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EX-2
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AGREEMENT AND PLAN OF MERGER
dated as of February 25, 1999
among
BANCWEST CORPORATION,
BANK OF THE WEST
and
SIERRAWEST BANCORP
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER.....................................................2
1.1 Effective Time of the Merger...................................2
1.2 Closing........................................................2
1.3 Effects of the Merger..........................................2
1.4 Alternative Structure..........................................2
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES...................................................3
2.1 Effect on Capital Stock of the Constituent Corporations........3
(a) Cancellation of Treasury Stock.............................3
(b) Conversion of SierraWest Common Stock......................3
(c) BW Common Stock............................................4
(d) BC Capital Stock...........................................4
2.2 No Further Ownership Rights in SierraWest Common Stock.........4
2.3 Fractional Shares..............................................4
2.4 Surrender of Shares of SierraWest Common Stock.................5
2.5 Adjustments....................................................6
2.6 Options........................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES.................................7
3.1 Representations and Warranties of SierraWest...................7
(a) Organization, Standing and Power...........................7
(b) Capital Structure; Ownership of BC Common Stock............8
(c) Authority; No Violation....................................9
(d) Financial Statements..................................... 11
(e) SierraWest SEC Documents................................. 11
(f) SierraWest Information Supplied.......................... 12
(g) Compliance with Applicable Laws.......................... 12
(h) Litigation............................................... 13
(i) Taxes.................................................... 13
(j) Certain Agreements....................................... 15
(k) Benefit Plans............................................ 16
(l) Subsidiaries............................................. 18
(m) Agreements with Bank or Other Regulators................. 18
(n) Absence of Certain Changes or Events..................... 18
(o) Undisclosed Liabilities.................................. 18
(p) Governmental Reports..................................... 19
(q) Environmental Liability.................................. 19
(r) Properties............................................... 20
(s) Transactions with Affiliates............................. 20
(t) Brokers or Finders....................................... 21
(u) Intellectual Property.................................... 21
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(v) Pooling of Interests..................................... 21
(w) Opinion of Financial Advisor............................. 21
(x) Rights Agreement; Anti-takeover Provisions............... 21
(y) Community Reinvestment Act Compliance.................... 21
(z) Year 2000 Readiness...................................... 22
(aa)Dissenters' Rights....................................... 22
(ab)Insurance................................................ 22
(ad)Restrictions on Investments.............................. 24
(ae)No Brokered Deposits..................................... 24
(af)Derivatives Contracts; Structured Notes; Etc............. 24
3.2 Representations and Warranties of BC......................... 25
(a) Organization, Standing and Power......................... 25
(b) Capital Structure........................................ 25
(c) Authority; No Violation.................................. 26
(d) Financial Statements..................................... 27
(e) BC SEC Documents......................................... 28
(f) BC Information Supplied.................................. 28
(g) Compliance with Applicable Laws.......................... 29
(h) Litigation............................................... 29
(i) Subsidiaries............................................. 29
(j) Agreements with Bank Regulators.......................... 30
(k) Absence of Certain Changes or Events..................... 30
(l) Undisclosed Liabilities.................................. 30
(m) Governmental Reports..................................... 30
(n) Pooling of Interests..................................... 31
(o) Vote Required............................................ 31
(p) Brokers or Finders....................................... 31
(q) Community Reinvestment Act Compliance.................... 31
(r) Year 2000 Readiness...................................... 31
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS.................... 32
4.1 Covenants of SierraWest...................................... 32
4.2 Covenants of BC.............................................. 35
ARTICLE V ADDITIONAL AGREEMENTS........................................ 36
5.1 Regulatory Matters........................................... 36
5.2 Access to Information........................................ 37
5.3 SierraWest Shareholders' Meeting............................. 38
5.4 No Solicitations............................................. 38
5.5 Legal Conditions............................................. 38
5.6 Employee Benefit Plans....................................... 39
5.7 Indemnification; Directors' and Officers' Insurance.......... 40
5.8 Additional Agreements........................................ 42
5.9 Fees and Expenses............................................ 42
5.10 Cooperation.................................................. 42
5.11 Affiliates................................................... 42
5.12 Stock Exchange Listing....................................... 43
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5.13 Advice of Changes............................................ 43
5.14 Subsequent Interim and Annual Financial Statements;
Certain Reports.............................................. 43
5.15 Dissenters' Rights........................................... 43
ARTICLE VI CONDITIONS PRECEDENT......................................... 43
6.1 Conditions to Each Party's Obligation........................ 43
(a) Shareholder Approval..................................... 43
(b) Other Approvals.......................................... 43
(c) No Injunctions or Restraints............................. 44
(d) NYSE Listing............................................. 44
(e) S-4...................................................... 44
(f) Pooling.................................................. 44
6.2 Conditions to Obligations of BC.............................. 44
(a) Representations and Warranties........................... 44
(b) Performance of Obligations............................... 44
(c) Corporate Action......................................... 45
(d) Tax Opinion.............................................. 45
(e) SierraWest Rights Agreement.............................. 45
(f) Burdensome Condition..................................... 45
(g) SAS 71 Review Letters.................................... 45
(h) Bank Merger.............................................. 45
(i) No Dissenters' Rights.................................... 46
6.3 Conditions to Obligations of SierraWest...................... 46
(a) Representations and Warranties........................... 46
(b) Performance of Obligations............................... 46
(c) Tax Opinion.............................................. 46
(d) Corporate Action......................................... 46
ARTICLE VII TERMINATION AND AMENDMENT.................................... 46
7.1 Termination.................................................. 46
7.2 Effect of Termination........................................ 49
7.3 Amendment.................................................... 49
7.4 Extension; Waiver............................................ 49
ARTICLE VIII GENERAL PROVISIONS........................................... 50
8.1 Nonsurvival of Representations and Warranties................ 50
8.2 Notices...................................................... 50
8.3 Interpretation............................................... 51
8.4 Counterparts................................................. 51
8.5 Entire Agreement No Third Party Beneficiaries; Rights of
Ownership.................................................... 51
8.6 Governing Law; Consent to Jurisdiction....................... 52
8.7 Severability................................................. 52
8.8 Assignment................................................... 52
8.9 Publicity.................................................... 53
Exhibit A: Form of Stock Option Agreement
Exhibit B: Form of Agreement of Merger
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Index of Defined Terms
Affiliate....................................................................9
Agreement....................................................................1
Agreement of Merger..........................................................2
Average BC Closing Price.....................................................4
Average BC Starting Price...................................................48
Bank Merger..................................................................1
Bank Regulators.............................................................12
BC...........................................................................1
BC Class A Common Stock.....................................................25
BC Disclosure Schedule......................................................26
BC Permits..................................................................29
BC Preferred Stock..........................................................25
BC Ratio....................................................................48
BC SEC Reports..............................................................28
BC Stock Plans..............................................................25
BC Common Stock..............................................................4
Benefit Plans...............................................................16
BHC Act......................................................................7
BIF..........................................................................7
Burdensome Condition........................................................45
Business Day.................................................................2
BW...........................................................................1
Change in Control...........................................................40
Closing......................................................................2
Closing Date.................................................................2
Code.........................................................................1
Confidentiality Agreement...................................................37
Consents....................................................................43
Constituent Corporations.....................................................2
CRA.........................................................................22
Derivatives Contract........................................................24
Determination Date..........................................................48
DPC Shares...................................................................3
Effective Time...............................................................2
Environmental Laws..........................................................19
ERISA.......................................................................16
Exchange Act................................................................11
Exchange Agent...............................................................5
Exchange Ratio...............................................................4
FDIC.........................................................................7
Federal Reserve.............................................................10
FFIEC.......................................................................22
Final Index Price...........................................................49
GAAP........................................................................11
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Governmental Entity.........................................................10
HSR Act.....................................................................10
Indemnified Liabilities.....................................................41
Indemnified Parties.........................................................40
Index.......................................................................49
Index Ratio.................................................................48
Initial Index Price.........................................................49
Injunction..................................................................44
Litigation..................................................................13
material.....................................................................7
material adverse effect......................................................7
Merger.......................................................................1
NYSE.........................................................................5
OREO........................................................................23
PBGC........................................................................17
person.......................................................................9
Preferred Lender............................................................13
Proxy Statement.............................................................10
Representatives.............................................................38
Requisite Regulatory Approvals..............................................44
S-4.........................................................................27
SAS 71......................................................................45
SBA.........................................................................12
SBA Act.....................................................................13
SEC..........................................................................8
Securities Act..............................................................11
SFAS No. 5...................................................................7
SierraWest...................................................................1
SierraWest Benefit Plans....................................................16
SierraWest Certificates......................................................5
SierraWest Common Stock......................................................1
SierraWest Consolidated Financial Statements................................11
SierraWest Disclosure Schedule...............................................8
SierraWest Intellectual Property............................................21
SierraWest KSOP Plan........................................................18
SierraWest Option............................................................6
SierraWest Permits..........................................................12
SierraWest Preferred Stock...................................................8
SierraWest Rights Agreement.................................................21
SierraWest SEC Reports......................................................11
SierraWest Shareholder Approval..............................................9
SierraWest Shareholders' Meeting............................................12
SierraWest Stock Option Plans................................................6
SierraWest's Current Premium................................................41
Significant Subsidiary.......................................................8
State Banking Approvals.....................................................10
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State Takeover Approvals....................................................10
Stock Option Agreement.......................................................1
Subsidiary...................................................................7
Surviving Corporation........................................................2
SWB..........................................................................1
SWB Preferred Stock..........................................................8
SWB Common Stock.............................................................1
Takeover Proposal...........................................................38
tax.........................................................................14
Tax return..................................................................14
taxable.....................................................................14
taxes.......................................................................14
trading day..................................................................5
Transaction Agreements.......................................................8
Trust Account Shares.........................................................3
Violation...................................................................10
Year 2000 Ready.............................................................22
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AGREEMENT AND PLAN OF MERGER dated as of February 25, 1999 (this
"Agreement") among BANCWEST CORPORATION, a Delaware corporation ("BC"), BANK OF
THE WEST, a California state-chartered bank and a wholly-owned subsidiary of BC
("BW"), and SIERRAWEST BANCORP, a California corporation ("SierraWest").
WHEREAS, SierraWest is the beneficial and record owner of 4,116,597 shares
of the issued and outstanding common stock, no par value per share (the "SWB
Common Stock"), of SierraWest Bank, a California state-chartered bank ("SWB"),
constituting all of the issued and outstanding shares of SWB Common Stock;
WHEREAS, the Boards of Directors of BC and BW have approved this
Agreement, declared it advisable and deem it advisable and in the best interests
of the stockholders of BC and BW to consummate the transactions provided for
herein in which, inter alia, SierraWest would merge with and into BW (the
"Merger");
WHEREAS, the Board of Directors of SierraWest has approved this Agreement
and declared it advisable and deems it advisable and in the best interests of
the shareholders of SierraWest to consummate the Merger;
WHEREAS, it is the intention of the parties that the Merger qualify as a
tax-free reorganization pursuant to Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and that the Merger shall be accounted for as
a "pooling of interests";
WHEREAS, it is the intention of the parties that immediately after the
consummation of the Merger, SWB shall be merged with and into BW (the "Bank
Merger") and the resulting bank, which shall be BW, shall continue as a
wholly-owned Subsidiary (as defined herein) of BC;
WHEREAS, the Boards of Directors of BC and SierraWest have each determined
that the Merger, the Bank Merger and the other transactions contemplated by this
Agreement are consistent with, and will contribute to the furtherance of, their
respective business strategies and goals; and
WHEREAS, as a condition and inducement to BC's and BW's willingness to
enter into this Agreement, BC and SierraWest are entering into a Stock Option
Agreement dated as of the date hereof in the form of Exhibit A hereto (the
"Stock Option Agreement") pursuant to which SierraWest has granted to BC an
option to purchase shares of the Common Stock, no par value, of SierraWest (the
"SierraWest Common Stock") constituting 19.9% of the presently outstanding
shares of SierraWest Common Stock.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
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ARTICLE I
THE MERGER
1.1 Effective Time of the Merger. Subject to the provisions of this
Agreement, the Merger shall become effective upon the occurrence of the filing
of an agreement of merger in substantially the form of Exhibit B hereto (the
"Agreement of Merger") with the Secretary of State of the State of California,
or at such time thereafter as is provided in the Agreement of Merger (the
"Effective Time").
1.2 Closing. The closing of the Merger (the "Closing") will take place at
10:00 a.m., California time, on the fifth Business Day after satisfaction or
waiver (subject to applicable law) of the conditions (excluding conditions that,
by their terms, cannot be satisfied until the Closing) set forth in Article VI
(the "Closing Date"), unless another time or date is agreed to in writing by the
parties hereto. The Closing shall be held at the offices of Pillsbury Madison &
Sutro LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such
other location as is agreed to in writing by the parties hereto. As used in this
Agreement, "Business Day" shall mean any day that is not a Saturday, Sunday or
other day on which banks are required or authorized by law to be closed in San
Francisco, California.
1.3 Effects of the Merger.
(a) At the Effective Time (i) SierraWest shall be merged with and into BW
and the separate corporate existence of SierraWest shall cease, (ii) the
Articles of Incorporation of BW as in effect immediately prior to the Effective
Time shall be the Articles of Incorporation of the Surviving Corporation, (iii)
the By-laws of BW as in effect immediately prior to the Effective Time shall be
the By-laws of the Surviving Corporation, (iv) the directors of BW at the
Effective Time shall be the directors of the Surviving Corporation (except that
BC and BW shall take all necessary action to appoint two representatives of
SierraWest, mutually acceptable to BC and SierraWest, to serve on the Surviving
Corporation's board of directors for a period of two years after the Effective
Time), such directors to serve until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as the case
may be, and (v) the officers of BW immediately prior to the Effective Time shall
be the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
(b) As used in this Agreement, "Constituent Corporations" shall mean each
of BC, BW and SierraWest, and "Surviving Corporation" shall mean BW, at and
after the Effective Time, as the surviving corporation in the Merger.
(c) At and after the Effective Time, the Merger will have the effects set
forth in the California Corporations Code.
1.4 Alternative Structure. Notwithstanding anything contained in this
Agreement to the contrary, BC may specify, for any reasonable business, tax or
regulatory purpose, that, before the Merger, BC, BW, SierraWest and SWB shall
enter into transactions other than
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those described herein in order to effect the purposes of this Agreement, and
the parties hereto shall take all action necessary and appropriate to effect, or
cause to be effected, such transactions, provided, however, that no such
specification may (a) materially and adversely affect the timing of the
consummation of the transactions contemplated herein or (b) adversely affect the
economic benefits, the form of consideration or the tax effect of the Merger to
the holders of SierraWest Common Stock.
1.5 Absence of Control. Subject to any specific provisions of this
Agreement, it is the intent of the parties hereto that neither BC nor SierraWest
by reason of this Agreement shall be deemed (until consummation of the
transactions contemplated hereby) to control, directly or indirectly, the other
party and shall not exercise, or be deemed to exercise, directly or indirectly,
a controlling influence over the management or policies of such other party.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock of the Constituent Corporations. As of the
Effective Time, by virtue of the Merger and without any action on the part of
the holder of any shares of SierraWest or BW capital stock:
(a) Cancellation of Treasury Stock. All shares of SierraWest that
are owned directly or indirectly by BC or SierraWest or any of their
respective Subsidiaries (other than shares of SierraWest Common Stock held
directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary or nominee capacity that are beneficially
owned by third parties (any such shares, and shares of BC Common Stock (as
hereinafter defined) which are similarly held, whether held directly or
indirectly by BC or SierraWest or any of their respective Subsidiaries, as
the case may be, being referred to herein as "Trust Account Shares") and
other than any shares of SierraWest Common Stock held by BC or SierraWest
or any of their respective Subsidiaries in respect of a debt previously
contracted (any such shares of SierraWest Common Stock, and shares of BC
Common Stock which are similarly held, whether held directly or indirectly
by BC or SierraWest or any of their respective Subsidiaries, being
referred to herein as "DPC Shares")) shall be cancelled and shall cease to
exist and no stock of BC or other consideration shall be delivered in
exchange therefor. All shares of BC Common Stock that are owned by
SierraWest or any of its Subsidiaries (other than Trust Account Shares and
DPC Shares) shall continue to be owned by a Subsidiary of BC.
(b) Conversion of SierraWest Common Stock. Subject to Sections 2.3,
2.5 and 7.1(h), each of the shares of SierraWest Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares to
be cancelled in accordance with Section 2.1(a)) shall be converted
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into the right to receive 0.82 shares (the "Exchange Ratio") of fully paid
and nonassessable shares of Common Stock, $1.00 par value per share (the
"BC Common Stock"), of BC. All such shares of SierraWest Common Stock
shall no longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each certificate previously
representing any such shares shall thereafter represent the shares of BC
Common Stock into which such SierraWest Common Stock has been converted
and, if applicable, the right to receive cash in lieu of fractional shares
as provided in Section 2.3 hereof. Certificates previously representing
shares of SierraWest Common Stock shall be exchanged for certificates
representing whole shares of BC Common Stock issued in consideration
therefor (and, if applicable, cash in lieu of fractional shares as
provided in Section 2.3 hereof) upon the surrender of such certificates.
(c) BW Common Stock. Each of the issued and outstanding shares of
the capital stock of BW immediately prior to the Effective Time shall
remain issued and outstanding after the Merger as shares of the Surviving
Corporation, which shall thereafter constitute all of the issued and
outstanding shares of capital stock of the Surviving Corporation. No
capital stock of BW will be issued or used in the Merger.
(d) BC Capital Stock. At and after the Effective Time, each share of
BC Common Stock issued and outstanding immediately prior to the Effective
Time shall remain an issued and outstanding share of capital stock of BC
and shall not be affected by the Merger.
2.2 No Further Ownership Rights in SierraWest Common Stock. All shares of
BC Common Stock issued upon conversion of shares of SierraWest Common Stock in
accordance with the terms hereof shall be deemed to represent all rights
pertaining to such shares of SierraWest Common Stock, and, after the Effective
Time, there shall be no further registration of transfers on the stock transfer
books of SierraWest of the shares of SierraWest Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, certificates formerly representing shares of SierraWest Common Stock are
presented to BC for any reason, they shall be cancelled and, if applicable,
exchanged as provided in this Article II.
2.3 Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of BC Common Stock shall be issued to holders of shares of
SierraWest Common Stock. In lieu thereof, each such holder entitled to a
fraction of a share of BC Common Stock (after taking into account all shares of
SierraWest Common Stock held at the Effective Time by such holder) shall
receive, at the time of surrender of the certificates representing such holder's
SierraWest Common Stock, an amount in cash equal to the Average BC Closing Price
(as defined herein), multiplied by the fraction of a share of BC Common Stock to
which such holder would otherwise 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. As used herein, the term "Average BC Closing
Price" means the average of the
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closing prices of BC Common Stock on the New York Stock Exchange (the "NYSE")
for the 20 consecutive trading days ending on the Determination Date (as defined
in Section 7.1(h)(iii) hereof), rounded to four decimal places, whether or not
trades occurred on those days (subject to adjustment as provided below and
provided that if no trades of BC Common Stock shall occur on a given trading day
the closing price thereof on the next preceding day when a trade shall have
occurred shall be deemed to be the closing price on such day for the purposes
hereof). The term "trading day" shall mean a day on which trading generally
takes place on the NYSE and on which trading in BC Common Stock has not been
halted or suspended. In the event BC pays, declares or otherwise effects a stock
split, reverse stock split, reclassification or stock dividend or stock
distribution with respect to the BC Common Stock between the date of this
Agreement and the Effective Time, appropriate adjustments will be made to the
Average BC Closing Price of BC Common Stock.
2.4 Surrender of Shares of SierraWest Common Stock.
(a) Prior to the Effective Time, BC shall appoint American Stock Transfer
& Trust Company, New York, New York or its successor, or any other bank or trust
company (having capital of at least $50 million) mutually acceptable to
SierraWest and BC, as exchange agent (the "Exchange Agent") for the purpose of
exchanging certificates representing the BC Common Stock which are to be issued
pursuant to Section 2.1, and at and after the Effective Time, BC shall issue and
deliver to the Exchange Agent certificates representing the shares of BC Common
Stock, as shall be required to be delivered to holders of shares of SierraWest
Common Stock pursuant to Section 2.1 hereof. As soon as practicable after the
Effective Time, each holder of shares of SierraWest Common Stock converted
pursuant to Section 2.1, upon surrender to the Exchange Agent of one or more
SierraWest share certificates (the "SierraWest Certificates") for cancellation,
will be entitled to receive a certificate representing the number of shares of
BC Common Stock determined in accordance with Section 2.1 and a payment in cash
with respect to fractional shares, if any, determined in accordance with Section
2.3.
(b) No dividends or other distributions of any kind which are declared
payable to shareholders of record of the shares of BC Common Stock after the
Effective Time will be paid to persons entitled to receive such certificates for
shares of BC Common Stock until such persons surrender their SierraWest
Certificates. Upon surrender of such SierraWest Certificate, the holder thereof
shall be paid, without interest, any dividends or other distributions with
respect to the shares of BC Common Stock as to which the record date and payment
date occurred on or after the Effective Time and on or before the date of
surrender.
(c) If any certificate for shares of BC Common Stock is to be issued in a
name other than that in which the SierraWest Certificate 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 shares of BC Common Stock in a name other than the registered holder of the
SierraWest Certificate surrendered, or such persons shall establish to the
satisfaction of BC and the Exchange Agent that such costs, taxes or other
expenses have been paid or are not applicable.
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(d) All dividends or distributions, and any cash to be paid in lieu of
fractional shares pursuant to Section 2.3, if held by the Exchange Agent for
payment or delivery to the holders of unsurrendered SierraWest Certificates
representing shares of SierraWest Common Stock and unclaimed at the end of one
year from the Effective Time, shall (together with any interest earned thereon)
at such time be paid or redelivered by the Exchange Agent to BC, and after such
time any holder of a SierraWest Certificate who has not surrendered such
SierraWest Certificate to the Exchange Agent shall, subject to applicable law,
look as a general creditor only to BC for payment or delivery of such dividends
or distributions or cash, as the case may be.
(e) Neither BC nor the Surviving Corporation shall be liable to any holder
of SierraWest Common Stock for such shares (or dividends or distributions
thereon) or cash payable in lieu of fractional shares pursuant to Section 2.3
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
2.5 Adjustments. If, between the date of this Agreement and the Effective
Time, the outstanding shares of BC Common Stock 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 Exchange Ratio shall be correspondingly adjusted and BC
shall give SierraWest prompt written notice of the declaration of the record
date with respect thereto.
