Exhibit 2.1
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
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
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 Approvals13
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
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.
"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
(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
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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 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.
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(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
(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
15
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.
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.
16
(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 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
17
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
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
18
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.
(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.
19
(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
(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
20
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.
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,
21
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.
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.
22
(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.
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
23
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).
(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
24
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.
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
25
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.
(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
26
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.
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,
27
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.
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.
28
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.
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
29
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.
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
30
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.
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
31
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;
(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;
32
(xi) acquire in any manner whatsoever (other than to realize upon
collateral for a defaulted loan) any business or entity;
(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
33
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 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.
34
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
35
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
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
36
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.
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.
37
(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
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.
38
(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.
(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.
39
(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 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
40
(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.
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.
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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 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)
42
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);
(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
43
with 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.
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.
44
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.
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.
45
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.
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.
46
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 Financial Officer and Chief Executive
Secretary Officer
PEOPLE'S BANK OF CALIFORNIA
Attest:
/s/ Doreen J. Blausch By: /s/ Rudolf P. Guenzel
---------------------------------- ---------------------------
Name: Doreen J. Blausch Name: Rudolf P. Guenzel
Title: Senior Vice President, Title: President and
General Counsel and Chief Executive
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
---------------------------------- ---------------------------
Name: John "Jack" Myers Name: Robert Ucciferri
Title: Secretary Title: President and
Chief Executive
Officer
47
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
(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
Title: President and Chief Executive Officer
A-2
Schedule I
Number of Shares Beneficially
Name of Shareholder Owned of BYL Common Stock (1)
---------------------------- -----------------------------------
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
----------------
(1) Does not include options to purchase shares of BYL Common Stock.
A-3
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
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
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
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
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
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 HOLDINGS INC.
Attest:
_____________________ By: _____________________________
Rudolf Guenzel
President and Chief Executive
Officer
BYL BANCORP
Attest:
_____________________ By: _____________________________
Robert Ucciferri
President and Chief Executive
Officer
C-2
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
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 Costa Mesa
People's Bank of California 1700 Adams Avenue, Suite 100
6930 Hollywood Blvd. Costa Mesa, 92626
Los Angeles, CA 90028
Bank of Hollywood - A Division of De Anza
People's 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 18206 Imperial Highway
Garden Grove, CA 92845-1796 Yorba Linda, CA 92886
D-2
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
Irvine
15475 Jeffrey Road
Irvine, CA 92620-4102
D-3
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 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
D-4
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.
Name Term Expires
---- ------------
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
The address of each such director is c/o People's Bank, 5900 Wilshire
Blvd., Los Angeles, CA 90036.
D-5
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.
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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. Blausch Rudolf P. Guenzel
Senior Vice President, General Counsel President and Chief Executive
and Secretary Officer
BYL BANK GROUP
Attest:
By:
---------------------------------- ---------------------------
Name: Robert Ucciferri
Title: President and Chief Executive
Officer
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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: ___________________________________
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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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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
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 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, consolidation, share exchange or otherwise) of securities representing
10% or more of the voting
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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.
(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:
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"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 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
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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.
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
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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 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.
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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 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
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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.
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
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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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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
Chief Financial Officer and Executive 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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