SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
____________________________
For the Quarter Ended March 31, 1996, Commission File No. 0-15450
SIERRA TAHOE BANCORP
(Exact Name of Registrant as Specified in its Charter)
California 68-0091859
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Reorganization)
10181 Truckee Tahoe Airport Rd., P.O. Box 61000, Truckee, California 96160-9010
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (916) 582-3000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of May 1, 1996: Common Stock - Authorized 10,000,000 shares of no par value;
issued and outstanding - 2,668,319
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<PAGE>
10-Q Filing
March 31, 1996
Part I. Financial Information
Item 1. Financial Statements
Following are condensed consolidated financial statements for Sierra Tahoe
Bancorp ("Bancorp", or together with its subsidiaries, the "Company") for the
reportable period ended March 31, 1996. These condensed consolidated financial
statements are unaudited; however, in the opinion of management, all adjustments
have been made for a fair presentation of the financial condition and earnings
of the Company in conformity with generally accepted accounting principles. The
accompanying notes are an integral part of these condensed consolidated
financial statements.
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<PAGE>
SIERRA TAHOE BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CONDITION
(Unaudited)
March 31, 1996 and December 31, 1995
(Amounts in thousands of dollars)
<TABLE>
<S> <C> <C>
ASSETS 03/31/96 12/31/95
Cash and due from banks $ 17,486 $ 18,689
Federal funds sold 18,100 20,500
Investment securities and
investments in mutual funds 27,878 29,734
Loans held for sale 32,324 16,529
Loans and leases, net of allowance
for possible loan and lease losses of
$4,368 in 1996 and $3,845 in 1995 (Note 2) 223,508 219,595
Other assets 33,607 32,471
TOTAL ASSETS $ 352,903 $ 337,518
LIABILITIES
Deposits $ 308,180 $ 293,154
Convertible debentures 9,465 10,000
Other liabilities 4,534 4,531
TOTAL LIABILITIES 322,179 307,685
SHAREHOLDERS' EQUITY
Common stock 11,225 10,709
Retained earnings 19,698 19,131
Unrealized loss on investment
securities available for sale (199) (7)
TOTAL SHAREHOLDERS' EQUITY 30,724 29,833
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $ 352,903 $ 337,518
</TABLE>
The accompanying notes are an integral part of these Condensed Consolidated
Statements of Condition.
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<PAGE>
SIERRA TAHOE BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
For the Three Months Ended March 31, 1996 and 1995
(Amounts in thousands except per share amounts)
<TABLE>
Three Three
Months Months
Ended Ended
03/31/96 03/31/95
<S> <C> <C>
Interest Income:
Interest and fees on loans and leases $ 6,782 $ 5,083
Interest on federal funds sold 254 75
Interest on investment securities and deposits 390 443
Total Interest Income 7,426 5,601
Interest Expense:
Interest on deposits 2,566 1,397
Interest on convertible debentures 206 212
Other interest expense (24) 16
Total Interest Expense 2,748 1,625
Net Interest Income 4,678 3,976
Provision for Possible Loan and Lease Losses 510 270
Net Interest Income After Provision for
Possible Loan and Lease Losses 4,168 3,706
Other Operating Income 1,666 2,157
Other Operating Expenses 4,910 5,034
Income Before Provision for Income Taxes 924 829
Provision for Income Taxes 357 301
NET INCOME $ 567 $ 528
EARNINGS PER SHARE
Primary $ .21 $ .20
Weighted Average Shares Outstanding 2,737 2,689
Fully diluted $ .18 $ .18
Weighted Average Shares Outstanding 3,750 3,690
</TABLE>
The accompanying notes are an integral part of these Condensed Consolidated
Statements of Income.
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<PAGE>
SIERRA TAHOE BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
For the Three Months Ended March 31, 1996 and 1995
(Amounts in thousands of dollars)
<TABLE>
Three Three
Months Months
Ended Ended
03/31/96 03/31/95
<S> <C> <C>
Interest and fees received $ 7,286 $ 5,399
Service charges and commissions received 391 426
Servicing income received 1,443 1,608
Interest paid (2,911) (1,832)
Cash paid to suppliers and employees (4,668) (4,870)
Income taxes paid (75) (105)
Mortgage loans originated for sale 0 (5,981)
SBA loans originated for sale (2,548) (8,839)
SBA loans sold 134 3,845
Mortgage loans sold 0 6,354
Other items 184 105
Net Cash Used In Operating Activities $ (764) $ (3,890)
Cash Flow From Investing Activities:
Proceeds from:
Maturities of investment securities - held to maturity 15 563
Maturities of investment securities - available for sale 5,322 0
Sales of investment securities - available for sale 7,242 3,499
Purchase of investment securities - available for sale (11,049) 0
Loans made net of principal collections (17,686) (1,552)
Capital expenditures (1,858) (253)
(Decrease) increase in other assets 127 (33)
Net Cash (Used In) Provided by Investing Activities $ (17,887) $ 2,224
Cash Flow From Financing Activities:
Net increase (decrease) in demand, interest bearing
and savings accounts 2,759 (13,067)
Net increase in time deposits 12,267 11,856
Dividend paid 0 (314)
Proceeds from issuance of common stock 22 10
Net Cash Provided by (Used in) Financing Activities 15,048 (1,515)
Net Decrease in Cash and Cash Equivalents (3,603) (3,181)
Cash and Cash Equivalents at Start of Year 39,189 26,049
Cash and Cash Equivalents at March 31 $ 35,586 $ 22,868
</TABLE>
The accompanying notes are an integral part of these Condensed Consolidated
Statements of Cash Flows.
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<PAGE>
SIERRA TAHOE BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
For The Three Months Ended March 31, 1996 and 1995 (Continued)
(Amounts in thousands of dollars)
RECONCILIATION OF NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
<TABLE>
Three Three
Months Months
Ended Ended
03/31/96 03/31/95
<S> <C> <C>
Net Income: $ 567 $ 528
Adjustment to Reconcile Net Income to Net Cash Provided:
Depreciation and amortization 282 255
Provision for possible loan and lease losses 510 270
Provision for income taxes 357 301
Gain on sale of SBA loans under cash received 1 38
Amortization of excess servicing on SBA loans 326 330
Amortization of purchased mortgage servicing rights 43 43
Decrease in interest payable (162) (207)
Increase (decrease) in accrued expenses 5 (280)
Amortization of premiums/discounts on loans (119) (107)
Decrease in taxes payable (75) (105)
Increase in loans originated for sale (2,414) (4,621)
Increase in prepaid expenses (45) (179)
Other items (40) (156)
Total Adjustments (1,331) (4,418)
Net Cash Used in Operating Activities $ (764) $ (3,890)
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND FINANCING ACTIVITIES
During the first quarter of 1996, $15.7 million of unguaranteed SBA loans were
transferred to held for sale status. Also, in 1996, $535 thousand of convertible
debentures were converted to common stock, net of a $41 thousand discount. For
the three months ended March 31, 1995, $201 thousand of loans were transferred
to other real estate owned. In the 1995 period, $572 thousand of assets formerly
classified as in-substance foreclosures were reclassified as loans.
The accompanying notes are an integral part of these Condensed Consolidated
Statements of Cash Flows.
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<PAGE>
Sierra Tahoe Bancorp
Notes to Condensed Consolidated Financial Statements
March 31, 1996 and December 31, 1995
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have
been prepared in a condensed format and, therefore, do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. However, in
the opinion of management, all adjustments, consisting only of normal
recurring adjustments, considered necessary for a fair presentation
have been reflected in the financial statements. The results of
operations for the three months ended March 31, 1996, are not
necessarily indicative of the results to be expected for the full
year. Certain reclassifications have been made to prior period amounts
to present them on a basis consistent with classifications for the
three months ended March 31, 1996.
2. LOANS
As of March 31, 1996, and December 31, 1995, the Company's loan
portfolio consisted of the following (in thousands):
<TABLE>
March 31, December 31,
1996 1995
<S> <C> <C>
Commercial............................................................ $ 158,624 $ 155,176
Real estate--mortgage................................................. 25,663 26,665
Real estate--construction............................................. 31,730 31,718
Individual and other.................................................. 6,603 6,530
Lease receivables..................................................... 5,953 4,164
Total gross loans and leases.......................................... 228,573 224,253
Unearned income on leases............................................. (855) (808)
Net deferred loan costs / (fees)...................................... 158 (5)
Allowance for possible loan and lease losses.......................... (4,368) (3,845)
Total loans and leases, net of deferred fees
and allowance for possible loan and
lease losses........................................................ $ 223,508 $ 219,595
Loans held for sale................................................... $ 32,324 $ 16,529
</TABLE>
Of total gross loans and leases at March 31, 1996, $6.1 million were
considered to be impaired. The allowance for possible loan and lease
losses included $501 thousand related to these loans. The average
recorded investment in impaired loans during the three months ended
March 31, 1996 was $5.3 million.
3. COMMITMENTS & CONTINGENT LIABILITIES
In the normal course of business, there are outstanding various
commitments and contingent liabilities, such as commitments to extend
credit and letters of credit, which are not reflected in the financial
statements. Management does not anticipate any material loss as a
result of these transactions.
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<PAGE>
4. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
During the first quarter of 1996, the Company entered into an interest
rate swap agreement with a major bank (the "Bank") to reduce its
exposure to fluctuations in interest rates. The notional principal
amount is $20 million, and the term is three years. Under the
agreement, the Bank pays a fixed rate of 8.17% and receives from the
Company the prime rate. Net interest income or expense resulting from
the differential between the fixed and prime rates is recorded on a
current basis and any resultant accrual is settled quarterly. The net
interest expense recognized in the first quarter of 1996 was $1,200.
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<PAGE>
SIERRA TAHOE BANCORP AND SUBSIDIARIES
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
FINANCIAL CONDITION
Total assets increased by $15.4 million from $337.5 million at December 31,
1995, to $352.9 million at March 31, 1996. This increase included increases of
$19.7 million in loans, net of the allowance for possible loan and lease losses,
and $1.1 million in other assets. These increases were offset by decreases of
$1.2 million in cash and due from banks, $2.4 million in federal funds sold and
$1.8 million in investment securities and investments in mutual funds. Mutual
funds, federal funds sold and unpledged investment securities classified as
available for sale (which consist primarily of U. S. Treasury securities with a
remaining maturity of less than two years and collateralized mortgage
obligations) are all sources of short-term liquidity and can be used somewhat
interchangeably to provide liquidity. Of the Company's total investment
securities, $7.5 million were pledged at March 31, 1996.
In 1995, the Company opened three new branches in California and one in Nevada.
Early in 1996, the Company closed one of its two branches located in South Lake
Tahoe, California and transferred the deposits to its Bijou branch located
approximately one mile away.
The increase in loans primarily consists of a $13.7 million increase in non-SBA
commercial loans, $5.6 million increase in SBA loans and a $1.7 million increase
in net leases, offset by a $1.0 million decrease in real estate mortgage loans.
Of the $13.7 million increase in commercial loans, $4.7 million was generated
out of the Company's new branch located in Sacramento, California. Loans held
for sale increased $15.8 million, primarily as a result of a change in SBA
regulations. In 1996, the SBA ruled that loans originated through the Preferred
Lender Program could be sold down to 10% of the principal balance. At December
31, 1995, loans held for sale reflected the previous regulation allowing sale
down to just 20%. Pending approval from the SBA, the Company intends to
securitize these loans and sell the resulting securities to investors.
Deposits increased by $15.0 million from $293.2 million at December 31, 1995 to
$308.2 million at March 31, 1996. This primarily consists of increases of $12.3
million and $2.3 million in time deposits and interest-bearing transaction
accounts, respectively. The increase in time deposits includes a $300 thousand
increase in out-of-area certificates of deposit. The Company's new branches
opened during 1995 generated a net increase in deposits of $16.1 million during
the first quarter of 1996.
The unrealized loss on investment securities available for sale, net of the
related tax effect, increased $192 thousand from $7 thousand at December 31,
1995 to $199 thousand at March 31, 1996. Of this ending balance, $104 thousand
represents unrealized losses on mutual funds and $95 thousand relates to other
securities. Gross unrealized losses on securities classified as available for
sale represent 1.3% of the amortized cost of the Company's available for sale
securities at March 31, 1996.
The Company is constructing a new regional facility in Reno, Nevada. Total costs
incurred for the land and building through March 31, 1996 were $3.1 million.
Also under construction is a branch facility in Carson City, Nevada to replace
the leased branch currently in use. Through March 31, 1996, total land and
construction costs incurred on the Carson City facility were $535 thousand.
Bancorp paid dividends of twelve cents per share during March 1995 and fifteen
cents per share in April 1996.
In the first quarter of 1996, the names of both of the Bancorp's banking
subsidiaries were changed to SierraWest Bank.
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<PAGE>
Also in the first quarter, $535 thousand of the Company's 8 1/2% convertible
debentures were converted into 53,500 shares of common stock. In April, an
additional $180 thousand of these same debentures was converted to common stock.
RESULTS OF OPERATIONS (Three Months Ended March 31, 1996 and 1995)
Net income for the three months ended March 31, 1996 increased by 7.4% from $528
thousand for the three months ended March 31, 1995 to $567 thousand during the
current three month period. An increase in net interest income was offset by an
increase in the provision for possible loan and lease losses and a decrease in
other operating income.
Net Interest Income
The yield on average interest earning assets for the three months ended March
31, 1996 was 6.29%. This compares to 7.48% for the first three months of 1995.
The decrease reflects the decrease in the average prime rate during the
comparison periods and the funding of loan growth primarily through increases in
time deposits. Offsetting the effect of the decrease in yield was an increase in
average earning assets from $216 million during the first quarter of 1995 to
$299 million in the current quarter.