2.6 Options. At the Effective Time, each option granted by SierraWest to
purchase shares of SierraWest Common Stock (each a "SierraWest Option") which is
outstanding and unexercised immediately prior thereto shall cease to represent a
right to acquire shares of SierraWest Common Stock and shall be converted
automatically into an option to purchase shares of BC Common Stock in an amount
and at an exercise price determined as provided below (and otherwise subject to
the terms of the SierraWest 1988 Non-Qualified Stock Option Agreement and 1996
Stock Option Plan, the California Community Bancshare Corporation 1993 Stock
Option Plan, as amended and restated March 19, 1996, and the Continental Pacific
Bank 1990 Amended Stock Option Plan, each as amended to date (collectively, the
"SierraWest Stock Option Plans") and the agreements evidencing grants
thereunder, including but not limited to, the accelerated vesting of such
options which shall occur in connection with and by virtue of the consummation
of the Merger as and to the extent required by such plans and agreements): (a)
the number of shares of BC Common Stock to be subject to the new option shall be
equal to the product of the number of shares of SierraWest Common Stock subject
to the original option and the Exchange Ratio, provided that any fractional
shares of BC Common Stock resulting from such multiplication shall be rounded
down to the nearest share; and (b) the exercise price per share of BC Common
Stock under the new option shall be equal to the exercise price per share of
SierraWest Common Stock under the original option divided by the Exchange Ratio,
provided that such exercise price shall be rounded up to the nearest cent. In
the case of any options which are "incentive stock options" (as defined in
section 422 of the Code), the exercise price, the number of shares purchasable
pursuant to such options and the terms and conditions of exercise of such
options shall be determined in order to comply with section 424(a) of the Code.
The duration and other terms
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of the new option shall be the same as the original option except that all
references to SierraWest shall be deemed to be references to BC.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of SierraWest. SierraWest represents
and warrants to BC and BW as follows:
(a) Organization, Standing and Power. SierraWest is a bank holding company
registered under the Bank Holding Company Act of 1956, as amended (the "BHC
Act"). SWB is a wholly-owned Subsidiary of SierraWest and is a California
banking association chartered under the laws of the State of California. The
deposit accounts of SWB are insured by the Bank Insurance Fund ("BIF") of the
Federal Deposit Insurance Corporation ("FDIC") to the fullest extent permitted
by law, and all premiums and assessments required in connection therewith have
been paid when due. SierraWest and each of its Subsidiaries, including SWB, is a
bank or corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization, has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary, other
than in such jurisdictions where the failure so to qualify would not, either
individually or in the aggregate, have a material adverse effect on SierraWest.
The Articles of Incorporation and By-laws of each of SierraWest, and each other
Subsidiary of SierraWest, copies of which were previously made available to BC,
are true, complete and correct. The minute books of SierraWest and its
Subsidiaries which have been made available to BC contain a complete (except for
certain portions thereof relating to the Merger and the transactions
contemplated hereby) and accurate record of all meetings of the respective
Boards of Directors (and committees thereof) and shareholders. As used in this
Agreement, (i) the term "Subsidiary" when used with respect to any party means
any corporation or other organization, whether incorporated or unincorporated,
(x) of which such party or any other Subsidiary of such party is a general
partner (excluding partnerships, the general partnership interests of which held
by such party or any Subsidiary of such party do not have a majority of the
voting interests in such partnership), or (y) at least a majority of the
securities or other interests of which having by their terms ordinary voting
power to elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries, (ii) any
reference to any event, change or effect being "material" with respect to any
entity means an event, change or effect which is material in relation to the
condition (financial or otherwise), properties, assets, liabilities, businesses,
results of operations or prospects of such entity and its Subsidiaries taken as
a whole and (iii) the term "material adverse effect" means, with respect to any
entity, a material adverse effect (whether or not required to be accrued or
disclosed under Statement of Financial Accounting Standards No. 5 ("SFAS No.
5")) (A) on the condition (financial or otherwise), properties, assets,
liabilities,
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15
businesses, results of operations or prospects of such entity and its
Subsidiaries taken as a whole (but does not include any such effect resulting
from or attributable to (1) any action or omission by SierraWest or BC or any
Subsidiary of either of them taken with the prior written consent of the other
parties hereto, in contemplation of the transactions contemplated hereby or (2)
any expenses incurred by such party in connection with this Agreement or the
transactions contemplated hereby, but only to the extent set forth in Section
3.1(a) of the SierraWest Disclosure Schedule (as defined herein), with respect
to SierraWest), or (y) on the ability of such entity to perform its obligations
under the Transaction Agreements (as defined below) on a timely basis. A
"Significant Subsidiary" means any Subsidiary of a person that would constitute
a Significant Subsidiary of such person within the meaning of Rule 1-02 of
Regulation S-X of the Securities and Exchange Commission (the "SEC"). The term
"Transaction Agreements" shall mean this Agreement, the Stock Option Agreement
and the Agreement of Merger. The term "to best knowledge of" any person means
the actual knowledge of such person after reasonable inquiry under all the
circumstances.
(b) Capital Structure; Ownership of BC Common Stock.
(i) The authorized capital stock of SierraWest consists of
10,000,000 shares of SierraWest Common Stock, 9,800,000 shares of
preferred stock, no par value, and 200,000 shares of preferred stock
series A, no par value (such classes of preferred stock, collectively, the
"SierraWest Preferred Stock") of which (A) as of February 24, 1999,
5,324,074 shares of SierraWest Common Stock were outstanding (none having
been issued thereafter except from the exercise of SierraWest Options) and
(B) as of the date hereof, no shares of SierraWest Preferred Stock are
outstanding. All outstanding shares of SierraWest Common Stock have been
duly authorized and validly issued and are fully paid and non-assessable
and not subject to preemptive rights.
(ii) The authorized capital stock of SWB consists of 10,000,000
shares of SWB Common Stock of which 4,116,597 shares are outstanding. All
outstanding shares of SWB Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable and not subject to
preemptive rights.
(iii) Except for this Agreement and the Stock Option Agreement and
except as set forth in Section 3.1(b)(iii) of the disclosure schedule of
SierraWest delivered to BC on the date hereof (the "SierraWest Disclosure
Schedule"), (A) there are no options, warrants, calls, rights, commitments
or agreements of any character to which SierraWest or any of its
Subsidiaries or Affiliates (as defined herein) is a party or by which any
of the foregoing are bound obligating SierraWest or any of its
Subsidiaries or Affiliates to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of
SierraWest or any of its Subsidiaries or obligating SierraWest or any of
its Subsidiaries or Affiliates to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement, (B) there are no
outstanding contractual obligations of SierraWest or any of its
Subsidiaries or Affiliates to repurchase, redeem or otherwise acquire any
shares of capital
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16
stock of SierraWest or any of its Subsidiaries and (C) there are no
outstanding securities of any kind convertible into or exchangeable for
the capital stock of SierraWest or any of its Subsidiaries (or any
interest therein). Except as set forth in Section 3.1(b)(iii) of the
SierraWest Disclosure Schedule, there is no agreement of any kind that
gives any person any right to participate in the equity, value or income
of, or to vote (x) in the election of directors or officers of or (y)
otherwise with respect to the affairs of, SierraWest or any of its
Subsidiaries. As used in this Agreement, the term "Affiliate" means, as to
any person, a person which controls, is controlled by or is under common
control with such person. The term "person" shall mean an individual,
corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity.
(iv) Neither SierraWest nor any of its Subsidiaries or, to
SierraWest's best knowledge (without inquiry), its Affiliates,
beneficially owns, directly or indirectly, any shares of capital stock of
BC, securities of BC convertible into, or exchangeable for, such shares,
or options, warrants or other rights to acquire such shares (regardless of
whether such securities, options, warrants or other rights are then
exercisable or convertible), nor is SierraWest or any of such Subsidiaries
or Affiliates a party to any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of shares of
capital stock of BC or any such other securities, options, warrants or
other rights.
(c) Authority; No Violation.
(i) SierraWest has all requisite corporate power and authority to
enter into this Agreement and the other Transaction Agreements and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the other Transaction Agreements and
the consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of
SierraWest, other than the approval of this Agreement by the holders of a
majority of the outstanding shares of SierraWest Common Stock (the
"SierraWest Shareholder Approval"). The SierraWest Shareholder Approval is
the only vote of any class or series of SierraWest capital stock necessary
to approve this Agreement and the other Transaction Agreements and the
consummation of the transactions contemplated hereby and thereby. This
Agreement and the other Transaction Agreements have been duly executed and
delivered by SierraWest and (assuming due authorization, execution and
delivery by BC and BW) constitute the valid and binding obligations of
SierraWest, enforceable against it in accordance with their terms. SWB has
full corporate power and authority to consummate the Bank Merger.
(ii) Except as set forth in Section 3.1(c)(ii) of the SierraWest
Disclosure Schedule, the execution and delivery by SierraWest of this
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Agreement and the other Transaction Agreements does not, and the
consummation of the transactions contemplated hereby and thereby will not,
conflict with, or result in any violation of, or constitute a default
(with or without notice or lapse of time, or both) under, or give rise to
a right of termination, cancellation or acceleration of any obligation or
the loss of a material benefit under, or the creation of a lien, pledge,
security interest, charge or other encumbrance on any assets (any such
conflict, violation, default, right of termination, cancellation or
acceleration, loss or creation, a "Violation") pursuant to, (x) any
provision of the articles of incorporation or by-laws or comparable
organizational documents of SierraWest or any Subsidiary of SierraWest, or
(y) subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
paragraph (iii) below, any loan or credit agreement, note, mortgage,
indenture, lease, SierraWest Benefit Plan (as defined in Section 3.1(j))
or other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to SierraWest or any Subsidiary of SierraWest or its
properties or assets, which Violation, in the case of clause (y),
individually or in the aggregate, would have a material adverse effect on
SierraWest.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency
or commission or other governmental authority or instrumentality, domestic
or foreign (a "Governmental Entity"), is required by or with respect to
SierraWest or any of its Subsidiaries in connection with the execution and
delivery of this Agreement or the other Transaction Agreements or the
consummation by SierraWest of the transactions contemplated hereby or
thereby, the failure to make or obtain which would have a material adverse
effect on SierraWest or on the ability of SierraWest to perform its
obligations hereunder or thereunder on a timely basis, or on BC's ability
to own, possess or exercise the rights of an owner with respect to the
business and assets of SierraWest and its Subsidiaries, except for (A) the
filing of applications and notices with the FDIC under the Bank Merger Act
and, if required, the Board of Governors of the Federal Reserve System
(the "Federal Reserve") under the BHC Act and approval of same, (B) the
filing by SierraWest with the SEC of a proxy statement in definitive form
relating to the meeting of SierraWest's shareholders to be held to approve
and adopt this Agreement and the transactions contemplated hereby (the
"Proxy Statement"), (C) the filing of applications with the California
State Department of Financial Institutions and such other applications,
filings, authorizations, orders and approvals as may be required under the
banking laws of other states or jurisdictions, and approval thereof
(collectively, the "State Banking Approvals") and pursuant to any
applicable state takeover laws ("State Takeover Approvals"), (D) notices
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), if required, (E) the filing with the Secretary of State
of the State
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of California of the Agreement of Merger, and (F) the filing of a notice
with the Department of Financial Institutions of the State of Nevada.
(d) Financial Statements. SierraWest has previously delivered to BC copies
of (a) the consolidated statements of financial condition of SierraWest and its
Subsidiaries, as of December 31, for the fiscal years 1997 and 1998, and the
related consolidated statements of income, shareholders' equity and cash flows
for the fiscal years 1996 through 1998, inclusive, as reported (except in
respect of such consolidated financial statements as at the end of and for the
fiscal year 1998) in SierraWest's Annual Reports on Form 10-K for the relevant
fiscal years filed with the SEC under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), in each case accompanied by the report of Deloitte
& Touche LLP, independent auditors with respect to SierraWest (except for the
consolidated financial statements as at and for the year ended December 31, 1998
which, as of the date hereof, are not accompanied by such report) (the
consolidated financial statements of SierraWest and its Subsidiaries referred to
in this sentence being hereinafter sometimes referred to as the "SierraWest
Consolidated Financial Statements"). Each of the financial statements referred
to in this Section 3.1(d) (including the related notes, where applicable) fairly
present, and the financial statements referred to in Section 5.14 hereof will
fairly present (subject, in the cases of the unaudited statements, to normal
recurring adjustments, none of which are expected to be material in nature or
amount), the results of the consolidated operations and changes in stockholders'
equity and consolidated financial condition of SierraWest and its Subsidiaries
for the respective fiscal periods or as of the respective dates therein set
forth. Each of such statements (including the related notes, where applicable)
complies, and the financial statements referred to in Section 5.14 hereof will
comply, in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto and
each of such statements (including the related notes, where applicable) has
been, and the financial statements referred to in Section 5.14 will be, prepared
in accordance with United States generally accepted accounting principles
("GAAP") consistently applied during the periods involved, except in each case
as indicated in such statements or in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q. The books and records of
SierraWest and its Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable legal and
accounting requirements and, where such books and records purport to reflect any
transactions, the transactions so reflected are actual transactions.
(e) SierraWest SEC Documents. SierraWest has made available to BC a true
and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by SierraWest with the SEC pursuant to the
Securities Act of 1933 (the "Securities Act") or the Exchange Act (other than
reports filed pursuant to Section 13(g) of the Exchange Act), since December 31,
1997 (as such documents have since the time of their filing been amended, the
"SierraWest SEC Reports"), which are all the documents (other than preliminary
material and reports required pursuant to Section 13 (g) of the Exchange Act)
that SierraWest was required to file with the SEC since such date. As of their
respective dates of filing with the SEC, the SierraWest SEC Reports complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such SierraWest SEC Reports, and did not contain any
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untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of SierraWest included in the SierraWest SEC Reports complied as to
form, as of their respective dates of filing with the SEC, in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (as defined hereinafter) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto or,
in the case of the unaudited statements, as permitted by Form 10-Q of the SEC)
and fairly present in all material respects the consolidated financial position
of SierraWest and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of operations, changes in stockholders' equity and cash
flows of such companies for the periods then ended.
(f) SierraWest Information Supplied. None of the information supplied or
to be supplied by SierraWest for inclusion or incorporation by reference in the
Proxy Statement relating to the meeting of the shareholders (the "SierraWest
Shareholders' Meeting") of SierraWest at which the SierraWest Shareholder
Approval will be sought or for inclusion in the S-4 (as defined herein) will, at
the date of mailing to shareholders of SierraWest and at the time of the
SierraWest Shareholders' Meeting, (i) contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading or (ii) at the time and in the light
of the circumstances under which it is made, be false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements therein not false or misleading or necessary to correct any
statement in any earlier communication with respect to the solicitation of a
proxy for the SierraWest Shareholders' Meeting which has become false or
misleading. The Proxy Statement (except for such portions thereof furnished in
writing to SierraWest by BC or any Subsidiary of BC as to which no warranty is
made) will comply as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations of the SEC thereunder.
(g) Compliance with Applicable Laws. SierraWest and its Subsidiaries hold,
and at all relevant times have held, all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities which are material
to the operation of the businesses of SierraWest and its Subsidiaries, taken as
a whole (the "SierraWest Permits"). SierraWest and its Subsidiaries are in
compliance and have complied with the terms of the SierraWest Permits, except
where the failure so to comply, individually or in the aggregate, would not have
a material adverse effect on SierraWest. The businesses of SierraWest and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for possible violations which,
individually or in the aggregate, do not, and, insofar as reasonably can be
foreseen, in the future will not, have a material adverse effect on SierraWest.
Except for routine examinations by Federal or state Governmental Entities
charged with the supervision or regulation of banks or bank holding companies or
engaged in the insurance of bank deposits ("Bank Regulators") or by the United
States Small Business Administration (the "SBA"), no investigation by any
Governmental Entity with respect to SierraWest or any of its Subsidiaries is
pending or threatened, and no proceedings
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by any Bank Regulator are pending or threatened which seek to revoke or
materially limit any of the SierraWest Permits. Without limiting the generality
of the foregoing provisions of this Section 3.1(g), SierraWest and its
Subsidiaries are in compliance with and have been in compliance with any
applicable federal or state insurance or securities law, or other rule,
regulation, guidelines or policy statements of any Governmental Entity, as to
all insurance and/or securities products offered or sold by SierraWest or its
Subsidiaries for its own account or the account of others, including but not
limited to annuity products. SWB is approved to conduct operations as a
"Preferred Lender" by the SBA under the Small Business Administration Act of
1953 (the "SBA Act") and the SBA's rules and regulations at each of its offices
except for those offices listed in Section 3.1(g) of the SierraWest Disclosure
Schedule. All loans originated by SWB under the SBA's loan guarantee program
have been originated in full compliance with the rules and regulations of the
SBA and the SBA Act except to the extent that any noncompliance would not be
reasonably likely to result in a material adverse effect with respect to
SierraWest. Neither SierraWest nor any of its Subsidiaries has received any
notice from the SBA which calls into question SierraWest and its Subsidiaries'
compliance with the rules and regulations of the SBA in any respect. Except as
described in Section 3.1(g) of the SierraWest Disclosure Schedule, the SBA has
not given to SierraWest or any of its Subsidiaries notice that it will not honor
its guarantee with respect to any loan originated by any of them which loan is
on the books of SierraWest or its Subsidiaries as of the date hereof or is the
subject of any securitization heretofore consummated.
(h) Litigation. Except as set forth in Section 3.1(h) of the SierraWest
Disclosure Schedule, there is no suit, action, proceeding, arbitration or
investigation ("Litigation") pending to which SierraWest or any Subsidiary of
SierraWest is a party or by which any of such persons or their respective assets
may be bound or, to the best knowledge of SierraWest, threatened against or
affecting SierraWest or any Subsidiary of SierraWest, or challenging the
validity or propriety of the transactions contemplated hereby which, if
adversely determined, would, individually or in the aggregate, have or
reasonably be expected to have a material adverse effect on SierraWest or on the
ability of SierraWest to perform its obligations under this Agreement or the
Stock Option Agreement in a timely manner, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against SierraWest or any Subsidiary of SierraWest.
(i) Taxes. SierraWest and each of its Subsidiaries have timely filed all
tax returns required to be filed by any of them and all such tax returns are
correct and complete in all material respects. SierraWest and each of its
Subsidiaries have timely paid (or SierraWest has paid on their behalf), or have
set up an adequate reserve for the payment of, all taxes required to be paid
(whether or not shown as due on such returns), and the most recent financial
statements that have been delivered to BC reflect an adequate reserve (other
than reserves for deferred taxes established to reflect differences between tax
and book basis of assets and liabilities) for all taxes accrued but not yet due
and owing, by SierraWest and its Subsidiaries accrued through the date of such
financial statements. SierraWest and its Subsidiaries file tax returns in all
jurisdictions where required to file tax returns. No material deficiencies for
any taxes have been proposed, asserted or assessed against SierraWest or any of
its Subsidiaries that are not adequately reserved for (other than reserves for
deferred taxes
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21
established to reflect differences between tax and book basis of assets and
liabilities). Except as set forth in Section 3.1(i) of the SierraWest Disclosure
Schedule: (i) there are no liens with respect to taxes upon any of the assets or
properties of SierraWest and its Subsidiaries, other than with respect to taxes
not yet due and payable, (ii) no material issue relating to taxes of SierraWest
and its Subsidiaries has been raised in writing by any taxing authority in any
audit or examination which can result in a proposed adjustment or assessment by
a governmental authority in a taxable period (or portion thereof) ending on or
before the Closing Date nor to the best knowledge of SierraWest does any basis
exist for the raising of any such issue, (iii) SierraWest and its Subsidiaries
have duly and timely withheld from all payments (including employee salaries,
wages and other compensation) and paid over to the appropriate taxing
authorities all amounts required to be so withheld and paid over for all periods
for which the statute of limitations has not expired under all applicable laws
and regulations, (iv) as of the Closing Date, none of SierraWest nor any of its
Subsidiaries shall be a party to, be bound by or have any obligation under, any
tax sharing agreement or similar contract or arrangement or any agreement that
obligates any of them to make any payment computed by reference to the taxes,
taxable income or taxable losses of any other person, (v) there is no contract
or agreement, plan or arrangement by SierraWest or any of its Subsidiaries
covering any person that, individually or collectively, could give rise to the
payment of any amount that would not be deductible by SierraWest or any of its
Subsidiaries by reason of Section 280G of the Code, (vi) SierraWest and its
Subsidiaries have collected all material sales and use taxes required to be
collected, and have remitted, or will remit on a timely basis, such amounts to
the appropriate governmental authorities, or have been furnished properly
completed exemption certificates and have maintained all such records and
supporting documents in the manner required by all applicable sales and use tax
statutes and regulations for all periods for which the statute of limitations
has not expired, (vii) neither SierraWest nor any of its Subsidiaries has been a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code, and (viii) none of SierraWest nor any of its
Subsidiaries (A) has been a member of an affiliated group (other than the group
to which they are currently members) filing a consolidated federal income tax
return or (B) has any liability for the taxes of any person (other than the
members of such current group) under Treasury Regulation Section 1.1502-6(a) (or
any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise. For the purpose of this Agreement, the
term "tax" (including, with correlative meaning, the terms "taxes" and
"taxable") shall include, except where the context otherwise requires, all
Federal, state, local and foreign income, profits, franchise, gross receipts,
payroll, sales, employment, use, property, withholding, excise, occupancy,
custom, duty, capital stock, ad valorem, value added, estimated, stamp,
alternative, environmental, any taxes imposed under Subchapter H of Chapter I of
Subtitle A of the Code, and other taxes, duties or assessments of any nature
whatsoever, together with all interest, penalties and additions imposed with
respect to such amounts. As used in this Agreement, the term "Tax return" shall
mean any return, declaration, report, claim for refund or information return or
statement relating to taxes, including any schedule or attachment thereto, and
including any amendment thereof. Neither SierraWest nor any of its Subsidiaries
has filed a consent to the application of Section 341(f) of the Code.
