Document:

THIRD
PARTY BROKERAGE ARRANGEMENT

 

In accordance with the terms of
section 3(a)(4)(B)(i) of the Securities Exchange Act of 1934, as amended
(“the Act”), Woodbury Financial Services, Inc. (“Woodbury Financial”) and
Western Sierra National Bank (“Financial Institution”), a national bank, agree
to enter into this third party brokerage arrangement (“Agreement”) whereby
Woodbury Financial shall be authorized to sell securities, variable insurance
products, and variable and fixed annuities to the Financial Institution’s
customers at the location described in Exhibit A. Woodbury Financial,
authorized Registered Representatives of Woodbury Financial, and the Financial
Institution agree to be bound by the following conditions:

 

I.    Representations and
Identification of the Parties

 

1.1 Woodbury Financial is a broker-dealer duly
registered and in good standing with the Securities and Exchange Commission
(“SEC”) under the Securities Exchange Act of 1934, and the National Association
of Securities Dealers (“NASD”).  Woodbury
Financial has satisfied itself that it is permitted to engage in this activity
pursuant to section 3(a)(4)(B)(i) of the Act and interpretive
releases.  Woodbury Financial will
comply with all applicable laws and regulations as well as all rules of all
regulatory bodies that exercise jurisdiction over Woodbury Financial.

 

1.2 The Financial Institution is a bank as defined in
section 3(a)(6) of the Act. The Financial Institution has satisfied itself
that it is permitted under applicable federal and state banking laws and
regulations, including OCC Bulletin 94-13, to execute the Agreement with
Woodbury Financial, as defined in section 3(a)(4)(B)(i) of the Act.
Financial Institution will comply with all applicable laws and regulations as
well as all rules of all regulatory bodies that exercise jurisdiction over
Financial Institution.

 

II.    Duties
and Responsibilities

 

2.1 As set forth more fully in Section VI of this
agreement, Woodbury Financial agrees to pay Financial Institution a fee in
exchange for customer referrals made by Financial Institution to Woodbury
Financial and Woodbury Financial Registered Representatives (“Registered
Representatives”) that provide securities-related services in the Financial
Institution’s premises.  Such services
will include executing purchases and sales of securities.  Woodbury Financial will provide
securities-related services to customers of Financial Institution who are
referred to Woodbury Financial; Financial Institution will provide no
securities related services whatsoever and agrees not to become involved with
securities or fixed annuity related activities or supervision of any Woodbury
Financial Registered Representatives. As used herein, the term “Security” or
“Securities’ shall have the meaning set forth in the Securities Exchange Act of
1934, as amended, and shall also include all other financial instruments or
products included in the Woodbury Financial brokerage services program from
time to time, including without limitation, debt and equity instruments, mutual
funds, variable and fixed annuities and other financial instruments and
products approved by appropriate regulatory authorities from time to time for
sale (directly or indirectly) by financial institutions.

 

2.2 The parties to this Agreement will maintain a copy
of this Agreement in their principal office.

 

2.3 All securities-related customer account records
will be maintained either at Woodbury Financial or by the Registered
Representatives in a secure location at the Financial Institution.  No securities-related customer information
will be maintained by the Financial Institution.  Financial Institution will maintain strict confidentiality of the
names of all customers whom it refers to Woodbury Financial and Registered
Representatives.  Financial Institution
specifically agrees not disclose the names of customers it refers to Woodbury
Financial and Registered Representatives to any third party and furthermore
agrees to comply with all the requirements regarding customer privacy as set
forth in the Gramm-Leach-Bliley Act of 1998.

 

2.4 All books, records, and files relating to the
Agreement, whether located at Financial Institution or Woodbury Financial,
shall be available for inspection during normal business hours by the
Securities Exchange Commission, the National Association or Securities Dealers,
or other securities regulatory authorities. 
Such book, records and files, whether located at Financial Institution
or Woodbury Financial, shall also be available for inspection during normal
business hours to all regulators having jurisdiction over the activities of the
Financial Institution.

 

2.5 Only those Registered Representatives that enter
into an  employment agreement
(“Employment Agreement”) with the Financial Institution and that are approved
by Woodbury Financial to conduct business on the premises of the Financial
Institution and execute the appropriate addendum to the Woodbury Financial
Representative Sales Contract that reflects this fact will be permitted to
offer securities-related services on the premises of the Financial Institution.

