HOLDINGS, INC.
AGREEMENT AND PLAN OF MERGER AND LIQUIDATION agreed to this __ day of
____ 2001, between PBOC Holdings, Inc., a Delaware corporation ("Company"), and
BYL Bancorp, a California corporation ("BYL").
WHEREAS, the Company owns all of the issued and outstanding capital
stock of BYL; and
WHEREAS, the Company wishes to approve, authorize, and consent to (i)
the merger of BYL with and into the Company pursuant to the Delaware General
Corporation Law ("DGCL") and the California Corporations Code and (ii) the
voluntary liquidation of BYL in accordance with Section 332 of the Internal
Revenue Code of 1986, as amended ("Code") and pursuant to an Agreement and Plan
of Reorganization, dated as of November 1, 2000; and
WHEREAS, PBOC Acquisition Corp., a Delaware corporation and former
subsidiary of the Company, previously has merged with and into BYL.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Company approves, authorizes, and consents to the merger and
liquidation of BYL.
2. Following the consummation of this Agreement and Plan of Merger and
Liquidation, BYL shall be liquidated in accordance with the provisions of
Section 332 of the Internal Revenue Code of 1986, as amended.
3. The officers of BYL are authorized and directed to distribute BYL's
assets (subject to its liabilities) within one year in cancellation of its stock
to the Company, as owner of all of its issued and outstanding stock.
4. The officers of BYL are further authorized and directed to take all
appropriate and necessary actions to liquidate BYL in accordance with the Code.
C-1
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger and Liquidation to be executed by their respective duly
authorized officers as of the day and year first above written.
PBOC ACQUISITION CORP.
Attest:
By:
------------------------------------
Rudolf Guenzel
President and Chief Executive Officer
BYL BANCORP
Attest:
By:
------------------------------------
Robert Ucciferri
President and Chief Executive Officer
C-2
<PAGE>
EXHIBIT D
ARTICLES OF COMBINATION
AND AGREEMENT OF MERGER
People's Bank of California, Los Angeles, California ("People's Bank"),
a federally-chartered savings bank, and BYL Bank Group, a California chartered
commercial bank ("BYL Bank"), hereby agree and certify as follows pursuant to 12
C.F.R. Sections 552.13 (f) and 552.13(j):
WITNESSETH:
WHEREAS, an Agreement and Plan of Reorganization, dated as of November
1, 2000 (the "Agreement"), by and among People's Bank, its parent holding
company, PBOC Holdings, Inc. ("PBOC"), BYL Bank and BYL Bancorp ("BYL"), the
holding company of BYL Bank, has been approved;
WHEREAS, PBOC, People's Bank, BYL and BYL Bank intend to comply with
Section 2.2(b) of the Agreement to effectuate the merger of BYL Bank with and
into People's Bank (the "Bank Merger"); and
WHEREAS, BYL Bank and People's Bank (the "Constituent Banks") desire to
provide for the terms and conditions of the Bank Merger.
NOW, THEREFORE, BYL Bank and People's Bank hereby agree as follows:
1. The Bank Merger shall become effective upon receipt of all
necessary approvals or non-objections from the Office of Thrift Supervision
("OTS") and the Commissioner of Financial Institutions of the State of
California and on the date specified in the endorsement of these Articles of
Combination and Agreement of Merger relating to the Bank Merger by the
Secretary of the OTS pursuant to 12 C.F.R. Section 552.13(k), or any
successor thereto (the "Effective Time").
2. People's Bank shall be the resulting institution ("Resulting
Institution") of the Bank Merger.
3. The name of the Resulting Institution shall be "People's Bank of
California."