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(j) Certain Agreements. Section 3.1(j) of the SierraWest Disclosure
Schedule sets forth a listing of all of the following contracts and other
agreements, oral or written (which are currently in force or which may in the
future be operative in any respect) to which SierraWest or any of its
Subsidiaries is a party or by or to which SierraWest or any of its Subsidiaries
or any of their respective assets or properties are bound or subject: (i)
consulting agreements not terminable on six months or less notice involving the
payment of more than $25,000 per annum, or union, guild or collective bargaining
agreements covering any employees in the United States, (ii) agreements with any
officer or other key employee of SierraWest or any of its Subsidiaries (x)
providing any term of employment or (y) the benefits of which are contingent, or
the terms of which are materially altered, upon the occurrence of a transaction
involving SierraWest of the nature contemplated by this Agreement, (iii) any
agreement or plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement, (iv) contracts and other agreements for the sale
or lease (other than where SierraWest or any of its Subsidiaries is a lessor) of
any assets or properties (other than in the ordinary course of business) or for
the grant to any person (other than to SierraWest or any of its Subsidiaries) of
any preferential rights to purchase any assets or properties, (v) contracts and
other agreements relating to the acquisition by SierraWest or any of its
Subsidiaries of any operating business or entity or any interest therein, (vi)
contracts or other agreements under which SierraWest or any of its Subsidiaries
agrees to indemnify any party, other than in the ordinary course of business,
consistent with past practice, or to share a tax liability of any party, (vii)
contracts and other agreements containing covenants restricting SierraWest or
any of its Subsidiaries from competing in any line of business or with any
person in any geographical area or requiring SierraWest or any of its
Subsidiaries to engage in any line of business, (viii) contracts or other
agreements (other than contracts in the ordinary course of their banking
business) relating to the borrowing of money by SierraWest or any of its
Subsidiaries, or the direct or indirect guaranty by SierraWest or any of its
Subsidiaries of any obligation for, or an agreement by SierraWest or any of its
Subsidiaries to service, the repayment of borrowed money, or any other
contingent obligations of SierraWest or any of its Subsidiaries in respect of
indebtedness of any other person, and (ix) any other material contract or other
agreement whether or not made in the ordinary course of business, including any
contract required to be filed by SierraWest pursuant to Item 601(b)(10) of
Regulation S-K of the SEC. There have been delivered or made available to BC
true and complete copies of all of the contracts and other agreements set forth
in Section 3.1(j) of the SierraWest Disclosure Schedule or in any other Section
of the SierraWest Disclosure Schedule. Except as set forth in Section 3.1(j) of
the SierraWest Disclosure Schedule, each such contract and other agreement is in
full force and effect and constitutes a legal, valid, and binding obligation of
SierraWest or its Subsidiaries, as the case may be, and to the best knowledge of
SierraWest, each other party thereto, enforceable in accordance with its terms.
Neither SierraWest nor any Subsidiary of SierraWest has received any notice,
whether written or oral, of termination or intention to terminate from any other
party to such contract or agreement. None of SierraWest or any of its
Subsidiaries or (to the best knowledge of SierraWest) any other party to any
such contract or agreement is in violation or breach of or default under any
such contract or agreement (or with or without notice or lapse of time or both,
would be in
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violation or breach of or default under any such contract or agreement), which
violation, breach, or default has had or would have, individually or in the
aggregate, a material adverse effect on SierraWest.
(k) Benefit Plans.
(i) Section 3.1(k) of the SierraWest Disclosure Schedule contains a
true and complete list of each "employee benefit plan" (within the meaning
of section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), including, without limitation, multiemployer plans
(within the meaning of ERISA section 3(37)), and all stock purchase, stock
option, severance, employment, change-in-control, fringe benefit,
collective bargaining, bonus, incentive, deferred compensation, employee
stock ownership, retirement, profit sharing and all other employee benefit
plans, agreements, programs, policies or other arrangements, whether or
not subject to ERISA, and whether formal or informal, oral or written (all
the foregoing being herein called "Benefit Plans"), that are sponsored or
are being maintained or contributed to, or required to be contributed to,
by SierraWest or any of its Subsidiaries (the "SierraWest Benefit Plans").
No SierraWest Benefit Plan is a multiemployer plan or is subject to a
collective bargaining agreement.
(ii) With respect to each SierraWest Benefit Plan, SierraWest has
delivered to BC a current, accurate and complete copy (or, to the extent
no such copy exists, an accurate description) thereof and, to the extent
applicable, (A) any related trust agreement or other funding instrument;
(B) the most recent determination letter; (C) any summary plan description
and other written communications (or a description of any oral
communications) by SierraWest or any of its Subsidiaries to any of their
respective employees concerning the extent of the benefits provided under
any SierraWest Benefit Plan; and (D) except as described in Section 3.1(k)
of the SierraWest Disclosure Schedule, for the two most recent years (I)
the Form 5500 and attached schedules; (II) audited financial statements;
and (III) actuarial valuation reports.
(iii) (A) Each SierraWest Benefit Plan has been established and
administered in accordance with its terms, and in compliance with the
applicable provisions of ERISA, the Code and other applicable laws, rules
and regulations; (B) each SierraWest Benefit Plan which is intended to be
qualified within the meaning of Code section 401(a) is so qualified and
has received a favorable determination letter as to its qualification and
nothing has occurred, whether by action or failure to act, which would
cause the loss of such qualification; (C) with respect to any SierraWest
Benefit Plan, no audits, actions, suits or claims (other than routine
claims for benefits in the ordinary course) are pending or threatened, and
no facts or circumstances exist which could give rise to any such audits,
actions, suits or claims; (D) neither SierraWest nor any other party has
engaged in a prohibited transaction which could subject SierraWest or any
of its Subsidiaries, or the Surviving
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Corporation to any taxes, penalties or other liabilities under Code
section 4975 or ERISA sections 409 or 502(i); (E) no event has occurred
and no condition exists that could subject SierraWest or any of its
Subsidiaries, or the Surviving Corporation, either directly or by reason
of any such entity's affiliation with any member of any such entity's
Controlled Group (defined as any organization which is a member of a
controlled group of organizations within the meaning of Code sections
414(b), (c), (m) or (o)), to any tax, fine, liability or penalty imposed
by ERISA, the Code or other applicable laws, rules and regulations; (F)
all insurance and Pension Benefit Guaranty Corporation ("PBGC") premiums
required to be paid with respect to SierraWest Benefit Plans through the
Closing Date have been or will be paid prior thereto and adequate reserves
will have been provided for on SierraWest's consolidated statement of
financial condition as of the month end immediately prior to the Closing
Date for any premiums (or portions thereof) attributable to service on or
prior to the Closing Date; (G) all contributions required to be made prior
to the Closing Date under the terms of each SierraWest Benefit Plan, the
Code, ERISA or other applicable laws, rules and regulations have been or
will be timely made and adequate reserves will have been provided for on
SierraWest's consolidated statement of financial condition as of the month
end immediately prior to the Closing Date for all benefits attributable to
service on or prior to the Closing Date; (H) no SierraWest Benefit Plan
has incurred any "accumulated funding deficiency" as such term is defined
in ERISA section 302 and (including, but not limited to the voting of any
securities held pursuant to a SierraWest Benefit Plan) Code section 412
(whether or not waived); and (I) the consummation of this Agreement will
not result in a nonexempt prohibited transaction or a breach of fiduciary
duty under ERISA.
(iv) Except as set forth in Section 3.1(k)(iv) of the SierraWest
Disclosure Schedule, with respect to each of the SierraWest Benefit Plans
which is subject to Title IV of ERISA, as of the Closing Date, the assets
of each such Plan shall be at least equal in value to the present value of
the accrued benefits (vested and unvested) of the participants in such
Plan on a termination and projected basis, based on the actuarial methods
and assumptions indicated in the most recent actuarial valuation reports.
(v) Except as set forth on Section 3.1(k)(v) of the SierraWest
Disclosure Schedule, no SierraWest Benefit Plan exists which provides for
an increase in benefits on or after the Closing Date or could result in
the payment to any employee of SierraWest or any of its Subsidiaries of
any money or other property or rights or accelerate or provide any other
rights or benefits to any such employee as a result of the transactions
contemplated by this Agreement. The aggregate amount of payments due from
SierraWest under all such contracts and the amount due under each such
contract, at the Effective Time, are as set forth in the schedule included
in Section 3.1(k)(v) of the SierraWest Disclosure Schedule. None of such
payments will constitute an "excess parachute" payment within the meaning
of Code section 280G.
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(vi) Prior to the Effective Time, the SierraWest KSOP Plan, as
amended (the "SierraWest KSOP Plan"), shall be terminated in a manner
which will permit distribution of all participant and beneficiary accounts
held thereunder.
(l) Subsidiaries. Section 3.1(l) of the SierraWest Disclosure Schedule
lists all the Subsidiaries of SierraWest. SierraWest owns, directly or
indirectly, beneficially and of record 100% of the issued and outstanding voting
securities of each such Subsidiary. All of the shares of capital stock of each
of the Subsidiaries held by SierraWest or by another of its Subsidiaries are
fully paid and nonassessable and are owned by SierraWest or one of its
Subsidiaries free and clear of any lien, claim or other encumbrance. Neither
SierraWest nor any of its Subsidiaries owns any shares of capital stock or other
equity securities of any person (other than, in the case of SierraWest, the
capital stock of its Subsidiaries and, in the case of such Subsidiaries, shares
or equity securities acquired in satisfaction of debts previously contracted in
good faith in the ordinary course of their banking business).
(m) Agreements with Bank or Other Regulators. Except as set forth in
Section 3.1(m) of the SierraWest Disclosure Schedule, neither SierraWest nor any
Subsidiary of SierraWest is a party to any written agreement or memorandum of
understanding with, or a party to any commitment letter or similar undertaking
to, or is subject to any order or directive by, or is a recipient of any
extraordinary supervisory letter from, or has adopted any board resolutions at
the request of, any Bank Regulator or the SBA or the U.S. Department of
Agriculture which restricts materially the conduct by SierraWest and its
Subsidiaries of their businesses, or in any manner relates to their capital
adequacy, credit policies, loan underwriting or documentation or management, nor
has SierraWest or any such Subsidiary been advised by any Bank Regulator or the
SBA or the U.S. Department of Agriculture that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order, decree, agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar submission, or any such board
resolutions.
(n) Absence of Certain Changes or Events. Since September 30, 1998, there
has not been any change, or any event involving a prospective change, in the
business, financial condition or results of operations or prospects of
SierraWest or any of its Subsidiaries which has had, or would be reasonably
likely to have, a material adverse effect on SierraWest. Except as set forth in
Section 3.1(n) of the SierraWest Disclosure Schedule, since September 30, 1998,
SierraWest and each of its Subsidiaries have conducted their respective
businesses in the ordinary course consistent with their past practices and
neither SierraWest nor any of its Subsidiaries has taken any action or entered
into any transaction, and no event has occurred, that would have required BC's
consent pursuant to Section 4.1 of this Agreement if such action had been taken,
transaction entered into or event had occurred, in each case, after the date of
this Agreement, nor has SierraWest or any of its Subsidiaries entered into any
agreement, plan or arrangement to do any of the foregoing.
(o) Undisclosed Liabilities. Except (i) for those liabilities or
obligations that are fully reflected or reserved against in the consolidated
statement of financial condition at December 31, 1998 of SierraWest referred to
in Section 3.1(d) or (ii) for liabilities or
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obligations incurred in the ordinary course of business consistent with past
practice since December 31, 1998 and which are not material to SierraWest and
its Subsidiaries taken as a whole, none of SierraWest or any of its Subsidiaries
has incurred any liability or obligation of any nature whatsoever (whether
absolute, accrued or contingent or otherwise and whether due or to become due)
that, either alone or when combined with all similar liabilities or obligations,
has had, or would have, a material adverse effect on SierraWest. Without
limiting the generality of the foregoing, neither SierraWest nor any Subsidiary
has any liabilities (whether or not required to be accrued or disclosed under
SFAS No. 5) relating to or arising from its securitizations of SBA guaranteed
loans except as described in Section 3.1(o) of the SierraWest Disclosure
Schedule. No agreement pursuant to which any loans or other assets have been or
will be sold by SierraWest or any Subsidiary entitle the buyer of such loans or
other assets, unless there is material breach of a representation or covenant by
SierraWest or its Subsidiaries not relating to the payment or other performance
by an obligor of such loan or other asset of its obligations thereunder, to
cause SierraWest or its Subsidiaries to repurchase such loan or other asset or
the buyer to pursue any other form of recourse against SierraWest or its
Subsidiaries.
(p) Governmental Reports. SierraWest and each of its Subsidiaries have
timely filed all material reports, registrations and statements, together with
any amendments required to be made with respect thereto, that they were required
to file since January 1, 1995 with any Governmental Entity and have paid all
fees and assessments due and payable in connection therewith. Except as set
forth in Section 3.1(p) of the SierraWest Disclosure Schedule and except for
normal examinations conducted by a Governmental Entity in the regular course of
business of SierraWest and its Subsidiaries, no Governmental Entity has
initiated any proceeding or, to the best knowledge of SierraWest, investigation
into the business or operations of SierraWest or any of its Subsidiaries since
January 1, 1995. Except as set forth in Section 3.1(p) of the SierraWest
Disclosure Schedule, there is no material unresolved violation, criticism or
exception by any Governmental Entity with respect to any report or statement
relating to any examinations of SierraWest or any of its Subsidiaries.
(q) Environmental Liability. Except as set forth in Section 3.1(q) of the
SierraWest Disclosure Schedule, there are no legal, administrative, arbitral or
other proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose, or that is reasonably likely to result in the
imposition, on SierraWest or any of its Subsidiaries of any liability or
obligation arising under common law standards relating to environmental
protections, human health or safety, or under any local, state or federal
environmental statute, regulation or ordinance, including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended (collectively, the "Environmental Laws"), pending or, to the
best knowledge of SierraWest, threatened, against SierraWest or any of its
Subsidiaries, which liability or obligation, individually or in the aggregate,
would have or would be reasonably likely to have a material adverse effect on
SierraWest. To the best knowledge of SierraWest, there is no reasonable basis
for any such proceeding, claim, action or governmental investigation that would
impose any liability or obligation that would have or would be reasonably likely
to have a material adverse effect on SierraWest. Except as set forth in Section
3.1(q) of the SierraWest Disclosure Schedule, to
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the best knowledge of SierraWest, during or prior to the period of (i) the
ownership by SierraWest or any of its Subsidiaries of any of their respective
current properties, (ii) the participation by SierraWest or any of its
Subsidiaries in the management of any property, or (iii) the holding by
SierraWest or any of its Subsidiaries of a security interest or other interest
in any property, there were no releases or threatened release of hazardous,
toxic, radioactive or dangerous materials or other materials regulated under
Environmental Laws in, on, under or affecting any such property which,
individually or in the aggregate, would be reasonably likely to have a material
adverse effect on SierraWest. Neither SierraWest nor any Subsidiary of
SierraWest or SWB is subject to any agreement, order, judgment, decree, letter
or memorandum by or with any Governmental Entity or third party imposing any
material liability or obligation pursuant to or under any Environmental Law that
would be reasonably likely to have a material adverse effect on SierraWest.
(r) Properties. Except as set forth in Section 3.1(r) of the SierraWest
Disclosure Schedule, SierraWest or one of its Subsidiaries (i) has good and
marketable title to all the properties and assets reflected in the SierraWest
Consolidated Financial Statements as being owned by SierraWest or one of its
Subsidiaries or acquired after the date thereof which are material to the
business of SierraWest on a consolidated basis (except properties sold or
otherwise disposed of since the date thereof in the ordinary course of
business), free and clear of all claims, liens, charges, security interests or
encumbrances of any nature whatsoever except (A) statutory liens securing
payments not yet due, (B) liens on assets of SWB securing deposits incurred in
the ordinary course of its banking business and (C) such imperfections or
irregularities of title, claims, liens, charges, security interests or
encumbrances as do not materially affect the use of the properties or assets
subject thereto or affected thereby or otherwise materially impair business
operations at such properties and (ii) is the lessee of all leasehold estates
reflected in the SierraWest Consolidated Financial Statements or acquired after
the date thereof which are material to its business on a consolidated basis
(except for leases that have expired by their terms since the date thereof) and
is in possession of the properties purported to be leased thereunder, and each
such lease is valid without default thereunder by the lessee or, to the best
knowledge of SierraWest, the lessor. Except as set forth in Section 3.1(r) of
the SierraWest Disclosure Schedule, all real properties owned by SierraWest or
any of its Subsidiaries are owned in accordance with all requirements of
applicable rules, regulations and policies of the Bank Regulators.
(s) Transactions with Affiliates. Except as set forth on Section 3.1(s) of
the SierraWest Disclosure Schedule and except for those arrangements, contracts,
agreements or transactions which either (A) involve per annum payments by
SierraWest and its Subsidiaries of less than $25,000 individually or $100,000 in
the aggregate or (B) are terminable by SierraWest or such Subsidiary on 30 days
or less notice with no financial penalty, (i) since December 31, 1996, none of
SierraWest or any of its Subsidiaries has engaged in any business arrangement or
relationship with any of its Affiliates and (ii) there are no, and since
December 31, 1996, there have not been, any, liabilities, contracts or other
agreements or other transactions between SierraWest or any of its Subsidiaries,
on the one hand, and any of its Affiliates or any officer, director or employee
of any such Affiliate, on the other hand.
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(t) Brokers or Finders. No agent, broker, investment banker, financial
advisor or other firm or person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement, except for NationsBanc
▇▇▇▇▇▇▇▇▇▇ Securities LLC, whose fees and expenses will be paid by SierraWest in
accordance with SierraWest's agreement with such firm (a copy of which agreement
has been delivered to BC prior to the date of this Agreement).
(u) Intellectual Property. Except as set forth in Section 3.1(u) of the
SierraWest Disclosure Schedule, SierraWest and its Subsidiaries own or have a
valid license to use all trademarks, service marks and trade names (including
any registrations or applications for registration of any of the foregoing)
(collectively, the "SierraWest Intellectual Property") necessary to carry on
their business substantially as currently conducted, except for such SierraWest
Intellectual Property the failure of which to own or validly license
individually or in the aggregate would not reasonably be expected to have a
material adverse effect on SierraWest. Neither SierraWest nor any such
Subsidiary has received any notice of infringement of or conflict with, and, to
SierraWest's knowledge, there are no infringements of or conflicts with, the
rights of others with respect to the use of any SierraWest Intellectual Property
that individually or in the aggregate, in either such case, would reasonably be
expected to have a material adverse effect on SierraWest.
(v) Pooling of Interests. As of the date of this Agreement, SierraWest has
no reason (in respect to matters pertaining to SierraWest existing as of the
date hereof or expected to exist as of the Closing Date) to believe that
SierraWest will not qualify for a pooling of interests treatment for accounting
purposes under GAAP as presently in effect.
(w) Opinion of Financial Advisor. SierraWest has received the written
opinion of NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities LLC, dated February 25, 1999, to
the effect that, as of such date, subject to the limitations and conditions
contained therein, the consideration to be received by the holders of SierraWest
Common Stock pursuant to the Merger is fair to such holders from a financial
point of view.
(x) Rights Agreement; Anti-takeover Provisions. SierraWest has taken all
action so that the entering into of this Agreement and the other Transaction
Agreements and the consummation of the transactions contemplated hereby and
thereby do not and will not result in the grant of any rights to any person
under the Rights Agreement between SierraWest and American Stock Transfer &
Trust Co. dated January 16, 1996, as amended January 29, 1998 and February 25,
1999 (the "SierraWest Rights Agreement") or enable or require the rights
thereunder to be exercised, distributed or triggered. The Board of Directors of
SierraWest has taken all necessary action so that the provisions of Section 1203
of the California Corporations Code (and any applicable provisions of the
takeover laws of any other state) and any comparable provisions of SierraWest's
Articles of Incorporation do not and will not apply to this Agreement and the
other Transaction Agreements, or the transactions contemplated hereby or
thereby.
(y) Community Reinvestment Act Compliance. SWB is in substantial
compliance with the applicable provisions of the Community Reinvestment Act of
1977 and the
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regulations promulgated thereunder (collectively, the "CRA") and has received a
CRA rating of "satisfactory" from the FDIC in its most recent examination, and
SierraWest has no knowledge of the existence of any fact or circumstance or set
of facts or circumstances which could be reasonably expected to result in SWB
failing to be in substantial compliance with such provisions or having its
current rating lowered.
(z) Year 2000 Readiness. SierraWest has a plan and organization in place
to minimize any material adverse effect caused by the failure of any system,
equipment or product which is material to its operations or financial condition
to be Year 2000 Ready (as defined below). Such plan addresses, at a minimum, the
issues set forth in the statement of the Federal Financial Institutions
Examination Council ("FFIEC"), dated May 5, 1997, entitled "Year 2000 Project
Management Awareness," and December 1997, entitled "Safety and Soundness
Guidelines Concerning the Year 2000 Business Risk," as well as any other
statements of the FFIEC related to the Year 2000, as such issues might affect
SierraWest and its Subsidiaries. SierraWest has provided to BC a complete and
accurate copy of the plan, which includes SierraWest's Year 2000 organization
and an estimate of anticipated associated costs. SierraWest is using its best
efforts to implement such plan, which includes seeking assurances from its
vendors and suppliers that such vendors' and suppliers' products and services
which are material to its operations are Year 2000 Ready, replacing any material
products and services supplied by such vendors or suppliers which are not Year
2000 Ready with new products and services which are Year 2000 Ready, and/or
working with such vendors and suppliers to achieve Year 2000 Readiness with
respect to such material products and services. Such plan shall also establish
procedures to evaluate, manage and mitigate Year 2000-related risks to
SierraWest posed by SierraWest's material customers who may not themselves be
Year 2000 Ready. Neither SierraWest nor its Subsidiaries have received, or
expect to receive, a "Year 2000 Deficiency Notification Letter" (as such term is
employed in the Federal Reserve's Supervision and Regulation Letter No. SR 98-3
(SUP), dated March 4, 1998). As used herein, the term "Year 2000 Ready" shall
mean that the functionality and the performance of any system or piece of
equipment will not be materially adversely affected as a result of the date
change for any date on or after January 1, 2000, including leap year
calculations, and that, to the extent applicable to normal operating
specifications, the system or equipment will in all material respects accurately
accept, store, retrieve, calculate, compare and otherwise process dates of
January 1, 2000 and later.
(aa) Dissenters' Rights. The SierraWest Common Stock is included on the
list of OTC margin stocks maintained by the Federal Reserve and therefore the
holders of such shares shall not be entitled to have their shares treated as
"dissenting shares" under Section 1300 of the California Corporations Code by
reason of the Merger unless demands for payment shall be filed with respect to
5% or more of the outstanding shares of such class.