 

2.6 After giving reasonable advance notice, Woodbury
Financial may visit the Financial Institution periodically during normal
business hours to audit the securities activities of Registered Representatives
and to inspect the premises for evidence of compliance with the terms of the
Agreement.

 

1

 

2.7 All customers referred to Registered
Representatives of Woodbury Financial by the Financial Institution will be
required by the Registered Representative of Woodbury Financial to sign a
Disclosure Statement prepared by Woodbury Financial.  The content of the Disclosure Statement will be determined by
Woodbury Financial, but will at a minimum explain that Woodbury Financial, not
the Financial Institution, offers all securities-related services. The
Disclosure Statement shall also include language to inform customers that
securities products are not deposits or obligations of the Financial
Institution, are not guaranteed by Woodbury Financial or Financial Institution,
and are not insured by the Federal Deposit Insurance Corporation and subject to
investment risk including possible loss of principal.

 

2.8 The Financial Institution will not carry a
securities account of any customer serviced under this Agreement except as
permitted under section 3(a)(4)(B)(ii) and 3(a)(4)(B)(viii) of the
Securities Exchange Act of 1934, as amended, these sections which are
incorporated into this agreement and attached as Exhibit B.

 

2.9 Woodbury Financial retains its rights to terminate
the Registered Representatives pursuant to the provisions set for the in
Woodbury Financial Representative Sales Contract, regardless of the Registered
Representative’s Employment Agreement with the Financial Institution.  Financial Institution agrees that any
Representative barred or suspended by any securities regulatory agency from
association with Woodbury Financial or any other broker-dealer will be
terminated or suspended, accordingly, from all securities activities by
Financial Institution.  Woodbury
Financial will promptly notify Financial Institution of termination, disbarment
or suspension by any securities or insurance regulatory agency of Registered
Representatives.

 

At its sole and separate option, Financial Institution
reserves right to terminate the Registered Representatives pursuant to the
provisions set forth in the Employment Agreement, regardless of Registered
Representatives’ contract or other agreement with Woodbury Financial.

 

2.10 In order to mitigate the risk of customer
confusion regarding the distinction between Woodbury Financial and the
Financial Institution, the Woodbury Financial sales location(s) at the
Financial Institution shall be established and located in a physically separate
and distinct area of the Financial Institution.  The Woodbury Financial sales location(s) shall be clearly
demarcated with Woodbury Financial and Securities Investors Protection
Corporation (“SIPC”) signage.  The
Financial Institution shall allow the Registered Representative to take
additional reasonable steps that may be prudent or necessary to mitigate the
risk of customer confusion.  In no
circumstances, however, shall any measure taken to mitigate such risk be allowed
to substitute for the duties set forth in section 2.7 of the Agreement.

 

2.11 The Woodbury Financial sales location(s) at the
Financial Institution shall be used solely for the purpose of selling
securities and variable insurance products by Registered Representatives of
Woodbury Financial.  Use of said
location(s) for any other purpose(s) will not be permitted without the prior
written agreement of Woodbury Financial and the Financial Institution.

 

2.12 The Employment Agreement between the Financial
Institution and the Registered Representative shall be determined solely by the
Financial Institution and the Registered Representative.  Woodbury Financial shall not be a party to
such contractual arrangement and shall honor all provisions of the Agreement until
notified in writing by either the Financial Institution or the Registered
Representative that the Employment Agreement has been terminated.  Woodbury Financial will honor all on-going
payment obligations to Financial Institution based on transactions consummated
prior to termination of the contractual arrangement between the Financial
Institution and the Registered Representative.

 

2.13 Woodbury Financial will be responsible for
recruiting, conducting background checks and training, obtaining appropriate
licenses or registration, and supervising Registered Representatives.  Such persons shall be independent
contractors of Woodbury Financial and may be employees of Financial Institution
if permitted under applicable state regulations.  Woodbury Financial will obtain from Registered Representatives an
executed Woodbury Financial Representative Sales Contract, an example of which
is attached hereto as Exhibit C.

 

2.14 Woodbury Financial shall provide to Financial
Institution for its customers, promotional material outlining Woodbury
Financial brokerage services which clearly identify Woodbury Financial as the
entity providing such services and include all necessary disclosures as
required by the Statement.

