Exhibit A
SETTLEMENT AGREEMENT
BETWEEN
MONTEREY BAY BANCORP, INC.
AND
XXXXXX X. XXXXXX
This Settlement Agreement is made and entered into this 29th day of
April, 1999, by and between Monterey Bay Bancorp, Inc., a Delaware corporation
("Monterey Bay") and Xxxxxx X. Xxxxxx ("Xx. Xxxxxx").
WHEREAS, Xx. Xxxxxx, a stockholder of record of Monterey Bay, has
notified Monterey Bay of his intention to support an alternative slate of
directors in opposition to management's nominees at Monterey Bay's 1999 Annual
Meeting of Stockholders (the "1999 Annual Meeting") and has requested access to
a list of stockholders of record of Monterey Bay for purposes of soliciting
proxies in opposition to management's nominees; and
WHEREAS, Xx. Xxxxxx and Monterey Bay are desirous of resolving the
matters in dispute between them without engaging in a contested proxy
solicitation.
NOW THEREFORE, in consideration of the respective promises made herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Monterey Bay and Xx. Xxxxxx hereby agree as follows:
1. (a) Concurrently with the execution of this Agreement, Xx. Xxxxxx
shall provide to the Board of Directors of Monterey Bay a written statement
containing all information concerning Xx. Xxxxxx that would be required to be
disclosed pursuant to the Securities and Exchange Act of 1934, as amended, and
the rules thereunder, if Xx. Xxxxxx were to be named as a director in Monterey
Bay's proxy statement for the 1999 Annual Meeting. No later than ten (10) days
after the execution of this Agreement, the Board of Directors of Monterey Bay
shall appoint Xx. Xxxxxx as a director of Monterey Bay for a term expiring at
Monterey Bay's annual meeting of stockholders in the year 2000 (the "2000 Annual
Meeting"), and shall, prior thereto, amend Monterey Bay's bylaws to increase the
authorized number of directors to provide for Xx. Xxxxxx'x service as a director
in accordance with this Agreement. As a condition of this appointment, Xx.
Xxxxxx shall execute and deliver to Monterey Bay his written resignation from
the Board, effective upon a material breach by Xx. Xxxxxx of this Agreement. If
Monterey Bay fails to appoint Xx. Xxxxxx within this time, then Monterey Bay
shall extend the date of the 1999 Annual Meeting by ten (10) days and this
Agreement shall terminate.
(b) Xx. Xxxxxx'x term as a director of Monterey Bay shall expire
at the 2000 Annual Meeting. During the term of his service as a director of
Monterey Bay, Xx. Xxxxxx shall have all the rights and benefits, including
insurance and indemnification, provided other members of the Board of Directors,
and shall be eligible to participate in meetings of the Board and committees
thereof, and have access to information, to the same extent as the other
directors.
2. As soon as practicable after the execution of this Agreement, but in
any event no later than thirty (30) days after the execution of this Agreement,
the Board of Directors of Monterey Bay shall retain a nationally recognized
investment banking firm to advise the Board concerning various means of
enhancing shareholder value. Without limiting the generality of the foregoing,
the parties intend that such investment bank shall as part of its engagement
solicit proposals or indications of interest from reputable financial
institutions and other third parties to acquire all or substantially all of
Monterey Bay, and present an analysis of such market check to Monterey Bay's
Board of Directors within ninety (90) days from the date of its engagement (it
being understood that Monterey Bay's Board of Directors shall not, by virtue of
such solicitation, be obliged to negotiate or consummate a sale of Monterey Bay
if it determines after such market check and other deliberations that such sale
would not be in the best interests of Monterey Bay's shareholders).
3. So long as Monterey Bay is not in breach of this Agreement, Xx.
Xxxxxx, from the date hereof through the date of termination of this Agreement,
shall not (other than by virtue of Xx. Xxxxxx'x participation as a director on
the Board of Monterey Bay) (a) make, or in any way participate, directly or
indirectly, in any "solicitation" of "proxies" (as such terms are defined in the
proxy rules of the Securities and Exchange Commission) to vote securities of
Monterey Bay in opposition to the recommendation of the Board of Directors on
any matter submitted, or to be submitted to the stockholders of the Company; (b)
form, join or in any way participate with unaffiliated third parties in a
"group" within the meaning of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended, with respect to any voting securities of Monterey Bay; or (c)
otherwise act alone or in concert with others to seek to control the management,
board of directors or policies of Monterey Bay, provided that, the restrictions
of this paragraph shall not (x) prevent Xx. Xxxxxx from acting in accordance
with legal requirements (y) require Xx. Xxxxxx to act in a manner inconsistent
with his fiduciary duty, or (z) apply in the event of (i) the commencement (or
announcement by a third party of an intent to commence) a proxy solicitation in
connection with any meeting of the stockholders of Monterey Bay other than the
1999 Annual Meeting, (ii) a third party acquires (or announces its intent to
acquire) more than 20% of Monterey Bay's shares of common stock or total voting
power, (iii) Monterey Bay proposes to adopt anti-takeover measures, or (iv)
Monterey Bay enters into or announces its intent to enter into a merger,
consolidation, recapitalization, liquidation, sale or other extraordinary
transaction.