Yields and interest earned, including loan fees for the three months ended March
31, 1996 and 1995, were as follows (in thousands except percent amounts): Three
Three Months Months Ended Ended 03/31/96 03/31/95 Average loans outstanding (1)
$ 250,076 $ 176,688 Average yields 10.9% 11.7% Amount of interest and
origination fees earned $ 6,782 $ 5,083
(1) Amounts outstanding are the average of daily balances for the periods.
Excluding loan fees of $262 thousand and $243 thousand for the three months
ended March 31, 1996 and 1995, yields on average loans outstanding were 10.5%
and 11.1%, respectively. The prime rate (upon which a large portion of the
Company's loan portfolio is based), averaged 8.3% for the 1996 period and 8.8%
for the 1995 period.
The Company has experienced an increase in its overall cost of deposits from
2.6% during the 1995 quarter to 3.5% during the current quarter. This increase
reflects an increase in average time deposits and the average rate paid on time
deposits. Time deposits represented 29% of average deposits in the first quarter
of 1995 and 45% in the first quarter of 1996.
Rates and amounts paid on average deposits including non-interest bearing
deposits for the three months ended March 31, 1996 and 1995 were as follows (in
thousands except percent amount).
<TABLE>
Three Three
Months Months
Ended Ended
03/31/96 03/31/95
<S> <C> <C>
Average deposits outstanding (1) $ 297,787 $ 214,988
Average rates paid 3.5% 2.6%
Amount of interest paid or accrued $ 2,566 $ 1,397
</TABLE>
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<PAGE>
The effective interest rate paid on NOW accounts, Money Market accounts and Time
Certificates of Deposits during the first three months of 1996 and 1995 were as
follows:
<TABLE>
1996 1995
MONEY MONEY
NOW MARKET TIME NOW MARKET TIME
<S> <C> <C> <C> <C> <C> <C>
Average Balance (in thousands) (1) $39,361 $54,047 $135,014 $33,637 $55,068 $63,202
Rate Paid 1.2% 3.3% 5.7% 1.2% 2.7% 5.5%
</TABLE>
(1) Amount outstanding is the average of daily balances for the period.
Provision for Possible Loan Losses
In evaluating the Company's loan loss reserve, management considers the credit
risk in the various loan categories in its portfolio. Historically, most of the
Company's loan losses have been in its commercial lending portfolio, which
includes SBA loans and local commercial loans. From inception of its SBA lending
program in 1983, the Company has sustained a relatively low level of losses from
these loans, averaging less than 0.5% of loans outstanding per year. Losses in
1994 for these loans were $373 thousand. During 1995, net losses in the SBA loan
portfolio increased to $575 thousand. For the first quarter of 1996, no net
losses were recorded. Most of the Company's other commercial loan losses have
been for loans to businesses within the Tahoe basin area and during 1994 and
1995 at the Company's SierraWest Bank subsidiary in Nevada. The Company believes
that it has taken steps to minimize its commercial loan losses, including
centralization of lending approval and processing functions. It is important for
the Company to maintain good relations with local business concerns and, to this
end, it supports small local businesses with commercial loans. To offset the
added risk these loans may represent, the Company typically charges a higher
interest rate. It also attempts to mitigate this risk through the loan review
and approval process.
The provision for loan losses was $510 thousand and $270 thousand for the first
three months of 1996 and 1995, respectively. The increase in 1996 is primarily
attributable to growth in the loan portfolio. Unguaranteed loans increased $16.1
million and $2.5 million in the first quarter of 1996 and 1995, respectively.
The allowance for possible loan and lease losses as a percentage of loans was
1.68% at March 31, 1996, 1.60% at December 31, 1995, and 2.05% at March 31,
1995. Net recoveries for the three months were $13 thousand compared to net
charge-offs of $139 thousand for the first three months of 1995. The decrease in
the allowance for possible loan and lease losses as a percentage of loans from
March 31, 1995 reflects the higher level of guaranteed loans in the portfolio
resulting from the Company's decision to retain the guaranteed portion of loans
it originates. The Company will monitor its exposure to loan losses each quarter
and adjust its level of provision in the future to reflect changing
circumstances. The Company expects that its existing loan loss reserve will be
adequate to provide for any additional losses.
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<PAGE>
The following table sets forth the ratio of nonperforming loans to total loans,
the allowance for possible loan and lease losses to nonperforming loans and the
ratio of the allowance for possible loan and lease losses to total loans, as of
the dates indicated.
<TABLE>
March 31, December 31,
1996 1995 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Nonaccrual loans to total loans 2.3% 1.7% 2.3% 1.4% 1.8%
Allowance for possible loan and lease
losses to nonaccrual loans 71.8% 118.4% 70.2% 142.9% 120.9%
Allowance for possible loan and lease
losses to total loans 1.7% 2.1% 1.6% 2.1% 2.2%
</TABLE>
If the guaranteed portions of loans on nonaccrual status are excluded from the
calculations, the ratio of nonaccrual loans to total loans at March 31, 1996
declines to 1.4% and the allowance for possible loan and lease losses to
nonaccrual loans increases to 119.4%. At March 31, 1995, there were no
significant guaranteed loans on nonaccrual status.
Other Operating Income
Other operating income decreased $491 thousand during the first three months of
1996 compared to the previous year's first quarter.
The net gain on sale of SBA loans for the current three month period declined
from $240 thousand to a net loss of $4 thousand. Sales of SBA loans for the
three months ended March 31, 1996 totaled $134 thousand compared to $3.8 million
in the 1995 period. In July 1995, the Company altered its strategy with respect
to the sale of SBA loans. Rather than continuing to sell the guaranteed portion
of the portfolio, the Company began to retain the guaranteed portion and plans
to securitize and sell portions of unguaranteed SBA loans. The Company's loan
portfolio currently includes $19.8 million in guaranteed portions of SBA loans
which are available for sale, an increase of $4.4 million over the balance of
the same loans at December 31, 1995.
Net servicing income on SBA loans (the net of the servicing income generated on
sold SBA loans less the amortization of the gain recorded on the sale of these
same loans and the amortization of purchased SBA servicing rights) decreased by
$123 thousand from $1,197 thousand during the first three months of 1995 to
$1,074 thousand for the three months ended March 31, 1996. This decline relates
to prepayments on existing loans, selling loans in recent years for maximum
premiums, and holding guaranteed portions of loans beginning in 1995.
Mortgage banking income was $108 thousand in the first quarter of 1995. In
mid-1995, mortgage banking operations were terminated.
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<PAGE>
Other Operating Expense
The following table compares the various elements of non-interest expense as an
annualized percentage of total assets for the first three months of 1996 and
1995 (in thousands except percentage amounts):
<TABLE>
Three Months Salaries & Occupancy & Other
Ended Average Related Equipment Operating
March 31 Assets (1) Benefits (2) Expenses Expenses
<S> <C> <C> <C> <C>
1996 $ 342,917 3.3% 1.0% 1.3%
1995 $ 256,562 3.9% 1.1% 2.5%
</TABLE>
(1) Based on average daily balances.
(2) Excludes provision for payment of bonuses and contribution to KSOP
plan. Including these items, percentages are 3.5% and 4.3% for 1996 and
1995, respectively.
The following table summarizes the principal elements of operating expenses and
discloses the increases (decreases) and percent of increases (decreases) for the
three months ended March 31, 1996 and 1995 (amounts in thousands except
percentage amounts):
<TABLE>
Increase (Decrease)
Three Months Ended March 31, 1996 over 1995
1996 1995 Amount Percentage
<S> <C> <C> <C> <C>
Salaries and related benefits.............. $ 2,958 $ 2,723 $ 235 8.6%
Occupancy and equipment.................... 833 782 51 6.5
Insurance.................................. 56 76 (20) (26.3)
Postage.................................... 61 65 (4) (6.2)
Stationery and supplies.................... 78 64 14 21.9
Telephone.................................. 73 72 1 1.4
Advertising................................ 134 143 (9) (6.3)
Legal...................................... 94 99 (5) (5.1)
Consulting................................. 61 100 (39) (39.0)
Audit and accounting fees.................. 35 56 (21) (37.5)
Director's fees and expenses............... 117 97 20 20.6
FDIC assessments........................... 1 138 (137) (99.3)
Other Real Estate Owned.................... 16 36 (20) (55.6)
Other...................................... 393 583 (190) (32.6)
$ 4,910 $ 5,034 $ (124) (2.5)%
</TABLE>
The increases in salaries and benefits, as well as occupancy and equipment, are
primarily attributable to the opening of four branches and an equipment leasing
division in 1995. In addition the Company has experienced a $57 thousand
increase in group insurance costs related both to an increase in personnel and
an increase in the rate charged for this insurance.
Consulting costs in 1995 included costs related to a corporate identity study
and a review of directors' compensation. The decrease in FDIC assessments
resulted from a reduction in rates. Other expenses in 1995 included a $100
thousand business loss related to other real estate owned and $100 thousand
accrued as potential losses on two litigation matters.
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<PAGE>
Provision for Income Taxes
Provision for income taxes have been made at the prevailing statutory rates and
include the effect of items which are classified as permanent differences for
federal and state income tax. The provision for income taxes was $357 thousand
and $301 thousand for the three months ended March 31, 1996 and 1995,
respectively, representing 38.6% and 36.3% of income before taxation for the
respective periods.
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<PAGE>
Sierra Tahoe Bancorp
10-Q Filing
March 31, 1996
Part II.
Item 1. Legal Proceedings.
During 1987, SierraWest Bank, formerly Truckee River Bank,
("SWBC") took title, through foreclosure, of a property located
in Placer County which subsequent to SWBC's sale of the property
was determined to be contaminated with a form of hydrocarbons. At
the time it owned the property, SWBC became aware of and
investigated the status of certain underground tanks that had
existed on the property. SWBC hired a consultant to study the
tanks and properly seal them. Several years later, and after
resale of the property, contamination was observed in the area of
at least one of the buried tanks and along an adjoining riverbank
of the Yuba River. SWBC, at the time of resale of the property,
was not aware of this contamination to the tanks but was aware of
the existence of the tanks and disclosed this to its purchaser.
A formal plan of remediation has not been approved by the County
of Placer or the State Regional Water Quality Board. As a result
of the discovery of the contamination, two civil lawsuits were
instituted against SWBC and other prior owners by the current
owner of the property, who is also SWBC's borrower. One of the
actions was dismissed by agreement of the parties. In the
remaining action, the method and responsibility for remediation
are currently being litigated in federal court.
SWBC's external and internal counsel on this matter believe that
SWBC's share of the cost of remediation and the costs of defense
will not be material to SWBC's or the Company's performance and
will be within existing reserves established by SWBC for this
matter.
In addition, the Company is subject to some minor pending and
threatened legal actions which arise out of the normal course of
business and, in the opinion of Management and the Company's
General Counsel, the disposition of these claims currently
pending will not have a material adverse affect on the Company's
financial position or results of operations.
Item 2. Change in Securities. No changes.
Item 3. Defaults Upon Senior Securities. Not applicable.
Item 4. Submission of Matters to a Vote of Securities Holders. - None
Item 5. Other Information.
On May 9, 1996, the Company announced that it will consolidate
its two banking subsidiaries into a single bank, SierraWest Bank,
subject to regulatory review and approval.
As part of the consolidation efforts, twenty positions have been
eliminated, resulting in a nonrecurring pre-tax charge of
approximately $450 thousand in the second quarter. This charge is
expected to be offset by cost savings during the remainder of
1996. Future pre-tax cost savings will be approximately $900
thousand on an annual basis.
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<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
<TABLE>
(a) Exhibits.
<S> <C>
10.1 Executive Salary Continuation Agreement Between Bancorp
and Peter Raffetto dated April 2, 1996.
10.2 Credit Agreement between Sanwa Bank California and Truckee River Bank dated October 10,
1995.
10.3 Equipment Sale Agreement between Information Technology, Inc. and Truckee River Bank.
10.4 Federal funds facility agreement between Union Bank of California and Truckee River Bank
dated April 8, 1996.
10.5 Senior Manager Separation Benefits Agreement between Sierra Tahoe Bancorp and David A.
Funk, dated April 18, 1996.
10.6 First Amendment to Senior Management Benefits Agreement between Sierra Tahoe Bancorp and
David C. Broadley, dated April 2, 1996.
11 Statement regarding computation of per share earnings.
27 Financial Data Schedule
(b) Reports on Form 8-K.
Bancorp filed two forms 8-K in the quarter ended March 31, 1996. Form 8-K dated January 2, 1996
reported the announced closing of a South Lake Tahoe branch of the Company. Form 8-K dated January
3, 1996 reported the execution of a Shareholder Protection Rights Plan.
</TABLE>
-16-
15
<PAGE>
10-Q Filing
March 31, 1996
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 thereunto duly authorized.
Date: May 14, 1996 /s/ William T. Fike
William T. Fike
President, Chief Executive Officer
Date: May 14, 1996 /s/ David C. Broadley
David C. Broadley
Executive Vice President/
Chief Financial Officer
-17-
16
<PAGE>
EXHIBIT 10.1
EXECUTIVE SALARY CONTINUATION AGREEMENT
This Executive Salary Continuation Agreement (the "Agreement") is made April 2,
1996, by and between SIERRA TAHOE BANCORP, a California corporation (hereinafter
the "Bancorp") and PETER RAFFETTO (hereinafter the "Executive").
