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(Name of Shareholder)
CUSTODY AGREEMENT, LETTER OF TRANSMITTAL, POWER OF ATTORNEY
AND OFFER OF SALE
FOR CUSTODY AND EXCHANGE OF COMMON STOCK OF
VALLEY BANK
AND FOR CUSTODY AND SALE OF COMMON STOCK OF
PACIFIC COMMUNITY BANKING GROUP
Marion V. Ashley
N. Douglas Mills
As Attorneys-in-Fact
c/o Valley Bank
24010 Sunnymead Boulevard
Moreno Valley CA 92553
U.S. Stock Transfer Company
As Custodian
1745 Gardena Avenue, Suite 200
Glendale, CA 91204
Sutro & Co. Incorporated
As Representative of the several Underwriters
c/o Sutro & Co. Incorporated
11150 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025
Ladies and Gentlemen:
The undersigned (the "Shareholder") is a shareholder of Valley Bank ("Valley
Bank"), a California corporation. Pacific Community Banking Group, a California
corporation, and Valley Bank have signed a First Restatement of Agreement and
Plan of Reorganization (as amended, the "Acquisition Agreement") providing for
the acquisition of Valley Bank by Pacific Community Banking Group. If the
acquisition is completed, the Shareholder's shares of Valley Bank will
automatically convert into a right to receive shares of Pacific Community
Banking Group. Pacific Community Banking Group and the Shareholder propose to
sell some or all of the shares of Pacific Community Banking Group common stock
received by the Shareholder to underwriters (the "Underwriters") for whom Sutro
& Co. Incorporated will act as representative (the "Representative" ), for
distribution under a Registration Statement on Form S-1 (the "Registration
Statement") to the public at a price and on terms to be hereafter determined. It
is understood that at this time there is no commitment on the part of the
Underwriters to purchase any shares of Pacific Community Banking Group common
stock and no assurance that an offering of Pacific
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Community Banking Group common stock will take place. The shares of Pacific
Community Banking Group common stock received by the Shareholder in exchange for
shares of Valley Bank common stock, all of which the Shareholder will hereby
offer to sell to the Underwriters, are referred to herein as the "Shares."
1. APPOINTMENT AND POWERS OF ATTORNEYS-IN-FACT.
A. The Shareholder irrevocably constitutes and appoints Marion V. Ashley
and N. Douglas Mills (the "Attorneys-in-Fact"), and each of them, its agent and
attorney-in-fact, with full power of substitution, with respect to all matters
arising in connection with the public offering and sale of the Shares,
including, but not limited to, the power and authority on behalf of the
Shareholder to do or cause to be done any of the following things:
(i) to instruct the Custodian (as defined below) to surrender certificates
for all of the Shareholders' shares of common stock of Valley Bank in
exchange for shares of Pacific Community Banking Group as provided in
the Acquisition Agreement;
(ii) to negotiate, determine and agree upon (a) the price at which the
Shares will be initially offered to the public by the Underwriters,
provided that the price shall not be less than $15 per share, and (b)
the price at which the Shares will be sold to the Underwriters;
(iii) to execute on behalf of the Shareholder an underwriting agreement as
follows: (a) making the representations and warranties of the
Shareholder contained in this Agreement to the Underwriters; (b)
undertaking the obligations of the Shareholder contained in this
agreement, for the benefit of the Underwriters; and (c) indemnifying
the Underwriters, on a joint and several basis with Pacific Community
Banking Group, for losses resulting from a breach of those
representations, warranties and obligations, up to the amount of
consideration received by the Shareholder for shares of Pacific
Community Banking Group sold to the public in the initial public
offering. Such indemnification may include a provision for interim
reimbursement and contribution, provided the underwriters have a
reciprocal obligation to the shareholders participating in the public
offering.
(iv) to allocate the number of shares of Pacific Community Banking Group
common stock owned by the Shareholder that shall be sold to the
Underwriters and the number of shares of Pacific Community Banking
Group common stock that shall be retained by the Shareholder, in
satisfaction of the terms of the Acquisition Agreement. Notwithstanding
the statement of preference made by the Shareholder herein, the
Attorneys-in-Fact are authorized, in their sole discretion, to sell up
to the total number of shares of Pacific Community Banking Stock owned
by the Shareholder.