4. Notwithstanding anything to the contrary in paragraph 3 hereof, so
long as Monterey Bay is not in breach of this Agreement, Xx. Xxxxxx shall vote
all of the securities of Monterey Bay beneficially owned by him for the director
nominees proposed by the Board at the 1999 Annual Meeting.
5. It is understood and agreed that monetary damages would not be a
sufficient remedy for any breach or threatened breach of this Agreement. Each of
the parties hereto shall be entitled to equitable relief by way of injunction or
specific performance if the other party or any of its respective officers,
directors, investment bankers, attorneys, accountants or other representatives
breach, or threaten to breach, any of the provisions of this agreement, such
remedy by way of equitable relief being cumulative, and not exclusive, of any
other remedies and/or rights that the complaining party shall have the right to
exercise. It is further understood and agreed that no failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any right, power or
privilege hereunder.
6. In the event of any dispute between the parties hereto regarding the
performance or interpretation of this Agreement, the prevailing party shall be
entitled to its reasonable attorneys' fees, costs and other expenses, in
addition to any other relief to which such party may be entitled.
7. This Agreement shall be governed in all respects, including
validity, interpretation and effect, by the internal laws of the State of
Delaware, without regard to the principles of conflicts of laws.
8. This Agreement shall terminate upon the earliest of (i) the failure
of the Board of Directors to appoint Xx. Xxxxxx as a director at Monterey Bay
within ten (10) days after the execution of this Agreement; (ii) March 31, 2000,
provided that if the Agreement is not otherwise breached by the action of Xx.
Xxxxxx, the term of Xx. Xxxxxx shall continue until a successor is duly elected
or appointed; or (iii) Xx. Xxxxxx'x resignation from the Board. No right or
obligation shall survive the termination of this Agreement except for claims
arising from, or in connection with, the breach of this Agreement.
9. During the term of this Agreement, neither Monterey Bay nor Xx.
Xxxxxx shall institute any litigation against the other, except that either
party may institute litigation against the other party in the event of, and
alleging, any breach of or default under or threatened breach of or default
under, this Agreement.
10. All the terms and provisions of this Agreement shall inure to the
benefit of, shall be enforceable by, and shall be binding upon, the successors
and assigns of the parties hereto.
11. The parties hereto agree to cooperate in good faith with respect to
the making of any public announcement of the terms or existence of this
Agreement. Notwithstanding the foregoing, nothing in this Agreement shall affect
the right of any party to make any public disclosure deemed necessary by that
party to comply with that party's obligations under the Securities Exchange Act
of 1934, as amended and the rules thereunder, or other applicable laws.
12. This Agreement contains the entire understanding of the parties
with respect to its subject matter. There are no restrictions, agreements,
promises, representations, warranties, covenants or understandings other than
those expressly set forth herein. This Agreement may be amended only by a
written instrument duly executed by the parties or their respective successors
or assigns.
13. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given if so given) by hand delivery, cable, telecopy (confirmed in
writing) or telex, or by mail (registered or certified, postage prepaid, return
receipt requested) to the respective parties as follows:
If to Monterey Bay:
with a copy to:
Monterey Bay Bancorp, Inc. McGuire, Woods, Battle & Xxxxxx LLP
000 Xxxx Xxxxxx Xxxxx 0000 Xxxxxxxxxxx Xxxxxx, X.X., Xxx. 0000
Xxxxxxxxxxx, XX 00000 Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxxxx Xxxx Attention: Xxxxxxx X. Xxxxxxxx, Esquire
If to Xx. Xxxxxx:
with a copy to:
El Coronado Ranch Dechert Price & Xxxxxx
Star Route Box 395 0000 Xxx Xxxxxx, X.X.
Xxxxxx, XX 00000 Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxx X. Xxxxxx, Esquire
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
14. This Agreement may be executed in counterparts, each of which shall
be an original, but each of which together shall constitute one and the same
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
MONTEREY BAY BANCORP, INC.
By: /s/ Xxxxxxxx X. Xxxx
Xxxxxxxx X. Xxxx
President and Chief Operating Officer
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