 

2.15 Woodbury Financial shall assist Financial
Institution in fulfilling its compliance responsibilities under the Statement
including providing Financial Institution with the Woodbury Financial
Representative’s Procedure Manual which includes rules and policies that
Woodbury Financial requires Registered Representatives to follow.

 

2.16 Woodbury Financial shall safeguard customer funds
and securities which are transferred between Financial Institution customers
and Woodbury Financial.

 

2.17 Woodbury Financial shall maintain books and
records for the securities accounts of each customer serviced by Woodbury

 

2

 

Financial as required by SEC Rule 17a-3 and other
applicable laws, rules and regulations.

 

2.18 Notwithstanding any other provision contained in
this Agreement, Woodbury Financial shall cause all aspects of its brokerage
services program to be conducted in accordance and conformity with the
Interagency Statement on Retail Sales of Non-deposit Investment Products, date
February 15, 1994, published by the Board of Governors of the Federal
Reserve System, the Office of the Comptroller of the Currency, the Federal
Deposit Insurance Corporation and the Office of Thrift Supervision (the
“Statement”) and all other applicable rules and regulations as issued and in
effect by Financial Institution’s federal banking regulator during the term of
this Agreement.  In accordance with
their responsibilities under the Statement and various other laws, rules,
regulations and policies of their respective regulatory agencies as in effect
from time to time.  Financial
Institution and its affiliates on whose premises the activities contemplated by
this Agreement are conducted may from time to time review the sales and other
activities of the Woodbury Financial Registered Representative(s) and other
operations of Woodbury Financial on Financial Institution’s premises to confirm
that such activities and operations are being conducted in a manner consistent
with the Statement and any such laws, rules, regulations and policies, and in
connection therewith to review such records of Woodbury Financial relating to
the Agreement as the Financial Institution or 
an affiliate of the Financial Institution that is approved by Woodbury
Financial, deems necessary or appropriate to evaluate compliance with the terms
of the Agreement.  Any such review or
investigation shall not relieve Woodbury Financial from its obligations
hereunder to operate all aspects of its brokerage services program in
accordance with the Statement and any additional laws, rules, regulations or
policies that may affect the terms of the Agreement.

 

2.19 Woodbury Financial shall require Registered
Representative to install appropriate Woodbury Financial signage that is also
compatible with the Financial Institution’s space and design.

 

2.20 Woodbury Financial will secure and maintain
errors and omissions insurance and will provide Financial Institution with
proof of maintenance of the required insurance on a regular basis.

 

2.21 Subject to applicable law, regulation and/or
regulatory guidance, and the Privacy Policy of The Hartford Financial Services
Group, Inc. and its Affiliates, including Woodbury Financial, Woodbury
Financial shall authorize Financial Institution to monitor, periodically review
and verify that Woodbury Financial and its Registered Representatives are
complying with the terms of this Agreement.

 

2.22 Woodbury Financial, its employees, officers or
affiliates shall not use any proprietary or confidential customer information
learned from Financial Institution in the course of their relationship for any
purposes other than those contemplated by this Agreement. The employees,
officers or affiliates thereof shall not disclose any such proprietary or
confidential information to any unauthorized third party.

 

2.23 Woodbury Financial will hold all customer data
provided by Financial Institution confidential, will protect the
confidentiality of the data in a manner no less effective than that used by
Woodbury to protect its own confidential information, and will not use or
re-disclose the customer data except in accordance with Section 502(b)(2)
of the Gramm-Leach-Bliley Act, Public Law 106-102, S. 900 (1999) and any
regulations promulgated thereunder by any state or Federal regulatory agency
with jurisdiction over any of the parties, and the Privacy Policy of The
Hartford Financial Services Group, Inc. and its Affiliates, including Woodbury
Financial.

 

2.24 Woodbury Financial shall notify Financial
Institution of breaches in security resulting in unauthorized intrusions that
may materially affect the Financial Institution and its customers.  In such and event, Woodbury Financial shall
notify Financial Institution when a material intrusion occurs, estimate the
intrusion’s effect on the Financial Institution and specify the corrective
action taken.

