AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of September 7, 2000 by and
among BYL Bancorp, a California corporation (the "Company"), BYL Bank Group, a
California Corporation (the "Bank"), and JAM Partners, L.P., Seymour M. Jacobs,
Everest Partners Limited Partnership, Everest Managers, L.L.C., David M. W.
Harvey and Nick A. Becker (collectively, the "Investors").
WHEREAS, the Investors have notified the Company that they wish to
nominate for election to the Company's Board of Directors at the Company's
Annual Meeting of Stockholders scheduled to be held on September 27, 2000 (the
"Annual Meeting") certain persons; and
WHEREAS, the Investors have determined that their and the Company's
best interests would be served by (i) the Investors not engaging in a
solicitation of proxies for the Annual Meeting for the election of the
Investors' nominees in opposition to nominees of the Board of Directors (a
"Proxy Contest"), (ii) the nomination of the Investors' representative to the
Boards of Directors of the Company and the Bank as provided herein and (iii) the
other arrangements set forth herein; and
WHEREAS, the Company has determined that the best interests of the
Company and its stockholders would be served by (i) the Investors not engaging
in a Proxy Contest for the Annual Meeting, (ii) the nomination of the Investors'
representative to the Boards of Directors of the Company and the Bank as
provided herein and (iii) the other arrangements set forth herein.
NOW, THEREFORE, in consideration of the promises, mutual covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each of the parties
hereto, and intending to be legally bound hereby, each of the parties hereby
agree as follows:
I.
REPRESENTATIONS
1. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. The Investors each
represent and warrant to the Company as follows:
a. Such Investor has the requisite legal power and authority to
execute, deliver and carry out this Agreement and has taken all necessary legal
action to authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby.
b. This Agreement has been duly and validly authorized, executed and
delivered by such Investor and constitutes a valid and binding obligation of
such Investor, enforceable in accordance with its terms.
c. The Investors and their affiliates beneficially own an aggregate of
228,400 shares of the Company's common stock, no par value per share (the
"Common Stock"). The Investors and their affiliates do not beneficially own any
equity or debt securities of the Company or any subsidiary, other than the
foregoing.
2. REPRESENTATIONS AND WARRANTS OF THE COMPANY AND THE BANK. The
Company and the Bank represent and warrant to the Investors as follows:
a. The Company and the Bank are each duly organized and validly
existing and in good standing under the laws of the State of California, have
the requisite corporate power and authority to execute, deliver and carry out
this Agreement and have taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby.
b. This Agreement has been duly and validly authorized, executed and
delivered by the Company and the Bank and constitutes a valid and binding
agreement of the Company and the Bank, enforceable in accordance with its terms.
II.
BOARD OF DIRECTORS AND MANAGEMENT
1. ANNUAL MEETING; INVESTOR DESIGNEE.
a. The Annual Meeting shall be held on September 27, 2000, or such
later date as the Board of Directors may determine. The parties hereby agree
that the slate of the nominees for election to the Board of Directors at the
Annual Meeting to be proposed by the Board of Directors shall be each of the
four current members of the Board of Directors up for reelection, namely Barry
Moore, John Myers, Brent Wahlberg and Eddie Fischer and the parties hereto
further agree that they shall nominate, recommend and support such slate at the
Annual Meeting and shall vote, and shall cause their affiliates to vote, all
shares of Common Stock or proxies which they are entitled to vote in favor of
the election of such nominees at the Annual Meeting.
b. The Company shall promptly commence action necessary, including all
necessary regulatory consents, to appoint one representative of the Investors
(the "Investor Designee"), namely Seymour M. Jacobs, to the Board of Directors
of the Company as a Class II director, and to the Board of Directors of the
Bank. The parties acknowledge that the Investor Designee will not be able to
assume office until all required regulatory consents have been obtained.
