AGREEMENT AND
PLAN OF REORGANIZATION
BY AND BETWEEN
WESTERN SIERRA BANCORP
AND
CENTRAL CALIFORNIA BANK
DATED NOVEMBER 15, 2001
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
and entered into as of November 15, 2001, by and between Western Sierra
Bancorp, a California corporation ("WSB"), 0000 Xxxxxxx Xxxx Xxxxx, Xxxxx 000,
Xxxxxxx Xxxx, Xxxxxxxxxx 00000, and Central California Bank, a California
banking corporation ("CCB"), 00000 Xxxx Xxx, Xxxxxx, Xxxxxxxxxx 00000,
pursuant to which CCB will become a separate, wholly-owned subsidiary of WSB,
with reference to the following:
R E C I T A L S
WHEREAS, CCB is a California banking corporation with its principal
office in the City of Sonora, State of California, and WSB is a California
corporation with its principal office in the City of Cameron Park, State
of California;
WHEREAS, Lake Community Bank ("LCB") is a California banking
corporation with its principal office in the City of Lakeport, State of
California, and Western Sierra National Bank ("WSNB") is a national
banking association with its principal office in the City of Cameron Park,
State of California, and both are wholly-owned subsidiaries of WSB;
WHEREAS, CCB and WSB desire to enter into this Agreement which
contemplates the acquisition of CCB by WSB, pursuant to which CCB will
become a separate, wholly-owned subsidiary of WSB;
WHEREAS, this Agreement provides for the completion of the
acquisition of CCB by WSB through the merger (the "Merger") of CCB with a
newly formed California banking corporation which shall be a wholly-owned
subsidiary of WSB ("New CCB Bank") under the applicable laws of the State
of California and in accordance with the separate agreement of merger (the
"Merger Agreement") to be entered into by and between New CCB Bank and CCB
substantially in the form of EXHIBIT "A" hereto;
WHEREAS, to consummate the Merger the parties hereto will have to
take various steps and actions in furtherance of the transaction
contemplated by this Agreement (collectively, with the Merger, the
"Transactions");
WHEREAS, the Boards of Directors of WSB and CCB have determined that
this Agreement and the Transactions are in the best interests of their
respective shareholders and have approved this Agreement and authorized
its execution; and
WHEREAS, WSNB proposes to sell and transfer to CCB its Sonora Main,
Sonora Junction, Xxxxx Xxxxx and Colombia branches (the "Branches") as
soon as possible after the consummation of the Transactions and CCB
proposes to acquire the Branches, subject to completion of a separate
definitive branch acquisition agreement and regulatory approvals;
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained herein, and intending
to be legally bound, the parties hereto agree as follows:
A G R E E M E N T
1
ARTICLE I
THE MERGER AND RELATED TRANSACTIONS
1.1 CREATION OF NEW CCB BANK. As soon as practicable, WSB shall: (i)
organize New CCB Bank ("New CCB") pursuant to Section 350 et seq. of the
California Financial Code as a new California banking corporation,
wholly-owned by WSB; and (ii) cause New CCB to file an application for deposit
insurance with the Federal Deposit Insurance Corporation (the "FDIC"). The
Articles of Incorporation and Bylaws of New CCB shall be identical to CCB's
Articles of Incorporation and Bylaws except for the corporate name.
1.2 MERGER. The Merger shall become effective (the "Effective Time of
the Merger") on the date that the Merger Agreement is filed with the
Commissioner of the California Department of Financial Institutions (the
"Commissioner"), after having been filed with the California Secretary of
State and previously approved by the Commissioner as provided in Section 2.2
hereof. At the Effective Time of the Merger, and pursuant to the terms of this
Agreement and the Merger Agreement, the following transactions will be deemed
to have occurred simultaneously:
(a) MERGER OF NEW CCB AND CCB. New CCB and CCB will merge, and the
separate corporate existence of CCB shall cease. New CCB as the
corporation surviving the Merger is sometimes referred to herein as the
"Merged Bank."
(b) EFFECT ON NEW CCB SHARES. Each share of the common stock of New
CCB (the "New CCB Stock") issued and outstanding immediately prior to the
Effective Time of the Merger, on and after the Effective Time of the
Merger, pursuant to the Merger Agreement and without any further action on
the part of WSB or New CCB, shall be converted into one share of common
stock of the Merged Bank (the "Merged Bank Stock"). Each outstanding stock
certificate which prior to the Effective Time of the Merger represented
shares of New CCB Stock automatically and for all purposes shall be deemed
to represent the number of shares of Merged Bank Stock into which the
shares of New CCB Stock represented by such certificate have been
converted as provided in this Section 1.2(b); provided, however, at the
request of WSB, the Merged Bank shall exchange WSB's certificate or
certificates formerly representing shares of New CCB Stock for a
certificate or certificates of Merged Bank Stock.
(c) EFFECT ON CCB SHARES. Each share of the common stock, no par
value, of CCB (the "CCB Stock") issued and outstanding immediately prior
to the Effective Time of the Merger, except for Dissenting CCB Shares (as
defined in Section 1.3 hereof), on and after the Effective Time of the
Merger, pursuant to the Merger Agreement and without any further action on
the part of CCB or the holders of CCB Stock, automatically shall be
canceled and cease to be an issued and outstanding share of CCB Stock, and
shall be converted into the right to elect to receive newly issued shares
of common stock, no par value, of WSB ("WSB Stock"), valued at the WSB
Stock Market Value (as that term is defined below), cash or a combination
thereof equal to $14.10; provided, however, that the aggregate total WSB
Stock Market Value for the shares of WSB Stock payable in the Merger shall
be equal to or as nearly equal to (taking into consideration that cash
will be paid in lieu of fractional shares) $4,998,000; and provided
further that the aggregate total amount of cash payable in the Merger
shall be equal to or as nearly equal to (taking into consideration that
cash will be paid in lieu of fractional shares) $4,175,070, less the
aggregate total of the Per Option Merger Consideration (as that term is
defined in Section 1.6 hereof) payable by CCB pursuant to Section 1.6,
plus the aggregate total of the per share exercise prices for all CCB
Stock Options (as that term is defined in Section 1.6 hereof) exercised
after the date hereof and not subject to purchase pursuant to Section 1.6
hereof. Holders of CCB Stock shall be entitled to elect whether to receive
WSB Stock, cash, or any combination thereof in accordance with the
procedures established in Section 1.5(b) hereof. For purposes of this
Agreement, "WSB Stock Market Value" shall be determined by taking the
higher of: (i) the average of the closing prices of the WSB Stock on the
Nasdaq National Market for the 20 trading days immediately preceding the
fifth business day prior to the Closing Date (the "WSB Average Price"); or
(ii) $11.90.
Certificates formerly evidencing shares of CCB Stock shall be surrendered
for payment and exchange to the Transfer Agent (as defined in Section 1.5
hereof) in accordance with Section 1.5.
(d) EFFECT ON WSB SHARES. Each share of WSB Stock issued and
outstanding immediately prior to the Effective Time of the Merger shall,
on and after the Effective Time of the Merger, remain
2
issued and outstanding and shall automatically and for all purposes be
deemed to represent one share of common stock of WSB.
(e) ALTERNATIVE METHOD. Anything herein to the contrary
notwithstanding, upon written notice to CCB, WSB may at any time prior to
the Effective Time of the Merger change the method of effecting the
acquisition of CCB (including, without limitation, the provisions of this
Article I) if and to the extent it deems such change to be necessary,
appropriate or desirable; provided, however, that no such change shall:
(i) alter or change the amount or kind of consideration to be issued to
holders of CCB Stock as provided for in this Agreement; (ii) cause the
transaction to be treated as anything other than a tax-free reorganization
to WSB, CCB and, except to the extent cash is received, the holders of CCB
Stock; or (iii) materially impede or delay the receipt of any approvals
referred to in Section 10.1 or the consummation of the Transactions
contemplated by this Agreement.
1.3 DISSENTING SHARES OF CCB STOCK. Subject to the limitations of
California Corporations Code Section 1300(b), any shareholder of CCB who shall
have lawfully dissented from the Transactions in accordance with the
applicable statutes of the State of California, and who shall have timely
demanded payment of the value of such shareholder's CCB Stock and submitted
such shares for endorsement as provided in California Corporations Code
Section 1300(b) ("Dissenting CCB Shares"), shall thereafter have only such
rights as are provided a dissenting shareholder in accordance with said
statutes and shall have no other rights under this Agreement or as
shareholders of WSB.
1.4 FRACTIONAL SHARES. No fractional shares of WSB Stock shall be
issued in the Merger. In lieu thereof, each holder of CCB Stock who would
otherwise be entitled to receive fractional shares of WSB Stock shall receive
an amount in cash equal to the WSB Average Price multiplied by the fraction of
a share of WSB Stock to which such holder would otherwise be entitled.
1.5 DELIVERY OF CERTIFICATES AND CASH.
(a) TRANSFER AGENT. Prior to the Effective Time of the Merger, WSB
shall deliver or cause to be delivered to Computershare Investor Services,
LLC, its transfer agent (the "Transfer Agent"): (i) an amount of cash
equal to $3,700,000; and (ii) a sufficient number of certificates
representing the shares of WSB Stock to be issued to CCB's shareholders.
Delivery to the holders of CCB Stock of the certificates for WSB Stock and
cash to which they are entitled will subsequently be made by the Transfer
Agent against delivery of share certificates formerly evidencing CCB Stock
(duly executed and in proper form for transfer) to the Transfer Agent in
accordance with this Section 1.5 and the terms and conditions of an
agreement to be entered into by and between WSB and the Transfer Agent
(the "Transfer Agent Agreement"). A copy of the Transfer Agent Agreement
will be provided to CCB and its counsel for approval prior to consummation
of the Merger, which approval shall not be unreasonably withheld.
(b) EXCHANGE PROCEDURES. As soon as practicable, but not more than
30 days after the Effective Time of the Merger, the Transfer Agent will
send a notice and transmittal form to each holder of a certificate
previously representing shares of CCB Stock advising such holders of the
applicable terms of the conversion effected by the Merger and the
procedure for surrendering to the Transfer Agent such certificate for
payment and conversion. Each holder of such certificates, upon surrender
of the same to the Transfer Agent in accordance with such transmittal
form, shall be entitled to elect to receive the consideration provided for
in Section 1.2(c) hereof. Those holders of such certificates who surrender
their certificates to the Transfer Agent in accordance with such
transmittal form within 30 days after the date the transmittal forms are
first mailed to such holders shall have the opportunity to elect payment
of $14.10 in the form of WSB Stock, cash or any combination thereof for
each share of CCB Stock represented by such surrendered certificates. In
the event that such holders of CCB Stock have requested more shares of WSB
Stock or more cash than available pursuant to Section 1.2(c) hereof, the
Transfer Agent shall adjust all such requests, on a pro rata basis, such
that the aggregate number of shares of WSB Stock issued shall not exceed
the number of shares available and the aggregate amount of cash issued
shall not exceed the amount of cash available pursuant to Section 1.2(c)
hereof. Those holders of such certificates who surrender their
certificates to the Transfer Agent in accordance with such transmittal
form after 30 days from the Effective Time of the Merger shall NOT be
entitled to elect the form of payment of $14.10 but instead shall be paid
WSB Stock, cash or any combination thereof, on a pro rata basis out of the
then remaining shares of WSB
3
Stock and cash available pursuant to Section 1.2(c) hereof. If the
consideration for shares of CCB Stock provided for in Section 1.2(c) is
to be delivered to any person other than the registered holder of said
shares surrendered for exchange, the amount of any stock transfer tax or
similar taxes (whether imposed on the registered holder or such person)
payable on account of the transfer to such person shall be paid to the
Transfer Agent by such person, or the Transfer Agent may refuse to make
such exchange unless satisfactory evidence of the payment of such taxes
or exemption therefrom is submitted. The certificates so surrendered
shall forthwith be canceled. No interest will be paid or accrued on any
amount payable upon due surrender of the certificates.
(c) TRANSFERS. After the Effective Time of the Merger, there shall
be no transfers on the stock transfer books of CCB of the CCB Stock that
was outstanding immediately prior to the Effective Time of the Merger.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the cash delivered
to the Transfer Agent (including the proceeds of any investments thereof)
that remains unclaimed by the holders of CCB Stock for six months after
the Effective Time of the Merger shall be returned to WSB. Any holders of
CCB Stock who have not theretofore complied with this Section 1.5 shall
thereafter look only to WSB for exchange of their CCB Stock upon due
surrender of their certificates (or affidavits of loss in lieu thereof),
without any interest thereon. Notwithstanding the foregoing, none of WSB,
CCB, the Transfer Agent or any other person shall be liable to any former
holder of CCB Stock for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(e) LOST, STOLEN OR DESTROYED CCB STOCK CERTIFICATES. In the event
any certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming such certificate to be
lost, stolen or destroyed and, if required by WSB, the posting by such
person of a bond in customary amount as indemnity against any claim that
may be made against it with respect to such certificate, the Transfer
Agent shall exchange such lost, stolen or destroyed certificate, upon due
surrender thereof, in accordance with the provisions of this Section 1.5.
1.6 CCB STOCK OPTIONS. Prior to the Effective Time of the Merger, CCB
shall purchase each outstanding option theretofore granted by CCB to its
employees and directors to purchase shares of CCB Stock ("CCB Stock Option")
that has not theretofore been exercised or terminated at a price per CCB Stock
Option (the "Per Option Merger Consideration") equal to: (i) the difference
between (A) $14.10 and (B) the per share exercise price applicable to each
such CCB Stock Option; (ii) multiplied by the total number of shares of CCB
Stock subject to each such CCB Stock Option. CCB shall pay the holders of CCB
Stock Options pursuant to this Section 1.6 immediately prior to the Effective
Time of the Merger. Any such CCB Stock Options not purchased by CCB pursuant
to such offer and not exercised prior to the Effective Time of the Merger
shall expire at the Effective Time of the Merger.
1.7 EFFECT OF THE MERGER. By virtue of the Merger and at the Effective
Time of the Merger, all of the rights, privileges, powers and franchises and
all property and assets of every kind and description of New CCB and CCB shall
be vested in and be held and enjoyed by the Merged Bank, without further act
or deed, and all the estates and interests of every kind of New CCB and CCB,
including all debts due to either of them, shall be as effectively the
property of the Merged Bank as they were the property of New CCB and CCB, and
the title to any real estate vested by deed or otherwise in either New CCB or
CCB shall not revert or be in any way impaired by reason of the Merger; and
all rights of creditors and liens upon any property of New CCB and CCB shall
be preserved unimpaired, and all debts, liabilities and duties of New CCB and
CCB shall be debts, liabilities and duties of the Merged Bank and may be
enforced against it to the same extent as if such debts, liabilities and
duties had been incurred or contracted by it, and none of such debts,
liabilities or duties shall be expanded, increased, broadened or enlarged by
reason of the Merger.
1.8 NAME OF MERGED BANK. Prior to the Effective Time of the Merger,
New CCB shall file a Certificate of Amendment of its Articles of Incorporation
changing its corporate name to "Central California Bank" with the Commissioner
and thereafter shall file the Certificate of Amendment with the California
Secretary of State as of the Closing Date. Immediately thereafter, a certified
copy of the Certificate of Amendment shall be submitted to the Commissioner.
4
1.9 CHARTER, ARTICLES AND BYLAWS OF MERGED BANK. The Charter,
Insurance of Accounts, Articles of Incorporation and Bylaws of New CCB as in
effect immediately prior to the Effective Time of the Merger shall be the
Charter, Insurance of Accounts, Articles of Incorporation and Bylaws of the
Merged Bank, except as provided in Section 1.8 hereof.
1.10 DIRECTORS AND OFFICERS OF MERGED BANK. The directors of New CCB
immediately prior to the Effective Time of the Merger shall be the directors
of the Merged Bank until their successors have been chosen and qualified in
accordance with the Articles of Incorporation and the Bylaws of the Merged
Bank; provided, however, that prior to the Effective Time of the Merger New
CCB shall: (i) appoint either nine or ten directors from CCB's existing Board
of Directors to the Board of Directors of New CCB effective as of the Closing
Date; and (ii) cause all incumbent directors of New CCB, except for Xxxxxxx
Xxxxxx, Xxxx Xxxxx and Xxxx X. Xxxx, to resign from the Board of Directors of
New CCB effective as of the Closing Date. The officers of New CCB immediately
prior to the Effective Time of the Merger shall be the officers of the Merged
Bank until their successors have been chosen and qualified in accordance with
the Articles of Incorporation and the Bylaws of the Merged Bank; provided,
however, that prior to the Effective Time of the Merger New CCB shall: (i)
cause all incumbent officers of New CCB to resign as officers of New CCB
effective as of the Closing Date; and (ii) appoint all incumbent officers of
CCB as officers of New CCB effective as of the Closing Date.
1.11 ARTICLES OF INCORPORATION, BYLAWS AND DIRECTORS OF WSB. At the
Closing, WSB's Articles of Incorporation and Bylaws as in effect immediately
prior to the Closing shall remain the Articles of Incorporation and Bylaws of
WSB. At the Effective Time of the Merger, two members of CCB's Board of
Directors designated by WSB, in its sole and absolute discretion, shall be
appointed to the Board of Directors of WSB.
1.12 DIRECTOR'S AGREEMENT. Concurrently with the execution of this
Agreement, CCB shall cause its directors to enter into an agreement in the
form of EXHIBIT "B" hereto, pursuant to which each director shall agree to
vote or cause to be voted all shares of his or her CCB Stock with respect to
which such director has voting power on the date hereof or hereafter acquired
to approve the Transactions contemplated hereby and all requisite matters
related thereto.
1.13 AFFILIATE'S LETTER. Concurrently with the execution of this
Agreement, CCB shall use its best efforts to cause each of its "affiliates"
for purposes of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act"), to sign an Affiliates' Letter substantially in the form of
EXHIBIT "C" hereto. At the Closing, CCB shall use its best efforts to cause
any affiliates who had not previously signed an Affiliates' Letter to do so.
Each share of WSB Stock issued in respect of CCB Stock pursuant to the Merger
to each of CCB's affiliates shall bear the restrictive legend specified in
EXHIBIT "C".
1.14 COOPERATION; BEST EFFORTS. Each of the parties, consistent with
the fiduciary duties of the directors of each party, will use its best efforts
to consummate the Transactions contemplated by this Agreement and cooperate in
any action necessary or advisable to facilitate such consummation including,
without limitation, making all filings required in order to obtain any
necessary consents or to comply with any law and providing any information
required in connection therewith.
1.15 DIRECTOR AND OFFICER LIABILITY INSURANCE. WSB, from and after the
Effective Time of the Merger, will directly or indirectly cause the persons
who served as directors or officers of CCB on or before the Effective Time of
the Merger to be covered by WSB's existing directors' and officers' liability
insurance policy (provided that WSB may substitute therefor policies of at
least the same coverage and amounts containing terms and conditions which are
not less advantageous than such policy) or so-called tail coverage obtained in
connection with CCB's directors' and officers' liability insurance policies in
effect as of the Effective Time of the Merger; provided that WSB shall not be
obligated to make annual premium payments for such insurance to the extent
such premiums exceed 150% of the premiums paid as of the date hereof by CCB
for such insurance. Subject to the preceding sentence, such insurance coverage
shall commence on the Effective Time of the Merger and will be provided for a
period of no less than three (3) years after the Effective Time of the Merger.
From the date hereof through the Effective Time of the Merger and subject to
the foregoing, CCB shall use its best efforts to arrange for tail coverage
related to its then current policies of directors' and officers' liability
insurance and, following the Effective Time of the Merger, WSB shall exercise
those rights which it may have in order to commence such coverage. In
connection
5
with any active, pending claim which may arise after the date hereof through
the Effective Time of the Merger under an existing CCB directors' and
officers' liability insurance policy, WSB will take no action that would have
the effect of waiving any such claim and will not omit to take any action that
is necessary to preserve such claim.
In the event WSB or any of its successors or assigns (A) consolidates with
or merges into any third person, group or entity and shall not be the continuing
or surviving corporation or entity of such consolidation or merger, or (B)
transfers or conveys all or substantially all of its properties and assets to
any third person, group or entity, then, and in each such case, to the extent
necessary, proper provision shall be made so that the successors and assigns of
WSB assume the obligations set forth in this Section 1.15. The provisions of
this Section 1.15 are intended to be for the benefit of, and shall be
enforceable by, each of CCB's directors and officers as of the Effective Time of
the Merger and his or her heirs and representatives.
ARTICLE II
THE CLOSING
2.1 CLOSING DATE. The consummation of the Transactions contemplated by
this Agreement (the "Closing"), unless another date or place is agreed in
writing by the parties hereto, shall take place at the main office of WSB in
Cameron Park at a time and on a date mutually agreeable to CCB and WSB within
fifteen days after the last of the following shall have occurred: (i) the
receipt of all approvals and consents specified in Article X hereof; (ii) the
expiration of the applicable waiting period under the Bank Merger Act and the
Bank Holding Company Act of 1956, as amended (the "BHCA"); and (iii) all
conditions specified in Articles VIII, IX and X hereof shall have been
satisfied (the "Closing Date"); provided, however, that if the parties cannot
agree on the Closing Date, the Closing Date shall be the last business day in
such fifteen day period.
2.2 EXECUTION OF MERGER AGREEMENT. Prior to the Closing Date and as
soon as practicable after the organization of New CCB, the approval of this
Agreement and the Transactions contemplated hereby by the shareholder of New
CCB and the shareholders of CCB, and the satisfaction of the conditions
precedent to the consummation of the Merger, the Merger Agreement in the form
attached as EXHIBIT "A" (as amended, if necessary, to conform to the
requirements of law or a governmental authority or agency having authority
over the Merger, which requirements are not materially in contravention of any
of the substantive terms hereof) shall be executed by CCB and New CCB. As soon
as possible thereafter, the Merger Agreement, along with the requisite
Officers' Certificates, shall be submitted to the Commissioner for approval
and endorsement pursuant to Section 4887(a) of the California Financial Code
and, thereafter, shall be filed with the California Secretary of State. Prior
to the close of business on the Closing Date, an executed copy of the Merger
Agreement with the approval of the Commissioner endorsed therein and certified
by the California Secretary of State shall be filed with the Commissioner as
provided in Section 4887(b) of the California Financial Code effective as of
the close of business on the Closing Date. The Merger shall become effective
in accordance with the provisions of Section 1.2 of this Agreement.