RECITALS:
WHEREAS, Bancorp deems Executive's future counsel and advice to be
valuable to it by virtue of Executive's experience as an executive officer
of Bancorp's subsidiary Truckee River Bank; the tenure of Executive's
employment with Truckee River Bank; and further by virtue of Executive's
acknowledged reputation in the banking field; and
WHEREAS, Bancorp deems it to be in its best interest to enter into a
contract wherein it engages Executive to act as a consultant and advisor to
Bancorp after Executive's retirement and/or termination of full time
employment as hereafter specified;
NOW, THEREFORE, Bancorp and Executive agree as follows:
AGREEMENTS: 1. Nature of Agreement. This Agreement is a distinct and
separate agreement from any employment agreement entered into between the
parties, and shall not in any way vary the terms of any other agreement, if
it exists, except as specifically provided herein.
Executive Salary Continuation Agreement
Peter Raffetto
17
<PAGE>
2. Benefit Granted.
A. Retirement or Termination. If Executive: (i) continues in the
employment of Bancorp until he attains the age of sixty-five (65) years
("Retirement") or (ii) terminates employment after completing at least one
(1) continuous year of service after the date of May 15, 1995 (the
"Eligibility Date"), then Executive shall be eligible for the appropriate
vested benefit as hereafter set forth in Schedule "A" attached hereto and
incorporated herein by this reference in consideration for his agreement to
act as a consultant exclusively for Bancorp as set forth in Paragraph 3
following Executive's retirement or termination of full time employment and
further in consideration of his covenant not to accept employment as a
consultant, advisor, or employee of any other financial institution as set
forth in Paragraph 5. Executive shall vest in his benefits as set forth in
Schedule A.
B. Option To Pay Benefits In Installments; Election Date. In lieu of
receiving a lump sum pursuant to Schedule "A", Executive may elect,
provided such election is made at least two (2) years prior to his
termination or retirement, to receive two hundred forty (240) equal monthly
installments of the vested benefit rather than in a lump sum. Beginning
ninety (90) days after retirement or termination, interest shall accrue on
unpaid vested benefit balance at a fixed rate of Ten Percent (10.00%) per
annum based upon an assumed year containing 365 days. Said monthly
installments shall be paid to him starting ninety (90) days after
retirement or termination. Should Executive pass
Executive Salary Continuation Agreement
Peter Raffetto
18
<PAGE>
away during such payout period, said installments shall be paid to those
persons set forth in Paragraph 6.
3. Consultant Obligation.
In addition to the benefits granted above, and as further described in
this Paragraph, Executive agrees to serve the Bancorp as a consultant
following his retirement or termination for a five (5) year term. Executive
agrees that he will devote as much time as is necessary and required by
Bancorp, but not to exceed twenty-five (25) hours per month, as a
consultant to Bancorp at an hourly fee of one hundred fifty dollars
($150.00). It is expressly understood that the compensation paid in the
prior sentence is in addition to compensation paid pursuant to Paragraph 2,
above, and is paid in consideration for the services of Executive as a
consultant and advisor to Bancorp at Bancorp's request. Executive agrees to
make himself available to the management of Bancorp and its subsidiaries,
its various boards of directors and other specified individuals that
management or the board may designate for the purpose of advising and
consulting with those individuals on behalf of Bancorp and its
subsidiaries. Bancorp shall reimburse Executive for his reasonable and
necessary travel and expenses incurred by Executive in the nature of
Executive's consulting or advisory work, and required travel to locations
outside of the main office or executive offices of Bancorp. In the event
Executive is not residing in the community where Bancorp's principal
offices are located, Bancorp agrees to reimburse Executive for reasonable
and necessary travel from Executive's residence to the main office or
executive offices of Bancorp provided the same does not exceed 200 miles
one way. Executive agrees that during his
Executive Salary Continuation Agreement
Peter Raffetto
19
<PAGE>
engagement he will keep himself informed concerning the affairs of
Bancorp and its subsidiaries by reviewing annual or periodic reports and
other data supplied to Executive by Bancorp. Executive agrees to review
these items without charge to Bancorp.
4. Independent Contractor.
The status of Executive when engaged as a consultant and contemplated by
this Agreement shall be that of Independent Contractor. Bancorp shall not
direct Executive as to the method or way by which Executive shall perform
his counseling and/or advisory services to Bancorp or its subsidiaries.
5. Agreement Not To Compete.
In the event Executive retires at age sixty-five (65) or terminates his
employment prior to retirement and receives the benefits as provided in
Schedule "A" herein, Executive further agrees as a condition to receiving
the sums set forth in Paragraph 2(A) that he will not become an owner,
employee advisor or consultant for any business which is substantially
similar to or in competition with the business of Bancorp or its
subsidiaries and which competing business is located within a one hundred
fifty (150) mile radius of any branch, office or established location of
Bancorp or any of its subsidiaries for a period of five (5) years.
6. Death of Executive.
In the event that a vested sum is due to Executive and Executive should die
while actively employed by Bancorp prior to his attaining the age of
sixty-five (65) but subsequent to May 15, 2000 and prior to the exercise of
any benefits under this Agreement, Bancorp will pay the full accumulation
as of the date of death to Executive's surviving spouse even if the full
accumulation exceeds the vested value. Should Executive die after
retirement or termination if
Executive Salary Continuation Agreement
Peter Raffetto
20
<PAGE>
installment payments were elected, Bancorp will pay the remaining
installment payments to Executive's surviving spouse. In the event
Executive is not survived by a spouse, then said vested value or
installment payments shall be paid to those individuals named in writing by
Executive as contingent payees in the event of Executive's spouse's death.
In the event Executive dies without a spouse and without naming any
contingent payees, the amount shall be paid to Executive's personal
representative upon his or her qualification as executor or administrator.
7. Forfeiture of Benefits.
Should Executive retire or terminate his employment, he may elect to
forfeit all vested benefits of this Agreement in exchange for his
unrestricted right to consult for and advise other financial services
business(es) in competition with Bancorp and upon such written election,
the Executive shall be free of any restrictive covenants herein in such
event; provided, however, Executive shall under no circumstances divulge
any confidential matters of Bancorp, or its subsidiaries; or divulge any
customer lists or confidential and proprietary data developed and owned by
Bancorp or its subsidiaries. Any election to forfeit benefits must be made
within thirty (30) days after the date of retirement or termination or such
election will be deemed to have lapsed.
8. Benefits Not Accumulated;
Cancellation; Notice. Except as hereafter set forth, Bancorp reserves the
right to terminate this Agreement as to any benefits not yet vested for any
reason in the sole and absolute discretion of Bancorp; provided, however,
that Executive shall be entitled to the vested amount set forth on Schedule
"A" attached hereto based upon the date the
Executive Salary Continuation Agreement
Peter Raffetto
21
<PAGE>
cancellation occurs in relationship with Schedule "A". Said vested amount
may be paid in the event of termination of this Agreement by Bancorp to
Executive in a single lump sum. Bancorp shall give not less than fifteen
(15) days prior written notice to Executive of any intent to terminate this
Agreement. The foregoing notwithstanding, in the event of a successful
merger, acquisition, business combination or tender offer (the acceptance
of which was not recommended by a majority of the directors of Bancorp),
then in such event Executive shall be entitled in a single lump sum payment
of the Full Accumulation Value as set forth in Schedule "A" as if Executive
had served through all years as specified on Schedule "A". Also, in such
event only, Executive shall be excused and shall not be obligated to act as
a consultant or be restricted in his activities as provided in Paragraphs 3
and 5 of this Agreement.
9. Inability To Transfer Benefits.
Neither Executive, Executive's spouse, nor any other beneficiary under this
Agreement shall have any power or right to transfer, assign, anticipate,
hypothecate, mortgage, or in any way exercise any control or anticipatory
right over vested benefits granted under this Agreement nor shall any of
said benefits be subject to seizure for the payments of any debts,
judgments, alimony or separate maintenance which may be owed by Executive
or his beneficiary or be transferable by operation of law in the event of
bankruptcy, insolvency or otherwise until actually paid. In the event
Executive or any beneficiary attempts to execute or issue any assignment,
computation, hypothecation, transfer or disposal of the benefit hereunder,
Bancorp's
Executive Salary Continuation Agreement
Peter Raffetto
22
<PAGE>
responsibilities, liabilities, and obligations shall forthwith immediately
cease and terminate as to any unvested benefits and this Agreement shall be
deemed to terminate as set forth in Paragraph 8.
10. Agreement Does Not Replace Other Agreements.
Nothing contained in this Agreement shall be construed to alter, abridge or
in any manner affect the rights and privileges of Executive to participate
in and be covered by any other pension, profit sharing or other retirement
plan(s); severance plans; stock option plans; group insurance; bonus or
similar employment benefit plans; or other benefits which Bancorp may now
have or hereafter adopt for its officers and/or general employees.
11. Funding of Benefits.
Bancorp reserves the absolute right in its sole and exclusive discretion
either to: (i) fund by cash, insurance or otherwise the obligation
undertaken by this Agreement; or (ii) to not fund the obligation in
advance. Should Bancorp elect to fund in advance the obligations
anticipated under this Agreement in whole or in part through the medium of
life insurance or annuities or both, then Bancorp shall be deemed the sole
owner and beneficiary of the policy. Bancorp reserves the absolute right in
its sole discretion to terminate such life insurance or annuities as well
as any other funding program at any time in whole or in part and cancel any
advance funding mechanism. At no time shall Executive be deemed to have any
right, title or interest in any specified asset or assets of Bancorp used
to fund obligations hereunder including but not by way of restriction any
insurance or annuity contract(s) or the proceeds thereof.
Executive Salary Continuation Agreement
Peter Raffetto
23
<PAGE>
12. Funding Method Not Considered As Security For Performance.
Any advance funding of obligations hereunder by use of insurance products
shall not in any way be considered to constitute security for the
performance of the obligations of this Agreement. The obligation of Bancorp
shall be considered to be paid from current available resources and
otherwise unsecured.
13. Cooperation of Executive As To Funding Method.
If Bancorp purchases a life insurance or annuity policy on the life of
Executive to fund any obligations under this Agreement, Executive agrees to
cooperate with the issuance of such policy(ies) and sign any and all
documents which may be required for that purpose and further agrees to
submit to any and all reasonable medical examinations or tests which may be
required or necessary to obtain said policy(ies).
14. Agreement Represents Only A General Obligation of Bancorp.
This Agreement shall not be construed as giving Executive or his
beneficiary any greater rights or higher priority than those of any other
unsecured creditor of Bancorp.
15. Binding Nature of Agreement.
This Agreement shall be binding upon and inure to the benefit of Executive
and his personal representatives, agents and assigns. To the extent
consistent herewith, this Agreement shall also inure to any successor
organization which shall succeed to substantially all of the stock or
assets of Bancorp.
16. Beneficiaries; Election.
Executive reserves the right to change the name of his named primary and/or
contingent beneficiaries by separate acknowledged change form from time to
time or upon properly notifying Bancorp or its successor of this document
in writing as to the
Executive Salary Continuation Agreement
Peter Raffetto
24
<PAGE>
successor beneficiary of such benefits. Bancorp reserves the right to
require a spouse's signature thereon if in the opinion of counsel such a
consent is required.
17. Suicide Exclusion Clause.
In the event that it is proved with reasonable certainty and in the sole
discretion of Bancorp that Executive, within two (2) years of the execution
of this Agreement, has taken his own life, any and all amounts unpaid under
this Agreement shall be deemed to have fully lapsed and terminated prior to
any vesting and in such an event Bancorp shall have no liability to
Executive or any other persons who otherwise would be entitled to benefits
under this Agreement.
18. Miscellaneous.
This Agreement shall be construed under the laws of the State of
California. Venue shall be appropriate wherever allowed by law and in the
County of Nevada (Truckee Session), State of California. Where applicable,
this Agreement shall be deemed modified as to gender, tense and
pluralization. This Agreement represents the final expression of the
parties and shall be modified only in a signed amendment executed by each
party hereto. This Agreement may be executed in counterparts.
Executive Salary Continuation Agreement
Peter Raffetto
25
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
above-referenced date.
SIERRA TAHOE BANCORP
By: /s/ William T. Fike
William T. Fike
Its: Chief Executive Officer
Accepted and Agreed:
By: /s/ Peter Raffetto
Peter Raffetto
J:\Lawyer\HR\Salary.3
Executive Salary Continuation Agreement
Peter Raffetto
26
<PAGE>
SCHEDULE "A"
1. Plan Commencement Date: May 15, 1995
2. Vested Benefits:
<TABLE>
Vested Benefit Under
Retirement/Termination Date After Paragraph 2(A):
<S> <C>
December 31, 1996 $11,411.40
December 31, 1997 $38,449.60
December 31, 1998 $83,569.20
December 31, 1999 $149,567.20
December 31, 2000 $239,628
December 31, 2001 $297,813
October 11, 2002 $345,416*
</TABLE>
*Final Vested Benefit
*****
Executive Salary Continuation Agreement
Peter Raffetto
27
<PAGE>
EXHIBIT 10.2
CORRESPONDENT BANK AGREEMENT
CREDIT AGREEMENT
This Credit Agreement ('Agreement') is made and entered into as of the
10 day of October, 1995 by and between SANWA BANK CALIFORNIA ('Sanwa') and
TRUCKEE RIVER BANK ('Client'), with respect to the following:
1.00 Agreement to Lend.
1.01 Line of Credit Subject to the terms and conditions
hereof and so long as no Event of Default occurs, Sanwa
agrees to extend to Client certain credit accommodations up
to a total principal amount, including any sublimits, from
time to time outstanding of $250,000.00 ( the "Line of
Credit"), as follows:
1.02 Purpose(s). Extensions of credit shall be limited to the
following types of credit facilities:
[ X ] A. Commercial Letters of Credit For the [X]
issuance [X] confirmation of sight and/or usance commercial
letters of credit. All commercial letters of credit issued
and/or confirmed under this credit facility, together with
any related drafts, shall aggregate to no greater than
$250,000.00 and have an expiry date of not later than one
year after the date of issuance.