Accordingly, from and after the date hereof until such time as all such
regulatory consents have been processed, Mr. Jacobs shall have the right to
attend as an observer all meetings of the Board of Directors of each of the
Company and the Bank, and shall receive all materials distributed to the members
of such boards during that time. Within 48 hours of receipt of all necessary
regulatory consents, the Boards of Directors of the Company and the Bank shall
take action necessary to increase the size of the Board of Directors of each of
the Company and the Bank by one member and fill the vacancies created with the
Investor Designee. Prior to expiration of the Investor Designee's initial term
of office at the Company and the Bank, the Company will cause the Investor
Designee to be nominated for reelection to such positions.
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c. While serving as director, each the Investor Designee shall have the
same legal duties and responsibilities and the same rights and privileges as the
other nonemployee directors of the Company and the Bank, including without
limitation, with respect to expense reimbursement, director compensation,
notice, indemnification, confidentiality, trading blackouts and other trading
restrictions and access to Company and Bank information and personnel.
2. OTHER OBLIGATIONS. The Investors shall not engage in any
solicitation of proxies in connection with the Annual Meeting. If, at any time
after the date hereof, the Investors and their affiliates beneficially own less
than 114,200 shares of Common Stock, at the Company's option, the Investors
shall cause the Investor Designee to immediately thereafter resign from the
Boards of Directors of each of the Company and the Bank. The Investors agree to
provide the Company with reasonable evidence of the number of shares of Common
Stock and other securities of the Company and its subsidiaries beneficially
owned by them, upon request of the Company from time to time following the
election of the Investor Designee to the Board.
III.
STANDSTILL AND VOTING AGREEMENT
1. STANDSTILL PROVISIONS. The Investors agree that, for so long as an
Investor Designee has observer rights as set forth in Section II, or serves on
the Board of Directors of either the Company or the Bank, and for three months
thereafter (it being understood, in the case of resignation, that such three
month period shall commence upon the date the Company receives notice of
resignation from such boards), without the Company's prior written consent, no
Investor shall:
a. acquire, announce an intention to acquire, offer or propose to
acquire, or agree to acquire, directly or indirectly, by purchase or otherwise,
beneficial ownership of any Common Stock, or direct or indirect rights to
options to acquire (through purchase, exchange, conversion or otherwise) any
Common Stock, if, immediately after any such acquisition, the Investors would
beneficially own, in the aggregate, Common Stock representing more than 9.9% of
the outstanding Common Stock;
b. make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies" (as such terms are defined in Rule 14a-1 under the
Securities Exchange Act of 1934, as amended (the "1934 Act") to vote any Common
Stock, seek to advise , encourage or influence any person or entity with respect
to the voting of any Common Stock, initiate or propose any shareholder proposal
or induce or attempt to induce any other person to initiate any shareholder
proposal;
c. make any statement or proposal, whether written or oral, to the
Board of Directors of the Company, or to any director, officer or agent of the
Company, or make any public announcement or proposal whatsoever with respect to
a merger, acquisition of control or other business combination, sale or transfer
of assets, recapitalization, dividend, share repurchase, liquidation or other
extraordinary corporate transaction with the Company or any
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other transaction which could result in a change of control, or solicit or
encourage any other person to make any such statement or proposal;
d. form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the 1934 Act) with respect to any securities of
the Company, other than the group which the Investors is a member of as of the
date hereof;
e. deposit any Common Stock into a voting trust or subject any Common
Stock to any arrangement or agreement with respect to the voting of any Common
Stock other than this Agreement;
f. execute any written consent with respect to the Company, except in
accordance with Section III.3;
g. otherwise act, alone or in concert with others, to seek to exercise
any control over the management, Board of Directors or policies of the Company;
h. make a public request to the Company (or its directors, officers,
shareholders, employees or agents) to amend or waive any provisions of this
Agreement, the Articles of Incorporation or Bylaws of the Company, including
without limitation any public request to permit the Investors or any other
person to take any action in respect of the matters referred to in this Section
III.1;
i. take any action which might require the Company to make a public
announcement regarding the possibility of any transaction referred to in
paragraph (c) above or similar transaction or, advise, assist or encourage any
other persons in connection with the foregoing; or
j. disclose publicly, or privately in a manner that could reasonably be
expected to become public, any intention, plan or arrangement inconsistent with
the foregoing;
provided that nothing in this Section III.1 shall prohibit any person who is
serving as a director of the Company as contemplated herein from, solely in his
or her capacity as such director, (a) taking any action or making any statement
at any meeting of the Board of Directors or of any committee thereof; (b) making
any statement to any director, officer or agent of the Company, or (c) making
any statement or disclosure required under the federal securities laws or other
applicable laws; and provided, further, that nothing in this Section shall
restrict any private communications between the Investors and any person
designated by the Investors as a director, provided that all such communications
by such person remain subject to the fiduciary duties of such person as a
director.