(ab) Insurance. SierraWest has previously delivered to BC a list
identifying all insurance policies maintained on behalf of SierraWest and its
Subsidiaries (other than mortgage, title and other similar policies for the
benefit of SierraWest or its Subsidiaries as mortgagees under residential
mortgage loans). All of the material insurance policies and bonds maintained by
or for the benefit of SierraWest and its Subsidiaries are in full force and
effect, SierraWest and its Subsidiaries are not in default thereunder and all
material claims
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thereunder have been filed in due and timely fashion and neither SierraWest nor
any of its Subsidiaries have received notice that any of such material claims
have been or will be denied. The insurance policies and bonds maintained by
SierraWest and its Subsidiaries are written by reputable insurers and are in
such amounts, cover such risks and have such other terms as is customary for
banks and bank holding companies comparable in size and operations to SierraWest
and its Subsidiaries. Since December 31, 1997, there has not been any damage to,
destruction of, or loss of any assets of SierraWest and its Subsidiaries
(whether or not covered by insurance) that could have a material adverse effect
on SierraWest. Neither SierraWest nor any SierraWest Subsidiaries has received
any notice of a premium increase or cancellation with respect to any of its
insurance policies or bonds, and within the last three years, neither SierraWest
nor any of its Subsidiaries has been refused any insurance coverage sought or
applied for, and SierraWest has no reason to believe that existing insurance
coverage cannot be renewed as and when the same shall expire, upon terms and
conditions as favorable as those presently in effect, other than possible
increases in premiums or unavailability in coverage that have not resulted from
an extraordinary loss experience of SierraWest or any SierraWest Subsidiary.
(ac) Loans and Other Assets.
(i) SierraWest has disclosed to BC prior to the date hereof the amounts of
all loans, leases, other extensions of credit, commitments or other
interest-bearing assets presently owned by SierraWest or any of its Subsidiaries
that have been classified by any Bank Regulator, SierraWest's independent
auditors, or the management of SierraWest or any Subsidiary of SierraWest as
"Other Loans Especially Mentioned," "Substandard," "Doubtful," or "Loss" or
classified using categories with similar import and will have disclosed to BC
prior to the Closing Date all such items which will be so classified hereafter
and prior to the Closing Date. All such assets or portions thereof classified
"Loss" or which are subsequently so classified, have been (or will be) charged
off on a timely basis in full, collected or otherwise placed in a bankable
condition. SierraWest regularly reviews and appropriately classifies its and its
Subsidiaries' loans and other assets in accordance with all applicable legal and
regulatory requirements and GAAP. SierraWest has disclosed to BC the amounts and
identities of all other real estate owned ("OREO") that have been classified as
such as of the date hereof by SierraWest's independent auditors, management or
any Bank Regulator and will have disclosed to BC prior to the Closing Date all
such terms which will be so classified hereafter and prior to the Closing Date.
As of the date hereof and the Closing Date, the recorded values of all OREO on
the books of SierraWest and its Subsidiaries accurately reflect and will reflect
the net realizable values of each OREO parcel thereof in compliance with GAAP.
SierraWest and its Subsidiaries have recorded on a timely basis all expenses
associated with or incidental to its OREO including but not limited to taxes,
maintenance and repairs as required by GAAP.
(ii) All loans, leases, other extensions of credit, commitments or other
interest-bearing assets and investments of SierraWest and its Subsidiaries are
legal, valid and binding obligations enforceable in accordance with their
respective terms and are not subject to any setoffs, counterclaims or disputes
known to SierraWest (subject to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and subject, as to
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enforceability, to equitable principles of general applicability), except as
previously disclosed to BC in Section 3.1(ac)(ii) of the SierraWest Disclosure
Schedule or reserved for in the consolidated statement of financial condition of
SierraWest as of December 31, 1998 referred to in Section 3.1(d) in accordance
with GAAP, and were duly authorized under and made in compliance with applicable
federal and state laws and regulations. SierraWest and its Subsidiaries do not
have any extensions or letters 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 SierraWest and its Subsidiaries.
(ad) Restrictions on Investments. Except for pledges to secure public and
trust deposits and repurchase agreements in the ordinary course of business,
none of the investments reflected in the consolidated statement of financial
condition of SierraWest as of December 31, 1998 referred to in Section 3.1(d),
and none of the investments made by SierraWest and its Subsidiaries since
December 31, 1998, is subject to any restriction, whether contractual or
statutory, which materially impairs the ability of SierraWest or its
Subsidiaries freely to dispose of such investment at any time.
(ae) No Brokered Deposits. Except as described in Section 3.1(ae) of the
SierraWest Disclosure Schedule, as of the date hereof, neither SierraWest nor
any of its Subsidiaries now has any "brokered deposits" as such deposits are
defined by applicable regulations of the FDIC as of the date hereof.
(af) Derivatives Contracts; Structured Notes; Etc. Except as set forth in
Section 3.1(af) of the SierraWest Disclosure Schedule, neither SierraWest nor
any Subsidiary is a party to or has 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") or owns 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 their banking business, consistent with safe and sound
banking practices and regulatory guidance, and with counterparties reasonably
believed by SierraWest to be financially responsible. All of such Derivatives
Contracts or other instruments are legal, valid and binding obligations of
SierraWest or one of its Subsidiaries and to the best knowledge of SierraWest,
each of the other counterparties thereto, 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. SierraWest and each of its Subsidiaries and to
the best knowledge of SierraWest, each of the other counterparties thereto, have
duly performed in all material respects all of their material obligations
thereunder to the extent that such obligations to perform have accrued; and
there
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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 on SierraWest.
(ag) Labor Matters. Neither SierraWest nor any of its Subsidiaries is a
party to, or is bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is it
or any of its Subsidiaries the subject to a proceeding asserting that it or any
such Subsidiary has committed an unfair labor practice (within the meaning of
the National Labor Relations Act) or seeking to compel it or such Subsidiary to
bargain with any labor organization as to wages and conditions of employment,
nor is there any strike or other labor dispute involving it or any of its
Subsidiaries pending or, to the best of its knowledge, threatened, nor is it
aware of any activity involving it or any of its Subsidiaries' employees seeking
to certify a collective bargaining unit or engaging in any other organization
activity.
3.2 Representations and Warranties of BC. BC represents and warrants to
SierraWest as follows:
(a) Organization, Standing and Power. BC is a bank holding company
registered under the BHC Act and organized under the laws of the State of
Delaware. Each of BW and First Hawaiian Bank ("FHB") is a wholly-owned
Subsidiary of BC and each is a banking corporation organized under the laws of
the State of California in the case of BW and the State of Hawaii in the case of
FHB. The deposit accounts of BC's bank Subsidiaries are insured by the BIF or
the Savings Association Insurance Fund of the FDIC to the fullest extent
permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid when due. Each of BC and its Significant
Subsidiaries is a bank or corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization, has all requisite power and authority to own, lease and operate
its properties and to carry on its business as now being conducted, and is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification necessary, other than in such jurisdictions where the failure so
to qualify would not, either individually or in the aggregate, have a material
adverse effect on BC. The Certificate of Incorporation and By-laws of BC, copies
of which were previously made available to SierraWest, are true, complete and
correct copies of such documents as in effect on the date of this Agreement.
(b) Capital Structure.
(i) As of the date hereof, the authorized capital stock of BC
consists of 200,000,000 shares of BC Common Stock, 75,000,000 shares of
Class A Common Stock, par value $1.00 per share (the "BC Class A Common
Stock") and 50,000,000 shares of preferred stock, par value $1.00 per
share ("BC Preferred Stock"). As of February 19, 1999 (A) 31,572,627
shares of BC Common Stock were outstanding, 1,203,129 shares of BC Common
Stock were reserved for issuance upon the exercise of outstanding stock
options or awards under incentive plans (such plans or programs,
collectively, the "BC Stock
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Plans"), and 1,617,747 shares of BC Common Stock were held by BC in its
treasury or by its Subsidiaries (other than shares held in trust, managed,
custodial or nominee accounts and the like, or held by mutual funds for
which a Subsidiary of BC acts as investment advisor, that in any such case
are beneficially owned by third parties); (B) 25,814,768 shares of BC
Class A Common Stock were outstanding and (C) no shares of BC Preferred
Stock were outstanding. All outstanding shares of BC Common Stock and BC
Class A Common Stock have been duly authorized and validly issued and are
fully paid and non-assessable and not subject to preemptive rights. At the
Effective Time, the BC Common Stock to be issued hereunder will be, when
issued in accordance with the terms hereof, duly authorized, validly
issued, fully paid and non-assessable and not subject to preemptive
rights.
(ii) Except as set forth in Section 3.2(b) of the disclosure
schedule of BC delivered to SierraWest on the date hereof (the "BC
Disclosure Schedule") or as disclosed in the BC SEC Reports (as defined
herein) heretofore filed with the SEC prior to the date of this Agreement,
as of the date of this Agreement, except for this Agreement, (A) there are
no options, warrants, calls, rights, commitments or agreements of any
character to which BC or any of its Subsidiaries is a party or by which
any of them are bound obligating BC or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of BC or of its Subsidiaries or obligating BC or
any of its Subsidiaries to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement, (B) there are no
outstanding contractual obligations of BC or of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of BC
or any of its Subsidiaries and (C) there are no outstanding securities of
any kind convertible into or exchangeable for the capital stock of BC or
any of its Subsidiaries (or any interest therein). Except as set forth in
Section 3.2(b) of the BC Disclosure Schedule or as disclosed in the BC SEC
Reports (as defined herein) filed with the SEC prior to the date of this
Agreement, there is no agreement of any kind that gives any person any
right to participate in the equity, value or income of, or to vote (i) in
the election of directors or officers of or (ii) otherwise with respect to
the affairs of, BC of any of its Subsidiaries.
(c) Authority; No Violation.
(i) BC and BW have all requisite corporate power and authority to
enter into this Agreement and the other Transaction Agreements and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the other Transaction Agreements and
the consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of BC
and BW. This Agreement and the other Transaction Agreements have been duly
executed and delivered by BC and BW and (assuming due authorization,
execution and
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delivery by SierraWest) constitute the valid and binding obligations of BC
and BW, enforceable against BC and BW in accordance with their terms.
(ii) The execution and delivery by BC and BW of this Agreement and
the other Transaction Agreements does not, and the consummation of the
transactions contemplated hereby and thereby will not result in any
Violation pursuant to (x) any provision of the Certificate of
Incorporation or By-laws or comparable organizational documents of BC, BW
or any other Significant Subsidiary of BC, or (y) subject to obtaining or
making the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (iii) below, any loan or
credit agreement, note, mortgage, indenture, lease, benefit plan or other
agreement, obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to BC, BW or any other Significant Subsidiary of BC or their
respective properties or assets which Violation (in the case of clause
(y)), individually or in the aggregate, would have a material adverse
effect on BC.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, is
required by or with respect to BC, BW or any other Subsidiary of BC in
connection with the execution and delivery by BC and BW of this Agreement
and the other Transaction Agreements or the consummation by BC and BW of
the transactions contemplated hereby and thereby, the failure to make or
obtain which would have a material adverse effect on BC, or on BC's
ability to own, possess or exercise the rights of an owner with respect to
its Subsidiaries, except for (A) the filing of applications and notices
with the FDIC under the Bank Merger Act and, if required, the Board of
Governors of the Federal Reserve under the BHC Act and approval of same,
(B) the filing by BC with the SEC of a registration statement on Form S-4
(the "S-4") with respect to the BC Common Stock issuable pursuant hereto,
(C) the State Banking Approvals and any applicable State Takeover
Approvals, (D) approval for listing upon official notice of issuance on
the NYSE of the BC Common Stock issuable pursuant hereto, (E) notices
under the HSR Act, if required (F) compliance with applicable state blue
sky laws, (G) the filing with the Secretary of State of the State of
California of the Agreement of Merger, and (H) the filing of a notice with
the Department of Financial Institutions of the State of Nevada.
(d) Financial Statements. BC has previously delivered to SierraWest copies
of (a) the consolidated balance sheets of BC and its Subsidiaries, as of
December 31, for the fiscal years 1997 and 1998, and the related consolidated
statements of income changes in stockholders' equity and cash flows for the
fiscal years 1996 through 1998, inclusive, as reported (except in respect of
such financial statements as at the end of and for the fiscal year 1998) in BC's
Annual Reports on Form 10-K for the relevant fiscal years filed with the SEC
under the Exchange Act, in each case accompanied by the report of
PricewaterhouseCoopers L.L.P. or its predecessors, independent auditors with
respect to BC. Each of the financial
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statements referred to in this Section 3.2(d) (including the related notes,
where applicable) fairly present, and the consolidated financial statements
referred to in Section 5.14 hereof will fairly present (subject, in the cases of
the unaudited statements, to normal recurring adjustments, none of which are
expected to be material in nature or amount), the results of the consolidated
operations and changes in stockholders' equity and consolidated financial
condition of BC and its Subsidiaries for the respective fiscal periods or as of
the respective dates therein set forth. Each of such statements (including the
related notes, where applicable) complies, and the financial statements referred
to in Section 5.14 hereof will comply, in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto and each of such statements (including the related notes,
where applicable) has been, and the financial statements referred to in Section
5.14 will be, prepared in accordance with GAAP consistently applied during the
periods involved, except in each case as indicated in such statements or in the
notes thereto or, in the case of unaudited statements, as permitted by Form
10-Q. The books and records of BC and its Subsidiaries have been, and are being,
maintained in all material respects in accordance with GAAP and any other
applicable legal and accounting requirements and, where such books and records
purport to reflect any transactions, the transactions so reflected are actual
transactions.
(e) BC SEC Documents. BC has made available to SierraWest a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by BC with the SEC (other than reports filed pursuant to
Section 13(g) of the Exchange Act), since December 31, 1997 (as such documents
have since the time of their filing been amended, the "BC SEC Reports"), which
are all the documents (other than preliminary material and reports required
pursuant to Section 13 (g) of the Exchange Act) that BC was required to file
with the SEC since such date. As of their respective dates of filing with the
SEC, the BC SEC Reports complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such BC SEC Reports, and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of BC included in the BC SEC Reports complied as to form,
as of their respective dates of filing with the SEC, in all material respects
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with GAAP applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC) and fairly present in all
material respects the consolidated financial position of BC and its consolidated
Subsidiaries as at the dates thereof and the consolidated results of operations,
changes in stockholders' equity and cash flows of such companies for the periods
then ended.
(f) BC Information Supplied. None of the information supplied or to be
supplied by BC for inclusion or incorporation by reference in the Proxy
Statement will, at the date of mailing to SierraWest's shareholders and at the
time of the SierraWest Shareholders' Meeting, (i) contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
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circumstances under which they were made, not misleading or (ii) at the time and
in the light of the circumstances under which it is made, be false or misleading
with respect to any material fact, or omit to state any material fact necessary
in order to make the statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of a proxy for the SierraWest Shareholders' Meeting which has
become false or misleading. The S-4 (except for such portions thereof furnished
in writing to BC by SierraWest or any Subsidiary of SierraWest as to which no
warranty is made) will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
thereunder.
(g) Compliance with Applicable Laws. BC and its Subsidiaries hold, and at
all times have held, all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities which are material to the operation of
the businesses of BC and its Subsidiaries, taken as a whole (the "BC Permits").
BC and its Subsidiaries are in compliance and have complied with the terms of
the BC Permits and all applicable laws and regulations, except where the failure
so to comply, individually or in the aggregate, would not have a material
adverse effect on BC. Except as disclosed in the BC SEC Reports filed prior to
the date of this Agreement, the businesses of BC and its Subsidiaries are not
being conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except for possible violations which, individually or in
the aggregate, do not, and, insofar as reasonably can be foreseen, in the future
will not, have a material adverse effect on BC. Except as described in Section
3.2(g) of the BC Disclosure Schedule and except for routine examinations by Bank
Regulators, to the best knowledge of BC, no investigation by any Governmental
Entity with respect to BC or any of its Subsidiaries is pending or threatened,
other than, in each case, those the outcome of which, individually or in the
aggregate, as far as reasonably can be foreseen, would not have a material
adverse effect on BC, and no proceedings by any Bank Regulator are pending or
threatened which seek to revoke or materially limit any of the BC Permits.
(h) Litigation. Except as disclosed in the BC SEC Reports filed prior to
the date of this Agreement or as listed in Section 3.2(h) of the BC Disclosure
Schedule, there is no Litigation pending or, to the best knowledge of BC,
threatened, against or affecting BC or any Subsidiary of BC which could
reasonably be expected, individually or in the aggregate, to have a material
adverse effect on BC, nor is there any judgment, decree, injunction, rule or
order of any Governmental Entity or arbitrator outstanding against BC or any
Subsidiary of BC having, or which, insofar as reasonably can be foreseen, in the
future could have, individually or in the aggregate, any such effect.
(i) Subsidiaries. Exhibit 21 to BC's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 includes all the Significant Subsidiaries of
BC as of the date of this Agreement except for BW and its Subsidiaries which
were acquired by BC on November 1, 1998. The Subsidiaries of BW as of the date
hereof are as listed in Section 3.2(i) of the BC Disclosure Schedule. BC owns,
directly or indirectly, beneficially and of record 100% of the issued and
outstanding voting securities of each such Significant Subsidiary (other than
directors' qualifying shares, if any). Except as provided in any provision of
applicable state law in the case of Significant Subsidiaries of BC that are
state
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chartered banks, all of the shares of capital stock of each of the Significant
Subsidiaries held by BC or by another Subsidiary of BC are fully paid and
nonassessable and are owned by BC or a Subsidiary of BC free and clear of any
claim, lien or encumbrance.
(j) Agreements with Bank Regulators. Except as set forth in Section 3.2(j)
of the BC Disclosure Schedule, neither BC nor any of its Subsidiaries is a party
to any written agreement or memorandum of understanding with, or a party to any
commitment letter or similar undertaking to, or is subject to any order or
directive by, or is a recipient of any extraordinary supervisory letter from, or
has adopted any board resolutions at the request of, any Bank Regulator which
restricts materially the conduct by BC and its Subsidiaries of their businesses,
or in any manner relates to their capital adequacy, credit policies or
management, nor has BC or any such Subsidiary been advised by any Bank Regulator
that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, extraordinary supervisory letter, commitment letter
or similar submission, or any such board resolutions.
(k) Absence of Certain Changes or Events. Except as disclosed in the BC
SEC Reports filed prior to the date of this Agreement and except as set forth in
Section 3.2(k) of the BC Disclosure Schedule, since September 30, 1998, (i)
there has not been any change, or any event involving a prospective change, in
the business, financial condition, results of operations or prospects of BC or
any of its Subsidiaries which has had, or would be reasonably likely to have, a
material adverse effect on BC, (ii) BC and its Subsidiaries have conducted their
respective businesses in the ordinary course consistent with their past
practices, and (iii) neither BC nor any of its Subsidiaries has taken any action
or entered into any transaction, and no event has occurred, that would have
required SierraWest's consent pursuant to Section 4.2 of this Agreement if such
action had been taken, transaction entered into or event had occurred, in each
case, after the date of this Agreement, nor has BC or any of its Subsidiaries
entered into any agreement, plan or arrangement to do any of the foregoing.
(l) Undisclosed Liabilities. Except (i) for those liabilities or
obligations that are fully reflected or reserved against in the consolidated
balance sheet at December 31, 1998 of BC referred to in Section 3.2(d) or (ii)
for liabilities or obligations incurred in the ordinary course of business
consistent with past practice since December 31, 1998 and which are not material
to BC and its Subsidiaries taken as a whole, none of BC or any of its
Subsidiaries has incurred any liability or obligation of any nature whatsoever
(whether absolute, accrued or contingent or otherwise and whether due or to
become due) that, either alone or when combined with all similar liabilities or
obligations, has had, or would have, a material adverse effect on BC.
(m) Governmental Reports. BC and each of its Subsidiaries have timely
filed all material reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were required to
file since January 1, 1995 with any Governmental Entity and have paid all fees
and assessments due and payable in connection therewith. Except as set forth in
Section 3.2(m) of the BC Disclosure Schedule and except for normal examinations
conducted by a Governmental Entity in the regular course of
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business of BC and its Subsidiaries, no Governmental Entity has initiated any
proceeding or, to the best knowledge of BC, investigation into the business or
operations of BC or any of its Subsidiaries since January 1, 1995 which would be
reasonably likely to have a material adverse effect on BC and its Subsidiaries
taken as a whole. Except as set forth in Section 3.2(m) of the BC Disclosure
Schedule, there is no material unresolved violation, criticism or exception by
any Governmental Entity with respect to any report or statement relating to any
examinations of BC or any of its Subsidiaries.
(n) Pooling of Interests. As of the date of this Agreement, BC has no
reason (in respect of matters pertaining to BC existing as of the date hereof or
expected to exist as of the Closing Date) to believe that BC will not qualify
for pooling of interests treatment for accounting purposes under GAAP as
presently in effect.
(o) Vote Required. No vote of the holders of any securities of BC is
required with respect to the adoption of this Agreement.
(p) Brokers or Finders. No agent, broker, investment banker, financial
advisor or other firm or person is or will be entitled to any broker's or
finder's fee or any other similar commission or fee by BC in connection with any
of the transactions contemplated by this Agreement.
(q) Community Reinvestment Act Compliance. BW and FHB are in substantial
compliance with the applicable provisions of the CRA and have received a CRA
rating of "satisfactory" and "outstanding," respectively, from the FDIC in their
most recent examinations, and BC has no knowledge of the existence of any fact
or circumstance or set of facts or circumstances which could be reasonably
expected to result in BW or FHB failing to be in substantial compliance with
such provisions or having their current ratings lowered.
(r) Year 2000 Readiness. Each of FHB and BW has a plan and organization in
place to minimize any material adverse effect caused by the failure of any
system, equipment or product which is material to its respective operations or
financial condition to be Year 2000 Ready (as defined in Section 3.1(z) hereto).
Such plans address, at a minimum, the issues set forth in the statement of the
FFIEC, dated May 5, 1997, entitled "Year 2000 Project Management Awareness," and
December 1997, entitled "Safety and Soundness Guidelines Concerning the Year
2000 Business Risk," as well as any other statements of the FFIEC related to the
Year 2000, as such issues might affect FHB and BW. FHB and BW have provided to
SierraWest an accurate summary of such plans, which includes FHB's and BW's Year
2000 organizations and estimates of anticipated associated costs. Each of FHB
and BW is using its best efforts to implement such plan, which includes seeking
assurances from its vendors and suppliers that such vendors' and suppliers'
products and services which are material to its operations are Year 2000 Ready,
replacing any material products and services supplied by such vendors or
suppliers which are not Year 2000 Ready with new products and services which are
Year 2000 Ready, and/or working with such vendors and suppliers to achieve Year
2000 Readiness with respect to such material products and services. Such plan
shall also establish procedures to evaluate, manage and mitigate Year
2000-related risks to FHB and BW posed by their respective material customers
who may not themselves be Year
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2000 Ready. None of FHB, BW or their Subsidiaries have received, or expect to
receive, a "Year 2000 Deficiency Notification Letter" (as such term is employed
in the Federal Reserve's Supervision and Regulation Letter No. SR 98-3 (SUP),
dated March 4, 1998).