[ X ] B. Standby Letters of Credit For the [X] issuance
[X] confirmation of standby letters of credit. All standby
letters of credit issued and/or confirmed under this credit
facility shall aggregate to no greater than $250,000, and
have an expiry date of not later than one year after the
date of issuance.
Sanwa may decline to issue a letter of credit for any
reason, including without limitation, the nature of the
transaction, or its terms or in connection with any
transaction where Sanwa, due to the nationality or residence
of the beneficiary, would be prohibited by any applicable
law, regulation or order from issuing or confirming such
letter of credit. Client may, but is not required, to make
such amendments as it deems appropriate to make the letter
of credit application or request for confirmation of letter
of credit acceptable to Sanwa.
[ X ] C. Federal Funds. In Sanwa's sole discretion,
which shall depend on, among other things, its activity in
the Fed Funds market, Sanwa shall permit Client to purchase
[X] over-night [X] term (up to 30 days) Federal Funds ("Fed
Funds") up to a maximum aggregate amount of $250,000.00;
[N/A] provided that absent Sanwa's prior approval and a 30
day out-of-debt period, Client shall have no more than N/A
consecutive business days of borrowing in the Fed Funds
market.
[ X ] D. Foreign Exchange. For the purchase and/or sale
through Sanwa of [X] spot (requiring completion within two
business days) [X] forward (any foreign exchange contract
which is to be completed after two business days but not
later than 183 days) contract to buy or sell foreign
currency at a given date up to a maximum aggregate face
amount of $250,000.00.
Sanwa may refuse to enter into a foreign exchange
transaction with Client where Sanwa, in its sole discretion,
determines that such foreign currency is unable, or where
Sanwa would be prohibited by any applicable law, regulation
or order from purchasing such foreign currency.
[N/A] E. Line of Credit Advances. Line of Credit
Advances ("Advances") up to a maximum aggregate amount of
$N/A.
Quotes. Any quotation given by Sanwa will be valid only as of the time
given. If not accepted by Client at that, which acceptance will be irrevocable,
the quote shall be deemed automatically withdrawn and cannot be accepted later.
28
<PAGE>
1.03 Fees and Interest.
A.Commercial and/or Standby Letters of Credit
1. Commercial Letters of Credit
The fee for issuing any commercial letter of credit and
any additional letter of credit fees which may arise in
connection therewith, including, without limitation, the
fees for amendment and payment, shall be: Sanwa's minimum
letter of credit fee for the applicable service plus 50% of
the standard letter of credit fee for such service in excess
of the minimum fee. The letter of credit fees are published
from time to time in Sanwa's Schedule of Fees and Charges.
Client acknowledges receipt of Sanwa's current Schedule of
Fees and Charges.
The fee for confirming any commercial letter of credit
and any additional letter of credit fees which may arise in
connection therewith, including, without limitation, the
fees for amendment and payment, shall be: Sanwa's minimum
letter of credit fee for the applicable service plus 50% of
the standard letter of credit fee for such service in excess
of the minimum fee. The letter of credit fees are published
from time to time in Sanwa's Schedule of Fees and Charges.
2. Standby Letters of Credit
The fee for issuing any standby letter of credit shall
be: Sanwa's minimum letter of credit fee for the applicable
service plus 50% of the standard letter of credit fee for
such service in excess of the minimum fee. The letter of
credit fees are published from time to time in Sanwa's
Schedule of Fees and Charges.
The fee for confirming any standby letter of credit
shall be: Sanwa's standard fee for such service, as set
forth in Sanwa's Schedule of Fees and Charges.
Any additional fees which may arise in connection with
such letters of credit, including without limitation, the
fees for amendment and payment, shall be: Sanwa's minimum
letter of credit fee for the applicable service plus 50% of
the standard letter of credit fee for such service in excess
of the minimum fee. The letter of credit fees are published
from time to time in Sanwa's Schedule of Fees and Charges.
B. Overnight Fed Funds. Interest shall accrue on any
purchase of Fed Funds at the rate quoted by Sanwa's Fed
Funds trader in the Treasury Department (the "Fed Funds
Rate").
C. Foreign Exchange. Client acknowledges that the
purchase and/or sale price for foreign currency quoted to
Client includes Sanwa's profit margin on the transaction,
which margin shall not be disclosed to Client. Client
further acknowledges that Client may seek to purchase or
sell foreign exchange contracts through another source which
may offer Client a more favorable price on any given date.
Sanwa reserves the right to require payment in collected
funds at least one business day prior to the delivery date
specified in any forward contract as a condition of delivery
of the specified currency. If such advance payment will be
required, Sanwa will so notify you at least two business
days prior to the stated delivery date.
D. Draws under Letters of Credit. Advances to pay any
draw under a letter of credit shall accrue interest at the
rate set forth in the Loan Documents, as defined herein,
including, without limitation, the applicable Security
Agreement for Issuance of Commercial Letter of Credit or
Security Agreement for Issuance of Stand-by Letter of
Credit.
E. Line of Credit Advances. Interest shall accrue on
each Advance from the date of the Advance at a variable rate
equivalent to an index for a variable interest rate which is
quoted, published or announced from time to time by Sanwa as
its reference rate and as to which loans may be made by
Sanwa at, below or above such reference rate (the "Reference
Rate") plus/minus N/A% per annum (the "Variable Rate").
Interest shall be adjusted concurrently with any change in
the Reference Rate. Interest hereunder shall be computed on
the basis of N/A days per year, but charged on the actual
number of days elapsed.
29
<PAGE>
[N/A] In addition to Variable Rate Advances, Sanwa
agrees to make Advances to Client, at Client's election, at
a fixed rate for such period of time that Sanwa may quote
and offer, provided that any such period of time shall be
for at least N/A days and shall not exceed N/A days and
provided further that any such period of time does not
extend beyond the Expiration Date (the "Interest Period")
for Advances in the minimum amount $N/A and in $N/A
increments thereafter. Such interest rate shall be a
percentage approximately equivalent to N/A% per annum in
excess of the rate which Sanwa determines in its sole and
absolute discretion to be equal to Sanwa's cost of acquiring
funds (adjusted for any and all assessments, surcharges and
reserve requirements pertaining to the borrowing or purchase
by Sanwa of such funds) in an amount approximately equal to
the amount of the relevant Advance and for a period of time
approximately equal to the relevant Interest Period (the
"Fixed Rate"). Advances based upon the Fixed Rate are
hereinafter referred to as "Fixed Rate Advances".
Interest on any Fixed Rate Advance shall be computed on
the basis of N/A days per year, but charged on the actual
number of days elapsed.
Client hereby promises and agrees to pay Sanwa interest
as follows: (i) On Variable Rate Advances at the time and in
the manner provided in any note; and (ii) on Fixed Rate
Advances at the time and in the manner provided in any note.
If interest is not paid as and when it is due, the amount of such unpaid
interest shall bear interest, until paid in full, at the then applicable
interest rate.
1. Notice of Borrowing. Client may borrow under the Line of Credit by
requesting:
(a) [N/A] A Variable Rate Advance. A Variable Rate Advance may be made on
the day notice is received by Sanwa; provided, however, that if Sanwa shall not
have received notice at or before 3:30 p.m. on the day such Advance is requested
to be made, such Variable Rate Advance may be made, at Sanwa's option, on the
next business day.
(b) [N/A] A Fixed Rate Advance. Notice of any Fixed Rate Advance shall be
received by Sanwa no later 11:00 a.m. two business days prior to the day (which
shall be a business day) on which Client requests such Fixed Rate Advance to be
made.
2. Prohibition Against Prepayment of Fixed Rate Advances. Notwithstanding
anything to the contrary herein or in any note, no prepayment shall be made on
any Fixed Rate Advance except on a day which is the last day of the Interest
Period pertaining thereto. If the whole or any part of any Fixed Rate Advance is
prepaid by reason of acceleration or otherwise, Client shall, upon Sanwa's
request, promptly pay to and indemnify Sanwa for all costs and any loss
(including interest) actually incurred by Sanwa and any loss (including loss of
profit resulting from the re-employment of funds) sustained by Sanwa as a
consequence of such prepayment.
3. Indemnification for Fixed Rate Costs. During any period of time in which
interest on any Advance is accruing on the basis of the Fixed Rate, Client
shall, upon Sanwa's request, promptly pay to and reimburse Sanwa for all costs
incurred and payments made by Sanwa by reason of any future assessment, reserve,
deposit or similar requirements or any surcharge, tax or fee imposed upon Sanwa
or as a result of Sanwa's compliance with any directive or requirement of any
regulatory authority pertaining or relating to funds used by Sanwa in quoting
and determining the Fixed Rate.
4. Conversion from Fixed Rate to Variable Rate. In the event that Sanwa
shall, at any time, determine that the accrual of interest on the basis of the
Fixed Rate (i) is infeasible because Sanwa is unable to determine the Fixed Rate
due to the unavailability of U.S. dollar deposits, contracts or certificates of
deposit in an amount approximately equal to the amount of the relevant Advance
and for a period of time approximately equal to the relevant Interest Period; or
(ii) is or has become unlawful or infeasible by reason of Sanwa's compliance
with any new law, rule, regulation, guideline or order, or any new
interpretation of any present law, rule, regulation, guideline or order, then
Sanwa shall give telephonic notice thereof (confirmed in writing) to Client, in
which event any Fixed Rate Advance shall be deemed to be a Variable Rate Advance
and interest shall thereupon immediately accrue at the Variable Rate.
1.04 Compensating Balances; Fee-in-Lieu of Compensating Balances. Maintain
demand deposits with Sanwa with net free compensating balances in an amount
equivalent to not less than $65,000.00 on an average daily basis during each
[N/A] month [ X ]
30
<PAGE>
calendar quarter (the "Compensating Balance Requirement"). Client shall pay to
Sanwa on the 10th day following the last day of each [N/A] month calendar
quarter (the "Time Period") a fee equivalent to (check as applicable):
[X ] the product of (i) the earnings credit rate for account analysis
purposes during the preceding Time Period; times (ii) the difference, if
any, by which the compensating balances to be maintained by Client pursuant
to this paragraph shall exceed the amount of average daily balances
actually maintained by Client during such preceding Time Period.
[N/A] N/A% of the sum of $N/A if the Compensating Balance Requirement
is not met.
For purposes of this paragraph, the term "net free compensating balances" means
balances of all accounts included in Client's account analysis statement.
1.05 Line Account. Sanwa shall maintain on its books a record of account in
which Sanwa shall make entries for each letter of credit, borrowing in the Fed
Funds market or Advance and such other debits and credits as shall be
appropriate in connection with the credit facility (the "Line Account"). Sanwa
shall provide Client with a monthly statement of Client's Line Account, which
statement shall be considered to be correct and conclusively binding on Client
unless Client notifies Sanwa to the contrary within 30 days after Client's
receipt of any statement which it deems to be incorrect.
1.06 Principal. Unless sooner due in accordance with the terms of this
Agreement or any note issued hereunder, Client promises and agrees to pay Sanwa
the amount of each (i) borrowing in the Fed Funds market upon maturity; (ii)
Advance at the Expiration Date; (iii) drawing under a letter of credit or draft
issued thereunder (each a "Drawing") on Sanwa's demand therefore; and (iv) pay
any foreign exchange transaction on the settlement date.
1.07 Expiration of Line of Credit
1.07 A. Unless earlier terminated in accordance with the terms of this
Agreement, Sanwa's commitment to extend credit under the Line of Credit shall
automatically expire on July 31, 1996 (the "Expiration Date").
1.07 B. The commitment by Sanwa to issue Letters of Credit shall, unless
earlier terminated in accordance with the terms of this Agreement, automatically
terminate on the Expiration Date and no Letter of Credit shall expire on a date
which is (check as applicable) [N/A] after the Expiration Date [X] 365 days
after the Expiration Date.
1.07 C. The commitment by Sanwa to enter into foreign exchange transactions
shall, unless earlier terminated in accordance with this Agreement,
automatically terminate on the Expiration Date and no foreign exchange contract
shall expire on a date which is (check as applicable) [N/Al after the Expiration
Date [X] 183 days after the Expiration Date.
2.00 Conditions Precedent.
2.01 Conditions Precedent to any Transactions. Prior to the extension of
credit under the Line of Credit, Client shall deliver or cause to be delivered
to Sanwa, in form and substance satisfactory to Sanwa: (i) Loan Fees of $N/A;
(ii) evidence relating to the duly given approval and authorization to execute,
deliver and perform this Agreement, including, without limitation, a certificate
by Client's secretary that: (a) the Client's Board of Directors has adopted the
agreements encompassed hereunder; and (b) that such agreements are noted on the
Client's books and records as part of Client's official records; (iii) all other
documents, instruments and agreements required hereunder; and (iv) all other
actions to be taken by Client hereunder or thereunder together with such other
documents and opinions as Sanwa may require with respect to the transactions
described herein (the "Loan Documents").
2.02 Conditions Precedent to Each Transaction under the Line of Credit
A. Representations and Warranties. The representations and warranties
set forth below and in any other document, instrument, agreement or
certificate delivered to Sanwa hereunder are true and correct.
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B. Event of Default. No event has occurred and is continuing which
constitutes, or, with the lapse of time or giving of notice or both, would
constitute an Event of Default, as defined below.
C. Form of Letter of Credit Application. If Client seeks a letter of
credit pursuant to paragraph 1.02A or 1.02B above, Client shall have
delivered to Sanwa, Sanwa's standard form of application for letter of
credit duly completed and executed by and on behalf of Client. If Client is
seeking a letter of credit pursuant to paragraph 1.02A or 1.02B above in
connection with a letter of credit sought by one of Client's customers,
Client shall have delivered to Sanwa, Sanwa's standard form of application
for a letter of credit duly completed and executed by Client's customer and
by Client. Sanwa may decline to issue or confirm any letter of credit if
the application is not in a form acceptable to Sanwa, as determined at the
sole discretion of Sanwa.
