SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: November 14, 1997
SIERRAWEST BANCORP
(Exact Name of Registrant as Specified in its Charter)
California File No. 0-15450 68-0091859
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(IRS Employer Identification No.) (Commission File No.) (State of Incorporation)
10181 Truckee-Tahoe Airport Road, Truckee, CA 96160-9010
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(Address of Principal Executive Offices)
Registrant's Telephone Number: (916) 582-3000
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Item 5. Other Events
On November 14, 1997, SierraWest Bancorp ("SWB") and California Community
Bancshares Corporation ("CCBC") issued a joint press release announcing that
they have signed a definitive agreement under which SWB will acquire the
outstanding common stock of CCBC in a transaction valued at approximately $39
million, based on the closing price of SWB stock on November 13, 1997. CCBC, the
parent of Continental Pacific Bank, is headquartered in Vacaville, California.
Continental Pacific Bank operates eight banking offices in Solano and Contra
Costa counties in California. CCBC had total assets of $192 million at September
30, 1997. The merger, which is scheduled to close during the first half of 1998,
is subject to the approval of CCBC's and SWB's shareholders and federal and
state regulators, as well as certain other terms and conditions.
Under the terms of the proposed transaction, shareholders of CCBC will receive
shares of SWB common stock at an exchange ratio to be determined by a formula
prior to the effective date of the transaction, based on the average of the
closing prices of SWB common stock during a defined 20-day period. For example,
if the average price during the 20-day period were $28.75, the closing price of
SWB stock on November 13, 1997, each share of CCBC stock would be exchanged for
approximately 0.9957 shares of SWB common stock. This transaction is expected to
be accounted for under the pooling of interests accounting method.
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Item 7. Financial Statements and Exhibits
(c) Exhibits
2. Plan of Acquisition and Merger by and between SierraWest
Bancorp, SierraWest Bank, and California Community Bancshares,
Continental Pacific Bank.
99. Press release dated November 14, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SierraWest Bancorp
------------------
(Registrant)
Dated: November 17, 1997 By:/s/David C. Broadley
Truckee, California David C. Broadley
EVP/Chief Financial Officer
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EXHIBIT 2
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PLAN OF ACQUISITION AND MERGER
BY AND BETWEEN
SIERRAWEST BANCORP
SIERRAWEST BANK
AND
CALIFORNIA COMMUNITY BANCSHARES
CONTINENTAL PACIFIC BANK
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TABLE OF CONTENTS
PAGE
Section 1. THE MERGER AND BANK MERGER.........................................2
1.1 Effective Date................................................2
1.2 Effect of the Bank Merger.....................................2
1.3 Effect of the Merger..........................................2
1.4 Board Composition After the Merger............................3
Section 2. CONVERSION AND CANCELLATION OF SHARES.........................3
2.1 Exchange Amount; Conversion of Shares of Bancshares Common
Stock.........................................................3
2.2 Fractional Shares.............................................5
2.3 Surrender of CCBC Shares......................................5
2.4 No Further Transfers of CCBC Shares...........................6
2.5 Adjustments...................................................6
2.6 Treatment of Stock Options....................................6
2.7 Personnel Matters.............................................7
(a) Employment At Effective Date............................7
(b) Retirement Benefits.....................................7
(c) Other Benefit Plans.....................................7
(d) Other Benefits..........................................8
Section 3. COVENANTS OF THE PARTIES......................................8
3.1 Mutual Covenants..............................................8
(a) Government Approvals....................................8
(b) Notification of Breach of Representations, Warranties
and Covenants...........................................8
(c) Financial Statements....................................8
(d) Press Releases..........................................9
(e) Access to Properties, Books and Records;
Confidentiality.........................................9
(f) Additional Agreements ..................................10
(g) Advice of Changes.......................................10
(h) Legal Conditions to Merger..............................10
3.2 Covenants of CCBC.............................................10
(a) Approval by Shareholders................................10
AC973160.145 19835-004 i
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(b) Compensation............................................11
(c) Conduct of Business in the Ordinary Course..............11
(d) No Merger or Solicitation...............................14
(e) Changes in Capital Stock; Dividends.....................14
(f) Employee Welfare Benefit Plans..........................15
(g) Shareholder Lists and Other Information.................15
(h) Capital Commitments and Expenditures....................15
(i) Asset Review............................................15
(j) Execution of Stock Option Agreement.....................16
(k) Pre-Closing Adjustments.................................16
3.3 Covenants of Sierra...........................................16
(a) Approval by Shareholders................................16
(b) Conduct of Business in the Ordinary Course..............17
(c) Dividends...............................................18
(d) Indemnification; Insurance..............................18
Section 4. REPRESENTATIONS AND WARRANTIES OF CCBC........................20
4.1 Corporate Status and Power to Enter Into Agreements...........20
4.2 Articles, Bylaws, Books and Records...........................20
4.3 Compliance With Laws, Regulations and Decrees.................20
4.4 Capitalization................................................20
4.5 Equity Interest in Any Entity.................................21
4.6 Financial Statements, Regulatory Reports......................21
4.7 Tax Returns...................................................22
4.8 Material Adverse Change.......................................22
4.9 No Undisclosed Liabilities....................................23
4.10 Properties and Leases.........................................23
4.11 Material Contracts............................................24
4.12 Loans.........................................................24
ii
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4.13 Restrictions on Investments...................................25
4.14 Employment Contracts and Benefits.............................25
4.15 Compliance with ERISA.........................................25
4.16 Collective Bargaining and Employment Agreements...............26
4.17 Compensation of Officers and Employees........................26
4.18 Legal Actions and Proceedings.................................26
4.19 Execution and Delivery of the Agreements......................27
4.20 Retention of Broker or Consultant.............................27
4.21 Insurance.....................................................28
4.22 Loan Loss Reserves............................................28
4.23 Transactions With Affiliates..................................28
4.24 Information in Sierra Registration Statement..................28
4.25 Pooling of Interests..........................................29
4.26 Derivatives Contracts; Structured Notes; Etc..................29
4.27 Accuracy of Representations and Warranties....................29
Section 5. REPRESENTATIONS AND WARRANTIES OF SIERRA......................29
5.1 Corporate Status and Power to Enter Into Agreements...........29
5.2 Articles, Bylaws, Books and Records...........................30
5.3 Compliance With Laws, Regulations and Decrees.................30
5.4 Capitalization................................................30
5.5 Financial Statements, Regulatory Reports......................31
5.6 Tax Returns...................................................31
5.7 Material Adverse Change.......................................32
5.8 Legal Actions and Proceedings.................................32
5.9 Execution and Delivery of the Agreement.......................32
5.10 No Undisclosed Liabilities....................................33
5.11 No Material Environmental Liabilities.........................33
iii
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5.12 No Material Liabilities Under ERISA...........................33
5.13 Retention of Broker or Consultant.............................33
5.14 Loan Loss Reserves............................................34
5.15 Information in Sierra Registration Statement..................34
(a) Pooling of Interests....................................34
5.16 Equity Interest in Any Entity.................................34
5.17 Loans.........................................................34
5.18 Derivatives Contracts; Structured Notes; Etc..................35
5.19 Accuracy of Representations and Warranties....................35
Section 6. SECURITIES ACT OF 1933; SECURITIES EXCHANGE ACT OF 1934.......35
6.1 Preparation and Filing of Registration Statement..............35
6.2 Effectiveness of Registration Statement and Listing of Shares.36
6.3 Sales and Resales of Common Stock.............................36
6.4 Rule 145 and Related Matters.................................36
Section 7. CONDITIONS TO THE OBLIGATIONS OF SIERRA.......................36
7.1 Representations and Warranties................................36
7.2 Compliance and Performance Under Agreement....................37
7.3 Material Adverse Change.......................................37
7.4 Approval of Agreement.........................................37
7.5 Officer's Certificate.........................................37
7.6 Opinion of Counsel............................................37
7.7 Absence of Legal Impediment...................................37
7.8 Effectiveness of Registration Statement.......................37
7.9 Government Approvals..........................................37
7.10 Tax Opinion...................................................38
7.11 Unaudited Financials..........................................39
7.12 Rule 145 Undertaking..........................................39
7.13 Closing Documents.............................................39
7.14 Consents......................................................39
iv
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7.15 Shareholder Agreements........................................39
7.16 Noncompetition Agreements.....................................40
7.17 Fairness Opinion..............................................40
7.18 Pooling of Interests..........................................40
7.19 Resignations..................................................40
Section 8. CONDITIONS TO THE OBLIGATIONS OF CCBC.........................40
8.1 Representations and Warranties................................40
8.2 Compliance and Performance Under Agreement....................40
8.3 Material Adverse Change.......................................40
8.4 Approval of Agreement.........................................41
8.5 Officer's Certificate.........................................41
8.6 Opinion of Counsel............................................41
8.7 Absence of Legal Impediment...................................41
8.8 Effectiveness of Registration Statement.......................41
8.9 Government Approvals..........................................41
8.10 Tax Opinion or Ruling.........................................41
8.11 Unaudited Financials..........................................41
8.12 Closing Documents.............................................42
8.13 Fairness Opinion..............................................42
Section 9. CLOSING.......................................................42
9.1 Closing Date..................................................42
9.2 Delivery of Documents.........................................42
9.3 Filings.......................................................42
Section 10. EXPENSES......................................................42
Section 11. AMENDMENT; TERMINATION........................................42
11.1 Amendment.....................................................42
11.2 Termination...................................................42
v
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11.3 Notice of Termination.........................................44
11.4 Breach of Obligations.........................................44
11.5 Termination and Expenses......................................44
Section 12. MISCELLANEOUS.................................................45
12.1 Notices.......................................................45
12.2 Binding Agreement.............................................45
12.3 Survival of Representations and Warranties....................45
12.4 Governing Law.................................................45
12.5 Attorneys' Fees...............................................45
12.6 Entire Agreement; Severability................................46
12.7 Counterparts..................................................46
vi
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Plan of Acquisition and Merger
THIS PLAN OF ACQUISITION AND MERGER, dated as of November 13, 1997
("Agreement"), is made by and between SierraWest Bancorp ("Bancorp"), a
California corporation and a registered bank holding company under the Federal
Bank Holding Company Act of 1956 as amended ("BHCA"), SierraWest Bank ("Sierra
Bank"), a California banking corporation (collectively "Sierra") and California
Community Bancshares Corporation ("Bancshares"), a Delaware corporation and a
registered bank holding company under the BHCA, and its wholly owned subsidiary,
Continental Pacific Bank ("CPB"), a California state banking corporation
(collectively "CCBC").
WITNESSETH:
A. The Boards of Directors of Sierra and CCBC deem it advisable and in
the best interests of Sierra, CCBC and their shareholders that Sierra and CCBC
enter into a business combination whereby Bancshares will be merged with and
into Bancorp ("Merger") with Bancorp as the surviving corporation and Bancorp's
wholly owned subsidiary, Sierra Bank will be merged with CPB ("Bank Merger"),
with Sierra Bank being the surviving corporation.
B. The Agreement and Plan of Merger attached as Exhibit A is intended
to be filed with the California Secretary of State and the Delaware Secretary of
State ("Agreement and Plan of Merger") and the Bank Merger Agreement attached as
Exhibit B is intended to be filed with the California Secretary of State when it
has been approved by the Department of Financial Institutions of the State of
California ("Bank Merger Agreement"), (collectively the "Merger Agreements").
C. The Merger is intended to qualify as a tax free reorganization
within the meaning of the provisions of Section 368 of the Internal Revenue Code
of 1986, as amended (the "IRC") and to qualify as a "pooling of interests".
D. Pursuant to the Merger, each Bancshares shareholder will receive, in
exchange for each share of Bancshares common stock of Bancorp, the number of
shares of Bancorp common stock determined in accordance with the Exchange Ratio
as more fully set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto agree as follows:
Section 1. THE MERGER AND BANK MERGER.
1.1 Effective Date. Subject to the terms and conditions of this
Agreement, the Merger shall become effective at the date on which an executed
copy of the Agreement and Plan of Merger has been filed with the California
Secretary of State and the Delaware Secretary of State ("Effective Date"). On
the Effective Date, the Bank Merger Agreement will be certified by the
California Secretary of State and filed with the Commissioner of Financial
Institutions of the State of California ("Commissioner") pursuant to Section
4887 of the California Financial Code, in each case on the Closing Date as
defined in Section 9.1 hereof.
1.2 Effect of the Bank Merger. Subject to the terms and conditions of
this Agreement, on the Effective Date, CPB shall be merged with and into Sierra
Bank and Sierra Bank shall be the surviving bank ("Surviving Bank") in the Bank
Merger. All assets, rights, privileges, immunities, power, franchises and
interests of CPB in and to every type of property (real, personal and mixed) and
choses in action, as they exist as of the Effective Date, including
appointments, designations and nominations and all other rights and interests,
shall pass and be transferred to and vest in Sierra Bank as the Surviving Bank
by virtue of the Bank Merger on the Effective Date without any deed, conveyance
or other transfer; the separate existence of CPB shall cease and the corporate
existence of Sierra Bank as the Surviving Bank shall continue unaffected and
unimpaired by the Bank Merger; and the Surviving Bank shall be deemed to be the
same entity as each of CPB and Sierra Bank and shall be subject to all of their
duties and liabilities of every kind and description. The Surviving Bank shall
be responsible and liable for all the liabilities and obligations of each of
Sierra Bank and CPB; and any claim existing or action or proceeding pending by
or against Sierra Bank or CPB may be prosecuted as if the Bank Merger had not
taken place, or the Surviving Bank may be substituted in its place. Neither the
rights of creditors nor any liens upon the property of Sierra, Sierra Bank or
CPB shall be impaired by reason of the Bank Merger. The articles of
incorporation of Sierra Bank shall be the articles of incorporation of the
Surviving Bank and the bylaws of Sierra Bank shall be the bylaws of the
Surviving Bank. On the Effective Date, Sierra Bank shall assume the operations
of, as successor to, CPB. Subject to Section 1.4, on the Effective Date the
board of directors of Sierra Bank will continue to serve until successors are
duly elected and qualified. Sierra Bank shall remain a wholly-owned subsidiary
of Bancorp.
1.3 Effect of the Merger. Subject to the terms and conditions of this
Agreement, on the Effective Date, Bancshares shall be merged with and into
Bancorp with Bancorp as the surviving corporation ("Surviving Corporation") in
the merger. All assets, rights, privileges, immunities, power, franchises and
interests of Bancshares in and to every type of property (real, personal and
mixed) and choses in action, as they exist as of the Effective Date, including
appointments, designations and nominations and all other rights and interests,
shall pass and be transferred to and vest in Bancorp as the Surviving
Corporation by virtue of the Merger on the Effective Date without any deed,
conveyance or other transfer; the separate existence of Bancshares shall cease
and the corporate existence of Bancorp as the Surviving Corporation shall
continue unaffected and unimpaired by the merger; and the Surviving Corporation
shall be deemed to be the same entity as each of Bancshares and Bancorp and
shall be subject to all of their duties and liabilities of every kind and
description. The Surviving Corporation shall be responsible and liable for all
the liabilities and obligations of each of Bancorp and Bancshares; and any claim
existing or action or proceeding pending by or against Bancorp or Bancshares may
be prosecuted as if the Merger had not taken place, or the Surviving Corporation
may be substituted in its place. Neither the rights of creditors nor any liens
upon the property of Sierra, Bancorp or Bancshares shall be impaired by reason
of the Merger. The articles of incorporation of Bancorp shall be the articles of
incorporation of the Surviving Corporation and the bylaws of Bancorp shall be
the bylaws of the Surviving Bank. On the Effective Date, Bancorp shall assume
the operations of, as successor to, Bancshares. Subject to Section 1.4, on the
Effective Date the board of directors of Bancorp will continue to serve until
successors are duly elected and qualified. Sierra Bank shall remain a
wholly-owned subsidiary of Bancorp.
1.4 Board Composition After the Merger. As soon as practicable
following the Effective Date, the Boards of Directors of Bancorp and of Sierra
Bank shall appoint two existing directors of Bancshares, Mr. Bernard E. Moore
and Mr. Walter D. Sunderman, to the Boards of Directors of Bancorp and Sierra
Bank. In the event Mr. Moore and/or Mr. Sunderman (each a "CCBC Appointee")
resigns or chooses not to serve as a director of Bancorp and/or Sierra Bank,
such CCBC Appointee shall recommend his successor from those persons who were
directors of CCBC on the Effective Date (a "Successor Director") to the
Nominating Committee of the Bancorp Board of Directors. Assuming that such
recommended Successor Director meets the then existing written criteria for
selection of board nominees, the recommended Successor Director will be
appointed to the Boards of Directors of Bancorp and Sierra Bank. If because of
death, disability, or otherwise, either Mr. Moore or Sunderman is incapable of
selecting his successor, then the remaining CCBC Appointee shall recommend the
Successor Director for the CCBC Appointee who is so incapacitated. In the event
that any Successor Director resigns, chooses not to serve, or otherwise cannot
serve, then Bancorp shall have no further obligation to offer any other existing
director a position on Bancorp's or Sierra Bank's Boards of Directors. Once
appointed to the Boards, subject to the written performance criteria applicable
to all Bancorp directors, the nominating committee of Bancorp shall nominate and
recommend for approval such CCBC Appointee (or a Successor Director thereof) for
one year terms at the annual meetings of Bancorp for the years 1998, 1999 and
2000; provided, however, if any such director is not re-elected by the
shareholders of Bancorp, then Bancorp shall have no further obligation to
further nominate or appoint such director to the Boards of Directors of Bancorp
or Sierra Bank and shall have no further obligation to offer any other existing
director a position on Bancorp's or Sierra Bank's Boards of Directors. In the
event of a change of control of Bancorp occurs in which the acquirer elects a
majority of the Board of Directors, then the requirements of this Section 1.4
shall cease.
Section 2. CONVERSION AND CANCELLATION OF SHARES.
2.1 Exchange Amount; Conversion of Shares of Bancshares Common Stock.
(a) For purposes of this Agreement, capitalized terms have the
following meanings:
CCBC Shares Issued and outstanding shares of Bancshares
$0.10 par value common stock ("CCBC Shares")
as of the Effective Date.
Business Combination Any merger, sale or purchase of an entity
or subsidiary, sale or purchase of a
substantial portion of any entity's assets, or
tender offer or other means of acquisition of
substantially all the outstanding capital
stock of any entity.
Exchange Ratio The number of Sierra Shares to be
received in exchange for each CCBC Share
pursuant to the calculation set forth in
Section 2.1(b) below.
Market Value The average of the closing prices of the
Sierra Shares as reported in the western
edition of the Wall Street Journal for the 20
trading days preceding the Determination Date.
For purpose of determining the average, the
divisor shall be only those days on which a
trade occurs.
Determination Date The fifth business day preceding the Effective
Date.
(b) On the Effective Date, by virtue of the Merger and without any
action on the part of the holders of CCBC Shares, each outstanding CCBC Share
(other than any shares as to which dissenters' rights have been perfected) shall
be converted into the right to receive shares of the common stock, no par value,
of Bancorp ("Sierra common stock" or "Sierra Shares") equal to the Exchange
Ratio as follows:
(i) If the Market Value is between $22.76 and $25.24,
inclusive, the Exchange Ratio shall be determined by
dividing $26.40 by the Market Value.
(ii) If the Market Value is between $25.25 and $26.25,
inclusive, the Exchange Ratio shall be 1.0476.
(iii)If the Market Value is between $26.26 and 28.24,
inclusive, the Exchange Ratio shall be 1.0476 minus
.000238 for each $0.01 by which the Market Value is
greater than $26.25.
(iv) If the Market Value is $28.25, the Exchange Ratio shall
be 1.000.
(v) Subject to the limitations set forth in Section 2.1(c)
below, if the Market Value is between $28.26 and $29.25,
inclusive, the Exchange Ratio shall be determined by
dividing (A) $28.25 plus 75% of the amount by which the
Market Value exceeds $28.25 by (B) the Market Value.
(vi) Subject to the limitations set forth in Section 2.1(c)
below, if the Market Value is between $29.26 and $30.25,
inclusive, the Exchange Ratio shall be determined by
dividing (A) $29.00 plus 50% of the amount by which the
Market Value exceeds $29.25 by (B) the Market Value.
(vii)Subject to the limitations set forth in Section 2.1(c)
below, if the Market Value exceeds $30.26, the Exchange
Ratio shall be determined by dividing (A) $29.50 plus 25%
of the amount by which the Market Value exceeds $30.25 by
(B) the Market Value.
(viii)Subject to the limitations set forth in Section 2.1(d)
below, if the Market Value is $22.75 or less, the
Exchange Ratio shall be 1.1579.
(c) In the event that Sierra enters into a Business Combination with
any other entity in which Sierra shall not be the continuing or surviving
corporation or entity of such Business Combination prior to the Determination
Date, then, in the event that the Market Value exceeds $28.25, the Exchange
Ratio shall be 1.000.
(d) In the event that the Market Value is less than $21.59, then CCBC
has the right to terminate this Agreement pursuant to the terms of Section 11(h)
hereof. If CCBC notifies Sierra that it intends to terminate this Agreement
pursuant to the provisions of Section 11(h), then Sierra shall have the right
but not the obligation to elect to issue an additional number of Sierra Shares
so that the Exchange Ratio shall be equal to the quotient obtained by dividing
$25.00 by the Market Value. If Sierra chooses not to exercise its right to issue
such additional Sierra Shares, then CCBC may proceed to terminate this Agreement
pursuant to Section 11(h).
(e) On the Effective Date each outstanding Bancshares debenture, as
defined in Section 4.4, shall be by virtue of the Merger, assumed by Bancorp,
provided, however, the conversion of such Bancshares debentures into Sierra
Shares shall be adjusted to reflect the Exchange Ratio on the Effective Date.
(f) All references in this Agreement to Sierra Shares or Sierra common
stock shall be deemed to include the corresponding rights to purchase shares of
Sierra common stock, including common stock equivalent preferred stock of
Bancorp, pursuant to that Rights Agreement dated as of January 16, 1996 between
American Stock Transfer and Trust Company and Sierra Tahoe Bancorp. Each
certificate representing Sierra Shares will bear a notation incorporating the
Rights Agreement by reference.
2.2 Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of Sierra common stock shall be issued to holders of CCBC
Shares. In lieu thereof, each such holder entitled to a fraction of a share of
Sierra common stock shall receive, at the time of surrender of the certificate
or certificates representing such holder's CCBC Shares, an amount in cash equal
to the Market Value per share of the common stock of Sierra, multiplied by the
fraction of a share of Sierra common stock to which such holder otherwise would
be entitled. No such holder shall be entitled to dividends, voting rights,
interest on the value of, or any other rights in respect of a fractional share.
2.3 Surrender of CCBC Shares.
(a) Prior to the Effective Date, Sierra shall appoint any bank or trust
company mutually acceptable to Bancshares and Sierra, as exchange agent (the
"Exchange Agent") for the purpose of exchanging certificates representing the
CCBC Shares at and after the Effective Date, Sierra shall issue and deliver to
the Exchange Agent certificates representing the Sierra Shares, as shall be
required to be delivered to holders of CCBC Shares. As soon as practicable after
the Effective Date, each holder of CCBC Shares converted pursuant to Section
2.1, upon surrender to the Exchange Agent of one or more certificates for such
CCBC Shares for cancellation, will be entitled to receive a certificate
representing the number of Sierra Shares determined in accordance with Section
2.1 and a payment in cash with respect to fractional shares, if any, determined
in accordance with Section 2.2.
(b) No dividends or other distributions of any kind which are declared
payable to stockholders of record of the Sierra Shares after the Effective Date
will be paid to persons entitled to receive such certificates for Sierra Shares
until such persons surrender their certificates representing CCBC Shares. Upon
surrender of such certificate representing CCBC Shares, the holder thereof shall
be paid, without interest, any dividends or other distributions with respect to
the Sierra Shares as to which the record date and payment date occurred on or
after the Effective Date and on or before the date of surrender.
(c) If any certificate for Sierra Shares is to be issued in a name
other than that in which the certificate for CCBC Shares surrendered in exchange
therefor is registered, it shall be a condition of such exchange that the person
requesting such exchange shall pay to the Exchange Agent any transfer costs,
taxes or other expenses required by reason of the issuance of certificates for
such Sierra Shares in a name other than the registered holder of the certificate
surrendered, or such persons shall establish to the satisfaction of Sierra and
the Exchange Agent that such costs, taxes or other expenses have been paid or
are not applicable.
(d) All dividends or distributions, and any cash to be paid pursuant to
Section 2.2 in lieu of fractional shares, if held by the Exchange Agent for
payment or delivery to the holders of unsurrendered certificates representing
CCBC Shares and unclaimed at the end of one year from the Effective Date, shall
(together with any interest earned thereon) at such time be paid or redelivered
by the Exchange Agent to Sierra, and after such time any holder of a certificate
representing CCBC Shares who has not surrendered such certificate to the
Exchange Agent shall, subject to applicable law, look as a general creditor only
to Sierra for payment or delivery of such dividends or distributions or cash, as
the case may be.
2.4 No Further Transfers of CCBC Shares. At the Effective Date, the
stock transfer books of Bancshares shall be closed and no transfer of CCBC
Shares theretofore outstanding shall thereafter be made.
2.5 Adjustments. If, between the date of this Agreement and the
Effective Date, the outstanding Sierra Shares shall have been changed into a
different number of shares or a different class by reason of any
reclassification, recapitalization, split up, combination, exchange of shares or
readjustment, or a stock dividend thereon shall be declared with a record date
within such period, the number of Sierra Shares to be issued and delivered in
the Merger in exchange for each outstanding CCBC Share shall be correspondingly
adjusted.
2.6 Treatment of Stock Options.
(a) On the Effective Date, the obligations under any stock option plans
of CCBC shall be assumed by Sierra. On the Effective Date, options to purchase
CCBC Shares issued pursuant to CCBC's stock option plans shall be converted,
without any action on the part of the holders thereof, into options to acquire,
upon payment of the adjusted exercise price (which shall equal the exercise
price per share for the options immediately prior to the Merger, divided by the
Exchange Ratio), the number of shares of Sierra shares the option holder would
have received pursuant to the Merger if he or she had exercised all his or her
options immediately prior thereto.
(b) Such stock option plan as shall be applicable to CCBC stock options
shall be deemed to be amended to the effect that a non-officer Director's
service does not terminate as long as he or she remains a Director or advisory
Director of Sierra on and after the Effective Date. Sierra covenants that it
will, for purposes of the CCBC stock option plan, at or immediately following
the Effective Date, offer each current non-officer Director of CCBC a position
as advisory Director of Sierra for a period of not less than 2 years.
