<PAGE> 1
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (earliest event reported) NOVEMBER 14, 1997
-----------------
CALIFORNIA COMMUNITY BANCSHARES CORPORATION
- -------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Commission file number 0-27856
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DELAWARE 68-0366324
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
555 Mason Street, Suite 280, Vacaville, CA 95688-4612
- ------------------------------------------ ---------------
(Address of principal executive offices) (ZIP Code)
(707) 448-1200
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(Issuer's telephone number)
Not Applicable
- -------------------------------------------------------------
(Former name or former address, if changed since last report)
Index to Exhibits is on page 5
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Not applicable
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Not applicable
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable
ITEM 5. OTHER EVENTS
On November 13, 1997, California Community Bancshares
Corporation ("Bancshares"), a Delaware corporation and a
registered bank holding company under the Federal Bank Holding
Company Act of 1956 as amended ("BHCA"), and its wholly owned
subsidiary, Continental Pacific Bank ("CPB"), a California state
banking corporation (collectively "CCBC"), entered into a Plan of
Acquisition and Merger Agreement ("Agreement") with SierraWest
Bancorp ("Bancorp"), a California corporation and a registered
bank holding company under the BHCA, SierraWest Bank ("Sierra
Bank"), a California Banking corporation (Collectively "SWB").
The Agreement is attached as exhibit 2 to this report and is
incorporated herein by reference. The following discussion of
the Agreement does not purport to be a complete summary of the
Agreement and is qualified in its entirety by reference thereto.
Under the terms of the proposed transaction, shareholders of
CCBC will receive shares of SWB common stock at an exchange ratio
to be determined by a formula prior to the effective date of the
transaction, based on the average of the closing prices of SWB
common stock during a defined 20-day period. This transaction is
expected to be accounted for under the pooling of interest method
of accounting.
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On November 14, 1997, CCBC and SWB issued a joint press
release (exhibit 99) announcing that they have signed the
definitive agreement. The transaction is valued at approximately
$39 million, based on the closing price of SWB stock on November
13, 1997.
CCBC is headquartered in Vacaville, California. CPB operates
eight banking offices in Solano and Contra Costa counties in
California. CCBC had total assets of $192 million at September
30, 1997.
SWB is headquartered in Truckee, California. SWB operates
branches in Sacramento, the Sierra foothills and Lake Tahoe
regions of California and northern Nevada. SWB had total assets
of $575 million at September 30, 1997.
The merger, which is scheduled to close during the first half of
1998, is subject to the satisfaction, on or before the Closing
date, of certain conditions, including, without limitation,
receipt of the approval of CCBC's and SWB's shareholders and
various regulatory and governmental agencies.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
Not applicable
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following exhibits are filed with this report:
(c) Exhibits
1. Plan of Acquisition and Merger by and between SierraWest
Bancorp, SierraWest Bank, and California Community Bancshares
Corporation, Continental Pacific Bank, dated November 13, 1997.
2. Press release dated November 14, 1997.
ITEM 8. CHANGE IN FISCAL YEAR
Not applicable
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
CALIFORNIA COMMUNITY BANCSHARES CORPORATION
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Date 11/19/97 /s/ Walter O. Sunderman
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Walter O. Sunderman
President
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Date 11/19/97 /s/ ANDREW S. POPOVICH
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Andrew S. Popovich
Principal Accounting Officer
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INDEX TO EXHIBITS
- --------------------------------------------------------------
Sequentially
Exhibit Numbered
Number Description of Exhibit Page
- --------------------------------------------------------------
2 Plan of Acquisition and Merger
Agreement by and between SierraWest
Bancorp, SierraWest Bank, and
California Community Bancshares
Corporation, Continental Pacific Bank,
- dated November 13, 1997. 6
99 Press Release
- dated November 14, 1997 104
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EXHIBIT 2 - TO THE 8-K FORM
PLAN OF ACQUISITION AND MERGER
BY AND BETWEEN
SIERRAWEST BANCORP
SIERRAWEST BANK
AND
CALIFORNIA COMMUNITY BANCSHARES
CONTINENTAL PACIFIC BANK
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TABLE OF CONTENTS
PAGE
Section 1. THE MERGER AND BANK MERGER......................2
1.1 Effective Date..............................2
1.2 Effect of the Bank Merger...................2
1.3 Effect of the Merger........................2
1.4 Board Composition After the Merger..........3
Section 2. CONVERSION AND CANCELLATION OF SHARES...........3
2.1 Exchange Amount; Conversion of Shares of
Bancshares Common Stock.....................3
2.2 Fractional Shares...........................5
2.3 Surrender of CCBC Shares....................5
2.4 No Further Transfers of CCBC Shares.........6
2.5 Adjustments.................................6
2.6 Treatment of Stock Options..................6
2.7 Personnel Matters...........................7
(a) Employment At Effective Date.........7
(b) Retirement Benefits..................7
(c) Other Benefit Plans..................7
(d) Other Benefits.......................8
Section 3. COVENANTS OF THE PARTIES...................8
3.1 Mutual Covenants...........................8
(a) Government Approvals.................8
(b) Notification of Breach of
Representations, Warranties and
Covenants............................8
(c) Financial Statements.................8
(d) Press Releases.......................9
(e) Access to Properties, Books and
Records; Confidentiality.............9
(f) Additional Agreements ..............10
(g) Advice of Changes...................10
(h) Legal Conditions to Merger..........10
3.2 Covenants of CCBC.........................10
(a) Approval by Shareholders............10
(b) Compensation........................11
(c) Conduct of Business in the
Ordinary Course.....................11
(d) No Merger or Solicitation...........14
(e) Changes in Capital Stock; Dividends.14
(f) Employee Welfare Benefit Plans......15
AC973160.145 19835-004 i
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(g) Shareholder Lists and Other
Information.........................15
(h) Capital Commitments and
Expenditures........................15
(i) Asset Review........................15
(j) Execution of Stock Option Agreement.16
(k) Pre-Closing Adjustments.............16
3.3 Covenants of Sierra.......................16
(a) Approval by Shareholders............16
(b) Conduct of Business in the
Ordinary Course.....................17
(c) Dividends...........................18
(d) Indemnification; Insurance..........18
Section 4. REPRESENTATIONS AND WARRANTIES OF CCBC....20
4.1 Corporate Status and Power to
Enter Into Agreements.....................20
4.2 Articles, Bylaws, Books and Records.......20
4.3 Compliance With Laws, Regulations
and Decrees...............................20
4.4 Capitalization............................20
4.5 Equity Interest in Any Entity.............21
4.6 Financial Statements, Regulatory Reports..21
4.7 Tax Returns...............................22
4.8 Material Adverse Change...................22
4.9 No Undisclosed Liabilities................23
4.10 Properties and Leases.....................23
4.11 Material Contracts........................24
4.12 Loans.....................................24
4.13 Restrictions on Investments...............25
4.14 Employment Contracts and Benefits.........25
4.15 Compliance with ERISA.....................25
4.16 Collective Bargaining and
Employment Agreements.....................26
4.17 Compensation of Officers and Employees....26
4.18 Legal Actions and Proceedings.............26
4.19 Execution and Delivery of the Agreements..27
4.20 Retention of Broker or Consultant.........27
4.21 Insurance.................................28
4.22 Loan Loss Reserves........................28
4.23 Transactions With Affiliates..............28
4.24 Information in Sierra Registration
Statement.................................28
4.25 Pooling of Interests......................29
4.26 Derivatives Contracts; Structured
Notes; Etc................................29
4.27 Accuracy of Representations and
Warranties................................29
ii
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Section 5. REPRESENTATIONS AND WARRANTIES OF SIERRA..29
5.1 Corporate Status and Power to Enter
Into Agreements...........................29
5.2 Articles, Bylaws, Books and Records.......30
5.3 Compliance With Laws, Regulations
and Decrees...............................30
5.4 Capitalization............................30
5.5 Financial Statements, Regulatory Reports..31
5.6 Tax Returns...............................31
5.7 Material Adverse Change...................32
5.8 Legal Actions and Proceedings.............32
5.9 Execution and Delivery of the Agreement...32
5.10 No Undisclosed Liabilities................33
5.11 No Material Environmental Liabilities.....33
5.12 No Material Liabilities Under ERISA.......33
5.13 Retention of Broker or Consultant.........33
5.14 Loan Loss Reserves........................34
5.15 Information in Sierra Registration
Statement.................................34
(a) Pooling of Interests................34
5.16 Equity Interest in Any Entity.............34
5.17 Loans.....................................34
5.18 Derivatives Contracts; Structured
Notes; Etc................................35
5.19 Accuracy of Representations and
Warranties................................35
Section 6. SECURITIES ACT OF 1933; SECURITIES
EXCHANGE ACT OF 1934......................35
6.1 Preparation and Filing of Registration
Statement.................................35
6.2 Effectiveness of Registration
Statement and Listing of Shares...........36
6.3 Sales and Resales of Common Stock.........36
6.4 Rule 145 and Related Matters..............36
Section 7. CONDITIONS TO THE OBLIGATIONS OF SIERRA...36
7.1 Representations and Warranties............36
7.2 Compliance and Performance Under
Agreement.................................37
7.3 Material Adverse Change...................37
7.4 Approval of Agreement.....................37
7.5 Officer's Certificate.....................37
7.6 Opinion of Counsel........................37
7.7 Absence of Legal Impediment...............37
7.8 Effectiveness of Registration Statement...37
iii
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7.9 Government Approvals......................37
7.10 Tax Opinion...............................38
7.11 Unaudited Financials......................39
7.12 Rule 145 Undertaking......................39
7.13 Closing Documents.........................39
7.14 Consents..................................39
7.15 Shareholder Agreements....................39
7.16 Noncompetition Agreements.................40
7.17 Fairness Opinion..........................40
7.18 Pooling of Interests......................40
7.19 Resignations..............................40
Section 8. CONDITIONS TO THE OBLIGATIONS OF CCBC.....40
8.1 Representations and Warranties............40
8.2 Compliance and Performance Under
Agreement.................................40
8.3 Material Adverse Change...................40
8.4 Approval of Agreement.....................41
8.5 Officer's Certificate.....................41
8.6 Opinion of Counsel........................41
8.7 Absence of Legal Impediment...............41
8.8 Effectiveness of Registration Statement...41
8.9 Government Approvals......................41
8.10 Tax Opinion or Ruling.....................41
8.11 Unaudited Financials......................41
8.12 Closing Documents.........................42
8.13 Fairness Opinion..........................42
Section 9. CLOSING...................................42
9.1 Closing Date..............................42
9.2 Delivery of Documents.....................42
9.3 Filings...................................42
Section 10. EXPENSES..................................42
Section 11. AMENDMENT; TERMINATION....................42
11.1 Amendment.................................42
11.2 Termination...............................42
11.3 Notice of Termination.....................44
11.4 Breach of Obligations.....................44
11.5 Termination and Expenses..................44
iv
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Section 12. MISCELLANEOUS.............................45
12.1 Notices...................................45
12.2 Binding Agreement.........................45
12.3 Survival of Representations and
Warranties................................45
12.4 Governing Law.............................45
12.5 Attorneys' Fees...........................45
12.6 Entire Agreement; Severability............46
12.7 Counterparts..............................46
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Plan of Acquisition and Merger
THIS PLAN OF ACQUISITION AND MERGER, dated as of November
13, 1997("Agreement"), is made by and between SierraWest
Bancorp("Bancorp"), a California corporation and a registered
bank holding company under the Federal Bank Holding Company Act
of 1956 as amended ("BHCA"), (collectively "Sierra") and
California Community Bancshares Corporation ("Bancshares"), a
Delaware corporation and a registered bank holding company under
the BHCA, and its wholly owned subsidiary, Continental Pacific
Bank ("CPB"), a California state banking corporation
(collectively "CCBC").
WITNESSETH:
A. The Boards of Directors of Sierra and CCBC deem it
advisable and in the best interests of Sierra, CCBC and their
shareholders that Sierra and CCBC enter into a business
combination whereby Bancshares will be merged with and
into Bancorp ("Merger") with Bancorp as the surviving corporation
and Bancorp's wholly owned subsidiary, Sierra Bank will be merged
with CPB ("Bank Merger"), with Sierra Bank being the surviving
corporation.
B. The Agreement and Plan of Merger attached as Exhibit A is
intended to be filed with the California Secretary of State and
the Delaware Secretary of State ("Agreement and Plan of Merger")
and the Bank Merger Agreement attached as Exhibit B is intended
to be filed with the California Secretary of State when it has
been approved by the Department of Financial Institutions of the
State of California ("Bank Merger Agreement"), (collectively the
"Merger Agreements").
C. The Merger is intended to qualify as a tax free
reorganization within the meaning of the provisions of Section
368 of the Internal Revenue Code of 1986, as amended (the "IRC")
and to qualify as a "pooling of interests".
D. Pursuant to the Merger, each Bancshares shareholder will
receive, in exchange for each share of Bancshares common stock of
Bancorp, the number of shares of Bancorp common stock determined
in accordance with the Exchange Ratio as more fully set forth in
this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements contained herein, the parties hereto agree as
follows:
Section 1. THE MERGER AND BANK MERGER.
1.1 Effective Date. Subject to the terms and conditions of
this Agreement, the Merger shall become effective at the date on
which an executed copy of the Agreement and Plan of Merger has
been filed with the California Secretary of State and the
Delaware Secretary of State ("Effective Date"). On the Effective
Date, the Bank Merger Agreement will be certified by the
California Secretary of State and filed with the Commissioner of
Financial Institutions of the State of California
("Commissioner") pursuant to Section 4887 of the California
Financial Code, in each case on the Closing Date as defined in
Section 9.1 hereof.
1.2 Effect of the Bank Merger. Subject to the terms and
conditions of this Agreement, on the Effective Date, CPB shall be
merged with and into Sierra Bank and Sierra Bank shall be the
surviving bank ("Surviving Bank") in the Bank Merger. All assets,
rights, privileges, immunities, power, franchises and interests
of CPB in and to every type of property (real, personal and
mixed) and chooses in action, as they exist as of the Effective
Date, including appointments, designations and nominations and
all other rights and interests, shall pass and be transferred to
and vest in Sierra Bank as the Surviving Bank by virtue of the
Bank Merger on the Effective Date without any deed, conveyance or
other transfer; the separate existence of CPB shall cease and the
corporate existence of Sierra Bank as the Surviving Bank shall
continue unaffected and unimpaired by the Bank Merger; and the
Surviving Bank shall be deemed to be the same entity as each of
CPB and Sierra Bank and shall be subject to all of their duties
and liabilities of every kind and description. The Surviving Bank
shall be responsible and liable for all the liabilities and
obligations of each of Sierra Bank and CPB; and any claim
existing or action or proceeding pending by or against Sierra
Bank or CPB may be prosecuted as if the Bank Merger had not taken
place, or the Surviving Bank may be substituted in its place.
Neither the rights of creditors nor any liens upon the property
of Sierra, Sierra Bank or CPB shall be impaired by reason of the
Bank Merger. The articles of incorporation of Sierra Bank shall
be the articles of incorporation of the Surviving Bank and the
bylaws of Sierra Bank shall be the bylaws of the Surviving Bank.
On the Effective Date, Sierra Bank shall assume the operations
of, as successor to, CPB. Subject to Section 1.4, on the
Effective Date the board of directors of Sierra Bank will
continue to serve until successors are duly elected and
qualified. Sierra Bank shall remain a wholly-owned subsidiary of
Bancorp.
1.3 Effect of the Merger. Subject to the terms and conditions
of this Agreement, on the Effective Date, Bancshares shall be
merged with and into Bancorp with Bancorp as the surviving
corporation ("Surviving Corporation") in the merger. All assets,
rights, privileges, immunities, power, franchises and interests
of Bancshares in and to every type of property (real, personal
and mixed) and chooses in action, as they exist as of the
Effective Date, including appointments, designations and
nominations and all other rights and interests, shall pass and be
transferred to and vest in Bancorp as the Surviving Corporation
by virtue of the Merger on the Effective Date without any deed,
conveyance or other transfer; the separate existence of
Bancshares shall cease and the corporate existence of Bancorp as
the Surviving Corporation shall continue unaffected and
unimpaired by the merger; and the Surviving Corporation shall be
deemed to be the same entity as each of Bancshares and Bancorp
and shall be subject to all of their duties and liabilities of
every kind and description. The Surviving Corporation shall be
responsible and liable for all the liabilities and obligations of
each of Bancorp and Bancshares; and any claim existing or action
or proceeding pending by or against Bancorp or Bancshares may be
prosecuted as if the Merger had not taken place, or the Surviving
Corporation may be substituted in its place. Neither the rights
of creditors nor any liens upon the property of Sierra, Bancorp
or Bancshares shall be impaired by reason of the Merger. The
articles of incorporation of Bancorp shall be the articles of
incorporation of the Surviving Corporation and the bylaws of
Bancorp shall be the bylaws of the Surviving Bank. On the
Effective Date, Bancorp shall assume the operations of, as
successor to, Bancshares. Subject to Section 1.4, on the
Effective Date the board of directors of Bancorp will continue to
serve until successors are duly elected and qualified. Sierra
Bank shall remain a wholly-owned subsidiary of Bancorp.
1.4 Board Composition After the Merger. As soon as practicable
following the Effective Date, the Boards of Directors of Bancorp
and of Sierra Bank shall appoint two existing directors of
Bancshares, Mr. Bernard E. Moore and Mr. Walter D. Sunderman, to
the Boards of Directors of Bancorp and Sierra Bank. In the event
Mr. Moore and/or Mr. Sunderman (each a "CCBC Appointee") resigns
or chooses not to serve as a director of Bancorp and/or Sierra
Bank, such CCBC Appointee shall recommend his successor from
those persons who were directors of CCBC on the Effective Date (a
"Successor Director") to the Nominating Committee of the Bancorp
Board of Directors. Assuming that such recommended Successor
Director meets the then existing written criteria for selection
of board nominees, the recommended Successor Director will be
appointed to the Boards of Directors of Bancorp and Sierra Bank.
If because of death, disability, or otherwise, either Mr. Moore
or Sunderman is incapable of selecting his successor, then the
remaining CCBC Appointee shall recommend the Successor Director
for the CCBC Appointee who is so incapacitated. In the event that
any Successor Director resigns, chooses not to serve, or
otherwise cannot serve, then Bancorp shall have no further
obligation to offer any other existing director a position on
Bancorp's or Sierra Bank's Boards of Directors. Once appointed to
the Boards, subject to the written performance criteria
applicable to all Bancorp directors, the nominating committee of
Bancorp shall nominate and recommend for approval such CCBC
Appointee (or a Successor Director thereof) for one year terms at
the annual meetings of Bancorp for the years 1998, 1999 and 2000;
provided, however, if any such director is not re-elected by the
shareholders of Bancorp, then Bancorp shall have no further
obligation to further nominate or appoint such director to the
Boards of Directors of Bancorp or Sierra Bank and shall have no
further obligation to offer any other existing director a
position on Bancorp's or Sierra Bank's Boards of Directors. In
the event of a change of control of Bancorp occurs in which the
acquirer elects a majority of the Board of Directors, then the
requirements of this Section 1.4 shall cease.
Section 2. CONVERSION AND CANCELLATION OF SHARES.
2.1 Exchange Amount; Conversion of Shares
of Bancshares Common Stock.
(a) For purposes of this Agreement, capitalized terms
have the following meanings:
CCBC Shares Issued and outstanding shares of
Bancshares $0.10 par value common stock
("CCBC Shares") as of the Effective Date.
Business Combination Any merger, sale or purchase of an entity
or subsidiary, sale or purchase of a
substantial portion of any entity's
assets, or tender offer or other means of
acquisition of substantially all the
outstanding capital stock of any entity.
Exchange Ratio The number of Sierra Shares to be received
in exchange for each CCBC Share pursuant
to the calculation set forth in Section
2.1(b) below.
Market Value The average of the closing prices of the
Sierra Shares as reported in the western
edition of the Wall Street Journal for the
20 trading days preceding the
Determination Date. For purpose of
determining the average, the divisor shall
be only those days on which a trade
occurs.
Determination Date The fifth business day preceding the
Effective Date.
(b) On the Effective Date, by virtue of the Merger and without
any action on the part of the holders of CCBC Shares, each
outstanding CCBC Share (other than any shares as to which
dissenters' rights have been perfected) shall be converted into
the right to receive shares of the common stock, no par value, of
Bancorp ("Sierra common stock" or "Sierra Shares") equal to the
Exchange Ratio as follows:
(i) If the Market Value is between $22.76 and $25.24,
inclusive, the Exchange Ratio shall be determined by dividing
$26.40 by the Market Value.
(ii) If the Market Value is between $25.25 and $26.25,
inclusive, the Exchange Ratio shall be 1.0476.
(iii) If the Market Value is between $26.26 and 28.24,
inclusive, the Exchange Ratio shall be 1.0476 minus .000238 for
each $0.01 by which the Market Value is greater than $26.25.
(iv) If the Market Value is $28.25, the Exchange Ratio shall
be 1.000.
(v) Subject to the limitations set forth in Section 2.1(c)
below, if the Market Value is between $28.26 and $29.25,
inclusive, the Exchange Ratio shall be determined by dividing (A)
$28.25 plus 75% of the amount by which the Market Value exceeds
$28.25 by (B) the Market Value.
(vi) Subject to the limitations set forth in Section 2.1(c)
below, if the Market Value is between $29.26 and $30.25,
inclusive, the Exchange Ratio shall be determined by dividing (A)
$29.00 plus 50% of the amount by which the Market Value exceeds
$29.25 by (B) the Market Value.
(vii)Subject to the limitations set forth in Section 2.1(c)
below, if the Market Value exceeds $30.26, the Exchange Ratio
shall be determined by dividing (A) $29.50 plus 25% of the amount
by which the Market Value exceeds $30.25 by (B) the Market Value.
(viii)Subject to the limitations set forth in Section 2.1(d)
below, if the Market Value is $22.75 or less, the Exchange Ratio
shall be 1.1579.
(c) In the event that Sierra enters into a Business
Combination with any other entity in which Sierra shall not be
the continuing or surviving corporation or entity of such
Business Combination prior to the Determination Date, then, in
the event that the Market Value exceeds $28.25, the Exchange
Ratio shall be 1.000.
(d) In the event that the Market Value is less than $21.59,
then CCBC has the right to terminate this Agreement pursuant to
the terms of Section 11(h) hereof. If CCBC notifies Sierra that
it intends to terminate this Agreement pursuant to the provisions
of Section 11(h), then Sierra shall have the right but not the
obligation to elect to issue an additional number of Sierra
Shares so that the Exchange Ratio shall be equal to the quotient
obtained by dividing $25.00 by the Market Value. If Sierra
chooses not to exercise its right to issue such additional Sierra
Shares, then CCBC may proceed to terminate this Agreement
pursuant to Section 11(h).
(e) On the Effective Date each outstanding Bancshares
debenture, as defined in Section 4.4, shall be by virtue of the
Merger, assumed by Bancorp, provided, however, the conversion of
such Bancshares debentures into Sierra Shares shall be adjusted
to reflect the Exchange Ratio on the Effective Date.
(f) All references in this Agreement to Sierra Shares or
Sierra common stock shall be deemed to include the corresponding
rights to purchase shares of Sierra common stock, including
common stock equivalent preferred stock of Bancorp, pursuant to
that Rights Agreement dated as of January 16, 1996 between
American Stock Transfer and Trust Company and Sierra Tahoe
Bancorp. Each certificate representing Sierra Shares will bear a
notation incorporating the Rights Agreement by reference.
2.2 Fractional Shares. Notwithstanding any other provision
hereof, no fractional shares of Sierra common stock shall be
issued to holders of CCBC Shares. In lieu thereof, each such
holder entitled to a fraction of a share of Sierra common stock
shall receive, at the time of surrender of the certificate or
certificates representing such holder's CCBC Shares, an amount in
cash equal to the Market Value per share of the common stock of
Sierra, multiplied by the fraction of a share of Sierra common
stock to which such holder otherwise would be entitled. No such
holder shall be entitled to dividends, voting rights, interest on
the value of, or any other rights in respect of a fractional
share.
2.3 Surrender of CCBC Shares.
(a) Prior to the Effective Date, Sierra shall appoint any bank
or trust company mutually acceptable to Bancshares and Sierra, as
exchange agent (the "Exchange Agent") for the purpose of
exchanging certificates representing the CCBC Shares at and after
the Effective Date, Sierra shall issue and deliver to the
Exchange Agent certificates representing the Sierra Shares, as
shall be required to be delivered to holders of CCBC Shares. As
soon as practicable after the Effective Date, each holder of CCBC
Shares converted pursuant to Section 2.1, upon surrender to the
Exchange Agent of one or more certificates for such CCBC Shares
for cancellation, will be entitled to receive a certificate
representing the number of Sierra Shares determined in accordance
with Section 2.1 and a payment in cash with respect to fractional
shares, if any, determined in accordance with Section 2.2.
(b) No dividends or other distributions of any kind which are
declared payable to stockholders of record of the Sierra Shares
after the Effective Date will be paid to persons entitled to
receive such certificates for Sierra Shares until such persons
surrender their certificates representing CCBC Shares. Upon
surrender of such certificate representing CCBC Shares, the
holder thereof shall be paid, without interest, any dividends or
other distributions with respect to the Sierra Shares as to which
the record date and payment date occurred on or after the
Effective Date and on or before the date of surrender.
(c) If any certificate for Sierra Shares is to be issued in a
name other than that in which the certificate for CCBC Shares
surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the person requesting such
exchange shall pay to the Exchange Agent any transfer costs,
taxes or other expenses required by reason of the issuance of
certificates for such Sierra Shares in a name other than the
registered holder of the certificate surrendered, or such persons
shall establish to the satisfaction of Sierra and the Exchange
Agent that such costs, taxes or other expenses have been paid or
are not applicable.
(d) All dividends or distributions, and any cash to be paid
pursuant to Section 2.2 in lieu of fractional shares, if held by
the Exchange Agent for payment or delivery to the holders of
unsurrendered certificates representing CCBC Shares and unclaimed
at the end of one year from the Effective Date, shall (together
with any interest earned thereon) at such time be paid or
redelivered by the Exchange Agent to Sierra, and after such time
any holder of a certificate representing CCBC Shares who has not
surrendered such certificate to the Exchange Agent shall, subject
to applicable law, look as a general creditor only to Sierra for
payment or delivery of such dividends or distributions or cash,
as the case may be.
2.4 No Further Transfers of CCBC Shares. At the Effective
Date, the stock transfer books of Bancshares shall be closed and
no transfer of CCBC Shares theretofore outstanding shall
thereafter be made.
2.5 Adjustments. If, between the date of this Agreement and
the Effective Date, the outstanding Sierra Shares shall have been
changed into a different number of shares or a different class by
reason of any reclassification, recapitalization, split up,
combination, exchange of shares or readjustment, or a stock
dividend thereon shall be declared with a record date within such
period, the number of Sierra Shares to be issued and delivered in
the Merger in exchange for each outstanding CCBC Share shall be
correspondingly adjusted.