(v) to sell, assign, transfer and deliver the Shares to the Underwriters and
deliver to the Underwriters certificates for the Shares so sold;
(vi) take any and all steps deemed necessary or desirable by the
Attorneys-in-Fact in connection with the registration of the Shares
under the Securities Act of 1933, as amended (the "Securities Act"),
the Securities Exchange Act of 1934, as amended, and under the
securities or "blue sky" laws of various states and jurisdictions,
including, without limitation, the giving or making of such
undertakings, representations and agreements and the taking of such
other steps as the Attorneys-in-Fact may deem necessary or advisable;
(vii) instruct Pacific Community Banking Group and the Custodian (as
hereinafter defined) on all matters pertaining to the sale of the
Shares and delivery of certificates therefor; and
(viii) otherwise take all actions and do all things necessary or proper,
required, contemplated or deemed advisable or desirable by the
Attorneys-in-Fact in their discretion, including the
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execution and delivery of any documents, and generally act for and in
the name of the Shareholder with respect to the sale of the Shares to
the Underwriters and the reoffering of the Shares by the Underwriters
as fully as could the Shareholder if then personally present and
acting.
B. Each Attorney-in-Fact may act alone in exercising the rights and powers
conferred on the Attorneys-in-Fact by this Custody Agreement, Letter of
Transmittal, Power of Attorney and Offer of Sale (this "Agreement"), and the act
of any Attorney-in-Fact shall be the act of the Attorneys-in-Fact. Each
Attorney-in-Fact is hereby empowered to determine, in his sole and absolute
discretion, the time or times when, the purposes for which, and the manner in
which, any power herein conferred upon the Attorneys-in-Fact shall be exercised.
C. The Custodian, the Representatives, Pacific Community Banking Group and
all other persons dealing with the Attorneys-in-Fact as such may rely and act
upon any writing believed in good faith to be signed by one or more of the
Attorneys-in-Fact.
D. The Attorneys-in-Fact shall not receive any compensation from the
Shareholder for their services rendered hereunder.
2. APPOINTMENT OF CUSTODIAN; DEPOSIT OF SHARES.
A. In connection with and to facilitate the exchange of shares of Valley
Bank common stock and the sale of the Shares to the Underwriters, the
Shareholder hereby appoints U.S. Stock Transfer Corporation as custodian (the
"Custodian") and herewith deposits with the Custodian one or more certificates
for Valley Bank common stock which represent the total number of the shares of
Valley Bank common stock held by the Shareholder, and which number is set forth
on Schedule I hereto. Each such certificate so deposited is in negotiable and
proper deliverable form and either (a) the certificate has been endorsed in
blank with the signature of the Shareholder thereon, medallion guaranteed by an
eligible guarantor institution, such as a bank, a stock broker, savings and loan
association, or credit union, with membership in an approved medallion signature
program, or (b) the Shareholder has separately provided a duly executed stock
power or powers in blank, bearing the signature of the Shareholder, medallion
guaranteed in the same manner. The Custodian is hereby authorized and directed,
subject to the instructions of the Attorneys-in-Fact, to act as follows:
(i) to surrender the certificates for Shareholder's shares of Valley Bank in
exchange for certificates of Pacific Community Banking Group common
stock in accordance with the Acquisition Agreement;
(ii) to hold in custody the certificate or certificates deposited herewith
and any other certificates or instruments exchanged therefor;
(iii) to deliver or to authorize Pacific Community Banking Group's transfer
agent to deliver the certificates of Pacific Community Banking Group
common stock received in exchange for the certificates deposited
herewith (or replacement certificate(s) for the Shares) to or at the
direction of the Attorneys-in-Fact; and
(iv) to return or cause Pacific Community Banking Group's transfer agent to
return to the Shareholder cash in lieu of fractional shares and in new
certificate(s) for the shares of Pacific Community Banking Group common
stock and warrants that are received in exchange for any certificate
deposited hereunder but that are not sold to the Underwriters, and cash
in place of any fractional share interest in Pacific Community Banking
Group.
B. Until the shares of Valley Bank common stock deposited hereunder have
been exchanged for Pacific Community Banking Group common stock, the Shareholder
shall retain all rights of ownership with respect to the shares of Valley Bank
common stock deposited hereunder, including the right to vote and to
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receive all dividends and payments thereon, except the right to retain custody
of or dispose of such Shares, which right is subject to this Agreement. Until
the Shares have been delivered to the Underwriters against payment therefor, the
Shareholder shall retain all rights of ownership with respect to the Shares,
including the right to vote and to receive all dividends and payment thereon,
except the right to retain custody of or dispose of such Shares, which right is
subject to this Agreement.