(c) Subject to the mutual intent of the parties that the Merger will be
accounted for under the pooling-of-interests method, Sierra and CCBC shall
otherwise amend their respective option plans and obtain any required
shareholder approvals of such option plan amendments and shall amend, as
necessary, any and all option agreements (including obtaining any required
participant consents) prior to the Effective Date to make them consistent with
this Section 2.6.
2.7 Personnel Matters.
(a) Employment At Effective Date. On the Effective Date, except for
employees with contracts that will be assumed by Sierra, CCBC employees shall
become employees at will of Sierra. Prior to the Effective Date, CCBC may, with
the consent of Sierra, make additional special bonus payments not to exceed six
months salary to retain employees who are deemed necessary to complete the
Merger and the Bank Merger. In the even that CCBC terminates employees prior to
the Effective Date, it shall abide by all internal policies and all legal
requirements for termination of employment. From the date of this agreement
through the Effective Date, CCBC shall consult with the human resources
representative of Sierra, who shall be designated in writing to CCBC by Sierra,
and keep that representative advised as to all matters related to employment.
From the day of the Effective Date or any time thereafter, former employees of
CCBC who are employed by Sierra following the Effective Date may be terminated
by Sierra, with or without cause, for any reason not prohibited by law.
(b) Retirement Benefits. Employees of Sierra formerly employed by CCBC
on the Effective Date shall be eligible for participation in the Sierra 401(k)
plan and employee stock option plan at the earliest normal entry date following
the Effective Date as allowed by applicable law and the provisions of Sierra's
benefit plans, so long as such employees then meet the eligibility requirements
for participation in the Sierra plan. The former employees of CCBC who are
employed by Sierra Bank will be credited for years of prior service with CCBC
for vesting (non-forfeitability) of accrued benefits in the Sierra plans to the
fullest extent such credit for such prior service is permitted by Sierra's plans
and by the laws, rules and regulations of the Internal Revenue Service and the
Employee Income Security Act of 1974, as amended.
(c) Other Benefit Plans.
(i) After the Effective Date, any or all CCBC welfare benefit
plans shall be terminated by Sierra. Sierra Bank employees formerly employed by
CCBC immediately prior to the Effective Date shall be eligible for participation
in any existing Sierra plan, so long as such employee would otherwise be
eligible to participate in such plan.
(ii)Employees of Sierra Bank formerly employed by CCBC on the
Effective Date will receive credit for length of service with CCBC for
determination of eligibility or participation in the Sierra (A) health service
plans, or (B) long-term disability, voluntary accident and life insurance plans.
(d) Other Benefits.
(i) Employees of Sierra formerly employed by CCBC on the
Effective Date will retain vacation benefits accrued with CCBC prior to the
Effective Date, subject to Sierra's maximum accrual and carryover limitations
for such benefits; and will also retain the amount of sick leave benefit
eligibility on CCBC's records prior to the Effective Date, to be available
subject to Sierra's policy for sick leave benefits; provided, however, such
employees shall not be entitled to payment for carry-over CCBC sick leave upon
termination of employment as is provided under Sierra's sick leave policy, and,
provided further, CCBC shall have accrued the cost of such benefits on the books
of CCBC on or before the Determination Date. Following the Effective Date, all
employees shall be subject to the standard policies of Sierra for accrual of
such benefits.
(ii)Employees of Sierra Bank formerly employed by CCBC on the
Effective Date will be subject to the severance policies in effect for all
Sierra employees.
Section 3. COVENANTS OF THE PARTIES.
3.1 Mutual Covenants.
(a) Government Approvals. Each party will use its reasonable best
efforts in good faith to take or cause to be taken as promptly as practicable
all such steps within their reasonable control to obtain (i) the waiver of an
application or prior approval of the Merger by the Board of Governors of the
Federal Reserve System ("FRB") under the BHCA, (ii) the prior approval of the
Commissioner to the Merger; (iii) the prior approval of the Federal Deposit
Insurance Corporation ("FDIC") under the Bank Merger Act, and (iv) all other
consents and approvals of government agencies as are required by law or
otherwise, and shall do any and all acts and things necessary or appropriate in
order to cause the Merger and Bank Merger to be consummated on the terms
provided in the Merger Agreements and this Agreement as promptly as practicable.
The approvals referred to in clauses (i)-(iv) of this Section 3.1(a) are
hereinafter referred to as the "Government Approvals." Each party shall respond
to a written request for information sought by the other for the purpose of
obtaining the Government Approvals promptly and in all cases within 10 days
after receipt of such request.
(b) Notification of Breach of Representations, Warranties and
Covenants. Each party shall promptly give written notice to the other party upon
becoming aware of the occurrence or impending or threatened occurrence of any
event which would cause or constitute a material breach of any of the
representations, warranties or covenants of that party contained or referred to
in the Merger Agreements or this Agreement and shall use its reasonable best
efforts to prevent the same or remedy the same promptly.
(c) Financial Statements.
(i) Each party has delivered or shall deliver to the other
party promptly after they become available true and correct copies of audited
financial statements as of such date and covering such period as may be
necessary to satisfy the minimum requirements of the Securities and Exchange
Commission ("SEC") and other governmental authorities having approval authority
over the Merger and Bank Merger. The financial statements for such year ends
have been or shall be audited by their respective independent certified public
accounting firms which have been engaged in the past and include or shall
include an unqualified opinion of each such accounting firm, to the effect that
such financial statements have been prepared in accordance with GAAP
consistently applied and present fairly, in all material respects, the
consolidated financial position, results of operations and cash flows of the
respective parties at the dates indicated and for the periods then ending.
(ii) Each party shall provide to the other party promptly
after they become available copies of all financial statements and proxy
statements issued to either party's shareholders and/or directors after December
31, 1996, or to be issued at or prior to the Effective Date.
(iii) Each party has delivered or shall deliver, to the other
party true and complete copies of its Annual Report to Shareholders for the
years ended December 31, 1996, 1995 and 1994, all periodic reports (including
interim quarterly financial statements) since December 31, 1994, all proxy
statements and other written material furnished to its shareholders since
December 31, 1994, and all other material reports, including year-end call
reports, relating to Sierra or CCBC filed by Sierra or CCBC with the SEC, the
FRB, the Commissioner or the FDIC during 1994 through 1996 and in 1997 prior to
the Effective Date. As of its date, each of the documents described in the
preceding sentence complied or shall comply in all material respects with all
legal and regulatory requirements applicable thereto.
(d) Press Releases. Neither party shall issue any press release or
written statement for general circulation relating to this Agreement unless
previously provided to the other party for review and approval (which approval
will not be unreasonably withheld or delayed) and shall cooperate with the other
party in the development and distribution of all news releases and other public
information disclosures with respect to the Bank Merger, the Merger, this
Agreement or the Agreement and Plan of Merger or Bank Merger Agreement; provided
that either party may, without the consent of the other party, make any
disclosure with regard to this Agreement that it determines, upon advice of
counsel, is required under any applicable law or regulation.
(e) Access to Properties, Books and Records; Confidentiality. Prior to
the Effective Date, each party shall (except as may be prohibited by applicable
law) give the other party and its officers, employees, agents and
representatives full access, during normal business hours and upon reasonable
notice, to all of its properties, books, contracts, records and facilities
including, but not limited to, the corporate, financial and operational records,
papers, reports, instructions, procedures, tax returns and filings, tax
settlement letters, material contracts or commitments, regulatory examinations
and correspondences. Each party shall also use its reasonable best efforts to
cause its independent accounting firm to make available to the other party, its
accountants, counsel and other agents, to the extent reasonably requested in
connection with such review, such firm's work papers and documentation relating
to its work papers and its audits of the books and records of each party. Each
party shall make available to the other originals or copies, at the responding
party's election, of such documents and records as the other may reasonably
request. The availability or actual delivery of such information about either
party shall not affect the covenants, representations and warranties of either
party contained in this Agreement, the Bank Merger Agreement and the Agreement
and Plan of Merger. Each party shall respond to any written request for
information promptly and in all cases within 10 days after receipt of such
request. Each party shall use its reasonable best efforts to cause its officers,
directors, employees, auditors and attorneys to cooperate with the other in its
reasonable requests for information except that no information which is
reasonably determined to be the subject of the attorney client privilege shall
be required to be disclosed. Each party shall treat as confidential all such
information in the same manner as each party treats similar confidential
information of its own, and if this Agreement is terminated, each party shall
continue to treat all such information as confidential and to cause its
employees to keep all such information confidential and shall return such
documents therefore delivered by the other party as the other party shall
request, and shall use such information, or cause it to be used, solely for the
purposes of evaluating and completing the transactions contemplated hereby;
provided that each party may disclose any such information to the extent
required by federal or state securities laws or otherwise required by any
governmental agency or authority, or by generally accepted accounting
principles. The foregoing confidentiality obligations shall not apply in respect
of any information publicly available or to any information previously known to
the party in question, the use of which is not otherwise restricted.
(f) Additional Agreements. In case at any time after the Effective Date
any further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation and the Surviving Bank with full
title to all properties, assets, rights, approvals, immunities and franchises of
any of the parties to the Merger and the Bank Merger, the proper officers and
directors of each party to this Agreement shall take all such necessary action
as may be reasonably requested by, and at the sole expense of, Sierra. Pending
the Effective Date, Sierra and CCBC shall consult with one another and cooperate
as reasonably requested by Sierra to facilitate the integration of their
respective operations as promptly as practicable after the Effective Date. Such
cooperation shall include, if requested, communicating with employees, customers
and depositors; consultation regarding material contracts, renewals, and capital
commitments to be entered into by CCBC; coordination regarding third-party
service agreements with a view to providing common products and services as
expeditiously as practicable following the Effective Date; making arrangements
for employee training prior to the Effective Date; and taking action to
facilitate an orderly conversion of data processing operations to occur promptly
following the Effective Date, provided that the cooperation required under this
Section 3.1(f) shall not be deemed to require actions that would materially
delay or impede the Merger.
(g) Advice of Changes. Sierra and CCBC shall promptly advise the other
party of any change or event having, or that would be reasonably likely to have,
a material adverse effect on it or which it believes would or would be
reasonably likely to cause or constitute a material breach of any of its
representations, warranties or covenants contained herein.
(h) Legal Conditions to Merger. Each of Sierra and CCBC shall use their
reasonable best efforts (a) to take, or cause to be taken, all actions
necessary, proper, or advisable to comply promptly with all legal requirements
which may be imposed on such party with respect to the Merger and, subject to
the respective conditions set forth in Sections 7 and 8 hereof, to consummate
the transactions contemplated by this Agreement and (b) to obtain (and to
cooperate with the other party to obtain) any consent, authorization, order or
approval of, or any exemption by, any governmental entity and any other third
party which is required to be obtained by CCBC or Sierra in connection with the
Merger and the other transactions contemplated by this Agreement.
3.2 Covenants of CCBC.
(a) Approval by Shareholders. CCBC shall cause the Merger, the Bank
Merger, this Agreement, the Bank Merger Agreement and the Agreement and Plan of
Merger to be submitted promptly for the approval of its shareholders in the most
expeditious manner available to cause approval of the Merger and Bank Merger at
a meeting to be called and held in accordance with applicable laws. CCBC shall
cause the Joint Proxy Materials (as defined in Section 6.1), when approved or
otherwise deemed effective, with any amendments thereto that may, in the
judgment of its counsel, be necessary or desirable, to be mailed to shareholders
of Bancshares. Subject to the fiduciary duty of the Board of Directors of
Bancshares, the Joint Proxy Materials shall include therein a recommendation
that Bancshares shareholders vote to approve the proposed Merger. The Joint
Proxy Materials shall be subject to prior approval by Sierra. In the event that
such is required by applicable securities laws, Sierra shall prepare for
inclusion in the Joint Proxy Materials an appropriate registration
statement/prospectus which CCBC shall assist with by providing such information
and documents as may be required in an expeditious and timely manner. Bancshares
shall hold its shareholder meeting as soon as possible but no later than March
31, 1998 unless prevented from doing so by the regulatory authorities or by
delays in obtaining or conditions imposed by the Government Approvals. Subject
to its continuing fiduciary duty to the shareholders of Bancshares, the members
of the Board of Directors of Bancshares shall at all times prior to and during
such meeting of its shareholders recommend that the transactions contemplated
hereby be adopted and approved and, subject to such duty, use its reasonable
best efforts to cause such adoption and approval.
(b) Compensation. Except for obligations under contracts with executive
officers including salary continuation plans and standard annual review of
employees and the normal wage increases incident thereto and subject to the
provision of Section 2.7(a) hereof, CCBC shall not make or approve any increase
in the compensation payable or to become payable by it to any of its directors,
officers, employees or agents (including but not limited to compensation through
any profit sharing, pension, retirement, severance, incentive or other employee
benefit program or arrangement), provided that CCBC may, with the prior written
consent of Sierra, make agreements to provide special bonus payments not to
exceed six months salary to retain employees who are deemed necessary to
complete the Merger and the Bank Merger; nor shall any bonus payment or any
agreement or commitment to make a bonus payment be made other than the
obligations to make distributions reflecting 1997 profits under Bancshares'
profit sharing plan and obligations under the 1997 bonus plans, nor shall any
stock option, warrant or other right to acquire capital stock be granted; nor
shall any existing employment agreement be extended or renewed or modified on
terms more favorable to the employee than those that are currently contained in
such contract; nor shall any employment agreement (other than any such
employment agreement that may arise by operation of law upon the hiring of any
new employee) or consulting agreement be entered into by CCBC with any such
directors, officers, employees or agents unless Sierra has given its prior
written consent. Without prior notification to Sierra, CCBC shall not hire any
new employee at an annual rate in excess of current customary practice or, in
any event, in excess of $40,000 per year.
(c) Conduct of Business in the Ordinary Course. Prior to the Effective
Date:
(i) Except as expressly contemplated or permitted in this
Agreement, CCBC shall conduct its businesses in the Ordinary Course as
heretofore conducted. For purposes of this Agreement, the "Ordinary Course" of
CCBC shall consist of banking and related businesses as presently conducted or
consistent with good banking practices and permitted under applicable laws.
Unless Sierra has given its previous written consent to any act or omission to
the contrary (which Sierra shall not unreasonably withhold), CCBC shall, until
the Effective Date, cause its officers to use their reasonable best efforts to:
(A) preserve its business and business organizations
intact;
(B) preserve the good will of customers and others having
business relations with it and take no action that would impair the benefit to
the other party of the goodwill of it or the other benefits of the Merger;
(C) consult with Sierra as to the making of any decisions
or the taking of any actions in matters other than in the Ordinary Course and
cooperate with all reasonable requests of Sierra that, in the reasonable
judgment of Sierra, are necessary to successfully complete the transactions
contemplated by this Agreement, including permitting a designated representa-
tive or representatives of Sierra to attend and participate (but not vote)
in all loan committee meetings and board of directors meetings, provided such
Sierra representative may be excluded from any portion of a board of directors
meeting which relates to the Merger or any examination report or response
thereto, or is reasonably determined to be the subject of the attorney client
privilege;
(D) maintain its properties in customary repair, working
order and condition (reasonable wear and tear excepted);
(E) comply in all material respects with all laws,
regulations and decrees applicable to the conduct of its business;
(F) keep in force at not less than its present limits all
policies of insurance, including deposit insurance of the FDIC, to the extent
reasonably practicable in light of the prevailing market conditions in the
insurance industry;
(G) keep available to the other party the services of its
present officers and employees (it being understood that both parties shall have
the right to terminate the employment of any of its officers or employees in
accordance with its established employment procedures);
(H) comply in all material respects with all orders,
agreements and memoranda of understanding with respect to it made by or with any
regulatory authority of competent jurisdiction, and promptly forward to the
other party all communications received from any such authority that are not
prohibited by such authority from being so disclosed and inform the other party
of any material restrictions imposed by any governmental authority on its
business;
(I) file in a timely manner (taking into account any
extensions duly obtained) all reports, tax returns and other documents required
to be filed with federal, state, local and other authorities;
(J) conduct an environmental audit prior to foreclosure on
any property concerning which it has knowledge, or should have knowledge, that
asbestos or asbestos-containing material, PCB's or PCB-contaminated materials,
any petroleum product, or hazardous substance or waste (as defined under any
applicable environmental laws) was or is present, manufactured, recycled,
reclaimed, released, stored, treated, or disposed of, and provide the results of
such audit to and consult with the other party regarding the significance of the
audit prior to the foreclosure on any such property;
(K) not make, renegotiate, renew, increase, extend or
purchase any loans, advances or loan commitments, in each case to any of CCBC's
officers, directors or any affiliated or related persons of such directors or
officers except in the Ordinary Course consistent with CCBC's established loan
procedures and in compliance with FRB Regulation O;
(L) not settle or otherwise take any action to release or
reduce any of its rights with respect to any litigation involving a claim of
more than $50,000 in which it is a party without the consent of Sierra which
consent shall not be unreasonably withheld; and
(M) maintain an allowance for loan losses which shall be
in substantial compliance with the comments of the FDIC in its most recent
Report of Examination.
(ii)CCBC shall not, without first having obtained the written
consent of Sierra which consent shall not be unreasonably withheld, cause its
officers to:
(A) commit itself to any loan or renewal or restructure of
an existing loan with a principal amount in excess of $100,000 if unsecured, or
in excess of $500,000 and with a loan-to-value ratio above 75% if secured by
real property, provided that Sierra's consent shall be deemed given unless it
objects and states the basis of its objection in writing, or verbally with
prompt written confirmation, within two business days after receipt of written
notice directed to the Chief Credit Officer of Sierra, together with sufficient
supporting information to allow Sierra to make an informed judgment, and Sierra
shall not unreasonably withhold its consent; provided, further, that any consent
given by Sierra shall be binding only if given by such person or persons who are
identified in writing by Sierra;
(B) purchase or sell any investment security with a
maturity in excess of three years;
(C) issue any certificate of deposit in excess of 12
months with a rate of interest in excess of the rate sheets provided weekly to
CCBC by Sierra or any other certificate of deposit in excess of 50 basis points
greater than the rates set forth on the rate sheets provided weekly to CCBC by
Sierra;
(D) enter into or renew any contract having a duration
extending beyond 9 months from the date of this Agreement, whether or not in the
Ordinary Course.
(E) sell, lease, pledge, assign, encumber or otherwise
dispose of any of its assets except other real estate owned or other property in
the Ordinary Course, in each case for adequate value, without recourse and
consistent with its customary practice; or
(F) take any action to create, relocate or terminate the
operations of any banking office or branch, or to form any new subsidiary or
affiliated entity;
(iii) Except as otherwise specifically provided, it is
understood and agreed by the parties hereto that any consent sought of Sierra or
required by CCBC pursuant to any provision of this Agreement shall be deemed to
be given following five (5) business days advanced notice by CCBC to Sierra,
which notice shall include such information as Sierra shall reasonably request.
(iv) CCBC shall conduct its business, in all material
respects, in accordance with its 1997-1998 operating and revenue budgets
heretofore delivered to Sierra and shall deliver to Sierra monthly reports in
sufficient detail to demonstrate material compliance with such budgets.
(d) No Merger or Solicitation.
(i) Prior to the Effective Date, CCBC and its Boards of
Directors and officers shall not initiate negotiations toward, or otherwise
effect or agree to effect, any Business Combination involving CCBC, acquire or
agree to acquire any of its own capital stock or the capital stock (except in a
fiduciary capacity) or assets (except in the Ordinary Course) of any other
entity, or commence any proceedings for winding up and dissolution affecting
CCBC, provided, however, that to the extent required by the fiduciary
obligations of the Board of Directors of CCBC, as determined in good faith by
the Board of Directors based on the advice of counsel, CCBC shall not be
prohibited from reviewing or responding in any way to unsolicited proposals
involving a Business Combination.
(ii)Prior to the Effective Date, neither CCBC nor any officer,
director or affiliate of CCBC, nor any investment banker, attorney, accountant
or other agent, advisor or representative retained by CCBC shall (A) solicit or
initiate, directly or indirectly, any inquiries, discussions or proposals for,
continue, propose or enter into discussions or negotiations looking toward, or
enter into any agreement or understanding providing for, any Business
Combination with CCBC; or (B) disclose, directly or indirectly, any nonpublic
information to any corporation, partnership, person or other entity or group
concerning CCBC's business and properties or afford any such other party access
to CCBC's properties, books or records or otherwise assist or encourage any such
other party in connection with the foregoing except in satisfaction of the Board
of Directors' fiduciary duties as determined on the advice of counsel; or (C)
furnish or cause to be furnished any information concerning the business,
financial condition, operations, properties or prospects of CCBC to another
person, having any actual or prospective role with respect to any such
transaction, provided, however, that to the extent required by the fiduciary
obligations of the Board of Directors of CCBC, as determined in good faith by
the Board of Directors based on the advice of counsel, CCBC shall not be
prohibited from reviewing or responding in any way to unsolicited proposals
involving such transactions.
(iii) CCBC shall notify Sierra immediately of the details of
any indication of interest of any person, corporation, firm, association or
group to acquire by any means a controlling interest in it or engage in any
Business Combination with it.
(e) Changes in Capital Stock; Dividends. At or after the date hereof
and at or prior to the Effective Date, except with the prior written consent of
Sierra or as otherwise provided in this Agreement:
(i) Bancshares shall not amend its Certificate of
Incorporation or Bylaws; other than pursuant to an outstanding stock option
agreement or the conversion of debentures make any change in its authorized,
issued or outstanding capital stock or any other equity security; issue, sell,
pledge, assign or otherwise encumber or dispose of, or purchase, redeem or
otherwise acquire, any of its shares of capital stock or other equity securities
or enter into any agreement, call or commitment of any character to do so; grant
or issue any stock option relating to, right to acquire, or security convertible
into, shares of its capital stock or other equity security; purchase, redeem,
retire or otherwise acquire (other than in a fiduciary capacity) any shares of,
or any security convertible into, capital stock or other equity security of its
companies, or agree to do any of the foregoing, except as expressly provided
herein; and
(ii)Bancshares shall not declare, set aside or pay any cash or
stock dividend or other distribution in respect of its common stock other than
regular cash dividends not to exceed $0.15 per share on a quarterly basis.
(f) Employee Welfare Benefit Plans. CCBC agrees that its employee
welfare benefit plans, as defined in Section 3(1) of ERISA, may be terminated,
frozen, modified or merged into Sierra's employee welfare benefit plans as of or
after the Effective Date, as determined by Sierra, in each case consistent with
Section 4980B of the Internal Revenue Code ("IRC"). On the Effective Date, CCBC
employees will commence participation in Sierra's welfare benefit plans on the
same terms and limitations as Sierra employees.
(g) Shareholder Lists and Other Information. After execution hereof,
Bancshares shall from time to time make available to Sierra, upon request, a
list of its shareholders and their addresses, a list showing all transfers of
the its common stock and such other information as Sierra shall reasonably
request regarding both the ownership and prior transfers of Bancshares' common
stock.
(h) Capital Commitments and Expenditures. After the execution of this
Agreement, no new capital commitments shall be entered into and no capital
expenditures shall be made by CCBC, including but not limited to creation of any
new branches and acquisitions or leases of real property, except commitments or
expenditures within existing operating and capital budgets furnished to and
approved by Sierra and commitments and expenditures not exceeding $25,000 in the
aggregate.
(i) Asset Review. CCBC shall continue to engage its internal asset
review examiners to identify potential losses with respect to loans and other
assets on its books and who shall have reviewed all nonperforming loans,
including other real estate owned, and other classified or criticized assets as
of a date within the end of the month preceding the Determination Date. CCBC
shall promptly provide a copy of such reports to Sierra. Between the date of
this Agreement and the end of the month preceding the Determination Date, all
assets of CCBC, including classified or criticized and NPAs, may be reviewed by
Sierra and Sierra shall provide, not later than the last day of the month
preceding the Determination Date, a report thereon to CCBC setting forth
Sierra's grading or other assessment thereof (including accounting treatment and
loss recognition) utilizing CCBC's regular loan/OREO review criteria consistent
with GAAP and RAP. CCBC may either accept and implement Sierra's grading or
other assessments (including accounting treatment and loss recognition)
concerning loans or OREO, or, if it does not agree with Sierra's conclusions as
set forth in the report, refer the matter for resolution by the independent loan
and appraisal experts agreed to in writing by the parties (the "Independent Loan
Reviewer" or "Independent Appraiser") who shall immediately review and/or
appraise said loan(s) or OREO utilizing CCBC's regular loan/OREO review criteria
consistent with GAAP and RAP. The parties agree that if the Independent Loan
Reviewer believes it necessary to retain an Independent Appraiser (or if such an
Appraiser is required by the penultimate sentence below), the selection and
supervision thereof of said Appraiser shall be at the discretion and under the
control of the Independent Loan Reviewer. CCBC agrees to recognize on its books
and records all loan losses and record all OREO at their net realizable value
(and record related OREO expenses) based on the review/appraisal by the
Independent Loan Reviewer or Independent Appraiser no later than the
Determination Date. Sierra and CCBC agree to accept the determinations of the
Independent Loan Reviewer and Independent Appraiser. With respect to any OREO,
based on all known information available from time to time, if it appears that
the then current independent appraisals may not be accurate or upon request of
and at the expense of Sierra, CCBC shall immediately obtain updated independent
appraisals by an Independent Appraiser (utilizing CCBC's regular criteria
consistent with GAAP and RAP) and provide copies of all such appraisals to
Sierra. Any new or additional writedowns or OREO expenses shall be recorded
immediately upon receiving any updated independent appraisal. The costs of the
neutral loan reviewer shall be shared equally by the parties.
(j) Execution of Stock Option Agreement. Concurrently with the
execution of this Agreement and as a condition thereto, Bancshares shall have
executed and delivered a stock option agreement (the "CCBC Stock Option
Agreement") which grants to Sierra an option to acquire up to 19.9% of the
issued and outstanding CCBC Shares including unconverted debentures and
unexercised options to acquire CCBC Shares (including the CCBC Shares to be
granted pursuant to the CCBC Stock Option Agreement upon the occurrence of
certain circumstances, substantially in the form of Exhibit C hereto.
(k) Pre-Closing Adjustments. On or before the Effective Date, CCBC
shall, in a manner mutually satisfactory to the parties, establish such
additional accruals and reserves consistent with GAAP and RAP as may be directed
by Sierra; provided, however, that CCBC shall not be required to take such
action (a) more than five days prior to the Effective Date, (b) unless Sierra
agrees in writing that all conditions to closing set forth in Section 7 have
been satisfied or waived, and (c) unless CCBC shall have received a written
waiver by Sierra of its rights to terminate this Agreement, and no accrual or
reserve made by CCBC pursuant to this Section 3.2(k) or any litigation or
regulatory proceeding arising out of any such accrual or reserve, shall
constitute or be deemed to be a breach, violation of or failure to satisfy any
representation, warranty, covenant, condition or other provisions of this
Agreement or otherwise be considered in determining whether any such breach,
violation or failure to satisfy shall have occurred.