D-1
<PAGE>
4. Upon the Effective Time, all offices of BYL Bank shall be offices
of People's Bank. As of the Effective Time, the home office of People's Bank
shall remain at 5900 Wilshire Blvd., Los Angeles, CA 90036 and the locations of
the offices of People's Bank shall be:
Bank of Hollywood - a Division of People's COSTA MESA
Bank of California 1700 Adams Avenue, Suite 100
6930 Hollywood Blvd. Costa Mesa, 92626
Los Angeles, CA 90028
Bank of Hollywood - a Division of People's DE ANZA
Bank of California 7710 Limonite Avenue
10100 Riverside Drive Riverside, CA 92509
Toluca Lake, CA 91602
NORTH HOLLYWOOD HUNTINGTON BEACH
6350 Laurel Canyon Blvd. 16900 Goldenwest Street
North Hollywood, CA 91606 Huntington Beach, CA 92647
LONG BEACH MIRA LOMA
525 East Ocean Blvd. 11010 Limonite Avenue
Long Beach, CA 90802 Mira Loma, CA 91752
BEVERLY HILLS ORANGE
9100 Wilshire Blvd. 1875 North Tustin Avenue
Beverly Hills, CA 90212 Orange, CA 92865
ORANGE ORANGE REGIONAL LOAN CENTER
216 Chapman Ave. 18206 Imperial Highway
Orange, CA 92866-1506 Yorba Linda, CA 92886
PACIFIC PALISADES INLAND REGION LOAN CENTER**
15305 Sunset Blvd. 7710 Limonite, Suite M
Pacific Palisades, CA 90272 Riverside, CA 92509
MONTEBELLO WESTMINSTER
1300 W. Beverly Blvd. 8251 Westminster Blvd.
Montebello, CA 90640 Westminster, CA 92683
GARDEN GROVE YORBA LINDA
12112 Valley View
D-2
<PAGE>
18206 Imperial Highway
Garden Grove, CA 92845-1796 Yorba Linda, CA 92886
D-3
<PAGE>
SIMI VALLEY CONSTRUCTION FINANCE DIVISION**
1445 Los Angeles 18206 Imperial Highway
Simi Valley, CA 93065 Yorba Linda, CA 92886
SYLMAR MORTGAGE DIVISION - TUSTIN**
13831 Foothill Blvd. 18302 Irvine Blvd.
Sylmar, CA 91342 Tustin, CA 92680
BUENA PARK SBA/CAL CAP DIVISION
5470 Beach Blvd. 26137 La Paz Road, Suite 102
Buena Park, CA 90621 Mission Viejo, CA 92691
BEVERLY / SERRANO
4500 W. Beverly Blvd.
Los Angeles, CA 90004
TARZANA
19500 Ventura Blvd.
Tarzana, CA 91356
BURBANK
240 North San Fernando Road
Burbank, CA 91502
NORTH IRVINE
4860 Irvine Blvd.
Irvine, CA 92620
SANTA CLARITA
26425 Sierra Highway
Santa Clarita, CA 91321
VENTURA
996 South Seaward Ave.
Ventura, CA 93001
CALABASAS
23642 Calabasas Rd., Bldg 2
Calabasas, CA 91302
D-4
<PAGE>
IRVINE
15475 Jeffrey Road
Irvine, CA 92620-4102
FAIRFAX
145 South Fairfax Avenue
Los Angeles, CA 90036
SAN PEDRO
28110 South Western Ave.
San Pedro, CA 90732
LOS ANGELES
5900 Wilshire Blvd.
Los Angeles, CA 90036
WESTMINSTER
15555 Brookhurst St.
Westminster, CA 92683
ENCINO*
16820 Ventura Blvd.
Encino, CA 91436
WOODLAND HILLS*
21919 Erwin Street
Woodland Hills, CA 91367
* Universal Branch Acquisition - tentatively approved as of 12/31/00.
** Non-Depository division.
5. Upon consummation of the Bank Merger, People's Bank shall be
considered the same business and corporate entity as each of the Constituent
Banks and thereupon and thereafter all the property, rights, powers and
franchises of each of the Constituent Banks shall vest in People's Bank and
People's Bank shall be subject to and be deemed to have assumed all of the
debts, liabilities, obligations and duties of each of the Constituent Banks and
shall have succeeded to all of each of their relationships, fiduciary or
otherwise, as fully and to the same extent as if such property, rights,
privileges, powers, franchises, debts, obligations, duties and relationships had
been originally
D-5
<PAGE>
acquired, incurred or entered into by People's Bank. In addition, any reference
to either of the Constituent Banks in any contract, will or document, whether
executed or taking effect before or after the Effective Time, shall be
considered a reference to People's Bank if not inconsistent with the other
provisions of the contract, will or document; and any pending action or other
judicial proceedings to which either of the Constituent Banks is a party shall
not be deemed to have abated or to have been discontinued by reason of the Bank
Merger, but may be prosecuted to final judgment, order or decree in the same
manner as if the Bank Merger had not occurred or People's Bank may be
substituted as a party to such action or proceeding, and any judgment, order or
decree may be rendered for or against it that might have been rendered for or
against either of the Constituent Banks if the Bank Merger had not occurred.