3. IRREVOCABLE OFFER TO SELL SHARES OF PACIFIC COMMUNITY BANKING GROUP
COMMON STOCK.
The Shareholder offers for sale to the Underwriters any and all shares of
Pacific Community Banking Group common stock received in exchange for the shares
of Valley Bank common stock transmitted herewith. This offer is made without
conditions, except as provided in this Agreement, and may be accepted and
executed without prior notice to the Shareholder. The Shareholder may not revoke
this offer; however, this offer will expire if not accepted in whole or in part
by the Underwriter on or before August 31, 1999.
4. PREFERENCE TO RECEIVE CASH OR SHARES OF PACIFIC COMMUNITY BANKING GROUP
COMMON STOCK
The Shareholder hereby instructs the Attorney-in-Fact that the shareholder
prefers to receive consideration for the surrendered shares of Valley Bank
common stock as indicated on the Statement of Preference attached to this
Agreement. The Shareholder acknowledges that this preference is subject to the
power of the Attorney-in-Fact to allocate the number of Shareholders' shares
sold to the Underwriters to satisfy the terms of the Acquisition Agreement, in
the sole discretion of the Attorney-in-Fact.
5. SALE OF SHARES; REMITTING NET PROCEEDS.
The Attorneys-in-Fact are hereby authorized and directed to deliver or cause
the Custodian or Pacific Community Banking Group's transfer agent to deliver
certificates for the Shares to the Representatives, against delivery to the
Attorneys-in-Fact, for the account of the Shareholder, of the purchase price of
the Shares. The Attorneys-in-Fact are authorized, on behalf of the Shareholder,
to accept and acknowledge receipt of the payment of the purchase price for the
Shares and shall promptly deposit such proceeds with the Custodian. The
Custodian shall promptly remit to the Shareholder his or her share of the
proceeds.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
To induce the Underwriters to enter into an underwriting agreement with
Pacific Community Banking Group and certain of its shareholders, and in
consideration of the performance of this Agreement by the other parties thereto,
the Shareholder represents and warrants to, and agrees with, the Underwriters,
Pacific Community Banking Group, the Attorneys-in-Fact and the Custodian as
follows:
A. The Shareholder has full legal right, power and authority to enter into
and perform this Agreement. This Agreement has been duly executed and delivered
by the Shareholder and (assuming this Agreement is a binding Agreement of the
other parties thereto) constitutes the valid and binding agreement of the
Shareholder, enforceable against the Shareholder in accordance with its terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting the enforcement of creditors' rights and the
application of equitable principles relating to the availability of remedies,
and except as rights or affecting the enforcement of creditors' rights and
except as rights to indemnity or contribution may be limited by federal or state
securities law and the public policy underlying such laws).
B. None of the execution, delivery or performance of this Agreement and the
consummation of the transactions herein contemplated will conflict with or
result in a breach of, or default under, any indenture, mortgage, deed of trust,
voting trust agreement, shareholders' agreement, note agreement or other
agreement or instrument to which the Shareholder is a party or by which the
Shareholder is bound or to which any of his or its property is or may be
subject, or any statute, judgment, decree, order, rule or
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regulation applicable to the Shareholder of any government, arbitrator, court,
regulatory body or administrative agency or other governmental agency or body,
domestic or foreign, having jurisdiction over the Shareholder or any of his
activities or properties.
C. At the date hereof, the Shareholder has full right, power and authority
to sell, assign, transfer and deliver the shares of The Bank of Hemet common
stock to be surrendered in exchange for the Shares, and at the time of delivery
of the Shares to be sold by the Shareholder to the several Underwriters, the
Shareholder will have full right, power and authority to sell, assign, transfer
and deliver the Shares to be sold by the Shareholder hereunder. At the date
hereof the Shareholder is the lawful owner of and has good and marketable title
to the shares of The Bank of Hemet common stock to be surrendered in exchange
for the Shares, free and clear of any and all encumbrances, and at the time of
delivery of the Shares to be sold by the Shareholder, the Shareholder will be
the lawful owner of and will have good and marketable title to the Shares free
and clear of any and all encumbrances.
D. To the Shareholder's knowledge, the Shareholder has not taken any action
designed to stabilize or manipulate the price of any security of Pacific
Community Banking Group, or which has constituted or which might in the future
reasonably be expected to cause or result in stabilization or manipulation of
the price of any security of Pacific Community Banking Group, to facilitate the
sale or resale of the Shares or otherwise.