3.3 Covenants of Sierra.
(a) Approval by Shareholders. Sierra shall cause the Merger, the Bank
Merger, this Agreement, the Bank Merger Agreement and the Agreement and Plan of
Merger to be submitted promptly for the approval of its shareholders in the most
expeditious manner available to cause approval of the Merger and Bank Merger at
a meeting to be called and held in accordance with applicable laws. Sierra shall
cause the Joint Proxy Materials (as defined in Section 6.1), when approved or
otherwise deemed effective, with any amendments thereto that may, in the
judgment of its counsel, be necessary or desirable, to be mailed to shareholders
of Bancorp. Subject to the fiduciary duty of the Board of Directors of Bancorp,
the Joint Proxy Materials shall include therein a recommendation that Bancorp
shareholders vote to approve the proposed Merger. The Joint Proxy Materials
shall be subject to prior approval by Sierra. In the event that such is required
by applicable securities laws, Sierra shall prepare an appropriate registration
statement/prospectus which CCBC shall assist with by providing such information
and documents as may be required in an expeditious and timely manner. Bancorp
shall hold its shareholder meeting as soon as possible but no later than March
31, 1998 unless prevented from doing so by the regulatory authorities or by
delays in obtaining or conditions imposed by the Government Approvals. Subject
to its continuing fiduciary duty to the shareholders of Bancorp, the members of
the Board of Directors of Bancorp shall at all times prior to and during such
meeting of its shareholders recommend that the transactions contemplated hereby
be adopted and approved and, subject to such duty, use its reasonable best
efforts to cause such adoption and approval.
(b) Conduct of Business in the Ordinary Course. Prior to the Effective
Date:
(i) In the event that Sierra undertakes any transaction or
series of transactions outside the ordinary course of business prior to the
Effective Date, as soon as is practicable following the determination to proceed
with such a transaction or transactions, Sierra shall advise the board of
directors of CCBC of such determination. For purposes of this Agreement, the
"Ordinary Course" of Sierra shall consist of banking and related businesses as
permitted under applicable banking laws. Unless CCBC has given its previous
written consent to any act or omission to the contrary, Sierra shall, until the
Effective Date, cause its officers to use their reasonable best efforts to:
(A) preserve its business and business organizations
intact;
(B) preserve the good will of customers and others having
business relations with it and take no action that would materially impair the
benefit to the other party of the goodwill of it or the other benefits of the
Merger;
(C) permit Walter O. Sunderman to attend and participate
(but not vote) in all loan committee meetings, provided such CCBC representative
may be excluded from any portion of a meeting which relates to the Merger or any
examination report or response thereto, or is reasonably determined to be the
subject of the attorney client privilege;
(D) maintain its properties in customary repair, working
order and condition (reasonable wear and tear excepted);
(E) comply with all laws, regulations and decrees
applicable to the conduct of its business;
(F) use its reasonable best efforts to keep in force at
not less than its present limits all policies of insurance, including deposit
insurance of the FDIC, to the extent reasonably practicable in light of the
prevailing market conditions in the insurance industry;
(G) comply with all orders, agreements and memoranda of
understanding with respect to it made by or with any regulatory authority of
competent jurisdiction;
(H) file in a timely manner (taking into account any
extensions duly obtained) all reports, tax returns and other documents required
to be filed with federal, state, local and other authorities;
(I) not sell, lease, pledge, assign, encumber or otherwise
dispose of any of its assets except for adequate value, without recourse and
consistent with its customary practice; and
(J) not make, renegotiate, renew, increase, extend or
purchase any loans, advances or loan commitments, in each case to any of its
officers, directors or any affiliated or related persons of such directors or
officers except in the Ordinary Course consistent with its established loan
procedures and in compliance with FRB Regulation O.
(ii)It is understood and agreed by the parties hereto that any
consent sought of CCBC or required by Sierra pursuant to any provision of this
Agreement shall be deemed to be given following five (5) business days advanced
notice by Sierra to CCBC, which notice shall include such information as CCBC
shall reasonably request or unless the comments of CCBC have been addressed by
Sierra.
(c) Dividends. At or after the date hereof and at or prior to the
Effective Date, except for stock dividends for which adjustments are provided in
Section 2.5 or with the prior written consent of CCBC or as otherwise provided
in this Agreement, Sierra shall not declare, set aside or pay any cash dividend
or other distribution in respect of its common stock other than, in the
discretion of the board of directors of Sierra, regular cash dividends not to
exceed $0.50 per share on an annual basis.
(d) Indemnification; Insurance.
(i) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior to
the date of this Agreement, or who becomes prior to the Effective Time, a
director or officer of CCBC ("Indemnified Parties") is, or is threatened to be,
made a party based in whole or in part on, or arising in whole or in part out
of, or pertaining to (i) the fact that he is or was a director or officer of
CCBC or any predecessor or (ii) this Agreement or any of the transactions
contemplated hereby, whether in any case asserted or arising before or after the
Effective Date, the parties hereto agree to cooperate and use their best efforts
to defend against and respond thereto. It is understood and agreed that after
the Effective Date, Sierra shall indemnify and hold harmless, as and to the
fullest extent permitted by law, each such Indemnified Party against any losses,
claims, damages, liabilities, costs, expenses (including reasonable attorney's
fees and expenses in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party to the fullest extent
permitted by law upon receipt of any undertaking required by applicable law),
judgments, fines and amounts paid in settlement in connection with any such
threatened or actual claim, action, suit, proceeding or investigation and in the
event of any such threatened or actual claim, action, suit, proceeding, or
investigation (whether asserted or arising before or after the Effective Date),
the Indemnified Parties may retain counsel reasonably satisfactory to them after
consultation with Sierra; provided, however, that (1) Sierra shall have the
right to assume the defense thereof and upon such assumption Sierra shall not be
liable to any Indemnified Party for any legal expenses of other counsel or any
other expenses subsequently incurred by any Indemnified Party in connection with
the defense thereof, except that if Sierra elects not to assume such defense or
counsel for the Indemnified Parties reasonably advises the Indemnified Parties
that there are issues which raise conflicts of interest between Sierra and the
Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with Sierra, and Sierra shall pay the
reasonable fees and expenses of such counsel for the Indemnified Parties, (2)
Sierra shall be obligated pursuant to this paragraph to pay for only one firm of
counsel for all Indemnified Parties, unless an Indemnified Party shall have
reasonably concluded; based on the advice of counsel, that in order to be
adequately represented, separate counsel is necessary for such Indemnified
Party, in which case, Sierra shall be obligated to pay for such separate
counsel, (3) Sierra shall not be liable for any settlement effected without its
prior written consent (which consent shall not be unreasonably withheld), and
(4) Sierra shall have no obligation hereunder to any Indemnified Party when and
if a court of competent jurisdiction shall ultimately determine, and such
determination shall have become final and nonappealable, that indemnification of
such Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. Any Indemnified Party wishing to claim Indemnification under
this Section 3.3(d), upon learning of any such claim, action, suit, proceeding
or investigation, shall notify Sierra thereof, provided that the failure to so
notify shall not affect the obligations of Sierra under this Section 3.3(d)
except to the extent such failure to notify materially prejudices Sierra.
Sierra's obligations under this Section 3.3(d) continue in full force and effect
for a period of four (4) years from the Effective Date; provided, however, that
all rights to indemnification in respect of any claim ("Claim") asserted or made
within such period shall continue until the final disposition of such Claim and
provided further that Sierra shall have the right of setoff against any payments
required to be made by Sierra to an Indemnified Party pursuant to this Section
3.3(d) to the extent that such Indemnified Party shall have received the
indemnification to which such Indemnified Party is entitled from an insurer
under a directors' and officers' liability insurance policy maintained by CCBC
or Sierra.
(ii)Sierra, from and after the Effective Date, will directly or
indirectly cause the persons who served as directors or officers of CCBC on or
before the Effective Date to be covered by Sierra's existing directors' and
officers' liability insurance policy (provided that Sierra may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are not less advantageous than such policy) or so-called tail
coverage obtained in connection with CCBC's directors' and officers' liability
insurance policies in effect as of the Effective Date; provided that Sierra
shall not be obligated to make annual premium payments for such insurance to the
extent such premiums exceed 150% of the premiums paid as of the date hereof by
CCBC for such insurance. Subject to the preceding sentence, such insurance
coverage, shall commence on the Effective Date and will be provided for a period
of no less than three years after the Effective Date. From the date hereof
through the Effective Date and subject to the foregoing, CCBC shall use its best
efforts to arrange for tail coverage related to its then current policies of
directors' and officers' liability insurance and following the Effective Date
Sierra shall exercise those rights which it may have to in order to commence
such coverage.
(iii) In the event Sierra or any of its successors or assigns (A)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (B) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Sierra
assume the obligations set forth in this section. The provisions of this Section
3.3(d) are intended to be for the benefit of, and shall be enforceable by, each
Indemnified Party and his or her heirs and representatives.
Section 4. REPRESENTATIONS AND WARRANTIES OF CCBC.
CCBC represents and warrants to Sierra that, except as set forth in
writing corresponding in number with the applicable section:
4.1 Corporate Status and Power to Enter Into Agreements. (i) Bancshares
is a corporation duly incorporated, validly existing under Delaware law and in
good standing under the laws of the states of Delaware and California, (ii)
subject to the Government Approvals and to the approval of this Agreement and
the transactions contemplated hereby by the shareholders of Bancshares, CCBC has
all necessary corporate power to enter into this Agreement, the Bank Merger
Agreement and the Agreement and Plan of Merger and to carry out all of the terms
and provisions hereof and thereof to be carried out by it, (iii) CPB is a
California banking corporation duly licensed by the Commissioner to engage in
the business of commercial banking in California at its principal office in
Vacaville, California and at its branch offices and (iv) neither Bancshares nor
CPB is subject to any order of the FRB, the FDIC, the Commissioner or any other
regulatory authority having jurisdiction over its business or any of its assets
or properties. Neither the scope of the business of CCBC nor the location of its
properties requires it to be licensed to do business in any jurisdiction other
than the State of California. CPB's deposits are insured by the FDIC to the
maximum extent permitted by applicable law and regulation.
4.2 Articles, Bylaws, Books and Records. The copies of the Certificate
of Incorporation of Bancshares, Articles of Incorporation of CPB and Bylaws of
CCBC heretofore delivered to Sierra are complete and accurate copies thereof as
in effect on the date hereof. The minute books of CCBC made available to Sierra
contain a complete and accurate record of all meetings of CCBC's Board of
Directors (and committees thereof) and shareholders. The corporate books and
records (including financial statements) of CCBC fairly reflect the material
transactions to which CCBC is a party or by which its properties are subject or
bound, and such books and records have been properly kept and maintained.
4.3 Compliance With Laws, Regulations and Decrees. CCBC (i) has the
corporate power to own or lease its properties and to conduct its business as
currently conducted, (ii) has complied with, and is not in default of any laws,
regulations, ordinances, orders or decrees applicable to the conduct of its
business and the ownership of its properties, including but not limited to all
federal and state laws (including but not limited to the Bank Secrecy Act),
rules and regulations relating to the offer, sale or issuance of securities, and
the operation of a commercial bank other than where such noncompliance or
default is not likely to result in a material limitation on the conduct of its
business or is not likely to otherwise have a material adverse effect on CCBC
taken as a whole, (iii) has not failed to file with the proper federal, state,
local or other authorities any material report or other document required to be
filed, and (iv) has all approvals, authorizations, consents, licenses,
clearances and orders of, and has currently effective all registrations with,
all governmental and regulatory authorities which are necessary to the business
and operations of CCBC as now being conducted.
4.4 Capitalization. As of October 31, 1997, the authorized capital
stock of Bancshares consists of 4,000,000 CCBC Shares, $0.10 par value, of which
1,096,331 are duly authorized, validly issued, fully paid and nonassessable and
currently outstanding, 1,000,000 shares of preferred stock none of which is
outstanding. Said stock has been issued in compliance with all applicable
securities laws. As of October 31, 1997, there were outstanding $2,503,000 of
Bancshares debentures ("Bancshares Debentures") convertible into 196,314 CCBC
Shares. There are currently outstanding options to purchase 129,036 CCBC Shares,
at a weighted average exercise price of $10.82 per share, issued pursuant to its
1990 and 1993 Stock Option Plan. Said options were issued and, upon issuance in
accordance with the terms of the outstanding options said shares shall be
issued, in compliance with all applicable securities laws. Otherwise, there are
no outstanding (i) options, agreements, calls or commitments of any character
which would obligate Bancshares to issue, sell, pledge, assign or otherwise
encumber or dispose of, or to purchase, redeem or otherwise acquire, any Sierra
common stock or any other equity security of Bancshares, or (ii) warrants or
options relating to, rights to acquire, or debt or equity securities convertible
into, shares of Bancshares common stock or any other equity security of
Bancshares. The outstanding common stock of Bancshares has been duly and validly
registered with the SEC pursuant to the 1934 Act, to the extent required
thereunder
4.5 Equity Interest in Any Entity. Except as collateral for outstanding
loans held in its loan portfolio and its ownership of CPB and its wholly owned
subsidiary, CCBC does not own, directly or indirectly, any equity interest in
any bank, corporation or other entity.
4.6 Financial Statements, Regulatory Reports. No financial statement or
other document to be provided to Sierra by CCBC under this Agreement, as of the
date of such document, contained, or as to documents to be delivered after the
date hereof, will contain, any untrue statement of a material fact, or, at the
date thereof, omitted or will omit to state a material fact necessary in order
to make the statements contained therein, in light of the circumstances under
which such statements were or will be made, not misleading; provided, however,
that information as of a later date shall be deemed to modify information as of
any earlier date. CCBC has filed all material documents and reports required to
be filed by it with the SEC, the FRB, the FDIC, the Commissioner and any other
governmental authority having jurisdiction over its business or any of its
assets or properties. All such reports conform in all material respects with the
requirements promulgated by such regulatory agencies. All compliance or
corrective action relating to CCBC required by governmental authorities and
regulatory agencies having jurisdiction over either Bancshares or CPB have been
taken, including compliance with any of the FRB, the FDIC or the Commissioner in
their most recent Reports of Examination. CCBC's composite CAMELS rating in its
most recent Reports of Examination is a "1" or a "2" and its CRA rating is
"outstanding" or "satisfactory' and CCBC has not been notified formally or
informally that such ratings may be changed by any bank regulatory agency having
authority over CCBC. CCBC has not received any notification, formally or
informally, from any agency or department of any federal, state or local
government or any regulatory agency or the staff thereof (i) asserting that it
is not in compliance with any of the statutes, regulations or ordinances which
such government or regulatory authority enforces, where such non-compliance or
default is likely to result in a material limitation on the conduct of its
business or is not likely to otherwise have a material adverse effect on CCBC
taken as a whole, or (ii) threatening to revoke any license, franchise, permit
or governmental authorization. CCBC has paid all assessments made or imposed by
any governmental agency. CCBC has delivered to Sierra copies of all annual
management letters and opinions, and has made available to Sierra for inspection
all reviews, correspondence and other documents in the files of CCBC prepared by
its independent accounting firm delivered to CCBC since December 31, 1996. The
financial records of CCBC have been, and are being and shall be, maintained in
all material respects in accordance with all applicable legal and accounting
requirements sufficient to insure that all transactions reflected therein are,
in all material respects, executed in accordance with management's general or
specific authorization and recorded in conformity with generally accepted
accounting principles at the time in effect. The data processing equipment, data
transmission equipment, related peripheral equipment and software used by CCBC
in the operation of its business to generate and retrieve its financial records
are adequate for the current needs of CCBC.
4.7 Tax Returns.
(i) CCBC has timely filed (taking into account any extensions
duly obtained) all federal, state, county, local and foreign tax returns
required to be filed by it, including, without limitation, estimated tax, use
tax, excise tax, real property and personal property tax reports and returns,
employer's withholding tax returns, other withholding tax returns and Federal
Unemployment Tax Returns, and all other reports or other information required or
requested to be filed by it, and each such return, report or other information
was, when filed, complete and accurate in all material respects. CCBC has paid
all taxes, fees and other governmental charges, including any interest and
penalties thereon, shown on such returns as due, except those that are being
contested in good faith, which contested matters have been disclosed to Sierra
and are disclosed on Schedule 4.7 hereto. CCBC has not been requested to give or
has given any currently effective waivers extending the statutory period of
limitation applicable to any tax return required to be filed by it for any
period. Other than as disclosed in writing to Sierra, there are no claims
pending against CCBC for any alleged deficiency in the payment of any taxes, and
no officer of CCBC responsible for tax matters knows of any pending or
threatened audits, investigations or claims for unpaid taxes or relating to any
liability in respect of any taxes. As to such tax claims, CCBC has accrued on
its books an amount that is believed to be sufficient to pay all such taxes,
including interest and penalties that may be due, and has reduced tangible
shareholders' equity by such amount. There has been no event, including a change
in ownership, that would result in a reappraisal and establishment of a new
base-year full value for purposes of Article XIII.A of the California
Constitution, of any real property owned in whole or in part by CCBC or to
CCBC's knowledge, of any real property leased by CCBC.
(ii)CCBC has delivered to Sierra copies of all its income and
franchise tax returns with respect to taxes payable to the United States of
America and the State of California for the fiscal years ended December 31, 1995
and 1996.
(iii) No consent has been filed relating to CCBC pursuant to
Section 341(f) of the IRC.
4.8 Material Adverse Change. Except as heretofore disclosed in writing
by CCBC to Sierra, since December 31, 1996, there has been (i) no material
adverse change in the business, assets, licenses, permits, franchises, results
of operations or financial condition of CCBC (whether or not in the Ordinary
Course), (ii) no change in any of the assets, licenses, permits or franchises of
CCBC that has had or can reasonably be expected to have a material adverse
effect on any of the items listed in clause (i) above, (iii) no damage,
destruction, or other casualty loss (whether or not covered by insurance) that
has had or can reasonably be expected to have a material adverse effect on any
of the items listed in clause (i) above, (iv) no amendment, modification, or
termination of any existing, or entering into of any new, contract, agreement,
plan, lease, license, permit or franchise that is material to the business,
financial condition, assets, liabilities or operations of CCBC, except in the
Ordinary Course; and (v) no disposition by CCBC of one or more assets that,
individually or in the aggregate, are material to CCBC, except sales of assets
in the Ordinary Course.
4.9 No Undisclosed Liabilities. Except as previously disclosed and
except for items for which reserves have been established or accrued and
recorded in the audited balance sheets of CCBC as of December 31, 1996, CCBC has
not incurred or discharged, and is not legally obligated with respect to any
indebtedness, liability (including, without limitation, a liability arising out
of an indemnification, guarantee, hold harmless or similar arrangement) or
obligation (accrued or contingent, whether due or to become due, and whether or
not subordinated to the claims of its general creditors), which would have a
material effect on the capital or earnings of CCBC other than as a result of
operations in the Ordinary Course after such date. No agreement pursuant to
which any loans or other assets have been or will be sold by CCBC entitled the
buyer of such loans or other assets, unless there is material breach of a
representation or covenant by the seller, to cause CCBC to repurchase such loan
or other asset or the buyer to pursue any other form of recourse against CCBC.
CCBC has not knowingly made and shall not make any representation or covenant in
any such agreement that contained or shall contain any untrue statement of a
material fact or omitted or shall omit to state a material fact necessary in
order to make the statements contained therein, in light of the circumstances
under which such representations and/or covenants were made or shall be made,
not misleading. Other than regular quarterly dividends, no cash, stock or other
dividend or any other distribution with respect to the stock of CCBC has been
declared, set aside or paid, nor have any shares of the stock of CCBC been
purchased, redeemed or otherwise acquired, directly or indirectly, by CCBC since
December 31, 1996.
4.10 Properties and Leases.
(a) CCBC has good and marketable title, free and clear of all liens and
encumbrances and the right of possession, subject to existing leaseholds, to all
real properties and good title, free and clear of all liens and encumbrances, to
all other property and assets, tangible and intangible, reflected in the CCBC
balance sheet as of December 31, 1996 (except property held as lessee under
leases disclosed in writing prior to the date hereof and except personal
property sold or otherwise disposed of since December 31, 1996, in the Ordinary
Course), except (i) liens for taxes or assessments not delinquent, (ii) such
other liens and encumbrances and imperfections of title as do not materially
affect the value of such property as reflected in the CCBC balance sheet as of
December 31, 1996, or as currently shown on the books and records of CCBC and
which do not interfere with or impair its present and continued use, (iii)
exceptions disclosed in title reports and preliminary title reports, copies of
which have been provided to Sierra. All tangible properties of CCBC conform in
all material respects with all applicable ordinances, regulations and zoning
laws. All tangible properties of CCBC are in a good state of maintenance and
repair and are adequate for the current business of CCBC. No properties of CCBC,
and, to CCBC's knowledge, no properties in which it holds a collateral or
contingent interest or purchase option, are the subject of any pending or
threatened investigation, claim or proceeding relating to the use, storage or
disposal on such property of or contamination of such property by any toxic or
hazardous waste material or substance. To CCBC's knowledge, CCBC does not own,
possess or have a collateral or contingent interest or purchase option in any
properties or other assets which contain or have located within or thereon any
hazardous or toxic waste material or substance unless the location of such
hazardous or toxic waste material or other substance or its use thereon conforms
in all material respect with all federal, state and local laws, rules,
regulations or other provisions regulating the discharge of materials into the
environment. As to any asset not owned or leased by CCBC, CCBC has not
controlled, directed or participated in the operation or management of any such
asset or any facilities or enterprise conducted thereon, such that it has become
an owner or operator of such asset under applicable environmental laws.
(b) All properties held by CCBC under leases are held by it under
valid, binding and enforceable leases, with such exceptions as are not material
and do not interfere with the conduct of the business of CCBC, and CCBC enjoys
quiet and peaceful possession of such leased property. CCBC is not in default in
any respect under any material lease, agreement or obligation regarding its
properties to which it is a party or by which it is bound.
(c) Except as disclosed to Sierra in writing, all of CCBC's rights and
obligations under the leases referred to in Section (b) above do not require the
consent of any other party to the transactions contemplated by this Agreement
and the Merger Agreements. Where required, CCBC shall obtain, prior to the
Effective Date, the consent of all parties to any such transaction.
4.11 Material Contracts. Except as previously disclosed to Sierra in
writing and excluding loans, lines of credit, loan commitments or letters of
credit to which CCBC is a party, CCBC is not a party to or bound by any contract
or other agreement made in the Ordinary Course which involves aggregate future
payments by or to CCBC of more than $25,000 and which is made for a fixed period
expiring more than one year from the date hereof, and CCBC is not a party to or
bound by any agreement not made in the Ordinary Course which is to be performed
at or after the date hereof. Each of the contracts and agreements disclosed to
Sierra pursuant to this Section is a legal and binding obligation (subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of general
applicability), and no material breach or default (and no condition which, with
notice or passage of time, or both, could become a material breach or default)
exists with respect thereto.
4.12 Loans. CCBC has disclosed to Sierra in writing prior to the date
hereof, and will promptly inform Sierra of the amounts of all loans, leases,
other extensions of credit or commitments, or other interest-bearing assets of
CCBC, that have been classified as of the date hereof or hereafter by any
internal bank examiner or any bank regulatory agency or the Commissioner as
"Other Loans Specially Mentioned," "Special Mention," "Substandard," "Doubtful,"
"Loss," or words of similar import in the case of loans (or that would have been
so classified, in the case of other interest-bearing assets, had they been
loans). CCBC has furnished and will continue to furnish to Sierra true and
accurate information concerning the loan portfolio of CCBC, and no material
information with respect to the loan portfolio has been or will be withheld from
Sierra. All loans and investments of CCBC are legal, valid and binding
obligations enforceable in accordance with its terms and are not subject to any
setoffs, counterclaims or disputes (subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general applicability), except as
disclosed to Sierra in writing or reserved for in the balance sheet of CCBC as
of September 30, 1997, and were duly authorized under and made in compliance
with applicable federal and state laws and regulations. CCBC does not have any
extensions of credit, investments, guarantees, indemnification agreements or
commitments for the same (including without limitation commitments to issue
letters of credit, to create acceptances, or to repurchase securities, federal
funds or other assets) other than those documented on the books and records of
CCBC.
4.13 Restrictions on Investments. Except for pledges to secure public
and trust deposits and repurchase agreements in the Ordinary Course, none of the
investments reflected in the CCBC unaudited balance sheet as of September 30,
1997, and none of the investments made by CCBC since September 30, 1997, is
subject to any restriction, whether contractual or statutory, which materially
impairs the ability of CCBC to freely dispose of such investment at any time
except as restricted by any applicable banking, securities or government
regulations.
4.14 Employment Contracts and Benefits.
(a) CCBC shall deliver to Sierra an accurate list setting forth all
bonus, incentive compensation, profit-sharing, pension, retirement, stock
purchase, stock option, deferred compensation, severance, hospitalization,
medical, dental, vision, group insurance, death benefits, disability and other
fringe benefit plans, trust agreements, arrangements and commitments of CCBC
(including but not limited to such plans, agreements, arrangements and
commitments applicable to former employees or retired employees, or for which
such persons are eligible), if any, together with copies of all such plans,
agreements, arrangements and commitments that are documented, any and all
contracts of employment and has made available to Sierra any Board of Directors'
minutes (or committee minutes) authorizing, approving or guaranteeing such plans
and contracts.
(b) All contributions, premiums or other payments due from CCBC to (or
under) any plan listed in subsection (a) have been fully paid or adequately
provided for through periodic accruals or otherwise on its unaudited financial
statements for the period ended September 30, 1997. Except as previously
discussed, all accruals thereon (including, where appropriate, proportional
accruals for partial periods) have been made in accordance with generally
accepted accounting principles consistently applied on a reasonable basis.
(c) To CCBC's actual knowledge without conducting due diligence, each
plan listed in subsection (a) complies with all material requirements of (i) the
Age Discrimination in Employment Act of 1967, as amended, and the regulations
thereunder and (ii) Title VII of the Civil Rights Act of 1964, as amended, and
the regulations thereunder.
(d) To CCBC's actual knowledge without conducting due diligence, each
plan listed in subsection (a) complied with all material requirements of the
health care continuation coverage provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 and the regulations thereunder.
(f) CCBC has heretofore disclosed in writing to Sierra the names of
each director, officer and employee of CCBC.