6. On and after the Effective Time, the Charter of People's Bank as in
effect immediately prior to the Effective Time shall be the Charter of the
Resulting Institution until amended in accordance with the terms thereof and
applicable law.
On and after the Effective Time, the Bylaws of People's Bank as in
effect immediately prior to the Effective Time shall be the Bylaws of the
Resulting Institution until amended in accordance with the terms thereof and
applicable law.
7. Upon and after the Effective Time, until changed in accordance with
the Charter and Bylaws of People's Bank and applicable law, the number of
directors of the Resulting Institution authorized by the Charter shall be nine
(9) (which includes one vacancy). The names of those persons who, upon and after
the Effective Time, shall be directors of the Resulting Institution are set
forth below. Each such director shall serve for the term which expires at the
annual meeting of stockholders of the Resulting Institution in the year set
forth after his respective name, and until his or her successor is elected and
qualified.
<TABLE>
<CAPTION>
NAME TERM EXPIRES
---- ------------
<S> <C>
Rudolf P. Guenzel 2001
J. Michael Holmes 2001
C. Stephen Mansfield 2001
Richard Delaney 2001
John F. Davis 2002
Murray Kalis 2002
Robert MacDonald 2003
Carl Lo Bue 2003
</TABLE>
D-6
<PAGE>
The address of each such director is c/o People's Bank, 5900 Wilshire
Blvd., Los Angeles, CA 90036.
8. OUTSTANDING SHARES AND VOTING.
(a) PEOPLE'S BANK. The number of issued and outstanding shares of
common stock, par value $0.01 per share, of People's Bank is 100,000, all of
which were voted in favor of these Articles of Combination and Agreement of
Merger pursuant to the unanimous written consent (in lieu of a meeting) of PBOC
as the sole stockholder of People's Bank dated as of _______ __, 2001.
(b) BYL BANK. The number of issued and outstanding shares of common
stock, par value $______ per share, of BYL Bank is 100, all of which were voted
in favor of these Articles of Combination and Agreement of Merger pursuant to
the unanimous written consent (in lieu of a meeting) of BYL Bancorp as the sole
stockholder of BYL Bank dated as of ________ __, 2001.
D-7
<PAGE>
IN WITNESS WHEREOF, each party hereto has caused these Articles of
Combination and Agreement of Merger to be executed by their duly authorized
officers as of the ____ day of ______ 2001.
PEOPLE'S BANK OF CALIFORNIA
Attest:
By:
-------------------------------------- -------------------------------------
Doreen J. Blauschild Rudolf P. Guenzel
Senior Vice President, General Counsel President and Chief Executive Officer
and Secretary
BYL BANK GROUP
Attest:
By:
-------------------------------------- -------------------------------------
Name: Robert Ucciferri
Title: President and Chief Executive Officer
D-8
<PAGE>
ENDORSEMENT
These Articles of Combination and Agreement of Merger were filed
with the Secretary of the Office of Thrift Supervision in the Department of
Treasury and endorsed pursuant to 12 C.F.R. Section 552.13(j), effective at
______, Eastern Time, on ________ __, 2001.
Signed:
--------------------------------
D-9
<PAGE>
VERIFICATIONS
I, Rudolf P. Guenzel, President and Chief Executive Officer of People's
Bank of California ("People's Bank"), having read the foregoing Articles of
Combination and Agreement of Merger, hereby verify that the statements contained
therein are true and correct as to People's Bank.
By:
----------------------------------
Rudolf P. Guenzel
I, Robert Ucciferri, President and Chief Executive Officer of BYL Bank
Group ("BYL Bank"), having read the foregoing Articles of Combination and
Agreement of Merger, hereby verify that the statements contained therein are
true and correct as to BYL Bank.