2.6 Treatment of Stock Options.
(a) On the Effective Date, the obligations under any stock
option plans of CCBC shall be assumed by Sierra. On the Effective
Date, options to purchase CCBC Shares issued pursuant to CCBC's
stock option plans shall be converted, without any action on the
part of the holders thereof, into options to acquire, upon
payment of the adjusted exercise price (which shall equal the
exercise price per share for the options immediately prior to the
Merger, divided by the Exchange Ratio), the number of shares of
Sierra shares the option holder would have received pursuant to
the Merger if he or she had exercised all his or her options
immediately prior thereto.
(b) Such stock option plan as shall be applicable to CCBC
stock options shall be deemed to be amended to the effect that a
non-officer Director's service does not terminate as long as he
or she remains a Director or advisory Director of Sierra on and
after the Effective Date. Sierra covenants that it will, for
purposes of the CCBC stock option plan, at or immediately
following the Effective Date, offer each current non-officer
Director of CCBC a position as advisory Director of Sierra for a
period of not less than 2 years.
(c) Subject to the mutual intent of the parties that the
Merger will be accounted for under the pooling-of-interests
method, Sierra and CCBC shall otherwise amend their respective
option plans and obtain any required shareholder approvals of
such option plan amendments and shall amend, as necessary, any
and all option agreements (including obtaining any required
participant consents) prior to the Effective Date to make them
consistent with this Section 2.6.
2.7 Personnel Matters.
(a) Employment At Effective Date. On the Effective Date,
except for employees with contracts that will be assumed by
Sierra, CCBC employees shall become employees at will of Sierra.
Prior to the Effective Date, CCBC may, with the consent of
Sierra, make additional special bonus payments not to exceed six
months salary to retain employees who are deemed necessary to
complete the Merger and the Bank Merger. In the even that CCBC
terminates employees prior to the Effective Date, it shall abide
by all internal policies and all legal requirements for
termination of employment. From the date of this agreement
through the Effective Date, CCBC shall consult with the human
resources representative of Sierra, who shall be designated in
writing to CCBC by Sierra, and keep that representative advised
as to all matters related to employment. From the day of the
Effective Date or any time thereafter, former employees of CCBC
who are employed by Sierra following the Effective Date may be
terminated by Sierra, with or without cause, for any reason not
prohibited by law.
(b) Retirement Benefits. Employees of Sierra formerly employed
by CCBC on the Effective Date shall be eligible for participation
in the Sierra 401(k) plan and employee stock option plan at the
earliest normal entry date following the Effective Date as
allowed by applicable law and the provisions of Sierra's benefit
plans, so long as such employees then meet the eligibility
requirements for participation in the Sierra plan. The former
employees of CCBC who are employed by Sierra Bank will be
credited for years of prior service with CCBC for vesting
(non-forfeitability) of accrued benefits in the Sierra plans to
the fullest extent such credit for such prior service is
permitted by Sierra's plans and by the laws, rules and
regulations of the Internal Revenue Service and the Employee
Income Security Act of 1974, as amended.
(c) Other Benefit Plans.
(i) After the Effective Date, any or all CCBC welfare
benefit plans shall be terminated by Sierra. Sierra Bank
employees formerly employed by CCBC immediately prior to the
Effective Date shall be eligible for participation in any
existing Sierra plan, so long as such employee would otherwise be
eligible to participate in such plan.
(ii)Employees of Sierra Bank formerly employed by CCBC on
the Effective Date will receive credit for length of service with
CCBC for determination of eligibility or participation in the
Sierra (A) health service plans, or (B) long-term disability,
voluntary accident and life insurance plans.
(d) Other Benefits.
(i) Employees of Sierra formerly employed by CCBC on the
Effective Date will retain vacation benefits accrued with CCBC
prior to the Effective Date, subject to Sierra's maximum accrual
and carryover limitations for such benefits; and will also retain
the amount of sick leave benefit eligibility on CCBC's records
prior to the Effective Date, to be available subject to Sierra's
policy for sick leave benefits; provided, however, such employees
shall not be entitled to payment for carry-over CCBC sick leave
upon termination of employment as is provided under Sierra's sick
leave policy, and, provided further, CCBC shall have accrued the
cost of such benefits on the books of CCBC on or before the
Determination Date. Following the Effective Date, all employees
shall be subject to the standard policies of Sierra for accrual
of such benefits.
(ii)Employees of Sierra Bank formerly employed by CCBC on
the Effective Date will be subject to the severance policies in
effect for all Sierra employees.
Section 3. COVENANTS OF THE PARTIES.
3.1 Mutual Covenants.
(a) Government Approvals. Each party will use its reasonable
best efforts in good faith to take or cause to be taken as
promptly as practicable all such steps within their reasonable
control to obtain (i) the waiver of an application or prior
approval of the Merger by the Board of Governors of the Federal
Reserve System ("FRB") under the BHCA, (ii) the prior approval of
the Commissioner to the Merger; (iii) the prior approval of the
Federal Deposit Insurance Corporation ("FDIC") under the Bank
Merger Act, and (iv) all other consents and approvals of
government agencies as are required by law or otherwise, and
shall do any and all acts and things necessary or appropriate in
order to cause the Merger and Bank Merger to be consummated on
the terms provided in the Merger Agreements and this Agreement as
promptly as practicable. The approvals referred to in clauses
(i)-(iv) of this Section 3.1(a) are hereinafter referred to as
the "Government Approvals." Each party shall respond to a written
request for information sought by the other for the purpose of
obtaining the Government Approvals promptly and in all cases
within 10 days after receipt of such request.
(b) Notification of Breach of Representations, Warranties and
Covenants. Each party shall promptly give written notice to the
other party upon becoming aware of the occurrence or impending or
threatened occurrence of any event which would cause or
constitute a material breach of any of the representations,
warranties or covenants of that party contained or referred to in
the Merger Agreements or this Agreement and shall use its
reasonable best efforts to prevent the same or remedy the same
promptly.
(c) Financial Statements.
(i) Each party has delivered or shall deliver to the other
party promptly after they become available true and correct
copies of audited financial statements as of such date and
covering such period as may be necessary to satisfy the minimum
requirements of the Securities and Exchange Commission ("SEC")
and other governmental authorities having approval authority over
the Merger and Bank Merger. The financial statements for such
year ends have been or shall be audited by their respective
independent certified public accounting firms which have been
engaged in the past and include or shall include an unqualified
opinion of each such accounting firm, to the effect that such
financial statements have been prepared in accordance with GAAP
consistently applied and present fairly, in all material
respects, the consolidated financial position, results of
operations and cash flows of the respective parties at the dates
indicated and for the periods then ending.
(ii) Each party shall provide to the other party promptly
after they become available copies of all financial statements
and proxy statements issued to either party's shareholders and/or
directors after December 31, 1996, or to be issued at or prior to
the Effective Date.
(iii) Each party has delivered or shall deliver, to the
other party true and complete copies of its Annual Report to
Shareholders for the years ended December 31, 1996, 1995 and
1994, all periodic reports (including interim quarterly financial
statements) since December 31, 1994, all proxy statements and
other written material furnished to its shareholders since
December 31, 1994, and all other material reports, including
year-end call reports, relating to Sierra or CCBC filed by Sierra
or CCBC with the SEC, the FRB, the Commissioner or the FDIC
during 1994 through 1996 and in 1997 prior to the Effective Date.
As of its date, each of the documents described in the preceding
sentence complied or shall comply in all material respects with
all legal and regulatory requirements applicable thereto.
(d) Press Releases. Neither party shall issue any press
release or written statement for general circulation relating to
this Agreement unless previously provided to the other party for
review and approval (which approval will not be unreasonably
withheld or delayed) and shall cooperate with the other party in
the development and distribution of all news releases and other
public information disclosures with respect to the Bank Merger,
the Merger, this Agreement or the Agreement and Plan of Merger or
Bank Merger Agreement; provided that either party may, without
the consent of the other party, make any disclosure with regard
to this Agreement that it determines, upon advice of counsel, is
required under any applicable law or regulation.
(e) Access to Properties, Books and Records; Confidentiality.
Prior to the Effective Date, each party shall (except as may be
prohibited by applicable law) give the other party and its
officers, employees, agents and representatives full access,
during normal business hours and upon reasonable notice, to all
of its properties, books, contracts, records and facilities
including, but not limited to, the corporate, financial and
operational records, papers, reports, instructions, procedures,
tax returns and filings, tax settlement letters, material
contracts or commitments, regulatory examinations and
correspondences. Each party shall also use its reasonable best
efforts to cause its independent accounting firm to make
available to the other party, its accountants, counsel and other
agents, to the extent reasonably requested in connection with
such review, such firm's work papers and documentation relating
to its work papers and its audits of the books and records of
each party. Each party shall make available to the other
originals or copies, at the responding party's election, of such
documents and records as the other may reasonably request. The
availability or actual delivery of such information about either
party shall not affect the covenants, representations and
warranties of either party contained in this Agreement, the Bank
Merger Agreement and the Agreement and Plan of Merger. Each party
shall respond to any written request for information promptly and
in all cases within 10 days after receipt of such request. Each
party shall use its reasonable best efforts to cause its
officers, directors, employees, auditors and attorneys to
cooperate with the other in its reasonable requests for
information except that no information which is reasonably
determined to be the subject of the attorney client privilege
shall be required to be disclosed. Each party shall treat as
confidential all such information in the same manner as each
party treats similar confidential information of its own, and if
this Agreement is terminated, each party shall continue to treat
all such information as confidential and to cause its employees
to keep all such information confidential and shall return such
documents therefore delivered by the other party as the other
party shall request, and shall use such information, or cause it
to be used, solely for the purposes of evaluating and completing
the transactions contemplated hereby; provided that each party
may disclose any such information to the extent required by
federal or state securities laws or otherwise required by any
governmental agency or authority, or by generally accepted
accounting principles. The foregoing confidentiality obligations
shall not apply in respect of any information publicly available
or to any information previously known to the party in question,
the use of which is not otherwise restricted.
(f) Additional Agreements. In case at any time after the
Effective Date any further action is necessary or desirable to
carry out the purposes of this Agreement or to vest the Surviving
Corporation and the Surviving Bank with full title to all
properties, assets, rights, approvals, immunities and franchises
of any of the parties to the Merger and the Bank Merger, the
proper officers and directors of each party to this Agreement
shall take all such necessary action as may be reasonably
requested by, and at the sole expense of, Sierra. Pending the
Effective Date, Sierra and CCBC shall consult with one another
and cooperate as reasonably requested by Sierra to facilitate the
integration of their respective operations as promptly as
practicable after the Effective Date. Such cooperation shall
include, if requested, communicating with employees, customers
and depositors; consultation regarding material contracts,
renewals, and capital commitments to be entered into by CCBC;
coordination regarding third-party service agreements with a view
to providing common products and services as expeditiously as
practicable following the Effective Date; making arrangements for
employee training prior to the Effective Date; and taking action
to facilitate an orderly conversion of data processing operations
to occur promptly following the Effective Date, provided that the
cooperation required under this Section 3.1(f) shall not be
deemed to require actions that would materially delay or impede
the Merger.
(g) Advice of Changes. Sierra and CCBC shall promptly advise
the other party of any change or event having, or that would be
reasonably likely to have, a material adverse effect on it or
which it believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations,
warranties or covenants contained herein.
(h) Legal Conditions to Merger. Each of Sierra and CCBC shall
use their reasonable best efforts (a) to take, or cause to be
taken, all actions necessary, proper, or advisable to comply
promptly with all legal requirements which may be imposed on such
party with respect to the Merger and, subject to the respective
conditions set forth in Sections 7 and 8 hereof, to consummate
the transactions contemplated by this Agreement and (b) to obtain
(and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any
governmental entity and any other third party which is required
to be obtained by CCBC or Sierra in connection with the Merger
and the other transactions contemplated by this Agreement.
3.2 Covenants of CCBC.
(a) Approval by Shareholders. CCBC shall cause the Merger, the
Bank Merger, this Agreement, the Bank Merger Agreement and the
Agreement and Plan of Merger to be submitted promptly for the
approval of its shareholders in the most expeditious manner
available to cause approval of the Merger and Bank Merger at a
meeting to be called and held in accordance with applicable laws.
CCBC shall cause the Joint Proxy Materials (as defined in Section
6.1), when approved or otherwise deemed effective, with any
amendments thereto that may, in the judgment of its counsel, be
necessary or desirable, to be mailed to shareholders of
Bancshares. Subject to the fiduciary duty of the Board of
Directors of Bancshares, the Joint Proxy Materials shall include
therein a recommendation that Bancshares shareholders vote to
approve the proposed Merger. The Joint Proxy Materials shall be
subject to prior approval by Sierra. In the event that such is
required by applicable securities laws, Sierra shall prepare for
inclusion in the Joint Proxy Materials an appropriate
registration statement/prospectus which CCBC shall assist with by
providing such information and documents as may be required in an
expeditious and timely manner. Bancshares shall hold its
shareholder meeting as soon as possible but no later than March
31, 1998 unless prevented from doing so by the regulatory
authorities or by delays in obtaining or conditions imposed by
the Government Approvals. Subject to its continuing fiduciary
duty to the shareholders of Bancshares, the members of the Board
of Directors of Bancshares shall at all times prior to and during
such meeting of its shareholders recommend that the transactions
contemplated hereby be adopted and approved and, subject to such
duty, use its reasonable best efforts to cause such adoption and
approval.
(b) Compensation. Except for obligations under contracts with
executive officers including salary continuation plans and
standard annual review of employees and the normal wage increases
incident thereto and subject to the provision of Section 2.7(a)
hereof, CCBC shall not make or approve any increase in the
compensation payable or to become payable by it to any of its
directors, officers, employees or agents (including but not
limited to compensation through any profit sharing, pension,
retirement, severance, incentive or other employee benefit
program or arrangement), provided that CCBC may, with the prior
written consent of Sierra, make agreements to provide special
bonus payments not to exceed six months salary to retain
employees who are deemed necessary to complete the Merger and the
Bank Merger; nor shall any bonus payment or any agreement or
commitment to make a bonus payment be made other than the
obligations to make distributions reflecting 1997 profits under
Bancshares' profit sharing plan and obligations under the 1997
bonus plans, nor shall any stock option, warrant or other right
to acquire capital stock be granted; nor shall any existing
employment agreement be extended or renewed or modified on terms
more favorable to the employee than those that are currently
contained in such contract; nor shall any employment agreement
(other than any such employment agreement that may arise by
operation of law upon the hiring of any new employee) or
consulting agreement be entered into by CCBC with any such
directors, officers, employees or agents unless Sierra has given
its prior written consent. Without prior notification to Sierra,
CCBC shall not hire any new employee at an annual rate in excess
of current customary practice or, in any event, in excess of
$40,000 per year.
(c) Conduct of Business in the Ordinary Course. Prior to the
Effective Date:
(i) Except as expressly contemplated or permitted in this
Agreement, CCBC shall conduct its businesses in the Ordinary
Course as heretofore conducted. For purposes of this Agreement,
the "Ordinary Course" of CCBC shall consist of banking and
related businesses as presently conducted or consistent with good
banking practices and permitted under applicable laws. Unless
Sierra has given its previous written consent to any act or
omission to the contrary (which Sierra shall not unreasonably
withhold), CCBC shall, until the Effective Date, cause its
officers to use their reasonable best efforts to:
(A) preserve its business and business organizations
intact;
(B) preserve the good will of customers and others having
business relations with it and take no action that would impair
the benefit to the other party of the goodwill of it or the other
benefits of the Merger;
(C) consult with Sierra as to the making of any decisions
or the taking of any actions in matters other than in the
Ordinary Course and cooperate with all reasonable requests of
Sierra that, in the reasonable judgment of Sierra, are necessary
to successfully complete the transactions contemplated by this
Agreement, including permitting a designated representa- tive or
representatives of Sierra to attend and participate (but not
vote) in all loan committee meetings and board of directors
meetings, provided such Sierra representative may be excluded
from any portion of a board of directors meeting which relates to
the Merger or any examination report or response thereto, or is
reasonably determined to be the subject of the attorney client
privilege;
(D) maintain its properties in customary repair, working
order and condition (reasonable wear and tear excepted);
(E) comply in all material respects with all laws,
regulations and decrees applicable to the conduct of its
business;
(F) keep in force at not less than its present limits all
policies of insurance, including deposit insurance of the FDIC,
to the extent reasonably practicable in light of the prevailing
market conditions in the insurance industry;
(G) keep available to the other party the services of its
present officers and employees (it being understood that both
parties shall have the right to terminate the employment of any
of its officers or employees in accordance with its established
employment procedures);
(H) comply in all material respects with all orders,
agreements and memoranda of understanding with respect to it made
by or with any regulatory authority of competent jurisdiction,
and promptly forward to the other party all communications
received from any such authority that are not prohibited by such
authority from being so disclosed and inform the other party of
any material restrictions imposed by any governmental authority
on its business;
(I) file in a timely manner (taking into account any
extensions duly obtained) all reports, tax returns and other
documents required to be filed with federal, state, local and
other authorities;
(J) conduct an environmental audit prior to foreclosure on
any property concerning which it has knowledge, or should have
knowledge, that asbestos or asbestos-containing material, PCB's
or PCB-contaminated materials, any petroleum product, or
hazardous substance or waste (as defined under any applicable
environmental laws) was or is present, manufactured, recycled,
reclaimed, released, stored, treated, or disposed of, and provide
the results of such audit to and consult with the other party
regarding the significance of the audit prior to the foreclosure
on any such property;
(K) not make, renegotiate, renew, increase, extend or
purchase any loans, advances or loan commitments, in each case to
any of CCBC's officers, directors or any affiliated or related
persons of such directors or officers except in the Ordinary
Course consistent with CCBC's established loan procedures and in
compliance with FRB Regulation O;
(L) not settle or otherwise take any action to release or
reduce any of its rights with respect to any litigation involving
a claim of more than $50,000 in which it is a party without the
consent of Sierra which consent shall not be unreasonably
withheld; and
(M) maintain an allowance for loan losses which shall be in
substantial compliance with the comments of the FDIC in its most
recent Report of Examination.
(ii)CCBC shall not, without first having obtained the
written consent of Sierra which consent shall not be unreasonably
withheld, cause its officers to:
(A) commit itself to any loan or renewal or restructure of
an existing loan with a principal amount in excess of $100,000 if
unsecured, or in excess of $500,000 and with a loan-to-value
ratio above 75% if secured by real property, provided that
Sierra's consent shall be deemed given unless it objects and
states the basis of its objection in writing, or verbally with
prompt written confirmation, within two business days after
receipt of written notice directed to the Chief Credit Officer of
Sierra, together with sufficient supporting information to allow
Sierra to make an informed judgment, and Sierra shall not
unreasonably withhold its consent; provided, further, that any
consent given by Sierra shall be binding only if given by such
person or persons who are identified in writing by Sierra;
(B) purchase or sell any investment security with a
maturity in excess of three years;
(C) issue any certificate of deposit in excess of 12 months
with a rate of interest in excess of the rate sheets provided
weekly to CCBC by Sierra or any other certificate of deposit in
excess of 50 basis points greater than the rates set forth on the
rate sheets provided weekly to CCBC by Sierra;
(D) enter into or renew any contract having a duration
extending beyond 9 months from the date of this Agreement,
whether or not in the Ordinary Course.
(E) sell, lease, pledge, assign, encumber or otherwise
dispose of any of its assets except other real estate owned or
other property in the Ordinary Course, in each case for adequate
value, without recourse and consistent with its customary
practice; or
(F) take any action to create, relocate or terminate the
operations of any banking office or branch, or to form any new
subsidiary or affiliated entity;
(iii) Except as otherwise specifically provided, it is
understood and agreed by the parties hereto that any consent
sought of Sierra or required by CCBC pursuant to any provision of
this Agreement shall be deemed to be given following five (5)
business days advanced notice by CCBC to Sierra, which notice
shall include such information as Sierra shall reasonably
request.
(iv) CCBC shall conduct its business, in all material
respects, in accordance with its 1997-1998 operating and revenue
budgets heretofore delivered to Sierra and shall deliver to
Sierra monthly reports in sufficient detail to demonstrate
material compliance with such budgets.
(d) No Merger or Solicitation.
(i) Prior to the Effective Date, CCBC and its Boards of
Directors and officers shall not initiate negotiations toward, or
otherwise effect or agree to effect, any Business Combination
involving CCBC, acquire or agree to acquire any of its own
capital stock or the capital stock (except in a fiduciary
capacity) or assets (except in the Ordinary Course) of any other
entity, or commence any proceedings for winding up and
dissolution affecting CCBC, provided, however, that to the extent
required by the fiduciary obligations of the Board of Directors
of CCBC, as determined in good faith by the Board of Directors
based on the advice of counsel, CCBC shall not be prohibited from
reviewing or responding in any way to unsolicited proposals
involving a Business Combination.
(ii)Prior to the Effective Date, neither CCBC nor any
officer, director or affiliate of CCBC, nor any investment
banker, attorney, accountant or other agent, advisor or
representative retained by CCBC shall (A) solicit or initiate,
directly or indirectly, any inquiries, discussions or proposals
for, continue, propose or enter into discussions or negotiations
looking toward, or enter into any agreement or understanding
providing for, any Business Combination with CCBC; or (B)
disclose, directly or indirectly, any nonpublic information to
any corporation, partnership, person or other entity or group
concerning CCBC's business and properties or afford any such
other party access to CCBC's properties, books or records or
otherwise assist or encourage any such other party in connection
with the foregoing except in satisfaction of the Board of
Directors' fiduciary duties as determined on the advice of
counsel; or (C) furnish or cause to be furnished any information
concerning the business, financial condition, operations,
properties or prospects of CCBC to another person, having any
actual or prospective role with respect to any such transaction,
provided, however, that to the extent required by the fiduciary
obligations of the Board of Directors of CCBC, as determined in
good faith by the Board of Directors based on the advice of
counsel, CCBC shall not be prohibited from reviewing or
responding in any way to unsolicited proposals involving such
transactions.
(iii) CCBC shall notify Sierra immediately of the details of
any indication of interest of any person, corporation, firm,
association or group to acquire by any means a controlling
interest in it or engage in any Business Combination with it.
(e) Changes in Capital Stock; Dividends. At or after the date
hereof and at or prior to the Effective Date, except with the
prior written consent of Sierra or as otherwise provided in this
Agreement:
(i) Bancshares shall not amend its Certificate of
Incorporation or Bylaws; other than pursuant to an outstanding
stock option agreement or the conversion of debentures make any
change in its authorized, issued or outstanding capital stock or
any other equity security; issue, sell, pledge, assign or
otherwise encumber or dispose of, or purchase, redeem or
otherwise acquire, any of its shares of capital stock or other
equity securities or enter into any agreement, call or commitment
of any character to do so; grant or issue any stock option
relating to, right to acquire, or security convertible into,
shares of its capital stock or other equity security; purchase,
redeem, retire or otherwise acquire (other than in a fiduciary
capacity) any shares of, or any security convertible into,
capital stock or other equity security of its companies, or agree
to do any of the foregoing, except as expressly provided herein;
and
(ii)Bancshares shall not declare, set aside or pay any cash
or stock dividend or other distribution in respect of its common
stock other than regular cash dividends not to exceed $0.15 per
share on a quarterly basis.
(f) Employee Welfare Benefit Plans. CCBC agrees that its
employee welfare benefit plans, as defined in Section 3(1) of
ERISA, may be terminated, frozen, modified or merged into
Sierra's employee welfare benefit plans as of or after the
Effective Date, as determined by Sierra, in each case consistent
with Section 4980B of the Internal Revenue Code ("IRC"). On the
Effective Date, CCBC employees will commence participation in
Sierra's welfare benefit plans on the same terms and limitations
as Sierra employees.
(g) Shareholder Lists and Other Information. After execution
hereof, Bancshares shall from time to time make available to
Sierra, upon request, a list of its shareholders and their
addresses, a list showing all transfers of the its common stock
and such other information as Sierra shall reasonably request
regarding both the ownership and prior transfers of Bancshares'
common stock.
(h) Capital Commitments and Expenditures. After the execution
of this Agreement, no new capital commitments shall be entered
into and no capital expenditures shall be made by CCBC, including
but not limited to creation of any new branches and acquisitions
or leases of real property, except commitments or expenditures
within existing operating and capital budgets furnished to and
approved by Sierra and commitments and expenditures not exceeding
$25,000 in the aggregate.
(i) Asset Review. CCBC shall continue to engage its internal
asset review examiners to identify potential losses with respect
to loans and other assets on its books and who shall have
reviewed all nonperforming loans, including other real estate
owned, and other classified or criticized assets as of a date
within the end of the month preceding the Determination Date.
CCBC shall promptly provide a copy of such reports to Sierra.
Between the date of this Agreement and the end of the month
preceding the Determination Date, all assets of CCBC, including
classified or criticized and NPAs, may be reviewed by Sierra and
Sierra shall provide, not later than the last day of the month
preceding the Determination Date, a report thereon to CCBC
setting forth Sierra's grading or other assessment thereof
(including accounting treatment and loss recognition) utilizing
CCBC's regular loan/OREO review criteria consistent with GAAP and
RAP. CCBC may either accept and implement Sierra's grading or
other assessments (including accounting treatment and loss
recognition) concerning loans or OREO, or, if it does not agree
with Sierra's conclusions as set forth in the report, refer the
matter for resolution by the independent loan and appraisal
experts agreed to in writing by the parties (the "Independent
Loan Reviewer" or "Independent Appraiser") who shall immediately
review and/or appraise said loan(s) or OREO utilizing CCBC's
regular loan/OREO review criteria consistent with GAAP and RAP.
The parties agree that if the Independent Loan Reviewer believes
it necessary to retain an Independent Appraiser (or if such an
Appraiser is required by the penultimate sentence below), the
selection and supervision thereof of said Appraiser shall be at
the discretion and under the control of the Independent Loan
Reviewer. CCBC agrees to recognize on its books and records all
loan losses and record all OREO at their net realizable value
(and record related OREO expenses) based on the review/appraisal
by the Independent Loan Reviewer or Independent Appraiser no
later than the Determination Date. Sierra and CCBC agree to
accept the determinations of the Independent Loan Reviewer and
Independent Appraiser. With respect to any OREO, based on all
known information available from time to time, if it appears that
the then current independent appraisals may not be accurate or
upon request of and at the expense of Sierra, CCBC shall
immediately obtain updated independent appraisals by an
Independent Appraiser (utilizing CCBC's regular criteria
consistent with GAAP and RAP) and provide copies of all such
appraisals to Sierra. Any new or additional writedowns or OREO
expenses shall be recorded immediately upon receiving any updated
independent appraisal. The costs of the neutral loan reviewer
shall be shared equally by the parties.
(j) Execution of Stock Option Agreement. Concurrently with the
execution of this Agreement and as a condition thereto,
Bancshares shall have executed and delivered a stock option
agreement (the "CCBC Stock Option Agreement") which grants to
Sierra an option to acquire up to 19.9% of the issued and
outstanding CCBC Shares including unconverted debentures and
unexercised options to acquire CCBC Shares (including the CCBC
Shares to be granted pursuant to the CCBC Stock Option Agreement
upon the occurrence of certain circumstances, substantially in
the form of Exhibit C hereto.