4.15 Compliance with ERISA. CCBC has not, since its inception, either
maintained or contributed to an employee pension benefit plan, as defined in
Section 3(2) of ERISA, including multi-employer plans, other than the
Continental Pacific Bank Profit Sharing Plan (the "CCBC Plan") which was
originally adopted by CCBC on November 1, 1988 and amended and restated as of
January 1, 1996, and a true and accurate copy of which has been provided to
Sierra. With respect to the CCBC Plan and its related trust (the "CCBC Trust"),
as of the Effective Date to CCBC's actual knowledge based upon written
communication from the California Bankers Association ("CBA") and any agents of
the CBA responsible for oversight of the CCBC Plan and the CCBC Trust, (i) the
CCBC Plan will in all material respects be (and currently is) in compliance with
all the applicable requirements of Section 401(a) of the IRC, and the CCBC Trust
will be exempt from income tax under Section 501(a) of the IRC; (ii) the CCBC
Plan is a adaptation of a prototype document which has received a favorable
opinion letter from the IRS, the qualified status of the CCBC Plan as adopted,
under Section 401(a) of the IRC will be determined upon the filing with the IRS
of a request for a favorable determination to be made before September 26, 1991,
or such other date prescribed by the IRS, and the IRS has not raised any
question on audit or otherwise with respect to the qualified status of the CCBC
Plan or the CCBC Trust prior to the Effective Date; (iii) CCBC shall not have
amended the CCBC Plan or administered the CCBC Plan in such a manner that would
preclude the issuance of a favorable Determination Letter to the CCBC Plan and
Trust; (iv) no contributions have exceeded the limitations set forth in Section
415 of the IRC; (v) all required and necessary filings with the IRS, Department
of Labor and any other governmental agencies with respect to the CCBC Plan and
CCBC Trust for all periods ending at or prior to the Effective Date will have
been made on a timely basis by CCBC and the plan administrator; (vi) with
respect to participation of CCBC employees in the CCBC Plan, there shall have
been no material violation of Parts 1 and 4 of Subtitle B of Title I of ERISA or
of Section 4975 of the IRC; and (vii) with respect to participation of CCBC
employees in the CCBC Plan, there shall have been no action, claim or demand of
any kind known to CCBC brought or threatened by any potential claimant or
representative of such claimant under the CCBC Plan or CCBC Trust where CCBC may
be either (A) liable directly on such action, claim or demand, or (B) obligated
to indemnify any person, group of persons or entity with respect to such action,
claim or demand, unless such action, claim or demand is covered by adequate
reserves reflected in CCBC's September 30, 1997 unaudited financial statements
or an insurer of CCBC has agreed to defend against and pay the amount of any
resulting liability without reservation.
4.16 Collective Bargaining and Employment Agreements. Except as
provided in this Agreement or as previously disclosed to Sierra in writing, CCBC
does not have any union or collective bargaining or written employment
agreements, contracts or other agreements with any labor organization or with
any member of management, or any management or consultation agreement not
terminable at will by CCBC and no such contract or agreement has been requested
by, or is under discussion by management with, any group of employees, any
member of management or any other person. There are no material controversies
pending between CCBC and any current or former employees, and to CCBC's
knowledge, there are no efforts presently being made by any labor union seeking
to organize any of such employees.
4.17 Compensation of Officers and Employees. Except as previously
disclosed to Sierra in writing, (i) no officer or employee of CCBC is receiving
aggregate direct remuneration at a rate exceeding $60,000 per annum, and (ii)
the consummation of the transactions contemplated by this Agreement, the Bank
Merger Agreement and the Agreement and Plan of Merger will not (either alone or
upon the occurrence of any additional or further acts or events) result in any
payment (whether of severance pay or otherwise) becoming due from CCBC or Sierra
to any employee of CCBC.
4.18 Legal Actions and Proceedings. Except as previously disclosed to
Sierra in writing, CCBC is not a party to, or so far as either of them is aware,
threatened with, and to CCBC's knowledge, there is no reasonable basis for, any
legal action or other proceeding or investigation before any court, any
arbitrator of any kind or any government agency, and CCBC is not subject to any
potential adverse claim, the outcome of which could involve the payment or
receipt by CCBC of any amount in excess of $50,000, unless an insurer of CCBC
has agreed to defend against and pay the amount of any resulting liability
without reservation, or, if any such legal action, proceeding, investigation or
claim will not involve the payment by CCBC of a monetary amount, which could
materially adversely affect CCBC or its business or property or the transactions
contemplated hereby. CCBC has no knowledge of any pending or threatened claims
or charges under the Community Reinvestment Act, before the Equal Employment
Opportunity Commission, the California Department of Fair Housing & Economic
Development, the California Unemployment Appeals Board, or any human relations
commission. There is no labor dispute, strike, slow-down or stoppage pending or,
to CCBC's knowledge, threatened against CCBC.
4.19 Execution and Delivery of the Agreements.
(a) The execution and delivery of this Agreement have been duly
authorized by the Boards of Directors of CCBC and, when the Merger, this
Agreement, the Bank Merger Agreement and the Agreement and Plan of Merger have
been or will be duly approved by the affirmative vote of the holders of a
majority of the outstanding shares of Bancshares common stock at a meeting of
shareholders duly called and held, the Merger, this Agreement and the Merger
Agreements will be duly and validly authorized by all necessary corporate action
on the part of CCBC.
(b) This Agreement has been duly executed and delivered by CCBC and
(assuming due execution and delivery by Sierra) constitutes, and the Bank Merger
Agreement and the Agreement and Plan of Merger upon execution and delivery by
CCBC (and assuming due execution and delivery by Sierra) will constitute, legal
and binding obligations of CCBC in accordance with its terms except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditor's rights and remedies generally.
(c) The execution and delivery by CCBC of this Agreement, the Bank
Merger Agreement and the Agreement and Plan of Merger and the consummation of
the transactions herein and therein contemplated (i) do not violate any
provision of the Certificate of Incorporation of Bancshares, the Articles of
Incorporation of CPB or Bylaws of CCBC or, to CCBC's knowledge, any provision of
federal or state law or any governmental rule or regulation (assuming (A)
receipt of the Government Approvals, (B) receipt of the requisite Bancshares
shareholder approval, (C) due registration of the Sierra Shares under the
Securities Act of 1933, as amended ("1933 Act"), (D) receipt of appropriate
permits or approvals under state securities or "blue sky" laws, and (E) accuracy
of the representations of Sierra set forth herein), and (ii) to CCBC's
knowledge, do not require any consent of any person except as contemplated
herein, conflict with or result in a breach of, or accelerate the performance
required by any of the terms of, any material debt instrument, lease, license,
covenant, agreement or understanding to which CCBC is a party or by which it is
bound or any order, ruling, decree, judgment, arbitration award or stipulation
to which CCBC is subject, or constitute a default thereunder or result in the
creation of any lien, claim, security interest, encumbrance, charge, restriction
or right of any third party of any kind whatsoever upon any of the properties or
assets of CCBC.
4.20 Retention of Broker or Consultant. Other than Van Kasper and
Company, no broker, agent, finder, consultant or other party (other than legal,
compliance, loan auditors and accounting advisors) has been retained by CCBC or
is entitled to be paid based upon any agreements, arrangements or understandings
made by CCBC in connection with any of the transactions contemplated by this
Agreement or the Merger Agreements. Van Kasper and Company will render an
opinion regarding the fairness of the Merger from a financial point of view.
CCBC shall provide Sierra with a true and accurate copy of its agreement(s) with
such firm. Except as previously disclosed, all costs related to such opinion
shall be paid or accrued prior to the Effective Date.
4.21 Insurance. CCBC is and continuously since its inception has been,
insured with reputable insurers against all risks normally insured against by
California commercial banks, and all of the insurance policies and bonds
maintained by CCBC are in full force and effect, CCBC is not in default
thereunder and all material claims thereunder have been filed in due and timely
fashion. In the best judgment of the management of CCBC, such insurance coverage
is adequate for CCBC. Except as disclosed to Sierra in writing, there has not
been any damage to, destruction of, or loss of any assets of CCBC not covered by
insurance that could materially and adversely affect the business, financial
condition, properties, assets or results of operations of CCBC.
4.22 Loan Loss Reserves. To the knowledge of CCBC's management, the
allowance for loan losses as of the Effective Date will be adequate in all
material respects under the requirements of all applicable state and federal
laws and regulations to provide for possible loan losses on outstanding loans,
net of recoveries.
4.23 Transactions With Affiliates. Except as may arise in the Ordinary
Course, CCBC has not extended credit, committed itself to extend credit, or
transferred any asset to or assumed or guaranteed any liability of the employees
or directors of CCBC, or any spouse or child of any of them, or to any of their
"affiliates" or "associates" as such terms are defined in Rule 405 under the
1933 Act. CCBC has not entered into any other transactions with the employees or
directors of CCBC or any spouse or child of any of them, or any of their
affiliates or associates, except as disclosed in writing to Sierra. Any such
transactions have been on terms no less favorable to CCBC than those which would
prevail in an arms-length transaction with an independent third party.
4.24 Information in Sierra Registration Statement. The information
pertaining to CCBC which has been or will be furnished to Sierra for or on
behalf of CCBC for inclusion in the Sierra Registration Statement and the Joint
Proxy Materials, or in the applications to be filed to obtain the Government
Approvals ("Applications"), does not and will not contain any untrue statement
of any material fact or omit or will omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading; provided, however, that
information of a later date shall be deemed to modify information as of an
earlier date. All financial statements of CCBC included in the Joint Proxy
Materials will present fairly the financial condition and results of operations
of CCBC at the dates and for the periods covered by such statements in
accordance with generally accepted accounting principles consistently applied
throughout the periods covered by such statements. CCBC shall promptly advise
Sierra in writing if prior to the Effective Date CCBC shall obtain knowledge of
any facts that would make it necessary to amend or supplement the Sierra
Registration Statement, the Joint Proxy Materials or the Applications, in order
to make the statements therein not misleading or to comply with applicable law.
4.25 Pooling of Interests. CCBC knows of no reason relating to it or
any of its subsidiaries which would reasonably cause it to believe that the
Merger will not qualify as a pooling of interests for financial accounting
purposes.
4.26 Derivatives Contracts; Structured Notes; Etc. Except as previously
disclosed, CCBC is not a party to nor has it agreed to enter into an exchange
traded or over-the-counter equity, interest rate, foreign exchange or other
swap, forward, future, option, cap, floor or collar or any other contract that
is not included on the balance sheet and is a derivatives contract (including
various combinations thereof) (each, a "Derivatives Contract") nor does it own
securities that (1) are referred to generically as "structured notes," high risk
mortgage derivatives," "capped floating rate notes" or "capped floating rate
mortgage derivatives" or (2) are likely to have changes in value as a result of
interest or exchange rate changes that significantly exceed normal changes in
value attributable to interest or exchange rate changes, except for those
Derivatives Contracts and other instruments legally purchased or entered into in
the ordinary course of business, consistent with safe and sound banking
practices and regulatory guidelines, and previously disclosed in writing to
Sierra. All of such Derivatives Contracts or other instruments are legal, valid
and binding obligations of CCBC enforceable in accordance with their terms
(except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally), and are in
full force and effect. CCBC has duly performed in all material respects all of
their material obligations thereunder to the extent that such obligations to
perform have accrued; and, to CCBC's knowledge, there are no breaches,
violations or defaults or allegations or assertions of such by any party
thereunder which would have or would reasonably be expected to have a Material
Adverse Effect.
4.27 Accuracy of Representations and Warranties. No representation or
warranty by CCBC, and no statement by CCBC in any certificate, agreement,
schedule or other document furnished in connection with the transactions
contemplated by this Agreement or the Merger Agreements, contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary to make such representation, warranty or statement
not misleading to Sierra; provided, however, that information as of a later date
shall be deemed to modify information as of an earlier date.
Section 5. REPRESENTATIONS AND WARRANTIES OF SIERRA.
Sierra represents and warrants to CCBC that, except as set forth in
writing corresponding in number to the appropriate section:
5.1 Corporate Status and Power to Enter Into Agreements. (i) Bancorp is
a corporation duly incorporated, validly existing and in good standing under
California law, and is a registered bank holding company under the BHCA, (ii)
subject to the approval of this Agreement and the transactions contemplated
hereby by the Commissioner, the FDIC and, unless waived, the FRB, Sierra has all
necessary corporate power to enter into this Agreement and the Merger Agreements
and to carry out all of the terms and provisions hereof and thereof to be
carried out by it, (iii) Sierra Bank is a California banking corporation duly
licensed by the Commissioner to engage in the commercial banking business as now
conducted by it, and (iv) neither Sierra nor any of its subsidiaries is subject
to any order of the FRB, the FDIC, the Commissioner or any other regulatory
authority having jurisdiction over its business or any of its assets or
properties. Neither the scope of the business of Sierra nor the location of its
properties requires it to be licensed to do business in any jurisdictions other
than states of California and Nevada. Sierra Bank's deposits are insured by the
FDIC to the maximum extent permitted by applicable law and regulation.
5.2 Articles, Bylaws, Books and Records. The copies of the Articles of
Incorporation and Bylaws of Sierra made available to CCBC are complete and
accurate copies thereof as in effect on the date hereof. The minute books of
Sierra contain a complete and accurate record of all meetings of Sierra's Boards
of Directors (and committees thereof) and shareholders. The corporate books and
records (including financial statements) of Sierra fairly reflect the material
transactions to which Sierra is a party or by which its properties are subject
or bound, and such books and records have been properly kept and maintained.
5.3 Compliance With Laws, Regulations and Decrees. Sierra (i) has the
corporate power to own or lease its properties and to conduct its business as
currently conducted, (ii) has complied with, and is not in default of any laws,
regulations, ordinances, orders or decrees applicable to the conduct of its
business and the ownership of its properties, including but not limited to all
federal and state laws (including but not limited to the Bank Secrecy Act),
rules and regulations relating to the offer, sale or issuance of securities, and
the operation of a commercial bank, other than where such noncompliance or
default is not likely to result in a material limitation on the conduct of the
business of Sierra or is not likely to otherwise have a material adverse effect
on Sierra taken as a whole, (iii) has not failed to file with the proper
federal, state, local or other authorities any material report or other document
required to be to filed, and (iv) has all approvals, authorizations, consents,
licenses, clearances and orders of, and has currently effective all
registrations with, all governmental and regulatory authorities which are
necessary to the business and operations of Sierra as now being conducted.
5.4 Capitalization. As of October 31, 1997, the authorized capital
stock of Sierra consists of 10,000,000 shares of Sierra common stock, no par
value, of which 4,088,659 are duly authorized, validly issued, fully paid and
nonassessable and currently outstanding, 9,800,000 shares of preferred stock
none of which is outstanding, 200,000 shares of series A preferred stock none of
which are issued or outstanding. Said stock has been issued in compliance with
all applicable securities laws. There are currently outstanding options to
purchase 345,383 shares of Sierra common stock, at a weighted average exercise
price of $11.56 per share, issued pursuant to its 1988 and 1996 Stock Option
Plan. Said options were issued and, upon issuance in accordance with the terms
of the outstanding options said shares shall be issued, in compliance with all
applicable securities laws. Sierra has adopted a Board of Directors Deferred
Compensation and Stock Award Plan under which the members of Sierra's Board of
Directors can elect to defer earned director compensation and take such
compensation upon retirement from the Board either in the form of Sierra Shares
or in cash. Otherwise, there are no outstanding (i) options, agreements, calls
or commitments of any character which would obligate Sierra to issue, sell,
pledge, assign or otherwise encumber or dispose of, or to purchase, redeem or
otherwise acquire, any Sierra common stock or any other equity security of
Sierra, or (ii) warrants or options relating to, rights to acquire, or debt or
equity securities convertible into, shares of Sierra common stock or any other
equity security of Sierra. The outstanding common stock of Sierra has been duly
and validly registered with the SEC pursuant to the 1934 Act, to the extent
required thereunder.
5.5 Financial Statements, Regulatory Reports. No financial statement or
other document to be provided to CCBC by Sierra under this Agreement, as of the
date of such document, contained, or as to documents to be delivered after the
date hereof, will contain, any untrue statement of a material fact, or, at the
date thereof, omitted or will omit to state a material fact necessary in order
to make the statements contained therein, in light of the circumstances under
which such statements were or will be made, not misleading; provided, however,
that information as of a later date shall be deemed to modify information as of
any earlier date. Sierra has filed all material documents and reports required
to be filed by it with the FDIC, the Commissioner, the FRB, the SEC and any
other governmental authority having jurisdiction over its business or any of its
assets or properties. All such reports conform in all material respects with the
requirements promulgated by such regulatory agencies. All compliance or
corrective action relating to Sierra required by governmental authorities and
regulatory agencies having jurisdiction over either Bancorp or Sierra Bank have
been taken, including compliance with any of the FRB, the FDIC or the
Commissioner in their most recent Reports of Examination. Sierra's composite
CAMELS rating in its most recent Reports of Examination is a "1" or a "2" and
its CRA rating is "outstanding" or "satisfactory' and Sierra has not been
notified formally or informally that such ratings may be changed by any bank
regulatory agency having authority over Sierra. Sierra has not received any
notification, formally or informally, from any agency or department of any
federal, state or local government or any regulatory agency or the staff thereof
(i) asserting that it is not in compliance with any of the statutes, regulations
or ordinances which such government or regulatory authority enforces, or (ii)
threatening to revoke any license, franchise, permit or governmental
authorization of Sierra. Sierra has paid all assessments made or imposed by any
governmental agency. Sierra has delivered to CCBC copies of all annual
management letters and opinions, and has made available to CCBC for inspection
all reviews, correspondence and other documents in the files of Sierra prepared
by Deloitte & Touche or any other certified public accountant engaged by Sierra
and delivered to Sierra since December 31, 1996. The financial records of Sierra
have been, are being and shall be maintained in all material respects in
accordance with all applicable legal and accounting requirements sufficient to
insure that all transactions reflected therein are, in all material respects,
executed in accordance with management's general or specific authorization and
recorded in conformity with generally accepted accounting principles at the time
in effect. The data processing equipment, data transmission equipment, related
peripheral equipment and software used by Sierra in the operation of its
business to generate and retrieve its financial records are adequate for the
current needs of Sierra.
5.6 Tax Returns.
(a) Sierra has timely filed all federal, state, county, local and
foreign tax returns required to be filed by it, including, without limitation,
estimated tax, use tax, excise tax, real property and personal property tax
reports and returns, employer's withholding tax returns, other withholding tax
returns and Federal Unemployment Tax Returns, and all other reports or other
information required or requested to be filed by each of them, and each such
return, report or other information was, when filed, complete and accurate in
all material respects. Sierra has paid all taxes, fees and other governmental
charges, including any interest and penalties thereon, when they have become
due, except those that are being contested in good faith, which contested
matters have been disclosed to CCBC. Except as set forth below, neither Sierra
nor any of its subsidiaries has been requested to give or has given any
currently effective waivers extending the statutory period of limitation
applicable to any tax return required to be filed by either of them for any
period. Except as set forth below, there are no claims pending against Sierra or
any of its subsidiaries for any alleged deficiency in the payment of any taxes,
and Sierra does not know of any pending or threatened audits, investigations or
claims for unpaid taxes or relating to any liability in respect of any taxes.
(b) No consent has been filed relating to Sierra pursuant to Section
341(f) of the IRC.
5.7 Material Adverse Change. Except as heretofore disclosed in writing
by Sierra to CCBC, since September 30, 1997, there has been no material adverse
change in the business, assets, licenses, permits, franchises, results of
operations or financial condition of Sierra (whether or not in the Ordinary
Course).
5.8 Legal Actions and Proceedings. Except as previously disclosed to
CCBC in writing, Sierra is not a party to, or so far as either of them is aware,
threatened with, and to Sierra's knowledge, there is no reasonable basis for,
any legal action or other proceeding or investigation before any court, any
arbitrator of any kind or any government agency, and Sierra is not subject to
any potential adverse claim, the outcome of which could involve the payment or
receipt by Sierra of any amount in excess of $200,000, unless an insurer of
Sierra has agreed to defend against and pay the amount of any resulting
liability without reservation, or, if any such legal action, proceeding,
investigation or claim will not involve the payment by Sierra of a monetary
amount, which could materially adversely affect Sierra or its business or
property or the transactions contemplated hereby. Sierra has no knowledge of any
pending or threatened claims or charges under the Community Reinvestment Act,
before the Equal Employment Opportunity Commission, the California Department of
Fair Housing & Economic Development, the California Unemployment Appeals Board,
or any human relations commission. There is no labor dispute, strike, slow-down
or stoppage pending or, to the knowledge of Sierra, threatened against Sierra.
5.9 Execution and Delivery of the Agreement.
(a) The execution and delivery of this Agreement have been duly
authorized by the Boards of Directors of Sierra and, when the Merger, this
Agreement, the Bank Merger Agreement and the Agreement and Plan of Merger have
been or will be duly approved by the affirmative vote of the holders of a
majority of the outstanding shares of Bancorp common stock at a meeting of
shareholders duly called and held, the Merger, this Agreement and the Merger
Agreements will be duly and validly authorized by all necessary corporate action
on the part of Sierra.
(b) This Agreement has been duly executed and delivered by Sierra and
(assuming due execution and delivery by CCBC) constitutes, and the Merger
Agreements, upon execution and delivery by Sierra (and assuming due execution
and delivery by CCBC) will constitute, legal and binding obligations of Sierra
in accordance with its terms.
(c) The execution and delivery by Sierra of this Agreement and the
Merger Agreements and the consummation of the transactions herein and therein
contemplated (i) do not violate any provision of the Articles of Incorporation
or Bylaws of Sierra or, to Sierra's knowledge, any provision of federal or state
law or any governmental rule or regulation (assuming (A) receipt of the
Government Approvals, (B) due registration of the Sierra Shares under the 1933
Act, (C) receipt of appropriate permits or approvals under state securities or
"blue sky" laws, and (D) accuracy of the representations of CCBC set forth
herein), and (ii) to Sierra's knowledge, do not require any consent of any
person under, conflict with or result in a breach of, or accelerate the
performance required by any of the terms of, any material debt instrument,
lease, license, covenant, agreement or understanding to which Sierra is a party
or by which it is bound or any order, ruling, decree, judgment, arbitration
award or stipulation to which Sierra is subject, or constitute a default
thereunder or result in the creation of any lien, claim, security interest,
encumbrance, charge, restriction or right of any third party of any kind
whatsoever upon any of the properties or assets of Sierra.
5.10 No Undisclosed Liabilities. Except for items for which reserves
have been established in the audited balance sheets of Sierra as of December 31,
1996, Sierra has not incurred or discharged, and is not legally obligated with
respect to any indebtedness, liability (including, without limitation, a
liability arising out of an indemnification, guarantee, hold harmless or similar
arrangement) or obligation (accrued or contingent, whether due or to become due,
and whether or not subordinated to the claims of its general creditors), which
would have a material effect on the capital or earnings of Sierra other than as
a result of operations in the Ordinary Course after such date. No agreement
pursuant to which any loans or other assets have been or will be sold by Sierra
entitled the buyer of such loans or other assets, unless there is material
breach of a representation or covenant by the seller, to cause Sierra to
repurchase such loan or other asset or the buyer to pursue any other form of
recourse against Sierra. Sierra has not knowingly made and shall not make any
representation or covenant in any such agreement that contained or shall contain
any untrue statement of a material fact or omitted or shall omit to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which such representations and/or covenants
were made or shall be made, not misleading. Other than regular quarterly cash
dividends by Sierra, no cash, stock or other dividend or any other distribution
with respect to the stock of Sierra has been declared, set aside or paid, nor
have any shares of the stock of Sierra been purchased, redeemed or otherwise
acquired, directly or indirectly, by Sierra since December 31, 1996.
5.11 No Material Environmental Liabilities. To Sierra's knowledge,
Sierra does not own, possess or have a collateral or contingent interest or
purchase option in any properties or other assets which contain or have located
within or thereon any hazardous or toxic waste material or substance unless the
location of such hazardous or toxic waste material or other substance or its use
thereon conforms in all material respect with all federal, state and local laws,
rules, regulations or other provisions regulating the discharge of materials
into the environment the liability of remediation for which would cause a
material adverse change in the capital or earnings of Sierra.
5.12 No Material Liabilities Under ERISA. No governmental agency or
claimant or representative of such claimant have alleged a material violation of
ERISA by Sierra the liability for which, if adversely determined, would result
in a material adverse change in the capital or earnings of Sierra.
5.13 Retention of Broker or Consultant. Other than NationsBanc
Montgomery Securities, Inc., no broker, agent, finder, consultant or other party
(other than legal, compliance, loan auditors and accounting advisors) has been
retained by Sierra or is entitled to be paid based upon any agreements,
arrangements or understandings made by Sierra in connection with any of the
transactions contemplated by this Agreement or the Merger Agreements.
NationsBanc Montgomery Securities, Inc. will render an opinion regarding the
fairness of the Merger from a financial point of view.
5.14 Loan Loss Reserves. To the knowledge of Sierra's management, the
allowance for loan losses in the Sierra balance sheet dated September 30, 1997,
and as of the Effective Date are and will be adequate in all material respects
under the requirements of all applicable state and federal laws and regulations
to provide for possible loan losses on outstanding loans, net of recoveries,
including compliance with the comments of the FDIC in its most recent Report of
Examination.
5.15 Information in Sierra Registration Statement. The information
pertaining to Sierra which has been or will be furnished for or on behalf of
Sierra for inclusion in the Sierra Registration Statement or the Joint Proxy
Materials, or in the Applications, does not and will not contain any untrue
statement of any material fact or omit or will omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading; provided,
however, that information of a later date shall be deemed to modify information
as of an earlier date. All financial statements of Sierra included in the Joint
Proxy Materials will present fairly the financial condition and results of
operations of Sierra at the dates and for the periods covered by such statements
in accordance with generally accepted accounting principles consistently applied
throughout the periods covered by such statements. Sierra shall promptly advise
CCBC in writing if prior to the Effective Date Sierra shall obtain knowledge of
any facts that would make it necessary to amend the Sierra Registration
Statement, the Joint Proxy Materials or any Application, or to supplement the
prospectus, in order to make the statements therein not misleading or to comply
with applicable law.
(a) Pooling of Interests. Sierra knows of no reason relating to it or
any of its subsidiaries which would reasonably cause it to believe that the
Merger will not qualify as a pooling of interests for financial accounting
purposes.
5.16 Equity Interest in Any Entity. Except as collateral for
outstanding loans held in its loan portfolio and its ownership of Sierra Bank,
Bancorp does not own, directly or indirectly, any equity interest in any bank,
corporation or other entity.
5.17 Loans. Sierra has disclosed to CCBC in writing prior to the date
hereof, and will promptly inform CCBC of the amounts of all loans, leases, other
extensions of credit or commitments, or other interest-bearing assets of Sierra,
that have been classified as of the date hereof or hereafter by any internal
bank examiner or any bank regulatory agency or the Commissioner as "Other Loans
Specially Mentioned," "Special Mention," "Substandard," "Doubtful," "Loss," or
words of similar import in the case of loans (or that would have been so
classified, in the case of other interest-bearing assets, had they been loans).