By:
----------------------------------
Robert Ucciferri
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<PAGE>
EXHIBIT E
Matters to be covered in Opinion(s) of Counsel to be delivered to BYL and BYL
Bank pursuant to Section 6.2(d) of the Agreement
(a) Each of PBOC and the Bank is duly incorporated and validly
existing under the laws of the State of Delaware and the United States,
respectively.
(b) The Agreement has been duly authorized, executed and delivered
by PBOC and the Bank and constitutes a valid and binding obligation of PBOC and
the Bank and enforceable in accordance with its terms, except that the
enforceability of the obligations of PBOC and the Bank may be limited by (i)
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
rights of creditors, (ii) equitable principles limiting the right to obtain
specific performance or other similar equitable relief and (iii) considerations
of public policy, and except that certain remedies may not be available in the
case of a nonmaterial breach of the Agreement.
(c) All corporate and shareholder actions required to be taken by
PBOC and the Bank by law and their Certificate of Incorporation, Federal Stock
Charter and Bylaws to authorize the execution and delivery of the Agreement and
consummation of the transactions contemplated thereby have been taken.
(d) All permits, consents, waivers, clearances, approvals and
authorizations of any Governmental Entity or third party which are necessary to
be obtained by PBOC and the Bank to permit the execution, delivery and
performance of the Agreement and consummation of the transactions contemplated
thereby have been obtained.
In rendering their opinion, such counsel may rely, to the extent
such counsel deems such reliance necessary or appropriate, upon certificates of
governmental officials and, as to matters of fact, certificates of officers of
PBOC and the Bank. The opinion of such counsel need refer only to matters of
Delaware law and may add other qualifications and explanations of the basis of
their opinion as may be reasonably acceptable to BYL and BYL Bank.
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EXHIBIT F
INTENTIONALLY OMITTED
F-1
<PAGE>
EXHIBIT G
Matters to be covered in Opinion of Counsel to be delivered to PBOC and the Bank
pursuant to Section 6.3(d) of the Agreement
(a) BYL and BYL Bank are duly incorporated and validly existing under
the laws of their jurisdiction of incorporation.
(b) The authorized capital stock of BYL and BYL Bank is as set forth
in Section 3.1 of the Agreement. As of the date hereof, there are 2,542,568
shares of BYL Common Stock issued and outstanding and no shares of BYL Preferred
Stock issued or outstanding. All of the outstanding shares of BYL Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable, and the shareholders of BYL have no preemptive rights with
respect to any shares of BYL Common Stock. To such counsel's knowledge, except
for BYL Options to purchase 377,203 shares of BYL Common Stock, there are no
Rights authorized, issued or outstanding with respect to the capital stock of
BYL. BYL owns all of the outstanding Common Stock of BYL Bank, free and clear of
any Liens or other attachments or encumbrances.
As of the date hereof, there are 100 shares of BYL Bank common stock
issued and outstanding, no shares of BYL Bank preferred stock issued and
outstanding and no shares of BYL Bank common stock are held as treasury shares.
All outstanding shares of BYL Bank common stock have been duly authorized and
validly issued and are fully paid and nonassessable and are owned by BYL.
(c) The Agreement has been duly authorized, executed and delivered by
BYL and BYL Bank and constitutes a valid and binding obligation of BYL and BYL
Bank enforceable in accordance with their terms, except that the enforceability
of the obligations of BYL and BYL Bank may be limited by (i) bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting the rights of
creditors, (ii) equitable principles limiting the right to obtain specific
performance or other similar equitable relief and (iii) considerations of public
policy, and except that certain remedies may not be available in the case of a
nonmaterial breach of the Agreement.
(d) All corporate and shareholder actions required to be taken by BYL
and BYL Bank by law and the Articles of Incorporation and Bylaws of BYL and BYL
Bank to authorize the execution and delivery of the Agreement and consummation
of the transactions contemplated thereby have been taken.
(e) All permits, consents, waivers, clearances, approvals and
authorizations of any Governmental Entity or third party which are necessary to
be obtained by BYL and BYL Bank to
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permit the execution, delivery and performance of the Agreement and consummation
of the transactions contemplated thereby have been obtained.
