STOCKHOLDERS' AGREEMENT
Stockholders' Agreement (this "Agreement"), dated as of this 20th day of
April 1998, by and among PBOC Holdings, Inc., a Delaware corporation (formerly
known as SoCal Holdings, Inc.) (the "Company"), and the Trustees of the Estate
of Bernice Pauahi Bishop, a trust organized under the laws of Hawaii ("Bishop"),
BIL Securities (Offshore) Limited, a corporation organized under the laws of New
Zealand ("BIL Securities"), and Arbur, Inc., a Delaware corporation ("Arbur")
(collectively the "Stockholders"), who are the holders of all of the outstanding
shares of common stock, par value $0.01 per share ("Common Stock") and all of
the outstanding shares of series preferred stock, par value $0.01 per share
("Preferred Stock") of the Company.
WHEREAS, the Company and the Stockholders (which included BIL (Far East
Holdings) Limited which transferred its interest in the Company to BIL
Securities as of August 2, 1995) entered into an Agreement and Plan of
Reorganization dated as of June 1, 1995 ("Plan of Reorganization"), which
provided for the recapitalization of the Company and its wholly-owned
subsidiary, People's Bank of California (formerly known as Southern California
Federal Savings and Loan Association) (the "Bank");
WHEREAS, Article II of the Plan of Reorganization provided, among other
things, that the Company would issue and sell to: (x) Bishop: $10.0 million
aggregate principal amount of its senior notes ("Senior Notes"), 85,000 shares
of its Preferred Stock, Series C ("Series C Preferred Stock"), 14,000 shares of
its Preferred Stock, Series D ("Series D Preferred Stock"), 226,000 shares of
its Preferred Stock, Series E ("Series E Preferred Stock"); (y) BIL Securities:
14,000 shares of Series D Preferred Stock and 106,000 shares of Series E
Preferred Stock; and (z) Arbur: 40,000 shares of Series D Preferred Stock
(collectively, the outstanding Series C Preferred Stock, Series D Preferred
Stock and Series E Preferred Stock is referred to as the "Outstanding Preferred
Stock"), and the Stockholders agreed to purchase such securities from the
Company;
WHEREAS, the Company provided the Stockholders in the Plan of
Reorganization with, among other things, (i) a right of first refusal with
respect to the sale by the Company or the Bank of any shares of Capital
Securities (as defined in the Plan of Reorganization) of either of the Company
or the Bank, under the circumstances defined therein; and (ii) certain
continuing covenants as set forth in Article V of the Plan of Reorganization.
WHEREAS, the Company and the Stockholders entered into a Stockholders'
Agreement dated as of June 1, 1995 (the "1995 Stockholders' Agreement"), which
provides, among other things, for restrictions on the ability of the
Stockholders to transfer shares of SCH Common Stock and registration rights
under various circumstances with respect to the Company's SCH Capital Stock, as
each term is defined in the 1995 Stockholders' Agreement;
WHEREAS, the Company has filed a Registration Statement on Form S-1 (the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission")
with respect to a proposed public offering of its Common Stock (the "Public
Offering") and, in connection therewith, but subject to consummation of the
Public Offering, the Stockholders desire to (i) take certain actions to amend
and restate the Amended and Restated Certificate of Incorporation and to
adopt new Bylaws of the Company, (ii) simplify the Company's capital
structure, including an exchange of Outstanding Preferred Stock for shares of
Common Stock in accordance with the terms hereof and prepayment of the
Company's Senior Notes, (iii) terminate the remaining operative provisions of
the Plan of Reorganization and the 1995 Stockholders' Agreement and (iv)
agree to continuing Board representation by the Stockholders subject to
certain conditions; and
WHEREAS, the Stockholders understand that in order to normalize the number
of shares of Common Stock and price per share of Common Stock that is
outstanding prior to the Public Offering, the Company has authorized a 32:1
stock split (the "Stock Split"), to be effected in the form of a stock dividend
of additional shares of Common Stock, which dividend is intended to be paid
subsequent to the exchange of Outstanding Preferred Stock for Common Stock and
immediately prior to the declaration of effectiveness by the Commission of the
Company's Registration Statement with respect to the Public Offering.
NOW, THEREFORE, in consideration of the mutual promises and agreements of
the parties hereto and other good and valuable consideration, the parties hereby
agree as follows:
1. EFFECTIVE TIME OF AGREEMENT.
Each of the transactions contemplated by this Agreement shall be taken
immediately prior to the declaration of effectiveness by the Commission of
the Company's Registration Statement with respect to the Public Offering
2. AGREEMENT WITH RESPECT TO AMENDMENT AND RESTATEMENT OF CERTIFICATE OF
INCORPORATION AND ADOPTION OF NEW BYLAWS.