Sierra has furnished and will continue to furnish to CCBC true and accurate
information concerning the loan portfolio of Sierra, and no material information
with respect to the loan portfolio has been or will be withheld from CCBC. All
loans and investments of Sierra are legal, valid and binding obligations
enforceable in accordance with its terms and are not subject to any setoffs,
counterclaims or disputes (subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general applicability), except as
disclosed to CCBC in writing or reserved for in the balance sheet of Sierra as
of September 30, 1997, and were duly authorized under and made in compliance
with applicable federal and state laws and regulations. Sierra does not have any
extensions of credit, investments, guarantees, indemnification agreements or
commitments for the same (including without limitation commitments to issue
letters of credit, to create acceptances, or to repurchase securities, federal
funds or other assets) other than those documented on the books and records of
Sierra.
5.18 Derivatives Contracts; Structured Notes; Etc. Except as previously
disclosed, Sierra is not a party to nor has it agreed to enter into an exchange
traded or over-the-counter equity, interest rate, foreign exchange or other
swap, forward, future, option, cap, floor or collar or any other contract that
is not included on the balance sheet and is a derivatives contract (including
various combinations thereof) (each, a "Derivatives Contract") nor does it own
securities that (1) are referred to generically as "structured notes," high risk
mortgage derivatives," "capped floating rate notes" or "capped floating rate
mortgage derivatives" or (2) are likely to have changes in value as a result of
interest or exchange rate changes that significantly exceed normal changes in
value attributable to interest or exchange rate changes, except for those
Derivatives Contracts and other instruments legally purchased or entered into in
the ordinary course of business, consistent with safe and sound banking
practices and regulatory guidelines, and previously disclosed in writing to
CCBC. All of such Derivatives Contracts or other instruments are legal, valid
and binding obligations of Sierra enforceable in accordance with their terms
(except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally), and are in
full force and effect. Sierra has duly performed in all material respects all of
their material obligations thereunder to the extent that such obligations to
perform have accrued; and, to Sierra's knowledge, there are no breaches,
violations or defaults or allegations or assertions of such by any party
thereunder which would have or would reasonably be expected to have a Material
Adverse Effect.
5.19 Accuracy of Representations and Warranties. No representation or
warranty by Sierra, and no statement by Sierra in any certificate, agreement,
schedule or other document furnished in connection with the transactions
contemplated by this Agreement or the Merger Agreements, contains or will
contain any untrue statement of a material fact or omits or will omit to state
any material fact necessary to make such representation, warranty or statement
not misleading to CCBC; provided, however, that information as of a later date
shall be deemed to modify information as of an earlier date.
Section 6. SECURITIES ACT OF 1933; SECURITIES EXCHANGE ACT OF 1934.
6.1 Preparation and Filing of Registration Statement. Sierra shall
promptly prepare and file with the SEC a registration statement on the
appropriate form (the "Sierra Registration Statement") under and pursuant to the
provisions of the 1933 Act for the purpose of registering the Sierra Shares to
be issued in the Acquisition. Sierra and CCBC shall promptly prepare joint proxy
materials (the "Joint Proxy Materials") for the purpose of submitting this
Agreement, the Bank Merger and the Agreement and Plan of Merger to the
respective shareholders of Sierra and CCBC for approval. Sierra and CCBC shall
cooperate in all reasonable respects with regard to the preparation of the
Sierra Registration Statement and the Joint Proxy Materials. The Joint Proxy
Materials in definitive form are expected to serve as the prospectus to be
included in the Sierra Registration Statement. Sierra and CCBC shall each
provide promptly to the other such information concerning its business and
financial condition and affairs as may be required or appropriate for inclusion
in the Sierra Registration Statement or the Joint Proxy Materials, and shall
cause its counsel and auditors to cooperate with the other's counsel and
auditors in the preparation of the Sierra Registration Statement and the Joint
Proxy Materials.
6.2 Effectiveness of Registration Statement and Listing of Shares.
Sierra and CCBC shall use their commercially reasonable efforts to have the
Sierra Registration Statement and any amendments or supplements thereto declared
effective under the 1933 Act as soon as practicable, and thereafter CCBC shall
distribute the Proxy Materials to holders of its common stock in accordance with
applicable laws. Sierra shall use commercially reasonable efforts to cause the
Sierra Shares issued to effect the Merger to be approved for listing on the
Nasdaq National Market System when such Sierra Shares are issued to Bancshares'
shareholders.
6.3 Sales and Resales of Common Stock. Sierra shall not be required to
maintain the effectiveness of the Sierra Registration Statement for the purpose
of sale or resale of the Sierra Shares by any person.
6.4 Rule 145 and Related Matters. At Sierra's option, securities
representing Sierra Shares issued to "affiliates", as that term is defined in
the 1933 Act, of CCBC (as determined by counsel to Sierra and CCBC) under Rule
145 of the Rules and Regulations under the 1933 Act pursuant to the Merger
Agreements will be subject to stop transfer orders and will bear a restrictive
legend in substantially the following form:
"The Securities Represented by this Certificate Have been
Issued in a Transaction to Which Rule 145 Promulgated under
the Securities Act of 1933, as Amended, Applies and May Only
Be Sold or Otherwise Transferred in Compliance with the
Requirements of Rule 145 or Pursuant to an Effective
Registration Statement under Said Act or in a Transaction
Which, in the Opinion of Counsel Satisfactory to the Issuer,
satisfies an Exemption from Such Registration."
Should any opinion of counsel described in the foregoing legend indicate that
the legend and any stop transfer order then in effect with respect to the shares
may be removed, Sierra will upon request substitute unlegended securities and
remove any stop transfer orders.
Section 7. CONDITIONS TO THE OBLIGATIONS OF SIERRA.
The obligations of Sierra under this Agreement are, at its option,
subject to fulfillment at or prior to the Effective Date of each of the
following conditions; provided, however, that any one or more of such conditions
may be waived by the Board of Directors of Sierra at any time at or prior to the
Effective Date:
7.1 Representations and Warranties. The representations and warranties
of CCBC in Section 4 hereof shall be true and correct in all material respects
on and as of the Effective Date, with the same effect as though such
representations and warranties had been made on and as of such date except as to
any representation or warranty which specifically relates to an earlier date.
7.2 Compliance and Performance Under Agreement. CCBC shall have
performed and complied in all material respects with all terms of this Agreement
and the Merger Agreements required to be performed or complied with by it at or
prior to the Effective Date.
7.3 Material Adverse Change. No materially adverse change shall have
occurred since September 30, 1997, in the business, financial condition or
results of operations of CCBC and CCBC shall not be a party to or, so far as
CCBC is aware, threatened with, and to CCBC's knowledge there is no reasonable
basis for, any legal action or other proceeding before any court, any arbitrator
of any kind or any Government agency if, in the reasonable judgment of Sierra,
such legal action or proceeding could materially adversely affect CCBC, or its
business, financial condition or results of operations.
7.4 Approval of Agreement. The Merger, this Agreement and the Merger
Agreements shall have been duly approved by the affirmative vote of the holders
of a majority of the outstanding shares of Sierra Shares and CCBC Shares.
7.5 Officer's Certificate. Sierra shall have received a certificate,
dated the Effective Date, signed on behalf of CCBC by the respective Presidents
and Chief Financial Officers of Bancshares and CPB to the effect that the
conditions in Sections 7.1-7.4 have been satisfied.
7.6 Opinion of Counsel. CCBC shall have delivered to Sierra such
documents as may reasonably be requested by Sierra to evidence compliance by
CCBC with the provisions of this Agreement and the Merger Agreements, including
an opinion of its counsel in a form substantially as set forth on Exhibit 7.6.
7.7 Absence of Legal Impediment. On the Effective Date, there shall be
an absence of: (a) any suit, action or proceeding, or order against CCBC or
Sierra with respect to any part of this Agreement, or the Merger, or
challenging, enjoining, or otherwise affecting the consummation of the Merger
which, in the opinion of counsel for Sierra, materially affects the Merger or
the consummation of this Agreement; or (b) any pending or threatened action or
proceeding by the United States Department of Justice or other federal
governmental agency seeking to enjoin, prohibit or otherwise impede the Merger;
or (c) a banking moratorium or other suspension of payment by banks in the
United States or any general limitation on extension of credit by lending banks
in the United States.
7.8 Effectiveness of Registration Statement. The Sierra Registration
Statement and any amendments or supplements thereto shall have become effective
under the 1933 Act. No stop order suspending the effectiveness of such
Registration Statement shall be in effect and no proceedings for such purpose
shall have been initiated or threatened by or before the SEC. All state
securities and "blue sky" permits or approvals required to consummate the
transactions contemplated by this Agreement and the Merger Agreements shall have
been received.
7.9 Government Approvals. All Government Approvals shall be in effect,
and all conditions or requirements prescribed by law or by any such Governmental
Approval shall have been satisfied; provided, however, that no Government
Approval shall be deemed to have been received if it shall require the
divestiture or cessation of any of the present businesses or operations
conducted by either of the parties hereto or shall impose any other condition or
requirement, which Sierra in its reasonable judgment shall deem to be materially
burdensome (in which case Sierra shall promptly notify CCBC). For purposes of
this Agreement no condition shall be deemed to be "materially burdensome" if
such condition does not materially differ from conditions regularly imposed by
the FRB, the Commissioner, or FDIC in orders approving transactions of the type
contemplated by this Agreement and compliance with such condition would not:
(a) require the taking of any action inconsistent with the manner in
which Sierra or CCBC has conducted its business previously;
(b) have a material adverse effect upon the business, financial
condition or results of operations of Sierra or CCBC; or
(c) preclude satisfaction of any of the conditions to consummation of
the transactions contemplated by this Agreement.
7.10 Tax Opinion. Sierra and CCBC shall have received an opinion of
counsel or accountants satisfactory to both parties, subject to assumptions and
exceptions normally included, in form and substance reasonably satisfactory to
both parties, substantially to the effect that under federal income tax law and
California income and franchise tax law:
(a) The Merger will qualify as a "reorganization" within the meaning of
Internal Revenue Code Section 368(a)(1)(A);
(b) Except for any cash received in lieu of any fractional share, no
gain or loss will be recognized by holders of CCBC Shares who receive Sierra
Shares in exchange for the CCBC Shares which they hold;
(c) The holding period of Sierra Shares exchanged for CCBC Shares
(including any fractional share prior to its conversion into cash) will include
the holding period of the CCBC Shares for which they are exchanged, assuming the
shares of CCBC Shares are capital assets in the hands of the holder thereof at
the Effective Date;
(d) The basis of the Sierra Shares received in the exchange will be the
same as the basis of the CCBC Shares for which they are exchanged, less any
basis attributable to fractional shares for which cash is received;
(e) No gain or loss will be recognized by Bancshares or CPB in
connection with the Merger or the Bank Merger;
(f) Any cash received by a shareholder of CCBC in lieu of a fractional
share will, to the extent such share was a capital asset in the hands of the
CCBC shareholder, result in recognition of capital gain or loss by such
shareholder measured by the difference between the cash received and the basis
of such fractional share;
(g) Provided the options to buy Sierra Shares are not actively traded
on an established market, no gain or loss will be recognized by the holders of
nonqualified options to buy CCBC Shares upon the conversion of those options
into nonqualified options to buy Sierra Shares under the same terms and
conditions as in effect immediately prior to the proposed transaction;
(h) No gain or loss will be recognized by the holders of incentive
stock options to buy CCBC Shares upon the conversion of those options into
incentive stock options to buy Sierra Shares under the same terms and conditions
as in effect immediately prior to the proposed transaction;
(i) A CCBC shareholder who dissents to the transaction and receives
cash in exchange for the shareholder's CCBC Shares will be treated as having
received a distribution in redemption of the shareholder's CCBC Shares, subject
to the provisions and limitations of Section 302. Where, as a result of such
distribution, the shareholder owns no Sierra Shares, either directly or by
reason of Section 318, and provided the CCBC Shares were capital assets in such
shareholder's hands, the redemption will result in the recognition of capital
gain or loss by such shareholder measured by the difference between the amount
of cash received and the adjusted basis of the CCBC Shares surrendered; and
(j) No gain or loss will be recognized (and no amount will be included
in income) by a holder of CCBC convertible debentures (whether or not such
holder also holds CCBC Shares) upon the assumption of such debentures by Sierra.
7.11 Unaudited Financials. Not later than the Determination Date, CCBC
shall have furnished Sierra a copy of its most recently prepared unaudited
consolidated financial statements for the period beginning January 1, 1997 and
ending the month end immediately preceding the Determination Date, including a
balance sheet and statement of income of CCBC for that period.
7.12 Rule 145 Undertaking. Each director, executive officer and other
person who is an "affiliate" (for purposes of Rule 145 under the Securities Act)
of CCBC shall have delivered to Sierra, as soon as practicable after the date of
this Agreement, and prior to the date of the shareholder meeting called by
Bancshares to approve this Agreement, a written agreement, in the form of
Exhibit 7.12 hereto, providing that such person will not sell, pledge, transfer
or otherwise dispose of any Sierra Shares to be received by such "affiliate" in
the Merger, except in compliance with the applicable provisions of the
Securities Act and the rules and regulations thereunder. Notwithstanding any
other provision of this Agreement, no certificate for Sierra Shares shall be
delivered in exchange for CCBC Shares held by any such "affiliate" who shall not
have executed and delivered such an agreement.
7.13 Closing Documents. Sierra shall have received such certificates
and other closing documents as counsel for Sierra shall reasonably request.
7.14 Consents. CCBC shall have received, or Sierra shall have satisfied
itself that CCBC will receive, all consents of other parties to and required by
material mortgages, notes, leases, franchises, agreements, licenses and permits
applicable to CCBC, in each case in form and substance reasonably satisfactory
to Sierra, and no such consent or license or permit shall have been withdrawn or
suspended.
7.15 Shareholder Agreements. All directors of CCBC shall have entered
into a shareholder's agreement in the form attached hereto as Exhibit 7.15
contemporaneously with the execution of this Agreement by which such
shareholders agree to vote their shares and any shares over which such
shareholders have voting authority in favor of the Merger and further agreeing,
to the extent permitted by law and the bylaws of CCBC, to vote in favor of the
Merger by consent solicitation.
7.16 Noncompetition Agreements. All existing non-employee directors of
CCBC shall have entered into a written agreement not to engage in a business
competitive to that of Sierra or CCBC in Solano, Sacramento and Contra Costa
Counties for a period of three years from the closing of the Acquisition.
Restricted activities shall include participation in organizing or any stock
ownership in a new bank, acquisition of equity securities of any competing bank
that has operations within the aforementioned counties with less than $5 billion
of assets or acting as a director of any competing institution within such area
for such period; provided that this provision shall not preclude the acquisition
of such securities if the securities so acquired do not exceed in the aggregate
the lesser of $50,000 in market value at the time of acquisition or 1% of the
outstanding equities of the competing bank.
7.17 Fairness Opinion. The Board of Directors of Bancorp shall have
received an opinion of its financial advisor to the effect that the terms of the
Merger are fair, from a financial point of view, to Bancorp and its
shareholders.
7.18 Pooling of Interests. Prior to the Effective Date, Sierra shall
have received a written opinion from Deloitte & Touche that the Merger will
qualify for pooling of interests accounting treatment. In making its
determination that the Merger will qualify for such treatment, Deloitte & Touche
shall be entitled to assume that cash will be paid with respect to all shares
held of record by any holder of dissenting shares.
7.19 Resignations. Sierra shall have received resignations of all of
the directors of CCBC, which resignations shall be effective on the Effective
Date.
Section 8. CONDITIONS TO THE OBLIGATIONS OF CCBC.
The obligations of CCBC under this Agreement are, at its option,
subject to the fulfillment at or prior to the Effective Date of each of the
following conditions provided, however, that any one or more of such conditions
may be waived by the Board of Directors of Bancshares at any time at or prior to
the Effective Date:
8.1 Representations and Warranties. The representations and warranties
of Sierra in Section 5 hereof shall be true and correct in all material respects
on and as of the Effective Date with the same effect as though such
representations and warranties had been made on and as of such date except as to
any representation or warranty which specifically related to an earlier date.
8.2 Compliance and Performance Under Agreement. Sierra shall have
performed and complied in all material respects with all of the terms of this
Agreement and the Merger Agreements required to be performed or complied with by
them at or prior to the Effective Date.
8.3 Material Adverse Change. No materially adverse change shall have
occurred since September 30, 1997, in the business, financial condition, results
of operations or properties of Sierra and its subsidiaries taken as a whole, and
Sierra shall not be engaged in, or a party to or so far as Sierra is aware,
threatened with, and to Sierra's knowledge no grounds shall exist for, any legal
action or other proceeding before any court, any arbitrator of any kind or any
government agency if, in the reasonable judgment of CCBC, such legal action or
proceeding could materially adversely affect Sierra or its business, financial
condition, results of operations or assets.
8.4 Approval of Agreement. The Merger, this Agreement and the Merger
Agreements shall have been duly approved by the affirmative vote of the holders
of a majority of the outstanding Sierra Shares and CCBC Shares.
8.5 Officer's Certificate. CCBC shall have received a certificate,
dated the Effective Date, signed on behalf of Sierra by the respective
Presidents and Chief Financial Officers of Bancorp and Sierra Bank, certifying
to the fulfillment of the conditions stated in Sections 8.1-8.4 hereof.
8.6 Opinion of Counsel. Sierra shall have delivered to CCBC such
documents as may reasonably be requested by CCBC to evidence compliance by
Sierra with the provisions of this Agreement and the Merger Agreements,
including an opinion of its counsel in a form substantially as set forth on
Exhibit 8.6.
8.7 Absence of Legal Impediment. On the Effective Date, there shall be
an absence of: (a) any suit, action or proceeding, or order against CCBC or
Sierra with respect to any part of this Agreement, or the Merger, or
challenging, enjoining, or otherwise affecting the consummation of the Merger
which, in the opinion of counsel for CCBC, materially affects the Merger or the
consummation of this Agreement; or (b) any pending or threatened action or
proceeding by the United States Department of Justice or other federal
governmental agency seeking to enjoin, prohibit or otherwise impede the Merger;
or (c) a banking moratorium or other suspension of payment by banks in the
United States or any general limitation on extension of credit by lending banks
in the United States.
8.8 Effectiveness of Registration Statement. The Sierra Registration
Statement and any amendments or supplements thereto shall have become effective
under the 1933 Act. No stop order suspending the effectiveness of the Sierra
Registration Statement shall be in effect and no proceedings for such purpose
shall have been initiated or threatened by or before the SEC. All state
securities and "blue sky" permits or approvals required to consummate the
transactions contemplated by this Agreement and the Merger Agreements shall have
been received.
8.9 Government Approvals. The Government Approvals shall have been
received and shall be in effect, and all conditions or requirements prescribed
by law or by any such approval shall have been satisfied; provided, however that
no Government Approval shall be deemed to have been received if it shall require
the divestiture or cessation of any of the present business or operations
conducted by either of the parties hereto or shall impose any other condition or
requirement, which CCBC in its reasonable judgment shall deem to be materially
burdensome (in which case CCBC shall promptly notify Sierra).
8.10 Tax Opinion or Ruling. Sierra and CCBC shall have received the
opinion referred to in Section 7.10 hereof which opinion shall meet the
requirements of such section.
8.11 Unaudited Financials. Not later than the Determination Date,
Sierra shall have furnished CCBC a copy of its most recently prepared unaudited
year-to-date consolidated financial statements for the period beginning January
1, 1997 and ending the month immediately preceding the Determination Date,
including a balance sheet and year-to-date statement of income of Sierra.
8.12 Closing Documents. CCBC shall have received such certificates and
other closing documents as counsel for CCBC shall reasonably request.
8.13 Fairness Opinion. The Board of Directors of Bancshares shall have
received an opinion of its financial advisor to the effect that the Exchange
Ratio in the Merger as set forth in Section 2.1(b) of this Agreement is fair,
from a financial point of view, to the shareholders of Bancshares.
Section 9. CLOSING.
9.1 Closing Date. The closing of the transactions contemplated by this
Agreement ("Closing") shall, unless another date, time or place is agreed to in
writing by Sierra and CCBC, be held at the offices of McCutchen, Doyle, Brown &
Enersen LLP, San Francisco, California on the Effective Date.
9.2 Delivery of Documents. At the Closing, the opinions, certificates
and other documents required to be delivered by this Agreement shall be
delivered.
9.3 Filings. At the Closing, Sierra and CCBC shall instruct its
representatives to make or confirm such filings as shall be required in the
opinion of counsel to Sierra and CCBC to give effect to the Merger and the Bank
Merger.
Section 10. EXPENSES.
Each party hereto agrees to pay, without right of reimbursement from
the other party and whether or not the transactions contemplated by this
Agreement or the Merger Agreements shall be consummated, the costs incurred by
such party incident to the performance of its obligations under this Agreement
and the Merger Agreements, including without limitation, costs incident to the
preparation of the Merger Agreements, this Agreement, the Sierra Registration
Statement and the Proxy Materials (including the audited financial statements of
the parties contained therein) and incident to the consummation of the
Acquisition and of the other transactions contemplated herein and in the Merger
Agreements, including the fees and disbursements of counsel, accountants,
consultants and financial advisers employed by such party in connection
therewith. CCBC shall pay 50% of the printing costs of the Sierra Registration
Statement, the Joint Proxy Materials, all fees payable pursuant to state
"blue-sky" securities laws, fees related to obtaining a tax opinion, the fee
required to be paid to the SEC to register the Sierra Shares and the costs of
distributing the Joint Proxy Materials and other information relating to these
transactions to shareholders of CCBC.
Section 11. AMENDMENT; TERMINATION.
11.1 Amendment. This Agreement and the Merger Agreements may be amended
by Sierra and CCBC at any time prior to the Effective Date without the approval
of the shareholders of Bancshares with respect to any of their terms except,
after Bancshares shareholders have approved the Merger, the terms relating to
the form or amount of consideration to be delivered to Bancshares shareholders
in the Merger.
11.2 Termination. This Agreement and the Merger Agreements may be
terminated as follows:
(a) By the mutual consent of the Boards of Directors of both Bancorp
and Bancshares at any time prior to the consummation of the Merger.
(b) By the Board of Directors of Bancorp on or after June 30, 1998, if
(i) any of the conditions in Section 7 to which the obligations of Sierra are
subject have not been fulfilled, or (ii) such conditions have been fulfilled or
waived by Sierra and CCBC shall have failed to complete the Merger.
(c) By the Board of Directors of Bancorp if (i) it has become aware of
any facts or circumstances of which it was not aware on the date hereof and
which materially adversely affect CCBC taken as a whole or its properties,
operations or financial condition, (ii) a materially adverse change shall have
occurred since September 30, 1997, in the business, financial condition, results
of operations or properties of CCBC, or (iii) there has been material failure or
prospective material failure on the part of CCBC to comply with its obligations
under this Agreement or the Merger Agreements, or any material failure or
prospective failure to comply with any of the conditions set forth in Section 7
hereof.
(d) By the Board of Directors of either party in the event that CCBC
approves, recommends or enters into an agreement for a Business Combination with
any third party or group or announces publicly or privately its intention to
enter into a transaction or series of transactions with a third person or group
providing for the acquisition of all or a substantial part of CCBC, whether by
way of merger, exchange or purchase of stock, sale of assets or otherwise.
(e) By the Board of Directors of Bancshares on or after June 30, 1998,
if (i) any of the conditions contained in Section 8 to which the obligations of
CCBC are subject have not been fulfilled, or (ii) such conditions have been
fulfilled or waived but Sierra shall have failed to complete the Merger;
provided, however, that if Sierra is engaged at the time in litigation
(including an administrative appeal procedure) relating to an attempt to obtain
one or more of the Governmental Approvals or if Sierra shall be contesting in
good faith any litigation which seeks to prevent consummation of the
transactions contemplated hereby, such nonfulfillment shall not give CCBC the
right to terminate this Agreement until the later of (A) June 30, 1998, and (B)
60 days after the completion of such litigation and of any further regulatory or
judicial action pursuant thereto, including any further action by a governmental
agency as a result of any judicial remand, order or directive or otherwise or
any waiting period with respect thereto provided such date shall not occur
beyond December 31, 1998.
(f) By the Board of Directors of Bancshares if (i) it has become aware
of any facts or circumstances of which it was not aware on the date hereof and
which can or do materially adversely affect Sierra taken as a whole or its
properties, operations or financial condition, (ii) a materially adverse change
shall have occurred since September 30, 1997 in the business, financial
condition, results of operations or assets of Sierra, or (iii) there has been a
material failure or prospective material failure on the part of Sierra to comply
with its obligations under this Agreement or the Merger Agreements, or any
material failure or prospective material failure to comply with any condition
set forth in Section 8.
(g) By the Board of Directors of either party in the event Sierra or
its affiliates enter into a Business Combination with any other entity which
does not expressly contemplate the performance by Sierra or its successor in
interest of Sierra's obligations under this Agreement and Sierra indicates it
will not consummate this Agreement.
(h) By the Board of Directors of Bancshares, if the Board of Directors
determines at any time during the two business-day period commencing one day
after the Determination Date, if the Market Value is less than $21.59; provided,
however, if CCBC elects to exercise its termination right pursuant to this
Section 11(h), it shall give prompt written notice to Sierra (provided that such
notice of election to terminate may be withdrawn at any time within the
aforementioned two business-day period), in which case, within such two
business-day period, commencing on the day after receipt of such notice, Sierra
shall have the option of adjusting the Exchange Ratio to a number equal to a
quotient (rounded to the nearest ten thousandth), the numerator of which is
$25.00 and the denominator of which is the Market Value. If Sierra makes an
election contemplated by the preceding sentence, it shall give prompt written
notice to CCBC of such election and the revised Exchange Ratio, whereupon no
termination shall have occurred pursuant to this Section and this Agreement
shall remain in effect in accordance with its terms (except as the Exchange
Ratio shall have been so modified), and any references in this Agreement to
shall have been so modified), and any references in this Agreement to "Exchange
Ratio" shall thereafter be deemed to refer to the Exchange Ratio as adjusted
pursuant to this Section.
11.3 Notice of Termination. The power of termination hereunder may be
exercised by Sierra or CCBC, as the case may be, only by giving written notice,
signed on behalf of such party by its Chief Executive Officer or President, to
the other party.
11.4 Breach of Obligations. If there has been a material breach by
either party in the performance of any of the obligations herein which shall not
have been cured within twenty business days after written notice thereof has
been given to the defaulting party, the nondefaulting party shall have the right
to terminate this Agreement upon written notice to the other party. In any
event, the nondefaulting party shall have no obligation to consummate any
transaction or take any further steps toward such consummation contemplated
hereunder until such breach is cured.