 

2.25 Woodbury Financial shall provide or make
available to Financial Institution the following written reports on the basis
indicated to assist management in fulfilling its oversight responsibilities:

 

i.  A list of
all customer complaints against Registered Representatives and their resolution
(monthly).

 

ii. A  copy of
all audit or inspection reports created by Woodbury Financial’s Compliance
Department, other personnel designated by the Compliance Department, or
regulatory authorities that relate to the activities of the Registered
Representatives.

 

iii. A monthly commissions report (which includes a
list of sales by product, salesperson and location) describing aggregate
commissions payable to individual Registered Representatives.

 

iv. Reports reflecting independent review by Woodbury
Financial’s Compliance Department of questionable sales

 

3

 

of securities to Registered Representative’s customers
by Registered Representative and/or questionable activities of the Registered
Representative where the Compliance Department’s review results in a
determination that potential problems may exist.  However, in no situation shall any report provided to Financial
Institution under this paragraph be deemed an admission of any guilt or
wrongdoing or any kind by Woodbury Financial or Registered Representative.

 

v. A copy of any portion of an SEC or NASD report
received by Woodbury Financial and reflecting upon the bank activities of
Woodbury Financial.

 

2.26 Woodbury Financial shall allow Financial
Institution and the appropriate regulators reasonable access to Woodbury
Financial records relating to the Agreement to fulfill supervisory and
oversight responsibilities.

 

2.27 Financial Institution shall provide space in its
main building and, upon agreement between the parties, in its branches for
Woodbury Financial brokerage services. 
The space provided shall be used solely for the purpose of marketing
nondeposit investment products.  Where
practical, the space shall be in a physical location distinct from the retail
deposit-taking area of Financial Institution. 
Signage and decor shall be used to minimize customer confusion with
deposit products.  All sales or
recommendations of nondeposit investment products by registered or non-registered
personnel, on Financial Institution’s premises, shall take place in the
designated area.

 

2.28 Financial Institution shall provide furniture
compatible with the design and quality of other adjacent office furniture
sufficient for the needs of the Woodbury Financial Registered Representative.

 

2.29 Financial Institution shall adopt a written
policy summarizing the procedures governing its responsibilities and the
activities of its employees under this Agreement and addressing the concerns
described in the Interagency Statement On Retail Sales of Nondeposit Investment
Products (February 15, 1994) (the Statement).  The policy shall be adopted and reviewed in accordance with
Bank’s regulatory requirements.

 

2.30 
Registered Representative shall only offer those categories of products
generically designated by Financial Institution. Financial Institution may
instruct Registered Representative that Registered Representative is prohibited
from selling designated categories of securities products that the Financial
Institution deems to be excessively volatile. The Financial Institution shall
provide Registered Representative and Woodbury Financial with advanced, written
notice of such prohibition.  Financial
Institution shall not, however, prohibit the sale of a particular securities
product nor shall it interfere with a suitability determination for a
particular customer.  Financial
Institution understands and agrees that all suitability determinations shall be
made by Woodbury Financial and the Registered Representative. Financial
Institution understands and agrees that Woodbury Financial shall not directly
monitor whether Registered Representative only sells those products designated
by the Financial Institution, however Woodbury Financial shall cooperate in determining
whether a violation has occurred, upon reasonable request by the Financial
Institution.  In no event shall the
products offered by Woodbury Financial include securities of Financial
Institution or any affiliate of Financial Institution or any securities as to
which the Financial Institution or Woodbury Financial acts as a “dealer,”
“market maker,” or “underwriter” as those terms are defined under federal
securities laws. This provision shall be construed narrowly as to avoid the
characterization of the Financial Institution’s activities as that of acting as
an unregistered securities representative or broker-dealer.

 

2.31 To the extent that any provision of this
Agreement shall be deemed invalid, unenforceable, or in contravention of any
contractual provision between Woodbury and its Registered Representatives then
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.

 

III.    Indemnification

 

3.1 Woodbury Financial shall indemnify, defend, and hold
harmless Financial Institution, any controlling person of the Financial
Institution and its affiliates, from and against all losses, claims, damages,
proceedings, suits, and actions commenced against Financial Institution, and
all liabilities, expenses, and costs, including reasonable attorney’s fees, in
connection therewith, arising out of Woodbury Financial’s or its Registered
Representatives’ reckless or fraudulent act or omission or negligence involving
the sale of securities to the Financial Institution’s customers.