E. If the Shareholder is acting as a fiduciary, officer, partner or agent,
the Shareholder is enclosing with this Agreement certified copies of the
appropriate instruments pursuant to which the Shareholder is authorized to act
hereunder. If the Shareholder is an individual and is married, and the spouse is
not named as an owner on the stock certificate, the Shareholder is enclosing
with this Agreement a duly completed and executed consent of his or her spouse,
in the form attached to this Agreement as Annex A.
F. The Shareholder agrees to deliver to the Attorneys-in-Fact such
documentation as the Attorneys-in-Fact, Valley Bank, Pacific Community Banking
Group or the Underwriters or any of their respective counsel may reasonably
request in order to effectuate any of the provisions hereof, in form and
substance satisfactory in all respects to the Attorneys-in-Fact.
G. The foregoing representations, warranties and agreements are made for
the benefit of, and may be relied upon by, the Attorneys-in-Fact, Valley Bank,
Pacific Community Banking Group, the Custodian, the Underwriters and their
respective representatives, agents and counsel.
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7. IRREVOCABILITY OF INSTRUMENTS; TERMINATION OF THIS AGREEMENT.
A. This Agreement, the deposit of Valley Bank common stock pursuant hereto
and all authority hereby conferred, is granted, made and conferred subject to
and in consideration of (a) the interests of the Attorneys-in-Fact, the
Underwriters, Valley Bank and Pacific Community Banking Group in and for the
purpose of completing the transactions contemplated hereunder and by the
Acquisition Agreement and the Underwriting Agreement between Pacific Community
Banking Group, certain other selling shareholders and the Underwriters, and (b)
the completion of the registration of Pacific Community Banking Group common
stock pursuant to the Registration Statement and the other acts of the above-
mentioned parties from the date hereof to and including the time the Shares are
purchased by the Underwriters, and the Attorneys-in-Fact are hereby further
vested with an estate, right, title and interest in and to the Shares deposited
herewith for the purpose of irrevocably empowering and securing to them
authority sufficient to consummate said transactions. Accordingly, this
Agreement and the offer of the Shares made herein shall be irrevocable prior to
August 31, 1999, and shall remain in full force and effect until that date. The
Shareholder further agrees that this Agreement shall not be terminated by
operation of law or upon the occurrence of any event whatsoever, including the
death, disability or incompetence of the Shareholder or, if the Shareholder is
not a natural person, upon any dissolution, winding up, distribution of assets
or other event affecting the legal existence of the Shareholder. If any event
referred to in the preceding sentence shall occur, whether with or without
notice thereof to the Attorneys-in-Fact, any of the Underwriters or any other
person, the Attorneys-in-Fact shall nevertheless be authorized and empowered to
deliver and deal with the Shares deposited under the Agreement by the
Shareholder in accordance with the terms and provisions of this Agreement as if
such event had not occurred.
B. If the transactions contemplated in the Acquisition Agreement are not
completed by August 31, 1999, this Agreement shall terminate (without affecting
any lawful action of the Attorneys-in-Fact or the Custodian prior to such
termination), and the Attorneys-in-Fact shall cause the Custodian to return to
the Shareholder all certificates for Valley Bank common stock deposited
hereunder.
8. LIABILITY AND INDEMNIFICATION OF THE ATTORNEYS-IN-FACT AND CUSTODIAN.
The Attorneys-in-Fact and the Custodian assume no responsibility or
liability to the Shareholder or to any other person, other than to deal with
Valley Bank common stock deposited hereunder, the Pacific Community Banking
Group common stock exchanged therefor, the proceeds from the sale of the Shares
and any other shares of Pacific Community Banking Group common stock deposited
with the Custodian pursuant to the terms of this Agreement in accordance with
the provisions hereof. The Shareholder hereby agrees to indemnify and hold
harmless the Attorneys-in-Fact and the Custodian, and their respective officers,
agents, successors, assigns and personal representatives with respect to any act
or omission of or by any of them in good faith in connection with any and all
matters contemplated by this Agreement or the Underwriting Agreement.
9. INTERPRETATION.
A. The representations, warranties and agreements of the Shareholder
contained herein shall survive the sale and delivery of the Shares and the
termination of this Agreement.
B. The validity, enforceability, interpretation and construction of this
Agreement shall be determined in accordance with the laws of the State of
California applicable to contracts made and to be performed within the State of
California, and this Agreement shall inure to the benefit of, and be binding
upon, the Shareholder and the Shareholder's heirs, executors, administrators,
successors and assigns, as the case may be.