(k) Pre-Closing Adjustments. On or before the Effective Date,
CCBC shall, in a manner mutually satisfactory to the parties,
establish such additional accruals and reserves consistent with
GAAP and RAP as may be directed by Sierra; provided, however,
that CCBC shall not be required to take such action (a) more than
five days prior to the Effective Date, (b) unless Sierra agrees
in writing that all conditions to closing set forth in Section 7
have been satisfied or waived, and (c) unless CCBC shall have
received a written waiver by Sierra of its rights to terminate
this Agreement, and no accrual or reserve made by CCBC pursuant
to this Section 3.2(k) or any litigation or regulatory proceeding
arising out of any such accrual or reserve, shall constitute or
be deemed to be a breach, violation of or failure to satisfy any
representation, warranty, covenant, condition or other provisions
of this Agreement or otherwise be considered in determining
whether any such breach, violation or failure to satisfy shall
have occurred.
3.3 Covenants of Sierra.
(a) Approval by Shareholders. Sierra shall cause the Merger,
the Bank Merger, this Agreement, the Bank Merger Agreement and
the Agreement and Plan of Merger to be submitted promptly for the
approval of its shareholders in the most expeditious manner
available to cause approval of the Merger and Bank Merger at a
meeting to be called and held in accordance with applicable laws.
Sierra shall cause the Joint Proxy Materials (as defined in
Section 6.1), when approved or otherwise deemed effective, with
any amendments thereto that may, in the judgment of its counsel,
be necessary or desirable, to be mailed to shareholders of
Bancorp. Subject to the fiduciary duty of the Board of Directors
of Bancorp, the Joint Proxy Materials shall include therein a
recommendation that Bancorp shareholders vote to approve the
proposed Merger. The Joint Proxy Materials shall be subject to
prior approval by Sierra. In the event that such is required by
applicable securities laws, Sierra shall prepare an appropriate
registration statement/prospectus which CCBC shall assist with by
providing such information and documents as may be required in an
expeditious and timely manner. Bancorp shall hold its shareholder
meeting as soon as possible but no later than March 31, 1998
unless prevented from doing so by the regulatory authorities or
by delays in obtaining or conditions imposed by the Government
Approvals. Subject to its continuing fiduciary duty to the
shareholders of Bancorp, the members of the Board of Directors of
Bancorp shall at all times prior to and during such meeting of
its shareholders recommend that the transactions contemplated
hereby be adopted and approved and, subject to such duty, use its
reasonable best efforts to cause such adoption and approval.
(b) Conduct of Business in the Ordinary Course. Prior to the
Effective Date:
(i) In the event that Sierra undertakes any transaction or
series of transactions outside the ordinary course of business
prior to the Effective Date, as soon as is practicable following
the determination to proceed with such a transaction or
transactions, Sierra shall advise the board of directors of CCBC
of such determination. For purposes of this Agreement, the
"Ordinary Course" of Sierra shall consist of banking and related
businesses as permitted under applicable banking laws. Unless
CCBC has given its previous written consent to any act or
omission to the contrary, Sierra shall, until the Effective Date,
cause its officers to use their reasonable best efforts to:
(A) preserve its business and business organizations
intact;
(B) preserve the good will of customers and others having
business relations with it and take no action that would
materially impair the benefit to the other party of the goodwill
of it or the other benefits of the Merger;
(C) permit Walter O. Sunderman to attend and participate
(but not vote) in all loan committee meetings, provided such CCBC
representative may be excluded from any portion of a meeting
which relates to the Merger or any examination report or response
thereto, or is reasonably determined to be the subject of the
attorney client privilege;
(D) maintain its properties in customary repair, working
order and condition (reasonable wear and tear excepted);
(E) comply with all laws, regulations and decrees
applicable to the conduct of its business;
(F) use its reasonable best efforts to keep in force at not
less than its present limits all policies of insurance, including
deposit insurance of the FDIC, to the extent reasonably
practicable in light of the prevailing market conditions in the
insurance industry;
(G) comply with all orders, agreements and memoranda of
understanding with respect to it made by or with any regulatory
authority of competent jurisdiction;
(H) file in a timely manner (taking into account any
extensions duly obtained) all reports, tax returns and other
documents required to be filed with federal, state, local and
other authorities;
(I) not sell, lease, pledge, assign, encumber or otherwise
dispose of any of its assets except for adequate value, without
recourse and consistent with its customary practice; and
(J) not make, renegotiate, renew, increase, extend or
purchase any loans, advances or loan commitments, in each case to
any of its officers, directors or any affiliated or related
persons of such directors or officers except in the Ordinary
Course consistent with its established loan procedures and in
compliance with FRB Regulation O.
(ii)It is understood and agreed by the parties hereto that
any consent sought of CCBC or required by Sierra pursuant to any
provision of this Agreement shall be deemed to be given following
five (5) business days advanced notice by Sierra to CCBC, which
notice shall include such information as CCBC shall reasonably
request or unless the comments of CCBC have been addressed by
Sierra.
(c) Dividends. At or after the date hereof and at or prior to
the Effective Date, except for stock dividends for which
adjustments are provided in Section 2.5 or with the prior written
consent of CCBC or as otherwise provided in this Agreement,
Sierra shall not declare, set aside or pay any cash dividend or
other distribution in respect of its common stock other than, in
the discretion of the board of directors of Sierra, regular cash
dividends not to exceed $0.50 per share on an annual basis.
(d) Indemnification; Insurance.
(i) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim,
action, suit, proceeding or investigation in which any person who
is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director
or officer of CCBC ("Indemnified Parties") is, or is threatened
to be, made a party based in whole or in part on, or arising in
whole or in part out of, or pertaining to (i) the fact that he is
or was a director or officer of CCBC or any predecessor or (ii)
this Agreement or any of the transactions contemplated hereby,
whether in any case asserted or arising before or after the
Effective Date, the parties hereto agree to cooperate and use
their best efforts to defend against and respond thereto. It is
understood and agreed that after the Effective Date, Sierra shall
indemnify and hold harmless, as and to the fullest extent
permitted by law, each such Indemnified Party against any losses,
claims, damages, liabilities, costs, expenses (including
reasonable attorney's fees and expenses in advance of the final
disposition of any claim, suit, proceeding or investigation to
each Indemnified Party to the fullest extent permitted by law
upon receipt of any undertaking required by applicable law),
judgments, fines and amounts paid in settlement in connection
with any such threatened or actual claim, action, suit,
proceeding or investigation and in the event of any such
threatened or actual claim, action, suit, proceeding, or
investigation (whether asserted or arising before or after the
Effective Date), the Indemnified Parties may retain counsel
reasonably satisfactory to them after consultation with Sierra;
provided, however, that (1) Sierra shall have the right to assume
the defense thereof and upon such assumption Sierra shall not be
liable to any Indemnified Party for any legal expenses of other
counsel or any other expenses subsequently incurred by any
Indemnified Party in connection with the defense thereof, except
that if Sierra elects not to assume such defense or counsel for
the Indemnified Parties reasonably advises the Indemnified
Parties that there are issues which raise conflicts of interest
between Sierra and the Indemnified Parties, the Indemnified
Parties may retain counsel reasonably satisfactory to them after
consultation with Sierra, and Sierra shall pay the reasonable
fees and expenses of such counsel for the Indemnified Parties,
(2) Sierra shall be obligated pursuant to this paragraph to pay
for only one firm of counsel for all Indemnified Parties, unless
an Indemnified Party shall have reasonably concluded; based on
the advice of counsel, that in order to be adequately
represented, separate counsel is necessary for such Indemnified
Party, in which case, Sierra shall be obligated to pay for such
separate counsel, (3) Sierra shall not be liable for any
settlement effected without its prior written consent (which
consent shall not be unreasonably withheld), and (4) Sierra shall
have no obligation hereunder to any Indemnified Party when and if
a court of competent jurisdiction shall ultimately determine, and
such determination shall have become final and nonappealable,
that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any
Indemnified Party wishing to claim Indemnification under this
Section 3.3(d), upon learning of any such claim, action, suit,
proceeding or investigation, shall notify Sierra thereof,
provided that the failure to so notify shall not affect the
obligations of Sierra under this Section 3.3(d) except to the
extent such failure to notify materially prejudices Sierra.
Sierra's obligations under this Section 3.3(d) continue in full
force and effect for a period of four (4) years from the
Effective Date; provided, however, that all rights to
indemnification in respect of any claim ("Claim") asserted or
made within such period shall continue until the final
disposition of such Claim and provided further that Sierra shall
have the right of setoff against any payments required to be made
by Sierra to an Indemnified Party pursuant to this Section 3.3(d)
to the extent that such Indemnified Party shall have received the
indemnification to which such Indemnified Party is entitled from
an insurer under a directors' and officers' liability insurance
policy maintained by CCBC or Sierra.
(ii)Sierra, from and after the Effective Date, will directly
or indirectly cause the persons who served as directors or
officers of CCBC on or before the Effective Date to be covered by
Sierra's existing directors' and officers' liability insurance
policy (provided that Sierra may substitute therefor policies of
at least the same coverage and amounts containing terms and
conditions which are not less advantageous than such policy) or
so-called tail coverage obtained in connection with CCBC's
directors' and officers' liability insurance policies in effect
as of the Effective Date; provided that Sierra shall not be
obligated to make annual premium payments for such insurance to
the extent such premiums exceed 150% of the premiums paid as of
the date hereof by CCBC for such insurance. Subject to the
preceding sentence, such insurance coverage, shall commence on
the Effective Date and will be provided for a period of no less
than three years after the Effective Date. From the date hereof
through the Effective Date and subject to the foregoing, CCBC
shall use its best efforts to arrange for tail coverage related
to its then current policies of directors' and officers'
liability insurance and following the Effective Date Sierra shall
exercise those rights which it may have to in order to commence
such coverage.
(iii) In the event Sierra or any of its successors or assigns
(A) 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 (B) transfers or conveys all or
substantially all of its properties and assets to any person,
then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of
Sierra assume the obligations set forth in this section. The
provisions of this Section 3.3(d) are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party
and his or her heirs and representatives.
Section 4. REPRESENTATIONS AND WARRANTIES OF CCBC.
CCBC represents and warrants to Sierra that, except as set
forth in writing corresponding in number with the applicable
section:
4.1 Corporate Status and Power to Enter Into Agreements. (i)
Bancshares is a corporation duly incorporated, validly existing
under Delaware law and in good standing under the laws of the
states of Delaware and California, (ii) subject to the Government
Approvals and to the approval of this Agreement and the
transactions contemplated hereby by the shareholders of
Bancshares, CCBC has all necessary corporate power to enter into
this Agreement, the Bank Merger Agreement and the Agreement and
Plan of Merger and to carry out all of the terms and provisions
hereof and thereof to be carried out by it, (iii) CPB is a
California banking corporation duly licensed by the Commissioner
to engage in the business of commercial banking in California at
its principal office in Vacaville, California and at its branch
offices and (iv) neither Bancshares nor CPB is subject to any
order of the FRB, the FDIC, the Commissioner or any other
regulatory authority having jurisdiction over its business or any
of its assets or properties. Neither the scope of the business of
CCBC nor the location of its properties requires it to be
licensed to do business in any jurisdiction other than the State
of California. CPB's deposits are insured by the FDIC to the
maximum extent permitted by applicable law and regulation.
4.2 Articles, Bylaws, Books and Records. The copies of the
Certificate of Incorporation of Bancshares, Articles of
Incorporation of CPB and Bylaws of CCBC heretofore delivered to
Sierra are complete and accurate copies thereof as in effect on
the date hereof. The minute books of CCBC made available to
Sierra contain a complete and accurate record of all meetings of
CCBC's Board of Directors (and committees thereof) and
shareholders. The corporate books and records (including
financial statements) of CCBC fairly reflect the material
transactions to which CCBC is a party or by which its properties
are subject or bound, and such books and records have been
properly kept and maintained.
4.3 Compliance With Laws, Regulations and Decrees. CCBC (i)
has the corporate power to own or lease its properties and to
conduct its business as currently conducted, (ii) has complied
with, and is not in default of any laws, regulations, ordinances,
orders or decrees applicable to the conduct of its business and
the ownership of its properties, including but not limited to all
federal and state laws (including but not limited to the Bank
Secrecy Act), rules and regulations relating to the offer, sale
or issuance of securities, and the operation of a commercial bank
other than where such noncompliance or default is not likely to
result in a material limitation on the conduct of its business or
is not likely to otherwise have a material adverse effect on CCBC
taken as a whole, (iii) has not failed to file with the proper
federal, state, local or other authorities any material report or
other document required to be filed, and (iv) has all approvals,
authorizations, consents, licenses, clearances and orders of, and
has currently effective all registrations with, all governmental
and regulatory authorities which are necessary to the business
and operations of CCBC as now being conducted.
4.4 Capitalization. As of October 31, 1997, the authorized
capital stock of Bancshares consists of 4,000,000 CCBC Shares,
$0.10 par value, of which 1,096,331 are duly authorized, validly
issued, fully paid and nonassessable and currently outstanding,
1,000,000 shares of preferred stock none of which is outstanding.
Said stock has been issued in compliance with all applicable
securities laws. As of October 31, 1997, there were outstanding
$2,503,000 of Bancshares debentures ("Bancshares Debentures")
convertible into 196,314 CCBC Shares. There are currently
outstanding options to purchase 129,036 CCBC Shares, at a
weighted average exercise price of $10.82 per share, issued
pursuant to its 1990 and 1993 Stock Option Plan. Said options
were issued and, upon issuance in accordance with the terms of
the outstanding options said shares shall be issued, in
compliance with all applicable securities laws. Otherwise, there
are no outstanding (i) options, agreements, calls or commitments
of any character which would obligate Bancshares to issue, sell,
pledge, assign or otherwise encumber or dispose of, or to
purchase, redeem or otherwise acquire, any Sierra common stock or
any other equity security of Bancshares, or (ii) warrants or
options relating to, rights to acquire, or debt or equity
securities convertible into, shares of Bancshares common stock or
any other equity security of Bancshares. The outstanding common
stock of Bancshares has been duly and validly registered with the
SEC pursuant to the 1934 Act, to the extent required thereunder
4.5 Equity Interest in Any Entity. Except as collateral for
outstanding loans held in its loan portfolio and its ownership of
CPB and its wholly owned subsidiary, CCBC does not own, directly
or indirectly, any equity interest in any bank, corporation or
other entity.
4.6 Financial Statements, Regulatory Reports. No financial
statement or other document to be provided to Sierra by CCBC
under this Agreement, as of the date of such document, contained,
or as to documents to be delivered after the date hereof, will
contain, any untrue statement of a material fact, or, at the date
thereof, omitted or will omit to state a material fact necessary
in order to make the statements contained therein, in light of
the circumstances under which such statements were or will be
made, not misleading; provided, however, that information as of a
later date shall be deemed to modify information as of any
earlier date. CCBC has filed all material documents and reports
required to be filed by it with the SEC, the FRB, the FDIC, the
Commissioner and any other governmental authority having
jurisdiction over its business or any of its assets or
properties. All such reports conform in all material respects
with the requirements promulgated by such regulatory agencies.
All compliance or corrective action relating to CCBC required by
governmental authorities and regulatory agencies having
jurisdiction over either Bancshares or CPB have been taken,
including compliance with any of the FRB, the FDIC or the
Commissioner in their most recent Reports of Examination. CCBC's
composite CAMELS rating in its most recent Reports of Examination
is a "1" or a "2" and its CRA rating is "outstanding" or
"satisfactory' and CCBC has not been notified formally or
informally that such ratings may be changed by any bank
regulatory agency having authority over CCBC. CCBC has not
received any notification, formally or informally, from any
agency or department of any federal, state or local government or
any regulatory agency or the staff thereof (i) asserting that it
is not in compliance with any of the statutes, regulations or
ordinances which such government or regulatory authority
enforces, where such non-compliance or default is likely to
result in a material limitation on the conduct of its business or
is not likely to otherwise have a material adverse effect on CCBC
taken as a whole, or (ii) threatening to revoke any license,
franchise, permit or governmental authorization. CCBC has paid
all assessments made or imposed by any governmental agency. CCBC
has delivered to Sierra copies of all annual management letters
and opinions, and has made available to Sierra for inspection all
reviews, correspondence and other documents in the files of CCBC
prepared by its independent accounting firm delivered to CCBC
since December 31, 1996. The financial records of CCBC have been,
and are being and shall be, maintained in all material respects
in accordance with all applicable legal and accounting
requirements sufficient to insure that all transactions reflected
therein are, in all material respects, executed in accordance
with management's general or specific authorization and recorded
in conformity with generally accepted accounting principles at
the time in effect. The data processing equipment, data
transmission equipment, related peripheral equipment and software
used by CCBC in the operation of its business to generate and
retrieve its financial records are adequate for the current needs
of CCBC.
4.7 Tax Returns.
(i) CCBC has timely filed (taking into account any
extensions duly obtained) all federal, state, county, local and
foreign tax returns required to be filed by it, including,
without limitation, estimated tax, use tax, excise tax, real
property and personal property tax reports and returns,
employer's withholding tax returns, other withholding tax returns
and Federal Unemployment Tax Returns, and all other reports or
other information required or requested to be filed by it, and
each such return, report or other information was, when filed,
complete and accurate in all material respects. CCBC has paid all
taxes, fees and other governmental charges, including any
interest and penalties thereon, shown on such returns as due,
except those that are being contested in good faith, which
contested matters have been disclosed to Sierra and are disclosed
on Schedule 4.7 hereto. CCBC has not been requested to give or
has given any currently effective waivers extending the statutory
period of limitation applicable to any tax return required to be
filed by it for any period. Other than as disclosed in writing to
Sierra, there are no claims pending against CCBC for any alleged
deficiency in the payment of any taxes, and no officer of CCBC
responsible for tax matters knows of any pending or threatened
audits, investigations or claims for unpaid taxes or relating to
any liability in respect of any taxes. As to such tax claims,
CCBC has accrued on its books an amount that is believed to be
sufficient to pay all such taxes, including interest and
penalties that may be due, and has reduced tangible shareholders'
equity by such amount. There has been no event, including a
change in ownership, that would result in a reappraisal and
establishment of a new base-year full value for purposes of
Article XIII.A of the California Constitution, of any real
property owned in whole or in part by CCBC or to CCBC's
knowledge, of any real property leased by CCBC.
(ii)CCBC has delivered to Sierra copies of all its income
and franchise tax returns with respect to taxes payable to the
United States of America and the State of California for the
fiscal years ended December 31, 1995 and 1996.
(iii) No consent has been filed relating to CCBC pursuant to
Section 341(f) of the IRC.
4.8 Material Adverse Change. Except as heretofore disclosed in
writing by CCBC to Sierra, since December 31, 1996, there has
been (i) no material adverse change in the business, assets,
licenses, permits, franchises, results of operations or financial
condition of CCBC (whether or not in the Ordinary Course), (ii)
no change in any of the assets, licenses, permits or franchises
of CCBC that has had or can reasonably be expected to have a
material adverse effect on any of the items listed in clause (i)
above, (iii) no damage, destruction, or other casualty loss
(whether or not covered by insurance) that has had or can
reasonably be expected to have a material adverse effect on any
of the items listed in clause (i) above, (iv) no amendment,
modification, or termination of any existing, or entering into of
any new, contract, agreement, plan, lease, license, permit or
franchise that is material to the business, financial condition,
assets, liabilities or operations of CCBC, except in the Ordinary
Course; and (v) no disposition by CCBC of one or more assets
that, individually or in the aggregate, are material to CCBC,
except sales of assets in the Ordinary Course.
4.9 No Undisclosed Liabilities. Except as previously disclosed
and except for items for which reserves have been established or
accrued and recorded in the audited balance sheets of CCBC as of
December 31, 1996, CCBC has not incurred or discharged, and is
not legally obligated with respect to any indebtedness, liability
(including, without limitation, a liability arising out of an
indemnification, guarantee, hold harmless or similar arrangement)
or obligation (accrued or contingent, whether due or to become
due, and whether or not subordinated to the claims of its general
creditors), which would have a material effect on the capital or
earnings of CCBC other than as a result of operations in the
Ordinary Course after such date. No agreement pursuant to which
any loans or other assets have been or will be sold by CCBC
entitled the buyer of such loans or other assets, unless there is
material breach of a representation or covenant by the seller, to
cause CCBC to repurchase such loan or other asset or the buyer to
pursue any other form of recourse against CCBC. CCBC has not
knowingly made and shall not make any representation or covenant
in any such agreement that contained or shall contain any untrue
statement of a material fact or omitted or shall omit to state a
material fact necessary in order to make the statements contained
therein, in light of the circumstances under which such
representations and/or covenants were made or shall be made, not
misleading. Other than regular quarterly dividends, no cash,
stock or other dividend or any other distribution with respect to
the stock of CCBC has been declared, set aside or paid, nor have
any shares of the stock of CCBC been purchased, redeemed or
otherwise acquired, directly or indirectly, by CCBC since
December 31, 1996.
4.10 Properties and Leases.
(a) CCBC has good and marketable title, free and clear of all
liens and encumbrances and the right of possession, subject to
existing leaseholds, to all real properties and good title, free
and clear of all liens and encumbrances, to all other property
and assets, tangible and intangible, reflected in the CCBC
balance sheet as of December 31, 1996 (except property held as
lessee under leases disclosed in writing prior to the date hereof
and except personal property sold or otherwise disposed of since
December 31, 1996, in the Ordinary Course), except (i) liens for
taxes or assessments not delinquent, (ii) such other liens and
encumbrances and imperfections of title as do not materially
affect the value of such property as reflected in the CCBC
balance sheet as of December 31, 1996, or as currently shown on
the books and records of CCBC and which do not interfere with or
impair its present and continued use, (iii) exceptions disclosed
in title reports and preliminary title reports, copies of which
have been provided to Sierra. All tangible properties of CCBC
conform in all material respects with all applicable ordinances,
regulations and zoning laws. All tangible properties of CCBC are
in a good state of maintenance and repair and are adequate for
the current business of CCBC. No properties of CCBC, and, to
CCBC's knowledge, no properties in which it holds a collateral or
contingent interest or purchase option, are the subject of any
pending or threatened investigation, claim or proceeding relating
to the use, storage or disposal on such property of or
contamination of such property by any toxic or hazardous waste
material or substance. To CCBC's knowledge, CCBC does not own,
possess or have a collateral or contingent interest or purchase
option in any properties or other assets which contain or have
located within or thereon any hazardous or toxic waste material
or substance unless the location of such hazardous or toxic waste
material or other substance or its use thereon conforms in all
material respect with all federal, state and local laws, rules,
regulations or other provisions regulating the discharge of
materials into the environment. As to any asset not owned or
leased by CCBC, CCBC has not controlled, directed or participated
in the operation or management of any such asset or any
facilities or enterprise conducted thereon, such that it has
become an owner or operator of such asset under applicable
environmental laws.
(b) All properties held by CCBC under leases are held by it
under valid, binding and enforceable leases, with such exceptions
as are not material and do not interfere with the conduct of the
business of CCBC, and CCBC enjoys quiet and peaceful possession
of such leased property. CCBC is not in default in any respect
under any material lease, agreement or obligation regarding its
properties to which it is a party or by which it is bound.
(c) Except as disclosed to Sierra in writing, all of CCBC's
rights and obligations under the leases referred to in Section
(b) above do not require the consent of any other party to the
transactions contemplated by this Agreement and the Merger
Agreements. Where required, CCBC shall obtain, prior to the
Effective Date, the consent of all parties to any such
transaction.
4.11 Material Contracts. Except as previously disclosed to
Sierra in writing and excluding loans, lines of credit, loan
commitments or letters of credit to which CCBC is a party, CCBC
is not a party to or bound by any contract or other agreement
made in the Ordinary Course which involves aggregate future
payments by or to CCBC of more than $25,000 and which is made for
a fixed period expiring more than one year from the date hereof,
and CCBC is not a party to or bound by any agreement not made in
the Ordinary Course which is to be performed at or after the date
hereof. Each of the contracts and agreements disclosed to Sierra
pursuant to this Section is a legal and binding obligation
(subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general
applicability), and no material breach or default (and no
condition which, with notice or passage of time, or both, could
become a material breach or default) exists with respect thereto.
4.12 Loans. CCBC has disclosed to Sierra in writing prior to
the date hereof, and will promptly inform Sierra of the amounts
of all loans, leases, other extensions of credit or commitments,
or other interest-bearing assets of CCBC, that have been
classified as of the date hereof or hereafter by any internal
bank examiner or any bank regulatory agency or the Commissioner
as "Other Loans Specially Mentioned," "Special Mention,"
"Substandard," "Doubtful," "Loss," or words of similar import in
the case of loans (or that would have been so classified, in the
case of other interest-bearing assets, had they been loans). CCBC
has furnished and will continue to furnish to Sierra true and
accurate information concerning the loan portfolio of CCBC, and
no material information with respect to the loan portfolio has
been or will be withheld from Sierra. All loans and investments
of CCBC are legal, valid and binding obligations enforceable in
accordance with its terms and are not subject to any setoffs,
counterclaims or disputes (subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally
and subject, as to enforceability, to equitable principles of
general applicability), except as disclosed to Sierra in writing
or reserved for in the balance sheet of CCBC as of September 30,
1997, and were duly authorized under and made in compliance with
applicable federal and state laws and regulations. CCBC does not
have any extensions of credit, investments, guarantees,
indemnification agreements or commitments for the same (including
without limitation commitments to issue letters of credit, to
create acceptances, or to repurchase securities, federal funds or
other assets) other than those documented on the books and
records of CCBC.
4.13 Restrictions on Investments. Except for pledges to secure
public and trust deposits and repurchase agreements in the
Ordinary Course, none of the investments reflected in the CCBC
unaudited balance sheet as of September 30, 1997, and none of the
investments made by CCBC since September 30, 1997, is subject to
any restriction, whether contractual or statutory, which
materially impairs the ability of CCBC to freely dispose of such
investment at any time except as restricted by any applicable
banking, securities or government regulations.
4.14 Employment Contracts and Benefits.
(a) CCBC shall deliver to Sierra an accurate list setting
forth all bonus, incentive compensation, profit-sharing, pension,
retirement, stock purchase, stock option, deferred compensation,
severance, hospitalization, medical, dental, vision, group
insurance, death benefits, disability and other fringe benefit
plans, trust agreements, arrangements and commitments of CCBC
(including but not limited to such plans, agreements,
arrangements and commitments applicable to former employees or
retired employees, or for which such persons are eligible), if
any, together with copies of all such plans, agreements,
arrangements and commitments that are documented, any and all
contracts of employment and has made available to Sierra any
Board of Directors' minutes (or committee minutes) authorizing,
approving or guaranteeing such plans and contracts.
(b) All contributions, premiums or other payments due from
CCBC to (or under) any plan listed in subsection (a) have been
fully paid or adequately provided for through periodic accruals
or otherwise on its unaudited financial statements for the period
ended September 30, 1997. Except as previously discussed, all
accruals thereon (including, where appropriate, proportional
accruals for partial periods) have been made in accordance with
generally accepted accounting principles consistently applied on
a reasonable basis.
(c) To CCBC's actual knowledge without conducting due
diligence, each plan listed in subsection (a) complies with all
material requirements of (i) the Age Discrimination in Employment
Act of 1967, as amended, and the regulations thereunder and (ii)
Title VII of the Civil Rights Act of 1964, as amended, and the
regulations thereunder.
(d) To CCBC's actual knowledge without conducting due
diligence, each plan listed in subsection (a) complied with all
material requirements of the health care continuation coverage
provisions of the Consolidated Omnibus Budget Reconciliation Act
of 1985 and the regulations thereunder.