(f) To such counsel's knowledge, except as Previously Disclosed, there
are no material legal or governmental proceedings pending to which BYL and BYL
Bank is a party or to which any property of BYL and BYL Bank are subject and no
such proceedings are threatened by governmental authorities or by others.
In rendering their opinion, such counsel may rely, to the extent such
counsel deems such reliance necessary or appropriate, upon certificates of
governmental officials and, as to matters of fact, certificates of officers of
BYL and BYL Bank. The opinion of such counsel need refer only to matters of
California and federal law and may add other qualifications and explanations of
the basis of their opinion as may be reasonably acceptable to PBOC and the Bank.
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EXHIBIT H
STOCK OPTION AGREEMENT
Stock Option Agreement, dated as of November 1, 2000, between PBOC
Holdings, Inc., a Delaware corporation ("Grantee"), and BYL Bancorp, a
California corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Reorganization of even date herewith (the "Merger Agreement"), providing for,
among other things, the merger of Issuer with and into a wholly-owned subsidiary
of Grantee (the "Merger");
WHEREAS, as a condition and an inducement to Grantee to enter into the
Merger Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined); and
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 505,971 fully paid and nonassessable shares (the "Option Shares")
of common stock of Issuer (the "Common Stock") at a price per share equal to
$10.597 (the "Option Price"); provided, however, that in no event shall the
number of shares for which this Option is exercisable exceed 19.9% of the issued
and outstanding shares of Common Stock without giving effect to any shares
subject to or issued pursuant to the Option. The number of shares of Common
Stock that may be received upon the exercise of the Option and the Option Price
are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), including, without limitation, pursuant to stock option or
other employee plans or as a result of the exercise of conversion rights, the
number of shares of Common Stock subject to the Option shall be increased so
that, after such event, such number equals 19.9% of the number of shares of
Common Stock then issued and outstanding without giving effect to any shares
subject to or issued pursuant to the Option. Nothing contained in this Section
l(b) or elsewhere in this Agreement shall be deemed to authorize Issuer to issue
shares in breach of any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of
<PAGE>
an Exercise Termination Event (as hereinafter defined), provided that the Holder
shall have sent the written notice of the first exercise (as provided in
paragraph (e) of this Section 2) within 90 days following the first Subsequent
Triggering Event to occur (or such later period as provided in Section 7). Each
of the following shall be an Exercise Termination Event: (i) the Effective Time
(as defined in the Merger Agreement); (ii) termination of the Merger Agreement
in accordance with the provisions thereof if such termination occurs prior to
the occurrence of an Initial Triggering Event, except a termination by Grantee
pursuant to Section 7.1(b) of the Merger Agreement (unless the breach by Issuer
giving rise to such right of termination was non-volitional); or (iii) the
passage of 15 months after termination of the Merger Agreement if such
termination follows the occurrence of an Initial Triggering Event or is a
termination by Grantee pursuant to Section 7.1(b) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of termination is
non-volitional), provided that if an Initial Triggering Event continues or
occurs beyond such termination and prior to the passage of such 15-month-period,
the Exercise Termination Event shall be 15 months from the expiration of the
Last Triggering Event but in no event more than 18 months after such
termination. The term "Last Triggering Event" shall mean the last "Initial
Triggering Event" to expire, and the term "Holder" shall mean the holder or
holders of the Option pursuant to this Agreement. Notwithstanding anything to
the contrary contained herein, the Option may not be exercised at any time when
Grantee shall be in willful material breach of any of its covenants or
agreements contained in the Merger Agreement such that Issuer shall be entitled
to terminate the Merger Agreement pursuant to Section 7.1(b) thereof as a result
of such a willful material breach.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring on or after the date hereof:
(i) Issuer or any Subsidiary of Issuer (an "Issuer
Subsidiary"), without having received Grantee's prior written consent, shall
have entered into an agreement to engage in an Acquisition Transaction (as
hereinafter defined) with any person (the term "person" for purposes of this
Agreement having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3)
of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and the
rules and regulations thereunder), other than Grantee or any Subsidiary of
Grantee (a "Grantee Subsidiary") or the Board of Directors of Issuer (the
"Issuer Board") shall have recommended that the shareholders of Issuer approve
