FORM OF
SHAREHOLDER AGREEMENT
Shareholder Agreement (the "Agreement"), dated as of October 6, 1998,
by and among (i) ___________________________________, a shareholder (the
"Shareholder") of PNB Financial Group, Inc., a California corporation (the
"Company"), and (ii) Western Bancorp, a California corporation ("Western"). All
terms used herein and not defined herein shall have the meanings assigned
thereto in the Merger Agreement (defined below).
Whereas, Western and the Company have entered into an Agreement and
Plan of Merger, dated as of the date hereof (the "Merger Agreement"), providing
for the business combination transaction contemplated therein in which the
Company will merge with and into Western pursuant to the terms and conditions of
the Merger Agreement (the "Merger") and Western will pay consideration to the
shareholders of the Company in the form of Western Common Stock;
Whereas, the Shareholder owns shares of Company Common Stock (such
shares, together with all shares of Company Common Stock subsequently acquired
by the Shareholder during the term of this Agreement, being referred to as the
"Shares"); and
Whereas, in order to induce Western to enter into the Merger Agreement
and in consideration of the substantial expenses incurred and to be incurred by
Western in connection therewith, the Shareholder, solely in such Shareholder's
capacity as a shareholder of the Company and not in any other capacity, has
agreed to enter into and perform this Agreement.
Now, therefore, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. Agreement to Vote Shares. Shareholder shall vote or cause to be
voted, or execute a written consent with respect to, the Shares then held of
record or beneficially owned, directly or indirectly, by such Shareholder in
favor of adoption and approval of the principal terms of the Merger Agreement
and all transactions contemplated thereby including any agreement of merger
contemplated thereby at every meeting of the shareholders of the Company at
which such matters are considered and at every adjournment thereof and in
connection with every proposal to take action by written consent with respect
thereto.
2. Delivery of Schedule. Shareholder shall deliver to Western not more
than seven (7) days after the date of this Agrement a schedule that identifies
the total number of
B-1
shares held of record or beneficially owned, directly or indirectly, by such
Shareholder on the date hereof.
3. No Voting Trusts. Shareholder agrees that Shareholder will not, nor
will Shareholder permit any entity under Shareholder's control to, deposit any
Shares in a voting trust or subject the Shares to any agreement, arrangement or
understanding with respect to the voting of the Shares inconsistent with this
Agreement.
4. Representations and Warranties of Shareholder. Shareholder
represents and warrants to and agrees with Western as follows:
a. Capacity. Shareholder has all requisite capacity and authority
to enter into and perform his or her obligations under this Agreement.
b. Binding Agreement. This Agreement constitutes the valid and
legally binding obligation of Shareholder, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
c. Non-Contravention. The execution and delivery of this Agreement
by Shareholder does not, and the performance by Shareholder of his or
her obligations hereunder and the consummation by Shareholder of the
transactions contemplated hereby will not, violate or conflict with, or
constitute a default under, any agreement, instrument, contract or
other obligation or any order, arbitration award, judgment or decree to
which Shareholder is a party or by which Shareholder is bound, or any
statute, rule or regulation to which Shareholder is subject or, in the
event that Shareholder is a corporation, partnership, trust or other
entity, any charter, bylaw or other organizational document of the
Shareholder.
d. Ownership of Shares. Shareholder has good title to all of the
Shares as of the date hereof, and, except as set forth on Annex A
hereto (to be delivered to Western not more than seven (7) days after
the date of this Agreement), the Shares are so owned free and clear of
any liens, security interests, charges or other encumbrances.
5. Non-Competition; Disclosure; Solicitation. Neither Shareholder nor
any corporation, partnership, trust or other entity "controlled" by Shareholder
(as that term is defined in the Securities Exchange Act of 1934, as amended)
shall:
a. at any time within a one-year period immediately following the
Effective Time, be employed at a senior level by, acquire greater than
10% of the capital stock of or serve as an organizer or promoter of any
business which provides banking
B-2
services, including, but not limited to, deposit and operational
services, loans, trust services, escrow services and electronic banking
services ("Banking Businesses"), in the county of Orange in the State
of California so long as Western, any of its subsidiaries or any of
their respective assigns remain engaged in any Banking Businesses;
b. at any time following the Effective Date, disclose confidential
information regarding the Company to any third parties, except as
required by law, regulation, a court order, in the defense of
litigation for which the Company may be liable, or in any actions
relating to this Agreement or the Merger Agreement and the transactions
contemplated hereby or thereby; and
c. for a period of three years following the Effective Date,
solicit, directly or indirectly, on its own behalf or on behalf of any
other person or entity, management personnel employed by Western or its
subsidiaries, including the Company immediately after the Effective
Time for employment with any other business;
provided, however, that with respect to any of the matters covered in this
Section 5, to the extent that any restriction set forth in this Section 5 is
adjudicated to be invalid or unenforceable in any jurisdiction, the court making
such determination shall have the power to limit, construe or reduce the
duration, scope, activity or area of such provision to the extent necessary to
render such provision enforceable to the maximum extent permitted by applicable
law, such limited form to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made.