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of SierraWest. During the period from the date of this
Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement or to the extent that BC shall
otherwise consent in writing) SierraWest agrees that it will and will cause each
of its Subsidiaries to carry on the business of SierraWest and each of its
Subsidiaries in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and use all reasonable efforts to preserve intact
the present business organizations of SierraWest and each of its Subsidiaries,
maintain the rights and franchises of, and preserve the relationships with
customers, suppliers and others having business dealings with, SierraWest and
each of its Subsidiaries to the end that their goodwill and ongoing businesses
shall not be impaired in any material respect at the Effective Time. Without
limiting the generality of the foregoing, during the period from the date of
this Agreement to the Effective Time, SierraWest shall not, and shall not permit
any of its Subsidiaries to, without the prior consent of BC in writing:
(a) (i) declare or pay any dividends on or make other distributions
in respect of any of its capital stock, except (A) for dividends by a
wholly-owned Subsidiary of SierraWest to SierraWest, and (B) SierraWest
may pay on March 31, 1999, a cash dividend in the amount of up to $0.26
per share on the SierraWest Common Stock and, if the Closing occurs after
the record date set by BC's Board of Directors for the cash dividend
payable by BC on its outstanding Common Stock in respect to the third
fiscal quarter of 1999 a further cash dividend of up to $0.26 per share on
the SierraWest Common Stock, (ii) set any record or payment dates for the
payment of any dividends or distribution on its capital stock except in
the ordinary course of business consistent with past practice, (iii)
split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of,
in lieu of or in substitution for, shares of its capital stock or (iv)
repurchase, redeem or otherwise acquire, or permit any Subsidiary to
purchase or otherwise acquire, any shares of its capital stock or the
capital stock of any other Subsidiary of SierraWest or any securities
convertible into or exercisable for any shares of such capital stock;
(b) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock of any class, any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with
respect to any of the foregoing, other than issuances of SierraWest Common
Stock pursuant to the exercise of SierraWest Options;
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(c) amend or propose to amend its Articles of Incorporation or its
By-laws or other organizational documents or that of any Subsidiary;
(d) (i) enter into any new material line of business, (ii) change
its lending, investment, liability management and other material banking
policies in any respect which is material to SierraWest, except as
required by law or by policies imposed by a Bank Regulator or the SBA, or
(iii) except as set forth in Section 4.1(d) of the SierraWest Disclosure
Schedule, incur or commit to any capital expenditures or any obligations
or liabilities in connection therewith other than capital expenditures and
obligations or liabilities incurred or committed to in the ordinary course
of business consistent with past practice but in no event for more than
$50,000 as to any one such item or $200,000 as to all such items in the
aggregate;
(e) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other means, any business or any corporation,
partnership, association or other business organization or division
thereof; provided, however, that the foregoing shall not prohibit
foreclosures and other debt-previously-contracted acquisitions in the
ordinary course of business consistent with past practice.
(f) sell, lease, encumber or otherwise dispose of, or agree to sell,
lease, encumber or otherwise dispose of, any of its assets (including
capital stock of Subsidiaries of SierraWest), which are material,
individually or in the aggregate, to SierraWest, other than in the
ordinary course of business consistent with past practice;
(g) incur any long-term indebtedness for borrowed money or guarantee
any such long-term indebtedness or issue or sell any long-term debt
securities or warrants or rights to acquire any long-term debt securities
of SierraWest or any of its Subsidiaries or guarantee any long-term debt
securities of others other than (i) indebtedness of any Subsidiary of
SierraWest to SierraWest or to another Subsidiary of SierraWest, (ii)
deposits taken in the ordinary course of business consistent with past
practice, or (iii) renewals or extensions of existing long-term
indebtedness without any change in the material terms thereof;
(h) intentionally take or fail to take any action that would, or
reasonably might be expected to, result in any of the representations and
warranties set forth in this Agreement being or becoming untrue in any
material respect, or in any of the conditions to the Closing set forth in
Article VI (including without limitation the conditions set forth in
Sections 6.1(f) and 6.3(c)) not being satisfied, or (unless such action is
required by applicable law or sound banking practice) which would
adversely affect the ability of BC or SierraWest to obtain any of the
Requisite Regulatory
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Approvals without imposition of a condition or restriction of the type
referred to in Section 6.2 (f);
(i) change the methods of accounting of SierraWest or any of its
Subsidiaries, except as required by changes in GAAP as concurred in by
such party's independent auditors;
(j) (i) except for the retention bonus arrangements and the
severance arrangements specified in Section 4.1(j) of the SierraWest
Disclosure Schedule, and the termination of the SierraWest KSOP Plan
described in Section 3.1(k)(vi) enter into, adopt, amend (except for
technical amendments and such amendments as may be required by law) or
terminate any SierraWest Benefit Plan or any other Benefit Plan or any
agreement, arrangement, plan or policy between SierraWest or any of its
Subsidiaries and one or more of its directors or officers, increase in any
manner the compensation or fringe benefits of any director, officer or
employee of SierraWest or any of its Subsidiaries (except for general
salary increases for non-officer employees and the scheduled annual merit
increases to be effective as of March 1, 1999, as previously disclosed to
BC, in respect to certain officers of SierraWest or its Subsidiaries,
other than the chief executive officer and the chief financial officer of
SierraWest, in each case, in the ordinary course of business consistent
with established salary guidelines and policies as heretofore furnished to
BC by SierraWest) or pay or grant any benefit not required by any plan and
arrangement as in effect as of the date hereof (including, without
limitation, the granting of stock options, stock appreciation rights,
restricted stock, restricted stock units or performance units or shares or
any similar awards) or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing, (ii) except for the retention
bonus arrangements specified in Section 4.1(j) of the SierraWest
Disclosure Schedule, enter into or renew any contract, agreement,
commitment or arrangement providing for the payment to any director,
officer or employee of SierraWest or any of its Subsidiaries of
compensation or benefits contingent, or the terms of which are materially
altered, upon the occurrence of any of the transactions contemplated by
this Agreement, or (iii) except as provided in Section 3.1(k)(vi) with
respect to any SierraWest Benefit Plan which is a defined benefit or
defined contribution pension plan, permit or cause (A) a consolidation or
merger of any such Plan, (B) a spin-off involving any such Plan, (C) a
transfer of assets and/or liabilities from or to any such Plan, or (D) any
similar transaction involving any such Plan;
(k) enter into any contract that would be required to be disclosed
on Section 3.1(j) of the SierraWest Disclosure Schedule or renew or
terminate any contract listed in Section 3.1(j) of the SierraWest
Disclosure Schedule, other than renewals of contracts or leases for a term
of one year or less without material adverse changes to the terms thereof;
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(l) make or acquire any loan or issue a commitment for any loan
except for loans and commitments that are made in the ordinary course of
business consistent with past practice or issue or agree to issue any
letters of credit or otherwise guarantee the obligations of any other
persons except in the ordinary course of business consistent with past
practice;
(m) engage or participate in any material transaction or incur or
sustain any material obligation not in the ordinary course of business
consistent with past practice;
(n) settle any claim, action or proceeding involving money damages
involving a payment in excess of $50,000 as to any such matter, or settle
any other matter not involving money damages which is material to
SierraWest;
(o) change or make any tax elections, change any method of
accounting with respect to taxes, file any amended tax return, or settle
or compromise any federal, state, local or foreign material tax liability;
(p) except as set forth in Section 4.1(p) of the SierraWest
Disclosure Schedule, make an application for the opening, relocation or
closing of, or open, relocate or close any branch or loan production
office;
(q) except as provided in Section 3.1(x) hereof, modify, amend or
waive any provision of, or terminate the SierraWest Rights Plan, or redeem
any of the rights outstanding thereunder;
(r) except as described in Section 4.1(r) of the SierraWest
Disclosure Schedule, enter into any securitization or similar transactions
with respect to any loans, leases or other assets of SierraWest or any of
its Subsidiaries;
(s) agree to, or make any commitment to, take any of the actions
prohibited by this Section 4.1.
4.2 Covenants of BC. During the period from the date of this Agreement and
continuing until the Effective Time, BC agrees as to itself and its Subsidiaries
that (except as expressly contemplated or permitted by this Agreement or to the
extent that SierraWest shall otherwise consent in writing), BC will and will
cause each of its Subsidiaries to carry on its business in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted and
use all reasonable efforts to preserve intact its present business
organizations, maintain its rights and franchises and preserve its relationships
with customers, suppliers and others having business dealings with them to the
end that their goodwill and ongoing businesses shall not be impaired in any
material respect at the Effective Time. Without limiting the generality of the
foregoing, during the period from the date of this Agreement to the Effective
Time, BC shall not, and shall not permit any of its Subsidiaries to, without the
prior consent of SierraWest in writing:
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(a) amend or propose to amend its Certificate of Incorporation or
its By-laws in a manner that would materially and adversely affect its
ability to perform its obligations under this Agreement or consummate the
transactions contemplated hereunder, or otherwise materially and adversely
affect the rights, powers and privileges of the shares of BC Common Stock
to be issued in the Merger;
(b) intentionally take or fail to take any action that would, or
reasonably might be expected to, result in any of its representations and
warranties set forth in this Agreement being or becoming untrue, subject
to such exceptions as do not have, and would not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on BC
following the Effective Time, or in any of the conditions to the Closing
set forth in Article VI (including without limitation the conditions set
forth in Sections 6.1(f) and 6.2(d)) not being satisfied, or (unless such
action is required by applicable law or sound banking practice) which
would adversely affect the ability of BC or SierraWest to obtain any of
the Requisite Regulatory Approvals without imposition of a condition or
restriction of the type referred to in Section 6.2(f);
(c) agree to, or make any commitment to, take any of the actions
prohibited by this Section 4.2.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Regulatory Matters.
(a) SierraWest shall promptly prepare and file with the SEC a Proxy
Statement and BC shall promptly prepare and file with the SEC the S-4, in which
the Proxy Statement will be included as a prospectus. Each of BC and SierraWest
shall use all reasonable efforts to have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing, and SierraWest
shall thereafter promptly mail the Proxy Statement to its shareholders.
(b) The parties hereto shall cooperate with each other and use reasonable
best efforts to promptly prepare and file all necessary documentation, to effect
all applications, notices, petitions and filings, to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to consummate
the transactions contemplated by this Agreement and the other Transactions
Agreements (including without limitation the Merger and the Bank Merger) and any
branch consolidation, relocation or closure applications or notices with respect
to the branches of SWB which BC shall request SWB to file and to comply with the
terms and conditions of all such permits, consents, approvals and authorizations
of all such Governmental Entities. BC and SierraWest shall have the right to
review in advance and to the extent practicable each will consult the other on,
in each case subject to applicable laws
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relating to the exchange of information, all the information relating to
SierraWest or BC, as the case may be, and any of their respective Subsidiaries
which appears in any filing made with, or written materials submitted to, any
third party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto shall act reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement (including without limitation the
Merger and the SierraWest Merger) and each party will keep the other apprised of
the status of matters relating to completion of the transactions contemplated
herein.
(c) BC and SierraWest shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Statement, the S-4 or any other statement, filing,
notice or application made by or on behalf of BC, SierraWest or any of their
respective Subsidiaries to any Governmental Entity in connection with the Merger
and the other transactions contemplated by this Agreement.
(d) BC and SierraWest shall promptly advise each other upon receiving any
communication from any Governmental Entity whose consent or approval is required
for consummation of the transactions contemplated by this Agreement which causes
such party to believe that there is a reasonable likelihood that any Requisite
Regulatory Approval (as defined below) will not be obtained or that the receipt
of any such approval will be materially delayed.
5.2 Access to Information.
(a) Upon reasonable notice, SierraWest and BC shall (and shall cause each
of their respective Subsidiaries to) afford to the other and their
representatives and advisors access, during normal business hours during the
period prior to the Closing Date, to all the properties, books, contracts,
commitments and records of SierraWest (in the case of SierraWest) and of BC (in
the case of BC) and, during such period, each of SierraWest and BC shall (and
shall cause each of their respective Subsidiaries to) make available to the
other and their representatives and advisors (a) a copy of each report,
schedule, registration statement and other document filed or received by
SierraWest or BC, as the case may be, during such period pursuant to the
requirements of Federal securities laws or Federal or state banking laws (other
than reports or documents which such party is not permitted to disclose under
applicable law or reports or documents which are subject to an attorney-client
privilege or which constitute attorney work product) and (b) all other
information concerning the business, properties and personnel of SierraWest or
of BC, as the case may be, as such other party may reasonably request. BC will
hold any such information with respect to SierraWest and its Subsidiaries which
is nonpublic in confidence to the extent required by, and in accordance with,
the provisions of the letter dated October 27, 1998, between SierraWest and BC
(the "Confidentiality Agreement"). SierraWest will hold all such information
with respect to BC and its Subsidiaries which is nonpublic in confidence and
will otherwise deal with such
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information to the extent required by, and in accordance with, the provisions of
the Confidentiality Agreement, deeming for purpose of this sentence, such
information to be subject to the provision of the Confidentiality Agreement as
if such provisions applied by their terms to such information of BC and its
Subsidiaries, as well as to such information of SierraWest and its Subsidiaries.
No investigation by either BC, on the one hand, or SierraWest, on the other
hand, shall affect the representations and warranties of the other.
5.3 SierraWest Shareholders' Meeting. SierraWest shall call a meeting of
its shareholders to be held as promptly as practicable for the purpose of voting
upon the adoption of this Agreement. SierraWest will, through its Board of
Directors, recommend to its shareholders adoption of this Agreement unless the
Board of Directors of SierraWest determines in good faith, based upon the
written advice of outside counsel, that making such recommendation, or failing
to withdraw, modify or amend any previously made recommendation, would
constitute a breach of fiduciary duty by SierraWest's Board of Directors under
applicable law. In addition, nothing in this Section 5.3 or elsewhere in this
Agreement shall prohibit accurate disclosure by SierraWest of information that
is required to be disclosed in the Proxy Statement or any other document
required to be filed with the SEC (including without limitation a
Solicitation/Recommendation Statement on Schedule 14D-9) or otherwise required
to be disclosed by applicable law or regulation or the rules of any securities
exchange or automated quotation system on which the securities of SierraWest may
then be traded.
5.4 No Solicitations. From the date hereof until the earlier of the
Effective Time or the termination of this Agreement, SierraWest agrees that
neither it, nor any of its Subsidiaries, Affiliates or agents shall, nor shall
it authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative or agent (collectively, "Representatives") retained by it or any
of its Subsidiaries, Affiliates or agents to, solicit, initiate or knowingly
encourage the submission of, or enter into discussions or negotiations with or
provide information to any person or group of persons (other than the respective
parties to this Agreement) concerning, any Takeover Proposal (as defined below)
or enter into any agreement with a third party relating to a Takeover Proposal
or assist, participate in, facilitate or encourage any effort or attempt by any
other person to do or seek to do any of the foregoing. As used in this
Agreement, "Takeover Proposal" shall mean any proposal for the acquisition of a
15% or greater equity interest in, or a merger, consolidation, liquidation,
dissolution or other disposition of 15% or more of the assets of, SierraWest or
any Significant Subsidiary of SierraWest, or any tender offer or exchange offer
that if consummated would result in any person beneficially owning 15% or more
of any class of equity securities of SierraWest or any Significant Subsidiary of
SierraWest (other than pursuant to the transactions contemplated by this
Agreement and the Stock Option Agreement).
5.5 Legal Conditions.
(a) Each of SierraWest and BC shall, and shall cause its respective
Subsidiaries to, use all reasonable efforts (i) to take, or cause to be taken,
all actions necessary to comply promptly with all legal requirements which may
be imposed on such party or its Subsidiaries
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with respect to the transactions contemplated by this Agreement and as promptly
as practicable, (ii) 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 or any other public or private third party which is
required to be obtained or made by such party or any of its Subsidiaries in
connection with the Merger and the other transactions contemplated by this
Agreement. Each of SierraWest and BC will promptly cooperate with and furnish
information to the other in connection with any such burden suffered by, or
requirement imposed upon, any of them or any of their Subsidiaries in connection
with the foregoing.
(b) Each of SierraWest and BC agrees to use all reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary and proper or advisable to consummate, as soon as practicable
after the date of this Agreement, the transactions contemplated hereby,
including, without limitation, using all reasonable best efforts to (i) lift or
rescind any injunction or restraining order or other order adversely affecting
the ability of the parties to consummate the transactions contemplated hereby,
(ii) defend any Litigation seeking to enjoin, prevent or delay the consummation
of the transactions contemplated hereby or seeking material damages, (iii)
provide to counsel to the other party hereto representations and certifications
as to such matters as such counsel may reasonably request in order to render the
opinions referred to in Sections 6.2(d) and 6.3(c), and (iv) to obtain the
letters of the independent accountants referred to in Section 6.1(f).
5.6 Employee Benefit Plans.
(a) For purposes of all employee benefit plans of BC or its Subsidiaries
in which the employees of SierraWest who shall remain in the employment of BC or
its Subsidiaries after the Closing Date shall participate from and after such
date (including all policies and employee fringe benefit programs, including
vacation policies), and under which an employee's benefit depends, in whole or
in part, on length of service, credit will be given to SierraWest Employees for
vesting and eligibility purposes only for service previously credited with
SierraWest or its Subsidiaries prior to the Effective Time to the extent that
such crediting of service does not result in duplication of benefits, provided,
however, that BC shall determine each employee's length of service in a manner
consistent with the customary practice with respect to the employees of the BC
Subsidiary by which they shall be employed. BC shall also cause each employee
benefit plan in which SierraWest Employees participate from and after the
Effective Time to waive (i) any preexisting condition restriction which was
waived under the terms of any analogous Plan immediately prior to the Effective
Time or (ii) any waiting period limitation which would otherwise be applicable
to a SierraWest Employee on or after the Effective Time to the extent such
SierraWest Employee had satisfied any similar waiting period limitation under an
analogous Plan prior to the Effective Time.
(b) Notwithstanding the foregoing, except as otherwise expressly provided
in this Agreement, BC shall, and shall cause its Subsidiaries to, honor in
accordance with their terms all Plans, each as amended to the date hereof and as
otherwise amended prior to the Closing Date in accordance with the terms of
paragraph (e) hereof, and other contracts, arrangements, commitments or
understandings described in the SierraWest Disclosure Schedule; provided,
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however, that this paragraph (b) shall be subject to the provisions of paragraph
(d) hereof. BC and SierraWest hereby acknowledge that consummation of the Merger
will constitute a "Change in Control" for purposes of all Plans, contracts,
arrangements and commitments of SierraWest identified pursuant to Section 3.1(j)
that contain change in control provisions.
(c) Except as provided in Section 5.6(g), SierraWest and its Subsidiaries
shall take all action necessary to ensure that no further mortgage loans will be
made to employees and to amend any retiree medical plans so that no additional
retirees shall become entitled to continuing medical insurance benefits
thereunder.
(d) Except as otherwise provided herein, nothing in this Section 5.6 shall
be interpreted as preventing BC or its Subsidiaries after the Effective Time
from amending, modifying or terminating any of the Plans, or other contracts,
arrangements, commitments or understandings, in accordance with their terms and
applicable law.
(e) Prior to the Closing Date, SierraWest and its Subsidiaries shall
implement the modifications to its present incentive compensation and bonus
plans which are described more fully in Section 5.6(e) of the SierraWest
Disclosure Schedule which will provide for the settlement promptly after the
Effective Time of the accrued entitlement of the participants in such plans as
of such date. BC and BW shall cause such entitlements to be paid to the
respective participants promptly after the Effective Time subject to required
withholdings. For the period from the Closing Date to and including December 31,
1999, BC and BW shall either cause the existing incentive compensation and bonus
plans of SierraWest and its Subsidiaries to be continued by the Surviving
Corporation or shall make comparable plans available to the participants in such
plans.
(f) After the Closing Date, BC and BW shall cause the Surviving
Corporation to honor the obligations of SierraWest under Section 2.6(b) of the
Plan of Acquisition and Merger dated November 13, 1997, among SierraWest, SWB,
California Community Bancshares and Continental Pacific Bank.
(g) After the Closing Date, BC shall and BC and BW shall cause the
Surviving Corporation to honor the arrangements regarding health and life
insurance coverage, continuation of directors' fees and deferral of directors'
fees for certain individuals which are described in Section 5.6(g) of the
SierraWest Disclosure Schedule and SierraWest shall have performed all necessary
actions so that the modification or termination of the various plans or
arrangements which are described in Section 5.6(g) of the SierraWest Disclosure
Schedule shall be effective at the Effective Time.
5.7 Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time, the Surviving Corporation shall
indemnify, defend and hold harmless each person who is now, or has been at any
time prior to the date hereof or who becomes prior to the Effective Time, an
officer or director of SierraWest or any of its Subsidiaries (the "Indemnified
Parties") against (i) all losses, claims, damages, costs, expenses, liabilities
or judgments or amounts of any nature whatsoever, governmental
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or non-governmental (including but not limited to reasonable expenses of counsel
and investigation) that are paid in settlement of or in connection with any
claim, action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or was a
director or officer of SierraWest or any Subsidiary of SierraWest, whether
pertaining to any matter existing or occurring at or prior to the Effective Time
and whether asserted or claimed prior to, or at or after, the Effective Time
("Indemnified Liabilities") and (ii) all Indemnified Liabilities based in whole
or in part on, or arising in whole or in part out of, or pertaining to this
Agreement or the transactions contemplated hereby, in each case to the full
extent that SierraWest would have been permitted under applicable law and its
Articles of Incorporation, and the Surviving Corporation is permitted under
California law, to indemnify such person (and the Surviving Corporation shall
pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the full extent permitted by law with no
bond or security to be required upon receipt of any undertaking required by
Section 317(f) of the California Corporations Code). Without limiting the
foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Parties (whether arising before
or after the Effective Time), (i) any counsel retained by the Indemnified
Parties for any period after the Effective Time shall be reasonably satisfactory
to the Surviving Corporation; (ii) after the Effective Time, the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; and (iii)
after the Effective Time, the Surviving Corporation will use all reasonable
efforts to assist in the vigorous defense of any such matter, provided that the
Surviving Corporation shall not be liable for any settlement of any claim
effected without its written consent, which consent, however, shall not be
unreasonably withheld or delayed. Any Indemnified Party wishing to claim
indemnification under this Section 5.7, upon learning of any such claim, action,
suit, proceeding or investigation, shall notify the Surviving Corporation (but
the failure so to notify the Surviving Corporation shall not relieve it from any
liability which it may have under this Section 5.7 except to the extent such
failure materially prejudices the Surviving Corporation), and shall deliver to
the Surviving Corporation the undertaking, if any, required by Section 317(f) of
the California Corporations Code. The Surviving Corporation shall be liable for
the fees and expenses hereunder with respect to only one law firm, in addition
to local counsel in each applicable jurisdiction, to represent the Indemnified
Parties as a group with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict between the positions
of any two or more Indemnified Parties that would preclude or render inadvisable
joint or multiple representation of such parties.