(f) CCBC has heretofore disclosed in writing to Sierra the
names of each director, officer and employee of CCBC.
4.15 Compliance with ERISA. CCBC has not, since its inception,
either maintained or contributed to an employee pension benefit
plan, as defined in Section 3(2) of ERISA, including
multi-employer plans, other than the Continental Pacific Bank
Profit Sharing Plan (the "CCBC Plan") which was originally
adopted by CCBC on November 1, 1988 and amended and restated as
of January 1, 1996, and a true and accurate copy of which has
been provided to Sierra. With respect to the CCBC Plan and its
related trust (the "CCBC Trust"), as of the Effective Date to
CCBC's actual knowledge based upon written communication from the
California Bankers Association ("CBA") and any agents of the CBA
responsible for oversight of the CCBC Plan and the CCBC Trust,
(i) the CCBC Plan will in all material respects be (and currently
is) in compliance with all the applicable requirements of Section
401(a) of the IRC, and the CCBC Trust will be exempt from income
tax under Section 501(a) of the IRC; (ii) the CCBC Plan is a
adaptation of a prototype document which has received a favorable
opinion letter from the IRS, the qualified status of the CCBC
Plan as adopted, under Section 401(a) of the IRC will be
determined upon the filing with the IRS of a request for a
favorable determination to be made before September 26, 1991, or
such other date prescribed by the IRS, and the IRS has not raised
any question on audit or otherwise with respect to the qualified
status of the CCBC Plan or the CCBC Trust prior to the Effective
Date; (iii) CCBC shall not have amended the CCBC Plan or
administered the CCBC Plan in such a manner that would preclude
the issuance of a favorable Determination Letter to the CCBC Plan
and Trust; (iv) no contributions have exceeded the limitations
set forth in Section 415 of the IRC; (v) all required and
necessary filings with the IRS, Department of Labor and any other
governmental agencies with respect to the CCBC Plan and CCBC
Trust for all periods ending at or prior to the Effective Date
will have been made on a timely basis by CCBC and the plan
administrator; (vi) with respect to participation of CCBC
employees in the CCBC Plan, there shall have been no material
violation of Parts 1 and 4 of Subtitle B of Title I of ERISA or
of Section 4975 of the IRC; and (vii) with respect to
participation of CCBC employees in the CCBC Plan, there shall
have been no action, claim or demand of any kind known to CCBC
brought or threatened by any potential claimant or representative
of such claimant under the CCBC Plan or CCBC Trust where CCBC may
be either (A) liable directly on such action, claim or demand, or
(B) obligated to indemnify any person, group of persons or entity
with respect to such action, claim or demand, unless such action,
claim or demand is covered by adequate reserves reflected in
CCBC's September 30, 1997 unaudited financial statements or an
insurer of CCBC has agreed to defend against and pay the amount
of any resulting liability without reservation.
4.16 Collective Bargaining and Employment Agreements. Except
as provided in this Agreement or as previously disclosed to
Sierra in writing, CCBC does not have any union or collective
bargaining or written employment agreements, contracts or other
agreements with any labor organization or with any member of
management, or any management or consultation agreement not
terminable at will by CCBC and no such contract or agreement has
been requested by, or is under discussion by management with, any
group of employees, any member of management or any other person.
There are no material controversies pending between CCBC and any
current or former employees, and to CCBC's knowledge, there are
no efforts presently being made by any labor union seeking to
organize any of such employees.
4.17 Compensation of Officers and Employees. Except as
previously disclosed to Sierra in writing, (i) no officer or
employee of CCBC is receiving aggregate direct remuneration at a
rate exceeding $60,000 per annum, and (ii) the consummation of
the transactions contemplated by this Agreement, the Bank Merger
Agreement and the Agreement and Plan of Merger will not (either
alone or upon the occurrence of any additional or further acts or
events) result in any payment (whether of severance pay or
otherwise) becoming due from CCBC or Sierra to any employee of
CCBC.
4.18 Legal Actions and Proceedings. Except as previously
disclosed to Sierra in writing, CCBC is not a party to, or so far
as either of them is aware, threatened with, and to CCBC's
knowledge, there is no reasonable basis for, any legal action or
other proceeding or investigation before any court, any
arbitrator of any kind or any government agency, and CCBC is not
subject to any potential adverse claim, the outcome of which
could involve the payment or receipt by CCBC of any amount in
excess of $50,000, unless an insurer of CCBC has agreed to defend
against and pay the amount of any resulting liability without
reservation, or, if any such legal action, proceeding,
investigation or claim will not involve the payment by CCBC of a
monetary amount, which could materially adversely affect CCBC or
its business or property or the transactions contemplated hereby.
CCBC has no knowledge of any pending or threatened claims or
charges under the Community Reinvestment Act, before the Equal
Employment Opportunity Commission, the California Department of
Fair Housing & Economic Development, the California Unemployment
Appeals Board, or any human relations commission. There is no
labor dispute, strike, slow-down or stoppage pending or, to
CCBC's knowledge, threatened against CCBC.
4.19 Execution and Delivery of the Agreements.
(a) The execution and delivery of this Agreement have been
duly authorized by the Boards of Directors of CCBC and, when the
Merger, this Agreement, the Bank Merger Agreement and the
Agreement and Plan of Merger have been or will be duly approved
by the affirmative vote of the holders of a majority of the
outstanding shares of Bancshares common stock at a meeting of
shareholders duly called and held, the Merger, this Agreement and
the Merger Agreements will be duly and validly authorized by all
necessary corporate action on the part of CCBC.
(b) This Agreement has been duly executed and delivered by
CCBC and (assuming due execution and delivery by Sierra)
constitutes, and the Bank Merger Agreement and the Agreement and
Plan of Merger upon execution and delivery by CCBC (and assuming
due execution and delivery by Sierra) will constitute, legal and
binding obligations of CCBC in accordance with its terms except
as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by
bankruptcy, insolvency and similar laws affecting creditor's
rights and remedies generally.
(c) The execution and delivery by CCBC of this Agreement, the
Bank Merger Agreement and the Agreement and Plan of Merger and
the consummation of the transactions herein and therein
contemplated (i) do not violate any provision of the Certificate
of Incorporation of Bancshares, the Articles of Incorporation of
CPB or Bylaws of CCBC or, to CCBC's knowledge, any provision of
federal or state law or any governmental rule or regulation
(assuming (A) receipt of the Government Approvals, (B) receipt of
the requisite Bancshares shareholder approval, (C) due
registration of the Sierra Shares under the Securities Act of
1933, as amended ("1933 Act"), (D) receipt of appropriate permits
or approvals under state securities or "blue sky" laws, and (E)
accuracy of the representations of Sierra set forth herein), and
(ii) to CCBC's knowledge, do not require any consent of any
person except as contemplated herein, conflict with or result in
a breach of, or accelerate the performance required by any of the
terms of, any material debt instrument, lease, license, covenant,
agreement or understanding to which CCBC is a party or by which
it is bound or any order, ruling, decree, judgment, arbitration
award or stipulation to which CCBC is subject, or constitute a
default thereunder or result in the creation of any lien, claim,
security interest, encumbrance, charge, restriction or right of
any third party of any kind whatsoever upon any of the properties
or assets of CCBC.
4.20 Retention of Broker or Consultant. Other than Van Kasper
and Company, no broker, agent, finder, consultant or other party
(other than legal, compliance, loan auditors and accounting
advisors) has been retained by CCBC or is entitled to be paid
based upon any agreements, arrangements or understandings made by
CCBC in connection with any of the transactions contemplated by
this Agreement or the Merger Agreements. Van Kasper and Company
will render an opinion regarding the fairness of the Merger from
a financial point of view. CCBC shall provide Sierra with a true
and accurate copy of its agreement(s) with such firm. Except as
previously disclosed, all costs related to such opinion shall be
paid or accrued prior to the Effective Date.
4.21 Insurance. CCBC is and continuously since its inception
has been, insured with reputable insurers against all risks
normally insured against by California commercial banks, and all
of the insurance policies and bonds maintained by CCBC are in
full force and effect, CCBC is not in default thereunder and all
material claims thereunder have been filed in due and timely
fashion. In the best judgment of the management of CCBC, such
insurance coverage is adequate for CCBC. Except as disclosed to
Sierra in writing, there has not been any damage to, destruction
of, or loss of any assets of CCBC not covered by insurance that
could materially and adversely affect the business, financial
condition, properties, assets or results of operations of CCBC.
4.22 Loan Loss Reserves. To the knowledge of CCBC's
management, the allowance for loan losses as of the Effective
Date will be adequate in all material respects under the
requirements of all applicable state and federal laws and
regulations to provide for possible loan losses on outstanding
loans, net of recoveries.
4.23 Transactions With Affiliates. Except as may arise in the
Ordinary Course, CCBC has not extended credit, committed itself
to extend credit, or transferred any asset to or assumed or
guaranteed any liability of the employees or directors of CCBC,
or any spouse or child of any of them, or to any of their
"affiliates" or "associates" as such terms are defined in Rule
405 under the 1933 Act. CCBC has not entered into any other
transactions with the employees or directors of CCBC or any
spouse or child of any of them, or any of their affiliates or
associates, except as disclosed in writing to Sierra. Any such
transactions have been on terms no less favorable to CCBC than
those which would prevail in an arms-length transaction with an
independent third party.
4.24 Information in Sierra Registration Statement. The
information pertaining to CCBC which has been or will be
furnished to Sierra for or on behalf of CCBC for inclusion in the
Sierra Registration Statement and the Joint Proxy Materials, or
in the applications to be filed to obtain the Government
Approvals ("Applications"), does not and will not contain any
untrue statement of any material fact or omit or will omit to
state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading;
provided, however, that information of a later date shall be
deemed to modify information as of an earlier date. All financial
statements of CCBC included in the Joint Proxy Materials will
present fairly the financial condition and results of operations
of CCBC at the dates and for the periods covered by such
statements in accordance with generally accepted accounting
principles consistently applied throughout the periods covered by
such statements. CCBC shall promptly advise Sierra in writing if
prior to the Effective Date CCBC shall obtain knowledge of any
facts that would make it necessary to amend or supplement the
Sierra Registration Statement, the Joint Proxy Materials or the
Applications, in order to make the statements therein not
misleading or to comply with applicable law.
4.25 Pooling of Interests. CCBC knows of no reason relating to
it or any of its subsidiaries which would reasonably cause it to
believe that the Merger will not qualify as a pooling of
interests for financial accounting purposes.
4.26 Derivatives Contracts; Structured Notes; Etc. Except as
previously disclosed, CCBC is not a party to nor has it agreed to
enter into an exchange traded or over-the-counter equity,
interest rate, foreign exchange or other swap, forward, future,
option, cap, floor or collar or any other contract that is not
included on the balance sheet and is a derivatives contract
(including various combinations thereof) (each, a "Derivatives
Contract") nor does it own securities that (1) are referred to
generically as "structured notes," high risk mortgage
derivatives," "capped floating rate notes" or "capped floating
rate mortgage derivatives" or (2) are likely to have changes in
value as a result of interest or exchange rate changes that
significantly exceed normal changes in value attributable to
interest or exchange rate changes, except for those Derivatives
Contracts and other instruments legally purchased or entered into
in the ordinary course of business, consistent with safe and
sound banking practices and regulatory guidelines, and previously
disclosed in writing to Sierra. All of such Derivatives Contracts
or other instruments are legal, valid and binding obligations of
CCBC enforceable in accordance with their terms (except as
enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by
bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally), and are in full force and effect.
CCBC has duly performed in all material respects all of their
material obligations thereunder to the extent that such
obligations to perform have accrued; and, to CCBC's knowledge,
there are no breaches, violations or defaults or allegations or
assertions of such by any party thereunder which would have or
would reasonably be expected to have a Material Adverse Effect.
4.27 Accuracy of Representations and Warranties. No
representation or warranty by CCBC, and no statement by CCBC in
any certificate, agreement, schedule or other document furnished
in connection with the transactions contemplated by this
Agreement or the Merger Agreements, contains or will contain any
untrue statement of a material fact or omits or will omit to
state any material fact necessary to make such representation,
warranty or statement not misleading to Sierra; provided,
however, that information as of a later date shall be deemed to
modify information as of an earlier date.
Section 5. REPRESENTATIONS AND WARRANTIES OF SIERRA.
Sierra represents and warrants to CCBC that, except as set
forth in writing corresponding in number to the appropriate
section:
5.1 Corporate Status and Power to Enter Into Agreements. (i)
Bancorp is a corporation duly incorporated, validly existing and
in good standing under California law, and is a registered bank
holding company under the BHCA, (ii) subject to the approval of
this Agreement and the transactions contemplated hereby by the
Commissioner, the FDIC and, unless waived, the FRB, Sierra has
all necessary corporate power to enter into this Agreement and
the Merger Agreements and to carry out all of the terms and
provisions hereof and thereof to be carried out by it, (iii)
Sierra Bank is a California banking corporation duly licensed by
the Commissioner to engage in the commercial banking business as
now conducted by it, and (iv) neither Sierra nor any of its
subsidiaries is subject to any order of the FRB, the FDIC, the
Commissioner or any other regulatory authority having
jurisdiction over its business or any of its assets or
properties. Neither the scope of the business of Sierra nor the
location of its properties requires it to be licensed to do
business in any jurisdictions other than states of California and
Nevada. Sierra Bank's deposits are insured by the FDIC to the
maximum extent permitted by applicable law and regulation.
5.2 Articles, Bylaws, Books and Records. The copies of the
Articles of Incorporation and Bylaws of Sierra made available to
CCBC are complete and accurate copies thereof as in effect on the
date hereof. The minute books of Sierra contain a complete and
accurate record of all meetings of Sierra's Boards of Directors
(and committees thereof) and shareholders. The corporate books
and records (including financial statements) of Sierra fairly
reflect the material transactions to which Sierra is a party or
by which its properties are subject or bound, and such books and
records have been properly kept and maintained.
5.3 Compliance With Laws, Regulations and Decrees. Sierra (i)
has the corporate power to own or lease its properties and to
conduct its business as currently conducted, (ii) has complied
with, and is not in default of any laws, regulations, ordinances,
orders or decrees applicable to the conduct of its business and
the ownership of its properties, including but not limited to all
federal and state laws (including but not limited to the Bank
Secrecy Act), rules and regulations relating to the offer, sale
or issuance of securities, and the operation of a commercial
bank, other than where such noncompliance or default is not
likely to result in a material limitation on the conduct of the
business of Sierra or is not likely to otherwise have a material
adverse effect on Sierra taken as a whole, (iii) has not failed
to file with the proper federal, state, local or other
authorities any material report or other document required to be
to filed, and (iv) has all approvals, authorizations, consents,
licenses, clearances and orders of, and has currently effective
all registrations with, all governmental and regulatory
authorities which are necessary to the business and operations of
Sierra as now being conducted.
5.4 Capitalization. As of October 31, 1997, the authorized
capital stock of Sierra consists of 10,000,000 shares of Sierra
common stock, no par value, of which 4,088,659 are duly
authorized, validly issued, fully paid and nonassessable and
currently outstanding, 9,800,000 shares of preferred stock none
of which is outstanding, 200,000 shares of series A preferred
stock none of which are issued or outstanding. Said stock has
been issued in compliance with all applicable securities laws.
There are currently outstanding options to purchase 345,383
shares of Sierra common stock, at a weighted average exercise
price of $11.56 per share, issued pursuant to its 1988 and 1996
Stock Option Plan. Said options were issued and, upon issuance in
accordance with the terms of the outstanding options said shares
shall be issued, in compliance with all applicable securities
laws. Sierra has adopted a Board of Directors Deferred
Compensation and Stock Award Plan under which the members of
Sierra's Board of Directors can elect to defer earned director
compensation and take such compensation upon retirement from the
Board either in the form of Sierra Shares or in cash. Otherwise,
there are no outstanding (i) options, agreements, calls or
commitments of any character which would obligate Sierra to
issue, sell, pledge, assign or otherwise encumber or dispose of,
or to purchase, redeem or otherwise acquire, any Sierra common
stock or any other equity security of Sierra, or (ii) warrants or
options relating to, rights to acquire, or debt or equity
securities convertible into, shares of Sierra common stock or any
other equity security of Sierra. The outstanding common stock of
Sierra has been duly and validly registered with the SEC pursuant
to the 1934 Act, to the extent required thereunder.
5.5 Financial Statements, Regulatory Reports. No financial
statement or other document to be provided to CCBC by Sierra
under this Agreement, as of the date of such document, contained,
or as to documents to be delivered after the date hereof, will
contain, any untrue statement of a material fact, or, at the date
thereof, omitted or will omit to state a material fact necessary
in order to make the statements contained therein, in light of
the circumstances under which such statements were or will be
made, not misleading; provided, however, that information as of a
later date shall be deemed to modify information as of any
earlier date. Sierra has filed all material documents and reports
required to be filed by it with the FDIC, the Commissioner, the
FRB, the SEC and any other governmental authority having
jurisdiction over its business or any of its assets or
properties. All such reports conform in all material respects
with the requirements promulgated by such regulatory agencies.
All compliance or corrective action relating to Sierra required
by governmental authorities and regulatory agencies having
jurisdiction over either Bancorp or Sierra Bank have been taken,
including compliance with any of the FRB, the FDIC or the
Commissioner in their most recent Reports of Examination.
Sierra's composite CAMELS rating in its most recent Reports of
Examination is a "1" or a "2" and its CRA rating is "outstanding"
or "satisfactory' and Sierra has not been notified formally or
informally that such ratings may be changed by any bank
regulatory agency having authority over Sierra. Sierra has not
received any notification, formally or informally, from any
agency or department of any federal, state or local government or
any regulatory agency or the staff thereof (i) asserting that it
is not in compliance with any of the statutes, regulations or
ordinances which such government or regulatory authority
enforces, or (ii) threatening to revoke any license, franchise,
permit or governmental authorization of Sierra. Sierra has paid
all assessments made or imposed by any governmental agency.
Sierra has delivered to CCBC copies of all annual management
letters and opinions, and has made available to CCBC for
inspection all reviews, correspondence and other documents in the
files of Sierra prepared by Deloitte & Touche or any other
certified public accountant engaged by Sierra and delivered to
Sierra since December 31, 1996. The financial records of Sierra
have been, are being and shall be maintained in all material
respects in accordance with all applicable legal and accounting
requirements sufficient to insure that all transactions reflected
therein are, in all material respects, executed in accordance
with management's general or specific authorization and recorded
in conformity with generally accepted accounting principles at
the time in effect. The data processing equipment, data
transmission equipment, related peripheral equipment and software
used by Sierra in the operation of its business to generate and
retrieve its financial records are adequate for the current needs
of Sierra.
5.6 Tax Returns.
(a) Sierra has timely filed all federal, state, county, local
and foreign tax returns required to be filed by it, including,
without limitation, estimated tax, use tax, excise tax, real
property and personal property tax reports and returns,
employer's withholding tax returns, other withholding tax returns
and Federal Unemployment Tax Returns, and all other reports or
other information required or requested to be filed by each of
them, and each such return, report or other information was, when
filed, complete and accurate in all material respects. Sierra has
paid all taxes, fees and other governmental charges, including
any interest and penalties thereon, when they have become due,
except those that are being contested in good faith, which
contested matters have been disclosed to CCBC. Except as set
forth below, neither Sierra nor any of its subsidiaries has been
requested to give or has given any currently effective waivers
extending the statutory period of limitation applicable to any
tax return required to be filed by either of them for any period.
Except as set forth below, there are no claims pending against
Sierra or any of its subsidiaries for any alleged deficiency in
the payment of any taxes, and Sierra does not know of any pending
or threatened audits, investigations or claims for unpaid taxes
or relating to any liability in respect of any taxes.
(b) No consent has been filed relating to Sierra pursuant to
Section 341(f) of the IRC.
5.7 Material Adverse Change. Except as heretofore disclosed in
writing by Sierra to CCBC, since September 30, 1997, there has
been no material adverse change in the business, assets,
licenses, permits, franchises, results of operations or financial
condition of Sierra (whether or not in the Ordinary Course).
5.8 Legal Actions and Proceedings. Except as previously
disclosed to CCBC in writing, Sierra is not a party to, or so far
as either of them is aware, threatened with, and to Sierra's
knowledge, there is no reasonable basis for, any legal action or
other proceeding or investigation before any court, any
arbitrator of any kind or any government agency, and Sierra is
not subject to any potential adverse claim, the outcome of which
could involve the payment or receipt by Sierra of any amount in
excess of $200,000, unless an insurer of Sierra has agreed to
defend against and pay the amount of any resulting liability
without reservation, or, if any such legal action, proceeding,
investigation or claim will not involve the payment by Sierra of
a monetary amount, which could materially adversely affect Sierra
or its business or property or the transactions contemplated
hereby. Sierra has no knowledge of any pending or threatened
claims or charges under the Community Reinvestment Act, before
the Equal Employment Opportunity Commission, the California
Department of Fair Housing & Economic Development, the California
Unemployment Appeals Board, or any human relations commission.
There is no labor dispute, strike, slow-down or stoppage pending
or, to the knowledge of Sierra, threatened against Sierra.
5.9 Execution and Delivery of the Agreement.
(a) The execution and delivery of this Agreement have been
duly authorized by the Boards of Directors of Sierra and, when
the Merger, this Agreement, the Bank Merger Agreement and the
Agreement and Plan of Merger have been or will be duly approved
by the affirmative vote of the holders of a majority of the
outstanding shares of Bancorp common stock at a meeting of
shareholders duly called and held, the Merger, this Agreement and
the Merger Agreements will be duly and validly authorized by all
necessary corporate action on the part of Sierra.
(b) This Agreement has been duly executed and delivered by
Sierra and (assuming due execution and delivery by CCBC)
constitutes, and the Merger Agreements, upon execution and
delivery by Sierra (and assuming due execution and delivery by
CCBC) will constitute, legal and binding obligations of Sierra in
accordance with its terms.
(c) The execution and delivery by Sierra of this Agreement and
the Merger Agreements and the consummation of the transactions
herein and therein contemplated (i) do not violate any provision
of the Articles of Incorporation or Bylaws of Sierra or, to
Sierra's knowledge, any provision of federal or state law or any
governmental rule or regulation (assuming (A) receipt of the
Government Approvals, (B) due registration of the Sierra Shares
under the 1933 Act, (C) receipt of appropriate permits or
approvals under state securities or "blue sky" laws, and (D)
accuracy of the representations of CCBC set forth herein), and
(ii) to Sierra's knowledge, do not require any consent of any
person under, conflict with or result in a breach of, or
accelerate the performance required by any of the terms of, any
material debt instrument, lease, license, covenant, agreement or
understanding to which Sierra is a party or by which it is bound
or any order, ruling, decree, judgment, arbitration award or
stipulation to which Sierra is subject, or constitute a default
thereunder or result in the creation of any lien, claim, security
interest, encumbrance, charge, restriction or right of any third
party of any kind whatsoever upon any of the properties or assets
of Sierra.
5.10 No Undisclosed Liabilities. Except for items for which
reserves have been established in the audited balance sheets of
Sierra as of December 31, 1996, Sierra has not incurred or
discharged, and is not legally obligated with respect to any
indebtedness, liability (including, without limitation, a
liability arising out of an indemnification, guarantee, hold
harmless or similar arrangement) or obligation (accrued or
contingent, whether due or to become due, and whether or not
subordinated to the claims of its general creditors), which would
have a material effect on the capital or earnings of Sierra other
than as a result of operations in the Ordinary Course after such
date. No agreement pursuant to which any loans or other assets
have been or will be sold by Sierra entitled the buyer of such
loans or other assets, unless there is material breach of a
representation or covenant by the seller, to cause Sierra to
repurchase such loan or other asset or the buyer to pursue any
other form of recourse against Sierra. Sierra has not knowingly
made and shall not make any representation or covenant in any
such agreement that contained or shall contain any untrue
statement of a material fact or omitted or shall omit to state a
material fact necessary in order to make the statements contained
therein, in light of the circumstances under which such
representations and/or covenants were made or shall be made, not
misleading. Other than regular quarterly cash dividends by
Sierra, no cash, stock or other dividend or any other
distribution with respect to the stock of Sierra has been
declared, set aside or paid, nor have any shares of the stock of
Sierra been purchased, redeemed or otherwise acquired, directly
or indirectly, by Sierra since December 31, 1996.
5.11 No Material Environmental Liabilities. To Sierra's
knowledge, Sierra does not own, possess or have a collateral or
contingent interest or purchase option in any properties or other
assets which contain or have located within or thereon any
hazardous or toxic waste material or substance unless the
location of such hazardous or toxic waste material or other
substance or its use thereon conforms in all material respect
with all federal, state and local laws, rules, regulations or
other provisions regulating the discharge of materials into the
environment the liability of remediation for which would cause a
material adverse change in the capital or earnings of Sierra.
5.12 No Material Liabilities Under ERISA. No governmental
agency or claimant or representative of such claimant have
alleged a material violation of ERISA by Sierra the liability for
which, if adversely determined, would result in a material
adverse change in the capital or earnings of Sierra.
5.13 Retention of Broker or Consultant. Other than NationsBanc
Montgomery Securities, Inc., no broker, agent, finder, consultant
or other party (other than legal, compliance, loan auditors and
accounting advisors) has been retained by Sierra or is entitled
to be paid based upon any agreements, arrangements or
understandings made by Sierra in connection with any of the
transactions contemplated by this Agreement or the Merger
Agreements. NationsBanc Montgomery Securities, Inc. will render
an opinion regarding the fairness of the Merger from a financial
point of view.
5.14 Loan Loss Reserves. To the knowledge of Sierra's
management, the allowance for loan losses in the Sierra balance
sheet dated September 30, 1997, and as of the Effective Date are
and will be adequate in all material respects under the
requirements of all applicable state and federal laws and
regulations to provide for possible loan losses on outstanding
loans, net of recoveries, including compliance with the comments
of the FDIC in its most recent Report of Examination.
5.15 Information in Sierra Registration Statement. The
information pertaining to Sierra which has been or will be
furnished for or on behalf of Sierra for inclusion in the Sierra
Registration Statement or the Joint Proxy Materials, or in the
Applications, does not and will not contain any untrue statement
of any material fact or omit or will omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they are made, not misleading; provided, however, that
information of a later date shall be deemed to modify information
as of an earlier date. All financial statements of Sierra
included in the Joint Proxy Materials will present fairly the
financial condition and results of operations of Sierra at the
dates and for the periods covered by such statements in
accordance with generally accepted accounting principles
consistently applied throughout the periods covered by such
statements. Sierra shall promptly advise CCBC in writing if prior
to the Effective Date Sierra shall obtain knowledge of any facts
that would make it necessary to amend the Sierra Registration
Statement, the Joint Proxy Materials or any Application, or to
supplement the prospectus, in order to make the statements
therein not misleading or to comply with applicable law.
(a) Pooling of Interests. Sierra knows of no reason relating
to it or any of its subsidiaries which would reasonably cause it
to believe that the Merger will not qualify as a pooling of
interests for financial accounting purposes.
5.16 Equity Interest in Any Entity. Except as collateral for
outstanding loans held in its loan portfolio and its ownership of
Sierra Bank, Bancorp does not own, directly or indirectly, any
equity interest in any bank, corporation or other entity.