D. Fees. Client shall have paid to Sanwa the fee applicable for any
letter of credit issued hereunder. 3.00 Representations and Warranties.
Client hereby makes the following representations and warranties to Sanwa,
which representations and warranties are continuing:
3.01 Status. Client is a corporation duly organized and validly existing
under the laws of the State of California or [ ] of the United States of
America, and is properly licensed, qualified to do business and in good standing
in, and, where necessary to maintain Client's rights and privileges.
3.02 Authority. The execution, delivery and performance by Client hereunder
has been duly authorized and does and will not: (i) violate any provision of any
law, rule, regulation, writ, judgment or injunction presently in effect
affecting Client; (ii) result in a breach of or constitute a default under any
material agreement to which Client is a party or by which it or its properties
may be bound or affected; (iii) require any consent or approval of its
stockholders or violate any provision of its articles of incorporation or
by-laws; or (iv) require any consent or approval of any federal or state
regulatory authority.
3.03 Financial Statements. All financial statements, call reports,
information and other data which may have been or which may hereafter be
submitted by Client to Sanwa are true, accurate and correct and have been or
will be prepared in accordance with generally accepted accounting principles
consistently applied and accurately represent Client's financial condition or,
as applicable, the other information disclosed herein. Since the most recent
submission of any such financial statement, information, or other data to Sanwa,
Client represents and warrants that no material adverse change in Client's
financial condition or operations has occurred which has not been fully
disclosed to Sanwa in writing.
4.00 Other Agreements. Client covenants and agrees that, during the term of
this Agreement, and so long thereafter as Client is indebted to Sanwa hereunder,
Client shall, unless Sanwa otherwise consents in writing:
4.01 Reporting Requirements. Deliver or cause to be delivered to Sanwa in
form and detail satisfactory to Sanwa:
A. Annual Statements. Not later than 120 days after the end of each of
Client's fiscal years, a copy of the annual financial report of Client for
such year, which report shall be a CPA audited report.
B. Call Reports. Not later than 60 days after the end of each calendar
quarter a copy of Client's most recent Call Report (or such other similar
report required by Client's regulator)
C. Other Information. Promptly upon Sanwa's request, such other
information pertaining to Client as Sanwa may reasonably request.
4.02 Financial Condition. Maintain at all times equity (Tier 1, total
equity and risk based capital) in accordance with applicable federal
regulations.
4.03 Borrowing/Not Deposit. Client shall record on its Call Report and in
all other financial records appropriate notations reporting the credit hereunder
as a borrowing and not as a deposit.
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4.04 Maintain Corporate Records. Client shall maintain the resolution of
its Board of Directors which authorizes this borrowing and the execution,
delivery and performance of the obligations hereunder as an official record of
the Client and, further, will maintain as the official records of Client the
minutes of any meeting which mention this borrowing.
4.05 Senior Officers Certificate. Upon request by Sanwa, Client must
deliver to Sanwa a certificate of a Senior Officer which certifies that the
transaction is governed by this Credit Agreement and related documents;
reconfirming the truth of all representations and warranties of Section 3.00, et
seq.; and certifying to compliance with all Other Agreements, as specified in
Section 4.00, et.seq.
4.06 Other. N/A.
5.00 Events of Default. Any one or more of the following described events
shall constitute an event of default (an "Event of Default") under this
Agreement:
5.01 Non-Payment Client shall fail to pay any payment of principal or
interest or any other sum referred to in this Agreement within 10 days of when
due.
5.02 Performance Under This and Other Agreements. Client shall fail in any
material respect to perform or observe any term, covenant or agreement contained
in this Agreement or in any document, instrument or agreement evidencing or
relating to any indebtedness of Client (whether owed to Sanwa or third persons),
and any such failure (exclusive of the payment of money to Sanwa under this
Agreement or under any other document, instrument or agreement, which failure
shall constitute and be an immediate Event of Default if not paid when due or
when demanded to be due) shall continue for more than 30 days after written
notice from Sanwa to Client of the existence and character of such Event of
Default.
5.03 Representations and Warranties; Financial Statements. Any
representation or warranty made by Client under or in connection with this
Agreement or any financial statement given by Client shall prove to have been
incorrect in any material respect when made or given.
5.04 Insolvency. An order shall be made, appointing any receiver, custodian
or trustee for itself or any of its properties, assets or businesses.
5.05 Insurance. Client shall terminate or have terminated its deposit
insurance coverage as administered by the Federal Deposit Insurance Corporation
("FDIC") or any successor thereto or any other regulatory agency.
5.06 Suspension. Client shall voluntarily suspend the transaction of
business or allow to be suspended, revoked or expired any permit, license or
approval of any governmental body necessary to conduct Client's business as now
conducted.
6.00 Remedies on Default.
Upon the occurrence of any Event of Default, the Bank may, at its sole
election, without demand and upon only such notice as may be required by law:
6.01 Acceleration. Declare any or all of the Borrower's indebtedness owing
to the Bank, whether under this Agreement or under any other document,
instrument or agreement, immediately due and payable, whether or not otherwise
due and payable.
6.02 Cease Extending Credit. Cease making Advances or otherwise extending
credit to or for the account of the Borrower under this Agreement or under any
other agreement now existing or hereafter entered into between the Borrower and
the Bank.
6.03 Termination. Terminate this Agreement as to any future obligation of
the Bank without affecting the Borrower's obligations to the Bank or the Bank's
rights and remedies under this Agreement or under any other document, instrument
or agreement.
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6.04 Defaults and Letters of Credit. Upon the occurrence of any Event of
Default, Sanwa may, at its sole and absolute discretion and in addition to any
other remedies available to it under the Agreement or otherwise, require Client
to pay immediately to Sanwa, for application against drawings under any
outstanding letters of credit, the outstanding principal of any such letters of
credit which have not expired. Any portion of the amount so paid to Sanwa which
is not applied to satisfy draws under any such letters of credit or any other
obligation of the Client to Sanwa shall be repaid to the Client without
interest.
6.05 Defaults and Foreign Exchange Transactions. Upon the occurrence of any
Event of Default, Sanwa may, at its sole and absolute discretion and in addition
to any other remedies available to it under the Agreement or otherwise, require
the Client to pay immediately to Sanwa, for application against the future
settlement price under any outstanding foreign exchange transaction, the
outstanding face amount of any such foreign exchange contract which have not
matured or settled and Client hereby grants to Sanwa a security interest in and
to such funds. Any portion of the amount so paid to Sanwa which is subsequently
applied to satisfy repayment on any such matured foreign exchange contract or
any other obligations of the Client to Sanwa shall be repaid to the Client
without interest.
6.06 Non-Exclusivity of Remedies. Exercise one or more of the Bank's rights
set forth herein or seek such other rights or pursue such other remedies as may
be provided by law, in equity or in any other agreement now existing or
hereafter entered into between the Borrower and the Bank, or otherwise.
7.00 Miscellaneous Provisions.
7.01 Amounts Payable on Demand. If Client fails to pay on demand any amount
so payable under this Agreement, such amount shall bear interest as provided in
the Loan Documents. If the Loan Documents do not provide a rate of interest,
where a Line of Credit for Client exists, Sanwa may, at its option and without
any obligation to do so and without waiving any default occasioned by Client's
failure to pay such amount, create an Advance in an amount equal to the amounts
payable, which Advance shall thereafter bear interest as provided under the Line
of Credit. If no Line of Credit is in existence, the amount due and payable
shall accrue interest at the Reference Rate plus/minus -0-% per annum (the
"Variable Rate"). Interest shall be adjusted concurrently with any change in the
Reference Rate. Interest hereunder shall be computed on the basis of 360 days
per year, but charged on the actual number of days elapsed.
7.02 Default Interest Rate. Client shall pay to Sanwa interest on any
indebtedness or amount payable under this Agreement, from the date that such
indebtedness or amount became due or was demanded to be due until paid in full,
at a rate which is 3% in excess of the rate otherwise provided under this
Agreement.
7.03 Indemnification for Letter of Credit Costs. Client shall, upon Sanwa's
request, promptly pay to and reimburse Sanwa for all costs incurred and payments
made by Sanwa by reason of any future assessment reserve, deposit or similar
requirement or any surcharge, tax or fee imposed upon Sanwa or as a result of
Sanwa's compliance with any directive or requirement of any regulatory authority
pertaining or relating to any letter of credit or acceptance.
7.04 Indemnification for Foreign Exchange Transactions. Client shall, upon
Sanwa's request, promptly pay to and reimburse Sanwa for all costs incurred and
payments made by Sanwa by reason of any assessment, reserve, deposit, capital
maintenance or similar requirement or any surcharge, tax or fee imposed upon
Sanwa or as a result of Sanwa's compliance with any directive or requirement of
any regulatory authority pertaining or relating to any foreign exchange
contract.
7.05 "Netting" Provision. This provision is intended to establish a
"netting contract" as defined in #402(14) of the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") with respect to the entirety of
obligations between Sanwa and Client. All words and expressions used in this
section which are defined in FDICIA #402 shall have the same meaning herein as
therein. If at any time either Sanwa or Client becomes a failed financial
institution, then, from and after such time, all covered contractual payment
entitlements and all covered contractual payment obligations between Sanwa and
Client, regardless of their source or derivation, including but not limited to
those arising out of the credit arrangement contemplated hereunder, shall be
netted and FDICIA #403 shall apply thereto.
7.06 Accounting and Other Terms. All references to financial statements,
assets, liabilities and similar accounting terms not specifically defined in
this Agreement shall mean such financial statements prepared and such terms
determined in accordance with
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generally accepted accounting principles consistently applied. Except where
otherwise specified in this Agreement, all financial data submitted or to be
submitted to Sanwa pursuant to this Agreement shall be prepared in accordance
with generally accepted accounting principles consistently applied. Terms not
otherwise defined in this Agreement shall have the meanings attributed to such
terms in the California Uniform Commercial Code.
7.07 Attorney's Fees. In the event of any action in relation to this
Agreement or any document, instrument or agreement executed with respect to,
evidencing or securing the indebtedness hereunder, the prevailing party, in
addition to all other sums to which it may be entitled, shall be entitled to
reasonable attorneys' fees.
7.08 Notices. All notices, payments, requests, information and demands
which either party hereto may desire, or may be required to give or make to the
other party shall be given or made to such party by hand delivery or through
deposit in the United States mail, postage prepaid, or by Western Union
telegram, addressed to the address set forth below such party's signature to
this Agreement or to such other address as may be specified from time to time in
writing by either party to the other.
7.09 Waiver. Neither the failure nor delay by Sanwa in exercising any right
hereunder or under any document, instrument or agreement mentioned herein shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right hereunder or under any document, instrument or agreement mentioned herein
preclude other or further exercise thereof or the exercise of any other right;
nor shall any waiver of any right or default hereunder or under any other
document, instrument or agreement mentioned herein constitute a waiver of any
other right of default or constitute a waiver of any other default of the same
or any other term or provision.
7.10 Conflicting Provisions. To the extent that any of the terms or
provisions contained in this Agreement are inconsistent with those contained in
any other document, instrument or agreement executed pursuant hereto, the terms
and provisions contained herein shall control. Otherwise, such provisions shall
be considered cumulative.
7.11 Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of Client and Sanwa and their respective successors and
assigns, except that Client shall not have the right to assign its rights
hereunder or any interest herein without Sanwa's prior written consent. Sanwa
may sell, assign or grant participations in all or any portion of its rights and
benefits hereunder. Client agrees that, in connection with any such sale, grant
or assignment, Sanwa may deliver to the prospective buyer, participant or
assignee financial statements and other relevant information relating to Client.
7.12 Jurisdiction. This Agreement, any notes issued hereunder, and any
documents, instruments or agreements mentioned or referred to herein shall be
governed by and construed according to the laws of the State of California, to
the jurisdiction of whose courts the parties hereby submit.
7.13 Entire Agreement. This Agreement and the Loan Documents shall
constitute the entire and complete understanding of the parties with respect to
the transactions contemplated hereunder.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of
the date first hereinabove written.
SANWA BANK CALIFORNIA. TRUCKEE RIVER BANK
By: By: /s/ Martin R. Sorensen
Robert Solomon, Vice President Martin R. Sorensen/ President & CEO
(Name/Title) (Name/Title)
Address: 601 S. Figueroa St., WS-17 By: /s/ William H. McGaughey
Los Angeles, CA 90017 William H. McGaughey, SVP/Treasurer
(Name/Title)
Address: P.O. Box 61000
Truckee, CA 96160
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ADDENDUM "I"
Effective as of October Sanwa Bank California ("Sanwa") is interested in
being allowed the opportunity to consider the requests of TRUCKEE RIVER BANK
("Client") for the credit accommodations described below.
THIS ADDENDUM "I" IS NOT A COMMITMENT OR OFFER TO EXTEND CREDIT.
RATHER, THIS ADDENDUM "I" PROVIDES THE TERMS UNDER WHICH SANWA MAY BID FOR
SPECIFIC CREDIT REQUESTS OF CLIENT AND THE TERMS WHICH GOVERN SHOULD SANWA'S BID
BE ACCEPTED.
Purpose(s). Extensions of credit shall be limited to the following types of
credit facilities:
[N/A] A. Commercial Letters of Credit. For the (check as appropriate) [N/A]
issuance [N/A] confirmation of sight and/or usance commercial letters of credit.
All commercial letters of credit issued and/or confirmed under this credit
facility, together with any related drafts, shall aggregate to no greater than
$N/A and have an expiry date of not later than one year after the date of
issuance.