11.5 Termination and Expenses.
(a) If this Agreement is terminated for any reason, the Bank Merger
Agreement and the Agreement and Plan of Merger shall automatically terminate.
Termination of this Agreement shall not terminate or affect the obligations of
the parties to pay expenses as provided in Section 10, to maintain the
confidentiality of the other party's information pursuant to Section 3.1(f), or
the provisions of this Section 11.5 or of Sections 12.1-12.7.
(b) If this Agreement is terminated pursuant to Section 11.2(d) or
because of a willful breach of the Agreement by CCBC, CCBC shall pay to Sierra,
on demand, the sum of $1,200,000. If this Agreement is terminated pursuant to
Section 11.2(g) or because of a willful breach of the Agreement by Sierra,
Sierra shall pay to CCBC, on demand, the sum of $1,200,000. In each case, the
amount indicated shall be deemed consideration or liquidated damages for
expenses incurred and the lost opportunity cost for time devoted to the
transactions contemplated by this Agreement, provided, however, each party shall
remain liable for expenses as set forth in Section 10.
Section 12. MISCELLANEOUS.
12.1 Notices. Any notice or other communication required or permitted
under this Agreement shall be effective only if it is in writing and delivered
personally, or by overnight courier, or by facsimile or sent by first class
United States mail, postage prepaid, registered or certified mail, addressed as
follows:
To Sierra: To CCBC:
SierraWest Bancorp California Community Bancshares Corporation
10181 Truckee-Tahoe Airport Road 555 Mason Street, Suite 280
Truckee, California 96160 Vacaville, CA 95688-3985
Attention: William T. Fike Attention: Walter O. Sunderman
President & CEO President & CEO
With a copy to: With a copy to:
McCutchen, Doyle, Brown & Enersen Lillick & Charles
Three Embarcadero Center Two Embarcadero Center
San Francisco, CA 94111 San Francisco, CA 94111
Attention: James M. Rockett Attention: Ronald W. Bachli
or to such other address as either party may designate by notice to the other,
and shall be deemed to have been given upon receipt.
12.2 Binding Agreement. This Agreement is binding upon and is for the
benefit of Sierra and CCBC and its successors and permitted assigns. This
Agreement is not made for the benefit of any person, firm, corporation or
association not a party hereto, and no other person, firm, corporation or
association shall acquire or have any right under or by virtue of this
Agreement. No party may assign this Agreement or any of its rights, privileges,
duties or obligations hereunder without the prior written consent of the other
party to this Agreement.
12.3 Survival of Representations and Warranties. No investigation by
Sierra or CCBC made before or after the date of this Agreement shall affect the
representations and warranties which are contained in this Agreement and such
representations and warranties shall survive such investigation, provided that,
except for the obligations of Sierra as set forth in Section 1.4,
representations, warranties, covenants and agreements of Sierra and CCBC
contained in this Agreement shall not survive the Closing.
12.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
12.5 Attorneys' Fees. In any action at law or suit in equity in
relation to this Agreement, the prevailing party in such action or suit shall be
entitled to receive a reasonable sum for its attorneys' fees and all other
reasonable costs and expenses incurred in such action or suit.
12.6 Entire Agreement; Severability. This Agreement and the documents,
certificates, agreements, letters, schedules and exhibits attached or required
to be delivered pursuant hereto set forth the entire agreement and
understandings of the parties in respect of the transactions contemplated
hereby, and supersede all prior agreements, arrangements and understanding
relating to the subject matter hereof. Each provision of this Agreement shall be
interpreted in a manner to be effective and valid under applicable law, but if
any provision hereof shall be prohibited or ruled invalid under applicable law,
the validity, legality and enforceability of the remaining provisions shall not,
except as otherwise required by law, be affected or impaired as a result of such
prohibition or ruling.
12.7 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Sierra and CCBC have caused this Agreement and Plan
of Merger to be signed by its Chief Executive Officer or Chairman as of the day
and year first above written.
CALIFORNIA COMMUNITY BANCSHARES SIERRAWEST BANCORP
CORPORATION
By /S/Walter O. Sunderman By /s/William T. Fike
Walter O. Sunderman William T. Fike
President and Chief Executive Officer President and Chief Executive Officer
CONTINENTAL PACIFIC BANK SIERRAWEST BANK
By /s/ Walter O. Sunderman By /s/ William T. Fike
Walter O. Sunderman William T. Fike
President and Chief Executive Officer President and Chief Executive Officer
<PAGE>
EXHIBIT A
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of ____________, 19__ (this
"Merger Agreement"), is made and entered into by and between California
Community Bancshares Corporation, a Delaware corporation ("Seller") and
SierraWest Bancorp, a California corporation ("Buyer").
W I T N E S S E T H:
A. The Boards of Directors of Buyer and Seller have approved, and deem
it advisable and in the best interests of Buyer, Seller and their respective
shareholders, that Buyer and Seller consummate the business transaction provided
for herein in which Seller would merge with and into Buyer (the "Merger").
B. Buyer and Seller have entered into an Plan of Acquisition and Merger
dated as of ______________, 19__ (the "Plan"), providing, among other things,
for the execution and filing of this Merger Agreement and the consummation of
the Merger.
NOW, THEREFORE, in consideration of the promises and mutual agreements
contained in this Merger Agreement, the parties to this Merger Agreement hereby
agree that Seller shall be merged with and into Buyer in accordance with the
provisions of the laws of the State of California and the State of Delaware upon
the terms and subject to the conditions set forth as follows:
Section 1. The Merger.
1.1 Effective Time. On _____________, 1998, upon the filing with the
California Secretary of State of a duly executed counterpart of this Merger
Agreement with the officers' certificates prescribed by Section 1103 of the
California General Corporation Law attached thereto, the Merger shall become
effective. The effective time of the Merger on the Effective Date shall be 12:01
a.m., Pacific Standard Time.
1.2 Effect of the Merger. On the Effective Date, Seller shall be merged
with and into Buyer and the separate corporate existence of Seller shall cease.
Buyer shall be the surviving corporation (the "Surviving Corporation") in the
Merger. It shall thereupon succeed, without other transfer, to all rights and
properties of, and shall be subject to all the debts and liabilities of, Seller
and the separate existence of Buyer as a California corporation, with all its
purposes, objects, rights, powers, privileges and franchises shall continue
unaffected and unimpaired by the Merger.
Section 2. Corporate Governance Matters.
2.1 From and after the Effective Date and until thereafter amended as
provided by law: (a) the Articles of Incorporation of Buyer as in effect
immediately prior to the Effective Date shall be and continue to be the Articles
of Incorporation of the Surviving Corporation; and (b) the Bylaws of Buyer as in
effect immediately prior to the Effective Date shall be and continue to be the
Bylaws of the Surviving Corporation.
2.2 Subject to the provisions of Section 1.4 of the Plan, (a) the
directors of the Surviving Corporation shall be those persons who are the
directors of Buyer immediately prior to the Effective Date; and (b) the officers
of the Surviving Corporation shall be those persons who are the officers of
Buyer at the Effective Date.
Section 3. Conversion of Shares.
3.1 Conversion of Seller Shares. As of the Effective Date, by virtue of
the Merger and without any action on the part of the holder of the common stock
of Seller, [par value $.10 per share] (a "Seller Share" or "Seller Common
Stock"):
(a) Each issued and outstanding Seller Share (other than fractional
shares, or any shares as to which dissenters' rights have been perfected, but
including any shares issued pursuant to the Rights Agreement), shall be
converted into ______ shares of the common stock, without par value, of Buyer
("Buyer Common Stock" or a "Buyer Share").
(b) From and after the Effective Date, the holders of certificates
formerly representing Seller Shares shall cease to have any rights with respect
thereto other than any dissenters' rights they have perfected pursuant to
Section 262 of the General Corporation Law of the State of Delaware.
(c) On the Effective Date, all shares of Seller Common Stock held in
the treasury of Seller or owned beneficially by any subsidiary of Seller other
than in a fiduciary capacity or in connection with a debt previously contracted
and all shares of Seller Common Stock owned by Buyer or owned beneficially by
any subsidiary of Buyer other than in a fiduciary capacity or in connection with
a debt previously contracted shall be canceled and no cash, stock or other
property shall be delivered in exchange therefor.
3.2 Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of Buyer Common Stock shall be issued to holders of Seller
Shares. In lieu thereof, each such holder entitled to a fraction of a share of
Buyer Common Stock shall receive, at the time of surrender of the certificate or
certificates representing such holder's Seller Shares, an amount in cash equal
to the market value per share of the Common Stock of Buyer, calculated by taking
the average of the closing price quoted on the Nasdaq, as reported in The Wall
Street Journal, for each of the twenty consecutive trading days prior to five
trading days prior to the Effective Date, rounded to 4 decimal places (whether
or not there were any trades in Buyer Common Stock on such days), multiplied by
the fraction of a share of Buyer Common Stock to which such holder otherwise
would be entitled. No such holder shall be entitled to dividends, voting rights,
interest on the value of, or any other rights in respect of, a fractional share.
<PAGE>
3.3 Surrender of Seller Shares.
(a) Prior to the Effective Date, Buyer shall appoint
____________________________, or its successor, or any other bank or trust
company mutually acceptable to Seller and Buyer, as exchange agent (the
"Exchange Agent") for the purpose of exchanging certificates representing the
Buyer Common Stock, and at and after the Effective Date, Buyer shall issue and
deliver to the Exchange Agent certificates representing the Buyer Common Stock,
as shall be required to be delivered to holders of Seller Shares pursuant to
Section 3.1 of this Merger Agreement. As soon as practicable after the Effective
Date, each holder of Seller Shares converted pursuant to Section 3.1, upon
surrender to the Exchange Agent of one or more certificates for such Seller
Shares for cancellation, along with duly executed transmittal materials to be
mailed after the Effective Date by the Exchange Agent, will be entitled to
receive a certificate representing the number of shares of Buyer Common Stock
determined in accordance with Section 3.1 and a payment in cash with respect to
fractional shares, if any, determined in accordance with Section 3.2. Each
certificate representing Buyer Common Stock will bear a notation incorporating
the Rights Agreement (as that term is defined in Section 2.1(f) of the Plan) by
reference and certificates representing the Buyer Common Stock will evidence and
entitle the holders thereof to certain rights as set forth in and subject to the
terms of the Rights Agreement ("Rights"). Certificates issued for the Buyer
common Stock shall be deemed to be certificates for said Rights.
(b) No dividends or other distributions of any kind which are declared
payable to shareholders of record of the Buyer Common Stock after the Effective
Date will be paid to persons entitled to receive such certificates for Buyer
Common Stock until such persons surrender their certificates representing Seller
Shares. Upon surrender of such certificates representing Seller Shares, the
holder thereof shall be paid, without interest, any dividends or other
distributions with respect to the Buyer Common Stock as to which the record date
and payment date occurred on or after the Effective Date and on or before the
date of surrender.
(c) If any certificate for a Buyer Share is to be issued in a name
other than that in which the certificate for a Seller Share surrendered in
exchange therefor is registered, it shall be a condition of such exchange that
the person requesting such exchange shall pay to the Exchange Agent any transfer
costs, taxes or other expenses required by reason of the issuance of
certificates for such Buyer Share in a name other than the registered holder of
the certificate surrendered, or such persons shall establish to the satisfaction
of Buyer and the Exchange Agent that such costs, taxes or other expenses have
been paid or are not applicable.
(d) All dividends or distributions, and any cash to be paid pursuant to
Section 3.2 in lieu of fractional shares, if held by the Exchange Agent for
payment or delivery to the holders of unsurrendered certificates representing
Seller Shares and unclaimed at the end of one year from the Effective Date,
shall (together with any interest earned thereon) at such time be paid or
redelivered by the Exchange Agent to Buyer, and after such time any holder of a
certificate representing a Seller Share who has not surrendered such certificate
to the Exchange Agent shall, subject to applicable law, look as a general
creditor only to Buyer for payment or delivery of such dividends or
distributions or cash, as the case may be. Buyer shall not be liable to any
holder of a share of Seller Common Stock for such share (or dividends or
distributions with respect thereto) delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(e) Upon the Effective Date, the stock transfer books of Seller shall
be closed and no transfer of Seller Common Stock shall thereafter be made or
recognized.
(f) In the event that prior to the Effective Date the outstanding
shares of Buyer Common Stock or Seller Common Stock shall have been increased,
decreased or changed into or exchanged for a different number or kind of shares
or securities by recapitalization, reclassification, stock dividend, stock split
or other like changes in Buyer's or Seller's capitalization, or a distribution
shall be made on Buyer Common Stock or Seller Common Stock in any security
convertible into Buyer Common Stock or Seller Common Stock, respectively
(provided that no such action shall be taken by Seller without Buyer's prior
written consent pursuant to Section 3.2(e) of the Plan), then an appropriate and
proportionate adjustment shall be made in the number and kind of shares of Buyer
Common Stock to be thereafter delivered pursuant to this Merger Agreement.
3.4 All shares of Buyer Common Stock shall remain outstanding and
unaffected by the Merger.
Section 4. Termination and Amendment.
4.1 The obligations of the parties to effect the Merger shall be
subject to all the terms and conditions contained in the Plan. Notwithstanding
the approval of this Merger Agreement by the shareholders of Seller or Buyer,
this Merger Agreement shall terminate forthwith in the event that the Plan shall
be terminated as therein provided.
4.2 This Merger Agreement may be amended by Buyer and Seller at any
time prior to the Effective Date without the approval of the shareholders of
Seller or Buyer with respect to any of its terms except any change in its
principal terms or in the terms relating to the form or amount of consideration
to be delivered to the Seller shareholders in the Merger. This Merger Agreement
may not be amended, except by an instrument in writing signed on behalf of each
of the parties hereto.
4.3 This Merger Agreement may be signed in any number of counterparts,
each of which shall be deemed an original, and all of which shall be deemed but
one and the same instrument.
Section 5. Miscellaneous.
5.1 The Plan is and will be maintained on file at the principal place
of business of the Surviving Corporation. The address of the principal place of
business of the Surviving Corporation is 10181 Truckee-Tahoe Airport Road,
Truckee, California, 96160.
5.2 A copy of the Plan will be furnished by the Surviving Corporation,
on request and without cost to any stockholder of Seller or Buyer.
5.3 The Plan between the parties to the Merger has been approved,
adopted, certified, executed and acknowledged by each of the Seller and Buyer
pursuant to Section 252 of the General Corporation Law of the State of Delaware,
and executed by the parties in accordance with the requirements of Chapter 12 of
the California General Corporation Law.
5.4 The Surviving Corporation agrees that it may be served with process
in the State of Delaware in any proceeding for enforcement of any obligation of
Seller, as well as for enforcement of any obligation of the Surviving
Corporation arising from the Merger, including any suit or other proceedings to
enforce the right of any stockholders as determined in appraisal proceedings
pursuant to the provisions of Section 262 of the General Corporation Law of the
State of Delaware, and irrevocably appoints the Secretary of State of the State
of Delaware as its agent to accept service of process in any such suit or other
proceedings and directs the Secretary of State of the State of Delaware to mail
copies of such process to the following address: 10181 Truckee-Tahoe Airport
Road, Truckee, California 96160.
IN WITNESS WHEREOF, the parties have duly executed this Merger
Agreement as of the date first written above.
BUYER
By
William T. Fike
President and Chief Executive Officer
By
A. Morgan Jones
Corporate Secretary
SELLER
By
Walter O. Sunderman
President and Chief Executive Officer
By
John Usnick
Corporate Secretary
<PAGE>
OFFICERS' CERTIFICATE
William T. Fike and A. Morgan Jones hereby certify that:
1. They are the President and Chief Executive Officer and Corporate
Secretary, respectively, of SierraWest Bancorp, a corporation organized under
the laws of the State of California.
2. The Merger Agreement in the form attached was duly approved by the
Board of Directors and shareholders of the corporation.
3. The shareholder approval was by the holders of a number of
outstanding shares which equaled or exceeded the vote required. The percentage
vote required was more than 50% of the outstanding shares.
4. There is only one class of shares and the number of shares
outstanding is ____________.
We further declare under penalty of perjury under the laws of the State
of California that the matters set forth in this certificate are true and
correct of our own knowledge.
Date: _______________, 19__
- ------------------------------------------------------------
William T. Fike
President and Chief Executive Officer
- ------------------------------------------------------------
A. Morgan Jones
Corporate Secretary
<PAGE>
OFFICERS' CERTIFICATE
Walter O. Sunderman and John Usnick hereby certify that:
1. They are the President and Chief Executive Officer and Corporate
Secretary, respectively, of California Community Bancshares Corporation, a
corporation organized under the laws of the State of Delaware.
2. The Merger Agreement in the form attached was duly approved by the
Board of Directors and shareholders of the corporation.
3. The shareholder approval was by the holders of a number of
outstanding shares which equaled or exceeded the vote required. The percentage
vote required was more than 50% of the outstanding shares.
4. There is only one class of shares and the number of shares
outstanding is ___________.
We further declare under penalty of perjury under the laws of the State
of California that the matters set forth in this certificate are true and
correct of our own knowledge.
Date: ____________, 19__
- ------------------------------------------------------------
Walter O. Sunderman
President and Chief Executive Officer
- ------------------------------------------------------------
John Usnick
Corporate Secretary
<PAGE>
EXHIBIT B
<PAGE>
BANK MERGER AGREEMENT
This merger agreement ("Bank Merger Agreement") is entered into as of
__________, 19__ by and among SierraWest Bank ("Sierra Bank"), a California
banking corporation, Continental Pacific Bank ("Continental"), a California
banking corporation, as follows:
Section 1. Outstanding Shares.
(a) Sierra Bank is a California banking corporation authorized by the
California Department of Financial Institutions. Sierra Bank has [____________]
authorized shares of no par value common stock of which [____________] are
outstanding and of which [__________] are subject to issued and outstanding
stock options. Sierra Bank has no outstanding shares of preferred stock or
warrants. All of the issued and outstanding shares of Sierra Bank common stock
are owned by SierraWest Bancorp, a California corporation.
(b) Continental is a California banking corporation authorized by the
California Department of Financial Institutions. Continental has [____________]
authorized shares of common stock of which [____________] are outstanding.
Continental has no outstanding shares of preferred stock, options or warrants.
All of the issued and outstanding shares of Continental common stock are owned
by California Community Bancshares, a Delaware corporation.
Section 2. The Merger.
Continental shall be merged into Sierra Bank ("Bank Merger"). Sierra
Bank shall be the surviving corporation (the "Surviving Corporation").
Section 3. Stock.
On the Effective Date, the outstanding shares of Continental shall be
canceled and no shares of Sierra Bank shall be issued in exchange therefor.
Section 4. Articles of Incorporation and By-Laws.
(a) The Articles of Incorporation of Sierra Bank shall, upon the
Effective Date, be the Articles of Incorporation of the Surviving Corporation.
It is the intention of the parties that the Merger will be treated as a tax free
reorganization pursuant to Section 368 of the Internal Revenue Code.
(b) The By-Laws of Sierra Bank, as they exist on the Effective Date,
shall be the By-Laws of the Surviving Corporation until the same are amended.
Section 5. Effect of Merger And Effective Date.
The effect of the Merger and the Effective Date of the Merger are as
prescribed by law.
Section 6. Officers and Directors
Subject to the provisions of Section 1.4 of the Plan, the officers and
directors of Sierra Bank holding office on the Effective Date shall be the
officers and directors of the Surviving Corporation until removed as provided by
law or until the election of their respective successors.
Section 7. Acts of Merging Corporation
Continental, as the merging corporation, shall from time to time, as
and when requested by the Surviving Corporation, execute and deliver all such
documents and instruments and take all such action necessary or desirable to
evidence or carry out this Merger.
Section 8. Definitions.
All capitalized terms herein shall have the meanings ascribed to them
in this Merger Agreement; provided, however, if no meaning is separately
ascribed to such capitalized terms in this Merger Agreement, then such terms
will have the meanings ascribed to them in the Plan of Acquisition and Merger
dated ______________, 19__, among SierraWest Bancorp, SierraWest Bank,
California Community Bancshares and Continental Pacific Bank ("Plan").
In witness whereof the parties have executed this Merger Agreement.
CONTINENTAL PACIFIC BANK
By___________________________________
Walter O. Sunderman
President and Chief Executive Officer
By___________________________________
John Usnick
Corporate Secretary
SIERRAWEST BANK
By___________________________________
William T. Fike
President and Chief Executive Officer
By___________________________________
A. Morgan Jones
Corporate Secretary
<PAGE>
EXHIBIT C
<PAGE>
STOCK OPTION AGREEMENT
This AGREEMENT is dated as of November 13, 1997, between SierraWest
Bancorp ("Sierra"), a California corporation, and California Community
Bancshares, a California corporation ("CCBC").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Sierra and CCBC have approved an
Plan of Acquisition and Merger ("Plan") dated as of the date hereof which
contemplates the acquisition by Sierra of CCBC by means of the merger of CCBC
with and into Sierra, with Sierra as the entity surviving the merger;
WHEREAS, as a condition to Sierra's entry into the Plan and to induce
such entry, CCBC has agreed to grant to Sierra the option set forth herein to
purchase shares of CCBC's authorized but unissued common stock, par value $.10
per share ("Common Stock");
Unless otherwise provided in this Agreement, capitalized terms shall
have the meanings ascribed to such terms in the Plan.
NOW, THEREFORE, in consideration of the premises herein contained, the
parties agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth
herein, CCBC hereby grants to Sierra an option (the "Option") to purchase up to
282,914 shares of Common Stock (the "Option Shares"), at a per share price equal
to the average of the bid and ask prices for CCBC Common Stock for the five
trading days preceding the execution of the Plan (the "Exercise Price");
provided, however, that in the event CCBC issues or agrees to issue any shares
of Common Stock to an Acquiring Person (as that term is defined in Section 6
herein) at a price less than the Exercise Price, the Exercise Price shall be
equal to such lesser price.
2. Exercise of Option.
(a) Sierra may exercise the Option, in whole or in part, in
accordance with and to the extent permitted by applicable law at any time or
from time to time but only upon or after the occurrence of a Purchase Event (as
that term is defined in Paragraph (b) below of this section); provided that to
the extent the Option shall not have been exercised, it shall terminate and be
of no further force and effect upon the earliest to occur (such earliest date,
the "Expiration Date") of (i) the termination of the Plan pursuant to Section
11.2 (a) and (g) thereof; (ii) the date of termination pursuant to Section 11.2
(b), (c), (d), (e) or (h) thereof if such date is prior to a Purchase Event;
(iii) the effective time of the acquisition of CCBC by Sierra pursuant to the
Plan, or (iv) twelve months following the occurrence of the earliest to occur of
(A) the date-of any termination of the Plan other than as described in (i) or
(ii) above or (B) the date of first occurrence of a Purchase Event.
Notwithstanding the foregoing, CCBC shall not be obligated to issue the Option
Shares upon exercise of the Option (i) in the absence of any required
governmental or regulatory waiver, consent or approval necessary for CCBC to
issue such Option Shares or for Sierra or any transferee to exercise the Option
or prior to the expiration or termination of any waiting period required by law,
or (ii) so long as any injunction or other order, decree or ruling issued by any
federal or state court of competent jurisdiction is in effect which prohibits
the sale or delivery of the Option Shares.
(b) As used herein, a "Purchase Event" shall have occurred
when: (i) CCBC or any subsidiary of CCBC, (without the prior written consent of
Sierra) enters into an agreement with any person (other than Sierra or any of
its subsidiaries) pursuant to which such person would: (x) merge or consolidate
with, or enter into any similar transaction with CCBC or any subsidiary of CCBC,
(y) purchase, lease or otherwise acquire all or substantially all of the assets
of CCBC or (z) purchase or otherwise acquire (by merger, consolidation, share
exchange or any similar transaction) securities representing 10 percent or more
of the voting shares of CCBC (the transactions referred to in subparagraph (x),
(y) and (z) are referred to as an "Acquisition Transaction"); (ii) any person or
group of persons acting in concert (other than Sierra or any of its
subsidiaries) acquires the beneficial ownership or the right to acquire
beneficial ownership of securities representing 24.99 percent or more of the
voting shares of CCBC (the term "beneficial ownership" for purposes of this
Agreement shall have the meaning set forth in Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the regulations
promulgated thereunder); (iii) the shareholders of CCBC fail to approve the
business combination between CCBC and Sierra contemplated by the Plan at any
meeting of such shareholders which has been held for that purpose or any
adjournment or postponement thereof, the failure of such a shareholder meeting
to occur prior to termination of the Plan, or the withdrawal or modification (in
a manner adverse to Sierra) of the recommendation of CCBC's Board of Directors
of the Merger and Plan that the shareholders of CCBC approve the Merger and the
Plan, in each case, after there shall have been a public announcement that any
person (other than Sierra or any of its subsidiaries), shall have (A) made, or
publicly disclosed an intention to make, a proposal to engage in an Acquisition
Transaction, (B) commenced a tender offer, as defined herein, or filed a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to an exchange offer, as defined herein, or (C)
filed an application (or given a notice), whether in draft or final form, with
the Department of Financial Institutions of the State of California or other
federal or state bank regulatory authority, which application or notice has been
accepted for processing, for approval to engage in an Acquisition Transaction;
(iv) any person (other than Sierra or other than in connection with a
transaction which Sierra has given its prior written consent), shall have filed
an application or notice with the Department of Financial Institutions of the
State of California or other federal or state bank regulatory authority, which
application or notice has been accepted for processing, for approval to engage
in an Acquisition Transaction, exchange offer or tender offer; (v) CCBC shall
have willfully breached any covenant or obligation contained in the Plan in
anticipation of engaging in a Purchase Event, and following such breach Sierra
would be entitled to terminate the Plan (whether immediately or after the giving
of notice or passage of time or both); or (vi) a public announcement by CCBC of
the authorization, recommendation or endorsement by CCBC of an Acquisition
Transaction, exchange offer or tender offer or a public announcement by CCBC of
an intention to authorize, recommend or announce an Acquisition Transaction,
exchange offer or tender offer. If a Purchase Event has occurred, the Option
shall continue to be exercisable until its termination in accordance with
Section 2(a) hereof. CCBC shall notify Sierra promptly in writing upon learning
of the occurrence of a Purchase Event, it being understood that the giving of
such notice by CCBC shall not be a condition to the right of Sierra to transfer
or exercise the Option. As used in this Agreement, "person" shall have the same
meaning set forth in the Plan. As used in this paragraph "tender offer" or
"exchange offer" shall mean, respectively, the commencement (as such term is
defined in Rule 14d-2 promulgated under the Exchange Act) by any person (other
than Sierra or any subsidiary of Sierra) of, or the filing by any person (other
than Sierra or any subsidiary of Sierra) of a registration statement under the
Securities Act with respect to, a tender offer or exchange offer, respectively,
to purchase shares of CCBC Stock such that, upon consummation of such offer,
such person would own or control 10 percent or more of the then-outstanding
shares of CCBC Stock.