5.17 Loans. Sierra has disclosed to CCBC in writing prior to
the date hereof, and will promptly inform CCBC of the amounts of
all loans, leases, other extensions of credit or commitments, or
other interest-bearing assets of Sierra, that have been
classified as of the date hereof or hereafter by any internal
bank examiner or any bank regulatory agency or the Commissioner
as "Other Loans Specially Mentioned," "Special Mention,"
"Substandard," "Doubtful," "Loss," or words of similar import in
the case of loans (or that would have been so classified, in the
case of other interest-bearing assets, had they been loans).
Sierra has furnished and will continue to furnish to CCBC true
and accurate information concerning the loan portfolio of Sierra,
and no material information with respect to the loan portfolio
has been or will be withheld from CCBC. All loans and investments
of Sierra are legal, valid and binding obligations enforceable in
accordance with its terms and are not subject to any setoffs,
counterclaims or disputes (subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally
and subject, as to enforceability, to equitable principles of
general applicability), except as disclosed to CCBC in writing or
reserved for in the balance sheet of Sierra as of September 30,
1997, and were duly authorized under and made in compliance with
applicable federal and state laws and regulations. Sierra does
not have any extensions of credit, investments, guarantees,
indemnification agreements or commitments for the same (including
without limitation commitments to issue letters of credit, to
create acceptances, or to repurchase securities, federal funds or
other assets) other than those documented on the books and
records of Sierra.
5.18 Derivatives Contracts; Structured Notes; Etc. Except as
previously disclosed, Sierra is not a party to nor has it agreed
to enter into an exchange traded or over-the-counter equity,
interest rate, foreign exchange or other swap, forward, future,
option, cap, floor or collar or any other contract that is not
included on the balance sheet and is a derivatives contract
(including various combinations thereof) (each, a "Derivatives
Contract") nor does it own securities that (1) are referred to
generically as "structured notes," high risk mortgage
derivatives," "capped floating rate notes" or "capped floating
rate mortgage derivatives" or (2) are likely to have changes in
value as a result of interest or exchange rate changes that
significantly exceed normal changes in value attributable to
interest or exchange rate changes, except for those Derivatives
Contracts and other instruments legally purchased or entered into
in the ordinary course of business, consistent with safe and
sound banking practices and regulatory guidelines, and previously
disclosed in writing to CCBC. All of such Derivatives Contracts
or other instruments are legal, valid and binding obligations of
Sierra enforceable in accordance with their terms (except as
enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by
bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally), and are in full force and effect.
Sierra has duly performed in all material respects all of their
material obligations thereunder to the extent that such
obligations to perform have accrued; and, to Sierra's knowledge,
there are no breaches, violations or defaults or allegations or
assertions of such by any party thereunder which would have or
would reasonably be expected to have a Material Adverse Effect.
5.19 Accuracy of Representations and Warranties. No
representation or warranty by Sierra, and no statement by Sierra
in any certificate, agreement, schedule or other document
furnished in connection with the transactions contemplated by
this Agreement or the Merger Agreements, contains or will contain
any untrue statement of a material fact or omits or will omit to
state any material fact necessary to make such representation,
warranty or statement not misleading to CCBC; provided, however,
that information as of a later date shall be deemed to modify
information as of an earlier date.
Section 6. SECURITIES ACT OF 1933;
SECURITIES EXCHANGE ACT OF 1934.
6.1 Preparation and Filing of Registration Statement. Sierra
shall promptly prepare and file with the SEC a registration
statement on the appropriate form (the "Sierra Registration
Statement") under and pursuant to the provisions of the 1933 Act
for the purpose of registering the Sierra Shares to be issued in
the Acquisition. Sierra and CCBC shall promptly prepare joint
proxy materials (the "Joint Proxy Materials") for the purpose of
submitting this Agreement, the Bank Merger and the Agreement and
Plan of Merger to the respective shareholders of Sierra and CCBC
for approval. Sierra and CCBC shall cooperate in all reasonable
respects with regard to the preparation of the Sierra
Registration Statement and the Joint Proxy Materials. The Joint
Proxy Materials in definitive form are expected to serve as the
prospectus to be included in the Sierra Registration Statement.
Sierra and CCBC shall each provide promptly to the other such
information concerning its business and financial condition and
affairs as may be required or appropriate for inclusion in the
Sierra Registration Statement or the Joint Proxy Materials, and
shall cause its counsel and auditors to cooperate with the
other's counsel and auditors in the preparation of the Sierra
Registration Statement and the Joint Proxy Materials.
6.2 Effectiveness of Registration Statement and Listing of
Shares. Sierra and CCBC shall use their commercially reasonable
efforts to have the Sierra Registration Statement and any
amendments or supplements thereto declared effective under the
1933 Act as soon as practicable, and thereafter CCBC shall
distribute the Proxy Materials to holders of its common stock in
accordance with applicable laws. Sierra shall use commercially
reasonable efforts to cause the Sierra Shares issued to effect
the Merger to be approved for listing on the Nasdaq National
Market System when such Sierra Shares are issued to Bancshares'
shareholders.
6.3 Sales and Resales of Common Stock. Sierra shall not be
required to maintain the effectiveness of the Sierra Registration
Statement for the purpose of sale or resale of the Sierra Shares
by any person.
6.4 Rule 145 and Related Matters. At Sierra's option,
securities representing Sierra Shares issued to "affiliates", as
that term is defined in the 1933 Act, of CCBC (as determined by
counsel to Sierra and CCBC) under Rule 145 of the Rules and
Regulations under the 1933 Act pursuant to the Merger Agreements
will be subject to stop transfer orders and will bear a
restrictive legend in substantially the following form:
"The Securities Represented by this Certificate Have been
Issued in a Transaction to Which Rule 145 Promulgated under
the Securities Act of 1933, as Amended, Applies and May Only
Be Sold or Otherwise Transferred in Compliance with the
Requirements of Rule 145 or Pursuant to an Effective
Registration Statement under Said Act or in a Transaction
Which, in the Opinion of Counsel Satisfactory to the Issuer,
satisfies an Exemption from Such Registration."
Should any opinion of counsel described in the foregoing legend
indicate that the legend and any stop transfer order then in
effect with respect to the shares may be removed, Sierra will
upon request substitute unlegended securities and remove any stop
transfer orders.
Section 7. CONDITIONS TO THE OBLIGATIONS OF SIERRA.
The obligations of Sierra under this Agreement are, at its
option, subject to fulfillment at or prior to the Effective Date
of each of the following conditions; provided, however, that any
one or more of such conditions may be waived by the Board of
Directors of Sierra at any time at or prior to the Effective
Date:
7.1 Representations and Warranties. The representations and
warranties of CCBC in Section 4 hereof shall be true and correct
in all material respects on and as of the Effective Date, with
the same effect as though such representations and warranties had
been made on and as of such date except as to any representation
or warranty which specifically relates to an earlier date.
7.2 Compliance and Performance Under Agreement. CCBC shall
have performed and complied in all material respects with all
terms of this Agreement and the Merger Agreements required to be
performed or complied with by it at or prior to the Effective
Date.
7.3 Material Adverse Change. No materially adverse change
shall have occurred since September 30, 1997, in the business,
financial condition or results of operations of CCBC and CCBC
shall not be a party to or, so far as CCBC is aware, threatened
with, and to CCBC's knowledge there is no reasonable basis for,
any legal action or other proceeding before any court, any
arbitrator of any kind or any Government agency if, in the
reasonable judgment of Sierra, such legal action or proceeding
could materially adversely affect CCBC, or its business,
financial condition or results of operations.
7.4 Approval of Agreement. The Merger, this Agreement and the
Merger Agreements shall have been duly approved by the
affirmative vote of the holders of a majority of the outstanding
shares of Sierra Shares and CCBC Shares.
7.5 Officer's Certificate. Sierra shall have received a
certificate, dated the Effective Date, signed on behalf of CCBC
by the respective Presidents and Chief Financial Officers of
Bancshares and CPB to the effect that the conditions in Sections
7.1-7.4 have been satisfied.
7.6 Opinion of Counsel. CCBC shall have delivered to Sierra
such documents as may reasonably be requested by Sierra to
evidence compliance by CCBC with the provisions of this Agreement
and the Merger Agreements, including an opinion of its counsel in
a form substantially as set forth on Exhibit 7.6.
7.7 Absence of Legal Impediment. On the Effective Date, there
shall be an absence of: (a) any suit, action or proceeding, or
order against CCBC or Sierra with respect to any part of this
Agreement, or the Merger, or challenging, enjoining, or otherwise
affecting the consummation of the Merger which, in the opinion of
counsel for Sierra, materially affects the Merger or the
consummation of this Agreement; or (b) any pending or threatened
action or proceeding by the United States Department of Justice
or other federal governmental agency seeking to enjoin, prohibit
or otherwise impede the Merger; or (c) a banking moratorium or
other suspension of payment by banks in the United States or any
general limitation on extension of credit by lending banks in the
United States.
7.8 Effectiveness of Registration Statement. The Sierra
Registration Statement and any amendments or supplements thereto
shall have become effective under the 1933 Act. No stop order
suspending the effectiveness of such Registration Statement shall
be in effect and no proceedings for such purpose shall have been
initiated or threatened by or before the SEC. All state
securities and "blue sky" permits or approvals required to
consummate the transactions contemplated by this Agreement and
the Merger Agreements shall have been received.
7.9 Government Approvals. All Government Approvals shall be in
effect, and all conditions or requirements prescribed by law or
by any such Governmental Approval shall have been satisfied;
provided, however, that no Government Approval shall be deemed to
have been received if it shall require the divestiture or
cessation of any of the present businesses or operations
conducted by either of the parties hereto or shall impose any
other condition or requirement, which Sierra in its reasonable
judgment shall deem to be materially burdensome (in which case
Sierra shall promptly notify CCBC). For purposes of this
Agreement no condition shall be deemed to be "materially
burdensome" if such condition does not materially differ from
conditions regularly imposed by the FRB, the Commissioner, or
FDIC in orders approving transactions of the type contemplated by
this Agreement and compliance with such condition would not:
(a) require the taking of any action inconsistent with the
manner in which Sierra or CCBC has conducted its business
previously;
(b) have a material adverse effect upon the business,
financial condition or results of operations of Sierra or CCBC;
or
(c) preclude satisfaction of any of the conditions to
consummation of the transactions contemplated by this Agreement.
7.10 Tax Opinion. Sierra and CCBC shall have received an
opinion of counsel or accountants satisfactory to both parties,
subject to assumptions and exceptions normally included, in form
and substance reasonably satisfactory to both parties,
substantially to the effect that under federal income tax law and
California income and franchise tax law:
(a) The Merger will qualify as a "reorganization" within the
meaning of Internal Revenue Code Section 368(a)(1)(A);
(b) Except for any cash received in lieu of any fractional
share, no gain or loss will be recognized by holders of CCBC
Shares who receive Sierra Shares in exchange for the CCBC Shares
which they hold;
(c) The holding period of Sierra Shares exchanged for CCBC
Shares (including any fractional share prior to its conversion
into cash) will include the holding period of the CCBC Shares for
which they are exchanged, assuming the shares of CCBC Shares are
capital assets in the hands of the holder thereof at the
Effective Date;
(d) The basis of the Sierra Shares received in the exchange
will be the same as the basis of the CCBC Shares for which they
are exchanged, less any basis attributable to fractional shares
for which cash is received;
(e) No gain or loss will be recognized by Bancshares or CPB in
connection with the Merger or the Bank Merger;
(f) Any cash received by a shareholder of CCBC in lieu of a
fractional share will, to the extent such share was a capital
asset in the hands of the CCBC shareholder, result in recognition
of capital gain or loss by such shareholder measured by the
difference between the cash received and the basis of such
fractional share;
(g) Provided the options to buy Sierra Shares are not actively
traded on an established market, no gain or loss will be
recognized by the holders of nonqualified options to buy CCBC
Shares upon the conversion of those options into nonqualified
options to buy Sierra Shares under the same terms and conditions
as in effect immediately prior to the proposed transaction;
(h) No gain or loss will be recognized by the holders of
incentive stock options to buy CCBC Shares upon the conversion of
those options into incentive stock options to buy Sierra Shares
under the same terms and conditions as in effect immediately
prior to the proposed transaction;
(i) A CCBC shareholder who dissents to the transaction and
receives cash in exchange for the shareholder's CCBC Shares will
be treated as having received a distribution in redemption of the
shareholder's CCBC Shares, subject to the provisions and
limitations of Section 302. Where, as a result of such
distribution, the shareholder owns no Sierra Shares, either
directly or by reason of Section 318, and provided the CCBC
Shares were capital assets in such shareholder's hands, the
redemption will result in the recognition of capital gain or loss
by such shareholder measured by the difference between the amount
of cash received and the adjusted basis of the CCBC Shares
surrendered; and
(j) No gain or loss will be recognized (and no amount will be
included in income) by a holder of CCBC convertible debentures
(whether or not such holder also holds CCBC Shares) upon the
assumption of such debentures by Sierra.
7.11 Unaudited Financials. Not later than the Determination
Date, CCBC shall have furnished Sierra a copy of its most
recently prepared unaudited consolidated financial statements for
the period beginning January 1, 1997 and ending the month end
immediately preceding the Determination Date, including a balance
sheet and statement of income of CCBC for that period.
7.12 Rule 145 Undertaking. Each director, executive officer
and other person who is an "affiliate" (for purposes of Rule 145
under the Securities Act) of CCBC shall have delivered to Sierra,
as soon as practicable after the date of this Agreement, and
prior to the date of the shareholder meeting called by Bancshares
to approve this Agreement, a written agreement, in the form of
Exhibit 7.12 hereto, providing that such person will not sell,
pledge, transfer or otherwise dispose of any Sierra Shares to be
received by such "affiliate" in the Merger, except in compliance
with the applicable provisions of the Securities Act and the
rules and regulations thereunder. Notwithstanding any other
provision of this Agreement, no certificate for Sierra Shares
shall be delivered in exchange for CCBC Shares held by any such
"affiliate" who shall not have executed and delivered such an
agreement.
7.13 Closing Documents. Sierra shall have received such
certificates and other closing documents as counsel for Sierra
shall reasonably request.
7.14 Consents. CCBC shall have received, or Sierra shall have
satisfied itself that CCBC will receive, all consents of other
parties to and required by material mortgages, notes, leases,
franchises, agreements, licenses and permits applicable to CCBC,
in each case in form and substance reasonably satisfactory to
Sierra, and no such consent or license or permit shall have been
withdrawn or suspended.
7.15 Shareholder Agreements. All directors of CCBC shall have
entered into a shareholder's agreement in the form attached
hereto as Exhibit 7.15 contemporaneously with the execution of
this Agreement by which such shareholders agree to vote their
shares and any shares over which such shareholders have voting
authority in favor of the Merger and further agreeing, to the
extent permitted by law and the bylaws of CCBC, to vote in favor
of the Merger by consent solicitation.
7.16 Noncompetition Agreements. All existing non-employee
directors of CCBC shall have entered into a written agreement not
to engage in a business competitive to that of Sierra or CCBC in
Solano, Sacramento and Contra Costa Counties for a period of
three years from the closing of the Acquisition. Restricted
activities shall include participation in organizing or any stock
ownership in a new bank, acquisition of equity securities of any
competing bank that has operations within the aforementioned
counties with less than $5 billion of assets or acting as a
director of any competing institution within such area for such
period; provided that this provision shall not preclude the
acquisition of such securities if the securities so acquired do
not exceed in the aggregate the lesser of $50,000 in market value
at the time of acquisition or 1% of the outstanding equities of
the competing bank.
7.17 Fairness Opinion. The Board of Directors of Bancorp shall
have received an opinion of its financial advisor to the effect
that the terms of the Merger are fair, from a financial point of
view, to Bancorp and its shareholders.
7.18 Pooling of Interests. Prior to the Effective Date, Sierra
shall have received a written opinion from Deloitte & Touche that
the Merger will qualify for pooling of interests accounting
treatment. In making its determination that the Merger will
qualify for such treatment, Deloitte & Touche shall be entitled
to assume that cash will be paid with respect to all shares held
of record by any holder of dissenting shares.
7.19 Resignations. Sierra shall have received resignations of
all of the directors of CCBC, which resignations shall be
effective on the Effective Date.
Section 8. CONDITIONS TO THE OBLIGATIONS OF CCBC.
The obligations of CCBC under this Agreement are, at its
option, subject to the fulfillment at or prior to the Effective
Date of each of the following conditions provided, however, that
any one or more of such conditions may be waived by the Board of
Directors of Bancshares at any time at or prior to the Effective
Date:
8.1 Representations and Warranties. The representations and
warranties of Sierra in Section 5 hereof shall be true and
correct in all material respects on and as of the Effective Date
with the same effect as though such representations and
warranties had been made on and as of such date except as to any
representation or warranty which specifically related to an
earlier date.
8.2 Compliance and Performance Under Agreement. Sierra shall
have performed and complied in all material respects with all of
the terms of this Agreement and the Merger Agreements required to
be performed or complied with by them at or prior to the
Effective Date.
8.3 Material Adverse Change. No materially adverse change
shall have occurred since September 30, 1997, in the business,
financial condition, results of operations or properties of
Sierra and its subsidiaries taken as a whole, and Sierra shall
not be engaged in, or a party to or so far as Sierra is aware,
threatened with, and to Sierra's knowledge no grounds shall exist
for, any legal action or other proceeding before any court, any
arbitrator of any kind or any government agency if, in the
reasonable judgment of CCBC, such legal action or proceeding
could materially adversely affect Sierra or its business,
financial condition, results of operations or assets.
8.4 Approval of Agreement. The Merger, this Agreement and the
Merger Agreements shall have been duly approved by the
affirmative vote of the holders of a majority of the outstanding
Sierra Shares and CCBC Shares.
8.5 Officer's Certificate. CCBC shall have received a
certificate, dated the Effective Date, signed on behalf of Sierra
by the respective Presidents and Chief Financial Officers of
Bancorp and Sierra Bank, certifying to the fulfillment of the
conditions stated in Sections 8.1-8.4 hereof.
8.6 Opinion of Counsel. Sierra shall have delivered to CCBC
such documents as may reasonably be requested by CCBC to evidence
compliance by Sierra with the provisions of this Agreement and
the Merger Agreements, including an opinion of its counsel in a
form substantially as set forth on Exhibit 8.6.
8.7 Absence of Legal Impediment. On the Effective Date, there
shall be an absence of: (a) any suit, action or proceeding, or
order against CCBC or Sierra with respect to any part of this
Agreement, or the Merger, or challenging, enjoining, or otherwise
affecting the consummation of the Merger which, in the opinion of
counsel for CCBC, materially affects the Merger or the
consummation of this Agreement; or (b) any pending or threatened
action or proceeding by the United States Department of Justice
or other federal governmental agency seeking to enjoin, prohibit
or otherwise impede the Merger; or (c) a banking moratorium or
other suspension of payment by banks in the United States or any
general limitation on extension of credit by lending banks in the
United States.
8.8 Effectiveness of Registration Statement. The Sierra
Registration Statement and any amendments or supplements thereto
shall have become effective under the 1933 Act. No stop order
suspending the effectiveness of the Sierra Registration Statement
shall be in effect and no proceedings for such purpose shall have
been initiated or threatened by or before the SEC. All state
securities and "blue sky" permits or approvals required to
consummate the transactions contemplated by this Agreement and
the Merger Agreements shall have been received.
8.9 Government Approvals. The Government Approvals shall have
been received and shall be in effect, and all conditions or
requirements prescribed by law or by any such approval shall have
been satisfied; provided, however that no Government Approval
shall be deemed to have been received if it shall require the
divestiture or cessation of any of the present business or
operations conducted by either of the parties hereto or shall
impose any other condition or requirement, which CCBC in its
reasonable judgment shall deem to be materially burdensome (in
which case CCBC shall promptly notify Sierra).
8.10 Tax Opinion or Ruling. Sierra and CCBC shall have
received the opinion referred to in Section 7.10 hereof which
opinion shall meet the requirements of such section.
8.11 Unaudited Financials. Not later than the Determination
Date, Sierra shall have furnished CCBC a copy of its most
recently prepared unaudited year-to-date consolidated financial
statements for the period beginning January 1, 1997 and ending
the month immediately preceding the Determination Date, including
a balance sheet and year-to-date statement of income of Sierra.
8.12 Closing Documents. CCBC shall have received such
certificates and other closing documents as counsel for CCBC
shall reasonably request.
8.13 Fairness Opinion. The Board of Directors of Bancshares
shall have received an opinion of its financial advisor to the
effect that the Exchange Ratio in the Merger as set forth in
Section 2.1(b) of this Agreement is fair, from a financial point
of view, to the shareholders of Bancshares.
Section 9. CLOSING.
9.1 Closing Date. The closing of the transactions contemplated
by this Agreement ("Closing") shall, unless another date, time or
place is agreed to in writing by Sierra and CCBC, be held at the
offices of McCutchen, Doyle, Brown & Enersen LLP, San Francisco,
California on the Effective Date.
9.2 Delivery of Documents. At the Closing, the opinions,
certificates and other documents required to be delivered by this
Agreement shall be delivered.
9.3 Filings. At the Closing, Sierra and CCBC shall instruct
its representatives to make or confirm such filings as shall be
required in the opinion of counsel to Sierra and CCBC to give
effect to the Merger and the Bank Merger.
Section 10. EXPENSES.
Each party hereto agrees to pay, without right of
reimbursement from the other party and whether or not the
transactions contemplated by this Agreement or the Merger
Agreements shall be consummated, the costs incurred by such party
incident to the performance of its obligations under this
Agreement and the Merger Agreements, including without
limitation, costs incident to the preparation of the Merger
Agreements, this Agreement, the Sierra Registration Statement and
the Proxy Materials (including the audited financial statements
of the parties contained therein) and incident to the
consummation of the Acquisition and of the other transactions
contemplated herein and in the Merger Agreements, including the
fees and disbursements of counsel, accountants, consultants and
financial advisers employed by such party in connection
therewith. CCBC shall pay 50% of the printing costs of the Sierra
Registration Statement, the Joint Proxy Materials, all fees
payable pursuant to state "blue-sky" securities laws, fees
related to obtaining a tax opinion, the fee required to be paid
to the SEC to register the Sierra Shares and the costs of
distributing the Joint Proxy Materials and other information
relating to these transactions to shareholders of CCBC.
Section 11. AMENDMENT; TERMINATION.
11.1 Amendment. This Agreement and the Merger Agreements may
be amended by Sierra and CCBC at any time prior to the Effective
Date without the approval of the shareholders of Bancshares with
respect to any of their terms except, after Bancshares
shareholders have approved the Merger, the terms relating to the
form or amount of consideration to be delivered to Bancshares
shareholders in the Merger.
11.2 Termination. This Agreement and the Merger Agreements may
be terminated as follows:
(a) By the mutual consent of the Boards of Directors of both
Bancorp and Bancshares at any time prior to the consummation of
the Merger.
(b) By the Board of Directors of Bancorp on or after June 30,
1998, if (i) any of the conditions in Section 7 to which the
obligations of Sierra are subject have not been fulfilled, or
(ii) such conditions have been fulfilled or waived by Sierra and
CCBC shall have failed to complete the Merger.
(c) By the Board of Directors of Bancorp if (i) it has become
aware of any facts or circumstances of which it was not aware on
the date hereof and which materially adversely affect CCBC taken
as a whole or its properties, operations or financial condition,
(ii) a materially adverse change shall have occurred since
September 30, 1997, in the business, financial condition, results
of operations or properties of CCBC, or (iii) there has been
material failure or prospective material failure on the part of
CCBC to comply with its obligations under this Agreement or the
Merger Agreements, or any material failure or prospective failure
to comply with any of the conditions set forth in Section 7
hereof.
(d) By the Board of Directors of either party in the event
that CCBC approves, recommends or enters into an agreement for a
Business Combination with any third party or group or announces
publicly or privately its intention to enter into a transaction
or series of transactions with a third person or group providing
for the acquisition of all or a substantial part of CCBC, whether
by way of merger, exchange or purchase of stock, sale of assets
or otherwise.
(e) By the Board of Directors of Bancshares on or after June
30, 1998, if (i) any of the conditions contained in Section 8 to
which the obligations of CCBC are subject have not been
fulfilled, or (ii) such conditions have been fulfilled or waived
but Sierra shall have failed to complete the Merger; provided,
however, that if Sierra is engaged at the time in litigation
(including an administrative appeal procedure) relating to an
attempt to obtain one or more of the Governmental Approvals or if
Sierra shall be contesting in good faith any litigation which
seeks to prevent consummation of the transactions contemplated
hereby, such nonfulfillment shall not give CCBC the right to
terminate this Agreement until the later of (A) June 30, 1998,
and (B) 60 days after the completion of such litigation and of
any further regulatory or judicial action pursuant thereto,
including any further action by a governmental agency as a result
of any judicial remand, order or directive or otherwise or any
waiting period with respect thereto provided such date shall not
occur beyond December 31, 1998.
(f) By the Board of Directors of Bancshares if (i) it has
become aware of any facts or circumstances of which it was not
aware on the date hereof and which can or do materially adversely
affect Sierra taken as a whole or its properties, operations or
financial condition, (ii) a materially adverse change shall have
occurred since September 30, 1997 in the business, financial
condition, results of operations or assets of Sierra, or (iii)
there has been a material failure or prospective material failure
on the part of Sierra to comply with its obligations under this
Agreement or the Merger Agreements, or any material failure or
prospective material failure to comply with any condition set
forth in Section 8.
(g) By the Board of Directors of either party in the event
Sierra or its affiliates enter into a Business Combination with
any other entity which does not expressly contemplate the
performance by Sierra or its successor in interest of Sierra's
obligations under this Agreement and Sierra indicates it will not
consummate this Agreement.
(h) By the Board of Directors of Bancshares, if the Board of
Directors determines at any time during the two business-day
period commencing one day after the Determination Date, if the
Market Value is less than $21.59; provided, however, if CCBC
elects to exercise its termination right pursuant to this Section
11(h), it shall give prompt written notice to Sierra (provided
that such notice of election to terminate may be withdrawn at any
time within the aforementioned two business-day period), in which
case, within such two business-day period, commencing on the day
after receipt of such notice, Sierra shall have the option of
adjusting the Exchange Ratio to a number equal to a quotient
(rounded to the nearest ten thousandth), the numerator of which
is $25.00 and the denominator of which is the Market Value. If
Sierra makes an election contemplated by the preceding sentence,
it shall give prompt written notice to CCBC of such election and
the revised Exchange Ratio, whereupon no termination shall have
occurred pursuant to this Section and this Agreement shall remain
in effect in accordance with its terms (except as the Exchange
Ratio shall have been so modified), and any references in this
Agreement to shall have been so modified), and any references in
this Agreement to "Exchange Ratio" shall thereafter be deemed to
refer to the Exchange Ratio as adjusted pursuant to this Section.
11.3 Notice of Termination. The power of termination hereunder
may be exercised by Sierra or CCBC, as the case may be, only by
giving written notice, signed on behalf of such party by its
Chief Executive Officer or President, to the other party.