[N/A] B. Standby letters of Credit. For the [N/A] issuance [N/A]
confirmation of standby letters of credit. All standby letters of credit issued
and/or confirmed under this credit facility shall aggregate to no greater than
$N/A and have an expiry date of not later than one year after the date of
issuance.
[ X] C. Federal Funds. In Sanwa's sole discretion, which shall depend on
its activity in the Fed Funds market, Sanwa shall permit Client [X] to purchase
[ X] overnight [ X] term (up to 30 days) Federal Funds ("Fed Funds") market up
to a maximum aggregate amount of $ 1,000,000.00 ; [N/A] provided that, absent
Sanwa's prior approval and a 30 day out-of-debt period, Client shall have no
more than N/A consecutive business days of borrowing in the Fed Funds market.
[X] D. Foreign Exchange. For the [X] purchase [X] sale through Sanwa of [X]
spot (requiring completion within two business days) [X] forward (any foreign
exchange transaction which is to be completed after two business days but not
later than 183. days) contract to buy or sell foreign currency at a given date
up to a maximum aggregate amount of $1,000,000.00 .
[N/A] E. Repurchase Agreements. For investing in [N/A] overnight and [N/A]
term (up to N/A days) repurchase agreements in amounts up to $ N/A
Delivery. Sanwa reserves the right to require payment in collected funds at
least one business day prior to the delivery date specified in any forward
contract as a condition of delivery of the specified currency. If such advance
payment will be required, Sanwa will so notify you at least two business days
prior to the stated delivery date.
Rates and Fees. As quoted at the time of a requested transaction. Client
acknowledges that in some instances the bid includes Sanwa's rate or profit
margin which may or may not be disclosed to Client.
Quotes. Any quotation given by Sanwa will be valid only as of the time given. If
not accepted by Client at that, which acceptance will be irrevocable, the quote
shall be deemed automatically withdrawn and cannot be accepted later.
Maximum Indebtedness. The maximum aggregate amount of all of the credit
accommodations which Sanwa is interested in considering is $1,000,000.00.
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Expiration Date. This expression of interest shall expire on July 31, 1996.
IN WITNESS WHEREOF, this Addendum I has been executed by the parties hereto as
of the date first hereinabove written.
SANWA BANK CALIFORNIA TRUCKEE RIVER BANK
By:/s/ Robert Solomon By:/s/ Marin R. Sorensen
Robert Solomon, Vice President Martin R. Sorensen, President/CEO
(Name/Title) (Name/Title)
Address: 601 S. Figueroa St., W8-17 By: /s/ William H. McGaughey
Los Angeles, CA 90017 William H. McGaughey,
SVP/Treasurer
(Name/Title)
Address: P.O. Box 61000
Truckee, CA 96160
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CERTIFIED CORPORATE RESOLUTION TO BORROW
WHEREAS, TRUCKEE RIVER BANK (the "Corporation") has made application to SANWA
BANK CALIFORNIA (the "Bank") for credit accommodations which may consist of but
shall in no way be limited to the following: the renewal, continuation or
extension of an existing obligation; the extension of a new loan, line of credit
or commitment; the issuance or confirmation of letters of credit or banker's
acceptances; the purchase or sale through Bank of foreign currencies; or the
purchase through Bank of Fed Funds.
RESOLVED that:
<TABLE>
Name Title
<S> <C>
Martin R. Sorensen President and Chief Executive Officer
[ ] and [X] or William H. McGaughey Senior Vice President and Treasurer
[ ] and [X] or David C. Broadley Executive Vice President and Chief Financial Officer
[ ] and [X] or Patrick S. Day Executive Vice President and Chief Credit Officer
</TABLE>
are authorized, in the name of and on behalf of the Corporation to:
1. Borrow money from the Bank in such amounts and upon such terms and
conditions as are agreed upon by the officers of the Corporation and the Bank;
and execute and deliver or endorse such evidences of indebtedness or renewals
thereof or agreements therefor as may be required by the Bank, all in such form
and content as the officers of the Corporation executing such documents shall
approve (which approval shall be evidenced by the execution and delivery of such
documents); provided, however, that the maximum amount of such indebtedness
shall not exceed the principal sum of $ 1,250,000.00 exclusive of any interest,
fees, attorneys' fees and other costs and expenses related to the indebtedness.
2. Execute such evidences of indebtedness, agreements, security instruments
and other documents and to take such other actions as are herein authorized.
3. Sell to or discount or re-discount with the Bank any and all negotiable
instruments, contracts or instruments or, evidences of indebtedness at any time
held by the Corporation; and endorse, transfer and deliver the same, together
with guaranties of payment or repurchase thereof, to the Bank (for which the
Bank is hereby authorized and directed to pay the proceeds of such sale,
discount or re- discount as directed by such endorsement without inquiring into
the circumstances of its issue or endorsement or the disposition of such
proceeds).
4. Withdraw, receive and execute receipts for deposits and withdrawals on
accounts of the Corporation maintained with the Bank.
5. Grant security interests and liens in any real, personal or other
property belonging to or under the control of the Corporation as security for
any indebtedness of the Corporation to the Bank; and execute and deliver to the
Bank any and all security agreements, pledges, mortgages, deeds of trust and
other security instruments and any other documents to effectuate the grant of
such security interests and liens, which security instruments and other
documents shall be in such form and content as the officers of the Corporation
executing such security instruments and other documents shall approve and which
approval shall be evidenced by the execution and delivery of such security
instruments and other documents.
6. Apply for letters of credit or seek the issuance of banker's acceptances
under which the Corporation shall be liable to the Bank for repayment.
7. Purchase and sell foreign currencies, on behalf of the Corporation,
whether for immediate or future delivery, in such amounts and upon such terms
and conditions as the officer(s) authorized herein may deem appropriate, and
give any instructions for transfers or
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deposits of monies by check, drafts, cable, letter or otherwise for any purpose
incidental to the foregoing, and authorize or direct charges to the depository
account or accounts of the Corporation for the cost of any foreign currencies so
purchased through the Bank.
8. To designate in writing to the Bank in accordance with the terms of any
agreement or other document executed by the above- named individuals one or more
individuals who shall have the authority to as provided herein, (check as
applicable):
[N/A] request advances under lines of credit extended by the Bank to
the Corporation;
[X] apply for letters of credit or seek the issuance of banker's
acceptances under which the Corporation shall be liable to the Bank
for repayment;
[X] make deposits and receive and execute receipts for deposits on
accounts of the Corporation maintained with the Bank;
[X] make withdrawals and receive and execute receipts for withdrawals
on account of the Corporation maintained with the Bank;
[X] purchase and sell foreign currencies.
[X] make buy or sell orders regarding Fed Funds
[N/A] enter into Repurchase Agreements
9. Transact any other business with the Bank incidental to the powers
hereinabove stated.
10. Transact or designate specified person(s) to transact any business
contemplated by these Resolutions by telephonic or facsimile machine
transmission instruction.
RESOLVED FURTHER, that all such evidences of indebtedness, agreements,
security instruments and other documents executed in the name of and on behalf
of the Corporation and all such actions taken on behalf of the Corporation in
connection with the matters described herein are hereby ratified and approved.
RESOLVED FURTHER, that the Bank is authorized to act upon these resolutions
until written notice of their revocation is delivered to the Bank.
RESOLVED FURTHER, that any resolution set forth herein is in addition to
and does not supersede any resolutions' previously given by the Corporation to
the Bank.
RESOLVED FURTHER, that the Secretary of the Corporation be, and hereby is,
authorized and directed to prepare, execute and deliver to the Bank a certified
copy of the foregoing resolutions.
I do hereby certify that I am the Secretary of TRUCKEE RIVER BANK , a
California banking corporation, and I do hereby further certify that the
foregoing is a true copy of the resolutions of the Board of Directors of the
Corporation adopted and approved at a meeting which was duly called and held in
accordance with all applicable provisions of law and the Articles and By-Laws of
the Corporation, on the 26th day of October, 1995, at which meeting a majority
of the Board of Directors of the Corporation was present and voted in favor of
the resolutions. I further certify that this resolution authorizing the credit
transaction are noted in the Corporation's books and records as part of the
official records of the Corporation.
I hereby further certify that such resolutions are presently in full force
and effect and have not been amended or revoked. I do further certify that the
following persons have been duly elected and qualified as and, this day are,
officers of the Corporation, holding their respective offices appearing below
their names, and that the signatures appearing opposite their names are the
genuine signatures of such persons.
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<PAGE>
Martin R, Sorensen /s/ Martin R. Sorensen
(NAME OF OFFICER) (SIGNATURE)
President and Chief Executive Officer
(TITLE)
William H. McGaughey /s/ William H. McGaughey
(NAME OF OFFICER) (SIGNATURE)
Senior Vic& President and Treasurer
(TITLE)
David C. Broadley /s/ David C. Broadley
(NAME OF OFFICER) (SIGNATURE)
Executive Vice President and Chief Financial Officer
(TITLE)
Patrick S. Day /s/ Patrick S. Day
(NAME OF OFFICER) (SIGNATURE)
Executive Vice President and Chief Credit Officer
(TITLE)
IN WITNESS WHEREOF
NAME OF CORPORATION: TRUCKEE RIVER BANK
BY: /s/ Donald Strand
NAME: Donald Strand, Secretary
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EXHIBIT 10.3
INFORMATION TECHNOLOGY INC.
EQUIPMENT SALE AGREEMENT
Agreement made between Information Technology, Inc. (the "Vendor"), and the
"Customer" identified below.
I. PURCHASE
1.1 Customer hereby purchases from Vendor and Vendor hereby sells to
Customer the equipment identified in Appendix A (the "Equipment"), upon the
terms set forth in this agreement.
II. DELIVERY
2.1 Delivery and installation of the Equipment will be made by the
manufacturer of the Equipment identified in Appendix A (the "Manufacturer"), at
Customer's address set forth below. Customer agrees to have a site adequately
and properly prepared, in accordance with Manufacturer's instructions, to
receive and accept delivery of the Equipment. In no event shall Vendor be
responsible to Customer for any delays in delivery or installation or any
damages to Customer resulting from such delays.
III. CONSIDERATION
3.1 PURCHASE PRICE. As and for the purchase price for the Equipment,
Customer agrees to pay Vendor and Vendor agrees to accept from Customer, the
purchase price specified in Appendix A.
3.2 TAXES AND OTHER CHARGES. In addition to the purchase price, Customer
shall pay all transportation charges and all taxes (including, without
limitation, sales, use, privilege, ad valorem or excise taxes) and customs
duties paid or payable by Vendor, however designated, levied or based on amounts
payable to Vendor under this agreement, but exclusive of federal, state and
local taxes based on Vendor's net income. If additional labor and rigging are
required for installation due to Customer's special site requirements, Customer
will pay those costs, including costs to meet union or local law requirements.
Customer shall not deduct from payments to Vendor any amounts paid or payable to
third parties for transportation charges, customs duties or taxes, however
designated.
3.3 MANNER OF PAYMENTS. The purchase price and other charges arising under
this agreement shall be payable by Customer to Vendor in the following manner:
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(A) A percentage of the purchase price, as specified in Appendix
A, shall be payable upon execution of this agreement by Customer; the
receipt or deposit of such payment, however, shall not constitute
Vendor's acceptance of this agreement.
(B) The balance of the purchase price, together with any
transportation charges and any taxes and duties theretofore incurred
by Vendor, shall be payable upon delivery of the Equipment to
Customer. (C) Any taxes, duties, or other charges incurred by Vendor
following delivery of the Equipment shall be payable within ten (10)
days of receipt by Customer of Vendor's invoice therefor.
3.4 CURRENCY. The purchase price and any other charges arising under this
agreement shall be invoiced and be payable in U.S. Dollars.
3.5 LATE PAYMENT. Customer shall pay a late payment charge of one and
one-half percent (1 1/2%) per month, or the maximum late payment charge
permitted by applicable law, whichever is less, on any amount payable by
Customer under this Agreement and not paid when due. Said late payment charge
shall be applied for each calendar month (or fraction thereof) that such payment
is not made following its due date.
IV. TITLE
4.1 Until such time as the purchase price and any other charges payable to
Vendor as of the date of delivery have been paid in full, the Equipment and all
instruction manuals therefor shall remain the property of Vendor and, at the
option of Vendor, shall be returned to Vendor at Customer's expense in the event
the purchase price is not paid as hereinabove provided.
V. SECURITY
5.1 Vendor reserves and Customer grants to Vendor a security interest in
the Equipment as security for the performance by Customer of its obligations
hereunder including, but not limited to, payment of the purchase price and other
charges as specified in Section III above. A copy of this agreement may be filed
in appropriate filing offices at any time after signature by Customer as a
financing statement or Vendor may require and Customer shall execute a separate
financing state ment for purposes of perfecting Vendor's security interest
granted pursuant to the provisions of this paragraph.
VI. CUSTOMER OBLIGATIONS
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<PAGE>
6.1 RISK OF LOSS. From and after the date of delivery, the risk of loss or
damage to the Equipment shall be on the Customer.
6.2 OPERATION. Customer acknowledges and agrees that it is exclusively
responsible for the operation, supervision, management and control of the
Equipment, including, but not limited to, providing adequate training for its
personnel, instituting appropriate security procedures, and implementing
reasonable procedures to examine and verify all output before use. Vendor shall
have no responsibility or liability for Customer's selection or use of the
Equipment or any associated equipment.
VII. WARRANTIES
7.1 WARRANTY. Vendor warrants to Customer that it has the right to transfer
title of the Equipment to Customer. Vendor's sole liability under this warranty
shall be to, obtain any title or authorization necessary to transfer such title
to Customer.