 

3.2 Financial Institution shall indemnify, defend, and
hold harmless Woodbury Financial, and any controlling person of Woodbury
Financial, from and against all losses, claims, damages, proceedings, suits,
and actions commenced against Woodbury Financial, and all liabilities,
expenses, and costs, including reasonable attorney’s fees, in connection
therewith, arising out of Financial Institution’s reckless or fraudulent act or
omission or negligence involving the 
Financial Institution’s customers.

 

3.3  All
parties shall provide prompt notice of any claim for indemnification. Each
party shall have the right to either defend the

 

4

 

action from which a claim for indemnification stems or
to compensate the other party for the losses set forth in paragraphs 3.1 or
3.2.  Failure to provide prompt notice
under this paragraph that results in significant damages to the indemnifying
party which would not otherwise have been incurred shall release indemnifying
party from the responsibility to indemnify.

 

IV.    Advertising and
Promotional Materials

 

4.1 Any advertising or promotional materials used by
Financial Institution regarding securities-related services of Woodbury
Financial must be approved by Woodbury Financial prior to their use.

 

4.2  All
advertising and promotional materials relating to this arrangement referring to
the Financial Institution will clarify that the Financial Institution is not
registered as a broker or dealer, that the Financial Institution and Woodbury
Financial are distinct and separate entities and that securities services are
provided by Woodbury Financial and not by the Financial Institution.

 

4.3 All confirmations, account statements, and other
customer communications will indicate that securities services are provided
solely by Woodbury Financial and not by the Financial Institution.

 

4.4  All
aspects of this paragraph shall be subject to approval by the Compliance
Department of Woodbury Financial. Parties agree, from time to time, to
advertise and promote the investment products through direct mailing of
promotional literature, newspaper and other media advertisements, seminars and
other approaches.  Any such
advertisements and promotions shall contain conspicuous and easy to comprehend
disclosures concerning the nature of and the risk associated with investment
products.  The cost of such marketing
activities shall be shared equally by the parties, or as otherwise agreed to in
writing, by both parties from time to time. 
Each party must obtain prior written permission from the other before
distributing any advertisement or promotional material of any kind that refers
to the other party or the services available from the other party.  On a best efforts basis, Woodbury Financial
will work with Financial Institution to utilize the Hartford logo wherever
possible as permitted by Hartford policy.

 

V.    Activities of
Unregistered Financial Institution Employees

 

5.1 Unregistered employees of Financial Institution
will not recommend securities, provide investment advice, or handle any
questions that might require familiarity with the securities industry or
require the exercise of judgment regarding securities; however, unregistered
employees may describe in general terms the types of investment vehicles
available from Woodbury Financial under this Agreement.

 

5.2 Unregistered employees will direct all
securities-related questions to Woodbury Financial Registered Representatives.

 

5.3 Unregistered employees will only provide clerical
or ministerial assistance.

 

5.4 Unregistered employees will not accept or transmit
orders on behalf of customers.

 

5.5 Financial Institution may not pay its employees
any referral fees that exceed a nominal one-time cash fee of a fixed dollar
amount.  As used in paragraph 5.5, the
term “nominal” shall mean an amount not to exceed one hour of the referring
employee’s wage.  Referral fees must not
be contingent upon whether or not a referral results in a transaction and must
be paid regardless of whether or not a sale is made.  Referral fees cannot be in any way related to, or calculated on
the basis of, any transaction effectuated between the customer and Registered
Representative.

 

VI.  Compensation to the
Financial Institution

 

6.1  Woodbury
Financial will pay commissions to the Financial Institution on a semi-monthly
basis. Financial Institution shall receive a percentage of gross commissions,
as described in Exhibit D, less any credits and/or refunds made to customers,
generated by the brokerage services rendered by Registered Representatives on
Financial Institution’s premises or attributable to Financial Institution
customers referred to Registered Representatives.  The contract between Woodbury Financial and Financial Institution
shall be a Third Party Brokerage Arrangement pursuant to
Section 3(a)(4)(B)(i) of the Act and is not a joint venture or partnership
of any kind.