2.3 DOCUMENTS TO BE DELIVERED. The parties shall deliver, or cause to
be delivered, the documents called for by the Closing Schedule attached hereto
as EXHIBIT "D," along with such other documents or certificates as may be
necessary, in the reasonable opinion of counsel for each of the parties, to
effectuate the Transactions called for hereunder. In the event that counsel
for any of the parties believes that documents necessary for the Closing have
not been set forth on the Closing Schedule, counsel shall advise the other
party in writing, no less than five business days prior to the Closing Date,
setting forth a brief description of the additional documents desired and such
documents shall also be provided at the Closing. If, at any time after the
Effective Time of the Merger, the Merged Bank or WSB or their successors or
assigns shall determine that any further conveyance, assignment or other
documents or any further action is necessary or desirable to further
effectuate the Transactions set forth herein or contemplated hereby, the
officers and directors of the parties hereto shall execute and deliver, or
cause to be executed and delivered, all such documents as may be reasonably
required to effectuate such Transactions, whether at the Closing or thereafter.
6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CCB
CCB hereby represents and warrants to WSB as follows:
3.1 ORGANIZATION, STANDING AND POWER. CCB is a California state banking
corporation, duly organized, validly existing and in good standing under the
laws of the State of California, and is authorized by the Commissioner to
conduct a commercial banking business. CCB has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as presently conducted. Neither the scope of the business of CCB
nor the location of any of its properties requires that it be licensed or
qualified to do business in any jurisdiction other than the State of California.
Attached hereto as SCHEDULE 3.1 are true and correct copies of its Articles of
Incorporation and Bylaws, as amended to the date hereof.
3.2 CAPITALIZATION. The authorized capitalization of CCB consists of
10,000,000 shares of common stock, no par value, of which 612,738 shares are
issued and outstanding as of the date of this Agreement. As of the date of this
Agreement, the CCB Stock was held by approximately 536 shareholders of record
and the CCB Stock was registered under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). All of the outstanding shares of the CCB Stock are
validly issued, fully paid and nonassessable. Except as contemplated herein and
except for stock options covering 138,000 shares of the CCB Stock under the CCB
1998 Stock Option Plan there are presently, and on the Closing Date there will
be, no outstanding options, warrants or other rights in or with respect to the
unissued shares of the CCB Stock or any securities convertible into such CCB
Stock, and CCB is not obligated to issue any additional shares of its CCB Stock
or any other security convertible into its CCB Stock.
3.3 SUBSIDIARIES. Except as set forth on SCHEDULE 3.3, CCB does not own,
directly or indirectly (except as pledged pursuant to loans which are not in
default or for shares held by CCB as the result of any foreclosure by CCB on any
loan, which shares do not exceed 4.9% of the outstanding common stock of any
such company), any outstanding stock or other voting interests in any
corporation, partnership, joint venture or other entity. Each such entity is
duly organized, validly existing and in good standing under the laws of the
jurisdiction.
3.4 AUTHORITY. The execution and delivery by CCB of this Agreement and
the Merger Agreement and the consummation of the Transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary
corporate action on the part of CCB. The Agreement is, and the Merger Agreement
will be, binding and enforceable obligations of CCB, except as enforceability
thereof may be limited by bankruptcy, insolvency, moratorium or similar laws
affecting the rights of creditors generally or federally insured banks, or by
general equitable principles, or by 12 U.S.C. 1818(b)(6)(D). Neither the
execution and delivery by CCB of this Agreement or the Merger Agreement, nor the
consummation of the Transactions contemplated herein or therein, nor compliance
by CCB with any of the provisions hereof or thereof will: (i) conflict with, or
result in a breach of, any provision of its Articles of Incorporation or Bylaws;
or (ii) except as set forth in SCHEDULE 3.4, constitute a material breach of, or
result in a material default, or give rise to any rights of termination,
cancellation or acceleration, or give rise to any right by any other person or
entity to acquire any security interest in any assets under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, franchise,
license, permit, agreement or other instrument or obligation to which CCB or any
of its properties or assets are subject. No consent or approval of, notice to or
filing with any governmental authority having jurisdiction over any aspect of
the business or assets of CCB, and no consent or approval of or notice to any
other person or entity, is required in connection with the execution and
delivery by CCB of this Agreement or the Merger Agreement or the consummation by
CCB of the Transactions contemplated hereby or thereby, except: (i) approval of
this Agreement and the Merger Agreement by the shareholders of CCB; (b) such
approvals of this Agreement, the Merger Agreement, and the Transactions
contemplated herein as may be required by the Federal Reserve Board (the "FRB")
pursuant to the BHCA, the Federal Deposit Insurance Corporation (the "FDIC")
pursuant to the Bank Merger Act, and the Commissioner pursuant to Section 700 ET
SEQ. and Section 4880 et seq. of the California Financial Code; and (iii) as set
forth on SCHEDULE 3.4.
3.5 BRANCHES. Except for its main office located at 00000 Xxxx Xxx,
Xxxxxx, Xxxxxxxxxx 00000, and its branch offices located at 000 Xxxxx Xxxxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, and 000 Xxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx
00000, a loan production office located at 0000 Xxxxx Xxxx, Xxxxx X, Xxxxxxx,
Xxxxxxxxxx 00000,
7
and an approved but unopened branch to be located in Antioch, California, CCB
does not operate or conduct business out of any other location and has not
applied for or received permission to open any other branch or to operate out
of any other location.
3.6 FINANCIAL STATEMENTS. Except as disclosed in the notes relating
thereto, or otherwise on SCHEDULE 3.6, the audited financial statements of CCB
as of and for the periods ended December 31, 1999 and 2000, as well as the
unaudited financial statements of CCB as of and for the periods ended September
30, 2000 and 2001, attached hereto as SCHEDULE 3.6 (all of these statements are
collectively referred to herein as the "CCB Financial Statements"): (i) fairly
and accurately present the financial condition of CCB as of the dates thereof
and the results of operations and its cash flows for the periods therein set
forth; (ii) have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved; and (iii) are
based on the books and records of CCB. Except to the extent that WSB and CCB
have agreed that, following regulatory approval being obtained and the
satisfaction of all other conditions to the Closing and immediately prior to the
Effective Time of the Merger, CCB shall, if permissible under and subject to
compliance with generally accepted accounting principles and the rules and
regulations of the applicable regulatory authorities, taking into account the
consummation of the Merger, increase its reserve for possible loan losses by
$100,000, CCB's reserves for possible loan losses as disclosed in the CCB
Financial Statements dated September 30, 2001 were adequate as of such date to
absorb reasonably anticipated losses in the loan portfolio of CCB in view of the
size and character of such portfolio, then current economic conditions, and
other pertinent factors; and no facts have subsequently come to the attention of
management of CCB which would cause management to restate as of such date in any
material way the level of such reserves for possible loan losses. The CCB
Financial Statements have properly accrued for all known and reasonably
anticipated liabilities and contingencies, including any liabilities providing
for severance and other compensation resulting from a change in control pursuant
to employment agreements. With respect to other real estate owned by CCB, the
value attributed thereto for purposes of preparing the CCB Financial Statements
does not exceed the aggregate fair market value of such real estate as of the
date of acquisition of such real estate or as subsequently reduced, all in
accordance with generally accepted accounting principles. With regard to
investments owned by CCB, the value attributed thereto for purposes of preparing
the CCB Financial Statements is in accordance with generally accepted accounting
principles.
3.7 UNDISCLOSED LIABILITIES. Except for the disclosures contained in
SCHEDULE 3.7, CCB does not have any liabilities or obligations, either accrued
or contingent, which are material to CCB and which have not been reflected or
disclosed in the CCB Financial Statements. CCB does not know of any basis for
the assertion against it of any liability, obligation or claim (including,
without limitation, that of any regulatory authority) that is reasonably likely
to result in or cause any material adverse change in the business or financial
condition of CCB, which is not fairly reflected in the CCB Financial Statements
or otherwise disclosed in SCHEDULE 3.7 hereto.
3.8 TITLE TO ASSETS. Except for liens for current taxes not yet due and
payable and except as disclosed in the CCB Financial Statements or in SCHEDULE
3.8 hereto, CCB has good, valid and marketable title to all material properties
and assets, other than real property and securities pledged to secure public
deposits or retail repurchase agreements, owned or stated to be owned by CCB and
reflected on the CCB Financial Statements, or acquired after December 31, 2000
(except properties sold or otherwise transferred in the ordinary course of
business since December 31, 2000), free and clear of all mortgages, liens,
encumbrances, pledges or charges of any kind or nature.
3.9 REAL ESTATE. Except for the information disclosed in SCHEDULE 3.9
hereto, there is no other real property, including leaseholds (copies of all
leases to which CCB is a party are attached to SCHEDULE 3.9 hereto) and "other
real estate owned," owned by CCB. SCHEDULE 3.9 contains, among other things, an
accurate summary of all material commitments which CCB has to improve real
estate owned or leased by it. CCB has good and marketable title to all the real
property, and valid leasehold interests in the leaseholds, described in SCHEDULE
3.9, free and clear of all mortgages, covenants, conditions, restrictions,
easements, liens, security interests, charges, claims and encumbrances, except
for: (i) rights of lessors, co-lessees or sublessees in such matters which are
reflected in the leases; (ii) current taxes not yet due and payable; (iii) as
described in any title policies (included in SCHEDULE 3.9); (iv) such
imperfections of title and encumbrances, if any, as do not materially detract
from the value of or materially interfere with the present use of such property;
or (v) except as described in SCHEDULE 3.9 hereto. Copies of title policies for
properties described in SCHEDULE 3.9 as owned by CCB have been delivered or made
available to WSB. The activities of CCB with respect to its real property owned
and their leaseholds for use in connection with their operations are in all
material respects permitted and authorized by applicable zoning laws, ordinances
and regulations and all laws and regulations of any governmental department or
agency relative to environmental matters
8
affecting such property, except as otherwise disclosed in SCHEDULE 3.9. CCB
enjoys quiet and peaceful possession of all such property. All tangible
properties of CCB that are material to the business, financial condition,
results of operations or prospects of CCB are in a good state of maintenance
and repair, except for ordinary wear and tear, and are adequate for the conduct
of the business of CCB as presently conducted. Except as set forth in SCHEDULE
3.9: (i) the execution of this Agreement and the Merger Agreement, the
performance of the obligations of CCB hereunder and thereunder and the
consummation of the Transactions contemplated hereby and thereby do not
conflict in any material way with and will not result in a material breach or
material default under any lease, agreement or contract described in SCHEDULE
3.9, or give any other party thereto a right to terminate or modify any term
thereof; (ii) each lease and agreement under which CCB is a lessee or holds or
operates any property (real, personal or mixed) owned by any third party is in
full force and effect and is a valid and legally binding obligation of CCB,
subject to applicable bankruptcy, insolvency, moratorium and similar laws
affecting creditors' rights generally and equitable principles of general
applicability; (iii) CCB and each other party to any such lease or agreement
have performed in all material respects all the obligations required to be
performed by them to date under such lease or agreement and are not in default
in any material respect under any such lease or agreement and there is no
pending or, to the best of CCB's knowledge, threatened proceeding that would
interfere with the quiet enjoyment of such leasehold or such material property
by CCB; (iv) to the best of CCB's knowledge, no underground storage tanks or
surface impoundments are on or in the real property; and (v) to the best of
CCB's knowledge, no asbestos is contained or located on any of the real
property.
3.10 ENVIRONMENTAL LIABILITIES. To the best of CCB's knowledge, except as
set forth on SCHEDULE 3.10, no properties of CCB or properties in which CCB
holds a collateral or contingent interest or purchase option, are the subject of
any pending or threatened investigation, claim or proceeding relating to the
use, storage or disposal on such property of or contamination of such property
by any toxic or hazardous waste material or substance. To the best of CCB's
knowledge, CCB does not own, possess or have a collateral or contingent interest
or purchase option in any properties or other assets which contain or have
located within or thereon any hazardous or toxic waste material or its use
thereon conforms in all material respects with all federal, state and local
laws, rules, regulations or other provisions regulating the discharge of
materials into the environment. As to any real property now owned or leased by
CCB and held as security for a loan or in which CCB otherwise has an interest,
to the best of CCB's knowledge, CCB has not controlled, directed or participated
in the operation or management of any such real property or any facilities or
enterprise conducted thereon, such that it has become an owner or operator of
such real property under applicable environmental laws.
3.11 LOANS AND INVESTMENTS. Except as disclosed in SCHEDULE 3.11 hereto:
(i) all the loans and investments of CCB are legal, valid and permitted under
federal and state laws and regulations applicable at the time of their
origination or assumption; and (ii) CCB is not subject to any liability or claim
for violation of any state or federal law or regulation concerning extensions of
credit, including, without limitation, those relating to discriminatory lending
practices and truth-in-lending. Except for investments that have matured or been
sold, SCHEDULE 3.11 sets forth all of the investments reflected in the balance
sheets of CCB dated December 31, 2000 and September 30, 2001. Except as set
forth in SCHEDULE 3.11, none of such investments is subject to any restriction,
contractual, statutory or other, that would materially impair the ability of CCB
to dispose freely of any such investment at any time, except restrictions on the
public distribution or transfer of such investments under the Securities Act or
state securities laws. Except as set forth in SCHEDULE 3.11, as of December 31,
2000 and September 30, 2001, CCB had no holdings of positions in forwards,
futures, options, swaps, interest rate caps, collars and floors, or any other
similar instruments ("Derivative Instruments"). Except as set forth in SCHEDULE
3.11, since January 1, 1999, CCB has not engaged in any transactions in or
involving Derivative Instruments except as agent on the order and for the
account of others. SCHEDULE 3.11 sets forth for each Derivative Instrument held
by CCB since January 1, 1999, the present book value and market value, if
applicable, the open exposure of CCB, if any, and whether any counterparties to
any contract or agreement with respect to any such instrument is in default with
respect to such contract or agreement.
3.12 EXTENSIONS OF CREDIT. SCHEDULE 3.12 sets forth a description of: (a)
by type and classification, if any, all loans, leases or other extensions of
credit by CCB on nonaccrual; (b) by type and classification, if any, all loans,
leases, or other extensions of credit or other real estate owned that have been
classified by the Commissioner, FDIC, external or internal auditors, directors,
management or other examiners as "Watch List," "Specially Mentioned,"
"Substandard," "Doubtful," "Loss" or any comparable classification; and (c) all
loans, leases or other extensions of credit of CCB as to which any payment of
principal, interest or other amount is 90 days or more past
9
due. With respect to loan delinquencies, SCHEDULE 3.12 contains the monthly
loan delinquency report dated on or about September 30, 2001, in the form
customarily prepared for and delivered to the Board of Directors of CCB.
3.13 DEPOSITS. Except as set forth on SCHEDULE 3.13, there are no deposit
accounts outstanding at CCB with an outstanding balance as of September 30,
2001, in excess of $100,000.
3.14 LITIGATION AND GOVERNMENTAL PROCEEDINGS. Except as otherwise
expressly disclosed in SCHEDULE 3.14, CCB: (i) is not engaged in, or, to the
best of CCB's knowledge, threatened with, any legal action or other proceeding
before any court or administrative agency which might be material to its
business or in which the amount claimed against it is $25,000 or more; (ii) is
not in material default of any of its duties or obligations under, or with
respect to, any judgment, order, writ, injunction or decree of any court or
governmental department, commission, board, bureau, agency or other
instrumentality having jurisdiction over CCB or its business; (iii) has not been
served with written notice of and is not, to the best knowledge of CCB, under
investigation with respect to, any material violation of any provision of
federal, state or local laws, rules, or regulations; and (iv) is not subject to
any order, letter agreement or written direction of any governmental agency with
respect to its financial or operating ratios, or with respect to any other
standards or tests imposed by state and federal laws and regulations, including,
without limitation, those relating to net worth, liquidity and the maintenance
of reserves, nor, to the best of CCB's knowledge, has any such order, letter
agreement or written direction been proposed to CCB. SCHEDULE 3.14 contains a
list identifying any claims pending on behalf of CCB against the Small Business
Administration (the "SBA"), any other governmental agencies, or any third
parties for reimbursement for loan defaults, indicating the date of the claim,
the name of the borrower, and the amount of the claim.
3.15 CONTRACTS AND AGREEMENTS. Except as provided by this Agreement and
except as set forth in SCHEDULE 3.15, CCB is not a party to any material
contract, agreement, commitment or offer which may become a binding obligation
if accepted by another person or entity, whether written or oral (collectively
referred to herein as an "Understanding") which individually, or with all other
similar Understandings relating to the same or similar subject matter, falls
within any of the following classifications:
(a) Any loan commitment, agreement, pledge, conditional sale
contract, security agreement, lease (excluding leases of real property
listed in SCHEDULE 3.9), guarantee, subordination agreement or other
similar or related type of Understanding (but not including any deposit
agreements as to which CCB is the debtor), involving the expenditure of
$10,000 or more as to which CCB is a debtor, pledgor, lessee or obligor;
(b) Any Understanding for the employment of any officer or employee
which is not terminable by CCB without liability, except as may be
provided by law, on not more than 30 days' notice;
(c) Any Understanding with any labor organization;
(d) Any Understanding which obligates CCB for a period in excess of
one year to purchase, sell or provide services, materials, supplies,
merchandise, facilities or equipment;
(e) Any Understanding for the sale of any of its assets in excess of
$25,000 in amount, or for the grant of any preferential right to purchase
any of its assets, properties or rights in excess of $25,000 in amount, or
which requires the consent of any third party to the transfer and
assignment of any of its assets, properties or rights in excess of $25,000
in amount, other than in the ordinary course of business;
(f) Any Understanding for the borrowing of any money by CCB or for a
line of credit to CCB, except borrowings from the Federal Reserve Bank of
San Francisco or the Federal Home Loan Bank of San Francisco in the
ordinary course of business;
(g) Any Understanding for any one capital expenditure or
series of related capital expenditures in excess of $10,000;
(h) Any Understanding to make, renew or extend the term of a loan to
any affiliate (as that term is defined for purposes of Rule 144 under the
Securities Act) or group of persons related to any
10
affiliate, which, including any undisbursed or unfunded amount, when
aggregated with all outstanding indebtedness of such affiliate or group of
related persons to CCB, would exceed $250,000;
(i) Any Understanding of any kind (other than contracts relating to
demand, savings or time deposits) with any director or officer of CCB or
with any affiliate or member of the immediate family (defined to include a
person's spouse, parents, in laws, descendants or siblings) of any such
director, officer or affiliate;
(j) Any Understanding for the sale of loans with recourse; or
(k) Any Understanding not otherwise disclosed pursuant to this
Section 3.15 which is material to the financial condition, results of
operations, assets or business of CCB.
True and correct copies of all contracts, including amendments thereto,
setting forth the foregoing Understandings, are attached as a part of SCHEDULE
3.15.
3.16 PERFORMANCE OF OBLIGATIONS. Except as has been disclosed in SCHEDULE
3.16, CCB has performed in all material respects all of the material obligations
required to be performed by it to date and CCB is not in default in any material
respect under any agreement, contract or lease to which it is a party or subject
or is otherwise bound and which are material to the financial condition of CCB;
and no party with whom CCB has an agreement which is of material importance to
the business of CCB is in material default thereunder.
3.17 INSURANCE. Except as set forth in SCHEDULE 3.17, CCB has in full
force and effect policies of insurance, including, without limitation, a
banker's blanket bond, with respect to its assets and business and against such
casualties and contingencies and of such amounts, types and forms as are
appropriate for its business, operations, properties and assets and as are usual
and customary in the banking industry. Set forth in SCHEDULE 3.17 hereto is a
schedule of all policies of insurance (other than title insurance) carried and
owned by CCB; showing the name of the insurance company, the nature of the
coverage, the policy limit, the annual premiums and the expiration dates. There
has been delivered to or made available to WSB a copy of each such policy of
insurance. Since commencing its business, CCB has continually maintained a
fidelity bond insuring it against acts of dishonesty by its employees in such
amounts as are disclosed in SCHEDULE 3.17. Except as disclosed in SCHEDULE 3.17,
no claims have been made under such bond. CCB is not aware of any facts which
would form the basis of a claim under any such bond; nor does CCB have any
reason to believe that any insurance coverage will not be renewed by the
existing carrier on substantially the same terms as existing coverage.
3.18 TAXES. Except as set forth in SCHEDULE 3.18 hereto, CCB has timely
filed all federal, state and local tax returns required to be filed by it or on
its behalf. Except as set forth in SCHEDULE 3.18, all taxes shown by such
returns to be due and payable have been paid or are reflected as a liability on
the CCB Financial Statements. None of the federal, state and local tax returns
of CCB have been audited by the Internal Revenue Service or other governmental
authorities having jurisdiction over the examination of such returns except for
the years or periods indicated in SCHEDULE 3.18. All material deficiencies
(including interest and penalties, if any, thereon), if any, imposed as a result
of such examinations have been either paid, or have been accrued as a liability
on the CCB Financial Statements, or are being contested in good faith and are
disclosed in SCHEDULE 3.18. No material tax deficiency has been or to the
knowledge of CCB is proposed to be assessed against CCB by any federal, state or
local authority or agency. CCB has not agreed to any extension of time for the
assessment of any taxes of whatsoever kind or nature payable by it, nor has CCB
waived or been requested to waive any applicable statute of limitations with
relation to the payment of any federal, state or local taxes. The accruals for
taxes reflected on the CCB Financial Statements are adequate for all unpaid
federal, state or local taxes (including interest and penalties, if any,
thereon) due, or which became due for any period commencing prior to December
31, 2000.
3.19 ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE 3.19 or
as permitted by this Agreement, since December 31, 2000, the business of CCB has
been conducted diligently and only in the ordinary course, in the same manner as
heretofore conducted and there has not been:
(a) Any change (other than changes affecting financial institutions
generally, including changes in interest rates, laws or regulations) in
the financial condition of CCB which has been materially adverse;
11
(b) Any declaration, setting aside, or the payment of any dividend
or other distribution with respect to CCB Stock or the issuance of any
additional shares of, or options to purchase, CCB Stock or any other
security of CCB;
(c) Any damage, destruction or loss (whether or not covered by
insurance) which individually or taken as a whole materially adversely
affects the property, business or prospects of CCB;
(d) Any change in accounting methods or practices of CCB other
than required by generally accepted accounting principles;
(e) Any revaluation by CCB of any of CCB's assets except as may be
applicable to available-for-sale securities;
(f) Any increase in the salary schedule or compensation rate, or the
declaration, payment or commitment or obligation of any kind for the
payment by CCB of a bonus or other additional salary or compensation,
other than in accordance with past practice;
(g) Any sale, assignment or transfer of any material assets of CCB
except in the ordinary course of business;
(h) Any waiver or release of any material right or claim of CCB,
except in the ordinary course of business; or
(i) Any agreement to take any action specified in Sections
3.19(a) through (h) hereof.
3.20 BROKERS' AND FINDERS' FEES. Neither CCB nor any of its officers or
employees have paid or agreed to pay, or have done any act which would give rise
to the payment of, any fee, commission or consideration to any agent, broker,
finder or other person on account of services rendered as a broker or finder in
connection with this Agreement or the Transactions contemplated herein, or which
has resulted in, or may give rise to, any obligation on the part of CCB or WSB
therefor, except that CCB has engaged the firm of Xxxx Xxxxxxxxxx and Co. to act
as its financial adviser and to render an opinion regarding the fairness of the
consideration in the form of WSB Stock and cash or a combination thereof in the
Merger, from a financial point of view, to CCB shareholders. CCB has provided
WSB with a true and accurate copy of its agreement with Xxxx Xxxxxxxxxx and Co.
CCB agrees to indemnify and hold WSB harmless from and against any and all
claims, liabilities, or obligations with respect to any other brokers' or
finders' fees, commissions, or expenses asserted by any other person on the
basis of any act or statement alleged to have been made by CCB or its
affiliates.
3.21 EMPLOYEES. Except as disclosed in SCHEDULE 3.21, there are no
material controversies pending or, to the best of CCB's knowledge, threatened
between CCB and any of its employees. Except as disclosed in the CCB Financial
Statements, all material sums due for employee compensation and benefits have
been duly and adequately paid or accrued on the books of CCB.
3.22 REGULATORY REPORTS. Except as disclosed in SCHEDULE 3.22, since
January 1, 1999, CCB has filed all reports, returns, registrations and
statements, together with any amendments required to be made with respect
thereto (such reports, filings and amendments referred to hereinafter as "CCB
Filings"), that were required to be filed with: (i) the Commissioner; (ii) FDIC;
and (iii) any other applicable regulatory agency, except where the failure to
file such reports, returns, registrations and statements has not had and is not
reasonably expected to have a material adverse effect on the business,
properties, financial condition, results of operations or prospects of CCB.
Except as otherwise set forth in SCHEDULE 3.22, no administrative actions have
been taken or orders issued in connection with such CCB Filings and as of their
respective dates, each of such CCB Filings: (i) complied in all material
respects with all rules and regulations promulgated by the regulatory agency
with which it was filed (or was amended so as to be so promptly following
discovery of any such noncompliance); and (ii) 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. Any financial
12
statement contained in any of such CCB Filings that was intended to present the
financial position of CCB fairly presented the financial position of CCB and was
prepared in accordance with generally accepted accounting principles or banking
regulations consistently applied, except as stated therein, during the periods
involved. CCB has furnished WSB with true and correct copies of all CCB Filings
filed by CCB since January 1, 1999.
3.23 CCB EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AND LABOR CONTRACTS.
(a) Except as disclosed in SCHEDULE 3.23, there are no director
and/or employee benefit plans or any collective bargaining agreements,
labor contracts and employment agreements in which CCB participates, or by
which it is bound, including, without limitation: (i) any profit sharing,
deferred compensation, bonus, stock option, stock purchase, pension, ESOP,
retainer consulting, retirement, welfare or incentive plan or agreement
whether legally binding or not; (ii) any written employment agreement and
any other employment agreement whether written or oral; (iii) any other
"employee benefit plan" [within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1975 ("ERISA")] (collectively,
the "CCB Employment Agreements"); or (iv) any salary continuation or
change in control agreements. Except as disclosed in SCHEDULE 3.23: (i)
there are no negotiations, demands or proposals that are pending or, to
the best knowledge of CCB, threatened that concern matters now covered, or
that would be covered, by any employment agreements or employee benefit
plans other than amendments to plans qualified under Section 401 of the
Internal Revenue Code (the "Code") that are required by the Tax Reform Act
of 1986 and later legislation; (ii) CCB is in material compliance with the
requirements prescribed by any and all rules and regulations currently in
effect including but not limited to ERISA and the Code applicable to all
such employee benefit plans; (iii) CCB is in compliance in all material
respects with all other rules and regulations applicable to employee
benefit plans and employment agreements; (iv) CCB has performed all of its
obligations under all such employee benefit plans and employment
agreements; and (v) there are no actions, suits or claims pending or, to
the best knowledge of CCB, threatened against any such employee benefit
plans, or the assets of such plans, or with respect to any CCB Employment
Agreements, and, to the best knowledge of CCB, no facts exist which are
reasonably likely to give rise to any actions, suits or claims (other than
routine claims for benefits) against such plans or the assets of such
plans or CCB on account of any such employment agreements, whether written
or oral.
(b) Except as disclosed in SCHEDULE 3.23, the "employee pension
benefit plans" (within the meaning of Section 312 of ERISA) described on
SCHEDULE 3.23 have been duly authorized by the Board of Directors of CCB.
Except as set forth in SCHEDULE 3.23, each such plan and associated trust
is qualified in form and operation under Section 401(a) and exempt from
tax under Section 501(a) of the Code, respectively, and, to the best
knowledge of CCB, no event has occurred that will or is reasonably likely
to give rise to disqualification of any such plan or loss of the exemption
from tax of any such trust under said sections. To the best knowledge of
CCB, no event has occurred that will or is reasonably likely to subject
any such plans to tax under Section 511 of the Code. None of such plans
has engaged in a merger or consolidation with any other plan or
transferred assets or liabilities from any other plan. To the best
knowledge of CCB, no prohibited transaction (within the meaning of Section
409 or 502(i) of ERISA or Section 4975 of the Code) or party-in-interest
transaction (within the meaning of Section 406 of ERISA) has occurred with
respect to any of such plans. To the best knowledge of CCB, no employee of
CCB has engaged in any transactions which could subject CCB to indemnify
such person against liability. To the best knowledge of CCB, all costs of
plans have been provided for on the basis of consistent methods in
accordance with sound actuarial assumptions and practices. To the best
knowledge of CCB, no employee benefit plan has incurred any "accumulated
funding deficiency" (as defined in ERISA), whether or not waived, taking
into account contributions made within the period described in Section
412(c)(10) of the Code; nor, to the best knowledge of CCB, are there any
unfunded amounts under any employee benefit plan; nor, to the best
knowledge of CCB, has CCB failed to make any contributions or pay any
amount due and owing as required by law or the terms of any employee
benefit plan or employment agreement. Subject to amendments that are
required by the Tax Reform Act of 1986 as amended and later legislation,
since the last valuation date for each employee pension benefit plan,
there has been no amendment or change to such plan that to the best
knowledge of CCB, would increase the amount of benefits thereunder.
(c) CCB does not sponsor or participate in, and has not sponsored or
participated in, any employee benefit pension plan to which Section 4021
of ERISA applies that would create a liability under Title IV of ERISA.
13
(d) There have been no acts or omissions by CCB that have given rise
to or, to the best knowledge of CCB, may give rise to fines, penalties,
taxes, or related charges under Sections 502(c) or (i) or 4071 of ERISA or
Chapter 43 of the Code.
(e) Except as disclosed in Section 3.23(h), CCB does not maintain
any employee benefit plan or employment agreement pursuant to which any
benefit plan or other payment will be required to be made by CCB or
pursuant to which any other benefit will accrue or vest in any director,
officer or employee of CCB, in either case as a result of the consummation
of the transactions contemplated by the Agreement.
(f) To the best knowledge of CCB, no "reportable event," as defined
in ERISA, has occurred with respect to any of the employee benefit plans.
(g) To the best knowledge of CCB, all amendments required to bring
each of the employee benefit plans into conformity with all of the
provisions of ERISA and the Code and all other applicable laws, rules and
regulations have been made.
(h) Except for the persons named in SCHEDULE 3.23, no director,
officer or employee of CCB is entitled to receive any benefit or any
payment of any amount under any existing employment agreement, severance
plan or other benefit plan as a result of the consummation of any
transaction contemplated in this Agreement, and with respect to each such
person, CCB has included in SCHEDULE 3.23 the nature of such benefit or
the amount of such payment, the event triggering the benefit or payment,
and the date of, and parties to, such employment agreement, severance plan
or other benefit plan. CCB has furnished WSB with true and correct copies
of all documents with respect to the plans and agreements referred to in
SCHEDULE 3.23 delivered as of the date of this Agreement, including all
amendments and supplements thereto, and all related summary plan
descriptions. For each of the employee pension benefit plans of CCB
referred to in SCHEDULE 3.23 delivered as of the date of this Agreement,
if any, or except as noted therein, CCB has furnished WSB with true and
accurate copies of: (i) the Form 5500 which was filed in each of the three
most recent plan years, including without limitation, all schedules
thereto and all financial statements with attached opinions of independent
accountants; (ii) the most recent determination letter from the Internal
Revenue Service; (iii) the statement of assets and liabilities as of the
most recent valuation date; and (iv) the statement of changes in fund
balance and in financial position or the statement of changes in net
assets available for benefits under each of said plans for the most
recently ended plan year. To the best knowledge of CCB, the documents
referred to in subdivisions (iii) and (iv) fairly present the financial
condition of each of said plans as of and at such dates and the results of
operations of each of said plans, all in accordance with generally
accepted accounting principles applied on a consistent basis.
3.24 STOCK OPTION PLANS. SCHEDULE 3.24 sets forth a true and correct copy
of CCB's 1998 Stock Option Plan and a schedule showing the names, dates of
grant, vesting schedules, termination dates, and option prices for each option
outstanding as of the date of this Agreement. The 1998 Stock Option Plan has
been duly approved by the Board of Directors and shareholders of CCB. SCHEDULE
3.24 sets forth a copy of the Order of Exemption issued by the Commissioner.
Each stock option has been approved by the Board of Directors of CCB, and, upon
exercise of the options in accordance with their terms, the shares of CCB Stock
issued have been and will be validly issued, fully paid and nonassessable.
3.25 ABSENCE OF CERTAIN PRACTICES. Except as disclosed on SCHEDULE 3.25,
neither CCB, nor to the best knowledge of CCB any officer, director, employee or
agent of CCB, directly or indirectly, within the past three years, gave or made
or agreed to give or make any illegal commission, payment, gratuity, gift,
political contribution or similar benefit to any customer, supplier,
governmental employee or other person in order to obtain business for or further
the business of CCB.
3.26 NO VIOLATION OF LAW. CCB is in substantial compliance with all
material laws relating to its business or employment practices or the ownership
of its properties, and is in substantial compliance with each material law,
ordinance, order, decree or regulation of any governmental entity applicable to
the conduct thereof or the ownership of the properties related thereto, except
in each case for violations which either individually or in the
14
aggregate do not and will not have a material adverse effect on the business,
properties, financial condition, results of operations or prospects of CCB.
3.27 CERTAIN INTERESTS. Except as disclosed on SCHEDULE 3.27, except in
arm's-length transactions pursuant to normal commercial terms and conditions:
(i) no officer or director of CCB has any material interest in any property,
real or personal, tangible or intangible, used in or pertaining to the business
of CCB except for the normal rights of a shareholder of CCB; (ii) no such person
is indebted to CCB except for normal business expense advances or lending
transactions in the ordinary course of business on the same terms, including
interest rates and collateral on loans as those prevailing at the same time for
comparable transactions with others; and (iii) CCB is not indebted to any such
person except for amounts due under normal salary or reimbursement of ordinary
business expenses. Except as disclosed on SCHEDULE 3.23, the consummation of the
Transactions contemplated hereby will not (either alone, or upon the occurrence
of any act or event, or with the lapse of time, or both) result in any payment
(severance or other) becoming due from CCB to any employee of CCB.
3.28 MINUTE BOOKS. The minute books of CCB accurately reflect all
material actions duly taken by the shareholders, Board of Directors and
committees of CCB and contain true and complete copies of CCB's Articles of
Incorporation and Bylaws and all amendments thereto.
3.29 ACCOUNTING RECORDS; DATA PROCESSING. CCB has records that, in all
material respects, fairly reflect its transactions, and accounting controls
sufficient to ensure that such transactions are in all material respects: (i)
executed in accordance with management's general or specific authorization; and
(ii) recorded in conformity with generally accepted accounting principles.
Except as set forth in SCHEDULE 3.29, the procedures and equipment, including,
without limitation, the data processing equipment, data transmission equipment,
and related peripheral equipment and software, used by CCB in the operation of
its business (including any disaster recovery facility) to generate and retrieve
such records are adequate in relation to the size and complexity of the business
of CCB.
3.30 OPERATING LOSSES. Except as disclosed on SCHEDULE 3.30, there is no
individual Operating Loss (as defined below) in excess of $5,000 that has
occurred at CCB during the period after December 31, 2000. Except as disclosed
on SCHEDULE 3.30, since December 31, 2000, no event has occurred, and no action
has been taken or omitted to be taken by any employee of CCB that has resulted
in the incurrence by CCB of an Operating Loss or that might reasonably be
expected to result in the incurrence by CCB of an Operating Loss after December
31, 2000, which, net of any insurance proceeds payable in respect thereof,
exceeds, or would exceed $5,000 by itself or $10,000 when aggregated with all
other Operating Losses during such period. For purposes of this Agreement,
"Operating Loss" means any loss resulting from cash shortages, lost or misposted
items, disputed clerical and accounting errors, forged checks, payment of checks
over stop payment orders, counterfeit money, wire transfers made in error,
theft, robberies, employee dishonesty, defalcations, check kiting, fraudulent
use of credit cards or electronic teller machines, civil money penalties, fines,
litigation, claims, arbitration awards or other similar acts or occurrences.
3.31 CRA STANDING. CCB's compliance under the Community Reinvestment Act
(the "CRA") should not constitute grounds for either the denial by any
regulatory agency of any application to consummate the Transactions contemplated
by this Agreement or the imposition of a materially burdensome condition in
connection with the approval of any such application. CCB has not been advised
of any concerns regarding compliance with the CRA by any regulatory agency or
any other person.
3.32 ACCURACY AND CURRENTNESS OF INFORMATION FURNISHED. The
representations and warranties made by CCB hereby and in the schedules hereto
contain no statements of fact which are untrue or misleading, or omit to state
any material fact which is necessary under the circumstances to prevent the
statements contained herein or in such schedules from being misleading. CCB
hereby covenants that it shall, as of the Effective Time of the Merger, amend
and/or supplement the schedules prepared and delivered pursuant to this Article
III to ensure that the information set forth in such schedules accurately
reflects the then-current status of CCB.
3.33 EFFECTIVE DATE OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Each representation, warranty, covenant and agreement of CCB set
forth in this Agreement shall be deemed to be made on and as of the date hereof
and, as subsequently amended and/or supplemented as provided in Section 3.32, as
of the Effective Time of the Merger.
15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF WSB
WSB hereby represents and warrants to CCB as follows:
4.1 ORGANIZATION, STANDING AND POWER. WSB is a California corporation,
duly organized, validly existing and in good standing under the laws of the
State of California and WSB has all requisite corporate power and authority to
own, lease and operate its properties and assets and to carry on its business as
presently conducted. Neither the scope of the business of WSB nor the location
of any of its properties requires that it be licensed to do business in any
jurisdiction other than the State of California.
4.2 CAPITALIZATION. The authorized capitalization of WSB consists of
10,000,000 shares of Preferred Stock, no par value, of which no shares are
issued and outstanding, and 10,000,000 shares of Common Stock, no par value, of
which 3,354,824 shares are issued and outstanding as of the date of this
Agreement. As of the date of this Agreement, WSB Stock was held by approximately
1,600 shareholders of record and the WSB Stock was registered under the Exchange
Act. All of the outstanding shares of the WSB Stock are, and when issued in
exchange for the CCB Stock will be, validly issued, fully paid and
nonassessable.
4.3 SUBSIDIARIES. Except for LCB, WSNB, and Sentinel Associates, Inc.
(collectively, the "WSB Subsidiaries"), WSB does not own, directly or indirectly
(except as pledged pursuant to loans which are not in default or for shares held
by the WSB Subsidiaries as the result of any foreclosure by the WSB Subsidiaries
on any loan, which shares do not exceed 4.9% of the outstanding common stock of
any such company), any outstanding stock or other voting interests in any
corporation, partnership, joint venture or other entity. LCB is a California
state banking corporation, duly organized, validly existing and in good standing
under the laws of the State of California. WSNB is national banking association,
duly authorized, validly existing and in good standing under the laws of the
United States. Sentinel Associates, Inc. is a California corporation, duly
organized, validly existing and in good standing under the laws of the State of
California. LCB and WSNB are "insured banks" as defined in Section 3(h) of the
FDI Act; and the WSB Subsidiaries have all requisite corporate power and
authority to own, lease and operate their properties and assets and carry on
their businesses as presently conducted. Neither the scope of the business of
the WSB Subsidiaries nor the location of any of their properties require that
they be licensed or qualified to do business in any jurisdiction other than the
State of California. The shares of the WSB Subsidiaries' common stock held by
WSB are free and clear of all security interests, encumbrances, restrictions,
claims or other defects in title.
4.4 AUTHORITY. The execution and delivery by WSB of this Agreement and
the consummation of the Transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of WSB. The
Agreement is, and the Merger Agreement will be, binding and enforceable
obligations of WSB and New CCB, respectively, except as enforceability thereof
may be limited by bankruptcy, insolvency, moratorium or similar laws affecting
the rights of creditors generally or California corporations, or by general
equitable principles, or by 12 U.S.C. Section 1818(b)(6)(D). Neither the
execution and delivery by WSB of this Agreement, nor the consummation of the
Transactions contemplated herein, nor compliance by WSB with any of the
provisions hereof will: (i) conflict with, or result in a breach of, any
provision of its Articles of Incorporation or Bylaws; or (ii) except as set
forth in SCHEDULE 4.4, constitute a material breach of, or result in a material
default, or give rise to any rights of termination, cancellation or
acceleration, or give rise to any right by any other person or entity to acquire
any security interest in any assets under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, franchise, license, permit,
agreement or other instrument or obligation to which WSB and the WSB
Subsidiaries or any of their properties or assets are subject. No consent or
approval of, notice to, or filing with any governmental authority having
jurisdiction over any aspect of the business or assets of WSB and the WSB
Subsidiaries, and no consent or approval of, or notice to any other person or
entity, is required in connection with the execution and delivery by WSB of this
Agreement or by New CCB of the Merger Agreement or the consummation by WSB of
the Transactions contemplated hereby or thereby, except: (i) approval of this
Agreement and the Merger Agreement by the sole shareholder of New CCB; (ii) such
approvals of this Agreement, the Merger Agreement, and the Transactions
contemplated herein and therein as may be required by the FRB pursuant to the
BHCA, the FDIC pursuant to the Bank Merger Act and the Commissioner pursuant to
Section 700 ET SEQ. and Section 4880 ET SEQ. of the California Financial Code;
and (iii) as set forth on SCHEDULE 4.4.
16
4.5 FINANCIAL STATEMENTS. Except as disclosed in the notes relating
thereto, or otherwise on SCHEDULE 4.5, the audited consolidated financial
statements of WSB as of and for the periods ended December 31, 1999 and 2000, as
well as the unaudited consolidated financial statements of WSB as of and for the
periods ended September 30, 2000 and 2001, attached hereto as SCHEDULE 4.5 (all
of these statements are collectively referred to herein as the "WSB Financial
Statements"): (i) fairly and accurately present the financial condition of WSB
as of the dates thereof and the results of operations and its cash flows for the
periods therein set forth; (ii) have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved; and (iii) are based on the books and records of WSB. WSB's reserves
for possible loan losses as disclosed in the WSB Financial Statements dated
September 30, 2001 were adequate as of such dates to absorb reasonably
anticipated losses in the loan portfolio of WSB in view of the size and
character of such portfolio, then current economic conditions, and other
pertinent factors; and no facts have subsequently come to the attention of
management of WSB which would cause management to restate as of such date in any
material way the level of such reserves for possible loan losses. With respect
to other real estate owned by WSB, the value attributed thereto for purposes of
preparing the WSB Financial Statements does not exceed the aggregate fair market
value of such real estate as of the date of acquisition of such real estate or
as subsequently reduced, all in accordance with generally accepted accounting
principles. With regard to investments owned by WSB, the value attributed
thereto for purposes of preparing the WSB Financial Statements is in accordance
with generally accepted accounting principles.
4.6 UNDISCLOSED LIABILITIES. Except for the disclosures contained in
SCHEDULE 4.6, neither WSB nor the WSB Subsidiaries have any liabilities or
obligations, either accrued or contingent, which are material to WSB and which
have not been reflected or disclosed in the WSB Financial Statements. Neither
WSB nor the WSB Subsidiaries know of any basis for the assertion against them of
any liability, obligation or claim (including, without limitation, that of any
regulatory authority) that is reasonably likely to result in or cause any
material adverse change in the business or financial condition of WSB which is
not fairly reflected in the WSB Financial Statements or otherwise disclosed in
SCHEDULE 4.6 hereto.
4.7 TITLE TO ASSETS. Except for liens for current taxes not yet due and
payable and except as disclosed in the WSB Financial Statements or in SCHEDULE
4.7 hereto, WSB and the WSB Subsidiaries have good, valid and marketable title
to all material properties and assets, other than real property and securities
pledged to secure public deposits or retail repurchase agreements, owned or
stated to be owned by WSB or any of the WSB Subsidiaries and reflected on the
WSB Financial Statements, or acquired after December 31, 2000 (except properties
sold or otherwise transferred in the ordinary course of business since December
31, 2000), free and clear of all mortgages, liens, encumbrances, pledges or
charges of any kind or nature.
4.8 ENVIRONMENTAL LIABILITIES. To the best of WSB's knowledge, except as
set forth on SCHEDULE 4.8, no properties of WSB or the WSB Subsidiaries or
properties in which WSB or the WSB Subsidiaries hold a collateral or contingent
interest or purchase option, are the subject of any pending or threatened
investigation, claim or proceeding relating to the use, storage or disposal on
such property of or contamination of such property by any toxic or hazardous
waste material or substance. To the best of WSB's knowledge, WSB or the WSB
Subsidiaries do not own, possess or have a collateral or contingent interest or
purchase option in any properties or other assets which contain or have located
within or thereon any hazardous or toxic waste material or its use thereon
conforms in all material respects with all federal, state and local laws, rules,
regulations or other provisions regulating the discharge of materials into the
environment. As to any real property now owned or leased by WSB or the WSB
Subsidiaries and held as security for a loan or in which WSB or the WSB
Subsidiaries otherwise have an interest, to the best of WSB's knowledge, WSB or
the WSB Subsidiaries have not controlled, directed or participated in the
operation or management of any such real property or any facilities or
enterprise conducted thereon, such that or they have become an owner or operator
of such real property under applicable environmental laws.
4.9 LOANS AND INVESTMENTS. Except as disclosed in SCHEDULE 4.9 hereto:
(i) all the loans and investments of WSB and the WSB Subsidiaries are legal,
valid and permitted under federal and state laws and regulations applicable at
the time of their origination or assumption; and (ii) WSB and the WSB
Subsidiaries are not subject to any liability or claim for violation of any
state or federal law or regulation concerning extensions of credit, including,
without limitation, those relating to discriminatory lending practices and
truth-in-lending. Except as set forth in SCHEDULE 4.9, none of such investments
is subject to any restriction, contractual, statutory or other, that
17
would materially impair the ability of WSB and the WSB Subsidiaries to dispose
freely of any such investment at any time, except restrictions on the public
distribution or transfer of such investments under the Securities Act or state
securities laws. Except as set forth in SCHEDULE 4.9, as of December 31, 2000
and September 30, 2001, neither WSB nor the WSB Subsidiaries had holdings of
positions in Derivative Instruments. Except as set forth in SCHEDULE 4.9, since
January 1, 1999, neither WSB nor the WSB Subsidiaries have engaged in any
transactions in or involving Derivative Instruments except as agent on the
order and for the account of others. SCHEDULE 4.9 sets forth for each
Derivative Instrument held by WSB or the WSB Subsidiaries since January 1,
1999, the present book value and market value, if applicable, the open exposure
of the WSB Subsidiaries, if any, and whether any counterparties to any contract
or agreement with respect to any such instrument is in default with respect to
such contract or agreement.
4.10 LITIGATION AND GOVERNMENTAL PROCEEDINGS. Except as otherwise
expressly disclosed in SCHEDULE 4.10, neither WSB nor the WSB Subsidiaries: (i)
are engaged in, or, to the best of WSB's knowledge, threatened with, any legal
action or other proceeding before any court or administrative agency which might
be material to its business or in which the amount claimed against it is
$100,000 or more; (ii) are in material default of any of its duties or
obligations under, or with respect to, any judgment, order, writ, injunction or
decree of any court or governmental department, commission, board, bureau,
agency or other instrumentality having jurisdiction over WSB or its business;
(iii) have been served with written notice of and is not, to the best knowledge
of WSB, under investigation with respect to, any material violation of any
provision of federal, state or local laws, rules, or regulations; or (iv) are
subject to any order, letter agreement or written direction of any governmental
agency with respect to its financial or operating ratios, or with respect to any
other standards or tests imposed by state and federal laws and regulations,
including, without limitation, those relating to net worth, liquidity and the
maintenance of reserves, nor, to the best of WSB's knowledge, has any such
order, letter agreement or written direction been proposed to WSB or any of the
WSB Subsidiaries. SCHEDULE 4.10 contains a list identifying any claims pending
on behalf of WSB or any of the WSB Subsidiaries against the Small Business
Administration (the "SBA"), any other governmental agencies, or any third
parties for reimbursement for loan defaults, indicating the date of the claim,
the name of the borrower, and the amount of the claim.
4.11 PERFORMANCE OF OBLIGATIONS. Except as disclosed in SCHEDULE 4.11,
WSB and the WSB Subsidiaries have performed in all material respects all of the
material obligations required to be performed by them to date and WSB or the WSB
Subsidiaries are not in default in any material respect under any agreement,
contract or lease to which they are a party or subject or are otherwise bound
and which are material to the financial condition of WSB and the WSB
Subsidiaries; and no party with whom WSB or the WSB Subsidiaries have an
agreement which is of material importance to the business of WSB is in material
default thereunder.
4.12 INSURANCE. Except as set forth in SCHEDULE 4.12, WSB and the WSB
Subsidiaries have in full force and effect policies of insurance, including,
without limitation, a banker's blanket bond, with respect to its assets and
business and against such casualties and contingencies and of such amounts,
types and forms as are appropriate for its business, operations, properties and
assets and as are usual and customary in the banking industry. Set forth in
SCHEDULE 4.12 hereto is a schedule of all policies of insurance (other than
title insurance) carried and owned by WSB and the WSB Subsidiaries; showing the
name of the insurance company, the nature of the coverage, the policy limit, the
annual premiums and the expiration dates. Since commencing business, WSB and the
WSB Subsidiaries have continually maintained a fidelity bond insuring them
against acts of dishonesty by their respective employees in such amounts as are
disclosed in SCHEDULE 4.12.
4.13 ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE 4.13 or
as permitted by this Agreement, since December 31, 2000, the business of WSB and
the WSB Subsidiaries have been conducted diligently and only in the ordinary
course, in the same manner as heretofore conducted and there has not been:
(a) Any change (other than changes affecting financial institutions
generally, including changes in interest rates, laws or regulations) in
the financial condition of WSB and the WSB Subsidiaries which has been
materially adverse;
(b) Any damage, destruction or loss (whether or not covered by
insurance) which individually or taken as a whole materially adversely
affects the property, business or prospects of WSB or the WSB
Subsidiaries;
18
(c) Any change in accounting methods or practices of WSB or the WSB
Subsidiaries other than required by generally accepted accounting
principles;
(d) Any revaluation by WSB of any of WSB's or any WSB
Subsidiary's assets except as may be applicable to
available-for-sale securities;
(e) Any sale, assignment or transfer of any material assets
of WSB or any WSB Subsidiary except in the ordinary course of
business;
(f) Any waiver or release of any material right or claim of
WSB or any WSB Subsidiary, except in the ordinary course of
business; or
(g) Any agreement to take any action specified in Sections
4.13(a) through (f) hereof.
4.14 BROKERS' AND FINDERS' FEES. Neither WSB, nor any WSB Subsidiary, nor
any of their officers or employees have paid or agreed to pay, or have done any
act which would give rise to the payment of, any fee, commission or
consideration to any agent, broker, finder or other person on account of
services rendered as a broker or finder in connection with this Agreement or the
Transactions, or which has resulted in, or may give rise to, any obligation on
the part of WSB, any WSB Subsidiary or CCB therefor. WSB agrees to indemnify and
hold CCB harmless from and against any and all claims, liabilities, or
obligations with respect to any brokers' or finders' fees, commissions, or
expenses asserted by any person on the basis of any act or statement alleged to
have been made by WSB or its affiliates.
4.15 EMPLOYEES. Except as disclosed in SCHEDULE 4.15, there are no
material controversies pending or, to the best of WSB's knowledge, threatened
between WSB, the WSB Subsidiaries and any of their employees. Except as
disclosed in the consolidated WSB Financial Statements, all material sums due
for employee compensation and benefits have been duly and adequately paid or
accrued on the books of WSB.
4.16 REGULATORY REPORTS. Except as disclosed in SCHEDULE 4.16, since
January 1, 0000, XXX and the WSB Subsidiaries have filed all reports, returns,
registrations and statements, together with any amendments required to be made
with respect thereto (such reports, filings and amendments referred to
hereinafter as "WSB Filings"), that were required to be filed with: (i) the
Commissioner; (ii) the FDIC; (iii) the Federal Reserve; (iv) the Securities and
Exchange Commission (the "SEC"); (v) the Office of the Comptroller of the
Currency (the "OCC"); and (vi) any other applicable regulatory agency, except
where the failure to file such reports, returns, registrations and statements
has not had and is not reasonably expected to have a material adverse effect on
the business, properties, financial condition, results of operations or
prospects of WSB. Except as otherwise set forth in SCHEDULE 4.16, no
administrative actions have been taken or orders issued in connection with such
WSB Filings and as of their respective dates, each of such WSB Filings: (i)
complied in all material respects with all rules and regulations promulgated by
the regulatory agency with which it was filed (or was amended so as to be so
promptly following discovery of any such noncompliance); and (ii) 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. Any
financial statement contained in any of such WSB Filings that was intended to
present the financial position of each WSB Subsidiary or WSB fairly presented
the financial position of the WSB Subsidiary or WSB and was prepared in
accordance with generally accepted accounting principles or banking regulations
and/or securities rules and regulations, as applicable, consistently applied,
except as stated therein, during the periods involved. WSB has furnished CCB
with true and correct copies of all WSB Filings filed by the WSB Subsidiaries or
WSB since January 1, 1999.
4.17 WSB EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AND LABOR CONTRACTS.
(a) Except as disclosed in SCHEDULE 4.17 there are no employee
benefit plans or any collective bargaining agreements, labor contracts and
employment agreements in which WSB or the WSB Subsidiaries participate, or
by which they are bound, including, without limitation: (i) any profit
sharing, deferred compensation, bonus, stock option, stock purchase,
pension, ESOP, retainer consulting, retirement, welfare or incentive plan
or agreement whether legally binding or not; (ii) any written
19
employment agreement and any other employment agreement whether written
or oral; or (iii) any other "employee benefit plan" [within the meaning of
Section 3(3) of "ERISA"] (collectively, the "WSB Employment Agreements").
Except as set forth in SCHEDULE 4.17: (i) there are no negotiations,
demands or proposals that are pending or, to the best of WSB's knowledge,
threatened that concern matters now covered, or that would be covered, by
any employment agreements or employee benefit plans other than amendments
to plans qualified under Section 401 of the Code that are required by the
Tax Reform Act of 1986 and later legislation; (ii) WSB and the WSB
Subsidiaries are in material compliance with the requirements prescribed
by any and all rules and regulations currently in effect including but
not limited to ERISA and the Code applicable to all such employee benefit
plans; (iii) WSB and the WSB Subsidiaries are in compliance in all
material respects with all other rules and regulations applicable to
employee benefit plans and employment agreements; (iv) WSB and the WSB
Subsidiaries have performed all of their obligations under all such
employee benefit plans and employment agreements; and (v) there are no
actions, suits or claims pending or, to the best of WSB's knowledge,
threatened against any such employee benefit plans, the assets of such
plans, or with respect to any employment agreements, and, to the best
knowledge of WSB, no facts exist which could give rise to any actions,
suits or claims (other than routine claims for benefits) against such
plans or the assets of such plans or WSB or any WSB Subsidiary on account
of any such employment agreements, whether written or oral.
(b) Except as disclosed in SCHEDULE 4.17, the "employee pension
benefit plans" (within the meaning of Section 312 of ERISA) described in
SCHEDULE 4.17 of WSB and the WSB Subsidiaries have been duly authorized by
the Board of Directors of WSB or of the applicable WSB Subsidiary. Except
as disclosed in SCHEDULE 4.17, each such plan and associated trust is
qualified in form and operation under Section 401(a) and exempt from tax
under Section 501(a) of the Code, respectively, and, to the best knowledge
of WSB, no event has occurred that will or is reasonably likely to give
rise to disqualification of any such plan or loss of the exemption from
tax of any such trust under said sections. To the best knowledge of WSB,
no event has occurred that will or is reasonably likely to subject any
such plans to tax under Section 511 of the Code. None of such plans has
engaged in a merger or consolidation with any other plan or transferred
assets or liabilities from any other plan. To the best knowledge of WSB,
no prohibited transaction (within the meaning of Section 409 or 502(i) of
ERISA or Section 4975 of the Code) or party-in-interest transaction
(within the meaning of Section 406 of ERISA) has occurred with respect to
any of such plans. To the best knowledge of WSB, no employee of WSB or any
WSB Subsidiary has engaged in any transactions which could subject WSB or
any WSB Subsidiary to indemnify such person against liability. All costs
of plans have been provided for on the basis of consistent methods in
accordance with sound actuarial assumptions and practices. To the best
knowledge of WSB, no employee benefit plan has incurred any "accumulated
funding deficiency" (as defined in ERISA), whether or not waived, taking
into account contributions made within the period described in Section
412(c)(10) of the Code; nor, to the best knowledge of WSB, are there any
unfunded amounts under any employee benefit plan; nor, to the best
knowledge of WSB, has WSB or any WSB Subsidiary failed to make any
contributions or pay any amount due and owing as required by law or the
terms of any employee benefit plan or employment agreement. Subject to
amendments that are required by the Tax Reform Act of 1986 as amended and
later legislation, since the last valuation date for each employee pension
benefit plan, there has been no amendment or change to such plan that, to
the best knowledge of WSB, would increase the amount of benefits
thereunder.
(c) WSB and WSB Subsidiaries do not sponsor or participate in, and
have not sponsored or participated in, any employee benefit pension plan
to which Section 4021 of ERISA applies that would create a liability under
Title IV of ERISA.
(d) WSB and the WSB Subsidiaries do not sponsor or participate in,
and have not sponsored or participated in, any employee benefit pension
plan that is a "multi-employer plan" (within the meaning of Section 3(37)
of ERISA) that would subject WSB or the WSB Subsidiaries to any liability
with respect to any such plan.
(e) All group health plans of WSB and the WSB Subsidiaries
(including any plans of affiliates of WSB or the WSB Subsidiaries that
must be taken into account under Section 162(i) or (k) of the Code as in
effect immediately prior to the Technical and Miscellaneous Revenue Act of
1988 and Section 4980B of the Code) have been operated in compliance with
the group health plan continuation
20
coverage requirements of Section 4980B of the Code to the extent such
requirements are applicable.
(f) There have been no acts or omissions by WSB or the WSB
Subsidiaries that have given rise to or, to the best knowledge of WSB or
the WSB Subsidiaries, may give rise to fines, penalties, taxes, or related
charges under Sections 502(c) or (i) or 4071 of ERISA or Chapter 43 of the
Code.
(g) Except as disclosed in Section 4.12(j), WSB and the WSB
Subsidiaries do not maintain any employee benefit plan or employment
agreement pursuant to which any benefit plan or other payment will be
required to be made by WSB or the WSB Subsidiaries or pursuant to which
any other benefit will accrue or vest in any director, officer or employee
of WSB or any WSB Subsidiary, in either case as a result of the
consummation of the transactions contemplated by the Agreement.
(h) To the best knowledge of WSB, no "reportable event," as defined
in ERISA, has occurred with respect to any of the employee benefit plans.
(i) To the best knowledge of WSB, all amendments required to bring
each of the employee benefit plans into conformity with all of the
provisions of ERISA and the Code and all other applicable laws, rules and
regulations have been made.
(j) Except for the persons named in SCHEDULE 4.17, no director,
officer or employee of WSB or of any WSB Subsidiary is entitled to receive
any benefit or any payment of any amount under any existing employment
agreement, severance plan or other benefit plan as a result of the
consummation of any transaction contemplated in this Agreement, and with
respect to each such person, WSB has included in SCHEDULE 4.17 the nature
of such benefit or the amount of such payment, the event triggering the
benefit or payment, and the date of, and parties to, such employment
agreement, severance plan or other benefit plan.
4.18 ABSENCE OF CERTAIN PRACTICES. Except as disclosed in SCHEDULE 4.18,
to the best knowledge of WSB, neither WSB nor the WSB Subsidiaries, nor any
officer, director, employee or agent of WSB or of the WSB Subsidiaries has,
directly or indirectly, within the past three years, given or made or agreed to
give or make any illegal commission, payment, gratuity, gift, political
contribution or similar benefit to any customer, supplier, governmental employee
or other person in order to obtain business for or further the business of WSB
or of the WSB Subsidiaries.
4.19 NO VIOLATION OF LAW. WSB and the WSB Subsidiaries are in substantial
compliance with all material laws relating to their business or employment
practices or the ownership of their properties, and are in substantial
compliance with each material law, ordinance, order, decree or regulation of any
governmental entity applicable to the conduct thereof or the ownership of the
properties related thereto, except in each case for violations which either
individually or in the aggregate do not and will not have a material adverse
effect on the business, properties, financial condition, results of operations
or prospects of WSB and the WSB Subsidiaries.
4.20 CERTAIN INTERESTS. Except as disclosed in SCHEDULE 4.20, except in
arm's-length transactions pursuant to normal commercial terms and conditions:
(i) no officer or director of WSB or any WSB Subsidiary has any material
interest in any property, real or personal, tangible or intangible, used in or
pertaining to the business of WSB or any of the WSB Subsidiaries except for the
normal rights of a shareholder of WSB; (ii) no such person is indebted to WSB or
to any WSB Subsidiary except for normal business expense advances or lending
transactions in the ordinary course of business on the same terms, including
interest rates and collateral on loans as those prevailing at the same time for
comparable transactions with others; and (iii) WSB and the WSB Subsidiaries are
not indebted to any such person except for amounts due under normal salary or
reimbursement of ordinary business expenses. Except as disclosed in SCHEDULE
4.20, the consummation of the Transactions contemplated hereby will not (either
alone, or upon the occurrence of any act or event, or with the lapse of time, or
both) result in any payment (severance or other) becoming due from WSB or from
the WSB Subsidiaries to any employee of WSB or the WSB Subsidiaries.
4.21 MINUTE BOOKS. The minute books of WSB and the WSB Subsidiaries
accurately reflect all material actions duly taken by the shareholders, Boards
of Directors and committees of WSB or of the WSB
21
Subsidiaries, as applicable, and contain true and complete copies of Articles
of Incorporation and Bylaws and all amendments thereto of WSB and the WSB
Subsidiaries.
4.22 ACCOUNTING RECORDS; DATA PROCESSING. WSB and the WSB Subsidiaries
have records that, in all material respects, fairly reflect their transactions
and accounting controls sufficient to ensure that such transactions are in all
material respects: (i) executed in accordance with management's general or
specific authorization; and (ii) recorded in conformity with generally accepted
accounting principles.
4.23 OPERATING LOSSES. Except as disclosed in SCHEDULE 4.23, there is no
individual Operating Loss (as defined below) in excess of $50,000 that has
occurred at WSB or at any of the WSB Subsidiaries during the period after
December 31, 2000. Except as disclosed on SCHEDULE 4.23, since December 31,
2000, no event has occurred, and no action has been taken or omitted to be taken
by any employee of WSB or any WSB Subsidiary that has resulted in the incurrence
by WSB or by any of the WSB Subsidiaries of an Operating Loss or that might
reasonably be expected to result in the incurrence by WSB or by any WSB
Subsidiary of an Operating Loss after December 31, 2000, which, net of any
insurance proceeds payable in respect thereof, exceeds, or would exceed $50,000
by itself or $100,000 when aggregated with all other Operating Losses during
such period.
4.24 CRA STANDING. The WSB Subsidiaries' compliance under the CRA should
not constitute grounds for either the denial by any regulatory agency of any
application to consummate the Transactions contemplated by this Agreement or the
imposition of a materially burdensome condition in connection with the approval
of any such application. The WSB Subsidiaries have not been advised of any
concerns regarding compliance with the CRA by any regulatory agency or any other
person.
4.25 ACCURACY AND CURRENTNESS OF INFORMATION FURNISHED. The
representations and warranties made by WSB hereby and in the schedules hereto
contain no statements of fact which are untrue or misleading, or omit to state
any material fact which is necessary under the circumstances to prevent the
statements contained herein or in such schedules from being misleading. WSB
hereby covenants that it shall, as of the Effective Time of the Merger, amend
and/or supplement the schedules prepared and delivered pursuant to this Article
IV to ensure that the information set forth in such schedules accurately
reflects the then-current status of WSB and the WSB Subsidiaries.
4.26 EFFECTIVE DATE OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Each representation, warranty, covenant and agreement of WSB set
forth in this Agreement shall be deemed to be made on and as of the date hereof
and, as subsequently amended and/or supplemented as provided in Section 4.20, as
of the Effective Time of the Merger.
ARTICLE V
COVENANTS OF CCB PRIOR TO CLOSING
CCB hereby covenants and agrees with WSB as follows:
5.1 BUSINESS RECORDS AND INFORMATION. During the period commencing on the
date hereof, and ending on the Closing Date, CCB will afford WSB, its
representatives, counsel, accountants, agents and employees reasonable access
during normal business hours to all of its business, operations, properties,
books, files and records and will do everything reasonably necessary to enable
WSB and its representatives, counsel, accountants, agents and employees to make
a complete examination of the financial statements, business, operations, assets
and properties of CCB and the conditions thereof, and to update such examination
at such reasonable intervals as WSB shall deem appropriate. Such examination
shall be conducted in cooperation with the officers of CCB in such a manner as
to minimize, to the extent possible consistent with the conducting of a
comprehensive examination, any disruption of or interference with the normal
business operations of CCB. No such examination or WSB's examination prior to
the date of this Agreement, however, shall constitute a waiver or relinquishment
on the part of WSB of its right to rely upon the representations, warranties or
covenants made by CCB herein or pursuant hereto. CCB will permit an authorized
representative or representatives of WSB, designated as such from time to time
by WSB's President (the "WSB Representative") access during normal business
hours to all of its business, operations, properties, books, files and records
for the additional purpose of rendering any approvals required of WSB by CCB
pursuant to Section 5.2. In addition, CCB shall provide WSB and the WSB
Representative with three days' notice of all regular
22
meetings of its Board of Directors and notice, at the same time notice is given
to members, of any committee meeting, and the earliest possible notice of all
special meetings of its Board of Directors. CCB will permit the WSB
Representative to attend and observe all Board and committee meetings (except
during confidential discussions regarding the Merger), and CCB shall indemnify
and hold harmless WSB, New CCB and the WSB Representative in connection with
actions taken by CCB: (i) pursuant to any approvals obtained pursuant to
Section 5.2; or (ii) during any Board or committee meetings attended and
observed by the WSB Representative. It is agreed and acknowledged by CCB that
any such indemnification may be deemed a material adverse change pursuant to
Section 8.3 hereof. CCB will hold in strict confidence all documents and
information concerning WSB or the WSB Subsidiaries obtained pursuant to the
disclosure Schedules of Article IV hereof or pursuant to Section 6.1 and will
not use such documents or information for its own benefit (except to the extent
that such documents or information are a matter of public record or require
disclosure in any application necessary to obtain regulatory approval of the
Transactions contemplated by this Agreement) and, if the Transactions
contemplated herein are not consummated, such confidence shall be maintained
and all such documents and any documents provided pursuant to Section 6.3(c)
shall be returned to WSB, without any copies being retained by CCB and CCB
shall destroy any document, memoranda, notes and other writings whatsoever
prepared by CCB or any of its agents relating to or containing the confidential
information promptly upon notice by WSB. Upon request by WSB, such destruction
shall be certified in writing to WSB by an authorized officer of CCB
supervising such destruction.
5.2 LIMITATIONS UPON CCB PRIOR TO CLOSING. Except as required by this
Agreement, between the date hereof and the Closing Date, without the prior
written consent of WSB, which shall not be unreasonably withheld and which shall
be deemed granted if within five days after receipt of written request refusal
of such written consent is not received from WSB by CCB, CCB shall not do any of
the following:
(a) Create or take action to incur any liabilities in excess of
$10,000 or having a term in excess of one year, other than liabilities
incurred in the usual and ordinary course of business or in connection
with the creation or performance of this Agreement;
(b) Except in the usual and ordinary course of business, create or
incur or suffer to exist any mortgage, lien, pledge, security interest,
charge, encumbrance or restriction of any kind against or in respect of
any property or right of CCB securing an obligation in excess of $10,000
or having a term in excess of one year, and except for a pledge of
security interests given in connection with the acceptance of repurchase
agreements or government deposits;
(c) Make or become a party to any contract or commitment in excess
of $10,000 or having a term in excess of one year, or renew, extend, amend
or modify any contract or commitment in excess of $10,000, except in the
usual and ordinary course of business or except in connection with the
Transactions contemplated in this Agreement or the Merger Agreement;
(d) Make any loan, loan commitment, or renewal or extension thereof
("Loan") to any person or entity, which, individually or when aggregated
with all other outstanding Loans made by CCB to such person or entity,
exceeds $250,000 if the Loan is unsecured or is secured but is an
exception to CCB's Loan Policy, or exceeds $500,000 if the Loan is secured
and in conformity to CCB's Loan Policy, or make any Loan to any of its
directors or executive officers;
(e) Purchase any loan participation interest in excess of $250,000;
(f) File a notice of default on any delinquent real estate secured
loan with a principal balance of $250,000 or more;
(g) Make any capital expenditures in excess of $10,000, except for
ordinary and necessary repairs and replacements;
(h) Sell or otherwise dispose of any of its assets or properties in
excess of $10,000 in value, except in the usual and ordinary course of its
business, or charge off any of its assets or properties in excess of
$10,000 in value;
23
(i) Declare or pay any dividend (cash, in kind, or stock) or make
any other distribution upon, or purchase or redeem, any shares of CCB
Stock;
(j) Except as contemplated herein, issue or sell or obligate itself
to issue or sell any shares of CCB Stock or any other securities
including, without limitation, any capital notes, or any warrants, rights
or options to acquire any shares of CCB Stock or other securities
otherwise than pursuant to this Agreement; except pursuant to the exercise
of the stock options set forth in Schedule 3.24;
(k) Acquire capital stock of any corporation or any interest in any
person except in the usual and ordinary course of its business;
(l) Amend its Articles of Incorporation or Bylaws, except for such
amendments as contemplated by this Agreement;
(m) Grant any salary increase over 5% or enter into or amend, except
as may be required by applicable law, any bonus, incentive compensation,
deferred compensation, pension, profit sharing, retirement, group
insurance or other benefit plan or any employment agreement or consulting
agreement or amend its Personnel Policy where the individual or aggregate
cost to CCB is increased, except as approved by WSB, which approval shall
not be unreasonably withheld;
(n) Pay any obligation or liability, absolute or contingent, in
excess of $25,000 except liabilities shown on the CCB Financial
Statements, or except in the usual and ordinary course of business or in
connection with the Transactions contemplated herein;
(o) Institute, settle or agree to settle any claim, action or
proceeding involving an expenditure by CCB or waiver of its claims in
excess of $25,000 before any court or governmental agency, except in the
usual and ordinary course of its business;
(p) Invest in any real estate except upon the foreclosure of loans
in the ordinary course of business, or acceptance of a deed in lieu of
foreclosure, in the ordinary course of business;
(q) Except in the usual and ordinary course of its business, enter
into any continuing contract or series of related contracts in excess of
$10,000 for the purchase of materials, supplies, equipment or services
which cannot be terminated without cause and without payment of any amount
as a penalty, bonus, premium or other compensation for such termination;
(r) Except as contemplated in Section 5.8 hereof, enter into or
amend any contract or agreement (other than loans or bank accounts) with
any officer, director or any affiliate of such person on terms that are
less favorable to CCB than could be obtained from an unrelated third party
on an arm's-length basis;
(s) File any applications for additional branches or to relocate
operations from any existing location, except as contemplated herein;
(t) Change any of CCB's basic policies and practices with respect to
liquidity management and cash flow planning, marketing, deposit
origination, lending, budgeting, profit and tax planning, personnel
practices, accounting or any other material aspect of its business or
operations, except such change as may be required in the opinion of CCB's
management to respond to economic or market conditions or as may be
required by the rules of the AICPA or FASB, by applicable law, or by bank
regulatory authorities;
(u) Introduce any material new products or services, or commence any
material new marketing campaigns or any material new sales compensation or
incentive programs or arrangements, except as approved by WSB, which
approval shall not be unreasonably withheld;
(v) Knowingly default in any material respect under any
Understanding to which CCB is a
24
party, and which, individually or together with other Understandings with
respect to which a default by CCB exists, would materially adversely
affect the business, properties, financial condition, results of
operations or prospects of CCB;
(w) Conduct its business in a manner that would violate its Articles
of Incorporation or Bylaws or would materially violate or be in material
conflict with any law, ordinance, rule or regulation of any applicable
federal or state authority; provided, however, that no exception to this
Section 5.2(w) shall constitute a waiver of any rights of WSB under any
other provision of this Agreement; or
(x) Take any action that is intended or may reasonably be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time of the Merger, or in any of the conditions to
the Merger set forth in Articles IX or X not being satisfied, or in a
material violation of any provision of this Agreement, except, in every
case, as may be required by applicable law.
5.3 AFFIRMATIVE CONDUCT OF CCB PRIOR TO CLOSING. Between the date hereof
and the Closing Date, CCB shall:
(a) Use its best efforts to obtain as expeditiously as possible and
cooperate with others to expeditiously bring about the satisfaction of the
conditions and approvals specified in Articles VII, VIII, IX and X hereof
and advise WSB promptly in writing of any matter which would make the
representations and warranties set forth in Article III hereof not true
and correct in all material respects at the Closing;
(b) Use and devote its best efforts consistent with this Agreement
to maintain and preserve intact its present business organization and to
maintain and preserve its relationships and goodwill with account holders,
borrowers, employees and others having business relationships with it;
(c) Carefully prepare or review and make available to WSB prior to
filing, all federal, state and local tax returns and reports to government
authorities regarding CCB required to be filed by it between the date
hereof and the Closing;
(d) Furnish WSB with such financial and other information with
respect to CCB and its properties, business and operations as in the
reasonable opinion of WSB, counsel for WSB and counsel for CCB shall be
necessary in order to prepare applications for and obtain the permits,
approvals, nondisapprovals, consents and authorizations referred to in
Article X hereof; such information will not 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 information contained
therein not misleading;
(e) Provide WSB and the WSB Representative with CCB's monthly Board
package and all committee meeting packages at the time provided to CCB's
directors (excluding any confidential information regarding the
Transactions contemplated hereby);
(f) Provide WSB all monthly new loan reports, all monthly past due
loan reports, all listings of any new loans placed on non-accrual, all
monthly watchlist reports, and all listings of loans greater than $50,000
that have been downgraded within two days of when such reports are
prepared;
(g) Provide WSB with five days' notice and, subject to any
limitation or prohibition of any so-called "right to privacy" law, a copy
of the applicable credit report prior to making any Loan to any person or
entity which, individually or when aggregated with all other outstanding
Loans made by CCB to such person or entity, exceeds $250,000;
(h) Provide WSB with five days' notice prior to purchasing or
selling any loan participation interest;
(i) Provide WSB with five days' notice prior to initiating any
action to foreclose on real estate or personal property collateral and
provide WSB with monthly status reports on all foreclosed properties;
25
(j) Provide WSB with qualified appraisals on all newly acquired
foreclosed properties and on all existing foreclosed properties where
appraisals are or become more than 12 months old;
(k) Maintain insurance coverage at least equal to that now in effect
on all of its properties and on all properties for which it is
responsible, and carry not less than the same coverage for fidelity,
directors and officers, public liability, personal injury and property
damage that is presently in effect;
(l) Duly observe and conform to lawful requirements applicable to
its business in all material respects;
(m) Maintain its books of account and records in the regular manner
consistent with past practices and, where applicable, in all material
respects in accordance with generally accepted accounting principles and
applicable statutory and regulatory requirements applied on a consistent
basis;
(n) Following receipt of regulatory approval and the satisfaction of
all other conditions precedent to the Closing and immediately prior to the
Effective Time of the Merger, CCB shall, if permissible under and subject
to compliance with generally accepted accounting principles and the rules
and regulations of applicable regulatory authorities, taking into account
the consummation of the Merger, increase its reserves for possible loan
losses by $100,000;
(o) Notify WSB by telephone, confirmed promptly in writing, of any
breach or violation on CCB's part of any covenant contained herein, or of
the occurrence of an event which would cause any warranties or
representations made by CCB herein to be or become false or misleading, or
if CCB becomes a party or is threatened with becoming a party to any legal
or equitable proceeding or governmental investigation, or upon the
occurrence of any event which would result in a material change in the
circumstances of CCB described in the representations and warranties
contained herein; and
(p) Take all actions reasonably necessary, including seeking
regulatory approvals, to consummate the acquisition of the Branches as
soon as possible, but not more than 45 days, after the Closing.
5.4 INDEMNIFICATION. CCB hereby agrees to indemnify and hold harmless WSB
against, and with respect to, any liability, damages, losses, expenses or costs
arising from or by virtue of any misstatement or omission to state any fact
which is required to be disclosed by CCB for purposes of the inclusion of such
information in any regulatory filing made on behalf of the parties hereto for
the purpose of effecting the terms of this Agreement and consummating the
Transactions contemplated herein and for any material breach of any
representation, warranty, covenant or agreement of CCB under this Agreement.
5.5 EXECUTE MERGER AGREEMENT. As soon as possible after receipt of
shareholder and regulatory approvals, CCB shall execute the Merger Agreement.
26
5.6 DISCUSSION WITH THIRD PARTIES.
(a) STRATEGIC TRANSACTIONS. CCB: (i) shall not, and shall instruct
and cause each of its directors, officers, employees, agents,
representatives and advisors ("Representatives") not to, solicit or
encourage, directly or indirectly, inquires or proposals with respect to
any CCB Strategic Transaction Proposal (as hereinafter defined); and (ii)
except as expressly permitted by Section 5.6(b), shall not, and shall
instruct and cause each of its Representatives not to, furnish any
non-public information relating to or participate in any negotiations,
discussions or other activities concerning, any CCB Strategic Transaction
Proposal with any party other than WSB. CCB shall notify WSB promptly
after any CCB Strategic Transaction Proposal is received by, or any
negotiations or discussions regarding a CCB Strategic Transaction Proposal
are sought to be initiated, directly or indirectly, with CCB or any of its
Representatives, and shall disclose to WSB the identity of the third party
making or seeking to make such CCB Strategic Transaction Proposal, the
terms and conditions thereof and such other information as WSB reasonably
may request; provided, however, that if CCB receives a CCB Strategic
Transaction Proposal and the foregoing disclosure of such CCB Strategic
Transaction Proposal to WSB would violate a confidentiality agreement by
which CCB is bound, CCB: (i) shall make the foregoing disclosure only to
the maximum extent permissible under such confidentiality agreement; (ii)
shall return such CCB Strategic Transaction Proposal to the initiating
party without substantive response; and (iii) to the extent such
disclosure has not been made under clause (i) of this sentence, shall
notify WSB that a CCB Strategic Transaction Proposal has been received and
that the same has been returned to the initiating party without
substantive response. For purposes of this Section 5.6, a "CCB Strategic
Transaction Proposal" means any proposal regarding an acquisition or
purchase of all or a significant (i.e., more than 5%) portion of the
assets of or a significant equity interest in, CCB or any merger or other
business combination involving CCB or any recapitalization involving CCB
resulting in an extraordinary dividend or distribution to CCB's
shareholders or a self-tender for or redemption of some or all of the
outstanding shares of CCB Stock.
(b) QUALIFYING PROPOSAL. Notwithstanding Section 5.6(a), following
receipt of a CCB Qualifying Strategic Transaction Proposal (as hereinafter
defined), neither CCB nor any of its Representatives shall be prohibited
from: (i) engaging in discussions or negotiations with a third party which
has made a proposal that satisfies the requirements of a CCB Qualifying
Strategic Transaction Proposal and thereafter providing to such third
party information previously provided or made available to WSB, provided
the third party shall have entered into a confidentiality agreement; (ii)
taking and disclosing to CCB's shareholders a position contemplated by
Rule 14e-2(a) under the Exchange Act, or otherwise making disclosure of
the CCB Qualifying Strategic Transaction Proposal to CCB's shareholders;
or (iii) subject to the terms of Section 11.1(d), terminating this
Agreement. For purposes of this Section 5.6, a "CCB Qualifying Strategic
Transaction Proposal" shall mean a bona fide written CCB Strategic
Transaction Proposal with respect to which CCB's Board of Directors shall
have determined, after consultation with CCB's counsel, that the action by
CCB contemplated under either clause (i), (ii) or (iii), as applicable, of
the immediately preceding sentence is required under the fiduciary duties
owed by the Board of Directors to the holders of CCB Stock, which
determination has been made acting in good faith and on the basis of a
written opinion from a financial advisor retained by CCB to the effect
that the financial terms of such CCB Strategic Transaction Proposal are,
from CCB's shareholders' perspective, superior to the Merger.
(c) DISCLOSURE AND TRADING. Upon receipt of the disclosure by WSB
of a WSB Strategic Transaction Proposal (as that term is defined in
Section 6.6(a) hereof) involving WSB or any subsidiary thereof or a WSB
Acquisition Transaction (as that term is defined in Section 6.6(c)
hereof), CCB, its executive officers and directors shall, and each hereby
agrees to, maintain the confidentiality of all non-public information
regarding the WSB Strategic Transaction Proposal involving WSB or any
subsidiary thereof or the WSB Acquisition Transaction to the same extent
as required of WSB and/or any subsidiary thereof under the terms of any
confidentiality agreement to which WSB and/or any subsidiary is a party or
is bound and to refrain from trading in WSB Stock, CCB Stock and the
securities of the party or parties to the WSB Strategic Transaction
Proposal or the WSB Acquisition Transaction until the earlier of: (i) full
public disclosure of such non-public
27
information has been made and trading in the subject securities would not
be a violation of applicable securities laws; or (ii) the WSB Strategic
Transaction Proposal or the WSB Acquisition Transaction has been
terminated or has expired by its terms and disclosure of such non-public
information is permitted under the terms of any agreement regarding the
transaction and trading in the subject securities would not be a
violation of applicable securities laws.
5.7 CCB STOCK OPTIONS. CCB shall make payments required to be made to
holders of CCB Stock Options pursuant to Section 1.6 immediately prior to the
Effective Time of the Merger. CCB shall take all steps necessary and appropriate
such that any CCB Stock Options not purchased by CCB and not exercised prior to
the Effective Time of the Merger shall be terminated by CCB or expire as of the
Effective Time of the Merger.
5.8 CCB PROXY MATERIALS. The proxy statement, notice of meeting, form of
proxy and/or any other materials or documents (collectively, the "CCB Proxy
Materials") to be used in connection with the CCB shareholders' meeting (the
"CCB Meeting") required pursuant to Section 7.1 hereof, with respect to all
information set forth therein relating to CCB, the Agreement, the Merger
Agreement and the Transactions, at the time of mailing to shareholders and at
the time of the CCB Meeting, shall:
(a) Comply in all material respects with the provisions of
all applicable laws and regulations; and
(b) Except with respect to any information regarding WSB or the WSB
Subsidiaries supplied to CCB by WSB for inclusion in the CCB Proxy
Materials, not contain any statement which, at the time and in light of
the circumstances under which it is made, is false or misleading with
respect to any material fact or not 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 CCB Meeting or subject
matter that has become false or misleading.
ARTICLE VI
COVENANTS OF WSB PRIOR TO CLOSING
WSB hereby covenants and agrees with CCB as follows:
6.1 BUSINESS RECORDS AND INFORMATION. During the period commencing on the
date hereof, and ending on the Closing Date, WSB will afford CCB, its
representatives, counsel, accountants, agents and employees reasonable access
during normal business hours to all of its business, operations, properties,
books, files and records and will do everything reasonably necessary to enable
CCB and its representatives, counsel, accountants, agents and employees to make
a complete examination of the financial statements, business, operations, assets
and properties of WSB and the WSB Subsidiaries and the conditions thereof, and
to update such examination at such intervals as CCB shall deem appropriate. Such
examination shall be conducted in cooperation with the officers of WSB or the
WSB Subsidiaries in such a manner as to minimize, to the extent possible
consistent with the conducting of a comprehensive examination, any disruption of
or interference with the normal business operations of WSB or the WSB
Subsidiaries. No such examination or CCB's examination prior to the date of this
Agreement, however, shall constitute a waiver or relinquishment on the part of
CCB of its right to rely upon the representations, warranties or covenants made
by WSB herein or pursuant hereto. WSB shall use its best efforts to have the WSB
Representative or another authorized representative available during CCB's
normal business hours to render approvals required pursuant to Section 5.2. WSB
will hold in strict confidence all documents and information concerning CCB
obtained pursuant to the disclosure Schedules of Article III hereof or pursuant
to Section 5.1 and will not use such documents or information for its own
benefit (except to the extent that such documents or information are a matter of
public record or require disclosure in any application necessary to obtain
regulatory approval of the Transactions contemplated by this Agreement) and, if
the Transactions contemplated herein are not consummated, such confidence shall
be maintained and all such documents and any documents provided pursuant to
Section 5.3(d) shall be returned to CCB, without any copies being retained by
WSB and WSB shall destroy any document, memoranda, notes and other writings
whatsoever prepared by WSB or any of its agents relating to or containing the
confidential information promptly upon notice by CCB. Upon request by CCB, such
destruction shall be certified in writing to CCB by an authorized officer of WSB
supervising such destruction.
6.2 LIMITATIONS UPON WSB PRIOR TO CLOSING. Except as required by this
Agreement, between the date hereof and the Closing Date, without the prior
written consent of CCB, which shall not be unreasonably
28
withheld and which shall be deemed granted if within five days after receipt of
written request refusal of such written consent is not received from CCB by
WSB, WSB and, as applicable, the WSB Subsidiaries, shall not do any of the
following:
(a) Declare or pay a stock dividend of WSB Stock in excess of 5% (it
being recognized and understood that WSB may declare a stock dividend of
up to 5%, which dividend will not affect the number of shares of WSB Stock
issuable pursuant to this Agreement);
(b) Repurchase more than 10% of the outstanding shares of WSB Stock
(it being recognized and understood that WSB may continue its practice of
limited stock repurchases, which repurchases will not affect the number of
shares WSB Stock issuable pursuant to this Agreement);
(c) Knowingly default in any material respect under any
Understanding to which WSB or a WSB Subsidiary is a party, and which,
individually or together with other Understandings with respect to which a
default by WSB or a WSB Subsidiary exists, would materially adversely
affect the business, properties, prospects, financial condition, results
of operations or prospects of WSB and the WSB Subsidiaries; or
(d) Conduct their businesses in a manner that would violate their
respective Articles of Incorporation, Articles of Association or Bylaws or
would materially violate or be in material conflict with any law,
ordinance, rule or regulation of any applicable federal or state
authority; provided, however, that no exception to this Section 6.2(d)
shall constitute a waiver of any rights of CCB under any other provision
of this Agreement.
6.3 AFFIRMATIVE CONDUCT OF WSB PRIOR TO CLOSING. Between the date hereof
and the Closing Date, WSB shall:
(a) Use its best efforts to obtain as expeditiously as possible and
cooperate with others to expeditiously bring about the satisfaction of the
conditions and approvals specified in Articles VII, VIII, IX and X hereof,
including the organization of New CCB and approval of New CCB's sole
shareholder, and advise CCB promptly in writing of any matter which would
make the representations and warranties set forth in Article IV hereof not
true and correct in all material respects at the Closing;
(b) Use and devote its best efforts consistent with this Agreement
to maintain and preserve intact its present business organization and to
maintain and preserve its relationships and goodwill with account holders,
borrowers, employees and others having business relationships with it;
(c) Furnish CCB with such financial and other information with
respect to WSB and its properties, business and operations as in the
reasonable opinion of CCB, counsel for CCB and counsel for WSB shall be
necessary in order to prepare applications for and obtain the permits,
approvals, nondisapprovals, consents and authorizations referred to in
Article X hereof; such information will not 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 information contained
therein not misleading;
(d) Maintain its and the WSB Subsidiaries' insurance coverage at
least equal to that now in effect on all of their properties and on all
properties for which they are responsible, and carry the same coverage for
fidelity, directors and officers, public liability, personal injury and
property damage that is presently in effect;
(e) Duly observe and conform to lawful requirements applicable to
its and the WSB Subsidiaries' business in all material respects;
(f) Maintain its and the WSB Subsidiaries' books of account and
records in the regular manner in accordance with generally accepted
accounting principles, with all applicable statutory and regulatory
requirements applied on a consistent basis;
(g) Notify CCB by telephone, confirmed promptly in writing, of any
breach or violation on
29
WSB's part of any covenant contained herein, or of the occurrence of an
event which would cause any warranties or representations made by WSB
herein to be or become false or misleading, or if WSB becomes a party or
is threatened with becoming a party to any legal or equitable proceeding
or governmental investigation, or upon the occurrence of any event which
would result in a change in the circumstances of WSB described in the
representations and warranties contained herein; and
(h) Take all actions reasonably necessary, including seeking
regulatory approvals, to consummate the sale by WSNB of the Branches as
soon as possible, but not more than 45 days, after the Closing.
6.4 INDEMNIFICATION. WSB hereby agrees to indemnify and hold harmless CCB
against, and with respect to, any liability, damages, losses, expenses or costs
arising from or by virtue of any misstatement or omission to state any fact
which is required to be disclosed by WSB for purposes of the inclusion of such
information in any regulatory filing made on behalf of the parties hereto for
the purpose of effecting the terms of this Agreement and consummating the
Transactions contemplated herein and for any material breach of any
representation, warranty, covenant or agreement of WSB under this Agreement.
6.5 EXECUTE MERGER AGREEMENT. As soon as possible after receipt of
shareholder and regulatory approvals, WSB shall cause New CCB to execute the
Merger Agreement.
6.6 DISCUSSION WITH THIRD PARTIES.
(a) STRATEGIC TRANSACTIONS. Except as provided in Section 6.6(c),
WSB and the WSB Subsidiaries: (i) shall not, and shall instruct and cause
each of their Representatives not to, solicit or encourage, directly or
indirectly, inquires or proposals with respect to any WSB Strategic
Transaction Proposal (as hereinafter defined); and (ii) except as
expressly permitted by Section 6.6(b), shall not, and shall instruct and
cause each of their Representatives not to, furnish any non-public
information relating to or participate in any negotiations, discussions or
other activities concerning, any WSB Strategic Transaction Proposal with
any party other than CCB. WSB and the WSB Subsidiaries shall notify CCB
promptly after any WSB Strategic Transaction Proposal is received by, or
any negotiations or discussions regarding a WSB Strategic Transaction
Proposal are sought to be initiated with, directly or indirectly, WSB or
the WSB Subsidiaries or any of their Representatives, and shall disclose
to CCB the identity of the third party making or seeking to make such WSB
Strategic Transaction Proposal, the terms and conditions thereof and such
other information as CCB reasonably may request; provided, however, that
if WSB or any of the WSB Subsidiaries receives a WSB Strategic Transaction
Proposal and the foregoing disclosure of such WSB Strategic Transaction
Proposal to CCB would violate a confidentiality agreement by which WSB or
the WSB Subsidiaries are bound, WSB: (i) shall make the foregoing
disclosure only to the maximum extent permissible under such
confidentiality agreement: (ii) shall return such WSB Strategic
Transaction Proposal to the initiating party without substantive response:
and (iii) to the extent such disclosure has not been made under clause (i)
of this sentence, shall notify CCB that a WSB Strategic Transaction
Proposal has been received and that the same has been returned to the
initiating party without substantive response. For purposes of this
Section 6.6, a "WSB Strategic Transaction Proposal" means any proposal
regarding an acquisition or purchase of all or a significant (i.e., more
than 5%) portion of the assets of or a significant equity interest in, WSB
or any of the WSB Subsidiaries, or any merger or other business
combination involving WSB or any of the WSB Subsidiaries, or any
recapitalization involving WSB or any of the WSB Subsidiaries resulting in
an extraordinary dividend or distribution to WSB's shareholders or a
self-tender for or redemption of more than 10% of the outstanding shares
of WSB Stock.
(b) QUALIFYING PROPOSAL. Notwithstanding Section 6.6(a), following
receipt of a WSB Qualifying Strategic Transaction Proposal (as hereinafter
defined), neither WSB, any of the WSB Subsidiaries, nor any of their
Representatives shall be prohibited from: (i) engaging in discussions or
negotiations with a third party which has made a proposal that satisfies
the requirements of a WSB Qualifying Strategic Transaction Proposal and
thereafter providing to such third party information previously provided
or made available to CCB, provided the third party shall have entered into
a confidentiality agreement; (ii) taking and disclosing to WSB's
shareholders a position contemplated by Rule 14e-2(a) under the Exchange
Act, or otherwise making disclosure of the WSB Qualifying Strategic
30
Transaction Proposal to WSB's shareholders; or (iii) subject to the terms
of Section 11.1(e) terminating this Agreement. For purposes of this
Section 6.6, a "WSB Qualifying Strategic Transaction Proposal" shall mean
a bona fide written WSB Strategic Transaction Proposal with respect to
which WSB's Board of Directors shall have determined, after consultation
with WSB's counsel, that the action by WSB contemplated under either
clause (i), (ii) or (iii), as applicable, of the immediately preceding
sentence is required under the fiduciary duties owed by the Board of
Directors to the holders of WSB Stock, which determination has been made
acting in good faith and on the basis of a written opinion from a
financial advisor retained by WSB to the effect that the financial terms
of such WSB Strategic Transaction Proposal are, from WSB's shareholders'
perspective, superior to the Merger.
(c) WSB ACQUISITION TRANSACTION. Notwithstanding Sections 6.6(a) or
(b) hereof, WSB or any of the WSB Subsidiaries shall be permitted to and
may cause their Representatives to solicit, encourage, discuss, negotiate,
enter into agreements, and carry out and complete transactions regarding a
WSB Acquisition Transaction (as hereinafter defined), provided, however,
that should WSB enter into or modify any agreement, or complete without
any agreement, any WSB Acquisition Transaction which has a material
adverse effect upon WSB or the Transactions contemplated by this Agreement
and the Merger Agreement without written approval of CCB, then such action
shall constitute a breach under this Agreement giving rise to a right of
termination by CCB in accordance with Section 11.1(e) of this Agreement.
For purposes of this Agreement, "WSB Acquisition Transaction" shall mean:
(i) a merger or consolidation or any similar transaction where WSB or any
of its subsidiaries will be the surviving or resulting corporation or
where the holders of WSB Stock or any of WSB's subsidiaries immediately
prior to the completion of the transaction will own 50% or more of the
surviving or resulting corporation immediately after the completion of the
transaction; (ii) a purchase, lease or other acquisition of all or
substantially all of the assets of or assumption of all or substantially
all the deposits of another corporation, partnership or limited liability
company which business is permissible under the BHCA, and Regulation Y
promulgated pursuant thereto; or (iii) the purchase or other acquisition
of securities representing 10% or more of the voting power of another
corporation, partnership or limited liability company which business is
permissible under the BHCA and Regulation Y promulgated pursuant thereto.
WSB shall promptly notify CCB of any WSB Acquisition Transaction and shall
disclose to CCB the identity of the party or parties to the transaction,
and the terms and conditions thereof. To the extent WSB makes a disclosure
of any non-public information to CCB, its executive officers and/or
directors, then CCB and its executive officers and directors shall, and
each hereby agrees to, maintain the confidentiality of all non-public
information regarding the WSB Acquisition Transaction so disclosed and to
refrain from trading in WSB Stock, CCB Stock and the securities of the
party or parties to the WSB Acquisition Transaction so disclosed in
accordance with the provisions of Section 5.6(c) hereof.
(d) DISCLOSURE AND TRADING. Upon receipt of the disclosure by CCB
of a CCB Strategic Transaction Proposal involving CCB, WSB, its executive
officers and directors shall, and each hereby agrees to, maintain the
confidentiality of all non-public information regarding the CCB Strategic
Transaction Proposal involving CCB to the same extent as required of CCB
under the terms of any confidentiality agreement to which CCB is a party
or is bound and to refrain from trading in WSB Stock, CCB Stock and the
securities of the party or parties to the CCB Strategic Transaction
Proposal until the earlier of: (i) full public disclosure of such
non-public information has been made and trading in the subject securities
would not be a violation of all applicable securities laws; or (ii) the
CCB Strategic Transaction Proposal has been terminated or has expired by
its terms and disclosure of such non-public information is permitted under
the terms of any agreement regarding the transaction and trading in the
subject securities would not be a violation of applicable securities laws.
6.7 PREPARATION OF WSB REGISTRATION STATEMENT AND THE CCB PROXY MATERIALS.
WSB shall promptly prepare and file with the SEC a Registration Statement on
Form S-4 (the "WSB Registration Statement"), in which the CCB Proxy Materials
will be included. Each of WSB and CCB shall use its best efforts to have the WSB
Registration Statement and any amendments or supplements thereto declared
effective under the Securities Act as promptly as practicable after such filing.
WSB shall also take any action (other than qualifying to do business in any
jurisdiction in which it is now not so qualified) required to be taken under any
applicable state securities laws in connection with the issuance of WSB Common
Stock in the Merger, and CCB shall furnish all information concerning CCB and
the holders of CCB Common Stock as may be reasonably requested in connection
with any such action.
31
6.8 WSB REGISTRATION STATEMENT. The WSB Registration Statement, with
respect to all information set forth therein relating to WSB, the Agreement, the
Merger Agreement and the Transactions, at the time of mailing to CCB's
shareholders and at the time of the CCB Meeting, shall:
(a) Comply in all material respects with the provisions of
all applicable laws and regulations; and
(b) Except with respect to any information regarding CCB supplied to
WSB by CCB for inclusion in the CCB Proxy Materials, not contain any
statement which, at the time and in light of the circumstances under which
it is made, is false or misleading with respect to any material fact or
not 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 same meeting or subject matter that has become false or
misleading.
6.9 COVENANT REGARDING BOARD OF DIRECTORS OF MERGED BANK. At the Closing,
WSB shall cause New CCB to deliver to CCB: (i) the written resignations as
directors of New CCB of all incumbent directors, except for Xxxxxxx Xxxxxx, Xxxx
Xxxxx and Xxxx X. Xxxx and a copy of resolutions duly adopted by its Board of
Directors, which copy shall be certified by its Corporate Secretary, providing
for the appointment of either nine or ten directors of CCB to the Board of
Directors of New CCB effective as of the Closing Date; and (ii) the written
resignations as officers of New CCB of all incumbent officers and a copy of
resolutions duly adopted by its Board of Directors, which copy shall be
certified by its Corporate Secretary, providing for the appointment of all
officers of CCB as officers of New CCB effective as of the Closing Date. For a
period of 2 years from the Effective Time of the Merger, WSB shall: (i) cause to
be elected to the Board of Directors of the Merged Bank, all incumbent directors
of Merged Bank as of the day after the Closing Date who so choose to be elected;
and (ii) not increase the total number of directors of the Merged Bank as of the
day after the Closing Date by more than five.
6.10 COVENANT REGARDING BOARD OF DIRECTORS OF WSB. WSB, through its Board
of Directors, shall nominate, recommend the election of, and include as nominees
for election along with other WSB director nominees in any management proxy
statement or other document which solicits WSB shareholder votes or consents to
elect WSB directors and otherwise use its best efforts to cause to be elected to
its Board of Directors for at least two years after the Effective Time of the
Merger the two members of CCB's Board of Directors designated pursuant to
Section 1.11 hereof.
ARTICLE VII
MEETING OF SHAREHOLDERS AND FEDERAL SECURITIES LAWS
CCB hereby covenants and agrees with WSB as follows:
7.1 SHAREHOLDERS' MEETING. CCB will, promptly after execution of this
Agreement, cause the CCB Meeting to be duly called and held upon requisite
notice and shall obtain shareholder approval:
(a) Authorizing and approving this Agreement and the
Transactions contemplated herein; and
(b) For such other business as its Board of Directors deems
advisable and proper in connection therewith.
CCB, through its Board of Directors, will, subject to the exercise of its
fiduciary duties, recommend that its shareholders approve the Transactions
contemplated hereby, and will use its best efforts to obtain the affirmative
votes of the holders of the largest possible percentage of its outstanding
shares of common stock.
7.2 FEDERAL SECURITIES LAWS. In obtaining the consent of its shareholders
to the matters described in Section 7.1 hereof, CCB and its officers, directors,
controlling shareholders, and representatives, will, in all respects,
32
comply with Sections 10 and 14 of the Exchange Act, the rules and regulations
of the SEC promulgated thereunder, the rules and regulations of the
Commissioner, and the securities laws of all states in which shareholders of
CCB reside, if required. Without in any way limiting the generality of the
forgoing, CCB agrees that the CCB Proxy Materials:
(a) Will be filed with, and not be used before the same are cleared
for use by the SEC and the Commissioner and CCB will cooperate with WSB in
connection with WSB's filings, if any, of applications for approvals and
the issuance of permits and orders for the distribution of WSB Stock to
CCB shareholders by the securities administrators of all states in which
CCB shareholders reside;
(b) Will contain all of the material information required by
the Exchange Act and the rules and regulations of the SEC and
Commissioner thereunder; and
(c) Will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, except that neither party
warrants the accuracy or completeness of any information contained therein
which is furnished to it by the other relating to the business, assets,
properties, financial condition or management of the other or any
corporation or person affiliated therewith.
WSB and CCB will use their respective best efforts to obtain clearance by
all appropriate regulatory authorities for the use of the CCB Proxy Materials.
WSB and CCB will consult and cooperate with the other in the preparation of the
WSB Registration Statement and the CCB Proxy Materials for the CCB Meeting.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF CCB
All obligations of CCB to consummate the Transactions contemplated herein
are subject to the satisfaction, on or before the Closing Date, of the following
conditions precedent, unless compliance with or the occurrence of any one or
more of such conditions precedent is waived in writing by CCB:
8.1 CONTINUED ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of WSB contained in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement.
8.2 PERFORMANCE OF OBLIGATIONS. WSB shall have performed and satisfied in
all material respects all of the covenants, agreements, obligations and
conditions required by this Agreement to be performed and satisfied by WSB at or
prior to the Closing Date.
8.3 ABSENCE OF MATERIAL CHANGES. Between the date of this Agreement and
the Closing Date there shall have been: (i) no damage, destruction, whether or
not covered by insurance (except damage, destruction or loss for which, prior to
the Closing Date, WSB has been compensated by insurance in such measure as to
fully cover the replacement or repair of all damage, destruction or loss) or
Operating Loss, materially and adversely affecting the business or prospects of
WSB; (ii) no material adverse change in the business, properties, financial
condition, results of operations or prospects of WSB; and (iii) an absence of
the institution of litigation involving WSB or any of its assets (including the
WSB Subsidiaries) which, if determined adverse to WSB or the WSB Subsidiaries,
would have a material adverse effect upon WSB taken as a whole, unless CCB shall
have received an opinion satisfactory to it of counsel handling such matter
stating that such action or proceeding will not, in all likelihood, have a
material adverse effect upon WSB.
8.4 OFFICERS' CERTIFICATE. There shall have been delivered to CCB at the
Closing a certificate executed by the President and Chief Executive Officer, by
the Corporate Secretary, and by the Chief Financial Officer of WSB certifying,
to the best of their knowledge, compliance by WSB with all of the provisions of
Sections 8.1, 8.2, 8.3, 8.6 and 8.7 of this Agreement.
33
8.5 FAIRNESS OPINION. The Board of Directors of CCB shall have received
an opinion of Xxxx Xxxxxxxxxx & Co., dated as of the date of this Agreement and
as of a date within three days prior to the mailing date of the CCB Proxy
Materials to the effect that the consideration in the form of WSB Stock and cash
or a combination thereof in the Merger is fair, from a financial point of view,
to CCB and its shareholders and such opinion shall not have been withdrawn prior
to the Closing Date.
8.6 APPOINTMENT OF WSB DIRECTORS. WSB shall have delivered to CCB at the
Closing a copy of resolutions duly adopted by its Board of Directors, which copy
shall be certified by its Corporate Secretary, providing for the appointment of
two of CCB's directors by WSB to the WSB Board of Directors, as required by
Section 1.11 hereof, effective as of the Closing Date.
8.7 APPOINTMENT OF NEW CCB DIRECTORS AND OFFICERS. New CCB shall have
delivered to CCB at the Closing: (i) the written resignations as directors of
New CCB of all incumbent directors, except for Xxxxxxx Xxxxxx, Xxxx Xxxxx and
Xxxx X. Xxxx; (ii) the written resignations as officers of New CCB of all
incumbent officers; (iii) a copy of resolutions duly adopted by its Board of
Directors, which copy shall be certified by its Corporate Secretary, providing
for the appointment of either nine or ten directors of CCB to the Board of
Directors of New CCB effective as of the Closing Date; and (iv) a copy of
resolutions duly adopted by its Board of Directors, which copy shall be
certified by its Corporate Secretary, providing for the appointment of all
officers of CCB as officers of New CCB effective as of the Closing Date.
8.8 CLOSING DOCUMENTS. WSB shall have delivered to CCB the Closing
documents required pursuant to the Closing Schedule, EXHIBIT "D," and Section
2.3 of this Agreement.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF WSB
All obligations of WSB to consummate the Transactions contemplated herein
are subject to the satisfaction, on or before the Closing Date, of the following
conditions precedent, unless compliance with or the occurrence of any one or
more of such conditions precedent is waived in writing by WSB:
9.1 CONTINUED ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of CCB contained in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement.
9.2 PERFORMANCE OF OBLIGATIONS. CCB shall have performed and satisfied in
all material respects all of the covenants, agreements, obligations and
conditions required by this Agreement to be performed and satisfied by CCB at or
prior to the Closing Date.
9.3 ABSENCE OF MATERIAL CHANGES. Between the date of this Agreement and
the Closing Date there shall have been: (i) no damage, destruction, whether or
not covered by insurance (except damage, destruction or loss for which, prior to
the Closing Date, CCB has been compensated by insurance in such measure as to
fully cover the replacement or repair of all damage, destruction or loss) or
Operating Loss, materially and adversely affecting the business or prospects of
CCB; (ii) no material adverse change in the business, properties, financial
condition, results of operations or prospects of CCB, including, but not limited
to, reduction in CCB's shareholders' equity below $4,700,000; and (iii) an
absence of the institution of litigation involving CCB or any of its assets
which, if determined adverse to CCB, would have a material adverse effect upon
CCB, unless WSB shall have received an opinion satisfactory to it of counsel
handling such matter stating that such action or proceeding will not, in all
likelihood, have a material adverse effect upon CCB. For purposes of this
Section 9.3, CCB's shareholders' equity shall be measured as of the last month
end preceding the Closing Date, adjusted for any known material changes not yet
reflected; provided, however, any changes to shareholders' equity from the
exercise of CCB Stock Options or CCB's cash payments for the purchase of CCB
Stock Options pursuant to the provisions of Section 1.6 hereof after the date
hereof shall be ignored.
9.4 AFFILIATE'S LETTERS. CCB shall have delivered to WSB Affiliate's
Letters, substantially in the form of EXHIBIT "C" hereto, signed by each of its
affiliates, in accordance with Section 1.13 hereof.
34
9.5 OFFICERS' CERTIFICATE. There shall have been delivered to WSB at the
Closing a certificate executed by the President and Chief Executive Officer, by
the Corporate Secretary, and by the Chief Financial Officer of CCB certifying,
to the best of their knowledge, compliance by CCB with all of the provisions of
Sections 9.1, 9.2, 9.3, 9.4 and 9.6 of this Agreement.
9.6 DIRECTOR'S AGREEMENTS. CCB shall have delivered to WSB, Director's
Agreements, substantially in the form of EXHIBIT "B" hereto, signed by each of
its directors, in accordance with Section 1.12 hereof.
9.7 CLOSING DOCUMENTS. CCB shall have delivered to WSB the Closing
documents required pursuant to the Closing Schedule, EXHIBIT "D," and Section
2.3 of this Agreement.
ARTICLE X
CONDITIONS PRECEDENT TO THE MERGER
The obligations of WSB and CCB to proceed with the Merger and the
Transactions provided for herein are subject to the fulfillment, at or prior to
the Effective Time of Merger, of the following conditions:
10.1 PERMITS AND APPROVALS. Appropriate permits or approvals from the
Commissioner, the FRB, the FDIC, and any other governmental agencies having
jurisdiction which are necessary to carry out the Transactions contemplated in
this Agreement, shall have been received without the imposition of any
conditions or requirements which, in the reasonable opinion of the affected
party, are materially burdensome or undesirable, and the United States
Department of Justice shall not have taken any adverse action within the period
allowed under 12 U.S.C. Section 1828(c)(6). Said permits and approvals shall be
on terms and conditions acceptable to WSB and CCB and shall include, but shall
not be limited to, the following:
(a) Issuance of a charter for New CCB by the Commissioner and
approval for federal deposit insurance by the FDIC;
(b) Prior written approval from the FRB for WSB to acquire
control of CCB pursuant to the BHCA;
(c) Prior written approval from the Commissioner for: (i)
WSB to acquire control of CCB pursuant to Financial Code Sections
700 ET SEQ. and (ii) New CCB to merge with CCB pursuant to Financial
Code Sections 4880 ET SEQ.;
(d) Prior written approval from the FDIC pursuant to 12
U.S.C. 1828(c)(2)(C);
(e) The declaration as effective by the SEC of the WSB Registration
Statement with respect to the shares of WSB Stock to be issued upon
consummation of the Merger;
(f) Prior written approval of and the issuance of any required
permits or orders related to any application or notification filing
required with any state securities administrator or the confirmation of an
exemption from a notification filing in connection with the distribution
of WSB Stock to CCB shareholders; and
(g) Any and all other actions required by the shareholders of CCB
and New CCB to authorize or effect the Transactions called for herein
shall have been duly and validly taken.
10.2 TAX RULING OR OPINION. Receipt by the parties of the opinion of
Xxxxx-Xxxxx, LLP to the effect that:
(a) The Merger constitutes a "reorganization" within the meaning of
IRC Section 368(a)(1)(A) by reason of the application of IRC Section
368(a)(2)(D);
35
(b) WSB, CCB and New CCB are each a "party" to a reorganization
within the meaning of IRC Section 368(b);
(c) Neither WSB, New CCB nor CCB will recognize federal taxable gain
or loss as a result of the Merger;
(d) The federal income tax basis and holding periods of the assets
exchanged between the parties to the Merger will be the same as the
federal income tax basis and holding periods of those assets prior to the
Merger;
(e) To the extent that CCB stockholders exchange CCB Stock in the
Merger solely for WSB Stock, (i) no gain or loss will be recognized on the
exchange, (ii) the federal income tax basis of the shares of WSB Stock
received by former holders of CCB Stock will equal the federal income tax
basis of such stockholders' shares of CCB Stock (reduced by any amount
allocable to fractional share interests for which cash is received)
exchanged, and (iii) the holding period for the shares of WSB Stock
received will include the holding period for the shares of CCB Stock
exchanged, provided that the CCB Stock exchanged was held as a "capital
asset" as such term is defined in IRC Section 1221;
(f) To the extent that holders of CCB Stock exchange CCB Stock in
the Merger solely for cash, (i) gain or loss will be recognized equal to
the difference between the amount of cash received and the federal income
tax basis in their shares of CCB Stock exchanged, and (ii) the nature of
the gain or loss recognized will be capital gain or loss if the shares of
CCB Stock exchanged were held as a capital asset;
(g) To the extent that holders of CCB Stock receive a combination of
cash and WSB Stock (other than cash in lieu of fractional shares), (i)
loss, if any, will not be recognized, (ii) gain, if any, will be
recognized in an amount equal to the lesser of (1) the difference between
the fair market value of all consideration received in the exchange (WSB
Stock plus cash) and the basis in the CCB Stock surrendered or (2) the
amount of cash received in the exchange; (iii) the federal income tax
basis of the WSB Stock received by holders of CCB Stock in the Merger will
be equal to the total federal income tax basis of the CCB Stock exchanged,
decreased by the amount of cash (other than cash received in lieu of
fractional share interests) received in the exchange, and increased by the
amount of gain recognized in the exchange, if any, and (iv) the holding
period of the WSB Stock received in the Merger will include the holding
period for which holders of CCB Stock held their CCB Stock provided, that
such CCB Stock was held as a capital asset; and
(h) To the extent that cash is received by holders of CCB Stock in
lieu of fractional share interests in WSB Stock, the cash will be treated
as being received by the holders of CCB Stock as a distribution in
redemption of such stockholders' fractional share interests, subject to
the provisions and limitations of IRC Section 302.
10.3 ABSENCE OF LITIGATION. On the Closing Date and at the Effective Time
of the Merger:
(a) There shall be no action pending before any court of competent
jurisdiction in which any injunction is sought by any governmental
authority against the Transactions contemplated hereby, unless WSB shall
have received an opinion satisfactory to it of counsel handling such
matter for WSB or CCB stating that such action or proceeding will not, in
all likelihood, result in a restraint or prohibition; and
(b) There shall be in effect no order, writ, injunction or decree of
any court or governmental authority prohibiting the consummation of any of
the Transactions contemplated hereby.
10.4 SHAREHOLDER APPROVALS.
(a) APPROVAL OF MERGER. This Agreement shall have been approved by
the holders of at least a majority of the issued and outstanding shares of
CCB Stock entitled to vote, and by at least a majority of the issued and
outstanding shares of New CCB Stock entitled to vote.
36
(b) OTHER ACTIONS. Any and all other actions required by the
shareholders of CCB and New CCB to authorize or effect the Transactions
called for herein shall have been duly and validly taken.
ARTICLE XI
TERMINATION
11.1 TERMINATION OF THIS AGREEMENT. This Agreement shall terminate and be
of no further force and effect as between the parties hereto, except as to
liability for a material breach of any representation, warranty or covenant
occurring or arising prior to the date of termination, upon the occurrence of
any of the following:
(a) Immediately upon the expiration of 30 days from the date that
WSB has given notice to CCB of breach or default by CCB in the performance
of any covenant, agreement, representation, warranty, duty or obligation
hereunder, including, but not limited to, the occurrence of any material
changes as set forth in Section 9.3 hereof; provided, however, that no
such termination shall be effective if, within said 30-day period, CCB
shall have substantially corrected and cured the grounds for the
termination as set forth in said notice of termination;
(b) Immediately upon the expiration of 30 days from the date that
CCB has given notice to WSB of breach or default by WSB in the performance
of any covenant, agreement, representation, warranty, duty or obligation
hereunder, including, but not limited to, the occurrence of any material
changes as set forth in Section 8.3 hereof; provided, however, that no
such termination shall be effective if, within said 30-day period WSB
shall have substantially corrected and cured the grounds for the
termination as set forth in said notice of termination;
(c) Upon the expiration of 30 days after the Commissioner, the FDIC,
the FRB or any other applicable regulatory agency denies or refuses in
writing to grant the approvals, nondisapprovals, consents, or
authorizations required to be obtained in order to consummate the
Transactions contemplated by this Agreement, unless within said 30-day
period the parties hereto agree to appeal or resubmit the application to
the regulatory authority which has denied or refused to grant such
approval, nondisapproval, consent, authorization or ruling, as the case
may be;
(d) Immediately after: (i) WSB is notified by CCB or WSB otherwise
becomes aware that, pursuant to Section 5.6, CCB has received a CCB
Qualifying Strategic Transaction Proposal; and (ii) payment by CCB to WSB
of the Termination Fee pursuant to Section 11.4(a) hereof;
(e) Immediately after: (i) CCB is notified by WSB or CCB otherwise
becomes aware that, pursuant to Section 6.6, WSB has received a WSB
Qualifying Strategic Transaction Proposal that is not a WSB Acquisition
Transaction; and (ii) WSB has provided CCB with evidence showing that WSB
has used its best efforts by taking all reasonable measures necessary to
provide for the inclusion of CCB in the WSB Qualifying Strategic
Transaction; and (iii) payment by WSB of the Termination Fee pursuant to
Section 11.4(a) hereof; provided, however, in the event WSB has received a
WSB Qualifying Strategic Transaction Proposal that is not a WSB
Acquisition Transaction and that does not require WSB to abandon the
Merger as a condition to the consummation of the transaction contemplated
by the WSB Qualifying Strategic Transaction Proposal, then this Agreement
will not be terminated and WSB shall not be obligated to pay CCB the
Termination Fee pursuant to Section 11.4(a) hereof; or (iv) WSB is
notified by CCB that WSB has breached this Agreement as set forth in
Section 6.6(c) and payment by WSB of the Termination Fee pursuant to
Section 11.4(a) hereof;
(f) By notice by WSB to CCB or by CCB to WSB, if the Closing has not
occurred on or before June 30, 2002, but subject to the expiration of any
statutory waiting periods following receipt of any required regulatory
approvals received prior to June 30, 2002, unless said date shall be
extended by the mutual agreement of the parties hereto and unless such
failure results primarily from any material breach pursuant to Sections
11.1(a) or (b) or by virtue of the events described in Sections 11.1(c),
(d) or (e);
(g) Upon the mutual agreement of the parties hereto; or
37
(h) By CCB, in CCB's discretion, should the WSB Average Price be
less than $11.40.
11.2 IMMATERIAL BREACH. Notwithstanding anything to the contrary
contained herein, no party hereto shall have the right to terminate this
Agreement on account of its own breach or due to any immaterial breach by any
other party hereto of any covenant, agreement, representation, warranty, duty or
obligation hereunder.
11.3 EFFECT OF TERMINATION. If this Agreement shall be terminated as
provided herein, each party shall redeliver all documents, work papers and other
material of the other party relating to the Transactions contemplated herein to
the party furnishing the same, except that the foregoing shall not apply to any
documents, work papers, material or information which is a matter of public
knowledge. No termination of this Agreement under this Article XI for any reason
or in any manner, except as permitted by Sections 11.1(f) and (g), shall
release, or be construed as so releasing, any party hereto from any liability or
damage to any other party hereto arising out of, in connection with or otherwise
relating to, directly or indirectly, said party's material and bad faith breach,
default or failure in performance of any of its covenants, agreements, duties or
obligations arising hereunder, or any breaches of any representation or warranty
contained herein; provided, however, neither party shall be liable to the other
for termination pursuant to Section 11.1(c) for the failure of the Commissioner,
the FDIC, the FRB, or any other applicable regulatory agency to grant the
approvals, nondisapprovals, consents, or authorizations required if the failure
is not the result of a material breach by that party of a representation,
warranty or covenant set forth in this Agreement. If, however, such termination
shall result from an election to terminate by WSB pursuant to Section 11.1(a),
then CCB shall pay to WSB, as reasonable and full liquidated damages and
reasonable compensation for the loss sustained thereby and not as a penalty or
forfeiture, the Liquidated Damages as set forth in Section 11.4(b). If, however,
such termination shall result from an election to terminate by CCB pursuant to
Section 11.1(b), then WSB shall pay to CCB, as reasonable and full liquidated
damages and reasonable compensation for the loss sustained thereby and not as a
penalty for forfeiture, the Liquidated Damages as set forth in Section 11.4(b).
If, however, such termination shall result from an election to terminate by WSB
or CCB pursuant to Section 11.1(d), then CCB shall pay to WSB the Termination
Fee pursuant to Section 11.4(a). If, however, such termination shall result from
an election to terminate by CCB or WSB pursuant to Section 11.1(e), then WSB
shall pay to CCB the Termination Fee pursuant to Section 11.4(a).
11.4 TERMINATION FEE AND LIQUIDATED DAMAGES.
(a) TERMINATION FEE. The Termination Fee shall be the amount of
$500,000 (the "Termination Fee") in the event this Agreement is terminated
pursuant to Section 11.1(d) or Section 11.1(e).
(b) LIQUIDATED DAMAGES. As reasonable and full liquidated damages
and reasonable compensation for the loss sustained and not as a penalty or
forfeiture in the event that this Agreement is terminated pursuant to
Section 11.1(a) or Section 11.1(b), the liquidated damages shall be the
amount of $500,000 (the "Liquidated Damages").
(c) EXCLUSIVE REMEDY. Except in the event the responsible party
fails to pay the Termination Fee or the Liquidated Damages, as applicable,
within ten business days after receipt of an invoice therefor, which
period shall be extended by an additional reasonable time if the
responsible party has reasonably disputed the existence or amount of such
obligations, timely receipt of such payment shall constitute an exclusive
remedy, and following such receipt and acceptance, the receiving party
shall be barred from recovering damages for any breach of any term of this
Agreement.
38
ARTICLE XII
GENERAL PROVISIONS
12.1 EXPENSES. WSB and CCB agree that WSB and CCB shall each bear their
own expenses incurred in connection with the negotiation, preparation, and
performance of this Agreement, including legal and accounting fees, printing
costs, filing fees, and other necessary expenses regardless of whether the
Merger or any of the Transactions contemplated under this Agreement are
consummated. By way of example, the parties agree that: (A) WSB shall bear the
expense of: (i) the preparation and delivery of the tax opinion; (ii) the
preparation of the WSB Registration Statement (except the CCB Proxy Materials),
including filing fees and fees related to conversion of the WSB Registration
Statement into electronic format for filing with the SEC; (iii) filing fees and
related costs of regulatory applications including approvals and permits or
orders of state securities administrators; (iv) organization expenses, filing
and other fees related to New CCB; (v) payments to any CCB dissenters who
perfect dissenters' rights in connection with the Transactions; and (vi) any
notifications and press releases to WSB shareholders including printing
expenses; and (B) CCB shall bear the expenses of: (i) the preparation and
delivery of the CCB Proxy Materials, including printing and mailing expenses;
(ii) the fairness opinion from Xxxx Xxxxxxxxxx & Co.; and (iii) any
notifications and press releases to CCB shareholders including printing and
mailing expenses.
12.2 NOTICES. All notices, demands or other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered in
person, or if sent by Federal Express, overnight delivery United States mail, or
other overnight delivery service, or sent by facsimile transmission (with
confirmation) addressed as follows:
(i) If to WSB, to:
Western Sierra Bancorp
0000 Xxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxx, President and CEO
Fax: (000) 000-0000
With a copy to:
Horgan, Rosen, Beckham & Coren, L.L.P.
00000 Xxxx Xxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: S. Xxxx Xxxxx, Esq.
Fax: (000) 000-0000
(ii) If to CCB, to:
Central California Bank
00000 Xxxx Xxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Mr. C. Xxxxxxxxx Xxxxxx, President and CEO
Fax: (000) 000-0000
With a copy to:
Coudert Brothers LLP
000 Xxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxx, Esq.
Fax: (000) 000-0000
The persons or addresses to which mailings or deliveries shall be made may
change from time to time by notice given pursuant to the provisions of this
Section 12.2. Any notice, demand or other communications given pursuant to the
provisions of this Section 12.2 shall be deemed to have been given on the date
actually delivered or the business day following the date sent by overnight
delivery, as the case may be.
39
12.3 SUCCESSORS AND ASSIGNS. All terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective transferees, successors and assigns; provided, however, that except
as otherwise contemplated hereby, this Agreement and all rights, privileges,
duties and obligations of the parties hereto may not be assigned or delegated by
any party hereto without the prior written consent of the other parties to this
Agreement.
12.4 THIRD PARTY BENEFICIARIES. CCB and WSB intend that this Agreement
shall not benefit or create any right or cause of action in or on behalf of any
person other than CCB or WSB.
12.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
12.6 GOVERNING LAW. This Agreement is made and entered into in the State
of California and the internal laws (without regard to the conflict of law
provisions thereof) of that state shall govern the validity and interpretation
hereof and the performance of the parties hereto of their respective duties and
obligations hereunder, except as required by applicable provisions of Title 12
of the United States Code.
12.7 CAPTIONS. The captions contained in this Agreement and the Exhibits
and Schedules hereto are for convenience of reference only and do not form a
part of or affect the interpretation of this Agreement.
12.8 EXHIBITS AND SCHEDULES. The Exhibits and confidential disclosure
Schedules attached hereto are an integral part of this Agreement and each
Exhibit and confidential disclosure Schedule shall be applicable as if set forth
in full in the text hereof only with respect to the sections of this Agreement
to which it is cross-referenced. In the event there is any absolute
unconditional representation contained in this Agreement, said representation
shall be modified by any contrary information set forth on a confidential
disclosure Schedule which expressly cross-references to the section where the
absolute or unconditional representation is contained.
12.9 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the parties hereto contained in this Agreement or any Exhibit or Schedule
hereto shall terminate after the Effective Time of the Merger and shall be of no
further force and effect. Nothing in this Article XII shall be construed as
limiting the applicable statute of limitations in the event the Transactions are
not consummated.
12.10 WAIVER AND MODIFICATION. No waiver of any term, provision or
condition of this Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed to be or construed as a further or continuing waiver
of any such term, provision or condition of this Agreement. This Agreement may
be modified or amended only by an instrument of equal formality signed by the
parties or their duly authorized agents.
12.11 ATTORNEYS' FEES. In the event any of the parties to this Agreement
brings an action or suit against any other party by reason of any breach of any
covenant, agreement, representation, warranty or other provision hereof, the
substantially prevailing party in whose favor final judgment is entered shall be
entitled to have and recover of and from the other party all reasonable costs
and expenses incurred or sustained by such prevailing party in connection with
such suit or action, including, without limitation, legal fees and court costs.
12.12 KNOWLEDGE. In all representations and warranties concerning the
best knowledge of CCB, WSB or the WSB Subsidiaries, wherever included herein,
there shall be imputed to CCB, WSB or WSB Subsidiaries the actual knowledge
after due inquiry and notice of their respective current directors, executive
officers and officers holding the titles or positions of Chief Financial Officer
or Senior Accounting Officer, Chief or Senior Credit Officer, or Loan Officer or
positions with substantially equivalent responsibilities.
12.13 ENTIRE AGREEMENT. The making, execution and delivery of this
Agreement by the parties hereto have been induced by no representations,
statements, warranties or agreements other than those herein expressed. This
Agreement embodies the entire understanding of the parties and there are no
further or other agreements or understandings, written or oral, in effect
between the parties relating to the subject matter hereof, unless expressly
referred to by reference herein.
12.14 CONSENTS. Any and all consents required to be obtained from any of
the parties hereto under this Agreement shall not be unreasonably withheld and
shall be deemed given unless the requesting party receives written notice to the
contrary from the party to whom such request is made within ten business days
after request therefor.
12.15 SEVERABILITY. If any portion of this Agreement shall be deemed by a
court of competent
40
jurisdiction to be unenforceable, the remaining terms hereof shall provide for
the consummation of the Transactions contemplated herein in substantially the
same manner as originally set forth at the date this Agreement was executed.
12.16 PRESS RELEASE. No press release or other public disclosure of
matters related to this Agreement of any of the Transactions contemplated hereby
shall be made by WSB, New CCB, or CCB unless the other parties shall have
provided their prior consent to the form and substance thereof; provided,
however, that nothing herein shall be deemed to prohibit any party hereto from
making any disclosure which its counsel deems necessary or advisable in order to
fulfill such party's disclosure obligations imposed by law.
12.17 ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or the breach hereof, and which arises after the effective date
of this Agreement, shall be settled by arbitration to take place in Sacramento,
California, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and judgment upon the award rendered by the arbitrator
or arbitrators may be entered in any court having jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
CENTRAL CALIFORNIA BANK WESTERN SIERRA BANCORP
By: /s/ C. Xxxxxxxxx Xxxxxx By: /s/ Xxxx X. Xxxx
--------------------------- ----------------------
C. Xxxxxxxxx Xxxxxx Xxxx X. Xxxx
Its: President and Chief Its: President and Chief
Executive Officer Executive Officer
By: /s/ Xxxxx Xxxxxxxxxxx By: /s/ Xxxxxx X. Xxxx
--------------------------- ----------------------
Xxxxx Xxxxxxxxxxx Xxxxxx X. Xxxx
Its: Corporate Secretary Its: Corporate Secretary
41
EXHIBIT "A"
MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement") is made this ___ day of
___________, 200__, by and between NEW CCB BANK, a California banking
corporation located at 00000 Xxxx Xxx, Xxxxxx, Xxxxxxxxxx 00000 (hereinafter
referred to as "New CCB"), and CENTRAL CALIFORNIA BANK, a California banking
corporation, located at 00000 Xxxx Xxx, Xxxxxx, Xxxxxxxxxx 00000 (hereinafter
referred to as "CCB"), with reference to the following:
R E C I T A L S
WHEREAS, CCB is a California banking corporation duly organized, validly
existing and in good standing under the laws of the State of California with an
authorized capitalization of 10,000,000 shares of common stock, no par value per
share, of which 612,738 shares are issued and outstanding;
WHEREAS, New CCB is a newly formed California banking corporation
established as a wholly-owned subsidiary of Western Sierra Bancorp, a California
corporation ("WSB") and is duly organized, validly existing and in good standing
under the laws of the State of California with ____ shares of its no par value
common stock outstanding;
WHEREAS, WSB and CCB have entered into that certain Agreement and Plan of
Reorganization dated _______________ ___, 2001 (the "Acquisition Agreement")
providing for the acquisition of CCB by WSB (the "Acquisition") through the
Merger of CCB with and into New CCB, under the Articles of Incorporation and
Bylaws of New CCB (the "Merger");
WHEREAS, both New CCB and CCB wish to complete the Acquisition by
consummating the Merger; and
WHEREAS, the Boards of Directors of each of WSB, CCB and New CCB have
approved this Agreement and have authorized its execution and delivery and the
sole shareholder of New CCB and the shareholders of CCB have approved this
Agreement and the transactions contemplated hereby;
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements set forth herein, the parties hereto hereby agree as follows:
A G R E E M E N T
SECTION 1. DEFINITIONS. All capitalized terms not otherwise defined
herein shall have the meanings specified in the Acquisition Agreement.
SECTION 2. MERGED BANK. At the Effective Time of the Merger, New CCB and
CCB shall be merged under the Articles of Incorporation and Bylaws of New CCB
(the "Merged Bank").
SECTION 3. CLOSING. The closing of the transactions contemplated hereby
(the "Closing"), unless another place is agreed in writing by the parties
hereto, shall take place at the main office of WSB in Cameron Park, at the time
and on the date fixed therefor pursuant to Section 2.1 of the Acquisition
Agreement.
SECTION 4. NAME. Prior to the Effective Time of the Merger, New CCB shall
file with the Commissioner a Certificate of Amendment (the "Certificate") of its
Articles of Incorporation changing its corporate name to "Central California
Bank," and thereafter file the Certificate with the California Secretary of
State effective as of the Closing Date. Immediately thereafter, a certified copy
of the Certificate shall be submitted to the Commissioner.
SECTION 5. BUSINESS; OFFICES. The business of the Merged Bank shall be
that of a California banking corporation. This business shall be conducted by
the Merged Bank at its main office located at 00000 Xxxx Xxx, Xxxxxx,
0
Xxxxxxxxxx 00000, and at its legally established branches and loan production
offices.
SECTION 6. CAPITAL. The capital accounts of the Merged Bank at the
Effective Time of the Merger shall be equal to the combined capital accounts of
CCB and New CCB, adjusted, however, for normal earnings, expenses and purchase
accounting adjustments up to the Effective Time of the Merger. The authorized
capitalization of the Merged Bank shall be 10,000,000 shares of common stock, no
par value per share.
SECTION 7. ASSETS; LIABILITIES. All assets of each of CCB and New CCB, as
they exist immediately prior to the Effective Time of the Merger, shall pass to
and vest in the Merged Bank without any conveyance or other transfer. The Merged
Bank shall be responsible for all of the liabilities of every kind and
description of each of CCB and New CCB existing as of the Effective Time of the
Merger.
SECTION 8. OUTSTANDING STOCK. Each share of CCB Stock issued and
outstanding immediately prior to the Effective Time of the Merger, on and after
the Effective Time of the Merger, without any further action on the apart of CCB
or the holders of CCB Stock, automatically shall be cancelled and cease to be an
issued and outstanding share of CCB Stock, and shall be converted into the right
to elect to receive newly issued shares of WSB Stock, cash or a combination
thereof equal to the Net Merger Consideration Price, subject to all terms and
conditions set forth in the Acquisition Agreement. Each share of the common
stock of New CCB shall be automatically converted into one share of the common
stock of the Merged Bank.
SECTION 9. DIVIDENDS. Neither New CCB nor CCB shall declare or pay any
dividend to its shareholders between the date of this Agreement and the
Effective Time of the Merger, or dispose of any of their assets in any other
manner except in the normal course of business and for adequate value.
SECTION 10. BOARD OF DIRECTORS; OFFICERS. The directors of New CCB at the
Effective Time of the Merger shall be the directors of the Merged Bank until
their successors have been chosen and qualified in accordance with the Articles
of Incorporation and the Bylaws of the Merged Bank. The officers of New CCB at
the Effective Time of the Merger shall be the officers of the Merged Bank until
their successors have been chosen and qualified in accordance with the Articles
of Incorporation and the Bylaws of the Merged Bank.
SECTION 11. CHARTER, ARTICLES OF INCORPORATION AND BYLAWS OF MERGED BANK.
The Charter, Articles of Incorporation and Bylaws of New CCB as in effect
immediately prior to the Effective Time of the Merger shall be the Charter,
Articles of Incorporation and Bylaws of the Merged Bank, subject to the
requirement of amending New CCB's Articles of Incorporation to effectuate a name
change effective as of the Closing Date pursuant to Section 4 of this Agreement
and Section 1.8 of the Acquisition Agreement.
SECTION 12. CONDITIONS. The obligations of the parties to proceed with
the Closing are subject to the satisfaction or waiver at or prior to the
Closing of all of the conditions to the Merger set forth herein and in the
Acquisition Agreement.
SECTION 13. TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(a) by the written agreement of New CCB, WSB and CCB;
(b) by New CCB or CCB if the Closing shall not have been
consummated on or before June 30, 2002, subject to the expiration of any
statutory waiting periods following receipt of any required regulatory approvals
received prior to June 30, 2002, or such other date, if any, upon which New CCB,
WSB and CCB may agree in writing; or
(c) automatically in the event the Acquisition Agreement is
terminated in accordance with its terms.
SECTION 14. APPROVALS. This Agreement has been approved and/or ratified
and confirmed by the affirmative vote of the holders a majority of CCB Stock
outstanding and, by the sole shareholder of New CCB, by unanimous written
consent or at a meeting held on the call of the Board of Directors; and the
Merger shall become effective when this Agreement and other required
certificates have been filed with the Commissioner, after having been filed with
the California Secretary of State and previously approved by the Commissioner as
provided in Section 2.2 of the Acquisition Agreement.
2
SECTION 15. MISCELLANEOUS.
(a) NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally (professional
courier acceptable) or mailed by registered or certified mail, return receipt
requested, or transmitted by facsimile transmission to the parties at the
following addresses:
If to New CCB:
New CCB
c/o Western Sierra Bancorp
0000 Xxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxx, President and CEO
Fax: (000) 000-0000
If to CCB:
Central California Bank
00000 Xxxx Xxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Mr. C. Xxxxxxxxx Xxxxxx, President and CEO
Fax: (000) 000-0000
(b) AGREEMENT AND PLAN OF REORGANIZATION UNAFFECTED. WSB
and CCB agree that nothing in this Agreement shall be deemed to change or
modify in any manner the provisions of the Acquisition Agreement.
(c) SUCCESSION. This Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective successors and assigns;
provided, however, that neither this Agreement nor any right hereunder may be
assigned by any party without the consent of the other party hereto.
(d) ENTIRE AGREEMENT; AMENDMENTS; ETC. This Agreement and the
Acquisition Agreement embody the entire agreement of the parties hereto with
respect to the subject matter hereof and supersede all prior agreements with
respect thereto. This Agreement may be amended, and any provision hereof waived,
but only in writing signed by the party against whom such amendment or waiver is
sought to be enforced. Except as otherwise expressly provided herein, no person
other than the parties hereto shall have any right hereunder or be entitled to
the benefit of any provision hereof.
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall together constitute one and the same instrument
and shall become effective when one or more counterparts hereof have been signed
by CCB and delivered to WSB, and one or more counterparts hereof have been
signed by WSB and delivered to CCB.
(f) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
3
WITNESS, the signatures of said merging companies this _____ day of
______________, 200__, each set by its President and Secretary, pursuant to a
resolution of its respective Board of Directors, acting by a majority and
verified by its Secretary.
NEW CCB BANK
By:
Xxxx X. Xxxx,
President and Chief Executive Officer
By:
Xxxxxx X. Xxxx,
Corporate Secretary
I further declare under penalty of perjury that the matters set forth in
this document are true and correct of my own knowledge.
-------------------------------
Xxxxxx X. Xxxx,
Corporate Secretary
CENTRAL CALIFORNIA BANK
By:
C. Xxxxxxxxx Xxxxxx,
President and Chief Executive Officer
By:
Xxxxx Xxxxxxxxxxx,
Corporate Secretary
I further declare under penalty of perjury that the matters set forth in
this document are true and correct of my own knowledge.
-------------------------------
Xxxxx Xxxxxxxxxxx,
Corporate Secretary
4
EXHIBIT "B"
DIRECTOR'S AGREEMENT
THIS DIRECTOR'S AGREEMENT (this "Director's Agreement"), is made as of
this ___ day of _______________, 2001, by and between Western Sierra Bancorp, a
California corporation ("WSB"), and the director of Central California Bank, a
California banking corporation ("CCB"), whose name is set forth under "Director"
on the signature page hereof (the "Director"). WSB is contemporaneously herewith
entering into agreements with other directors of CCB, which agreements are
identical in all respects hereto, except as to (a) the number of shares of CCB's
common stock, no par value (the "CCB Stock") owned by such other directors, and
(b) the name and address of the other directors. The Director and such other
persons shall hereinafter be referred to as to the "Directors" and this
Agreement and such other agreements as the "Director's Agreements." This
Director's Agreement is made with reference to the following:
R E C I T A L S
WHEREAS, that certain Agreement and Plan of Reorganization (the
"Agreement"), dated as of ________________ ___, 2001, entered into by and
between WSB and CCB, provides for the acquisition by WSB of one hundred percent
(100%) of the CCB Stock, through the merger (the "Merger") of CCB with a
wholly-owned subsidiary of WSB ("New CCB Bank"); and
WHEREAS, as a condition precedent to the obligations of WSB and CCB under
Section 1.12 of the Agreement, the Director and all the Directors shall have
entered into Director's Agreements concurrent with the execution of the
Agreement in accordance with the terms, conditions, and provisions thereof;
NOW, THEREFORE, in order to effectuate the transactions set forth above
and in consideration of the mutual covenants, conditions, agreements,
representations and warranties contained herein and in the Agreement, and
intending to be legally bound, the parties hereto agree as follows:
A G R E E M E N T
ARTICLE I
COVENANTS OF DIRECTOR
1.1 VOTE OF SHAREHOLDERS. At the meeting of shareholders of CCB
referred to in Section 7.1 of the Agreement (the "Meeting"), the Director
shall vote or cause to be voted the shares of CCB Stock indicated as owned or
controlled by such Director in Schedule I attached hereto, and any other
shares of CCB Stock now owned or hereafter acquired or controlled by such
Director, in favor of, and to approve the principal terms of, the Merger, and
any other matter contemplated by the Agreement which requires the approval of
the shareholders of CCB.
1.2 OTHER CONTRACTS. From and after the date of this Director's
Agreement, the Director shall not enter into or become subject to any
agreement or commitment which would restrict or in any way impair the
obligation of the Director to comply with all the terms of this Director's
Agreement, including, without limitation, any other agreement to sell,
transfer or otherwise dispose of the Director's shares of CCB Stock.
1.3 UPDATING INFORMATION. In the event that the Director shall
discover that any representation or warranty made herein by such Director was
false or misleading in any material respect when made or that any event has
occurred such that any representation or warranty of the Director made herein
would, if made at and as of the time of the occurrence of such event, or
thereafter, be incorrect in any material respect, the Director shall deliver
to WSB a statement specifying that it is delivered pursuant to this Section
1.3 and stating in reasonable detail the facts with respect thereto. Delivery
of any such statement shall not limit any rights which WSB may otherwise have
under this Director's Agreement.
1
1.4 AGREEMENT TO RECOMMEND. The Director agrees that, upon the
execution of this Director's Agreement, Director shall at all times use his or
her best efforts in order to obtain the approval of the shareholders of CCB of
the principal terms of the Merger, and any other matter contemplated by the
Agreement which requires approval of the shareholders of CCB and shall
recommend the approval of such matters by the shareholders of CCB at the
Meeting; provided, however, that the terms of this Section 1.4 shall not apply
in the event CCB receives a CCB Qualifying Strategic Transaction Proposal (as
defined in the Agreement) with respect to which CCB's Board of Directors shall
have determined, after consultation with CCB's counsel, that the action by CCB
contemplated under either clause (i), (ii) or (iii) of Section 5.6(b) of the
Agreement is required under the fiduciary duties owed by the Board of
Directors to the holders of CCB Stock, which determination has been made
acting in good faith and on the basis of a written opinion from a financial
advisor retained by CCB to the effect that the financial terms of such CCB
Qualifying Strategic Transaction Proposal (as defined in the Agreement) are,
from CCB's shareholders' perspective, superior to the Merger.
1.5 CCB STOCK OPTIONS. The Director agrees: (i) not to exercise any
outstanding CCB Stock Options granted to and held by the Director (the
"Director's Options") as of the date hereof and as set forth in Schedule II
attached hereto; and (ii) to sell the Director's Options to CCB at the Per
Option Merger Consideration (as defined in the Agreement) in accordance with
the terms and conditions of Section 1.6 of the Agreement. The Director further
agrees that any of the Director's Options not sold to CCB pursuant to Section
1.6 of the Agreement prior to the Effective Time of the Merger shall expire at
the Effective Time of the Merger.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF DIRECTOR
2.1 REPRESENTATIONS AND WARRANTIES OF DIRECTOR. The Director
represents and warrants to, and agrees with, WSB as follows:
(a) CAPACITY. The Director has all requisite capacity to enter into
and to perform the Director's obligations under this Director's Agreement.
(b) AGREEMENT. The Director has received a copy of the Agreement and
has had the opportunity to review and to consider the terms and conditions
contained in this Director's Agreement and in the Agreement and to confer with
his or her counsel concerning said terms and conditions.
(c) BINDING AGREEMENT. This Director's Agreement has been
duly executed and delivered by such Director and constitutes a valid and
legally binding agreement of such Director.
(d) OWNERSHIP OF SHARES. Schedule I hereto correctly sets forth the
number of shares of CCB Stock owned by the Director or with respect to which
such Director has sole or shared voting power, and the Director has good and
marketable title to all such shares of CCB Stock free and clear of any liens,
security interests, charges or other encumbrances of any kind of nature, except
as set forth on Schedule I.
(e) RELATIONSHIP WITH CCB. The Director is a director of CCB.
(f) NON-CONTRAVENTION. The execution and delivery of this Agreement
by the Director does not, and the performance by the Director of the Director's
obligations hereunder and the consummation by the Director of the transactions
contemplated hereby will not, in any material respect, violate or conflict with,
or constitute a material default under any agreement, instrument, contract or
other obligation or any order, arbitration award, judgment or decree to which
the Director is a party or by which the Director is bound, or any statute, rule
or regulation to which the Director or any of the Director's property is
subject.
ARTICLE III
TERMINATION
2
3.1 AUTOMATIC TERMINATION. This Director's Agreement shall
automatically terminate and be of no further force or effect if the Agreement
is terminated in accordance with the terms thereof, except as to any breach
occurring prior to the date of such termination.
ARTICLE IV
MISCELLANEOUS
4.1 EXPENSES. Each party hereto shall pay its own costs and expenses
in connection with this Director's Agreement and the transactions covered and
contemplated hereby; provided, however, that nothing contained herein shall
preclude the payment of the Director's expenses in connection with the
negotiation and documentation of this Director's Agreement by CCB.
4.2 NOTICES, ETC. All communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given to
the appropriate parties if delivered in person, or if sent by Federal Express,
overnight delivery United States mail, or other overnight delivery service, or
sent by facsimile transmission (with confirmation) addressed as follows:
(a) If to the Director, to the address set forth in Schedule I
attached hereto.
With a copy to:
Central California Bank
00000 Xxxx Xxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Mr. C. Xxxxxxxxx Xxxxxx, President and CEO
Fax: (000) 000-0000
With an additional copy to:
Coudert Brothers LLP
000 Xxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxx, Esq.
Fax: (000) 000-0000
(b) If to WSB, to:
Western Sierra Bancorp
0000 Xxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxx, President and CEO
Fax: (000) 000-0000
With a copy to:
Horgan, Rosen, Beckham & Coren, L.L.P.
00000 Xxxx Xxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attention: S. Xxxx Xxxxx, Esq.
Fax: (000) 000-0000
or such other address as any party may have furnished in writing to the
other parties.
4.3 ENTIRE AND SOLE AGREEMENT. The making, execution and delivery of
this Director's Agreement by
3
the parties hereto have not been induced by any representations, statements,
warranties or agreements other than those expressed herein and in the
Agreement. This Director's Agreement embodies the entire understanding of the
parties, and there are no further or other agreements or understandings,
whether written or oral, in effect among the parties relating to the subject
matter hereof, unless expressly referred to by reference herein.
4.4 SUCCESSORS AND ASSIGNS. Except as otherwise provided in this
Director's Agreement, all covenants and agreements of the parties contained in
this Director's Agreement shall be binding upon and inure to the benefit of
the respective successors and assigns of the parties hereto.
4.5 GOVERNING LAW. This Director's Agreement shall construed and
enforced in accordance with and governed by the laws of the State of
California.
4.6 COUNTERPARTS. This Director's Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
4.7 AMENDMENT, SUPPLEMENT AND WAIVER. This Director's Agreement may be
amended or supplemented, and compliance with the provisions hereof may be
waived only by an instrument in writing signed by the party against which
enforcement of such amendment, supplement or waiver of compliance is sought.
4.8 HEADINGS. The headings in this Director's Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
4.9 SPECIFIC PERFORMANCE. It is recognized and agreed that monetary
damages will not compensate the parties hereto for nonperformance by any
party. Accordingly, each party agrees that his, her or its obligation shall be
enforceable by a court order requiring specific performance.
4.10 SEVERAL OBLIGATIONS. All duties and obligations of the Director
executing this Director's Agreement shall be several and not joint with the
duties and obligations of other Directors executing similar Directors'
Agreements with WSB.
IN WITNESS WHEREOF, the parties hereto have caused this Director's
Agreement to be duly executed as of the date first above written.
DIRECTOR WESTERN SIERRA BANCORP
By:
----------------------------- -------------------------------
(Name) Xxxx X. Xxxx
Its: President and Chief Executive Officer
-----------------------------
(Signature)
4
SCHEDULE I
NAME OF DIRECTOR:
ADDRESS OF DIRECTOR:
CERTIFICATE NUMBER NUMBER OF SHARES REGISTERED OWNER(S)
DESCRIBE ANY LIENS, SECURITY INTERESTS, CHARGES OR OTHER ENCUMBRANCES:
5
SCHEDULE II
NAME OF DIRECTOR:
ADDRESS OF DIRECTOR:
NUMBER OF CCB STOCK OPTIONS EXERCISE PRICE
6
EXHIBIT "C"
AFFILIATE'S LETTER
____________, 2001
Western Sierra Bancorp
0000 Xxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxx, President and CEO
Dear Xx. Xxxx:
I have been advised that I may be an "affiliate," as defined in Rule 145
under the Securities Act of 1933, as amended (the "Act"), of Central California
Bank ("CCB") at the time of the merger (the "Merger") of CCB and New CCB Bank
pursuant to which CCB will become a wholly-owned subsidiary of Western Sierra
Bancorp ("WSB"). In the Merger, I may acquire shares of the common stock of WSB
("WSB Shares") in exchange for my shares of the common stock of CCB ("CCB
Stock").
To the extent that I do acquire WSB Shares in connection with the Merger,
I represent and agree as follows:
1. I have carefully read this letter and, to the extent I felt
necessary, I have discussed it with legal counsel.
2. The WSB Shares are being acquired by me in good faith for
investment, for my own account, and not with a view to distributing the
WSB Shares to others or otherwise reselling the WSB Shares.
3. I will not make any sale or other disposition of the WSB Shares
in violation of the Act or related rules and regulations. In this
connection, I understand that the issuance of the WSB Shares to me has
been or will be registered under the Act, but that such registration will
not cover resales by affiliates. Accordingly, the WSB Shares must be held
by me for at least one year unless: (i) the WSB Shares have been
registered under the Act for sale by me; (ii) a sale of the WSB Shares is
made in conformity with the volume and other applicable limitations of
paragraph (d) of Rule 145; or (iii) another exemption from registration is
available.
4. I understand that WSB is under no obligation to register the sale
or other disposition of the WSB Shares by me or on my behalf or to take
any other action to qualify the sale of the WSB Shares for any exemption
from registration.
5. I also understand that stop transfer instructions will be given
to WSB's transfer agent with respect to the WSB Shares and that there will
be placed on the certificates for the WSB Shares a legend stating in
substance:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, APPLIES AND MAY ONLY BE SOLD OR
OTHERWISE TRANSFERRED IN COMPLIANCE WITH THE REQUIREMENTS OF RULE
145 OR PURSUANT TO A REGISTRATION STATEMENT UNDER THAT ACT OR AN
EXEMPTION FROM SUCH REGISTRATION.
1
6. I know of no plan (written or oral) pursuant to which holders of
shares of the outstanding CCB Stock intend to sell or otherwise dispose of
more than 50%, in the aggregate, of their interest in such shares, either
by a sale or other disposition of CCB Stock before the Merger, by the
exercise of dissenters' rights in the Merger, or by a sale or other
disposition of the WSB Shares to be received by them as a result of the
Merger.
7. I understand and agree that WSB will rely upon the foregoing
representations and warranties in issuing the WSB Shares to me and I
hereby agree to indemnify WSB and hold it and its officers, directors,
employees, agents and representatives harmless from and against all
liabilities, costs, or expenses (including reasonable attorneys' fees)
arising as a result of a sale or disposition by me of any of the WSB
Shares in violation of paragraph 3 above.
9. I understand that so long as I am an "affiliate" of WSB within
the meaning of the Act, any shares of WSB's common stock I may acquire in
the future, separate and apart from the WSB Shares described above,
whether or not such shares have been previously registered with the
Securities and Exchange Commission, will also be subject to restriction on
resale. Moreover, I understand that under various circumstances, including
the case where I acquire shares of WSB's common stock which have not
previously been registered with the Securities and Exchange Commission, I
will be required to hold such shares for a minimum of one year before I
can sell the shares in the trading market unless otherwise allowed by law,
rule or regulation. I also understand that legends reflecting the
restrictions on WSB's common stock which I may acquire will be placed on
all certificates representing such shares, and that stop transfer orders
will be placed with WSB's transfer agent prohibiting transfers by me in
violation of such restrictions.
Very truly yours,
Dated:
-------------------- -----------------------------
Signature
-----------------------------
Type or Print Name
2
EXHIBIT "D"
CLOSING SCHEDULE
The terms used herein shall have the same meaning as ascribed to them in
the Agreement and Plan of Reorganization (the "Agreement") or the Merger
Agreement referred to therein. Section references in parentheticals are to
sections in the Agreement and are provided for reference only.
I. DOCUMENTS COMPLETED PRIOR TO AND TO BE PROVIDED AT THE
CLOSING:
A. GENERAL:
1.1 The Agreement dated ________________, 2001,
executed by WSB and CCB.
1.2 CCB's executed Director's Agreements (Section
1.12).
1.3 The Registration Statement/Proxy Materials
(Sections 5.9 and 6.7).
1.4 The CCB Fairness Opinion (Section 8.5).
1.5 The Transfer Agent Agreement (Section 1.5(a)).
1.6 Receipt for delivery of $3,700,000 cash to
Transfer Agent (Section 1.5(a)).
1.7 The draft form of Transmittal Letter for CCB
shareholders (Section 1.5(b)).
B. THE MERGER:
1.8 Charter and FDIC Deposit Insurance for New CCB Bank
(Section 10.1(a)).
1.9 The executed Merger Agreement (Section 2.2).
1.10 Affidavit of Publication of Notice of the proposed
Merger, as required by the FDIC.
1.11 Notice of Approvals from the Commissioner and FDIC
(Sections 10.1(c) and (d)).
1.12 Opinion of Xxxxx-Xxxxx re: tax aspects of the
transaction (Section 10.2).
1
C. THE ACQUISITION:
1.13 Affidavit of Publication of Notice of the proposed
acquisition, as required by the FRB.
1.14 Notice of Approvals from the FRB and Commissioner for
WSB to acquire control of CCB (Section 10.1(b) and (c)).
II. CCB CLOSING DOCUMENTS:
2.1 Certified copy of the resolutions of the Board of
Directors of CCB authorizing the execution, delivery and
performance of the terms of the Agreement and the Merger
Agreement (Section 3.4).
2.2 Certified copy of the resolutions of the shareholders of
CCB authorizing the execution, delivery and performance
of the terms of the Agreement and the Merger Agreement
(Section 10.4).
2.3 Officers' Certificate, signed by the President and Chief
Executive Officer, the Corporate Secretary, and the
Chief Financial Officer of CCB certifying the
fulfillment of the conditions precedent to the Merger
(Section 9.5).
2.4 Incumbency Certificate for CCB, setting forth the names
of the directors and corporate officers of CCB, together
with specimen signatures thereof, certified by the
Corporate Secretary of CCB and issued under the
corporate seal of CCB.
2.5 The executed Affiliate's Letters (Sections 1.13
and 9.4).
2.6 A Certificate of the President and Chief Executive
Officer and the Chief Financial Officer of CCB as to the
fulfillment of the conditions set forth in Section 10.4
and listing the name, number of shares and, if
available, the amount demanded by each dissenting
shareholder (Section 10.4).
2.7 A Certificate of the President and Chief Executive
Officer and the Chief Financial Officer of CCB as to the
fulfillment of the conditions set forth in Sections 1.6
and 5.7.
2.8 Landlord consents regarding leases.
2.9 The executed Director's Agreements (Sections 1.12
and 9.6).
2.10 The executed Affiliate's Letters (Sections 1.13
and 9.4).
2
III. WSB CLOSING DOCUMENTS:
3.1 Certified copy of the resolutions of the Board of
Directors of WSB authorizing the execution, delivery and
performance of the terms of the Agreement and the Merger
Agreement (Section 4.4).
3.2 Certified copy of the resolutions of the Board of
Directors of New CCB, authorizing the execution,
delivery and performance of the Agreement and the Merger
Agreement.
3.3 Certified copy of the resolutions of the sole
shareholder of New CCB, authorizing the execution,
delivery and performance of the Agreement and the Merger
Agreement (Section 10.4).
3.4 Officers' Certificate, signed by the President and Chief
Executive Officer, Corporate Secretary and Chief
Financial Officer of WSB, certifying the fulfillment of
the conditions precedent to the Merger (Section 8.4).
3.5 Incumbency Certificate for WSB, setting forth the names
of the directors and executive officers of WSB, together
with specimen signatures thereof, certified by the
Corporate Secretary of WSB and issued under the
corporate seal of WSB.
3.6 Certified copy of the resolutions of the Board of
Directors of WSB adding Mr. ________________ and
Mr. ________________ to the WSB Board of Directors
(Sections 1.11 and 8.6).
3.7 Certified copy of the resolutions of the Board of
Directors of New CCB adding CCB's directors and officers
to New CCB's Board and management team (Sections 1.10
and 8.7).
3.8 Resignations of New CCB's directors and officers
(Sections 1.10 and 6.9).
3.9 SEC Order declaring the WSB Registration Statement
effective and any required approvals, permits or orders
from state securities administrators or confirmation of
exemptions (Section 7.2).
3