(b) For a period of four years after the Effective Time, BC shall cause to
be maintained in effect the current policies of directors' and officers'
liability insurance maintained by SierraWest and its Subsidiaries (provided that
BC may substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are not materially less advantageous in
the aggregate) with respect to claims arising from facts or events which
occurred before the Effective Time; provided, however, that BC shall not be
obligated to make annual premium payments for such insurance to the extent such
premiums exceed 150% of the premiums paid by SierraWest and SWB in respect of
1998 for such insurance, as previously disclosed to BC ("SierraWest's Current
Premium"), and if such
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premiums for such insurance would at any time exceed 150% of SierraWest's
Current Premium, then BC shall cause to be maintained policies of insurance
which, in BC's good faith determination, provide the maximum coverage available
at an annual premium equal to 150% of SierraWest's Current Premium.
(c) The provisions of this Section 5.7 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party, his or her heirs and
his or her representatives and are in addition to, and not in substitution for,
any other rights to indemnification or contribution that any such person may
have by contract or otherwise.
(d) BW acknowledges and agrees to honor the obligations contained in
Section 3.3(d) of the Plan of Acquisition and Merger dated as of November 13,
1997, among SierraWest, SWB, California Community Bancshares Corporation and
Continental Pacific
Bank.
5.8 Additional Agreements. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall take all such necessary action.
5.9 Fees and Expenses. Except as otherwise expressly provided herein,
whether or not the transactions contemplated hereby are consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense.
5.10 Cooperation. During the period from the date of this Agreement to the
Effective Time, each of SierraWest and BC shall, (i) confer on a regular and
frequent basis with the other, report on operational matters, policies and
banking practices and promptly advise the other orally and in writing of any
change or event having, or which, insofar as can reasonably be foreseen, could
have, a material adverse effect on SierraWest or BC, as the case may be, or
which would cause or constitute a material breach of any of the representations,
warranties or covenants of such party contained herein and (ii) cause each
Subsidiary of SierraWest and BC that is a bank to file all call reports with the
appropriate Bank Regulators and all other reports, applications and other
documents required to be filed with the applicable Governmental Entities between
the date hereof and the Effective Time.
5.11 Affiliates. Each of BC and SierraWest shall use its commercially
reasonable efforts to cause each director, executive officer and other person
who is an "affiliate" (for purposes of Rule 145 under the Securities Act, in the
case of affiliates of SierraWest, and for purposes of qualifying the Merger for
pooling of interests accounting treatment, in the case of affiliates of either
BC or SierraWest) of such party to execute and deliver, as soon as practicable
after the date of this Agreement, and in any event prior to the date of the
SierraWest Shareholders meeting, a written agreement, in substantially the form
heretofore agreed to by the parties hereto.
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5.12 Stock Exchange Listing. BC shall use its commercially reasonable
efforts to cause the shares of BC Common Stock to be issued in the Merger to be
approved for listing on the NYSE, subject to official notice of issuance, prior
to the Effective Time.
5.13 Advice of Changes. BC and SierraWest shall promptly advise the other
party of any change or event which, individually or in the aggregate with other
such changes or events, has 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.
5.14 Subsequent Interim and Annual Financial Statements; Certain Reports.
As soon as reasonably available, but in no event more than 45 days after the end
of each fiscal quarter (other than the fourth quarter of a fiscal year) or 90
days after December 31, 1998 or the end of each fiscal year ending after the
date of this Agreement, each party will deliver to the other party its Quarterly
Report on Form 10-Q or its Annual Report on Form 10-K, as the case may be, as
filed with the SEC under the Exchange Act and SierraWest will furnish to BC
copies of its management's monthly interim reports (which do not comply with the
published rules and regulations of the SEC or GAAP) to SierraWest's Board of
Directors within two days after such reports are so furnished to the Board. No
later than March 31, 1999, SierraWest will cause there to be delivered to BC
copies of the consolidated statements of financial condition of SierraWest and
its Subsidiaries, as of December 31, 1998, and the related consolidated
statements of income, shareholders' equity and cash flows for the fiscal year
ended December 31, 1998, accompanied by the report of Deloitte & Touche LLP,
independent auditors with respect to SierraWest.
5.15 Dissenters' Rights. SierraWest shall include in the notice of the
SierraWest Shareholders' Meeting the summary of certain provisions of the
California Corporations Code as required by California Corporation's Code, ss.
1300(b)(1), so that the shares of SierraWest Common Stock shall not constitute
"dissenting shares."
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation. The respective obligations of
each party to consummate the transactions contemplated by this Agreement shall
be subject to the satisfaction on or prior to the Closing Date of the following
conditions:
(a) Shareholder Approval. The SierraWest Shareholder Approval shall have
been obtained.
(b) Other Approvals. All authorizations, consents, orders or approvals of,
or declarations or filings with, and all expirations of waiting periods imposed
by, any Governmental Entity (all the foregoing, "Consents") which are necessary
pursuant to the Merger, other than immaterial Consents the failure to obtain
which would have no material
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adverse effect on the consummation of the transactions contemplated by this
Agreement and the Agreement of Merger or on either BC or the Surviving
Corporation, shall have been filed, have occurred or been obtained (all such
permits, approvals, filings and consents and the lapse of all such waiting
periods being referred to as the "Requisite Regulatory Approvals") and all such
Requisite Regulatory Approvals shall be in full force and effect.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the transactions contemplated by this Agreement
or the Transaction Agreements shall be in effect. There shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the transactions contemplated by this Agreement or the
Transaction Agreements, by any Federal, state or foreign Governmental Entity of
competent jurisdiction which makes the consummation of the transactions
contemplated by this Agreement or the Transaction Agreements illegal.
(d) NYSE Listing. The shares of BC Common Stock which shall be issued to
the shareholders of SierraWest upon consummation of the Merger shall have been
approved for listing upon official notice of issuance on the NYSE.
(e) S-4. The S-4 shall become effective under the Securities Act, no stop
orders suspending the effectiveness of the S-4 shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
(f) Pooling. Each of BC and SierraWest shall have received a letter from
its independent public accountants, dated the Closing Date, in form and
substance reasonably satisfactory to BC and SierraWest, respectively, to the
effect that the Merger will qualify for "pooling of interests" accounting
treatment, provided that if either party shall have knowingly taken or omitted
to take any action which shall have prevented such party's independent public
accountants from rendering such letter, then this condition shall not be
applicable to such party.
6.2 Conditions to Obligations of BC. The obligation of BC to consummate
the transactions contemplated by this Agreement is subject to the satisfaction
of the following conditions unless waived by BC:
(a) Representations and Warranties. The representations and warranties of
SierraWest set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, and BC shall have received a
certificate signed on behalf of SierraWest by its President and Chief Executive
Officer and its Chief Financial Officer to such effect.
(b) Performance of Obligations. SierraWest shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the
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Closing Date, and BC shall have received a certificate signed on behalf of
SierraWest by its President and Chief Executive Officer and its Chief Financial
Officer to such effect.
(c) Corporate Action. BC shall have received a copy of the resolution or
resolutions duly adopted by the Board of Directors (or a duly authorized
committee thereof) of SierraWest and of the holders of the SierraWest Common
Stock authorizing the execution, delivery and performance by SierraWest of this
Agreement, certified by the Secretary or an Assistant Secretary of SierraWest.
(d) Tax Opinion. BC shall have received the opinion of Pillsbury Madison &
Sutro LLP, counsel to BC, dated the Closing Date, to the effect that (i) the
Merger will be treated for Federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code and (ii) BC and SierraWest will
each be a party to that reorganization within the meaning of Section 368(b) of
the Code. In rendering such opinion, such counsel may require and rely upon
representations and covenants contained in certificates of officers of BC,
SierraWest and others.
(e) SierraWest Rights Agreement. The rights issued pursuant to the
SierraWest Rights Agreement shall not have become nonredeemable, exercisable,
distributed or triggered pursuant to the terms of such agreement.
(f) Burdensome Condition. There shall not be any action taken, or any
statute, rule, regulation, order or decree enacted, entered, enforced or deemed
applicable to the Merger or the other Transaction Agreements by any Federal,
state or foreign Governmental Entity which, in connection with the grant of a
Requisite Regulatory Approval or otherwise, imposes any condition or restriction
(a "Burdensome Condition") upon BC or its Subsidiaries or any Affiliate hereof
which would reasonably be expected to (i) have a material adverse effect after
the Effective Time on the present or prospective consolidated financial
condition, business, operating results or prospects of BC or the Surviving
Corporation (including, without limitation, any requirement to dispose of any
material assets or businesses or restrict in any significant way any material
operations or activities), (ii) prevent BC or its Subsidiaries from realizing
all or a substantial portion of the economic benefits of the transactions
contemplated by this Agreement, or (iii) materially impair BC's ability to
exercise and enforce its rights under the Transaction Agreements.
(g) SAS 71 Review Letters. SierraWest shall have provided to BC a review
report prepared in accordance with the provisions of Statement of Accounting
Standards No. 71 ("SAS 71"), Interim Financial Information, by SierraWest's
independent accountants covering SierraWest's quarterly financial report for the
most recent quarter ending at least 45 days prior to the Closing Date.
(h) Bank Merger. All conditions precedent (including required regulatory
approvals) to the consummation of the Bank Merger shall have been satisfied and
the Bank Merger shall be able to be consummated immediately following the
Effective Time of the Merger.
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(i) No Dissenters' Rights. BC shall have determined to its satisfaction
that no holders of SierraWest Common Stock are entitled to have their shares
treated as "dissenting shares" under Section 1300 of the California Corporations
Code by reason of the Merger because such shares are listed on the list of OTC
margin stocks maintained by the Federal Reserve and demands for payment shall
not have been filed with respect to 5% or more of the shares of the SierraWest
Common Stock then outstanding.
6.3 Conditions to Obligations of SierraWest. The obligation of SierraWest
to consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions unless waived by SierraWest:
(a) Representations and Warranties. The representations and warranties of
BC set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the extent such
representations speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date, and SierraWest shall have received a
certificate signed on behalf of BC by its Chairman and Chief Executive Officer
or its President or Chief Financial Officer to such effect.
(b) Performance of Obligations. BC shall have performed in all material
respects all obligations required to be performed by it under this Agreement at
or prior to the Closing Date, and SierraWest shall have received a certificate
signed on behalf of BC by its President or its Chief Financial Officer to such
effect.
(c) Tax Opinion. SierraWest shall have received the opinion of McCutchen,
Doyle, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel to SierraWest, dated the Closing Date, to
the effect that (i) the Merger will be treated for Federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code and (ii) BC
and SierraWest will each be a party to that reorganization within the meaning of
Section 368(b) of the Code. In rendering such opinion, such counsel may require
and rely upon representations and covenants contained in certificates of
officers of BC, SierraWest and others.
(d) Corporate Action. SierraWest shall have received a copy of the
resolution or resolutions duly adopted by the Board of Directors of BC
authorizing the execution, delivery or performance by BC of this Agreement and
the other Transaction Agreements, certified by the Secretary or an Assistant
Secretary of BC.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, by action taken or authorized by the Board of Directors of the
terminating party or parties, whether before or after adoption of the Agreement
by the shareholders of SierraWest:
(a) by mutual consent of BC and SierraWest in a written instrument;
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(b) by (i) either BC or SierraWest upon written notice to the other
party if any Bank Regulator shall have issued an order denying approval of
the Merger and the other material aspects of the transactions contemplated
by this Agreement or if any Governmental Entity of competent jurisdiction
shall have issued a final permanent order enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this
Agreement or (ii) by BC, if any Governmental Entity of competent
jurisdiction shall have issued an order in connection with the
transactions contemplated hereby imposing a Burdensome Condition on BC or
the Surviving Corporation, and in any such case the time for appeal or
petition for reconsideration of any such order referred to in clauses (i)
or (ii) shall have expired without such appeal or petition being granted;
(c) by either BC or SierraWest if the Merger shall not have been
consummated on or before September 30, 1999; provided that if the Merger
shall not been consummated on or before such date due to the act or
omission of BC or SierraWest, then that party may not terminate this
Agreement pursuant to this paragraph (c);
(d) by BC in the event of a breach by SierraWest of any
representation, warranty or covenant contained in this Agreement, which
breach (i) either is not cured within 45 days after the giving of written
notice to SierraWest, or is of a nature which cannot be cured prior to the
Closing and (ii) would entitle the non-breaching party to elect not to
consummate the transactions contemplated hereby pursuant to Article VI;
provided, however, that BC may immediately terminate this agreement upon
notice to SierraWest in the event that SierraWest shall breach the
covenant provided for in Section 5.4 hereof;
(e) by SierraWest in the event of a breach by BC of any
representation, warranty or covenant contained in this Agreement, which
breach (i) either is not cured within 45 days after the giving of written
notice to BC or is of a nature which cannot be cured prior to the Closing
and (ii) would entitle the non-breaching party to elect not to consummate
the transactions contemplated hereby pursuant to Article VI;
(f) by BC if, in accordance with Section 5.3, the Board of Directors
of SierraWest fails to recommend adoption of this Agreement by the
shareholders of SierraWest, or amends or modifies such recommendation in a
manner materially adverse to BC or withdraws such recommendation to the
shareholders of SierraWest;
(g) by BC or SierraWest, if the SierraWest Shareholder Approval
shall not have been obtained at a duly held meeting of shareholders of
SierraWest held for such purpose or at any adjournment, postponement or
continuation thereof; or
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(h) by the Board of Directors of SierraWest, if the Board of
Directors so determines by a vote of a majority of the members of its
entire Board, at any time during the two-Business Day period commencing on
the first Business Day after the Determination Date (as defined herein),
if (i) the Average BC Closing Price shall be less than the product of 0.85
and the Average BC Starting Price, and (ii) the number obtained by
dividing the Average BC Closing Price by the Average BC Starting Price
(the "BC Ratio") shall be less than the number obtained by dividing the
Final Index Price by the Initial Index Price and by multiplying such
quotient by 0.85 (the "Index Ratio"); subject, however, to the following
provisions of this paragraph (h). If SierraWest elects to exercise its
termination right pursuant to the immediately preceding sentence, it shall
give prompt written notice to BC during such two-Business Day period by
means of facsimile transmission (as provided in Section 8.2 hereof);
provided that such notice of election to terminate may be withdrawn at any
time within the aforementioned two-Business Day period. During the five
Business-Day period commencing on the day after receipt of such notice of
election to terminate, BC shall have the option of adjusting the Exchange
Ratio to equal the lesser of (A) a number equal to a quotient (rounded to
the nearest one ten-thousandth), the numerator of which is the product of
0.85, the Average BC Starting Price and the Exchange Ratio (as then in
effect) and the denominator of which is the Average BC Closing Price and
(B) a number equal to a quotient (rounded to the nearest one
ten-thousandth), the numerator of which is the Index Ratio multiplied by
the Exchange Ratio (as then in effect) and the denominator of which is the
BC Ratio. If BC makes the election contemplated by the preceding sentence,
within such five Business-Day period, it shall give prompt written notice
to SierraWest of such election and the revised Exchange Ratio, whereupon
no termination shall have occurred pursuant to this paragraph (h) 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 "Exchange Ratio" shall thereafter be deemed to refer to
the Exchange Ratio as adjusted pursuant to this paragraph (h).
For purposes hereof, the following terms have the following
meanings:
(i) "Average BC Closing Price" shall have the meaning ascribed
thereto in Section 2.3 hereof.
(ii) "Average BC Starting Price" shall mean the average of the
closing prices of BC Common Stock on the NYSE for the five
consecutive trading days immediately preceding the day on which a
press release regarding this Agreement shall be issued.
(iii) "Determination Date" shall mean the date on which
approval of the FDIC required for consummation of the Merger shall
be received.
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(iv) "Index" shall mean the Standard & Poor's Mid-Cap Regional
Bank Index (MBKRG) as published by Bloomberg Financial Markets.
(v) "Initial Index Price" shall mean the average of the Index
on the five consecutive trading days immediately preceding the
public announcement of this Agreement.
(vi) "Final Index Price" shall mean the average of the Index
for the 20 trading day period referred to in the definition of
Average BC Closing Price.
(vii) "Trading day" shall have the meaning ascribed thereto in
Section 2.3 hereof.
(i) by BC if SierraWest shall have failed to deliver the financial
statements and report of Deloitte & Touche LLP accompanying such financial
statements pursuant to the last sentence of Section 5.14 hereto or if the
financial statements so delivered shall reflect any material adverse
change in the consolidated financial condition, income, shareholders'
equity or cash flows of SierraWest and its Subsidiaries compared to the
financial condition, income, shareholders' equity or cash flows reflected
in the unaudited consolidated financial statements of SierraWest and its
Subsidiaries, or if the report of Deloitte & Touche LLP accompanying such
financial statements contains any qualifications which are not
satisfactory to BC.
7.2 Effect of Termination. In the event of termination of this Agreement
by either SierraWest or BC as provided in Section 7.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of BC or SierraWest or their respective officers or directors except (i) with
respect to Sections 3.1(t) and the penultimate sentence of Section 5.2, and (ii)
with respect to any liabilities or damages incurred or suffered by a party as a
result of the willful breach by the other party or parties of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
7.3 Amendment. This Agreement may be amended by the parties hereto at any
time before or after adoption of this Agreement by the shareholders of
SierraWest, but after any such approval, no amendment shall be made which by law
requires further approval by such shareholders without such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
7.4 Extension; Waiver. At any time prior to the Closing Date, the parties
hereto, by action taken or authorized by their respective Board of Directors,
may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a
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party hereto to any such extension or waiver shall be valid only if set forth in
a written instrument signed on behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Nonsurvival of Representations and Warranties. None of the
representations or warranties in this Agreement shall survive the Effective
Time.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally, or by telecopy or telefacsimile, upon confirmation of receipt, (b)
on the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service, or (c) on the third Business Day following
the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered as set
forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice.
(a) if to SierraWest, to
SierraWest Bancorp
10181 Truckee-Tahoe ▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President and
Chief Executive Officer
with a copy to
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
McCutchen, Doyle, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
(b) if to BC and BW, to
BancWest Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., Chairman and
Chief Executive Officer
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with a copy to
Pillsbury Madison & Sutro LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
8.3 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. The phrases "the date of this
Agreement", "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to February 25, 1999.
8.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
8.5 Entire Agreement No Third Party Beneficiaries; Rights of Ownership.
This Agreement (including the documents and the instruments referred to herein)
(a) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, other than the Confidentiality Agreements, which shall
survive the execution and delivery of this Agreement and (b) is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder except as otherwise expressly provided in Section 5.7. The parties
hereby acknowledge that, except as hereinafter agreed to in writing, no party
shall have the right to acquire or shall be deemed to have acquired shares of
common stock of the other party pursuant to the Merger until consummation
thereof. No current or former employee of SierraWest, BC, or any of their
respective Subsidiaries, shall be construed as a third party beneficiary under
this Agreement, and no provision in this Agreement shall create any right in any
such employee (or his or her beneficiary or dependent) for any reason,
including, without
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limitation, in respect of employment, continued employment, or resumed
employment with the Surviving Corporation, SierraWest or BC (or any of their
respective Affiliates) or in respect of any benefits that may be provided,
directly or indirectly, under any Benefit Plan maintained by the Surviving
Corporation, SierraWest or BC (or any of their respective Affiliates).
8.6 Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of California
without giving effect to the principles of conflicts of law. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to the
non-exclusive jurisdiction of the courts of the State of California and of the
United States of America, in each case located in the City and County of San
Francisco, for any Litigation in any court or before any governmental authority
arising out of or relating to this Agreement and the transactions contemplated
hereby. Each of the parties hereto hereby irrevocably and unconditionally
waives, and agrees not to assert, by way of motion, as a defense, counterclaim
or otherwise, in any such Litigation, any claim that it is not personally
subject to the jurisdiction of the aforesaid courts for any reason other than
the failure to serve process in accordance with this Section 8.6, that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), and to the fullest extent permitted by
applicable law, that the Litigation in any such court is brought in an
inconvenient forum, that the venue of such Litigation is improper, or that this
Agreement, or the subject matter hereof, may not be enforced in or by such
courts and further irrevocably waives, to the fullest extent permitted by
applicable law, the benefit of any defense that would hinder, ▇▇▇▇▇▇ or delay
the levy, execution or collection of any amount to which the party is entitled
pursuant to the final judgment of any court having jurisdiction. Each of the
parties irrevocably and unconditionally waives, to the fullest extent permitted
by applicable law, any and all rights to trial by jury in connection with any
Litigation arising out of or relating to this Agreement or the transactions
contemplated hereby.
8.7 Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability and, unless the
effect of such invalidity or unenforceability would prevent the parties from
realizing the major portion of the economic benefits of the Merger that they
currently anticipate obtaining therefrom, shall not render invalid or
unenforceable the remaining terms and provisions of this Agreement or affect the
validity or enforceability of any of the terms or provisions of this Agreement
in any other jurisdiction. If any provision of this Agreement is so broad as to
be unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
8.8 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by either of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
party, and any attempt to make any such assignment without such consent shall be
null and void. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
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8.9 Publicity. BC and SierraWest shall consult with each other before
issuing any press release with respect to the Merger or this Agreement and shall
not issue any such press release or make any such public statement without the
prior consent of the other party, which shall not be unreasonably withheld;
provided, however, that a party may, without the prior consent of the other
party (but after prior consultation, to the extent practicable in the
circumstances) issue such press release or make such public statement as may
upon the advice of outside counsel be required by law or the rules and
regulations of the NYSE (in the case of BC) or the National Association of
Securities Dealers (in the case of SierraWest). Without limiting the reach of
the preceding sentence, BC and SierraWest shall cooperate to develop all public
announcement materials and make appropriate management available at
presentations related to the transactions contemplated by this Agreement as
reasonably requested by the other party. In addition, SierraWest and its
Subsidiaries shall (a) consult with BC regarding communications with customers,
shareholders, prospective investors and employees related to the transactions
contemplated hereby, (b) provide BC with shareholders lists of SierraWest
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and (c) allow and facilitate BC contact with shareholders of SierraWest and
other prospective investors.
IN WITNESS WHEREOF, BC, BW and SierraWest have caused this Agreement to be
executed by their respective officers thereunto duly authorized, all as of date
first above written.