 

6.2  The
Financial Institution shall direct any and all compensation to the Registered
Representative pursuant to the contractual arrangement between Financial
Institution and the Registered Representative to which Woodbury Financial is
not a party.

 

6.3 Financial Institution shall have no right to be
compensated for transactions effectuated with customers of the Financial
Institution who retained the services of Woodbury Financial Registered
Representatives without being referred to such representative directly by
Financial Institution.

 

5

 

6.4 If any premium, deposit, or other consideration
collected pursuant to any sale made under this Agreement is refunded by
Woodbury Financial, product manufacturer, issuer, or any other party for any
reason, or if a reversal of the sale occurs for any reason, Woodbury Financial
shall not be obligated to pay any commission to Financial Institution for such
sale.  If such payment has already been
made to Financial Institution, Financial Institution shall be responsible to
promptly repay all money or other consideration received from Woodbury
Financial on the basis of such sale. 
Woodbury shall also be entitled to withhold any current or future
commissions payable to Financial Institution under this Agreement in order to
satisfy any balance under this paragraph. 
This paragraph shall not eliminate any other rights to collect such
money or other consideration or foreclose any other collection procedure that
may be available.

 

VII. Assignment

 

7.1  This
Agreement shall not be assignable by either Woodbury Financial or Financial
Institution without the written consent of the other party.

 

VIII. Termination

 

8.1  This
agreement shall be terminable without cause at any time by either party hereto
by written notice to the other party at least thirty (30) days prior to the
effective termination date contained in said notice.

 

In addition, this Agreement may be terminated
immediately and with notice for “cause.” 
“Cause” is defined to include, but is not limited to:

 

a.  If either
party undertakes any act of fraud, deceit, or violates any statute or rule
governing the sale of mutual funds, variable insurance products, or variable
annuities.

 

b.  If a party
shall breach a material term of this Agreement and fails to cure such breach
within 30 days of prior written notice of the breach from the non-breaching
party.

 

8.2 In the event a customer of Financial Institution
terminates his/her account with Financial Institution, Woodbury Financial may
continue to provide securities-related services to such customers subject to
Section 8.4.

 

8.3 This agreement will terminate immediately if third
party brokerage arrangements of this kind become impermissible under applicable
laws and regulations or if any change in regulatory interpretation of those
laws and regulations creates a good faith belief by either party that either
party may be subject to regulatory enforcement action.

 

8.4  Upon
termination of this Agreement, Woodbury Financial agrees to cooperate in the
transfer of records relating to customer accounts to a broker/dealer designated
by the Financial Institution, as permissible under applicable law including any
regulatory guidance.  Financial
Institution shall be exclusively responsible for obtaining customer
authorization for such transfer and of adequately notifying Woodbury Financial
that a broker-dealer change form has been obtained.  After termination of this Agreement, Woodbury Financial shall not
provide information with respect to such accounts to any other broker dealer or
financial institution nor shall information with respect to such accounts be
used by Woodbury Financial after such transfer except as requested by
customer.  Woodbury Financial shall not
engage in the contact or solicitation of any securities business from any
customer account, or from any person whose name becomes known to Woodbury
Financial Registered Representatives through Financial Institution as a
potential customer if this Agreement is terminated for a period of 60
days.  If, however, Financial
Institution does not transfer customer accounts to a successor broker dealer
within 60 days of the date of termination of this Agreement, Woodbury Financial
may contact such customers and continue to provide brokerage services.  If Woodbury terminates this agreement
without providing advance notice and Financial Institution fails to transfer
such accounts within 60 days, then Woodbury shall provide the Financial
Institution with an additional 30 days, however this 30 day extension period
shall be reduced by the number of days advance notice that Woodbury provides,
not to exceed 30 days.  Nothing in this
provision shall foreclose any customer’s right to determine their broker-dealer
or to otherwise manage his/her assets and Woodbury Financial shall not be
prohibited from assisting a customer in effectuating his/her decision,
including transferring such accounts or sharing customer information with a
party designated by the customer.  For
customers who choose to leave their account with Woodbury Financial, Woodbury
Financial may continue to provide securities services to them.  Woodbury Financial shall retain all original
customer account records following termination.