2. TRANSFER LIMITATIONS. The Investors agree that, for so long as an
Investor Designee has observer rights as set forth in Section II, or serves on
the Board of Directors of either the Company or the Bank, and for three months
thereafter (it being understood, in the case of resignation, that such three
month period shall commence upon the date the Company receives notice of
resignation from such boards):
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a. Without the Company's prior written consent, which may not
unreasonably be withheld, no Investor shall, directly or indirectly, sell,
transfer or otherwise dispose of any interest in the Investors shares ,
provided, that the Investors may transfer the Investors' shares: (i) to any
person who the Investors believe, after due inquiry, would beneficially own
immediately after any such sale or transfer less than 5% of the outstanding
Common Stock; (ii) to any person who the Investors believe, after due inquiry,
would be entitled to report beneficial ownership of Common Stock on Schedule 13G
under the Securities Exchange Act of 1934, as amended (the "Exchange Act");
(iii) in a registered broad-distribution underwritten public offering; (iv) to
the Company; (v) pursuant to any tender offer or exchange offer which is
recommended by the Board of Directors of the Company; (vi) to any other person
who enters into a standstill agreement with the Company on terms and conditions
substantially equivalent to those in this Agreement; (vii) to any corporation,
partnership or other entity wholly-owned by the Investors or to any other
Investor; or (viii) to any trust the sole beneficiaries of which are family
members or any charitable trust or charitable foundation established by the
Investors, provided that such trust, charitable trust or charitable foundation
either (y) enters into a standstill agreement with the Company containing terms
and conditions substantially equivalent to those in this Agreement or (z) is and
remains during the term of this Agreement an affiliate of an Investor.
b. In the event of any proposed sale or transfer of shares of Common
Stock (other than as described in 2(a)(vii or viii above)), such Investor shall
give written notice to the Company of such proposed sale and the bona fide terms
on which the sale is proposed to be made. For these purposes, such notice may
state an intention of the Investor to sell into the public market at the market
price prevailing on the date of sale. The Company and, if the Company is unable
or unwilling to make such purchase, the then current members of the Board of
Directors, shall have a right of first refusal on such shares to buy some or all
of them at the price and terms stated in the notice, which may be exercised no
later than seven days from the date of notice. If not all of such shares are so
purchased by the Company or the members of the Board of Directors, the Investor
may sell them to the third party (subject to the limitations in 2(a) above) at
the price and terms stated in the notice, at any time within the 30 days
following the failure of the Company or the Board of Directors to exercise its
option.
3. VOTING. The Investors agree that, during the term specified in III.2
above, for so long as the Investors beneficially own any Common Stock, the
Investors will (a) be present, in person or represented by proxy, at all
shareholder meetings of the Company so that all Common Stock beneficially owned
by the Investors may be counted for the purpose of determining the presence of a
quorum at such meetings and (b) with respect to the election of directors, vote
or consent, or cause to be voted or a consent to be given, with respect to all
Common Stock beneficially owned by the Investors on all matters submitted to
shareholders for a vote or consent in the same proportion as Common Stock are
voted by holders unaffiliated with the Investors.