or accept any Acquisition Transaction with any person other than Grantee or a
Grantee Subsidiary. For purposes of this Agreement, (a) "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any similar
transaction, involving Issuer or any Issuer Subsidiary (other than mergers,
consolidations or similar transactions (i) involving solely Issuer and/or one or
more wholly-owned Subsidiaries of Issuer, provided any such transaction is not
entered into in violation of the terms of the Merger Agreement, or (ii) in which
the shareholders of Issuer immediately prior to the completion of such
transaction own at least 50% of the Common Stock of Issuer (or the resulting or
surviving entity in such transaction) immediately after completion of such
transaction, provided any such transaction is not entered into in violation of
the terms of the Merger Agreement), (x) a purchase, lease or other acquisition
of all or any substantial part of the assets or deposits of Issuer or any Issuer
Subsidiary, (y) a purchase or other acquisition (including by way of merger,
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<PAGE>
consolidation, share exchange or otherwise) of securities representing 10% or
more of the voting power of Issuer or any Issuer Subsidiary or (z) any
substantially similar transaction; and (b) "Subsidiary" shall have the meaning
set forth in Rule 12b-2 under the 1934 Act;
(ii) Any person, other than Grantee or a Grantee Subsidiary, shall
have acquired beneficial ownership or the right to acquire beneficial ownership
of 10% or more of the outstanding shares of Common Stock (the term "beneficial
ownership" for purposes of this Agreement having the meaning assigned thereto in
Section 13(d) of the 1934 Act, and the rules and regulations thereunder);
(iii) Any person, other than Grantee or a Grantee Subsidiary, shall
have made a bona fide proposal to Issuer or its stockholders by public
announcement or written communication that is or becomes the subject of public
disclosure to engage in an Acquisition Transaction;
(iv) The Issuer Board, without having received Grantee's prior written
consent, shall have withdrawn or modified, or publicly announced its interest to
withdraw or modify in any manner adverse in any respect to Grantee, its
recommendation that the stockholders of Issuer approve the transactions
contemplated by the Merger Agreement in anticipation of engaging in an
Acquisition Transaction, or Issuer or any Issuer Subsidiary shall have
authorized, recommended or proposed, or publicly announced its intention to
authorize, recommend or propose, an agreement to engage in an Acquisition
Transaction with any person other than Grantee or a Grantee Subsidiary;
(v) Any person other than Grantee or a Grantee Subsidiary shall have
filed with the Securities and Exchange Commission ("SEC") a registration
statement or tender offer materials with respect to a potential exchange or
tender offer that would constitute an Acquisition Transaction (or filed a
preliminary proxy statement with the SEC with respect to a potential vote by its
stockholders to approve the issuance of shares to be offered in such an exchange
offer);
(vi) After an overture is made by any person, other than Grantee or a
Grantee Subsidiary, to Issuer or its stockholders to engage in an Acquisition
Transaction, Issuer shall have breached any covenant or obligation contained in
the Merger Agreement and such breach (x) would entitle Grantee to terminate the
Merger Agreement (whether immediately or after the giving of notice or passage
of time or both) and (y) shall not have been cured prior to the Notice Date (as
defined below); or
(vii) Any person other than Grantee or a Grantee Subsidiary shall have
filed an application or notice with any federal or state bank regulatory or
antitrust authority, which application or notice has been accepted for
processing, for approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or
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(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (y) of the second sentence thereof shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event") of which it has notice, it being understood that the giving
of such notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares of Common Stock it will purchase pursuant to such
exercise and (ii) a place and date not earlier than three business days nor
later than 60 business days from the Notice Date for the closing of such
purchase (the "Closing"); provided that if prior notification to or approval of
any regulatory or antitrust agency is required in connection with such purchase,
the Holder shall promptly file the required notice or application for approval,
shall promptly notify Issuer of such filing and shall expeditiously process the
same and the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which any required notification periods have
expired or been terminated or such approvals have been obtained and any
requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto. The term
"business day" for purposes of this Agreement means any day, excluding
Saturdays, Sundays and any other day that is a legal holiday in the State of
California or a day on which banking institutions in the State of California are
authorized by law or executive order to close.