11.4 Breach of Obligations. If there has been a material
breach by either party in the performance of any of the
obligations herein which shall not have been cured within twenty
business days after written notice thereof has been given to the
defaulting party, the nondefaulting party shall have the right to
terminate this Agreement upon written notice to the other party.
In any event, the nondefaulting party shall have no obligation to
consummate any transaction or take any further steps toward such
consummation contemplated hereunder until such breach is cured.
11.5 Termination and Expenses.
(a) If this Agreement is terminated for any reason, the Bank
Merger Agreement and the Agreement and Plan of Merger shall
automatically terminate. Termination of this Agreement shall not
terminate or affect the obligations of the parties to pay
expenses as provided in Section 10, to maintain the
confidentiality of the other party's information pursuant to
Section 3.1(f), or the provisions of this Section 11.5 or of
Sections 12.1-12.7.
(b) If this Agreement is terminated pursuant to Section
11.2(d) or because of a willful breach of the Agreement by CCBC,
CCBC shall pay to Sierra, on demand, the sum of $1,200,000. If
this Agreement is terminated pursuant to Section 11.2(g) or
because of a willful breach of the Agreement by Sierra, Sierra
shall pay to CCBC, on demand, the sum of $1,200,000. In each
case, the amount indicated shall be deemed consideration or
liquidated damages for expenses incurred and the lost opportunity
cost for time devoted to the transactions contemplated by this
Agreement, provided, however, each party shall remain liable for
expenses as set forth in Section 10.
Section 12. MISCELLANEOUS.
12.1 Notices. Any notice or other communication required or
permitted under this Agreement shall be effective only if it is
in writing and delivered personally, or by overnight courier, or
by facsimile or sent by first class United States mail, postage
prepaid, registered or certified mail, addressed as follows:
To Sierra: To CCBC:
SierraWest Bancorp California Community
Bancshares Corporation
10181 Truckee-Tahoe Airport Road 555 Mason Street, Suite 280
Truckee, California 96160 Vacaville, CA 95688-3985
Attention: Attention:
William T. Fike Walter O. Sunderman
President & CEO President & CEO
With a copy to: With a copy to:
McCutchen, Doyle, Brown & Enersen Lillick & Charles
Three Embarcadero Center Two Embarcadero Center
San Francisco, CA 94111 San Francisco, CA 94111
Attention: James M. Rockett Attention: Ronald W. Bachli
or to such other address as either party may designate by notice
to the other, and shall be deemed to have been given upon
receipt.
12.2 Binding Agreement. This Agreement is binding upon and is
for the benefit of Sierra and CCBC and its successors and
permitted assigns. This Agreement is not made for the benefit of
any person, firm, corporation or association not a party hereto,
and no other person, firm, corporation or association shall
acquire or have any right under or by virtue of this Agreement.
No party may assign this Agreement or any of its rights,
privileges, duties or obligations hereunder without the prior
written consent of the other party to this Agreement.
12.3 Survival of Representations and Warranties. No
investigation by Sierra or CCBC made before or after the date of
this Agreement shall affect the representations and warranties
which are contained in this Agreement and such representations
and warranties shall survive such investigation, provided that,
except for the obligations of Sierra as set forth in Section 1.4,
representations, warranties, covenants and agreements of Sierra
and CCBC contained in this Agreement shall not survive the
Closing.
12.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
12.5 Attorneys' Fees. In any action at law or suit in equity
in relation to this Agreement, the prevailing party in such
action or suit shall be entitled to receive a reasonable sum for
its attorneys' fees and all other reasonable costs and expenses
incurred in such action or suit.
12.6 Entire Agreement; Severability. This Agreement and the
documents, certificates, agreements, letters, schedules and
exhibits attached or required to be delivered pursuant hereto set
forth the entire agreement and understandings of the parties in
respect of the transactions contemplated hereby, and supersede
all prior agreements, arrangements and understanding relating to
the subject matter hereof. Each provision of this Agreement shall
be interpreted in a manner to be effective and valid under
applicable law, but if any provision hereof shall be prohibited
or ruled invalid under applicable law, the validity, legality and
enforceability of the remaining provisions shall not, except as
otherwise required by law, be affected or impaired as a result of
such prohibition or ruling.
12.7 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Sierra and CCBC have caused this Agreement
and Plan of Merger to be signed by its Chief Executive Officer or
Chairman as of the day and year first above written.
CALIFORNIA COMMUNITY BANCSHARES SIERRAWEST BANCORP CORPORATION
By____________________________ By___________________________
Walter O. Sunderman William T. Fike
President and President and
Chief Executive Officer Chief Executive Officer
CONTINENTAL PACIFIC BANK SIERRAWEST BANK
By___________________________ By___________________________
Walter O. Sunderman William T. Fike
President and President and
Chief Executive Officer Chief Executive Officer
<PAGE>
EXHIBIT A - TO THE PLAN OF ACQUISITION AND MERGER
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of ____________,
19__ (this "Merger Agreement"), is made and entered into by and
between California Community Bancshares Corporation, a Delaware
corporation ("Seller") and SierraWest Bancorp, a California
corporation ("Buyer").
W I T N E S S E T H:
A. The Boards of Directors of Buyer and Seller have approved,
and deem it advisable and in the best interests of Buyer, Seller
and their respective shareholders, that Buyer and Seller
consummate the business transaction provided for herein in which
Seller would merge with and into Buyer (the "Merger").
B. Buyer and Seller have entered into an Plan of Acquisition
and Merger dated as of ______________, 19__ (the "Plan"),
providing, among other things, for the execution and filing of
this Merger Agreement and the consummation of the Merger.
NOW, THEREFORE, in consideration of the promises and mutual
agreements contained in this Merger Agreement, the parties to
this Merger Agreement hereby agree that Seller shall be merged
with and into Buyer in accordance with the provisions of the laws
of the State of California and the State of Delaware upon the
terms and subject to the conditions set forth as follows:
Section 1. The Merger.
1.1 Effective Time. On _____________, 1998, upon the filing
with the California Secretary of State of a duly executed
counterpart of this Merger Agreement with the officers'
certificates prescribed by Section 1103 of the California General
Corporation Law attached thereto, the Merger shall become
effective. The effective time of the Merger on the Effective Date
shall be 12:01 a.m., Pacific Standard Time.
1.2 Effect of the Merger. On the Effective Date, Seller shall
be merged with and into Buyer and the separate corporate
existence of Seller shall cease. Buyer shall be the surviving
corporation (the "Surviving Corporation") in the Merger. It shall
thereupon succeed, without other transfer, to all rights and
properties of, and shall be subject to all the debts and
liabilities of, Seller and the separate existence of Buyer as a
California corporation, with all its purposes, objects, rights,
powers, privileges and franchises shall continue unaffected and
unimpaired by the Merger.
Section 2. Corporate Governance Matters.
2.1 From and after the Effective Date and until thereafter
amended as provided by law: (a) the Articles of Incorporation of
Buyer as in effect immediately prior to the Effective Date shall
be and continue to be the Articles of Incorporation of the
Surviving Corporation; and (b) the Bylaws of Buyer as in effect
immediately prior to the Effective Date shall be and continue to
be the Bylaws of the Surviving Corporation.
2.2 Subject to the provisions of Section 1.4 of the Plan, (a)
the directors of the Surviving Corporation shall be those persons
who are the directors of Buyer immediately prior to the Effective
Date; and (b) the officers of the Surviving Corporation shall be
those persons who are the officers of Buyer at the Effective
Date.
Section 3. Conversion of Shares.
3.1 Conversion of Seller Shares. As of the Effective Date, by
virtue of the Merger and without any action on the part of the
holder of the common stock of Seller, [par value $.10 per share]
(a "Seller Share" or "Seller Common Stock"):
(a) Each issued and outstanding Seller Share (other than
fractional shares, or any shares as to which dissenters' rights
have been perfected, but including any shares issued pursuant to
the Rights Agreement), shall be converted into ______ shares of
the common stock, without par value, of Buyer ("Buyer Common
Stock" or a "Buyer Share").
(b) From and after the Effective Date, the holders of
certificates formerly representing Seller Shares shall cease to
have any rights with respect thereto other than any dissenters'
rights they have perfected pursuant to Section 262 of the General
Corporation Law of the State of Delaware.
(c) On the Effective Date, all shares of Seller Common Stock
held in the treasury of Seller or owned beneficially by any
subsidiary of Seller other than in a fiduciary capacity or in
connection with a debt previously contracted and all shares of
Seller Common Stock owned by Buyer or owned beneficially by any
subsidiary of Buyer other than in a fiduciary capacity or in
connection with a debt previously contracted shall be canceled
and no cash, stock or other property shall be delivered in
exchange therefor.
3.2 Fractional Shares. Notwithstanding any other provision
hereof, no fractional shares of Buyer Common Stock shall be
issued to holders of Seller Shares. In lieu thereof, each such
holder entitled to a fraction of a share of Buyer Common Stock
shall receive, at the time of surrender of the certificate or
certificates representing such holder's Seller Shares, an amount
in cash equal to the market value per share of the Common Stock
of Buyer, calculated by taking the average of the closing price
quoted on the Nasdaq, as reported in The Wall Street Journal, for
each of the twenty consecutive trading days prior to five trading
days prior to the Effective Date, rounded to 4 decimal places
(whether or not there were any trades in Buyer Common Stock on
such days), multiplied by the fraction of a share of Buyer Common
Stock to which such holder otherwise would be entitled. No such
holder shall be entitled to dividends, voting rights, interest on
the value of, or any other rights in respect of, a fractional
share.
3.3 Surrender of Seller Shares.
(a) Prior to the Effective Date, Buyer shall appoint
____________________________, or its successor, or any other bank
or trust company mutually acceptable to Seller and Buyer, as
exchange agent (the "Exchange Agent") for the purpose of
exchanging certificates representing the Buyer Common Stock, and
at and after the Effective Date, Buyer shall issue and deliver to
the Exchange Agent certificates representing the Buyer Common
Stock, as shall be required to be delivered to holders of Seller
Shares pursuant to Section 3.1 of this Merger Agreement. As soon
as practicable after the Effective Date, each holder of Seller
Shares converted pursuant to Section 3.1, upon surrender to the
Exchange Agent of one or more certificates for such Seller Shares
for cancellation, along with duly executed transmittal materials
to be mailed after the Effective Date by the Exchange Agent, will
be entitled to receive a certificate representing the number of
shares of Buyer Common Stock determined in accordance with
Section 3.1 and a payment in cash with respect to fractional
shares, if any, determined in accordance with Section 3.2. Each
certificate representing Buyer Common Stock will bear a notation
incorporating the Rights Agreement (as that term is defined in
Section 2.1(f) of the Plan) by reference and certificates
representing the Buyer Common Stock will evidence and entitle the
holders thereof to certain rights as set forth in and subject to
the terms of the Rights Agreement ("Rights"). Certificates issued
for the Buyer common Stock shall be deemed to be certificates for
said Rights.
(b) No dividends or other distributions of any kind which are
declared payable to shareholders of record of the Buyer Common
Stock after the Effective Date will be paid to persons entitled
to receive such certificates for Buyer Common Stock until such
persons surrender their certificates representing Seller Shares.
Upon surrender of such certificates representing Seller Shares,
the holder thereof shall be paid, without interest, any dividends
or other distributions with respect to the Buyer Common Stock as
to which the record date and payment date occurred on or after
the Effective Date and on or before the date of surrender.
(c) If any certificate for a Buyer Share is to be issued in a
name other than that in which the certificate for a Seller Share
surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the person requesting such
exchange shall pay to the Exchange Agent any transfer costs,
taxes or other expenses required by reason of the issuance of
certificates for such Buyer Share in a name other than the
registered holder of the certificate surrendered, or such persons
shall establish to the satisfaction of Buyer and the Exchange
Agent that such costs, taxes or other expenses have been paid or
are not applicable.
(d) All dividends or distributions, and any cash to be paid
pursuant to Section 3.2 in lieu of fractional shares, if held by
the Exchange Agent for payment or delivery to the holders of
unsurrendered certificates representing Seller Shares and
unclaimed at the end of one year from the Effective Date, shall
(together with any interest earned thereon) at such time be paid
or redelivered by the Exchange Agent to Buyer, and after such
time any holder of a certificate representing a Seller Share who
has not surrendered such certificate to the Exchange Agent shall,
subject to applicable law, look as a general creditor only to
Buyer for payment or delivery of such dividends or distributions
or cash, as the case may be. Buyer shall not be liable to any
holder of a share of Seller Common Stock for such share (or
dividends or distributions with respect thereto) delivered to a
public official pursuant to any applicable abandoned property,
escheat or similar law.
(e) Upon the Effective Date, the stock transfer books of
Seller shall be closed and no transfer of Seller Common Stock
shall thereafter be made or recognized.
(f) In the event that prior to the Effective Date the
outstanding shares of Buyer Common Stock or Seller Common Stock
shall have been increased, decreased or changed into or exchanged
for a different number or kind of shares or securities by
recapitalization, reclassification, stock dividend, stock split
or other like changes in Buyer's or Seller's capitalization, or a
distribution shall be made on Buyer Common Stock or Seller Common
Stock in any security convertible into Buyer Common Stock or
Seller Common Stock, respectively (provided that no such action
shall be taken by Seller without Buyer's prior written consent
pursuant to Section 3.2(e) of the Plan), then an appropriate and
proportionate adjustment shall be made in the number and kind of
shares of Buyer Common Stock to be thereafter delivered pursuant
to this Merger Agreement.
3.4 All shares of Buyer Common Stock shall remain outstanding
and unaffected by the Merger.
Section 4. Termination and Amendment.
4.1 The obligations of the parties to effect the Merger shall
be subject to all the terms and conditions contained in the Plan.
Notwithstanding the approval of this Merger Agreement by the
shareholders of Seller or Buyer, this Merger Agreement shall
terminate forthwith in the event that the Plan shall be
terminated as therein provided. 4.2 This Merger Agreement may
be amended by Buyer and Seller at any time prior to the Effective
Date without the approval of the shareholders of Seller or Buyer
with respect to any of its terms except any change in its
principal terms or in the terms relating to the form or amount of
consideration to be delivered to the Seller shareholders in the
Merger. This Merger Agreement may not be amended, except by an
instrument in writing signed on behalf of each of the parties
hereto.
4.3 This Merger Agreement may be signed in any number of
counterparts, each of which shall be deemed an original, and all
of which shall be deemed but one and the same instrument.
Section 5. Miscellaneous.
5.1 The Plan is and will be maintained on file at the
principal place of business of the Surviving Corporation. The
address of the principal place of business of the Surviving
Corporation is 10181 Truckee-Tahoe Airport Road, Truckee,
California, 96160.
5.2 A copy of the Plan will be furnished by the Surviving
Corporation, on request and without cost to any stockholder of
Seller or Buyer.
5.3 The Plan between the parties to the Merger has been
approved, adopted, certified, executed and acknowledged by each
of the Seller and Buyer pursuant to Section 252 of the General
Corporation Law of the State of Delaware, and executed by the
parties in accordance with the requirements of Chapter 12 of the
California General Corporation Law.
5.4 The Surviving Corporation agrees that it may be served
with process in the State of Delaware in any proceeding for
enforcement of any obligation of Seller, as well as for
enforcement of any obligation of the Surviving Corporation
arising from the Merger, including any suit or other proceedings
to enforce the right of any stockholders as determined in
appraisal proceedings pursuant to the provisions of Section 262
of the General Corporation Law of the State of Delaware, and
irrevocably appoints the Secretary of State of the State of
Delaware as its agent to accept service of process in any such
suit or other proceedings and directs the Secretary of State of
the State of Delaware to mail copies of such process to the
following address: 10181 Truckee-Tahoe Airport Road, Truckee,
California 96160.
IN WITNESS WHEREOF, the parties have duly executed this Merger
Agreement as of the date first written above.
BUYER
By William T. Fike
President and Chief Executive Officer
By A. Morgan Jones
Corporate Secretary
SELLER
By Walter O. Sunderman
President and Chief Executive Officer
By John Usnick
Corporate Secretary
<PAGE>
OFFICERS' CERTIFICATE
William T. Fike and A. Morgan Jones hereby certify that:
1. They are the President and Chief Executive Officer and
Corporate Secretary, respectively, of SierraWest Bancorp, a
corporation organized under the laws of the State of California.
2. The Merger Agreement in the form attached was duly approved
by the Board of Directors and shareholders of the corporation.
3. The shareholder approval was by the holders of a number of
outstanding shares which equaled or exceeded the vote required.
The percentage vote required was more than 50% of the outstanding
shares.
4. There is only one class of shares and the number of shares
outstanding is ____________.
We further declare under penalty of perjury under the laws of
the State of California that the matters set forth in this
certificate are true and correct of our own knowledge.
Date: _______________, 19__
- --------------------------------------
William T. Fike
President and Chief Executive Officer
- --------------------------------------
A. Morgan Jones
Corporate Secretary
<PAGE>
OFFICERS' CERTIFICATE
Walter O. Sunderman and John Usnick hereby certify that:
1. They are the President and Chief Executive Officer and
Corporate Secretary, respectively, of California Community
Bancshares Corporation, a corporation organized under the laws of
the State of Delaware.
2. The Merger Agreement in the form attached was duly approved
by the Board of Directors and shareholders of the corporation.
3. The shareholder approval was by the holders of a number of
outstanding shares which equaled or exceeded the vote required.
The percentage vote required was more than 50% of the outstanding
shares.
4. There is only one class of shares and the number of shares
outstanding is ___________.
We further declare under penalty of perjury under the laws of
the State of California that the matters set forth in this
certificate are true and correct of our own knowledge.
Date: ____________, 19__
- --------------------------------------
Walter O. Sunderman
President and Chief Executive Officer
- --------------------------------------
John Usnick
Corporate Secretary
<PAGE>
EXHIBIT B - TO THE PLAN OF ACQUISITION AND MERGER
BANK MERGER AGREEMENT
This merger agreement ("Bank Merger Agreement") is entered into
as of __________, 19__ by and among SierraWest Bank ("Sierra
Bank"), a California banking corporation, Continental Pacific
Bank ("Continental"), a California banking corporation, as
follows:
Section 1. Outstanding Shares.
(a) Sierra Bank is a California banking corporation authorized
by the California Department of Financial Institutions. Sierra
Bank has [____________] authorized shares of no par value common
stock of which [____________] are outstanding and of which
[__________] are subject to issued and outstanding stock options.
Sierra Bank has no outstanding shares of preferred stock or
warrants. All of the issued and outstanding shares of Sierra Bank
common stock are owned by SierraWest Bancorp, a California
corporation.
(b) Continental is a California banking corporation authorized
by the California Department of Financial Institutions.
Continental has [____________] authorized shares of common stock
of which [____________] are outstanding. Continental has no
outstanding shares of preferred stock, options or warrants. All
of the issued and outstanding shares of Continental common stock
are owned by California Community Bancshares, a Delaware
corporation.
Section 2. The Merger.
Continental shall be merged into Sierra Bank ("Bank Merger").
Sierra Bank shall be the surviving corporation (the "Surviving
Corporation").
Section 3. Stock.
On the Effective Date, the outstanding shares of Continental
shall be canceled and no shares of Sierra Bank shall be issued in
exchange therefor.
Section 4. Articles of Incorporation and By-Laws.
(a) The Articles of Incorporation of Sierra Bank shall, upon
the Effective Date, be the Articles of Incorporation of the
Surviving Corporation. It is the intention of the parties that
the Merger will be treated as a tax free reorganization pursuant
to Section 368 of the Internal Revenue Code.
(b) The By-Laws of Sierra Bank, as they exist on the Effective
Date, shall be the By-Laws of the Surviving Corporation until the
same are amended.
Section 5. Effect of Merger And Effective Date.
The effect of the Merger and the Effective Date of the Merger
are as prescribed by law.
Section 6. Officers and Directors
Subject to the provisions of Section 1.4 of the Plan, the
officers and directors of Sierra Bank holding office on the
Effective Date shall be the officers and directors of the
Surviving Corporation until removed as provided by law or until
the election of their respective successors.
Section 7. Acts of Merging Corporation
Continental, as the merging corporation, shall from time to
time, as and when requested by the Surviving Corporation, execute
and deliver all such documents and instruments and take all such
action necessary or desirable to evidence or carry out this
Merger.
Section 8. Definitions.
All capitalized terms herein shall have the meanings ascribed
to them in this Merger Agreement; provided, however, if no
meaning is separately ascribed to such capitalized terms in this
Merger Agreement, then such terms will have the meanings ascribed
to them in the Plan of Acquisition and Merger dated
______________, 19__, among SierraWest Bancorp, SierraWest Bank,
California Community Bancshares and Continental Pacific Bank
("Plan").
In witness whereof the parties have executed this Merger
Agreement.
CONTINENTAL PACIFIC BANK
By___________________________________
Walter O. Sunderman
President and Chief Executive Officer
By___________________________________
John Usnick
Corporate Secretary
SIERRAWEST BANK
By___________________________________
William T. Fike
President and Chief Executive Officer
By___________________________________
A. Morgan Jones
Corporate Secretary
<PAGE>
EXHIBIT C - TO PLAN OF ACQUISITION AND MERGER
STOCK OPTION AGREEMENT
This AGREEMENT is dated as of November 13, 1997, between
SierraWest Bancorp ("Sierra"), a California corporation, and
California Community Bancshares, a California corporation
("CCBC").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Sierra and CCBC have
approved an Plan of Acquisition and Merger ("Plan") dated as of
the date hereof which contemplates the acquisition by Sierra of
CCBC by means of the merger of CCBC with and into Sierra, with
Sierra as the entity surviving the merger;
WHEREAS, as a condition to Sierra's entry into the Plan and to
induce such entry, CCBC has agreed to grant to Sierra the option
set forth herein to purchase shares of CCBC's authorized but
unissued common stock, par value $.10 per share ("Common Stock");
Unless otherwise provided in this Agreement, capitalized terms
shall have the meanings ascribed to such terms in the Plan.
NOW, THEREFORE, in consideration of the premises herein
contained, the parties agree as follows:
1. Grant of Option. Subject to the terms and conditions set
forth herein, CCBC hereby grants to Sierra an option (the
"Option") to purchase up to 282,914 shares of Common Stock (the
"Option Shares"), at a per share price equal to the average of
the bid and ask prices for CCBC Common Stock for the five trading
days preceding the execution of the Plan (the "Exercise Price");
provided, however, that in the event CCBC issues or agrees to
issue any shares of Common Stock to an Acquiring Person (as that
term is defined in Section 6 herein) at a price less than the
Exercise Price, the Exercise Price shall be equal to such lesser
price.
2. Exercise of Option.
(a) Sierra may exercise the Option, in whole or in part, in
accordance with and to the extent permitted by applicable law at
any time or from time to time but only upon or after the
occurrence of a Purchase Event (as that term is defined in
Paragraph (b) below of this section); provided that to the extent
the Option shall not have been exercised, it shall terminate and
be of no further force and effect upon the earliest to occur
(such earliest date, the "Expiration Date") of (i) the
termination of the Plan pursuant to Section 11.2 (a) and (g)
thereof; (ii) the date of termination pursuant to Section 11.2
(b), (c), (d), (e) or (h) thereof if such date is prior to a
Purchase Event; (iii) the effective time of the acquisition of
CCBC by Sierra pursuant to the Plan, or (iv) twelve months
following the occurrence of the earliest to occur of (A) the
date-of any termination of the Plan other than as described in
(i) or (ii) above or (B) the date of first occurrence of a
Purchase Event. Notwithstanding the foregoing, CCBC shall not be
obligated to issue the Option Shares upon exercise of the Option
(i) in the absence of any required governmental or regulatory
waiver, consent or approval necessary for CCBC to issue such
Option Shares or for Sierra or any transferee to exercise the
Option or prior to the expiration or termination of any waiting
period required by law, or (ii) so long as any injunction or
other order, decree or ruling issued by any federal or state
court of competent jurisdiction is in effect which prohibits the
sale or delivery of the Option Shares.
(b) As used herein, a "Purchase Event" shall have occurred
when: (i) CCBC or any subsidiary of CCBC, (without the prior
written consent of Sierra) enters into an agreement with any
person (other than Sierra or any of its subsidiaries) pursuant to
which such person would: (x) merge or consolidate with, or enter
into any similar transaction with CCBC or any subsidiary of CCBC,
(y) purchase, lease or otherwise acquire all or substantially all
of the assets of CCBC or (z) purchase or otherwise acquire (by
merger, consolidation, share exchange or any similar transaction)
securities representing 10 percent or more of the voting shares
of CCBC (the transactions referred to in subparagraph (x), (y)
and (z) are referred to as an "Acquisition Transaction"); (ii)
any person or group of persons acting in concert (other than
Sierra or any of its subsidiaries) acquires the beneficial
ownership or the right to acquire beneficial ownership of
securities representing 24.99 percent or more of the voting
shares of CCBC (the term "beneficial ownership" for purposes of
this Agreement shall have the meaning set forth in Section 13(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the regulations promulgated thereunder); (iii) the
shareholders of CCBC fail to approve the business combination
between CCBC and Sierra contemplated by the Plan at any meeting
of such shareholders which has been held for that purpose or any
adjournment or postponement thereof, the failure of such a
shareholder meeting to occur prior to termination of the Plan, or
the withdrawal or modification (in a manner adverse to Sierra) of
the recommendation of CCBC's Board of Directors of the Merger and
Plan that the shareholders of CCBC approve the Merger and the
Plan, in each case, after there shall have been a public
announcement that any person (other than Sierra or any of its
subsidiaries), shall have (A) made, or publicly disclosed an
intention to make, a proposal to engage in an Acquisition
Transaction, (B) commenced a tender offer, as defined herein, or
filed a registration statement under the Securities Act of 1933,
as amended (the "Securities Act"), with respect to an exchange
offer, as defined herein, or (C) filed an application (or given a
notice), whether in draft or final form, with the Department of
Financial Institutions of the State of California or other
federal or state bank regulatory authority, which application or
notice has been accepted for processing, for approval to engage
in an Acquisition Transaction; (iv) any person (other than Sierra
or other than in connection with a transaction which Sierra has
given its prior written consent), shall have filed an application
or notice with the Department of Financial Institutions of the
State of California or other federal or state bank regulatory
authority, which application or notice has been accepted for
processing, for approval to engage in an Acquisition Transaction,
exchange offer or tender offer; (v) CCBC shall have willfully
breached any covenant or obligation contained in the Plan in
anticipation of engaging in a Purchase Event, and following such
breach Sierra would be entitled to terminate the Plan (whether
immediately or after the giving of notice or passage of time or
both); or (vi) a public announcement by CCBC of the
authorization, recommendation or endorsement by CCBC of an
Acquisition Transaction, exchange offer or tender offer or a
public announcement by CCBC of an intention to authorize,
recommend or announce an Acquisition Transaction, exchange offer
or tender offer. If a Purchase Event has occurred, the Option
shall continue to be exercisable until its termination in
accordance with Section 2(a) hereof. CCBC shall notify Sierra
promptly in writing upon learning of the occurrence of a Purchase
Event, it being understood that the giving of such notice by CCBC
shall not be a condition to the right of Sierra to transfer or
exercise the Option. As used in this Agreement, "person" shall
have the same meaning set forth in the Plan. As used in this
paragraph "tender offer" or "exchange offer" shall mean,
respectively, the commencement (as such term is defined in Rule
14d-2 promulgated under the Exchange Act) by any person (other
than Sierra or any subsidiary of Sierra) of, or the filing by any
person (other than Sierra or any subsidiary of Sierra) of a
registration statement under the Securities Act with respect to,
a tender offer or exchange offer, respectively, to purchase
shares of CCBC Stock such that, upon consummation of such offer,
such person would own or control 10 percent or more of the
then-outstanding shares of CCBC Stock.