IV.
ADDITIONAL AGREEMENTS
1. PRESS RELEASE. Upon the effectiveness of this Agreement, the Company
shall issue a press release in a form that shall have been previously approved
by the Investors, such
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approval not to be unreasonably withheld. Neither the Company nor the Investors
nor any of their affiliates, associates or representatives shall issue any other
press release or other publicly available document that is inconsistent with, or
is otherwise contrary to, the statements in such Company press release. The
Company shall make all filings with the Securities Exchange Commission
appropriate in connection with the execution of this Agreement, including a
Current Report on Form 8-K and amended proxy materials.
2. WITHDRAWAL OF NOTICES. The Investors hereby withdraw their request made
by letter dated September 5, 2000 giving notice to the Company of the Investors'
wish to nominate directors at the Annual Meeting. The Investors hereby withdraw
the letter of August 30, 2000 from Mr. Jacobs to the Company's Board of
Directors requesting, among other things, a list of the Company's shareholders.
The Investors agree to promptly amend their Schedule 13D filing to reflect, as
appropriate, the substance of this Agreement and that their intention no longer
involves a change in the board of directors or management of the Company except
as specified in this Agreement.
3. CHALLENGES TO AGREEMENT; DISPARAGING REMARKS. Each party hereto shall
not, and shall use its best efforts to cause each of its affiliates, associates
and representatives not to, challenge the validity of any provisions of this
Agreement. In the event that any part of this Agreement or any transaction
contemplated hereby is temporarily, preliminarily or permanently enjoined or
restrained by a court of competent jurisdiction, the parties hereto shall use
their reasonable best efforts to cause any such injunction or restraining order
to be vacated or dissolved or otherwise declared or determined to be of no
further force or effect. During the term of this Agreement, each of the
Investors agrees not to make any public statement or comment or private
statement or comment which could reasonably be expected to become public which
could in any way be deemed to diminish the reputation of or otherwise disparage
the Company, the Bank or its management; PROVIDED, HOWEVER, this section shall
in no way (i) estop either party from making factual statements which are
reasonably necessary or appropriate in the ordinary course of its business or
(ii) limit the ability of any party to pursue any remedy under this Agreement or
otherwise.
4. SPECIFIC PERFORMANCE. The Company and the Investors acknowledge and
agree that in the event of any breach of this Agreement, the non-breaching party
would be irreparably harmed and could not be made whole by monetary damages. It
is accordingly agreed that the Company and the Investors, in addition to any
other remedy to which they may be entitled at law or in equity, shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and/or to compel specific performance of this Agreement in any action instituted
in any federal court of the United States having subject matter jurisdiction.
5. CONFIDENTIALITY AGREEMENT. The Company, the Bank and the Investors shall
enter into the Confidentiality Agreement attached hereto as Annex A. It is
understood and agreed that a material inducement to the Company to enter into
this Agreement is the agreement of the Investors to enter into and perform the
terms of the Confidentiality Agreement. Accordingly, failure of any Investor to
comply with the provisions of such agreements shall constitute cause for the
Company to terminate this Agreement.
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V.
MISCELLANEOUS
1. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding of
the parties with respect to the subject matter hereof and may be amended only by
an agreement in writing executed by all the parties hereto.
2. HEADINGS. Descriptive headings are for convenience only and shall not
control or affect the meaning or construction of any provision of this
Agreement.
3. COUNTERPARTS. For the convenience of the parties, any number of
counterparts of this Agreement may be executed by the parties, and each such
executed counterpart shall be an original instrument.