(f) At a Closing, the Holder shall (i) pay to Issuer the aggregate
purchase price for the shares of Common Stock purchased pursuant to the exercise
of the Option in immediately available funds by wire transfer to a bank account
designated by Issuer, and (ii) present and surrender this Agreement to Issuer at
its principal executive offices, provided that the failure or refusal of the
Issuer to designate such a bank account or accept surrender of this Agreement
shall not preclude the Holder from exercising the Option.
(g) At a Closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer a copy of this Agreement and a letter agreeing that the
Holder will not offer to sell or otherwise dispose of such shares in violation
of applicable law or the provisions of this Agreement.
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(h) Certificates for Common Stock delivered at a Closing hereunder may
be endorsed (in the sole discretion of Issuer) with a restrictive legend that
shall read substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file at
the principal office of Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the reasonable opinion of counsel to
the Holder; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under paragraph (e) of this Section 2, the
tender of the applicable purchase price in immediately available funds and the
tender of a copy of this Agreement to Issuer, the Holder shall be deemed,
subject to the receipt of any necessary regulatory approvals, to be the holder
of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including without limitation (x) complying with all applicable premerger
notification, reporting and waiting period requirements specified in 15 U.S.C.
Section 18a and regulations promulgated thereunder and (y) in the event, under
the Change in Bank
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<PAGE>
Control Act of 1978, as amended, or any state or other federal banking law,
prior approval of or notice to any state or federal regulatory authority is
necessary before the Option may be exercised, cooperate fully with the Holder in
connection with the preparation of such applications or notices and providing
such information to such state or federal regulatory authority as they may
require) in order to permit the Holder to exercise the Option and Issuer duly
and effectively to issue shares of Common Stock pursuant hereto; and (iv)
promptly to take all action provided herein to protect the rights of the Holder
against dilution.
4. This Agreement and the Option granted hereby are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase
on the same terms and subject to the same conditions as are set forth herein in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, subject to the
aforementioned indemnification, if applicable, whether or not the Agreement so
lost, stolen, destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of Option Shares purchasable upon the exercise of the
Option and the Option Price shall be subject to adjustment from time to time as
provided in this Section 5.
(a) In the event of any change in, or distributions in respect of, the
Common Stock by reason of stock dividend, split-up, merger, recapitalization,
combination, subdivision, conversion, exchange of shares, distribution on or in
respect of the Common Stock or similar transaction, the type and number of
Option Shares shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Grantee shall receive
upon exercise of the Option the number and class of Option Shares that Grantee
would have held immediately after such event if the Option had been exercised
immediately prior to such event, or the record date therefor, as applicable.
(b) Whenever the number of Option Shares is adjusted as provided in
this Section 5, the Option Price shall be adjusted by multiplying the Option
Price by a fraction, the numerator of which shall be equal to the number of
Option Shares purchasable prior to the adjustment and the denominator of which
shall be equal to the number of Option Shares purchasable after the adjustment.
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<PAGE>
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within six months (or such later period as provided in Section 10)
following such Subsequent Triggering Event (whether on its own behalf or on
behalf of any subsequent holder of this Option (or part thereof) or any of the
Option Shares issued pursuant hereto), promptly prepare, file and keep current,
with respect to the Option and the Option Shares, a registration statement under
the 1933 Act and qualify such Option and Option Shares for resale or other
disposition under applicable state securities laws, in each case in accordance
with any plan of disposition requested by Grantee. Issuer will use all
reasonable efforts to cause such registration statement promptly to become
effective and then to remain effective for such period not in excess of 180 days
from the day such registration statement first becomes effective or such shorter
time as may be reasonably necessary to effect such sales or other dispositions.