(c) In the event a Purchase Event occurs, Sierra may elect
to exercise the Option. If Sierra wishes to exercise the Option,
it shall send to CCBC a written notice (the date of which shall
be referred to herein as the "Notice Date") which specifies (i)
the total number of Option Shares to be purchased, and (ii) a
place and date not earlier than two business days nor later than
ten business days from the Notice Date for the closing (the
"Closing") of such purchase (the "Closing Date"); provided
however, that if prior notification to or approval of the
Department of Financial Institutions of the State of California
or any other regulatory agency is required in connection with
such purchase, the Holder, as defined below, shall promptly file
the required notice or application for approval, shall promptly
notify CCBC 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,
subject to receipt of any required regulatory approvals.
3. Payment and Delivery of Certificates;
Sierra Representation.
(a) If Sierra elects to exercise the Option, then at the
Closing, Sierra shall pay to CCBC the aggregate purchase price
for the Option Shares purchased pursuant to the exercise of the
Option in immediately available funds by a wire transfer to a
bank designated by CCBC.
(b) At such Closing, simultaneously with the delivery of the
purchase price for the Option Shares as provided in Paragraph (a)
hereof, CCBC shall deliver to Sierra a certificate or
certificates, registered in the name of Sierra or its designee,
representing the number of Option Shares purchased by Sierra.
Such certificates may be endorsed with any legend required
pursuant to any permit or exemption granted by the Department of
Financial Institutions of the State of California or any other
regulatory agency, as well as the following legend:
THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO CERTAIN PROVISIONS OF AN AGREEMENT BETWEEN THE
REGISTERED HOLDER HEREOF AND THE ISSUER, A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER. A
COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A REQUEST THEREFOR.
Any such legend shall be removed by delivery of a substitute
certificate without such legend if Sierra shall have delivered to
CCBC an opinion of counsel, in form and substance satisfactory to
CCBC, that such legend is not required for purposes of assuring
compliance with applicable securities or other law or with this
Agreement.
(c) Except as otherwise provided herein, Sierra hereby
represents and warrants to CCBC that the Option is being, and any
Option Shares issued upon exercise of the Option will be,
acquired by Sierra for its own account and not with a view to any
distribution thereof, and Sierra will not sell any Option Shares
purchased pursuant to exercise of the Option except in compliance
with applicable securities and other laws.
4. Representations. CCBC hereby represents and warrants to
Sierra as follows:
(a) CCBC has all requisite corporate power and authority to
enter into and perform all of its obligations under this
Agreement. The execution, delivery and performance of this
Agreement and all of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the
part of CCBC. This Agreement has been duly executed and delivered
by CCBC and constitutes a valid and binding agreement of CCBC,
enforceable against CCBC in accordance with its terms, except as
the enforceability hereof may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting the rights
of creditors generally or by equitable principles, whether such
enforcement is sought in law or equity.
(b) The execution and delivery by CCBC of this Agreement and
the consummation of the transactions herein contemplated do not
and will not violate or conflict with CCBC's Certificate of
Incorporation or Bylaws, any statute, regulation, judgment,
order, writ, decree or injunction applicable to CCBC (other than
as may be effected by Sierra's ownership of CCBC Common Stock
exceeding certain limits set forth by statute or regulation) or
its properties or assets and do not and will not violate,
conflict with, result in a breach of, constitute a default (or an
event which with due notice and/or lapse of time would constitute
a default) under, result in a termination of, accelerate the
performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any
of the properties or assets of CCBC under the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of
trust, or loan agreement or other agreement, instrument or
obligation to which CCBC is a party, or by which CCBC or any Of
its properties or assets may be bound or affected.
(c) CCBC 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 a number of shares of Common Stock
sufficient to satisfy the exercise of the Option in full, all of
which Common Stock, upon issuance pursuant hereto, shall be duly
authorized, validly issued, fully paid and nonassessable, and
shall be delivered free and clear of all claims, liens,
encumbrances, security interests and preemptive rights.
5. Adjustment Upon Changes in Capitalization.
(a) In the event of any stock dividend, stock split,
split-up, recapitalization, reclassification, combination,
exchange of shares or similar transaction or event with respect
to Common Stock, the type and number of shares or securities
subject to the Option and the Exercise Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction so that Sierra shall
receive, upon exercise of the Option, the number and class of
shares or other securities or property that Sierra would have
received in respect of Common Stock if the Option had been
exercised immediately prior to such event, or the record date
thereof, as applicable. If any shares of Common Stock are issued
after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 5(a)), the number
of shares of Common Stock subject to the Option shall be adjusted
so that, after such issuance, it, together with any shares of
Common Stock previously issued to Sierra pursuant hereto, equals
19.9 percent of the number of shares of Common Stock then issued
and outstanding, without giving effect to any shares subject to
or issued pursuant to this Option.
(b) In the event that CCBC, shall, prior to the Expiration
Date, enter into an agreement: (i) to consolidate with or merge
into any person, other than Sierra or one of its subsidiaries,
and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than
Sierra or one of its subsidiaries, to merge into CCBC and CCBC
shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of
Common Stock shall be changed into or exchanged for stock or
other securities of CCBC or any other person or cash or any other
property or the outstanding shares of Common Stock immediately
prior to such merger shall after such merger represent less than
50 percent of the outstanding shares and share equivalents of the
merged company; or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Sierra
or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions
so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein,
be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Sierra, of either (x) the Succeeding
Corporation (as defined below), (y) any person that controls the
Succeeding Corporation, or (z) in the case of a merger described
in clause (ii), CCBC (in each case, such person being referred to
as the "Substitute Option Issuer.")
(c) The Substitute Option shall have the same terms as the
Option, provided, that, if the terms of the Substitute Option
cannot, for legal reasons, be the same as the Option, such terms
shall be as similar as possible and in no event less advantageous
to Sierra. The Substitute Option Issuer shall also enter into an
agreement with the then-holder or holders of the Substitute
Option in substantially the form as this Agreement, which shall
be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such
number of shares of the Substitute Common Stock (as hereinafter
defined) as is equal to the Assigned Value (as hereinafter
defined) multiplied by the number of shares of Common Stock for
which the Option was theretofore exercisable, divided by the
Average Price (as hereinafter defined). The exercise price of the
Substitute Option per share of the Substitute Common Stock (the
"Substitute Option Price") shall then be equal to the Exercise
Price multiplied by a fraction in which the numerator is the
number of shares of the Common Stock for which the Option was
theretofore exercisable and the denominator is the number of
shares for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Succeeding Corporation" shall mean (x) the continuing
or surviving corporation of a consolidation or merger with CCBC
(if other than CCBC), (y) CCBC in a merger in which CCBC is the
continuing or surviving person, and (z) the transferee of all or
any substantial part of CCBC assets (or the assets of its
subsidiaries).
(ii)"Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the
Substitute Option.
(iii) "Assigned Value" shall mean the highest of (x) the
price per share of Common Stock at which a tender offer or
exchange offer therefor has been made by any person (other than
Sierra or its subsidiaries) (y) the price per share of Common
Stock to be paid by any person (other than Sierra or any of its
subsidiaries) pursuant to an agreement with CCBC, and (z) the
highest closing sales price per share of Common Stock as quoted
on the Nasdaq National Market (or if Common Stock is not quoted
on the Nasdaq National Market, the highest bid price per share on
any day as quoted on the principal trading market or securities
exchange on which such shares are traded as reported by a
recognized source chosen by Sierra) within the six-month period
immediately preceding the agreement referred to in (y); provided,
that in the event of a sale of less than all of CCBC's assets,
the Assigned Value shall be the sum of the price paid in such
sale for such assets and the current market value of the
remaining assets of CCBC as determined by a nationally recognized
investment banking firm selected by Sierra and reasonably
acceptable to CCBC, divided by the number of shares of Common
Stock outstanding at the time of such sale. In the event that an
exchange offer is made for Common Stock or an agreement is
entered into for a merger or consolidation involving
consideration other than cash, the value of the securities or
other property issuable or deliverable in exchange for the Common
Stock shall be determined by a nationally recognized investment
banking firm mutually selected by Sierra and CCBC (or if
applicable, the Succeeding Corporation), provided that if a
mutual selection cannot be made as to such investment banking
firm, it shall be selected by Sierra.
(iv)"Average Price" shall mean the average closing price of
a share of the Substitute Common Stock for the one year
immediately preceding the consolidation, merger or sale in
question, but in no event higher than the closing price of the
shares of the Substitute Common Stock on the day preceding such
consolidation, merger or sale, provided that if CCBC is the
issuer of the Substitute Option, the Average Price shall be
computed with respect to a share of common stock issued by CCBC,
the person merging into CCBC or by any company which controls or
is controlled by such merging person, as Sierra may elect.
(f) In no event pursuant to any of foregoing paragraphs
shall the Substitute Option be exercisable for more than 19.9
percent of the aggregate of the shares of the Substitute Common
Stock outstanding immediately prior to exercise of the Substitute
Option. In the event that the Substitute Option would be
exercisable for more than 19.9 percent of the aggregate of the
shares of Substitute Common Stock but for this clause (f), the
Substitute Option Issuer shall make a cash payment to Sierra
equal to the excess of (i) the value of the Substitute Option
without giving effect to the limitation in this clause (f) over
(ii) the value of the Substitute Option after giving effect to
the limitation in this clause (f). This difference in value shall
be determined by a nationally recognized investment banking firm
selected by Sierra and the Substitute Option Issuer.
(g) CCBC shall not enter into any transaction described in
subsection (b) of this Section 5 unless the Succeeding
Corporation and any person that controls the Succeeding
Corporation assume in writing all the obligations of CCBC
hereunder and take all other actions that may be necessary so
that the provisions of this Agreement, including but not limited
to this Section 5, are given full force and effect (including,
without limitation, any action that may be necessary so that the
shares of Substitute Common Stock are in no way distinguishable
from or have lesser economic value than other shares of common
stock issued by the Substitute Option Issuer).
6. Purchase of Option Shares and Options by CCBC.
(a) From and after the first date a transaction specified in
Section 5(b) herein is consummated (the "Repurchase Event"), and
subject to applicable regulatory restrictions, Sierra or a holder
or former holder of any Options (a "Holder") who has exercised
the Options in whole or in part shall have the right to require
CCBC to purchase some or all of the Option Shares at a purchase
price per share (the "Purchase Price") equal to the highest of
(i) 100 percent of the Exercise Price, (ii) the highest price
paid or agreed to be paid for shares of Common Stock by an
Acquiring Person (as defined in Paragraph (b) of this Section) in
any tender offer, exchange offer or other transaction or series
of related transactions involving the acquisition of 10 percent
or more of the outstanding shares of Common Stock during the
one-year period immediately preceding the Purchase Date (as
defined in Paragraph (d) of this Section) and (iii) in the event
of a sale of all or substantially all of CCBC's assets, (x) the
sum of the price paid in such sale for such assets and the
current market value of the remaining assets of CCBC as
determined by a recognized investment banking firm jointly
selected by such Holder and CCBC, each acting in good faith,
divided by (y) the number of shares of Common Stock then
outstanding; provided, however, that the amount calculated
pursuant to clauses (ii) and (iii) of this Section 6(a) shall not
exceed $2.0 million. In the event that any of the consideration
paid or agreed to be paid by an Acquiring Person for any shares
of Common Stock or for any of CCBC's assets consists in whole or
in part of securities, the value of such securities for purposes
of determining the Purchase Price shall be determined (i) if
there is an existing public trading market therefor, by the
average of the last sales prices for such securities on the ten
trading days ending three trading days prior to the payment of
such consideration (if such consideration has been paid) or prior
to the date of determination (if such consideration has not yet
been paid) and (ii) if there is no existing public trading market
for such securities, by a recognized investment banking firm
jointly selected by the Holder and CCBC, each acting in good
faith. The Holder's right to require CCBC to purchase some or all
of the Option Shares under this Section shall expire on the day
which is one year following the Repurchase Event; provided, that
if CCBC is prohibited under applicable regulations from
purchasing Common Stock as to which a Holder has given notice
hereunder, then the Holder's right to require CCBC to purchase
such shares shall expire on the date which is one year following
the date on which CCBC no longer is prohibited from purchasing
such shares: provided further, that CCBC shall use its best
efforts to obtain any consent or approval and make any filing
required for CCBC to consummate as quickly as possible the
purchase of the Common Stock contemplated hereunder.
(b) For purposes of this Agreement, "Acquiring Person" shall
mean a person or group (as such terms are defined in the Exchange
Act and the rules and regulations thereunder) other than Sierra
or a subsidiary of Sierra who on or after the date of this
Agreement engages in a transaction which gives rise to a Purchase
Event.
(c) Subject to applicable regulatory restrictions, from and
after a Repurchase Event or after Sierra receives official notice
that an approval of the Department of Financial Institutions of
the State of California, or any other regulatory authority,
required for the exercise of the Option and purchase of the
Option Shares will not be issued or granted, a Holder shall have
the right to require CCBC to purchase some or all of the Options
held by such Holder at a price equal to the Purchase Price minus
the Exercise Price on the Purchase Date (as defined in Paragraph
(d) of this Section) multiplied by the number of shares of Common
Stock that may be purchased on the Purchase Date upon the
exercise of the Options elected to be purchased; provided,
however, that the amount calculated pursuant to this Section 6(c)
shall not exceed $2.0 million. Notwithstanding the termination
date of the Options, the Holder's right to require CCBC to
purchase some or all of the Options under this Section shall
expire on the day which is one year following the Repurchase
Event; provided, that if CCBC is prohibited under applicable
regulations from purchasing the Options as to which an Holder has
given notice hereunder, then the Holder's right to require CCBC
to purchase such Options shall expire on the day which is one
year following the date on which CCBC no longer is prohibited
from purchasing such Options; provided further, that CCBC shall
use its best efforts to obtain any consent or approval and make
any filing required for CCBC to consummate as quickly as possible
the purchase of the Options contemplated hereunder.
(d) A Holder may exercise its right to require CCBC to
purchase the Common Stock or Options (collectively, "Securities")
pursuant to this Section by surrendering for such purpose to
CCBC, at its principal office or at such other office or agency
maintained by CCBC for that purpose, within the period specified
above, the certificates or other instruments representing the
Securities to be purchased accompanied by a written notice
stating that it elects to require CCBC to purchase all or a
specified number of such Securities. Within five business days
after the surrender of such certificates or instruments and the
receipt of such notice relating thereto, to the extent it is
legally permitted to do so, CCBC shall deliver or cause to be
delivered to the Securities Holder (i) a bank cashier's or
certified check payable to the Securities Holder in an amount
equal to the applicable purchase price therefor, and (ii) if less
than the full number of Securities evidenced by the surrendered
instruments are being purchased, a new certificate or instrument,
for the number of Securities evidenced by such surrendered
certificates or other instruments less the number of Securities
purchased. Such purchases shall be deemed to have been made at
the close of business on the date (the "Purchase Date") of the
receipt of such notice and of such surrender of the certificates
or other instruments representing the Securities to be purchased
and the rights of the Securities Holder, except for the right to
receive the applicable purchase price therefor in accordance
herewith, shall cease on the Purchase Date.
7. Demand Registration Rights. As promptly as practicable upon
Sierra's request after a Purchase Event, CCBC agrees to prepare
and file not more than two registration statements, prospectuses
or permit or exemption applications ("Registration Event") as
appropriate, under federal and any applicable state securities
laws, with respect to any proposed sale of any warrants, options
or other securities representing any of Sierra's rights under
this Agreement or proposed dispositions by Sierra of any or all
of the Option Shares, if such registrations or filings are
required by law or regulation, and to use its best efforts to
cause any such registration statements or prospectuses to become
effective, or to have any permit or exemption granted, as
expeditiously as possible and to keep such registration
statement, prospectus, permit or exemption effective for a period
of not less than 180 days unless, in the written opinion of
counsel to CCBC, addressed to Sierra and satisfactory in form and
substance to Sierra and its counsel, registration (or filing of a
prospectus, or grant of a permit or exemption) is not required
for such proposed transactions. All fees, expenses and charges of
any kind or nature whatsoever incurred in connection with any
registration of, or the preparation of any registration
statement, prospectus or permit or exemption application relating
to, the Options or the Option Shares pursuant to this Section 7
shall be borne and paid by CCBC; provided, however, that in no
event shall this Section 7 be construed to require CCBC to bear
the expense of any change of control notice or similar regulatory
filing made by any purchaser or acquiror of Option Shares issued
to Sierra pursuant to this Agreement. In the event Sierra
exercises its registration rights under this Section 7, CCBC
shall provide Sierra, its affiliates, each of their respective
officers and directors and any underwriters used by Sierra, with
indemnifications, representations and warranties and shall cause
its attorneys and accountants to deliver to Sierra and any such
underwriters attorneys' opinions and "comfort letters", all of a
type customarily provided or delivered in connection with public
underwritten offerings of securities. In the event CCBC effects a
registration of Common Stock for its own account or for any other
shareholder of CCBC, it shall allow Sierra to participate in such
registration. Notwithstanding the foregoing, CCBC shall have the
right to delay (a "Delay Right") a Registration Event for a
period of up to thirty (30) days, in the event it receives a
request from Sierra to effect a Registration Event, if CCBC (i)
is involved in a material transaction, or (ii) determines, in the
good faith exercise of its reasonable business judgment, that
such registration and offering could adversely effect or
interfere with bona fide material financing plans of CCBC or
would require disclosure of information, the premature disclosure
of which could materially adversely affect CCBC or any
transaction under active consideration by CCBC. For purposes of
this Agreement, the term "material transaction" shall mean a
transaction which, if CCBC were subject to the reporting
requirements under the Exchange Act, would require CCBC to file a
current report on Form 8-K with the Securities Exchange
Commission. CCBC shall have the right to exercise two Delay
Rights in any eighteen (18) month period.
8. Listing.
If Common Stock or any other securities to be acquired upon
exercise of the Option are then authorized for quotation or
trading or listing on the Nasdaq National Market or any other
securities exchange or automated quotation system, CCBC, or any
successor thereto, upon the request of the holder of the Option,
will promptly file an application, if required, to authorize for
listing or trading or quotation the shares of Common Stock or
other securities to be acquired upon exercise of the Option on
the Nasdaq National Market or any other securities exchange or
automated quotation system and will use its best efforts to
obtain approval, if required, of such listing or quotation as
soon as possible.
9. Total Profit.
Notwithstanding any other provision of this Agreement to the
contrary, in no event shall Sierra purchase under the terms of
this Agreement that number of Option Shares which have a Spread
Value, as defined below, in excess of $2.0 million. In the event
the Spread Value exceeds $2.0 million, the number of Option
Shares which Sierra is entitled to purchase at the Closing Date
shall be reduced to the extent required such that the Spread
Value following such reduction is equal to or less than $2.0
million. "Spread Value" shall mean the difference between (i) the
product of (1) the sum of the total number of Option Shares
Sierra (x) intends to purchase at a Closing pursuant to the
exercise of the Option and (y) previously purchased pursuant to
the prior exercise of the Option, and (2) the closing price of
CCBC Common Stock as quoted on the Nasdaq National Market on the
last trading day immediately preceding the Closing Date, and (ii)
the product of (1) the total number of Option Shares Sierra (x)
intends to purchase at the Closing Date pursuant to the exercise
of the Option and (y) previously purchased pursuant to the prior
exercise of the Option and (2) the applicable Option Price of
such Option Shares.
10. Miscellaneous.
(a) Expenses. 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 contemplated hereunder,
including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
(b) Entire Agreement. Except as otherwise expressly provided
herein, 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 thereto, 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 assigns.
Nothing in this Agreement, expressed or implied, is intended to
confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement,
except as expressly provided herein.
(c) Assignment. At any time after a Purchase Event occurs,
Sierra may sell, assign or otherwise transfer its rights and
obligations hereunder, in whole or in part, by issuing Options or
otherwise, to any person or group of persons, subject to
applicable law, rule or regulation. In order to effectuate the
foregoing, Sierra (or any direct or indirect assignee or
transferee of Sierra) shall be entitled to surrender this
Agreement to CCBC in exchange for two or more Agreements
entitling the holders thereof to purchase in the aggregate the
same number of shares of Common Stock as may be purchasable
hereunder.
(d) Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and
sufficient if delivered personally or by confirmed facsimile
transmission or sent by registered or certified mail or overnight
courier, postage prepaid, with return receipt requested,
addressed as follows:
If to Sierra:
SierraWest Bancorp
10181 Truckee-Tahoe Airport Road
Truckee, California 96160
Attention: William T. Fike, President & CEO
Facsimile Number: (916) 582-2953
With a copy to:
McCutchen, Doyle, Brown & Enersen, LLP
3 Embarcadero Center, #1800
San Francisco, California 94111
Attention: James M. Rockett, Esq.
Facsimile Number: (415) 393-2286
If to CCBC:
California Community Bancshares Corporation
555 Mason Street, Suite 280
Vacaville, California 95688-3985
Attention: Walter O. Sunderman, President & CEO
Facsimile Number: (707) 448-1731
With a copy to:
Lillick and Charles
2 Embarcadero Center, #2600
San Francisco, California 94111
Attention: Ronald W. Bachli, Esq.
Facsimile Number: (415) 421-4799
A party may change its address for notice purposes by written
notice to the other party hereto.
(e) 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.
(f) Specific Performance. The parties hereto agree that
irreparable harm would occur in the event that any of the
provisions of this Agreement were not performed by them in
accordance with their specific terms or conditions or were
otherwise breached and that money damages are an inadequate
remedy for breach of this Agreement because of the difficulty of
ascertaining the amount of damage that will be suffered by the
parties in the event that this Agreement is not performed in
accordance with its terms or conditions or otherwise breached. It
is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
by the parties and to enforce specifically the terms and
provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy
to which it is entitled at law or in equity.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
(h) Best Efforts. Each of Sierra and CCBC will use its best
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 Department of
Financial Institutions of the State of California for approval to
acquire or issue the shares issuable hereunder.
(i) Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference and are not intended to be
part of or to affect the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement, as of the day and year first written above.
SIERRAWEST BANCORP
By:____________________________________
William T. Fike,
President and Chief Executive Officer
CALIFORNIA COMMUNITY BANCSHARES CORPORATION
By:_____________________________________
Walter O. Sunderman,
President and Chief Executive Officer
<PAGE>
EXHIBIT 7.6 - TO PLAN OF ACQUISITION AND MERGER
__________, 1997
SierraWest Bancorp
10181 Truckee-Tahoe Airport Road
P.O. Box 61000
Truckee, CA 96160
SierraWest Bancorp-California Community
Bancshares Corporation
Ladies and Gentlemen:
We have acted as counsel for California Community Bancshares
Corporation ("Bancshares"), a Delaware corporation, and its
wholly-owned subsidiary, Continental Pacific Bank ("CPB"), a
California banking corporation, with respect to the merger (the
"Merger") of Bancshares and SierraWest Bancorp ("Bancorp"), a
California corporation, and with respect to the merger (the "Bank
Merger") of CPB and Bancorp's wholly-owned subsidiary SierraWest
Bank ("Sierra Bank"), a California banking corporation, pursuant
to the Plan of Acquisition and Merger dated as of November __,
1997 (the "Agreement") between Bancshares, CPB, Bancorp and
Sierra Bank, and Exhibit A (the "Merger Agreement") and Exhibit B
(the "Bank Merger Agreement") thereto. This opinion is rendered
to you pursuant to Section 7.6 of the Agreement. Unless otherwise
defined herein, all capitalized terms in this opinion shall have
the meanings assigned to them in the Agreement.
In rendering the opinions hereinafter expressed, we have
examined and relied upon such documents and instruments as we
have deemed appropriate, including the following:
A. The Agreement and the exhibits thereto;
B. Resolutions of the boards of directors of Bancshares and
CPB with respect to the Merger and the Bank Merger;
C. Certificate of Incorporation of Bancshares certified by the
Delaware Secretary of State as of a recent date;
D. Articles of Incorporation of CPB certified by the
California Secretary of State as of a recent date;
E. Bylaws, minute book and stock ledger of Bancshares;
F. Bylaws, minute book and stock ledger of CPB;
G. Certificate of Status from the Delaware Secretary of State
indicating that Bancshares is in good standing in Delaware as of
a recent date (the "Bancshares Status Certificate").
H. Certificate of Status from the California Secretary of
State indicating that CPB is in good standing in California as of
a recent date (the "CPB Status Certificate");
I. Registration Statement on Form S-4 of Bancorp and the
related Proxy Statements of Bancshares and Bancorp with respect
to the Merger and the Bank Merger (the "Proxy Materials");
J. Proceedings of the meeting of shareholders of Bancshares
held on _____________; and,
K. Officers' certificates of Bancshares and CPB as to certain
factual matters.
We have obtained, and have assumed and relied upon the
accuracy, genuineness and completeness of, such certificates and
assurances from public officials as we have deemed necessary or
appropriate to enable us to render our opinion.
In conducting our examination, we have assumed, without
investigation, the genuineness of all signatures (other than that
of Bancshares), the correctness of all documents submitted to us
as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and
the authenticity of the originals of such copies; the accuracy of
the representations as to factual matters made by Bancorp and
Bancshares in the Agreement; the accuracy of representations and
statements as to factual matters made by officers and employees
of Bancshares; that the Agreement is the valid and binding
obligation of Bancorp and Sierra Bank; that Bancorp and Sierra
Bank will enforce the Agreement in a commercially reasonable
manner; and that the Agreement contains the entire agreement of
the parties.
Our opinions in paragraphs 4 and 5 below are subject to :
(i) the effect of bankruptcy, insolvency, reorganization,
arrangement, moratorium, and other similar laws now or here-
after in effect relating to or affecting the rights of creditors
generally;
(ii) limitations imposed by California law, federal law,
or equitable principles upon any of the remedies, covenants, or
other provisions of the Agreement and upon the availability of
injunctive relief or other equitable remedies, including, without
limitation, the effect of California and federal court decisions,
invoking statutes or principles of equity, which have held that
certain covenants and provisions of agreements are unenforceable
where: (A) the breach of such covenants or provisions imposes
restrictions or burdens upon one party, and it cannot be
demonstrated that the enforcement of such restrictions or burdens
is reasonably necessary for the protection of the other party, or
(B) a party's enforcement of such covenants or provisions under
the circumstances would violate such party's implied covenants of
good faith and fair dealing, and
(iii) the power of federal and state courts to refuse to
enforce (or to stay the enforcement of) any provision of the
Agreement which purports to waive the rights of Bancshares to
assert the claims or defenses available to Bancshares by statute,
common law, or equity.