4. NOTICES. All notices, consents, requests, instructions, approvals and
other communications provided for in this Agreement and all legal processes in
regard to this Agreement shall be validly given, made or served, if in writing
and delivered personally, by hand or by telecopy, or sent by registered mail
postage paid, if to the Company to it at:
BYL Bancorp
1875 N. Tustin Avenue
Orange, CA 92865
Attn: Robert Ucciferri
Fax: (714) 685-1372
with a copy, which shall not constitute notice, too:
Latham & Watkins
650 Town Center Drive
Costa Mesa, California 92626
Attn: David C. Flattum
Fax: (714) 755-8290
Knecht & Hansen
1301 Dove Street, Suite 900
Newport Beach, California 92660
Attn: Loren P. Hansen
Fax: (949) 851-1732
and if to the Investors as follows:
If to Everest/Harvey:
Mr. David M. W. Harvey
Post Office Box 3176
Gardnerville, NV 89410
Fax:
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If to JAM/Jacobs:
Mr. Seymour M. Jacobs
One Fifth Avenue
New York, New York 10003
Fax: (212) 271-5525
If to Becker:
Mr. Nick A. Becker
15061 Springdale Street, Suite 100
Huntington Beach, CA 92649
Fax (714) 890-4863
with a copy, which shall not constitute notice, to:
Horgan, Rosen, Beckham & Coren, L.L.P.
21700 Oxnard Street, Suite 1400
Woodland Hills, CA 91367
Attn: Mr. S. Alan Rosen
Fax: (818) 340-6190
or to such other address or telecopy number as any party may,
from time to time, designate in a written notice given in a like manner. Notice
given by hand or by telecopy shall be deemed given on the date on which so hand
delivered or telecopied. Notice given by mail as set out above shall be deemed
delivered five business days after the date the same is postmarked.
5. SUCCESSORS AND ASSIGNS. This Agreement shall bind the successors and
assigns of the parties, and inure to the benefit of any successor or assign of
any of the parties; PROVIDED, HOWEVER, that no party may assign this Agreement
without the other party's prior written consent.
6. GOVERNING LAW. This Agreement shall be governed by and constricted and
enforced in accordance with the internal laws of the State of California,
without giving effect to the conflict of the laws principles thereof.
7. CERTAIN TERMS. As used herein, (i) the terms "affiliate" and "associate"
shall have the meanings set forth in Rule 2b-2 under the Securities Exchange Act
of 1934, as amended, and (ii) "beneficial ownership" shall mean beneficial
ownership as determined under Rule 13d-3 under the Securities Exchange Act of
1934, as amended.
8. SURVIVAL OF REPRESENTATIONS. All representations, warranties and
agreements made by the Investors and the Company in this Agreement or pursuant
hereto shall survive the date hereof through the term of this Agreement.
9. CONSENT TO SERVICE. Each of the parties hereto hereby consents to the
personal jurisdiction of the United States District Court for the Central
District of California or if jurisdiction does not lie in the federal court,
then the California Superior Court for the County of
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Orange, in any action, suit or proceeding arising under this Agreement and each
agrees further that service of process or notice in any action, suit or
proceeding shall be effective if given in the manner set forth in Section V.4
hereof.
10. NO WAIVER. Any waiver by any party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
[SIGNATURES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first referred to above.
BYL Bancorp
By: /s/ Robert Ucciferri
-----------------------------
Its: President and Chief Executive
Officer
BYL Bank Group
By: /s/ Robert Ucciferri
-----------------------------
Its: President and Chief Executive
Officer
JAM Partners, L.P.
By: /s/ Seymour M. Jacobs
-----------------------------
Seymour M. Jacobs, general
partner
Everest Partners Limited Partnership
By: Everest Managers, L.L.C.,
its general partner
By: /s/ David M. W. Harvey*
-----------------------
David M. W. Harvey
its Managing Member
Everest Managers, L.L.C.
By: /s/ David M. W. Harvey*
-----------------------
David M. W. Harvey
its Managing Member
/s/ Seymour M. Jacobs
----------------------------
Seymour M. Jacobs
/s/ David M. W. Harvey*
----------------------------
David M. W. Harvey
/s/ Nick A. Becker
----------------------------
Nick A. Becker
* By S. Alan Rosen, attorney-in-fact
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