(c) In the event a Purchase Event occurs, Sierra may elect to
exercise the Option. If Sierra wishes to exercise the Option, it shall send to
CCBC a written notice (the date of which shall be referred to herein as the
"Notice Date") which specifies (i) the total number of Option Shares to be
purchased, and (ii) a place and date not earlier than two business days nor
later than ten business days from the Notice Date for the closing (the
"Closing") of such purchase (the "Closing Date"); provided however, that if
prior notification to or approval of the Department of Financial Institutions of
the State of California or any other regulatory agency is required in connection
with such purchase, the Holder, as defined below, shall promptly file the
required notice or application for approval, shall promptly notify CCBC of such
filing, and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which any required notification periods have expired or been terminated or such
approvals have been obtained and any requisite waiting period or periods shall
have passed. Any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto, subject to receipt of any required regulatory approvals.
3. Payment and Delivery of Certificates; Sierra Representation.
(a) If Sierra elects to exercise the Option, then at the
Closing, Sierra shall pay to CCBC the aggregate purchase price for the Option
Shares purchased pursuant to the exercise of the Option in immediately available
funds by a wire transfer to a bank designated by CCBC.
(b) At such Closing, simultaneously with the delivery of the
purchase price for the Option Shares as provided in Paragraph (a) hereof, CCBC
shall deliver to Sierra a certificate or certificates, registered in the name of
Sierra or its designee, representing the number of Option Shares purchased by
Sierra. Such certificates may be endorsed with any legend required pursuant to
any permit or exemption granted by the Department of Financial Institutions of
the State of California or any other regulatory agency, as well as the following
legend:
THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO CERTAIN PROVISIONS OF AN AGREEMENT BETWEEN THE REGISTERED HOLDER
HEREOF AND THE ISSUER, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICE OF THE ISSUER. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER
HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A REQUEST THEREFOR.
Any such legend shall be removed by delivery of a substitute certificate without
such legend if Sierra shall have delivered to CCBC an opinion of counsel, in
form and substance satisfactory to CCBC, that such legend is not required for
purposes of assuring compliance with applicable securities or other law or with
this Agreement.
(c) Except as otherwise provided herein, Sierra hereby
represents and warrants to CCBC that the Option is being, and any Option Shares
issued upon exercise of the Option will be, acquired by Sierra for its own
account and not with a view to any distribution thereof, and Sierra will not
sell any Option Shares purchased pursuant to exercise of the Option except in
compliance with applicable securities and other laws.
4. Representations. CCBC hereby represents and warrants to Sierra as
follows:
(a) CCBC has all requisite corporate power and authority to
enter into and perform all of its obligations under this Agreement. The
execution, delivery and performance of this Agreement and all of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of CCBC. This Agreement has been duly executed and
delivered by CCBC and constitutes a valid and binding agreement of CCBC,
enforceable against CCBC in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting the rights of creditors generally or by equitable
principles, whether such enforcement is sought in law or equity.
(b) The execution and delivery by CCBC of this Agreement and
the consummation of the transactions herein contemplated do not and will not
violate or conflict with CCBC's Certificate of Incorporation or Bylaws, any
statute, regulation, judgment, order, writ, decree or injunction applicable to
CCBC (other than as may be effected by Sierra's ownership of CCBC Common Stock
exceeding certain limits set forth by statute or regulation) or its properties
or assets and do not and will not violate, conflict with, result in a breach of,
constitute a default (or an event which with due notice and/or lapse of time
would constitute a default) under, result in a termination of, accelerate the
performance required by, or result in the creation of any lien, pledge, security
interest, charge or other encumbrance upon any of the properties or assets of
CCBC under the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, or loan agreement or other agreement, instrument or
obligation to which CCBC is a party, or by which CCBC or any Of its properties
or assets may be bound or affected.
(c) CCBC has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms, will
have reserved for issuance upon the exercise of the Option a number of shares of
Common Stock sufficient to satisfy the exercise of the Option in full, all of
which Common Stock, upon issuance pursuant hereto, shall be duly authorized,
validly issued, fully paid and nonassessable, and shall be delivered free and
clear of all claims, liens, encumbrances, security interests and preemptive
rights.
5. Adjustment Upon Changes in Capitalization.
(a) In the event of any stock dividend, stock split, split-up,
recapitalization, reclassification, combination, exchange of shares or similar
transaction or event with respect to Common Stock, the type and number of shares
or securities subject to the Option and the Exercise Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction so that Sierra shall receive, upon exercise of the
Option, the number and class of shares or other securities or property that
Sierra would have received in respect of Common Stock if the Option had been
exercised immediately prior to such event, or the record date thereof, as
applicable. If any shares of Common Stock are issued after the date of this
Agreement (other than pursuant to an event described in the first sentence of
this Section 5(a)), the number of shares of Common Stock subject to the Option
shall be adjusted so that, after such issuance, it, together with any shares of
Common Stock previously issued to Sierra pursuant hereto, equals 19.9 percent of
the number of shares of Common Stock then issued and outstanding, without giving
effect to any shares subject to or issued pursuant to this Option.
(b) In the event that CCBC, shall, prior to the Expiration
Date, enter into an agreement: (i) to consolidate with or merge into any person,
other than Sierra or one of its subsidiaries, and shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Sierra or one of its subsidiaries, to merge into CCBC and
CCBC shall be the continuing or surviving corporation, but, in connection with
such merger, the then outstanding shares of Common Stock shall be changed into
or exchanged for stock or other securities of CCBC or any other person or cash
or any other property or the outstanding shares of Common Stock immediately
prior to such merger shall after such merger represent less than 50 percent of
the outstanding shares and share equivalents of the merged company; or (iii) to
sell or otherwise transfer all or substantially all of its assets to any person,
other than Sierra or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of Sierra, of either (x) the
Succeeding Corporation (as defined below), (y) any person that controls the
Succeeding Corporation, or (z) in the case of a merger described in clause (ii),
CCBC (in each case, such person being referred to as the "Substitute Option
Issuer.")
(c) The Substitute Option shall have the same terms as the
Option, provided, that, if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to Sierra. The Substitute Option Issuer shall
also enter into an agreement with the then-holder or holders of the Substitute
Option in substantially the form as this Agreement, which shall be applicable to
the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of the Substitute Common Stock (as hereinafter defined) as is equal to
the Assigned Value (as hereinafter defined) multiplied by the number of shares
of Common Stock for which the Option was theretofore exercisable, divided by the
Average Price (as hereinafter defined). The exercise price of the Substitute
Option per share of the Substitute Common Stock (the "Substitute Option Price")
shall then be equal to the Exercise Price multiplied by a fraction in which the
numerator is the number of shares of the Common Stock for which the Option was
theretofore exercisable and the denominator is the number of shares for which
the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Succeeding Corporation" shall mean (x) the continuing or
surviving corporation of a consolidation or merger with CCBC (if other than
CCBC), (y) CCBC in a merger in which CCBC is the continuing or surviving person,
and (z) the transferee of all or any substantial part of CCBC assets (or the
assets of its subsidiaries).
(ii)"Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the Substitute Option.
(iii) "Assigned Value" shall mean the highest of (x) the price
per share of Common Stock at which a tender offer or exchange offer therefor has
been made by any person (other than Sierra or its subsidiaries) (y) the price
per share of Common Stock to be paid by any person (other than Sierra or any of
its subsidiaries) pursuant to an agreement with CCBC, and (z) the highest
closing sales price per share of Common Stock as quoted on the Nasdaq National
Market (or if Common Stock is not quoted on the Nasdaq National Market, the
highest bid price per share on any day as quoted on the principal trading market
or securities exchange on which such shares are traded as reported by a
recognized source chosen by Sierra) within the six-month period immediately
preceding the agreement referred to in (y); provided, that in the event of a
sale of less than all of CCBC's assets, the Assigned Value shall be the sum of
the price paid in such sale for such assets and the current market value of the
remaining assets of CCBC as determined by a nationally recognized investment
banking firm selected by Sierra and reasonably acceptable to CCBC, divided by
the number of shares of Common Stock outstanding at the time of such sale. In
the event that an exchange offer is made for Common Stock or an agreement is
entered into for a merger or consolidation involving consideration other than
cash, the value of the securities or other property issuable or deliverable in
exchange for the Common Stock shall be determined by a nationally recognized
investment banking firm mutually selected by Sierra and CCBC (or if applicable,
the Succeeding Corporation), provided that if a mutual selection cannot be made
as to such investment banking firm, it shall be selected by Sierra.
(iv)"Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of the Substitute Common Stock on the day preceding
such consolidation, merger or sale, provided that if CCBC is the issuer of the
Substitute Option, the Average Price shall be computed with respect to a share
of common stock issued by CCBC, the person merging into CCBC or by any company
which controls or is controlled by such merging person, as Sierra may elect.
(f) In no event pursuant to any of foregoing paragraphs shall
the Substitute Option be exercisable for more than 19.9 percent of the aggregate
of the shares of the Substitute Common Stock outstanding immediately prior to
exercise of the Substitute Option. In the event that the Substitute Option would
be exercisable for more than 19.9 percent of the aggregate of the shares of
Substitute Common Stock but for this clause (f), the Substitute Option Issuer
shall make a cash payment to Sierra equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (f)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (f). This difference in value shall be determined by a
nationally recognized investment banking firm selected by Sierra and the
Substitute Option Issuer.
(g) CCBC shall not enter into any transaction described in
subsection (b) of this Section 5 unless the Succeeding Corporation and any
person that controls the Succeeding Corporation assume in writing all the
obligations of CCBC hereunder and take all other actions that may be necessary
so that the provisions of this Agreement, including but not limited to this
Section 5, are given full force and effect (including, without limitation, any
action that may be necessary so that the shares of Substitute Common Stock are
in no way distinguishable from or have lesser economic value than other shares
of common stock issued by the Substitute Option Issuer).
6. Purchase of Option Shares and Options by CCBC.
(a) From and after the first date a transaction specified in
Section 5(b) herein is consummated (the "Repurchase Event"), and subject to
applicable regulatory restrictions, Sierra or a holder or former holder of any
Options (a "Holder") who has exercised the Options in whole or in part shall
have the right to require CCBC to purchase some or all of the Option Shares at a
purchase price per share (the "Purchase Price") equal to the highest of (i) 100
percent of the Exercise Price, (ii) the highest price paid or agreed to be paid
for shares of Common Stock by an Acquiring Person (as defined in Paragraph (b)
of this Section) in any tender offer, exchange offer or other transaction or
series of related transactions involving the acquisition of 10 percent or more
of the outstanding shares of Common Stock during the one-year period immediately
preceding the Purchase Date (as defined in Paragraph (d) of this Section) and
(iii) in the event of a sale of all or substantially all of CCBC's assets, (x)
the sum of the price paid in such sale for such assets and the current market
value of the remaining assets of CCBC as determined by a recognized investment
banking firm jointly selected by such Holder and CCBC, each acting in good
faith, divided by (y) the number of shares of Common Stock then outstanding;
provided, however, that the amount calculated pursuant to clauses (ii) and (iii)
of this Section 6(a) shall not exceed $2.0 million. In the event that any of the
consideration paid or agreed to be paid by an Acquiring Person for any shares of
Common Stock or for any of CCBC's assets consists in whole or in part of
securities, the value of such securities for purposes of determining the
Purchase Price shall be determined (i) if there is an existing public trading
market therefor, by the average of the last sales prices for such securities on
the ten trading days ending three trading days prior to the payment of such
consideration (if such consideration has been paid) or prior to the date of
determination (if such consideration has not yet been paid) and (ii) if there is
no existing public trading market for such securities, by a recognized
investment banking firm jointly selected by the Holder and CCBC, each acting in
good faith. The Holder's right to require CCBC to purchase some or all of the
Option Shares under this Section shall expire on the day which is one year
following the Repurchase Event; provided, that if CCBC is prohibited under
applicable regulations from purchasing Common Stock as to which a Holder has
given notice hereunder, then the Holder's right to require CCBC to purchase such
shares shall expire on the date which is one year following the date on which
CCBC no longer is prohibited from purchasing such shares: provided further, that
CCBC shall use its best efforts to obtain any consent or approval and make any
filing required for CCBC to consummate as quickly as possible the purchase of
the Common Stock contemplated hereunder.
(b) For purposes of this Agreement, "Acquiring Person" shall
mean a person or group (as such terms are defined in the Exchange Act and the
rules and regulations thereunder) other than Sierra or a subsidiary of Sierra
who on or after the date of this Agreement engages in a transaction which gives
rise to a Purchase Event.
(c) Subject to applicable regulatory restrictions, from and
after a Repurchase Event or after Sierra receives official notice that an
approval of the Department of Financial Institutions of the State of California,
or any other regulatory authority, required for the exercise of the Option and
purchase of the Option Shares will not be issued or granted, a Holder shall have
the right to require CCBC to purchase some or all of the Options held by such
Holder at a price equal to the Purchase Price minus the Exercise Price on the
Purchase Date (as defined in Paragraph (d) of this Section) multiplied by the
number of shares of Common Stock that may be purchased on the Purchase Date upon
the exercise of the Options elected to be purchased; provided, however, that the
amount calculated pursuant to this Section 6(c) shall not exceed $2.0 million.
Notwithstanding the termination date of the Options, the Holder's right to
require CCBC to purchase some or all of the Options under this Section shall
expire on the day which is one year following the Repurchase Event; provided,
that if CCBC is prohibited under applicable regulations from purchasing the
Options as to which an Holder has given notice hereunder, then the Holder's
right to require CCBC to purchase such Options shall expire on the day which is
one year following the date on which CCBC no longer is prohibited from
purchasing such Options; provided further, that CCBC shall use its best efforts
to obtain any consent or approval and make any filing required for CCBC to
consummate as quickly as possible the purchase of the Options contemplated
hereunder.
(d) A Holder may exercise its right to require CCBC to
purchase the Common Stock or Options (collectively, "Securities") pursuant to
this Section by surrendering for such purpose to CCBC, at its principal office
or at such other office or agency maintained by CCBC for that purpose, within
the period specified above, the certificates or other instruments representing
the Securities to be purchased accompanied by a written notice stating that it
elects to require CCBC to purchase all or a specified number of such Securities.
Within five business days after the surrender of such certificates or
instruments and the receipt of such notice relating thereto, to the extent it is
legally permitted to do so, CCBC shall deliver or cause to be delivered to the
Securities Holder (i) a bank cashier's or certified check payable to the
Securities Holder in an amount equal to the applicable purchase price therefor,
and (ii) if less than the full number of Securities evidenced by the surrendered
instruments are being purchased, a new certificate or instrument, for the number
of Securities evidenced by such surrendered certificates or other instruments
less the number of Securities purchased. Such purchases shall be deemed to have
been made at the close of business on the date (the "Purchase Date") of the
receipt of such notice and of such surrender of the certificates or other
instruments representing the Securities to be purchased and the rights of the
Securities Holder, except for the right to receive the applicable purchase price
therefor in accordance herewith, shall cease on the Purchase Date.
7. Demand Registration Rights. As promptly as practicable upon Sierra's
request after a Purchase Event, CCBC agrees to prepare and file not more than
two registration statements, prospectuses or permit or exemption applications
("Registration Event") as appropriate, under federal and any applicable state
securities laws, with respect to any proposed sale of any warrants, options or
other securities representing any of Sierra's rights under this Agreement or
proposed dispositions by Sierra of any or all of the Option Shares, if such
registrations or filings are required by law or regulation, and to use its best
efforts to cause any such registration statements or prospectuses to become
effective, or to have any permit or exemption granted, as expeditiously as
possible and to keep such registration statement, prospectus, permit or
exemption effective for a period of not less than 180 days unless, in the
written opinion of counsel to CCBC, addressed to Sierra and satisfactory in form
and substance to Sierra and its counsel, registration (or filing of a
prospectus, or grant of a permit or exemption) is not required for such proposed
transactions. All fees, expenses and charges of any kind or nature whatsoever
incurred in connection with any registration of, or the preparation of any
registration statement, prospectus or permit or exemption application relating
to, the Options or the Option Shares pursuant to this Section 7 shall be borne
and paid by CCBC; provided, however, that in no event shall this Section 7 be
construed to require CCBC to bear the expense of any change of control notice or
similar regulatory filing made by any purchaser or acquiror of Option Shares
issued to Sierra pursuant to this Agreement. In the event Sierra exercises its
registration rights under this Section 7, CCBC shall provide Sierra, its
affiliates, each of their respective officers and directors and any underwriters
used by Sierra, with indemnifications, representations and warranties and shall
cause its attorneys and accountants to deliver to Sierra and any such
underwriters attorneys' opinions and "comfort letters", all of a type
customarily provided or delivered in connection with public underwritten
offerings of securities. In the event CCBC effects a registration of Common
Stock for its own account or for any other shareholder of CCBC, it shall allow
Sierra to participate in such registration. Notwithstanding the foregoing, CCBC
shall have the right to delay (a "Delay Right") a Registration Event for a
period of up to thirty (30) days, in the event it receives a request from Sierra
to effect a Registration Event, if CCBC (i) is involved in a material
transaction, or (ii) determines, in the good faith exercise of its reasonable
business judgment, that such registration and offering could adversely effect or
interfere with bona fide material financing plans of CCBC or would require
disclosure of information, the premature disclosure of which could materially
adversely affect CCBC or any transaction under active consideration by CCBC. For
purposes of this Agreement, the term "material transaction" shall mean a
transaction which, if CCBC were subject to the reporting requirements under the
Exchange Act, would require CCBC to file a current report on Form 8-K with the
Securities Exchange Commission. CCBC shall have the right to exercise two Delay
Rights in any eighteen (18) month period.
8. Listing.
If Common Stock or any other securities to be acquired upon exercise of
the Option are then authorized for quotation or trading or listing on the Nasdaq
National Market or any other securities exchange or automated quotation system,
CCBC, or any successor thereto, upon the request of the holder of the Option,
will promptly file an application, if required, to authorize for listing or
trading or quotation the shares of Common Stock or other securities to be
acquired upon exercise of the Option on the Nasdaq National Market or any other
securities exchange or automated quotation system and will use its best efforts
to obtain approval, if required, of such listing or quotation as soon as
possible.
9. Total Profit.
Notwithstanding any other provision of this Agreement to the contrary,
in no event shall Sierra purchase under the terms of this Agreement that number
of Option Shares which have a Spread Value, as defined below, in excess of $2.0
million. In the event the Spread Value exceeds $2.0 million, the number of
Option Shares which Sierra is entitled to purchase at the Closing Date shall be
reduced to the extent required such that the Spread Value following such
reduction is equal to or less than $2.0 million. "Spread Value" shall mean the
difference between (i) the product of (1) the sum of the total number of Option
Shares Sierra (x) intends to purchase at a Closing pursuant to the exercise of
the Option and (y) previously purchased pursuant to the prior exercise of the
Option, and (2) the closing price of CCBC Common Stock as quoted on the Nasdaq
National Market on the last trading day immediately preceding the Closing Date,
and (ii) the product of (1) the total number of Option Shares Sierra (x) intends
to purchase at the Closing Date pursuant to the exercise of the Option and (y)
previously purchased pursuant to the prior exercise of the Option and (2) the
applicable Option Price of such Option Shares.
10. Miscellaneous.
(a) Expenses. Each of the parties hereto shall bear and pay all costs
and expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Entire Agreement. Except as otherwise expressly provided herein,
this Agreement contains the entire agreement between the parties with respect to
the transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns. Nothing in this Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided herein.
(c) Assignment. At any time after a Purchase Event occurs, Sierra may
sell, assign or otherwise transfer its rights and obligations hereunder, in
whole or in part, by issuing Options or otherwise, to any person or group of
persons, subject to applicable law, rule or regulation. In order to effectuate
the foregoing, Sierra (or any direct or indirect assignee or transferee of
Sierra) shall be entitled to surrender this Agreement to CCBC in exchange for
two or more Agreements entitling the holders thereof to purchase in the
aggregate the same number of shares of Common Stock as may be purchasable
hereunder.
(d) Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or by confirmed facsimile transmission or sent by registered or certified mail
or overnight courier, postage prepaid, with return receipt requested, addressed
as follows:
If to Sierra:
SierraWest Bancorp
10181 Truckee-Tahoe Airport Road
Truckee, California 96160
Attention: William T. Fike, President & CEO
Facsimile Number: (916) 582-2953
With a copy to:
McCutchen, Doyle, Brown & Enersen, LLP
3 Embarcadero Center, #1800
San Francisco, California 94111
Attention: James M. Rockett, Esq.
Facsimile Number: (415) 393-2286
If to CCBC:
California Community Bancshares Corporation
555 Mason Street, Suite 280
Vacaville, California 95688-3985
Attention: Walter O. Sunderman, President & CEO
Facsimile Number: (707) 448-1731
With a copy to:
Lillick and Charles
2 Embarcadero Center, #2600
San Francisco, California 94111
Attention: Ronald W. Bachli, Esq.
Facsimile Number: (415) 421-4799
A party may change its address for notice purposes by written notice to
the other party hereto.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(f) Specific Performance. The parties hereto agree that irreparable
harm would occur in the event that any of the provisions of this Agreement were
not performed by them in accordance with their specific terms or conditions or
were otherwise breached and that money damages are an inadequate remedy for
breach of this Agreement because of the difficulty of ascertaining the amount of
damage that will be suffered by the parties in the event that this Agreement is
not performed in accordance with its terms or conditions or otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement by the parties and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which it is entitled at law or in equity.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
(h) Best Efforts. Each of Sierra and CCBC will use its best efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including without limitation applying to the
Department of Financial Institutions of the State of California for approval to
acquire or issue the shares issuable hereunder.
(i) Descriptive Headings. The descriptive headings herein are inserted
for convenience of reference and are not intended to be part of or to affect the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, as of the day and year first written above.
SIERRAWEST BANCORP
By: /s/ William T. Fike
William T. Fike, President and
Chief Executive Officer
CALIFORNIA COMMUNITY BANCSHARES CORPORATION
By: /s/ Walter O. Sunderman
Walter O. Sunderman, President and
Chief Executive Officer
<PAGE>
EXHIBIT 7.6
<PAGE>
__________, 1997
SierraWest Bancorp
10181 Truckee-Tahoe Airport Road
P.O. Box 61000
Truckee, CA 96160
SierraWest Bancorp-California Community Bancshares Corporation
Ladies and Gentlemen:
We have acted as counsel for California Community Bancshares
Corporation ("Bancshares"), a Delaware corporation, and its wholly-owned
subsidiary, Continental Pacific Bank ("CPB"), a California banking corporation,
with respect to the merger (the "Merger") of Bancshares and SierraWest Bancorp
("Bancorp"), a California corporation, and with respect to the merger (the "Bank
Merger") of CPB and Bancorp's wholly-owned subsidiary SierraWest Bank ("Sierra
Bank"), a California banking corporation, pursuant to the Plan of Acquisition
and Merger dated as of November __, 1997 (the "Agreement") between Bancshares,
CPB, Bancorp and Sierra Bank, and Exhibit A (the "Merger Agreement") and Exhibit
B (the "Bank Merger Agreement") thereto. This opinion is rendered to you
pursuant to Section 7.6 of the Agreement. Unless otherwise defined herein, all
capitalized terms in this opinion shall have the meanings assigned to them in
the Agreement.
In rendering the opinions hereinafter expressed, we have examined and
relied upon such documents and instruments as we have deemed appropriate,
including the following:
A. The Agreement and the exhibits thereto;
B. Resolutions of the boards of directors of Bancshares and CPB with
respect to the Merger and the Bank Merger;
C. Certificate of Incorporation of Bancshares certified by the Delaware
Secretary of State as of a recent date;
D. Articles of Incorporation of CPB certified by the California
Secretary of State as of a recent date;
E. Bylaws, minute book and stock ledger of Bancshares;
F. Bylaws, minute book and stock ledger of CPB;
G. Certificate of Status from the Delaware Secretary of State
indicating that Bancshares is in good standing in Delaware as of a recent date
(the "Bancshares Status Certificate").
H. Certificate of Status from the California Secretary of State
indicating that CPB is in good standing in California as of a recent date (the
"CPB Status Certificate");
I. Registration Statement on Form S-4 of Bancorp and the related Proxy
Statements of Bancshares and Bancorp with respect to the Merger and the Bank
Merger (the "Proxy Materials");
J. Proceedings of the meeting of shareholders of Bancshares held on
_____________; and,
K. Officers' certificates of Bancshares and CPB as to certain factual
matters.
We have obtained, and have assumed and relied upon the accuracy,
genuineness and completeness of, such certificates and assurances from public
officials as we have deemed necessary or appropriate to enable us to render our
opinion.
In conducting our examination, we have assumed, without investigation,
the genuineness of all signatures (other than that of Bancshares), the
correctness of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such copies; the accuracy of the
representations as to factual matters made by Bancorp and Bancshares in the
Agreement; the accuracy of representations and statements as to factual matters
made by officers and employees of Bancshares; that the Agreement is the valid
and binding obligation of Bancorp and Sierra Bank; that Bancorp and Sierra Bank
will enforce the Agreement in a commercially reasonable manner; and that the
Agreement contains the entire agreement of the parties.
Our opinions in paragraphs 4 and 5 below are subject to :
(i) the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium, and other similar laws now or here-
after in effect relating to or affecting the rights of creditors generally;
(ii) limitations imposed by California law, federal
law, or equitable principles upon any of the remedies, covenants, or other
provisions of the Agreement and upon the availability of injunctive relief or
other equitable remedies, including, without limitation, the effect of
California and federal court decisions, invoking statutes or principles
of equity, which have held that certain covenants and provisions of
agreements are unenforceable where: (A) the breach of such covenants or
provisions imposes restrictions or burdens upon one party, and it cannot be
demonstrated that the enforcement of such restrictions or burdens is
reasonably necessary for the protection of the other party, or (B) a party's
enforcement of such covenants or provisions under the circumstances would
violate such party's implied covenants of good faith and fair dealing, and
(iii) the power of federal and state courts to
refuse to enforce (or to stay the enforcement of) any provision of the
Agreement which purports to waive the rights of Bancshares to assert the
claims or defenses available to Bancshares by statute, common law, or equity.