(a) The Stockholders hereby authorize the Board of Directors to adopt
the Amended and Restated Certificate of Incorporation of the Company in the
form attached hereto as Exhibit A (the "Amended Certificate") and authorize
the Board of Directors to cause such Amended Certificate to be filed with
the Delaware Secretary of State immediately prior to consummation of the
Public Offering. The Stockholders hereby approve and affirm the adoption
and filing with the Delaware Secretary of State of the Amended Certificate.
(b) The Stockholders hereby authorize the Board of Directors to adopt
new Bylaws in the form attached hereto as Exhibit B, which Bylaws shall be
effective upon consummation of the Public Offering.
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3. EXCHANGE OF OUTSTANDING PREFERRED STOCK.
(a) The Stockholders acknowledge that the terms of the Certificate of
Designation and Preferences with respect to each series of Outstanding
Preferred Stock provides that the Company has the right to redeem the
Outstanding Preferred Stock at any time, upon providing specified notice to
each of the Stockholders as to the date and place of redemption. The
Stockholders hereby agree with the Company that in lieu of said redemption
of the Outstanding Preferred Stock, each share of Outstanding Preferred
Stock shall be exchanged for 0.5495 shares of Common Stock, which exchange
shall take place prior to the Stock Split and the commencement of the
Public Offering. Thus, Bishop, BIL Securities and Arbur shall receive
178,571, 65,934 and 21,978 shares of Common Stock in such exchange,
respectively. Notwithstanding the foregoing, the Pricing Committee of the
Company's Board of Directors which has been established in connection with
the Public Offering may, in their discretion, determine not to exchange the
full amount of BIL Securities' Outstanding Preferred Stock prior to
commencement of the Public Offering. To the extent that not all of BIL
Securities' Outstanding Preferred Stock is so exchanged, the Stockholders
hereby authorize the Pricing Committee to exchange such Outstanding
Preferred Stock of BIL Securities for Common Stock of the Company
immediately following the commencement of the Public Offering under terms
which would provide BIL Securities with shares of Common Stock of
equivalent value to that which was exchanged for the Stockholders pursuant
to this Section 3 prior to commencement of the Public Offering.
(b) The Stockholders acknowledge that the accumulated and unpaid
dividends on the Outstanding Preferred Stock, at the stated dividend rate
with respect to each of the Series C Preferred Stock, Series D Preferred
Stock and Series E Preferred Stock, shall be paid by the Company to the
Stockholders following the closing of the Public Offering by wire transfer
of funds to the account designated in writing by each Stockholder to the
Secretary of the Company. The Stockholders acknowledge that the
Outstanding Preferred Stock shall be cancelled by the Company upon
consummation of such exchange and the Public Offering.
4. PREPAYMENT OF SENIOR NOTES.
Bishop agrees that effective upon consummation of the Public Offering
and pursuant to Section 7 of the Senior Notes, the Company shall prepay all
$10.0 million aggregate principal amount of the Senior Notes. Bishop
acknowledges that immediately following the Public Offering, the Company
shall pay Bishop the aggregate principal amount of such Senior Notes, plus
accrued interest thereon to the date of prepayment (but not including the
date of prepayment), by wire transfer of funds to the account designated in
writing by Bishop to the Secretary of the Company. Bishop acknowledges
that the Senior Notes shall be marked "paid in full" by the Company
following such prepayment hereunder.
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5. TERMINATION OF PLAN OF REORGANIZATION AND 1995 STOCKHOLDERS'
AGREEMENT.
The Stockholders agree that the remaining operative provisions of the
Plan of Reorganization and the 1995 Stockholders' Agreement in its entirety
are terminated effective with the consummation of the Public Offering.
6. CONTINUING BOARD REPRESENTATION BY STOCKHOLDERS.
(a) The Company agrees that for so long as each Stockholder continues
to be a Material Stockholder (as defined in Section 6(b) hereof), if
requested by such Stockholder, it shall (i) exercise all authority under
applicable law to cause the number of nominees permitted to be designated
by such Stockholder (as provided in Section 6(b) hereof) and consented to
by the Board of Directors of the Company (such consent not to be
unreasonably withheld) (a "Company Designated Director") to be included in
the slate of nominees recommended by the Board of Directors to stockholders
for election as directors at each annual meeting of stockholders of the
Company after the date of this Agreement at which the term of the Company
Designated Director is scheduled to expire (subject to the satisfaction of
any applicable regulatory requirements), and (ii) use all practical efforts
to cause the election of such slate, including such Company Designated
Director.