BANCWEST CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Title: Chairman and Chief Executive
Officer
BANK OF THE WEST
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
SIERRAWEST BANCORP
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive
Officer
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EXHIBIT A
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of February 25, 1999 (the "Agreement"),
by and between SIERRAWEST BANCORP, a California corporation ("Issuer"), and
BANCWEST CORPORATION, a Delaware corporation ("Grantee").
RECITALS
A. The Plan. Grantee, Issuer and Issuer's wholly-owned subsidiary, Bank of
the West, a California state-chartered bank ("BW"), are concurrently herewith
entering into an Agreement and Plan of Merger, dated as of the date hereof (the
"Plan"), providing for, among other things, the merger of Issuer with and into
BW with BW being the surviving corporation.
B. Condition to Plan. As a condition and inducement to Grantee's execution
of the Plan, Grantee has required that Issuer agree, and Issuer has agreed, to
grant Grantee the Option (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Plan, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. Defined Terms. Capitalized terms which are used but not defined herein
shall have the meanings ascribed to such terms in the Plan.
2. Grant of Option. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase
up to 1,059,490 shares of common stock, no par value ("Issuer Common Stock"), of
Issuer (as adjusted as set forth herein, the "Option Shares," which shall
include the Option Shares before and after any transfer of such Option Shares,
but in no event shall the number of Option Shares for which this Option is
exercisable exceed 19.9% of the issued and outstanding shares of Issuer Common
Stock) at a purchase price per Option Share (as adjusted as set forth herein,
the "Purchase Price") equal to $28.875. Each Option Share issued upon exercise
of the Option shall be accompanied by Rights (the "SierraWest Rights") as
provided in the SierraWest Rights Agreement.
3. Exercise of Option.
(a) The Holder (as hereinafter defined) may exercise the Option, in
whole or in part, at any time and from time to time following the
occurrence of a Purchase Event (as hereinafter defined); provided that the
option shall terminate and be of no further force or effect upon the
earliest to occur of (A) the Effective Time, (B) termination of the Plan
in accordance with the terms thereof prior to the occurrence of a Purchase
Event or a Preliminary Purchase Event (as hereinafter
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defined) or (C) 12 months after termination of the Plan following the
occurrence of a Purchase Event or a Preliminary Purchase Event; provided,
however, that any purchase of shares upon exercise of the Option shall be
subject to compliance with applicable law. Notwithstanding the termination
of the Option, Grantee or Holder as the case may be, shall be entitled to
purchase those Option Shares with respect to which it has exercised the
Option in accordance herewith prior to the termination of the Option. The
term "Holder" shall mean the holder or holders of the Option from time to
time, and which initially is Grantee. The termination of the Option shall
not affect any rights hereunder which by their terms extend beyond the
date of such termination.
(b) As used herein, a "Purchase Event" means any of the following
events:
(i) Without Grantee's prior written consent, Issuer or any of
its Significant Subsidiaries shall have recommended, publicly
proposed or publicly announced an intention to authorize, recommend
or propose, or entered into an agreement with any person (other than
Grantee or any Subsidiary of Grantee) to effect (A) a merger,
consolidation or similar transaction involving Issuer or any of its
Significant Subsidiaries (other than transactions solely between
Issuer's subsidiaries that are not violative of the Plan), (B) the
disposition, by sale, lease, exchange or otherwise, of assets or
deposits of Issuer or any of its Significant Subsidiaries
representing in either case 15% or more of the consolidated assets
or deposits of Issuer and its subsidiaries or (C) the issuance, sale
or other disposition by Issuer (including by way of merger,
consolidation, share exchange or any similar transaction) of
securities representing 15% or more of the voting power of Issuer or
any of its Significant Subsidiaries, other than, in each case of
(A), (B), or (C), any merger, consolidation, share exchange or
similar transaction involving Issuer or any of its Significant
Subsidiaries in which the voting securities of Issuer outstanding
immediately prior thereto continue to represent (by either remaining
outstanding or being converted into the voting securities of the
surviving entity of any such transaction) at least 80% of the
combined voting power of the voting securities of the Issuer or the
surviving entity outstanding immediately after the completion of
such merger, consolidation, or similar transaction (provided any
such transaction is not violative of the Plan) (each of (A), (B), or
(C), an "Acquisition Transaction"); or
(ii) any person (other than Grantee or any Subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) of or the
right to acquire beneficial ownership of, or any "group" (as such
term is defined in Section 13(d)(3) of the Exchange Act), other than
a group of which Grantee or any Subsidiary of Grantee is a member,
shall have been formed which beneficially owns or has the right to
acquire
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beneficial ownership of 15% or more of the voting power of Issuer or
any of its Significant Subsidiaries; or
(iii) any person (other than Grantee or any Subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act) or shall have filed a registration statement
under the Securities Act with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control 15% or
more of the then outstanding shares of Issuer Common Stock (such an
offer being referred to herein as a "Tender Offer" or an "Exchange
Offer," respectively); or
(iv) the shareholders shall not have approved the Plan by the
requisite vote at the SierraWest Shareholders Meeting, the
SierraWest Shareholders Meeting shall not have been held or shall
have been canceled prior to termination of the Plan, or Issuer's
Board of Directors shall have failed to make, withdrawn or modified
in a manner adverse to Grantee the recommendation of Issuer's Board
of Directors with respect to the Plan, in each case after it shall
have been publicly announced or disclosed that any person (other
than Grantee or any Subsidiary of Grantee) shall have (A) made, or
disclosed an intention to make, a bona fide proposal to engage in an
Acquisition Transaction, (B) commenced a Tender Offer or filed a
registration statement under the Securities Act with respect to an
Exchange Offer or (C) filed an application (or given a notice),
whether in draft or final form, under the BHC Act, the Bank Merger
Act, as amended (the "BMA") or the Change in Bank Control Act of
1978, as amended (the "CBCA"), for approval to engage in an
Acquisition Transaction.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any Subsidiary of
Grantee) shall have made a bona fide proposal to Issuer or its
shareholders by public announcement, or written communication that
is or becomes the subject of public disclosure, to engage in an
Acquisition Transaction; or
(ii) after a proposal is made by a third party to Issuer or
its shareholders to engage in an Acquisition Transaction, or such
third party states its intention to the Issuer to make such a
proposal if the Plan terminates, Issuer shall have breached any
representation, warranty, covenant or agreement contained in the
Plan, which breach would entitle Issuer to terminate the Plan
pursuant to Section 7.1(d) thereof; or
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(iii) any person (other than Grantee or any Subsidiary of
Grantee) other than in connection with a transaction to which
Grantee has given its prior written consent, shall have filed an
application or notice with any Governmental Entity for approval to
engage in an Acquisition Transaction; or
(iv) any event entitling Grantee to terminate the Plan
pursuant to Section 7.1(f) of the Plan.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event, it being
understood that the giving of such notice by Issuer shall not be a
condition to the right of Holder to exercise the Option.
(e) In the event Holder wishes to exercise the Option, it shall send
to Issuer a written notice (the date of which being herein referred to as
the "Notice Date") specifying (i) the total number of Option Shares it
intends to purchase pursuant to such exercise and (ii) a place and date
not earlier than three business days nor later than 20 business days from
the Notice Date for the closing (the "Closing") of such purchase (the
"Closing Date"); provided that if the Closing cannot be consummated by
reason of any applicable judgment, decree, order, law or regulation, the
period of time that otherwise would run pursuant to this sentence shall
run instead from the date on which such restriction on consummation has
expired or been terminated; and provided, further, without limiting the
foregoing, that if prior notification to or approval of any Governmental
Entity is required in connection with such purchase, Issuer shall
cooperate with the Holder in the filing of the required notice of
application for approval and the obtaining of such approval and the
Closing shall occur immediately following such regulatory approvals (and
any mandatory waiting periods). Any exercise of the Option shall be deemed
to occur on the Notice Date relating thereto.
(f) Notwithstanding Section 3(e), in no event shall any Closing Date
be more than 18 months after the related Notice Date, and if the Closing
Date shall not have occurred within 18 months after the related Notice
Date due to the failure to obtain any such required approval, the exercise
of the Option effected on the Notice Date shall be deemed to have expired.
In the event (i) Holder receives official notice that an approval of any
other Governmental Entity required for the purchase of Option Shares will
not be issued or granted or (ii) a Closing Date shall not have occurred
within 18 months after the related Notice Date due to the failure to
obtain any such required approval, Grantee shall be entitled to exercise
its right as set forth in Section 8 to exercise the option in connection
with the resale of Issuer Common Stock or other securities pursuant to a
registration statement as provided in Section 9. The provisions of this
Section 3 and Section 4 shall apply with appropriate adjustments to any
such exercise.
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4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated
by Issuer, an amount equal to the Purchase Price multiplied by the number
of Option Shares to be purchased on such Closing Date, and (ii) present
and surrender this Agreement to the Issuer at the address of the Issuer
specified in Section 12(f).
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section
4(a), (i) Issuer shall deliver to Holder (A) a certificate or certificates
representing the Option Shares to be purchased at such Closing, which
Option Shares shall be free and clear of any liens, claims or encumbrances
and subject to no preemptive rights, and (B) if the Option is exercised in
part only, an executed new agreement with the same terms as this Agreement
evidencing the right to purchase the balance of the shares of Issuer
Common Stock purchasable hereunder, and (ii) Holder shall deliver to
Issuer a letter agreeing that Holder shall not offer to sell or otherwise
dispose of such Option Shares in violation of applicable federal and state
law or of the provisions of this Agreement.
(c) In addition to any other legend that is required by applicable
law, certificates for the Option Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF FEBRUARY 25,
1999. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that (i) the portion of the above legend
relating to the Securities Act shall be removed by delivery of substitute
certificates without such legend if Holder shall have delivered to Issuer
a copy of a letter from the staff of the SEC, or an opinion of counsel in
form and substance reasonably satisfactory to Issuer and its counsel, to
the effect that such legend is not required for purposes of the Securities
Act and (ii) the reference to restrictions pursuant to this Agreement in
the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the Option Shares evidenced by certificate(s)
containing such reference have been sold or transferred in compliance with
the provisions of this Agreement under circumstances that do not require
the retention of such reference.
(d) Upon the giving by Holder to Issuer of the written notice of
exercise of the Option provided for under Section 3(e), the tender of the
applicable Purchase Price in immediately available funds and the tender of
this Agreement to Issuer, Holder shall be deemed to be the holder of
record of the shares of Issuer Common Stock
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issuable upon such exercise, notwithstanding that the stock transfer books
of Issuer shall then be closed or that certificates representing such
shares of Issuer Common Stock shall not then be actually delivered to
Holder. Issuer shall pay all expenses, and any and all United States
federal, state, and local taxes and other charges that may be payable in
connection with the preparation, issuance and delivery of stock
certificates under this Section 4(d) in the name of Holder or its
assignee, transferee, or designee.
(e) Issuer agrees (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares
of Issuer Common Stock so that the Option may be exercised without
additional authorization of Issuer Common Stock after giving effect to all
other options, warrants, convertible securities and other rights to
purchase Issuer Common Stock, (ii) that it will not, by charter amendment
or through reorganization, consolidation, merger, dissolution or sale of
assets, or by any other voluntary act, avoid or seek to avoid the
observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by Issuer, (iii) promptly
to take all action as may from time to time be required (including (A)
complying with all premerger notification, reporting and waiting period
requirements and (B) in the event prior approval of or notice to any
Governmental Entity is necessary before the Option may be exercised (the
"Governmental Approvals"), cooperating fully with Holder in preparing such
applications or notices and providing such information to such
Governmental Entity as it may require) in order to permit Holder to
exercise the Option and Issuer duly and effectively to issue shares of the
Issuer Common Stock pursuant hereto, and (iv) promptly to take all action
provided herein to protect the rights of Holder against dilution.
5. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee (and Holder, if different than Grantee) as follows:
(a) Corporate Authority. Issuer has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby; the execution and delivery of this
Agreement and, subject to receiving any necessary Governmental Approvals,
the consummation of the transactions contemplated hereby have been duly
and validly authorized by the Board of Directors of Issuer, and no other
corporate proceedings on the part of Issuer are necessary to authorize
this Agreement or to consummate the transactions so contemplated; this
Agreement has been duly and validly executed and delivered by Issuer.
(b) Beneficial Ownership. To the best knowledge of Issuer, as of the
date of this Agreement, no person or group has beneficial ownership of
more than 10% of the issued and outstanding shares of Issuer Common Stock.
(c) Shares Reserved for Issuance; Capital Stock. Issuer has taken
all necessary corporate action to authorize and reserve and 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, that
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number of shares of Issuer Common Stock equal to the maximum number of
shares of Issuer Common Stock at any time and from time to time
purchasable upon exercise of the Option, and all such shares, upon
issuance pursuant to the Option, will be duly authorized, validly issued,
fully paid and nonassessable, and will be delivered free and clear of any
liens, claims or encumbrances (other than those created by this
Agreement), and not subject to any preemptive rights.
(d) No Violations. The execution, delivery and performance of this
Agreement does not and will not, and the consummation by Issuer of any of
the transactions contemplated hereby will not, constitute or result in (A)
a breach or violation of, or a default under, its articles of
incorporation or by-laws, or the comparable governing instruments of any
of its subsidiaries, or (B) a breach or violation of, or a default under,
any agreement, lease, contract, note, mortgage, indenture, arrangement or
other obligation of it or any of its subsidiaries (with or without the
giving of notice, the lapse of time or both) or under any law, rule,
ordinance or regulation or judgment, decree, order, award or governmental
or nongovernmental permit or license to which it or any of its
subsidiaries is subject, that would, in any case give any other person the
ability to prevent or enjoin Issuer's performance under this Agreement in
any material respect.
(e) SierraWest Rights Agreement Amendment. The SierraWest Rights
Agreement has been amended to provide that Grantee will not become an
"Acquiring Person" and that no "Triggering Event," "Stock Acquisition
Date" or "Distribution Date" (as such terms are defined in the SierraWest
Rights Agreement) will occur as a result of the approval, execution or
delivery of this Agreement or the Plan or the consummation of the
transactions contemplated hereby and thereby, including the acquisition of
shares of Issuer Common Stock by Grantee or Holder pursuant to this
Agreement.
6. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer as follows:
(a) Corporate Authority. Grantee has full corporate power and
authority to enter into this Agreement and, subject to obtaining the
approvals referred to in this Agreement, to consummate the transactions
contemplated by this Agreement; the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Grantee; and this Agreement has been duly executed and delivered by
Grantee.
(b) Purchase Not for Distribution. Any Option Shares or other
securities acquired by Grantee or Holder upon exercise of the Option will
not be taken with a view to the public distribution thereof and will not
be transferred or otherwise disposed of except in a transaction registered
or exempt from registration under the Securities Act.
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7. Adjustment upon Changes in Issuer Capitalization, Etc.
(a) In the event of any change in Issuer Common Stock by reason of a
stock dividend, stock split, split-up, recapitalization, combination,
exchange of shares, exercise of the SierraWest Rights or similar
transaction, the type and number of shares or securities subject to the
Option, and the Purchase Price therefor, shall be adjusted appropriately,
and proper provision shall be made in the agreements governing such
transaction so that Holder shall receive, upon exercise of the Option, the
number and class of shares or other securities or property that Holder
would have received in respect of Issuer Common Stock if the Option had
been exercised immediately prior to such event, or the record date
therefor, as applicable. If any additional shares of Issuer Common Stock
are issued after the date of this Agreement (other than pursuant to an
event described in the first sentence of this Section 7(a)), upon exercise
of any option to purchase Issuer Common Stock outstanding on the date
hereof, the number of shares of Issuer Common Stock subject to the Option
shall be adjusted so that, after such issuance, it, together with any
shares of Issuer Common Stock previously issued pursuant hereto, equals
19.9% of the number of shares of Issuer Common Stock then issued and
outstanding, without giving effect to any shares subject to or issued
pursuant to the Option. No provision of this Section 7 shall be deemed to
affect or change, or constitute authorization for any violation of, any of
the covenants or representations in the Plan.
(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee 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
Grantee or one of its subsidiaries, to merge into Issuer and Issuer shall
be the continuing or surviving corporation, but, in connection with such
merger, the then outstanding shares of Issuer Common Stock shall be
changed into or exchanged for stock or other securities of Issuer or any
other person or cash or any other property or the outstanding shares of
Issuer Common Stock immediately prior to such merger shall after such
merger represent less than 50% 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 or deposits to any person, other
than Grantee 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 Holder, of
either (x) the Acquiring Corporation (as hereinafter defined), (y) any
person that controls the Acquiring Corporation, or (z) in the case of a
merger described in clause (ii), Issuer (such person being referred to as
"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 Holder. Substitute Option
Issuer shall also enter into an agreement
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with Holder in substantially the same 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 Substitute Common Stock (as hereinafter defined) as is equal to
the Assigned Value (as hereinafter defined) multiplied by the number of
shares of Issuer 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 Substitute Common
Stock (the "Substitute Option Price") shall be equal to the Purchase Price
multiplied by a fraction in which the numerator is the number of shares of
Issuer Common Stock for which the option was theretofore exercisable and
the denominator is the number of shares of the Substitute Common Stock for
which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (y) Issuer in a merger in which Issuer is the
continuing or surviving person, or (z) the transferee of all or
substantially all of Issuer's assets (or a substantial part of the
assets of its subsidiaries taken as a whole).
(ii) "Substitute Common Stock" shall mean the shares of
capital stock (or similar equity interest) with the greatest voting
power in respect of the election of directors (or persons similarly
responsible for the direction of the business and affairs) of the
Substitute Option Issuer.
(iii) "Assigned Value" shall mean the highest of (w) the price
per share of Issuer Common Stock at which a Tender Offer or an
Exchange Offer therefor has been made, (x) the price per share of
Issuer Common Stock to be paid by any third party pursuant to an
agreement with Issuer, (y) the highest closing price for shares of
Issuer Common Stock within the six-month period immediately
preceding the consolidation, merger, or sale in question and (z) in
the event of a sale of all or substantially all of Issuer's assets
or deposits an amount equal to (I) the sum of the price paid in such
sale for such assets (and/or deposits) and the current market value
of the remaining assets of Issuer, as determined by a nationally
recognized investment banking firm selected by Holder divided by
(II) the number of shares of Issuer Common Stock outstanding at such
time. In the event that a Tender Offer or an Exchange Offer is made
for Issuer 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 Issuer Common Stock
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shall be determined by a nationally recognized investment banking
firm selected by Holder.
(iv) "Average Price" shall mean the average closing price of a
share of 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 Substitute
Common Stock on the day preceding such consolidation, merger or
sale; provided that if Issuer is the issuer of the Substitute
Option, the Average Price shall be computed with respect to a share
of common stock issued by Issuer, the person merging into Issuer or
by any company which controls such person, as Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of Substitute Common Stock outstanding prior to exercise of
the Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of
Substitute Common Stock but for the limitation in the first sentence of
this Section 7(f), Substitute Option Issuer shall make a cash payment to
Holder equal to the excess of (i) the value of the Substitute Option
without giving effect to the limitation in the first sentence of this
Section 7(f) over (ii) the value of the Substitute Option after giving
effect to the limitation in the first sentence of this Section 7(f). This
difference in value shall be determined by a nationally-recognized
investment banking firm selected by Holder.
(g) Issuer shall not enter into any transaction described in Section
7(b) unless the Acquiring Corporation and any person that controls the
Acquiring Corporation assume in writing all the obligations of Issuer
hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including,
without limitation, any action that may be necessary so that the holders
of the other shares of common stock issued by Substitute Option Issuer are
not entitled to exercise any rights by reason of the issuance or exercise
of the Substitute Option and the shares of Substitute Common Stock are
otherwise in no way distinguishable from or have lesser economic value
(other than any diminution in value resulting from the fact that the
Substitute Common Stock are restricted securities, as defined in Rule 144
under the Securities Act or any successor provision) than other shares of
common stock issued by Substitute Option Issuer).
8. Repurchase at the Option of Holder.
(a) At the request of Holder at any time (i) commencing upon the
first occurrence of a Repurchase Event (as defined in Section 8(d)) and
ending 18 months immediately thereafter and (ii) for 30 business days
following the occurrence of either of the events set forth in clauses (i)
and (ii) of Section 3(f) (but solely as to the shares of Issuer Common
Stock with respect to which the required approval was not received, Issuer
(or any successor) shall repurchase from Holder (x) the Option and (y) all
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shares of Issuer Common Stock purchased by Holder pursuant hereto with
respect to which Holder then has beneficial ownership. The date on which
Holder exercises its rights under this Section 8 is referred to as the
"Request Date". Such repurchase shall be at an aggregate price (the
"Section 8 Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares
of Issuer Common Stock acquired pursuant to the Option with respect
to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 7),
multiplied by the number of shares of Issuer Common Stock with
respect to which the Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid
(or, in the case of Option Shares with respect to which the Option
has been exercised but the Closing Date has not occurred, payable)
by Holder for each share of Issuer Common Stock with respect to
which the Option has been exercised and with respect to which Holder
then has beneficial ownership, multiplied by the number of such
shares.
(b) If Holder exercises its rights under this Section 8, Issuer
shall, within 10 business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment, Holder shall surrender to Issuer the
Option and the certificates evidencing the shares of Issuer Common Stock
purchased thereunder with respect to which Holder then has beneficial
ownership, and Holder shall warrant that it has sole record and beneficial
ownership of such shares and that the same are then free and clear of all
Liens. Notwithstanding the foregoing, to the extent that prior
notification to or approval of any Governmental Entity is required in
connection with the payment of all or any portion of the Section 8
Repurchase Consideration, Holder shall have the ongoing option to revoke
its request for repurchase pursuant to Section 8, in whole or in part, or
to require that Issuer deliver from time to time that portion of the
Section 8 Repurchase Consideration that it is not then so prohibited from
paying and promptly file the required notice or application for approval
and expeditiously process the same (and each party shall cooperate with
the other in the filing of any such notice or application and the
obtaining of any such approval) and the period of time that would
otherwise run pursuant to the preceding sentence for the payment of the
portion of the Section 8 Repurchase Consideration shall run instead from
the date on which, as the case may be, (i) any required notification
period has expired or been terminated or (ii) such approval has been
obtained and, in either event, any requisite waiting period shall have
passed. If any Governmental Entity disapproves of any part of Issuer's
proposed repurchase pursuant to this Section 8, Issuer shall promptly give
notice of such fact to
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Holder. If any Governmental Entity prohibits the repurchase in part but
not in whole, then Holder shall have the right (i) to revoke the
repurchase request or (ii) to the extent permitted by such Governmental
Entity, determine whether the repurchase should apply to the Option and/or
Option Shares and to what extent to each, and Holder shall thereupon have
the right to exercise the Option as to the number of Option Shares for
which the Option was exercisable at the Request Date less the sum of the
number of shares covered by the Option in respect of which payment has
been made pursuant to Section 8(a)(ii) and the number of shares covered by
the portion of the Option (if any) that has been repurchased; provided
that if the Option shall have terminated prior to the date of such notice
or shall be scheduled to terminate at any time before the expiration of a
period ending on the thirtieth business day after such date, Grantee shall
nonetheless have the right so to exercise the Option or exercise its
rights under Section 9 until the expiration of such period of 30 business
days. Holder shall notify Issuer of its determination under the preceding
sentence within five (5) business days of receipt of notice of disapproval
of the repurchase.