Whenever a statement herein with respect to the existence or absence of
facts is qualified by the phrases "we are not aware" or "to our knowledge," it
is intended to indicate that, during the course of our representation of
Bancshares and CPB, no information that would give us current actual knowledge
of the inaccuracy of such statement has come to the attention of those attorneys
in this firm who have rendered legal services in connection with the
representation described in the introductory paragraph of this opinion letter
and such statement is based solely upon (i) an inquiry of attorneys within this
firm who have rendered such services; (ii) receipt of a certificate executed by
an officer of Bancshares or CPB covering such matters; and (iii) opinions of
other counsel engaged by Bancshares or CPB regarding any litigation matters with
respect to which we do not represent Bancshares or CPB. However, we have not
undertaken any independent investigation to determine the accuracy of such
statement, and any limited inquiry undertaken by us during the preparation of
this opinion letter should not be regarded as such an investigation; no
inference as to our knowledge of any matters bearing on the accuracy of any such
statement should be drawn from the fact of our representation of Bancshares or
CPB.
Based upon and subject to the foregoing, we are of the opinion that:
1. Bancshares is a Delaware corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power to own all of its property and assets and to carry on its
business as it is now being conducted. Bancshares is a registered bank holding
company under the Bank Holding Company Act of 1956.
2. CPB is a California banking corporation duly incorporated, validly
existing and in good standing under the laws of the State of California and has
the corporate power to own all of its property and assets and to carry on its
business as it is now being conducted. CPB is duly licensed as a commercial bank
by the California Department of Financial Institutions, and its deposits are
insured by the Federal Deposit Insurance Corporation in accordance with
applicable laws and regulations.
3. Bancshares and CPB have the corporate power and corporate authority
to enter into and perform their respective obligations under the Agreement, the
Merger Agreement and the Bank Merger Agreement. The execution and delivery by
Bancshares and CPB of the Agreement, the execution by Bancshares of the Merger
Agreement and the execution by CPB of the Bank Merger Agreement did not, and the
consummation by Bancshares and CPB of the transactions contemplated by the
Agreement, the Merger Agreement and the Bank Merger Agreement will not, violate
any provision of Bancshares' or CPB's certificate or articles of incorporation
or bylaws, any provision of federal or California law applicable to Bancshares
or CPB, or any governmental regulation applicable to Bancshares or CPB, or
constitute a material default under, or result in the breach or acceleration of
any obligation or the creation of any material lien under any material agreement
to which Bancshares or CPB is bound and of which we have knowledge (except that
we express no opinion relating to the effect of the Agreement under any
financial test or ratio contained in any mortgage, lease, agreement, instrument,
judgment, decree, order, arbitration award, writ, or injunction applicable to
Bancshares or CPB).
4. The Agreement and the Merger Agreement have been duly authorized,
executed and delivered by Bancshares, and each of them is a valid and binding
agreement of Bancshares.
5. The Agreement and the Bank Merger Agerement have been duly
authorized, executed and delivered by CPB, and each of them is a valid and
binding agreement of CPB.
6. All California state and federal regulatory approvals that are
required to be obtained by Bancshares and CPB in connection with the Merger and
the Bank Merger have been obtained.
7. To our knowledge, neither Bancshares nor CPB is a party to, nor
threatened with, any legal action or other proceeding or investigation before
any court, any arbitrator of any kind or any government agency that challenges
or questions the authority or ability of Bancshares or CPB to perform its
obligations under the Agreement, the Merger Agreement or the Bank Merger
Agreement or to carry out the Merger or the Bank Merger, or where the amount in
controversy exceeds $50,000 and which has not been disclosed by Bancshares to
Bancorp.
8. The authorized capital stock of Bancshares consists of ___________
shares of no par value common stock. To our knowledge and before giving effect
to the issuance of shares in connection with the Merger:
(a) _________ shares of common stock are duly authorized, validly
issued and outstanding, fully paid and nonassessable;
(b) there are no outstanding (i) options, agreements, calls or
commitments of any character that would obligate Bancshares to issue, sell,
pledge, assign or otherwise encumber or dispose of, or to purchase, redeem or
otherwise acquire, any Bancshares common stock or any other equity security of
Bancshares, or (ii) warrants or options relating to, rights to acquire or debt
or equity securities convertible into, shares of Bancshares common stock or any
other equity security of Bancshares; and.
(c) the outstanding common stock of Bancshares has not been
registered with the Securities and Exchange Commission or the FDIC pursuant to
the 1934 Act.
In connection with the preparation of the Registration Statement,
including the related Proxy Materials, we have performed legal services for
Bancshares and participated in conferences with directors, officers and
employees of Bancshares and representatives of the independent accountants for
Bancshares. At such conferences, the contents of the Proxy Materials related to
Bancshares and related matters were discussed and, although we are not passing
upon, and do not assume any responsibility for, the accuracy, completeness or
fairness of the statements related to Bancshares and contained in the Proxy
Materials, on the basis of the foregoing, we are not aware of any facts that
would lead us to believe that the Proxy Materials as of the date thereof
contained any statement in respect to Bancshares which, at the time and in light
of the circumstances under which it was made, was false or misleading with
respect to any material fact or omitted to state any material fact necessary in
order to make the statements therein not false or misleading. In making the
foregoing statement, we express no belief with respect to the financial
statements and other financial and statistical data included in the Proxy
Materials or with respect to statements in, or omissions from, the Proxy
Materials made in reliance upon, or in conformity with, information furnished by
Bancshares for use in connection with the Proxy Materials.
We are members of the bar of the State of California. Our opinions
below are limited to the effect of (i) the laws of the State of California and
(ii) the federal laws of the United States of America; we express no opinion
with respect to the laws of any other jurisdiction.
This opinion is rendered solely for the benefit of Bancorp in
connection with the Merger and the Bank Merger and may not be relied upon by any
other party or for any other purpose. Neither the original nor any copies of
this opinion may be furnished to any other person without our prior written
consent.
Very truly yours,
Lillick & Charles, LLP
<PAGE>
EXHIBIT 7.12
<PAGE>
Rule 145 Undertaking
________________, 1997
SierraWest Bancorp
10181 Truckee-Tahoe Airport Road
P.O. Box 61000
Truckee, CA 96160
Ladies and Gentlemen:
The undersigned is a director of California Community Bancshares
Corporation ("Bancshares") and an owner of common stock of Bancshares ("CBCC
Shares").
Bancshares and its wholly-owned subsidiary, Continental Pacific Bank
("CPC"), have entered into a Plan of Acquisition and Merger ("Agreement") dated
today's date with SierraWest Bancorp ("Bancorp") and its wholly-owned
subsidiary, SierraWest Bank ("Sierra Bank"), related to the merger of Bancshares
into Bancorp (the "Merger") and the merger of CPC into Sierra Bank. In
consideration of the premises and the representations, warranties, agreements
and conditions in this letter and in the Agreement and in order to induce
Bancorp to execute the Agreement, the undersigned agrees and undertakes, as
follows:
The undersigned is currently determined to be an affiliate of Bancshares
for purposes of Rule 145 promulgated by the Securities and Exchange Commission.
The following undertaking is given pursuant to and in compliance with Section
7.12 of the Agreement. The Merger will result in the issuance of new common
stock of Sierra.
The undersigned understand that Bancorp and Bancshares are relying on the
performance of the covenants contained herein to insure that any sales of shares
owned by the undersigned are not deemed to be acting as an underwriter in an
unregistered public offering in violation of federal securities laws.
The undersigned hereby further agrees not to sell, transfer or dispose of
any shares of Bancorp acquired in the Merger, or to attempt to do so, whether or
not deemed to be an affiliate of Bancorp, unless such sale, transfer or
disposition is made:
(i) pursuant to a then-current, effective registration statement under the
Securities Act of 1933, or
(ii)in a transaction which, in the opinion of counsel satisfactory to the
issuer, is not required to be registered under the Securities Act of 1933; or
(iii) in a transaction permitted by the Securities and Exchange
Commission's Rule 145.
The undersigned acknowledges that the above agreements are supported by
valid consideration.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
date first above written.
Very truly yours,
------------------------------------
<PAGE>
EXHIBIT 7.15
<PAGE>
Shareholder Agreement
__________________, 1997
SierraWest Bancorp
10181 Truckee-Tahoe Airport Road
P.O. Box 61000
Truckee, CA 96160
Ladies and Gentlemen:
The undersigned is a director of California Community Bancshares
Corporation ("Bancshares") and an owner of common stock of Bancshares ("CCBC
Shares").
Bancshares and its wholly-owned subsidiary, Continental Pacific Bank
("CPB"), have entered into a Plan of Acquisition and Merger ("Agreement") dated
today's date with SierraWest Bancorp ("Bancorp") and its wholly-owned
subsidiary, SierraWest Bank ("Sierra Bank"), related to the Merger of Bancshares
into Bancorp and the merger of CPB into Sierra Bank. In consideration of the
premises and the representations, warranties, agreements and conditions in this
letter and in the Agreement and in order to induce Bancorp to execute the
Agreement, the undersigned agrees and undertakes, as follows:
The undersigned will vote, in person or by proxy, at any meeting of
shareholders of Bancshares (or any action by written consent in lieu of a
meeting) to approve the Agreement and the transactions contemplated thereby (the
"Shareholders' Meeting"), all of the CCBC Shares as to which the undersigned has
sole or shared voting power (the "Shares") as of the record date established to
determine shareholders who have the right to vote at the Shareholders' Meeting.
The undersigned agrees that, from and after the date of this letter and
through the date of the Shareholders' Meeting (and any postponements or
adjournments thereof), the shareholder will not sell, assign, transfer or
otherwise take any action that will alter or affect in any way the right to vote
the Shares, except (i) with the prior written consent of Bancorp (ii) to change
such right from that of a shared right of the shareholder to vote the Shares to
a sole right of the shareholder to vote the Shares.
The undersigned represents and warrants that the undersigned has sole or
shared voting power over ________ Shares covered by the terms of this letter;
and there are no proxies, voting trusts or other agreements or understandings to
which the undersigned or the undersigned's spouse, if any, is a party or bound
or that requires that any of the Shares be voted in any specific manner other
than as provided in this letter.
The undersigned is currently determined to be an affiliate of Bancshares
for purposes of Rule 145 promulgated by the Securities and Exchange Commission.
The following undertaking is given pursuant to and in compliance with Section
7.12 of the Agreement. The Merger will result in the issuance of new common
stock of Bancorp.
The undersigned understands that Bancorp and Bancshares are relying on the
performance of the covenants contained herein to insure that any sales of shares
owned by the undersigned are not deemed to be acting as an underwriter in an
unregistered public offering in violation of federal securities laws.
The undersigned hereby further agrees not to sell, transfer or dispose of
any shares of Bancorp acquired in the Merger, or to attempt to do so, whether or
not deemed to be an affiliate of Bancorp, unless such sale, transfer or
disposition is made:
(i)pursuant to a then-current, effective registration statement under the
Securities Act of 1933, or
(ii)in a transaction which, in the opinion of counsel satisfactory to the
issuer, is not required to be registered under the Securities Act of 1933.
The undersigned understands that Bancorp shares issued to the undersigned
will bear a restrictive legend to this effect. The undersigned has no present
intention of selling, and has made no arrangements to sell, Bancorp shares to be
issued to the undersigned in connection with the Merger.
The undersigned and Bancorp each acknowledge that, in view of the
uniqueness of the obligations of the undersigned in this letter, Bancorp would
not have an adequate remedy at law for money damages in the event that the
promises in this letter have not been performed according to its terms, and,
therefore, the undersigned agrees that Bancorp shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which it may
be entitled at law or in equity.
This letter shall terminate automatically without further action at the
earlier of the Effective Date under the Agreement or the termination of the
Agreement in accordance with its terms.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original instruments, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the
date first above written.
Very truly yours,
------------------------------------
SPOUSAL CONSENT
I, ____________________, hereby confirm that I have read and understand
this letter and agree that it shall bind my interest in the Shares, if any.
------------------------------------
Accepted and agreed to as of the date first above written:
SIERRAWEST BANCORP
By_________________________________
<PAGE>
EXHIBIT 8.6
<PAGE>
_____________, 1997 Direct: (415) 393-2025
[email protected]
California Community Bancshares Corporation
141 Parker Street
Vacaville, California 95688-3985
SierraWest Bancorp - Bancshares Bank
Ladies and Gentlemen:
We have acted as counsel for SierraWest Bancorp ("Bancorp"), a
California corporation, and SierraWest Bank ("Sierra Bank"), a California
banking corporation with respect to the acquisition and merger (the "Merger") of
California Community Bancshares Corporation ("Bancshares"), a California
corporation, with and into Bancorp and with respect to the merger (the "Bank
Merger") of Continental Pacific Bank ("CPB"), a California banking corporation,
with and into Sierra Bank, pursuant to the Plan of Acquisition and Merger dated
as of November __, 1997 (the "Agreement") and Exhibit A (the "Merger Agreement")
and Exhibit B (the "Bank Merger Agreement") thereto. This opinion is rendered to
you pursuant to Section 8.6 of the Agreement. Unless otherwise defined herein,
all capitalized terms in this opinion shall have the meaning assigned to them in
the Agreement.
In rendering the opinions hereinafter expressed, we have examined and
relied upon such documents and instruments as we have deemed appropriate,
including the following:
A. The Agreement and the exhibits thereto;
B. Resolutions of the board of directors of Bancorp and Sierra Bank
with respect to the Merger and the Bank Merger;
C. Articles of Incorporation of Bancorp certified by the California
Secretary of State as of a recent date;
D. Articles of Incorporation of Sierra Bank certified by the California
Secretary of State as of a recent date;
E. Bylaws, minute book and stock ledger of Bancorp;
F. Bylaws and minute book of Sierra Bank;
G. Certificate of Status from the California Secretary of State
indicating that Bancorp is in good standing in California as of a recent date
(the "Bancorp Status Certificate");
H. Certificate of Status from the California Secretary indicating that
Sierra Bank is in good standing in California as of a recent date (the "Sierra
Bank Status Certificate");
I. Registration Statement on Form S-4 of Bancorp and the related Proxy
Statements of Bancshares and Bancorp with respect to the Merger and the Bank
Merger (the "Proxy Materials");
J. Proceedings of the meeting of shareholders of Bancorp held on
______________, 19__; and
K. Officers' certificates of Bancorp and Sierra Bank as to certain
factual matters.
We have obtained, and have assumed and relied upon the accuracy,
genuineness and completeness of, such certificates and assurances from public
officials as we have deemed necessary or appropriate to enable us to render our
opinion.
In conducting our examination, we have assumed, without investigation,
the genuineness of all signatures (other than that of Bancorp and Sierra Bank to
the Agreement and to the Merger Agreement), the correctness of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies; the accuracy of the
representations as to factual matters made by Bancorp, Sierra Bank, Bancshares
and CPB in the Agreement; the accuracy of representations and statements as to
factual matters made by officers and employees of Bancshares and CPB; that the
Agreement is the valid and binding obligation of Bancshares and CPB; that
Bancshares and CPB will enforce the Agreement in a commercially reasonable
manner; and that the Agreement contains the entire agreement of the parties.
Our opinions in paragraphs 4 and 5 below are subject to :
(i) the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium, and other similar laws now or here-
after in effect relating to or affecting the rights of creditors generally;
(ii) limitations imposed by California law, federal
law, or equitable principles upon any of the remedies, covenants, or other
provisions of the Agreement and upon the availability of injunctive relief or
other equitable remedies, including, without limitation, the effect of
California and federal court decisions, invoking statutes or principles
of equity, which have held that certain covenants and provisions of
agreements are unenforceable where: (A) the breach of such covenants or
provisions imposes restrictions or burdens upon one party, and it cannot be
demonstrated that the enforcement of such restrictions or burdens is
reasonably necessary for the protection of the other party, or (B) a party's
enforcement of such covenants or provisions under the circumstances would
violate such party's implied covenants of good faith and fair dealing, and
(iii) the power of federal and state courts to
refuse to enforce (or to stay the enforcement of) any provision of the
Agreement which purports to waive the rights of Bancorp and Sierra Bank to
assert the claims or defenses available to Bancorp and Sierra Bank by statute,
common law, or equity.
Whenever a statement herein with respect to the existence or absence of
facts is qualified by the phrases "we are not aware" or "to our knowledge," it
is intended to indicate that, during the course of our representation of Bancorp
and Sierra Bank, no information that would give us current actual knowledge of
the inaccuracy of such statement has come to the attention of those attorneys in
this firm who have rendered legal services in connection with the representation
described in the introductory paragraph of this opinion letter and such
statement is based solely upon (i) an inquiry of attorneys within this firm who
have rendered such services; (ii) receipt of one or more certificates executed
by officers of Bancorp or Sierra Bank covering such matters; and (iii) opinions
of other counsel engaged by Bancorp or Sierra Bank regarding any litigation
matters with respect to which we do not represent Bancorp or Sierra Bank.
However, we have not undertaken any independent investigation to determine the
accuracy of such statement, and any limited inquiry undertaken by us during the
preparation of this opinion letter should not be regarded as such an
investigation; no inference as to our knowledge of any matters bearing on the
accuracy of any such statement should be drawn from the fact of our
representation of Bancorp or Sierra Bank.
Based upon and subject to the foregoing, we are of the opinion that:
1. Bancorp is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of California and has the corporate
power to own all of its property and assets and to carry on its business as it
is now being conducted. Bancorp is a registered bank holding company under the
Bank Holding Company Act of 1956.
2. Sierra Bank is a California banking corporation duly incorporated,
validly existing and in good standing under the laws of the State of California
and has the corporate power to own all of its property and assets and to carry
on its business as it is now being conducted. Sierra Bank is duly licensed as a
commercial bank by the California Department of Financial Institutions, and its
deposits are insured by the Federal Deposit Insurance Corporation in accordance
with applicable laws and regulations.
3. Bancorp and Sierra Bank have the corporate power and corporate
authority to enter into and perform their respective obligations under the
Agreement, the Merger Agreement and the Bank Merger Agreement. The execution and
delivery by Bancorp and Sierra Bank of the Agreement, the execution and delivery
by Bancorp of the Merger Agreement and the execution by Sierra Bank of the Bank
Merger Agreement did not, and the consummation by Bancorp and Sierra Bank of the
transactions contemplated by the Agreement, the Merger Agreement and the Bank
Merger Agreement will not, violate any provision of Bancorp's or Sierra Bank's
articles of incorporation or bylaws, any provision of federal or California law,
or any governmental regulation applicable to Bancorp or Sierra Bank, or
constitute a material default under, or result in the breach or acceleration of
any obligation or the creation of any material lien under any material agreement
to which either Bancorp or Sierra Bank is bound and of which we have knowledge
(except that we express no opinion relating to the effect of the Agreement under
any financial test or ratio contained in any mortgage, lease, agreement,
instrument, judgment, decree, order, arbitration award, writ, or injunction
applicable to Bancorp or Sierra Bank).
4. The Agreement and the Merger Agreement have been duly authorized,
executed and delivered by Bancorp, and each of them is a valid and binding
agreement of Bancorp.
5. The Agreement and the Bank Merger Agreement have been duly
authorized, executed and delivered by Sierra Bank, and each of them is a valid
and binding agreement of Sierra Bank.
6. All California state and federal regulatory approvals that are
required to be obtained by Bancorp and Sierra Bank in connection with the Merger
and the Bank Merger have been obtained.
7. To our knowledge, neither Bancorp nor Sierra Bank is a party to, nor
threatened with, any legal action or other proceeding or investigation before
any court, any arbitrator of any kind or any government agency that challenges
or questions the authority or ability of Bancorp or Sierra Bank to perform its
obligations under the Agreement, the Merger Agreement or the Bank Merger
Agreement or to carry out the Merger or the Bank Merger, or where the amount in
controversy exceeds $200,000 and which has not been disclosed by Bancorp to
Bancshares.
8. As of October 31, 1997, the authorized capital stock of Bancorp
consists of [9,800,000] shares of preferred stock, [200,000] shares of series A
preferred stock and [10,000,000] shares of common stock. To our knowledge and
before giving effect to the issuance of shares in connection with the Merger:
(a) [3,324,764] shares of Bancorp common stock are duly authorized,
validly issued and outstanding, fully paid and nonassessable;
(b) there are currently outstanding options to purchase [371,355]
shares of common stock issued pursuant to the 1996 Stock Option Plan;
(c) there are $[3,564,000] of Bancorp debentures convertible into
[356,400] shares of Bancorp common stock;
(d) said outstanding stock, options and debentures were all issued
pursuant to and in conformance with one or more exemptions from registration
under the Securities Act of 1933, as amended, or were registered pursuant to
said Act;
(e) other than the options and debentures identified above, there are
no outstanding (i) options, agreements, calls or commitments of any character
that would obligate Bancorp to issue, sell, pledge, assign or otherwise encumber
or dispose of, or to purchase, redeem or otherwise acquire, any Bancorp common
stock or any other equity security of Bancorp, or (ii) warrants or options
relating to, rights to acquire or debt or equity securities convertible into,
shares of Bancorp common stock or any other equity security of Bancorp; and.
(f) the outstanding common stock of Bancorp has been registered with
the Securities and Exchange Commission pursuant to the 1934 Act.
9. All outstanding capital stock of Sierra Bank is held by Bancorp.
10. The issuance of the Shares to be issued pursuant to the Merger has
been duly registered under the Securities Act of 1933. Such Shares, when issued
in accordance with the terms of the Agreement, will be duly authorized, validly
issued, fully paid and nonassessable.
In connection with the preparation of the Registration Statement we
have performed legal services for Bancorp and participated in conferences with
directors, officers and employees of Bancorp and representatives of the
independent accountants for Bancorp. At such conferences, the contents of the
Proxy Materials and related matters were discussed and, although we are not
passing upon, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Proxy Materials, on
the basis of the foregoing, we are not aware of any facts that would lead us to
believe that the Proxy Materials as of the date thereof contained any statement
in respect to Bancorp which, at the time and in light of the circumstances under
which it was made, was false or misleading with respect to any material fact or
omitted to state any material fact necessary in order to make the statements
therein not false or misleading. In making the foregoing statement, we express
no belief with respect to the financial statements and other financial and
statistical data included in the Proxy Materials or with respect to statements
in, or omissions from, the Proxy Materials made in reliance upon, or in
conformity with, information furnished by Bancshares for use in connection with
the Proxy Materials.
We are members of the bar of the State of California. Our opinions
below are limited to the effect of (i) the laws of the State of California and
(ii) the federal laws of the United States of America; we express no opinion
with respect to the laws of any other jurisdiction.
This opinion is rendered solely for the benefit of Bancshares in
connection with the Merger and the Bank Merger and may not be relied upon by any
other party or for any other purpose. Neither the original nor any copies of
this opinion may be furnished to any other person without our prior written
consent.
Very truly yours,
McCutchen, Doyle, Brown & Enersen, LLP
By_________________________________
A member of the firm
<PAGE>
EXHIBIT 99
News Release
FOR: SIERRAWEST BANCORP AND
CALIFORNIA COMMUNITY BANCSHARES CORPORATION
APPROVED BY: William T. Fike, Walter O. Sunderman
CONTACT: David Broadley, CFO, SierraWest Bancorp
(916) 582-3000
Andrew Popovich, Executive VP
California Community Bancshares Corporation
(707)448-1200
CONTACT: Morgen-Walke Associates, Inc.
Investor Relations: John Swenson, Micah Epps
(415) 296-7383
Media Relations: Sheryl Seapy, Carol Lehrman
(415)296-7383
Wire Services: Joshua Passman
(212)850-5600
SIERRAWEST BANCORP AND CALIFORNIA COMMUNITY BANCSHARES
CORPORATION SIGN DIFINITIVE MERGER AGREEMENT
Transaction Valued at Approximately $39 Million
TRUCKEE, Calif. and Vacaville, Calif.(November 14, 1997) -- SierraWest Bancorp
(Nasdaq: SWBS) and California Community Bancshares Corp. (Nasdaq:CCBC) jointly
announced today that they have signed a definitive agreement under which
SierraWest will acquire the outstanding common stock of California Community
Bancshares in a transaction valued at approximately $39 million, based on
yesterday's closing price of SierraWest stock.
The Boards of Directors of both companies have unanimously approved the
merger agreement. The merger, which is expected to close during the first half
of 1998, is subject to the approval of each company's shareholders and state and
federal regulatory agencies, as well as certain other terms and conditions.
Under the terms of the proposed transaction, shareholders of California
Community Bancshares will receive shares of SierraWest common stock at an
exchange ratio to be determined by a formula prior to the effective date of the
transaction, based on the average of the closing prices of SierraWest common
stock during a defined 20-day period. For example, if the average price during
that 20-day period were $28.75, the closing price of SierraWest stock on
November 13, 1997, each share of California Community Bancshares stock would be
exchanged for approximately 0.9957 shares of SierraWest. The merger is expected
to be accounted for under the pooling of interests method of accounting.
"We are very pleased with the opportunity to expand SierraWest's
community banking franchise into Solano and Contra Costa counties," said William
T. Fike, president and chief executive officer of SierraWest. "During the past
three years, we have extended our franchise as far as Sacramento through new
branch openings, the July 1997 acquisition of Mercantile Bank and the hiring of
experienced lending officers to serve the Sacramento region. Continental Pacific
Bank will strengthen our franchise along the Interstate 80 corridor by adding a
strong business banking franchise staffed by senior lending and branch
personnel. We strongly believe that this merger, which creates a banking
franchise with more than $750 million in assets, opens up new opportunities for
our combined operations and will provide benefits to SierraWest's current and
new shareholders."
Walter O. Sunderman, president and chief executive officer of CCBC,
said, "We are excited about joining with SierraWest to build together a great
California banking franchise and about owning one of the best-performing
California bank stocks. The banking industry in California is changing rapidly,
largely due to consolidation. We concluded that merging with SierraWest
presented an outstanding opportunity for our shareholders, employees and
customers throughout Solano and Contra Costa counties. SierraWest is a community
bank that shares our philosophy of providing customers with personalized,
professional service."
California Community Bancshares has also granted SierraWest an option
to purchase up to 19.9% of the outsanding shares of California Community
Bancshares if certain events and conditions (as defined in the option agreement)
occur, including a third party merger proposal or tender offer.
California Community Bancshares, the parent company of Continental
Pacific Bank, is headquartered in Vacaville, California and had assets of $192
million at September 30, 1997. Continental Pacific Bank operates eight banking
offices in Solano and Contra Costa counties in California.
SierraWest Bancorp is the holding company for SierraWest Bank
headquarted in Truckee, California with branches in Sacramento, the Sierra
foothills and Lake Tahoe regions of California and northern Nevada. SierraWest
had assets of $575 million at September 30, 1997. The Company is a significant
originator under the U.S. Government's SBA loan program, with recent SBA loan
offices opened in Portland, Oregon and in Chattanooga, Tennessee.
# # #
<PAGE>