(b) For purposes of this Section 6, Bishop shall be considered a
Material Stockholder and entitled to nominate two (2) directors for
election to the Company's Board of Directors for so long as Bishop
beneficially owns 9.9% or more of the Company's outstanding Common Stock
following the consummation of the Public Offering. Bishop shall be
considered a Material Stockholder entitled to nominate one (1) director for
election to the Company's Board of Directors for so long as Bishop
beneficially owns less than 9.9% but 5.0% or more of the Company's
outstanding Common Stock following the consummation of the Public Offering.
BIL Securities and Arbur collectively shall be considered a Material
Stockholder entitled to nominate one (1) director for election to the
Company's Board of Directors for so long as BIL Securities and Arbur
collectively beneficially own 5.0% or more of the Company's outstanding
Common Stock following the consummation of the Public Offering. Bishop
shall not be considered a Material Stockholder if Bishop's beneficial
ownership of the Company's outstanding Common Stock following consummation
of the Public Offering is less than 5.0% and BIL Securities and Arbur
collectively shall not be considered Material Stockholders if BIL
Securities' and Arbur's collective beneficial ownership of the Company's
outstanding Common Stock following consummation of the Public Offering is
less than 5.0% For purposes of this Agreement, "beneficial ownership"
shall have the meaning set forth in Section 13(d) of the Securities
Exchange Act of 1934, as amended.
(c) Notwithstanding any other provision of this Section 6, the
Company shall not be required to take any action required by this Section 6
if such action would
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cause the Company to be in violation of any law, regulation, order or other
written requirement of the Office of Thrift Supervision, the Federal
Deposit Insurance Corporation, or any successor thereto, provided that the
Company agrees to promptly use its reasonable best efforts to remove any
regulatory impediment to the exercise of the Stockholder's rights under
this Agreement.
(d) The Company agrees that in the event that a Stockholder's Company
Designated Director elected to the Board of Directors of the Company shall
cease to serve as a director for any reason while such Stockholder remains
a Material Stockholder, the vacancy resulting therefrom (including a
vacancy on any committee of the Board of Directors) will be filled promptly
by the Board of Directors with a substitute Company Designated Director
designated by such Stockholder if requested to do so by such Stockholder.
(e) Unless otherwise approved by the requisite vote of all
stockholders required by the Company's Amended and Restated Certificate of
Incorporation to amend the Bylaws, for so long as the provisions of this
Section 6 shall be applicable, the Bylaws of the Company shall provide for
and the Board of Directors shall be comprised of seven (7) directors.
(f) Notwithstanding any other provisions of this Agreement and
subject to any applicable regulatory restrictions, the Stockholders shall
at all times have and retain a right of attendance at Board of Directors
meetings, irrespective of their continued status as Material Stockholders,
until such time as the Litigation shall have been settled or otherwise
terminated (and any Litigation Recovery therefrom distributed) in
accordance with the Shareholder Rights Agreement executed contemporaneously
with this Agreement, or until the Stockholders shall have transferred all
of their Rights under such Shareholder Rights Agreement. For purposes of
this Section 6(f), the terms "Litigation," "Litigation Recovery," and
"Rights" shall have the meaning set forth in such Shareholder Rights
Agreement.
7. REPRESENTATIONS AND WARRANTIES.
Each of the parties hereto represents and warrants to the other
parties that (i) such party has full power and authority to enter into this
Agreement and to perform its obligations hereunder, (ii) such party has
taken all actions required to authorize the execution of this Agreement and
the performance of its obligations hereunder, (iii) this Agreement is a
valid and binding obligation upon and enforceable in accordance with its
terms against such party, and (iv) such party will not take any action
inconsistent with the purposes and provisions of this Agreement.
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8. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute
but one and the same Agreement.
9. GOVERNING LAW.
This Agreement shall be deemed to be a contract made under the laws of
the State of California and for all purposes shall be construed in
accordance with the laws of said State, without regard to principles of
conflict of laws.
10. ENTIRE AGREEMENT.
This Agreement constitutes the entire contract between the parties
relative to the subject matter hereof and all other previous agreements
among the parties relative to the subject matter hereof are superseded by
this Agreement.
11. SURVIVAL.
The provisions of Section 6 shall survive the consummation of the
Public Offering and shall continue in full force and effect thereafter, but
only so long as any of the Stockholders are Material Stockholders.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first shown above.
PBOC HOLDINGS, INC.
By:
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Name:
Title:
STOCKHOLDERS:
TRUSTEES OF THE ESTATE OF
BERNICE PAUAHI BISHOP
By:
------------------------------------
Name:
Title: Trustee
By:
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Name:
Title: Trustee
By:
------------------------------------
Name:
Title: Trustee
BIL SECURITIES (OFFSHORE) LIMITED
By:
------------------------------------
Name:
Title:
ARBUR, INC.
By:
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Name:
Title:
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