6. Specific Performance and Remedies. Shareholder acknowledges that it
will be impossible to measure in money the damage to Western if Shareholder
fails to comply with the obligations imposed by this Agreement and that, in the
event of any such failure, Western will not have an adequate remedy at law or in
damages. Accordingly, Shareholder agrees that injunctive relief or other
equitable remedy, in addition to remedies at law or in damages, is the
appropriate remedy for any such failure and will not oppose the granting of such
relief on the basis that Western has an adequate remedy at law. Shareholder
agrees that it will not seek, and agrees to waive any requirement for, the
securing or posting of a bond in connection with Western's seeking or obtaining
such equitable relief. In addition, after discussing the matter with
Shareholder, Western shall have the right to inform any third party that Western
reasonably believes to be, or to be contemplating, participating with
Shareholder or receiving from Shareholder assistance in violation of this
Agreement, of the terms of this Agreement and of the rights of Western
hereunder, and that participation by any such persons with Shareholder in
activities in violation of Shareholder's agreement with Western set forth in
this Agreement may give rise to claims by Western against such third party.
B-3
7. Term of Agreement; Termination. a. The term of this Agreement shall
commence on the date hereof.
b. This Agreement shall terminate upon the date, if any, of the
termination of the Merger Agreement prior to the Effective Time in accordance
with its terms. Upon such termination, no party shall have any further
obligations or liabilities hereunder; provided, however, such termination shall
not relieve any party from liability for any breach of this Agreement prior to
such termination.
c. If the Merger Agreement is not terminated prior to the Effective
Time, this Agreement (except for the provisions of Sections 4, 5, 6, 9, 10 and
11, which shall survive the Effective Time) shall terminate upon the Effective
Time. Upon such termination, no party shall have any further obligations or
liabilities under this Agreement; provided, however, such termination shall not
relieve any party from liability for any breach of such Section prior to such
termination.
8. Entire Agreement. This Agreement supersedes all prior agreements,
written or oral, among the parties hereto with respect to the subject matter
hereof and contains the entire agreement among the parties with respect to the
subject matter hereof. This Agreement may not be amended, supplemented or
modified, and no provisions hereof may be modified or waived, except by an
instrument in writing signed by each party hereto. No waiver of any provisions
hereof by either party shall be deemed a waiver of any other provisions hereof
by any such party, nor shall any such waiver be deemed a continuing waiver of
any provision hereof by such party.
9. Notices. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission and on the next business day when sent by a
reputable overnight courier service to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Western:
0000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxxx
Telecopier: (000) 000-0000
B-4
With a copy to:
Xxxxxxxx & Xxxxxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopier: (000) 000-0000
If to the Shareholder:
10. Miscellaneous.
a. Severability. If any provision of this Agreement or the
application of such provision to any person or circumstances shall be
held invalid or unenforceable by a court of competent jurisdiction,
such provision or application shall be unenforceable only to the extent
of such invalidity or unenforceability, and the remainder of the
provision held invalid or unenforceable and the application of such
provision to persons or circumstances, other than the party as to which
it is held invalid, and the remainder of this Agreement, shall not be
affected.
b. Capacity. The covenants contained herein shall apply to
Shareholder solely in his or her capacity as a shareholder of the
Company, and no covenant contained herein shall apply to Shareholder in
his or her capacity as a director or officer of the Company.
c. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
d. Headings. All Section headings herein are for convenience of
reference only and are not part of this Agreement, and no construction
or reference shall be derived therefrom.
B-5
E. CHOICE OF LAW. THIS AGREEMENT SHALL BE DEEMED A CONTRACT MADE
UNDER, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF CALIFORNIA, WITHOUT REFERENCE TO ITS CONFLICTS OF
LAW PRINCIPLES.
11. Attorney's Fees. The prevailing party or parties in any litigation,
arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party or parties all fees and disbursements of
counsel (including expert witness and other consultants' fees and costs)
relating to or arising out of (a) the Proceeding (whether or not the Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding
including, without limitation, one to enforce or collect any judgment or award
resulting from the Proceeding. All such judgments and awards shall contain a
specific provision for the recovery of all such subsequently incurred costs,
expenses, and fees and disbursements of counsel.
B-6
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
WESTERN BANCORP
By:
-----------------------------------
Name: Xxxxxx X. Xxxx
Title: Executive Vice President and
Chief Financial Officer
SHAREHOLDER:
--------------------------------------
(Print or type name)
--------------------------------------
(Signature)
B-7