Whenever a statement herein with respect to the existence or
absence of facts is qualified by the phrases "we are not aware"
or "to our knowledge," it is intended to indicate that, during
the course of our representation of Bancshares and CPB, no
information that would give us current actual knowledge of the
inaccuracy of such statement has come to the attention of those
attorneys in this firm who have rendered legal services in
connection with the representation described in the introductory
paragraph of this opinion letter and such statement is based
solely upon (i) an inquiry of attorneys within this firm who have
rendered such services; (ii) receipt of a certificate executed by
an officer of Bancshares or CPB covering such matters; and (iii)
opinions of other counsel engaged by Bancshares or CPB regarding
any litigation matters with respect to which we do not represent
Bancshares or CPB. However, we have not undertaken any
independent investigation to determine the accuracy of such
statement, and any limited inquiry undertaken by us during the
preparation of this opinion letter should not be regarded as such
an investigation; no inference as to our knowledge of any matters
bearing on the accuracy of any such statement should be drawn
from the fact of our representation of Bancshares or CPB.
Based upon and subject to the foregoing, we are of the opinion
that:
1. Bancshares is a Delaware corporation duly incorporated,
validly existing and in good standing under the laws of the State
of Delaware and has the corporate power to own all of its
property and assets and to carry on its business as it is now
being conducted. Bancshares is a registered bank holding company
under the Bank Holding Company Act of 1956.
2. CPB is a California banking corporation duly incorporated,
validly existing and in good standing under the laws of the State
of California and has the corporate power to own all of its
property and assets and to carry on its business as it is now
being conducted. CPB is duly licensed as a commercial bank by the
California Department of Financial Institutions, and its deposits
are insured by the Federal Deposit Insurance Corporation in
accordance with applicable laws and regulations.
3. Bancshares and CPB have the corporate power and corporate
authority to enter into and perform their respective obligations
under the Agreement, the Merger Agreement and the Bank Merger
Agreement. The execution and delivery by Bancshares and CPB of
the Agreement, the execution by Bancshares of the Merger
Agreement and the execution by CPB of the Bank Merger Agreement
did not, and the consummation by Bancshares and CPB of the
transactions contemplated by the Agreement, the Merger Agreement
and the Bank Merger Agreement will not, violate any provision of
Bancshares' or CPB's certificate or articles of incorporation or
bylaws, any provision of federal or California law applicable to
Bancshares or CPB, or any governmental regulation applicable to
Bancshares or CPB, or constitute a material default under, or
result in the breach or acceleration of any obligation or the
creation of any material lien under any material agreement to
which Bancshares or CPB is bound and of which we have knowledge
(except that we express no opinion relating to the effect of the
Agreement under any financial test or ratio contained in any
mortgage, lease, agreement, instrument, judgment, decree, order,
arbitration award, writ, or injunction applicable to Bancshares
or CPB).
4. The Agreement and the Merger Agreement have been duly
authorized, executed and delivered by Bancshares, and each of
them is a valid and binding agreement of Bancshares.
5. The Agreement and the Bank Merger Agerement have been duly
authorized, executed and delivered by CPB, and each of them is a
valid and binding agreement of CPB.
6. All California state and federal regulatory approvals that
are required to be obtained by Bancshares and CPB in connection
with the Merger and the Bank Merger have been obtained.
7. To our knowledge, neither Bancshares nor CPB is a party to,
nor threatened with, any legal action or other proceeding or
investigation before any court, any arbitrator of any kind or any
government agency that challenges or questions the authority or
ability of Bancshares or CPB to perform its obligations under the
Agreement, the Merger Agreement or the Bank Merger Agreement or
to carry out the Merger or the Bank Merger, or where the amount
in controversy exceeds $50,000 and which has not been disclosed
by Bancshares to Bancorp.
8. The authorized capital stock of Bancshares consists of
___________ shares of no par value common stock. To our knowledge
and before giving effect to the issuance of shares in connection
with the Merger:
(a) _________ shares of common stock are duly authorized,
validly issued and outstanding, fully paid and nonassessable;
(b) there are no outstanding (i) options, agreements, calls
or commitments of any character that would obligate Bancshares to
issue, sell, pledge, assign or otherwise encumber or dispose of,
or to purchase, redeem or otherwise acquire, any Bancshares
common stock or any other equity security of Bancshares, or (ii)
warrants or options relating to, rights to acquire or debt or
equity securities convertible into, shares of Bancshares common
stock or any other equity security of Bancshares; and.
(c) the outstanding common stock of Bancshares has not been
registered with the Securities and Exchange Commission or the
FDIC pursuant to the 1934 Act.
In connection with the preparation of the Registration
Statement, including the related Proxy Materials, we have
performed legal services for Bancshares and participated in
conferences with directors, officers and employees of Bancshares
and representatives of the independent accountants for
Bancshares. At such conferences, the contents of the Proxy
Materials related to Bancshares and related matters were
discussed and, although we are not passing upon, and do not
assume any responsibility for, the accuracy, completeness or
fairness of the statements related to Bancshares and contained in
the Proxy Materials, on the basis of the foregoing, we are not
aware of any facts that would lead us to believe that the Proxy
Materials as of the date thereof contained any statement in
respect to Bancshares which, at the time and in light of the
circumstances under which it was made, was false or misleading
with respect to any material fact or omitted to state any
material fact necessary in order to make the statements therein
not false or misleading. In making the foregoing statement, we
express no belief with respect to the financial statements and
other financial and statistical data included in the Proxy
Materials or with respect to statements in, or omissions from,
the Proxy Materials made in reliance upon, or in conformity with,
information furnished by Bancshares for use in connection with
the Proxy Materials.
We are members of the bar of the State of California. Our
opinions below are limited to the effect of (i) the laws of the
State of California and (ii) the federal laws of the United
States of America; we express no opinion with respect to the laws
of any other jurisdiction.
This opinion is rendered solely for the benefit of Bancorp in
connection with the Merger and the Bank Merger and may not be
relied upon by any other party or for any other purpose. Neither
the original nor any copies of this opinion may be furnished to
any other person without our prior written consent.
Very truly yours,
Lillick & Charles, LLP
<PAGE>
EXHIBIT 7.12 - TO THE PLAN OF ACQUISITION AND MERGER
Rule 145 Undertaking
________________, 1997
SierraWest Bancorp
10181 Truckee-Tahoe Airport Road
P.O. Box 61000
Truckee, CA 96160
Ladies and Gentlemen:
The undersigned is a director of California Community
Bancshares Corporation ("Bancshares") and an owner of common
stock of Bancshares ("CBCC Shares").
Bancshares and its wholly-owned subsidiary, Continental Pacific
Bank ("CPC"), have entered into a Plan of Acquisition and Merger
("Agreement") dated today's date with SierraWest Bancorp
("Bancorp") and its wholly-owned subsidiary, SierraWest Bank
("Sierra Bank"), related to the merger of Bancshares into Bancorp
(the "Merger") and the merger of CPC into Sierra Bank. In
consideration of the premises and the representations,
warranties, agreements and conditions in this letter and in the
Agreement and in order to induce Bancorp to execute the
Agreement, the undersigned agrees and undertakes, as follows:
The undersigned is currently determined to be an affiliate of
Bancshares for purposes of Rule 145 promulgated by the Securities
and Exchange Commission. The following undertaking is given
pursuant to and in compliance with Section 7.12 of the Agreement.
The Merger will result in the issuance of new common stock of
Sierra.
The undersigned understand that Bancorp and Bancshares are
relying on the performance of the covenants contained herein to
insure that any sales of shares owned by the undersigned are not
deemed to be acting as an underwriter in an unregistered public
offering in violation of federal securities laws.
The undersigned hereby further agrees not to sell, transfer or
dispose of any shares of Bancorp acquired in the Merger, or to
attempt to do so, whether or not deemed to be an affiliate of
Bancorp, unless such sale, transfer or disposition is made:
(i) pursuant to a then-current, effective registration
statement under the Securities Act of 1933, or
(ii)in a transaction which, in the opinion of counsel
satisfactory to the issuer, is not required to be registered
under the Securities Act of 1933; or
(iii) in a transaction permitted by the Securities and Exchange
Commission's Rule 145.
The undersigned acknowledges that the above agreements are
supported by valid consideration.
IN WITNESS WHEREOF, the undersigned has executed this Agreement
as of the date first above written.
Very truly yours,
-----------------------------
<PAGE>
EXHIBIT 7.15 - TO THE PLAN OF ACQUISITION AND MERGER
Shareholder Agreement
__________________, 1997
SierraWest Bancorp
10181 Truckee-Tahoe Airport Road
P.O. Box 61000
Truckee, CA 96160
Ladies and Gentlemen:
The undersigned is a director of California Community
Bancshares Corporation ("Bancshares") and an owner of common
stock of Bancshares ("CCBC Shares").
Bancshares and its wholly-owned subsidiary, Continental Pacific
Bank ("CPB"), have entered into a Plan of Acquisition and Merger
("Agreement") dated today's date with SierraWest Bancorp
("Bancorp") and its wholly-owned subsidiary, SierraWest Bank
("Sierra Bank"), related to the Merger of Bancshares into Bancorp
and the merger of CPB into Sierra Bank. In consideration of the
premises and the representations, warranties, agreements and
conditions in this letter and in the Agreement and in order to
induce Bancorp to execute the Agreement, the undersigned agrees
and undertakes, as follows:
The undersigned will vote, in person or by proxy, at any
meeting of shareholders of Bancshares (or any action by written
consent in lieu of a meeting) to approve the Agreement and the
transactions contemplated thereby (the "Shareholders' Meeting"),
all of the CCBC Shares as to which the undersigned has sole or
shared voting power (the "Shares") as of the record date
established to determine shareholders who have the right to vote
at the Shareholders' Meeting.
The undersigned agrees that, from and after the date of this
letter and through the date of the Shareholders' Meeting (and any
postponements or adjournments thereof), the shareholder will not
sell, assign, transfer or otherwise take any action that will
alter or affect in any way the right to vote the Shares, except
(i) with the prior written consent of Bancorp (ii) to change such
right from that of a shared right of the shareholder to vote the
Shares to a sole right of the shareholder to vote the Shares.
The undersigned represents and warrants that the undersigned
has sole or shared voting power over ________ Shares covered by
the terms of this letter; and there are no proxies, voting trusts
or other agreements or understandings to which the undersigned or
the undersigned's spouse, if any, is a party or bound or that
requires that any of the Shares be voted in any specific manner
other than as provided in this letter.
The undersigned is currently determined to be an affiliate of
Bancshares for purposes of Rule 145 promulgated by the Securities
and Exchange Commission. The following undertaking is given
pursuant to and in compliance with Section 7.12 of the Agreement.
The Merger will result in the issuance of new common stock of
Bancorp.
The undersigned understands that Bancorp and Bancshares are
relying on the performance of the covenants contained herein to
insure that any sales of shares owned by the undersigned are not
deemed to be acting as an underwriter in an unregistered public
offering in violation of federal securities laws.
The undersigned hereby further agrees not to sell, transfer or
dispose of any shares of Bancorp acquired in the Merger, or to
attempt to do so, whether or not deemed to be an affiliate of
Bancorp, unless such sale, transfer or disposition is made:
(i)pursuant to a then-current, effective registration statement
under the Securities Act of 1933, or
(ii)in a transaction which, in the opinion of counsel
satisfactory to the issuer, is not required to be registered
under the Securities Act of 1933.
The undersigned understands that Bancorp shares issued to the
undersigned will bear a restrictive legend to this effect. The
undersigned has no present intention of selling, and has made no
arrangements to sell, Bancorp shares to be issued to the
undersigned in connection with the Merger.
The undersigned and Bancorp each acknowledge that, in view of
the uniqueness of the obligations of the undersigned in this
letter, Bancorp would not have an adequate remedy at law for
money damages in the event that the promises in this letter have
not been performed according to its terms, and, therefore, the
undersigned agrees that Bancorp shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy
to which it may be entitled at law or in equity.
This letter shall terminate automatically without further
action at the earlier of the Effective Date under the Agreement
or the termination of the Agreement in accordance with its terms.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original instruments, but
all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned has executed this Agreement
as of the date first above written.
Very truly yours,
------------------------------------
SPOUSAL CONSENT
I, ____________________, hereby confirm that I have read and
understand this letter and agree that it shall bind my interest
in the Shares, if any.
- ------------------------------------
Accepted and agreed to as of
the date first above written:
SIERRAWEST BANCORP
By_________________________________
<PAGE>
EXHIBIT 8.6 - TO THE PLAN OF ACQUISITION AND MERGER
_____________, 1997 Direct: (415) 393-2025
[email protected]
California Community Bancshares Corporation
141 Parker Street
Vacaville, California 95688-3985
SierraWest Bancorp - Bancshares Bank
Ladies and Gentlemen:
We have acted as counsel for SierraWest Bancorp ("Bancorp"), a
California corporation, and SierraWest Bank ("Sierra Bank"), a
California banking corporation with respect to the acquisition
and merger (the "Merger") of California Community Bancshares
Corporation ("Bancshares"), a California corporation, with and
into Bancorp and with respect to the merger (the "Bank Merger")
of Continental Pacific Bank ("CPB"), a California banking
corporation, with and into Sierra Bank, pursuant to the Plan of
Acquisition and Merger dated as of November __, 1997 (the
"Agreement") and Exhibit A (the "Merger Agreement") and Exhibit B
(the "Bank Merger Agreement") thereto. This opinion is rendered
to you pursuant to Section 8.6 of the Agreement. Unless otherwise
defined herein, all capitalized terms in this opinion shall have
the meaning assigned to them in the Agreement.
In rendering the opinions hereinafter expressed, we have
examined and relied upon such documents and instruments as we
have deemed appropriate, including the following:
A. The Agreement and the exhibits thereto;
B. Resolutions of the board of directors of Bancorp and Sierra
Bank with respect to the Merger and the Bank Merger;
C. Articles of Incorporation of Bancorp certified by the
California Secretary of State as of a recent date;
D. Articles of Incorporation of Sierra Bank certified by the
California Secretary of State as of a recent date;
E. Bylaws, minute book and stock ledger of Bancorp;
F. Bylaws and minute book of Sierra Bank;
G. Certificate of Status from the California Secretary of
State indicating that Bancorp is in good standing in California
as of a recent date (the "Bancorp Status Certificate");
H. Certificate of Status from the California Secretary
indicating that Sierra Bank is in good standing in California as
of a recent date (the "Sierra Bank Status Certificate");
I. Registration Statement on Form S-4 of Bancorp and the
related Proxy Statements of Bancshares and Bancorp with respect
to the Merger and the Bank Merger (the "Proxy Materials");
J. Proceedings of the meeting of shareholders of Bancorp held
on ______________, 19__; and
K. Officers' certificates of Bancorp and Sierra Bank as to
certain factual matters.
We have obtained, and have assumed and relied upon the
accuracy, genuineness and completeness of, such certificates and
assurances from public officials as we have deemed necessary or
appropriate to enable us to render our opinion.
In conducting our examination, we have assumed, without
investigation, the genuineness of all signatures (other than that
of Bancorp and Sierra Bank to the Agreement and to the Merger
Agreement), the correctness of all documents submitted to us as
originals, the conformity to original documents of all documents
submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies; the accuracy of the
representations as to factual matters made by Bancorp, Sierra
Bank, Bancshares and CPB in the Agreement; the accuracy of
representations and statements as to factual matters made by
officers and employees of Bancshares and CPB; that the Agreement
is the valid and binding obligation of Bancshares and CPB; that
Bancshares and CPB will enforce the Agreement in a commercially
reasonable manner; and that the Agreement contains the entire
agreement of the parties.
Our opinions in paragraphs 4 and 5 below are subject to :
(i) the effect of bankruptcy, insolvency, reorganization,
arrangement, moratorium, and other similar laws now or here-
after in effect relating to or affecting the rights of creditors
generally;
(ii) limitations imposed by California law, federal law,
or equitable principles upon any of the remedies, covenants, or
other provisions of the Agreement and upon the availability of
injunctive relief or other equitable remedies, including, without
limitation, the effect of California and federal court decisions,
invoking statutes or principles of equity, which have held that
certain covenants and provisions of agreements are unenforceable
where: (A) the breach of such covenants or provisions imposes
restrictions or burdens upon one party, and it cannot be
demonstrated that the enforcement of such restrictions or burdens
is reasonably necessary for the protection of the other party, or
(B) a party's enforcement of such covenants or provisions under
the circumstances would violate such party's implied covenants of
good faith and fair dealing, and
(iii) the power of federal and state courts to refuse to
enforce (or to stay the enforcement of) any provision of the
Agreement which purports to waive the rights of Bancorp and
Sierra Bank to assert the claims or defenses available to Bancorp
and Sierra Bank by statute, common law, or equity.
Whenever a statement herein with respect to the existence or
absence of facts is qualified by the phrases "we are not aware"
or "to our knowledge," it is intended to indicate that, during
the course of our representation of Bancorp and Sierra Bank, no
information that would give us current actual knowledge of the
inaccuracy of such statement has come to the attention of those
attorneys in this firm who have rendered legal services in
connection with the representation described in the introductory
paragraph of this opinion letter and such statement is based
solely upon (i) an inquiry of attorneys within this firm who have
rendered such services; (ii) receipt of one or more certificates
executed by officers of Bancorp or Sierra Bank covering such
matters; and (iii) opinions of other counsel engaged by Bancorp
or Sierra Bank regarding any litigation matters with respect to
which we do not represent Bancorp or Sierra Bank. However, we
have not undertaken any independent investigation to determine
the accuracy of such statement, and any limited inquiry
undertaken by us during the preparation of this opinion letter
should not be regarded as such an investigation; no inference as
to our knowledge of any matters bearing on the accuracy of any
such statement should be drawn from the fact of our
representation of Bancorp or Sierra Bank.
Based upon and subject to the foregoing, we are of the opinion
that:
1. Bancorp is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
California and has the corporate power to own all of its property
and assets and to carry on its business as it is now being
conducted. Bancorp is a registered bank holding company under the
Bank Holding Company Act of 1956.
2. Sierra Bank is a California banking corporation duly
incorporated, validly existing and in good standing under the
laws of the State of California and has the corporate power to
own all of its property and assets and to carry on its business
as it is now being conducted. Sierra Bank is duly licensed as a
commercial bank by the California Department of Financial
Institutions, and its deposits are insured by the Federal Deposit
Insurance Corporation in accordance with applicable laws and
regulations.
3. Bancorp and Sierra Bank have the corporate power and
corporate authority to enter into and perform their respective
obligations under the Agreement, the Merger Agreement and the
Bank Merger Agreement. The execution and delivery by Bancorp and
Sierra Bank of the Agreement, the execution and delivery by
Bancorp of the Merger Agreement and the execution by Sierra Bank
of the Bank Merger Agreement did not, and the consummation by
Bancorp and Sierra Bank of the transactions contemplated by the
Agreement, the Merger Agreement and the Bank Merger Agreement
will not, violate any provision of Bancorp's or Sierra Bank's
articles of incorporation or bylaws, any provision of federal or
California law, or any governmental regulation applicable to
Bancorp or Sierra Bank, or constitute a material default under,
or result in the breach or acceleration of any obligation or the
creation of any material lien under any material agreement to
which either Bancorp or Sierra Bank is bound and of which we have
knowledge (except that we express no opinion relating to the
effect of the Agreement under any financial test or ratio
contained in any mortgage, lease, agreement, instrument,
judgment, decree, order, arbitration award, writ, or injunction
applicable to Bancorp or Sierra Bank).
4. The Agreement and the Merger Agreement have been duly
authorized, executed and delivered by Bancorp, and each of them
is a valid and binding agreement of Bancorp.
5. The Agreement and the Bank Merger Agreement have been duly
authorized, executed and delivered by Sierra Bank, and each of
them is a valid and binding agreement of Sierra Bank.
6. All California state and federal regulatory approvals that
are required to be obtained by Bancorp and Sierra Bank in
connection with the Merger and the Bank Merger have been
obtained.
7. To our knowledge, neither Bancorp nor Sierra Bank is a
party to, nor threatened with, any legal action or other
proceeding or investigation before any court, any arbitrator of
any kind or any government agency that challenges or questions
the authority or ability of Bancorp or Sierra Bank to perform its
obligations under the Agreement, the Merger Agreement or the Bank
Merger Agreement or to carry out the Merger or the Bank Merger,
or where the amount in controversy exceeds $200,000 and which has
not been disclosed by Bancorp to Bancshares.
8. As of October 31, 1997, the authorized capital stock of
Bancorp consists of [9,800,000] shares of preferred stock,
[200,000] shares of series A preferred stock and [10,000,000]
shares of common stock. To our knowledge and before giving effect
to the issuance of shares in connection with the Merger:
(a) [3,324,764] shares of Bancorp common stock are duly
authorized, validly issued and outstanding, fully paid and
nonassessable;
(b) there are currently outstanding options to purchase
[371,355] shares of common stock issued pursuant to the 1996
Stock Option Plan;
(c) there are $[3,564,000] of Bancorp debentures convertible
into [356,400] shares of Bancorp common stock;
(d) said outstanding stock, options and debentures were all
issued pursuant to and in conformance with one or more exemptions
from registration under the Securities Act of 1933, as amended,
or were registered pursuant to said Act;
(e) other than the options and debentures identified above,
there are no outstanding (i) options, agreements, calls or
commitments of any character that would obligate Bancorp to
issue, sell, pledge, assign or otherwise encumber or dispose of,
or to purchase, redeem or otherwise acquire, any Bancorp common
stock or any other equity security of Bancorp, or (ii) warrants
or options relating to, rights to acquire or debt or equity
securities convertible into, shares of Bancorp common stock or
any other equity security of Bancorp; and.
(f) the outstanding common stock of Bancorp has been
registered with the Securities and Exchange Commission pursuant
to the 1934 Act.
9. All outstanding capital stock of Sierra Bank is held by
Bancorp.
10. The issuance of the Shares to be issued pursuant to the
Merger has been duly registered under the Securities Act of 1933.
Such Shares, when issued in accordance with the terms of the
Agreement, will be duly authorized, validly issued, fully paid
and nonassessable.
In connection with the preparation of the Registration
Statement we have performed legal services for Bancorp and
participated in conferences with directors, officers and
employees of Bancorp and representatives of the independent
accountants for Bancorp. At such conferences, the contents of the
Proxy Materials and related matters were discussed and, although
we are not passing upon, and do not assume any responsibility
for, the accuracy, completeness or fairness of the statements
contained in the Proxy Materials, on the basis of the foregoing,
we are not aware of any facts that would lead us to believe that
the Proxy Materials as of the date thereof contained any
statement in respect to Bancorp which, at the time and in light
of the circumstances under which it was made, was false or
misleading with respect to any material fact or omitted to state
any material fact necessary in order to make the statements
therein not false or misleading. In making the foregoing
statement, we express no belief with respect to the financial
statements and other financial and statistical data included in
the Proxy Materials or with respect to statements in, or
omissions from, the Proxy Materials made in reliance upon, or in
conformity with, information furnished by Bancshares for use in
connection with the Proxy Materials.
We are members of the bar of the State of California. Our
opinions below are limited to the effect of (i) the laws of the
State of California and (ii) the federal laws of the United
States of America; we express no opinion with respect to the laws
of any other jurisdiction.
This opinion is rendered solely for the benefit of Bancshares
in connection with the Merger and the Bank Merger and may not be
relied upon by any other party or for any other purpose. Neither
the original nor any copies of this opinion may be furnished to
any other person without our prior written consent.
Very truly yours,
McCutchen, Doyle, Brown & Enersen, LLP
By_________________________________
A member of the firm
<PAGE>
EXHIBIT 99 - TO THE 8-K FORM
NEWS RELEASE
FOR: SIERRAWEST BANCORP
CALIFORNIA COMMUNITY BANCSHARES CORPORATION
APPROVED BY: William T Fike, Walter 0 Sunderman
CONTACT: David Broadley, CEO, SierraWest Bancorp
(916) 582-3000
Andrew Popovich, Executive VP
California Community Bancshares Corporation
(707) 448-1200
CONTACT: Morgen-Walke Associates, Inc
Investor Relations: John Swenson, Micah Epps
(415) 296~7383
Media Relations: Sheryl Seapy, Carol Lehrman
(415)296-7383
Wire Services: Joshua Passman
(212) 850-5600
SIERRAWEST BANCORP AND CALIFORNIA COMMUNITY BANCSHARES
CORPORATION SIGN DEFINITIVE MERGER AGREEMENT
Transaction Valued at Approximately S39 Million
TRUCKEE, Calif. and Vacaville. Calif. (November 14, 1997) --
SierraWest Bancorp (Nasdaq: SWBS) and California Community
Bancshares Corp. (Nasdaq: CCBC) jointly announced today that
they have signed a definitive agreement under which SierraWest
will acquire the outstanding common stock of California Community
Bancshares in a transaction valued at approximately $39
million, based on yesterday's closing price of SierraWest stock.
The Boards of Directors of both companies have unanimously
approved the merger agreement. The merger, which is expected to
close during the first half of 1998, is subject to the approval
of each company's shareholders and state and federal regulatory
agencies, as well as certain other terms and conditions.
Under the terms of the proposed transaction, shareholders
of California Community Bancshares will receive shares of
SierraWest common stock at an exchange ratio to be determined by
a formula prior to the effective date of the transaction, based
on the average of the closing prices of SierraWest common stock
during a defined 20-day period. For example, if the average price
that 20-day period were $28.75, the closing price of SierraWest
stock on November 13 1997, each share of California Community
Bancshares stock would be exchanged for approximately 0.9957
shares of SierraWest. The merger is expected to be accounted for
under the pooling of interest method of accounting.
"We are very pleased with the opportunity to expand
SierraWest's community banking franchise into Solano and Contra
Costa counties," said William T. Fike, president and chief
executive officer of SierraWest. "During the past three years,
we have extended our franchise as far as Sacramento through new
branch openings, the July 1997 acquisition of Mercantile Bnak and
the hiring of experienced lending offices to serve the Sacramento
region. Continental Pacific Bnak will strengthen our franchise
along the Interstate 80 corridor by adding a strong business
banking franchise staffed by senior lending and branch personnel.
We strongly believe that this merger, which creates a banking
franchise with more than $750 million in assets, opens up new
opportunities for our combined operations and will provide
benefits to SierraWest's current and new shareholders."
Walter 0. Sunderman, president and chief executive officer
of California Community Bancshares, said, "We are excited about
joining with SierraWest to build together a great California
banking franchise and about owning one of the best-performing
California bank stocks. The banking industry in California is
changing rapidly, largely doe to consolidation. We concluded that
merging with SierraWest presented an outstanding opportunity for
our shareholders, employees and customers throughout Solano and
Contra Costa counties. SierraWest is a community bank that
shares our philosophy of providing customers with personalized,
professional service."
California Community Bancshares has also granted SierraWest
an option to purchase up to 19.9% of the outstanding shares of
California Community Bancshares if certain events and conditions
(as defined in the option agreement) occur, including a third
party merger proposal or tender offer.
California Community Bancshares, the parent company of
Continental Pacific Bank, is headquartered in Vacaville,
California and had assets of $192 million at Sept. 30, 1997.
Continental Pacific Bank operates eight banking offices in Solano
and Contra Costa counties in California.
SierraWest Bancorp is the holding company for SierraWest
Bank, headquartered in Truckee, California with branches in
Sacramento, the Sierra foothills and Lake Tahoe regions of
California and northern Nevada. SierraWest had assets of S575
million at Sept. 30, 1997. The Company is a significant
originator under The U.S. Government's SBA loan program, with
recent SBA loan offices opened in Portland, Oregon and
Chattanooga, Tennessee.