Grantee shall have the right to demand two such registrations. The Issuer shall
bear the costs of such registrations (including, but not limited to, Issuer's
attorneys' fees, printing costs and filing fees, except for underwriting
discounts or commissions, brokers' fees and the fees and disbursements of
Grantee's counsel related thereto). The foregoing notwithstanding, if, at the
time of any request by Grantee for registration of the Option or Option Shares
as provided above, Issuer is in registration with respect to an underwritten
public offering by Issuer of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering, the inclusion of the Option
and/or Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of shares represented by the
Option and/or the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced; provided, however,
that after any such required reduction the number of shares represented by the
Option and/or the number of Option Shares to be included in such offering for
the account of the Holder shall constitute at least 25% of the total number of
shares to be sold by the Holder and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then Issuer shall file a
registration statement for the balance as promptly as practicable thereafter as
to which no reduction pursuant to this Section 6 shall be permitted or occur.
Each such Holder shall provide all information reasonably requested by Issuer
for inclusion in any such registration statement to be filed hereunder. If
requested by any such Holder in connection with such registration, Issuer shall
become a party to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements customarily
included in secondary offering underwriting agreements. Upon receiving any
request under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained herein, in no event
shall the number of registrations that Issuer is obligated to effect be
increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.
7. The 90-day or 6-month periods for exercise of certain rights under
Sections 2, 6, and 9 shall be extended: (i) to the extent necessary to obtain
all regulatory approvals for the exercise of
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such rights (for so long as the Holder is using its reasonable best efforts to
obtain such regulatory approvals), and for the expiration of all statutory
waiting periods; (ii) during the pendency of any temporary restraining order,
injunction or other legal bar to exercise of such rights; and (iii) to the
extent necessary to avoid liability under Section 16(b) of the 1934 Act by
reason of such exercise.
8. (a) Issuer hereby represents and warrants to Grantee as follows:
(i) Issuer 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 authorized by the
Issuer Board and no other corporate proceedings on the part of Issuer are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered by
Issuer and is a valid and legally binding obligation of Issuer, enforceable
against Issuer in accordance with its terms, except that enforcement thereof may
be limited by the receivership, conservatorship and supervisory powers of bank
regulatory agencies generally as well as bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors rights
generally and except that enforcement thereof may be subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and the availability of equitable remedies.
(ii) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
(b) Grantee hereby represents and warrants to Issuer that:
(i) Grantee has full corporate power and authority to execute and
deliver this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Grantee and no other corporate proceedings on the part of Grantee are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly executed and delivered by Grantee and
is a valid and legally binding obligation of Grantee.
(ii) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution
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thereof and will not be transferred or otherwise disposed of except in a
transaction registered or exempt from registration under the Securities Act.
9. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder within six months
following such Subsequent Triggering Event; provided, however, that until the
date 15 days following the date on which the applicable federal or state bank
regulatory authority approves an application by Grantee to acquire the shares of
Common Stock subject to the Option, Grantee may not assign its rights under the
Option except in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase in excess of 2%
of the voting shares of Issuer, (iii) an assignment to a single party (e.g., a
broker or investment banker) for the sole purpose of conducting a widely
dispersed public distribution on Grantee's behalf or (iv) any other manner
approved by the applicable federal or state bank regulatory authority.
10. Each of Grantee and Issuer will use all reasonable efforts to make
all filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including, without limitation, applying to the applicable
federal or state bank regulatory authority for approval to acquire the shares
issuable hereunder and applying for listing or quotation of such shares on any
exchange or quotation system on which the Common Stock is then listed or quoted.
11. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
12. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire the full number of shares of Common
Stock provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or
Section 5 hereof), it is the express intention of Issuer to allow the Holder to
acquire such lesser number of shares as may be permissible, without any
amendment or modification hereof.
13. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
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<PAGE>
14. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to the conflict of law
principles thereof.
15. This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
16. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
17. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided herein.
18. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
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<PAGE>
IN WITNESS WHEREOF, Grantee and Issuer have caused this Agreement to
be executed by their duly authorized officers as of the day and year first above
written.
PBOC HOLDINGS, INC.
Attest:
By:
-------------------------------------- -----------------------------
Name: J. Michael Holmes Name: Rudolf P. Guenzel
Title: Senior Executive Vice President, Title: President and Chief Executive
Chief Financial Officer and Officer
Secretary
BYL BANCORP
Attest:
By:
-------------------------------------- -----------------------------
Name: John "Jack" Myers Name: Robert Ucciferri
Title: Secretary Title: President and Chief Executive
Officer
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