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share of Issuer Common Stock paid for
any such share by the person or groups described in Section 8(d)(i), (ii)
the price per share of Issuer Common Stock received by holders of Issuer
Common Stock in connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii)
the highest closing sales price per share of Issuer Common Stock quoted on
the Nasdaq National Market System during the 40 business days preceding
the Request Date; provided, however, that in the event of a sale of less
than all of Issuer's assets, the Applicable Price shall be the sum of the
price paid in such sale for such assets and the current market value of
the remaining assets of Issuer as determined by a nationally recognized
investment banking firm selected by Holder, divided by the number of
shares of the Issuer Common Stock outstanding at the time of such sale. If
the consideration to be offered, paid or received pursuant to either of
the foregoing clauses (i) or (ii) shall be other than in cash, the value
of such consideration shall be determined in good faith by an independent
nationally recognized investment banking firm selected by Holder and
reasonably acceptable to Issuer, which determination shall be conclusive
for all purposes of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any person
(other than Grantee or any Subsidiary of Grantee) shall have acquired
beneficial ownership of (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act), or the right to acquire beneficial ownership of,
or any "group" (as such term is defined under the Exchange Act) shall have
been formed which beneficially owns or has the right to acquire beneficial
ownership of, 25% or more of the then outstanding shares of Issuer Common
stock, or (ii) Issuer has entered into an agreement pursuant to which any
of the transactions described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii)
could or will be consummated.
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9. Registration Rights.
(a) Demand Registration Rights. Issuer shall, subject to the
conditions of Section 9(c) below, if requested by any Holder, including
Grantee and any permitted transferee ("Selling Shareholder"), as
expeditiously as possible prepare and file a registration statement under
the Securities Act if such registration is necessary in order to permit
the sale or other disposition of any or all shares of Issuer Common Stock
or other securities that have been acquired by or are issuable to the
Selling Shareholder upon exercise of the Option in accordance with the
intended method of sale or other disposition stated by the Selling
Shareholder in such request, including without limitation a "shelf"
registration statement under Rule 415 under the Securities Act or any
successor provision, and Issuer shall use its best efforts to qualify such
shares or other securities for sale under any applicable state securities
laws.
(b) Additional Registration Rights. If Issuer at any time after the
exercise of the Option proposes to register any shares of Issuer Common
Stock under the Securities Act in connection with an underwritten public
offering of such Issuer Common Stock, Issuer will promptly give written
notice to the Selling Shareholders of its intention to do so and, upon the
written request of any Selling Shareholder given within 30 days after
receipt of any such notice (which request shall specify the number of
shares of Issuer Common Stock intended to be included in such underwritten
public offering by the Selling Shareholder), Issuer will cause all such
shares for which a Selling Shareholder requests participation in such
registration, to be so registered and included in such underwritten public
offering; provided, however, that Issuer may elect to not cause any such
shares to be so registered (i) if the underwriters in good faith object
for valid business reasons, or (ii) in the case of a registration solely
to implement an employee benefit plan or a registration filed on Form S-4
of the Securities Act or any successor Form; provided, further, however,
that such election pursuant to (i) may only be made two times. If some but
not all the shares of Issuer Common Stock with respect to which Issuer
shall have received requests for registration pursuant to this Section
9(b) shall be excluded from such registration, Issuer shall make
appropriate allocation of shares to be registered among the Selling
Shareholders desiring to register their shares pro rata in the proportion
that the number of shares requested to be registered by each such Selling
Shareholder bears to the total number of shares requested to be registered
by all such Selling Shareholders then desiring to have Issuer Common Stock
registered for sale.
(c) Conditions to Required Registration. Issuer shall use all
reasonable efforts to cause each registration statement referred to in
Section 9(a) above to become effective and to obtain all consents or
waivers of other parties which are required therefor and to keep such
registration statement effective; provided, however, that Issuer may delay
any registration of Option Shares required pursuant to Section 9(a) above
for a period not exceeding 90 days provided Issuer shall in good faith
determine that any such registration would adversely affect an offering or
contemplated offering of other securities by Issuer, and Issuer shall not
be required to register Option Shares under the Securities Act pursuant to
Section 9(a) above:
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(i) prior to the earliest of (a) termination of the Plan
pursuant to Article VII thereof, (b) failure to obtain the requisite
shareholder approval pursuant to Section 6.1(a) of the Plan, and (c)
a Purchase Event or a Preliminary Purchase Event;
(ii) on more than one occasion during any calendar year;
(iii) within 90 days after the effective date of a
registration referred to in Section 9(b) above pursuant to which the
Selling Shareholder or Selling Shareholders concerned were afforded
the opportunity to register such shares under the Securities Act and
such shares were registered as requested; and
(iv) unless a request therefor is made to Issuer by Selling
Shareholders that hold at least 25% or more of the aggregate number
of Option Shares (including shares of Issuer Common Stock issuable
upon exercise of the Option) then outstanding.
In addition to the foregoing, Issuer shall not be required to maintain the
effectiveness of any registration statement after the expiration of nine
months from the effective date of such registration statement. Issuer
shall use all reasonable efforts to make any filings, and take all steps,
under all applicable state securities laws to the extent necessary to
permit the sale or other disposition of the Option Shares so registered in
accordance with the intended method of distribution for such shares;
provided, however, that Issuer shall not be required to consent to general
jurisdiction or qualify to do business in any state where it is not
otherwise required to so consent to such jurisdiction or to so qualify to
do business.
(d) Expenses. Except where applicable state law prohibits such
payments, Issuer will pay all expenses (including without limitation
registration fees, qualification fees, blue sky fees and expenses
(including the fees and expenses of counsel), legal expenses, including
the reasonable fees and expenses of one counsel to the holders whose
Option Shares are being registered, printing expenses and the costs of
special audits or "cold comfort" letters, expenses of underwriters,
excluding discounts and commissions but including liability insurance if
Issuer so desires or the underwriters so require, and the reasonable fees
and expenses of any necessary special experts) in connection with each
registration pursuant to Section 9(a) or 9(b) above (including the related
offerings and sales by holders of Option Shares) and all other
qualifications, notifications or exemptions pursuant to Section 9(a) or
9(b) above.
(e) Indemnification. In connection with any registration under
Section 9(a) or 9(b) above Issuer hereby indemnifies the Selling
Shareholders, and each underwriter thereof, including each person, if any,
who controls such holder or underwriter within the meaning of Section 15
of the Securities Act, against all expenses, losses, claims, damages and
liabilities caused by any untrue, or alleged untrue, statement of a
material fact contained in any registration statement or prospectus or
notification or offering
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circular (including any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission, or alleged omission, to
state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as such
expenses, losses, claims, damages or liabilities of such indemnified party
are caused by any untrue statement or alleged untrue statement that was
included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall
be indemnified by such Selling Shareholders, or by such underwriter, as
the case may be, for all such expenses, losses, claims, damages and
liabilities caused by any untrue, or alleged untrue, statement, that was
included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon, and in conformity with, information furnished
in writing to Issuer by such holder or such underwriter, as the case may
be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section 9(e) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 9(e), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
Section 9(e) unless the failure so to notify the indemnified party results in
substantial prejudice thereto. In case notice of commencement of any such action
shall be given to the indemnifying party as above provided, the indemnifying
party shall be entitled to participate in and, to the extent it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense of such action at its own expense, with counsel chosen by it and
satisfactory to such indemnified party. The indemnified party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party unless
(i) the indemnifying party either agrees to pay the same, (ii) the indemnifying
party fails to assume the defense of such action with counsel satisfactory to
the indemnified party, or (iii) the indemnified party has been advised by
counsel that one or more legal defenses may be available to the indemnifying
party that may be contrary to the interest of the indemnified party, in which
case the indemnifying party shall be entitled to assume the defense of such
action notwithstanding its obligation to bear fees and expenses of such counsel.
No indemnifying party shall be liable for any settlement entered into without
its consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 9(e) is unavailable to
a party otherwise entitled to be indemnified in respect of any expenses, losses,
claims, damages or liabilities referred to herein, then the indemnifying party,
in lieu of indemnifying such party otherwise entitled to be indemnified, shall
contribute to the amount paid or payable by such party to be indemnified as a
result of such expenses, losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative benefits received by
Issuer, the Selling
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Shareholders and the underwriters from the offering of the securities and also
the relative fault of Issuer, the Selling Shareholders and the underwriters in
connection with the statements or omissions which resulted in such expenses,
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The amount paid or payable by a party as a result of the
expenses, losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim;
provided, however, that in no case shall any Selling Shareholder be responsible,
in the aggregate, for any amount in excess of the net offering proceeds
attributable to its Option Shares included in the offering. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Any obligation by any holder to
indemnify shall be several and not joint with other holders.
In connection with any registration pursuant to Section 9(a) or 9(b)
above, Issuer and each Selling Shareholder (other than Grantee) shall enter into
an agreement containing the indemnification provisions of this Section 9(e).
(f) Miscellaneous Reporting. Issuer shall comply with all reporting
requirements and will do all such other things as may be necessary to
permit the expeditious sale at any time of any Option Shares by the
Selling Shareholders thereof in accordance with and to the extent
permitted by any rule or regulation promulgated by the SEC from time to
time, including, without limitation, Rule 144. Issuer shall at its expense
provide the Selling Shareholders with any information necessary in
connection with the completion and filing of any reports or forms required
to be filed by them under the Securities Act or the Exchange Act, or
required pursuant to any state securities laws or the rules of any stock
exchange.
10. Quotation; Listing. If Issuer Common Stock or any other securities to
be acquired in connection with the exercise of the Option are then authorized
for quotation or trading or listing on the NYSE, the Nasdaq National Market
System or any securities exchange, Issuer, upon the request of Holder, will
promptly file an application, if required, to authorize for quotation or trading
or listing the shares of Issuer Common Stock or other securities to be acquired
upon exercise of the Option on the NYSE, the Nasdaq National Market System or
such other securities exchange and will use its best efforts to obtain approval,
if required, of such quotation or listing as soon as practicable.
11. Division of Option. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Holder, upon presentation and
surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory
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indemnification, and upon surrender and cancellation of this Agreement, if
mutilated, Issuer will execute and deliver a new Agreement of like tenor and
date. Any such new Agreement executed and delivered shall constitute an
additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. 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;
provided, however, that Issuer will pay all stamp taxes in connection with
the issuance and the sale of the Option Shares and in connection with the
exercise of the Option, and will save the Selling Shareholders harmless,
without limitation as to time, against any and all liabilities, with
respect to all such taxes..
(b) Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) Entire Agreement; No Third-Party Beneficiaries; Severability.
This Agreement, together with the Plan and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to
the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto (other than the indemnified parties
under Section 9(e) and any transferees of the Option Shares or any
permitted transferee of this Agreement pursuant to Section 12(h)) any
rights or remedies hereunder. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
or Governmental Entity to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected,
impaired or invalidated. If for any reason such court or Governmental
Entity determines that the Option does not permit Holder to acquire, or
does not require Issuer to repurchase, the full number of shares of Issuer
Common Stock as provided in Section 2 (as may be adjusted herein), it is
the express intention of Issuer to allow Holder to acquire or to require
Issuer to repurchase such lesser number of shares as may be permissible
without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of California without regard to any
applicable conflicts of law rules.
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(e) Descriptive Headings. The descriptive headings contained herein
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied
(with confirmation) or mailed by registered or certified mail (return
receipt requested) to the parties at the addresses set forth in the Plan
(or at such other address for a party as shall be specified by like
notice).
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and
the same agreement and shall become effective when both counterparts have
been signed, it being understood that both parties need not sign the same
counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned
by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other party, except that Holder
may assign this Agreement to a wholly-owned subsidiary of Holder and
Holder may assign its rights hereunder in whole or in part after the
occurrence of a Purchase Event. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the Option
by the Holder, Issuer and the Holder shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such
exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree
to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such equitable
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relief and that this provision is without prejudice to any other rights
that the parties hereto may have for any failure to perform this
Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
SIERRAWEST BANCORP
By ____________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive
Officer
BANCWEST CORPORATION
By ____________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Title: Chairman and Chief Executive
Officer
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EXHIBIT B
AGREEMENT OF MERGER
OF
SIERRAWEST BANCORP WITH AND INTO BANK OF THE WEST
THIS AGREEMENT OF MERGER, dated as of __________, 1999 (this "Merger
Agreement"), is made and entered into by and between BANCWEST CORPORATION, a
Delaware corporation ("BC"), BANK OF THE WEST, a California state-chartered
banking corporation ("Surviving Corporation"), and SIERRAWEST BANCORP, a
California corporation ("Disappearing Corporation").
W I T N E S S E T H:
WHEREAS, BancWest Corporation, the Surviving Corporation and the
Disappearing Corporation have entered into an Agreement and Plan of Merger dated
as of February 25, 1999 (the "Agreement and Plan of Merger") which provides for,
among other things, the merger (the "Merger") of the Disappearing Corporation
with and into the Surviving Corporation, which is a wholly-owned subsidiary of
BC; and
WHEREAS, BancWest Corporation, the Surviving Corporation and the
Disappearing Corporation have further agreed pursuant to the Agreement and Plan
of Merger that immediately after the Merger, SierraWest Bank, a wholly-owned
subsidiary of the Disappearing Corporation will be merged with and into the
Surviving Corporation (the "Bank Merger"); and
WHEREAS, the Boards of Directors of Surviving Corporation and Disappearing
Corporation have approved, and deem it advisable and in the best interests of
Surviving Corporation, Disappearing Corporation and their respective
shareholders that Surviving Corporation and Disappearing Corporation consummate
the Merger.
NOW, THEREFORE, in consideration of the mutual agreements contained in
this Merger Agreement, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties to this Merger Agreement
hereby agree that Disappearing Corporation shall be merged with and into
Surviving Corporation in accordance with the provisions of the Federal Deposit
Insurance Act and the California Financial Code upon the terms and subject to
the conditions set forth as follows:
1. The Merger. On the Effective Date (as hereinafter defined),
Disappearing Corporation shall be merged with and into Surviving Corporation.
The Merger shall become effective on _________, 1999 (the "Effective Date"), on
which date a copy of this Merger Agreement will be filed with the Secretary of
State of the State of California. The Merger shall become effective at 5:00
p.m., California time, on the Effective Date (the "Effective Time").
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2. Articles of Incorporation and By-laws. The Articles of Incorporation
and Bylaws, respectively, of Surviving Corporation in effect immediately prior
to the Effective Time shall be and remain the Articles of Incorporation and
By-laws, respectively, of the Surviving Corporation until amended as provided by
law.
3. Officers and Directors. From and after the Effective Time and until
they shall have resigned or shall have been legally removed or until their
respective successors shall have been elected or appointed and qualified, the
directors and officers of Surviving Corporation shall be those persons who are
the directors and officers of Surviving Corporation immediately prior to the
Effective Time.
4. Effect of the Merger.
4.1 All assets, rights, privileges, immunities, powers, franchises and
interests of Disappearing Corporation and Surviving Corporation in and to every
type of property (real, personal and mixed) and choses in action, as they exist
as of the Effective Time, including appointments, designations and nominations
and all other rights and interests as trustee, executor, administrator,
registrar of stocks and bonds, guardian of estates, assignee, receiver and in
every other fiduciary capacity, shall pass and be transferred to and vest in
Surviving Corporation by virtue of the Merger at the Effective Time without any
deed, conveyance or other transfer. The corporate existence of Surviving
Corporation as a state-chartered banking corporation shall continue unaffected
and unimpaired upon consummation of the Merger and the separate corporate
existence of Disappearing Corporation shall cease at and as of the Effective
Time. From and after the Effective Time, Surviving Corporation shall be deemed
to be the same entity as each of Disappearing Corporation and Surviving
Corporation and shall be subject to all of their duties and liabilities of every
kind and description.
4.2 From and after the Effective Time, Surviving Corporation shall be
responsible and liable for all the liabilities and obligations of each of
Surviving Corporation and Disappearing Corporation. Any claim existing or action
or proceeding pending by or against Surviving Corporation or Disappearing
Corporation at the Effective time thereafter may be prosecuted as if the Merger
had not taken place or, in connection with any such action or proceeding to
which Disappearing Corporation is a party, Surviving Corporation may be
substituted in place of Disappearing Corporation. Neither the rights of
creditors nor any liens upon the property of either Surviving Corporation or
Disappearing Corporation shall be impaired by reason of the Merger.
5. Effect of Merger on Outstanding Shares.
5.1 Surviving Corporation. Each share of the common stock of Surviving
Corporation issued and outstanding immediately prior to the Effective Time shall
continue to be issued and outstanding from and after the Effective Time.
5.2 Disappearing Corporation. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of the
capital stock of the
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Disappearing Corporation (the "SierraWest Common Stock"), (i) all shares of
SierraWest Common Stock that are owned directly or indirectly by the Surviving
Corporation, the Disappearing Corporation or any of their respective
Subsidiaries (other than shares of SierraWest Common Stock held directly or
indirectly in trust accounts, managed accounts and the like or otherwise held in
a fiduciary or nominee capacity that are beneficially owned by third parties and
other than any shares of SierraWest Common Stock held by the Surviving
Corporation or the Disappearing Corporation or any of their respective
Subsidiaries in respect of a debt previously contracted) shall be cancelled and
shall cease to exist and no stock of the Surviving Corporation or other
consideration shall be delivered in exchange therefor, and (ii) each of the
shares of SierraWest Common Stock issued and outstanding immediately prior to
the Effective Time (other than shares to be cancelled in accordance with
subparagraph (i) above) shall be converted into the right to receive 0.82 shares
of fully paid and nonassessable shares of Common Stock, $1.00 par value per
share, of BC (the "BC Common Stock"). All such shares of SierraWest Common Stock
shall no longer be outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each certificate previously representing any such
shares shall thereafter represent the shares of BC Common Stock into which such
SierraWest Common Stock has been converted and, if applicable, the right to
receive cash in lieu of fractional shares. Certificates previously representing
shares of SierraWest Common Stock shall be exchanged for certificates
representing whole shares of BC Common Stock issued in consideration therefor
(and, if applicable, cash in lieu of fractional shares) upon the surrender of
such certificates.
6. Further Assurances. From time to time as and when requested by
Surviving Corporation and to the extent permitted by law, the officers and
directors of Disappearing Corporation and Surviving Corporation last in office
shall execute and deliver such assignments, deeds and other instruments and
shall take or cause to be taken such further or other action as shall be
necessary in order to vest or perfect in or to confirm of record or otherwise to
Surviving Corporation title to, and possession of, all of the assets, rights,
franchises and interests of Disappearing Corporation and Surviving Corporation
in and to every type of property (real, personal and mixed) and choses in
action, and otherwise to carry out the purposes of this Merger Agreement, and
the proper officers and directors of Surviving Corporation are fully authorized
to take any and all such action in the name of Disappearing Corporation or
Surviving Corporation or otherwise.
7. Conditions to the Obligations of Surviving Corporation. The obligations
of Surviving Corporation under this Agreement are subject to fulfillment at or
prior to the Effective Time of each of the following conditions:
7.1 Shareholder Approval. The approval by BancWest Corporation, as the
sole common shareholder of Surviving Corporation, and by the holders of a
majority of the outstanding shares of the Common Stock of Disappearing
Corporation of this Agreement and the Merger shall have been obtained.
7.2 Government Approvals. All consents and approvals of any state or
federal governmental authority, including, without limitation, the Federal
Deposit Insurance
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Corporation and the Commissioner of Financial Institutions of the State of
California that are required by law or otherwise in connection with the Merger
(collectively, "Governmental Approvals") shall have been obtained and shall be
in effect, and all conditions or requirements prescribed by law or by any such
Government Approval shall have been satisfied.
8. Conditions to the Obligations of Disappearing Corporation. The
obligations of Disappearing Corporation under this Agreement are subject to
fulfillment at or prior to the Effective Time of each of the following
conditions:
8.1 Shareholder Approval. The approval by the holders of a majority of the
outstanding shares of the Common Stock of Disappearing Corporation, and by
BancWest Corporation, as the sole common shareholder of Surviving Corporation,
of this Agreement and the Merger, shall have been obtained.
8.2 Government Approvals. All Governmental Approvals shall have been
obtained and shall be in effect, and all conditions or requirements prescribed
by law or by any such Government Approval shall have been satisfied.
9. Termination. This Merger Agreement may be terminated by the mutual
consent of the Boards of Directors of Disappearing Corporation and Surviving
Corporation, and may be amended with respect to its principal terms by the
mutual consent of the Boards of Directors of Disappearing Corporation and
Surviving Corporation and the approval of the shareholders of Disappearing
Corporation and Surviving Corporation. This Merger Agreement shall terminate
automatically upon the termination of the Agreement and Plan of Merger prior to
the consummation of the merger therein provided for.
10. Counterparts. 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.
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IN WITNESS WHEREOF, the parties have duly executed this Merger Agreement
as of the date first written above.
BANCWEST CORPORATION
By___________________________________
Name:
Title:
By___________________________________
Name:
Title:
BANK OF THE WEST
By___________________________________
Name:
Title:
By___________________________________
Name:
Title:
SIERRAWEST BANCORP
By___________________________________
Name:
Title:
By___________________________________
Name:
Title:
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OFFICERS' CERTIFICATE
________________ and _______________ hereby certify that:
1. They are the Chief Executive Officer and Secretary, respectively, of
BANK OF THE WEST, a banking 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 sole shareholder of the corporation.
3. The shareholder approval was by the holder 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 entitled to vote on the Merger 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: ___________________
_____________________________________
Name:
Title:
_____________________________________
Name:
Title:
87
OFFICERS' CERTIFICATE
_________________ and ________________ hereby certify that:
1. They are the Chief Executive Officer and Secretary, respectively,
SIERRAWEST BANCORP, a California corporation.
1. The Merger Agreement in the form attached was duly approved by the
Board of Directors and the shareholders of the corporation.
2. 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 entitled to vote on the Merger 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: ____________________
_____________________________________
Name:
Title:
_____________________________________
Name:
Title: