As filed with the Securities and Exchange Commission on October 17, 1997
File No. 333-____
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION Washington,ON APRIL 14, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FIRST HAWAIIAN, INC.
FIRST HAWAIIAN DELAWARE 6711
CAPITAL I DELAWARE (PRIMARY 99-0156159------------------------
BANCWEST CORPORATION
(EXACT NAMESNAME OF (STATE OR OTHER STANDARD 94-3284085
REGISTRANTSREGISTRANT AS JURISDICTION INDUSTRIAL (I.R.S. EMPLOYER SPECIFIED IN THEIR OF INCORPORATION CLASSIFICATION IDENTIFICATION
CHARTERS) OR ORGANIZATION) CODE NUMBER) NUMBERS)ITS CHARTER)
DELAWARE 6711 99-0156159
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
999 Bishop Street
Honolulu, HawaiiBISHOP STREET
HONOLULU, HAWAII 96813
(808) 525-7000
(Address, including zip code, and telephone number, including
area code, of Registrants' principal executive offices)
Walter(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)
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WALTER A. Dods, Jr.
Chairman and Chief Executive Officer
First Hawaiian, Inc.DODS, JR.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
BANCWEST CORPORATION
999 Bishop Street
Honolulu, HawaiiBISHOP STREET
HONOLULU, HAWAII 96813
(808) 525-7000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Howard H. Karr Lee Meyerson, Esq.
Executive Vice President and Treasurer Simpson Thacher & Bartlett
First Hawaiian, Inc. 425 Lexington Avenue
999 Bishop Street New York, New York 10017
Honolulu, Hawaii 96813 (212) 455-2000
(808) 525-8800
Approximate Date of Commencement of Proposed Sale to the Public:(NAME, ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER OF AGENT FOR SERVICE)
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WITH COPIES TO:
RODNEY R. PECK, ESQ. LEE MEYERSON, ESQ. JAMES M. ROCKETT, ESQ.
PILLSBURY MADISON & SUTRO LLP SIMPSON THACHER & BARTLETT MCCUTCHEN, DOYLE, BROWN & ENERSEN, LLP
235 MONTGOMERY STREET 425 LEXINGTON AVENUE THREE EMBARCADERO CENTER, SUITE 2700
SAN FRANCISCO, CALIFORNIA 94104 NEW YORK, NEW YORK 10017 SAN FRANCISCO, CALIFORNIA 94111
(415) 983-1000 (212) 455-2000 (415) 393-2000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this formForm are being offered in
connection with the formation of a holding company and there is compliance with
General InstructionsInstruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If the form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
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CALCULATION OF REGISTRATION FEE
Proposed Maximum
Aggregate Proposed Maximum
Title of Each Class of Securities to Amount to be Offering Price Aggregate Offering Amount of
be Registered Registered per Security Price Registration Fee- ---------------------------------------------------------------------------------------------------------------------------------
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED(1) REGISTERED(2) PER UNIT PRICE(2) REGISTRATION FEE(3)
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Capital SecuritiesCommon Stock
(par value $1.00 per share)....... 4,624,004 shares Not applicable Not applicable $39,730
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(1) This registration statement relates to securities of the Registrant issuable
to holders of common stock of SierraWest Bancorp.
(2) The number of shares to be registered is based upon a product of (a) the
number of shares of common stock, no par value, of SierraWest ("SierraWest
Common Stock") outstanding, assuming exercise of all SierraWest stock
options (whether or not currently exercisable) multiplied by (b) 0.82, the
exchange ratio in the merger.
(3) Pursuant to Rule 457(f), the registration fee was computed on the basis of
$30.907, the market value of the common stock of SierraWest Bancorp to be
exchanged for the Registrant's common stock in the merger, computed in
accordance with Rule 457(c) on the basis of the average of the high and low
price as quoted on the Nasdaq National Market on April 8, 1999. In
accordance with Rule 457(b), the total registration fee of $39,730 has been
reduced by $35,456, which was paid on March 25, 1999, at the time of the
filing under the Securities Exchange Act of 1934, as amended, of preliminary
copies of SierraWest's proxy materials included herein. Therefore the
registration fee payable upon filing of this Registration Statement is
$4,274.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SHALL SPECIFICALLY STATE THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
[SierraWest Bancorp Logo]
April , 1999
Dear Shareholder,
You are cordially invited to attend the Annual Meeting of Shareholders of
SierraWest Bancorp which we will hold at the North Tahoe Conference Center, 8318
North Lake Boulevard, Kings Beach, California on Thursday, May 27, 1999 at 4:00
p.m.
As you have probably read, we have signed an agreement to merge with Bank
of the West, a subsidiary of BancWest Corporation. In the proposed merger, you
will receive 0.82 of a share of BancWest common stock for each share of
SierraWest common stock that you own. You will not incur federal income tax as a
result of the merger, except with respect to cash you receive instead of
fractional shares.
BancWest common stock is traded on the New York Stock Exchange under the
symbol "BWE" and on April 13, 1999, the BancWest common stock closed at $40.63
per share. SierraWest common stock is traded on the Nasdaq National Market under
the symbol "SWBS" and on April 13, 1999, the SierraWest common stock closed at
$31.19 per share. Based on that closing stock price of the BancWest common
stock, you would receive for each share of SierraWest common stock BancWest
common stock with a value equal to $33.31.
The most important issue on the agenda for our meeting will be a
shareholder vote to approve the merger. We believe the merger is in your best
interests as shareholders and we hope you will support it. Information about the
proposed merger is included in the enclosed proxy statement-prospectus. We will
also be voting on the election of 13 people to SierraWest's Board of Directors
to serve until the proposed merger is completed or until the next annual
meeting.
Please give these proxy materials your careful attention. Your Board of
Directors has unanimously approved the merger and recommends that you vote to
approve it as well.
Sincerely,
/s/ William T. Fike
William T. Fike
President and Chief Executive
Officer
SierraWest Bancorp
Neither the Securities and Exchange Commission nor any state securities
regulators have approved this transaction or the shares of BancWest common stock
to be issued under this proxy statement-prospectus or determined if this proxy
statement-prospectus is accurate or adequate. Any representation to the contrary
is a criminal offense.
The shares of BancWest common stock offered by this proxy
statement-prospectus are not savings accounts, deposits or other obligations of
any bank or nonbank subsidiary of BancWest Corporation and are not insured by
the Federal Deposit Insurance Corporation or any other governmental agency.
THE DATE OF THIS PROXY STATEMENT-PROSPECTUS IS APRIL , 1999,
AND IS FIRST BEING MAILED TO SIERRAWEST SHAREHOLDERS ON OR ABOUT APRIL 21, 1999.
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PRELIMINARY PROXY STATEMENT -- SUBJECT TO COMPLETION
SIERRAWEST BANCORP
10181 TRUCKEE-TAHOE AIRPORT ROAD
TRUCKEE, CALIFORNIA 96161
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 27, 1999
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To the Shareholders of SierraWest Bancorp:
Notice is hereby given that we will hold an Annual Meeting of Shareholders
of SierraWest Bancorp, a California corporation, at the North Tahoe Conference
Center, 8318 North Lake Boulevard, Kings Beach, California on Thursday, May 27,
1999 at 4:00 p.m., for the following purposes:
1. Approving the Agreement and Plan of Merger dated as of February 25,
1999, as amended, among BancWest Corporation, Bank of the West and
SierraWest Bancorp. The merger agreement provides for the merger of
SierraWest and its subsidiary, SierraWest Bank, into Bank of the
West and the conversion of each outstanding share of SierraWest
common stock into the right to receive 0.82 of a share of BancWest
common stock.
2. Electing 13 people to SierraWest's Board of Directors.
3. Acting upon any other matters that may properly come before the
annual meeting or any adjournment or postponement thereof.
You are entitled to notice of and to vote at the annual meeting and any
postponements or adjournments if you were listed in SierraWest's records as a
holder of common stock at the close of business on April 19, 1999. The merger
agreement and other related matters are described in more detail in the
accompanying proxy statement-prospectus and the attached Appendices, which are
incorporated by reference into and should be considered a part of this Notice.
If the merger is completed and you comply with the requirements of Chapter
13 of the California General Corporation Law, you may have dissenters' rights
giving you the right to receive from BancWest a cash payment of the fair market
value of your shares determined in accordance with Chapter 13. BancWest does not
have to complete the merger if you properly exercise your dissenters' rights.
See "THE MERGER -- Dissenters' Rights of Appraisal" in the attached proxy
statement-prospectus for a discussion of the availability of dissenters' rights
and a description of the procedures which you must follow to enforce those
rights under Chapter 13. A copy of Chapter 13 is included as Appendix D to the
attached proxy statement-prospectus.
By Order of the Board of Directors,
/s/ A. Morgan Jones
A. Morgan Jones, Secretary
Truckee, California
April , 1999
IMPORTANT
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING,
PLEASE SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
4
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THE
MERGER............................. 1
SUMMARY.............................. 2
Comparative Market Price Data...... 2
Selected Historical Consolidated
Financial Data of BancWest
Corporation..................... 7
Selected Historical Consolidated
Financial Data of SierraWest
Bancorp......................... 9
Comparative Per Common Share
Data............................ 11
INFORMATION REGARDING FORWARD LOOKING
STATEMENTS......................... 12
ANNUAL MEETING OF SIERRAWEST
SHAREHOLDERS....................... 13
Date, Time and Place............... 13
The Annual Meeting................. 13
Record Date; Quorum................ 13
Vote Required...................... 13
Voting of Proxies.................. 14
Revocability of Proxies............ 14
Solicitation of Proxies............ 15
PROPOSAL ONE......................... 16
THE MERGER........................... 16
General............................ 16
Background of the Merger........... 16
Reasons for the Merger;
Recommendation of the Board of
Directors....................... 19
Opinion of Financial Advisor....... 20
Regulatory Approvals Required...... 26
Stock Exchange Listing............. 27
Interest of Certain Officers and
Directors in the Merger......... 27
Effect on SierraWest's Employee
Benefits Plans.................. 29
Accounting Treatment............... 29
Certain Federal Income Tax
Consequences.................... 30
Dissenters' Rights of Appraisal.... 31
SierraWest's Rights Agreement...... 33
Resales of BancWest Common Stock... 33
THE MERGER AGREEMENT................. 35
Structure of the Merger; Effective
Time............................ 35
Conversion of SierraWest Common
Stock........................... 35
Options............................ 36
Exchange Agent; Exchange
Procedure....................... 36
Representations and Warranties..... 37
Conduct of Business Pending the
Merger.......................... 38
Additional Agreements.............. 40
Conditions to the Completion of the
Merger.......................... 42
Termination........................ 43
Fees and Expenses.................. 45
Amendment.......................... 45
Extension; Waiver.................. 46
STOCK OPTION AGREEMENT BETWEEN
SIERRAWEST AND BANCWEST............ 47
Exercise of Stock Option........... 47
Termination of Stock Option........ 48
Adjustment of Number of Shares
Subject to Option............... 48
Repurchase of Option Shares........ 49
Registration Rights................ 50
Effect of Stock Option Agreement... 50
OPERATIONS FOLLOWING THE MERGER...... 51
BANCWEST CORPORATION................. 52
First Hawaiian, Inc./BancWest
Corporation Merger.............. 52
First Hawaiian Bank................ 52
Bank of the West................... 55
First Hawaiian Capital I . . . . . . . . . . . . . . $100,000,000 100% $100,000,000 $30,303
Junior Subordinated Deferrable
Interest DebenturesI........... 57
Employees.......................... 57
Monetary Policy and Economic
Conditions...................... 58
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Competition........................ 58
Supervision and Regulation......... 58
SIERRAWEST BANCORP................... 63
MARKET PRICE AND DIVIDEND
INFORMATION........................ 64
Dividend Policy.................... 64
DESCRIPTION OF BANCWEST CAPITAL
STOCK.............................. 65
Common Stock....................... 65
CERTAIN DIFFERENCES IN RIGHTS OF
HOLDERS OF SIERRAWEST COMMON STOCK
AND BANCWEST COMMON STOCK.......... 69
Dividends.......................... 69
Indemnification of First Hawaiian, Inc.. . . . . .Directors and
Executive Officers.............. 69
Cumulative Voting.................. 70
Classified Board of Directors...... 71
Dissenters' Rights in Mergers and
Other Reorganizations........... 71
Anti-Takeover Statutes............. 72
Shareholder Vote for Mergers and
Asset Sales..................... 72
Inspection of Stockholder Lists.... 74
Nomination of Directors............ 74
Amendment of Certificate of
Incorporation and Bylaws........ 74
PROPOSAL TWO......................... 76
ELECTION OF DIRECTORS................ 76
The Board of Directors and
Committees...................... 79
Compensation of Directors.......... 79
EXECUTIVE COMPENSATION............... 81
Summary Compensation Table......... 81
Aggregated Option/SAR Exercises in
Last Fiscal Year and FY-End
Option/SAR Value................ 83
Salary Continuation Plan........... 83
Employment Agreements.............. 84
Personnel/Compensation Committee
Report on Executive
Compensation.................... 85
Personnel/Compensation Committee
Interlocks and Insider
Participation................... 86
SHAREHOLDINGS OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.............. 87
SECTION 16(a) BENEFICIAL OWNERSHIP
AND COMPLIANCE..................... 89
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS....................... 89
LEGAL MATTERS........................ 89
EXPERTS.............................. 89
SUBMISSIONS OF SHAREHOLDERS'
PROPOSALS.......................... 90
INFORMATION CONCERNING BANCWEST
MANAGEMENT......................... 90
WHERE YOU CAN FIND MORE
INFORMATION........................ 91
APPENDICES
Appendix A -- Agreement and Plan of
Merger.......................... A-1
Appendix B -- Stock Option
Agreement....................... B-1
Appendix C -- Fairness Opinion by
NationsBanc Montgomery
Securities LLC.................. C-1
Appendix D -- Guarantee of First Hawaiian, Inc. -- -- -- --
Total . . . . . . . . . . . . . . $100,000,000 100% $100,000,000 $30,303
____________________
Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
The Junior Subordinated Deferrable Interest Debentures will be
exchanged for outstanding unregistered Junior Subordinated Deferrable
Interest Debentures which were purchased by First Hawaiian Capital I
with the proceedsChapter 13 of the
sale of the unregistered Capital Securities.
No separate consideration will be received for the issuance of Junior
Subordinated Deferrable Interest Debentures. Pursuant to Rule 457(a),
no separate fee is payable with respect to the Junior Subordinated
Deferrable Interest Debentures.
No separate consideration will be received for the issuance of the
Guarantee. Pursuant to Rule 457(a), no separate fee is payable with
respect to the Guarantee.
This Registration Statement is deemed to cover the rights of holders
of Capital Securities of First Hawaiian Capital I under the Trust
Agreement, the rights of holders of Junior Subordinated DeferrableCalifornia General Corporation
Law Regarding Dissenters'
Rights.......................... D-1
ii
Interest Debentures6
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHY IS THIS MERGER PROPOSED?
A: SierraWest is proposing this merger because its board of directors has
concluded that this merger is in the best interest of its shareholders and that
the combined companies can offer SierraWest's customers a broader array of
services and products than SierraWest could offer on its own.
Q: WHAT WILL I RECEIVE IN THIS MERGER?
A: Under the merger agreement, you will have the right to receive 0.82 of
a share of BancWest common stock for each share of SierraWest common stock that
you own.
Q: WHAT WILL HAPPEN TO SIERRAWEST BANK IN THIS MERGER?
A: Immediately after the merger, SierraWest Bank will merge into Bank of
the West. The resulting bank will continue under the Junior Subordinated Indenturename "Bank of the West" as
a wholly owned subsidiary of BancWest.
Q: HOW DO I VOTE?
A: Simply indicate on your proxy card how you want to vote and then sign
and mail your proxy card in the enclosed return envelope as soon as possible so
that your shares may be represented at the SierraWest annual meeting.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
VOTE MY SHARES FOR ME?
A: Your broker will not vote your shares for you unless you provide
instructions to your broker on how to vote. It is important therefore that you
follow the directions provided by your broker regarding how to instruct your
broker to vote your shares. If you fail to instruct your broker how to vote your
shares, the effect will be the same as a vote against the merger agreement.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A: Yes. You may change your vote at any time before your proxy is voted at
the annual meeting. If your shares are held in your name you may do this in one
of three ways. First, you may send a written notice stating that you would like
to revoke your proxy. Second, you may complete and submit a new proxy card. If
you choose either of these two methods, you must submit your notice of
revocation or your new proxy card to SierraWest at the address at the top of the
SierraWest notice of annual meeting. Third, you may attend the meeting and vote
in person if you tell the Secretary that you want to cancel your proxy and vote
in person. Simply attending the SierraWest annual meeting, however, will not
revoke your proxy. If you have instructed a broker to vote your shares, you must
follow directions received from your broker to change your vote or to vote at
the SierraWest annual meeting.
Q: SHOULD I SEND IN MY CERTIFICATES NOW?
A: No. After the merger is completed, we will send you written
instructions for exchanging your stock certificates.
Q: WHEN DO YOU EXPECT THIS MERGER TO BE COMPLETED?
A: We are working toward completing this merger as quickly as possible. We
currently expect to complete this merger in mid-1999.
Q: WHY HAVE YOU SENT ME THIS DOCUMENT?
A: This proxy statement-prospectus contains important information
regarding this proposed merger, as well as information about BancWest and
SierraWest. It also contains important information about what the SierraWest
board of directors and management considered in evaluating this proposed merger.
We urge you to read this proxy statement-prospectus carefully, including its
appendices. You may also want to review the documents listed under "WHERE YOU
CAN FIND MORE INFORMATION" on page 91.
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SUMMARY
This summary, together with the "Questions and Answers" on the preceding
pages, highlights important selected information from this proxy
statement-prospectus. To understand the merger fully and for a more complete
description of the legal terms of the merger, you should read carefully this
entire document and the other information available to you. We have included
page references parenthetically to direct you to a more complete description of
the topics presented in this summary.
SIERRAWEST SHAREHOLDERS WILL RECEIVE 0.82 OF A SHARE OF BANCWEST COMMON STOCK IN
THE MERGER (page 35)
When the merger is completed, you will receive 0.82 of a share of BancWest
common stock for each share of SierraWest common stock that you hold. Cash will
be paid instead of fractional shares. For example, if you hold 115 shares of
SierraWest common stock, you will have the right to receive 94.3 shares of
BancWest common stock in the merger. Since cash will be paid instead of
fractional shares, you would only receive 94 shares of BancWest common stock and
a check in an amount equal to 0.3 of a share multiplied by the closing price of
the BancWest common stock on the trading day before the closing date.
SierraWest has the option to terminate the merger agreement with the
approval of a majority of its entire board during a two business day period
following the approval of the merger by the Federal Deposit Insurance
Corporation (the "FDIC") if:
- the average closing price of BancWest common stock for the 20 trading
days before the receipt of the FDIC approval is less than 85% of
$43.8375, or $37.2619, the average closing price of BancWest common stock
for the 5 trading days before the public announcement of the merger, AND
- the ratio of the average closing price of BancWest common stock during
the 20 trading day period to $43.8375 is less than 85% of the ratio of
Standard & Poor's Mid-Cap Regional Bank Index during the 20 trading day
period to $223.854, the average of the bank stock index for the 5 trading
days before the public announcement of the merger.
SierraWest cannot terminate the merger agreement, if within 5 business days
of being notified by SierraWest of SierraWest's intention to terminate, BancWest
adjusts the exchange ratio so that the value of the BancWest shares you receive
in the merger will not have declined more than 15% in relation to any decline in
the bank stock index. In this event, you will receive more than 0.82 of a share
of BancWest stock for each share of SierraWest common stock that you hold.
COMPARATIVE MARKET PRICE DATA
BancWest common stock is listed on the New York Stock Exchange under the
symbol "BWE." Before November 2, 1998, BancWest's common stock was quoted under
the symbol "FHWN" on the Nasdaq National Market. SierraWest common stock is
traded on the Nasdaq National Market under the symbol "SWBS." The following
table sets forth historical per share market values for BancWest common stock
and SierraWest common stock based on the last sales prices and the equivalent
pro forma market values for SierraWest common stock on:
- February 25, 1999, the last trading day before public announcement of the
merger, and
2
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- April 13, 1999, the most recent date before the mailing of this proxy
statement-prospectus.
The equivalent pro forma sales price of SierraWest common stock is determined by
multiplying the exchange ratio (0.82) by the BancWest stock price.
HISTORICAL MARKET PRICE
------------------------ SIERRAWEST EQUIVALENT
BANCWEST SIERRAWEST PRO FORMA MARKET VALUE
--------- ----------- ----------------------
February 25, 1999................. $43.00 $28.88 $35.26
April 13, 1999.................... $40.63 $31.19 $33.31
BancWest cannot assure you that actual stock prices for its common stock
will be equal to or greater than the prices shown in the table at the time of
the merger or at any time after the completion of the merger. In the merger,
SierraWest will be merged into Bank of the West and there will be no further
public market for SierraWest common stock after the merger. BancWest common
stock will continue to be traded on the New York Stock Exchange after the
merger.
THE MERGER WILL BE A TAX-FREE TRANSACTION IN WHICH SIERRAWEST SHAREHOLDERS WILL
NOT RECOGNIZE GAIN OR LOSS (page 30)
The merger is intended to be a tax-free reorganization so that no gain or
loss will be recognized by either BancWest or SierraWest or their respective
shareholders for federal income tax purposes, except with respect to cash that
SierraWest shareholders will receive instead of fractional shares.
SIERRAWEST BOARD RECOMMENDS SHAREHOLDER APPROVAL (page 20)
SierraWest's board of directors believes that the merger is in the best
interests of SierraWest and its shareholders and has unanimously approved the
merger agreement. SierraWest's board recommends that you vote "FOR" approval of
the merger agreement.
FINANCIAL ADVISOR GIVES OPINION THAT CONSIDERATION IS FAIR TO SIERRAWEST
SHAREHOLDERS (page 20)
In deciding to approve the merger, the SierraWest board of directors
considered the opinion of its financial advisor, NationsBanc Montgomery
Securities LLC, dated as of February 25, 1999, as to the fairness of the merger
consideration to SierraWest shareholders from a financial point of view. This
opinion is attached as Appendix C to this proxy statement-prospectus. We
encourage you to read this opinion carefully. Under an agreement with
SierraWest, NationsBanc Montgomery received a fee of $600,000 when we executed
the merger agreement and will receive an additional fee of about $1.9 million
when the merger closes.
ANNUAL SHAREHOLDERS' MEETING TO BE HELD ON MAY 27, 1999 (page 13)
We will hold the annual meeting of shareholders at 4:00 p.m. on Thursday,
May 27, 1999, at the North Tahoe Conference Center, 8318 North Lake Boulevard,
Kings Beach, California. At the annual meeting, you will be asked (1) to approve
the merger agreement and (2) to elect 13 people to the board of directors to
serve until the merger is completed or until the next annual meeting.
RECORD DATE SET AT APRIL 19, 1999; VOTE REQUIRED FOR APPROVAL OF MERGER (page
13) AND ELECTION OF DIRECTORS (page 13)
You can vote at the annual meeting if you owned SierraWest common stock at
the close of business on April 19, 1999. A majority of the outstanding shares of
SierraWest
3
9
common stock must vote to approve the merger agreement in order for the merger
to occur. In the election of directors, the 13 nominees receiving the greatest
number of votes will be elected.
DISSENTERS' RIGHTS OF APPRAISAL (page 31 and Appendix D)
No holder of SierraWest common stock will be entitled to dissenters' rights
ofunless holders of Capital Securities under the Guarantee. First
Hawaiian, Inc.'s obligations under the Trust Agreement, the Junior
Subordinated Deferrable Interest Debentures, the Junior Subordinated
Indenture and the Guarantee provide a full and unconditional guaranteeat least 5% of the Capital Securities.
____________________
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effectiveoutstanding shares of SierraWest common
stock have perfected their dissenters' rights in accordance with Section 8(a)Chapter 13 of
the Securities ActCalifornia General Corporation Law. BancWest will not be obligated to
complete the merger if shareholders of 1933SierraWest are entitled to exercise
dissenters' rights. Therefore, if you perfect your dissenters' rights, the
merger may not be completed.
INFORMATION REGARDING BANCWEST AND SIERRAWEST (pages 52 and 63)
BANCWEST CORPORATION
999 Bishop Street
Honolulu, Hawaii 96813
(808) 525-7000
http://www.bancwestcorp.com
BancWest is a $15 billion regional financial services company with
operations in five western states. Its headquarters are in Honolulu, with
administrative headquarters in San Francisco. Its major subsidiaries, First
Hawaiian Bank and Bank of the West, operate as separate institutions. First
Hawaiian Bank has 59 branches in Hawaii, Guam, and Saipan. Bank of the West is
California's fifth largest commercial bank with 146 branches serving nearly
400,000 households and businesses in California, Oregon, Washington, and Idaho.
At December 31, 1998, BancWest had consolidated total assets of $15.0 billion,
total deposits of $11.3 billion and total stockholders' equity of $1.7 billion.
On November 1, 1998, First Hawaiian, Inc. merged with BancWest Corporation,
which was a subsidiary of Banque Nationale de Paris and the parent corporation
of Bank of the West, and changed its name to BancWest Corporation. In the
merger, Banque Nationale de Paris received shares of Class A Common Stock of
First Hawaiian, Inc. representing 45% of the outstanding voting stock of First
Hawaiian, Inc. following that merger. Banque Nationale de Paris owns 45% of the
outstanding voting stock of BancWest as of the date of this proxy
statement-prospectus. The ownership percentage of Banque Nationale de Paris will
decline as a result of the issuance of BancWest shares to SierraWest
shareholders in the merger. However, under the terms of a standstill agreement
with BancWest, Banque Nationale de Paris will have the right to purchase
additional shares of BancWest common stock to maintain its 45% ownership
interest.
SIERRAWEST BANCORP
10181 Truckee-Tahoe Airport Road
Truckee, California 96161
(530) 582-3000
SierraWest is a bank holding company for SierraWest Bank, headquartered in
Truckee, California. SierraWest Bank has 20 branches in Solano and Contra Costa
Counties, Sacramento, the Sierra foothills and Lake Tahoe regions of California
and northern Nevada. SierraWest is a significant originator of loans under the
U.S. government's Small Business Administration loan program, with loan
production offices or until this Registration
Statement shall become effectiveagency relationships in California, Nevada, Arizona,
Washington, Colorado, Tennessee, Oregon, Georgia, Florida, Texas and Alabama. At
December 31, 1998, SierraWest had
4
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consolidated total assets of $879 million, total deposits of $783 million and
total shareholders' equity of $78 million.
BANCWEST TO USE "POOLING OF INTERESTS" ACCOUNTING TREATMENT (page 29)
BancWest expects to account for the merger as a "pooling of interests."
Under the pooling of interests accounting method, BancWest will carry forward on
such dateits books the assets and liabilities of SierraWest at their historical recorded
values.
BENEFITS TO CERTAIN OFFICERS AND DIRECTORS IN THE MERGER (page 27)
In considering the recommendation of the board of directors of SierraWest
to approve the merger agreement, you should be aware that certain officers and
directors of SierraWest have certain interests in, and will receive benefits as
a consequence of, the Commission, acting
pursuantmerger that are different from the benefits to said Section 8(a), may determine.
=============================================================================
____________________________________________________________________________
Information contained herein is subjectSierraWest
shareholders generally. These interests include:
- SierraWest directors who exercise nonqualified stock options after the
merger will receive a payment equal to completion or amendment. Athe estimated tax benefit of the
option exercise to BancWest,
- ten of SierraWest's directors will receive a cash payment at the time of
the merger in accordance with SierraWest's Amended and Restated Payment
Continuation Agreements,
- SierraWest's president and chief executive officer and its chief
financial officer have each entered into salary continuation agreements
with SierraWest under which each will receive annual payments for 20
years after the merger,
- some officers have entered into severance agreements with SierraWest
under which each will receive a severance payment after the merger, and
- following the merger, BancWest will indemnify the directors and officers
of SierraWest and SierraWest Bank.
CONDITIONS THAT MUST BE SATISFIED FOR THE MERGER TO OCCUR (page 42)
We will not complete the merger unless a number of conditions are met.
These include:
- approval of the merger agreement by SierraWest shareholders,
- receipt of all required regulatory approvals,
- absence of any court order prohibiting the merger,
- listing on the New York Stock Exchange of the BancWest shares which will
be issued to SierraWest shareholders,
- absence of any orders suspending the effectiveness of the registration
statement relatingfiled by BancWest to these securitiesregister the shares to be issued to
SierraWest shareholders, and
- receipt of opinions of independent public accountants to both BancWest
and SierraWest that the merger will qualify for "pooling of interests"
accounting treatment.
In addition, BancWest does not have to complete the merger if 5% or more of
SierraWest shareholders take all steps required to exercise dissenters' rights.
REGULATORY APPROVALS WE MUST OBTAIN FOR THE MERGER (page 26)
The merger requires the prior approval of the FDIC and the banking
authority of the State of California.
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TERMINATION OF THE MERGER AGREEMENT (page 43)
We can mutually agree to terminate the merger agreement at any time before
the merger is completed, even if SierraWest's shareholders have approved the
merger agreement.
Either BancWest or SierraWest can terminate the merger agreement if:
- any federal or state banking regulatory agency issues an order denying
approval of the merger or any governmental entity issues a final
permanent order prohibiting the merger,
- the merger is not completed by September 30, 1999, or
- SierraWest shareholders do not approve the merger at the annual meeting
of shareholders.
BancWest can terminate the merger agreement if:
- any governmental entity issues an order in connection with the merger
which imposes burdensome conditions on BancWest or the surviving
corporation, or
- SierraWest's board of directors withdraws its recommendation of the
merger.
SierraWest can terminate the merger agreement once the merger has been
approved by the FDIC if during a measurement period, the BancWest stock price
falls below 85% of $43.8375, or $37.2619, AND the BancWest stock price declines
more than 15% in relation to a bank stock index. SierraWest, however, cannot
exercise this termination right if BancWest chooses to adjust the exchange ratio
so that the value of the BancWest shares you receive in the merger will not have
declined more than 15% in relation to any decline in the bank stock index. This
is more fully described under "SierraWest shareholders will receive 0.82 of a
share of BancWest common stock in the merger" on page 2.
STOCK OPTION AGREEMENT BETWEEN BANCWEST AND SIERRAWEST (page 47)
When we signed the merger agreement we also signed a stock option
agreement. Under the stock option agreement, SierraWest gave BancWest an option
to purchase up to 1,059,490 shares of SierraWest common stock representing
approximately 19.9% of the outstanding shares of SierraWest common stock under
certain circumstances. BancWest has the right to purchase the shares for $28.875
per share.
SierraWest agreed to grant the option to BancWest in order to induce
BancWest to enter into the merger agreement. The option could have the effect of
discouraging other companies from trying to acquire SierraWest.
The stock option agreement is attached to this document as Appendix B.
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
OF BANCWEST CORPORATION
This financial information for BancWest for the fiscal years 1994 to 1998
is only a summary. You should read it with the audited consolidated financial
statements and the accompanying notes of BancWest, which BancWest has filed with
the Securities and Exchange Commission. For more information, see "WHERE YOU CAN
FIND MORE INFORMATION."
AT OR FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997(2) 1996(2) 1995(2) 1994(2)
-------- -------- -------- -------- --------
(IN THOUSANDS)
INCOME STATEMENTS:
Total interest income........... $684,439 $592,483 $574,140 $559,957 $475,760
Total interest expense.......... 290,202 258,011 252,795 265,297 179,688
-------- -------- -------- -------- --------
Net interest income............. 394,237 334,472 321,345 294,660 296,072
Provision for credit losses..... 28,555 17,211 23,627 38,107 22,922
Total noninterest income........ 119,581 98,513 87,455 82,106 75,512
Total noninterest expense....... 353,807 292,210 269,339 216,521 237,161
-------- -------- -------- -------- --------
Income before income taxes...... 131,456 123,564 115,834 122,138 111,501
Provision for income taxes...... 54,850 39,303 35,538 45,133 38,990
-------- -------- -------- -------- --------
Net income...................... $ 76,606(2) $ 84,261 $ 80,296 $ 77,005 $ 72,511
======== ======== ======== ======== ========
COMMON STOCK DATA:
Per share:
Basic:
Earnings................... $ 2.16 $ 2.66 $ 2.56 $ 2.43 $ 2.25
Cash earnings(3),(4)....... 3.08 2.86 2.74 2.56 2.37
Diluted:
Earnings................... 2.15 2.64 2.55 2.43 2.25
Cash earnings(3),(4)....... 3.06 2.83 2.73 2.56 2.37
Cash dividends................ 1.24 1.24 1.20 1.18 1.18
Book value (at December 31)... 29.07 23.34 22.22 20.86 19.61
Market price (at December
31)........................ 48.00 39.75 35.00 30.00 23.75
Average shares outstanding
(in thousands)................ 35,534 31,726 31,399 31,735 32,259
BALANCE SHEETS: (IN MILLIONS)
Average balances:
Total assets.................. $ 9,199 $ 7,918 $ 7,755 $ 7,528 $ 7,200
Total earning assets.......... 8,289 7,128 7,071 6,876 6,558
Loans and leases.............. 7,105 5,980 5,510 5,461 5,172
Deposits...................... 6,967 5,903 5,618 5,178 5,082
Stockholders' equity.......... 865 726 676 640 618
At December 31:
Total assets.................. $ 15,050 $ 8,093 $ 8,002 $ 7,565 $ 7,535
Loans and leases.............. 11,340 6,239 5,807 5,260 5,534
Deposits...................... 11,260 6,089 5,937 5,358 5,152
Long-term debt and capital
securities................. 730 319 206 239 219
Stockholders' equity.......... 1,668 732 706 650 628
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AT OR FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997(2) 1996(2) 1995(2) 1994(2)
-------- -------- -------- -------- --------
(IN THOUSANDS)
SELECTED RATIOS:
Return on average:
Total assets.................. 0.83% 1.06% 1.04% 1.02% 1.01%
Total stockholders' equity.... 8.86 11.61 11.88 12.03 11.73
Dividend payout ratio........... 57.41 46.62 46.68 48.56 52.44
Average stockholders' equity to
average total assets.......... 9.40 9.17 8.72 8.50 8.58
Net interest margin............. 4.76 4.70 4.57 4.36 4.63
At December 31:
Risk-based capital ratios:
Tier 1..................... 8.17 9.51 8.42 9.03 9.31
Total...................... 10.06 11.81 11.85 11.88 12.06
Tier 1 leverage ratio......... 9.16 9.14 7.32 7.72 7.51
Allowance for credit losses to
total loans and leases..... 1.32 1.32 1.47 1.50 1.11
Nonperforming assets to total
loans and leases and other
real estate owned.......... 1.08 1.38 1.68 1.75 1.14
Allowance for credit losses to
nonperforming loans
and leases................. 1.67x 1.49x 1.18x .95x 1.04x
- -------------------------
(1) On November 1, 1998, the former BancWest Corporation ("Old BancWest") merged
with and into First Hawaiian, Inc., which changed its name to "BancWest
Corporation." BancWest used the purchase method of accounting for the
merger. As a result, the financial information presented in this table at
and for the year ended December 31, 1998, includes the two months of
combined operations of First Hawaiian, Inc. and Old BancWest from November
1, 1998. The increase in substantially all categories of BancWest's
consolidated financial data between amounts reported at December 31, 1998
and those reported in previous years resulted from the merger of First
Hawaiian, Inc. and Old BancWest. In accordance with purchase accounting,
financial information at and for the years ended before 1998 is historical
information of First Hawaiian, Inc. and is not restated to reflect the
merger with Old BancWest.
(2) Net income before restructuring, merger related and other nonrecurring costs
of $21.9 million in connection with the merger of Old BancWest Corporation
with and into First Hawaiian, Inc. on November 1, 1998 was $98.5 million.
(3) Cash earnings per share (which is unaudited) is defined as earnings per
share in accordance with generally accepted accounting principles before the
after-tax amortization of goodwill and core deposit intangible.
(4) Excluding after-tax restructuring, merger-related and other nonrecurring
costs of $21.9 million in 1998.
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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
OF SIERRAWEST BANCORP
This financial information for SierraWest for the fiscal years 1994 to 1998
is only a summary. You should read it with the audited consolidated financial
statements and the accompanying notes of SierraWest, which SierraWest has filed
with the Securities and Exchange Commission. For more information, see "WHERE
YOU CAN FIND MORE INFORMATION."
AT OR FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------
1998 1997(2) 1996(2) 1995(2) 1994(2)
-------- -------- -------- -------- --------
(IN THOUSANDS)
STATEMENTS OF OPERATIONS DATA
Total interest income................. $ 65,102 $ 58,565 $ 46,371 $ 38,141 $ 30,610
Total interest expense................ 25,620 23,221 17,960 13,972 9,693
-------- -------- -------- -------- --------
Net interest income................... 39,482 35,344 28,411 24,169 20,917
Provision for possible loan and lease
losses............................. 2,370 2,799 1,421 1,594 1,141
-------- -------- -------- -------- --------
Net interest income after provision
for possible loan and lease
losses............................. 37,112 32,545 26,990 22,575 19,776
Total non-interest income............. 14,601 13,686 9,370 10,147 10,839
Total non-interest expense............ 38,268 31,610 28,478 27,574 23,964
Provision for income taxes............ 5,767 5,673 2,995 1,827 2,427
-------- -------- -------- -------- --------
Net income............................ $ 7,678 $ 8,948 $ 4,887 $ 3,321 $ 4,224
======== ======== ======== ======== ========
STATEMENTS OF
FINANCIAL CONDITION DATA
Total assets.......................... $879,169 $786,746 $639,718 $497,601 $416,707
Loans and leases, net................. 616,274 545,822 430,745 345,358 278,541
Allowance for possible loan and lease
losses............................. 8,709 7,891 5,647 5,003 4,654
Total deposits........................ 782,552 701,001 569,994 435,388 359,603
Convertible debentures................ 0 2,468 12,210 14,025 14,025
Notes payable......................... 2,650 2,650 2,650 0 0
Shareholders' equity.................. 78,270 69,383 47,285 42,095 38,889
PER SHARE DATA(1)
Book value............................ $ 14.76 $ 13.82 $ 12.67 $ 11.95 $ 10.98
Net income:
Basic.............................. 1.49 1.96 1.35 0.94 1.20
Diluted............................ 1.41 1.73 1.10 0.81 1.00
Cash dividends declared............... 0.40 0.40 0.38 0.31 0.14
Shares used to compute net income per
share:
Basic.............................. 5,151 4,566 3,622 3,525 3,518
Diluted............................ 5,474 5,280 5,014 4,951 4,859
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AT OR FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------
1998 1997(2) 1996(2) 1995(2) 1994(2)
-------- -------- -------- -------- --------
(IN THOUSANDS)
Dividend payout ratio:
Basic.............................. 26.7% 20.2% 28.0% 33.2% 11.3%
Diluted............................ 28.2 23.0 34.3 38.5 13.5
SELECTED RATIOS
Return on average assets.............. 0.9% 1.2% 0.9% 0.7% 1.0%
Return on average shareholders'
equity............................. 10.5 14.9 11.0 8.2 11.3
Net interest margin................... 5.3 5.5 5.8 6.3 6.0
Average shareholders' equity to
average assets..................... 8.8 8.4 8.1 9.2 9.1
ASSET QUALITY RATIOS
Allowance for possible loan and lease
losses to total loans and leases... 1.4% 1.4% 1.3% 1.4% 1.6%
Allowance for possible loan and lease
losses to nonaccrual loans......... 100.5 113.6 103.9 76.7 124.4
Net charge-offs to average loans
outstanding........................ 0.3 0.3 0.2 0.4 0.4
Nonaccrual and restructured performing
loans to total loans and leases.... 1.7 1.6 1.5 2.0 1.4
Nonperforming assets to total
assets............................. 1.1% 1.1% 0.9% 1.5% 1.3%
- -------------------------
(1) All per share data has been adjusted to reflect stock dividend and stock
splits and has been restated under the guidelines of SFAS 128. Book value
per share is calculated as total shareholders' equity divided by the number
of shares outstanding at the end of the period.
(2) Restated on a historical basis to reflect the acquisition of California
Community Bancshares Corporation on April 15, 1998, under the pooling of
interests method of accounting.
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COMPARATIVE PER COMMON SHARE DATA
We have summarized below the historical per share information for BancWest
and SierraWest and additional information as if the companies had been combined
for the periods shown ("pro forma") calculated based on an exchange ratio of
0.82 of a share of BancWest common stock per share of SierraWest common stock.
You should read this information with our historical financial statements
and related notes contained in the annual reports and other information that we
have filed with the Securities and Exchange Commission. See "WHERE YOU CAN FIND
MORE INFORMATION" on page 91.
SierraWest equivalent pro forma share amounts are calculated by multiplying
the pro forma book value per share, net income per share and BancWest's
historical per share dividends by the exchange ratio (0.82) so that the per
share amounts equate to the respective values for one share of SierraWest common
stock. You should not rely on the pro forma information as being indicative of
the historical results that we would have had or the future results that will
occur after the merger.
YEAR ENDED DECEMBER 31,
--------------------------
1998 1997 1996
------ ------ ------
BANCWEST
Net income:
Basic:
Historical............................................. $ 2.16(1) $ 2.66 $ 2.56
Pro forma.............................................. 2.12(1) 2.63 2.48
Diluted:
Historical............................................. 2.15(1) 2.64 2.55
Pro forma.............................................. 2.10(1) 2.58 2.41
Dividends:
Historical................................................ 1.24 1.24 1.20
Book value:
Historical................................................ 29.07
Pro forma................................................. 28.29
SIERRAWEST
Net income:
Basic:
Historical............................................. $ 1.49 $ 1.96 $ 1.35
Equivalent pro forma(2)................................ 1.74 2.16 2.03
Diluted:
Historical............................................. 1.41 1.73 1.10
Equivalent pro forma(2)................................ 1.72 2.11 1.98
Dividends:
Historical............................................. 0.40 0.40 0.38
Equivalent pro forma(3)................................ 1.02 1.02 0.98
Book value:
Historical............................................. 14.76
Equivalent pro forma(2)................................ 23.20
- -------------------------
(1) Includes after tax restructuring, merger related and other nonrecurring
costs of $21.9 million in connection with the merger of Old BancWest with
and into First Hawaiian, Inc. (now known as BancWest Corporation) on
November 1, 1998.
(2) Pro forma amounts for BancWest multiplied by 0.82 (the exchange ratio).
(3) Historical amounts for BancWest multiplied by 0.82 (the exchange ratio).
11
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INFORMATION REGARDING FORWARD LOOKING STATEMENTS
This proxy statement-prospectus contains forward looking statements
regarding each of SierraWest and BancWest and the combined company following the
merger, including statements relating to:
- the financial condition, results of operations and business of BancWest
following completion of the merger,
- cost savings, enhanced revenues and accretion to reported earnings that
are expected to be realized from the merger, and
- the restructuring charges expected to be incurred in connection with the
merger.
These forward-looking statements involve certain risks and uncertainties.
Factors that may cause actual results to differ materially from those
contemplated by such forward looking statements include, among others, the
following possibilities:
- expected cost savings from the merger cannot be fully realized or
realized within the expected time frame,
- revenues following the merger are lower than expected or deposit
withdrawals, operating costs or customer loss and business disruption
following the merger may be greater than expected,
- competitive pressures among depository and other financial services
companies increase significantly,
- costs or difficulties related to the integration of the businesses of
BancWest and SierraWest are greater than expected,
- changes in the interest rate environment reduce interest margins, cause
an increase in the prepayment rate on mortgages and other loans or reduce
the demand for new loans,
- general economic or business conditions, either internationally or
nationally or in the states in which the combined company will be doing
business, are less favorable than expected, resulting in, among other
things, a deterioration in credit quality or a reduced demand for credit,
- legislation or regulatory requirements or changes adversely affect the
businesses in which the combined company would be engaged,
- technology-related changes, including "Year 2000" data systems compliance
issues, may be harder to make or more expensive than expected, and
- changes in the securities markets.
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ANNUAL MEETING OF SIERRAWEST SHAREHOLDERS
DATE, TIME AND PLACE
The annual meeting of the shareholders of SierraWest will be held at the
North Tahoe Conference Center, 8318 North Lake Boulevard, Kings Beach,
California on Thursday, May 27, 1999, at 4:00 p.m., local time.
THE ANNUAL MEETING
At the annual meeting, holders of shares of common stock, no par value, of
SierraWest will consider and vote upon the approval of the Agreement and Plan of
Merger, dated as of February 25, 1999, as amended, among BancWest Corporation,
its wholly-owned subsidiary, Bank of the West, and SierraWest Bancorp. The
merger agreement provides for, among other things,
- the merger of SierraWest with and into Bank of the West, and
- the conversion of all the outstanding shares of SierraWest's common stock
into shares of common stock, par value $1.00 per share, of BancWest.
For more information see "THE MERGER" and "THE MERGER AGREEMENT."
THE BOARD OF DIRECTORS OF SIERRAWEST HAS, BY UNANIMOUS VOTE, APPROVED THE
MERGER AGREEMENT AND RECOMMENDS A VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
In addition to the proposal to approve the merger agreement, at the annual
meeting you will be asked to:
- elect 13 directors to serve until completion of the merger or until the
next annual meeting of shareholders, and
- transact any other business properly brought at the annual meeting.
THE BOARD OF DIRECTORS OF SIERRAWEST ALSO RECOMMENDS A VOTE FOR EACH OF THE
PROPOSED NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS.
RECORD DATE; QUORUM
Only holders of record of SierraWest common stock at the close of business
on April 19, 1999 are entitled to notice of and will be entitled to vote at the
annual meeting. As of the record date, there were shares of SierraWest
common stock issued and outstanding and entitled to vote at the annual meeting.
The shares were held by approximately holders of record.
The required quorum for the transaction of business at the annual meeting
is a majority of the outstanding shares of SierraWest's common stock issued and
outstanding on the record date, which shares may be present in person or
represented by proxy.
VOTE REQUIRED
The approval of the merger agreement will require the affirmative vote of
the holders of record of a majority of the outstanding shares of SierraWest
common stock on the record date.
In the election of directors, the 13 nominees receiving the most votes will
be elected.
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19
Holders of record of SierraWest common stock on the record date are each
entitled to one vote per share on the merger agreement. Shareholders are
entitled to cumulate votes for the election of directors.
As of the record date, directors and executive officers of SierraWest
beneficially owned or were entitled to vote shares of common
stock, representing approximately % of the outstanding shares of common
stock on the record date. Each director has indicated his or her present
intention to vote the common stock so owned by him or her (1) for the approval
of the merger agreement and (2) for each of the nominees for election to the
board of directors. In addition, as of the record date, SierraWest Bank, as
fiduciary, custodian or agent, held a total of shares of common
stock, representing approximately % of the outstanding shares of common
stock on the record date.
VOTING OF PROXIES
The proxy accompanying this proxy statement-prospectus is solicited on
behalf of the board of directors of SierraWest for use at the annual meeting.
Please complete, date and sign the accompanying proxy and promptly return it in
the accompanying envelope or otherwise mail it to SierraWest. All proxies that
are properly executed and returned, and that are not revoked, will be voted at
the annual meeting in accordance with the instructions indicated on the proxies.
IF YOU SIGN AND SEND IN YOUR PROXY AND DO NOT INDICATE HOW YOU WANT TO VOTE,
YOUR PROXY WILL BE COUNTED AS A VOTE FOR EACH OF THE PROPOSALS.
For voting purposes at the annual meeting, only shares affirmatively voted
in favor of approval of the merger agreement will be counted as favorable votes
for approval. IF YOU FAIL TO EITHER RETURN YOUR PROXY CARD OR VOTE IN PERSON OR
CHOOSE TO ABSTAIN FROM VOTING, THE EFFECT WILL BE THE SAME AS A VOTE AGAINST THE
MERGER.
If your shares are held in "street name" by your broker and you fail to
instruct your broker regarding how to vote your shares, the effect will be the
same as a vote against the merger.
The management of SierraWest is not aware of any other matters to be voted
on at the annual meeting. If other matters should properly come before the
annual meeting, the proxy holders will vote on such matters in accordance with
their judgment.
The persons named as proxies by a shareholder may propose and vote for one
or more adjournments of the annual meeting to permit further solicitations of
proxies in favor of any proposal. However, no proxy which is voted against the
merger will be voted in favor of any such adjournment.
REVOCABILITY OF PROXIES
You may revoke your proxy at any time before it is voted by:
- filing with the Secretary of SierraWest a duly executed revocation of
proxy,
- submitting a duly executed proxy bearing a later date, or
- attending the annual meeting and voting in person.
Simply attending the annual meeting, however, will not revoke your proxy.
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20
SOLICITATION OF PROXIES
All expenses of our solicitation of proxies, including the cost of mailing
this proxy statement-prospectus to you, will be paid by us. In addition to
solicitation by use of the mails, proxies may be solicited from shareholders by
our directors, officers and employees in person or by telephone, telegram or
other means of communication. Such directors, officers and employees will not
receive additional compensation, but we may reimburse them for their reasonable
out-of-pocket expenses in connection with such solicitation. We have retained
Morrow & Co., Inc., a proxy solicitation firm, for assistance in connection with
the solicitation of proxies for the annual meeting at a cost of approximately
$10,000 plus reimbursement of reasonable out-of-pocket expenses. Arrangements
will also be made with brokerage houses, custodians, nominees and fiduciaries
for the forwarding of proxy solicitation materials to beneficial owners of
shares held of record by such brokerage houses, custodians, nominees and
fiduciaries, and we will reimburse such brokerage houses, custodians, nominees
and fiduciaries for their reasonable expenses incurred in connection with such
solicitation.
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PROPOSAL ONE
THE MERGER
GENERAL
The board of directors of SierraWest has approved the merger agreement,
which provides for the merger of SierraWest with and into Bank of the West. Upon
completion of the merger, the separate corporate existence of SierraWest will
end. This section of the proxy statement-prospectus describes certain aspects of
the merger, including the background of the merger and SierraWest's reasons for
the merger.
In the merger, each outstanding share of SierraWest common stock will be
converted into the right to receive 0.82 of a share of BancWest common stock.
Based on the number of shares of SierraWest common stock outstanding as of April
9, 1999, BancWest will issue approximately 4,373,335 shares of BancWest common
stock in the merger, representing approximately 13.9% of the number of shares of
BancWest common stock and 7.6% of the number of shares of BancWest common stock
and Class A Common Stock that will be outstanding after the merger.
The merger agreement also provides that before the merger, BancWest may
specify that, for any reasonable business, tax or regulatory purpose, the
parties to the merger agreement and SierraWest Bank enter into transactions that
are different from the merger described in this section. No such change,
however, may materially and adversely affect the timing of the completion of the
merger or adversely affect the economic benefits, the form of consideration or
the tax effect of the merger to you.
BACKGROUND OF THE MERGER
The board of directors of SierraWest has consistently applied a policy of
identifying and reviewing any serious expression of interest in a business
combination. To that end, in late 1996 the board created a Merger and
Acquisition Committee and a Strategic Planning Committee that regularly met to
evaluate the strategic and shareholder value implications for SierraWest when
possible business combinations were considered. Those committees directed
management of SierraWest to communicate with parties who expressed an interest
in SierraWest. Such meetings took place from time to time and were reported to
the board committees and full board, as appropriate.
In July 1997, SierraWest commenced negotiations with California Community
Bancshares Corporation for the acquisition and merger of California Community
Bancshares and its subsidiary bank, Continental Pacific Bank. As those
negotiations were proceeding, SierraWest was contacted by the president of Bank
A, a large regional bank, to express interest in a possible acquisition of
SierraWest. Management representatives of SierraWest held informal discussions
with representatives of Bank A and in mid-October 1997, executed a
confidentiality agreement pursuant to which SierraWest provided non-public
information to Bank A.
In early November 1997, Bank A expressed its interest in pursuing a
possible transaction with SierraWest. At a special meeting, the SierraWest board
considered the implications of the expression of interest in light of the fact
that the transaction with California Community Bancshares was in its final stage
of documentation and about to be announced. SierraWest's advisers addressed the
legal and financial considerations. SierraWest then discussed these issues with
Bank A. Bank A responded that it would not accommodate the combination of
SierraWest and California Community Bancshares as part of its proposed
transaction. The SierraWest board in another special meeting voted
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unanimously to proceed with the California Community Bancshares transaction and
announced the transaction three days later. Subsequently in May 1998, Bank A had
further conversations with SierraWest's management but those conversations
terminated when Bank A entered into a larger merger which precluded the
acquisition of SierraWest.
In February 1998, the chief executive officer of Bank B, a regional banking
company, contacted the management of SierraWest to seek a meeting. A meeting
took place but further discussions were deferred until the completion of the
California Community Bancshares transaction in April 1998. In June 1998, after
additional discussions, Bank B signed a confidentiality agreement under which
SierraWest provided non-public information to Bank B. After receiving the
confidential information, Bank B did not communicate further with SierraWest for
an extended period of time.
In August 1998, the SierraWest board met with NationsBanc Montgomery
Securities and SierraWest's legal advisers to review the strategic alternatives
available to SierraWest and to consider commencing an active process of
evaluating these strategic alternatives. The board subsequently voted to proceed
with a process by authorizing the preparation of confidential materials for use
in approaching possible acquirers. However, immediately after that decision, a
significant stock market decline, which disproportionately affected bank, and
particularly community bank, stocks caused the board to slow down the process
until the marketplace stabilized.
On October 19, 1998, SierraWest formally retained NationsBanc Montgomery as
its investment bank to advise it on strategic alternatives and to establish a
process by which a possible business combination could be best pursued. In this
role, NationsBanc Montgomery provided SierraWest with financial summaries and
public information regarding Bank B and other banks that had previously
indicated an interest in merger discussions as well as a broad range of
institutions that might be potential partners. The board decided that if a sale
of SierraWest were to take place, it would be in the best interest of the
shareholders, employees and customers of SierraWest if the potential acquirers
approached were limited to a select group of highly qualified banks selected
based upon ability to pay, potential interest in SierraWest's market, size,
stock price and liquidity, and future prospects. Consequently, 11 potential
buyers, including Bank A and Bank B, were approached. Seven of the 11 potential
buyers contacted returned confidentiality agreements, signaling interest in
reviewing the confidential memorandum and potentially proceeding further with
possible merger discussions.
In early November 1998, five of the parties indicated their interest in
proceeding with a possible transaction by expressing ranges of pricing and
preliminary deal structures. On November 19, 1998, the board reviewed the
expressions of interest and decided that one proposal was below an acceptable
level to be considered. On November 30 and December 1, 1998, the board met
individually with representatives of each of the four remaining potential buyers
to determine if proceeding with such parties was in the best interests of the
shareholders of SierraWest. As a result of those meetings, the board eliminated
one prospective party because the board did not believe that SierraWest fit well
with the party's strategic focus and growth pattern and chose to proceed with
three parties, including BancWest, through the due diligence process.
One of the remaining parties informed NationsBanc Montgomery that it would
not proceed with due diligence unless it was permitted to do so on an exclusive
basis. The Merger and Acquisition Committee of the SierraWest board met on
December 17, 1998 to consider this request. The committee determined that it was
appropriate and in the best interests of the shareholders to proceed with the
process which it had initiated and
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informed that specific party that without the completion of its due diligence,
that party's expression of interest could not be considered a binding proposal
and that SierraWest would proceed with its process. The party declined to
participate further in the process.
During December 1998, BancWest and the other remaining party conducted due
diligence on SierraWest. BancWest and the other bidder submitted final offers on
January 6, 1999. On January 8, 1999, the Merger and Acquisition Committee met
with its legal and financial advisors to discuss the two bids. The committee
also directed SierraWest representatives to meet with BancWest representatives
to review various issues and to determine if the pricing structure could be
enhanced. The committee also decided to seek the advice of a respected economist
to review the status of the Hawaii economy and the possible effect of the
continuing Asian financial crisis on the performance of BancWest.
On January 19, 1999, the Merger and Acquisition Committee met again to
review the information obtained in response to the committee's directions. The
committee indicated its preference to proceed exclusively with BancWest and to
make such a recommendation to the board.
The BancWest board held a meeting on January 21, 1999, at which BancWest's
management described the results of its due diligence and the terms of the
expression of interest that had been communicated to SierraWest.
On January 26, 1999, the Merger and Acquisition Committee again met to
review the report of the economist and voted unanimously to recommend the
BancWest proposal to the full board. On January 27, 1999, the board voted to
pursue negotiation of a definitive agreement on an exclusive basis with
BancWest. An exclusivity agreement was thereafter executed with BancWest.
Between January 27, 1999, and February 25, 1999, the managements of
SierraWest and BancWest, together with their respective outside counsels,
negotiated the terms of the merger agreement and the stock option agreement.
The BancWest board held another meeting on February 18, 1999, at which
BancWest's directors discussed the proposed merger in detail with BancWest's
management, including the consideration to be paid by BancWest and the related
transactions. At the meeting, the BancWest board approved the merger agreement
and the related agreements contemplated thereby and authorized and directed
BancWest management to take all action reasonably necessary to effect the
merger.
On February 25, 1999, at a meeting of the SierraWest board, NationsBanc
Montgomery delivered its oral opinion that the consideration to be received was
fair to the SierraWest shareholders, as of that date. NationsBanc Montgomery's
oral opinion was subsequently confirmed in writing as of such date. At that
meeting, the SierraWest board approved the merger agreement and the transactions
contemplated by the merger agreement as in the best interests of SierraWest and
its shareholders. The SierraWest board also authorized the SierraWest management
to finalize the terms of the merger agreement and the stock option agreement.
Following the February 25, 1999 SierraWest board meeting and after the
close of the market, the parties signed the merger agreement and the stock
option agreement and issued a joint press release publicly announcing the
merger.
On March 24, 1999, the parties entered into an amendment to the merger
agreement to effect certain technical amendments.
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REASONS FOR THE MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS
In evaluating the terms of the merger, the board of directors of SierraWest
considered a number of different factors, including the following material
factors:
HISTORICAL AND RECENT MARKET PRICES OF SIERRAWEST SHARES COMPARED TO
BANCWEST SHARES. The board of directors reviewed the historical and recent
trading prices for SierraWest stock. The board of directors considered as
favorable the fact that, upon completion of the merger, SierraWest shareholders
would receive BancWest shares with a market value as of February 25, 1999 (the
date SierraWest's board approved the merger) of $35.26 per share, representing a
premium of 22% over the closing sales price for SierraWest shares of $28.88, on
such date. The board of directors also considered that after the trading price
of SierraWest's stock price fell in August 1998, it did not recover to the same
extent as many of the bank stocks in its peer group did in the last quarter of
1998 and the beginning of 1999. The board of directors also compared BancWest's
stock price to its book value ratio to those of other potential acquirers. The
board of directors found to be favorable the fact that BancWest's stock price to
book value ratio was relatively low, suggesting that, in this respect, the
BancWest shares that you will receive in the merger may represent a greater
value than the shares that you would receive in an identically priced stock
merger with a different acquirer whose shares trade at higher multiples of book
value.
SIERRAWEST'S BUSINESS, CONDITIONS AND PROSPECTS. The board of directors
considered information with respect to the financial condition, results of
operations and business risks of SierraWest on both a historical and prospective
basis and current industry, economic and market conditions. Among other things,
the board considered the negative impact that continuing lower interest rates
could have on SierraWest's Small Business Administration loan servicing assets.
Lower interest rates lead borrowers to refinance their loans. SierraWest's loan
servicing assets must be amortized as a charge against income over the expected
future life of the underlying loans. The increase in prepayments increases the
amortization charge which adversely affects SierraWest's results of operations.
BANCWEST'S BUSINESS, CONDITIONS AND PROSPECTS. The board of directors
considered information with respect to the financial condition, financial
performance, business operations, capital levels, assets quality, loan portfolio
breakdown and prospects of BancWest on both a historical and prospective basis.
The board of directors also considered information regarding current industry,
economic and market conditions in the financial services industry. SierraWest's
financial advisors, NationsBanc Montgomery, made presentations to and provided
the board of directors with information regarding BancWest's financial condition
and prospects after conducting business and financial due diligence. Officers of
SierraWest also made presentations to the board of directors regarding
BancWest's financial condition, business and prospects, all but one of four
presentations were made prior to conducting due diligence. In evaluating
BancWest's prospects, the board of directors considered, among other things,
BancWest's financial performance, the geographic areas in which BancWest
conducts business compared to those in which SierraWest conducts business, the
state of the economies in Northern California and Hawaii, the primary areas in
which BancWest conducts its business, and the effect those economies may have on
BancWest's performance. The board also considered the report of an economist
hired by the board to review the status of the Hawaiian economy and the possible
effect of the continuing Asian financial crisis on the performance of BancWest.
In addition, the board of directors considered and found favorable the fact that
BancWest's stock has greater market capitalization and liquidity compared to
SierraWest.
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OPINION OF NATIONSBANC MONTGOMERY. At its February 25, 1999 meeting, the
board of directors considered NationsBanc Montgomery's oral opinion delivered to
the board of directors at that meeting (which NationsBanc Montgomery
subsequently confirmed in a written opinion of that same date) that the
consideration to be received by SierraWest shareholders in the merger was, as of
that date, fair to SierraWest's shareholders, from a financial point of view.
TERMS OF THE MERGER. The board of directors considered the number and
value of shares of BancWest stock to be issued in exchange for each outstanding
share of SierraWest stock and found such consideration was the most favorable of
the final offers provided to SierraWest. In addition, the board considered the
terms, conditions, covenants and representations contained in the merger
agreement and the stock option agreement. The board also considered and found
favorable the fixed exchange ratio and absence of any collar, which would allow
you to benefit from any increase in the price of BancWest common stock, in view
of its relatively low stock price to book value ratio.
THE TAX-FREE NATURE OF THE MERGER. The board of directors considered and
found favorable the fact that the merger is structured to be tax free for
federal income tax purposes. You will recognize no gain for federal income tax
purposes in connection with the exchange of SierraWest stock for BancWest stock
(except with respect to cash received for fractional shares of BancWest stock).
IMPACT ON DEPOSITORS, CUSTOMERS AND EMPLOYEES. The board of directors
considered the impact of the merger upon SierraWest's depositors, customers,
employees, the overall compatibility of SierraWest's office and branch structure
compared to those of BancWest's.
The board of directors did not assign any relative or specific value to any
of the factors.
THE BOARD OF DIRECTORS OF SIERRAWEST HAS, BY UNANIMOUS VOTE, APPROVED THE
MERGER AGREEMENT AND RECOMMENDS A VOTE FOR APPROVAL OF THE MERGER AGREEMENT.
OPINION OF FINANCIAL ADVISOR
GENERAL. SierraWest engaged NationsBanc Montgomery on October 19, 1998, to
identify opportunities for maximizing shareholder value, including, among other
things, a sale of SierraWest. As part of its engagement, NationsBanc Montgomery
agreed to render to SierraWest's board an opinion with respect to the fairness
from a financial point of view of the consideration to be received by you in a
potential sale of SierraWest. NationsBanc Montgomery is a nationally recognized
investment banking firm and, as part of its investment banking activities, is
regularly engaged in the valuation of businesses and their securities in
connection with merger transactions and other types of acquisitions, negotiated
underwritings, private placements and valuations for corporate and other
purposes. SierraWest selected NationsBanc Montgomery to render the opinion on
the basis of its experience and expertise and its reputation in the banking and
investment communities.
At a meeting of SierraWest's board on February 25, 1999, NationsBanc
Montgomery delivered its oral opinion that the consideration to be received by
the holders of SierraWest's common stock in the merger was fair to such
shareholders from a financial point of view, as of the date of such opinion.
NationsBanc Montgomery's oral opinion was subsequently confirmed in writing as
of that date.
THE FULL TEXT OF NATIONSBANC MONTGOMERY'S WRITTEN OPINION TO SIERRAWEST'S
BOARD, DATED FEBRUARY 25, 1999, WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS
CONSIDERED, AND LIMITATIONS OF THE REVIEW BY NATIONSBANC MONTGOMERY, IS ATTACHED
AS APPENDIX C TO THIS
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PROXY STATEMENT-PROSPECTUS. YOU SHOULD READ THE NATIONSBANC MONTGOMERY OPINION
CAREFULLY AND IN ITS ENTIRETY. THE SUMMARY OF NATIONSBANC MONTGOMERY'S OPINION
INCLUDED IN THIS DOCUMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF NATIONSBANC MONTGOMERY'S OPINION. IN FURNISHING SUCH OPINION,
NATIONSBANC MONTGOMERY DOES NOT ADMIT THAT IT IS AN EXPERT WITH RESPECT TO THE
REGISTRATION STATEMENT OF WHICH THIS PROXY STATEMENT-PROSPECTUS IS A PART WITHIN
THE MEANING OF THE TERM "EXPERT" AS USED IN THE SECURITIES ACT OF 1933 AND THE
RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION, NOR DOES IT
ADMIT THAT ITS OPINION CONSTITUTES A REPORT OR VALUATION WITHIN THE MEANING OF
SECTION 11 OF THE SECURITIES ACT. NATIONSBANC MONTGOMERY'S OPINION IS DIRECTED
TO SIERRAWEST'S BOARD, COVERS ONLY THE FAIRNESS FROM A FINANCIAL POINT OF VIEW
OF THE CONSIDERATION TO BE RECEIVED BY YOU AS OF THE DATE OF THE OPINION AND
DOES NOT CONSTITUTE A RECOMMENDATION TO YOU AS TO HOW YOU SHOULD VOTE AT
SIERRAWEST'S ANNUAL MEETING.
In connection with its February 25, 1999 opinion, NationsBanc Montgomery,
among other things:
- reviewed certain publicly available financial and other data with respect
to SierraWest and BancWest, including the consolidated financial
statements for recent years and interim periods to December 31, 1998, and
certain other relevant financial and operating data relating to
SierraWest and BancWest made available to NationsBanc Montgomery from
published sources and from the internal records of SierraWest and
BancWest,
- reviewed the February 21, 1999 draft of the merger agreement,
- reviewed certain publicly available information concerning the trading
of, and market for, SierraWest common stock and BancWest common stock,
- compared certain financial data of SierraWest and BancWest with those of
certain other companies in the banking industry which NationsBanc
Montgomery deemed to be relevant,
- considered the financial terms, to the extent publicly available, of
selected recent business combinations of companies in the banking
industry which NationsBanc Montgomery deemed to be comparable, in whole
or in part, to the merger,
- conducted discussions with representatives of the senior management of
SierraWest and BancWest concerning their respective businesses and
prospects,
- reviewed certain information, including financial forecasts and related
assumptions, furnished to NationsBanc Montgomery by SierraWest and
BancWest, respectively, and
- performed such other analyses and examinations as NationsBanc Montgomery
deemed appropriate.
In connection with NationsBanc Montgomery's review, NationsBanc Montgomery
did not assume any obligation independently to verify the information listed
above and relied on its accuracy and completeness in all material respects. With
respect to the financial forecasts for SierraWest and BancWest provided to
NationsBanc Montgomery by their respective managements, upon their advice and
with SierraWest's consent, NationsBanc Montgomery assumed for purposes of its
opinion that the forecasts were reasonably prepared on bases reflecting the best
available estimates and judgments of their respective managements at the time of
preparation as to the future financial performance of SierraWest and BancWest
and that they provided a reasonable basis upon which
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NationsBanc Montgomery could form its opinion. NationsBanc Montgomery assumed
that there were no material changes in SierraWest's or BancWest's assets,
financial condition, results of operations, business or prospects since the
respective dates of their last financial statements made available to
NationsBanc Montgomery. NationsBanc Montgomery relied on advice of counsel to
SierraWest as to all legal matters with respect to SierraWest, the merger and
the merger agreement. NationsBanc Montgomery assumed that the merger will be
completed in a manner that complies in all respects with the applicable
provisions of the Securities Act of 1933, the Securities Exchange Act of 1934
and all other applicable federal and state statutes, rules and regulations. In
addition, NationsBanc Montgomery did not assume responsibility for reviewing any
individual credit files, or making an independent evaluation, appraisal or
physical inspection of any of the assets or liabilities (contingent or
otherwise) of SierraWest or BancWest, nor was NationsBanc Montgomery furnished
with any such appraisals. NationsBanc Montgomery is not an expert in the
evaluation of loan portfolios for purposes of assessing the adequacy of the
allowances for losses with respect thereto and assumed, with SierraWest's
consent, that such allowances for each of SierraWest and BancWest were in the
aggregate adequate to cover such losses. SierraWest informed NationsBanc
Montgomery, and NationsBanc Montgomery assumed, that the merger will be recorded
as a pooling of interests under generally accepted accounting principles.
Finally, NationsBanc Montgomery's opinion was based on economic, monetary and
market and other conditions as in effect on, and the information made available
to NationsBanc Montgomery as of, the date of the opinion.
Set forth below is a brief summary of the information presented by
NationsBanc Montgomery to SierraWest's board on February 25, 1999, in connection
with its opinion.
DISCOUNTED DIVIDEND ANALYSIS. In performing the discounted dividend
analysis, NationsBanc Montgomery used SierraWest's management estimates of
earnings per share and dividend payments over a four-year period. The estimated
earnings per share in the year 2002 was multiplied by an estimated price to
earnings multiple ranging from 13.0x to 15.0x. This product was then added to
the cumulative estimated dividends for the prior four years and the sum of these
two numbers was discounted to the present using discount rates ranging from
12.5% to 17.5%. This analysis indicated that the present value of SierraWest's
future stock price plus dividends ranged from $23.89 to $32.52 per share. The
$36.59 offer from BancWest, based on a closing price for BancWest common stock
of $44.625 on February 23, 1999 exceeded the range of values implied by this
analysis.
COMPARABLE PUBLIC COMPANY ANALYSIS. NationsBanc Montgomery analyzed the
trading multiples of a comparison group of 17 publicly traded California banks
(a group of banks published in the NationsBanc Montgomery Western Bank Monitor).
The multiples that were analyzed were price to book value, price to tangible
book value, price to latest twelve months ("LTM") earnings, price to deposits,
and the ratio of the premium (i.e., purchase price in excess of tangible book
value) to core deposits. The median values of these multiples were then
multiplied by SierraWest's current values. This analysis indicated a reference
range for SierraWest's current common stock price from $27.03 to $32.20 per
share. Based on the most common measures of public market valuation, price to
book value, price to tangible book value and price to LTM earnings, the analysis
indicated a reference range for SierraWest's current common stock price from
$27.03 to $27.85 per share with a median value of $27.58, as compared to
BancWest's offer of $36.59 per share.
ANALYSIS OF SELECTED MERGER TRANSACTIONS. NationsBanc Montgomery reviewed
the consideration paid in selected categories of bank transactions for which the
relevant
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information was publicly available. Specifically, NationsBanc Montgomery
reviewed selected bank transactions from January 1, 1997 to February 25, 1999,
involving (1) mergers in California with transaction values greater than $50
million and less than $500 million, (2) national mergers with transaction values
greater than $50 million and less than $500 million, and (3) all national
mergers. The multiples paid to SierraWest in this transaction are in line with
multiples paid in transactions in each of the above categories. For each
transaction, NationsBanc Montgomery analyzed data illustrating, among other
things, purchase price to book value, purchase price to "adjusted" book value
(assuming a premium is paid on a 6% "normalized" equity to assets level and
dollar for dollar for equity above 6%), purchase price to tangible book value,
purchase price to LTM earnings, purchase price to deposits, the ratio of the
premium (i.e., purchase price in excess of tangible book value) to core
deposits, and the premium paid to the seller's closing stock price thirty days
prior to announcement. For purposes of this analysis, NationsBanc Montgomery
specifically focused on bank transactions that have been announced since January
1, 1997.
A summary of the median multiples in the analysis is as follows:
PRICE TO
PRICE TO PRICE TO TANG. PRICE TO PREMIUM PREMIUM
TRANSACTION BOOK ADJ. BK. BOOK LTM PRICE TO TO CORE TO PRICE
CATEGORIES VALUE VALUE VALUE EPS DEPOSITS DEPOSITS 30 DAYS PRIOR
- ----------- -------- -------- -------- -------- -------- -------- -------------
1997-1999 Year-to-Date
Mergers in California with
Transaction Values Greater
than $50 Million and Less
than $500 Million......... 2.4x 4.0x 2.9x 21.2x 32.3% 23.0% 26.9%
1997-1999 Year-to-Date
National Mergers with
Transaction Values Greater
than $50 Million and Less
than $500 Million......... 2.9x 3.7x 3.0x 22.5x 32.3% 23.4% 31.0%
1997-1999 Year-to-Date All
National Mergers.......... 2.4x 3.1x 2.4x 20.0x 25.9% 17.4% 32.5%
A summary of the results of NationsBanc Montgomery's analysis of the multiples
to be paid in the merger with BancWest is as follows:
PRICE TO
PRICE TO PRICE TO TANG. PRICE TO PREMIUM PREMIUM
BOOK ADJ. BK. BOOK LTM PRICE TO TO CORE TO PRICE
VALUE VALUE VALUE EPS DEPOSITS DEPOSITS 30 DAYS PRIOR
-------- -------- -------- -------- -------- ---------- -------------
2.5x 3.2x 2.5x 19.2x 25.7% 19.5% 42.8%
CONTRIBUTION ANALYSIS. NationsBanc Montgomery analyzed the contribution of
each of SierraWest and BancWest to, among other things, assets, loans, deposits,
and tangible equity of the pro forma combined company for the period ending
December 31, 1998, and projected net income and cash net income for the calendar
year ending December 31, 1999. This analysis showed, among other things, that
based on pro forma combined balance sheets for SierraWest and BancWest at
December 31, 1998, SierraWest would have contributed approximately 6% of the
assets, 5% of the loans, 6% of the deposits, and 7% of the tangible equity. The
pro forma projected income statement for the period ending December 31, 1999,
showed that SierraWest would contribute approximately 7% and 5% of the net
income and cash net income, respectively, in 1999. Based on an exchange ratio of
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0.82 of a share of BancWest common stock for each share of SierraWest's common
stock, holders of SierraWest's common stock would own approximately 7.3% of the
combined company based on common shares outstanding at December 31, 1998, a
20.7% premium to its median contribution.
PRO FORMA EARNINGS DILUTION ANALYSIS. Using earnings estimates and
projected growth rates for SierraWest and BancWest provided by their respective
managements, NationsBanc Montgomery compared estimated reported earnings per
share ("Reported EPS") and estimated cash earnings per share ("Cash EPS") of
BancWest's common stock on a stand-alone basis to the estimated Reported EPS and
estimated Cash EPS of the common stock for the pro forma combined company for
the calendar year ending December 31, 1999. NationsBanc Montgomery noted that
the merger would result in dilution of 0.7% and 2.0% to BancWest's Reported EPS
and Cash EPS, respectively, for the year ending December 31, 1999. These
estimates were used for purposes of this analysis only and are not necessarily
indicative of expected results or plans of BancWest, SierraWest, or the combined
institution. Additionally, this analysis did not incorporate any anticipated
cost savings or revenue enhancements.
PRO FORMA BOOK VALUE/TANGIBLE BOOK VALUE DILUTION ANALYSIS. Using the book
value and the tangible book value for the period ending December 31, 1998, and
the exchange ratio of 0.82 of a share of BancWest common stock for each share of
SierraWest's common stock, NationsBanc Montgomery compared the book value and
the tangible book value of BancWest on a stand-alone basis to the pro forma book
value and tangible book value for the combined company. This analysis showed,
among other things, that the merger would be dilutive to BancWest's book value
by 2.9% and accretive to BancWest's tangible book value by 0.1%.
PICKUP ANALYSIS. This analysis attempts to illustrate the increase in per
share values to you as if the merger had been completed on January 1, 1999. As
shown below, the analysis shows an increase to you in dividends, book value and
earnings per share. In performing the pickup analysis, NationsBanc Montgomery
applied the exchange ratio of 0.82 of a share of BancWest common stock for each
share of SierraWest's common stock and applied it to the pro forma per share
values for BancWest. The results of this analysis were:
ESTIMATED
CURRENT PRO FORMA INCREASE FROM
SIERRAWEST SIERRAWEST CURRENT
VALUE VALUE(1) VALUE
---------- ---------- -------------
Annualized Dividend Per Share............ $ 0.40 $ 1.02 154.2%
Estimated 1999 Reported EPS.............. $ 2.20 $ 2.40 9.2%
Estimated 1999 Cash EPS.................. $ 2.10 $ 2.81 33.8%
Book Value Per Share..................... $14.76 $23.14 56.7%
Tangible Book Value Per Share............ $14.40 $13.72 (4.7)%
- -------------------------
(1) Adjusted for exchange of 0.82 of a share of BancWest common Stock for each
share of SierraWest common stock.
RELATIVE VALUE ANALYSIS. In performing the relative value analysis,
NationsBanc Montgomery compared the multiples paid to SierraWest relative to
BancWest's current trading multiples and compared such multiples to multiples
paid to other sellers relative to
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their buyers' trading multiples at the time of announcement of other
transactions. For the purposes of this analysis, NationsBanc Montgomery analyzed
other California bank transactions announced since 1997 with transaction values
greater than $10 million. The multiples that were compared included: purchase
price to book value, purchase price to "adjusted" book value (assuming a premium
is paid on a 6% "normalized" equity to assets level and dollar for dollar for
equity above 6%), purchase price to tangible book value, purchase price to LTM
earnings, purchase price to deposits, and the ratio of the premium (i.e.,
purchase price in excess of tangible book value) to core deposits. The multiples
paid to SierraWest relative to BancWest's current trading multiples ranged from
95% to 161%, with a median value of 116%. This compared favorably to multiples
paid to other sellers relative to their buyers in other transactions which
ranged from 78% to 103%, with a median value of 89%.
EARNINGS GROWTH ANALYSIS. Using a 14.2x terminal multiple (the median
price to 1998 earnings multiple of banks in the NationsBanc Montgomery's Western
Bank Monitor) and a 15% discount rate, NationsBanc Montgomery determined that
SierraWest would have to achieve an average annual earnings growth rate of 24.0%
through the year 2002 in order to obtain a present value stock price of $36.59.
SierraWest's estimated stand-alone earnings growth rate through the year 2002 is
14.5%.
The summary set forth above is not a complete description of the
presentation by NationsBanc Montgomery to SierraWest's board or of the analyses
performed by NationsBanc Montgomery. The preparation of a fairness opinion is
not necessarily susceptible to partial analysis or summary description.
NationsBanc Montgomery believes that its analyses and the summary set forth
above must be considered as a whole and that selecting a portion of its analyses
and factors, without considering all analyses and factors, would create an
incomplete view of the process underlying the analyses set forth in its
presentation to SierraWest's board. In addition, NationsBanc Montgomery may have
given various analyses more or less weight than other analyses, and may have
deemed various assumptions more or less probable than other assumptions, so that
the ranges of valuations resulting from any particular analysis described above
should not be taken to be NationsBanc Montgomery's view of the actual value of
SierraWest or the combined company. The fact that any specific analysis has been
referred to in the summary above is not meant to indicate that such analysis was
given greater weight than any other analysis.
In performing its analyses, NationsBanc Montgomery made numerous
assumptions with respect to industry performance, general business and economic
conditions and other matters, many of which are beyond the control of SierraWest
or BancWest. The analyses performed by NationsBanc Montgomery are not
necessarily indicative of actual values or actual future results, which may be
significantly more or less favorable than suggested by such analyses. Such
analyses were prepared solely as part of NationsBanc Montgomery's analysis of
the fairness of the consideration to be received by you in the merger and were
provided to SierraWest's board in connection with the delivery of NationsBanc
Montgomery's opinion. The analyses do not purport to be appraisals or to reflect
the prices at which a company might actually be sold or the prices at which any
securities may trade at the present time or any time in the future. The
forecasts used by NationsBanc Montgomery in certain of its analyses are based on
numerous variables and assumptions, which are inherently unpredictable and must
be considered not certain of occurrence as projected. Accordingly, actual
results could vary significantly from those contemplated in such forecasts.
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As described above under "THE MERGER -- Reasons for the Merger;
Recommendation of the Board of Directors," NationsBanc Montgomery's opinion and
presentation to SierraWest's board were among the many factors taken into
consideration by SierraWest's board in making its determination to approve the
merger agreement.
Pursuant to its engagement letter, SierraWest paid NationsBanc Montgomery a
fee of approximately $600,000 upon the signing of a definitive agreement. Based
on the transaction value at the time of the announcement of the transaction,
NationsBanc Montgomery will receive an additional fee of approximately
$1,930,000 upon the closing of the merger. Accordingly, a significant portion of
NationsBanc Montgomery's fee is contingent upon the closing of the merger.
SierraWest has also agreed to reimburse NationsBanc Montgomery for its
reasonable out-of-pocket expenses, including reasonable fees and disbursements
for NationsBanc Montgomery's legal counsel and other experts retained by
NationsBanc Montgomery. SierraWest has agreed to indemnify NationsBanc
Montgomery, its affiliates, and their respective partners, directors, officers,
agents, consultants, employees and controlling persons against certain
liabilities, including liabilities under the federal securities laws.
REGULATORY APPROVALS REQUIRED
The merger and the contemplated merger of SierraWest Bank and Bank of the
West (the "bank merger") are subject to the approval of the FDIC under Section
18(c) of the Federal Deposit Insurance Act and the approval of the Commissioner
of Financial Institutions of the State of California (the "California
Commissioner") under the California Financial Code. Aspects of the merger and
the bank merger will require notifications to, and/or approvals from, certain
other federal authorities and banking authorities in certain other states.
Under the Federal Deposit Insurance Act, the FDIC must withhold approval of
the merger or the bank merger, as the case may be, if it finds that the
transaction would tend to create a monopoly or would in any other manner be in
restraint of trade, unless it finds that any such anti-competitive effects of
the merger or the bank merger are clearly outweighed in the public interest by
the probable effects of the merger or the bank merger in meeting the convenience
and needs of the communities to be served. Also, the merger and the bank merger
may not be sold norconsummated for 30 days from the date of approval by the FDIC, during
which time it could be challenged by the United States Department of Justice on
antitrust grounds. With the approval of the Department of Justice, however, this
waiting period may offersbe reduced to buyno less than 15 days. The commencement of an
antitrust action by the Department of Justice would stay the effectiveness of
FDIC approval of the merger or the bank merger unless a court specifically
ordered otherwise.
In deciding whether to approve the merger and the bank merger, the FDIC
will also take into consideration the financial and managerial resources and
future prospects of the banking subsidiaries following the transactions. The
FDIC has indicated that it will not approve a significant acquisition unless the
resulting institution has sufficient capitalization, taking into account, among
other things, asset quality.
In addition, under the Community Reinvestment Act of 1977, the FDIC must
take into account the record of performance of each insured depository
institution subsidiary of BancWest, including Bank of the West, in meeting the
credit needs of the entire community, including low- and moderate-income
neighborhoods, served by each company. As part of the review process for the
merger and the bank merger, the FDIC will solicit public comments regarding the
applications. The FDIC frequently receives, in merger
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transactions, protests from community groups and others regarding various
aspects of the proposal and, in particular, the extent to which the applicants
are complying with Community Reinvestment Act and fair lending laws. All of the
banking subsidiaries of BancWest have received either an "outstanding" or a
"satisfactory" Community Reinvestment Act rating in their most recent Community
Reinvestment Act examinations by their respective federal regulators.
The FDIC is also authorized (but generally not required) to hold a public
hearing or meeting in connection with an application for approval of a merger
under the Bank Merger Act if it determines that such a hearing or meeting would
be appropriate. A decision by the FDIC to hold a public hearing or meeting
regarding any such application could prolong the period during which that
application is subject to review by the FDIC.
BancWest and Bank of the West filed an application seeking approval of the
merger and the bank merger with the FDIC on April 2, 1999. The parties
anticipate that the FDIC will act on and approve the application during the
second or third quarter of 1999.
The merger and bank merger will also be subject to the prior approval of
the California Commissioner. The factors that the California Commissioner will
consider in determining whether to grant its approval include the competitive
effects of the merger and the bank merger, the principles of sound banking and
the public interest and the needs of the communities served by Bank of the West.
BancWest and Bank of the West filed an application seeking approval of the
merger and the bank merger with the California Commissioner on April 2, 1999.
The parties anticipate that the California Commissioner will act on and approve
the application during the second or third quarter of 1999.
There can be no assurance as to whether or when any of the above-described
regulatory approvals required for consummation of the merger and the bank merger
will be obtained or as to any conditions that may be imposed in connection with
the granting of such approvals. See "THE MERGER AGREEMENT -- Conditions to the
Completion of the Merger."
STOCK EXCHANGE LISTING
The shares of BancWest common stock to be issued in the merger will be
listed on the New York Stock Exchange.
INTEREST OF CERTAIN OFFICERS AND DIRECTORS IN THE MERGER
In considering the recommendation of the board of directors of SierraWest
to approve the merger agreement, you should be aware that certain officers and
directors of SierraWest have certain interests in, and will receive benefits as
a consequence of, the merger that are different from the benefits to SierraWest
shareholders generally.
STOCK, OPTIONS AND DEFERRED COMPENSATION PLAN. As of March 15, 1999,
SierraWest's directors and executive officers owned an aggregate of 373,649
shares of SierraWest stock (including 118,507 shares subject to options
exercisable within 60 days of March 15, 1999) which, if owned at the time of the
merger, will be converted into shares of BancWest stock with an approximate
aggregate market value of $12,448,714, based on the $40.63 closing price of
BancWest stock on April 13, 1999. All outstanding options to purchase SierraWest
stock will vest at the time of the merger. Based on a policy adopted by the
board of directors of SierraWest, any current director of SierraWest who
exercises nonqualified stock options after the merger will be entitled to
receive a payment in the
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amount equal to the estimated imputed value of the tax benefits realized or
estimated to be realized by BancWest as a result of the exercise.
SierraWest's outside directors (i.e., directors who are not employees of
SierraWest or SierraWest Bank) participate in a Deferred Compensation and Stock
Award Plan. Under this plan, outside directors are required to defer receipt of
one-third of their directors' fees for regular board meetings in the form of
promised shares of SierraWest stock. The director may also voluntarily defer all
or a portion of the remaining amount of director's fees. The plan provides that,
at the time of the merger, the outside directors will receive cash payments
equal to the value of their deferred SierraWest stock at that date or an
aggregate of $327,735, based on $40.63, the closing price of BancWest stock on
April 13, 1999. Under the plan the directors are not entitled to receive shares
of SierraWest common stock.
PAYMENT CONTINUATION AGREEMENTS. In the interest of retaining qualified
directors and senior management, SierraWest has entered into agreements with
some of its directors and officers providing salary continuation benefits upon
their retirement or earlier death. Under these agreements, the vesting of
benefits accelerate and become payable upon a change in control, such as the
merger.
SierraWest has entered into Amended and Restated Payment Continuation
Agreements with the following directors: Jerrold Henley, Richard Gaston, Jack
Leonesio, William McClintock, Tom Watson, A. Morgan Jones, Ralph Coppola, John
Johnson, Ron Johnson and Dave Clark. These agreements provide for payments to
each participating director of $4,000 per year for 15 years, beginning 15 years
after the date of their respective agreement. Accrued benefits vest 20% per year
over a five-year period from the date of association with SierraWest. Upon a
change of control, such as the merger, the director will receive a lump sum cash
payment equal to the present value of the maximum benefits under the agreement.
The estimated present value for each participant is $31,018. In addition, two of
SierraWest's directors will have the right to purchase health insurance from
BancWest after the merger. SierraWest has entered into agreements with executive
officers William T. Fike and David Broadley providing salary continuation
benefits. These benefits fully vest and become payable upon the officer's
retirement at age 65, the officer's death or a change of control of SierraWest.
At the time of the merger, Mr. Fike will become entitled to receive annual
payments of $50,000 for 20 years and Mr. Broadley will become entitled to
receive annual payments of $40,000 for 20 years.
See "EXECUTIVE COMPENSATION -- Salary Continuation Plan" for a more
complete description of these agreements.
EMPLOYMENT AGREEMENTS. Mr. Fike's employment agreement with SierraWest
provides for a payment upon a change of control of SierraWest. Under the terms
of his employment agreement, Mr. Fike will receive a lump-sum severance payment
equal to $393,750, the automobile SierraWest provides for his use and a club
membership that SierraWest purchased for his use.
SierraWest has also entered into Senior Manager Separation Benefits
Agreement with officers, Rick Belstock, David Broadley, Pat Day, Mary Jane
Posnien and Bob Silver. Under the terms of these agreements, if the officer is
terminated, other than for cause, or (in the case of Mr. Broadley) chooses to
resign within nine months after a change in control, the officer will be
entitled to receive six, nine or 12 months' salary, depending on the officer,
either in a lump sum or in installments, at the officer's option. Under the
terms of his Senior Manager Separation Benefits Agreement and based on his
current salary,
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Mr. Belstock will be entitled to six months' salary or $44,031 if he is
terminated or chooses to resign after the merger. Messrs. Broadley and Day will
be entitled to receive 12 months' salary or $160,000 and $135,200, respectively,
based on their current salaries. Ms. Posnien and Mr. Silver will be entitled to
receive nine months' salary, or $63,750 and $75,750, respectively. In addition,
Mr. Broadley will be entitled to receive the automobile SierraWest provides for
his use.
See "EXECUTIVE COMPENSATION -- Employment Agreements" for a more complete
description of these agreements.
INDEMNIFICATION COVENANT. In the merger agreement, BancWest has agreed to
indemnify the directors and officers of SierraWest and SierraWest Bank against
claims and expenses paid in settlement of or in connection with any claim, suit
or investigation based, in whole or in part, on the fact that the person was or
is a director or officer of SierraWest or SierraWest Bank, the merger agreement
or the transactions described in the merger agreement.
EFFECT ON SIERRAWEST'S EMPLOYEE BENEFITS PLANS
Under the merger agreement, SierraWest and SierraWest Bank have agreed to
modify their present incentive compensation and bonus plans to provide for the
settlement promptly after the effective time of the merger of the accrued
entitlement of the participants in such plans as of the closing date. BancWest
and Bank of the West will pay such entitlements to the respective participants
promptly after the effective time of the merger subject to required
withholdings. For the period from the closing date to and including December 31,
1999, BancWest and Bank of the West will either continue the existing incentive
compensation and bonus plans of SierraWest and SierraWest Bank or will make
comparable plans available to the participants in these plans.
After the closing date, BancWest and Bank of the West will honor the
arrangements regarding health and life insurance coverage, continuation of
directors' fees and deferral of directors' fees for certain individuals and
SierraWest will have performed all necessary actions so that the modification or
termination of the various plans or arrangements will be effective at the
effective time of the merger.
ACCOUNTING TREATMENT
BancWest expects to account for this merger under the pooling of interests
method of accounting. It is a condition to completion of the merger that both
BancWest and SierraWest receive a letter from their respective independent
accountants stating that the merger will qualify as a pooling of interests
transaction under generally accepted accounting principles.
Under the pooling of interests method of accounting, BancWest will restate
its consolidated financial statements as follows:
- BancWest will carry forward on its books the assets and liabilities of
SierraWest at their historical recorded values,
- income of the combined BancWest will include income of BancWest and
SierraWest for the entire fiscal year in which the combination occurs,
- the reported income, assets, liabilities and shareholders' equity of the
separate companies for previous periods will be combined and restated as
income, assets, liabilities and shareholders' equity of BancWest, and
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- all intercompany accounts will be eliminated.
BancWest has been informed by its independent accountants that the merger will
likely qualify as a pooling of interests for financial accounting and financial
reporting purposes.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material United States federal
income tax consequences of the merger. The discussion does not address all
aspects of United States federal taxation that may be relevant to you, and it
may not be applicable to SierraWest shareholders who, for United States federal
income tax purposes, are nonresident alien individuals, foreign corporations,
foreign partnerships, foreign trusts or foreign estates, or who acquired their
SierraWest common stock pursuant to the exercise of SierraWest stock options or
otherwise as compensation. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES OF THE MERGER TO YOU.
This discussion is based on the Internal Revenue Code of 1986, regulations
and rulings now in effect or proposed thereunder, current administrative rulings
and practice, and judicial precedent, all of which are subject to change. Any
such change, which may or may not be retroactive, could alter the tax
consequences to you as discussed in this proxy statement-prospectus. This
discussion assumes that you hold your SierraWest common stock as a capital asset
within the meaning of Section 1221 of the Internal Revenue Code.
None of the parties is required to complete the merger unless BancWest
shall have received an opinion of Pillsbury Madison & Sutro LLP, counsel to
BancWest, and SierraWest shall have received an opinion of McCutchen, Doyle,
Brown & Enersen, LLP, counsel to SierraWest, based upon certain customary
assumptions and certain representations made by BancWest and SierraWest, to the
effect that, for United States federal income tax purposes, under currently
applicable law,
- the merger will constitute a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, and
- BancWest and SierraWest will each be party to that reorganization within
the meaning of Section 368(b) of the Internal Revenue Code.
Based upon such opinions, the following will be the material federal income
tax consequences of the merger:
(1) You will recognize no gain or loss if you receive solely BancWest
common stock in exchange for shares of SierraWest common stock you
hold, except with respect to cash received instead of fractional shares
of BancWest common stock.
(2) The aggregate adjusted tax basis of the shares of BancWest common stock
you receive in the merger (including any fractional share of BancWest
common stock deemed to be received by you, as described in paragraph
(4) below), will be equal to the aggregate adjusted tax basis of the
shares of SierraWest common stock surrendered by you for the shares of
the BancWest common stock.
(3) The holding period of the shares of BancWest common stock you receive
in the merger (including any fractional share of BancWest common stock
deemed to be received by you, as described in paragraph (4) below) will
include the holding period of the shares of SierraWest common stock you
exchange for the shares of BancWest common stock.
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(4) If you receive cash in the merger instead of a fractional share of
BancWest common stock it will be treated as if you received the
fractional share in the merger and then BancWest redeemed such share in
return for the cash. You will generally have to recognize capital gain
or loss equal to the difference between the amount of cash received and
the portion of your adjusted tax basis in the shares of BancWest common
stock allocable to the fractional share.
BancWest is not required to complete the merger if any SierraWest
shareholders perfect dissenters' rights. The following discussion applies only
if BancWest waives this condition. A shareholder who perfects dissenters' rights
and receives payment for his or her SierraWest shares will be treated as if such
shares were redeemed. In general, if the shares are held as a capital asset at
the date the merger is consummated, the dissenting shareholder will recognize a
capital gain or loss measured by the difference between the amount of cash
received and the basis of the shares in the hands of the dissenting shareholder.
However, if such dissenting shareholder owns, directly or indirectly through the
application of Section 318 of the Internal Revenue Code, any shares of common
stock as to which dissenters' rights are not exercised and perfected and which
are therefore exchanged for SierraWest common stock in the merger, such
shareholder may be treated as having received a dividend in the amount of cash
paid to the shareholder in exchange for the shares as to which dissenter's
rights were perfected. Under Section 318 of the Internal Revenue Code, you are
deemed to own stock that is actually owned (or deemed to be owned) by certain
members of your family (spouse, children, grandchildren and parents, with
certain exceptions) and other related parties, including, for example, certain
entities in which you have a direct or indirect interest (including
partnerships, estates, trusts and corporations), as well as stock that you have
(or a related person has) the right to acquire upon exercise of an option or
conversion right held by you (or a related person). If you intend to dissent
from the merger, you should consult your own tax advisor with respect to the
application of the constructive ownership rules to your particular
circumstances. See "-- Dissenters' Rights of Appraisal."
THE FOREGOING IS A GENERAL DISCUSSION OF THE MATERIAL UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER AND IS INCLUDED FOR GENERAL INFORMATION
ONLY. THE FOREGOING DISCUSSION DOES NOT TAKE INTO ACCOUNT THE PARTICULAR FACTS
AND CIRCUMSTANCES OF YOUR STATUS AND ATTRIBUTES. AS A RESULT, THE UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES ADDRESSED IN THE FOREGOING DISCUSSION MAY NOT
APPLY TO YOU. IN VIEW OF THE INDIVIDUAL NATURE OF INCOME TAX CONSEQUENCES, YOU
ARE URGED TO CONSULT YOUR OWN TAX ADVISOR TO DETERMINE THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER TO YOU, INCLUDING THE APPLICATION AND EFFECT OF
UNITED STATES FEDERAL, STATE, LOCAL AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS
OF CHANGES IN UNITED STATES FEDERAL AND OTHER TAX LAWS.
DISSENTERS' RIGHTS OF APPRAISAL
Because SierraWest common stock is traded on the Nasdaq National Market
System, dissenters' rights will be available to the shareholders of SierraWest
only if the holders of five percent or more of SierraWest common stock make a
written demand upon SierraWest for the purchase of dissenting shares in
accordance with Chapter 13 of California General Corporation Law. BANCWEST IS
NOT REQUIRED TO COMPLETE THE MERGER IF ANY HOLDERS OF SIERRAWEST COMMON STOCK
ARE ENTITLED TO HAVE THEIR SHARES TREATED AS "DISSENTING SHARES." THEREFORE, IF
YOU EXERCISE YOUR DISSENTERS' RIGHTS, THE MERGER MAY NOT BE COMPLETED AND YOU
MAY RETAIN YOUR SIERRAWEST SHARES. However, if holders are entitled to have
their shares treated as "dissenting shares" and BancWest has waived the
condition described above and the merger is completed, then shareholders of
SierraWest who dissent
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from the merger by complying with the procedures set forth in Chapter 13 of the
California law would be entitled to receive an amount equal to the fair market
value of their shares as of February 25, 1999, the day before the public
announcement of the merger. The closing sales price for SierraWest common stock
on February 25, 1999 was $28.875. A copy of Chapter 13 of the California General
Corporation Law is attached hereto as Appendix D and should be read for more
complete information concerning dissenters' rights. You must follow the required
procedure set forth in Chapter 13 of the California General Corporation Law
exactly or you will lose any dissenters' rights. The information set forth below
is a general summary of dissenters' rights as they apply to SierraWest
shareholders and is qualified in its entirety by reference to Appendix D.
In order to be entitled to exercise dissenters' rights, you must vote
"AGAINST" the merger. Thus, if you wish to dissent and execute and return a
proxy in the accompanying form, you must specify that your shares are to be
voted "AGAINST" the merger. If you return a proxy without voting instructions or
with instructions to vote "FOR" the merger, your shares will automatically be
voted in favor of the merger and you will lose any dissenters' rights. If you do
not return a proxy and you attend the annual meeting, you must vote "AGAINST"
the merger at the meeting to preserve your dissenter's rights. In addition, if
you abstain from voting your shares, you will lose your dissenter's rights.
Furthermore, in order to preserve your dissenters' rights, you must make a
written demand upon SierraWest for the purchase of dissenting shares and payment
to you of their fair market value, specifying the number of shares held of
record by you and a statement of what you claim to be the fair market value of
those shares as of February 25, 1999. You must address your demand to SierraWest
Bancorp, P.O. Box 61000, 10181 Truckee-Tahoe Airport Road, Truckee, California
96161, Attn: David Broadley, and we must receive it not later than the date of
the SierraWest annual meeting. A vote "AGAINST" the merger does not constitute
such written demand.
WE CANNOT ASSURE YOU THAT THE MERGER WILL BE COMPLETED IF ANY HOLDERS OF
SIERRAWEST COMMON STOCK ARE ENTITLED TO EXERCISE DISSENTERS' RIGHTS OF
APPRAISAL. BANCWEST IS NOT REQUIRED TO COMPLETE THE MERGER IF ANY HOLDERS OF
SIERRAWEST COMMON STOCK HAVE SUCH RIGHTS. SEE "THE MERGER
AGREEMENT -- CONDITIONS TO THE COMPLETION OF THE MERGER." AS A RESULT, THE
FOLLOWING DISCUSSION WILL ONLY APPLY IF BANCWEST WAIVES THAT CONDITION TO
CLOSING. BANCWEST DOES NOT INTEND TO WAIVE THAT CONDITION.
If the holders of five percent or more of the outstanding shares of
SierraWest common stock have submitted a written demand for SierraWest to
purchase their shares, and these demands are received by SierraWest on or before
the date of the SierraWest annual meeting and the merger is approved by the
shareholders, SierraWest will have 10 days after such approval to send to those
shareholders who have voted against the approval of the merger written notice of
such approval accompanied by a copy of Chapter 13 of the California General
Corporation Law, a statement of the price determined by SierraWest to represent
the fair market value of the dissenting shares as of February 25, 1999, and a
brief description of the procedure to be followed if you desire to exercise the
dissenters' rights. Within 30 days after the date on which the notice of the
approval of the merger is mailed, the dissenting shareholder must surrender to
SierraWest, at the office designated in the notice of approval, the certificate
representing the dissenting shares to be stamped or endorsed with a statement
that they are dissenting shares or to be exchanged for certificates for the
appropriate number of shares that are stamped or endorsed. Any shares
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of SierraWest common stock that are transferred prior to their submission for
endorsement lose their status as dissenting shares.
If SierraWest and the timedissenting shareholder agree that the registration statement
becomes effective. This prospectussurrendered
shares are dissenting shares and agree upon the price of the shares, the
dissenting shareholder will be entitled to the agreed price with interest
thereon at the legal rate on judgments from the date of the agreement. Payment
of the fair market value of the dissenting shares shall not constitute an offerbe made within 30 days
after the amount thereof has been agreed upon or 30 days after any statutory or
contractual conditions to sellthe merger have been satisfied, whichever is later,
subject to the surrender of the certificates therefor, unless provided otherwise
by agreement.
If SierraWest denies that the shares surrendered are dissenting shares, or
SierraWest and the dissenting shareholder fail to agree upon a fair market value
of such shares of SierraWest common stock, then the dissenting shareholder of
SierraWest must, within six months after the notice of approval is mailed, file
a complaint in the Superior Court of the proper county requesting the court to
make such determinations or the solicitation of an offer to buy nor shall there be any sale of these
securitiesdissenting shareholder must intervene in any
Statepending action brought by any other dissenting shareholder. If the complaint is
not filed or intervention in whicha pending action is not made within the specified
six-month period, the dissenters' rights are lost. If the fair market value of
the dissenting shares is at issue, the court or one or more court-appointed
appraisers will determine, such offer, solicitationfair market value. A dissenting shareholder may
not withdraw his or sale would be
unlawful priorher dissent or demand for payment unless SierraWest consents
to registrationsuch withdrawal.
The receipt of a cash payment for dissenting shares will result in
recognition of gain or qualificationloss for federal and California state income tax purposes
by dissenting shareholders. See "-- Certain Federal Income Tax Consequences."
SIERRAWEST'S RIGHTS AGREEMENT
Under the merger agreement, SierraWest agreed to amend its rights agreement
between SierraWest and American Stock Transfer & Trust Co. dated January 16,
1996, as amended, so that the transactions contemplated by the merger agreement
do not result in the grant of any rights to any person under the securities lawsrights
agreement. Accordingly, on February 25, 1999, SierraWest amended its rights
agreement to allow SierraWest to enter into the merger agreement. As amended,
the rights agreement provides that BancWest, Bank of any such State.
____________________________________________________________________________
SUBJECT TO COMPLETION, DATED OCTOBER __, 1997
PROSPECTUS
FIRST HAWAIIAN CAPITAL I
Offerthe West and their
affiliates and associates will not be "acquiring persons" as a result of the
merger agreement or the transactions described in the merger agreement.
RESALES OF BANCWEST COMMON STOCK
The shares of BancWest common stock to Exchange its 8.343% Capital Securities, Series B
whichbe issued to shareholders of
SierraWest under the merger agreement have been registered under the Securities
Act, so these shares may be freely traded without restriction by people who will
not be affiliates of 1933BancWest after the merger or who were not affiliates of
SierraWest on the date of the annual meeting. All directors and certain officers
of SierraWest may be deemed to have been affiliates of SierraWest within the
meaning of such rules. Those people may resell shares of BancWest common stock
to be received by them in the merger only if the shares are registered for
resale under the Securities Act or an exemption from such registration under the
Securities Act is available. Those people may be permitted to resell the
BancWest shares under the safe harbor provisions of Rule 145 under the
Securities Act (or Rule 144 in the case of such persons who become affiliates of
BancWest) or as otherwise permitted
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under the Securities Act. People who may be deemed affiliates of SierraWest or
BancWest generally include individuals or entities that control, are controlled
by, or are under common control with, SierraWest or BancWest, and may include
certain officers and directors of such entities as well as principal
shareholders of SierraWest or BancWest. We encourage any such person to obtain
advice of securities counsel before reselling any BancWest shares.
The merger agreement provides that SierraWest will use its Outstanding
8.343% Capitalcommercially
reasonable efforts to cause each director, executive officer and other person
who is an affiliate for purposes of Rule 145 under the Securities Series A
(Liquidation Amount $1,000 per Capital Security)
fullyAct to execute
and unconditionally
guaranteeddeliver, as soon as practicable after the date of the merger agreement and
prior to the extent set forth hereindate of the annual meeting, a written agreement to the effect that
such person will not offer or sell or otherwise dispose of:
- any BancWest common stock received in the merger in violation of the
Securities Act or the rules and regulations thereunder, and
- any shares of BancWest common stock or SierraWest common stock during in
the period beginning 30 days before the effective time of the merger and
ending at such time as results covering at least 30 days of combined
operations of BancWest and SierraWest have been published by First Hawaiian, Inc.
____________________BancWest.
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THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITYMERGER AGREEMENT
The following is a summary of the material provisions of the merger
agreement, as amended which is attached to this proxy statement-prospectus as
Appendix A. The merger agreement is incorporated by reference into this proxy
statement-prospectus. You are urged to read the merger agreement in its
entirety.
STRUCTURE OF THE MERGER; EFFECTIVE TIME
ON , 1997, UNLESS EXTENDED.
First Hawaiian Capital I, a Delaware statutory business trust (the
"Trust"), hereby offers,The merger agreement contemplates the merger of SierraWest with and into
Bank of the West. Bank of the West will be the surviving corporation in the
merger and will continue its corporate existence under California law. The
merger will become effective upon the terms and subjectfiling of an agreement of merger with the
Secretary of State of the State of California, or at such time thereafter as is
provided in such agreement of merger. The closing of the merger will take place
at 10:00 a.m., California time, on a date to be specified by the parties, which
will be the fifth business day after satisfaction or waiver (subject to
applicable law) of the conditions set forth in this Prospectus (asthe merger agreement, unless
another time or date is agreed to in writing by BancWest, Bank of the West and
SierraWest. The merger agreement may be terminated by either BancWest or
SierraWest if, among other reasons, the merger shall not have been consummated
on or before September 30, 1999. See "-- Conditions to the Completion of the
Merger" and "-- Termination" below.
Immediately after the merger of SierraWest into Bank of the West,
SierraWest's wholly-owned subsidiary SierraWest Bank will merge with and into
Bank of the West, and Bank of the West will be the surviving corporation.
The merger agreement provides that BancWest may change the structure of the
merger for any reasonable business, tax or regulatory purpose. The alternate
structure, however, may not materially and adversely affect the timing of the
merger, or adversely affect the economic benefits, the form of consideration or
the tax effect of the merger to you.
CONVERSION OF SIERRAWEST COMMON STOCK
If you are a shareholder of SierraWest common stock as of the effective
time of the merger your shares of SierraWest common stock will be converted into
the right to receive 0.82 of a share of BancWest common stock. Your shares of
SierraWest common stock will no longer be outstanding and will be automatically
canceled and retired and will cease to exist. Your stock certificate previously
representing shares of SierraWest common stock will be exchanged for a
certificate representing whole shares of BancWest common stock.
Under the merger agreement SierraWest has the option to terminate the
merger if the price per share of BancWest common stock declines significantly.
During the two days after the FDIC approves the transactions, the board of
directors of SierraWest may terminate the agreement, if:
- the average closing price per share of BancWest common stock for the 20
consecutive trading days ending on the date the FDIC approves the merger
is less than 85% of $43.8375 (the average closing price of BancWest
common stock for the 5 trading days before the public announcement of the
merger), and
- the ratio of the average closing price of BancWest common stock during
such 20 day period to $43.8375 is less than 85% of the ratio of Standard
& Poor's Mid-
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Cap Regional Bank Index during such 20 trading day period to $223.854
(the average bank index for the 5 trading days before the public
announcement of the merger).
SierraWest cannot terminate the merger agreement, if within 5 business days of
being notified by SierraWest of SierraWest's intention to terminate, BancWest
adjusts the exchange ratio so that the value of BancWest shares you receive in
the merger will not have declined more than 15% in relation to any decline in
the bank stock index. For more information see "-- Termination."
You will not receive any fractional shares of BancWest common stock. If you
are entitled to a fraction of a share of BancWest common stock you will,
instead, receive an amount in cash. The cash amount will be equal to the closing
price as reported on the New York Stock Exchange for the BancWest common stock
on the trading day immediately preceding the closing date, multiplied by the
fraction of a share of BancWest common stock to which you would otherwise be
entitled. You will not be entitled to dividends, voting rights, interest on the
value of, or any other rights in respect of a fractional share. In the event
BancWest pays, declares or otherwise effects a stock split, reverse stock split,
reclassification or stock dividend or stock distribution with respect to
BancWest common stock between the date of the merger agreement and the effective
time of the merger, appropriate adjustments will be made to the average BancWest
closing price of BancWest common stock.
OPTIONS
At the effective time of the merger, each option to acquire SierraWest
common stock which is outstanding and unexercised will be converted
automatically into an option to purchase shares of BancWest common stock. The
number of shares to be subject to the new option will be equal to the product of
the number of shares of SierraWest common stock subject to the original option
and the exchange ratio, rounded down to the nearest share. The exercise price
per share of BancWest common stock under the new option will be equal to the
exercise price per share of SierraWest common stock under the original option
divided by the exchange ratio. The exercise price will be rounded up to the
nearest cent. In the case of any options which are "incentive stock options," as
defined in Section 422 of the Internal Revenue Code, the exercise price, the
number of shares purchasable pursuant to such options and the terms and
conditions of such options will be determined in order to comply with Section
424(a) of the Internal Revenue Code. The duration and other terms of the new
options will be the same mayas those of the original option.
EXCHANGE AGENT; EXCHANGE PROCEDURE
Under the merger agreement, BancWest has agreed to appoint American Stock
Transfer & Trust Company, New York, New York or its successor, or any other bank
or trust company (having capital of at least $50 million) mutually acceptable to
SierraWest and BancWest, as exchange agent for the purpose of exchanging
certificates representing the BancWest common stock which are to be amended or supplemented from
time to time, the "Prospectus") and in the accompanying Letter of Transmittal
(which together constitute the "Exchange Offer"), to exchange up to
$100,000,000 aggregate liquidation amount of its 8.343% Capital Securities,
Series B (the "New Capital Securities") which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"),issued
pursuant to a
Registration Statement (as defined herein) of which this Prospectus
constitutes a part, for a like liquidation amount of its outstanding 8.343%
Capital Securities, Series A (the "Old Capital Securities"), of which
$100,000,000 aggregate liquidation amount is outstanding.the merger agreement. As soon as practicable after the Exchange Offer, First Hawaiian, Inc., a Delaware
corporation (the "Corporation"), will exchange its guaranteeeffective
time of the paymentmerger, upon the surrender of distributions and payments on liquidation or redemption of the Old Capital
Securities (the "Old Guarantee")your SierraWest shares certificate for
a like guarantee of the New Capital
Securities (the "New Guarantee") and all of its 8.343% Junior Subordinated
Deferrable Interest Debentures (the "Old Junior Subordinated Debentures"), of
which $103,093,000 aggregate principal amount is outstanding, for a like
aggregate principal amount of its 8.343% Junior Subordinated Deferrable
Interest Debentures (the "New Junior Subordinated Debentures"), which New
Guarantee and New Junior Subordinated Debentures also have been registered
under the Securities Act (the exchange of the Old Capital Securities for the
New Capital Securities, the exchange of the Old Guarantee for the New
Guarantee and the exchange of the Old Junior Subordinated Debentures for the
New Junior Subordinated Debentures is referred to collectively herein as the
"Exchange"). The Old Capital Securities, the Old Guarantee and the Old Junior
Subordinated Debentures are collectively referred to herein as the "Old
Securities" and the New Capital Securities, the New Guarantee and the New
Junior Subordinated Debentures are collectively referred to herein as the
"New Securities."
The terms of the New Securities are identical in all material respects
to the respective terms of the Old Securities, except that the New Securities
have been registered under the Securities Act and therefore will not be
subject to certain restrictions on transfer applicable to the Old Securities
and will not be entitled to any increase in the distribution rate thereon or
any further registration rights under the Securities Act, except in certain
limited circumstances. See "Description of Old Securities."
The New Capital Securities and the Old Capital Securities (together, the
"Capital Securities") represent undivided beneficial ownership interests in
the assets of the Trust. The Corporation is the owner of all of the
beneficial ownership interests represented by common securities of the Trust
(the "Common Securities"; together with the Capital Securities, the "Trust
Securities"). The Trust was formed for the sole purpose of issuing the Trust
Securities and investing the proceeds thereof in the Old Junior Subordinated
Debentures, which will be exchanged for New Junior Subordinated Debentures
(together, the "Junior Subordinated Debentures"). The Junior Subordinated
Debentures will mature on July 1, 2027 (the "Stated Maturity"). The terms of
the Capital Securities provide that they will have a preference under certain
circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the Common Securities. See
"Description of Capital Securities--Subordination of Common Securities."
See "Risk Factors" commencing on page 12 for certain information that
should be considered by holders who tender Old Capital Securities in the
Exchange Offer.
THESE SECURITIES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK AND
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENTAL AGENCY.
_________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1997.
(cover page continued)
Holders of the Capital Securitiescancellation, you will be entitled to receive cumulativea certificate representing the
number of shares of BancWest common stock determined in accordance with the
merger agreement and a payment in cash distributions accumulating from June 30, 1997 and payable
semi-annually in arrears on the first day of January and July of each year,
commencing January 1, 1998, at the annual rate of 8.343% of the Liquidation
Amount of $1,000 per Capital Security ("Distributions"). The Corporation has
the right to defer payment of interest on the Junior Subordinated Debentures
at any time or from time to time for a period not exceeding 10 consecutive
semi-annual periods with respect to each deferral period (each, an "Extension
Period"), provided that no Extension Period may extend beyond the Stated
Maturityany fractional shares.
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Do not send in your certificates at this time. Please wait until you receive a
transmittal letter with more specific instructions on exchanging your
certificates.
You will not receive any dividends or other distributions of any kind which
are declared payable to shareholders of record of the Junior Subordinated Debentures.shares of BancWest common
stock after the effective time of the merger until you surrender your
certificate for shares of SierraWest common stock. Upon the terminationsuch surrender of your
SierraWest certificate, you will be paid, without interest, any such Extension Period and the payment of all amounts then due, the
Corporation may elect to begin a new Extension Period subject to the
requirements set forth herein. If interest payments on the Junior
Subordinated Debentures are so deferred, Distributions on the Capital
Securities will also be deferred and the Corporation will not be permitted,
subject to certain exceptions described herein, to declaredividends or
pay any cashother distributions with respect to the Corporation'sshares of BancWest common stock as to
which the record date and payment date occurred on or after the effective time
of the merger and on or before the date on which you surrendered your
certificate for shares of SierraWest common stock.
If you would like your certificate for shares of BancWest common stock to
be issued in a name other than the name or names in which your exchanged
SierraWest certificate is registered, you will have to pay to the exchange agent
any transfer costs, taxes or other expenses required by reason of the issuance
of certificates for such shares of BancWest common stock in a name other than
the registered holder of the exchanged SierraWest certificate.
All dividends or distributions, and any cash to be paid instead of
fractional shares, if held by the exchange agent for payment or delivery to the
holders of unsurrendered SierraWest certificates representing shares of
SierraWest common stock and unclaimed at the end of one year from the effective
time of the merger, shall (together with any interest earned thereon) at such
time be paid or redelivered by the exchange agent to BancWest. After such time,
if you still have not surrendered your SierraWest certificate, you must, look as
a general creditor only to BancWest for payment or delivery of such dividends or
distributions or cash, as the case may be.
Neither BancWest nor the surviving corporation shall be liable to you for
such shares (or dividends or distributions thereon) or cash payable instead of
fractional shares delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains customary mutual representations by each of
BancWest and SierraWest relating to, among other things, (1) corporate
organization and existence, (2) capitalization, (3) corporate power and
authority to enter into, and due authorization, execution, delivery, performance
and enforceability of, the merger agreement, (4) required governmental and third
party consents and approvals and that neither the merger agreement nor the
transactions contemplated thereby violate either party's organizational
documents, applicable law and certain material agreements, (5) financial
statements, (6) Securities and Exchange Commission documents, (7) the accuracy
of the information provided by each of BancWest and SierraWest for inclusion in
this proxy statement-prospectus, (8) compliance with applicable laws, (9) the
absence of material litigation, (10) subsidiaries, (11) certain bank regulatory
matters, (12) the absence of certain material changes or events since September
30, 1998, (13) the absence of undisclosed liabilities, (14) timely filing of all
material regulatory reports, (15) brokers' and finders' fees, (16) confirmation
that the merger will qualify for pooling of interests treatment for accounting
purposes, (17) compliance with Community Reinvestment Act, and (18) Year 2000
readiness.
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In the merger agreement SierraWest also makes representations and
warranties to BancWest and Bank of the West concerning, (1) ownership of
BancWest common stock, (2) filing of tax returns, payment of taxes and related
matters, (3) certain material contracts, (4) employee benefit plans and
agreements, (5) the absence of material environmental liability, (6) title to
properties, (7) transactions with affiliates, (8) intellectual property, (9)
receipt of a fairness opinion from its financial advisor, (10) SierraWest's
rights agreement, (11) anti-takeover provisions of the California General
Corporation Law, (12) dissenters' rights, (13) insurance, (14) validity and
enforceability of all loans, leases, other extensions of credit, commitments or
other interest-bearing assets and investments of SierraWest, (15) absence of
restrictions on investments, (16) absence of brokered deposits (except as
disclosed), (17) absence of high risk, highly interest sensitive derivative
contracts (except as disclosed), and (18) absence of collective bargaining
agreements.
BancWest also makes the representation and warranty that no stockholder
approval is needed from its stockholders with respect to the approval of the
merger agreement.
The representations and warranties of BancWest and SierraWest terminate as
of the effective time of the merger.
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the merger agreement, BancWest and SierraWest have each agreed
that, during the period from the date of the merger agreement to the effective
time of the merger, it and each of its respective subsidiaries will:
- carry on its business in the usual, regular and ordinary course in
substantially the same manner as conducted prior to the execution of the
merger agreement and use all reasonable efforts to preserve intact its
present business organizations, and
- maintain the rights and franchises of its business, and preserve the
relationships with its customers, suppliers and others having business
dealings with it to the end that its goodwill and ongoing businesses will
not be impaired in any material respect at the effective time of the
merger.
The merger agreement permits exceptions for conduct expressly contemplated or
permitted by the merger agreement or consented to in writing by the other party.
In addition, SierraWest has agreed that it and its subsidiaries will not,
without the prior written consent of BancWest:
- declare or pay any dividends on or make other distributions in respect of
any of its capital stock, except (1) for dividends by a wholly-owned
subsidiary of SierraWest to SierraWest, and (2) SierraWest may pay on
March 31, 1999, a cash dividend in the amount of up to $0.26 per share on
SierraWest common stock and, if the effective time of the merger occurs
after the record date set by BancWest's board of directors for the cash
dividend payable by BancWest on its outstanding common stock in respect
to the third fiscal quarter of 1999, a further cash dividend of up to
$0.26 per share on the SierraWest common stock,
- split, combine or reclassify any of its capital stock or issue any other
securities instead of shares of its capital stock,
- issue or sell any shares of its capital stock, other than issuances of
SierraWest common stock in connection with the exercise of SierraWest
options, or repurchase, redeem or otherwise acquire any shares of its
capital stock,
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44
- amend its articles of incorporation or its bylaws or other organizational
documents or that of any subsidiary,
- enter into any new material line of business or materially change its
lending, investment, liability management and other material banking
policies, except as required by law or by policies imposed by a banking
regulatory authority or the U.S. Small Business Administration,
- subject to certain exceptions, incur or commit to any capital
expenditures or any obligations or liabilities in connection with capital
expenditures other than in the ordinary course of business consistent
with past practice but in no event for more than $50,000 as to any one
such item or $200,000 as to all such items in the aggregate,
- make any acquisition or enter into any merger, except as permitted by
certain limited exceptions,
- sell, lease, encumber or otherwise dispose of, any material assets, other
than in the ordinary course of business consistent with past practice,
- incur or guarantee any long-term indebtedness or issue or sell any
long-term debt securities or guarantee any long-term debt securities of
others other than (1) indebtedness of any subsidiary of SierraWest to
SierraWest or to another subsidiary of SierraWest, (2) deposits taken in
the ordinary course of business consistent with past practice, or (3)
renewals or extensions of existing long-term indebtedness without any
change in the material terms thereof,
- intentionally take or fail to take any action that would, or reasonably
might be expected to, result in any of the representations and warranties
set forth in the merger agreement being or becoming untrue in any
material respect, or in any of the conditions to the closing set forth in
the merger agreement not being satisfied, or, unless such action is
required by applicable law or sound banking practice, which would
adversely affect the ability of BancWest or SierraWest to obtain any of
the requisite regulatory approvals,
- subject to certain exceptions, change its methods of accounting,
- subject to certain exceptions, enter into or amend any employee benefit
plans or agreements or increase the compensation or fringe benefits of
any director, officer and employee,
- except in the ordinary course of business consistent with past practice,
make or acquire any loan or issue a commitment for any loan or agree to
issue any letters of credit or otherwise guarantee the obligations of any
other persons,
- engage or participate in any material transaction or incur or sustain any
material obligation not in the ordinary course of business consistent
with past practice,
- settle any claim involving money damages involving a payment in excess of
$50,000 as to any such matter, or settle any other matter not involving
money damages which is material to SierraWest,
- change or make any tax elections or settle or compromise any material tax
liability,
- subject to certain exceptions, make an application for the opening,
relocation or closing of, or open, relocate or close any branch or loan
production office,
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45
- amend or waive any provision of, or terminate, the SierraWest rights
plan, or redeem any of the rights outstanding thereunder,
- except as permitted by the merger agreement, enter into any
securitization or similar transactions with respect to debtany loans, leases
or other assets, or
- agree to, or make any commitment to, take any of the actions described
above.
Additionally, BancWest has agreed not to:
- amend its certificate of incorporation or its bylaws in a manner that
would materially and adversely affect (1) its ability to perform it
obligations under the merger agreement or complete the merger, or (2) the
rights, powers and privileges of the shares of BancWest common stock to
be issued in the merger,
- intentionally take or fail to take any action that would, or reasonably
might be expected to, result in (1) any of its representations and
warranties set forth in the merger agreement being or becoming untrue,
subject to such exceptions as do not have, and would not reasonably be
expected to have, individually or in the aggregate, a material adverse
effect on BancWest following the effective time of the merger, (2) any of
the conditions to the closing set forth in the merger agreement not being
satisfied, or unless such action is required by applicable law or sound
banking practice, that would adversely affect the ability of BancWest or
SierraWest to obtain any of the requisite regulatory approvals without
imposition of a burdensome condition, or
- agree to, or make any commitment to, take any of the actions described
above.
ADDITIONAL AGREEMENTS
SIERRAWEST SHAREHOLDERS' MEETING. In the merger agreement, SierraWest has
agreed to call a meeting of its shareholders to be held as promptly as
practicable for the purpose of voting on the merger. SierraWest is required
through its board of directors to recommend to its shareholders approval of the
merger agreement unless the board of directors of SierraWest determines in good
faith, based upon the written advice of outside counsel, that making such
recommendation, or failing to withdraw, modify or amend any previously made
recommendation, would constitute a breach of fiduciary duty by SierraWest's
board of directors under applicable law.
NO SOLICITATIONS. From February 25, 1999, until the earlier of the
effective time of the merger or the termination of the merger agreement,
SierraWest has agreed that neither it, nor any of its subsidiaries, affiliates
or agents, will enter into discussions or negotiations with or provide
information to any person or group of persons (other than BancWest and its
subsidiaries) concerning:
- the acquisition of a 15% or greater equity interest in, or a merger,
consolidation, liquidation, dissolution or other disposition of 15% or
more of the assets of, SierraWest or any significant subsidiary of
SierraWest, or
- any tender offer or exchange offer that if consummated would result in
any person beneficially owning 15% or more of any class of equity
securities of the Corporation that rank pari passu in all respects
withSierraWest or juniorany significant subsidiary of SierraWest
(other than pursuant to the Junior Subordinated Debentures. During an Extension
Period, interesttransactions contemplated by the merger
agreement and the stock option agreement).
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FILINGS AND OTHER ACTIONS. In the merger agreement, BancWest and
SierraWest have each agreed to use all reasonable efforts:
- to take all actions necessary to comply promptly with all legal
requirements which may be imposed on such party or its subsidiaries with
respect to the transactions contemplated by the merger agreement, and
- to obtain (and to cooperate with the other party to obtain) any
governmental or private consent, authorization, order, exemption or
approval which is required to be obtained or made by such party or any of
its subsidiaries in connection with the merger and the other transactions
contemplated by the merger agreement.
In addition, each of SierraWest and BancWest has agreed to use all
reasonable best efforts to take all actions, and to do, all things necessary and
proper or advisable to complete, as soon as practicable, the transactions
contemplated by the merger agreement, including using all reasonable best
efforts to:
- lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to complete the merger
according to the merger agreement,
- defend any litigation seeking to enjoin, prevent or delay the completion
of the merger according to the merger agreement or seeking material
damages, and
- provide to counsel to the other party representations and certifications
as to such matters as such counsel may reasonably request in order to
render the respective tax opinions described under "-- Conditions to the
Completion of the Merger" and to obtain the letters of their independent
accountants regarding pooling of interests accounting treatment.
EMPLOYEE BENEFIT PLANS. For a description of the effect of the merger on
the Junior Subordinated Debentures will continue to
accrue (andSierraWest employee benefit plans, see "THE MERGER -- Effect on SierraWest's
Employee Benefits Plans."
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. For a period of four
years after the amount of Distributions to which holderseffective time of the Capital
Securitiesmerger, BancWest has agreed to maintain in
effect the current policies of directors' and officers' liability insurance
maintained by SierraWest and its subsidiaries (provided that BancWest may
substitute policies of at least the same coverage and amounts containing terms
and conditions which are entitled will accumulate) atnot materially less advantageous in the rate of 8.343% per annum,
compounded semiannually, and holders of Capital Securities will be requiredaggregate) with
respect to include their pro rata share of such interest income in gross income for
United States federal income tax purposes. See "Description of Junior
Subordinated Debentures -- Option to Extend Interest Payment Period" and
"Certain Federal Income Tax Consequences -- Interest Income and Original
Issue Discount."
The Junior Subordinated Debentures are unsecured and subordinated to
all Senior Indebtedness (as defined herein). Substantially allclaims arising from facts or events which occurred before the
effective time of the Corporation's existing indebtedness constitutes Senior Indebtedness. Becausemerger. However, BancWest will not be obligated to make
annual premium payments for such insurance to the Corporation is a holding company, the rightextent such premiums exceed
150% of the Corporationpremiums paid by SierraWest and SierraWest Bank in respect of 1998
for such insurance, as previously disclosed to participateBancWest. If the premiums for
such insurance would at any time exceed 150% of the premiums paid by SierraWest
and SierraWest Bank in respect of 1998 for such insurance, then BancWest will
maintain policies of insurance which, in BancWest's good faith determination,
provide the maximum coverage available at an annual premium equal to 150% of the
premiums paid by SierraWest and SierraWest Bank in respect of 1998 for such
insurance.
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CONDITIONS TO THE COMPLETION OF THE MERGER
Each party's obligation to complete the merger is subject to various
conditions which include, in addition to the other customary closing conditions,
the following:
- SierraWest shareholders shall have approved the merger agreement,
- all necessary governmental approvals for the merger shall been obtained
and any distributionwaiting periods required by any governmental entity with respect
to the merger shall have expired,
- there shall not be any injunction or restraining order preventing the
completion of assetsthe merger or the transactions contemplated by the merger
agreement, stock option agreement and agreement of merger, nor shall the
merger or the transactions contemplated by the merger agreement, stock
option agreement and agreement of merger be illegal under any subsidiary, including its
principal subsidiary, First Hawaiian Bank,applicable
law,
- the shares of BancWest common stock to be issued to the shareholders of
SierraWest in the merger shall have been approved for listing upon
any such subsidiary's
liquidation or reorganization or otherwiseofficial notice of issuance on the New York Stock Exchange,
- no stop orders suspending the effectiveness of the registration statement
filed by BancWest to register the shares to be issued to SierraWest
shareholders shall have been issued, and
- receipt of reasonably satisfactory opinions of independent public
accountants to both BancWest and SierraWest to the effect that the merger
will qualify for "pooling of interests" accounting treatment.
In addition, each party's obligation to complete the merger is subject to
the prior claimsfollowing additional conditions, any of creditorswhich may be waived by such party:
- the representations and warranties of that subsidiary exceptthe other party set forth in the
merger agreement shall be true and correct in all material respects as of
the date of the merger agreement (except to the extent that the Corporation may
itself be recognizedsuch
representations and warranties speak as a creditor of that subsidiary. Accordingly, the
Junior Subordinated Debentures (and therefore the Capital Securities) will be
effectively subordinated to all existingan earlier date) and future liabilitiesas of the
Corporation's subsidiaries, and holders thereof should look only toclosing date,
- the assets of the Corporation for payments on the Junior Subordinated Debentures.
See "Description of Junior Subordinated Debentures -- Subordination."
The Corporation has, through the Guarantee, the Trust Agreement, the
Junior Subordinated Debentures and the Junior Subordinated Indenture (each as
defined herein), taken together, fully, irrevocably and unconditionally
guaranteedother party shall have performed in all material respects all of the Trust's obligations under the Capital Securities. See
"Relationship Among the Capital Securities, the Junior Subordinated
Debentures and the Guarantee -- Full and Unconditional Guarantee." The
Guarantee of the Corporation guarantees the payment of Distributions and
payments on liquidation or redemption of the Capital Securities, but only in
each case to the extent of funds held by the Trust, as described herein (the
"Guarantee"). See "Description of Guarantee." If the Corporation does not
make payments on the Junior Subordinated Debentures held by the Trust, the
Trust will have insufficient funds to pay Distributions on the Capital
Securities. The Guarantee does not cover payment of Distributions when the
Trust does not have sufficient funds to pay such Distributions. In such
event, a holder of Capital Securities may institute a legal proceeding
directly against the Corporation to enforce payment of such Distributions to
such holder. See "Description of Junior Subordinated Debentures --
Enforcement of Certain Rights by Holders of Capital Securities." The
obligations of the Corporation under the Guarantee, like its
obligations under the Junior Subordinated Debentures,merger agreement,
- such party shall have received a copy of the resolution or resolutions
duly approved by the board of directors (or a duly authorized committee
thereof) of the other party and in the case of BancWest, of the holders
of the SierraWest common stock, authorizing the execution, delivery and
performance by such party of the merger agreement,
- such party shall have received an opinion of its counsel, dated the
closing date, that the merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code and each party will be a party to that
reorganization within the meaning of Section 368(b) of the Internal
Revenue Code, and
- the rights issued under the SierraWest rights agreement shall not have
become nonredeemable, exercisable, distributed or triggered pursuant to
the terms of such agreement.
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In addition, BancWest's obligation to complete the merger is subject to the
following additional conditions, any of which may be waived by BancWest:
- in approving the merger agreement, no governmental authority shall have
imposed a burdensome condition or restriction upon BancWest or its
subsidiaries or any affiliate which would reasonably be expected to (1)
have a material adverse effect after the effective time of the merger on
the present or prospective consolidated financial condition, business,
operating results or prospects of BancWest or the surviving corporation,
including, without limitation, any requirement to dispose of any material
assets or businesses or restrict in any significant way any material
operations or activities, (2) prevent BancWest or its subsidiaries from
realizing all or a substantial portion of the economic benefits of the
transactions contemplated by the merger agreement, or (3) materially
impair BancWest's ability to exercise and enforce its rights under the
merger agreement, stock option agreement and agreement of merger,
- SierraWest shall have provided to BancWest a review report prepared in
accordance with the provisions of Statement on Auditing Standards No. 71,
Interim Financial Information, by SierraWest's independent accountants
covering SierraWest's quarterly financial report for the most recent
quarter ending at least 45 days prior to the closing date,
- all conditions, including required regulatory approvals, required to be
satisfied prior to the completion of the merger of SierraWest Bank with
and into Bank of the West shall have been satisfied and such merger shall
be able to be consummated immediately following the effective time of the
merger of SierraWest with and into Bank of the West, and
- BancWest shall have determined to its satisfaction that no holders of
SierraWest common stock are subordinateentitled to have their shares treated as
"dissenting shares."
TERMINATION
The merger agreement may be terminated at any time before the effective
time of the merger. If the merger agreement is terminated, the merger will not
occur. The merger agreement may be terminated by action taken or authorized by
the board of directors of the terminating party or parties whether before or
after the approval of the merger agreement by the shareholders of SierraWest:
- by mutual consent of BancWest and juniorSierraWest in a written instrument,
- by either party upon written notice to the other party if any bank
regulator shall have issued an order denying approval of the merger and
the other material aspects of the transactions contemplated by the merger
agreement or if any governmental entity with authority to do so shall
have issued a final permanent order enjoining or otherwise prohibiting
the completion of the merger in accordance with the merger agreement, and
the time for appeal or petition for reconsideration of any such order
shall have expired without such appeal or petition being granted,
- by either party if the merger shall not have been completed on or before
September 30, 1999, except that if the merger shall not been completed on
or before such date due to the act or omission of BancWest or SierraWest,
then that party may not terminate the merger agreement under this
provision,
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- by either party if the approval of the merger agreement by the SierraWest
shareholders is not obtained,
- by BancWest if any governmental entity with authority to do so shall have
issued an order in connection with the transactions under the merger
agreement imposing a burdensome condition on BancWest or the surviving
corporation, and the time for appeal or petition for reconsideration of
any such order shall have expired without such appeal or petition being
granted,
- by BancWest, in the event of a breach by SierraWest of any
representation, warranty or covenant contained in the merger agreement,
which breach (1) either is not cured within 45 days after the giving of
written notice to SierraWest, or is of a nature which cannot be cured
prior to the closing and (2) would entitle the non-breaching party to
elect not to complete the merger in accordance with the merger agreement
under the provisions described under "-- Conditions to the Completion of
the Merger;" provided, however, that BancWest may immediately terminate
the merger agreement upon notice to SierraWest in the event that
SierraWest shall breach the covenant described under "-- Additional
Agreements -- No Solicitations,"
- by BancWest, if the board of directors of SierraWest (1) fails to
recommend approval of the merger agreement by the shareholders of
SierraWest, (2) amends or modifies such recommendation in a manner
materially adverse to BancWest, or (3) withdraws such recommendation to
the shareholders of SierraWest,
- by SierraWest, in the event of a breach by BancWest of any
representation, warranty or covenant contained in the merger agreement,
which breach (1) either is not cured within 45 days after the giving of
written notice to SierraWest, or is of a nature which cannot be cured
prior to the closing and (2) would entitle the non-breaching party to
elect not to complete the merger in accordance with the merger agreement
under the provisions described under "-- Conditions to the Completion of
the Merger," or
- by SierraWest, if SierraWest's board of directors so determines by a vote
of a majority of the members of its entire board, at any time during the
two business day period beginning on the first business day after the
date on which FDIC approves the merger, if:
(1) the average of the closing prices of BancWest common stock on the
New York Stock Exchange for the 20 consecutive trading days ending
on the date on which the FDIC approves the merger (the "Average
BancWest Closing Price") is less than 85% of the average of closing
prices of BancWest common stock on the New York Stock Exchange for
the 5 consecutive trading days immediately before the public
announcement of the merger (or 85% of $43.8375), and
(2) the ratio of the Average BancWest Closing Price to $43.8375 (the
"BancWest Ratio") is less than 85% of the ratio of the average of
the Standard & Poor's Mid-Cap Regional Bank Index as published by
Bloomberg Financial Markets for the 20 consecutive trading days
ending on the date on which the FDIC approves the merger (the "Final
Index Price") to the average of the bank index on the 5 consecutive
trading days immediately before the public announcement of the
merger (or $223.854) (the "Index Ratio").
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However, during the five business day period beginning on the day after receipt
of notice of election by SierraWest to terminate under this provision, BancWest
will have the option to adjust the exchange ratio to equal the lesser of:
- 0.85 X $43.8375 X 0.82
------------------------------
Average BancWest Closing Price
or
- Index Ratio X 0.82
---------------------
BancWest Ratio
If BancWest elects to so adjust the exchange ratio, then the right of
paymentSierraWest to all Senior Indebtedness (as definedterminate the merger will end.
In other words, SierraWest will not have to option to terminate the merger
agreement unless, for the applicable period, the BancWest stock price falls
below $37.2619, AND the BancWest stock price declines more than 15% in "Description of Junior
Subordinated Debentures -- Subordination")relation
to the bank stock index. If BancWest chooses to adjust the exchange ratio, then
the value of the Corporation.BancWest shares you receive in the merger will not have
declined more than 15% in relation to any decline in the bank stock index. In
the absence of an adjustment to the exchange ratio, the bank stock index will
have no effect on the value of the BancWest shares you receive.
For example, if the Average BancWest Closing Price is $34.00 and the Final
Index Price is $215.00, the ratio of $34 to $43.8375 (.7756) is less than 85% of
the ratio of $215.00 to $223.854 (.8164). As a result, SierraWest would have the
right to terminate the merger agreement. In such situation, BancWest would have
the option to adjust the exchange ratio to equal the lesser of:
- 0.85 X $43.8375 X 0.82
---------------------- = 0.8987
$34
or
- 0.8164 X 0.82
--------------- = 0.8631
0.7756
In this example, the new exchange ratio would be 0.8631.
FEES AND EXPENSES
Whether or not the merger is completed in accordance with the merger
agreement, all costs and expenses incurred in connection with the merger
agreement and the transactions covered by the merger agreement will be paid by
the party incurring such expense.
AMENDMENT
The Capital Securitiesmerger agreement may be amended by the parties at any time before or
after approval of the merger agreement by the shareholders of SierraWest.
However, after the approval by the shareholders of SierraWest, no amendment
shall be made which by law requires further approval by such shareholders
without such further approval. The merger agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties.
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EXTENSION; WAIVER
At any time prior to the closing of the merger, the parties, by action
taken or authorized by their respective board of directors, may, to the extent
legally allowed, (1) extend the time for the performance of any of the
obligations or other acts of the other parties, (2) waive any inaccuracies in
the representations and warranties contained in the merger agreement or in any
document delivered pursuant to it, and (3) waive compliance with any of the
agreements or conditions contained in the merger agreement. To "waive" means to
give up rights.
Any agreement on the part of a party to the merger agreement to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party.
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STOCK OPTION AGREEMENT
BETWEEN SIERRAWEST AND BANCWEST
Concurrently with the execution and delivery of the merger agreement,
SierraWest and BancWest entered into a stock option agreement, under which
SierraWest granted BancWest an option to purchase up to 1,059,490 shares of
SierraWest common stock representing approximately 19.9% of the outstanding
shares of SierraWest common stock at a per share price equal to $28.875. The
option will only become exercisable upon the occurrence of certain events
described below.
The following is a summary of the material provisions of the stock option
agreement, which is attached as Appendix B to this to proxy statement-prospectus
and incorporated herein by reference. You are subjecturged to mandatory redemption,read the stock option
agreement in its entirety.
EXERCISE OF STOCK OPTION
BancWest may elect to exercise the option in whole or in part upon repaymentonly after
the occurrence of one of the Junior Subordinated Debentures at Stated
Maturityfollowing events (each a "Purchase Event"):
- SierraWest or their earlier redemption.any of its significant subsidiaries, without BancWest's
prior written consent, recommends, publicly announces an intention to
recommend, or enters into an agreement with any person (other than
BancWest or any subsidiary of BancWest) to effect (1) a merger,
consolidation or similar transaction involving SierraWest or any of its
significant subsidiaries, (2) the disposition, by sale, lease, exchange
or otherwise, of assets or deposits of SierraWest or any of its
significant subsidiaries representing 15% or more of the consolidated
assets or deposits of SierraWest and its subsidiaries, or (3) the
issuance, sale, or other disposition by SierraWest of securities
representing 15% or more of the voting power of SierraWest or any of its
significant subsidiaries (any of the foregoing is defined as an
"Acquisition Transaction"),
- any person or group of persons (other than BancWest or any subsidiary of
BancWest) acquires beneficial ownership (as such term is defined in Rule
13d-3 under the Securities Exchange Act) or the right to acquire
beneficial ownership of 15% or more of the voting power of SierraWest or
any of its significant subsidiaries,
- any person commences a tender offer or files a registration statement
under the Securities Act with respect to an exchange offer for SierraWest
common stock such that, upon completion of that offer, that person will
own or control 15% or more of the then outstanding shares of SierraWest
common stock, or
- the SierraWest shareholders have not approved the merger agreement, the
annual meeting of shareholders of SierraWest has not been held or has
been canceled or the SierraWest board has withdrawn or modified in a
manner adverse to BancWest its recommendation with respect to the merger
agreement, in each case after any person (other than BancWest or any
subsidiary of BancWest) has (1) made, or disclosed an intention to make,
a bona fide proposal, to engage in an Acquisition Transaction, (2)
commenced a tender offer or filed a registration statement under the
Securities Act with respect to an exchange offer, or (3) filed an
application (or given a notice) with a bank regulatory authority to
engage in an Acquisition Transaction.
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TERMINATION OF STOCK OPTION
The Junior Subordinated Debentures are
redeemableoption will terminate and be of no further force or effect upon the
earliest to occur of:
- the effective time of the merger,
- termination of the merger agreement in accordance with its terms before a
Purchase Event or a Preliminary Purchase Event (as defined below) occurs,
or
- 12 months after the termination of the merger agreement after a Purchase
Event or a Preliminary Purchase Event occurs.
Even if the option terminates, BancWest will still be entitled to purchase those
SierraWest shares with respect to which it exercised the option before the
termination of the option.
A "Preliminary Purchase Event" means the occurrence of one of the following
events:
- any person (other than BancWest or any subsidiary of BancWest) makes a
bona fide proposal to SierraWest or its shareholders by public
announcement, or written communication that is or becomes the subject of
public disclosure, to engage in an Acquisition Transaction,
- after a proposal is made by a third party to SierraWest or its
shareholders to engage in an Acquisition Transaction, or a third party
states its intention to SierraWest to make such a proposal if the merger
agreement terminates, SierraWest breaches any representation, warranty,
covenant or agreement contained in the merger agreement, which breach
would entitle BancWest to terminate the merger agreement,
- any person (other than BancWest or any subsidiary of BancWest) other than
in connection with a transaction to which BancWest has given its prior
written consent, shall have filed an application or notice with any
governmental entity for approval to maturity atengage in an Acquisition Transaction,
or
- SierraWest's board of directors (1) fails to recommend approval of the
merger agreement, (2) amends or modifies its recommendation in a manner
materially adverse to BancWest, or (3) withdraws it recommendation to the
shareholders of SierraWest.
ADJUSTMENT OF NUMBER OF SHARES SUBJECT TO OPTION
The number and type of securities subject to the option and the purchase
price of shares will be adjusted for any stock split, reverse split, dividend,
exchange of shares or similar transaction relating to the SierraWest common
stock, so that BancWest will receive upon exercise of the option the same number
and type of securities as if the option had been exercised immediately before
the change in SierraWest common stock. The number of shares of SierraWest common
stock subject to the option will also be adjusted if SierraWest issues
additional shares of SierraWest common stock, so that the number of shares of
SierraWest common stock subject to the option represents 19.9% of issued and
outstanding SierraWest common stock. In the event of a capital reorganization,
merger or consolidation of SierraWest with or into another corporation, or the
sale of all or substantially all of SierraWest's assets to any other person,
then, as a part of any such transaction, provision will be made so that BancWest
will be entitled to receive an option of the Corporation, subjectsucceeding corporation, any person
that controls the succeeding corporation or SierraWest, at the election of
BancWest.
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REPURCHASE OF OPTION SHARES
During the 18-month period after a Repurchase Event (as defined below)
occurs, BancWest can require SierraWest to repurchase (1) the option, and (2)
the shares of SierraWest common stock received by BancWest upon exercise of the
option by BancWest. In addition, BancWest has the same right of repurchase at
its request for the 30 days after (1) BancWest receives official notice that an
approval of a governmental entity required for the purchase of the option shares
will not be granted, or (2) the closing date of its purchase of option shares
does not occur within 18 months after the date on which BancWest delivered
notice to exercise to SierraWest.
The shares will be repurchased at a price equal to the Corporation having receivedsum of:
- the prior approvalaggregate purchase price paid by BancWest for any shares of
SierraWest common stock acquired under the option with respect to which
BancWest then has beneficial ownership;
- the excess, if any, of (x) the Applicable Price (as defined below) for
each share of SierraWest common stock over (y) $28.875 (subject to any
adjustments), multiplied by the number of shares of SierraWest common
stock with respect to which the option has not been exercised; and
- the excess, if any, of the Applicable Price over $28.875 (subject to any
adjustments) paid (or, in the case of option shares with respect to which
the option has been exercised but the closing date has not occurred,
payable) by BancWest for each share of SierraWest common stock with
respect to which the option has been exercised and with respect to which
BancWest then has beneficial ownership, multiplied by the number of such
shares.
A "Repurchase Event" will occur if:
- any person (other than BancWest or any subsidiary of BancWest) or group
of persons acting in concert acquires beneficial ownership of, 25% or
more of the then outstanding shares of SierraWest common stock, or
- SierraWest enters into an agreement in connection with any capital
reorganization, merger or consolidation of SierraWest with or into
another corporation, or the sale of all or substantially all of
SierraWest's assets to any other person.
The term "Applicable Price" means the highest of:
(1) the highest price per share of SierraWest common stock paid by any
person in connection with a Repurchase Event, or
(2) the highest closing sales price per share of SierraWest common stock
quoted on the Nasdaq National Market System during the 40 business days
before the request date,
provided, however, that in the event of a sale of less than all of SierraWest's
assets, the Applicable Price will be the sum of the price paid in such sale for
such assets and the current market value of the remaining assets of SierraWest
as determined by a nationally recognized investment banking firm selected by
BancWest, divided by the number of shares of the SierraWest common stock
outstanding at the time of such sale.
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REGISTRATION RIGHTS
BancWest has certain rights to require registration of any shares of
SierraWest common stock purchased pursuant to the stock option agreement under
the securities laws if necessary to enable BancWest to sell such shares.
EFFECT OF STOCK OPTION AGREEMENT
The stock option agreement is intended to increase the likelihood that the
merger will be completed on the terms set forth in the merger agreement. As a
result, certain aspects of the stock option agreement may have the effect of
discouraging persons who might now or before the effective time of the merger be
interested in acquiring all of or a significant interest in SierraWest from
considering or proposing such an acquisition, even if they were prepared to
offer higher consideration per share for SierraWest common stock than the
consideration set forth in the merger agreement.
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OPERATIONS FOLLOWING THE MERGER
Although we cannot assure you that any specific level of cost savings will
be achieved or as to the timing thereof, BancWest currently expects the
surviving corporation to achieve approximately $8.75 million and $12.25 million
in pre-tax annual cost savings in the first and second 12-month periods
following the completion of the merger, respectively, as a result of the merger.
It is also estimated that one-time, after-tax restructuring and other merger
related costs of approximately $6.8 million will be incurred upon completion of
the merger, principally as a result of severance costs, consolidation of
branches and investment banking, legal and accounting fees.
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BANCWEST CORPORATION
BancWest, a Delaware corporation, is a registered bank holding company
under the Bank Holding Company Act of 1956. As a bank holding company, BancWest
is allowed to acquire or invest in the securities of companies that are engaged
in banking or in activities closely related to banking as authorized by the
Board of Governors of the Federal Reserve System (the "Federal Reserve"Reserve Board").
BancWest, through its subsidiaries, operates a general commercial banking
business and other businesses related to do so, if such approval
is then required under applicable Federal Reserve capital guidelines or
policies, (i) on or after Julybanking. Its principal assets are its
investments in:
- First Hawaiian Bank, a State of Hawaii chartered bank,
- Bank of the West, a State of California chartered bank with authority to
operate interstate branches in Oregon, Washington and Idaho, and
- First Hawaiian Capital I (the "Trust"), a Delaware business trust.
First Hawaiian, Bank of the West, and the Trust are wholly-owned subsidiaries of
BancWest. At December 31, 1998, BancWest had consolidated total assets of $15.0
billion, total deposits of $11.3 billion and total stockholders' equity of $1.7
billion.
FIRST HAWAIIAN, INC./BANCWEST CORPORATION MERGER
On November 1, 2007, in whole at any time or in part from
time1998, the former BancWest Corporation ("Old BancWest"),
parent company of Bank of the West, merged with and into First Hawaiian, Inc.
Upon completion of the merger, First Hawaiian, Inc., the surviving corporation,
changed its name to time, or (ii) in whole (but not in part) at any time within 90 days
following the occurrence and continuation of a Tax Event or Capital Treatment
Event (each as defined herein), in each case at a redemption price set forth
herein, which includes the accrued and unpaid interest on the Junior
Subordinated Debentures so redeemed"BancWest Corporation." Prior to the date fixed for redemption. See
"Description of Junior Subordinated Debentures -- Redemption."
The Corporation, as the holdercompletion of the
merger, Old BancWest was wholly-owned by Banque Nationale de Paris ("BNP"). BNP
(and its affiliate, French American Banking Corporation) received approximately
25.8 million shares of BancWest's newly-authorized Class A Common Stock,
representing approximately 45% of the then outstanding Common Securities,
hastotal voting stock of
BancWest, after the right at any timemerger (a purchase price of approximately $905.7 million).
As a result of the merger, Bank of the West is now a wholly-owned subsidiary of
BancWest.
The merger of Old BancWest into First Hawaiian, Inc. represented a unique
opportunity for First Hawaiian. The merger transformed First Hawaiian into a
diversified regional financial services institution large enough to dissolvecompete in
the Trust, subjectmodern banking environment, and yet able to retain its community banking
focus on individual service.
FIRST HAWAIIAN BANK
First Hawaiian Bank, the Corporation
having received the prior approvaloldest financial institution in Hawaii, was
established as Bishop & Co. in 1858 in Honolulu. First Hawaiian is a State of
Hawaii-chartered bank that is not a member of the Federal Reserve to do so, if such
approval is then required under applicable Federal Reserve capital guidelines
or policies,System. The
deposits of First Hawaiian are insured by the Bank Insurance Fund and after satisfaction of liabilities to creditorsthe
Savings Association Insurance Fund of the Trust
as provided by applicable law, to cause the Junior Subordinated Debentures to
be distributedFDIC to the holders of the Capital Securities and Common Securities
in liquidation of the Trust. See "Description of Capital Securities --
Liquidation Distribution Upon Dissolution."
In the event of the dissolution of the Trust, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, the
holders of the Capital Securities will be entitled to receive a Liquidation
Amount of $1,000 per Capital Security plus accumulated and unpaid Distribu-
tions thereon to the date of payment, subject to certain exceptions, which
may be in the form of a distribution of such amount in Junior Subordinated
Debentures. See "Description of Capital Securities -- Liquidation
Distribution Upon Dissolution."
The Trust is making the Exchange Offer of the New Capital Securities
in reliance on the position of the staff of the Division of Corporation
Finance of the Securities and Exchange Commission (the "Commission") as set
forth in certain interpretive letters addressed to third parties in other
transactions. However, neither the Corporation nor the Trust has sought its
own interpretive letter and there can be no assurance that the staff of the
Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance,extent and subject to the
two
immediately following sentences,limitations set forth in the CorporationFederal Deposit Insurance Act.
First Hawaiian Bank, is a full-service bank conducting a general commercial
and consumer banking business and offering trust and insurance services. Its
banking activities include receiving demand, savings and time deposits for
personal and commercial accounts, making commercial, agricultural, real estate
and consumer loans, acting as a United States tax depository facility, providing
money transfer and cash management services, selling cash management services,
insurance products, mutual funds and annuities, traveler's checks and personal
money orders, issuing letters of credit, handling domestic and foreign
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collections, providing safe deposit and night depository facilities, offering
lease financing, and investing in U.S. Treasury securities and securities of
other U.S. government agencies and corporations and state and municipal
securities.
At December 31, 1998, First Hawaiian Bank had total assets of $7.2 billion
and total deposits of $5.5 billion, making it the second largest bank in Hawaii.
On June 19, 1998, First Hawaiian Creditcorp, Inc., a former wholly-owned
subsidiary of BancWest, was merged with and into First Hawaiian Bank. As a
result of the merger, all 13 Creditcorp branches were closed.
DOMESTIC SERVICES
The domestic operations of First Hawaiian are carried out through its main
banking office located in Honolulu, Hawaii, with 55 other banking offices
located throughout the State of Hawaii. All but one of the banking offices are
equipped with automatic teller machines that provide 24-hour service to
customers wishing to make withdrawals from and deposits to their personal
checking and savings accounts, to make balance inquiries, to obtain interim bank
statements and to make utility and loan payments. Sixty-three automatic teller
machines at nonbranch locations provide balance inquiry, withdrawal transaction
and account transfer services. At selected non-branch locations, interim bank
statements are also available. First Hawaiian is a member of the
CIRRUS(R)/MasterCard(R), Plus(R)/VISA(R) and Star System(R), AFFN(R), American
Express(R), Discover(R) and JCB(R) automatic teller machine networks which
provide First Hawaiian's customers with access to their funds nationwide and in
selected foreign countries.
LENDING ACTIVITIES
First Hawaiian engages in a broad range of lending activities, including
making real estate, commercial and consumer loans. At December 31, 1998, First
Hawaiian's loans totaled $5.6 billion, representing 76.7% of total assets. At
that date, 47.2% of the loans were construction, commercial and residential real
estate loans, 27.6% were commercial loans, 13.0% were consumer loans, 6.8% were
foreign loans and 5.4% were leases.
REAL ESTATE LENDING -- CONSTRUCTION. First Hawaiian provides construction
financing for a variety of commercial and residential single-family subdivision
and multi-family developments. At December 31, 1998, 3.4% of First Hawaiian's
total real estate loans were collateralized by properties under construction.
REAL ESTATE LENDING -- COMMERCIAL. First Hawaiian provides permanent
financing for a variety of commercial developments, such as various retail
facilities, warehouses and office buildings. At December 31, 1998, 36.1% of
First Hawaiian's total real estate loans were collateralized by commercial
properties.
REAL ESTATE LENDING -- RESIDENTIAL. First Hawaiian makes residential real
estate loans, including home equity loans to enable borrowers to purchase,
refinance or improve residential real property. The loans are collateralized by
mortgage liens on the related property, substantially all of which is located in
Hawaii. At December 31, 1998, 60.5% of First Hawaiian's total real estate loans
were collateralized by single-family and multi-family residences.
COMMERCIAL LENDING. First Hawaiian is a major lender to primarily
small-and medium-sized businesses in Hawaii. First Hawaiian also participates in
syndication lending to good credit quality large corporate entities and to the
media and telecommunications industry located on the mainland United States.
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CONSUMER LENDING. First Hawaiian offers many types of loans and credits to
consumers. First Hawaiian provides lines of credit, uncollateralized or
collateralized, and provides various types of personal and automobile loans.
First Hawaiian also provides indirect consumer automobile financing on new and
used autos by purchasing finance contracts from dealers. First Hawaiian's Dealer
Center is the largest commercial bank automobile lender in the State of Hawaii.
First Hawaiian is the largest issuer of MasterCard(R) credit cards and the
second largest issuer of VISA(R) credit cards in Hawaii.
AFFORDABLE HOUSING INITIATIVES
In an effort to support affordable housing and as part of First Hawaiian's
community reinvestment program, First Hawaiian is a member of the Hawaii
Community Reinvestment Corporation (the "HCRC"). The HCRC is a consortium of
local financial institutions that provides $50 million in permanent long-term
financing for affordable housing rental projects throughout Hawaii for low- and
moderate-income residents.
The $50 million loan pool is funded by the member financial institutions
which participate pro rata (based on deposit size) in each HCRC loan. First
Hawaiian's participations in these HCRC loans are included in its loan
portfolio.
To further enhance First Hawaiian's community reinvestment program and
provide support for the development of additional affordable housing rental
units in Hawaii, First Hawaiian, and other HCRC member institutions, have
subscribed to a $19.7 million tax credit equity fund ("Hawaii Affordable Housing
Fund I"). First Hawaiian and other HCRC members have also subscribed to a $20.0
million tax credit equity fund ("Hawaii Affordable Housing Fund II").
Hawaii Affordable Housing Fund I and Hawaii Affordable Housing Fund II have
been established to invest in qualified low-income housing tax credit rental
projects and to ensure that these projects are maintained as low-income housing
throughout the required compliance period. First Hawaiian's investments in the
Funds are included in its investment portfolio.
INTERNATIONAL BANKING SERVICES
First Hawaiian maintains an International Banking Division which provides
international banking products and services through First Hawaiian's branch
system, international banking headquarters in Honolulu, a Grand Cayman branch,
two Guam branches, a branch in Saipan and a representative office in Tokyo,
Japan. First Hawaiian maintains a network of correspondent banking relationships
throughout the world.
First Hawaiian's international banking activities are primarily
trade-related and are concentrated in the Asia-Pacific area.
TRUST, INVESTMENT AND INSURANCE SERVICES
TRUST SERVICES. First Hawaiian's Trust believe that
New Capital Securities issuedand Investments Division offers a
full range of trust and investment management services. The Trust and
Investments Division provides asset management, advisory and administrative
services for estates, trusts and individuals. It also acts as trustee and
custodian of retirement and other employee benefit plans. At December 31, 1998,
the Trust and Investments Division had 5,696 accounts with a market value of
$9.7 billion. Of this total, $7.0 billion represented assets in nonmanaged
accounts and $2.7 billion were managed assets.
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The Trust and Investments Division maintains custodial accounts pursuant to
this Exchange Offerwhich it acts as agent for customers in exchangerendering a variety of services,
including dividend and interest collection, collection under installment
obligations and rent collection.
INVESTMENT AND INSURANCE SERVICES. First Hawaiian, through a wholly-owned
subsidiary, offers insurance needs analysis for Old Capital Securities may be offered for resale, resoldindividuals, families and
otherwise
transferred by a holder thereof (other than a holder whobusinesses as well as insurance products such as life, disability and long-term
care. In association with an independent registered broker-dealer, First
Hawaiian offers mutual funds, annuities and other securities in its branches.
BANK OF THE WEST
Bank of the West is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirementsState of California-chartered bank that is not a
member of the Securities Act, provided that such New Capital SecuritiesFederal Reserve System. The deposits of the Bank of the West are
acquiredinsured by the Bank Insurance Fund of the FDIC to the extent and subject to the
limitations set forth in the ordinary courseFederal Deposit Insurance Act. The predecessor of
such holder's business and that such
holder is not participating, and has no arrangement or understanding with any
person to participate, in a distribution (within the meaningBank of the Securities Act)West, "The Farmers National Gold Bank", was chartered as a national
banking association in 1874 in San Jose, California.
On November 1, 1998, Pacific One Bank, a former wholly-owned subsidiary of
such New Capital Securities. However, any holder of Old
Capital Securities who is an "affiliate"First Hawaiian, Inc., was merged with and into Bank of the Corporation orWest. As a result of
the Trust
(withinmerger, 40 Pacific One Bank branches in Oregon, Washington and Idaho became
branches of Bank of the meaningWest.
Bank of Rule 405 under the Securities Act) or who intends to
participateWest is the fifth largest commercial bank in the Exchange OfferState of
California, with total assets of approximately $7.7 billion and total deposits
of approximately $5.8 billion at December 31, 1998. Bank of the West conducts a
general commercial banking business, providing retail and corporate banking and
trust services to individuals, institutions, businesses and governments through
146 branches and other commercial banking offices located primarily in the San
Francisco Bay area and elsewhere in the Northern and Central Valley regions of
California and in Oregon, Washington and Idaho. Bank of the West also generates
indirect automobile loans and leases, recreational vehicle loans, recreational
marine vessel loans, equipment leases and deeds of trust on single family
residences through a network of manufacturers, dealers, representatives and
brokers in all 50 states. Bank of the West's principal subsidiary is Essex
Credit Corporation ("Essex"), a Connecticut corporation. Essex is engaged
primarily in the business of originating and selling consumer loans on a
nationwide basis, such loans being made for the purpose of distributingacquiring or
refinancing pleasure boats or recreational vehicles. Essex has a network of 11
regional direct lending offices located in the following states: California,
Connecticut, Florida, Maryland, Massachusetts, New Jersey, New York, North
Carolina, Texas and Washington.
OPERATING DIVISIONS
COMMUNITY BANKING. The focus of Bank of the West's community banking
strategy has been Northern California and now, with the merger with Pacific One
Bank, the Pacific Northwest region. The Northern California market region is
comprised of the San Francisco Bay area and the Central Valley area of
California. This market area includes a population of approximately 14 million
residents, with approximately 7 million in the San Francisco Bay area and
approximately 4 million in the Central Valley as of December 31, 1998. The San
Francisco Bay area is one of the State of California's wealthiest regions, and
the Central Valley of California is an area which has been experiencing rapid
transition from a largely agricultural base to a mix of agricultural and
commercial
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enterprises. The Pacific Northwest region includes the states of Oregon,
Washington and Idaho.
Bank of the West utilizes its 146 branch network as its principal funding
source. A key element of Bank of the West's community banking strategy is to
seek to distinguish itself as the provider of the "best value" in community
banking services. To this end, Bank of the West seeks to position itself within
its markets as an alternative to both the higher priced, smaller "boutique"
commercial banks as well as the larger commercial banks, which may be perceived
as offering lower service and lower prices on a "mass market" basis.
In pursuing the Northern California and Pacific Northwest community banking
markets, Bank of the West seeks to serve a broad customer base by furnishing a
range of retail and commercial banking products. Through its branch network,
Bank of the West generates a variety of consumer loans, including direct vehicle
loans, consumer lines of credit and second mortgages. In addition, Bank of the
West generates and holds a small portfolio of first mortgage loans on
one-to-four family residences. Through its commercial banking operations
conducted from its branch network, Bank of the West offers a wide range of basic
commercial banking products that are intended to serve the needs of smaller
community-based businesses. These loan products include in-branch originations
of standardized products for businesses with relatively simple banking and
financing needs. More complex and customized commercial banking services are
offered through Bank of the West's regional banking centers which serve clusters
of branches and provide lending, deposit and cash management services to
companies operating in the relevant market areas. Bank of the West also provides
a number of fee-based products and services such as annuities, insurance and
securities brokerage.
The Professional Banking and Trust & Investment Services areas within the
Community Banking division provide a wide range of products to targeted markets.
Professional Banking, located in San Francisco, serves the banking needs of
attorneys, doctors and other working professionals. The Trust & Investment
Services area, headquartered in San Jose, and with offices in San Francisco,
provides a full range of individual and corporate trust services.
Another important element in Bank of the West's strategic plan for its
community banking operations is an effective promotion strategy which seeks to
position Bank of the West as "the Northern California Community Bank."
Television and radio advertising is an important component of developing Bank of
the West's community banking image and customer acceptance. In furtherance of
this objective, Bank of the West sponsors special events such as the "Bank of
the West Classic" professional women's tennis tournament held annually in Palo
Alto, California.
COMMERCIAL BANKING. Bank of the West's Business Banking division supports
commercial lending activities for larger business customers through ten regional
lending centers, six of which are located in Northern and Central California,
two of which are located in Oregon, and one each in Washington and Idaho. Each
regional office provides a wide range of loan and deposit services to mid-sized
companies with borrowing needs of $500,000 to $25 million. Lending services
include receivable and inventory financing, equipment term loans, letters of
credit, agricultural loans and trade finance. Other banking services include
cash management, insurance products, trust, investment, foreign exchange and
various international banking services.
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The Specialty Lending division seeks to provide focused banking services
and products to specifically targeted markets where Bank of the West's
resources, experience and technical expertise give it a competitive advantage.
Through operations conducted in this division, Bank of the West has established
a significant national market niche among those commercial banks which are
lenders to religious organizations. In addition, leasing operations within
Specialty Lending have made Bank of the West a significant provider of equipment
leasing financing, including both standard and tax-oriented products, to a wide
array of clients. To support the cash management needs of both Bank of the
West's corporate banking customers and large private and public deposit
relationships maintained with Bank of the West, the Specialty Lending division
operates a Cash Management group which provides a full range of innovative and
relationship-focused cash management services.
The Real Estate Industries division, whose primary markets are Northern and
Central California and Nevada, originates and services construction, short-term
and permanent loans to residential developers, commercial builders and
investors. The division is particularly active in financing the construction of
detached residential subdivisions in Northern California. Other construction
lending activities include low-income housing, industrial development,
apartment, retail and office projects. The division also originates and services
single-family home loans sourced through Bank of the West's Community Bank
branch network.
CONSUMER FINANCE. The Consumer Finance division targets the production of
auto loans and leases in the Western United States, and recreational vehicle and
marine loans nationwide, with a business emphasis on originating credits at the
high end of the credit spectrum. The Consumer Finance division originates
recreational vehicle and marine credits on a nationwide basis through sales
representatives located throughout the country servicing a network of over 1,900
recreational vehicle and marine dealers and brokers. During the fourth quarter
of 1997, Bank of the West acquired Essex to complement its dealer marine and
recreational vehicle presence. Essex primarily focuses on the origination and
sale of loans in the broker marine market and also originates and sells loans to
finance the acquisition of recreational vehicles.
The division's auto lending activity is primarily focused in the Western
United States. Bank of the West originates loans and leases to finance the
purchase of new and used autos, light trucks and vans through a network of more
than 2,000 dealers and brokers in California, Nevada and Arizona.
FIRST HAWAIIAN CAPITAL I
The Trust is a Delaware business trust which was formed in 1997. The Trust
issued $100,000,000 of its Capital Securities or any broker-dealer who purchased Old(the "Capital Securities") and
used the proceeds therefrom to purchase junior subordinated deferrable interest
debentures of BancWest. The Capital Securities fromqualify as Tier 1 Capital of
BancWest and are fully and unconditionally guaranteed by BancWest. All of the
common securities of the Trust to resell pursuant to Rule 144A under the Securities Act ("Rule
144A") or any other available exemption under the Securities Act, (a) will
not be able to rely on the interpretationsare owned by BancWest.
EMPLOYEES
At December 31, 1998, BancWest had 4,851 full-time equivalent employees.
First Hawaiian and Bank of the staffWest employed 2,470 and 2,381 persons,
respectively. None are represented by any collective bargaining agreements and
relations with employees are considered excellent.
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MONETARY POLICY AND ECONOMIC CONDITIONS
The earnings and business of BancWest are affected not only by general
economic conditions (both domestic and international), but also by the monetary
policies of various governmental regulatory authorities of (1) the United States
and foreign governments and (2) international agencies. In particular,
BancWest's earnings and growth may be affected by actions of the Division of
Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (b) will not be permitted or entitled to tender such
Old Capital Securities in the Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements of the Securities ActFederal Reserve
Board in connection with any saleits implementation of national monetary policy through
its open market operations in United States Government securities, control of
the discount rate and establishment of reserve requirements against both member
and non-member financial institutions' deposits. These actions have a
significant effect on the overall growth and distribution of loans, investments
and deposits as well as on the rates earned on loans or paid on deposits. It is
not possible to predict the effect of future changes in monetary policies upon
the operating results of BancWest.
COMPETITION
The financial services industry is highly competitive. BancWest's
subsidiaries compete with financial services providers, such as banks, savings
and loan associations, credit unions, finance companies, mortgage banking
companies and money market and mutual fund companies.
They also face increased competition from non-banking institutions such as
brokerage houses and insurance companies, as well as from financial services
subsidiaries of commercial and manufacturing companies. Many of these
competitors enjoy the benefits of advanced technology, fewer regulatory
constraints and lower cost structures.
The financial services industry is likely to become even more competitive
as further technological advances enable more companies to provide financial
services. These technological advances may diminish the importance of depository
institutions and other financial intermediaries in the transfer of funds between
parties.
SUPERVISION AND REGULATION
BancWest and its banking subsidiaries are subject to extensive regulation
by federal and state agencies. The regulation of bank holding companies and
their subsidiaries is intended primarily for the protection of depositors,
federal deposit insurance funds and the banking system as a whole and is not in
place to protect shareholders or other transfer of such Old Capital Securities
unless such saleinvestors.
BANK HOLDING COMPANY ACTIVITIES; INTERSTATE BANKING
BancWest is made pursuanta bank holding company subject to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds Old Capital
Securities acquired for its own accountthe Bank Holding Company Act
and, as a result, it reports to, is registered with, and is subject to
examination by, the Federal Reserve Board which also has authority to examine
the subsidiaries of market-making or other
trading activities and exchanges such Old Capital Securities for New Capital
Securities, then such broker-dealer must deliver a prospectus meeting the
requirementsBancWest, including Bank of the Securities Act in connection with any resales of such New
Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old
Capital Securities for New Capital Securities in the Exchange Offer will be
required to represent that (i) itWest and First Hawaiian
Bank.
A bank holding company is not an "affiliate" of the Corporation or
the Trust, (ii) any New Capital Securities to be received by it are being
acquired in the ordinary course of its business, and (iii) it has no
arrangement or understanding with any person to participate in and does not
intend to engage in a distribution (within the meaning of the Securities Act)
of such New Capital Securities. In addition, the Corporation and the Trust
may require such holder, as a condition to such holder's eligibility to
participate in the Exchange Offer, to furnish to the Corporation and the
Trust (or an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3generally prohibited under the Securities
ExchangeBank Holding
Company Act of 1934, as amended (the "Exchange Act")) on behalf of whom such
holder holds the Capital Securities to be exchangedfrom engaging in the Exchange Offer.
Each broker-dealer that receives New Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge that it acquired the Old
Capital Securities for its own account as the result of market-makingnonbanking (i.e., commercial or industrial)
activities, or other trading activities and must agree that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resale of such New Capital Securities. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. Based on the position taken by the staff of the Division of
Corporation Finance of the Commission in the interpretive letters referred to
above, the Corporation and the Trust believe that broker-dealers who acquired
Old Capital Securities for their own accounts, as a result of market-making
activities or other trading activities ("Participating Broker-Dealers"), may
use this Prospectus, as it may be amended or supplemented from time to time,
to fulfill their prospectus delivery requirements with respect to the New
Capital Securities received upon exchange of such Old Capital Securities
(other than Old Capital Securities which represent an unsold allotment from
the original sale of the Old Capital Securities). Subject to certain
exceptions, the Corporation and the Trust have agreed that this Prospectus,
as it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of such New Capital
Securities for a period ending, subject to certain exceptions, 180 days afterexceptions. Specifically, the dateactivities of first issuance of New Capital Securities. See "Plan of
Distribution." Any Participating Broker-Dealer who is an "affiliate"a
bank holding company, and those companies that it controls or in which it holds
more than 5% of the Trust (withinvoting stock, are limited to banking or managing or
controlling banks, furnishing services to its subsidiaries and such other
activities that the meaningFederal Reserve Board determines to be so closely related to
banking as to be a "proper incident thereto." In determining whether an activity
is sufficiently related to banking, the Federal Reserve Board will consider
whether the performance of Rule 405 undersuch activity by the Securities Act) may not rely
on such interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. See "The Exchange Offer--Resales of New Capital
Securities."
Any Old Capital Securities not tendered and accepted in the Exchange
Offer will remain outstanding and willbank holding company can
reasonably be entitledexpected to
all the same rights and
will be subject58
64
produce benefits to the same limitations applicable thereto under the Trust
Agreement (except for those rights which terminate upon consummationpublic (e.g., greater convenience, increased competition
or gains in efficiency) that outweigh possible adverse effects (e.g., undue
concentration of the
Exchange Offer)resources, decreased or unfair competition, conflicts of
interest or unsound banking practices). Following consummation of the Exchange Offer, the holders of
Old Capital Securities will not be entitled to any increase in the
Distribution rate thereon and will continue to be subject to all of the
existing restrictions upon transfer thereof and neither the Corporation nor
the Trust will have any further obligation to such holders (other than under
certain limited circumstances) to provide for registration under the
Securities Act of the Old Capital Securities held by them. To the extent that
Old Capital Securities are tendered and accepted in the Exchange Offer, a
holder's ability to sell untendered Old Capital Securities could be adversely
affected. See "Risk Factors--Consequences of a Failure to Exchange Old
Capital Securities."
The New Capital Securities will be a new issue of securities for
which there currently is no established trading market. Accordingly, there
can be no assurance as to the development or liquidity of any market for the
New Capital Securities. The Corporation currently does not intend to apply
for listing of the New Capital Securities on any securities exchange or for
quotation through the National Association of Securities Dealers Automated
Quotation System.
Old Capital Securities may be tendered for exchange on or prior to
5:00 p.m., New York City time, on , 1997 (such time on such date
being hereinafter called the "Expiration Date"), unless the Exchange Offer is
extended by the Corporation and the Trust (in which case the term "Expiration
Date" shall mean the latest date and time to which the Exchange Offer is
extended). Tenders of Old Capital Securities may be withdrawn at any time on
or prior to the Expiration Date. The Exchange Offer is not conditioned upon
any minimum liquidation amount of Old Capital Securities being tendered for
exchange. However, the Exchange Offer is subject to certain events and
conditions which may be waived by the Corporation or the Trust. The
Corporation has agreed to pay all expenses of the Exchange Offer. See "The
Exchange Offer--Fees and Expenses." This Prospectus, together with the Letter
of Transmittal, is being sent to all registered holders of Old Capital
Securities as of , 1997.
Neither the Corporation nor the Trust will receive any cash proceeds
from the issuance of the New Capital Securities offered hereby. No dealer-
manager is being used in connection with this Exchange Offer. See "Use of
Proceeds" and "Plan of Distribution."
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Exchange Act, and in accordance therewith files reports and other information
with the Commission. Reports, proxy statements and other information filed by
the Corporation with the Commission pursuant to the informational
requirements of the Exchange Act may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the following
Regional Offices of the Commission: Chicago Regional Office, Suite 1400,
Citicorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois
60661; and New York Regional Office, 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. The Commission
also maintains a Web site (http://www.sec.gov) that contains reports, proxy
statements and otherFor additional information regarding the
Corporation.
No separate financial statementsBank Holding Company Act and the powers of the Trust have been included or
incorporated by reference herein. The Corporation and the Trust do not
consider that such financial statements would be materialFederal Reserve Board thereunder,
you should refer to holders of the
Capital Securities because the Trust is a newly formed special purpose
entity, has no operating history or independent operations and is not engaged
in and does not propose to engage in any activity other than holding as trust
assets the Junior Subordinated Debentures and issuing the Trust Securities.
See "Description of Capital Securities," "Description of Junior Subordinated
Debentures" and "Description of Guarantee." In addition, the Corporation
does not expect that the Trust will be filing reports under the Exchange Act
with the Commission.
This Prospectus constitutes a part of a registration statement (the
"Registration Statement") filed by the Corporation and the Trust with the
Commission under the Securities Act. As permitted by the rules and
regulations of the Commission, this Prospectus does not contain all of the
information contained in the Registration Statement and the exhibits and
schedules thereto and reference is hereby made to the Registration Statement
and the exhibits and schedules thereto for further information with respect
to the Corporation, the Trust and the securities offered hereby. Statements
contained herein concerning the provisions of any documents filed as an
exhibit to the Registration Statement or otherwise filed with the Commission
are not necessarily complete, and in each instance reference is made to the
copy of such document so filed. Each such statement is qualified in its
entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Corporation'sBancWest's Annual Report on Form 10-K for the year ended
December 31, 19961998 "Item 1. Business -- Supervision and Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997 and June 30, 1997 areRegulation -- Holding
Company Structure," which is incorporated by reference herein. See "WHERE YOU
CAN FIND MORE INFORMATION."
Under the Riegle-Neal Interstate Banking and Branching Act (the "Interstate
Banking Act"), which became effective on September 29, 1995, a bank holding
company may acquire banks in states other than its home state, subject to any
state requirement that the bank has been organized and operating for a minimum
period of time, not to exceed five years, and the requirement that the bank
holding company not control, prior to or following the proposed acquisition,
more than 10% of the total amount of deposits of insured depository institutions
nationwide or, unless the acquisition is the bank holding company's initial
entry into the state, more than 30% of such deposits in the state (or such
lesser or greater amount set by the state).
The Interstate Banking Act also authorizes banks to merge across state
lines, thereby creating interstate branches, effective June 1, 1997. States may
opt out of the Interstate Banking Act, thereby prohibiting interstate mergers in
the state or opt in early, thereby allowing interstate mergers prior to June 1,
1997. BancWest will be unable to consolidate its banking operations in one state
with those of another state if either state in question has opted out of the
Interstate Banking Act. California and Hawaii "opted in" to certain provisions
of the Interstate Banking Act.
BancWest's acquisitions of banking institutions and other companies
generally are subject to the prior approval of the Federal Reserve Board and
other applicable federal or state regulatory authorities. In determining whether
to approve a proposed bank acquisition, federal banking regulators will
consider, among other factors:
- the effect of the acquisition on competition,
- the public benefits expected to be received from the consummation of the
acquisition,
- the projected capital ratios and levels on a post-acquisition basis, and
- the acquiring institution's record of addressing the credit needs of the
communities it serves, including the needs of low-and moderate-income
neighborhoods, consistent with the safe and sound operation of the bank,
under the Community Reinvestment Act.
BancWest is also a bank holding company within the meaning of Section 3700
of the California Financial Code and accordingly, is subject to examination by,
and may be required to file reports with, the California Commissioner of
Financial Institutions and the California Department of Financial Institutions.
FEDERAL DEPOSIT INSURANCE CORPORATION
Bank of the West and First Hawaiian Bank are federally insured depository
institutions and accordingly are regulated by the FDIC. For information
regarding the FDIC's powers of supervision and examination with respect to
insured banks, you should refer to BancWest's Annual Report on Form 10-K for the
year ended December 31, 1998,
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"Item 1. Business -- Supervision and Regulation," which is incorporated by
reference herein. See "WHERE YOU CAN FIND MORE INFORMATION."
DIVIDENDS
The power of the board of directors of insured depository institutions,
such as Bank of the West and First Hawaiian Bank, to declare a cash dividend or
other distribution with respect to capital is subject to statutory and
regulatory restrictions which limit the amount available for such distribution
depending upon the earnings, financial condition and cash needs of the
institution. The Federal Deposit Insurance Act prohibits insured depository
institutions from paying management fees to any controlling persons or, with
certain limited exceptions, making capital distributions, including dividends,
if, after such transaction, the institution would be undercapitalized.
The FDIC also has the authority to prohibit an insured depository
institution from engaging in business practices which are considered to be
unsafe or unsound, including the payment of dividends under certain
circumstances even if such payments are not expressly prohibited by statute.
Bank of the West and First Hawaiian Bank are also subject to dividend
restrictions under applicable state law.
CAPITAL STANDARDS
BancWest is subject to risk-based capital adequacy guidelines promulgated
by the federal banking agencies. For additional information regarding such
capital adequacy guidelines, please refer to BancWest's Annual Report on Form
10-K for the year ended December 31, 1998, "Item 1. Business -- Supervision and
Regulation -- Capital Requirements," which is incorporated by reference herein.
See "WHERE YOU CAN FIND MORE INFORMATION."
The following tables present the capital ratios for BancWest, compared to
the standards promulgated by the federal banking agencies for well-capitalized
depository institutions, as of December 31, 1998 (amounts in thousands except
percentage amounts).
BANCWEST
-------------------------------------------------
ACTUAL WELL MINIMUM
------------------- CAPITALIZED CAPITAL
CAPITAL RATIO RATIO REQUIREMENT
---------- ----- ----------- -----------
Leverage......................... $1,080,353 9.16% 5.00% 3.00%
Tier 1 Risk-Based................ $1,080,353 8.17% 6.00% 4.00%
Total Risk-Based................. $1,329,938 10.06% 10.00% 8.00%
REGULATION BY STATE BANKING AUTHORITIES
First Hawaiian Bank and Bank of the West, as state-chartered banks that are
not members of the Federal Reserve System, are subject to supervision and
regulation by the FDIC and by the Hawaii Division of Financial Institutions or
the California Department of Financial Institutions, respectively. The
regulations of these agencies affect most aspects of both banks' business and
prescribe permissible types of loans and investments, the amount of required
reserves, requirements for branch offices, the permissible scope of the banks'
activities and various other requirements. While the banks are not members of
the Federal Reserve System, they are subject to certain regulations of the
Federal Reserve Board
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dealing primarily with check clearing activities, establishment of banking
reserves, Truth-in-Lending (Regulation Z), Truth-in-Savings (Regulation DD), and
Equal Credit Opportunity (Regulation B). The banks are also subject to the
requirements of the Community Reinvestment Act.
Under Hawaii and California law, both banks are subject to various
restrictions on, and requirements regarding, this operation and administration,
including the maintenance of branch offices and automated teller machines,
capital and reserve requirements, deposits and borrowings, and investment and
lending activities.
Under Hawaii law, a receiver or conservator may be appointed to take
possession and control of a Hawaii state chartered bank if it becomes insolvent,
fails to correct an impairment of capital required by law, is not likely to be
able to meet the demands of its depositors or in other specified circumstances.
Appointment would be by the Hawaii Commissioner of Financial Institutions (the
"Hawaii Commissioner"), subject to judicial review.
Whenever it appears to the California Commissioner that certain conditions
exist with respect to a California state-chartered bank, such as when the
tangible shareholders' equity of such bank is less than the greater of three
percent of such bank's total assets or $1,000,000, the California Commissioner
may take possession of the property and business of such bank until such bank
resumes business upon such conditions as may be prescribed by the California
Commissioner or its affairs are finally liquidated as provided by statute.
Hawaii law permits a Hawaii state chartered bank to invest in the equity
securities of other corporations engaged in certain specified activities related
to banking or, with the approval of the Hawaii Commissioner, in subsidiary
corporations that are engaged in activities authorized for a bank or which are
usual to incidental to the business of a bank. California law permits a state
chartered bank to invest in the stock and securities of other corporations,
subject to receiving either general authorization or, depending on the amount of
the proposed investment, specific authorization from the California
Commissioner.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), however, imposes limitations upon the activities and equity
investments of state chartered, federally insured banks. The FDIC rules on
investments prohibit a state bank from acquiring equity investments of a type,
or in an amount, not permissible for a national bank. FDICIA also prohibits a
state bank from engaging as a principal in any activity that is not permissible
for a national bank, unless the bank is adequately capitalized and the FDIC
approves the activity after determining that such activity does not pose a
significant risk to the deposit insurance fund. The FDIC rules on activities of
state-chartered banks generally permit subsidiaries of such banks, without prior
FDIC authorization, to engage in those activities that have been approved by the
Federal Reserve Board for bank holding companies. The subsidiaries of both banks
engage only in such permissible activities. Other activities which may be
conducted by state-chartered banks generally require specific FDIC prior
approval, and the FDIC may impose additional restrictions on such activities on
a case-by-case basis in approving applications to engage in otherwise
impermissible activities.
California "opted in" to certain provisions of the Interstate Banking Act
regarding interstate branching. Under the California Interstate Banking and
Branching Act, California opted into the portion of the federal law allowing
early interstate merger transactions. However, California opted out of the
provisions of the federal law allowing interstate branching through the
acquisition of a branch located in California (without
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acquisition of the whole business unit of the California bank) and also opted
out of the provision of the federal law allowing interstate branching through de
novo establishment of California branch offices. Further, no out of state bank
that does not already maintain a California branch office may merge as the
surviving bank with a California bank or purchase the whole of the business of
the California bank unless the California bank has been in existence for at
least five years. The California Commissioner is also authorized to approve an
interstate merger transaction involving a California bank which would result in
a deposit concentration exceeding 30% of the deposits in California if the
California Commissioner finds that the transaction is consistent with the public
convenience and advantage in California.
Hawaii also permits interstate banking and branching transactions. Similar
to California, Hawaii also opted out of provisions of the federal law which
allowed banks not already operating a branch in the state to acquire a branch or
branches located in Hawaii (without acquisition of the entire bank) and which
allowed such banks to establish de novo branches in Hawaii. Out of state banks
not already operating branches in Hawaii may not merge with or acquire Hawaii
banks unless the Hawaii bank has been in existence for at least five years. The
Hawaii interstate banking and branching law also permits the Hawaii Commissioner
to waive, on a case by case basis, the federal 30% deposit concentration limit
under circumstances similar to those provided in the California law.
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SIERRAWEST BANCORP
SierraWest was incorporated under the name Sierra Tahoe Bancorp under the
laws of the State of California on December 5, 1985, as a bank holding company.
Pursuant to a plan of reorganization, SierraWest acquired 100% of the
outstanding shares of common stock of SierraWest Bank, then named Truckee River
Bank, in a one-for-one exchange of its stock for the stock of SierraWest Bank on
July 31, 1986. The activities of SierraWest are subject to the supervision of
the Federal Reserve Board. SierraWest may engage, directly or through subsidiary
corporations, in those activities closely related to banking which are
specifically permitted under the Bank Holding Company Act. SierraWest's
principal executive office is located at 10181 Truckee-Tahoe Airport Road,
Truckee, California 96161 and its telephone number is (530) 582-3000.
SierraWest Bank was incorporated under the laws of the State of California
as Truckee River Bank on March 19, 1980, and, with the approval of the
California Commissioner, opened for business on January 20, 1981. Truckee River
Bank commenced operations in Truckee, California, a small tourist-based town
located in the County of Nevada and situated in the High Sierra about 12 miles
north of Lake Tahoe. Truckee River Bank changed its name to SierraWest Bank in
early 1996. SierraWest Bank currently maintains 20 branch offices in the
following communities: Truckee (two branches), South Lake Tahoe, Tahoe City,
Kings Beach, Grass Valley (two branches), Auburn and Sacramento (two branches),
Vacaville (two branches), Fairfield (two branches), Vallejo (two branches),
Benicia and Concord, California, and in Reno and Carson City, Nevada. In
addition, SierraWest Bank maintains lending offices and agency relationships
primarily for its Small Business Administration lending activities in
California, Nevada, Arizona, Oregon, Washington, Colorado, Texas, Tennessee,
Georgia, Alabama and Florida. SierraWest Bank's deposits are insured by the FDIC
up to applicable limits.
In June 1997, SierraWest acquired Mercantile Bank, a state-chartered
commercial bank with its principal office formerly in Sacramento, California,
through a merger of Mercantile Bank with and into SierraWest Bank. On the
acquisition date, Mercantile Bank had assets of $42.8 million, deposits of $37.7
million and shareholders' equity of $4.9 million. The consideration for the
acquisition was a combination of cash and shares of SierraWest common stock with
an aggregate value of approximately $6.6 million. The merger was accounted for
by the purchase method of accounting.
On April 15, 1998, SierraWest acquired California Community Bancshares
Corporation and its wholly owned banking subsidiary Continental Pacific Bank.
Continental Pacific Bank was a state chartered bank with its principal office in
Vacaville, California. Continental Pacific Bank engaged in general commercial
banking, in Solano and Contra Costa counties in the State of California. On the
acquisition date, California Community Bancshares had assets of $206 million,
deposits of $184 million and shareholders' equity of $15.4 million. The
consideration for the acquisition was shares of SierraWest common stock with a
value of approximately $44.7 million. The merger was accounted for by the
pooling of interests method of accounting.
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MARKET PRICE AND DIVIDEND INFORMATION
BancWest common stock is traded on the New York Stock Exchange under the
symbol "BWE." SierraWest is quoted on the Nasdaq National Market under the
symbol "SWBS." The following table sets forth, for the calendar quarters
indicated, the reported high and low sales prices for BancWest common stock as
reported on the New York Stock Exchange composite transactions tape and the
reported high and low sales prices for SierraWest common stock as reported on
the Nasdaq National Market. In addition, the table sets forth for the calendar
quarters indicated, the per share cash dividend declared by BancWest and by
SierraWest.
BANCWEST SIERRAWEST
COMMON STOCK COMMON STOCK
--------------------------- -----------------------------
COMMON COMMON
MARKET PRICE STOCK MARKET PRICE STOCK
--------------- DIVIDENDS --------------- DIVIDENDS
HIGH LOW DECLARED HIGH LOW DECLARED(1)
------ ------ --------- ------ ------ -----------
1997
First Quarter............. $36.00 $30.50 $0.31 $18.69 $14.64 $0.15
Second Quarter............ 35.75 28.63 0.31 20.12 16.68 --
Third Quarter............. 40.75 33.63 0.31 25.75 18.81 0.16
Fourth Quarter............ 43.88 36.00 0.31 36.00 24.75 --
1998
First Quarter............. 42.00 34.63 0.31 39.00 30.00 --
Second Quarter............ 41.00 34.31 0.31 39.00 29.75 0.20
Third Quarter............. 38.00 27.63 0.31 35.75 20.50 --
Fourth Quarter............ 48.00 31.25 0.31 28.00 18.00 0.20
1999
First Quarter............. 48.50 38.88 0.31 32.56 23.50 0.26
Second Quarter (through
April 13).............. 42.44 39.56 -- 32.38 30.50 --
- -------------------------
(1) Dividends shown exclude dividends paid by California Community Bankshares
Corporation of $.124 each quarter of 1997 and the first quarter of 1998. In
April 1998, each share of California Community Bankshares Corporation common
stock was converted to 0.8283 shares of SierraWest common stock.
DIVIDEND POLICY
BancWest expects no changes in its dividend policies after the merger. The
current quarterly dividend rate on BancWest common stock is $0.31 per share.
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DESCRIPTION OF BANCWEST CAPITAL STOCK
BancWest is authorized to issue 325,000,000 shares of capital stock. The
shares are divided into three classes:
- 200,000,000 shares of common stock, $1.00 par value per share,
- 75,000,000 shares of Class A Common Stock, $1.00 par value per share, and
- 50,000,000 shares of preferred stock, $1.00 par value per share.
As of April 9, 1999, there were 31,576,886 shares of BancWest common stock
outstanding and 1,655,711 shares of stock were available for issuance upon
exercise of outstanding stock options or awards under incentive plans. As of
April 9, 1999, 25,814,768 shares of BancWest Class A Common Stock were
outstanding (all of which were owned by BNP and its affiliate, French American
Banking Corporation) and no shares of preferred stock were issued and
outstanding.
COMMON STOCK
DIVIDEND RIGHTS. Holders of BancWest common stock are entitled to receive
ratably such dividends as may be legally declared by BancWest's board of
directors. Holders of Class A Common Stock are entitled to receive ratably any
dividends paid to holders of BancWest common stock. If BancWest pays any
dividends on the Class A Common Stock in shares of Class A Common Stock or in
options, warrants or other securities exercisable for or convertible into shares
of Class A Common Stock, then BancWest must declare and pay an equivalent
dividend per share on the BancWest common stock. In addition, if BancWest
declares a stock-split that results in a greater or lesser number of Class A
shares being issued and outstanding, then BancWest will declare an equivalent
stock-split on the BancWest common stock.
LIQUIDATION RIGHTS. In the event of any voluntary or involuntary
liquidation, dissolution or winding-up of BancWest, the holders of BancWest
common stock will be entitled, together with the holders of Class A Common
Stock, to share ratably all the remaining assets of BancWest available for
distribution to stockholders.
VOTING RIGHTS; CLASSIFICATION OF DIRECTORS. Each holder of BancWest common
stock is entitled to one vote in respect of each share of BancWest common stock
held by such holder on each matter voted upon by the stockholders. Holders of
BancWest common stock, however, are not entitled to vote on the election of
Class A directors. On all matters other than the election of directors and
certain fundamental corporate actions under certain circumstances, holders of
BancWest common stock will vote together with the holders of the Class A Common
Stock as a single class. Approval of any matter voted upon at any stockholders'
meeting requires the affirmative vote of a majority of the shares of BancWest
stock which are present in person or by proxy and entitled to vote thereon,
except:
- election of directors, who are elected by plurality vote,
- amendment or repeal of the provisions of BancWest's certificate of
incorporation establishing a classified board of directors, which will
require the affirmative vote of three-fourths of the shares of BancWest
common stock and Class A Common Stock at the time outstanding, voting
together as a class, and
- with respect to any other actions (such as a merger or sale of
substantially all of BancWest assets) where higher percentage is required
by applicable law or the rules and regulations of any applicable stock
exchange.
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As long as the Class A shares are outstanding, unless the prior approval of
two-thirds of BancWest's entire board is obtained, BancWest may not take certain
fundamental corporate actions without the stockholder votes describe in this
Prospectusparagraph (even if such approval not required by Delaware law), including but
not limited to:
(1) any merger, consolidation or other business combination resulting in a
change of control of BancWest,
(2) any merger, consolidation or other business combination which would not
result in a change of control of BancWest but in which either:
- any person, other than a holder of shares of Class A Common Stock,
would become the beneficial owner of 25% or more of the total voting
power of all voting securities of BancWest outstanding after such
transaction, or
- any three persons, other than a holder of shares of Class A Common
Stock, would become the beneficial owners of 45% or more of the total
voting power of all BancWest voting securities outstanding after such
transaction,
(3) the amendment of our certificate of incorporation or our bylaws which
materially and adversely affect the rights of the holders of Class A
Common Stock,
(4) (A) the issuance of any series or class of capital stock having either:
- more than one vote per share or
- a class vote on any matter, except to the extent such class vote is
required by Delaware law or to the extent that holders of any series
of preferred stock may have the right, voting separately as a class,
to elect a number of directors of the corporation upon the occurrence
of a default in payment of dividends or redemption price or
(B) the adoption of any stockholder rights plan, or
(5) the issuance of any series of preferred stock which at the time of such
issuance would not be "non-voting shares" as defined under federal law.
In the case of the transaction described in clause (1), the holders of a
majority of the outstanding shares of Class A Common Stock and BancWest common
stock, voting together as a class, must consent to or approve such transaction.
In the case of the actions described in clauses (2), (3), (4) and (5) the
holders of a majority of the outstanding shares of Class A Common Stock and
BancWest common stock, voting as separate classes, must approve or consent to
such transaction.
BancWest's certificate of incorporation provides that the directors of
BancWest will be divided into three classes, each class to consist as nearly as
practicable of one-third of the number of directors then constituting the
authorized number of directors, and that each director shall be deemedelected for a
term of three years. At each meeting of stockholders held for the purpose of
electing directors, the holders of BancWest common stock will have the right to
elect that number of directors equal to the excess of:
(1) the total number of directors then constituting the authorized number
of directors over
(2) the sum of (x) the number of directors which the holders of the shares
of Class A Common Stock are entitled to elect, (y) the number of
directors elected by the stockholders of BancWest, other than the
holders of shares of Class A Common Stock or preferred stock, in each
of the other two classes and (z) the
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number of directors, if any, that the holders of the preferred stock,
voting separately by class or series, are entitled to elect.
The holders of shares of Class A Common Stock will not be entitled to vote for
the directors who are elected by the holders of the BancWest common stock as
described above.
The holders of the Class A Common Stock will have the right, voting
separately as a class, to elect that number of directors of BancWest equal to
the product, rounded to the nearest whole number, of:
(1) the Class A multiplier (as defined below), and
(2) the total number of directors constituting the authorized number of
directors; provided that the number of directors entitled to be elected
by holders of Class A Common Stock cannot constitute a part hereof.majority of the
total number of directors constituting the authorized number of
directors.
The Class A multiplier is equal to:
- .45, if the percentage of the outstanding BancWest common stock and Class
A Common Stock represented by shares of Class A Common Stock, determined
in accordance with the certificate of incorporation, is greater than or
equal to 40% and less than or equal to 45%,
- .35, if the percentage of the outstanding BancWest common stock and Class
A Common Stock represented by shares of Class A Common Stock, determined
in accordance with the certificate of incorporation, is greater than or
equal to 35% and less than 40%,
- .30, if the percentage of the outstanding BancWest common stock and Class
A Common Stock represented by shares of Class A Common Stock, determined
in accordance with the certificate of incorporation, is greater than or
equal to 30% and less than 35%,
- .25, if the percentage of the outstanding BancWest common stock and Class
A Common Stock represented by shares of Class A Common Stock, determined
in accordance with the certificate of incorporation, is greater than or
equal to 25% and less than 30%,
- .20, if the percentage of the outstanding BancWest common stock and Class
A Common Stock represented by shares of Class A Common Stock, determined
in accordance with the certificate of incorporation, is greater than or
equal to 20% and less than 25%,
- .15, if the percentage of the outstanding BancWest common stock and Class
A Common Stock represented by shares of Class A Common Stock, determined
in accordance with the certificate of incorporation, is greater than or
equal to 15% and less than 20%, and
- .10, if the percentage of the outstanding BancWest common stock and Class
A Common Stock represented by shares of Class A Common Stock, determined
in accordance with the certificate of incorporation, is greater than or
equal to 10% and less than 15%.
PREEMPTIVE RIGHTS. No holders of any class of BancWest's capital stock or
holder of any security or obligation convertible into shares of BancWest's
capital stock will have any
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preemptive right to subscribe for, purchase or otherwise acquire additional
shares of capital stock of any class of BancWest.
CONVERSION AND REDEMPTION PROVISIONS. Shares of BancWest common stock are
not convertible into shares of any other class of capital stock, nor do they
have any redemption provisions.
OTHER. The rights and percentage ownership of the holders of BancWest
common stock may be affected by the Corporation with the Commission pursuant
to Sections 13(a), 13(c), 14 or 15(d)conversion rights of the Exchange Act subsequentholders of Class A
Common Stock. BancWest's certificate of incorporation provides that if
beneficial ownership of Class A Common Stock is sold, transferred, pledged, or
otherwise disposed of to any person other than:
- an affiliate of the transferring holder, or
- certain permitted transferees or permitted pledgees,
then each such share of Class A Common Stock will automatically be converted
into one share of BancWest common stock.
In addition, if the number of outstanding shares of Class A Common Stock as
a percentage of the sum of the total number of outstanding shares of:
(1) BancWest common stock,
(2) Class A Common Stock, and the number of shares of BancWest common stock
or Class A Common Stock that are issuable upon conversion, exchange or
exercise of any shares of the outstanding shares of Class A Common
Stock decreases to less than 10%,
then each outstanding share of Class A Common Stock will automatically be
converted into one share of BancWest common stock. Shares of Class A Common
Stock may also be converted into BancWest common stock at the option of BNP
under certain limited circumstances.
STANDSTILL AGREEMENT WITH BANQUE NATIONALE DE PARIS. The standstill
agreement, dated as of November 1, 1998, between BancWest and BNP restricts BNP
and its affiliates, during a four year period, from acquiring additional shares
of BancWest capital stock, subject to certain exceptions, including the right to
increase its ownership level up to the then applicable permitted ownership level
(presently 45%) under the standstill agreement if BNP's percentage ownership is
diluted by issuances of common stock by BancWest, including the issuance of
shares to SierraWest shareholders in the merger. The standstill agreement also
restricts BNP's and its affiliates' ability to freely transfer any equity
securities of BancWest, including Class A Common Stock and BancWest common
stock, owned by BNP or such affiliates and gives BancWest a right of first
refusal with respect to certain transfers.
TRANSFER AGENT AND REGISTRAR. The transfer agent and registrar for
BancWest common stock is American Stock Transfer & Trust Company.
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CERTAIN DIFFERENCES IN RIGHTS OF HOLDERS OF SIERRAWEST
COMMON STOCK AND BANCWEST COMMON STOCK
SierraWest is incorporated under the laws of California. The rights of
SierraWest's shareholders are governed by the California General Corporation
Law. BancWest is incorporated under the laws of the state of Delaware. The
rights of BancWest stockholders are governed by Delaware General Corporation Law
and BancWest's restated certificate of incorporation and amended and restated
bylaws. Upon completion of the merger, SierraWest shareholders will become
stockholders of BancWest. As a result, their rights will be governed by Delaware
Corporation Law and BancWest's governing documents.
The following discussion compares certain rights of holders of SierraWest
common stock to the rights of the holders of BancWest common stock. You can find
additional information concerning the rights of BancWest stockholders in
BancWest's restated certificate of incorporation and amended and restated
bylaws, which are filed as exhibits to the registration statement in which this
document is included, and in BancWest's registration statement on Form 8-A dated
October 30, 1998, containing a description of BancWest's common stock.
DIVIDENDS
BANCWEST. Delaware corporations may pay dividends out of surplus or, if
there is no surplus, out of net profits for the fiscal year in which declared
and for the preceding fiscal year. Section 170 of Delaware Corporation Law also
provides that dividends may not be paid out of net profits if, after the payment
of the dividend, capital is less than the capital represented by the outstanding
stock of all classes having a preference upon the distribution of assets.
SIERRAWEST. Under California law, the directors of SierraWest may declare
and pay dividends upon the shares of its capital stock either (a) out of its
retained earnings, or (b) out of capital, provided the company would, after
making the distribution, meet two conditions, which generally stated are as
follows: (1) the corporation's assets must equal at least 125% of its
liabilities; and (2) the corporation's current assets must equal at least its
current liabilities or, if the average of the corporation's earnings before
taxes on income and before interest expense for the two preceding fiscal years
was less than the average of the corporation's interest expense for such fiscal
years, then the corporation's current assets must equal at least 125% of its
current liabilities.
INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
BANCWEST. BancWest's amended and restated bylaws provide that BancWest
must indemnify, to the extent permitted by Delaware law, each person who is
party to any threatened, pending or completed action, suit or proceeding by
reason of the fact that such person is or was a director, officer, employee or
agent of BancWest against all expenses, judgments, fines and amounts paid in
settlement or incurred in connection with such action. BancWest can only
eliminate or limit the liability of a director, officer, employee, or agent if:
- such person acted in good faith and in a manner that such person
reasonably believed to be in the best interests of BancWest, and
- with respect to any criminal action, such person had no reasonable cause
to believe his/her conduct was unlawful.
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BancWest cannot indemnify any person against expenses incurred in defense of an
action or suit if such person shall have been adjudged to be liable to BancWest.
BancWest may maintain insurance, at its expense, to protect any directors,
officers, employees or agents of BancWest or another entity against any expense,
liability or loss, regardless of whether BancWest has the power or obligation to
indemnify that person against such expense, liability or loss under Delaware
law.
SIERRAWEST. SierraWest's articles of incorporation provide that the
liability of directors for monetary damages is eliminated to the fullest extent
permissible under the California General Corporation Law. This provision
relieves directors of SierraWest of liability to SierraWest for simple
negligence but not for liability where the director was either grossly negligent
or guilty of a willful breach of his or her loyalty to SierraWest. The
SierraWest articles of incorporation do not, and under the California General
Corporation Law cannot, eliminate or limit the liability of a director resulting
from the following actions:
- acts or omissions that involve intentional conduct or a knowing and
culpable violation of law,
- acts or omissions that a director believes to be contrary to the best
interests of the corporation or its shareholders or that involve the
absence of good faith on part of the director,
- any transaction from which a director derived an improper personal
benefit,
- acts or omissions that show a reckless disregard for the director's duty
to the corporation or its shareholders in circumstances in which the
director was aware, or should have been aware, in the ordinary course of
performing a director's duties, of a risk of serious injury to the
corporation or its shareholders,
- acts or omissions that constitute an unexcused pattern of inattention
that amounts to an abdication of the director's duty to the corporation
or its shareholders,
- any transaction between the corporation and (1) a director, or (2) a
corporation, firm or association in which the director has a material
financial interest, or
- any distribution to shareholders, and for any loan or guaranty to
officers or directors, that violates specified provisions of California
law.
CUMULATIVE VOTING
BANCWEST. Stockholders of BancWest common stock may not cumulate their
votes for the elections of directors. Cumulative voting allows a stockholder to
cast a number of votes equal to the number of directors to be elected multiplied
by the number of shares held in the stockholder's name on the record date. This
total number of votes may be cast for one nominee or may be distributed among as
many candidates as the stockholder desires. The candidates, up to the number of
directors to be elected, receiving the highest number of votes are elected.
Under the Delaware General Corporation Law, stockholders of a Delaware
corporation do not have cumulative voting rights unless the certificate of
incorporation is amended to provide for cumulative voting.
SIERRAWEST. Shareholders of SierraWest are entitled to cumulate their
votes for the election of directors.
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CLASSIFIED BOARD OF DIRECTORS
BANCWEST. BancWest's certificate of incorporation provides for three
classes of directors, each class to consist as nearly as practicable of
one-third of the number of directors then constituting the authorized number of
directors. Each director is elected for a term of three years. For more
information regarding the mechanics for voting for directors see "DESCRIPTION OF
BANCWEST CAPITAL STOCK."
SIERRAWEST. The SierraWest bylaws provide that directors will be elected
for a one-year term at each annual meeting of shareholders.
DISSENTERS' RIGHTS IN MERGERS AND OTHER REORGANIZATIONS
BANCWEST. Under the Delaware General Corporation Law, stockholders do not
have dissenters' rights in connection with a business combination if:
- the shares of the corporation were either listed on a national securities
exchange or designated as a national market security by Nasdaq on the
record date for the stockholders meeting relating to such business
combination,
- held of record by 2,000 or more stockholders, or
- the transaction does not require approval of the corporation's
stockholders.
Notwithstanding the foregoing, stockholders have dissenters' rights if (1)
stockholder approval is required and (2) the holders would be required to accept
for their shares any consideration other than:
- shares of stock of the surviving corporation,
- shares of another corporation if such shares are listed on a national
exchange or designated as a national market system security by Nasdaq, or
- cash in lieu of fractional shares.
SIERRAWEST. Under the California General Corporation Law, a dissenting
shareholder of a corporation participating in certain business combinations may,
under varying circumstances, receive cash in the amount of the fair market value
of his or her shares in lieu of the consideration he or she would otherwise
receive under the terms of the transaction. The California General Corporation
Law generally does not require dissenters' rights of appraisal with respect to
shares which, immediately prior to the merger, are:
- listed on any national securities exchange certified by the California
Commissioner of Corporations, or
- listed on the list of over-the-counter margin stock issued by the Federal
Reserve Board.
SierraWest common stock is listed on the list of over-the-counter margin stocks
issued by the Federal Reserve Board. However, dissenters' rights are available
to the shareholders of SierraWest if the holders of five percent or more of
SierraWest's outstanding shares make a written demand upon SierraWest not later
than the date of this Prospectusthe SierraWest shareholders' meeting for the purchase of
dissenting shares in accordance with Section 13 of the California General
Corporation Law.
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ANTI-TAKEOVER STATUTES
BANCWEST. Section 203 of Delaware General Corporation Law would prohibit a
"business combination" defined generally to include mergers, sales and leases of
assets, issuances of securities and similar transactions, by BancWest or a
subsidiary with an "Interested Shareholder" (as defined in the Delaware General
Corporation Law) within three years after the person or entity becomes an
Interested Shareholder, unless:
- prior to the person or entity becoming an Interested Shareholder, the
business combination or the transaction pursuant to which such person or
entity became an Interested Shareholder shall have been approved by the
board of directors of BancWest,
- upon the consummation of the transaction in which the person or entity
became an Interested Shareholder, the Interested Shareholder holds at
least 85% of the voting stock of BancWest (excluding shares held by
persons who are both officers and directors of BancWest and shares held
by certain employee benefit plans), or
- the business combination is approved by the board of directors of
BancWest and by the holders of at least two-thirds of the outstanding
voting stock of BancWest, excluding shares held by the Interested
Shareholder.
SIERRAWEST. California law requires that in certain transactions involving
tender offers or acquisition proposals made to a target corporation's
shareholders by a person who:
- controls the target corporation,
- is an officer or director of the target or is controlled by an officer or
director of the target, or
- is an entity in which a director or executive officer of the target has a
material interest.
A written opinion of an independent expert be provided as to the fairness of the
consideration to the shareholders of the target corporation.
The statute also provides that if a competing proposal is made at least ten
days before shareholders are to vote or shares are to be purchased under the
pending offer by the affiliated party, the latter offer must be communicated to
shareholders and they must be given a reasonable opportunity to revoke their
vote or withdraw their shares, as the case may be.
SHAREHOLDER VOTE FOR MERGERS AND ASSET SALES
BANCWEST. Under Delaware law, unless a greater vote of stockholders is
required by a corporation's certificate of incorporation or unless the
provisions of Delaware law relating to "business combinations" discussed above
are applicable, a sale, lease or exchange of all or substantially all of the
corporation's assets, or a merger or consolidation of the corporation with
another corporation (except in certain limited circumstances) plus, with certain
exceptions, the affirmative vote of a majority of the outstanding stock entitled
to vote thereon. The foregoing provisions apply to BancWest and the holders of
its common stock and Class A Common Stock.
In addition, as long as the Class A shares are outstanding, BancWest's
certificate of incorporation provides that unless the prior approval of
two-thirds of BancWest's entire board is obtained, BancWest may not take the
following actions without the approval of the holders of a majority of the
outstanding shares of BancWest common stock and
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Class A Common Stock, voting together as a class (except in the case of the
matters described in the fifth bullet point, in which case the holders of the
Class A Common Stock will vote as a separate class). This stockholder approval
will be required even if no such approval is required under Delaware law.
- any merger, consolidation or other business combination in which BancWest
is a constituent company and (1) BancWest is not the surviving or
resulting entity in such transaction, or (2) if BancWest is the surviving
or resulting entity and such transaction results in a "Change of
Control," as defined in the certificate of incorporation,
- the sale, exchange, lease or mortgage of all or substantially all of
BancWest's assets in one or a series of related transactions,
- any acquisition by BancWest or any of its subsidiaries of any assets or
business, in one transaction or a series of related transactions in any
twelve-month period, in which the consideration paid by BancWest (1) if
in BancWest common stock, will exceed 20% of the aggregate voting power
of the outstanding voting securities, as defined in the certificate of
incorporation, as of the date that BancWest or any such subsidiary enters
into a definitive agreement to effect such transaction or, in the case of
a series of related transactions, as of the date that the corporation or
any such subsidiary enters into a definitive agreement to effect the last
of such related transactions, or (2) if in cash, property or other
securities of the BancWest, has a fair market value, as defined in the
certificate of incorporation, at the time of the execution by BancWest or
such subsidiary of a definitive agreement to effect such transaction or,
in the case of a series of related transactions, at the time of the
execution by BancWest or such subsidiary of a definitive agreement to
effect the last of such related transactions, which will exceed
one-fourth of the market capitalization, as defined in the certificate of
incorporation, of BancWest at such time,
- any disposition, directly or indirectly, by BancWest or any of its
subsidiaries, except to BancWest or a subsidiary of BancWest, of any
assets or businesses, in one transaction or a series of related
transactions in any twelve-month period, whether by merger, tender or
exchange offer, asset purchase or otherwise, in which the book value of
the assets disposed of, as shown on the most recently available financial
statements of BancWest, exceed one-sixth of the total consolidated
assets, as defined in the certificate of incorporation, of the
corporation at the time of the execution by BancWest or such subsidiary
of a definitive agreement to effect such disposition or, in the case of a
series of related transactions, at the time of the execution by BancWest
or such subsidiary of a definitive agreement to effect the last of such
dispositions, or
- any merger, consolidation, recapitalization, reorganization, sale,
acquisition, other business combination or other transaction to which
BancWest is a party involving the issuance of voting securities of
BancWest that does not result in a Change of Control of BancWest if, as a
result of such transaction, any person, other than a holder of shares of
Class A Common Stock, would become the beneficial owner of 25% or more of
the total voting power of all voting securities of BancWest outstanding
after such transaction or any three persons, other than holders of shares
of Class A Common Stock, would become the beneficial owners of 45% or
more of the total voting power of all voting securities of BancWest
outstanding after such transaction. In this case, the holders of each
class vote separately as a class.
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SIERRAWEST. The California General Corporation Law requires shareholder
vote for mergers and reorganizations by:
- shareholders of each California corporation where two California
corporations are to merge,
- shareholders of a corporation selling all or substantially all of its
assets,
- shareholders of an acquiring corporation in either a share for share
exchange or a sale of assets reorganization, and
- in certain circumstances, shareholders of a parent corporation, even
though it is not a California corporation whose securities are being
issued in connection with a corporate reorganization such as a triangular
merger.
INSPECTION OF STOCKHOLDER LISTS
BANCWEST. The Delaware Corporation Law permits any stockholder of record
to inspect the stockholder list for any purpose reasonably related to such
person's interest as a stockholder and, for a ten-day period preceding a
stockholders' meeting, for any purpose germane to the meeting.
SIERRAWEST. The California General Corporation Law provides an absolute
right of inspection of the corporation's shareholder list to any shareholder
holding five percent or more of a corporation's voting shares or a shareholder
holding one percent or more of a corporation's shares who has filed a Schedule
14B with the Securities and Exchange Commission. Schedule 14B is filed in
connection with certain proxy contests relating to the election of directors. In
addition, the California General Corporation Law provides a right of inspection
of shareholder lists by any shareholder for a purpose reasonably related to such
holder's interest as a shareholder.
NOMINATION OF DIRECTORS
BANCWEST. Under BancWest's certificate of incorporation, each candidate
for a directorship of BancWest, other than a directorship to be filled with a
Class A director, shall be nominated by a majority vote of a committee composed
of all non-Class A directors in office.
SIERRAWEST. Under SierraWest's bylaws, nominations for election of members
of the board of directors of SierraWest may be made by the board of directors or
by any holder of any outstanding class of capital stock of SierraWest entitled
to vote for the election of directors.
AMENDMENT OF CERTIFICATE OF INCORPORATION AND BYLAWS
BANCWEST. Under Delaware law, BancWest's certificate of incorporation may
be amended with the approval of the board of directors and a majority of the
stockholders (except the provision providing for a classified board which
requires the approval of three-fourths of the stockholders). In addition, any
amendment that would materially and adversely affect the rights of holders of
Class A Common Stock would require the vote of a majority of the holders of the
Class A shares, voting separately as a class. BancWest's certificate of
incorporation provides that the board of directors has the authority to make,
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alter or repeal the by-laws, but that the vote of two-thirds of the authorized
number of directors is necessary to repeal or alter the following provisions of
the by-laws:
- the notice provision for board meetings,
- the definition of quorum of the board,
- board vote required for certain transactions with interested
stockholders,
- board vote required for (1) distributions or dividends if the fair market
value exceeds a certain amount, (2) repurchases or redemptions of
BancWest equity securities where the consideration paid exceeds a certain
amount, or (3) a decision by the board to consent to enter into any cease
and desist order or formal agreement with any bank regulatory authority,
- board vote required for appointment of the Chief Executive Officer and
the Chief Operating Officer,
- provisions relating to the executive committee, and
- indemnification of directors, executive officers, employees, and agents
of BancWest.
SIERRAWEST. SierraWest's articles may be amended with the approval of the
board of directors and a majority of the outstanding shares of SierraWest common
stock. Under certain circumstances the articles of incorporation of a California
corporation may be amended without shareholder approval in connection with stock
splits. SierraWest's articles provide that the board of directors has the
authority to make, alter or repeal the bylaws.
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PROPOSAL TWO
ELECTION OF DIRECTORS
This section of the proxy statement-prospectus provides information related
to the election of directors at the annual meeting. The shareholders of
SierraWest will be asked to vote upon the election the following thirteen
nominees to serve as directors until the next annual meeting and until their
successors are elected and have been qualified, or until completion of the
merger, if earlier:
The following table lists the nominees, all of whom are currently directors
of SierraWest, and provides certain information about their ages, tenures and
principal occupations.
YEAR FIRST
APPOINTED POSITION AND PRINCIPAL OCCUPATION
NAME AGE DIRECTOR DURING THE PAST FIVE YEARS
- ---- --- ---------- -----------------------------------
CURRENT DIRECTORS
David W. Clark 61 1990 Chairman/CEO of Clark and Sullivan
Constructors, Inc. since January
1977.
Ralph J. Coppola 64 1996 Self-employed physician and auto
dealer.
William T. Fike 51 1992 President/CEO and Director of
SierraWest since July 1992.
President/ CEO of SierraWest Bank
since October 1996. Executive Vice
President and Chief Operating
Officer of SierraWest from May 1991
to July 1992.
Richard S. Gaston 65 1995 Chairman and Director of Gaston &
Wilkerson Management Group, real
estate investments and management
companies. Until 1998, President
and Director of GAC Corporation,
real estate management.
Jerrold T. Henley 61 1986 Chairman of SierraWest since July
1992. President/CEO of SierraWest
from its inception to June 1992.
John J. Johnson 65 1996 Retired. Owner, Johnson's Sporting
World, Reno, Nevada until April
1992.
Ronald A. Johnson 58 1996 Self-employed CPA and financial
consultant.
A. Morgan Jones 67 1986 Attorney. President and director of
Truckee River Associates,
(commercial real estate management,
development and sales).
Jack V. Leonesio 55 1986 Owner of a restaurant/bar in
Truckee, California since 1973 and
co-owner of a bar in Reno, Nevada
since April 1994.
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YEAR FIRST
APPOINTED POSITION AND PRINCIPAL OCCUPATION
NAME AGE DIRECTOR DURING THE PAST FIVE YEARS
- ---- --- ---------- -----------------------------------
William W. McClintock 53 1986 Self-employed CPA and financial
consultant.
Bernard E. Moore 69 1998 President of Bernard Moore, Inc.,
d.b.a. Moore Tractor, Inc., which
sells farm and industrial
equipment. Between 1983 and April
1998, Director of Continental
Pacific Bank. Continental Pacific
Bank's Chairman of the Board from
1986 until it merged with
SierraWest Bank in April 1998.
Between 1995 and April 1998,
Chairman of the Board of Directors
of California Community Bancshares
Corporation, Continental Pacific
Bank's holding company,
Gary E. Stein 53 1998 Physician in Vacaville, California,
formerly with University of
California, Davis, Davis Medical
Group, now retired. Director of
California Community Bancshares
Corporation since its inception in
1995 and a Director of Continental
Pacific Bank since 1983 until its
merger with SierraWest Bank in
April 1998.
Thomas M. Watson 55 1986 Managing Officer, Truckee River
Associates, (commercial real estate
management, development and sales).
EXECUTIVE OFFICERS
William T. Fike 51 President/CEO and Director of
SierraWest since July 1992.
President/ CEO of SierraWest Bank
since October, 1996. Executive Vice
President and Chief Operating
Officer of SierraWest, from May
1991 to July 1992.
David C. Broadley 55 Executive Vice President and Chief
Financial Officer of SierraWest
since February 1994. Executive Vice
President and Chief Financial
Officer of SierraWest Bank since
February 1995. Senior Vice
President and Chief Financial
Officer of SierraWest, from 1985 to
1994.
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YEAR FIRST
APPOINTED POSITION AND PRINCIPAL OCCUPATION
NAME AGE DIRECTOR DURING THE PAST FIVE YEARS
- ---- --- ---------- -----------------------------------
Patrick S. Day 49 Executive Vice President and Chief
Credit Officer of SierraWest and
SierraWest Bank since July 1995.
Executive Vice President and Chief
Operating Officer of Business &
Professional Bank from January
through June 1995. Principal of PSD
Associates, a bank consulting
company, from 1993 to 1995.
Executive Vice President and Chief
Credit Officer of Bank of San
Francisco from 1991 to 1993.
Robert C. Silver 56 Senior Vice President, manager of
Administration Division for
SierraWest Bank since November,
1995. Senior Vice President and
Director of Human Resources for
SierraWest Bank from July, 1991
through October, 1995.
Richard L. Belstock 42 Senior Vice President, Controller
and Chief Accounting Officer for
SierraWest since August 1997.
Senior Vice President and
Controller of SierraWest from July
1994 through September 1996. Senior
Vice President and Controller of
SierraWest Bank since June, 1994.
Vice President and Assistant
Controller for the Company from
August, 1990 through June, 1994.
Mary Jane Posnien 55 Senior Vice President of Operations
for SierraWest Bank since March
1998. Senior Vice President of
Operations for SierraWest Bank from
November 1995 to August 1997.
Senior Vice President of Operations
for Sierra Bank of Nevada from
March 1995 to November 1995. Vice
President of Operations for Sierra
Bank of Nevada from December 1993
to March 1995. Manager of Gotcha
Covered, a carpet/window covering
store from 1991 through 1993.
Messrs. Moore and Stein were elected as directors in accordance with the
terms of the merger agreement between SierraWest and California Community
Bancshares. Except for Messrs. Moore and Stein, none of the directors or
nominees were selected pursuant to any arrangement or understanding other than
with the directors of SierraWest acting
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within their capacities as such. There are no family relationships between any
of the directors and executive officers of SierraWest.
THE BOARD OF DIRECTORS AND COMMITTEES
SierraWest's board of directors met 14 times during 1998. None of the
directors or executive officers attended less than 75 percent of the aggregate
of all board of directors meetings and committee meetings, of which they were
members, held during 1998. SierraWest has a standing Audit/Ethics, Nominating
and Personnel/Compensation Committee.
The Audit/Ethics Committee reviews audits of SierraWest and its
subsidiaries, and considers the adequacy of auditing procedures. The
Audit/Ethics Committee consists of Messrs. Coppola, John J. Johnson, Moore,
Stein, McClintock, Gaston and Mr. Henley as a member-at-large. The Audit/Ethics
Committee met 12 times in 1998. The Nominating Committee consists of Messrs.
Henley, Watson, Clark, Fike and Jones. The Nominating Committee met once in
1998. The Nominating Committee recommends the nominees for director positions on
SierraWest's Board of Directors for review and approval by the Board. SierraWest
has a Personnel/Compensation Committee which consists of Messrs. Coppola, Moore,
Watson, Clark, Gaston, McClintock, Fike and Mr. Henley as a member-at-large. The
Personnel/Compensation Committee met 12 times in 1998. The Personnel/
Compensation Committee determines the salaries of executive officers of
SierraWest and also reviews and approves salary recommendations for all Senior
Vice Presidents and above. The Committee reviews and approves all benefit
program changes recommended by management and works with management in the
development of all company-wide incentive compensation programs.
COMPENSATION OF DIRECTORS
Directors' fees for board and committee meetings are as follows:
BOARD MEETING COMMITTEE MEETINGS
------------------------- ----------------------------
RETAINER ATTENDANCE RETAINER ATTENDANCE
------------ ---------- ---------- ---------------
Chairman of the
Board............... $3,383/month $0 $0 $0
Director.............. $1,500/month $0 (1) $0 $150/meeting(2)
Committee Chairman.... N/A N/A $100/month $150/meeting(2)
- -------------------------
(1) Compensation for attendance at special board meetings is $150 per director
per meeting.
(2) Fee for attendance at Directors' Loan Committee is $250 per meeting.
In addition to the above fees, an educational allowance is determined
annually by the board. The Chairman of the Board allocates funds for educational
expenses pursuant to requests submitted by each director until the allowance is
exhausted.
SierraWest's Deferred Compensation and Stock Award plan is provided to
members of the board of directors who are not employees of SierraWest or of its
subsidiary ("Outside Directors"). Under this plan Outside Directors are required
to take on a deferred basis one-third of their directors' fees for regular board
meetings in the form of promised shares of SierraWest common stock. The
remaining amount of director fees for regular board meetings may also be
deferred at the election of the director. The purpose of
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this plan is to enable Outside Directors to defer receipt of compensation for
their services to later years and to provide part of the compensation for their
services in the cash value of the promised shares of SierraWest common stock in
order to better align the interest of Outside Directors with those of
SierraWest's shareholders. Under the plan the directors are not entitled to
receive shares of SierraWest common stock.
Expenses for the directors and their spouses related to attendance at
SierraWest's annual weekend directors' retreat are paid for by SierraWest.
Directors are eligible for coverage under SierraWest's group health insurance
plan. Premiums for health insurance coverage are shared between the director and
SierraWest on the same basis as that for SierraWest employees. Additionally,
SierraWest pays for premiums covering the first $25,000 of accidental death
benefits and the administration of Keogh plans for directors, if they elect to
participate.
SierraWest maintains a salary continuation plan (see "Salary Continuation
Plan" on page 83) for its executive officers, certain senior officers and its
directors. As of December 31, 1998, SierraWest's non-employee directors were
credited with $201,097 in accrued benefits under the directors' salary
continuation plan. SierraWest allocated $113,075 to the Salary Continuation Plan
in 1998 on behalf of its non-employee directors.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------- ------------------------- -------
# OF SHARES
OTHER RESTRICTED # OF SHARES
ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
YEAR SALARY BONUS COMP. AWARDS SARS(2) PAYOUTS COMP.
---- -------- -------- ------ ----------- ----------- ------- ---------
William T. Fike...... 1998 $260,417 $225,000 $4,428 0 0 0 $21,709
President/CEO of 1997 $247,760 $135,000 $3,394 0 0 0 $21,005
SierraWest and 1996 $230,384(1) $ 0 $4,643 0 52,500 0 $17,351
SierraWest Bank
David C. Broadley.... 1998 $156,917 $ 60,000 $4,721 0 0 0 $23,594
Executive Vice 1997 $140,376 $ 73,870 $3,668 0 0 0 $20,902
President/CFO of 1996 $131,256 $ 0 $ 106 0 0 0 $20,154
SierraWest and
SierraWest Bank
Patrick S. Day....... 1998 $134,333 $ 47,726 $5,399 0 0 0 $ 5,376
Executive Vice 1997 $129,167 $ 67,972 $3,305 0 0 0 $ 4,391
President of the 1996 $126,519 $ 0 $3,858 0 0 0 $ 2,245
SierraWest and
SierraWest Bank
Robert C. Silver..... 1998 $100,347 $ 35,653 $ 138 0 0 0 $ 8,422
Senior Vice 1997 $ 98,078 $ 49,780 $ 0 0 2,750 0 $ 6,333
Senior Vice 1996 $ 87,369 $ 0 $ 0 0 0 0 $ 4,423
President of
SierraWest Bank
Richard L. 1998 $ 87,362 $ 31,086 $ 0 0 0 0 $ 6,052
Belstock...........
Senior Vice 1997 $ 83,202 $ 43,783 $ 0 0 0 0 $ 4,440
1996 $ 81,101 $ 15,000 $ 0 0 0 0 $ 3,114
President/Controller
of SierraWest and
SierraWest Bank
- -------------------------
NOTES:
(1) Includes payment of accrued vacation pay of $30,384.
(2) Adjusted for 5% stock dividend paid August 29, 1997.
BONUS -- Bonuses are generally paid in the year after they are earned. For
purposes of this table, bonuses have been reflected in the year earned, not the
year paid.
OTHER ANNUAL COMPENSATION -- Includes value of personal use of automobiles
provided by SierraWest and reimbursements for the personal portion of club dues
and spousal travel expenses.
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ALL OTHER COMPENSATION -- Includes the following:
1998 1997 1996
------- ------- -------
SIERRAWEST CONTRIBUTION TO 401(k) PLAN FOR:
Mr. Fike....................................... $ 5,000 $ 4,750 $ 4,652
Mr. Broadley................................... $ 5,000 $ 4,145 $ 3,896
Mr. Day........................................ $ 3,035 $ 1,938 $ 938
Mr. Silver..................................... $ 4,504 $ 2,779 $ 2,566
Mr. Belstock................................... $ 3,934 $ 2,946 $ 2,383
SIERRAWEST CONTRIBUTIONS TO ESOP PLAN FOR:
Mr. Fike....................................... $ 2,028(1) $ 2,715 $ 1,240
Mr. Broadley................................... $ 2,028(1) $ 2,382 $ 1,085
Mr. Day........................................ $ 2,028(1) $ 2,192 $ 1,046
Mr. Silver..................................... $ 2,028(1) $ 1,664 $ 722
Mr. Belstock................................... $ 2,028(1) $ 1,412 $ 671
- -------------------------
(1) Amount estimated for 1998, pending final plan accounting for the 1998 plan
year.
ALLOCATIONS TO SALARY CONTINUATION PLAN FOR:
Mr. Fike....................................... $12,031 $10,890 $ 9,858
Mr. Broadley................................... $14,226 $12,877 $13,675
COST OF LIFE INSURANCE PROVIDED BY SIERRAWEST OF
WHICH THE BENEFIT EXCEEDED $50,000 FOR:
Mr. Fike....................................... $ 2,650 $ 2,650 $ 1,601
Mr. Broadley................................... $ 2,340 $ 1,498 $ 1,498
Mr. Day........................................ $ 313 $ 261 $ 261
Mr. Silver..................................... $ 1,890 $ 1,890 $ 1,135
Mr. Belstock................................... $ 90 $ 82 $ 60
In 1998, SierraWest did not grant any options to any of the five executive
officers listed above.
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AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUE
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
AT FY-END- Options/SARs
# SHARES AT FY-END-$
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- --------------- -------- ------------- ---------------
Mr. Fike............. 45,987 $926,560 47,200/6,300 $589,530/92,712
Mr. Broadley......... 5,280 $127,900 2,835/2,520 $ 40,146/35,685
Mr. Day.............. 0 $ 0 6,720/5,880 $103,160/91,265
Mr. Silver........... 2,362 $ 58,488 1,180/3,460 $ 9,331/19,481
Mr. Belstock......... 2,257 $ 49,332 1,680/3,360 $ 23,290/46,580
The value of unexercised in-the-money options and the value realized on exercise
of stock options is calculated by subtracting the exercise price from the fair
market value at December 31, 1998 or the date of exercise, respectively, of the
securities underlying the options. All share amounts have been adjusted for the
5% stock dividend paid August 29, 1997.
SALARY CONTINUATION PLAN
SierraWest has entered into agreements with certain directors of SierraWest
and SierraWest Bank and certain executive officers of SierraWest Bank, to
provide for salary continuation benefits upon the retirement or earlier death of
the directors and executive officers. The benefits pursuant to this plan are:
$50,000 per year for Mr. Fike and $40,000 per year for Mr. Broadley payable for
a period of 20 years following retirement at age 65 or earlier death. Benefits
for the participating directors are $4,000 per year for 15 years, beginning 15
years after their respective plan commencement dates.
In the event of earlier death, the benefits are payable to the officer's or
director's designated beneficiary. SierraWest has secured life insurance
policies for the purpose of protecting it from loss in the event of earlier
death. In the event of earlier retirement or early termination of any offeringoffice or
employment of securities made by this Prospectus shallthe officer or director, a reduced benefit is payable. At the
option of the officer or director a reduced benefit may be deemed to be incorporated herein
by referencereceived in a lump
sum based on a discounting formula. Accrued benefits for both officers and
to bedirectors vest 20% per year over a part hereoffive-year period from the date of filingassociation
with SierraWest. Additionally, there are restrictions on the covered individual
from engaging in any competing occupation upon retirement and provisions
requiring the covered individual to perform advisory services, for compensation,
for a period of five (5) years following retirement or early termination of
office or employment.
During 1996 the agreements of Messrs. Fike and Broadley and certain
directors of SierraWest were modified to provide for an acceleration of benefits
such that the full amount due under the agreement would become payable in the
case of a change of control of SierraWest. For the Directors' plan this would be
in the form of a lump sum payment based on a discounting formula. The plan for
Messrs. Fike and Broadley provided for this payment in the form of 240 equal
monthly installments. The agreements were further modified to eliminate the
restrictions described above related to engaging in a competing occupation and
the performance of advisory services upon a change in control.
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As of December 31, 1998, executive officers were credited with the
following accrued benefits under this Plan:
David C. Broadley........................................... $120,491
William T. Fike............................................. 67,772
EMPLOYMENT AGREEMENTS
Effective October 1, 1994, SierraWest entered into an employment agreement
with Mr. Fike covering the terms of his employment, compensation, and conditions
of termination. Unless employment is terminated or the agreement is extended,
Mr. Fike's employment will continue until December 31, 2000. His base salary was
set initially at $200,000 per year and he is eligible for bonuses and
participation in all employee benefit programs. He will be considered for
periodic increases in base salary at the discretion of the board of directors.
He will continue to participate in the Salary Continuation Plan and be provided
with a company car and a country club membership. In the event of termination
without cause, Mr. Fike will receive all amounts owing to him at the date of
termination, a lump-sum severance payment equal to eighteen months' base salary,
direct payment of the premiums necessary to continue then existing medical
coverage for 18 months at the rate equivalent to SierraWest employees and
retention of his company-provided automobile and country club membership. During
the month of February 1997 Mr. Fike's base salary was increased to $250,000 per
year and during February 1998 Mr. Fike's base salary was increased to $262,500
per year.
In January 1999, Mr. Fike's employment agreement was amended to allow for a
scale back of payments to be made to Mr. Fike if any payment to be made, or
benefit to be provided, pursuant to the agreement would constitute a "parachute
payment" as defined in Section 280G of the Internal Revenue Code. The payments
to be made, or benefits to be provided, shall be reduced so that the aggregate
present value of all parachute payments does not exceed 299% of Mr. Fike's
"annualized includible compensation for the base period" (as such term is
defined in Section 280G(d)(1) of the Code Internal Revenue).
In 1996, Messrs. Broadley, Day, Silver and Belstock entered into Senior
Manager Separation Benefits Agreements. Under the terms of these agreements as
amended during 1997 and 1998, certain benefits would become payable to the
manager in the event of the termination of employment for any reason, other than
a material violation of SierraWest's personnel policies and procedures. Ms.
Posnien entered into her agreement in 1998. The benefit includes one year's base
salary (as to Messrs. Broadley and Day) or nine months' base salary (as to Mr.
Silver and Ms. Posnien) or six months' base salary (as to Mr. Belstock) paid as
a lump sum or in 24 equal semi-monthly payments (as to Messrs. Broadley and Day)
or 18 equal semi-monthly payments (as to Mr. Silver and Ms. Posnien) or twelve
equal semi-monthly payments (as to Mr. Belstock), at the election of the
executive officer. If the semi-monthly payments are chosen, health benefits
continue to be provided on the same terms as during active employment.
For Mr. Broadley, in the event of a change in control or reorganization of
SierraWest, the executive officer may, within a nine month period, resign from
SierraWest and receive the same benefits as would be payable upon involuntary
termination. Additionally, as to Mr. Broadley, upon termination of service for
any reason, except for cause, he is entitled to receive SierraWest-provided
automobile in use by him at the time of his termination. For Messrs. Day and
Silver and Ms. Posnien, resignation in response to and reasonably promptly
following a material reduction in job duties and responsibilities and/or
material
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reduction in compensation which reduction in job duties, responsibilities and/or
compensation occurs within six months following a change in control would result
in benefits the same as would be payable upon involuntary termination.
PERSONNEL/COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
The members of the Personnel/Compensation Committee collectively represent
a wide range of business and professional occupations, including business owners
and operators, accountants, and retired community leaders. They have available
to them various surveys reflecting executive compensation practices in banking
and other related industries. These sources are used by the Committee in
reviewing compensation. Once each year the Committee reviews the total
compensation of the executive officers listed in this proxy
statement-prospectus. The Committee has adopted a practice of keeping the base
salaries of these executives at, or slightly below, industry norms for
comparable positions within similarly sized and located institutions. The
Committee then establishes cash incentive bonus plans and stock option grants to
bring the executives' total compensation to, or above, industry norms only if
certain performance criteria are met. The performance criteria and resulting
cash incentive payments are approved annually by the Committee, and reflect
those elements that will most closely affect earnings and the growth of
shareholder equity.
In the Committee's opinion the named executives are properly compensated at
the present time when compared with all others in similar positions in companies
of similar size. In the Committee's opinion, they are not overcompensated and
never have been during the Committee's tenure.
CHIEF EXECUTIVE OFFICER COMPENSATION
In 1998, Mr. Fike received a salary of $260,417. This salary reflected a 5%
merit increase awarded on March 1, 1998. Mr. Fike's base salary was paid in
accordance with an employment agreement discussed herein. The Committee
considered this salary appropriate in light of Mr. Fike's leadership of one of
the stronger bank holding companies in California. Mr. Fike's total cash
compensation was also based on his contributions to the overall long-term
strategy and financial success of SierraWest.
The employment agreement was executed in 1994 and is effective through
1999. The Committee retained the consulting services of the Wyatt Company, a
leading compensation and benefits consulting firm, to research and recommends a
total compensation package for Mr. Fike, which is reflected in the employment
agreement. The only instructions given to the Wyatt Company were to recommend a
package based on comparable bank holding companies in California. During the
course of the Wyatt Company's engagement, the Committee independently reviewed
the following peer group survey studies: The Findley Reports "1994 Senior
Management Compensation Survey Analysis of California Banks;" Deloitte & Touche
LLP "California Banks 1994 Compensation Survey;" BAI Foundation "The Bank Key
Executive Compensation Survey -- 1994 Results;" Wyatt Data Services "1994
Community Bank Compensation Report;" and Sheshunoff "Bank Executive and Director
Compensation Survey." Based on this data, the Committee established Mr. Fike's
annual salary. The salary level thus established was then reviewed by Wyatt
Company's consultant and deemed to be competitive and within the appropriate
range.
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The board of directors awarded an incentive bonus of $225,000 to Mr. Fike
for his performance during 1998. In determining incentive bonus awards the
Compensation Committee and the board generally considers many factors, some of
which are: strategic focus, return on equity, improvement in shareholder value,
credit quality, plus the efficiency ratio of SierraWest. Additionally, study is
made of aggregate total compensation paid for other outstanding performing banks
of similar size. In light of Mr. Fike's leadership and consideration of the
above factors, an incentive bonus of $225,000 was awarded.
PERSONNEL/COMPENSATION COMMITTEE:
David W. Clark, Chairman William T. Fike
Richard S. Gaston Jerrold T. Henley (member-at-large)
William W. McClintock
PERSONNEL/COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
With the exception of Jerrold Henley and William Fike, no member of the
Personnel/ Compensation Committee is a former or current officer or employee of
SierraWest. Mr. Henley retired as President and CEO of SierraWest in June 1992.
Mr. Fike succeeded Mr. Henley as President and CEO of SierraWest. There are no
compensation committee interlocks between SierraWest and other entities
involving SierraWest executive officers and SierraWest directors.
COMMON STOCK PERFORMANCE: As part of the executive compensation
information presented in this proxy statement-prospectus, the Securities and
Exchange Commission requires a five-year comparison of stock performance for
SierraWest with stock performance of appropriate similar companies.
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The following graph compares SierraWest's performance with the total return
index for the Nasdaq Stock Market (US Companies) and the total return index for
Nasdaq traded banks:
COMPARISON OF FIVE YEAR
CUMULATIVE TOTAL RETURNS
[Graph appears here]
SIERRA WEST BANCORP CRSP INDEX FOR NASDAQ
------------------- STOCK MARKET (US CRSP INDEX FOR NASDAQ
COMPANIES) BANK STOCKS
--------------------- ---------------------
Dec 93 100.00 100.00 100.00
Dec 94 125.00 97.75 99.63
Dec 95 155.63 98.23 148.38
Dec 96 232.00 170.02 195.91
Dec 97 538.39 208.30 328.02
Dec 98 405.54 293.52 325.38
- -------------------------
Note to Graph Above: Assumes $100 invested on December 31, 1993, in SierraWest
Common Stock and an identical amount in the NASDAQ Indexes, includes the
reinvestment of dividends. The NASDAQ indexes were compiled by the Center for
Research in Securities Prices (CRSP), University of Chicago, Graduate School of
Business.
SHAREHOLDINGS OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Management of SierraWest knows of no person who owns, beneficially or of
record, either individually or together with associates, five percent (5%) or
more of the outstanding shares of SierraWest's common stock, except as set forth
in the table on the following page. This table sets forth, as of March 15, 1999
the number and percentage of shares of SierraWest's outstanding common stock
beneficially owned, directly or indirectly, by each of SierraWest's current
directors, chief executive officer, and four next most highly compensated
executive officers of SierraWest whose salary and bonus exceeded $100,000 during
1998 ("named executive officers") and principal shareholders, and by the
directors and executive officers of SierraWest as a group. The shares
"beneficially owned" are determined under Securities and Exchange Commission
rules, and do not necessarily indicate ownership for any other purpose. In
general, beneficial ownership includes shares over which a director, principal
shareholder, or executive officer has sole or shared voting or investment power
and shares which such person has the right to acquire within sixty (60) days of
March 15, 1999. Management is not aware of any arrangements which may, at a
subsequent date, result in a change of control of SierraWest.
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SHARES SHARES
OWNED WITH OWNED WITH
SOLE VOTING SHARED SHARES
AND VOTING AND ACQUIRABLE
NAME AND ADDRESS OF INVESTMENT INVESTMENT WITHIN 60 PERCENT OF
BENEFICIAL OWNER(1) POWER POWER DAYS(2)(3) TOTAL TOTAL SHARES
- ------------------- ----------- ---------- ---------- ------- ------------
Directors and Nominees and
Named Executive Officers
Richard L. Belstock........ 3,308 0 1,680 4,988 *
David C. Broadley(4)....... 26,220 8,350 2,835 37,405 *
David W. Clark............. 9,985 5,864 7,095 22,944 *
Ralph J. Coppola........... 7,430 0 2,017 9,447 *
Patrick S. Day............. 1,914 0 6,720 8,634 *
William T. Fike(4)......... 51,401 9,112 47,200 107,713 2.1%
Richard Gaston............. 3,866 0 2,335 6,201 *
Jerrold T. Henley.......... 47,725 0 9,381 57,106 1.1%
John J. Johnson............ 2,388 1,155 2,383 5,926 *
Ronald A. Johnson.......... 3,931 100 671 4,702 *
A. Morgan Jones............ 1,727 650 9,334 11,711 *
Jack V. Leonesio........... 16,688 0 671 17,359 *
William W. McClintock...... 7,820 105 9,334 17,259 *
Bernard E. Moore........... 7,648 0 263 7,911 *
Robert C. Silver(4)........ 754 8,350 1,180 10,284 *
Gary E. Stein.............. 17,912 1,704 263 19,879 *
Thomas M. Watson........... 8,102 0 10,733 18,835 *
Total for Directors and
Executive Officers
(numbering 18)........... 219,752 35,390 118,507 373,649 7.0%
Principal Shareholders
Investors of America, L. P.
39 Glen Eagles Drive
St. Louis, MO 63124...... 297,045 297,045 5.6%
- -------------------------
* Less than 1%
(1) The address for all Directors, Nominees and Named Executive Officers is c/o
SierraWest, P. O. Box 61000, Truckee, CA 96161.
(2) Includes shares that can be purchased through SierraWest's stock option
plan. For non-employee directors, includes 671 shares earned under the
Directors Deferred Compensation and Stock Award Plan for all but Mr. Clark
(688 shares), Mr. Henley (718 shares), Mr. Watson (2,070 shares), Mr. Stein
(159 shares), Mr. Moore (159 shares) and Mr. Coppola (2,017 shares).
(3) Upon completion of the proposed merger, all unvested options will become
vested. Unvested options held by the above listed persons total 27,609.
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(4) Messrs. Fike, Broadley and Silver have voting authority for 8,350 shares of
unallocated SierraWest common stock held by the SierraWest ESOP plan.
SECTION 16(a) BENEFICIAL OWNERSHIP AND COMPLIANCE
Section 16(a) of the Securities Exchange Act requires SierraWest's
directors, certain officers and persons who own more than ten percent of a
registered class of SierraWest's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission. Directors,
certain officers and greater than ten-percent shareholders ("Reporting Persons")
are required by Securities and Exchange Commission regulation to furnish
SierraWest with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such document. Any statement contained herein,forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, SierraWest believes that from January 1, 1998, to
December 31, 1998, all filing requirements applicable to its Reporting Persons
were complied with, except that Mr. Ronald Johnson was late in filing a documentForm 4
covering one transaction.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Some of the directors of SierraWest and the companies with which they are
associated are customers of, or have had banking transactions with, SierraWest
Bank in the ordinary course of its business and SierraWest Bank expects to have
banking transactions with these persons in the future. In management's opinion,
since January 1, 1998, all loans and commitments to lend included in such
transactions were made in the ordinary course of business on substantially the
same terms, including interest rates and collateral, as those prevailing for
comparable transactions with other persons of similar credit worthiness and, in
the opinion of management, did not involve more than a normal risk of
collectability or a portionpresent other unfavorable features.
LEGAL MATTERS
Certain legal matters with respect to BancWest, including the validity of
the shares of BancWest common stock to be issued in connection with the merger,
will be passed upon for BancWest by Simpson Thacher & Bartlett, New York, New
York. Certain federal tax matters will be passed upon by Pillsbury Madison &
Sutro LLP, San Francisco, California and McCutchen, Doyle, Brown & Enersen, LLP,
San Francisco, California.
EXPERTS
The consolidated financial statements incorporated in this proxy
statement-prospectus by reference from BancWest's annual report on Form 10-K for
the year ended December 31,1998 have been audited by PricewaterhouseCoopers LLP,
independent auditors, as stated in their report which is incorporated or deemed to beherein by
reference. Such statements have been so incorporated in reliance upon the report
of such firm given upon the authority as experts in accounting and auditing.
The consolidated financial statements of BancWest Corporation and
subsidiaries (old BancWest) as of December 31, 1997 and 1996 and for the years
then ended incorporated by reference from BancWest Corporation's (new BancWest)
Form 8-K/A dated November 1, 1998 have been audited by PricewaterhouseCoopers
LLP, independent
89
95
auditors, as stated in their report which is incorporated herein shall be deemed to be modified or supersededby reference.
Such statements have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements of BancWest Corporation and
subsidiaries (old BancWest) for purposes of the Registration
Statement and this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to beyear ended December 31, 1995 incorporated by
reference from BancWest Corporation's (new BancWest) Form 8-K/A dated November
1, 1998 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report which is incorporated herein modifies or supersedesby reference. Such
statements have been so incorporated in reliance upon the report of such statement. Any
such statement so modified or superseded shall not be deemed, exceptfirm
given upon their authority as so
modified or superseded, to constitute a part of the Registration Statement orexperts in accounting and auditing.
The consolidated financial statements incorporated in this Prospectus.
This Prospectus incorporates documentsproxy
statement-prospectus by reference from SierraWest's annual report on Form 10-K
for the year ended December 31, 1998 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report which is incorporated herein by
reference. Such statements have been so incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
Representatives of Deloitte & Touche LLP are not
included herein or delivered herewith. These documentsexpected to be present at the
annual meeting and are expected to have an opportunity to make a statement if
they desire and to be available without
charge upon written or oral request from First Hawaiian, Inc.,to respond to appropriate questions.
SUBMISSIONS OF SHAREHOLDERS' PROPOSALS
If the merger is completed, you will become a stockholder of BancWest. If
you wish to submit a proposal for consideration at the BancWest 2000 Annual
Meeting of Stockholders you must submit a proposal to BancWest Corporation, 999
Bishop Street, Honolulu, Hawaii 96813, Attention: Howard H. Karr, Executive Vice
PresidentCorporate Secretary. Your
proposal must be received no later than November 1, 1999, for inclusion, if
appropriate, in BancWest's proxy statement and Treasurer, telephone number (808) 525-8800. In orderform of proxy relating to ensure
timely deliveryits
2000 Annual Meeting of such documents, any request should be made at least five
business days priorStockholders and is subject to the Expiration Date.Securities and
Exchange Commission's rules regarding the inclusion of shareholder proposals.
In the event the merger is not completed, you must submit proposals for
consideration at the SierraWest 2000 Annual Meeting of Shareholders to
SierraWest Bancorp, P.O. Box 61000, 10181 Truckee-Tahoe Airport Road, Truckee,
California 96161, Attention: Corporate Secretary. Such proposals must have been
received not later than December 20, 1999 for inclusion, if appropriate, in
SierraWest's proxy statement and form of proxy relating to its 2000 Annual
Meeting of Shareholders and are subject to the Securities and Exchange
Commission's rules regarding the inclusion of shareholder proposals.
INFORMATION CONCERNING BANCWEST MANAGEMENT
Information concerning:
- directors and executive officers,
- executive compensation,
- principal stockholders,
- certain relationships and related transactions,
- and other related matters concerning BancWest
90
PROSPECTUS SUMMARY96
is included or incorporated by reference in its annual report on Form 10-K for
the year ended December 31, 1998.
BancWest's annual report on form 10-K is incorporated by reference into
this proxy statement-prospectus.
WHERE YOU CAN FIND MORE INFORMATION
Both BancWest and SierraWest file annual, quarterly and current reports,
proxy statements and other information with the Securities and Exchange
Commission. You may read and copy any reports, statements or other information
that BancWest and SierraWest file at the Commission's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the
Commission at (800) SEC-0330 for further information on the public reference
rooms. The following summary is qualifiedCommission also maintains an Internet World Wide Web site at
"http://www.sec.gov" at which reports, proxy and information statements and
other information regarding BancWest and SierraWest are available. In addition,
reports, proxy statements and other information concerning SierraWest also may
be inspected at the offices of The Nasdaq Stock Market, 1735 K Street,
Washington, D.C. 20006.
BancWest has filed with the Securities and Exchange Commission a
registration statement on Form S-4 under the Securities Act relating to the
shares of BancWest common stock to be issued in connection with the merger. This
proxy statement-prospectus also constitutes the prospectus of BancWest filed as
part of the registration statement and does not contain all the information set
forth in the registration statement and exhibits thereto. You may copy and read
the registration statement and its exhibits at the public reference facilities
maintained by the more detailedSecurities Exchange Commission at the address set forth above.
The Commission allows both BancWest and SierraWest to "incorporate by
reference" information into this proxy statement-prospectus, which means that
BancWest and SierraWest can disclose important information to you by referring
you to another document filed separately with the Commission. The information
incorporated by reference is deemed to be part of this proxy
statement-prospectus, except for any information superseded by information
contained directly in this proxy statement-prospectus. This proxy
statement-prospectus incorporates by reference the documents set forth below
that either BancWest or SierraWest has previously filed with the Commission.
These documents contain important information about BancWest and SierraWest and
their respective financial statements appearing elsewhere,conditions.
91
97
BANCWEST COMMISSION FILINGS PERIOD
(FILE NO. 0-7949)
Annual Report on Form 10-K............ Year ended December 31, 1998
Current Reports on Form 8-K........... Dated November 1, 1998 (filed December
30, 1998) and dated February 25, 1999
(filed February 26, 1999)
Proxy Statement....................... Dated March 1, 1999
Registration Statement on Form 8-A.... Dated October 30, 1998
SIERRAWEST COMMISSION FILINGS
(FILE NO. 0-15450)
Annual Report on Form 10-K............ Year ended December 31, 1998
Current Reports on Form 8-K........... Dated February 25, 1999 (filed March
3, 1999)
BancWest and SierraWest incorporate by reference any additional documents
that either may file with the Commission between the date of this proxy
statement-prospectus and the date of the annual meeting. These include periodic
reports, such as annual reports on Form 10-K, quarterly reports on Form 10-Q and
current reports on Form 8-K, as well as proxy statements.
BancWest has supplied all information contained or incorporated by
reference in the proxy statement-prospectus relating to BancWest and SierraWest
has supplied all such information relating to SierraWest.
This proxy statement-prospectus incorporates by reference documents
relating to BancWest and SierraWest which are not presented in this proxy
statement-prospectus or delivered herewith. Those documents relating to BancWest
are available from BancWest without charge, excluding all exhibits unless
specifically incorporated by reference in this proxy statement-prospectus, by
requesting them in writing or by telephone from BancWest Corporation, Herbert E.
Wolff, Secretary, 999 Bishop Street, Honolulu, Hawaii 96813, (808) 525-8144.
Those documents relating to SierraWest are available from SierraWest without
charge, excluding all exhibits unless specifically incorporated by reference in
this proxy statement-prospectus, by requesting them in writing or by telephone
from SierraWest Bancorp, David Broadley, Chief Financial Officer, 10181
Truckee-Tahoe Airport Road, Truckee, California 96161, (530) 582-3000. If you
would like to request documents from either BancWest or SierraWest, please do so
by May 20, 1999 to receive them before the annual meeting.
In deciding how to vote on the merger, you should rely only on the
information contained or incorporated by reference in this Prospectus.
First Hawaiian, Inc.proxy
statement-prospectus. Neither BancWest nor SierraWest has authorized any person
to provide you with any information that is different from what is contained in
this proxy statement-prospectus. This proxy statement-prospectus is dated April
, 1999. You should not assume that the information contained in this proxy
statement-prospectus is accurate as of any date other than such date, and
neither the mailing to you of this proxy statement-prospectus nor the issuance
to you of shares of BancWest common stock will create any implication to the
contrary. This proxy statement-prospectus does not constitute an offer to sell
or a solicitation of any offer to buy any securities, or the solicitation of a
proxy in any jurisdiction in which, or to any person to whom, it is unlawful.
92
98
APPENDIX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF FEBRUARY 25, 1999*
AMONG
BANCWEST CORPORATION,
BANK OF THE WEST
AND
SIERRAWEST BANCORP
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* RESTATED TO REFLECT AMENDMENT NO. 1 DATED MARCH 24, 1999
99
TABLE OF CONTENTS
PAGE
----
ARTICLE I THE MERGER.................. A-1
1.1 Effective Time of the Merger... A-1
1.2 Closing........................ A-2
1.3 Effects of the Merger.......... A-2
1.4 Alternative Structure.......... A-2
1.5 Absence of Control............. A-2
ARTICLE II EFFECT OF THE MERGER ON THE
CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF
CERTIFICATES......................... A-3
2.1 Effect on Capital Stock of the
Constituent Corporations..... A-3
(a) Cancellation of Treasury
Stock.................... A-3
(b) Conversion of SierraWest
Common Stock............. A-3
(c) BW Common Stock.......... A-3
(d) BC Capital Stock......... A-3
2.2 No Further Ownership Rights in
SierraWest Common Stock...... A-4
2.3 Fractional Shares.............. A-4
2.4 Surrender of Shares of
SierraWest Common Stock...... A-4
2.5 Adjustments.................... A-5
2.6 Options........................ A-5
ARTICLE III REPRESENTATIONS AND
WARRANTIES........................... A-6
3.1 Representations and Warranties
of SierraWest................ A-6
(a) Organization, Standing
and Power................ A-6
(b) Capital Structure;
Ownership of BC Common
Stock.................... A-7
(c) Authority; No
Violation................ A-8
(d) Financial Statements..... A-9
(e) SierraWest SEC
Documents................ A-10
(f) SierraWest Information
Supplied................. A-10
(g) Compliance with
Applicable Laws.......... A-11
PAGE
----
(h) Litigation............... A-11
(i) Taxes.................... A-12
(j) Certain Agreements....... A-13
(k) Benefit Plans............ A-14
(l) Subsidiaries............. A-16
(m) Agreements with Bank or
Other Regulators......... A-16
(n) Absence of Certain
Changes or Events........ A-16
(o) Undisclosed
Liabilities.............. A-16
(p) Governmental Reports..... A-17
(q) Environmental
Liability................ A-17
(r) Properties............... A-18
(s) Transactions with
Affiliates............... A-18
(t) Brokers or Finders....... A-18
(u) Intellectual Property.... A-19
(v) Pooling of Interests..... A-19
(w) Opinion of Financial
Advisor.................. A-19
(x) Rights Agreement; Anti-
takeover Provisions...... A-19
(y) Community Reinvestment
Act Compliance........... A-19
(z) Year 2000 Readiness...... A-19
(aa) Dissenters' Rights....... A-20
(ab) Insurance................ A-20
(ac) Loan and Other Assets.... A-21
(ad) Restrictions on
Investments.............. A-22
(ae) No Brokered Deposits..... A-22
(af) Derivatives Contracts;
Structured Notes; Etc.... A-22
(ag) Labor Matters............ A-22
3.2 Representations and Warranties
of BC........................ A-23
(a) Organization, Standing
and Power................ A-23
(b) Capital Structure........ A-23
A-i
100
PAGE
----
(c) Authority; No
Violation................ A-24
(d) Financial Statements..... A-25
(e) BC SEC Documents......... A-25
(f) BC Information
Supplied................. A-26
(g) Compliance with
Applicable Laws.......... A-26
(h) Litigation............... A-26
(i) Subsidiaries............. A-27
(j) Agreements with Bank
Regulators............... A-27
(k) Absence of Certain
Changes or Events........ A-27
(l) Undisclosed
Liabilities.............. A-27
(m) Governmental Reports..... A-28
(n) Pooling of Interests..... A-28
(o) Vote Required............ A-28
(p) Brokers or Finders....... A-28
(q) Community Reinvestment
Act Compliance........... A-28
(r) Year 2000 Readiness...... A-28
ARTICLE IV COVENANTS RELATING TO
CONDUCT OF BUSINESS.................. A-29
4.1 Covenants of SierraWest........ A-29
4.2 Covenants of BC................ A-32
ARTICLE V ADDITIONAL AGREEMENTS.......
A-33
5.1 Regulatory Matters............. A-33
5.2 Access to Information.......... A-34
5.3 SierraWest Shareholders'
Meeting........................ A-34
5.4 No Solicitations............... A-34
5.5 Legal Conditions............... A-35
5.6 Employee Benefit Plans......... A-35
5.7 Indemnification; Directors' and
Officers' Insurance.......... A-36
5.8 Additional Agreements.......... A-38
5.9 Fees and Expenses.............. A-38
5.10 Cooperation.................... A-38
5.11 Affiliates..................... A-38
5.12 Stock Exchange Listing......... A-38
5.13 Advice of Changes.............. A-38
PAGE
----
5.14 Subsequent Interim and Annual
Financial Statements; Certain
Reports...................... A-39
5.15 Dissenters' Rights............. A-39
ARTICLE VI CONDITIONS PRECEDENT....... A-39
6.1 Conditions to Each Party's
Obligation................... A-39
(a) Shareholder Approval..... A-39
(b) Other Approvals.......... A-39
(c) No Injunctions or
Restraints............... A-39
(d) NYSE Listing............. A-40
(e) S-4...................... A-40
(f) Pooling.................. A-40
6.2 Conditions to Obligations of
BC............................. A-40
(a) Representations and
Warranties............... A-40
(b) Performance of
Obligations.............. A-40
(c) Corporate Action......... A-40
(d) Tax Opinion.............. A-40
(e) SierraWest Rights
Agreement................ A-40
(f) Burdensome Condition..... A-40
(g) SAS 71 Review Letters.... A-41
(h) Bank Merger.............. A-41
(i) No Dissenters' Rights.... A-41
6.3 Conditions to Obligations of
SierraWest................... A-41
(a) Representations and
Warranties............... A-41
(b) Performance of
Obligations.............. A-41
(c) Tax Opinion.............. A-41
(d) Corporate Action......... A-42
ARTICLE VII TERMINATION AND
AMENDMENT............................ A-42
7.1 Termination.................... A-42
7.2 Effect of Termination.......... A-44
7.3 Amendment...................... A-44
7.4 Extension; Waiver.............. A-44
ARTICLE VIII GENERAL PROVISIONS....... A-45
A-ii
101
PAGE
----
8.1 Nonsurvival of Representations
and Warranties............... A-45
8.2 Notices........................ A-45
8.3 Interpretation................. A-46
8.4 Counterparts................... A-46
8.5 Entire Agreement No Third Party
Beneficiaries; Rights of
Ownership.................... A-46
PAGE
----
8.6 Governing Law; Consent to
Jurisdiction................. A-46
8.7 Severability................... A-47
8.8 Assignment..................... A-47
8.9 Publicity...................... A-47
A-iii
102
INDEX OF DEFINED TERMS
Affiliate............................. A-8
Agreement............................. A-1
Agreement of Merger................... A-1
Average BC Closing Price.............. A-43
Average BC Starting Price............. A-43
Bank Merger........................... A-1
Bank Regulators....................... A-11
BC.................................... A-1
BC Class A Common Stock............... A-23
BC Disclosure Schedule................ A-23
BC Permits............................ A-26
BC Preferred Stock.................... A-23
BC Ratio.............................. A-43
BC SEC Reports........................ A-25
BC Stock Plans........................ A-23
BC Common Stock....................... A-3
Benefit Plans......................... A-14
BHC Act............................... A-6
BIF................................... A-6
Burdensome Condition.................. A-41
Business Day.......................... A-2
BW.................................... A-1
Change in Control..................... A-36
Closing............................... A-2
Closing Date.......................... A-2
Code.................................. A-1
Confidentiality Agreement............. A-34
Consents.............................. A-39
Constituent Corporations.............. A-2
CRA................................... A-19
Derivatives Contract.................. A-22
Determination Date.................... A-44
DPC Shares............................ A-3
Effective Time........................ A-1
Environmental Laws.................... A-17
ERISA................................. A-14
Exchange Act.......................... A-9
Exchange Agent........................ A-4
Exchange Ratio........................ A-3
FDIC.................................. A-6
Federal Reserve....................... A-9
FFIEC................................. A-20
FHB................................... A-23
Final Index Price..................... A-44
GAAP.................................. A-10
Governmental Entity................... A-9
HSR Act............................... A-9
Indemnified Liabilities............... A-37
Indemnified Parties................... A-37
Index................................. A-44
Index Ratio........................... A-43
Initial Index Price................... A-44
Injunction............................ A-39
Litigation............................ A-11
material.............................. A-6
material adverse effect............... A-6
Merger................................ A-1
NYSE.................................. A-4
OREO.................................. A-21
PBGC.................................. A-15
person................................ A-8
Preferred Lender...................... A-11
Proxy Statement....................... A-9
Representatives....................... A-34
Requisite Regulatory Approvals........ A-39
S-4................................... A-25
SAS 71................................ A-41
SBA................................... A-11
SBA Act............................... A-11
SEC................................... A-7
Securities Act........................ A-10
SFAS No. 5............................ A-6
SierraWest............................ A-1
SierraWest Benefit Plans.............. A-14
SierraWest Certificates............... A-4
SierraWest Common Stock............... A-1
SierraWest Consolidated Financial
Statements.......................... A-9
A-iv
103
SierraWest Disclosure Schedule........ A-7
SierraWest Intellectual Property...... A-19
SierraWest Option..................... A-5
SierraWest Permits.................... A-11
SierraWest Preferred Stock............ A-7
SierraWest Rights Agreement........... A-19
SierraWest SEC Reports................ A-10
SierraWest Shareholder Approval....... A-8
SierraWest Shareholders' Meeting...... A-10
SierraWest Stock Option Plans......... A-5
SierraWest's Current Premium.......... A-37
Significant Subsidiary................ A-7
State Banking Approvals............... A-9
State Takeover Approvals.............. A-9
Stock Option Agreement................ A-1
Subsidiary............................ A-6
Surviving Corporation................. A-2
SWB................................... A-1
SWB Common Stock...................... A-1
Takeover Proposal..................... A-35
tax................................... A-13
Tax return............................ A-13
taxable............................... A-13
taxes................................. A-13
trading day........................... A-4
Transaction Agreements................ A-7
Trust Account Shares.................. A-3
Violation............................. A-8
Year 2000 Ready....................... A-20
A-v
104
AGREEMENT AND PLAN OF MERGER dated as of February 25, 1999 (this
"Agreement") among BANCWEST CORPORATION, a Delaware corporation ("BC"), BANK OF
THE WEST, a California state-chartered bank and a wholly-owned subsidiary of BC
("BW"), and SIERRAWEST BANCORP, a California corporation ("SierraWest").
WHEREAS, SierraWest is the beneficial and record owner of 4,116,597 shares
of the issued and outstanding common stock, no par value per share (the "SWB
Common Stock"), of SierraWest Bank, a California state-chartered bank ("SWB"),
constituting all of the issued and outstanding shares of SWB Common Stock;
WHEREAS, the Boards of Directors of BC and BW have approved this Agreement,
declared it advisable and deem it advisable and in the best interests of the
stockholders of BC and BW to consummate the transactions provided for herein in
which, inter alia, SierraWest would merge with and into BW (the "Merger");
WHEREAS, the Board of Directors of SierraWest has approved this Agreement
and declared it advisable and deems it advisable and in the best interests of
the shareholders of SierraWest to consummate the Merger;
WHEREAS, it is the intention of the parties that the Merger qualify as a
tax-free reorganization pursuant to Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and that the Merger shall be accounted for as
a "pooling of interests";
WHEREAS, it is the intention of the parties that immediately after the
consummation of the Merger, SWB shall be merged with and into BW (the "Bank
Merger") and the resulting bank, which shall be BW, shall continue as a
wholly-owned Subsidiary (as defined herein) of BC;
WHEREAS, the Boards of Directors of BC and SierraWest have each determined
that the Merger, the Bank Merger and the other transactions contemplated by this
Agreement are consistent with, and will contribute to the furtherance of, their
respective business strategies and goals; and
WHEREAS, as a condition and inducement to BC's and BW's willingness to
enter into this Agreement, BC and SierraWest are entering into a Stock Option
Agreement dated as of the date hereof in the form of Exhibit A hereto (the
"Stock Option Agreement") pursuant to which SierraWest has granted to BC an
option to purchase shares of the Common Stock, no par value, of SierraWest (the
"SierraWest Common Stock") constituting 19.9% of the presently outstanding
shares of SierraWest Common Stock.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 Effective Time of the Merger. Subject to the provisions of this
Agreement, the Merger shall become effective upon the occurrence of the filing
of an agreement of merger in substantially the form of Exhibit B hereto (the
"Agreement of Merger") with the Secretary of State of the State of California,
or at such time thereafter as is provided in the Agreement of Merger (the
"Effective Time").
A-1
105
1.2 Closing. The closing of the Merger (the "Closing") will take place at
10:00 a.m., California time, on the fifth Business Day after satisfaction or
waiver (subject to applicable law) of the conditions (excluding conditions that,
by their terms, cannot be satisfied until the Closing) set forth in Article VI
(the "Closing Date"), unless another time or date is agreed to in writing by the
parties hereto. The Closing shall be held at the offices of Pillsbury Madison &
Sutro LLP, 235 Montgomery Street, San Francisco, California 94104, or at such
other location as is agreed to in writing by the parties hereto. As used in this
Agreement, "Business Day" shall mean any day that is not a Saturday, Sunday or
other day on which banks are required or authorized by law to be closed in San
Francisco, California.
1.3 Effects of the Merger.
(a) At the Effective Time (i) SierraWest shall be merged with and into BW
and the separate corporate existence of SierraWest shall cease, (ii) the
Articles of Incorporation of BW as in effect immediately prior to the Effective
Time shall be the Articles of Incorporation of the Surviving Corporation, (iii)
the By-laws of BW as in effect immediately prior to the Effective Time shall be
the By-laws of the Surviving Corporation, (iv) the directors of BW at the
Effective Time shall be the directors of the Surviving Corporation (except that
BC and BW shall take all necessary action to appoint two representatives of
SierraWest, mutually acceptable to BC and SierraWest, to serve on the Surviving
Corporation's board of directors for a period of two years after the Effective
Time), such directors to serve until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as the case
may be, and (v) the officers of BW immediately prior to the Effective Time shall
be the officers of the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
(b) As used in this Agreement, "Constituent Corporations" shall mean each
of BC, BW and SierraWest, and "Surviving Corporation" shall mean BW, at and
after the Effective Time, as the surviving corporation in the Merger.
(c) At and after the Effective Time, the Merger will have the effects set
forth in the California Corporations Code.
1.4 Alternative Structure. Notwithstanding anything contained in this
Agreement to the contrary, BC may specify, for any reasonable business, tax or
regulatory purpose, that, before the Merger, BC, BW, SierraWest and SWB shall
enter into transactions other than those described herein in order to effect the
purposes of this Agreement, and the parties hereto shall take all action
necessary and appropriate to effect, or cause to be effected, such transactions,
provided, however, that no such specification may (a) materially and adversely
affect the timing of the consummation of the transactions contemplated herein or
(b) adversely affect the economic benefits, the form of consideration or the tax
effect of the Merger to the holders of SierraWest Common Stock.
1.5 Absence of Control. Subject to any specific provisions of this
Agreement, it is the intent of the parties hereto that neither BC nor SierraWest
by reason of this Agreement shall be deemed (until consummation of the
transactions contemplated hereby) to control, directly or indirectly, the other
party and shall not exercise, or be deemed to exercise, directly or indirectly,
a controlling influence over the management or policies of such other party.
A-2
106
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock of the Constituent Corporations. As of the
Effective Time, by virtue of the Merger and without any action on the part of
the holder of any shares of SierraWest or BW capital stock:
(a) Cancellation of Treasury Stock. All shares of SierraWest that are
owned directly or indirectly by BC or SierraWest or any of their respective
Subsidiaries (other than shares of SierraWest Common Stock held directly or
indirectly in trust accounts, managed accounts and the like or otherwise
held in a fiduciary or nominee capacity that are beneficially owned by
third parties (any such shares, and shares of BC Common Stock (as
hereinafter defined) which are similarly held, whether held directly or
indirectly by BC or SierraWest or any of their respective Subsidiaries, as
the case may be, being referred to herein as "Trust Account Shares") and
other than any shares of SierraWest Common Stock held by BC or SierraWest
or any of their respective Subsidiaries in respect of a debt previously
contracted (any such shares of SierraWest Common Stock, and shares of BC
Common Stock which are similarly held, whether held directly or indirectly
by BC or SierraWest or any of their respective Subsidiaries, being referred
to herein as "DPC Shares")) shall be cancelled and shall cease to exist and
no stock of BC or other consideration shall be delivered in exchange
therefor. All shares of BC Common Stock that are owned by SierraWest or any
of its Subsidiaries (other than Trust Account Shares and DPC Shares) shall
continue to be owned by a Subsidiary of BC.
(b) Conversion of SierraWest Common Stock. Subject to Sections 2.3,
2.5 and 7.1(h), each of the shares of SierraWest Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares to
be cancelled in accordance with Section 2.1(a)) shall be converted into the
right to receive 0.82 shares (the "Exchange Ratio") of fully paid and
nonassessable shares of Common Stock, $1.00 par value per share (the "BC
Common Stock"), of BC. All such shares of SierraWest Common Stock shall no
longer be outstanding and shall automatically be cancelled and retired and
shall cease to exist, and each certificate previously representing any such
shares shall thereafter represent the shares of BC Common Stock into which
such SierraWest Common Stock has been converted and, if applicable, the
right to receive cash in lieu of fractional shares as provided in Section
2.3 hereof. Certificates previously representing shares of SierraWest
Common Stock shall be exchanged for certificates representing whole shares
of BC Common Stock issued in consideration therefor (and, if applicable,
cash in lieu of fractional shares as provided in Section 2.3 hereof) upon
the surrender of such certificates.
(c) BW Common Stock. Each of the issued and outstanding shares of the
capital stock of BW immediately prior to the Effective Time shall remain
issued and outstanding after the Merger as shares of the Surviving
Corporation, which shall thereafter constitute all of the issued and
outstanding shares of capital stock of the Surviving Corporation. No
capital stock of BW will be issued or used in the Merger.
(d) BC Capital Stock. At and after the Effective Time, each share of
BC Common Stock issued and outstanding immediately prior to the Effective
Time shall remain an issued and outstanding share of capital stock of BC
and shall not be affected by the Merger.
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2.2 No Further Ownership Rights in SierraWest Common Stock. All shares of
BC Common Stock issued upon conversion of shares of SierraWest Common Stock in
accordance with the terms hereof shall be deemed to represent all rights
pertaining to such shares of SierraWest Common Stock, and, after the Effective
Time, there shall be no further registration of transfers on the stock transfer
books of SierraWest of the shares of SierraWest Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, certificates formerly representing shares of SierraWest Common Stock are
presented to BC for any reason, they shall be cancelled and, if applicable,
exchanged as provided in this Article II.
2.3 Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of BC Common Stock shall be issued to holders of shares of
SierraWest Common Stock. In lieu thereof, each such holder entitled to a
fraction of a share of BC Common Stock (after taking into account all shares of
SierraWest Common Stock held at the Effective Time by such holder) shall
receive, at the time of surrender of the certificates representing such holder's
SierraWest Common Stock, an amount in cash equal to the closing price as
reported on the New York Stock Exchange ("NYSE") for BC Common Stock on the
trading day immediately preceding the Closing Date, multiplied by the fraction
of a share of BC Common Stock to which such holder would otherwise be entitled.
No such holder shall be entitled to dividends, voting rights, interest on the
value of, or any other rights in respect of a fractional share. The term
"trading day" shall mean a day on which trading generally takes place on the
NYSE and on which trading in BC Common Stock has not been halted or suspended.
2.4 Surrender of Shares of SierraWest Common Stock.
(a) Prior to the Effective Time, BC shall appoint American Stock Transfer &
Trust Company, New York, New York or its successor, or any other bank or trust
company (having capital of at least $50 million) mutually acceptable to
SierraWest and BC, as exchange agent (the "Exchange Agent") for the purpose of
exchanging certificates representing the BC Common Stock which are to be issued
pursuant to Section 2.1, and at and after the Effective Time, BC shall issue and
deliver to the Exchange Agent certificates representing the shares of BC Common
Stock, as shall be required to be delivered to holders of shares of SierraWest
Common Stock pursuant to Section 2.1 hereof. As soon as practicable after the
Effective Time, each holder of shares of SierraWest Common Stock converted
pursuant to Section 2.1, upon surrender to the Exchange Agent of one or more
SierraWest share certificates (the "SierraWest Certificates") for cancellation,
will be entitled to receive a certificate representing the number of shares of
BC Common Stock determined in accordance with Section 2.1 and a payment in cash
with respect to fractional shares, if any, determined in accordance with Section
2.3.
(b) No dividends or other distributions of any kind which are declared
payable to shareholders of record of the shares of BC Common Stock after the
Effective Time will be paid to persons entitled to receive such certificates for
shares of BC Common Stock until such persons surrender their SierraWest
Certificates. Upon surrender of such SierraWest Certificate, the holder thereof
shall be paid, without interest, any dividends or other distributions with
respect to the shares of BC Common Stock as to which the record date and payment
date occurred on or after the Effective Time and on or before the date of
surrender.
(c) If any certificate for shares of BC Common Stock is to be issued in a
name other than that in which the SierraWest Certificate surrendered in exchange
therefor is registered, it shall be a condition of such exchange that the person
requesting such
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exchange shall pay to the Exchange Agent any transfer costs, taxes or other
expenses required by reason of the issuance of certificates for such shares of
BC Common Stock in a name other than the registered holder of the SierraWest
Certificate surrendered, or such persons shall establish to the satisfaction of
BC and the Exchange Agent that such costs, taxes or other expenses have been
paid or are not applicable.
(d) All dividends or distributions, and any cash to be paid in lieu of
fractional shares pursuant to Section 2.3, if held by the Exchange Agent for
payment or delivery to the holders of unsurrendered SierraWest Certificates
representing shares of SierraWest Common Stock and unclaimed at the end of one
year from the Effective Time, shall (together with any interest earned thereon)
at such time be paid or redelivered by the Exchange Agent to BC, and after such
time any holder of a SierraWest Certificate who has not surrendered such
SierraWest Certificate to the Exchange Agent shall, subject to applicable law,
look as a general creditor only to BC for payment or delivery of such dividends
or distributions or cash, as the case may be.
(e) Neither BC nor the Surviving Corporation shall be liable to any holder
of SierraWest Common Stock for such shares (or dividends or distributions
thereon) or cash payable in lieu of fractional shares pursuant to Section 2.3
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
2.5 Adjustments. If, between the date of this Agreement and the Effective
Time, the outstanding shares of BC Common Stock shall have been changed into a
different number of shares or a different class by reason of any
reclassification, recapitalization, split up, combination, exchange of shares or
readjustment, or a stock dividend thereon shall be declared with a record date
within such period, the Exchange Ratio shall be correspondingly adjusted and BC
shall give SierraWest prompt written notice of the declaration of the record
date with respect thereto.
2.6 Options. At the Effective Time, each option granted by SierraWest to
purchase shares of SierraWest Common Stock (each a "SierraWest Option") which is
outstanding and unexercised immediately prior thereto shall cease to represent a
right to acquire shares of SierraWest Common Stock and shall be converted
automatically into an option to purchase shares of BC Common Stock in an amount
and at an exercise price determined as provided below (and otherwise subject to
the terms of the SierraWest 1988 Non-Qualified Stock Option Agreement and 1996
Stock Option Plan, the California Community Bancshare Corporation 1993 Stock
Option Plan, as amended and restated March 19, 1996, and the Continental Pacific
Bank 1990 Amended Stock Option Plan, each as amended to date (collectively, the
"SierraWest Stock Option Plans") and the agreements evidencing grants
thereunder, including but not limited to, the accelerated vesting of such
options which shall occur in connection with and by virtue of the consummation
of the Merger as and to the extent required by such plans and agreements): (a)
the number of shares of BC Common Stock to be subject to the new option shall be
equal to the product of the number of shares of SierraWest Common Stock subject
to the original option and the Exchange Ratio, provided that any fractional
shares of BC Common Stock resulting from such multiplication shall be rounded
down to the nearest share; and (b) the exercise price per share of BC Common
Stock under the new option shall be equal to the exercise price per share of
SierraWest Common Stock under the original option divided by the Exchange Ratio,
provided that such exercise price shall be rounded up to the nearest cent. In
the case of any options which are "incentive stock options" (as defined in
section 422 of the Code), the exercise price, the number of shares purchasable
pursuant to such options and the terms and conditions of exercise of such
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options shall be determined in order to comply with section 424(a) of the Code.
The duration and other terms of the new option shall be the same as the original
option except that all references to SierraWest shall be deemed to be references
to BC.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of SierraWest. SierraWest represents
and warrants to BC and BW as follows:
(a) Organization, Standing and Power. SierraWest is a bank holding
company registered with the Federal
Reserve and operating under the Bank Holding Company Act of 1956, as amended
(the "BHC Act"). The Corporation, through its subsidiaries, conducts a
general commercial banking business and other businesses related to banking.
At December 31, 1996, the Corporation had consolidated total assets of $8.0
billion, total deposits of $5.9 billion and total stockholders' equity of
$705.9 million.
The Corporation's principal subsidiary is First Hawaiian Bank (the
"Bank"), a full-service bank and the oldest financial institution in Hawaii.
The Bank, which is headquartered in Honolulu, Hawaii,SWB is a wholly-owned Subsidiary of SierraWest and is a
California banking association chartered under the laws of the State of
Hawaii
chartered bank, the depositsCalifornia. The deposit accounts of whichSWB are insured by the Bank Insurance
Fund ("BIF") of the Federal Deposit Insurance Corporation.Corporation ("FDIC") to the
fullest extent permitted by law, and all premiums and assessments required
in connection therewith have been paid when due. SierraWest and each of its
Subsidiaries, including SWB, is a bank or corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite power and authority to
own, lease and operate its properties and to carry on its business as now
being conducted and is duly qualified and in good standing to do business
in each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification necessary, other than
in such jurisdictions where the failure so to qualify would not, either
individually or in the aggregate, have a material adverse effect on
SierraWest. The Articles of Incorporation and By-laws of each of
SierraWest, and each other Subsidiary of SierraWest, copies of which were
previously made available to BC, are true, complete and correct. The minute
books of SierraWest and its Subsidiaries which have been made available to
BC contain a complete (except for certain portions thereof relating to the
Merger and the transactions contemplated hereby) and accurate record of all
meetings of the respective Boards of Directors (and committees thereof) and
shareholders. As used in this Agreement, (i) the term "Subsidiary" when
used with respect to any party means any corporation or other organization,
whether incorporated or unincorporated, (x) of which such party or any
other Subsidiary of such party is a general partner (excluding
partnerships, the general partnership interests of which held by such party
or any Subsidiary of such party do not have a majority of the voting
interests in such partnership), or (y) at least a majority of the
securities or other interests of which having by their terms ordinary
voting power to elect a majority of the board of directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or
by any one or more of its Subsidiaries, or by such party and one or more of
its Subsidiaries, (ii) any reference to any event, change or effect being
"material" with respect to any entity means an event, change or effect
which is material in relation to the condition (financial or otherwise),
properties, assets, liabilities, businesses, results of operations or
prospects of such entity and its Subsidiaries taken as a whole and (iii)
the term "material adverse effect" means, with respect to any entity, a
material adverse effect (whether or not required to be accrued or disclosed
under Statement of Financial Accounting Standards No. 5 ("SFAS No. 5")) (A)
on the condition (financial or otherwise), properties, assets, liabilities,
businesses, results of operations or prospects of such entity and its
Subsidiaries taken
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as a whole (but does not include any such effect resulting from or
attributable to (1) any action or omission by SierraWest or BC or any
Subsidiary of either of them taken with the prior written consent of the
other parties hereto, in contemplation of the transactions contemplated
hereby or (2) any expenses incurred by such party in connection with this
Agreement or the transactions contemplated hereby, but only to the extent
set forth in Section 3.1(a) of the SierraWest Disclosure Schedule (as
defined herein), with respect to SierraWest), or (y) on the ability of such
entity to perform its obligations under the Transaction Agreements (as
defined below) on a timely basis. A "Significant Subsidiary" means any
Subsidiary of a person that would constitute a Significant Subsidiary of
such person within the meaning of Rule 1-02 of Regulation S-X of the
Securities and Exchange Commission (the "SEC"). The term "Transaction
Agreements" shall mean this Agreement, the Stock Option Agreement and the
Agreement of Merger. The term "to best knowledge of" any person means the
actual knowledge of such person after reasonable inquiry under all the
circumstances.
(b) Capital Structure; Ownership of BC Common Stock.
(i) The authorized capital stock of SierraWest consists of 10,000,000
shares of SierraWest Common Stock, 9,800,000 shares of preferred stock, no
par value, and 200,000 shares of preferred stock series A, no par value
(such classes of preferred stock, collectively, the "SierraWest Preferred
Stock") of which (A) as of February 24, 1999, 5,324,074 shares of
SierraWest Common Stock were outstanding (none having been issued
thereafter except from the exercise of SierraWest Options) and (B) as of
the date hereof, no shares of SierraWest Preferred Stock are outstanding.
All outstanding shares of SierraWest Common Stock have been duly authorized
and validly issued and are fully paid and non-assessable and not subject to
preemptive rights.
(ii) The authorized capital stock of SWB consists of 10,000,000 shares
of SWB Common Stock of which 4,116,597 shares are outstanding. All
outstanding shares of SWB Common Stock have been duly authorized and
validly issued and are fully paid and non-assessable and not subject to
preemptive rights.
(iii) Except for this Agreement and the Stock Option Agreement and
except as set forth in Section 3.1(b)(iii) of the disclosure schedule of
SierraWest delivered to BC on the date hereof (the "SierraWest Disclosure
Schedule"), (A) there are no options, warrants, calls, rights, commitments
or agreements of any character to which SierraWest or any of its
Subsidiaries or Affiliates (as defined herein) is a party or by which any
of the foregoing are bound obligating SierraWest or any of its Subsidiaries
or Affiliates to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock of SierraWest or any of its
Subsidiaries or obligating SierraWest or any of its Subsidiaries or
Affiliates to grant, extend or enter into any such option, warrant, call,
right, commitment or agreement, (B) there are no outstanding contractual
obligations of SierraWest or any of its Subsidiaries or Affiliates to
repurchase, redeem or otherwise acquire any shares of capital stock of
SierraWest or any of its Subsidiaries and (C) there are no outstanding
securities of any kind convertible into or exchangeable for the capital
stock of SierraWest or any of its Subsidiaries (or any interest therein).
Except as set forth in Section 3.1(b)(iii) of the SierraWest Disclosure
Schedule, there is no agreement of any kind that gives any person any right
to participate in the equity, value or income of, or to vote (x) in the
election of directors or officers of or (y) otherwise with respect to the
affairs of,
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SierraWest or any of its Subsidiaries. As used in this Agreement, the term
"Affiliate" means, as to any person, a person which controls, is controlled
by or is under common control with such person. The term "person" shall
mean an individual, corporation, partnership, limited liability company,
joint venture, association, trust, unincorporated organization or other
entity.
(iv) Neither SierraWest nor any of its Subsidiaries or, to
SierraWest's best knowledge (without inquiry), its Affiliates, beneficially
owns, directly or indirectly, any shares of capital stock of BC, securities
of BC convertible into, or exchangeable for, such shares, or options,
warrants or other rights to acquire such shares (regardless of whether such
securities, options, warrants or other rights are then exercisable or
convertible), nor is SierraWest or any of such Subsidiaries or Affiliates a
party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of shares of capital stock of BC or
any such other securities, options, warrants or other rights.
(c) Authority; No Violation.
(i) SierraWest has all requisite corporate power and authority to
enter into this Agreement and the other Transaction Agreements and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the other Transaction Agreements and the
consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of
SierraWest, other than the approval of this Agreement by the holders of a
majority of the outstanding shares of SierraWest Common Stock (the
"SierraWest Shareholder Approval"). The SierraWest Shareholder Approval is
the only vote of any class or series of SierraWest capital stock necessary
to approve this Agreement and the other Transaction Agreements and the
consummation of the transactions contemplated hereby and thereby. This
Agreement and the other Transaction Agreements have been duly executed and
delivered by SierraWest and (assuming due authorization, execution and
delivery by BC and BW) constitute the valid and binding obligations of
SierraWest, enforceable against it in accordance with their terms. SWB has
full corporate power and authority to consummate the Bank operates 61 branches located throughoutMerger.
(ii) Except as set forth in Section 3.1(c)(ii) of the SierraWest
Disclosure Schedule, the execution and delivery by SierraWest of this
Agreement and the other Transaction Agreements does not, and the
consummation of the transactions contemplated hereby and thereby will not,
conflict with, or result in any violation of, or constitute a default (with
or without notice or lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of any obligation or the loss
of a material benefit under, or the creation of a lien, pledge, security
interest, charge or other encumbrance on any assets (any such conflict,
violation, default, right of termination, cancellation or acceleration,
loss or creation, a "Violation") pursuant to, (x) any provision of the
articles of incorporation or by-laws or comparable organizational documents
of SierraWest or any Subsidiary of SierraWest, or (y) subject to obtaining
or making the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (iii) below, any loan or
credit agreement, note, mortgage, indenture, lease, SierraWest Benefit Plan
(as defined in Section 3.1(j)) or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to SierraWest or any
Subsidiary of SierraWest or its properties
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or assets, which Violation, in the case of clause (y), individually or in
the aggregate, would have a material adverse effect on SierraWest.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency
or commission or other governmental authority or instrumentality, domestic
or foreign (a "Governmental Entity"), is required by or with respect to
SierraWest or any of its Subsidiaries in connection with the execution and
delivery of this Agreement or the other Transaction Agreements or the
consummation by SierraWest of the transactions contemplated hereby or
thereby, the failure to make or obtain which would have a material adverse
effect on SierraWest or on the ability of SierraWest to perform its
obligations hereunder or thereunder on a timely basis, or on BC's ability
to own, possess or exercise the rights of an owner with respect to the
business and assets of SierraWest and its Subsidiaries, except for (A) the
filing of applications and notices with the FDIC under the Bank Merger Act
and, if required, the Board of Governors of the Federal Reserve System (the
"Federal Reserve") under the BHC Act and approval of same, (B) the filing
by SierraWest with the SEC of a proxy statement in definitive form relating
to the meeting of SierraWest's shareholders to be held to approve and adopt
this Agreement and the transactions contemplated hereby (the "Proxy
Statement"), (C) the filing of applications with the California State
Department of Financial Institutions and such other applications, filings,
authorizations, orders and approvals as may be required under the banking
laws of other states or jurisdictions, and approval thereof (collectively,
the "State Banking Approvals") and pursuant to any applicable state
takeover laws ("State Takeover Approvals"), (D) notices under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), if required, (E) the filing with the Secretary of State of the State
of Hawaii. AsCalifornia of December 31, 1996, the Bank was the second largest
bank in Hawaii in termsAgreement of total assets.
The Corporation's executive offices are located at 999 Bishop Street,
Honolulu, Hawaii 96813 (telephone no. (808) 525-7000).
First Hawaiian Capital I
The Trust is a statutory business trust created under Delaware law
pursuant toMerger, and (F) the filing of a certificate of trustnotice
with the Delaware SecretaryDepartment of Financial Institutions of the State on June 23,of Nevada.
(d) Financial Statements. SierraWest has previously delivered to BC
copies of (a) the consolidated statements of financial condition of
SierraWest and its Subsidiaries, as of December 31, for the fiscal years
1997 and governed1998, and the related consolidated statements of income,
shareholders' equity and cash flows for the fiscal years 1996 through 1998,
inclusive, as reported (except in respect of such consolidated financial
statements as at the end of and for the fiscal year 1998) in SierraWest's
Annual Reports on Form 10-K for the relevant fiscal years filed with the
SEC under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), in each case accompanied by the Trust Agreement (as defined
herein) amongreport of Deloitte & Touche LLP,
independent auditors with respect to SierraWest (except for the
Corporation,consolidated financial statements as Depositor, The First National Bankat and for the year ended December 31,
1998 which, as of Chicago,the date hereof, are not accompanied by such report) (the
consolidated financial statements of SierraWest and its Subsidiaries
referred to in this sentence being hereinafter sometimes referred to as Property Trustee (the "Property Trustee"the
"SierraWest Consolidated Financial Statements"), First Chicago Delaware
Inc., as Delaware Trustee (the "Delaware Trustee"). Each of the financial
statements referred to in this Section 3.1(d) (including the related notes,
where applicable) fairly present, and the financial statements referred to
in Section 5.14 hereof will fairly present (subject, in the cases of the
unaudited statements, to normal recurring adjustments, none of which are
expected to be material in nature or amount), the Administrative
Trustees namedresults of the
consolidated operations and changes in stockholders' equity and
consolidated financial condition of SierraWest and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein (the "Administrative Trustees",set forth.
Each of such statements (including the related notes, where applicable)
complies, and togetherthe financial statements
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referred to in Section 5.14 hereof will comply, in all material respects
with applicable accounting requirements and with the Property Trusteepublished rules and
regulations of the SEC with respect thereto and each of such statements
(including the related notes, where applicable) has been, and the Delaware Trustee, the "Issuer Trustees") and the
holders of the Trust Securities from timefinancial
statements referred to time. The Trust's business and
affairs are conducted by its trustees. The Trust exists for the exclusive
purposes of (i) issuing and selling the Trust Securities, (ii) using the
proceeds from the sale of the Trust Securities to acquire the Junior
Subordinated Debentures and (iii) engaging in only those other activities
necessary or incidental thereto (such as registering the transfer of the
Trust Securities). Accordingly, the Junior Subordinated Debentures are the
sole assets of the Trust, and payments under the Junior Subordinated
Debentures are the sole source of revenue of the Trust.
The Exchange Offer
The Exchange Offer . . . Up to $100,000,000 aggregate liquidation amount
of New Capital Securities are being offered in
exchange for a like aggregate liquidation amount
of Old Capital Securities. The TrustSection 5.14 will issue, promptly after the Expiration Date,
$1,000 liquidation amount of New Capital
Securities in exchange for each $1,000
liquidation amount of outstanding Old Capital
Securities tendered and accepted in connection
with the Exchange Offer. For a description of
the procedures for tendering Old Capital
Securities, see "The Exchange Offer--Procedures
for Tendering Old Capital Securities."
Expiration Date . . . . . 5:00 p.m., New York City time, on _______ __,
1997 (such time on such date being hereinafter
called the "Expiration Date") unless the
Exchange Offer is extended by the Corporation
and the Trust (in which case the term
"Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended).
See "The Exchange Offer--Expiration Date;
Extensions; Amendments."
Withdrawal Rights . . . . Tenders of Old Capital Securities may be, withdrawn at any time on or prior to the
Expiration Date by delivering a written notice
of such withdrawal to the Exchange Agent in
conformity with certain procedures set forth
below under "The Exchange Offer--Withdrawal
Rights."
Procedures for Tendering
Old Capital Securities Tendering holders of Old Capital Securities must
complete and sign a Letter of Transmittalprepared in accordance with
United States generally accepted accounting principles ("GAAP")
consistently applied during the instructions contained
thereinperiods involved, except in each case as
indicated in such statements or in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q. The books and forward the same by mail, facsimile
or hand delivery, togetherrecords of
SierraWest and its Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other required documents,applicable legal
and accounting requirements and, where such books and records purport to
reflect any transactions, the Exchange Agent,
eithertransactions so reflected are actual
transactions.
(e) SierraWest SEC Documents. SierraWest has made available to BC a
true and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by SierraWest with the Old Capital Securities to be
tendered or in compliance with the specified
procedures for guaranteed delivery of Old
Capital Securities. Certain brokers, dealers,
commercial banks, trust companies and other
nominees may also effect tenders by book-entry
transfer. Holders of Old Capital Securities
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
are urged to contact such person promptly if
they wish to tender Old Capital SecuritiesSEC pursuant to the
Exchange Offer. See "The
Exchange Offer--Procedures for Tendering Old
Capital Securities."
LettersSecurities Act of Transmittal and certificates
representing Old Capital Securities should not
be sent to the Corporation1933 (the "Securities Act") or the Trust. Such
documents should only be sentExchange Act (other
than reports filed pursuant to Section 13(g) of the Exchange Agent. Questions regarding howAct), since
December 31, 1997 (as such documents have since the time of their filing
been amended, the "SierraWest SEC Reports"), which are all the documents
(other than preliminary material and reports required pursuant to tender and
requests for information should be directed toSection
13(g) of the Exchange Agent. See "The Exchange Offer--
Exchange Agent."
Resales of New Capital
Securities . . . . . . The Corporation and the Trust are making the
Exchange Offer in reliance on the position of
the staff of the Division of Corporation Finance
of the Commission as set forth in certain
interpretive letters addressedAct) that SierraWest was required to third parties
in other transactions. However, neither the
Corporation nor the Trust has sought its own
interpretive letter and there can be no
assurance that the staff of the Division of
Corporation Finance of the Commission would make
a similar determination with respect to the
Exchange Offer as it has in such interpretive
letters to third parties. Based on these
interpretations by the staff of the Division of
Corporation Finance, and subject to the two
immediately following sentences, the Corporation
and the Trust believe that New Capital
Securities issued pursuant to this Exchange
Offer in exchange for Old Capital Securities may
be offered for resale, resold and otherwise
transferred by a holder thereof (other than a
holder who is a broker-dealer) without further
compliancefile with the
registration and prospectus
delivery requirementsSEC since such date. As of the Securities Act,
provided that such New Capital Securities are
acquired in the ordinary coursetheir respective dates of such holder's
business and that such holder is not
participating, and has no arrangement or
understanding with any person to participate, in
a distribution (within the meaning of the
Securities Act) of such New Capital Securities.
However, any holder of Old Capital Securities
who is an "affiliate" of the Corporation or the
Trust or who intends to participate in the
Exchange Offer for the purpose of distributing
the New Capital Securities, or any broker-dealer
who purchased the Old Capital Securities from
the Trust to resell pursuant to Rule 144A or any
other available exemption under the Securities
Act, (a) will not be able to rely on the
interpretations of the staff of the Division of
Corporation Finance of the Commission set forth
in the above-mentioned interpretive letters, (b)
will not be permitted or entitled to tender such
Old Capital Securities in the Exchange Offer and
(c) must complyfiling with the registration and
prospectus delivery requirements ofSEC,
the Securities ActSierraWest SEC Reports complied in connectionall material respects with any sale or
other transfer of such Old Capital Securities
unless such sale is made pursuant to an
exemption from such requirements. In addition,
as described below, if any broker-dealer holds
Old Capital Securities acquired for its own
account as a result of market-making or other
trading activities and exchanges such Old
Capital Securities for New Capital Securities,
then such broker-dealer must deliver a
prospectus meeting the
requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC thereunder applicable to such
SierraWest SEC Reports, and did not contain any 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 connectionlight of the
circumstances under which they were made, not misleading. The financial
statements of SierraWest included in the SierraWest SEC Reports complied as
to form, as of their respective dates of filing with any resalesthe SEC, in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (as defined hereinafter) applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as permitted
by Form 10-Q of the SEC) and fairly present in all material respects the
consolidated financial position of SierraWest and its consolidated
Subsidiaries as at the dates thereof and the consolidated results of
operations, changes in stockholders' equity and cash flows of such
New Capital Securities.
Each holdercompanies for the periods then ended.
(f) SierraWest Information Supplied. None of Old Capital Securities who wishesthe information supplied
or to exchange Old Capital Securitiesbe supplied by SierraWest for New
Capital Securitiesinclusion or incorporation by reference
in the Exchange OfferProxy Statement relating to the meeting of the shareholders (the
"SierraWest Shareholders' Meeting") of SierraWest at which the SierraWest
Shareholder Approval will be required to represent that (i) it is not an
affiliate of the Trustsought or the Corporation, (ii)
any New Capital Securities to be received by it
are being acquiredfor inclusion in the ordinary courseS-4 (as defined
herein) will, at the date of its
business,mailing to shareholders of SierraWest and (iii) at
the time of the Exchange
Offer it has no arrangement withSierraWest Shareholders' Meeting, (i) contain any person to
participate in, and does not intend to engage
in, a distribution (within the meaning of the
Securities Act) of such New Capital Securities.
Each broker-dealer that receives New Capital
Securities for its own account pursuant to the
Exchange Offer must acknowledge that it acquired
the Old Capital Securities for its own account
as the result of market-making activities or
other trading activities and must agree that it
will deliver a prospectus meeting the
requirements of the Securities Act in connection
with any resale of such New Capital Securities.
The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the
Securities Act. Based on the position taken by
the staff of the Division of Corporation Finance
of the Commission in the interpretive letters
referred to above, the Corporation and the Trust
believe that broker-dealers who acquired Old
Capital Securities for their own accounts, as a
result of market-making activities or other
trading activities ("Participating Broker-
Dealers"), may use this Prospectus, as it may be
amended or supplemented from time to time, to
fulfill their prospectus delivery requirements
with respect to the New Capital Securities
received upon exchange of such Old Capital
Securities (other than Old Capital Securities
which represent an unsold allotment from the
original sale of the Old Capital Securities).
Subject to certain limitations described below
under "The Exchange Offer--Resale of New Capital
Securities," the Corporation has agreed that
this Prospectus, as it may be amended or
supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with
resales of such New Capital Securities for a
period ending, subject to certain exceptions,
180 days after the date of first issuance of the
New Capital Securities. See "Plan of
Distribution." Any Participating Broker-Dealer
who is an "affiliate" of the Corporation may not
rely on such interpretive letters and must
comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with any resale transaction. See
"The Exchange Offer--Resales of New Capital
Securities."
Accrued Distributions . . Each New Capital Security will pay cumulative
Distributions from June 30, 1997. Holders of
Old Capital Securities which are accepted for
exchange will not receive any accumulated
Distributions on such Old Capital Securities and
will be deemed to have waived the right to
receive any Distributions on such Old Capital
Securities accumulated from and after June 30,
1997.
Conditions to the
Exchange Offer . . . . The Exchange Offer is subject to certain
conditions, which may be waived by the
Corporation and the Trust in their sole
discretion. The Exchange Offer is not
conditioned upon any minimum liquidation amount
of Old Capital Securities being tendered. See
"The Exchange Offer--Conditions to the Exchange
Offer."
Exchange Agent . . . . . The exchange agent with respect to the Exchange
Offer is The First National Bank of Chicago (the
"Exchange Agent"). The addresses and telephone
and facsimile numbers of the Exchange Agent are
set forth below under "The Exchange Offer--
Exchange Agent" and in the Letter of
Transmittal.
Use of Proceeds . . . . . Neither the Corporation nor the Trust will
receive any cash proceeds from the issuance of
the New Capital Securities offered hereby. The
New Capital Securities will be exchanged for Old
Capital Securities of like liquidation amount,
which will be retired and cancelled. The cash
proceeds from the sale of the Old Capital
Securities were used to purchase Old Junior
Subordinated Debentures. See "Use of Proceeds."
Certain United States
Federal Income Tax
Considerations . . . . Holders of Old Capital Securities should review
the information set forth under "Certain United
States Federal Income Tax Considerations" prior
to tendering Old Capital Securities in the
Exchange Offer.
Consequences of Failure Any Old Capital Securities not tendered and
to Exchange . . . . . . . accepted in the Exchange Offer will remain
outstanding and will be entitled to all the same
rights and will be subject to the same
limitations applicable thereto under the Trust
Agreement (except for those rights which
terminate upon consummation of the Exchange
Offer). Following consummation of the Exchange
Offer, the holders of Old Capital Securities
will not be entitled to any increase in the
Distribution rate thereon and will continue to
be subject to all of the existing restrictions
upon transfer thereof and neither the
Corporation nor the Trust will have any further
obligation to such holders (other than under
certain limited circumstances) to provide for
registration under the Securities Act of the Old
Capital Securities held by them. To the extent
that Old Capital Securities are tendered and
accepted in the Exchange Offer, a holder's
ability to sell untendered Old Capital
Securities could be adversely affected. See
"Risk Factors-- Consequencesuntrue
statement of a Failurematerial fact or omit to Exchange Old Capital Securities."
The New Securities
Securities Offered . . . Up to $100,000,000 aggregate liquidation amount
of the Trust's 8.343% Capital Securities, Series
B, which have been registered under the
Securities Act (liquidation amount $1,000 per
Capital Security). The terms of the New Capital
Securities are identical in allstate any material respects to the terms of the Old Capital
Securities, except that the New Capital
Securities have been registered under the
Securities Act and therefore are not subject to
certain restrictions on transfer applicable to
the Old Capital Securities and will not provide
for any increase in the Distribution rate
therefor under the circumstances described in
the Offering Circular, dated June 25, 1997,
under the caption "Exchange Offer; Registration
Rights". See "The Exchange Offer--Purpose and
Effect of the Exchange Offer", "Description of
Capital Securities" and "Description of the Old
Securities."
Distributions . . . . . . Holders of the Capital Securities will be
entitled to receive cumulative cash
Distributions at an annual rate of 8.343% of the
liquidation amount of $1,000 per New Capital
Security, accruing from June 30, 1997 and
payable semi-annually in arrears on the first
day of January and July of each year commencing
on January 1, 1998. The Distribution rate and
the Distribution and other payment dates for the
New Capital Securities will correspond to the
interest rate and interest and other payment
dates on the Junior Subordinated Debentures.
See "Description of Capital Securities."
Extension Periods . . . Distributions on the Capital Securities may be
deferred for the duration of any Extension
Period selected by the Corporation with respect
to the payment of interest on the Junior
Subordinated Debentures. No Extension Period
will exceed 10 consecutive semi-annual periods
or extend beyond the Stated Maturity. See
"Description of Junior Subordinated Debentures
Option to Extend Interest Payment Period" and
"Certain Federal Income Tax Consequences
Interest Income and Original Issue Discount."
Ranking . . . . . . . . . The Capital Securities rank pari passu, and
payments thereon will be made pro rata, with the
Common Securities except as described under
"Description of Capital Securities
Subordination of Common Securities." The Junior
Subordinated Debentures will be unsecured and
subordinate and junior in right of payment, to
the extent and in the manner set forth in the
Junior Subordinated Indenture, to all Senior
Indebtedness (as defined therein). See
"Description of Junior Subordinated Debentures."
The Guarantee will constitute an unsecured
obligation of the Corporation and will rank
subordinate and junior in right of payment, to
the extent and in the manner set forth in the
Guarantee, to all Senior Indebtedness. Because
the Corporation is a holding company, the right
of the Corporation to participate in any
distribution of assets of any subsidiary,
including the Bank, upon any such subsidiary's
liquidation or reorganization or otherwise is
subject to the prior claims of creditors of that
subsidiary except to the extent that the
Corporation may itself be recognized as a
creditor of that subsidiary. Accordingly, the
Junior Subordinated Debentures (and therefore
the Capital Securities) and the Guarantee will
be effectively subordinated to all existing and
future liabilities of the Corporation's
subsidiaries, and holders thereof should look
only to the assets of the Corporation for
payments on the Junior Subordinated Debentures
and the Guarantee. See "Description of
Guarantee."
Redemption . . . . . . . The Capital Securities are subject to mandatory
redemption (i) in whole, but not in part, at the
Stated Maturity upon repayment of the Junior
Subordinated Debentures, (ii) in whole, but not
in part, contemporaneously with the optional
redemption at any time by the Corporation of the
Junior Subordinated Debentures upon the
occurrence and continuation of a Tax Event or
Capital Treatment Event and (iii) in whole or in
part at any time on or after July 1, 2007,
contemporaneously with, and to the extent of the
proceeds from, the optional redemption by the
Corporation of the Junior Subordinated
Debentures, in each case at the applicable
Redemption Price. See "Description of Capital
Securities Redemption."
ERISA Considerations . . Prospective participants in the Exchange Offer
must carefully consider the matters set forth
under "Certain ERISA Considerations."
Absence of Market for the
New Capital Securities The New Capital Securities will be a new issue
of securities for which there currently is no
established trading market. Accordingly, there
can be no assurance as to the development or
liquidity of any market for the New Capital
Securities. The Corporation currently does not
intend to apply for listing of the New Capital
Securities on any securities exchange or for
quotation through the National Association of
Securities Dealers Automated Quotation System.
Risk Factors
Holders of Old Capital Securities should carefully consider
the matters set forth under "Risk Factors" before tendering their Old Capital
Securities in the Exchange Offer.
RISK FACTORS
Prospective purchasers of the New Capital Securities should carefully
review the information contained elsewhere in this Prospectus and should
particularly consider the following matters. To the extent any of the
information contained or incorporated by reference in this Prospectus
constitutes a "forward-looking statement" as defined in Section 27A(i)(1) of
the Securities Act, the risk factors set forth below are cautionary
statements identifying important factors that could cause actual results to
differ materially from those in the forward-looking statement.
Ranking of Subordinated Obligations Under the Guarantee and the Junior
Subordinated Debentures
The obligations of the Corporation under the Guarantee and under the
Junior Subordinated Debentures are subordinate and junior in right of payment
to all Senior Indebtedness of the Corporation. Because the Corporation is a
holding company, the right of the Corporation to participate in any
distribution of assets of any subsidiary, including the Bank, upon such
subsidiary's dissolution, winding-up, liquidation or reorganization or
otherwise (and thus the ability of holders of the Capital Securities to
benefit indirectly from such distribution), is subject to the prior claims of
creditors of that subsidiary, except to the extent that the Corporation may
itself be a creditor of that subsidiary and its claims are recognized. There
are various legal limitations on the extent to which certain of the
Corporation's subsidiaries may extend credit, pay dividends or otherwise
supply funds to, or engage in transactions with, the Corporation or certain
of its other affiliates. Accordingly, the Junior Subordinated Debentures and
Guarantee will be effectively subordinated to all existing and future
liabilities of the Corporation's subsidiaries, and holders of Junior
Subordinated Debentures and the Guarantee should look only to the assets of
the Corporation for payments on the Junior Subordinated Debentures and the
Guarantee. None of the Junior Subordinated Indenture, the Guarantee or the
Trust Agreement places any limitation on the amount of secured or unsecured
debt, including Senior Indebtedness, that may be incurred by the Corporation
or its subsidiaries. See "Description of Guarantee -- Status of the
Guarantee" and "Description of Junior Subordinated Debentures --
Subordination."
The ability of the Trust to pay amounts due on the Capital Securities
is solely dependent upon the Corporation's making payments on the Junior
Subordinated Debentures as and when required.
Option to Extend Interest Payment Period; Tax Consequences
So long as no Event of Default (as defined in the Junior Subordinated
Indenture) has occurred and is continuing with respect to the Junior
Subordinated Debentures (a "Debenture Event of Default"), the Corporation has
the right under the Junior Subordinated Indenture to defer the payment of
interest on the Junior Subordinated Debentures at any time or from time to
time for a period not exceeding 10 consecutive semi-annual periods with
respect to each Extension Period, provided that no Extension Period may
extend beyond the Stated Maturity of the Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures -- Debenture Events of
Default." As a consequence of any such deferral, semi-annual Distributions on
the Capital Securities by the Trust will be deferred (and the amount of
Distributions to which holders of the Capital Securities are entitled will
accumulate additional Distributions thereon at the rate of 8.343% per annum,
compounded semi-annually from the relevant payment date for such
Distributions) during any such Extension Period. During any such Extension
Period, the Corporation may not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Corporation's capital stock or (ii) make any
payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Corporation that rank pari
passu in all respects with or junior in interest to the Junior Subordinated
Debentures (other than (a) repurchases, redemptions or other acquisitions of
shares of capital stock of the Corporation in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit
of any one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or shareholder stock purchase plan or
in connection with the issuance of capital stock of the Corporation (or
securities convertible into or exercisable for such capital stock) as
consideration in an acquisition transaction entered into prior to the
applicable Extension Period, (b) as a result of an exchange or conversion of
any class or series of the Corporation's capital stock (or any capital stock
of an affiliate of the Corporation) for any class or series of the
Corporation's capital stock or of any class or series of the Corporation's
indebtedness for any class or series of the Corporation's capital stock, (c)
the purchase of fractional interests in shares of the Corporation's capital
stock pursuant to the conversion or exchange provisions of such capital stock
or the security being converted or exchanged, (d) any declaration of a
dividend in connection with the adoption of any shareholders' rights plan, or
the issuance of rights, stock or other property under any shareholders'
rights plan, or the redemption or repurchase of rights pursuant thereto, or
(e) any dividend in the form of stock, warrants, options or other rights
where the dividend stock or the stock issuable upon exercise of such
warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock).
Prior to the termination of any such Extension Period, the Corporation may
further defer the payment of interest on the Junior Subordinated Debentures,
provided that no Extension Period may exceed 10 consecutive semi-annual
periods or extend beyond the Stated Maturity of the Junior Subordinated
Debentures. Upon the termination of any Extension Period and the payment of
all interest then accrued and unpaid (together with interest thereon at the
annual rate of 8.343%, compounded semi-annually, to the extent permitted by
applicable law), the Corporation may elect to begin a new Extension Period
subject to the above conditions. There is no limitation on the number of
times that the Corporation may elect to begin an Extension Period. See
"Description of Capital Securities -- Distributions" and "Description of
Junior Subordinated Debentures -- Option to Extend Interest Payment Period."
Should an Extension Period occur, a holder of Capital Securities will
be required to accrue income (in the form of OID) in respect of its pro rata
share of the Junior Subordinated Debentures held by the Trust. As a result,
a holder of Capital Securities will be required to include such holder's
allocable share of the stated interest (and de minimus OID, if any) on the
Junior Subordinated Debentures in gross income for United States federal
income tax purposes in advance of the receipt of cash attributable to such
income, and will not receive the cash related to such income from the Trust
if the holder disposes of the Capital Securities prior to the record date for
the payment of Distributions with respect to such Extension Period. See
"Certain Federal Income Tax Consequences -- Interest Income and Original
Issue Discount" and "--Sales or Redemptions of Capital Securities."
The Corporation has no current intention of exercising its right to
defer payments of interest by extending the interest payment period on the
Junior Subordinated Debentures. However, should the Corporation elect to
exercise such right in the future, the market price of the Capital Securities
is likely to be affected. A holder that disposes of its Capital Securities
during an Extension Period, therefore, might not receive the same return on
its investment as a holder that continues to hold its Capital Securities. In
addition, as a result of the existence of the Corporation's right to defer
interest payments, the market price of the Capital Securities (which
represent undivided beneficial ownership interests in the assets of the
Trust) may be more volatile than the market prices of other similar
securities where the Issuer does not have such right to defer interest
payments.
Tax Event or Capital Treatment Event Redemption
Upon the occurrence and during the continuation of a Tax Event or
Capital Treatment Event, the Corporation has the right, subject to the
Corporation having received prior approval of the Federal Reserve to do so,
if such approval is then required under applicable Federal Reserve capital
guidelines or policies, to redeem the Junior Subordinated Debentures in whole
(but not in part) at any time within 90 days following the occurrence of such
Tax Event or Capital Treatment Event and thereby cause a mandatory redemption
of the Capital Securities. Any such redemption shall be at a price equal to
the Make-Whole Amount (as defined in "Description of Capital Securities --
Redemption"), together with accumulated Distributions to but excluding the
date fixed for redemption.
A "Tax Event" means the receipt by the Trust of an opinion of counsel
to the Corporation experienced in such matters to the effect that, as a
result of any amendment to, or change (including any announced proposed
change) in, the laws (or any regulations thereunder) of the United States or
any political subdivision or taxing authority thereof or therein, or as a
result of any official administrative pronouncement or action or judicial
decision interpreting or applying such laws or regulations, which amendment
or change is effective or which proposed change, pronouncement, action or
decision is announced on or after the date of issuance of the Capital
Securities by the Trust, there is more than an insubstantial risk that (i)
the Trust is, or will be within 90 days of the delivery of such opinion of
counsel, subject to United States federal income tax with respect to income
received or accrued on the Junior Subordinated Debentures, (ii) interest
payable by the Corporation on the Junior Subordinated Debentures is not, or
within 90 days of the delivery of such opinion of counsel will not be,
deductible by the Corporation, in whole or in part, for United States federal
income tax purposes or (iii) the Trust is, or will be within 90 days of the
delivery of such opinion of counsel, subject to more than a de minimis amount
of other taxes, duties or other governmental charges.
A "Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of the occurrence of any amendment to, or
change (including any announced proposed change) in, the laws (or any rules
or regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such
pronouncement, action or decision is announced on or after the date of
issuance of the Capital Securities, there is more than an insubstantial risk
that the Corporation will not be entitled to treat an amount equal to the
Liquidation Amount of the Capital Securities as "Tier 1 Capital" (or the then
equivalent thereof) for purposes of the capital adequacy guidelines of the
Federal Reserve, as then in effect and applicable to the Corporation.
Exchange of Capital Securities for Junior Subordinated Debentures
The Corporation, as the holder of all of the outstanding Common
Securities, has the right, subject to having received the prior approval of
the Federal Reserve to do so, if such approval is then required under
applicable Federal Reserve capital guidelines or policies, at any time to
dissolve the Trust and, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, cause the Junior Subordinated Debentures
to be distributed to the holders of the Capital Securities and Common
Securities in liquidation of the Trust. See "Description of Capital
Securities -- Liquidation Distribution Upon Dissolution."
Under current United States federal income tax law and
interpretations and assuming, as expected, that the Trust will not be taxable
as a corporation, a distribution of the Junior Subordinated Debentures upon a
liquidation of the Trust would not be a taxable event to holders of the New
Capital Securities. However, if a Tax Event were to occur that would cause
the Trust to be subject to United States federal income tax with respect to
income received or accrued on the Junior Subordinated Debentures, a
distribution of the Junior Subordinated Debentures by the Trust could be a
taxable event to the Trust and the holders of the Capital Securities. See
"Certain Federal Income Tax Consequences -- Distribution of Junior
Subordinated Debentures to Securityholders."
Market Prices
There can be no assurance as to the market prices for the Capital
Securities, or for Junior Subordinated Debentures that may be distributed in
exchange for Capital Securities if a liquidation of the Trust occurs.
Accordingly, the Capital Securities or the Junior Subordinated Debentures
that a holder of Capital Securities may receive on liquidation of the Trust
may trade at a discount to the price that the investor paid to purchase such
Capital Securities. See "Description of Junior Subordinated Debentures."
Rights Under the Guarantee
The First National Bank of Chicago will act as the trustee under the
New Guarantee (the "Guarantee Trustee") and will hold the New Guarantee for
the benefit of the holders of the Capital Securities. The First National
Bank of Chicago will also act as Debenture Trustee for the New Junior
Subordinated Debentures and acts as Property Trustee under the Trust
Agreement. The terms of the New Guarantee are substantially identical to
those of the Old Guarantee (the New Guarantee and the Old Guarantee being
referred to herein collectively as the "Guarantee"). The Guarantee guarantees
to the holders of the Capital Securities the following payments, to the
extent not paid by the Trust: (i) any accumulated and unpaid Distributionsfact required to
be paid on the Capital Securities, to the extent that the Trust
has funds on hand available therefor at such time, (ii) the Redemption Price
with respect to any Capital Securities called for redemption, to the extent
that the Trust has funds on hand available therefor at such time, and (iii)
upon a voluntarystated therein or involuntary dissolution, winding-up or liquidation of the
Trust (unless the Junior Subordinated Debentures are distributed to holders
of the Capital Securities), the lesser of (a) the aggregate of the
Liquidation Amount and all accumulated and unpaid Distributions to the date
of payment, to the extent that the Trust has funds on hand available therefor
at such time, and (b) the amount of assets of the Trust remaining available
for distribution to holders of the Capital Securities on liquidation of the
Trust after satisfaction of liabilities to creditors of the Trust as required
by applicable law. The Guarantee is subordinate as described under "--
Ranking of Subordinated Obligations Under the Guarantee and the Junior
Subordinated Debentures." The holders of not less than a majority in
aggregate Liquidation Amount of the outstanding Capital Securities have the
right to direct the time, method and place of conducting any proceeding for
any remedy available to the Guarantee Trustee in respect of the Guarantee or
to direct the exercise of any trust power conferred upon the Guarantee
Trustee under the Guarantee. In the event that the Guarantor has failed to
make a payment required under the Guarantee, any holder of the Capital
Securities may institute a legal proceeding directly against the Corporation
to enforce its rights under the Guarantee without first instituting a legal
proceeding against the Trust, the Guarantee Trustee or any other person or
entity. If the Corporation were to default on its obligation to pay amounts
payable under the Junior Subordinated Debentures, the Trust would lack funds
for the payment of Distributions or amounts payable on redemption of the
Capital Securities or otherwise, and, in such event, holders of the Capital
Securities would not be able to rely upon the Guarantee for payment of such
amounts. Instead, if a Debenture Event of Default has occurred and is
continuing and such event is attributable to the failure of the Corporation
to pay any amounts payable in respect of the Junior Subordinated Debentures
on the payment date on which such payment is due and payable, then a holder
of Capital Securities may institute a legal proceeding directly against the
Corporation for enforcement of payment to such holder of any amounts payable
in respect of such Junior Subordinated Debentures having a principal amount
equal to the aggregate Liquidation Amount of the Capital Securities of such
holder (a "Direct Action"). In connection with such Direct Action, the
Corporation will have a right of set-off under the Junior Subordinated
Indenture to the extent of any payment made by the Corporation to such holder
of Capital Securities in the Direct Action. Except as described herein,
holders of Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Junior Subordinated Debentures or
assert directly any other rights in respect of the Junior Subordinated
Debentures. See "Description of Junior Subordinated Debentures --
Enforcement of Certain Rights by Holders of Capital Securities," "--Debenture
Events of Default" and "Description of Guarantee." The Trust Agreement
provides that each holder of Capital Securities by acceptance thereof agrees
to the provisions of the Guarantee and the Junior Subordinated Indenture.
Limited Voting Rights
Holders of Capital Securities have limited voting rights relating
generally to the modification of the Capital Securities and the Guarantee and
the exercise of the Trust's rights as holder of Junior Subordinated
Debentures. Holders of Capital Securities are not entitled to appoint,
remove or replace the Property Trustee or the Delaware Trustee except upon
the occurrence of certain events described herein. The Trustees and the
holders of all of the Common Securities may, subject to certain conditions,
amend the Trust Agreement without the consent of holders of Capital
Securities to cure any ambiguity or make other provisions not inconsistent
with other provisions under the Trust Agreement or to ensure that the Trust
(i) will not be taxable as a corporation or as other than a grantor trust for
United States federal income tax purposes, or (ii) will not be required to
register as an "investment company" under the Investment Company Act. See
"Description of Capital Securities -- Voting Rights; Amendment of Trust
Agreement" and "--Removal of Trustees; Appointment of Successors."
Absence of Public Market for New Capital Securities
Although the New Capital Securities will generally be permitted to be
resold or otherwise transferred by the holders (who are not affiliates of the
Corporation or the Trust) without compliance with the registration
requirements under the Securities Act, they will constitute a new issue of
securities with no established trading market. Accordingly, no assurance can
be given that an active public or other market will develop for the New
Capital Securities or as to the liquidity of the trading market for the New
Capital Securities. The Corporation does not intend to apply for listing of
the New Capital Securities on any securities exchange or for quotation
through the National Association of Securities Dealers Automated Quotation
System.
If a public trading market develops for the New Capital Securities,
future trading prices of such securities will depend on many factors,
including, among other things, prevailing interest rates, the financial
condition and results of operations of the Corporation and the market for
similar securities.
Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of
the Securities Act) of the Corporation or the Trust may publicly offer for
sale or resell the New Capital Securities only in compliance with the
provisions of Rule 144 under the Securities Act.
Each broker-dealer that receives New Capital Securities for its own
account in exchange for Old Capital Securities, where such Old Capital
Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities, will be required to deliver a
prospectus in connection with any resale of such New Capital Securities. See
"Plan of Distribution."
Consequences of a Failure to Exchange Old Capital Securities
The Old Capital Securities have not been registered under the
Securities Act or any state securities laws and therefore may not be offered,
sold or otherwise transferred except in compliance with the registration
requirements of the Securities Act and any other applicable securities laws,
or pursuant to an exemption therefrom or in a transaction not subject
thereto, and in each case in compliance with certain other conditions and
restrictions. Old Capital Securities that remain outstanding after
consummation of the Exchange Offer will continue to bear a legend reflecting
such restrictions on transfer. In addition, upon consummation of the
Exchange Offer, holders of Old Capital Securities that remain outstanding
will not be entitled to any increase in the Distribution rate thereon or any
rights to have such Old Capital Securities registered under the Securities
Act (subject to certain limited exceptions). The Corporation and the Trust
do not intend to register under the Securities Act any Old Capital Securities
that remain outstanding after consummation of the Exchange Offer (subject to
such limited exceptions, if applicable).
The Old Capital Securities were issued to, and the Corporation
believes are currently owned by, a small number of beneficial owners. To the
extent that Old Capital Securities are tendered and accepted in connection
with the Exchange Offer, any trading market for Old Capital Securities that
remain outstanding after the Exchange Offer could be adversely affected.
Exchange Offer Procedures
Issuance of the New Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Trust of such Old Capital Securities, a properly completed and
duly executed Letter of Transmittal and all other required documents.
Therefore, holders of the Old Capital Securities desiring to tender such Old
Capital Securities in exchange for New Capital Securities should allow
sufficient time to ensure timely delivery. The Trust is under no duty to
give notification of defects or irregularities with respect to the tenders of
Old Capital Securities for exchange.
USE OF PROCEEDS
Neither the Corporation nor the Trust will receive any cash proceeds
from the issuance of the New Capital Securities offered hereby. The New
Capital Securities will be exchanged for Old Capital Securities of like
aggregate liquidation amount, which will be retired and cancelled. The cash
proceeds from the sale of the Old Capital Securities were used to purchase
the Old Junior Subordinated Debentures. The Corporation expects to use the
proceeds it received from the sale of the Old Junior Subordinated Debentures
for general corporate purposes, which may include the repayment of
indebtedness, repurchases of its outstanding common stock, investments in or
extensions of credit to its subsidiaries and the financing of possible
acquisitions. Pending such use, the net proceeds may be temporarily invested
in debt securities and other obligations. The precise amounts and timing of
the application of such proceeds will depend upon the funding requirements of
the Corporation and its subsidiaries and the availability of other funds.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Corporation's consolidated ratios
of earnings to fixed charges, calculated both excluding and including
interest on deposits. For the purpose of computing the consolidated ratios
of earnings to fixed charges, earnings represent consolidated income before
income taxes and cumulative effect of a change in accounting principle plus
fixed charges. Fixed charges excluding interest on deposits consist of
interest (other than on deposits), whether expensed or capitalized, and that
portion of rental expense (generally one-third) deemed representative of the
interest factor. Fixed charges including interest on deposits consist of the
foregoing items plus interest on deposits.
Six Months
Ended Year Ended December 31,
June 30, ------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------ -------------
Earnings to Fixed Charges:
Excluding Interest on Deposits . . . . . 2.72x 2.54x 2.30x 2.72x 4.15x 4.48x
Including Interest on Deposits . . . . . 1.47x 1.45x 1.45x 1.60x 1.71x 1.57x
The Corporation did not have any preferred stock outstanding during
the periods shown above.
REGULATORY TREATMENT
The Corporation is required by the Federal Reserve to maintain
certain levels of capital for bank regulatory purposes. The Corporation
expects that the Capital Securities will be treated as Tier 1 capital of the
Corporation for such purposes.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a
subsidiary of the Corporation and, accordingly, the accounts of the Trust
will be included in the consolidated financial statements of the Corporation.
The Capital Securities will be presented as part of debt and capitalized
lease obligations in the consolidated statement of financial condition.
Appropriate disclosure about the Junior Subordinated Debentures and the
Guarantee will be included in the notes to the consolidated financial
statements. For financial reporting purposes, the Corporation will record
Distributions payable on the Capital Securities as interest expense in the
consolidated statement of income.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation as of June 30, 1997. The following data should be read in
conjunction with the consolidated financial statements and notes thereto of
the Corporation which are incorporated herein by reference.
June 30, 1997
----------------------
(Dollars in thousands)
Long-Term Debt
Subordinated Notes . . . . . . . . . . . . . . $ 150,000
Subsidiary obligations . . . . . . . . . . . . 26,737
Guaranteed Preferred Beneficial Interests in
Corporation's Junior Subordinated Deferrable
Interest Debentures . . . . . . . . . . . 100,000
-------
Total long-term debt . . . . . . . . . . . . 276,737
Stockholders' Equity
Preferred stock, $5 par value; authorized and
unissued -- 50,000,000 shares . . . . . . . --
Common stock, $5 par value; authorized --
100,000,000 shares; issued -- 33,190,374
shares . . . . . . . . . . . . . . . . . . . 165,952
Surplus . . . . . . . . . . . . . . . . . . . 148,180
Retained earnings . . . . . . . . . . . . . . 451,771
Unrealized valuation adjustment . . . . . . . 827
Treasury stock, at cost (1,381,619 shares) . . (37,879)
June 30, 1997
----------------------
(Dollars in thousands)
Total stockholders' equity . . . . . . . . . 728,851
----------
Total long-term debt and stockholders' equity $1,005,588
==========
____________________
Guaranteed Preferred Beneficial Interests in Corporation's Junior
Subordinated Deferrable Interest Debentures reflects the Capital
Securities at their issue price. As described herein, the sole assets
of the Trust consist of $103,093,000 principal amount of the
Corporation's 8.343% Junior Subordinated Debentures which will mature
on July 1, 2027. The Corporation owns all of the Common Securities of
the Trust.
THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
In connection with the sale of the Old Capital Securities, the
Corporation and the Trust entered into a Registration Rights Agreement (the
"Registration Rights Agreement") with the Initial Purchaser of the Old
Capital Securities (the "Initial Purchaser"), pursuant to which the
Corporation and the Trust agreed to file and to use their reasonable efforts
to cause to become effective with the Commission a registration statement
with respect to the exchange of the Old Capital Securities for Capital
Securities with terms identical in all material respects to the terms of the
Old Capital Securities. A copy of the Registration Rights Agreement is an
exhibit to the Registration Statement of which this Prospectus is a part.
The Exchange Offer is being made to satisfy the contractual
obligations of the Corporation and the Trust under the Registration Rights
Agreement. The form and terms of the New Capital Securities are the same as
the form and terms of the Old Capital Securities except that the New Capital
Securities have been registered under the Securities Act and therefore will
not be subject to certain restrictions on transfer applicable to the Old
Capital Securities. In addition, upon consummation of the Exchange Offer,
holders of Old Capital Securities will not be entitled to any increase in the
Distribution rate thereon or any further registration rights under the
Registration Rights Agreement, except under certain limited circumstances.
See "Risk Factors--Consequences of a Failure to Exchange Old Capital
Securities" and "Description of Capital Securities."
As soon as practicable after the Expiration Date, the Corporation
will exchange the Old Guarantee for the New Guarantee and all of the Old
Junior Subordinated Debentures, of which $103,093,000 aggregate principal
amount is outstanding, for a like aggregate principal of the New Junior
Subordinated Debentures. The New Guarantee and New Junior Subordinated
Debentures have been registered under the Securities Act.
The Exchange Offer is not being made to, nor will the Trust accept
tenders for exchange from, holders of Old Capital Securities in any
jurisdiction in which the Exchange Offer or the acceptance thereof would not
be in compliance with the securities or blue sky laws of such jurisdiction.
Holders of Old Capital Securities do not have any appraisal or dissenters'
rights in connection with the Exchange Offer.
Unless the context requires otherwise, the term "holder" with respect
to the Exchange Offer means any person in whose name the Old Capital
Securities are registered on the books of the Trust or any other person who
has obtained a properly completed bond power from the registered holder, or
any person whose Old Capital Securities are held of record by The Depository
Trust Company who desires to deliver such Old Capital Securities by book-
entry transfer at The Depository Trust Company.
Terms of the Exchange
The Trust hereby offers, upon the terms and subject to the conditions
set forth in this Prospectus and in the accompanying Letter of Transmittal,
to exchange up to $100,000,000 aggregate liquidation amount of New Capital
Securities for a like aggregate liquidation amount of Old Capital Securities
properly tendered on or prior to the Expiration Date (as defined below) and
not properly withdrawn in accordance with the procedures described below.
The Trust will issue, promptly after the Expiration Date, $1,000 liquidation
amount of New Capital Securities in exchange for each $1,000 liquidation
amount of outstanding Old Capital Securities tendered and accepted in
connection with the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum liquidation
amount of Old Capital Securities being tendered. As of the date of this
Prospectus, $100,000,000 aggregate liquidation amount of the Old Capital
Securities is outstanding.
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set
forth herein or otherwise, certificates for any such unaccepted Old Capital
Securities will be returned, without expense, to the tendering holder thereof
promptly after the Expiration Date.
Holders who tender Old Capital Securities in connection with the
Exchange Offer will not be required to pay brokerage commissions or fees or,
subject to the instructions in the Letter of Transmittal, transfer taxes with
respect to the exchange of Old Capital Securities in connection with the
Exchange Offer. The Corporation will pay all charges and expenses, other
than certain applicable taxes described below, in connection with the
Exchange Offer. See "--Fees and Expenses."
Each holder who tenders Old Capital Securities will warrant and agree
in the Letter of Transmittal that it has full power and authority to tender,
exchange, sell, assign and transfer the tendered Old Capital Securities, that
the Trust will acquire good, marketable and unencumbered title to the
tendered Old Capital Securities, free and clear of all liens, restrictions,
charges and encumbrances, and that the Old Capital Securities tendered for
exchange are not subject to any adverse claims or proxies. The holder also
will warrant and agree that it will, upon request, execute and deliver any
additional documents deemed by the Trust or the Exchange Agent to be
necessary or desirable to complete the exchange, sale, assignment, and
transfer of the Old Capital Securities tendered pursuant to the Exchange
Offer.
The Trust reserves the right in its sole discretion to (a) purchase
or make offers for any Old Capital Securities that remain outstanding
subsequent to the Expiration Date, or, as set forth under "--Expiration Date;
Extensions; Amendments," to terminate the Exchange Offer and (b) to the
extent permitted by applicable law, purchase Old Capital Securities in the
open market, in privately negotiated transactions or otherwise. The terms of
any such purchases or offers may differ from the terms of the Exchange Offer.
Expiration Date; Extensions; Amendments
The term "Expiration Date" means 5:00 p.m., New York City time, on
_______ __, 1997 unless the Exchange Offer is extended by the Corporation and
the Trust (in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended).
The Corporation and the Trust expressly reserve the right in their
sole and absolute discretion, subject to applicable law, at any time and from
time to time, (i) to delay the acceptance of the Old Capital Securities for
exchange or to terminate the Exchange Offer (whether or not any Old Capital
Securities have theretofore been accepted for exchange) if the Corporation
and the Trust determine, in their sole and absolute discretion, that any of
the events or conditions referred to under "--Conditions to the Exchange
Offer" have occurred or exist or have not been satisfied, as the case may be,
(ii) to extend the Expiration Date of the Exchange Offer and retain all Old
Capital Securities tendered pursuant to the Exchange Offer, subject, however,
to the right of holders of Old Capital Securities to withdraw their tendered
Old Capital Securities as described under "--Withdrawal Rights," and (iii) to
waive any condition or otherwise amend the terms of the Exchange Offer in any
respect deemed by them to be advantageous to the holders of the Old Capital
Securities. If the Exchange Offer is amended in a manner determined by the
Corporation and the Trust to constitute a material change, or if the
Corporation and the Trust waive a material condition of the Exchange Offer,
the Trust will promptly disclose such amendment by means of a prospectus
supplement that will be distributed to the registered holders of the Old
Capital Securities, and the Corporation and the Trust will extend the
Exchange Offer to the extent required by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment
will be followed promptly by oral or written notice thereof to the Exchange
Agent and by making a public announcement thereof, and such announcement in
the case of an extension will be made no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration
Date. Without limiting the manner in which the Trust may choose to make any
public announcement and subject to applicable law, the Trust shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a release to an appropriate news agency.
Resales of New Capital Securities
The Trust is making the Exchange Offer for the Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance
of the Commission as set forth in certain interpretive letters addressed to
third parties in other transactions. However, neither the Corporation nor
the Trust sought its own interpretive letter and there can be no assurance
that the staff of the Division of Corporation Finance of the Commission would
make a similar determination with respect to the Exchange Offer as it has in
such interpretive letters to third parties. Based on these interpretations
by the staff of the Division of Corporation Finance, and subject to the two
immediately following sentences, the Corporation and the Trust believe that
New Capital Securities issued pursuant to this Exchange Offer in exchange for
Old Capital Securities may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Capital Securities
are acquired in the ordinary course of such holder's business and that such
holder is not participating, and has no arrangement or understanding with any
person to participate, in a distribution (within the meaning of the
Securities Act) of such New Capital Securities. However, any holder of Old
Capital Securities who is an "affiliate" of the Corporation or the Trust
(within the meaning of Rule 405 under the Securities Act) or who intends to
participate in the Exchange Offer for the purpose of distributing New Capital
Securities, or any broker-dealer who purchased Old Capital Securities from
the Trust to resell pursuant to Rule 144A or any other available exemption
under the Securities Act, (a) will not be able to rely on the interpretations
of the staff of the Division of Corporation Finance of the Commission set
forth in the above-mentioned interpretive letters, (b) will not be permitted
or entitled to tender such Old Capital Securities in the Exchange Offer and
(c) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any sale or other transfer of such Old
Capital Securities unless such sale is made pursuant to an exemption from
such requirements. In addition, as described below, if any broker-dealer
holds Old Capital Securities acquired for its own account as a result of
market-making or other trading activities and exchanges such Old Capital
Securities for New Capital Securities, then such broker-dealer must deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old
Capital Securities for New Capital Securities in the Exchange Offer will be
required to represent that (i) it is not an "affiliate" of the Corporation or
the Trust, (ii) any New Capital Securities to be received by it are being
acquired in the ordinary course of its business, (iii) it has no arrangement
or understanding with any person to participate in, and does not intend to
engage in, a distribution (within the meaning of the Securities Act) of such
New Capital Securities. In addition, the Corporation and the Trust may
require such holder, as a condition to such holder's eligibility to
participate in the Exchange Offer, to furnish to the Corporation and the
Trust (or an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the Exchange Act)
on behalf of whom such holder holds the Capital Securities to be exchanged in
the Exchange Offer. Any broker-dealer that receives New Capital Securities
for its own account pursuant to the Exchange Offer must acknowledge that it
acquired the Old Capital Securities for its own account as the result of
market-making activities or other trading activities and must agree that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Capital Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. Based on the position taken by the staff
of the Division of Corporation Finance of the Commission in the interpretive
letters referred to above, the Corporation and the Trust believe that broker-
dealers who acquired Old Capital Securities for their own accounts, as a
result of market-making activities or other trading activities
("Participating Broker-Dealers"), may use this Prospectus, as it may be
amended or supplemented from time to time, to fulfill their prospectus
delivery requirements with respect to the New Capital Securities received
upon exchange of such Old Capital Securities (other than Old Capital
Securities which represent an unsold allotment from the original sale of the
Old Capital Securities). Subject to certain provisions set forth in the
Registration Rights Agreement, the Corporation and the Trust have agreed that
this Prospectus, as it may be amended or supplemented from time to time, may
be used by a Participating Broker-Dealer in connection with resales of such
New Capital Securities for a period ending 180 days after the Registration
Statement of which this Prospectus constitutes a part is declared effective.
See "Plan of Distribution." Any Participating Broker-Dealer who is an
"affiliate" of the Corporation or the Trust may not rely on such interpretive
letters and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
Each Participating Broker-Dealer who surrenders Old Capital
Securities pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal, that, upon receipt of notice from the
Corporation or the Trust of the occurrence of any event or the discovery of
any fact which makes any statement contained or incorporated by reference in
this Prospectus untrue in any material respect or which causes this
Prospectus to omit to state a material fact necessary in order to make the statements contained or incorporated by reference herein,therein, in
light of the circumstances under which they were made, not misleading or
(ii) at the time and in the light of the circumstances under which it is
made, be false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein
not false or misleading or necessary
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to correct any statement in any earlier communication with respect to the
solicitation of a proxy for the SierraWest Shareholders' Meeting which has
become false or misleading. The Proxy Statement (except for such Participating
Broker-Dealerportions
thereof furnished in writing to SierraWest by BC or any Subsidiary of BC as
to which no warranty is made) will suspendcomply as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations of the SEC thereunder.
(g) Compliance with Applicable Laws. SierraWest and its Subsidiaries
hold, and at all relevant times have held, all permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities
which are material to the operation of the businesses of SierraWest and its
Subsidiaries, taken as a whole (the "SierraWest Permits"). SierraWest and
its Subsidiaries are in compliance and have complied with the terms of the
SierraWest Permits, except where the failure so to comply, individually or
in the aggregate, would not have a material adverse effect on SierraWest.
The businesses of SierraWest and its Subsidiaries are not being conducted
in violation of any law, ordinance or regulation of any Governmental
Entity, except for possible violations which, individually or in the
aggregate, do not, and, insofar as reasonably can be foreseen, in the
future will not, have a material adverse effect on SierraWest. Except for
routine examinations by Federal or state Governmental Entities charged with
the supervision or regulation of banks or bank holding companies or engaged
in the insurance of bank deposits ("Bank Regulators") or by the United
States Small Business Administration (the "SBA"), no investigation by any
Governmental Entity with respect to SierraWest or any of its Subsidiaries
is pending or threatened, and no proceedings by any Bank Regulator are
pending or threatened which seek to revoke or materially limit any of the
SierraWest Permits. Without limiting the generality of the foregoing
provisions of this Section 3.1(g), SierraWest and its Subsidiaries are in
compliance with and have been in compliance with any applicable federal or
state insurance or securities law, or other rule, regulation, guidelines or
policy statements of any Governmental Entity, as to all insurance and/or
securities products offered or sold by SierraWest or its Subsidiaries for
its own account or the account of others, including but not limited to
annuity products. SWB is approved to conduct operations as a "Preferred
Lender" by the SBA under the Small Business Administration Act of 1953 (the
"SBA Act") and the SBA's rules and regulations at each of its offices
except for those offices listed in Section 3.1(g) of the SierraWest
Disclosure Schedule. All loans originated by SWB under the SBA's loan
guarantee program have been originated in full compliance with the rules
and regulations of the SBA and the SBA Act except to the extent that any
noncompliance would not be reasonably likely to result in a material
adverse effect with respect to SierraWest. Neither SierraWest nor any of
its Subsidiaries has received any notice from the SBA which calls into
question SierraWest and its Subsidiaries' compliance with the rules and
regulations of the SBA in any respect. Except as described in Section
3.1(g) of the SierraWest Disclosure Schedule, the SBA has not given to
SierraWest or any of its Subsidiaries notice that it will not honor its
guarantee with respect to any loan originated by any of them which loan is
on the books of SierraWest or its Subsidiaries as of the date hereof or is
the subject of any securitization heretofore consummated.
(h) Litigation. Except as set forth in Section 3.1(h) of the
SierraWest Disclosure Schedule, there is no suit, action, proceeding,
arbitration or investigation ("Litigation") pending to which SierraWest or
any Subsidiary of SierraWest is a party or by which any of such persons or
their respective assets may be bound or, to
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the best knowledge of SierraWest, threatened against or affecting
SierraWest or any Subsidiary of SierraWest, or challenging the validity or
propriety of the transactions contemplated hereby which, if adversely
determined, would, individually or in the aggregate, have or reasonably be
expected to have a material adverse effect on SierraWest or on the ability
of SierraWest to perform its obligations under this Agreement or the Stock
Option Agreement in a timely manner, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against SierraWest or any Subsidiary of SierraWest.
(i) Taxes. SierraWest and each of its Subsidiaries have timely filed
all tax returns required to be filed by any of them and all such tax
returns are correct and complete in all material respects. SierraWest and
each of its Subsidiaries have timely paid (or SierraWest has paid on their
behalf), or have set up an adequate reserve for the payment of, all taxes
required to be paid (whether or not shown as due on such returns), and the
most recent financial statements that have been delivered to BC reflect an
adequate reserve (other than reserves for deferred taxes established to
reflect differences between tax and book basis of assets and liabilities)
for all taxes accrued but not yet due and owing, by SierraWest and its
Subsidiaries accrued through the date of such financial statements.
SierraWest and its Subsidiaries file tax returns in all jurisdictions where
required to file tax returns. No material deficiencies for any taxes have
been proposed, asserted or assessed against SierraWest or any of its
Subsidiaries that are not adequately reserved for (other than reserves for
deferred taxes established to reflect differences between tax and book
basis of assets and liabilities). Except as set forth in Section 3.1(i) of
the SierraWest Disclosure Schedule: (i) there are no liens with respect to
taxes upon any of the assets or properties of SierraWest and its
Subsidiaries, other than with respect to taxes not yet due and payable,
(ii) no material issue relating to taxes of SierraWest and its Subsidiaries
has been raised in writing by any taxing authority in any audit or
examination which can result in a proposed adjustment or assessment by a
governmental authority in a taxable period (or portion thereof) ending on
or before the Closing Date nor to the best knowledge of SierraWest does any
basis exist for the raising of any such issue, (iii) SierraWest and its
Subsidiaries have duly and timely withheld from all payments (including
employee salaries, wages and other compensation) and paid over to the
appropriate taxing authorities all amounts required to be so withheld and
paid over for all periods for which the statute of limitations has not
expired under all applicable laws and regulations, (iv) as of the Closing
Date, none of SierraWest nor any of its Subsidiaries shall be a party to,
be bound by or have any obligation under, any tax sharing agreement or
similar contract or arrangement or any agreement that obligates any of them
to make any payment computed by reference to the taxes, taxable income or
taxable losses of any other person, (v) there is no contract or agreement,
plan or arrangement by SierraWest or any of its Subsidiaries covering any
person that, individually or collectively, could give rise to the payment
of any amount that would not be deductible by SierraWest or any of its
Subsidiaries by reason of Section 280G of the Code, (vi) SierraWest and its
Subsidiaries have collected all material sales and use taxes required to be
collected, and have remitted, or will remit on a timely basis, such amounts
to the appropriate governmental authorities, or have been furnished
properly completed exemption certificates and have maintained all such
records and supporting documents in the manner required by all applicable
sales and use tax statutes and regulations for all periods for which the
statute of limitations has not expired, (vii) neither SierraWest nor any of
its Subsidiaries has been a United States real property holding corporation
within the
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meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code, and (viii) none of
SierraWest nor any of its Subsidiaries (A) has been a member of an
affiliated group (other than the group to which they are currently members)
filing a consolidated federal income tax return or (B) has any liability
for the taxes of any person (other than the members of such current group)
under Treasury Regulation Section 1.1502-6(a) (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract,
or otherwise. For the purpose of this Agreement, the term "tax" (including,
with correlative meaning, the terms "taxes" and "taxable") shall include,
except where the context otherwise requires, all Federal, state, local and
foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, custom, duty,
capital stock, ad valorem, value added, estimated, stamp, alternative,
environmental, any taxes imposed under Subchapter H of Chapter I of
Subtitle A of the Code, and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions
imposed with respect to such amounts. As used in this Agreement, the term
"Tax return" shall mean any return, declaration, report, claim for refund
or information return or statement relating to taxes, including any
schedule or attachment thereto, and including any amendment thereof.
Neither SierraWest nor any of its Subsidiaries has filed a consent to the
application of Section 341(f) of the Code.
(j) Certain Agreements. Section 3.1(j) of the SierraWest Disclosure
Schedule sets forth a listing of all of the following contracts and other
agreements, oral or written (which are currently in force or which may in
the future be operative in any respect) to which SierraWest or any of its
Subsidiaries is a party or by or to which SierraWest or any of its
Subsidiaries or any of their respective assets or properties are bound or
subject: (i) consulting agreements not terminable on six months or less
notice involving the payment of more than $25,000 per annum, or union,
guild or collective bargaining agreements covering any employees in the
United States, (ii) agreements with any officer or other key employee of
SierraWest or any of its Subsidiaries (x) providing any term of employment
or (y) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving
SierraWest of the nature contemplated by this Agreement, (iii) any
agreement or plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or the value of any
of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement, (iv) contracts and other
agreements for the sale or lease (other than where SierraWest or any of New Capital Securitiesits
Subsidiaries is a lessor) of any assets or properties (other than in the
ordinary course of business) or for the grant to any person (other than to
SierraWest or any of its Subsidiaries) of any preferential rights to
purchase any assets or properties, (v) contracts and other agreements
relating to the acquisition by SierraWest or any of its Subsidiaries of any
operating business or entity or any interest therein, (vi) contracts or
other agreements under which SierraWest or any of its Subsidiaries agrees
to indemnify any party, other than in the ordinary course of business,
consistent with past practice, or to share a tax liability of any party,
(vii) contracts and other agreements containing covenants restricting
SierraWest or any of its Subsidiaries from competing in any line of
business or with any person in any geographical area or requiring
SierraWest or any of its Subsidiaries to engage in any line of business,
(viii) contracts or other agreements (other than contracts in the ordinary
course of their banking business) relating to the borrowing of money by
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117
SierraWest or any of its Subsidiaries, or the direct or indirect guaranty
by SierraWest or any of its Subsidiaries of any obligation for, or an
agreement by SierraWest or any of its Subsidiaries to service, the
repayment of borrowed money, or any other contingent obligations of
SierraWest or any of its Subsidiaries in respect of indebtedness of any
other person, and (ix) any other material contract or other agreement
whether or not made in the ordinary course of business, including any
contract required to be filed by SierraWest pursuant to this Prospectus untilItem 601(b)(10) of
Regulation S-K of the CorporationSEC. There have been delivered or the Trust has amended or
supplemented this Prospectusmade available to
correct such misstatement or omissionBC true and has
furnishedcomplete copies of the amended or supplemented Prospectus to such
Participating Broker-Dealer or the Corporation or the Trust has given notice
that the saleall of the New Capital Securities may be resumed,contracts and other agreements
set forth in Section 3.1(j) of the SierraWest Disclosure Schedule or in any
other Section of the SierraWest Disclosure Schedule. Except as set forth in
Section 3.1(j) of the SierraWest Disclosure Schedule, each such contract
and other agreement is in full force and effect and constitutes a legal,
valid, and binding obligation of SierraWest or its Subsidiaries, as the
case may be.
Acceptance for Exchangebe, and Issuanceto the best knowledge of New Capital Securities
UponSierraWest, each other party
thereto, enforceable in accordance with its terms. Neither SierraWest nor
any Subsidiary of SierraWest has received any notice, whether written or
oral, of termination or intention to terminate from any other party to such
contract or agreement. None of SierraWest or any of its Subsidiaries or (to
the termsbest knowledge of Sierra West) any other party to any such contract or
agreement is in violation or breach of or default under any such contract
or agreement (or with or without notice or lapse of time or both, would be
in violation or breach of or default under any such contract or agreement),
which violation, breach, or default has had or would have, individually or
in the aggregate, a material adverse effect on SierraWest.
(k) Benefit Plans.
(i) Section 3.1(k) of the SierraWest Disclosure Schedule contains a
true and complete list of each "employee benefit plan" (within the meaning
of section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), including, without limitation, multiemployer plans
(within the meaning of ERISA section 3(37)), and all stock purchase, stock
option, severance, employment, change-in-control, fringe benefit,
collective bargaining, bonus, incentive, deferred compensation, employee
stock ownership, retirement, profit sharing and all other employee benefit
plans, agreements, programs, policies or other arrangements, whether or not
subject to the conditions of the Exchange Offer,
the Trust will exchange,ERISA, and will issue to the Exchange Agent, New Capital
Securities for Old Capital Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under "--Withdrawal Rights")
promptly after the Expiration Date.
Subject to the terms and conditions of the Exchange Offer, the Trust
will be deemed to have accepted for exchange, and thereby exchanged, Old
Capital Securities validly tendered and not withdrawn as, if and when the
Trust giveswhether formal or informal, oral or written notice to(all the
Exchange Agent of the Trust's
acceptance of such Old Capital Securities for exchange pursuant to the
Exchange Offer. The Exchange Agent will act as agent for the Trust for the
purpose of receiving tenders of Old Capital Securities, Letters of
Transmittal and related documents, and as agent for tendering holders for the
purpose of receiving Old Capital Securities, Letters of Transmittal and
related documents and transmitting New Capital Securities to validly
tendering holders. Such exchange will be made promptly after the Expiration
Date. If for any reason whatsoever, acceptance for exchange or the exchange
of any Old Capital Securities tendered pursuant to the Exchange Offer is
delayed (whether before or after the Trust's acceptance for exchange of Old
Capital Securities) or the Corporation and the Trust extend the Exchange
Offerforegoing being herein called "Benefit Plans"), that are sponsored or are
unablebeing maintained or contributed to, accept for exchange or exchange Old Capital Securities
tendered pursuantrequired to the Exchange Offer, then, without prejudicebe contributed to, the
Corporation'sby
SierraWest or the Trust's rights set forth herein, the Exchange Agent may,
nevertheless, on behalfany of the Trust andits Subsidiaries (the "SierraWest Benefit Plans"). No
SierraWest Benefit Plan is a multiemployer plan or is subject to Rule 14e-1(c) under the
Exchange Act, retain tendered Old Capital Securitiesa
collective bargaining agreement.
(ii) With respect to each SierraWest Benefit Plan, SierraWest has
delivered to BC a current, accurate and such Old Capital
Securities may not be withdrawn exceptcomplete copy (or, to the extent tendering holders are
entitledno
such copy exists, an accurate description) thereof and, to withdrawal rightsthe extent
applicable, (A) any related trust agreement or other funding instrument;
(B) the most recent determination letter; (C) any summary plan description
and other written communications (or a description of any oral
communications) by SierraWest or any of its Subsidiaries to any of their
respective employees concerning the extent of the benefits provided under
any SierraWest Benefit Plan; and (D) except as described under "--Withdrawal Rights."
Proceduresin Section 3.1(k)
of the SierraWest Disclosure Schedule, for Tendering Old Capital Securities
Valid Tender. Except as set forth below,the two most recent years (I)
the Form 5500 and attached schedules; (II) audited financial statements;
and (III) actuarial valuation reports.
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(iii) (A) Each SierraWest Benefit Plan has been established and
administered in order for Old Capital
Securitiesaccordance with its terms, and in compliance with the
applicable provisions of ERISA, the Code and other applicable laws, rules
and regulations; (B) each SierraWest Benefit Plan which is intended to be
validly tendered pursuantqualified within the meaning of Code section 401(a) is so qualified and has
received a favorable determination letter as to its qualification and
nothing has occurred, whether by action or failure to act, which would
cause the loss of such qualification; (C) with respect to any SierraWest
Benefit Plan, no audits, actions, suits or claims (other than routine
claims for benefits in the ordinary course) are pending or threatened, and
no facts or circumstances exist which could give rise to any such audits,
actions, suits or claims; (D) neither SierraWest nor any other party has
engaged in a prohibited transaction which could subject SierraWest or any
of its Subsidiaries, or the Surviving Corporation to any taxes, penalties
or other liabilities under Code section 4975 or ERISA sections 409 or
502(i); (E) no event has occurred and no condition exists that could
subject SierraWest or any of its Subsidiaries, or the Surviving
Corporation, either directly or by reason of any such entity's affiliation
with any member of any such entity's Controlled Group (defined as any
organization which is a member of a controlled group of organizations
within the meaning of Code sections 414(b), (c), (m) or (o)), to any tax,
fine, liability or penalty imposed by ERISA, the Code or other applicable
laws, rules and regulations; (F) all insurance and Pension Benefit Guaranty
Corporation ("PBGC") premiums required to be paid with respect to
SierraWest Benefit Plans through the Closing Date have been or will be paid
prior thereto and adequate reserves will have been provided for on
SierraWest's consolidated statement of financial condition as of the month
end immediately prior to the Exchange Offer, a properly
completed and duly executed Letter of TransmittalClosing Date for any premiums (or facsimileportions
thereof),
with any required signature guarantees and any other required documents, must
be received by the Exchange Agent at one of its addresses set forth under "--
Exchange Agent," and one of the following must apply: (i) tendered Old
Capital Securities must be received by the Exchange Agent, or (ii) such Old
Capital Securities must be tendered pursuant attributable to the procedures for book-entry
transfer set forth below and a book-entry confirmation must be received by
the Exchange Agent, in each caseservice on or prior to the ExpirationClosing Date; (G) all
contributions required to be made prior to the Closing Date under the terms
of each SierraWest Benefit Plan, the Code, ERISA or (iii)
the guaranteed delivery procedures set forth below mustother applicable laws,
rules and regulations have been or will be complied with.
If less than alltimely made and adequate
reserves will have been provided for on SierraWest's consolidated statement
of financial condition as of the Old Capital Securities are tendered, a
tendering holder should fill in the amount of Old Capital Securities being
tendered in the appropriate box on the Letter of Transmittal. The entire
amount of Old Capital Securities deliveredmonth end immediately prior to the Exchange Agent will be
deemedClosing
Date for all benefits attributable to have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book Entry Transfer. The Exchange Agent will establish an account
with respect to the Old Capital Securities at The Depository Trust Company
("DTC") for purposes of the Exchange Offer within two business days after the
date of this Prospectus. Any financial institution that is a participant in
DTC's book-entry transfer facility system may make a book-entry delivery of
the Old Capital Securities by causing DTC to transfer such Old Capital
Securities into the Exchange Agent's account at DTC in accordance with DTC's
procedures for transfers. However, although delivery of Old Capital
Securities may be effected through book-entry transfer into the Exchange
Agent's account at DTC, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees
and any other required documents, must in any case be delivered to and
received by the Exchange Agent at its address set forth under "--Exchange
Agent"service on or prior to the Expiration Date.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates forClosing
Date; (H) no SierraWest Benefit Plan has incurred any "accumulated funding
deficiency" as such term is defined in ERISA section 302 and (including,
but not limited to the Old Capital Securities
needvoting of any securities held pursuant to a
SierraWest Benefit Plan) Code section 412 (whether or not be endorsedwaived); and signature guarantees on(I)
the Letterconsummation of Transmittal
are unnecessary unless (a) a certificate for the Old Capital Securities is
registeredthis Agreement will not result in a name other than thatnonexempt
prohibited transaction or a breach of the person surrendering the
certificate or (b) such registered holder completes the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" in the Letter of
Transmittal. In the case of (a) or (b) above, such certificates for Old
Capital Securities must be duly endorsed or accompanied by a properly
executed bond power, with the endorsement or signature on the bond power and
on the Letter of Transmittal guaranteed by a firm or other entity identified
in Rule 17Ad-15fiduciary duty under the Exchange ActERISA.
(iv) Except as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank;
(ii) a broker, dealer, municipal securities broker or dealer or government
securities broker or dealer; (iii) a credit union; (iv) a national securities
exchange, registered securities association or clearing agency; or (v) a
savings association that is a participant in a Securities Transfer
Association (each, an "Eligible Institution"), unless surrendered on behalf
of such Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
Guaranteed Delivery. If a holder desires to tender Old Capital
Securities pursuant to the Exchange Offer and the certificates for such Old
Capital Securities are not immediately available or time will not permit all
required documents to reach the Exchange Agent on or before the Expiration
Date, or the procedures for book-entry transfer cannot be completed on a
timely basis, such Old Capital Securities may nevertheless be tendered,
provided that all of the following guaranteed delivery procedures are
complied with:
(i) such tenders are made by or through an Eligible
Institution;
(ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form accompanying the
Letter of Transmittal, is received by the Exchange Agent, as provided
below, on or prior to Expiration Date; and
(iii) the certificates (or a book-entry confirmation)
representing all tendered Old Capital Securities, in proper form for
transfer, together with a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature
guarantees and any other documents required by the Letter of
Transmittal, are received by the Exchange Agent within five New York
Stock Exchange trading days after the date of execution of such
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand,
transmitted by facsimile or mailed to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such notice.
Notwithstanding any other provisions hereof,Section 3.1(k)(iv) of the delivery of New
Capital Securities in exchange for Old Capital Securities tendered and
accepted for exchange pursuant to the Exchange Offer will in all cases be
made only after timely receipt by the Exchange Agent of Old Capital
Securities, or of a book-entry confirmationSierraWest
Disclosure Schedule, with respect to such Old Capital
Securities, and a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees and
any other documents required by the Letter of Transmittal. Accordingly, the
delivery of New Capital Securities might not be made to all tendering holders
at the same time, and will depend upon when Old Capital Securities, book-
entry confirmations with respect to Old Capital Securities and other required
documents are received by the Exchange Agent.
The Trust's acceptance for exchange of Old Capital Securities
tendered pursuant to anyeach of the procedures described above will constitute a
binding agreement between the tendering holder, the Trust and the Corporation
upon the terms andSierraWest Benefit Plans
which is subject to the conditionsTitle IV of ERISA, as of the Exchange Offer.
DeterminationClosing Date, the assets
of Validity. All questions aseach such Plan shall be at least equal in value to the formpresent value of
documents, validity, eligibility (including timethe accrued benefits (vested and unvested) of receipt)the participants in such Plan
on a termination and acceptance
for exchange of any tendered Old Capital Securities will be determined byprojected basis, based on the Trust, in its sole discretion, whose determination shall be finalactuarial methods and
binding
on all parties. The Trust reserves the absolute right, in its sole and
absolute discretion, to reject any and all tenders determined by it not to be
in proper form or the acceptance of which, or exchange for which, may,assumptions indicated in the view of counsel to the Trust, be unlawful. The Trust also reserves the
absolute right, subject to applicable law, to waive any of the conditions of
the Exchange Offermost recent actuarial valuation reports.
(v) Except as set forth under "--Conditionson Section 3.1(k)(v) of the SierraWest
Disclosure Schedule, no SierraWest Benefit Plan exists which provides for
an increase in benefits on or after the Closing Date or could result in the
payment to the Exchange Offer"any employee of SierraWest or any condition or irregularity in any tender of Old Capital Securitiesits Subsidiaries of any
particular holder whethermoney or not similar conditionsother property or irregularities are
waived in the case ofrights or accelerate or provide any other holders.
The Trust's interpretationrights
or benefits to any such employee as a result of the terms and conditionstransactions
contemplated by this Agreement. The aggregate amount of the
Exchange Offer (including the Letter of Transmittalpayments
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119
due from SierraWest under all such contracts and the instructions
thereto) will be final and binding. No tender of Old Capital Securities will
be deemed to have been validly made until all irregularities with respect toamount due under each
such tender have been cured or waived. Neithercontract, at the Trust, any affiliates or
assigns of the Trust, the Exchange Agent nor any other person shall be under
any duty to give any notification of any irregularities in tenders or incur
any liability for failure to give such notification.
If any Letter of Transmittal, endorsement, bond power, power of
attorney, or any other document required by the Letter of Transmittal is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
unless waived by the Trust, proper evidence satisfactory to the Trust, in its
sole discretion, of such person's authority to so act must be submitted.
A beneficial owner of Old Capital Securities thatEffective Time, are held by or
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
Withdrawal Rights
Except as otherwise provided herein, tenders of Old Capital
Securities may be withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic,
telex or facsimile transmission of such notice of withdrawal must be timely
received by the Exchange Agent at one of its addresses set forth under "--
Exchange Agent" on or prior to the Expiration Date. Any such notice of
withdrawal must specify the name of the person who tendered the Old Capital
Securities to be withdrawn, the aggregate principal amount of Old Capital
Securities to be withdrawn, and (if certificates for such Old Capital
Securities have been tendered) the name of the registered holder of the Old
Capital Securities as set forth in the Old Capital Securities, if different
from thatschedule
included in Section 3.1(k)(v) of the person who tendered such Old Capital Securities. If Old
Capital Securities have been delivered or otherwise identified to the
Exchange Agent, then prior to the physical releaseSierraWest Disclosure Schedule. None
of such Old Capital
Securities,payments will constitute an "excess parachute" payment within the
tendering holder must submitmeaning of Code section 280G.
(l) Subsidiaries. Section 3.1(l) of the serial numbers shown onSierraWest Disclosure
Schedule lists all the particular Old Capital Securities to be withdrawnSubsidiaries of SierraWest. SierraWest owns,
directly or indirectly, beneficially and of record 100% of the signature onissued and
outstanding voting securities of each such Subsidiary. All of the noticeshares of
withdrawal must be guaranteedcapital stock of each of the Subsidiaries held by an Eligible Institution, exceptSierraWest or by another
of its Subsidiaries are fully paid and nonassessable and are owned by
SierraWest or one of its Subsidiaries free and clear of any lien, claim or
other encumbrance. Neither SierraWest nor any of its Subsidiaries owns any
shares of capital stock or other equity securities of any person (other
than, in the case of Old Capital Securities tendered forSierraWest, the accountcapital stock of an Eligible
Institution. If Old Capital Securities have been tendered pursuant toits Subsidiaries and,
in the procedures for book-entry transfer set forth above under "--Procedures for
Tendering Old Capital Securities," the notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawal of
Old Capital Securities, in which case a notice of withdrawal will be
effective if delivered to the Exchange Agent by written, telegraphic, telex
or facsimile transmission. Withdrawals of tenders of Old Capital Securities
may not be rescinded. Old Capital Securities properly withdrawn will not be
deemed validly tendered for purposes of the Exchange Offer, but may be
retendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described above under "--Procedures for
Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including
time of receipt) of such withdrawal notices will be determined by the Trust,Subsidiaries, shares or equity securities acquired in
its sole discretion, whose determination shall be final and binding on all
parties. Neither the Trust, any affiliates or assignssatisfaction of the Trust, the
Exchange Agent nor any other person shall be under any duty to give any
notification of any irregularitiesdebts previously contracted in any notice of withdrawal or incur any
liability for failure to give any such notification. Any Old Capital
Securities which have been tendered but which are withdrawn will be returned
to the holder thereof promptly after withdrawal.
Distributions on the New Capital Securities
Each New Capital Security will pay cumulative Distributions from the
most recent Distribution Date on the Old Capital Securities surrendered in
exchange for such New Capital Securities or, if no Distributions have been
paid on such Old Capital Securities, from June 30, 1997. Holders of the Old
Capital Securities whose Old Capital Securities are accepted for exchange
will not receive accumulated Distributions on such Old Capital Securities for
any period from and after the last Distribution Date on such Old Capital
Securities prior to the original issue date of the New Capital Securities or,
if no such Distributions have been paid, will not receive any accumulated
Distributions on such Old Capital Securities, and will be deemed to have
waived the right to receive any Distributions on such Old Capital Securities
accumulated from and after June 30, 1997.
Conditions to the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Trust will not be required to accept for
exchange, or to exchange, any Old Capital Securities for any New Capital
Securities, and, as described below, may terminate the Exchange Offer
(whether or not any Old Capital Securities have theretofore been accepted for
exchange) or may waive any conditions to or amend the Exchange Offer, if any
of the following conditions have occurred or exists:
(a) there shall occur a change in the current
interpretation by the staff of the Commission which permits the New
Capital Securities issued pursuant to the Exchange Offer in exchange
for Old Capital Securities to be offered for resale, resold and
otherwise transferred by holders thereof (other than broker-dealers
and any such holder which is an "affiliate" of the Corporation or the
Trust within the meaning of Rule 405 under the Securities Act)
without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Capital
Securities are acquiredgood faith in the ordinary
course of such holders'
business and such holders have no arrangementtheir banking business).
(m) Agreements with Bank or Other Regulators. Except as set forth in
Section 3.1(m) of the SierraWest Disclosure Schedule, neither SierraWest
nor any Subsidiary of SierraWest is a party to any written agreement or
memorandum of understanding with, or a party to any personcommitment letter or
similar undertaking to, participate inor is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted any
board resolutions at the distributionrequest of, such New Capital
Securities;
(b) any actionBank Regulator or proceeding shall have been institutedthe SBA or threatenedthe
U.S. Department of Agriculture which restricts materially the conduct by
SierraWest and its Subsidiaries of their businesses, or in any courtmanner
relates to their capital adequacy, credit policies, loan underwriting or
documentation or management, nor has SierraWest or any such Subsidiary been
advised by or before any governmental agency or
body with respect to the Exchange Offer which, in the Trust's
judgment, would reasonably be expected to impair the ability of the
TrustBank Regulator or the Corporation to proceed with the Exchange Offer;
(c) any law, statute, rule or regulation shall have been
adopted or enacted which, in the Trust's judgment, would reasonably
be expected to impair the ability of the TrustSBA or the Corporation to
proceed withU.S. Department of
Agriculture that it is contemplating issuing or requesting (or is
considering the Exchange Offer;
(d) a banking moratorium shall have been declared by United
States federalappropriateness of issuing or New Yorkrequesting) any such order,
decree, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or Hawaii state authorities which, in the
Trust's judgment, would reasonably be expected to impair the ability
of the Trust or the Corporation to proceed with the Exchange Offer;
(e) trading on the New York Stock Exchange or generally in
the over-the-counter market shall have been suspended by order of the
Commissionsimilar submission, or any other governmental authority which, in the Trust's
judgment, would reasonably be expected to impair the abilitysuch board
resolutions.
(n) Absence of the
TrustCertain Changes or the Corporation to proceed with the Exchange Offer;
(f) a stop order shall have been issued by the Commission
or any state securities authority suspending the effectiveness of the
Registration Statement or proceedings shall have been initiated or,
to the knowledge of the Corporation or the Trust, threatened for that
purpose or any governmental approvalEvents. Since September 30, 1998,
there has not been obtained, which
approval the Trust shall, in its sole discretion, deem necessary for
the consummation of the Exchange Offer as contemplated hereby; or
(g) any change, or any developmentevent involving a prospective change,
in the business, financial condition or financial affairsresults of the Corporationoperations or prospects
of SierraWest or any of its subsidiariesSubsidiaries which has had, or would be
reasonably likely to have, a material adverse effect on SierraWest. Except
as set forth in Section 3.1(n) of the SierraWest Disclosure Schedule, since
September 30, 1998, SierraWest and each of its Subsidiaries have conducted
their respective businesses in the ordinary course consistent with their
past practices and neither SierraWest nor any of its Subsidiaries has taken
any action or entered into any transaction, and no event has occurred, which,that
would have required BC's consent pursuant to Section 4.1 of this Agreement
if such action had been taken, transaction entered into or event had
occurred, in each case, after the date of this Agreement, nor has
SierraWest or any of its Subsidiaries entered into any agreement, plan or
arrangement to do any of the foregoing.
(o) Undisclosed Liabilities. Except (i) for those liabilities or
obligations that are fully reflected or reserved against in the
sole judgmentconsolidated statement of financial condition at December 31, 1998 of
SierraWest referred to in Section 3.1(d) or (ii) for liabilities or
obligations incurred in the ordinary course of business consistent
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with past practice since December 31, 1998 and which are not material to
SierraWest and its Subsidiaries taken as a whole, none of SierraWest or any
of its Subsidiaries has incurred any liability or obligation of any nature
whatsoever (whether absolute, accrued or contingent or otherwise and
whether due or to become due) that, either alone or when combined with all
similar liabilities or obligations, has had, or would have, a material
adverse effect on SierraWest. Without limiting the generality of the
Trust, mightforegoing, neither SierraWest nor any Subsidiary has any liabilities
(whether or not required to be accrued or disclosed under SFAS No. 5)
relating to or arising from its securitizations of SBA guaranteed loans
except as described in Section 3.1(o) of the SierraWest Disclosure
Schedule. No agreement pursuant to which any loans or other assets have
been or will be sold by SierraWest or any Subsidiary entitle the buyer of
such loans or other assets, unless there is material breach of a
representation or covenant by SierraWest or its Subsidiaries not relating
to the payment or other performance by an obligor of such loan or other
asset of its obligations thereunder, to cause SierraWest or its
Subsidiaries to repurchase such loan or other asset or the buyer to pursue
any other form of recourse against SierraWest or its Subsidiaries.
(p) Governmental Reports. SierraWest and each of its Subsidiaries
have timely filed all material reports, registrations and statements,
together with any amendments required to be made with respect thereto, that
they were required to file since January 1, 1995 with any Governmental
Entity and have paid all fees and assessments due and payable in connection
therewith. Except as set forth in Section 3.1(p) of the SierraWest
Disclosure Schedule and except for normal examinations conducted by a
Governmental Entity in the regular course of business of SierraWest and its
Subsidiaries, no Governmental Entity has initiated any proceeding or, to
the best knowledge of SierraWest, investigation into the business or
operations of SierraWest or any of its Subsidiaries since January 1, 1995.
Except as set forth in Section 3.1(p) of the SierraWest Disclosure
Schedule, there is no material unresolved violation, criticism or exception
by any Governmental Entity with respect to any report or statement relating
to any examinations of SierraWest or any of its Subsidiaries.
(q) Environmental Liability. Except as set forth in Section 3.1(q) of
the SierraWest Disclosure Schedule, there are no legal, administrative,
arbitral or other proceedings, claims, actions, causes of action, private
environmental investigations or remediation activities or governmental
investigations of any nature seeking to impose, or that is reasonably
likely to result in the imposition, on SierraWest or any of its
Subsidiaries of any liability or obligation arising under common law
standards relating to environmental protections, human health or safety, or
under any local, state or federal environmental statute, regulation or
ordinance, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (collectively,
the "Environmental Laws"), pending or, to the best knowledge of SierraWest,
threatened, against SierraWest or any of its Subsidiaries, which liability
or obligation, individually or in the aggregate, would have or would be
reasonably likely to have a material adverse effect on SierraWest. To the
best knowledge of SierraWest, there is no reasonable basis for any such
proceeding, claim, action or governmental investigation that would impose
any liability or obligation that would have or would be reasonably likely
to have a material adverse effect on SierraWest. Except as set forth in
Section 3.1(q) of the SierraWest Disclosure Schedule, to the best knowledge
of SierraWest, during or prior to the period of (i) the ownership by
SierraWest or any of its Subsidiaries of any of their respective current
properties, (ii) the participation by SierraWest or any of its Subsidiaries
in the
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121
management of any property, or (iii) the holding by SierraWest or any of
its Subsidiaries of a security interest or other interest in any property,
there were no releases or threatened release of hazardous, toxic,
radioactive or dangerous materials or other materials regulated under
Environmental Laws in, on, under or affecting any such property which,
individually or in the aggregate, would be reasonably likely to have a
material adverse effect on SierraWest. Neither SierraWest nor any
Subsidiary of SierraWest or SWB is subject to any agreement, order,
judgment, decree, letter or memorandum by or with any Governmental Entity
or third party imposing any material liability or obligation pursuant to or
under any Environmental Law that would be reasonably likely to have a
material adverse effect on SierraWest.
(r) Properties. Except as set forth in Section 3.1(r) of the
SierraWest Disclosure Schedule, SierraWest or one of its Subsidiaries (i)
has good and marketable title to all the properties and assets reflected in
the SierraWest Consolidated Financial Statements as being owned by
SierraWest or one of its Subsidiaries or acquired after the date thereof
which are material to the business of SierraWest on a consolidated basis
(except properties sold or otherwise disposed of since the date thereof in
the ordinary course of business), free and clear of all claims, liens,
charges, security interests or encumbrances of any nature whatsoever except
(A) statutory liens securing payments not yet due, (B) liens on assets of
SWB securing deposits incurred in the ordinary course of its banking
business and (C) such imperfections or irregularities of title, claims,
liens, charges, security interests or encumbrances as do not materially
affect the use of the properties or assets subject thereto or affected
thereby or otherwise materially impair business operations at such
properties and (ii) is the lessee of all leasehold estates reflected in the
SierraWest Consolidated Financial Statements or acquired after the date
thereof which are material to its business on a consolidated basis (except
for leases that have expired by their terms since the date thereof) and is
in possession of the properties purported to be leased thereunder, and each
such lease is valid without default thereunder by the lessee or, to the
best knowledge of SierraWest, the lessor. Except as set forth in Section
3.1(r) of the SierraWest Disclosure Schedule, all real properties owned by
SierraWest or any of its Subsidiaries are owned in accordance with all
requirements of applicable rules, regulations and policies of the Bank
Regulators.
(s) Transactions with Affiliates. Except as set forth on Section
3.1(s) of the SierraWest Disclosure Schedule and except for those
arrangements, contracts, agreements or transactions which either (A)
involve per annum payments by SierraWest and its Subsidiaries of less than
$25,000 individually or $100,000 in the aggregate or (B) are terminable by
SierraWest or such Subsidiary on 30 days or less notice with no financial
penalty, (i) since December 31, 1996, none of SierraWest or any of its
Subsidiaries has engaged in any business arrangement or relationship with
any of its Affiliates and (ii) there are no, and since December 31, 1996,
there have not been, any, liabilities, contracts or other agreements or
other transactions between SierraWest or any of its Subsidiaries, on the
one hand, and any of its Affiliates or any officer, director or employee of
any such Affiliate, on the other hand.
(t) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any
broker's or finder's fee or any other similar commission or fee in
connection with any of the transactions contemplated by this Agreement,
except for NationsBanc Montgomery Securities LLC, whose fees and expenses
will be paid by SierraWest in accordance with SierraWest's agreement with
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such firm (a copy of which agreement has been delivered to BC prior to the
date of this Agreement).
(u) Intellectual Property. Except as set forth in Section 3.1(u) of
the SierraWest Disclosure Schedule, SierraWest and its Subsidiaries own or
have a valid license to use all trademarks, service marks and trade names
(including any registrations or applications for registration of any of the
foregoing) (collectively, the "SierraWest Intellectual Property") necessary
to carry on their business substantially as currently conducted, except for
such SierraWest Intellectual Property the failure of which to own or
validly license individually or in the aggregate would not reasonably be
expected to have a material adverse effect on SierraWest. Neither
SierraWest nor any such Subsidiary has received any notice of infringement
of or conflict with, and, to SierraWest's knowledge, there are no
infringements of or conflicts with, the rights of others with respect to
the use of any SierraWest Intellectual Property that individually or in the
aggregate, in either such case, would reasonably be expected to have a
material adverse effect on SierraWest.
(v) Pooling of Interests. As of the date of this Agreement,
SierraWest has no reason (in respect to matters pertaining to SierraWest
existing as of the date hereof or expected to exist as of the Closing Date)
to believe that SierraWest will not qualify for a pooling of interests
treatment for accounting purposes under GAAP as presently in effect.
(w) Opinion of Financial Advisor. SierraWest has received the written
opinion of NationsBanc Montgomery Securities LLC, dated February 25, 1999,
to the effect that, as of such date, subject to the limitations and
conditions contained therein, the consideration to be received by the
holders of SierraWest Common Stock pursuant to the Merger is fair to such
holders from a financial point of view.
(x) Rights Agreement; Anti-takeover Provisions. SierraWest has taken
all action so that the entering into of this Agreement and the other
Transaction Agreements and the consummation of the transactions
contemplated hereby and thereby do not and will not result in the grant of
any rights to any person under the Rights Agreement between SierraWest and
American Stock Transfer & Trust Co. dated January 16, 1996, as amended
January 29, 1998 and February 25, 1999 (the "SierraWest Rights Agreement")
or enable or require the rights thereunder to be exercised, distributed or
triggered. The Board of Directors of SierraWest has taken all necessary
action so that the provisions of Section 1203 of the California
Corporations Code (and any applicable provisions of the takeover laws of
any other state) and any comparable provisions of SierraWest's Articles of
Incorporation do not and will not apply to this Agreement and the other
Transaction Agreements, or the transactions contemplated hereby or thereby.
(y) Community Reinvestment Act Compliance. SWB is in substantial
compliance with the applicable provisions of the Community Reinvestment Act
of 1977 and the regulations promulgated thereunder (collectively, the
"CRA") and has received a CRA rating of "satisfactory" from the FDIC in its
most recent examination, and SierraWest has no knowledge of the existence
of any fact or circumstance or set of facts or circumstances which could be
reasonably expected to result in SWB failing to be in substantial
compliance with such provisions or having its current rating lowered.
(z) Year 2000 Readiness. SierraWest has a plan and organization in
place to minimize any material adverse effect caused by the failure of any
system, equipment
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or product which is material to its operations or financial condition to be
Year 2000 Ready (as defined below). Such plan addresses, at a minimum, the
issues set forth in the statement of the Federal Financial Institutions
Examination Council ("FFIEC"), dated May 5, 1997, entitled "Year 2000
Project Management Awareness," and December 1997, entitled "Safety and
Soundness Guidelines Concerning the Year 2000 Business Risk," as well as
any other statements of the FFIEC related to the Year 2000, as such issues
might affect SierraWest and its Subsidiaries. SierraWest has provided to BC
a complete and accurate copy of the plan, which includes SierraWest's Year
2000 organization and an estimate of anticipated associated costs.
SierraWest is using its best efforts to implement such plan, which includes
seeking assurances from its vendors and suppliers that such vendors' and
suppliers' products and services which are material to its operations are
Year 2000 Ready, replacing any material products and services supplied by
such vendors or suppliers which are not Year 2000 Ready with new products
and services which are Year 2000 Ready, and/or working with such vendors
and suppliers to achieve Year 2000 Readiness with respect to such material
products and services. Such plan shall also establish procedures to
evaluate, manage and mitigate Year 2000-related risks to SierraWest posed
by SierraWest's material customers who may not themselves be Year 2000
Ready. Neither SierraWest nor its Subsidiaries have received, or expect to
receive, a "Year 2000 Deficiency Notification Letter" (as such term is
employed in the Federal Reserve's Supervision and Regulation Letter No. SR
98-3 (SUP), dated March 4, 1998). As used herein, the term "Year 2000
Ready" shall mean that the functionality and the performance of any system
or piece of equipment will not be materially adversely affected as a result
of the date change for any date on or after January 1, 2000, including leap
year calculations, and that, to the extent applicable to normal operating
specifications, the system or equipment will in all material respects
accurately accept, store, retrieve, calculate, compare and otherwise
process dates of January 1, 2000 and later.
(aa) Dissenters' Rights. The SierraWest Common Stock is included on
the list of OTC margin stocks maintained by the Federal Reserve and
therefore the holders of such shares shall not be entitled to have their
shares treated as "dissenting shares" under Section 1300 of the California
Corporations Code by reason of the Merger unless demands for payment shall
be filed with respect to 5% or more of the outstanding shares of such
class.
(ab) Insurance. SierraWest has previously delivered to BC a list
identifying all insurance policies maintained on behalf of SierraWest and
its Subsidiaries (other than mortgage, title and other similar policies for
the benefit of SierraWest or its Subsidiaries as mortgagees under
residential mortgage loans). All of the material insurance policies and
bonds maintained by or for the benefit of SierraWest and its Subsidiaries
are in full force and effect, SierraWest and its Subsidiaries are not in
default thereunder and all material claims thereunder have been filed in
due and timely fashion and neither SierraWest nor any of its Subsidiaries
have received notice that any of such material claims have been or will be
denied. The insurance policies and bonds maintained by SierraWest and its
Subsidiaries are written by reputable insurers and are in such amounts,
cover such risks and have such other terms as is customary for banks and
bank holding companies comparable in size and operations to SierraWest and
its Subsidiaries. Since December 31, 1997, there has not been any damage
to, destruction of, or loss of any assets of SierraWest and its
Subsidiaries (whether or not covered by insurance) that could have a
material adverse effect on
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SierraWest. Neither SierraWest nor any SierraWest Subsidiaries has received
any notice of a premium increase or cancellation with respect to any of its
insurance policies or bonds, and within the last three years, neither
SierraWest nor any of its Subsidiaries has been refused any insurance
coverage sought or applied for, and SierraWest has no reason to believe
that existing insurance coverage cannot be renewed as and when the same
shall expire, upon terms and conditions as favorable as those presently in
effect, other than possible increases in premiums or unavailability in
coverage that have not resulted from an extraordinary loss experience of
SierraWest or any SierraWest Subsidiary.
(ac) Loans and Other Assets.
(i) SierraWest has disclosed to BC prior to the date hereof the
amounts of all loans, leases, other extensions of credit, commitments or
other interest-bearing assets presently owned by SierraWest or any of its
Subsidiaries that have been classified by any Bank Regulator, SierraWest's
independent auditors, or the management of SierraWest or any Subsidiary of
SierraWest as "Other Loans Especially Mentioned," "Substandard,"
"Doubtful," or "Loss" or classified using categories with similar import
and will have disclosed to BC prior to the Closing Date all such items
which will be so classified hereafter and prior to the Closing Date. All
such assets or portions thereof classified "Loss" or which are subsequently
so classified, have been (or will be) charged off on a timely basis in
full, collected or otherwise placed in a bankable condition. SierraWest
regularly reviews and appropriately classifies its and its Subsidiaries'
loans and other assets in accordance with all applicable legal and
regulatory requirements and GAAP. SierraWest has disclosed to BC the
amounts and identities of all other real estate owned ("OREO") that have
been classified as such as of the date hereof by SierraWest's independent
auditors, management or any Bank Regulator and will have disclosed to BC
prior to the Closing Date all such terms which will be so classified
hereafter and prior to the Closing Date. As of the date hereof and the
Closing Date, the recorded values of all OREO on the books of SierraWest
and its Subsidiaries accurately reflect and will reflect the net realizable
values of each OREO parcel thereof in compliance with GAAP. SierraWest and
its Subsidiaries have recorded on a timely basis all expenses associated
with or incidental to its OREO including but not limited to taxes,
maintenance and repairs as required by GAAP.
(ii) All loans, leases, other extensions of credit, commitments or
other interest-bearing assets and investments of SierraWest and its
Subsidiaries are legal, valid and binding obligations enforceable in
accordance with their respective terms and are not subject to any setoffs,
counterclaims or disputes known to SierraWest (subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of
general applicability), except as previously disclosed to BC in Section
3.1(ac)(ii) of the SierraWest Disclosure Schedule or reserved for in the
consolidated statement of financial condition of SierraWest as of December
31, 1998 referred to in Section 3.1(d) in accordance with GAAP, and were
duly authorized under and made in compliance with applicable federal and
state laws and regulations. SierraWest and its Subsidiaries do not have any
extensions or letters of credit, investments, guarantees, indemnification
agreements or commitments for the same (including without limitation
commitments to issue letters of credit, to create acceptances, or to
repurchase securities, federal funds or other assets) other than those
documented on the books and records of SierraWest and its Subsidiaries.
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(ad) Restrictions on Investments. Except for pledges to secure public
and trust deposits and repurchase agreements in the ordinary course of
business, none of the investments reflected in the consolidated statement
of financial condition of SierraWest as of December 31, 1998 referred to in
Section 3.1(d), and none of the investments made by SierraWest and its
Subsidiaries since December 31, 1998, is subject to any restriction,
whether contractual or statutory, which materially impairs the ability of
SierraWest or its Subsidiaries freely to dispose of such investment at any
time.
(ae) No Brokered Deposits. Except as described in Section 3.1(ae) of
the TrustSierraWest Disclosure Schedule, as of the date hereof, neither
SierraWest nor any of its Subsidiaries now has any "brokered deposits" as
such deposits are defined by applicable regulations of the FDIC as of the
date hereof.
(af) Derivatives Contracts; Structured Notes; Etc. Except as set
forth in Section 3.1(af) of the SierraWest Disclosure Schedule, neither
SierraWest nor any Subsidiary is a party to or has agreed to enter into an
exchange traded or over-the-counter equity, interest rate, foreign exchange
or other swap, forward, future, option, cap, floor or collar or any other
contract that is not included on the balance sheet and is a derivatives
contract (including various combinations thereof) (each, a "Derivatives
Contract") or owns securities that (1) are referred to generically as
"structured notes," "high risk mortgage derivatives," "capped floating rate
notes" or "capped floating rate mortgage derivatives" or (2) are likely to
have changes in value as a result of interest or exchange rate changes that
significantly exceed normal changes in value attributable to interest or
exchange rate changes, except for those Derivatives Contracts and other
instruments legally purchased or entered into in the ordinary course of
their banking business, consistent with safe and sound banking practices
and regulatory guidance, and with counterparties reasonably believed by
SierraWest to be financially responsible. All of such Derivatives Contracts
or other instruments are legal, valid and binding obligations of SierraWest
or one of its Subsidiaries and to the best knowledge of SierraWest, each of
the other counterparties thereto, enforceable in accordance with their
terms (except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies
generally), and are in full force and effect. SierraWest and each of its
Subsidiaries and to the best knowledge of SierraWest, each of the other
counterparties thereto, have duly performed in all material respects all of
their material obligations thereunder to the extent that such obligations
to perform have accrued; and there are no breaches, violations or defaults
or allegations or assertions of such by any party thereunder which would
have or would reasonably be expected to have a material adverse effect on
SierraWest.
(ag) Labor Matters. Neither SierraWest nor any of its Subsidiaries is
a party to, or is bound by, any collective bargaining agreement, contract
or other agreement or understanding with a labor union or labor
organization, nor is it or any of its Subsidiaries the subject to a
proceeding asserting that it or any such Subsidiary has committed an unfair
labor practice (within the meaning of the National Labor Relations Act) or
seeking to compel it or such Subsidiary to bargain with any labor
organization as to wages and conditions of employment, nor is there any
strike or other labor dispute involving it or any of its Subsidiaries
pending or, to the best of its knowledge, threatened, nor is it aware of
any activity involving it or any of its
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Subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
3.2 Representations and Warranties of BC. BC represents and warrants to
SierraWest as follows:
(a) Organization, Standing and Power. BC is a bank holding company
registered under the BHC Act and organized under the laws of the State of
Delaware. Each of BW and First Hawaiian Bank ("FHB") is a wholly-owned
Subsidiary of BC and each is a banking corporation organized under the laws
of the State of California in the case of BW and the State of Hawaii in the
case of FHB. The deposit accounts of BC's bank Subsidiaries are insured by
the BIF or the CorporationSavings Association Insurance Fund of the FDIC to proceedthe
fullest extent permitted by law, and all premiums and assessments required
to be paid in connection therewith have been paid when due. Each of BC and
its Significant Subsidiaries is a bank or corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite power and authority to
own, lease and operate its properties and to carry on its business as now
being conducted, and is duly qualified and in good standing to do business
in each jurisdiction in which the nature of its business or the ownership
or leasing of its properties makes such qualification necessary, other than
in such jurisdictions where the failure so to qualify would not, either
individually or in the aggregate, have a material adverse effect on BC. The
Certificate of Incorporation and By-laws of BC, copies of which were
previously made available to SierraWest, are true, complete and correct
copies of such documents as in effect on the date of this Agreement.
(b) Capital Structure.
(i) As of the date hereof, the authorized capital stock of BC consists
of 200,000,000 shares of BC Common Stock, 75,000,000 shares of Class A
Common Stock, par value $1.00 per share (the "BC Class A Common Stock") and
50,000,000 shares of preferred stock, par value $1.00 per share ("BC
Preferred Stock"). As of February 19, 1999 (A) 31,572,627 shares of BC
Common Stock were outstanding, 1,203,129 shares of BC Common Stock were
reserved for issuance upon the exercise of outstanding stock options or
awards under incentive plans (such plans or programs, collectively, the "BC
Stock Plans"), and 1,617,747 shares of BC Common Stock were held by BC in
its treasury or by its Subsidiaries (other than shares held in trust,
managed, custodial or nominee accounts and the like, or held by mutual
funds for which a Subsidiary of BC acts as investment advisor, that in any
such case are beneficially owned by third parties); (B) 25,814,768 shares
of BC Class A Common Stock were outstanding and (C) no shares of BC
Preferred Stock were outstanding. All outstanding shares of BC Common Stock
and BC Class A Common Stock have been duly authorized and validly issued
and are fully paid and non-assessable and not subject to preemptive rights.
At the Effective Time, the BC Common Stock to be issued hereunder will be,
when issued in accordance with the Exchange Offer.
Ifterms hereof, duly authorized, validly
issued, fully paid and non-assessable and not subject to preemptive rights.
(ii) Except as set forth in Section 3.2(b) of the Corporationdisclosure schedule
of BC delivered to SierraWest on the date hereof (the "BC Disclosure
Schedule") or as disclosed in the BC SEC Reports (as defined herein)
heretofore filed with the SEC prior to the date of this Agreement, as of
the date of this Agreement, except for this Agreement, (A) there are no
options, warrants, calls, rights, commitments or
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agreements of any character to which BC or any of its Subsidiaries is a
party or by which any of them are bound obligating BC or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of BC or of its Subsidiaries or
obligating BC or any of its Subsidiaries to grant, extend or enter into any
such option, warrant, call, right, commitment or agreement, (B) there are
no outstanding contractual obligations of BC or of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of BC
or any of its Subsidiaries and (C) there are no outstanding securities of
any kind convertible into or exchangeable for the capital stock of BC or
any of its Subsidiaries (or any interest therein). Except as set forth in
Section 3.2(b) of the BC Disclosure Schedule or as disclosed in the BC SEC
Reports (as defined herein) filed with the SEC prior to the date of this
Agreement, there is no agreement of any kind that gives any person any
right to participate in the equity, value or income of, or to vote (i) in
the election of directors or officers of or (ii) otherwise with respect to
the affairs of, BC of any of its Subsidiaries.
(c) Authority; No Violation.
(i) BC and BW have all requisite corporate power and authority to
enter into this Agreement and the Trust determine in their soleother Transaction Agreements and absolute
discretion that anyto
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the other Transaction Agreements and the
consummation of the foregoing events or conditions has occurred or
exists,transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the Corporationpart of BC and BW.
This Agreement and the Trust may,other Transaction Agreements have been duly executed
and delivered by BC and BW and (assuming due authorization, execution and
delivery by SierraWest) constitute the valid and binding obligations of BC
and BW, enforceable against BC and BW in accordance with their terms.
(ii) The execution and delivery by BC and BW of this Agreement and the
other Transaction Agreements does not, and the consummation of the
transactions contemplated hereby and thereby will not result in any
Violation pursuant to (x) any provision of the Certificate of Incorporation
or By-laws or comparable organizational documents of BC, BW or any other
Significant Subsidiary of BC, or (y) subject to obtaining or making the
consents, approvals, orders, authorizations, registrations, declarations
and filings referred to in paragraph (iii) below, any loan or credit
agreement, note, mortgage, indenture, lease, benefit plan or other
agreement, obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable law,
terminateto BC, BW or any other Significant Subsidiary of BC or their
respective properties or assets which Violation (in the case of clause
(y)), individually or in the aggregate, would have a material adverse
effect on BC.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, is
required by or with respect to BC, BW or any other Subsidiary of BC in
connection with the execution and delivery by BC and BW of this Agreement
and the other Transaction Agreements or the consummation by BC and BW of
the transactions contemplated hereby and thereby, the failure to make or
obtain which would have a material adverse effect on BC, or on BC's ability
to own, possess or exercise the rights of an owner with respect to its
Subsidiaries, except for (A) the filing of applications and notices with
the FDIC under the Bank Merger Act and, if required, the Board of Governors
of the Federal Reserve under the
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BHC Act and approval of same, (B) the filing by BC with the SEC of a
registration statement on Form S-4 (the "S-4") with respect to the BC
Common Stock issuable pursuant hereto, (C) the State Banking Approvals and
any applicable State Takeover Approvals, (D) approval for listing upon
official notice of issuance on the NYSE of the BC Common Stock issuable
pursuant hereto, (E) notices under the HSR Act, if required, (F) compliance
with applicable state blue sky laws, (G) the filing with the Secretary of
State of the State of California of the Agreement of Merger, and (H) the
filing of a notice with the Department of Financial Institutions of the
State of Nevada.
(d) Financial Statements. BC has previously delivered to SierraWest
copies of (a) the consolidated balance sheets of BC and its Subsidiaries,
as of December 31, for the fiscal years 1997 and 1998, and the related
consolidated statements of income changes in stockholders' equity and cash
flows for the fiscal years 1996 through 1998, inclusive, as reported
(except in respect of such financial statements as at the end of and for
the fiscal year 1998) in BC's Annual Reports on Form 10-K for the relevant
fiscal years filed with the SEC under the Exchange Offer (whetherAct, in each case
accompanied by the report of PricewaterhouseCoopers L.L.P. or its
predecessors, independent auditors with respect to BC. Each of the
financial statements referred to in this Section 3.2(d) (including the
related notes, where applicable) fairly present, and the consolidated
financial statements referred to in Section 5.14 hereof will fairly present
(subject, in the cases of the unaudited statements, to normal recurring
adjustments, none of which are expected to be material in nature or
amount), the results of the consolidated operations and changes in
stockholders' equity and consolidated financial condition of BC and its
Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth. Each of such statements (including the related
notes, where applicable) complies, and the financial statements referred to
in Section 5.14 hereof will comply, in all material respects with
applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto and each of such statements
(including the related notes, where applicable) has been, and the financial
statements referred to in Section 5.14 will be, prepared in accordance with
GAAP consistently applied during the periods involved, except in each case
as indicated in such statements or in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q. The books and records of
BC and its Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable legal
and accounting requirements and, where such books and records purport to
reflect any transactions, the transactions so reflected are actual
transactions.
(e) BC SEC Documents. BC has made available to SierraWest a true and
complete copy of each report, schedule, registration statement and
definitive proxy statement filed by BC with the SEC (other than reports
filed pursuant to Section 13(g) of the Exchange Act), since December 31,
1997 (as such documents have since the time of their filing been amended,
the "BC SEC Reports"), which are all the documents (other than preliminary
material and reports required pursuant to Section 13(g) of the Exchange
Act) that BC was required to file with the SEC since such date. As of their
respective dates of filing with the SEC, the BC SEC Reports complied in all
material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such BC SEC Reports, and did not contain any
Old Capital Securitiesuntrue statement of a material fact or omit to state a material fact
required to be stated
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therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of BC included in the BC SEC Reports complied as to form, as of
their respective dates of filing with the SEC, in all material respects
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have theretofore been acceptedprepared in
accordance with GAAP applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case
of the unaudited statements, as permitted by Form 10-Q of the SEC) and
fairly present in all material respects the consolidated financial position
of BC and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of operations, changes in stockholders' equity and
cash flows of such companies for exchange)the periods then ended.
(f) BC Information Supplied. None of the information supplied or may waiveto
be supplied by BC for inclusion or incorporation by reference in the Proxy
Statement will, at the date of mailing to SierraWest's shareholders and at
the time of the SierraWest Shareholders' Meeting, (i) contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading or
(ii) at the time and in the light of the circumstances under which it is
made, be false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein
not false or misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of a proxy for the
SierraWest Shareholders' Meeting which has become false or misleading. The
S-4 (except for such conditionportions thereof furnished in writing to BC by
SierraWest or otherwise amendany Subsidiary of SierraWest as to which no warranty is made)
will comply as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations of the SEC thereunder.
(g) Compliance with Applicable Laws. BC and its Subsidiaries hold,
and at all times have held, all permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities which are material to the
operation of the businesses of BC and its Subsidiaries, taken as a whole
(the "BC Permits"). BC and its Subsidiaries are in compliance and have
complied with the terms of the Exchange OfferBC Permits and all applicable laws and
regulations, except where the failure so to comply, individually or in the
aggregate, would not have a material adverse effect on BC. Except as
disclosed in the BC SEC Reports filed prior to the date of this Agreement,
the businesses of BC and its Subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity,
except for possible violations which, individually or in the aggregate, do
not, and, insofar as reasonably can be foreseen, in the future will not,
have a material adverse effect on BC. Except as described in Section 3.2(g)
of the BC Disclosure Schedule and except for routine examinations by Bank
Regulators, to the best knowledge of BC, no investigation by any
Governmental Entity with respect to BC or any of its Subsidiaries is
pending or threatened, other than, in each case, those the outcome of
which, individually or in the aggregate, as far as reasonably can be
foreseen, would not have a material adverse effect on BC, and no
proceedings by any Bank Regulator are pending or threatened which seek to
revoke or materially limit any of the BC Permits.
(h) Litigation. Except as disclosed in the BC SEC Reports filed prior
to the date of this Agreement or as listed in Section 3.2(h) of the BC
Disclosure Schedule, there is no Litigation pending or, to the best
knowledge of BC, threatened, against or
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affecting BC or any Subsidiary of BC which could reasonably be expected,
individually or in the aggregate, to have a material adverse effect on BC,
nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against BC or any Subsidiary
of BC having, or which, insofar as reasonably can be foreseen, in the
future could have, individually or in the aggregate, any such effect.
(i) Subsidiaries. Exhibit 21 to BC's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997 includes all the Significant
Subsidiaries of BC as of the date of this Agreement except for BW and its
Subsidiaries which were acquired by BC on November 1, 1998. The
Subsidiaries of BW as of the date hereof are as listed in Section 3.2(i) of
the BC Disclosure Schedule. BC owns, directly or indirectly, beneficially
and of record 100% of the issued and outstanding voting securities of each
such Significant Subsidiary (other than directors' qualifying shares, if
any). Except as provided in any respect. Ifprovision of applicable state law in the
case of Significant Subsidiaries of BC that are state chartered banks, all
of the shares of capital stock of each of the Significant Subsidiaries held
by BC or by another Subsidiary of BC are fully paid and nonassessable and
are owned by BC or a Subsidiary of BC free and clear of any claim, lien or
encumbrance.
(j) Agreements with Bank Regulators. Except as set forth in Section
3.2(j) of the BC Disclosure Schedule, neither BC nor any of its
Subsidiaries is a party to any written agreement or memorandum of
understanding with, or a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted any
board resolutions at the request of, any Bank Regulator which restricts
materially the conduct by BC and its Subsidiaries of their businesses, or
in any manner relates to their capital adequacy, credit policies or
management, nor has BC or any such waiverSubsidiary been advised by any Bank
Regulator that it is contemplating issuing or amendment constitutesrequesting (or is considering
the appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter or similar submission, or any such board resolutions.
(k) Absence of Certain Changes or Events. Except as disclosed in the
BC SEC Reports filed prior to the date of this Agreement and except as set
forth in Section 3.2(k) of the BC Disclosure Schedule, since September 30,
1998, (i) there has not been any change, or any event involving a
prospective change, in the business, financial condition, results of
operations or prospects of BC or any of its Subsidiaries which has had, or
would be reasonably likely to have, a material changeadverse effect on BC, (ii)
BC and its Subsidiaries have conducted their respective businesses in the
ordinary course consistent with their past practices, and (iii) neither BC
nor any of its Subsidiaries has taken any action or entered into any
transaction, and no event has occurred, that would have required
SierraWest's consent pursuant to Section 4.2 of this Agreement if such
action had been taken, transaction entered into or event had occurred, in
each case, after the Exchange Offer, the
Corporation and the Trust will promptly disclose such waiver by meansdate of a
prospectus supplement that will be distributedthis Agreement, nor has BC or any of its
Subsidiaries entered into any agreement, plan or arrangement to the registered holdersdo any of
the Old Capital Securities, and the Corporation and the Trust will extend the
Exchange Offer to the extent andforegoing.
(l) Undisclosed Liabilities. Except (i) for those liabilities or
obligations that are fully reflected or reserved against in the
mannerconsolidated balance sheet at December 31, 1998 of BC referred to in
Section 3.2(d) or (ii) for liabilities or obligations incurred in the
ordinary course of business consistent with past practice since December
31,
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1998 and which are not material to BC and its Subsidiaries taken as a
whole, none of BC or any of its Subsidiaries has incurred any liability or
obligation of any nature whatsoever (whether absolute, accrued or
contingent or otherwise and whether due or to become due) that, either
alone or when combined with all similar liabilities or obligations, has
had, or would have, a material adverse effect on BC.
(m) Governmental Reports. BC and each of its Subsidiaries have timely
filed all material reports, registrations and statements, together with any
amendments required by Rule 14e-1 under
the Exchange Act.
Exchange Agent
The First National Bank of Chicago has been appointed as Exchange
Agent for the Exchange Offer. Delivery of the Letters of Transmittalto be made with respect thereto, that they were
required to file since January 1, 1995 with any Governmental Entity and
any
other required documents, questions, requests for assistance,have paid all fees and requests
for additional copies of this Prospectus or of the Letter of Transmittal
should be directed to the Exchange Agent as follows:
The First National Bank of Chicago
c/o First Chicago Trust Company
of New York
14 Wall Street, 8th Floor
New York, New York 10005
Attention: Corporate Trust Administration
Telephone: (212) 240-8801
Facsimile: (212) 240-8938
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
Feesassessments due and Expenses
The Corporation has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable out-
of-pocket expensespayable in connection therewith.
The Corporation will also pay
brokerage housesExcept as set forth in Section 3.2(m) of the BC Disclosure Schedule and
other custodians, nomineesexcept for normal examinations conducted by a Governmental Entity in the
regular course of business of BC and fiduciariesits Subsidiaries, no Governmental
Entity has initiated any proceeding or, to the reasonable out-of-pocket expenses incurredbest knowledge of BC,
investigation into the business or operations of BC or any of its
Subsidiaries since January 1, 1995 which would be reasonably likely to have
a material adverse effect on BC and its Subsidiaries taken as a whole.
Except as set forth in Section 3.2(m) of the BC Disclosure Schedule, there
is no material unresolved violation, criticism or exception by them in forwarding copiesany
Governmental Entity with respect to any report or statement relating to any
examinations of BC or any of its Subsidiaries.
(n) Pooling of Interests. As of the date of this Prospectus and related documentsAgreement, BC has no
reason (in respect of matters pertaining to BC existing as of the date
hereof or expected to exist as of the Closing Date) to believe that BC will
not qualify for pooling of interests treatment for accounting purposes
under GAAP as presently in effect.
(o) Vote Required. No vote of the holders of any securities of BC is
required with respect to the beneficial ownersadoption of Old Capital
Securities, and in handlingthis Agreement.
(p) Brokers or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not
be obligated to pay any transfer taxes in connection therewith. If, however,
New Capital Securities are to be delivered to,Finders. No agent, broker, investment banker,
financial advisor or are to be issued in the
name of, anyother firm or person other than the registered holder of the Old Capital
Securities tendered,is or if a transfer tax is imposed for any reason other
than the exchange of Old Capital Securities in connection with the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
Neither the Corporation nor the Trust will make any payment to
brokers, dealers or others for soliciting acceptances of the Exchange Offer.
DESCRIPTION OF CAPITAL SECURITIES
Pursuant to the terms of the Trust Agreement for the Trust, the
Issuer Trustees on behalf of the Trust have issued the Old Capital Securities
and the Common Securities and will issue the New Capital Securities. The Old
Capital Securities represent, and the New Capital Securities will represent,
undivided beneficial ownership interests in the assets of the Trust and the
holders thereof will be entitled to any
broker's or finder's fee or any other similar commission or fee by BC in
connection with any of the transactions contemplated by this Agreement.
(q) Community Reinvestment Act Compliance. BW and FHB are in
substantial compliance with the applicable provisions of the CRA and have
received a preferenceCRA rating of "satisfactory" and "outstanding," respectively,
from the FDIC in certaintheir most recent examinations, and BC has no knowledge of
the existence of any fact or circumstance or set of facts or circumstances
which could be reasonably expected to result in BW or FHB failing to be in
substantial compliance with such provisions or having their current ratings
lowered.
(r) Year 2000 Readiness. Each of FHB and BW has a plan and
organization in place to minimize any material adverse effect caused by the
failure of any system, equipment or product which is material to its
respective operations or financial condition to be Year 2000 Ready (as
defined in Section 3.1(z) hereto). Such plans address, at a minimum, the
issues set forth in the statement of the FFIEC, dated May 5, 1997, entitled
"Year 2000 Project Management Awareness," and December 1997, entitled
"Safety and Soundness Guidelines Concerning the Year 2000 Business Risk,"
as well as any other statements of the FFIEC related to the Year 2000, as
such issues might affect FHB and BW. FHB and BW have provided to SierraWest
an accurate summary of such plans, which includes FHB's and BW's Year 2000
organizations and estimates of anticipated associated costs. Each
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of FHB and BW is using its best efforts to implement such plan, which
includes seeking assurances from its vendors and suppliers that such
vendors' and suppliers' products and services which are material to its
operations are Year 2000 Ready, replacing any material products and
services supplied by such vendors or suppliers which are not Year 2000
Ready with new products and services which are Year 2000 Ready, and/or
working with such vendors and suppliers to achieve Year 2000 Readiness with
respect to Distributionssuch material products and amounts payable on redemptionservices. Such plan shall also
establish procedures to evaluate, manage and mitigate Year 2000-related
risks to FHB and BW posed by their respective material customers who may
not themselves be Year 2000 Ready. None of FHB, BW or liquidation over the Common Securities, as well as other benefits as
describedtheir Subsidiaries
have received, or expect to receive, a "Year 2000 Deficiency Notification
Letter" (as such term is employed in the Trust Agreement. This summaryFederal Reserve's Supervision and
Regulation Letter No. SR 98-3 (SUP), dated March 4, 1998).
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of certain provisionsSierraWest. During the period from the date of this
Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement or to the extent that BC shall
otherwise consent in writing) SierraWest agrees that it will and will cause each
of its Subsidiaries to carry on the business of SierraWest and each of its
Subsidiaries in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and use all reasonable efforts to preserve intact
the present business organizations of SierraWest and each of its Subsidiaries,
maintain the rights and franchises of, and preserve the relationships with
customers, suppliers and others having business dealings with, SierraWest and
each of its Subsidiaries to the end that their goodwill and ongoing businesses
shall not be impaired in any material respect at the Effective Time. Without
limiting the generality of the Capital Securities andforegoing, during the Trustperiod from the date of
this Agreement which describes the material
provisions thereof, does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the Trust
Agreement, including the definitions therein of certain terms. Wherever
particular defined terms of the Trust Agreement are referred to herein, such
defined terms are incorporated herein by reference.
General
The Capital Securities rank pari passu, and payments will be made
thereon pro rata, with the Common Securities except as described under "--
Subordination of Common Securities." Legal title to the Junior Subordinated
Debentures will be held byEffective Time, SierraWest shall not, and shall not permit
any of its Subsidiaries to, without the Property Trusteeprior consent of BC in trust for the benefit of
the holders of the Capital Securities and Common Securities. The Guarantee
will be a guarantee on a subordinated basis with respect to the Capital
Securities but will not guarantee payment of Distributions or amounts payable
on redemption or liquidation of such Capital Securities when the Trust does
not have funds on hand available to make such payments. See "Description of
Guarantee."
Distributions
The Capital Securities represent undivided beneficial ownership
interests in the assets of the Trust, and Distributions on each Capital
Security will be payable at the annual rate of 8.343% of the stated
Liquidation Amount of $1,000, payable semi-annually in arrears on January 1
and July 1 of each year (each a "Distribution Date"), to the holders of the
Capital Securities at the close of business on the fifteenth day (whether or
not a Business Day (as defined herein)) next preceding the relevant
Distribution Date. Distributions on the Capital Securities will be
cumulative. Distributions will accumulate from June 30, 1997. The first
Distribution Date for the Capital Securities will be January 1, 1998. The
amount of Distributions payable for any period less than a full Distribution
period will be computed on the basis of a 360-day year of twelve 30-day
months and the actual days elapsed in a partial month in such period.
Distributions payable for each full Distribution period will be computed by
dividing the rate per annum by two. If any date on which Distributions are
payable on the Capital Securities is not a Business Day, then payment of the
Distributions payable on such date will be made on the next succeeding day
that is a Business Day (without any additional Distributions or other payment
in respect of any such delay), with the same force and effect as if made on
the date such payment was originally payable.
So long as no Debenture Event of Default has occurred and is
continuing, the Corporation has the right under the Junior Subordinated
Indenture to defer the payment of interest on the Junior Subordinated
Debentures at any time or from time to time for a period not exceeding 10
consecutive semi-annual periods with respect to each Extension Period,
provided that no Extension Period may extend beyond the Stated Maturity of
the Junior Subordinated Debentures or end on a date other than an Interest
Payment Date. As a consequence of any such election, semi-annual
Distributions on the Capital Securities will be deferred by the Trust during
any such Extension Period. Distributions to which holders of the Capital
Securities are entitled will accumulate additional Distributions thereon at
the rate per annum of 8.343% thereof, compounded semi-annually from the
relevant payment date for such Distributions, computed on the basis of a
360-day year of twelve 30-day months and the actual number of days elapsed in
a partial month in such period. Additional Distributions payable for each
full Distribution period will be computed by dividing the rate per annum by
two. The term "Distributions" as used herein shall include any such
additional Distributions. During any such Extension Period, the Corporation
may notwriting:
(a) (i) declare or pay any dividends or distributions on or make other distributions in
respect of any of its capital stock, except (A) for dividends by a
wholly-owned Subsidiary of SierraWest to SierraWest, and (B) SierraWest may
pay on March 31, 1999, a cash dividend in the amount of up to $0.26 per
share on the SierraWest Common Stock and, if the Closing occurs after the
record date set by BC's Board of Directors for the cash dividend payable by
BC on its outstanding Common Stock in respect to the third fiscal quarter
of 1999 a further cash dividend of up to $0.26 per share on the SierraWest
Common Stock, (ii) set any record or payment dates for the payment of any
dividends or distribution on its capital stock except in the ordinary
course of business consistent with past practice, (iii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock or (iv) repurchase, redeem purchase,or
otherwise acquire, or make a liquidation paymentpermit any Subsidiary to purchase or otherwise
acquire, any shares of its capital stock or the capital stock of any other
Subsidiary of SierraWest or any securities convertible into or exercisable
for any shares of such capital stock;
(b) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock of any class, any
securities convertible into or
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exercisable for, or any rights, warrants or options to acquire, any such
shares, or enter into any agreement with respect to any of the Corporation's capital stock or (ii) make any paymentforegoing,
other than issuances of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Corporation that rank pari passu in all respects with or
junior in interest to the Junior Subordinated Debentures (other than (a)
repurchases, redemptions or other acquisitions of shares of capital stock of
the Corporation in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of any one or more
employees, officers, directors or consultants, in connection with a dividend
reinvestment or shareholder stock purchase plan or in connection with the
issuance of capital stock of the Corporation (or securities convertible into
or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the
Corporation's capital stock (or any capital stock of a subsidiary of the
Corporation) for any class or series of the Corporation's capital stock or of
any class or series of the Corporation's indebtedness for any class or series
of the Corporation's capital stock, (c) the purchase of fractional interests
in shares of the Corporation's capital stockSierraWest Common Stock pursuant to the conversionexercise of
SierraWest Options;
(c) amend or exchange provisionspropose to amend its Articles of such capital stockIncorporation or the security being convertedits
By-laws or exchanged, (d) any declaration of a dividend in connection with the adoptionother organizational documents or that of any shareholder's rights plan, or the issuanceSubsidiary;
(d) (i) enter into any new material line of rights, stock or other
property under any shareholder's rights plan, or the redemption or repurchase
of rights pursuant thereto, or (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same
stock as that on which the dividend is being paid or ranks pari passu with or
junior to such stock). Prior to the termination of any such Extension
Period, the Corporation may further defer the payment of interest, provided
that no Extension Period may exceed 10 consecutive semi-annual periods or
extend beyond the Stated Maturity of the Junior Subordinated Debentures or
end on a date other than an Interest Payment Date. Upon the termination of
any such Extension Period and the payment of all amounts then due, the
Corporation may elect to begin a new Extension Period. There is no
limitation on the number of times that the Corporation may elect to begin an
Extension Period. See "Description of Junior Subordinated Debentures --
Option To Extend Interest Payment Period" and "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."
The Corporation has no current intention of exercisingbusiness, (ii) change its
right to
defer payments of interest by extending the interest payment period on the
Junior Subordinated Debentures.
The revenue of the Trust available for distribution to holders of the
Capital Securities will be limited to payments under the Junior Subordinated
Debentures. See "Description of Junior Subordinated Debentures." If the
Corporation does not make payments on the Junior Subordinated Debentures, the
Trust will not have funds available to pay Distributions or other amounts
payable on the Capital Securities. The payment of Distributionslending, investment, liability management and other amounts payable on the Capital Securities (if and to the extent the Trust has
funds legally available for and cash sufficient to make such payments) is
guaranteed by the Corporation on a limited basis as set forth herein under
"Description of Guarantee."
Redemption
Upon the repayment or redemption,material banking
policies in whole or in part, of the Junior
Subordinated Debentures, whether at Stated Maturity or upon earlier
redemption as provided in the Junior Subordinated Indenture, the proceeds
from such repayment or redemption shall be applied by the Property Trustee to
redeem a Like Amount (as defined herein) of the Trust Securities, upon not
less than 30 nor more than 60 days' notice, at a redemption price (the
"Redemption Price") equal to the aggregate Liquidation Amount of such Capital
Securities plus accumulated but unpaid Distributions thereon to the date of
redemption (the "Redemption Date") and the related amount of the premium, if
any paid by the Corporation upon the concurrent redemption of such Junior
Subordinated Debentures. See "Description of Junior Subordinated Debentures
- -- Redemption." If less than all of the Junior Subordinated Debentures are
to be repaid or redeemed on a Redemption Date, then the proceeds from such
repayment or redemption shall be allocated to the redemption pro rata of the
Capital Securities and the Common Securities. The amount of premium, if any,
paid by the Corporation upon the redemption of all or any part of the Junior
Subordinated Debentures to be repaid or redeemed on a Redemption Date shall
be allocated to the redemption pro rata of the Capital Securities and the
Common Securities.
The Corporation has the right to redeem the Junior Subordinated
Debentures (i) on or after July 1, 2007, in whole at any time or in part from
time to time, or (ii) in whole (but not in part) at any time within 90 days
following the occurrence and during the continuation of a Tax Event or
Capital Treatment Event (each as defined herein). A redemption of the Junior
Subordinated Debentures would cause a mandatory redemption of a Like Amount
of the Capital Securities and Common Securities.
The Redemption Price, in the case of a redemption under (i) above,
shall equal the following prices, expressed in percentages of the Liquidation
Amount, together with accumulated Distributions to but excluding the date
fixed for redemption, if redeemed during the 12-month period beginning July
1:
Year Redemption
- ---- Price
--------------------------------
2007 . . . . . . . . . . . . . . . 104.1715%
2008 . . . . . . . . . . . . . . . 103.7544
2009 . . . . . . . . . . . . . . . 103.3372
2010 . . . . . . . . . . . . . . . 102.9201
2011 . . . . . . . . . . . . . . . 102.5029
2012 . . . . . . . . . . . . . . . 102.0858
2013 . . . . . . . . . . . . . . . 101.6686
2014 . . . . . . . . . . . . . . . 101.2515
2015 . . . . . . . . . . . . . . . 100.8343
2016 . . . . . . . . . . . . . . . 100.4172
and 100% on or after July 1, 2017.
The Redemption Price, in the case of a redemption prior to July 1,
2007 following a Tax Event or Capital Treatment Event as described under (ii)
above, will equal for each Capital Security the Make-Whole Amount for a
corresponding $1,000 principal amount of Junior Subordinated Debentures
together with accumulated Distributions to but excluding the date fixed for
redemption. The "Make-Whole Amount" will be equal to the greater of (i) 100%
of the principal amount of such Junior Subordinated Debentures or (ii) as
determined by a Quotation Agent (as defined herein), the sum of the present
values of the principal amount and premium payable as part of the Redemption
Price with respect to an optional redemption of such Junior Subordinated
Debentures on July 1, 2007, together with the present values of scheduled
payments of interest from the Redemption Date to July 1, 2007 (the "Remaining
Life"), in each case discounted to the Redemption Date on a semi-annual basis
(assuming a 360-day year consisting of 30-day months) at the Adjusted
Treasury Rate.
"Adjusted Treasury Rate" means, with respect to any Redemption Date,
the Treasury Rate plus (i) 1.35% if such Redemption Date occurs on or before
July 1, 1998 or (ii) 0.50% if such Redemption Date occurs after July 1, 1998.
"Treasury Rate" means (i) the yield, under the heading which
represents the average for the week immediately prior to the calculation
date, appearing in the most recently published statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve and which establishes yields on actively traded United States
Treasury securities adjustedmaterial to constant maturity under the caption "Treasury
Constant Maturities," for the maturity corresponding to the Remaining Life
(if no maturity is within three months before or after the Remaining Life,
yields for the two published maturities most closely corresponding to the
Remaining Life shall be determined and the Treasury Rate shall be
interpolated or extrapolated from such yields on a straight-line basis,
rounding to the nearest month) or (ii) if such release (or any successor
release) is not published during the week preceding the calculation date or
does not contain such yields, the rate per annum equal to the semi-annual
equivalent yield to maturity of the Comparable Treasury Issue, calculated
using a price for the Comparable Treasury Issue (expressedSierraWest, except as a percentage of
its principal amount) equal to the Comparable Treasury Price for such
Redemption Date. The Treasury Rate shall be calculated on the third Business
Day preceding the Redemption Date.
"Business Day" means a day other than (i) a Saturday or Sunday, (ii)
a day on which banking institutions in The City of New York or in Honolulu,
Hawaii are authorized or required
by law or executive order to remain closed,by policies imposed by a Bank Regulator or the SBA, or (iii)
a day on which the Property Trustee's Corporate Trust Office or the
Corporate Trust Officeexcept as set forth in Section 4.1(d) of the Debenture Trustee is closed for business.
"Comparable Treasury Issue" means with respectSierraWest Disclosure
Schedule, incur or commit to any Redemption Datecapital expenditures or any obligations or
liabilities in connection therewith other than capital expenditures and
obligations or liabilities incurred or committed to in the United States Treasury security selectedordinary course
of business consistent with past practice but in no event for more than
$50,000 as to any one such item or $200,000 as to all such items in the
aggregate;
(e) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial equity interest in or a substantial portion of
the Quotation Agent as having
a maturity comparableassets of, or by any other means, any business or any corporation,
partnership, association or other business organization or division
thereof; provided, however, that the foregoing shall not prohibit
foreclosures and other debt-previously-contracted acquisitions in the
ordinary course of business consistent with past practice.
(f) sell, lease, encumber or otherwise dispose of, or agree to sell,
lease, encumber or otherwise dispose of, any of its assets (including
capital stock of Subsidiaries of SierraWest), which are material,
individually or in the Remaining Life that would be utilized, ataggregate, to SierraWest, other than in the timeordinary
course of selection and in accordancebusiness consistent with customary financial practice, in
pricing new issues of corporatepast practice;
(g) incur any long-term indebtedness for borrowed money or guarantee
any such long-term indebtedness or issue or sell any long-term debt
securities or warrants or rights to acquire any long-term debt securities
of comparable maturitySierraWest or any of its Subsidiaries or guarantee any long-term debt
securities of others other than (i) indebtedness of any Subsidiary of
SierraWest to SierraWest or to another Subsidiary of SierraWest, (ii)
deposits taken in the ordinary course of business consistent with past
practice, or (iii) renewals or extensions of existing long-term
indebtedness without any change in the material terms thereof;
(h) intentionally take or fail to take any action that would, or
reasonably might be expected to, result in any of the representations and
warranties set forth in this Agreement being or becoming untrue in any
material respect, or in any of the conditions to the Remaining Life. If no United States Treasury security hasClosing set forth in
Article VI (including without limitation the conditions set forth in
Sections 6.1(f) and 6.3(c)) not being satisfied, or (unless such action is
required by applicable law or sound banking practice) which would adversely
affect the ability of BC or SierraWest to obtain any of the Requisite
Regulatory Approvals without imposition of a maturity which
is within a period from three months beforecondition or restriction of
the type referred to three months after July 1,
2007,in Section 6.2 (f);
(i) change the two most closely corresponding United States Treasury securities
shall be usedmethods of accounting of SierraWest or any of its
Subsidiaries, except as required by changes in GAAP as concurred in by such
party's independent auditors;
(j) (i) except for the Comparable Treasury Issue,retention bonus arrangements and the Treasury Rate shallseverance
arrangements specified in Section 4.1(j) of the SierraWest Disclosure
Schedule, enter
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into, adopt, amend (except for technical amendments and such amendments as
may be interpolatedrequired by law) or extrapolated on a straight-line basis, rounding toterminate any SierraWest Benefit Plan or any
other Benefit Plan or any agreement, arrangement, plan or policy between
SierraWest or any of its Subsidiaries and one or more of its directors or
officers, increase in any manner the nearest month using such securities.
"Quotation Agent" means Goldman, Sachs & Co.compensation or fringe benefits of any
director, officer or employee of SierraWest or any of its Subsidiaries
(except for general salary increases for non-officer employees and their respective
successors; provided, however, that if the
foregoing shall ceasescheduled annual merit increases to be a
primary U.S. Government securities dealereffective as of March 1, 1999, as
previously disclosed to BC, in New York City, then the
Corporation shall substitute therefor another primary U.S. Government
securities dealer in New York City.
"Reference Treasury Dealer" means a primary U.S. Government
securities dealer in New York City selected by the Debenture Trustee after
consultation with the Corporation.
"Comparable Treasury Price" means (i) the average of five Reference
Treasury Dealer Quotations for such Redemption Date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the
Debenture Trustee obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealercertain officers of SierraWest or
its Subsidiaries, other than the chief executive officer and any Redemption Date, the average, as determined
by the Debenture Trustee,chief
financial officer of the bid and asked prices for the Comparable
Treasury Issue (expressedSierraWest, in each case, in the ordinary course of
business consistent with established salary guidelines and policies as
a percentageheretofore furnished to BC by SierraWest) or pay or grant any benefit not
required by any plan and arrangement as in effect as of the date hereof
(including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or
performance units or shares or any similar awards) or enter into any
contract, agreement, commitment or arrangement to do any of the foregoing,
(ii) except for the retention bonus arrangements specified in Section
4.1(j) of the SierraWest Disclosure Schedule, enter into or renew any
contract, agreement, commitment or arrangement providing for the payment to
any director, officer or employee of SierraWest or any of its principal
amount) quoted in writing toSubsidiaries
of compensation or benefits contingent, or the Debenture Trustee by such Reference Treasury
Dealer at 5:00 p.m., New York City time, onterms of which are
materially altered, upon the third Business Day preceding
such Redemption Date.
"Like Amount" means (i) with respect to a redemptionoccurrence of any Trust
Securities, Trust Securities having a Liquidation Amount equal to that
portion of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Junior Subordinated
Indenture, allocated to the Common Securities and to the Capital Securities
based upon the relative Liquidation Amounts of such classes, the proceeds of
which will be used to pay the Redemption Price of such Trust Securities, (ii)
with respect to a distribution of Junior Subordinated Debentures to holders
of Trust Securities in connection with a dissolutiontransactions
contemplated by this Agreement, or liquidation of the
Trust, Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities of the holder to whom such Junior
Subordinated Debentures are distributed and (iii) with respect to any Liquidation DistributionsSierraWest
Benefit Plan which is a defined benefit or defined contribution pension
plan, permit or cause (A) a consolidation or merger of any such Plan, (B) a
spin-off involving any such Plan, (C) a transfer of assets and/or
liabilities from or to holdersany such Plan, or (D) any similar transaction
involving any such Plan;
(k) enter into any contract that would be required to be disclosed on
Section 3.1(j) of Trust Securities, Junior Subordinated
Debentures havingthe SierraWest Disclosure Schedule or renew or terminate
any contract listed in Section 3.1(j) of the SierraWest Disclosure
Schedule, other than renewals of contracts or leases for a principal amount equalterm of one year
or less without material adverse changes to the Liquidation Amountterms thereof;
(l) make or acquire any loan or issue a commitment for any loan except
for loans and commitments that are made in the ordinary course of business
consistent with past practice or issue or agree to issue any letters of
credit or otherwise guarantee the obligations of any other persons except
in the ordinary course of business consistent with past practice;
(m) engage or participate in any material transaction or incur or
sustain any material obligation not in the ordinary course of business
consistent with past practice;
(n) settle any claim, action or proceeding involving money damages
involving a payment in excess of $50,000 as to any such matter, or settle
any other matter not involving money damages which is material to
SierraWest;
(o) change or make any tax elections, change any method of accounting
with respect to taxes, file any amended tax return, or settle or compromise
any federal, state, local or foreign material tax liability;
(p) except as set forth in Section 4.1(p) of the Trust SecuritiesSierraWest Disclosure
Schedule, make an application for the opening, relocation or closing of, or
open, relocate or close any branch or loan production office;
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(q) except as provided in Section 3.1(x) hereof, modify, amend or
waive any provision of, or terminate the SierraWest Rights Plan, or redeem
any of the rights outstanding thereunder;
(r) except as described in Section 4.1(r) of the SierraWest Disclosure
Schedule, enter into any securitization or similar transactions with
respect to any loans, leases or other assets of which such distribution is made.
"Liquidation Amount" means the stated amountSierraWest or any of $1,000 per Trust
Security.
"Tax Event" means the receipt by the Trust of an opinion of counsel
to the Corporation experienced in such matters to the effect that, as a
result of any amendmentits
Subsidiaries;
(s) agree to, or change (includingmake any announced proposed
change) in, the laws (orcommitment to, take any regulations thereunder) of the United States or
any political subdivision or taxing authority thereof or therein, or as a
resultactions
prohibited by this Section 4.1.
4.2 Covenants of any official administrative pronouncement or action or judicial
decision interpreting or applying such laws or regulations, which amendment
or change is effective or which proposed change, pronouncement, action or
decision is announced on or afterBC. During the period from the date of issuance ofthis Agreement
and continuing until the Capital
SecuritiesEffective Time, BC agrees as to itself and its
Subsidiaries that (except as expressly contemplated or permitted by the Trust, there is more than an insubstantial risk that (i)
the Trust is,this
Agreement or will be within 90 days of the delivery of such opinion of
counsel, subject to United States federal income tax with respect to income
received or accrued on the Junior Subordinated Debentures, (ii) interest
payable by the Corporation on the Junior Subordinated Debentures is not, or
within 90 days of the delivery of such opinion of counsel, will not be,
deductible by the Corporation, in whole or in part, for United States federal
income tax purposes or (iii) the Trust is, or will be within 90 days of the
delivery of such opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
"Capital Treatment Event" means the reasonable determination by the
Corporation that, as a result of the occurrence of any amendment to, or
change (including any announced proposed change) in, the laws (or any rules
or regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such
pronouncement, action or decision is announced on or after the date of
issuance of the Capital Securities, there is more than an insubstantial risk
that the Corporation will not be entitled to treat an amount equal to the
Liquidation Amount of the Capital Securities as "Tier 1 Capital" (or the then
equivalent thereof) for purposes of the capital adequacy guidelines of the
Federal Reserve, as then in effect and applicable to the Corporation.
Redemption Procedures
Capital Securities redeemed on each Redemption Date shall be redeemed
at the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Junior Subordinated Debentures. Redemptions of the Capital
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that SierraWest shall otherwise consent in writing),
BC will and will cause each of its Subsidiaries to carry on its business in the
Trust has funds on hand available
forusual, regular and ordinary course in substantially the payment of such Redemption Price. See also "--Subordination of
Common Securities."
Ifsame manner as
heretofore conducted and use all reasonable efforts to preserve intact its
present business organizations, maintain its rights and franchises and preserve
its relationships with customers, suppliers and others having business dealings
with them to the Property Trustee gives a notice of redemptionend that their goodwill and ongoing businesses shall not be
impaired in any material respect at the Effective Time. Without limiting the
generality of the Capital Securities, then, by 12:00 noon, New York City time, onforegoing, during the Redemption Date, to the extent funds are available, in the case of Capital
Securities held in book-entry form, the Property Trustee will deposit
irrevocably with DTC funds sufficient to pay the applicable Redemption Price
and will give DTC irrevocable instructions and authority to pay the
Redemption Price to the holders of the Capital Securities. With respect to
Capital Securities not held in book-entry form, the Property Trustee, to the
extent funds are available, will irrevocably deposit with the paying agent
for the Capital Securities funds sufficient to pay the applicable Redemption
Price and will give such paying agent irrevocable instructions and authority
to pay the Redemption Price to the holders of the Capital Securities upon
surrender of their certificates evidencing the Capital Securities.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Capital Securities called for redemption shall be
payable to the holders of the Capital Securities on the relevant record dates
for the related Distribution Dates. If notice of redemption shall have been
given and funds deposited as required, then uponperiod from the date of such deposit,
allthis Agreement
to the Effective Time, BC shall not, and shall not permit any of its
Subsidiaries to, without the prior consent of SierraWest in writing:
(a) amend or propose to amend its Certificate of Incorporation or its
By-laws in a manner that would materially and adversely affect its ability
to perform its obligations under this Agreement or consummate the
transactions contemplated hereunder, or otherwise materially and adversely
affect the rights, powers and privileges of the holdersshares of BC Common Stock
to be issued in the Merger;
(b) intentionally take or fail to take any action that would, or
reasonably might be expected to, result in any of its representations and
warranties set forth in this Agreement being or becoming untrue, subject to
such Capital Securities so called for redemption
will cease, exceptexceptions as do not have, and would not reasonably be expected to
have, individually or in the rightaggregate, a material adverse effect on BC
following the Effective Time, or in any of the holders of such Capital Securities to
receive the Redemption Price and any Distribution payable in respect of the
Capital Securities on or priorconditions to the Redemption Date, but without interest
on such Redemption Price, and such Capital Securities will cease to be
outstanding. If any date fixed for redemption of Capital Securities is not a
Business Day, then payment of the Redemption Price payable on such date will
be made on the next succeeding day which is a Business Day (without any
interest or other paymentClosing
set forth in respect of any such delay), except that, if such
Business Day falls in the next calendar year, such payment will be made on
the immediately preceding Business Day. In the event that payment of the
Redemption Price in respect of Capital Securities called for redemption is
improperly withheld or refused and not paid either by the Trust or by the
Corporation pursuant to the Guarantee as described under "Description of
Guarantee," Distributions on such Capital Securities will continue to
accumulate at the then applicable rate, from the Redemption Date originally
established by the Trust for such Capital Securities to the date such
Redemption Price is actually paid, in which case the actual payment date will
be the date fixed for redemption for purposes of calculating the Redemption
Price.
Subject to applicable lawArticle VI (including without limitation United
States federal securities laws), the Corporationconditions set
forth in Sections 6.1(f) and 6.2(d)) not being satisfied, or its affiliates may at any
time and from time(unless such
action is required by applicable law or sound banking practice) which would
adversely affect the ability of BC or SierraWest to time purchase outstanding Capital Securities by tender,
in the open market or by private agreement, and may resell such securities as
described in "Offer and Resale."
If less than all of the Capital Securities and Common Securities are
to be redeemed on a Redemption Date, then the aggregate Liquidation Amount of
such Capital Securities and Common Securities to be redeemed shall be
allocated pro rata to the Capital Securities and the Common Securities based
upon the relative Liquidation Amounts of such classes. The particular
Capital Securities to be redeemed shall be selected on a pro rata basis based
on their respective Liquidation Amounts not more than 60 days prior to the
Redemption Date by the Property Trustee from the outstanding Capital
Securities not previously called for redemption, or if the Capital Securities
are then held in the form of a Global Capital Security (as defined herein),
in accordance with DTC's customary procedures. The Property Trustee shall
promptly notify the securities registrar for the Trust Securities in writing
of the Capital Securities selected for redemption and, in the case of any
Capital Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of the Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of
Capital Securities shall relate, in the case of any Capital Securities
redeemed or to be redeemed only in part, to the portion of the aggregate
Liquidation Amount of Capital Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each registered holder of Capital
Securities to be redeemed at its address appearing on the securities register
for the Trust Securities. Unless the Corporation defaults in payment of the
Redemption Price on the Junior Subordinated Debentures, on and after the
Redemption Date interest will cease to accrue on the Junior Subordinated
Debentures or portions thereof (and, unless payment of the Redemption Price
in respect of the Capital Securities is withheld or refused and not paid
either by the Trust or the Corporation pursuant to the Guarantee,
Distributions will cease to accumulate on the Capital Securities or portions
thereof) called for redemption.
Subordination of Common Securities
Payment of Distributions on, the Redemption Price of, and any
Liquidation Distribution in respect of the Capital Securities and Common
Securities, as applicable, shall be made pro rata based on the Liquidation
Amount of such Capital Securities and Common Securities. However, if on any
Distribution Date, Redemption Date or Liquidation Date (as defined herein) a
Debenture Event of Default has occurred and is continuing as a result of any
failure by the Corporation to pay any amounts in respect of the Junior
Subordinated Debentures when due, no payment of any Distribution (including
any additional Distributions) on, Redemption Price of, or Liquidation
Distribution in respect ofobtain any of the
Common Securities, and no other payment
on accountRequisite Regulatory Approvals without imposition of a condition or
restriction of the redemption, liquidationtype referred to in Section 6.2(f);
(c) agree to, or make any commitment to, take any of the actions
prohibited by this Section 4.2.
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Regulatory Matters.
(a) SierraWest shall promptly prepare and file with the SEC a Proxy
Statement and BC shall promptly prepare and file with the SEC the S-4, in which
the Proxy Statement will be included as a prospectus. Each of BC and SierraWest
shall use all reasonable efforts to have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing, and SierraWest
shall thereafter promptly mail the Proxy Statement to its shareholders.
(b) The parties hereto shall cooperate with each other acquisition of such Common
Securities, shall be made unless payment in full in cashand use reasonable
best efforts to promptly prepare and file all necessary documentation, to effect
all applications, notices, petitions and filings, to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all accumulatedthird
parties and unpaid Distributions on all ofGovernmental Entities which are necessary or advisable to consummate
the outstanding Capital Securities for all
Distribution periods terminating ontransactions contemplated by this Agreement and the other Transactions
Agreements (including without limitation the Merger and the Bank Merger) and any
branch consolidation, relocation or prior thereto,closure applications or in the case of
payment of the Redemption Price the full amount of such Redemption Price on
all of the outstanding Capital Securities then called for redemption, or in
the case of payment of the Liquidation Distribution the full amount of such
Liquidation Distribution on all outstanding Capital Securities, shall have
been made or provided for, and all funds available to the Property Trustee
shall first be applied to the payment in full in cash of all Distributions
on, Redemption Price of, or the Liquidation Distribution in respect of, the
Capital Securities then due and payable. "Liquidation Date" means the date
of the dissolution, wind-up or termination of the Trust pursuant to the Trust
Agreement.
In the case of any Event of Default (as defined herein) resulting
from a Debenture Event of Default, the holders of the Common Securities will
have no right to act with respect to any such Event of Default under the
Trust Agreement until the effect of all such Events of Default with respect
to such Capital Securities have been cured, waived or otherwise eliminated.
See "--Events of Default; Notice" and "Description of Junior Subordinated
Debentures -- Debenture Events of Default." Until all such Events of Default
under the Trust Agreementnotices with respect
to the Capital Securities have been so
cured, waived or otherwise eliminated,branches of SWB which BC shall request SWB to file and to comply with the
Property Trustee will act solely
on behalfterms and conditions of the holdersall such permits, consents, approvals and authorizations
of the Capital Securitiesall such Governmental Entities. BC and not on behalf of the
holders of the Common Securities, and only the holders of the Capital
Securities willSierraWest shall have the right to
directreview in advance and to the Property Trusteeextent practicable each will consult the other on,
in each case subject to act onapplicable laws relating to the exchange of information,
all the information relating to SierraWest or BC, as the case may be, and any of
their behalf.
Liquidation Distribution Upon Dissolution
The amount payable onrespective Subsidiaries which appears in any filing made with, or written
materials submitted to, any third party or any Governmental Entity in connection
with the Capital Securities intransactions contemplated by this Agreement. In exercising the
event of any
liquidationforegoing right, each of the Trust is $1,000 per Capital Security plus accumulatedparties hereto shall act reasonably and unpaid Distributions, subject to certain exceptions, which may be in the form
of a distribution of such amount in Junior Subordinated Debentures.as promptly
as practicable. The Corporation, as the holder of all of the outstanding Common
Securities, has the right, subject to having received the prior approval of
the Federal Reserve to do so, if such approval is then required under
applicable Federal Reserve capital guidelines or policies, at any time to
dissolve the Trust and, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, cause the Junior Subordinated Debentures
to be distributed to the holders of the Capital Securities and Common
Securities in liquidation of the Trust.
Pursuant to the Trust Agreement, the Trustparties hereto agree that they will automatically
dissolve upon expiration of its term or, if earlier, will dissolve on the
first to occur of: (i) certain events of bankruptcy, dissolution or
liquidation of the Corporation; (ii) the distribution of a Like Amount of the
Junior Subordinated Debentures to the holders of the Trust Securities, if the
holders of Common Securities have given written direction to the Property
Trustee to dissolve the Trust (which direction, subject to the foregoing
restrictions, is optional and wholly within the discretion of the holders of
Common Securities); (iii) redemption of all of the Trust Securities as
described under "--Redemption" and (iv) the entry of an order for the
dissolution of the Trust by a court of competent jurisdiction.
If dissolution of the Trust occurs as described in clause (i), (ii)
or (iv) above, the Trust will be liquidated by the Property Trustee as
expeditiously as the Property Trustee determines to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to the holders of such Trust Securities a Like
Amount of the Junior Subordinated Debentures, unless such distribution is
determined by the Property Trustee not to be practical, in which event such
holders will be entitled to receive out of the assets of the Trust available
for distribution to holders, after satisfaction of liabilities to creditors
of the Trust as provided by applicable law, an amount equal to, in the case
of holders of Capital Securities, the aggregate of the Liquidation Amount
plus accumulated and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"). If such Liquidation
Distribution can be paid only in part because the Trust has insufficient
assets available to pay in full the aggregate Liquidation Distribution, then
the amounts payable directly by the Trust on its Capital Securities shall be
paid on a pro rata basis (based upon Liquidation Amounts). The holders of
the Common Securities will be entitled to receive distributions upon any such
liquidation pro rataconsult with the holders of the Capital Securities, except that
if a Debenture Event of Default has occurred and is continuing as a result of
any failure by the Corporation to pay any amounts in respect of the Junior
Subordinated Debentures when due, the Capital Securities shall have a
priority over the Common Securities.
After the Liquidation Date fixed for any distribution of Junior
Subordinated Debentures (i) the Capital Securities will no longer be deemed
to be outstanding, (ii) DTC or its nominee, as the registered holder of the
Capital Securities, will receive a registered global certificate or
certificates representing the Junior Subordinated Debentures to be delivered
upon such distribution with respect to Capital Securities held by DTC or its
nominee, (iii) any certificates representing the Capital Securities not held
by DTC or its nominee will be deemed to represent the Junior Subordinated
Debentures having a principal amount equal to the stated Liquidation Amount
of the Capital Securities and bearing accrued and unpaid interest in an
amount equal to the accumulated and unpaid Distributions on the Capital
Securities until such certificates are presented to the security registrar
for the Capital Securities for transfer or reissuance and (iv) all rights of
holders holding Capital Securities will cease, except the right of such
holders to receive Junior Subordinated Debentures upon surrender of
certificates representing Capital Securities.
If the Corporation does not redeem the Junior Subordinated Debentures
prior to maturity and the Trust is not liquidated and the Junior Subordinated
Debentures are not distributed to holders of the Capital Securities, the
Capital Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures and the distribution of the Liquidation Distribution
to the holders of the Capital Securities.
There can be no assurance as to the market prices for the Capital
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Capital Securities if a dissolution and liquidation of the Trust
were to occur. Accordingly, the Capital Securities that an investor may
purchase, or the Junior Subordinated Debentures that the investor may receive
on dissolution and liquidation of the Trust, may trade at a discount to the
price that the investor paid to purchase such Capital Securities.
Events of Default; Notice
Any one of the following events constitutes an "Event of Default"
under the Trust Agreement (an "Event of Default")each other
with respect to the Capital
Securities (whateverobtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the reasontransactions contemplated by this Agreement
(including without limitation the Merger and the SierraWest Merger) and each
party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein.
(c) BC and SierraWest shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Statement, the S-4 or any other statement, filing,
notice or application made by or on behalf of BC, SierraWest or any of their
respective Subsidiaries to any Governmental Entity in connection with the Merger
and the other transactions contemplated by this Agreement.
(d) BC and SierraWest shall promptly advise each other upon receiving any
communication from any Governmental Entity whose consent or approval is required
for consummation of the transactions contemplated by this Agreement which causes
such Eventparty to believe that there is a reasonable likelihood that any Requisite
Regulatory Approval (as defined below) will not be obtained or that the receipt
of Defaultany such approval will be materially delayed.
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5.2 Access to Information.
(a) Upon reasonable notice, SierraWest and whether itBC shall (and shall cause each
of their respective Subsidiaries to) afford to the other and their
representatives and advisors access, during normal business hours during the
period prior to the Closing Date, to all the properties, books, contracts,
commitments and records of SierraWest (in the case of SierraWest) and of BC (in
the case of BC) and, during such period, each of SierraWest and BC shall (and
shall cause each of their respective Subsidiaries to) make available to the
other and their representatives and advisors (a) a copy of each report,
schedule, registration statement and other document filed or received by
SierraWest or BC, as the case may be, during such period pursuant to the
requirements of Federal securities laws or Federal or state banking laws (other
than reports or documents which such party is voluntary or involuntary or is effected by operation ofnot permitted to disclose under
applicable law or pursuantreports or documents which are subject to an attorney-client
privilege or which constitute attorney work product) and (b) all other
information concerning the business, properties and personnel of SierraWest or
of BC, as the case may be, as such other party may reasonably request. BC will
hold any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) the occurrence of a Debenture Event of Default (see
"Description of Junior Subordinated Debentures -- Debenture Events of
Default"); or
(ii) default by the Trust in the payment of any
Distribution when it becomes due and payable, and continuation of
such default for a period of 30 days; or
(iii) default by the Trust in the payment of any
Redemption Price of any Trust Security when it becomes due and
payable; or
(iv) default in the performance, or breach, in any
material respect, of any covenant or warranty of the Trustees in the
Trust Agreement (other than a covenant or warranty a default in the
performance of which or the breach of which is dealt with in clause
(ii) or (iii) above), and continuation of such default or breach for
a period of 60 days after there has been given, by registered or
certified mail, to the Trustees and the Corporation by the holders of
at least 25% in aggregate Liquidation Amount of the outstanding
Capital Securities, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice
is a "Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or
insolvencyinformation with respect to the Property Trustee if a successor
Property Trustee has not been appointed within 90 days thereof.
Within five Business Days after the occurrence of any Event of
Default actually knownSierraWest and its Subsidiaries which
is nonpublic in confidence to the Property Trustee, the Property Trustee will
transmit notice of such Event of Default to the holders of Trust Securities,
the Administrative Trusteesextent required by, and the Corporation, unless such Event of Default
has been cured or waived. The Corporation, as Depositor, and the
Administrative Trustees are required to file annually with the Property
Trustee a certificate as to whether or not they are in compliance with all
the conditions and covenants applicable to them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing as a
result of any failure by the Corporation to pay any amounts in respect of the
Junior Subordinated Debentures when due, the Capital Securities will have a
preference over the Common Securities with respect to payments of any amounts
in respect of the Capital Securities as described above. See "--
Subordination of Common Securities," "--Liquidation Distribution Upon
Dissolution" and "Description of Junior Subordinated Debentures -- Debenture
Events of Default."
The existence of an Event of Default does not entitle the holders of
Capital Securities to accelerate the maturity thereof.
Removal of Issuer Trustees; Appointment of Successors
Unless a Debenture Event of Default has occurred and is continuing,
any Issuer Trustee may be removed at any time by the holders of the Common
Securities. If a Debenture Event of Default has occurred and is continuing,
the Property Trustee or the Delaware Trustee, or both of them, may be removed
at such time by the holders of a majority in Liquidation Amount of the
outstanding Capital Securities. In no event will the holders of the Capital
Securities have the right to vote to appoint, remove or replace the
Administrative Trustees, which voting rights are vested exclusively in the
holders of the Common Securities. No resignation or removal of an Issuer
Trustee and no appointment of a successor trustee will be effective until the
acceptance of appointment by the successor trustee in accordance with,
the provisions of the Trustletter dated October 27, 1998, between SierraWest and BC
(the "Confidentiality Agreement"). SierraWest will hold all such information
with respect to BC and its Subsidiaries which is nonpublic in confidence and
will otherwise deal with such information to the extent required by, and in
accordance with, the provisions of the Confidentiality Agreement, deeming for
purpose of this sentence, such information to be subject to the provision of the
Confidentiality Agreement as if such provisions applied by their terms to such
information of BC and its Subsidiaries, as well as to such information of
SierraWest and its Subsidiaries. No investigation by either BC, on the one hand,
or SierraWest, on the other hand, shall affect the representations and
warranties of the other.
5.3 SierraWest Shareholders' Meeting. SierraWest shall call a meeting of
its shareholders to be held as promptly as practicable for the purpose of voting
upon the adoption of this Agreement. MergerSierraWest will, through its Board of
Directors, recommend to its shareholders adoption of this Agreement unless the
Board of Directors of SierraWest determines in good faith, based upon the
written advice of outside counsel, that making such recommendation, or Consolidationfailing
to withdraw, modify or amend any previously made recommendation, would
constitute a breach of Issuer Trustees
Any entity intofiduciary duty by SierraWest's Board of Directors under
applicable law. In addition, nothing in this Section 5.3 or elsewhere in this
Agreement shall prohibit accurate disclosure by SierraWest of information that
is required to be disclosed in the Proxy Statement or any other document
required to be filed with the SEC (including without limitation a
Solicitation/Recommendation Statement on Schedule 14D-9) or otherwise required
to be disclosed by applicable law or regulation or the rules of any securities
exchange or automated quotation system on which the Property Trusteesecurities of SierraWest may
then be traded.
5.4 No Solicitations. From the date hereof until the earlier of the
Effective Time or the Delaware Trusteetermination of this Agreement, SierraWest agrees that
neither it, nor any of its Subsidiaries, Affiliates or agents shall, nor shall
it authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative or agent (collectively, "Representatives") retained by it or any
of its Subsidiaries, Affiliates or agents to, solicit, initiate or knowingly
encourage the submission of, or enter into discussions or negotiations with or
provide information to any person or group of persons (other than the respective
parties to this Agreement) concerning, any Takeover Proposal (as defined below)
or enter into any agreement with a third party
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relating to a Takeover Proposal or assist, participate in, facilitate or
encourage any effort or attempt by any other person to do or seek to do any of
the foregoing. As used in this Agreement, "Takeover Proposal" shall mean any
proposal for the acquisition of a 15% or greater equity interest in, or a
merger, consolidation, liquidation, dissolution or other disposition of 15% or
more of the assets of, SierraWest or any Significant Subsidiary of SierraWest,
or any tender offer or exchange offer that if consummated would result in any
person beneficially owning 15% or more of any class of equity securities of
SierraWest or any Significant Subsidiary of SierraWest (other than pursuant to
the transactions contemplated by this Agreement and the Stock Option Agreement).
5.5 Legal Conditions.
(a) Each of SierraWest and BC shall, and shall cause its respective
Subsidiaries to, use all reasonable efforts (i) to take, or cause to be taken,
all actions necessary to comply promptly with all legal requirements which may
be merged or converted or with which it may be consolidated, or any
entity resulting from any merger, conversion or consolidation to whichimposed on such
Issuer Trustee is a party or any entity succeeding to all or substantially
all the corporate trust business of such Issuer Trustee, will be the
successor of such Issuer Trustee under the Trust Agreement, provided such
entity is otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Trust
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any entity, except as described below or as
otherwise set forth in the Trust Agreement. The Trust may, at the request of
the holders of the Common Securities and with the consent of the
Administrative Trustees, but without the consent of the holders of the
outstanding Capital Securities, the Property Trustee and the Delaware
Trustee, merge with or into, consolidate, amalgamate, or be replaced by or
convey, transfer or lease its properties and assets substantially as an
entirety to a trust organized as such under the laws of any State, so long as
(i) such successor entity either (a) expressly assumes all of the obligations
of the TrustSubsidiaries with respect to the Capital Securitiestransactions
contemplated by this Agreement and as promptly as practicable, (ii) to obtain
(and to cooperate with the other party to obtain) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity and or any
other public or private third party which is required to be obtained or made by
such party or any of its Subsidiaries in connection with the Merger and the
other transactions contemplated by this Agreement. Each of SierraWest and BC
will promptly cooperate with and furnish information to the other in connection
with any such burden suffered by, or requirement imposed upon, any of them or
any of their Subsidiaries in connection with the foregoing.
(b) substitutesEach of SierraWest and BC agrees to use all reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary and proper or advisable to consummate, as soon as practicable
after the date of this Agreement, the transactions contemplated hereby,
including, without limitation, using all reasonable best efforts to (i) lift or
rescind any injunction or restraining order or other order adversely affecting
the ability of the parties to consummate the transactions contemplated hereby,
(ii) defend any Litigation seeking to enjoin, prevent or delay the consummation
of the transactions contemplated hereby or seeking material damages, (iii)
provide to counsel to the other party hereto representations and certifications
as to such matters as such counsel may reasonably request in order to render the
opinions referred to in Sections 6.2(d) and 6.3(c), and (iv) to obtain the
letters of the independent accountants referred to in Section 6.1(f).
5.6 Employee Benefit Plans.
(a) For purposes of all employee benefit plans of BC or its Subsidiaries in
which the employees of SierraWest who shall remain in the employment of BC or
its Subsidiaries after the Closing Date shall participate from and after such
date (including all policies and employee fringe benefit programs, including
vacation policies), and under which an employee's benefit depends, in whole or
in part, on length of service, credit will be given to SierraWest Employees for
vesting and eligibility purposes only for service previously credited with
SierraWest or its Subsidiaries prior to the Capital Securities other securities having substantiallyEffective Time to the same terms
asextent that
such crediting of service does not result in duplication of benefits, provided,
however, that BC shall determine each employee's length of service in a manner
consistent with the Capital Securities (the "Successor Securities") so long as the
Successor Securities have the same priority as the Capital Securitiescustomary practice with respect to distributions and payments upon liquidation, redemption and
otherwise, (ii) a trustee of such successor entity, possessing the same
powers and duties as the Property Trustee, is appointed to hold the Junior
Subordinated Debentures, (iii) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the Capital
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (iv) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privilegesemployees of the holdersBC
Subsidiary by which they shall be employed. BC shall also cause each employee
benefit plan in which SierraWest Employees participate from and after the
Effective Time to waive (i) any preexisting condition restriction which was
waived under the terms of the Capital Securities (including any Successor Securities) in any material
respect, (v) such successor entity has a purpose substantially identical to
that of the Trust, (vi)analogous Plan immediately
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prior to such merger, consolidation, amalgamation,
replacement, conveyance, transferthe Effective Time or lease,(ii) any waiting period limitation which would
otherwise be applicable to a SierraWest Employee on or after the Trust has received an opinion
from independent counsel experienced in such matters to the effect that (a)
such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges of
the holders of the Capital Securities (including any Successor Securities) in
any material respect and (b) following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, neither the Trust
nor such successor entity will be required to register as an investment
company under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), and (vii) the Corporation or any permitted successor or
assignee owns all of the common securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at leastEffective Time
to the extent provided bysuch SierraWest Employee had satisfied any similar waiting period
limitation under an analogous Plan prior to the Guarantee.Effective Time.
(b) Notwithstanding the foregoing, except as otherwise expressly provided
in this Agreement, BC shall, and shall cause its Subsidiaries to, honor in
accordance with their terms all Plans, each as amended to the Trust may not, exceptdate hereof and as
otherwise amended prior to the Closing Date in accordance with the consentterms of
holdersparagraph (e) hereof, and other contracts, arrangements, commitments or
understandings described in the SierraWest Disclosure Schedule; provided,
however, that this paragraph (b) shall be subject to the provisions of 100%
in aggregate Liquidation Amountparagraph
(d) hereof. BC and SierraWest hereby acknowledge that consummation of the Capital Securities, consolidate,
amalgamate, merge with or into, or be replaced by or convey, transfer or
lease its propertiesMerger
will constitute a "Change in Control" for purposes of all Plans, contracts,
arrangements and assets substantially as an entiretycommitments of SierraWest identified pursuant to any other
entity or permit any other entity to consolidate, amalgamate, merge with or
into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Trust or the successor entity
to be taxable as a corporation or as other than a grantor trust for United
States federal income tax purposes.
Voting Rights; Amendment of Trust AgreementSection 3.1(j)
that contain change in control provisions.
(c) Except as provided belowin Section 5.6(g), SierraWest and under "--Removal of Trustees;
Appointment of Successors" and "Description of Guarantee -- Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Capital Securities will have no voting rights. The New
Capital Securities and any Old Capital Securities remaining outstanding after
the Exchange Offer will vote together as a single class onits Subsidiaries
shall take all matters on
which holders of the Capital Securities are entitled to vote.
The Trust Agreement may be amended from time to time by the holders
of a majority of the Common Securities and the Issuer Trustees, without the
consent of the holders of the Capital Securities (i) to cure any ambiguity,
correct or supplement any provisions in the Trust Agreement that may be
inconsistent with any other provision, or to make any other provisions with
respect to matters or questions arising under the Trust Agreement, which are
not inconsistent with the other provisions of the Trust Agreement, provided
that any such amendment does not adversely affect in any material respect the
interests of any holder of Trust Securities, or (ii) to modify, eliminate or
add to any provisions of the Trust Agreement to such extent as may beaction necessary to ensure that no further mortgage loans will be
made to employees and to amend any retiree medical plans so that no additional
retirees shall become entitled to continuing medical insurance benefits
thereunder.
(d) Except as otherwise provided herein, nothing in this Section 5.6 shall
be interpreted as preventing BC or its Subsidiaries after the Trust will not be taxable as a corporationEffective Time
from amending, modifying or as
other than a grantor trust for United States federal income tax purposes atterminating any time that any Trust Securities are outstanding or to ensure that the
Trust will not be required to register as an "investment company" under the
Investment Company Act, provided that any such amendment does not adversely
affect in any material respect the interests of any holder of Trust
Securities. Any amendments of the Trust Agreement pursuant to the foregoing
sentence will become effective when notice of such amendment is given to the
holders of Trust Securities. The Trust Agreement may also be amended by the
holders of a majority of the Common Securities and the Trustees with (i) the
consent of holders representing not less than a majority in aggregate
Liquidation Amount of the outstanding Capital Securities and (ii) receipt by
the Trustees of an opinion of counsel to the effect that such amendmentPlans, or the exercise of any power granted to the Trusteesother contracts,
arrangements, commitments or understandings, in accordance with their terms and
applicable law.
(e) Prior to the Closing Date, SierraWest and its Subsidiaries shall
implement the modifications to its present incentive compensation and bonus
plans which are described more fully in Section 5.6(e) of the SierraWest
Disclosure Schedule which will provide for the settlement promptly after the
Effective Time of the accrued entitlement of the participants in such amendment will notplans as
of such date. BC and BW shall cause such entitlements to be paid to the
respective participants promptly after the Effective Time subject to required
withholdings. For the period from the Closing Date to and including December 31,
1999, BC and BW shall either cause the Trustexisting incentive compensation and bonus
plans of SierraWest and its Subsidiaries to be taxable as a corporation or as other
than a grantor trust for United States federal income tax purposes or affect
the Trust's exemption from status as an "investment company" under the
Investment Company Act. Without the consent of each holder of Trust
Securities, the Trust Agreement may not be amended to (i) change the amount
or timing of any Distribution on the Trust Securities or otherwise adversely
affect the amount of any Distribution required to be made in respect of the
Trust Securities as of a specified date or (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date.
So long as any Junior Subordinated Debentures are heldcontinued by the Trust,
the Property Trustee will not (i) direct the time, method and place of
conducting any proceeding for any remedySurviving
Corporation or shall make comparable plans available to the Debenture Trustee,
or execute any trust or power conferred onparticipants in such
plans.
(f) After the Property Trustee with respectClosing Date, BC and BW shall cause the Surviving Corporation
to honor the Junior Subordinated Debentures, (ii) waive any past default that is
waivableobligations of SierraWest under Section 5.132.6(b) of the Junior Subordinated Indenture, (iii)
exercise any rightPlan of
Acquisition and Merger dated November 13, 1997, among SierraWest, SWB,
California Community Bancshares and Continental Pacific Bank.
(g) After the Closing Date, BC shall and BC and BW shall cause the
Surviving Corporation to rescind or annul a declarationhonor the arrangements regarding health and life
insurance coverage, continuation of directors' fees and deferral of directors'
fees for certain individuals which are described in Section 5.6(g) of the
SierraWest Disclosure Schedule and SierraWest shall have performed all necessary
actions so that the Junior
Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Junior Subordinated Indenturevarious plans or
arrangements which are described in Section 5.6(g) of the Junior Subordinated Debentures, where such consentSierraWest Disclosure
Schedule shall be required,
without, ineffective at the Effective Time.
5.7 Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time, the Surviving Corporation shall
indemnify, defend and hold harmless each case, obtainingperson who is now, or has been at any
time prior to the
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date hereof or who becomes prior approvalto the Effective Time, an officer or director
of the holdersSierraWest or any of at
least a majority in aggregate Liquidation Amount of the outstanding Capital
Securities, except that if a consent under the Junior Subordinated Indenture
would require the consent of each holder of Junior Subordinated Debentures
affected thereby, no such consent will be given by the Property Trustee
without the prior consent of each holder of the Capital Securities. The
Property Trustee will not revoke any action previously authorizedits Subsidiaries (the "Indemnified Parties") against (i)
all losses, claims, damages, costs, expenses, liabilities or approved
by a vote of the holders of the Capital Securities except by subsequent vote
of the holders of the Capital Securities. The Property Trustee will notify
each holder of Capital Securitiesjudgments or
amounts of any notice of default with respect to
the Junior Subordinated Debentures. In addition to obtaining the foregoing
approvals of the holders of the Capital Securities, before taking any of the
foregoing actions, the Property Trustee will obtain an opinion of counsel
experienced in such matters to the effect that the Trust will not be taxable
as a corporationnature whatsoever, governmental or as other than a grantor trust for United States federal
income tax purposes on account of such action.
Any required approval of holders of Capital Securities may be given
at a meeting of holders of Capital Securities convened for such purpose or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of Capital Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be
taken, to be given to each registered holder of Capital Securities in the
manner set forth in the Trust Agreement.
No vote or consent of the holders of Capital Securities will be
required to redeem and cancel Capital Securities in accordance with the Trust
Agreement.
Notwithstanding that holders of Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Corporation, the Issuer Trustees or
any affiliate of the Corporation or any Issuer Trustee, will, for purposes of
such vote or consent, be treated as if they were not outstanding.
Expenses and Taxes
Since the Trust was formed solely to facilitate an investment in the
Junior Subordinated Debentures, the Corporation, as borrower, has covenanted
in the Junior Subordinated Indenture to pay all debts and obligations (other
than with respect to the Capital Securities and Common Securities) and all
costs and expenses of the Trustnon-governmental (including
but not limited to reasonable expenses of counsel and investigation) that are
paid in settlement of or in connection with any claim, action, suit, proceeding
or investigation based in whole or in part on or arising in whole or in part out
of the fact that such person is or was a director or officer of SierraWest or
any Subsidiary of SierraWest, whether pertaining to any matter existing or
occurring at or prior to the Effective Time and whether asserted or claimed
prior to, or at or after, the Effective Time ("Indemnified Liabilities") and
(ii) all costsIndemnified Liabilities based in whole or in part on, or arising in
whole or in part out of, or pertaining to this Agreement or the transactions
contemplated hereby, in each case to the full extent that SierraWest would have
been permitted under applicable law and its Articles of Incorporation, and the
Surviving Corporation is permitted under California law, to indemnify such
person (and the Surviving Corporation shall pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
full extent permitted by law with no bond or security to be required upon
receipt of any undertaking required by Section 317(f) of the California
Corporations Code). Without limiting the foregoing, in the event any such claim,
action, suit, proceeding or investigation is brought against any Indemnified
Parties (whether arising before or after the Effective Time), (i) any counsel
retained by the Indemnified Parties for any period after the Effective Time
shall be reasonably satisfactory to the Surviving Corporation; (ii) after the
Effective Time, the Surviving Corporation shall pay all reasonable fees and
expenses relatingof such counsel for the Indemnified Parties promptly as statements
therefor are received; and (iii) after the Effective Time, the Surviving
Corporation will use all reasonable efforts to assist in the vigorous defense of
any such matter, provided that the Surviving Corporation shall not be liable for
any settlement of any claim effected without its written consent, which consent,
however, shall not be unreasonably withheld or delayed. Any Indemnified Party
wishing to claim indemnification under this Section 5.7, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify the
Surviving Corporation (but the failure so to notify the Surviving Corporation
shall not relieve it from any liability which it may have under this Section 5.7
except to the organizationextent such failure materially prejudices the Surviving
Corporation), and shall deliver to the Surviving Corporation the undertaking, if
any, required by Section 317(f) of the Trust,California Corporations Code. The
Surviving Corporation shall be liable for the fees and expenses hereunder with
respect to only one law firm, in addition to local counsel in each applicable
jurisdiction, to represent the Indemnified Parties as a group with respect to
each such matter unless there is, under applicable standards of professional
conduct, a conflict between the Trusteespositions of any two or more Indemnified Parties
that would preclude or render inadvisable joint or multiple representation of
such parties.
(b) For a period of four years after the Effective Time, BC shall cause to
be maintained in effect the current policies of directors' and all costsofficers'
liability insurance maintained by SierraWest and expenses relatingits Subsidiaries (provided that
BC may substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are not materially less advantageous in
the aggregate) with respect to claims arising from facts or events which
occurred before the operation of the
Trust) andEffective Time; provided, however, that BC shall not be
obligated to pay any and all taxes, duties, assessments or governmental
charges of whatever nature (other than United States federal withholding
taxes) imposed on the Trust by the United States, or any other taxing
authority, so that the net amounts received and retained by the Trust and the
Property Trustee after payingmake annual premium payments for such expenses will be equal to the amounts the
Trust and the Property Trustee would have received had no such costs or
expenses been incurred by or imposed on the Trust. Such obligations shall
rank subordinate and junior in right of payment,insurance to the extent set forth in
the Junior Subordinated Indenture, to all Senior Indebtednesssuch
premiums exceed 150% of the Corporation.premiums paid by SierraWest and SWB in respect of
1998 for such insurance, as previously disclosed to BC ("SierraWest's Current
Premium"), and if such premiums for such insurance would at any time exceed 150%
of SierraWest's
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Current Premium, then BC shall cause to be maintained policies of insurance
which, in BC's good faith determination, provide the maximum coverage available
at an annual premium equal to 150% of SierraWest's Current Premium.
(c) The foregoing obligationsprovisions of the Corporationthis Section 5.7 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party, his or her heirs and
his or her representatives and are in addition to, and not in substitution for,
any personother rights to indemnification or entity to which any
such debts, obligations, costs, expenses and taxes are owed (each, a
"Creditor") whether or not such Creditor has received notice thereof. Any
such Creditor may enforce such obligations of the Corporation directly
against the Corporation, and the Corporation has irrevocably waived any right
or remedy to requirecontribution that any such Creditor takeperson may
have by contract or otherwise.
(d) BW acknowledges and agrees to honor the obligations contained in
Section 3.3(d) of the Plan of Acquisition and Merger dated as of November 13,
1997, among SierraWest, SWB, California Community Bancshares Corporation and
Continental Pacific Bank.
5.8 Additional Agreements. In case at any time after the Effective Time
any further action against the Trust
or any other person before proceeding against the Corporation. The
Corporation shall execute such additional agreements as may beis necessary or desirable to give full effectcarry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall take all such necessary action.
5.9 Fees and Expenses. Except as otherwise expressly provided herein,
whether or not the foregoing.
Paymenttransactions contemplated hereby are consummated, all costs
and Paying Agency
Payments in respect of the Capital Securities represented by one or
more Global Capital Securities (as defined herein; see "Book-Entry Issuance")
will be made to DTC, which will credit the relevant accounts at DTC on the
applicable Distribution Dates. Payments in respect of the Capital Securities
which are issued in definitive registered form will be made by check mailed
to the address of the holder entitled thereto as such address appears on the
securities register for the Trust Securities. The paying agent (the "Paying
Agent") will initially be the Property Trustee and any co-paying agent chosen
by the Property Trustee and acceptable to the Administrative Trustees. The
Paying Agent will be permitted to resign as Paying Agent upon 30 days'
written notice to the Property Trustee and the Administrative Trustees. If
the Property Trustee is no longer the Paying Agent, the Administrative
Trustees will appoint a successor (which must be a bank or trust company
reasonably acceptable to the Corporation) to act as Paying Agent.
Registrar and Transfer Agent
The Property Trustee will act as registrar and transfer agent for the
Capital Securities.
Registration of transfers of Capital Securities will be effected
without charge by or on behalf of the Trust, but the Trust may require
payment of any tax or other governmental charges that may be imposedexpenses incurred in connection with any transfer or exchange. The Property Trustee will not be
required to register or cause to be registered the transfer of the Capital
Securities after the Capital Securities have been called for redemption.
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and
continuance of an Event of Default, undertakes to perform only such duties as
are specifically set forth in the Trustthis Agreement and afterthe transactions
contemplated hereby shall be paid by the party incurring such Eventexpense.
5.10 Cooperation. During the period from the date of Default, must exercisethis Agreement to
the same degreeEffective Time, each of careSierraWest and skillBC shall, (i) confer on a regular and
frequent basis with the other, report on operational matters, policies and
banking practices and promptly advise the other orally and in writing of any
change or event having, or which, insofar as can reasonably be foreseen, could
have, a prudent personmaterial adverse effect on SierraWest or BC, as the case may be, or
which would exercisecause or use in the conductconstitute a material breach of his or her own affairs. Subject to
this provision, the Property Trustee is under no obligation to exercise any of the powers vested in it byrepresentations,
warranties or covenants of such party contained herein and (ii) cause each
Subsidiary of SierraWest and BC that is a bank to file all call reports with the
Trust Agreement at the request of any
holder of Capital Securities unless it is offered reasonable indemnity
against the costs, expensesappropriate Bank Regulators and liabilities that might be incurred thereby.
If no Event of Default has occurredall other reports, applications and is continuing and the Property
Trustee is required to decide between alternative courses of action, or
construe ambiguous provisions in the Trust Agreement, or is unsure of the
application of any provision of the Trust Agreement, and the matter is not
one on which holders of Trust Securities are entitled under the Trust
Agreement to vote, then the Property Trustee will take such action as it
deems advisable and in the best interests of the holders of the Trust
Securities and will have no liability except for its own bad faith,
negligence or willful misconduct.
For information concerning the relationships between The First
National Bank of Chicago and the Corporation, see "Description of Junior
Subordinated Debentures -- Information Concerning the Debenture Trustee."
Miscellaneous
The Administrative Trustees are authorized and directed to conduct
the affairs of and to operate the Trust in such a way that the Trust will not
be deemed to be an "investment company"other
documents required to be registeredfiled with the applicable Governmental Entities between
the date hereof and the Effective Time.
5.11 Affiliates. Each of BC and SierraWest shall use its commercially
reasonable efforts to cause each director, executive officer and other person
who is an "affiliate" (for purposes of Rule 145 under the Investment CompanySecurities Act, or taxable as a corporation or as other than a grantor
trust for United States federal income tax purposes and so that the Junior
Subordinated Debentures will be treated as indebtedness of the Corporation
for United States federal income tax purposes. In this connection, the
Administrative Trustees are authorized to take any action, not inconsistent
with applicable law, the certificate of trust of the Trust or the Trust
Agreement, that the holder of the Common Securities and such Administrative
Trustees determine in their discretion to be necessary or desirable for such
purposes, as long as such action does not materially adversely affect the
interests of the holders of the Capital Securities.
Holders of the Capital Securities have no preemptive or similar
rights.
The Trust may not borrow money or issue debt or mortgage or pledge
any of its assets.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Old Junior Subordinated Debentures were issued and the New Junior
Subordinated Debentures are to be issued under the Junior Subordinated
Indenture, under which The First National Bank of Chicago is acting as
Debenture Trustee (the "Debenture Trustee"). This summary of certain terms
and provisions of the Junior Subordinated Debentures and the Junior
Subordinated Indenture does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, all the provisions of the
Junior Subordinated Indenture, including the definitions therein of certain
terms. Whenever particular defined terms of the Junior Subordinated
Indenture (as amended or supplemented from time to time) are referred to
herein, such defined terms are incorporated herein by reference.
General
Concurrently with the issuance of the Old Capital Securities, the
Trust invested the proceeds thereof, together with the consideration paid by
the Corporation for the Common Securities, in the
Old Junior Subordinated
Debentures issued bycase of affiliates of SierraWest, and for purposes of qualifying the Corporation. PursuantMerger for
pooling of interests accounting treatment, in the case of affiliates of either
BC or SierraWest) of such party to the Exchange Offer, the
Corporation will exchange the Old Junior Subordinated Debentures for the New
Junior Subordinated Debenturesexecute and deliver, as soon as practicable
after the Expiration
Date. No Old Junior Subordinated Debenturesdate of this Agreement, and in any event prior to the date of the
SierraWest Shareholders meeting, a written agreement, in substantially the form
heretofore agreed to by the parties hereto.
5.12 Stock Exchange Listing. BC shall use its commercially reasonable
efforts to cause the shares of BC Common Stock to be issued in the Merger to be
approved for listing on the NYSE, subject to official notice of issuance, prior
to the Effective Time.
5.13 Advice of Changes. BC and SierraWest shall promptly advise the other
party of any change or event which, individually or in the aggregate with other
such changes or events, has a material adverse effect on it or which it believes
would or would be reasonably likely to cause or constitute a material breach of
any of its representations, warranties or covenants contained herein.
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5.14 Subsequent Interim and Annual Financial Statements; Certain
Reports. As soon as reasonably available, but in no event more than 45 days
after the end of each fiscal quarter (other than the fourth quarter of a fiscal
year) or 90 days after December 31, 1998 or the end of each fiscal year ending
after the date of this Agreement, each party will remain outstandingdeliver to the other party its
Quarterly Report on Form 10-Q or its Annual Report on Form 10-K, as the case may
be, as filed with the SEC under the Exchange Act and SierraWest will furnish to
BC copies of its management's monthly interim reports (which do not comply with
the published rules and regulations of the SEC or GAAP) to SierraWest's Board of
Directors within two days after such exchange. The following is a descriptionreports are so furnished to the Board. No
later than March 31, 1999, SierraWest will cause there to be delivered to BC
copies of the Junior Subordinated
Debentures.
The Junior Subordinated Debentures bear interest, accruing from June
30, 1997, atconsolidated statements of financial condition of SierraWest and
its Subsidiaries, as of December 31, 1998, and the annual raterelated consolidated
statements of 8.343%income, shareholders' equity and cash flows for the fiscal year
ended December 31, 1998, accompanied by the report of Deloitte & Touche LLP,
independent auditors with respect to SierraWest.
5.15 Dissenters' Rights. SierraWest shall include in the notice of the
principal amount thereof,
payable semi-annually in arrears on January 1 and July 1SierraWest Shareholders' Meeting the summary of certain provisions of the
California Corporations Code as required by California Corporation's Code, ss.
1300(b)(1), so that the shares of SierraWest Common Stock shall not constitute
"dissenting shares."
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation. The respective obligations of
each year (each,
an "Interest Payment Date"), commencing January 1, 1998,party to consummate the transactions contemplated by this Agreement shall
be subject to the person in
whose name each Junior Subordinated Debenture is registered atsatisfaction on or prior to the closeClosing Date of businessthe following
conditions:
(a) Shareholder Approval. The SierraWest Shareholder Approval shall
have been obtained.
(b) Other Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, and all expirations of
waiting periods imposed by, any Governmental Entity (all the foregoing,
"Consents") which are necessary pursuant to the Merger, other than
immaterial Consents the failure to obtain which would have no material
adverse effect on the fifteenth day (whether or not a Business Day) next preceding
such Interest Payment Date. It is anticipated that, until the liquidation,
if any,consummation of the Trust, each Junior Subordinated Debenture willtransactions contemplated by this
Agreement and the Agreement of Merger or on either BC or the Surviving
Corporation, shall have been filed, have occurred or been obtained (all
such permits, approvals, filings and consents and the lapse of all such
waiting periods being referred to as the "Requisite Regulatory Approvals")
and all such Requisite Regulatory Approvals shall be held in full force and
effect.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the nameconsummation of the Property Trusteetransactions contemplated
by this Agreement or the Transaction Agreements shall be in trusteffect. There
shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the transactions
contemplated by this Agreement or the Transaction Agreements, by any
Federal, state or foreign Governmental Entity of competent jurisdiction
which makes the consummation of the transactions contemplated by this
Agreement or the Transaction Agreements illegal.
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(d) NYSE Listing. The shares of BC Common Stock which shall be issued
to the shareholders of SierraWest upon consummation of the Merger shall
have been approved for listing upon official notice of issuance on the
benefitNYSE.
(e) S-4. The S-4 shall become effective under the Securities Act, no
stop orders suspending the effectiveness of the S-4 shall have been issued
and no proceedings for that purpose shall have been initiated or threatened
by the SEC.
(f) Pooling. Each of BC and SierraWest shall have received a letter
from its independent public accountants, dated the Closing Date, in form
and substance reasonably satisfactory to BC and SierraWest, respectively,
to the effect that the Merger will qualify for "pooling of interests"
accounting treatment, provided that if either party shall have knowingly
taken or omitted to take any action which shall have prevented such party's
independent public accountants from rendering such letter, then this
condition shall not be applicable to such party.
6.2 Conditions to Obligations of BC. The obligation of BC to consummate
the transactions contemplated by this Agreement is subject to the satisfaction
of the following conditions unless waived by BC:
(a) Representations and Warranties. The representations and
warranties of SierraWest set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the
Closing Date, and BC shall have received a certificate signed on behalf of
SierraWest by its President and Chief Executive Officer and its Chief
Financial Officer to such effect.
(b) Performance of Obligations. SierraWest shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and BC shall have received
a certificate signed on behalf of SierraWest by its President and Chief
Executive Officer and its Chief Financial Officer to such effect.
(c) Corporate Action. BC shall have received a copy of the resolution
or resolutions duly adopted by the Board of Directors (or a duly authorized
committee thereof) of SierraWest and of the holders of the Trust Securities. The amountSierraWest
Common Stock authorizing the execution, delivery and performance by
SierraWest of interest payable for any period less than a
full interest periodthis Agreement, certified by the Secretary or an Assistant
Secretary of SierraWest.
(d) Tax Opinion. BC shall have received the opinion of Pillsbury
Madison & Sutro LLP, counsel to BC, dated the Closing Date, to the effect
that (i) the Merger will be computedtreated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and (ii) BC
and SierraWest will each be a party to that reorganization within the
meaning of Section 368(b) of the Code. In rendering such opinion, such
counsel may require and rely upon representations and covenants contained
in certificates of officers of BC, SierraWest and others.
(e) SierraWest Rights Agreement. The rights issued pursuant to the
SierraWest Rights Agreement shall not have become nonredeemable,
exercisable, distributed or triggered pursuant to the terms of such
agreement.
(f) Burdensome Condition. There shall not be any action taken, or any
statute, rule, regulation, order or decree enacted, entered, enforced or
deemed applicable to the Merger or the other Transaction Agreements by any
Federal, state or foreign
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Governmental Entity which, in connection with the grant of a Requisite
Regulatory Approval or otherwise, imposes any condition or restriction (a
"Burdensome Condition") upon BC or its Subsidiaries or any Affiliate hereof
which would reasonably be expected to (i) have a material adverse effect
after the Effective Time on the basispresent or prospective consolidated
financial condition, business, operating results or prospects of BC or the
Surviving Corporation (including, without limitation, any requirement to
dispose of any material assets or businesses or restrict in any significant
way any material operations or activities), (ii) prevent BC or its
Subsidiaries from realizing all or a 360-day yearsubstantial portion of twelve 30-day monthsthe economic
benefits of the transactions contemplated by this Agreement, or (iii)
materially impair BC's ability to exercise and enforce its rights under the
Transaction Agreements.
(g) SAS 71 Review Letters. SierraWest shall have provided to BC a
review report prepared in accordance with the provisions of Statement of
Accounting Standards No. 71 ("SAS 71"), Interim Financial Information, by
SierraWest's independent accountants covering SierraWest's quarterly
financial report for the most recent quarter ending at least 45 days prior
to the Closing Date.
(h) Bank Merger. All conditions precedent (including required
regulatory approvals) to the consummation of the Bank Merger shall have
been satisfied and the actual days elapsed in a partial month inBank Merger shall be able to be consummated
immediately following the Effective Time of the Merger.
(i) No Dissenters' Rights. BC shall have determined to its
satisfaction that no holders of SierraWest Common Stock are entitled to
have their shares treated as "dissenting shares" under Section 1300 of the
California Corporations Code by reason of the Merger because such period. The amount of interest payable for any full interest period will be
computed by dividing the rate per annum by two. If any date on which
interest is payableshares
are listed on the Junior Subordinated Debentures islist of OTC margin stocks maintained by the Federal
Reserve and demands for payment shall not a Business
Day, then paymenthave been filed with respect to
5% or more of the interest payable on such date will be made on the
next succeeding day that is a Business Day (without any interest or other
payment in respect of any such delay), with the same force and effect as if
made on the date such payment was originally payable. Accrued interest that
is not paid on the applicable Interest Payment Date will bear additional
interest on the amount thereof (to the extent permitted by law) at the rate
per annum of 8.343%, compounded semi-annually and computed on the basis of a
360-day year of twelve 30-day months and the actual days elapsed in a partial
month in such period. The amount of additional interest payable for any full
interest period will be computed by dividing the rate per annum by two. The
term "interest" as used herein includes semi-annual interest payments,
interest on semi-annual interest payments not paid on the applicable Interest
Payment Date and Additional Sums (as defined herein), as applicable.
The Junior Subordinated Debentures will mature on July 1, 2027.
The Junior Subordinated Debentures will be unsecured and will rank
junior and be subordinate in right of payment to all Senior Indebtednessshares of the Corporation. BecauseSierraWest Common Stock then outstanding.
6.3 Conditions to Obligations of SierraWest. The obligation of SierraWest
to consummate the Corporation is a holding company, the right of
the Corporation to participate in any distribution of assets of any
subsidiary, including its banking subsidiaries, upon such subsidiary's
dissolution, winding-up, liquidation or reorganization or otherwise (and thus
the ability of holders of the Junior Subordinated Debentures to benefit
indirectly from such distribution),transactions contemplated by this Agreement is subject to the
prior claimssatisfaction of creditorsthe following conditions unless waived by SierraWest:
(a) Representations and Warranties. The representations and
warranties of that subsidiary, exceptBC set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and (except to the
extent such representations speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, and SierraWest shall
have received a certificate signed on behalf of BC by its Chairman and
Chief Executive Officer or its President or Chief Financial Officer to such
effect.
(b) Performance of Obligations. BC shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and SierraWest shall have
received a certificate signed on behalf of BC by its President or its Chief
Financial Officer to such effect.
(c) Tax Opinion. SierraWest shall have received the opinion of
McCutchen, Doyle, Brown & Enersen LLP, counsel to SierraWest, dated the
Closing Date, to the effect that (i) the Corporation may
itselfMerger will be treated for Federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code and (ii) BC and SierraWest will each be a creditorparty to that
reorganization within the meaning of that subsidiary and its claims as such are
recognized. There are various legal limitations on the extent to which
certainSection 368(b) of the Corporation's subsidiariesCode. In
rendering such opinion, such counsel may extend credit, pay dividendsrequire and
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rely upon representations and covenants contained in certificates of
officers of BC, SierraWest and others.
(d) Corporate Action. SierraWest shall have received a copy of the
resolution or resolutions duly adopted by the Board of Directors of BC
authorizing the execution, delivery or performance by BC of this Agreement
and the other Transaction Agreements, certified by the Secretary or an
Assistant Secretary of BC.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, by action taken or authorized by the Board of Directors of
the terminating party or parties, whether before or after adoption of the
Agreement by the shareholders of SierraWest:
(a) by mutual consent of BC and SierraWest in a written instrument;
(b) by (i) either BC or SierraWest upon written notice to the other
party if any Bank Regulator shall have issued an order denying approval of
the Merger and the other material aspects of the transactions contemplated
by this Agreement or if any Governmental Entity of competent jurisdiction
shall have issued a final permanent order enjoining or otherwise
supply fundsprohibiting the consummation of the transactions contemplated by this
Agreement or (ii) by BC, if any Governmental Entity of competent
jurisdiction shall have issued an order in connection with the transactions
contemplated hereby imposing a Burdensome Condition on BC or the Surviving
Corporation, and in any such case the time for appeal or petition for
reconsideration of any such order referred to in clauses (i) or (ii) shall
have expired without such appeal or petition being granted;
(c) by either BC or SierraWest if the Merger shall not have been
consummated on or before September 30, 1999; provided that if the Merger
shall not been consummated on or before such date due to the Corporationact or
certainomission of BC or SierraWest, then that party may not terminate this
Agreement pursuant to this paragraph (c);
(d) by BC in the event of a breach by SierraWest of any
representation, warranty or covenant contained in this Agreement, which
breach (i) either is not cured within 45 days after the giving of written
notice to SierraWest, or is of a nature which cannot be cured prior to the
Closing and (ii) would entitle the non-breaching party to elect not to
consummate the transactions contemplated hereby pursuant to Article VI;
provided, however, that BC may immediately terminate this agreement upon
notice to SierraWest in the event that SierraWest shall breach the covenant
provided for in Section 5.4 hereof;
(e) by SierraWest in the event of a breach by BC of any
representation, warranty or covenant contained in this Agreement, which
breach (i) either is not cured within 45 days after the giving of written
notice to BC or is of a nature which cannot be cured prior to the Closing
and (ii) would entitle the non-breaching party to elect not to consummate
the transactions contemplated hereby pursuant to Article VI;
(f) by BC if, in accordance with Section 5.3, the Board of Directors
of SierraWest fails to recommend adoption of this Agreement by the
shareholders of SierraWest, or amends or modifies such recommendation in a
manner materially adverse to BC or withdraws such recommendation to the
shareholders of SierraWest;
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(g) by BC or SierraWest, if the SierraWest Shareholder Approval shall
not have been obtained at a duly held meeting of shareholders of SierraWest
held for such purpose or at any adjournment, postponement or continuation
thereof; or
(h) by the Board of Directors of SierraWest, if the Board of Directors
so determines by a vote of a majority of the members of its other affiliates.
Accordingly, the Junior Subordinated Debentures will be effectively
subordinated to all existing and future liabilities of the Corporation's
subsidiaries, and holders of Junior Subordinated Debentures should look only
to the assets of the Corporation for payments on the Junior Subordinated
Debentures. See "First Hawaiian, Inc." The Junior Subordinated Indenture
does not limit the incurrence or issuance of other secured or unsecured debt
by the Corporation, including Senior Indebtedness, whether under the Junior
Subordinated Indenture or any existing or other indenture that the
Corporation may enter into in the future or otherwise. See "--
Subordination."
Option To Extend Interest Payment Period
So long as no Debenture Event of Default has occurred and is
continuing, the Corporation has the rightentire Board,
at any time during the termtwo-Business Day period commencing on the first
Business Day after the Determination Date (as defined herein), if (i) the
Average BC Closing Price shall be less than the product of 0.85 and the
Junior Subordinated DebenturesAverage BC Starting Price, and (ii) the number obtained by dividing the
Average BC Closing Price by the Average BC Starting Price (the "BC Ratio")
shall be less than the number obtained by dividing the Final Index Price by
the Initial Index Price and by multiplying such quotient by 0.85 (the
"Index Ratio"); subject, however, to defer the paymentfollowing provisions of interestthis
paragraph (h). If SierraWest elects to exercise its termination right
pursuant to the immediately preceding sentence, it shall give prompt
written notice to BC during such two-Business Day period by means of
facsimile transmission (as provided in Section 8.2 hereof); provided that
such notice of election to terminate may be withdrawn at any time within
the aforementioned two-Business Day period. During the five Business-Day
period commencing on the day after receipt of such notice of election to
terminate, BC shall have the option of adjusting the Exchange Ratio to
equal the lesser of (A) a number equal to a quotient (rounded to the
nearest one ten-thousandth), the numerator of which is the product of 0.85,
the Average BC Starting Price and the Exchange Ratio (as then in effect)
and the denominator of which is the Average BC Closing Price and (B) a
number equal to a quotient (rounded to the nearest one ten-thousandth), the
numerator of which is the Index Ratio multiplied by the Exchange Ratio (as
then in effect) and the denominator of which is the BC Ratio. If BC makes
the election contemplated by the preceding sentence, within such five
Business-Day period, it shall give prompt written notice to SierraWest of
such election and the revised Exchange Ratio, whereupon no termination
shall have occurred pursuant to this paragraph (h) and this Agreement shall
remain in effect in accordance with its terms (except as the Exchange Ratio
shall have been so modified), and any references in this Agreement to
"Exchange Ratio" shall thereafter be deemed to refer to the Exchange Ratio
as adjusted pursuant to this paragraph (h).
For purposes hereof, the following terms have the following meanings:
(i) "Average BC Closing Price" shall mean the average of the
closing prices of BC Common Stock on the NYSE for the 20 consecutive
trading days ending on the Determination Date, rounded to four decimal
places, whether or from timenot trades occurred on those days (subject to
timeadjustment as provided below and provided that if no trades of BC Common
Stock shall occur on a given trading day the closing price thereof on
the next preceding day when a trade shall have occurred shall be deemed
to be the closing price on such day for the purposes hereof). In the
event BC pays, declares or otherwise effects a period not exceeding 10 consecutive semi-annual
periodsstock split, reverse
stock split, reclassification or stock dividend or stock distribution
with respect to each Extension Period, provided that no Extension
Period may extend beyond the Stated MaturityBC Common Stock between the date of this Agreement
and the Effective Time, appropriate adjustments will be made to the
Average BC Closing Price of BC Common Stock.
(ii) "Average BC Starting Price" shall mean the average of the
Junior Subordinated
Debentures. At the endclosing prices of such Extension Period, the Corporation must pay
all interest then accrued and unpaid (together with interest thereon at the
annual rate of 8.343%, compounded semi-annually and computedBC Common Stock on the basisNYSE for the five consecutive
trading days
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immediately preceding the day on which a press release regarding this
Agreement shall be issued.
(iii) "Determination Date" shall mean the date on which approval of
a 360-day yearthe FDIC required for consummation of twelve 30-day monthsthe Merger shall be received.
(iv) "Index" shall mean the Standard & Poor's Mid-Cap Regional Bank
Index (MBKRG) as published by Bloomberg Financial Markets.
(v) "Initial Index Price" shall mean the average of the Index on
the five consecutive trading days immediately preceding the public
announcement of this Agreement.
(vi) "Final Index Price" shall mean the average of the Index for
the 20 trading day period referred to in the definition of Average BC
Closing Price.
(vii) "Trading day" shall have the meaning ascribed thereto in
Section 2.3 hereof.
(i) by BC if SierraWest shall have failed to deliver the financial
statements and report of Deloitte & Touche LLP accompanying such financial
statements pursuant to the last sentence of Section 5.14 hereto or if the
financial statements so delivered shall reflect any material adverse change
in the consolidated financial condition, income, shareholders' equity or
cash flows of SierraWest and its Subsidiaries compared to the financial
condition, income, shareholders' equity or cash flows reflected in the
unaudited consolidated financial statements of SierraWest and its
Subsidiaries, or if the report of Deloitte & Touche LLP accompanying such
financial statements contains any qualifications which are not satisfactory
to BC.
7.2 Effect of Termination. In the event of termination of this Agreement
by either SierraWest or BC as provided in Section 7.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of BC or SierraWest or their respective officers or directors except (i) with
respect to Sections 3.1(t) and the actual days elapsed in a
partial month in such period, to the extent permitted by applicable law).
The amountpenultimate sentence of additional interest payable for any full interest period will
be computed by dividing the rate per annum by two. During an Extension
Period, interest will continue to accrueSection 5.2, and holders of Junior Subordinated
Debentures (or holders of Capital Securities while outstanding) will be
required to accrue interest income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences -- Interest Income
and Original Issue Discount."
During any such Extension Period, the Corporation may not (i) declare
or pay any dividends or distributions on, or redeem, purchase, acquire or
make a liquidation payment(ii)
with respect to any of the Corporation's capital
stockliabilities or (ii) make any payment of principal ofdamages incurred or interest or premium, if
any, on or repay, repurchase or redeem any debt securities of the Corporation
that rank pari passu in all respects with or junior in interest to the Junior
Subordinated Debentures (other than (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Corporation in connection with
any employment contract, benefit plan or other similar arrangement with or
for the benefit of any one or more employees, officers, directors or
consultants, in connection withsuffered by a dividend reinvestment or shareholder stock
purchase plan or in connection with the issuance of capital stock of the
Corporation (or securities convertible into or exercisable for such capital
stock) as consideration in an acquisition transaction entered into prior to
the applicable Extension Period, (b)party as a
result of an exchangethe willful breach by the other party or conversionparties of any classof its
representations, warranties, covenants or seriesagreements set forth in this
Agreement.
7.3 Amendment. This Agreement may be amended by the parties hereto at any
time before or after adoption of this Agreement by the shareholders of
SierraWest, but after any such approval, no amendment shall be made which by law
requires further approval by such shareholders without such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the Corporation's capital stock (orparties hereto.
7.4 Extension; Waiver. At any capital
stock of a subsidiary of the Corporation) for any class or series of the
Corporation's capital stock or of any class or series of the Corporation's
indebtedness for any class or series of the Corporation's capital stock, (c)
the purchase of fractional interests in shares of the Corporation's capital
stock pursuant to the conversion or exchange provisions of such capital stock
or the security being converted or exchanged, (d) any declaration of a
dividend in connection with the adoption of any shareholders' rights plan, or
the issuance of rights, stock or other property under any shareholders'
rights plan, or the redemption or repurchase of rights pursuant thereto, or
(e) any dividend in the form of stock, warrants, options or other rights
where the dividend stock or the stock issuable upon exercise of such
warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock).
Prior to the termination of any such Extension Period, the Corporation may
further defer the payment of interest, provided that no Extension Period may
exceed 10 consecutive semi-annual periods or extend beyond the Stated
Maturity of the Junior Subordinated Debentures or end on a date other than an
Interest Payment Date. Upon the termination of any such Extension Period and
the payment of all amounts then due on any interest payment date, the
Corporation may elect to begin a new Extension Period subject to the above
conditions. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Corporation must give the Property Trustee
notice of its election of such Extension Period at least one Business Daytime prior to the earlierClosing Date, the parties
hereto, by action taken or authorized by their respective Board of Directors,
may, to the extent legally allowed, (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party.
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ARTICLE VIII
GENERAL PROVISIONS
8.1 Nonsurvival of Representations and Warranties. None of the
representations or warranties in this Agreement shall survive the Effective
Time.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date the Distributionsof delivery if delivered
personally, or by telecopy or telefacsimile, upon confirmation of receipt, (b)
on the Capital
Securities wouldfirst Business Day following the date of dispatch if delivered by a
recognized next-day courier service, or (c) on the third Business Day following
the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered as set
forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice.
(a) if to SierraWest, to
SierraWest Bancorp
10181 Truckee-Tahoe Airport Road
P.O. Box 61000
Truckee, CA 96160-9010
Fax: (530) 582-2953
Attention: Mr. William T. Fike, President and
Chief Executive Officer
with a copy to
James M. Rockett, Esq.
McCutchen, Doyle, Brown & Enersen, LLP
Three Embarcadero Center, Suite 2700
San Francisco, CA 94111-4067
Fax: (415) 393-2286
and
(b) if to BC and BW, to
BancWest Corporation
999 Bishop Street, 29th Floor
Honolulu, HI 96813
Fax: (808) 533-7844
Attention: Mr. Walter A. Dods, Jr., Chairman and
Chief Executive Officer
with a copy to
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, California 94104
Attention: Rodney R. Peck, Esq.
Fax: (415) 983-1200
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: Lee Meyerson, Esq.
Fax: (212) 455-2502
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8.3 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. The phrases "the date of this
Agreement", "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to February 25, 1999.
8.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been payable but for the election to begin such
Extension Period and (ii) the date the Property Trustee is required to give
notice to holderssigned by each of
the Capital Securities of the record date or the date
such Distributions are payable, but in any event not less than one Business
Day prior to such record date. The Property Trustee will give notice of the
Corporation's election to begin a new Extension Periodparties and delivered to the holdersother party, it being understood that both
parties need not sign the same counterpart.
8.5 Entire Agreement No Third Party Beneficiaries; Rights of
Ownership. This Agreement (including the Capital Securities. There is no limitation ondocuments and the number of times thatinstruments referred
to herein) (a) constitutes the Corporation may elect to begin an Extension Period.
Redemption
The Junior Subordinated Debentures are redeemableentire agreement and supersedes all prior
to maturity
atagreements and understandings, both written and oral, among the option of the Corporation, subject to the Corporation having received
the prior approval of the Federal Reserve to do so, if such approval is then
required under applicable Federal Reserve capital guidelines or policies, (i)
on or after July 1, 2007, in whole at any time or in part from time to time,
or (ii) in whole (but not in part) at any time within 90 days following the
occurrence and during the continuation of a Tax Event or Capital Treatment
Event (each as defined under "Description of Capital Securities --
Redemption"), in each case at the redemption price described below. The
proceeds of any such redemption will be used by the Trust to redeem the Trust
Securities.
The Redemption Price for Junior Subordinated Debentures in the case
of a redemption under (i) above shall equal the following prices, expressed
in percentages of the principal amount, together with accrued interest to but
excluding the date fixed for redemption, if redeemed during the 12-month
period beginning July 1:
Redemption
Year Price
- ---- ----------------------------------
2007 . . . . . . . . . . . . . . . 104.1715%
2008 . . . . . . . . . . . . . . . 103.7544
2009 . . . . . . . . . . . . . . . 103.3372
2010 . . . . . . . . . . . . . . . 102.9201
2011 . . . . . . . . . . . . . . . 102.5029
2012 . . . . . . . . . . . . . . . 102.0858
2013 . . . . . . . . . . . . . . . 101.6686
2014 . . . . . . . . . . . . . . . 101.2515
2015 . . . . . . . . . . . . . . . 100.8343
2016 . . . . . . . . . . . . . . . 100.4172
and 100% on or after July 1, 2017.
The Redemption Price for Junior Subordinated Debentures, in the case
of a redemption prior to July 1, 2007, following a Tax Event or Capital
Treatment Event, as described under (ii) above, will equal the Make-Whole
Amount (as defined under "Description of Capital Securities -- Redemption"),
together with accrued interest to but excluding the date fixed for
redemption.
Registration, Denomination and Transfer
The Junior Subordinated Debentures will initially be registered in
the name of the Property Trustee, as trustee of the Trust. If the Junior
Subordinated Debentures are distributed to holders of Capital Securities, it
is anticipated that the depositary arrangements for the Junior Subordinated
Debentures will be substantially identical to those in effect for the Capital
Securities. See "Book-Entry Issuance."
Although DTC has agreed to the procedures described above, it is
under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. If DTC is at any time
unwilling or unable to continue as depositary and a successor depositary is
not appointed by the Corporation within 90 days of receipt of notice from DTC
to such effect, the Corporation will cause the Junior Subordinated Debentures
to be issued in definitive form.
Payments on Junior Subordinated Debentures represented by a global
security will be made to Cede, the nominee for DTC, as the registered holder
of the Junior Subordinated Debentures, as described under "Book-Entry
Issuance". If Junior Subordinated Debentures are issued in certificated
form, principal and interest will be payable, the transfer of the Junior
Subordinated Debentures will be registrable, and Junior Subordinated
Debentures will be exchangeable for Junior Subordinated Debentures of other
authorized denominations of a like aggregate principal amount, at the
corporate trust office of the Debenture Trustee in Chicago, Illinois or at
the offices of any Paying Agent or transfer agent appointed by the Corpora-
tion, provided that payment of interest may be made at the option of the
Corporation by check mailed to the address of the persons entitled thereto or
by wire transfer.
Junior Subordinated Debentures may be presented for exchange as
provided above, and may be presented for registration of transfer (with the
form of transfer endorsed thereon, or a satisfactory written instrument of
transfer, duly executed), at the office of the securities registrar appointed
under the Junior Subordinated Debenture or at the office of any transfer
agent designated by the Corporation for such purpose without service charge
and upon payment of any taxes and other governmental charges as described in
the Junior Subordinated Indenture. The Corporation will appoint the
Debenture Trustee as securities registrar under the Junior Subordinated
Indenture. The Corporation may at any time designate additional transfer
agentsparties with
respect to the Junior Subordinated Debentures.
Insubject matter hereof, other than the eventConfidentiality Agreements,
which shall survive the execution and delivery of any redemption, neither the Corporation nor the
Debenture Trustee shall be required to (i) issue, register the transfer of or
exchange Junior Subordinated Debentures during a period beginning at the
opening of business 15 days before the day of selection for redemption of the
Junior Subordinated Debentures to be redeemed and ending at the close of
business on the day of mailing of the relevant notice of redemption or (ii)
transfer or exchange any Junior Subordinated Debentures so selected for
redemption, except, in the case of any Junior Subordinated Debentures being
redeemed in part, any portion thereof not to be redeemed.
Any moneys deposited with the Debenture Trustee or any paying agent,
or then held by the Corporation in trust, for the payment of the principal of
(and premium, if any) or interest on any Junior Subordinated Debenture and
remaining unclaimed for two years after such principal (and premium, if any)
or interest has become due and payable shall, at the request of the
Corporation, be repaid to the Corporation and the holder of such Junior
Subordinated Debenture shall thereafter look, as a general unsecured
creditor, only to the Corporation for payment thereof.
Restrictions on Certain Payments; Certain Covenants of the Corporation
The Corporation has covenanted in the Junior Subordinated Indenture
that it will not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Corporation's capital stock or (ii) make any payment of principal of
or interest or premium, if any, on, or repay, repurchase or redeem, any debt
securities of the Corporation that rank pari passu in all respects with or
junior in interest to the Junior Subordinated Debentures (other, than (a)
repurchases, redemptions or other acquisitions of shares of capital stock of
the Corporation in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of any one or more
employees, officers, directors or consultants, in connection with a dividend
reinvestment or shareholder stock purchase plan or in connection with the
issuance of capital stock of the Corporation (or securities convertible into
or exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the
Corporation's capital stock (or any capital stock of a subsidiary of the
Corporation) for any class or series of the Corporation's capital stock or of
any class or series of the Corporation's indebtedness for any class or series
of the Corporation's capital stock, (c) the purchase of fractional interests
in shares of the Corporation's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (d) any declaration of a dividend in connection with any
shareholders' rights plan, or the issuance of rights, stock or other property
under any shareholders' rights plan, or the redemption or repurchase of
rights pursuant thereto, or (e) any dividend in the form of stock, warrants,
options or other rights where the dividend stock or the stock issuable upon
exercise of such warrants, options or other rights is the same stock as that
on which the dividend is being paid or ranks pari passu with or junior to
such stock), if at such time (i) there has occurred any event (a) of which
the Corporation has actual knowledge that with the giving of notice or the
lapse of time, or both, would constitute a Debenture Event of Defaultthis Agreement and (b) thatis not
intended to confer upon any person other than the Corporation has not taken reasonable steps to cure, (ii) if the
Junior Subordinated Debentures are held by the Trust, the Corporation is in
default with respect to its payment ofparties hereto any obligations under the Guaranteerights or
(iii) the Corporation has given notice of its election of an Extension Periodremedies hereunder except as otherwise expressly provided in the Junior Subordinated Indenture and has not rescinded such
notice, or such Extension Period, or any extension thereof, is continuing.Section 5.7. The
Corporation has covenantedparties hereby acknowledge that, except as hereinafter agreed to in the Junior Subordinated Indenture
(i) to continue to hold, directly or indirectly, 100% of the Common
Securities, provided that certain successors that are permitted pursuant to
the Junior Subordinated Indenture may succeed to the Corporation's ownership
of the Common Securities, (ii) as holder of the Common Securities, not to
voluntarily dissolve, wind-up or liquidate the Trust, other than (a) in
connection with a distribution of Junior Subordinated Debentures to the
holders of the Capital Securities in liquidation of the Trust or (b) in
connection with certain mergers, consolidations or amalgamations permitted by
the Trust Agreement and (iii) to use its reasonable efforts, consistent with
the terms and provisions of the Trust Agreement, to cause the Trust to
continue to be classified as a grantor trust and not to be taxable as a
corporation for United States federal income tax purposes. The Corporation's
right to voluntarily dissolve or liquidate the Trust prior to the Stated
Maturity of the Junior Subordinated Debentures is subject to having received
the prior approval of the Federal Reserve to do so, if such approval is then
required under applicable Federal Reserve capital guidelines or policies.
Modification of Junior Subordinated Indenture
From time to time the Corporation and the Debenture Trustee may,
without the consent of the holders of the Junior Subordinated Debentures,
amend, waive or supplement the provisions of the Junior Subordinated
Indenture for specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies (provided that any such action does
not materially adversely affect the interests of the holders of the Junior
Subordinated Debentures or the holders of the Capital Securities so long as
they remain outstanding) and qualifying, or maintaining the qualification of,
the Indenture under the Trust Indenture Act. The Junior Subordinated
Indenture contains provisions permitting the Corporation and the Debenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of the Junior Subordinated Debentures, to modify the Junior
Subordinated Indenture in a manner affecting the rights of the holders of the
Junior Subordinated Debentures, except thatwriting, no
such modification may, without
the consent of the holder of each outstanding Junior Subordinated Debenture
so affected, (i) change the Stated Maturity of the principal of, or any
installment of interest on, the Junior Subordinated Debentures, or reduce the
principal amount thereof, the rate of interest thereon or any premium payable
upon the redemption thereof, or change the place of payment where, or the
currency in which, any such amount is payable or impair the right to
institute suit for the enforcement of any Junior Subordinated Debenture or
(ii) reduce the percentage of principal amount of Junior Subordinated
Debentures, the holders of which are required to consent to any such
modification of the Junior Subordinated Indenture. Furthermore, so long as
any of the Capital Securities remain outstanding, no such modification may be
made that adversely affects the holders of such Capital Securities in any
material respect, and no termination of the Junior Subordinated Indenture may
occur, and no waiver of any Debenture Event of Default or compliance with any
covenant under the Junior Subordinated Indenture may be effective, without
the prior consent of the holders of at least a majority of the aggregate
Liquidation Amount of the outstanding Capital Securities unless and until the
principal of (and premium, if any, on) the Junior Subordinated Debentures and
all accrued and unpaid interest thereon have been paid in full and certain
other conditions are satisfied.
Debenture Events of Default
The Junior Subordinated Indenture provides that any one or more of
the following described events with respect to the Junior Subordinated
Debentures that has occurred and is continuing constitutes an "Event of
Default" with respect to the Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on the
Junior Subordinated Debentures when due and payable (subject to the
deferral of any due date in the case of an Extension Period); or
(ii) failure to pay any principal of or premium, if any,
on the Junior Subordinated Debentures when due whether at maturity,
upon redemption, by declaration of acceleration or otherwise; or
(iii) failure to observe or perform in any material
respect certain other covenants contained in the Junior Subordinated
Indenture for 90 days after the date on which written notice, by
certified or registered mail, of such failure by the Corporation is
given to the Corporation from the Debenture Trustee or to the
Corporation and the Debenture Trustee from the holders of at least
25% in aggregate outstanding principal amount of the outstanding
Junior Subordinated Debentures; or
(iv) certain events of bankruptcy, insolvency or
reorganization of the Corporation.
For purposes of the Trust Agreement and this Prospectus, each such
Event of Default under the Junior Subordinated Debenture is referred to as a
"Debenture Event of Default." As described in "Description of Capital
Securities -- Events of Default; Notice," the occurrence of a Debenture Event
of Default will also constitute an Event of Default in respect of the Trust
Securities.
Subject to certain limitations in the Junior Subordinated Indenture,
the holders of at least a majority in aggregate principal amount of
outstanding Junior Subordinated Debenturesparty shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee. The Debenture Trusteeacquire or the holders of not less than 25%
in aggregate principal amount of outstanding Junior Subordinated Debentures
may declare the principal due and payable immediately upon a Debenture Event
of Default, and, should the Debenture Trustee or such holders of Junior
Subordinated Debentures fail to make such declaration, the holders of at
least 25% in aggregate Liquidation Amount of the outstanding Capital
Securities shall have such right. The holders of a majority in aggregate
principal amount of outstanding Junior Subordinated Debentures may annul such
declaration and waive the default if all defaults (other than the non-payment
of the principal of Junior Subordinated Debentures which has become due
solely by such acceleration) have been cured and a sum sufficient to pay all
matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee. Should the
holders of Junior Subordinated Debentures fail to annul such declaration and
waive such default, the holders of a majority in aggregate Liquidation Amount
of the outstanding Capital Securities shall have such right.
The holders of at least a majority in aggregate principal amount of
the outstanding Junior Subordinated Debentures, on behalf of the holders of
all Junior Subordinated Debentures, and the holders of a majority in
Liquidation Amount of Capital Securities may, on behalf of the holders of all
the Junior Subordinated Debentures, waive any past default, except a default
in the payment of principal (or premiums if any) or interest (unless such
default has been cured and a sum sufficient to pay all matured installments
of interest and principal due otherwise than by acceleration has been
deposited with the Debenture Trustee) or a default in respect of a covenant
or provision which under the Junior Subordinated Indenture cannot be modified
or amended without the consent of the holder of each outstanding Junior
Subordinated Debenture. See "--Modification of Junior Subordinated
Indenture." The Corporation is required to file annually with the Debenture
Trustee a certificate as to whether or not the Corporation is in compliance
with all the conditions and covenants applicable to it under the Junior
Subordinated Indenture.
If a Debenture Event of Default occurs and is continuing, the
Property Trustee will have the right to declare the principal of and the
interest on the Junior Subordinated Debentures, and any other amounts payable
under the Junior Subordinated Indenture, to be forthwith due and payable and
to enforce its other rights as a creditor with respect to the Junior
Subordinated Debentures.
Enforcement of Certain Rights by Holders of Capital Securities
If a Debenture Event of Default has occurred and is continuing and
such event is attributable to the failure of the Corporation to pay any
amounts payable in respect of the Junior Subordinated Debentures on the date
such amounts are otherwise payable, a registered holder of Capital Securities
may institute a legal proceeding directly against the Corporation for
enforcement of payment to such holder of an amount equal to the amount
payable in respect of Junior Subordinated Debentures having a principal
amount equal to the aggregate Liquidation Amount of the Capital Securities
held by such holder (a "Direct Action"). The Corporation may not amend the
Junior Subordinated Indenture to remove the foregoing right to bring a Direct
Action without the prior written consent of the holders of all of the Capital
Securities. The Corporation will have the right under the Junior
Subordinated Indenture to set-off any payment made to such holder of Capital
Securities by the Corporation in connection with a Direct Action.
The holders of the Capital Securities will not be able to exercise
directly any remedies available to the holders of the Junior Subordinated
Debentures except under the circumstances described in the preceding
paragraph. See "Description of Capital Securities -- Events of Default;
Notice."
Consolidation, Merger, Sale of Assets and Other Transactions
The Junior Subordinated Indenture provides that the Corporation may
not consolidate with or merge into any other Person or convey, transfer or
lease its properties and assets substantially as an entirety to any Person,
and no Person may consolidate with or merge into the Corporation or convey,
transfer or lease its properties and assets substantially as an entirety to
the Corporation, unless (i) if the Corporation consolidates with or merges
into another Person or conveys, transfers or leases its properties and assets
substantially as an entirety to any Person, the successor Person is organized
under the laws of the United States or any state or the District of Columbia,
and such successor Person expressly assumes the Corporation's obligations in
respect of the Junior Subordinated Debentures and the performance of all
covenants of the Corporation under the Junior Subordinated Indenture; (ii)
immediately after giving effect thereto, no Debenture Event of Default, and
no event which, after notice or lapse of time or both, would constitute a
Debenture Event of Default, has occurred and is continuing; and (iii) certain
other conditions as described in the Junior Subordinated Indenture are
satisfied.
The provisions of the Junior Subordinated Indenture do not afford
holders of the Junior Subordinated Debentures protection in the event of a
highly leveraged or other transaction involving the Corporation that may
adversely affect holders of the Junior Subordinated Debentures.
Satisfaction and Discharge
The Junior Subordinated Indenture provides that when, among other
things, all Junior Subordinated Debentures not previously delivered to the
Debenture Trustee for cancellation (i) have become due and payable, (ii) will
become due and payable at the Stated Maturity within one year or (iii) are to
be called for redemption within one year, and the Corporation deposits or
causes to be deposited with the Debenture Trustee funds, in trust, for the
purpose and in an amount sufficient to pay and discharge the entire
indebtedness on the Junior Subordinated Debentures not previously delivered
to the Debenture Trustee for cancellation, for the principal (and premium, if
any) and interest to the date of the deposit or to the Stated Maturity, as
the case may be, then the Junior Subordinated Indenture will cease to be of
further effect (except as to the Corporation's obligations to pay all other
sums due pursuant to the Junior Subordinated Indenture and to provide the
officers' certificates and opinions of counsel described therein), and the
Corporation will be deemed to have satisfied and dischargedacquired shares
of common stock of the Junior
Subordinated Indenture.
Subordination
The Junior Subordinated Debentures are subordinate and junior in
right of payment,other party pursuant to the extent set forth in the Junior Subordinated
Indenture, to all Senior Indebtedness (as defined herein)Merger until consummation
thereof. No current or former employee of the Corporation.
If the Corporation defaults in the payment of any principal, premium, if any,
or interest, if any,SierraWest, BC, or any other amount payable onof their
respective Subsidiaries, shall be construed as a third party beneficiary under
this Agreement, and no provision in this Agreement shall create any Senior Indebtedness
whenright in any
such employee (or his or her beneficiary or dependent) for any reason,
including, without limitation, in respect of employment, continued employment,
or resumed employment with the same becomes due and payable, whether at maturitySurviving Corporation, SierraWest or at a date fixed
for payment or by declarationBC (or any
of acceleration or otherwise, then, unless and
until such default has been cured or waived or has ceased to exist or all
Senior Indebtedness has been paid, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) may be made or agreed to be
made on account of the principal of (or premium, if any) or interest on the
Junior Subordinated Debentures,their respective Affiliates) or in respect of any redemption, repayment,
retirement, purchase or other acquisition of any of the Junior Subordinated
Debentures.
As used herein, "Senior Indebtedness" means any obligation of the
Corporation to its creditors, whether now outstanding or subsequently
incurred, other than any obligation as to which, in the instrument creating
or evidencing the obligation or pursuant to which the obligation is
outstanding, it is provided that such obligation is not Senior Indebtedness,
but does not include trade accounts payable and accrued liabilities arising
in the ordinary course of business. Senior Indebtedness includes the
Corporation's outstanding subordinated debt securities and any subordinated
debt securities issued in the future with substantially similar subordination
terms, but does not include the Junior Subordinated Debentures or any junior
subordinated debt securities issued in the future with subordination terms
substantially similar to those of the Junior Subordinated Debentures.
Substantially all of the existing indebtedness of the Corporation constitutes
Senior Indebtedness.
In the event of (i) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to the Corporation, its creditors or its property, (ii)
any proceeding for the liquidation, dissolution or other winding up of the
Corporation, voluntary or involuntary, whether or not involving insolvency or
bankruptcy proceedings, (iii) any assignment by the Corporation for the
benefit of creditors or (iv) any other marshalling of the assets of the
Corporation, all Senior Indebtedness (including any interest thereon accruing
after the commencement of any such proceedings) shall first be paid in full
before any payment or distribution, whether in cash, securities or other
property, shall be made on account of the Junior Subordinated Debentures. In
such event, any payment or distribution on account of the Junior Subordinated
Debentures, whether in cash, securities or other property, that would
otherwise (but for the subordination provisions) be payable or deliverable in
respect of the Junior Subordinated Debentures will be paid or delivered
directly to the holders of Senior Indebtedness in accordance with the
priorities then existing among such holders until all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) has been paid in full.
In the event of any such proceeding, after payment in full of all
sums owing with respect to Senior Indebtedness, the holders of Junior
Subordinated Debentures, together with the holders of any obligations of the
Corporation ranking on a parity with the Junior Subordinated Debentures, will
be entitled to be paid from the remaining assets of the Corporation the
amounts at the time due and owing on account of unpaid principal of (and
premium, if any) and interest on the Junior Subordinated Debentures and such
other obligations before any payment or other distribution, whether in cash,
property or otherwise, will be made on account of any capital stock or
obligations of the Corporation ranking junior to the Junior Subordinated
Debentures and such other obligations. If any payment or distribution on
account of the Junior Subordinated Debentures of any character or any
security, whether in cash, securities or other property, is received by the
Debenture Trustee or any holder of any Junior Subordinated Debentures in
contravention of any of the terms hereof and before all the Senior
Indebtedness (including any interest thereon accruing after the commencement
of any proceeding referred to in the immediately preceding paragraph) has
been paid in full, such payment or distribution or security will be received
in trust for the benefit of, and must be paid over or delivered and
transferred to, the holders of the Senior Indebtedness at the time
outstanding in accordance with the priorities then existing among such
holders for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all such Senior Indebtedness (including
any interest thereon accruing after the commencement of any proceeding
referred to on the immediately preceding paragraph) in full. By reason of
such subordination, in the event of the insolvency of the Corporation,
holders of Senior Indebtedness may receive more, ratably, and holders of the
Junior Subordinated Debentures may receive less, ratably, than the other
creditors of the Corporation. Such subordination will not prevent the
occurrence of any Event of Default in respect of the Junior Subordinated
Debentures.
The Junior Subordinated Indenture places no limitation on the amount
of additional Senior Indebtednessbenefits that may be
incurredprovided, directly or indirectly, under any Benefit Plan maintained by the
Corporation.
TheSurviving Corporation, expects from timeSierraWest or BC (or any of their respective Affiliates).
8.6 Governing Law; Consent to time to incur additional indebtedness
constituting Senior Indebtedness.
Governing Law
The Junior Subordinated Indenture and the Junior Subordinated
Debentures willJurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
Information ConcerningCalifornia
without giving effect to the Debenture Trustee
The Debenture Trustee,principles of conflicts of law. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to the
non-exclusive jurisdiction of the courts of the State of California and of the
United States of America, in each case located in the City and County of San
Francisco, for any Litigation in any court or before any governmental authority
arising out of or relating to this Agreement and the transactions contemplated
hereby. Each of the parties hereto hereby irrevocably and unconditionally
waives, and agrees not to assert, by way of motion, as a defense, counterclaim
or otherwise, in any such Litigation, any claim that it is not personally
subject to the jurisdiction of the aforesaid courts for any reason other than
during the occurrencefailure to serve process in accordance with this Section 8.6, that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), and continuanceto the fullest extent permitted by
applicable law, that the Litigation in any such court is brought in an
inconvenient forum, that the venue
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of a defaultsuch Litigation is improper, or that this Agreement, or the subject matter
hereof, may not be enforced in or by such courts and further irrevocably waives,
to the Corporationfullest extent permitted by applicable law, the benefit of any defense
that would hinder, fetter or delay the levy, execution or collection of any
amount to which the party is entitled pursuant to the final judgment of any
court having jurisdiction. Each of the parties irrevocably and unconditionally
waives, to the fullest extent permitted by applicable law, any and all rights to
trial by jury in performanceconnection with any Litigation arising out of its obligations
underor relating to
this Agreement or the Junior Subordinated Debenture,transactions contemplated hereby.
8.7 Severability. Any term or provision of this Agreement which is
under no obligationinvalid or unenforceable in any jurisdiction shall, as to exercisethat jurisdiction, be
ineffective to the extent of such invalidity or unenforceability and, unless the
effect of such invalidity or unenforceability would prevent the parties from
realizing the major portion of the economic benefits of the Merger that they
currently anticipate obtaining therefrom, shall not render invalid or
unenforceable the remaining terms and provisions of this Agreement or affect the
validity or enforceability of any of the powers vestedterms or provisions of this Agreement
in it byany other jurisdiction. If any provision of this Agreement is so broad as to
be unenforceable, the Junior Subordinated Indenture at the
request ofprovision shall be interpreted to be only so broad as is
enforceable.
8.8 Assignment. Neither this Agreement nor any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and
liabilities that might be incurred thereby. The Debenture Trustee is not
required to expend or risk its own funds or otherwise incur personal
financial liability in the performance of its duties if the Debenture Trustee
reasonably believes that repayment or adequate indemnity is not reasonably
assured to it.
The First National Bank of Chicago, the Debenture Trustee, is
currently the trustee under the Corporation's Indenture, dated as of August
9, 1993, related to certain series of subordinated notes, and may serve from
time to time as trustee under other indentures or trust agreements with the
Corporation or its affiliates relating to other issues of their securities.
In addition, the Corporation and certain of its affiliates may have other
banking relationships with The First National Bank of Chicago.
DESCRIPTION OF GUARANTEE
The Old Guarantee was executed and delivered by the Corporation
concurrently with the issuance of Old Capital Securities by the Trust for the
benefit of the holders from time to timerights, interests
or obligations hereunder shall be assigned by either of the Capital Securities. As soon
as practicable after the Expiration Date, the Old Guarantee will be exchangedparties hereto
(whether by the Corporation for the New Guarantee. The First National Bankoperation of Chicago
will act as Guarantee Trustee under the New Guarantee (the "Guarantee
Trustee"). This summary of certain provisions of the Guarantee does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of the Guarantee, including the
definitions therein of certain terms. The Guarantee Trustee will hold the
Guarantee for the benefit of the holders of the Capital Securities.