 

6

 

IX.  Miscellaneous

 

9.1  This
agreement shall be governed by the laws of the State of Minnesota.

 

9.2  Nothing
contained in this Agreement shall be deemed or construed to create a
partnership, joint venture or agency relationship between the parties or cause
Financial Institution to be responsible in any way for the debts or obligations
of Woodbury Financial.  The intention of
the parties is solely to create a Third Party Brokerage Arrangement whereby an
independent contractor of Woodbury Financial shall provide securities services
upon the premises of Financial Institution, subject to the Woodbury Financial
Services, Inc. Representative Sales Contract and the Employment Agreement.

 

9.3 Sales of securities, variable insurance products,
and variable annuities to the general public will not be limited by this
Agreement.

 

9.4 All notices required or permitted hereunder shall
be given if in writing and delivered personally or sent by United States
registered or certified mail, postage prepaid, to the following addresses:

 

	
  Woodbury Financial

  	
   

  	
  Western Sierra National Bank

  
	
  500 Bielenberg Drive

  St. Paul, MN 55102

  Attn: Sheryl Celestino

  (800) 800-2000

  FAX (651) 738-5262

  	
   

  	
  4080 Plaza Golorado

  Cameron Park, CA 95682

  Attn.: Kirk Dowdell

  Telephone: 530-677-5600

  Facsimile:  530-676-2817

  

 

9.5  This
Agreement contains the entire understanding of the parties and may be modified
only in writing executed by all parties. 
If any of its provisions are held unenforceable, the remaining
provisions shall not be invalidated.

 

9.6  Any
dispute or claim over the performance or interpretation of this Agreement that
cannot be resolved by mutual agreement of the parties shall be submitted to
arbitration under the rules and procedures of the American Arbitration
Association (“AAA”).

 

9.7 Subject to applicable law, each party agrees to
provide the other with information necessary to perform their responsibilities
pursuant to this Agreement.

 

This agreement dated the 22nd day of July, 2003 has been accepted by:

 

	
  By:

  	
  /s/ Kirk Dowdell

  	
   

  	
   

  
	
   

  	
  Kirk Dowdell, President and Chief Executive Officer

  	
   

  
	
   

  	
  Western Sierra National Bank

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Michael
  Brennan

  	
   

  	
   

  
	
   

  	
  Michael Brennan, Associate Counsel & Assistant
  Secretary

  	
   

  
	
   

  	
  Woodbury Financial Services, Inc.

  	
   

  
					

 

7EXHIBIT 10.73

 

The Company issued
$20,000,000 in 30 year trust preferred securities (“Capital Securities”)
through two Delaware business trusts. 
Bear, Stearns & Co. Inc. (“Bear Stearns”) and Sandler O’Neill &
Partners, L.P. (“Sandler”) acted as the placement agents in the issuance of
Capital Securities for $10,000,000 each, which was issued in two different
independent transactions from two different subsidiary trusts (Western Sierra
Capital Trust III for the Sandler transaction, and Western Sierra Capital Trust
IV for the Bear Stearns transaction (together, the “Trusts”)).  The Company established the Trusts for the
sole purpose of issuing Capital Securities pursuant to an Amended and Restated
Declaration of Trust (the “Declaration”). 
The proceeds from the sale of the Capital Securities were loaned to the
Company under 30 year deeply subordinated debentures (the “Debentures”) issued
to the Trust pursuant to an Indenture (the “Indenture”).  The terms of the Capital Securities issued
to Bear Stearns and Sandler are identical to the terms set forth in the
respective Indentures.

 

The material terms of the
transaction agreements are as follows:

 

Payment of Distributions and
Interest:  Distributions on the Capital Securities are
cumulative and payable quarterly at a floating rate of LIBOR plus 2.90%. LIBOR
will be recalculated quarterly on the 15thof each January, April, July and
October while the Capital Securities remain outstanding.  Interest payments are made quarterly on the
7th of each January, April, July and October while the capital
Securities remain outstanding.  The
distribution rate and payment dates on the Capital Securities coincide with the
interest rate and the payment dates on the Debentures.