7.2 DISCLAIMER. THE FOREGOING WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES
AND NO OTHER WARRANTY IS EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO,
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
7.3 MANUFACTURER'S WARRANTY. Customer expressly understands and agrees that
warranties regarding patents, materials, workmanship or use of the Equipment
(the "Manufacturer's Warranty"), if any, are made exclusively by the
Manufacturer and not by Vendor, and if made, shall be encompassed within a
separate agreement. Customer's exclusive remedy under Manufacturer's Warranty
shall be as provided therein and shall lie exclusively against and be obtainable
only from the Manufacturer, and Customer expressly agrees that it shall have no
claim or cause of action against Vendor in the event the Manufacturer is for any
reason unwilling or unable to perform under the terms of Manufacturer's
Warranty.
7.4 LIMITATION OF LIABILITY. Customer expressly agrees that Vendor's
responsibilities in the event of its breach of the warranties contained in
paragraph 7.1 of this agreement are as set forth in said paragraph. Vendor's
liability for damages, regardless of the form of action shall not exceed the
purchase price set forth in Appendix A to this agreement and shall arise only if
the remedies set forth in paragraph 7.1 are not fulfilled by Vendor. Customer
further agrees that Vendor will not be liable for any lost profits, or for any
claim or demand against Customer by any other party. IN NO EVENT WILL VENDOR BE
LIABLE FOR CONSEQUENTIAL DAMAGES EVEN IF VENDOR HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. No action, regardless of form, arising out of the
transactions under this agreement, may be brought by either party more than one
(1) year after the cause of action
43
<PAGE>
has accrued, except that an action for non-payment may be brought within one (1)
year after the date of the last payment.
THE CUSTOMER'S REMEDIES SET FORTH IN THIS AGREEMENT ARE EXCLUSIVE.
VIII. DEFAULT
8.1 REMEDY. Upon the occurrence of an event of default, as hereinafter
defined, by Customer, if the Equipment has theretofore been delivered, Vendor
may recover, together with any incidental damages, any unpaid portion of the
purchase price of the Equipment as specified in Appendix A hereto. If the
Equipment has not been delivered, in which event Vendor may withhold delivery of
such Equipment, or if the Equipment is returned to Vendor upon Vendor's election
pursuant to Section IV, Vendor shall resell the Equipment. Upon such resale,
Vendor shall recover from Customer the difference between the unpaid portion of
the purchase price, as specified in Appendix A, and the resale price, together
with any incidental damages, including expenses of resale, sustained by Vendor
by reason of Customer's breach. If the resale price exceeds the unpaid portion
of the purchase price and Vendor's incidental damages, Vendor shall remit the
excess to Customer.
8.2 EVENTS OF DEFAULT. As utilized in this agreement, an event of default
is defined as any of the following:
(A) Customer's failure to pay any amounts required to be paid to
Vendor under this agreement on a timely basis;
(B) Until the purchase price has been paid in full, any attempt by
Customer to assign, sell, mortgage, or otherwise convey the Equipment;
(C) Prior to the payment in full of the purchase price, Customer
causing or permitting any encumbrance, of any nature whatsoever, to attach
to Customer's interest in the Equipment in favor of any person or entity
other than Vendor;
(D) The entry of any order for relief under any provision of the
federal bankruptcy code in any bankruptcy proceedings initiated by or
against Customer; or
(E) Customer's breach of any of the terms or conditions of this
agreement.
44
<PAGE>
IX. GENERAL
9.1 TITLES. Titles and paragraph headings are for reference purposes only
and are not to be considered a part of this agreement.
9.2 FORCE MAJEURE. No party shall be liable for delay in performance
hereunder due to causes beyond its control, including but not limited to acts of
God, fires, strikes, delinquencies of suppliers, intervention of any
governmental authority or acts of war, and each party shall take steps to
minimize any such delay.
9.3 WAIVER. No waiver of any breach of any provision of this agreement
shall constitute a waiver of any prior, concurrent or subsequent breach of the
same or any other provisions hereof and no waiver shall be effective unless made
in writing and signed by an authorized representative of the party to be charged
therewith.
9.4 SEVERABILITY. In the event that any provision of this agreement shall
be illegal or otherwise unenforceable, such provision shall be severed from this
agreement and the entire agreement shall not fail on account thereof, the
balance of the agreement continuing in full force and effect.
9.5 NOTICES. Any notice which either party hereto is required or permitted
to give hereunder shall be addressed to the party to be charged therewith at the
address set forth below and shall be given by certified or registered mail. Any
such notice shall be deemed given on the date of deposit in the mail.
9.6 ENTIRE AGREEMENT. THE PARTIES HERETO ACKNOWLEDGE THAT EACH HAS READ
THIS AGREEMENT, UNDERSTANDS IT, AND AGREES TO BE BOUND BY ITS TERMS. THE PARTIES
FURTHER AGREE THAT THIS AGREEMENT AND ANY MODIFICATIONS MADE PURSUANT TO IT
CONSTITUTE THE COMPLETE AND EXCLUSIVE WRITTEN EXPRESSION OF THE TERMS OF THE
AGREEMENT BETWEEN THE PARTIES, AND SUPERSEDE ALL PRIOR OR CONTEMPORANEOUS
PROPOSALS, ORAL OR WRITTEN, UNDERSTANDINGS, REPRESENTATIONS, CONDITIONS,
WARRANTIES, COVENANTS, AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING
TO THE SUBJECT MATTER OF THIS AGREEMENT. THE PARTIES FURTHER AGREE THAT THIS
AGREEMENT MAY NOT IN ANY WAY BE EXPLAINED OR SUPPLEMENTED BY A PRIOR OR EXISTING
COURSE OF DEALINGS BETWEEN THE PARTIES, BY ANY USAGE OF TRADE OR CUSTOM, OR BY
ANY PRIOR PERFORMANCE BETWEEN THE PARTIES PURSUANT TO THIS AGREEMENT OR
OTHERWISE. IN THE EVENT CUSTOMER ISSUES A PURCHASE ORDER OR OTHER INSTRUMENT
COVERING THE EQUIPMENT HEREIN SPECIFIED, IT IS UNDERSTOOD AND AGREED THAT SUCH
PURCHASE ORDER OR OTHER INSTRUMENT IS FOR CUSTOMER'S INTERNAL USE AND
45
<PAGE>
PURPOSES ONLY AND SHALL IN NO WAY AFFECT ANY OF THE TERMS AND CONDITIONS OF THIS
AGREEMENT.
9.7 GOVERNING LAW. This agreement is accepted in the State of Nebraska, and
shall be enforced in accordance with and governed by the laws of the State of
Nebraska.
9.8 CHOICE OF FORUM. Any action arising out of or related to this agreement
or the transaction herein described, whether at law or in equity, may be
instituted in and litigated in the state or federal courts of the State of
Nebraska. In accordance herewith, the parties hereto submit to the jurisdiction
of the courts of said state. Any party being not a resident of Nebraska at the
time of suit hereby appoints the Secretary of State of Nebraska as its agent for
receipt of service of process.
9.9 ATTORNEY'S FEES. In the event that any action or proceeding is brought
in connection with this agreement the prevailing party therein shall be entitled
to recover its costs and reasonable attorney's fees.
9.10 EFFECTIVE DATE. This agreement shall be effective on the date accepted
and executed by an authorized representative of Vendor.
CUSTOMER: VENDOR:
Truckee River Bank INFORMATION TECHNOLOGY, INC.
Signature: /s/ Rick Belstock Signature: /s/ Michael K. Young
Name: Rick Belstock Name: Michael K. Young
Title: SVP/Controller Title: Vice President
Address:10181 Truckee-Tahoe Airport Road Address: 1345 Old Cheney Road
Truckee, CA 96160 Lincoln, NE 68512
Date: September 19, 1995 Date Accepted: 12/18/95
46
<PAGE>
APPENDIX A
EQUIPMENT AND TERMS
1. MANUFACTURER. The Manufacturer of the Equipment subject to this agreement is:
2. PURCHASE PRICE: The purchase price for the Equipment is: $268,422.__ %
thereof shall be payable upon execution of this agreement, the balance upon
delivery of the Equipment.
3. EQUIPMENT. The Equipment subject to this agreement consists of the following:
<TABLE>
EXTENDED
QTY STYLE DESCRIPTION PRICE PRICE
<S> <C> <C> <C> <C>
Hardware:
1 A1403-C11 Sys: A14 Model 311 $106,000 $106,000
1 A1405-SY3 Proc: A14 Sys 5 Single
1 A1401-MBD MEM: Board (4mbit)
1 A14-96M MEM: 96MB Increment
1 A1401-MOD Instl: Basic Sys Mod 1 X
1 A1405-OP3 Funct'; S/W: A1405-B11
1 A14-CP2 Instl: Component Pkg 2 24,000 24,000
1 RM36-0 Cabinet: 36U Open Front
1 RM1936-FOT Instl: Stabilizer Foot
1 EVG400-COL Display: 15" Color Mon
1 SVG1OO-EXT Cable: SVGA Extension
1 C3381-EXT Pwr Cord: Extended
1 PCK1O1-KBD Keybd: PC 101
1 PCK1-EXT Cable: PS2 Kyb Extension
1 PWM1-SER Mouse: 2 Button Mouse/AT
1 UN6100-MEX Cable Mouse Extension
1 RM5-CA4 Inst: Channel Adptr Mod
1 CA301-FT Adptr: CA Rack Feed Thru
1 CBL10-CS Cable: 10ft CSBUS
1 A1003-MOD COM HW: Remote Sprt Modem
1 ASP805-2XI Disk: Initial Order 2X805 1,500 1,500
1 RM3-APC Power: Automatic Control 6,000 6,000
1 CBL1-8 Cable 8 ft Singel Ribbon 100 100
1 M9700-LCI Power Cord, Domestic
2 RM9-I03 MLI I/O Base 12,500 25,000
2 CA301-MLI Adapter, MLI Channel 10,000 20,000
2 CBL15-MLI Cable 15 ft MLI 350 700
1 CBL7-8 Cable 8 ft ICD 100 100
1 CBL6-8 Cable 8 ft Dual Ribbon 100 100
2 CBL8-8 Cable 8 ft SCSI Woven 100 200
4 X369-23 TDI, EDC Quad -0- -0-
8 X369-24 RS232, Dual -0- -0-
Total Hardware $183,700
47
<PAGE>
Software:
1 A1403-SFI O/S: SSF for Model 311 $ 75,000 $75,000
1 A99-CPS O/S: Common Platform SW
1 A14-MCM O/S: A14 Sys S/W Core Med 5,000 5,000
1 A99-TAS Corn SW: TCP/IP Application
1 A14-PSS O/S: Platform Specific SW
1 A14-PCM O/S: Protocols Core Media
1 APL99-TIC COM SW: TCPLP Unrestircted
1 A99-TSA COM SW: SNMP Agent
1 A14-MCM O/S: A14 Sys S/W Core Med
1 HL256-HLC LAN SW: HLCN 64 User
1 NW3-CLI LAN SW: Netware Client V3
1 A99-LPS LAN SW: Local Port Subsystem
1 APL30-BYC COM SW: Bisync Protocol 2,430 2,430
1 A99-BYC COM SW: Bisync Protocol
1 APL30-DCS Data Comm Software 7,000 7,000
1 APL30-PLS Enhanced Poll/Select 2,500 2,500
1 SPL30-RMP Remote Print 7,120 7,120
Total Software
$ 99,050
Total $ 282,750
Less 7.8% Economic Incentive (14,328)
Net Investment $ 268,422
</TABLE>
48
<PAGE>
EXHIBIT 10.4
Union Bank of California
400 California Street
P.O. Box 45000
San Francisco, CA 94145
(415)765-0400
April 8, 1996
Mr. William H. McGaughey
CPA
TRUCKEE RIVER BANK
12242 Business Park Dr., Suite 15
Truckee, California 95734
Dear William:
Union Bank of California, N.A. (the "Bank") is pleased to offer
TRUCKEE RIVER BANK a Fed Funds facility in the maximum principal
amount of FOUR MILLION DOLLARS ($4,000,000) which, at Bank's sole
discretion, may be available from time to time until March 31, 1997
(the "Facility").
This Facility, which is subject to the receipt of all
documentation, reflects the Bank's general willingness to extend
credit to you, but do not involve any obligation on the part of the
Bank to make funds available.
You have agreed to provide the Bank a copy of your quarterly FDIC
Call Report after the end of each calendar quarter plus a copy of
your audited year-end financial statement after the end of your
financial reporting year.
This offer expires on May 8, 1996, unless a signed copy of this
letter is returned to the Bank by then.
Very truly yours,
THE BANK OF CALIFORNIA, N.A.
/s/ John Muhlner
By: John Muhlner
Title: Vice President
Accepted and Agreed:
/s/ William H. McGaughey
SVP / Treasurer
49
<PAGE>
EXHIBIT 10.5
SENIOR MANAGER SEPARATION BENEFITS AGREEMENT
THIS SENIOR MANAGER SEPARATION BENEFITS AGREEMENT (the
"Agreement") is made and entered into as of May 14, 1996, by and between SIERRA
TAHOE BANCORP, a California Corporation (hereinafter "STB"), with its principal
offices located at 10181 Truckee Tahoe Airport Road, P.O. Box 61000, Truckee,
California 96161 and DAVID A. FUNK, an individual ("DAF").
WITNESSETH
WHEREAS, DAF is currently designated a senior officer and 'at will' employee of
STB and expects to remain a senior officer and employee subject to the policies
and conditions contained within the STB Personnel Policies and Procedures;
WHEREAS, both STB and DAF feel it is in their respective and mutual best
interests to preagree upon appropriate and reasonable separation compensation
that will be paid to DAF should STB ever determine that DAF should, for whatever
reason, be terminated from his position and leave the company;
WHEREAS, STB and DAF agree that the benefits described herein constitute full
payment of and shall completely supersede and constitute full satisfaction of
any and all other monetary or nonmonetary benefits paid as a result of the
termination of DAF for any reason by STB except as may be additionally required
beyond the sums and benefits paid hereunder by law.