General
The Corporation has irrevocably and unconditionally agreed to pay in
full on a subordinated basis, to the extent set forth in the Guarantee, the
Guarantee Payments (as defined herein) to the holders of the Capital
Securities, as and when due, regardless of any defense, right of set-offlaw or counterclaim that the Trust may have or assert other than the defense of
payment. The following payments with respect to the Capital Securities, to
the extent not paid by or on behalf of the Trust (the "Guarantee Payments"),
will be subject to the Guarantee: (i) any accumulated and unpaid
Distributions required to be paid on such Capital Securities, to the extent
that the Trust has funds on hand available therefor at such time, (ii) the
Redemption Price with respect to any Capital Securities called for redemption
by the Trust, to the extent that the Trust has funds on hand available
therefor at such time, and (iii) upon a voluntary or involuntary dissolution,
winding-up or liquidation of the Trust (unless the Junior Subordinated
Debentures are distributed to holders of the Capital Securities), the lesser
of (a) the Liquidation Distribution, and (b) the amount of assets of the
Trust remaining available for distribution to holders of the Capital
Securities on liquidation of the Trust after satisfaction of liabilities to
creditors of the Trust as required by applicable law. The Corporation's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Corporation to the holders of the Capital
Securities or by causing the Trust to pay such amounts to such holders.
The Guarantee will be an irrevocable guarantee on a subordinated
basis of the Trust's obligations under the Capital Securities, but will apply
only to the extent that the Trust has funds sufficient to make such payments,
and is not a guarantee of collection.
If the Corporation does not make payments on the Junior Subordinated
Debentures held by the Trust, the Trust will not be able to pay any amounts
payable in respect of the Capital Securities and will not have funds legally
available therefor. The Guarantee ranks subordinate and junior in right of
payment to all Senior Indebtedness of the Corporation. See "--Status of the
Guarantee." Moreover, the Guarantee does not limit the incurrence or
issuance of other secured or unsecured debt of the Corporation, including
Senior Indebtedness, whether under the Junior Subordinated Indenture, any
other indenture that the Corporation may enter into in the future or
otherwise. Moreover, because the Corporation is a holding company, the right
of the Corporation to participate in any distribution of assets of any
subsidiary upon such subsidiary's dissolution, winding-up, liquidation or
reorganization or otherwise is subject tootherwise) without the prior claims of creditors of
that subsidiary, except to the extent that the Corporation may itself be a
creditor of that subsidiary and its claims are recognized. There are also
various legal limitations on the extent to which certain of the Corporation's
subsidiaries may extend credit, pay dividends or otherwise supply funds to
the Corporation or certain of its other affiliates. Accordingly, the
Corporation's obligations under the Guarantee will be effectively
subordinated and junior in right of payment to all existing and future
liabilities of the Corporation's subsidiaries, and claimants under the
Guarantee should look only to the assets of the Corporation for payments
thereunder.
The Corporation has, through the Guarantee, the Trust Agreement, the
Junior Subordinated Debentures and the Junior Subordinated Indenture, taken
together, fully, irrevocably and unconditionally guaranteed all of the
Trust's obligations under the Capital Securities. No single document
standing alone or operating in conjunction with fewer than allwritten consent of
the other documents constitutesparty, and any attempt to make any such guarantee. It is onlyassignment without such
consent shall be null and void. Subject to the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Trust's obligations in respect of the Capital
Securities. See "Relationship Among the Capital Securities, the Junior
Subordinated Debentures and the Guarantee."
Status of the Guarantee
The Guarantee constitutes an unsecured obligation of the Corporation
and ranks subordinate and junior in right of payment to all Senior
Indebtedness of the Corporation in the same manner as the Junior Subordinated
Debentures.
The Guarantee constitutes a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding
directly against the Guarantor to enforce its rights under the Guarantee
without first instituting a legal proceeding against any other person or
entity). The Guaranteepreceding sentence, this
Agreement will be held by the Guarantee Trustee for the benefit
of the holders of the Capital Securities. The Guarantee will not be
discharged except by payment of the Guarantee Payments in full to the extent
not paid by the Trust or distribution to the holders of the Capital
Securities of the Junior Subordinated Debentures.
Amendments and Assignment
Except with respect to any changes which do not materially adversely
affect the rights of holders of the Capital Securities (in which case no vote
will be required), the Guarantee may not be amended without the prior
approval of the holders of not less than a majority of the aggregate
Liquidation Amount of the outstanding Capital Securities. The manner of
obtaining any such approval will be as set forth under "Description of the
Capital Securities -- Voting Rights; Amendment of Trust Agreement." All
guarantees and agreements contained in the Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the
Corporation and shallbinding upon, inure to the benefit of the holders of the Capital
Securities then outstanding.
Events of Default
An event of default under the Guarantee will occur upon the failure
of the Corporation to perform any of its payment obligations thereunder, or
to perform any non-payment obligation if such nonpayment default remains
unremedied for 30 days. The holders of not less than a majority in aggregate
Liquidation Amount of the outstanding Capital Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of the Guarantee or to direct
the exercise of any trust or power conferred upon the Guarantee Trustee under
the Guarantee.
In the event that the Corporation has failed to make a Guarantee
Payment, any registered holder of Capital Securities may institute a legal
proceeding directly against the Corporation to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other person or entity.
The Corporation, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Corporation is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and
continuance of a defaultbe enforceable by
the Corporation in performance of the Guarantee,
undertakes to perform only such duties as are specifically set forth in the
Guaranteeparties and after the occurrence of an event of defaulttheir respective successors and assigns.
8.9 Publicity. BC and SierraWest shall consult with each other before
issuing any press release with respect to the Guarantee, mustMerger or this Agreement and shall
not issue any such press release or make any such public statement without the
prior consent of the other party, which shall not be unreasonably withheld;
provided, however, that a party may, without the prior consent of the other
party (but after prior consultation, to the extent practicable in the
circumstances) issue such press release or make such public statement as may
upon the advice of outside counsel be required by law or the rules and
regulations of the NYSE (in the case of BC) or the National Association of
Securities Dealers (in the case of SierraWest). Without limiting the reach of
the preceding sentence, BC and SierraWest shall cooperate to develop all public
announcement materials and make appropriate management available at
presentations related to the transactions contemplated by this Agreement as
reasonably requested by the other party. In addition, SierraWest and its
Subsidiaries shall (a) consult with BC regarding communications with customers,
shareholders, prospective investors and employees related to the transactions
contemplated hereby, (b) provide BC with shareholders lists of SierraWest and
(c) allow and facilitate BC contact with shareholders of SierraWest and other
prospective investors.
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IN WITNESS WHEREOF, BC, BW and SierraWest have caused this Agreement to be
executed by their respective officers thereunto duly authorized, all as of date
first above written.
BANCWEST CORPORATION
By: /s/ WALTER A. DODS, JR.
--------------------------------------
Name: Walter A. Dods, Jr.
Title: Chairman and Chief Executive
Officer
BANK OF THE WEST
By: /s/ DON J. MCGRATH
--------------------------------------
Name: Don J. McGrath
Title: President and Chief Executive
Officer
SIERRAWEST BANCORP
By: /s/ WILLIAM T. FIKE
--------------------------------------
Name: William T. Fike
Title: President and Chief Executive
Officer
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APPENDIX B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of February 25, 1999 (the "Agreement"), by
and between SIERRAWEST BANCORP, a California corporation ("Issuer"), and
BANCWEST CORPORATION, a Delaware corporation ("Grantee").
RECITALS
A. The Plan. Grantee, Issuer and Issuer's wholly-owned subsidiary, Bank
of the West, a California state-chartered bank ("BW"), are concurrently herewith
entering into an Agreement and Plan of Merger, dated as of the date hereof (the
"Plan"), providing for, among other things, the merger of Issuer with and into
BW with BW being the surviving corporation.
B. Condition to Plan. As a condition and inducement to Grantee's
execution of the Plan, Grantee has required that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Plan, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. Defined Terms. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Plan.
2. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase up to 1,059,490 shares of common stock, no par value
("Issuer Common Stock"), of Issuer (as adjusted as set forth herein, the
"Option Shares," which shall include the Option Shares before and after any
transfer of such Option Shares, but in no event shall the number of Option
Shares for which this Option is exercisable exceed 19.9% of the issued and
outstanding shares of Issuer Common Stock) at a purchase price per Option
Share (as adjusted as set forth herein, the "Purchase Price") equal to
$28.875. Each Option Share issued upon exercise of the Option shall be
accompanied by Rights (the "SierraWest Rights") as provided in the
SierraWest Rights Agreement.
3. Exercise of Option.
(a) The Holder (as hereinafter defined) may exercise the same degreeOption, in
whole or in part, at any time and from time to time following the
occurrence of care and skill as a prudent
person would exercise or use inPurchase Event (as hereinafter defined); provided that the
conduct of his or her own affairs.
Subject to this provision, the Guarantee Trustee is under no obligation to
exercise any of the powers vested in it by the Guarantee at the request of
any holder of the Capital Securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred
thereby.
For information concerning the relationship between The First
National Bank of Chicago, the Guarantee Trustee, and the Corporation, see
"Description of Junior Subordinated Debentures -- Information Concerning the
Debenture Trustee."
Termination of the Guarantee
The Guarantee willoption shall terminate and be of no further force andor effect (i) upon full paymentthe
earliest to occur of (A) the Effective Time, (B) termination of the Redemption PricePlan in
accordance with the terms thereof prior to the occurrence of a Purchase
Event or a Preliminary Purchase Event (as hereinafter defined) or (C) 12
months after termination of the Capital Securities, (ii)Plan following the occurrence of a Purchase
Event or a Preliminary Purchase Event; provided, however, that any purchase
of shares upon full paymentexercise of the amounts payableOption shall be subject to compliance with
respect toapplicable law. Notwithstanding the Capital
Securities upon liquidationtermination of the TrustOption, Grantee or
(iii) upon distribution of Junior
Subordinated Debentures to the holders of the Capital Securities. The
Guarantee will continue to be effective or will be reinstated,Holder as the case may be, shall be entitled to purchase those Option
Shares with respect to which it has exercised the Option in accordance
herewith prior to the termination of the Option.
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The term "Holder" shall mean the holder or holders of the Option from time
to time, and which initially is Grantee. The termination of the Option
shall not affect any rights hereunder which by their terms extend beyond
the date of such termination.
(b) As used herein, a "Purchase Event" means any of the following
events:
(i) Without Grantee's prior written consent, Issuer or any of its
Significant Subsidiaries shall have recommended, publicly proposed or
publicly announced an intention to authorize, recommend or propose, or
entered into an agreement with any person (other than Grantee or any
Subsidiary of Grantee) to effect (A) a merger, consolidation or similar
transaction involving Issuer or any of its Significant Subsidiaries
(other than transactions solely between Issuer's subsidiaries that are
not violative of the Plan), (B) the disposition, by sale, lease,
exchange or otherwise, of assets or deposits of Issuer or any of its
Significant Subsidiaries representing in either case 15% or more of the
consolidated assets or deposits of Issuer and its subsidiaries or (C)
the issuance, sale or other disposition by Issuer (including by way of
merger, consolidation, share exchange or any similar transaction) of
securities representing 15% or more of the voting power of Issuer or any
of its Significant Subsidiaries, other than, in each case of (A), (B),
or (C), any merger, consolidation, share exchange or similar transaction
involving Issuer or any of its Significant Subsidiaries in which the
voting securities of Issuer outstanding immediately prior thereto
continue to represent (by either remaining outstanding or being
converted into the voting securities of the surviving entity of any such
transaction) at least 80% of the combined voting power of the voting
securities of the Issuer or the surviving entity outstanding immediately
after the completion of such merger, consolidation, or similar
transaction (provided any such transaction is not violative of the Plan)
(each of (A), (B), or (C), an "Acquisition Transaction"); or
(ii) any person (other than Grantee or any Subsidiary of Grantee)
shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act) of or the right to
acquire beneficial ownership of, or any "group" (as such term is defined
in Section 13(d)(3) of the Exchange Act), other than a group of which
Grantee or any Subsidiary of Grantee is a member, shall have been formed
which beneficially owns or has the right to acquire beneficial ownership
of 15% or more of the voting power of Issuer or any of its Significant
Subsidiaries; or
(iii) any person (other than Grantee or any Subsidiary of Grantee)
shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act) or shall have filed a registration statement under the
Securities Act with respect to, a tender offer or exchange offer to
purchase any shares of Issuer Common Stock such that, upon consummation
of such offer, such person would own or control 15% or more of the then
outstanding shares of Issuer Common Stock (such an offer being referred
to herein as a "Tender Offer" or an "Exchange Offer," respectively); or
(iv) the shareholders shall not have approved the Plan by the
requisite vote at the SierraWest Shareholders Meeting, the SierraWest
Shareholders Meeting shall not have been held or shall have been
canceled prior to termination of the Plan, or Issuer's Board of
Directors shall have failed to make, withdrawn or modified in a manner
adverse to Grantee the recommendation of Issuer's Board of Directors
with respect to the Plan, in each case after it shall have been
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publicly announced or disclosed that any person (other than Grantee or
any Subsidiary of Grantee) shall have (A) made, or disclosed an
intention to make, a bona fide proposal to engage in an Acquisition
Transaction, (B) commenced a Tender Offer or filed a registration
statement under the Securities Act with respect to an Exchange Offer or
(C) filed an application (or given a notice), whether in draft or final
form, under the BHC Act, the Bank Merger Act, as amended (the "BMA") or
the Change in Bank Control Act of 1978, as amended (the "CBCA"), for
approval to engage in an Acquisition Transaction.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) any person (other than Grantee or any Subsidiary of Grantee)
shall have made a bona fide proposal to Issuer or its shareholders by
public announcement, or written communication that is or becomes the
subject of public disclosure, to engage in an Acquisition Transaction;
or
(ii) after a proposal is made by a third party to Issuer or its
shareholders to engage in an Acquisition Transaction, or such third
party states its intention to the Issuer to make such a proposal if the
Plan terminates, Issuer shall have breached any representation,
warranty, covenant or agreement contained in the Plan, which breach
would entitle Issuer to terminate the Plan pursuant to Section 7.1(d)
thereof; or
(iii) any person (other than Grantee or any Subsidiary of Grantee)
other than in connection with a transaction to which Grantee has given
its prior written consent, shall have filed an application or notice
with any Governmental Entity for approval to engage in an Acquisition
Transaction; or
(iv) any event entitling Grantee to terminate the Plan pursuant to
Section 7.1(f) of the Plan.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Preliminary Purchase Event or Purchase Event, it being understood
that the giving of such notice by Issuer shall not be a condition to the
right of Holder to exercise the Option.
(e) In the event Holder wishes to exercise the Option, it shall send
to Issuer a written notice (the date of which being herein referred to as
the "Notice Date") specifying (i) the total number of Option Shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 20 business days from the
Notice Date for the closing (the "Closing") of such purchase (the "Closing
Date"); provided that if the Closing cannot be consummated by reason of any
applicable judgment, decree, order, law or regulation, the period of time
that otherwise would run pursuant to this sentence shall run instead from
the date on which such restriction on consummation has expired or been
terminated; and provided, further, without limiting the foregoing, that if
prior notification to or approval of any Governmental Entity is required in
connection with such purchase, Issuer shall cooperate with the Holder in
the filing of the required notice of application for approval and the
obtaining of such approval and the Closing shall occur immediately
following such regulatory approvals (and any mandatory waiting
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periods). Any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto.
(f) Notwithstanding Section 3(e), in no event shall any Closing Date
be more than 18 months after the related Notice Date, and if the Closing
Date shall not have occurred within 18 months after the related Notice Date
due to the failure to obtain any such required approval, the exercise of
the Option effected on the Notice Date shall be deemed to have expired. In
the event (i) Holder receives official notice that an approval of any other
Governmental Entity required for the purchase of Option Shares will not be
issued or granted or (ii) a Closing Date shall not have occurred within 18
months after the related Notice Date due to the failure to obtain any such
required approval, Grantee shall be entitled to exercise its right as set
forth in Section 8 to exercise the option in connection with the resale of
Issuer Common Stock or other securities pursuant to a registration
statement as provided in Section 9. The provisions of this Section 3 and
Section 4 shall apply with appropriate adjustments to any such exercise.
4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in immediately
available funds by wire transfer to a bank account designated by Issuer, an
amount equal to the Purchase Price multiplied by the number of Option Shares to
be purchased on such Closing Date, and (ii) present and surrender this Agreement
to the Issuer at the address of the Issuer specified in Section 12(f).
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a), (i)
Issuer shall deliver to Holder (A) a certificate or certificates representing
the Option Shares to be purchased at such Closing, which Option Shares shall be
free and clear of any liens, claims or encumbrances and subject to no preemptive
rights, and (B) if the Option is exercised in part only, an executed new
agreement with the same terms as this Agreement evidencing the right to purchase
the balance of the shares of Issuer Common Stock purchasable hereunder, and (ii)
Holder shall deliver to Issuer a letter agreeing that Holder shall not offer to
sell or otherwise dispose of such Option Shares in violation of applicable
federal and state law or of the provisions of this Agreement.
(c) In addition to any other legend that is required by applicable law,
certificates for the Option Shares delivered at each Closing shall be endorsed
with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF FEBRUARY 25,
1999. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that (i) the portion of the above legend
relating to the Securities Act shall be removed by delivery of substitute
certificates without such legend if Holder shall have delivered to Issuer a copy
of a letter from the staff of the SEC, or an opinion of counsel in form and
substance reasonably satisfactory to Issuer and its counsel, to the effect that
such legend is not required for purposes of the Securities Act and (ii) the
reference to restrictions pursuant to this Agreement in the above legend shall
be
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removed by delivery of substitute certificate(s) without such reference if the
Option Shares evidenced by certificate(s) containing such reference have been
sold or transferred in compliance with the provisions of this Agreement under
circumstances that do not require the retention of such reference.
(d) Upon the giving by Holder to Issuer of the written notice of exercise
of the Option provided for under Section 3(e), the tender of the applicable
Purchase Price in immediately available funds and the tender of this Agreement
to Issuer, Holder shall be deemed to be the holder of record of the shares of
Issuer Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of Issuer shall then be closed or that certificates representing
such shares of Issuer Common Stock shall not then be actually delivered to
Holder. Issuer shall pay all expenses, and any and all United States federal,
state, and local taxes and other charges that may be payable in connection with
the preparation, issuance and delivery of stock certificates under this Section
4(d) in the name of Holder or its assignee, transferee, or designee.
(e) Issuer agrees (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Issuer Common Stock so that the Option may be exercised without additional
authorization of Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Issuer Common
Stock, (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer, (iii) promptly to take all action as may from time to time be required
(including (A) complying with all premerger notification, reporting and waiting
period requirements and (B) in the event prior approval of or notice to any
Governmental Entity is necessary before the Option may be exercised (the
"Governmental Approvals"), cooperating fully with Holder in preparing such
applications or notices and providing such information to such Governmental
Entity as it may require) in order to permit Holder to exercise the Option and
Issuer duly and effectively to issue shares of the Issuer Common Stock pursuant
hereto, and (iv) promptly to take all action provided herein to protect the
rights of Holder against dilution.
5. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee (and Holder, if different than Grantee) as follows:
(a) Corporate Authority. Issuer has full corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby; the execution and delivery of this Agreement and,
subject to receiving any necessary Governmental Approvals, the consummation
of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Issuer, and no other corporate
proceedings on the part of Issuer are necessary to authorize this Agreement
or to consummate the transactions so contemplated; this Agreement has been
duly and validly executed and delivered by Issuer.
(b) Beneficial Ownership. To the best knowledge of Issuer, as of the
date of this Agreement, no person or group has beneficial ownership of more
than 10% of the issued and outstanding shares of Issuer Common Stock.
(c) Shares Reserved for Issuance; Capital Stock. Issuer has taken all
necessary corporate action to authorize and reserve and permit it to issue,
and at all times from the date hereof through the termination of this
Agreement in accordance with its
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terms, will have reserved for issuance upon the exercise of the Option,
that number of shares of Issuer Common Stock equal to the maximum number of
shares of Issuer Common Stock at any time and from time to time purchasable
upon exercise of the Option, and all such shares, upon issuance pursuant to
the Option, will be duly authorized, validly issued, fully paid and
nonassessable, and will be delivered free and clear of any liens, claims or
encumbrances (other than those created by this Agreement), and not subject
to any preemptive rights.
(d) No Violations. The execution, delivery and performance of this
Agreement does not and will not, and the consummation by Issuer of any of
the transactions contemplated hereby will not, constitute or result in (A)
a breach or violation of, or a default under, its articles of incorporation
or by-laws, or the comparable governing instruments of any of its
subsidiaries, or (B) a breach or violation of, or a default under, any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation of it or any of its subsidiaries (with or without the giving of
notice, the lapse of time or both) or under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or
nongovernmental permit or license to which it or any of its subsidiaries is
subject, that would, in any case give any other person the ability to
prevent or enjoin Issuer's performance under this Agreement in any material
respect.
(e) SierraWest Rights Agreement Amendment. The SierraWest Rights
Agreement has been amended to provide that Grantee will not become an
"Acquiring Person" and that no "Triggering Event," "Stock Acquisition Date"
or "Distribution Date" (as such terms are defined in the SierraWest Rights
Agreement) will occur as a result of the approval, execution or delivery of
this Agreement or the Plan or the consummation of the transactions
contemplated hereby and thereby, including the acquisition of shares of
Issuer Common Stock by Grantee or Holder pursuant to this Agreement.
6. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer as follows:
(a) Corporate Authority. Grantee has full corporate power and
authority to enter into this Agreement and, subject to obtaining the
approvals referred to in this Agreement, to consummate the transactions
contemplated by this Agreement; the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of
Grantee; and this Agreement has been duly executed and delivered by
Grantee.
(b) Purchase Not for Distribution. Any Option Shares or other
securities acquired by Grantee or Holder upon exercise of the Option will
not be taken with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
7. Adjustment upon Changes in Issuer Capitalization, Etc.
(a) In the event of any change in Issuer Common Stock by reason of a stock
dividend, stock split, split-up, recapitalization, combination, exchange of
shares, exercise of the SierraWest Rights or similar transaction, the type and
number of shares or securities subject to the Option, and the Purchase Price
therefor, shall be adjusted appropriately, and proper provision shall be made in
the agreements governing such transaction so that
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Holder shall receive, upon exercise of the Option, the number and class of
shares or other securities or property that Holder would have received in
respect of Issuer Common Stock if the Option had been exercised immediately
prior to such event, or the record date therefor, as applicable. If any
additional shares of Issuer Common Stock are issued after the date of this
Agreement (other than pursuant to an event described in the first sentence of
this Section 7(a)), upon exercise of any option to purchase Issuer Common Stock
outstanding on the date hereof, the number of shares of Issuer Common Stock
subject to the Option shall be adjusted so that, after such issuance, it,
together with any shares of Issuer Common Stock previously issued
pursuant hereto, equals 19.9% of the number of shares of Issuer Common Stock
then issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option. No provision of this Section 7 shall be deemed to
affect or change, or constitute authorization for any violation of, any of the
covenants or representations in the Plan.
(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) to permit any person, other than Grantee or one of
its subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Issuer Common Stock shall be changed into or exchanged for stock or
other securities of Issuer or any other person or cash or any other property or
the outstanding shares of Issuer Common Stock immediately prior to such merger
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its assets or deposits to any person, other than
Grantee or one of its subsidiaries, then, and in each such case, the agreement
governing such transaction shall make proper provisions so that the Option
shall, upon the consummation of any such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of Holder, of either (x) the Acquiring
Corporation (as hereinafter defined), (y) any person that controls the Acquiring
Corporation, or (z) in the case of a merger described in clause (ii), Issuer
(such person being referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided, that, if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to Holder. Substitute Option Issuer shall also enter
into an agreement with Holder in substantially the same form as this Agreement,
which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock (as hereinafter defined) as is equal to the Assigned
Value (as hereinafter defined) multiplied by the number of shares of Issuer
Common Stock for which the Option was theretofore exercisable, divided by the
Average Price (as hereinafter defined). The exercise price of the Substitute
Option per share of Substitute Common Stock (the "Substitute Option Price")
shall be equal to the Purchase Price multiplied by a fraction in which the
numerator is the number of shares of Issuer Common Stock for which the option
was theretofore exercisable and the denominator is the number of shares of the
Substitute Common Stock for which the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (y) Issuer
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in a merger in which Issuer is the continuing or surviving person, or (z)
the transferee of all or substantially all of Issuer's assets (or a
substantial part of the assets of its subsidiaries taken as a whole).
(ii) "Substitute Common Stock" shall mean the shares of capital stock
(or similar equity interest) with the greatest voting power in respect of
the election of directors (or persons similarly responsible for the
direction of the business and affairs) of the Substitute Option Issuer.
(iii) "Assigned Value" shall mean the highest of (w) the price per
share of Issuer Common Stock at which a Tender Offer or an Exchange Offer
therefor has been made, (x) the price per share of Issuer Common Stock to
be paid by any third party pursuant to an agreement with Issuer, (y) the
highest closing price for shares of Issuer Common Stock within the
six-month period immediately preceding the consolidation, merger, or sale
in question and (z) in the event of a sale of all or substantially all of
Issuer's assets or deposits an amount equal to (I) the sum of the price
paid in such sale for such assets (and/or deposits) and the current market
value of the remaining assets of Issuer, as determined by a nationally
recognized investment banking firm selected by Holder divided by (II) the
number of shares of Issuer Common Stock outstanding at such time. In the
event that a Tender Offer or an Exchange Offer is made for Issuer Common
Stock or an agreement is entered into for a merger or consolidation
involving consideration other than cash, the value of the securities or
other property issuable or deliverable in exchange for Issuer Common Stock
shall be determined by a nationally recognized investment banking firm
selected by Holder.
(iv) "Average Price" shall mean the average closing price of a share
of Substitute Common Stock for the one year immediately preceding the
consolidation, merger, or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided that if Issuer is the issuer
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by Issuer, the person merging into Issuer
or by any company which controls such person, as Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of Substitute Common Stock
but for the limitation in the first sentence of this Section 7(f), Substitute
Option Issuer shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in the
first sentence of this Section 7(f) over (ii) the value of the Substitute Option
after giving effect to the limitation in the first sentence of this Section
7(f). This difference in value shall be determined by a nationally-recognized
investment banking firm selected by Holder.
(g) Issuer shall not enter into any transaction described in Section 7(b)
unless the Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer hereunder and take
all other actions that may be necessary so that the provisions of this Section 7
are given full force and effect (including, without limitation, any action that
may be necessary so that the holders of the other shares of common stock issued
by Substitute Option Issuer are not entitled to exercise any rights
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by reason of the issuance or exercise of the Substitute Option and the shares of
Substitute Common Stock are otherwise in no way distinguishable from or have
lesser economic value (other than any diminution in value resulting from the
fact that the Substitute Common Stock are restricted securities, as defined in
Rule 144 under the Securities Act or any successor provision) than other shares
of common stock issued by Substitute Option Issuer).
8. Repurchase at the Option of Holder.
(a) At the request of Holder at any time (i) commencing upon the first
occurrence of a Repurchase Event (as defined in Section 8(d)) and ending 18
months immediately thereafter and (ii) for 30 business days following the
occurrence of either of the events set forth in clauses (i) and (ii) of Section
3(f) (but solely as to the shares of Issuer Common Stock with respect to which
the required approval was not received, Issuer (or any successor) shall
repurchase from Holder (x) the Option and (y) all shares of Issuer Common Stock
purchased by Holder pursuant hereto with respect to which Holder then has
beneficial ownership. The date on which Holder exercises its rights under this
Section 8 is referred to as the "Request Date". Such repurchase shall be at an
aggregate price (the "Section 8 Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any shares of
Issuer Common Stock acquired pursuant to the Option with respect to which
Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as defined
below) for each share of Issuer Common Stock over (y) the Purchase Price
(subject to adjustment pursuant to Section 7), multiplied by the number of
shares of Issuer Common Stock with respect to which the Option has not been
exercised; and
(iii) the excess, if any, of the Applicable Price over the Purchase
Price (subject to adjustment pursuant to Section 7) paid (or, in the case
of Option Shares with respect to which the Option has been exercised but
the Closing Date has not occurred, payable) by Holder for each share of
Issuer Common Stock with respect to which the Option has been exercised and
with respect to which Holder then has beneficial ownership, multiplied by
the number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer shall,
within 10 business days after the Request Date, pay the Section 8 Repurchase
Consideration to Holder in immediately available funds, and contemporaneously
with such payment, Holder shall surrender to Issuer the Option and the
certificates evidencing the shares of Issuer Common Stock purchased thereunder
with respect to which Holder then has beneficial ownership, and Holder shall
warrant that it has sole record and beneficial ownership of such shares and that
the same are then free and clear of all Liens. Notwithstanding the foregoing, to
the extent that prior notification to or approval of any Governmental Entity is
required in connection with the payment of all or any portion of the Section 8
Repurchase Consideration, Holder shall have the ongoing option to revoke its
request for repurchase pursuant to Section 8, in whole or in part, or to require
that Issuer deliver from time to time that portion of the Section 8 Repurchase
Consideration that it is not then so prohibited from paying and promptly file
the required notice or application for approval and expeditiously process the
same (and each party shall cooperate with the other in the filing of any such
notice or application and the obtaining of any such approval) and the period of
time that would otherwise run pursuant to the preceding sentence for the payment
of the portion of the Section 8 Repurchase Consideration shall run instead from
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the date on which, as the case may be, (i) any required notification period has
expired or been terminated or (ii) such approval has been obtained and, in
either event, any requisite waiting period shall have passed. If any
Governmental Entity disapproves of any part of Issuer's proposed repurchase
pursuant to this Section 8, Issuer shall promptly give notice of such fact to
Holder. If any Governmental Entity prohibits the repurchase in part but not in
whole, then Holder shall have the right (i) to revoke the repurchase request or
(ii) to the extent permitted by such Governmental Entity, determine whether the
repurchase should apply to the Option and/or Option Shares and to what extent to
each, and Holder shall thereupon have the right to exercise the Option as to the
number of Option Shares for which the Option was exercisable at the Request Date
less the sum of the number of shares covered by the Option in respect of which
payment has been made pursuant to Section 8(a)(ii) and the number of shares
covered by the portion of the Option (if any) that has been repurchased;
provided that if the Option shall have terminated prior to the date of such
notice or shall be scheduled to terminate at any time before the expiration of a
period ending on the thirtieth business day after such date, Grantee shall
nonetheless have the right so to exercise the Option or exercise its rights
under Section 9 until the expiration of such period of 30 business days. Holder
shall notify Issuer of its determination under the preceding sentence within
five (5) business days of receipt of notice of disapproval of the repurchase.
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share of Issuer Common Stock paid for any
such share by the person or groups described in Section 8(d)(i), (ii) the price
per share of Issuer Common Stock received by holders of Issuer Common Stock in
connection with any merger or other business combination transaction described
in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the highest closing sales
price per share of Issuer Common Stock quoted on the Nasdaq National Market
System during the 40 business days preceding the Request Date; provided,
however, that in the event of a sale of less than all of Issuer's assets, the
Applicable Price shall be the sum of the price paid in such sale for such assets
and the current market value of the remaining assets of Issuer as determined by
a nationally recognized investment banking firm selected by Holder, divided by
the number of shares of the Issuer Common Stock outstanding at the time of such
sale. If the consideration to be offered, paid or received pursuant to either of
the foregoing clauses (i) or (ii) shall be other than in cash, the value of such
consideration shall be determined in good faith by an independent nationally
recognized investment banking firm selected by Holder and reasonably acceptable
to Issuer, which determination shall be conclusive for all purposes of this
Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any person (other
than Grantee or any Subsidiary of Grantee) shall have acquired beneficial
ownership of (as such term is defined in Rule 13d-3 promulgated under the
Exchange Act), or the right to acquire beneficial ownership of, or any "group"
(as such term is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, 25% or
more of the then outstanding shares of Issuer Common stock, or (ii) Issuer has
entered into an agreement pursuant to which any of the transactions described in
Section 7(b)(i), 7(b)(ii) or 7(b)(iii) could or will be consummated.
9. Registration Rights.
(a) Demand Registration Rights. Issuer shall, subject to the conditions of
Section 9(c) below, if requested by any Holder, including Grantee and any
permitted
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transferee ("Selling Shareholder"), as expeditiously as possible prepare and
file a registration statement under the Securities Act if such registration is
necessary in order to permit the sale or other disposition of any or all shares
of Issuer Common Stock or other securities that have been acquired by or are
issuable to the Selling Shareholder upon exercise of the Option in accordance
with the intended method of sale or other disposition stated by the Selling
Shareholder in such request, including without limitation a "shelf" registration
statement under Rule 415 under the Securities Act or any successor provision,
and Issuer shall use its best efforts to qualify such shares or other securities
for sale under any applicable state securities laws.
(b) Additional Registration Rights. If Issuer at any time after the
exercise of the Option proposes to register any shares of Issuer Common Stock
under the Securities Act in connection with an underwritten public offering of
such Issuer Common Stock, Issuer will promptly give written notice to the
Selling Shareholders of its intention to do so and, upon the written request of
any Selling Shareholder given within 30 days after receipt of any such notice
(which request shall specify the number of shares of Issuer Common Stock
intended to be included in such underwritten public offering by the Selling
Shareholder), Issuer will cause all such shares for which a Selling Shareholder
requests participation in such registration, to be so registered and included in
such underwritten public offering; provided, however, that Issuer may elect to
not cause any such shares to be so registered (i) if the underwriters in good
faith object for valid business reasons, or (ii) in the case of a registration
solely to implement an employee benefit plan or a registration filed on Form S-4
of the Securities Act or any successor Form; provided, further, however, that
such election pursuant to (i) may only be made two times. If some but not all
the shares of Issuer Common Stock with respect to which Issuer shall have
received requests for registration pursuant to this Section 9(b) shall be
excluded from such registration, Issuer shall make appropriate allocation of
shares to be registered among the Selling Shareholders desiring to register
their shares pro rata in the proportion that the number of shares requested to
be registered by each such Selling Shareholder bears to the total number of
shares requested to be registered by all such Selling Shareholders then desiring
to have Issuer Common Stock registered for sale.
(c) Conditions to Required Registration. Issuer shall use all reasonable
efforts to cause each registration statement referred to in Section 9(a) above
to become effective and to obtain all consents or waivers of other parties which
are required therefor and to keep such registration statement effective;
provided, however, that Issuer may delay any registration of Option Shares
required pursuant to Section 9(a) above for a period not exceeding 90 days
provided Issuer shall in good faith determine that any such registration would
adversely affect an offering or contemplated offering of other securities by
Issuer, and Issuer shall not be required to register Option Shares under the
Securities Act pursuant to Section 9(a) above:
(i) prior to the earliest of (a) termination of the Plan pursuant to
Article VII thereof, (b) failure to obtain the requisite shareholder
approval pursuant to Section 6.1(a) of the Plan, and (c) a Purchase Event
or a Preliminary Purchase Event;
(ii) on more than one occasion during any calendar year;
(iii) within 90 days after the effective date of a registration
referred to in Section 9(b) above pursuant to which the Selling Shareholder
or Selling Shareholders concerned were afforded the opportunity to register
such shares under the Securities Act and such shares were registered as
requested; and
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(iv) unless a request therefor is made to Issuer by Selling
Shareholders that hold at least 25% or more of the aggregate number of
Option Shares (including shares of Issuer Common Stock issuable upon
exercise of the Option) then outstanding.
In addition to the foregoing, Issuer shall not be required to maintain the
effectiveness of any registration statement after the expiration of nine months
from the effective date of such registration statement. Issuer shall use all
reasonable efforts to make any filings, and take all steps, under all applicable
state securities laws to the extent necessary to permit the sale or other
disposition of the Option Shares so registered in accordance with the intended
method of distribution for such shares; provided, however, that Issuer shall not
be required to consent to general jurisdiction or qualify to do business in any
state where it is not otherwise required to so consent to such jurisdiction or
to so qualify to do business.
(d) Expenses. Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and expenses
of counsel), legal expenses, including the reasonable fees and expenses of one
counsel to the holders whose Option Shares are being registered, printing
expenses and the costs of special audits or "cold comfort" letters, expenses of
underwriters, excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to Section 9(a) or 9(b) above (including the
related offerings and sales by holders of Option Shares) and all other
qualifications, notifications or exemptions pursuant to Section 9(a) or 9(b)
above.
(e) Indemnification. In connection with any registration under Section
9(a) or 9(b) above Issuer hereby indemnifies the Selling Shareholders, and each
underwriter thereof, including each person, if any, who controls such holder or
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement of a material fact contained in any registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission, or alleged omission, to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue statement
that was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Selling Shareholders, or by such underwriter, as the case
may be, for all such expenses, losses, claims, damages and liabilities caused by
any untrue, or alleged untrue, statement, that was included by Issuer in any
such registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to Issuer by such holder or
such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section 9(e) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 9(e), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
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liability which it may otherwise have to any indemnified party under this
Section 9(e) unless the failure so to notify the indemnified party results in
substantial prejudice thereto. In case notice of commencement of any such action
shall be given to the indemnifying party as above provided, the indemnifying
party shall be entitled to participate in and, to the extent it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense of such action at its own expense, with counsel chosen by it and
satisfactory to such indemnified party. The indemnified party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party unless
(i) the indemnifying party either agrees to pay the same, (ii) the indemnifying
party fails to assume the defense of such action with counsel satisfactory to
the indemnified party, or (iii) the indemnified party has been advised by
counsel that one or more legal defenses may be available to the indemnifying
party that may be contrary to the interest of the indemnified party, in which
case the indemnifying party shall be entitled to assume the defense of such
action notwithstanding its obligation to bear fees and expenses of such counsel.
No indemnifying party shall be liable for any settlement entered into without
its consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 9(e) is unavailable to
a party otherwise entitled to be indemnified in respect of any expenses, losses,
claims, damages or liabilities referred to herein, then the indemnifying party,
in lieu of indemnifying such party otherwise entitled to be indemnified, shall
contribute to the amount paid or payable by such party to be indemnified as a
result of such expenses, losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative benefits received by
Issuer, the Selling Shareholders and the underwriters from the offering of the
securities and also the relative fault of Issuer, the Selling Shareholders and
the underwriters in connection with the statements or omissions which resulted
in such expenses, losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The amount paid or payable by a party as a
result of the expenses, losses, claims, damages and liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim; provided, however, that in no case shall any Selling Shareholder be
responsible, in the aggregate, for any amount in excess of the net offering
proceeds attributable to its Option Shares included in the offering. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Any obligation by any holder to
indemnify shall be several and not joint with other holders.
In connection with any registration pursuant to Section 9(a) or 9(b) above,
Issuer and each Selling Shareholder (other than Grantee) shall enter into an
agreement containing the indemnification provisions of this Section 9(e).
(f) Miscellaneous Reporting. Issuer shall comply with all reporting
requirements and will do all such other things as may be necessary to permit the
expeditious sale at any time of any Option Shares by the Selling Shareholders
thereof in accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time, including, without limitation, Rule
144. Issuer shall at its expense provide the Selling Shareholders with any
information necessary in connection with the completion and filing of any
reports or forms required to be filed by them under the Securities Act or the
Exchange Act, or required pursuant to any state securities laws or the rules of
any stock exchange.
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10. Quotation; Listing. If Issuer Common Stock or any other securities to
be acquired in connection with the exercise of the Capital Securities must restore
paymentOption are then authorized
for quotation or trading or listing on the NYSE, the Nasdaq National Market
System or any securities exchange, Issuer, upon the request of Holder, will
promptly file an application, if required, to authorize for quotation or trading
or listing the shares of Issuer Common Stock or other securities to be acquired
upon exercise of the Option on the NYSE, the Nasdaq National Market System or
such other securities exchange and will use its best efforts to obtain approval,
if required, of such quotation or listing as soon as practicable.
11. Division of Option. This Agreement (and the Option granted hereby)
are exchangeable, without expense, at the option of Holder, upon presentation
and surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any sums paidother Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. Miscellaneous.
(a) Expenses. Each of the parties hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel; provided, however,
that Issuer will pay all stamp taxes in connection with the issuance and the
sale of the Option Shares and in connection with the exercise of the Option, and
will save the Selling Shareholders harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
(b) Waiver and Amendment. Any provision of this Agreement may be waived at
any time by the party that is entitled to the benefits of such provision. This
Agreement may not be modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the parties hereto.
(c) Entire Agreement; No Third-Party Beneficiaries; Severability. This
Agreement, together with the Plan and the other documents and instruments
referred to herein and therein, between Grantee and Issuer (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof
and (ii) is not intended to confer upon any person other than the parties hereto
(other than the indemnified parties under Section 9(e) and any transferees of
the Capital SecuritiesOption Shares or any permitted transferee of this Agreement pursuant to
Section 12(h)) any rights or remedies hereunder. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction or Governmental Entity to be invalid, void or unenforceable, the
Guarantee.remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated. If for any reason such court or Governmental Entity determines
that the Option does not permit Holder to acquire, or does not require Issuer to
repurchase, the full number of shares of Issuer Common Stock
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as provided in Section 2 (as may be adjusted herein), it is the express
intention of Issuer to allow Holder to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
(d) Governing Law
The Guarantee willLaw. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.California without regard to any
applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the addresses set forth in the Plan (or at such
other address for a party as shall be specified by like notice).
(g) Counterparts. This Agreement and any amendments hereto may be executed
in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Holder may assign this Agreement
to a wholly-owned subsidiary of Holder and Holder may assign its rights
hereunder in whole or in part after the occurrence of a Purchase Event. Subject
to the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
(i) Further Assurances. In the event of any exercise of the Option by the
Holder, Issuer and the Holder shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this Agreement may
be enforced by either party through specific performance, injunctive relief and
other equitable relief. Both parties further agree to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any such
equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
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DESCRIPTION OF THE OLD SECURITIES167
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
SIERRAWEST BANCORP
By /s/ WILLIAM T. FIKE
------------------------------------
Name: William T. Fike
Title: President and Chief Executive
Officer
BANCWEST CORPORATION
By /s/ WALTER A. DODS, JR.
------------------------------------
Name: Walter A. Dods, Jr.
Title: Chairman and Chief Executive
Officer
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APPENDIX C
[NationsBanc Montgomery Securities Logo]
February 25, 1999
Board of Directors
SierraWest Bancorp
10181 Truckee Tahoe Airport Road
Truckee, CA 96160-9010
Gentlemen:
We understand that SierraWest Bancorp, a California corporation
("SierraWest"), and BancWest Corporation, a Delaware corporation ("BWE"),
propose to enter into an Agreement and Plan of Merger to be dated on or about
February 25, 1999 (the "Merger Agreement"), pursuant to which SierraWest will be
merged with and into a wholly-owned subsidiary of BWE, which will be the
surviving entity (the "Merger"). Pursuant to the Merger, as more fully described
in the February 21, 1999 draft of the Merger Agreement provided to us and as
further described to us by management of SierraWest, we understand that each
outstanding share of the common stock, no par value per share ("SierraWest
Common Stock"), of SierraWest will be converted into 0.82 of a fully paid and
non-assessable share of the common stock, $1.00 par value per share ("BWE Common
Stock"), of BWE, subject to certain adjustments (the "Consideration"). The terms
and conditions of the Old SecuritiesMerger are identicalset forth in more detail in the Merger
Agreement.
You have asked for our opinion as investment bankers as to whether the
Consideration to be received by the shareholders of SierraWest pursuant to the
Merger is fair to such shareholders from a financial point of view, as of the
date hereof.
In connection with our opinion, we have, among other things: (i) reviewed
certain publicly available financial and other data with respect to SierraWest
and BWE, including the consolidated financial statements for recent years and
interim periods to December 31, 1998, and certain other relevant financial and
operating data relating to SierraWest and BWE made available to us from
published sources and from the internal records of SierraWest and BWE; (ii)
reviewed the February 21, 1999 draft of the Merger Agreement; (iii) reviewed
certain publicly available information concerning the trading of, and the
trading market for, SierraWest Common Stock and BWE Common Stock; (iv) compared
certain financial data of SierraWest and BWE with those of certain other
companies in the banking industry which we deemed to be relevant; (v) considered
the financial terms, to the extent publicly available, of selected recent
business combinations of companies in the banking industry which we deemed to be
comparable, in whole or in part, to the Merger; (vi) conducted discussions with
representatives of the senior management of SierraWest and BWE concerning their
respective businesses and prospects; (vii) reviewed certain information,
including financial forecasts and related assumptions, furnished to us by
SierraWest and BWE, respectively; and (viii) performed such other analyses and
examinations as we have deemed appropriate.
In connection with our review, we have not assumed any obligation
independently to verify the foregoing information and have relied on its being
accurate and complete in all
[NATIONSBANC LOGO SMALL]
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material respects. With respect to the New Securities, exceptfinancial forecasts for SierraWest and
BWE provided to us by their respective management, upon their advice and with
your consent we have assumed for purposes of our opinion that the Old Securitiesforecasts have
not been registered underreasonably prepared on bases reflecting the best available estimates and
judgements of their respective management at the time of preparation as to the
future financial performance of SierraWest and BWE and that they provide a
reasonable basis upon which we can form our opinion. We have relied upon
assurances of the management of SierraWest and BWE, respectively, that there
have been no material changes in SierraWest's or BWE's assets, financial
condition, results of operations, business or prospects since the respective
dates of their last financial statements made available to us. We have also
relied on advice of counsel to SierraWest as to all legal matters with respect
to SierraWest, the Merger and the Merger Agreement. We have assumed that the
Merger will be consummated in a manner that complies in all respects with the
applicable provisions of the Securities Act of 1933 (the "Securities Act"), the
Securities Exchange Act of 1934 and all other applicable federal and state
statutes, rules and regulations. In addition, we have not assumed responsibility
for reviewing any individual credit files, or making an independent evaluation,
appraisal or physical inspection of any of the assets or liabilities (contingent
or otherwise) of SierraWest or BWE, nor have we been furnished with any such
appraisals. We are subjectnot experts in the evaluation of loan portfolios for purposes
of assessing the adequacy of the allowances for losses with respect thereto and
have assumed, with your consent, that such allowances for each of SierraWest and
BWE are in the aggregate adequate to certain restrictionscover such losses. You have informed us,
and we have assumed, that the Merger will be recorded as a pooling of interests
under generally accepted accounting principles. Our opinion is based on
transfereconomic, monetary and are entitledmarket and other conditions as in effect on, and the
information made available to certain rights underus as of, the Registration Rightsdate hereof. Accordingly, although
subsequent developments may affect this opinion, we have not assumed any
obligation to update, revise or reaffirm this opinion.
We have further assumed with your consent that the Merger will be
consummated in accordance with the terms described in the February 21, 1999
draft of the Merger Agreement, without any further material revisions thereto,
and without waiver by SierraWest of any of the conditions to its obligations
thereunder.
We have acted as the financial advisor to SierraWest in connection with the
Merger and will receive a fee for our services, including rendering this
opinion, a significant portion of which is contingent upon the right to receive additional Distributions in certain
circumstances (which rights will terminate upon consummation of
the Exchange
Offer, except under certain limited circumstances). Holders of Old Capital
Securities should reviewMerger.
Based upon the information set forth under "Risk Factors--
Certain Consequences of a Failureforegoing and in reliance thereon, it is our opinion as
investment bankers that the Consideration to Exchange Old Capital Securities."
RELATIONSHIP AMONG THE CAPITAL SECURITIES, THE JUNIOR SUBORDINATED DEBENTURES
AND THE GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the Capital
Securities (to the extent the Trust has funds available for such payment) are
irrevocably guaranteedbe received by the Corporation as andshareholders of
SierraWest pursuant to the extent set forth
under "DescriptionMerger is fair to such shareholders from a financial
point of Guarantee." Taken together, the Corporation's
obligations under the Junior Subordinated Debentures, the Junior Subordinated
Indenture, the Trust Agreement and the Guarantee provide, in the aggregate, a
full, irrevocable and unconditional guarantee of payments of Distributions
and other amounts due on the Capital Securities. No single document standing
alone or operating in conjunction with fewer than allview, as of the other documents
constitutes such guarantee. Itdate hereof.
This opinion is onlydirected to the combined operationBoard of these
documents that has the effectDirectors of providing a full, irrevocable and
unconditional guaranteeSierraWest in its
consideration of the Trust's obligations in respect of the Capital
Securities. IfMerger and is not a recommendation to the extent that the Corporation does not make payments
on the Junior Subordinated Debentures, the Trust will not have sufficient
fundsany shareholder as to
pay Distributions or other amounts due on the Capital Securities.
The Guarantee does not cover payment of amounts payablehow such shareholder should vote with respect to the Capital Securities whenMerger. Further, this
opinion addresses only the Trustfinancial fairness of the Consideration to the
shareholders and does not have sufficient funds to pay such
amounts. In such event,address the remedy of a holderrelative merits of the Capital Securities is
to institute a legal proceeding directly against the Corporation for
enforcement of payment of the Corporation's obligations under Junior
Subordinated Debentures having a principal amount equalMerger and any
alternatives to the Liquidation
Amount ofMerger, SierraWest's underlying decision to proceed with or
effect the Capital Securities held by such holder.
The obligations of the Corporation under the Junior Subordinated
Debentures and the Guarantee are subordinate and junior in right of payment
to all Senior Indebtedness.
Sufficiency of Payments
As long as payments are made when due on the Junior Subordinated
Debentures, such payments will be sufficient to cover Distributions and other
payments distributable on the Capital Securities, primarily because (i) the
aggregate principal amount of the Junior Subordinated Debentures will be
equal to the sum of the aggregate stated Liquidation Amount of the Capital
Securities and Common Securities; (ii) the interest rate and interest and
other payment dates on the Junior Subordinated Debentures will match the
Distribution rate, Distribution Dates and other payment dates for the Capital
Securities; (iii) the Corporation will pay for all and any costs, expenses
and liabilities of the Trust except the Trust's obligations to holders of the
Trust Securities; and (iv) the Trust Agreement further provides that the
Trust will not engage in any activity that is not consistent with the limited
purposes of the Trust.
Notwithstanding anything to the contrary in the Junior Subordinated
Indenture, the Corporation has the right to set-off any payment it is
otherwise required to make thereunder against and to the extent the
Corporation has theretofore made, or is concurrently on the date of such
payment making, a payment under the Guarantee.
Enforcement Rights of Holders of Capital Securities
A holder of any Capital Security may institute a legal proceeding
directly against the Corporation to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Guarantee Trustee,
the TrustMerger, or any other person or entity. See "Description of Guarantee."
A default or event of default under any Senior Indebtednessaspect of the Corporation wouldMerger. This opinion may not constitute a defaultbe
used or Eventreferred to by SierraWest, or quoted or disclosed to any person in any
manner, without our prior written consent, which consent is hereby given to the
inclusion of Defaultthis opinion in respectany proxy statement, prospectus or registration
statement filed with the Securities and Exchange Commission in connection with
the Merger. In furnishing this
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opinion, we do not admit that we are experts within the meaning of the Capital Securities. Moreover,term
"experts" as used in the event of payment defaults under, or
acceleration of, Senior Indebtedness of the Corporation, the subordination
provisions of the Junior Subordinated Indenture provide that no payments may
be made in respect of the Junior Subordinated Debentures until such Senior
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. See "Description of Junior Subordinated Debentures --
Subordination."
Limited Purpose of Trust
The Capital Securities represent undivided beneficial interests in
the assets of the Trust,Act and the Trust exists for the sole purpose of issuing
its Capital Securitiesrules and Common Securities and investing the proceeds
thereof in Junior Subordinated Debentures. A principal difference between
the rights of a holder of a Capital Security and a holder of a Junior
Subordinated Debenture is that a holder of a Junior Subordinated Debenture is
entitled to receive from the Corporation payments on Junior Subordinated
Debentures held, while a holder of Capital Securities is entitled to receive
Distributions or other amounts distributable with respect to the Capital
Securities from the Trust (or from the Corporation under the Guarantee) only
if and to the extent the Trust has funds available for the payment of such
Distributions.
Rights Upon Dissolution
Upon any voluntary or involuntary dissolution, winding-up or
liquidation of the Trust, other than any such dissolution, winding-up or
liquidation involving the distribution of the Junior Subordinated Debentures,
after satisfaction of liabilities to creditors of the Trust as required by
applicable law, the holders of the Capital Securities will be entitled to
receive, out of assets held by the Trust, the Liquidation Distribution in
cash. See "Description of Capital Securities -- Liquidation Distribution
Upon Dissolution." Upon any voluntary or involuntary liquidation or bank-
ruptcy of the Corporation, the Property Trustee, as registered holder of the
Junior Subordinated Debentures, would be a subordinated creditor of the
Corporation, subordinated and junior in right of payment to all Senior
Indebtedness as set forth in the Junior Subordinated Indenture, but entitled
to receive payment in full of all amounts payable with respect to the Junior
Subordinated Debentures before any shareholders of the Corporation receive
payments or distributions. Since the Corporation is the guarantor under the
Guarantee and has agreed under the Junior Subordinated Indenture to pay for
all costs, expenses and liabilities of the Trust (other than the Trust's
obligations to the holders of the Trust Securities), the positions of a
holder of the Capital Securities and a holder of such Junior Subordinated
Debentures relative to other creditors and to shareholders of the Corporation
in the event of liquidation or bankruptcy of the Corporation are expected to
be substantially the same.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Simpson Thacher & Bartlett, special United States
federal income tax counsel to the Corporation and the Trust ("Tax Counsel"),
the following summary accurately describes the material United States federal
income tax consequences that may be relevant to the purchase, ownership and
disposition of the Capital Securities. Unless otherwise stated, this summary
deals only with Capital Securities held as capital assets by United States
Persons (defined below) who purchase the Capital Securities upon original
issuance at their original issue price. As used herein, a "United States
Person" means (i) a person that is a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized
in or under the laws of the United States or any political subdivision
thereof, (iii) an estate the income of which is subject to United States
federal income taxation regardless of its source, or (iv) any trust if a
court within the United States is able to exercise primary supervision over
the administration of such trust and one or more United States fiduciaries
have the authority to control all the substantial decisions of such trust.
The tax treatment of a holder may vary depending on such holder's particular
situation. This summary does not address all the tax consequences that may
be relevant to a particular holder or to holders who may be subject to
special tax treatment, such as banks, real estate investment trusts,
regulated investment companies, insurance companies, dealers in securities or
currencies, or tax-exempt investors. In addition, this summary does not
include any description of any alternative minimum tax consequences or the
tax laws of any state, local or foreign government that may be applicable to
a holder of Capital Securities. This summary is based on the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder, and administrative and judicial interpretations
thereof, as of the date hereof, all of which are subject to change, possibly
onnor do we admit that this opinion constitutes a retroactive basis. The authorities on which this summary is based are
subject to various interpretations and the opinions of Tax Counsel are not
binding on the Internal Revenue Service ("IRS")report
or the courts, either of
which could take a contrary position. Moreover, no rulings have been or will
be sought by the Corporation from the IRS with respect to the transactions
described herein. Accordingly, there can be no assurance that the IRS will
not challenge the opinions expressed herein or that a court would not sustain
such a challenge. Nevertheless, Tax Counsel has advised that it is of the
view that, if challenged, the opinions expressed herein would be sustained by
a court with jurisdiction in a properly presented case.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOR-
EIGN, AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES
FEDERAL OR OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION OF
THE CAPITAL SECURITIES UPON THE OCCURRENCE OF CERTAIN TAX EVENTS SEE
"DESCRIPTION OF CAPITAL SECURITIES -- REDEMPTION -- SPECIAL EVENT REDEMPTION
OR DISTRIBUTION OF DEBENTURES."
Tax Consequences of the Exchange
The Exchange will not be a taxable event for United States federal
income tax purposes. Accordingly, holders who exchange their Old Capital
Securities for New Capital Securities pursuant to the Exchange Offer will not
recognize any gain or loss on such exchange for such purposes, such
exchanging holders will have a tax basis in their New Capital Securities that
is equal to the adjusted tax basis they had in their Old Capital Securities
immediately before the Exchange and the holding period for their New Capital
Securities will include the period during which they held their Old Capital
Securities.
Classification of the Trust
In connection with the issuance of the Capital Securities, Tax
Counsel is of the opinion that under current law and assuming full compliance
with the terms of the Trust Agreement the Trust will be classified as a
grantor trust for United States federal income tax purposes and not as an
association taxable as a corporation. Accordingly, for United States federal
income tax purposes, each beneficial owner (a "holder") of Capital Securities
generally will be considered the owner of an undivided interest in the Junior
Subordinated Debentures and, thus, will be required to include in its gross
income its pro rata share of the interest income or OID that is paid or
accrued on the Junior Subordinated Debentures. See "--Interest Income and
Original Issue Discount."
Classification of the Junior Subordinated Debentures
The Corporation, the Trust and the holders of the Capital Securities
(by acceptance of a beneficial interest in a Security) will agree to treat
the Junior Subordinated Debentures as indebtedness for all United States tax
purposes. In connection with the issuance of the Junior Subordinated
Debentures, Tax Counsel is of the opinion that, under current law, and based
on certain representations, facts and assumptions set forth in such opinion,
the Junior Subordinated Debentures will be classified as indebtedness for
United States federal income tax purposes.
Interest Income and Original Issue Discount
Under the applicable Treasury regulations, the Junior Subordinated
Debentures will not be treated as issued with original issue discount ("OID")valuation within the meaning of Section 1273(a)11 of the Code. Accordingly, except as
set forth below, stated interestSecurities Act.
Very truly yours,
[NationsBanc Montgomery Securities LLC
Signature]
NATIONSBANC MONTGOMERY
SECURITIES LLC
C-3
171
APPENDIX D
CHAPTER 13. DISSENTERS' RIGHTS
1300 [SHORT FORM MERGER; PURCHASE OF SHARES AT FAIR MARKET VALUE;
"DISSENTING SHARES" AND DISSENTING SHAREHOLDER]. -- (a) If the approval of the
outstanding shares (Section 152) of a corporation is required for a
reorganization under subdivisions (a) and (b) or subdivision (e) or (f) of
Section 1201, each shareholder of the corporation entitled to vote on the
Junior Subordinated Debentures
generally willtransaction and each shareholder of a subsidiary corporation in a short-form
merger may, by complying with this chapter, require the corporation in which the
shareholder holds shares to purchase for cash at their fair market value the
shares owned by the shareholder which are dissenting shares as defined in
subdivision (b). The fair market value shall be taxable to a holderdetermined as ordinary income at the time it is
paid or accrued in accordance with such holder's regular method of tax
accounting.
If, however, the Corporation exercises its right to defer payments of
interest on the Junior Subordinated Debentures, the Junior Subordinated
Debentures will become OID instruments at such time and all holders will be
required to accrue the stated interest on the Junior Subordinated Debentures
on a daily economic accrual basis (using the constant-yield-to-maturity
method of accrual described in Section 1272 of the Code) duringday before
the Extension
Period even though the Corporation will not pay such interest until the endfirst announcement of the Extension Period, and even though some holders may use the cash method
of tax accounting. Moreover, thereafter the Junior Subordinated Debentures
will be taxed as OID instruments for as long as they remain outstanding.
Thus, even after the end of an Extension Period, all holders would be
required to continue to include the stated interest (and de minimus OID, if
any) on the Junior Subordinated Debentures in income on a daily economic
accrual basis, regardless of their method of tax accounting and in advance of
receipt of the cash attributable to such interest income. Under the OID
economic accrual rules, a holder would accrue an amount of interest income
each year that approximates the stated interest payments called for under the terms of the Junior Subordinated Debentures, and actual cash paymentsproposed reorganization or short-form
merger, excluding any appreciation or depreciation on consequence of stated interestthe
proposed action, but adjusted for any stock split, reverse stock split, or share
dividend which becomes effective thereafter.
(b) As used in this chapter, "dissenting shares" means shares which come
within all of the following descriptions:
(1) Which were not immediately prior to the reorganization or
short-form merger either (A) listed on any national securities exchange
certified by the Commissioner of Corporations under subdivision (o) of
Section 25100 or (B) listed on the Junior Subordinated Debentures wouldlist of OTC margin stocks issued by the
Board of Governors of the Federal Reserve System, and the notice of meeting
of shareholders to act upon the reorganization summarizes this section and
Sections 1301, 1302, 1303 and 1304; provided, however, that this provision
does not be reported
separately as taxable income. Any amount of OID included in a holder's gross
income (whether or not during an Extension Period)apply to any shares with respect to a Capital
Security will increase such holder's tax basis in such Capital Security, and
the amount of Distributions received by a holder in respect of such accrued
OID will reduce the tax basis of such Capital Security.
The Treasury regulations described above have not yet been addressed
inwhich there exists any
rulings or other interpretationsrestriction on transfer imposed by the IRS,corporation or by any law or
regulation; and it is possibleprovided, further, that the IRS could take a contrary position. If the IRS werethis provision does not apply to
assert
successfully that the stated interest on the Junior Subordinated Debentures
was OID regardlessany class of whether the Corporation exercises its option to defer
payments of interest on such debentures, all holders of Capital Securities
would be required to include such stated interestshares described in income on a daily
economic accrual basis as described above.
Corporate holders of Capital Securities will not be entitled to a
dividends-received deductionsubparagraph (A) or (B) if demands for
payment are filed with respect to any income recognized by such
holders with respect to the Capital Securities.
Distribution of Junior Subordinated Debentures or Cash upon Liquidation of
the Trust
As described under the caption "Description of Capital Securities --
Liquidation Distribution Upon Dissolution," Junior Subordinated Debentures
may be distributed to holders in exchange for the Capital Securities and in
liquidation of the Trust. Under current law, such a distribution would be
non-taxable, and will result in the holder receiving directly its pro rata
share of the Junior Subordinated Debentures previously held indirectly
through the Trust, with a holding period and aggregate tax basis equal to the
holding period and aggregate tax basis such holder had in its Capital
Securities before such distribution. If, however, the liquidation of the
Trust were to occur because the Trust is subject to United States federal
income tax with respect to income accrued or received on the Junior
Subordinated Debentures, the distribution of the Junior Subordinated
Debentures to holders would be a taxable event to the Trust and to each
holder, and a holder would recognize gain or loss as if the holder had
exchanged its Capital Securities for the Junior Subordinated Debentures it
received upon liquidation of the Trust.
A holder would accrue interest in respect of the Junior Subordinated
Debentures received from the Trust in the manner described above under "--
Interest Income and Original Issue Discount."
Under certain circumstances described herein (see "Description of
Capital Securities -- Redemption"), the Junior Subordinated Debentures may be
redeemed for cash, with the proceeds of such redemption distributed to
holders in redemption of their Capital Securities. Under current law, such a
redemption would constitute a taxable disposition of the redeemed Capital
Securities for United States federal income tax purposes, and a holder would
recognize gain or loss as if it sold such redeemed Capital Securities for
cash. See "--Sales of Capital Securities."
Sales of Capital Securities
A holder that sells Capital Securities will recognize gain or loss
equal to the difference between the amount realized by the holder on the sale
or redemption of the Capital Securities (except to the extent that such
amount realized is characterized as a payment in respect of accrued but
unpaid interest on such holder's allocable share of the Junior Subordinated
Debentures that such holder has not included in gross income previously) and
the holders adjusted tax basis in the Capital Securities sold or redeemed.
Such gain or loss generally will be a capital gain or loss and generally will
be a long-term capital gain or loss if the Capital Securities have been held
for more than one year. The Taxpayer Relief Act of 1997 generally reduces
the tax rates on capital gains recognized by individuals on the sale or other
taxable disposition of capital assets held for more than 18 months. Holders
are advised to consult with their own tax advisors as to the consequences in
their particular circumstances of the capital gain provisions of the Taxpayer
Relief Act of 1997. Subject to certain limited exceptions, capital losses
cannot be applied to offset ordinary income for United States federal income
tax purposes.
Non-United States Holders
As used herein, the term "Non-United States Holder" means any person
that is not a United States Person (as defined above). As discussed above,
the Capital Securities will be treated as evidence of an indirect beneficial
ownership interest in the Junior Subordinated Debentures. See "--
Classification of the Trust." Thus, under present United States federal
income tax law, and subject to the discussion below concerning backup
withholding:
(a) no withholding of United States federal income tax will
be required with respect to the payment by the Corporation or any
paying agent of principal or interest (which for purposes of this
discussion includes any OID) with respect to the Capital Securities
(or on the Junior Subordinated Debentures) to a Non-United States
Holder, provided (i) that the beneficial owner of the Capital
Securities (or Junior Subordinated Debentures) ("Beneficial Owner")
does not actually or constructively own 10%5 percent or more of the total
combined voting poweroutstanding
shares of all classesthat class.
(2) Which were outstanding on the date for the determination of
stock of the Corporationshareholders entitled to vote withinon the meaning of section 871(h)(3)reorganization and (A) were not voted
in favor of the Code
and the regulations thereunder, (ii) the Beneficial Owner is not a
controlled foreign corporation that is relatedreorganization or, (B) if described in subparagraph (A) or
(B) of paragraph (1) (without regard to the Corporation
through stock ownership, (iii)provisos in that paragraph),
were voted against the Beneficial Owner is not a bank
whose receiptreorganization, or which were held of interest with respect to the Capital Securities (orrecord on the
Junior Subordinated Debentures)effective date of a short-form merger; provided, however, that subparagraph
(A) rather than subparagraph (B) of this paragraph applies in any case
where the approval required by Section 1201 is described in section
881(c)sought by written consent
rather than at a meeting.
(3)(A) of Which the Code and (iv)dissenting shareholder has demanded that the Beneficial Owner satisfies the
statement requirement (described generally below) set forth in
section 871(h) and section 881(c) of the Code and the regulations
thereunder; and
(b) no withholding of United States federal income tax will
be required with respect to any gain realized by a Non-United States
Holder upon the sale or other disposition of the Capital Securities
(or the Junior Subordinated Debentures).
To satisfy the requirement referred to in (a) (iv) above, the
Beneficial Owner, or a financial institution holding the Capital Securities
(or the Junior Subordinated Debentures) on behalf of such owner, must
provide,corporation
purchase at their fair market value, in accordance with specified procedures, toSection 1301.
(4) Which the Trust or any paying
agent (a "Paying Agent"),dissenting shareholder has submitted for endorsement, in
accordance with Section 1302.
(c) As used in this chapter, "dissenting shareholder" means the
recordholder of dissenting shares and includes a statement to the effect that the Beneficial Owner
is not a United States Holder. Pursuant to current temporary Treasury
regulations, these requirements will be met if (1) the Beneficial Owner
provides his name and address, and certifies, under penaltiestransferee of perjury,
that it is not a United States person (which certification may be made on an
IRS Form W-8 (or successor form)) or (2) a financial institution holding the
Capital Securities (or the Junior Subordinated Debentures) on behalf of the
Beneficial Owner certifies, under penalties of perjury, that such statement
has been received by it and furnishes a paying agent with a copy thereof.record.
1301 [DISSENTER'S RIGHTS; DEMAND ON CORPORATION FOR PURCHASE OF
SHARES]. -- (a) If, a Non-United States Holder cannot satisfy the requirements of the
"portfolio interest" exception described in (a) above, payments of premium,
if any, and interest (including any OID) made to such Non-United States
Holder will be subject to a 30% withholding tax unless the Beneficial Owner
provides the Corporation or the relevant Paying Agent, as the case may be,
with a properly executed (1) IRS Form 1001 (or successor form) claiming an
exemption from, or a reduction of, such withholding tax under the benefit of
a United States income tax treaty or (2) IRS Form 4224 (or successor form)
stating that interest paid with respect to the Capital Securities (or on the
Junior Subordinated Debentures) is not subject to withholding tax because it
is effectively connected with the Beneficial Owner's conduct of a trade or
business in the United States.
If a Non-United States Holder is engaged in a trade or business in
the United States and interest paid with respect to the Capital Securities
(or on the Junior Subordinated Debentures) is effectively connected with the
conduct of such trade or business, the Non-United States Holder, although
exempt from the withholding tax discussed above, will be subject to United
States federal income tax on such interest on a net income basis in the same
manner as if it were a United States person. In addition, if such Non-United
States Holder is a foreign corporation, it may be subject to a branch profits
tax equal to 30% of its effectively connected earnings and profits for the
taxable year, subject to adjustments. For this purpose, such interest would
be included in such foreign corporation's earnings and profits.
Any gain realized upon the sale or other taxable disposition of the
Capital Securities (or the Junior Subordinated Debentures) by a Non-United
States Holder generally will not be subject to United States federal income
tax unless (i) such gain is effectively connected with a trade or business
carried on in the United States by such Non-United States Holder, (ii) in the case of reorganization, any shareholders of a
Non-United States Holder who is an individual,corporation have a right under Section 1300, subject to compliance with
paragraphs
D-1
172
(3) and (4) of subdivision (b) thereof, to require the corporation to purchase
their shares for cash, such individual is
present in the United States for 183 days or more in the taxable year ofcorporation shall mail to each such sale or disposition, and certain other conditions are met, and (iii) in the
case of any gain representing accrued interest with respect to the Capital
Securities (or on the Junior Subordinated Debentures), the requirements
described above are not satisfied.
Information Reporting and Backup Withholding
Income on the Capital Securities (or the Junior Subordinated
Debentures) held of record by United States persons (other than corporations
and other exempt holders) will be reported annually to such holders and to
the IRS. The Administrative Trustees currently intend to deliver such
reports to holders of record prior to January 31 following each calendar
year. It is anticipated that persons who hold Capital Securities (or Junior
Subordinated Debentures) as nominees for beneficial holders will report the
required tax information to beneficial holders on Form 1099.
"Backup withholding" atshareholder a
rate of 31% will apply to payments of
interest to non-exempt United States Holders unless the holder furnishes its
taxpayer identification number in the manner prescribed in applicable
Treasury regulations, certifies that such number is correct, certifies as to
no loss of exemption from backup withholding and meets certain other
conditions.
No information reporting or backup withholding will be required with
respect to payments made by the Trust or any Paying Agent to Non-United
States Holders if a statement described in (a) (iv) under "Non-United States
Holders" has been received and the payor does not have actual knowledge that
the beneficial owner is a United States person.
In addition, backup withholding and information reporting will not
apply if paymentsnotice of the principal, interest, OID or premium with respect to
the Capital Securities (or on the Junior Subordinated Debentures) are paid or
collected by a foreign office of a custodian, nominee or other foreign agent
on behalfapproval of the Beneficial Owner, or if a foreign office of a broker (as
defined in applicable Treasury regulations) pays the proceeds of the sale of
the Capital Securities (or Junior Subordinated Debentures) to the owner
thereof. If, however, such nominee, custodian, agent or broker is, for
United States federal income tax purposes, a United States person, a
controlled foreign corporation or a foreign person that derives 50% or more
of its gross income for certain periods from the conduct of a trade or
business in the United States, such payments will not be subject to backup
withholding but will be subject to information reporting, unless (1) such
custodian, nominee, agent or broker has documentary evidence in its records
that the Beneficial Owner is not a United States person and certain other
conditions are met or (2) the Beneficial Owner otherwise establishes an
exemption.
Payment of the proceeds from disposition of Capital Securities (or
Junior Subordinated Debentures) to or through a United States office of a
broker is subject to information reporting and backup withholding unless the
holder or beneficial owner establishes an exemption from information
reporting and backup withholding.
Any amounts withheld from a holder of the Capital Securities (or the
Junior Subordinated Debentures) under the backup withholding rules generally
will be allowed as a refund or a credit against such holder's United States
federal income tax liability, provided the required information is furnished
to the IRS.
BOOK-ENTRY ISSUANCE
The New Capital Securities initially will be represented by one or
more Capital Securities in registered, global form (the "Global Capital
Securities"). The Global Capital Securities will be deposited upon issuance
with the Property Trustee as custodian for DTC, in New York, New York, and
registered in the name of DTC or its nominee, in each case for credit to an
account of a direct or indirect participant in DTC as described below.
Except as set forth below, the Global Capital Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Beneficial interests in the Global Capital
Securities may not be exchanged for Capital Securities in certificated form
except in the limited circumstances described below.
DTC has advised the Trust and the Corporation that DTC is a
limited-purpose trust company created to hold securities for its
participating organizations (collectively, the "Participants") and to
facilitate the clearance and settlement of transactions in those securities
between Participants through electronic book-entry changes in accounts of its
Participants. The Participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other
organizations. Access to DTC's system is also available to other entities
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly (collectively, the "Indirect Participants"). Persons who are not
Participants may beneficially own securities held by or on behalf of DTC only
through the Participants or the Indirect Participants. The ownership
interest and transfer of ownership interest of each actual purchaser of each
security held by or on behalf of DTC are recorded on the records of the
Participants and Indirect Participants.
DTC has also advised the Trust and the Corporation that, pursuant to
procedures established by it, (i) upon deposit of the Global Capital
Securities, DTC will credit the accounts of Participants with portions of the
principal amount of the Global Capital Securities and (ii) ownership of such
interests in the Global Capital Securities will be shown on, and the transfer
of ownership thereof will be effected only through, records maintained by DTC
(with respect to the Participants) or by the Participants and the Indirect
Participants (with respect to other owners of beneficial interests in the
Global Capital Securities).
Investors in the Global Capital Securities may hold their interests
therein directly through DTC if they are participants in such system, or
indirectly through organizations which are participants in such system. The
laws of some states require that certain persons take physical delivery in
certificated form of securities that they own. Consequently, the ability to
transfer beneficial interests in a Global Capital Security to such persons
will be limited to that extent. Because DTC can act only on behalf of
Participants, which in turn act on behalf of Indirect Participants and
certain banks, the ability of a person having beneficial interests in a
Global Capital Security to pledge such interests to persons or entities that
do not participate in the DTC system, or otherwise take actions in respect of
such interests, may be affected by the lack of a physical certificate
evidencing such interests.
Except as described below, owners of interests in the Global Capital
Securities will not have Capital Securities registered in their name, will
not received physical delivery of Capital Securities in certificated form and
will not be considered the registered owners or holders thereof for any
purpose.
Payments in respect of the Global Capital Securities registered in
the name of DTC or its nominee will be payable by the Property Trustee to DTC
in its capacity as the registered holder. The Property Trustee will treat
the persons in whose names the Capital Securities, including the Global
Capital Securities, are registered as the owners thereof for the purpose of