 

Early Redemption: 
Unless earlier redeemed, the Capital Securities and Debentures mature
October 7, 2033.  The Capital
Securities and Debentures are redeemable at any time commencing in 2008 at par,
and may be redeemed earlier following the occurrence of a Special Event.  “Special Event” is defined as either (i) the
receipt by the Company of an opinion of counsel to the effect that there is
more than an insubstantial risk that (a) the Trust is or will be subject to
federal income tax with respect to the income received or accrued on the
Debentures, (b) interest payable by the Company on the Debentures is not or
will not be deductible, in whole or in part, for federal income tax purposes,
or (c) the Trust is or will be subject to more than a de minimis amount of
other taxes, duties or other governmental charges; (ii) the receipt by the
Company of an opinion of counsel to the effect that, as a result of the
occurrence of a change in law or regulation, there is more than an
insubstantial risk that the Trust is or will be considered as an “investment
company” that is required to be registered under the Investment Company Act of
1940; or (iii) the receipt by the Company of an opinion of counsel to the
effect that there is more than an insubstantial risk that the Company will not
be entitled to treat an amount equal to the aggregate liquidation amount of the
Capital Securities as “Tier 1 Capital” for purposes of the capital adequacy
guidelines of the Federal Reserve.  
Early redemption of the Capital Securities or the Debentures is subject
to approval by the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve.

 

Extension Periods. 
Interest payments on the Debentures (and the corresponding distributions
on the Capital Securities) may be deferred at any time at the election of the
Company for up to 20 consecutive quarterly periods (5 years).  There is no limitation on the number of
extension periods the Company may elect. 
Interest on the Debentures (and the corresponding distributions on the
Capital Securities) will accrue during the extension period, and all accrued
principal and interest must be paid at the end of each extension period.  During an extension period, the Company 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 Company’s or
any Company affiliate’s capital stock (other than payments of dividends or
distributions to the Company) or make any guarantee payments with respect to
the foregoing 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 Company or
any affiliate of the Company that rank pari passu in all respects with or
junior in interest to the Debentures (other than, with respect to clauses (i)
or (ii) above, (a) repurchases, redemptions or other acquisitions of shares of
capital stock of the Company in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of one or
more employees, officers, directors or consultants, in connection with a
dividend reinvestment or stockholder stock purchase plan or in connection with
the issuance of capital stock of the Company (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 any exchange or conversion of any class or series of the Company’s
capital stock (or any capital stock of a subsidiary of the Company) for any
class or series of the Company’s capital stock or of any class or series of the
Company’s indebtedness for any class or series of the Company’s capital stock,
(c) the purchase of fractional interests in shares of the Company’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 stockholder’s rights plan, or the issuance of rights,
stock or other property under any stockholder’s rights plan, or the redemption
or repurchase of rights pursuant thereto, (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 and any
cash payments in lieu of fractional shares issued in connection therewith, or
(f) payments under the Guarantee).

 

Subordination of the
Debentures.  The Company’s obligations under the
Debentures are subordinated to all Senior Indebtedness of the Company.  “Senior Indebtedness” is defined as (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of the Company
for money borrowed and (B) indebtedness evidenced by securities, debentures,
notes, bonds or other similar instruments issued by the Company; (ii) all
capital lease obligations of the Company; (iii) all obligations of the Company
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of the Company and all obligations of the Company under any
title retention agreement; (iv) all obligations of the Company for the
reimbursement of any letter of credit, any banker’s acceptance, any security
purchase facility, any repurchase agreement or similar arrangement, any
interest rate swap, any other hedging arrangement, any obligation under options
or any similar credit or other transaction; (v) all obligations of the type
referred to in clauses (i) through (iv) above of other Persons for the payment
of which the Company is responsible or liable as obligor, guarantor or
otherwise; and (vi) all obligations of the type referred to in clauses (i)
through (v) above of other Persons secured by any lien on any property or asset
of the Company (whether or not such obligation is assumed by the Company),
whether incurred on or prior to the date of this Indenture or thereafter
incurred.

 

Guarantee of Company.  The
Company will irrevocably and unconditionally guarantee, with respect to the
Capital Securities and to the extent not paid by the Trust, accrued and unpaid
distributions on the Capital Securities and the redemption price payable to the
holders of the Capital Securities, in each case to the extent the Trust has
funds available.

 

Nothing
in the transaction agreements prevents the Company from acquiring, being
acquired or merging with another entity. 
Furthermore, there is no restriction on the Company’s use of the
proceeds received upon issuance of the Capital Securities and the corresponding
Debentures.

 

2

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