WHEREAS, nothing in this Agreement is intended to change the current at will
employment of DAF or create a contract of employment. Further, this Agreement
shall only cover situations wherein STB requests the termination of DAF and
shall not apply if DAF elects to voluntarily leave STB.
NOW, THEREFORE, in consideration of the promises set forth below and for other
good and valuable consideration, including the mutual covenants and agreements
herein contained, the receipt and sufficiency of which is hereby acknowledged,
STB and DAF hereby agree as follows:
50
<PAGE>
1. Applicability of Agreement; Definition of Termination: This Agreement
coveys additional benefits not otherwise due to employees generally and shall
become operative upon DAF's termination of employment for any reason by STB, its
subsidiaries and, their respective officers or directors, so long as that
termination did not result from a final determination of the Human Resources
Director and the Personnel Committee of the Board of Directors of STB that DAF's
termination resulted from a material violation of the STB Personnel policies and
procedures (i.e. termination for cause) (hereinafter referred to as the
"Termination"). This Agreement shall not apply as to any event not covered under
the definition of the term 'Termination'. Following the defined Termination, and
the payment of benefits under this Agreement, it is expressly agreed and
understood that STB shall not be precluded from rehiring DAF's position either
now or in the future and such rehiring shall not be deemed to nullify or change
this Agreement if it is otherwise applicable.
2. Conditions For Payment of Separation Benefits. STB shall pay the
separation benefits set forth in Paragraph 3 to DAF after each of the following
requirements have been satisfied in the reasonable discretion of STB:
A. A defined Termination as set forth in Paragraph 1 has occurred and
DAF has left (or will promptly thereafter leave) the employment of STB; and
B. DAF consents to and does expressly waive, release, indemnify and
fully hold STB, its subsidiary companies and each of their employees,
officers and directors harmless with regard to his employment at STB; the
manner of his Termination; and any other matters reasonably related to his
employment. DAF agrees not to initiate any action, of any type or kind,
regarding his employment or Termination and if such an action is initiated
he agrees that such action may be promptly closed, dismissed or summarily
disallowed, or, if it shall continue, that DAF will indemnify STB for the
legal fees, costs and expenses resulting from its defense of that action;
and
C. DAF agrees to and shall maintain the confidentiality of any and all
proprietary secrets, processes and plans of STB and its subsidiaries made
known to DAF during his employment.
STB may elect to advance the separation benefits set forth in Paragraph 2 prior
to the satisfaction of each of the above requirements in this Paragraph 3, or in
anticipation of full performance by DAF, and should any requirement not be
satisfied within a reasonable period thereafter or continuously performed, DAF,
upon request of STB and presentation of proof of nonperformance and a reasonable
period to cure the continuing nonperformance, shall promptly return the
separation benefit(s) paid or granted to him and this Agreement shall terminate.
51
<PAGE>
3. Separation Benefits. STB shall, in addition to any final salary,
vacation, personal leave, retirement plan and other monetary or nonmonetary
benefit(s) provided for in one or more separate agreement(s) (including, but not
limited to any vested interest in any salary continuation agreement and
automobile retention agreement applicable to DAF in accordance with Paragraph 5
hereinbelow) and otherwise due or applicable to DAF upon Termination (except
benefits due under an agreement or policy concerning office closure or reduction
in force laws so long as less than the sums being paid hereunder), pay to DAF
upon Termination one of the following benefits, at the election and option of
DAF:
A. A lump sum payment equal to NINE (9) months of monthly salary, less
any and all applicable taxes, deductions arising from benefit
elections or any other sums required to be deducted by law, rule or
regulation. If this option is elected, and DAF elects continued health
coverage under COBRA, STB will require DAF to pay the full rate
allowed by COBRA for any continued health insurance coverage elected
at the time of Termination; or
B. Continuation of monthly salary for NINE (9) months, less any and
all applicable taxes, deductions arising from benefit elections or
other sums required to be deducted by law, rule or regulation. If this
option is elected, and if DAF elects to continue health insurance
coverage under COBRA, STB will continue to charge DAF's the applicable
employee coverage rate for Nine (9) months if said applicable employee
rate may be properly granted to DAF without violating any existing
policy or law and if said rate is lower than the COBRA rate that may
be assessed.
The payment option elected shall be deemed the "Separation Benefit". Said
Separation Benefit shall result in a waiver of any other separation benefits due
to DAF following the Termination as more fully set forth in Paragraph 4.
4. Express Waiver and Release of Other Separation Benefits. By executing
this Agreement, DAF agrees that the Separation Benefit paid pursuant to this
Agreement, provided the payments or benefits at least equal those payments or
benefits that must be paid to terminated employees by law, shall be deemed to be
the equivalent and substitute for any legally or customarily required separation
payments due to DAF and STB shall be given full credit for sums paid hereunder
as to any legal or customarily requirements to pay separation and payments
hereunder shall be deemed to have fully satisfied STB's obligations with regard
to any legally or customarily mandated separation payments due to DAF upon his
termination, including, but not limited to, any laws or customs regarding
reduction in force or job-site closing. If additional sums are legally required,
or are adjudicated as required, this Agreement shall be deemed to be
automatically amended to credit against the sums due the amount paid hereunder
and this Agreement shall be deemed to include any additionally required benefits
or payments.
52
<PAGE>
5. Salary Continuation Agreement: Nothing contained in this Agreement shall
have any effect upon the Salary Continuation Agreement by and between STB and
DAF dated December 10, 1991, including those certain provisions regarding
automobile retention contained therein.
6. Binding Effect of Agreement. This Agreement shall inure to the benefit
of and be binding upon the heirs, administrators, personal representatives,
successors and assigns of DAF and STB, as the case may be.
7. No Contest; Reimbursement of Benefits: The parties hereby mutually agree
that in the event that DAF contests this Agreement, or any of the provisions
hereunder, by the filing or commencement of any action or proceeding relating to
his employment or Termination of any kind or nature whatsoever against STB, its
parent company or subsidiary companies or is re-employed by STB involuntarily by
court order, or an enforceable judgment is obtained against STB, then STB shall
have the absolute right: (i) to enforce repayment in full on the date of such
re-employment of all sums paid to DAF hereunder, which sums shall include the
payment or value of any benefits received by DAF hereunder, as a credit in
offset, reduction and satisfaction of all or any portion of such judgment, or,
(ii) if there is no judgment, against wages due to DAF.
8. Captions: The captions set forth herein are included solely for ease and
convenience of reference and are not to be considered or construed in the
interpretation of this Agreement.
9. Entire Agreement: This Agreement constitutes and contains the entire
agreement between the parties and no statement or representation of either party
hereto, their agents, officers, directors or employees made outside of this
Agreement and not contained herein shall form a part of this Agreement or be
binding upon the other party. This Agreement shall not be changed, modified,
altered or amended, except by written instrument signed by the parties hereto.
10. Governing Law: This Agreement shall be construed and governed in
accordance with the laws of the State wherein DAF is predominantly employed,
with venue appropriate in the County wherein DAF is predominantly employed. Any
provision of this Agreement prohibited by law shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement. In the event of
any litigation or action being commenced with regard to this Agreement, the
prevailing party shall be awarded their reasonable attorneys fees, costs and
expenses.
11. Informed Consent and Waiver: DAF has executed this Agreement on a fully
informed, voluntary basis. DAF understands and agrees that the separation
benefit provided for herein will preclude DAF's right to seek other separation
benefits,
53
<PAGE>
except as allowed by law, and that DAF has been given the right and opportunity
to consult with an advisor or attorney prior to the execution of this Agreement.
IN WITNESS WHEREOF, the parties hereto have made, executed and delivered this
Agreement as of the day and year first above written.
/s/ David A. Funk
DAVID A. FUNK
SIERRA TAHOE BANCORP,
a California Corporation
By: /s/ William T. Fike
William T. Fike
Its: President/CEO
hr\funk.fin
54
<PAGE>
STATE OF NEVADA
COUNTY OF WASHOE
On April 19, 1996 , before me, Daisy H. Perry , Notary Public in and for said
State, personally appeared David A. Funk, personally known to me (or proved on
the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
(SEAL)
/s/ Daisy H. Perry
Notary Public
STATE OF CALIFORNIA
COUNTY OF NEVADA
On April 18, 1996 , before me, Julie Roberts , Notary Public in and for said
State, personally appeared William T. Fike, personally known to me to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he executed the same in his authorized capacity, and that by his signature
on the instrument the person, or the entity upon behalf of which the person
acted, executed the instrument.
WITNESS my hand and official seal.
(SEAL)
/s/ Julie Roberts
Notary Public
55
<PAGE>
EXHIBIT 10.6
FIRST AMENDMENT TO SENIOR MANAGEMENT BENEFITS AGREEMENT
THIS FIRST AMENDMENT TO SENIOR MANAGEMENT BENEFITS AGREEMENT
(the "Amendment") is made and entered into on May 14, 1996 by and between SIERRA
TAHOE BANCORP, a California Corporation (hereinafter "STB") and DAVID C.
BROADLEY, an individual ("DCB") and modifies and amends that certain Senior
Management Benefits Agreement (the "Agreement") as follows:
The following Paragraph 12 shall be deemed to be added to the Agreement by this
Addendum:
"12. Change In Job Title and Job Duties; Reduction In Salary. A Termination
shall be deemed to have occurred pursuant to this Agreement (as the term
Termination is specifically defined in Paragraph 2 thereof and assuming
that DCB has not waived the election) should: (i) DCB's job title, job
grade or job duties be modified or materially changed and that change is
not as to the senior management in its entirety; or (ii) DCB's base salary
be materially reduced or changed and that change is not agreed to by DCB.
Except as set forth above, the Agreement shall remain as stated.
IN WITNESS WHEREOF, the parties hereto have made, executed and delivered this
Amendment as of the day and year first above written.
/s/ David C. Broadley
DAVID C. BROADLEY
SIERRA TAHOE BANCORP,
a California Corporation
By: /s/ William T. Fike
William T. Fike
Its: President/CEO
56
<PAGE>
STATE OF CALIFORNIA
COUNTY OF NEVADA
On April 4, 1996 , before me, Julie Roberts , Notary Public in and for said
State, personally appeared David C. Broadley , personally known to me to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he executed the same in his authorized capacity, and that by his signature
on the instrument the person, or the entity upon behalf of which the person
acted, executed the instrument.
WITNESS my hand and official seal.
(SEAL)
/s/ Julie Roberts
Notary Public
STATE OF CALIFORNIA
COUNTY OF NEVADA
On April 4, 1996 , before me, Julie Roberts , Notary Public in and for said
State, personally appeared William T. Fike , personally known to me to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he executed the same in his authorized capacity, and that by his signature
on the instrument the person, or the entity upon behalf of which the person
acted, executed the instrument.
WITNESS my hand and official seal.
(SEAL)
/s/ Julie Roberts
Notary Public
57
<PAGE>
Exhibit 11
Sierra Tahoe Bancorp and Subsidiaries
Computation of Earnings Per Common Share
(Amounts in thousands except per share amounts)
<TABLE>
Three Three
Months Months
Ended Ended
03/31/96 03/31/95
<S> <C> <C>
Primary
Net Income $ 567 $ 528
Shares
Weighted average number of common
shares outstanding 2,629 2,621
Assuming exercise of options reduced by
the number of shares which could have
been purchased with the proceeds from
exercise of such option 108 68
Weighted average number of common
shares outstanding as adjusted 2,737 2,689
Net income per share $ 0.21 $ 0.20
Assuming full dilution
Earnings $ 567 $ 528
Add after tax interest expense
applicable to convertible debentures 121 125
Net income $ 688 $ 653
Shares
Weighted average number of common
shares outstanding 2,629 2,621
Assuming conversion of
convertible debentures 994 1,000
Assuming exercise of options reduced
by the number of shares which could
have been purchased with the proceeds
from exercise of such options 127 68
Weighted average number of common
shares outstanding as adjusted 3,750 3,689
Net income per share assuming full dilution $ 0.18 $ 0.18
</TABLE>
58
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 17,486
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 18,100
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 24,507
<INVESTMENTS-CARRYING> 3,371
<INVESTMENTS-MARKET> 3,365
<LOANS> 260,200
<ALLOWANCE> 4,368
<TOTAL-ASSETS> 352,903
<DEPOSITS> 308,180
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,534
<LONG-TERM> 9,465
<COMMON> 11,225
0
0
<OTHER-SE> 19,499
<TOTAL-LIABILITIES-AND-EQUITY> 352,903
<INTEREST-LOAN> 6,782
<INTEREST-INVEST> 363
<INTEREST-OTHER> 281
<INTEREST-TOTAL> 7,426
<INTEREST-DEPOSIT> 2,566
<INTEREST-EXPENSE> 2,748
<INTEREST-INCOME-NET> 4,678
<LOAN-LOSSES> 510
<SECURITIES-GAINS> (6)
<EXPENSE-OTHER> 4,910
<INCOME-PRETAX> 924
<INCOME-PRE-EXTRAORDINARY> 567
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 567
<EPS-PRIMARY> .21
<EPS-DILUTED> .18
<YIELD-ACTUAL> 6.29
<LOANS-NON> 6,080
<LOANS-PAST> 1,470
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,845
<CHARGE-OFFS> 48
<RECOVERIES> 61
<ALLOWANCE-CLOSE> 4,368
<ALLOWANCE-DOMESTIC> 4,368
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