C. Wherever possible each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
such provision shall be prohibited by or invalid under
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applicable law, it shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
D. The use of the masculine gender in this Agreement includes the feminine
and neuter, and the use of the singular includes the plural, wherever
appropriate.
THE NEXT PAGE IS THE SIGNATURE PAGE.
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IN WITNESS WHEREOF, the undersigned has executed this Custody Agreement, Letter
of Transmittal, Power of Attorney and Offer of Sale this ____ day of
____________, 1999.
Signature of Shareholder
Medallion Guaranteed by:
(Please sign exactly as your name
appears on your stock
certificate(s).)*
Name and address to which notices,
funds and stock certificates shall be
sent.
(NAME)
(STREET)
(CITY) (STATE) (ZIP)
* The signature MUST BE MEDALLION GUARANTEED by an eligible guarantor
institution, such as a bank, or a stock broker, savings and loan
association, or credit union, with membership in an approved medallion
signature program.
ACCEPTED by the Attorneys-in-Fact as of the ACCEPTED by the Custodian as of the of the
date above set forth: date above set forth:
Marion V. Ashley U.S. STOCK TRANSFER CORPORATION
By:
N. Douglas Mills Name:
Its:
SEE THE ATTACHED INSTRUCTIONS
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SCHEDULE I
CERTIFICATE(S) FOR SHARES OF COMMON STOCK OF
VALLEY BANK
DEPOSITED UNDER
Custody Agreement, Letter of Transmittal, Power of Attorney and Offer of Sale
Certificate Number
(or purchase date if held in street Number of Shares of
name) Valley Bank Common Stock
- ------------------------------------- -------------------------
...............................
...............................
...............................
...............................
...............................
...............................
Total Shares:
The Attorneys-in-Fact may not be able to sell all of the Pacific Community
Banking Group common stock received in exchange for your shares listed above or
you may have requested to sell some shares and keep some shares. If you wish to
do so for income tax purposes, please give the order in which you would like
your shares sold, listing by the certificate number, or date of purchase if held
in street name, in order from those you want the Attorneys-in-Fact to sell first
to those you want sold last.
1. 2. 3.
4. 5. 6.
7. 8. 9.
10.
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STATEMENT OF PREFERENCE
INSTRUCTION:See Section 4 of the Custody Agreement, Letter of Transmittal, Power
of Attorney and Offer of Sale.
CHECK THE BOX BELOW THAT APPLIES.
/ / A. I prefer to sell 100% of the shares of Pacific Community Banking
Group common stock that I will receive in the acquisition.
/ / B. I prefer to retain all of the shares of Pacific Community Banking
Group common stock that I will receive in the acquisition.
/ / C. I prefer to sell 60% and retain 40% of the shares of Pacific
Community Banking Group common stock that I will receive in the
acquisition.
Statement of Preference
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ANNEX A
INSTRUCTION: See Section 6, paragraph E, of the Custody Agreement, Letter of
Transmittal, Power of Attorney and Offer of Sale.
CONSENT OF SPOUSE
I am the spouse of ____________. On behalf of myself, my heirs, legatees,
and assigns, I hereby join in and consent to the terms of the foregoing Custody
Agreement, Letter of Transmittal, Power of Attorney and Offer of Sale (the
"Agreement"), and I agree to the sale of the shares of common stock of Pacific
Community Banking Group, a California corporation, to be received in exchange
for the shares of common stock of Valley Bank registered in the name of my
spouse or otherwise registered, which my spouse has offered to sell in the
Agreement.
Dated: ____________, 1999
______________________________________
(Signature of Spouse)
INSTRUCTION:See Instruction D. Shareholders sign only the spaces marked "X"; DO
NOT FILL IN THE TOP OF THE FORM OR DATE.
STOCK POWER
FOR VALUE RECEIVED, ________________________ hereby sells, assigns and
transfers unto ________________________ , ________________________ shares of the
Common Stock of Valley Bank, and does hereby irrevocably constitute and appoint
_________________________________ attorney to transfer such shares on the books
of Valley Bank with full power of substitution in the premises.
Dated: ______________ , 1999
X
X
(Please sign exactly as your name
appears on your stock
certificate(s).)
Signature medallion guaranteed by:
By:
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* The signature MUST BE MEDALLION GUARANTEED by an eligible guarantor
institution, such as a bank, a stock broker, savings and loan association,
or credit union, with membership in an approved medallion signature program.