<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________________________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended March 31, 1995
Commission File No. 0-3505
U. S. BANCORP
(Exact name of registrant as specified in its charter)
Oregon 93-0571730
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
97204
111 S.W. Fifth Avenue (Zip Code)
Portland, Oregon
(Address of principal executive offices)
(503) 275-6111
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Number of shares of Common Stock, par value $5, outstanding at
May 1, 1995: 98,202,805 shares.
<PAGE>
U. S. BANCORP
INDEX
<TABLE>
<CAPTION>
Part I - Financial Information Page
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheet -
March 31, 1995, December 31, 1994
and March 31, 1995................................... 3
Consolidated Statement of Income - First Quarter
Ended March 31, 1995 and 1994........................ 5
Consolidated Statement of Cash Flows -
First Quarter Ended March 31, 1995 and 1994.......... 7
Consolidated Statement of Changes in Shareholders'
Equity - First Quarter Ended March 31, 1995
and 1994............................................ 9
Notes to Financial Statements............................ 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.............. 11
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders... 27
Item 5. Other Information..................................... 27
Item 6. Exhibits and Reports on Form 8-K...................... 28
Signatures.......................................................... 29
Exhibit Index....................................................... 30
</TABLE>
<PAGE>
Part 1 - Financial Information
- ------------------------------
Item 1. Financial Statements
U.S. BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31, December 31, March 31,
In Thousands 1995 1994 1994
- ------------ --------- ------------ -----------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 1,276,957 $ 1,488,743 $ 1,250,552
Interest-bearing deposits with banks
and other short-term investments 7,538 10,748 27,682
Federal funds sold and security resell
agreements 99,719 429,366 346,875
Trading account securities 158,194 137,194 219,387
Loans held for sale 376,162 148,179 484,770
Securities available for sale, at fair
value (cost: $1,287,195; $1,411,764;
$1,586,386) 1,271,550 1,369,437 1,584,510
Securities held to maturity, at amortized
cost (fair value: $1,313,482; $1,342,638;
$1,725,187) 1,340,175 1,404,835 1,720,482
Loans and lease financing, net of
unearned income
Commercial 7,669,824 7,384,593 6,809,732
Real estate construction 706,715 667,177 692,225
Real estate mortgage 2,964,519 2,946,541 2,608,239
Consumer 3,408,355 3,737,973 3,251,998
Lease financing 830,480 819,599 739,503
Foreign 87,869 49,834 93,100
---------- ---------- ----------
Total loans and lease financing 15,667,762 15,605,717 14,194,797
Allowance for credit losses (307,088) (305,802) (270,938)
Net loans and lease financing 15,360,674 15,299,915 13,923,859
Premises, furniture and equipment 536,090 544,701 552,951
Other real estate and equipment owned 24,225 22,676 35,085
Customers' liability on acceptances 293,214 225,229 202,191
Other assets 694,472 735,386 723,071
---------- ---------- ----------
$21,438,970 $21,816,409 $21,071,415
========== ========== ==========
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
U.S. BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Continued)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
In Thousands 1995 1994 1994
- ------------ --------- ------------ ---------
<S> <C> <C> <C>
LIABILITIES
Deposits:
Noninterest-bearing deposits $ 3,724,063 $ 4,021,659 $ 3,710,066
NOW accounts and interest checking 1,983,065 2,071,293 1,811,586
Savings 1,493,318 1,612,356 2,154,876
Money market deposit accounts 3,303,870 3,176,920 2,987,256
Time deposits 3,723,105 3,514,942 3,967,747
Time - $100,000 or more 594,513 651,196 553,601
---------- ---------- ----------
14,821,934 15,048,366 15,185,132
---------- ---------- ----------
Federal funds purchased and security
repurchase agreements 2,175,854 2,783,503 1,822,791
Commercial paper 177,599 171,454 256,013
Other short-term borrowings 837,389 393,587 303,973
Long-term debt 852,664 994,870 1,125,088
Accrued income taxes 87,775 47,245 73,478
Acceptances outstanding 293,214 225,229 202,191
Other liabilities 361,626 374,870 351,022
---------- ---------- ----------
Total liabilities 19,608,055 20,039,124 19,319,688
---------- ---------- ----------
SHAREHOLDERS' EQUITY
Preferred stock 150,000 150,000 150,000
Common stock 490,778 490,690 499,560
Capital surplus 350,216 350,612 390,384
Retained earnings 850,896 811,808 713,540
Net unrealized gain (loss) on
securities available for sale,
net of tax (10,975) (25,825) (1,757)
---------- ---------- ----------
Total shareholders' equity 1,830,915 1,777,285 1,751,727
---------- ---------- ----------
$21,438,970 $21,816,409 $21,071,415
========== ========== ==========
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
U.S. BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
First Quarter Ended
March 31,
In Thousands, -------------------
Except Per Share Data 1995 1994
- --------------------- ------- -------
<S> <C> <C>
INTEREST INCOME
Loans and lease financing
including fees $363,172 $282,866
Securities available for sale 18,138 21,021
Securities held to maturity 21,352 25,400
Loans held for sale 3,178 10,813
Trading account securities 2,077 2,148
Interest-bearing deposits and
other short-term investments 2,667 2,288
------- -------
Total interest income 410,584 344,536
------- -------
INTEREST EXPENSE
Deposits 104,233 80,974
Short-term borrowings 43,722 17,882
Long-term debt 15,317 17,838
------- -------
Total interest expense 163,272 116,694
------- -------
NET INTEREST INCOME 247,312 227,842
Provision for credit losses 20,414 19,754
------- -------
Net interest income after
provision for credit losses 226,898 208,088
------- -------
NONINTEREST REVENUES
Service charges on deposit accounts 38,012 36,332
Bank card revenue, net 14,437 14,088
Trust and investment management 12,428 11,883
Exchange fees 8,046 6,932
Insurance revenue 3,473 5,172
Other operating revenue 18,191 20,256
Credit reporting revenue - 4,957
Mortgage banking income, net 1,314 8,149
Equity investment income (loss) 2,276 (1,423)
Gain on sale of securities
available for sale 35 324
------- -------
Total noninterest revenues $ 98,212 $106,670
------- -------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
U.S. BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Continued)
<TABLE>
<CAPTION>
First Quarter Ended
March 31,
In Thousands, -------------------
Except Per Share Data 1995 1994
- --------------------- ------- -------
<S> <C> <C>
NONINTEREST EXPENSES
Employee compensation and
benefits $107,459 $130,090
Net occupancy expense 15,938 16,332
Equipment rentals, depreciation
and maintenance 23,408 24,786
Stationery, supplies and
postage 11,469 11,559
Regulatory agency fees 9,765 10,027
Telecommunications 6,170 7,176
Amortization of intangibles 4,600 4,872
Other operating expense 45,735 50,580
Restructuring charge - 100,000
------- -------
Total noninterest expenses 224,544 355,422
------- -------
Income (loss) before income taxes 100,566 (40,664)
Provision (benefit) for income taxes 34,018 (12,199)
------- -------
Net income (loss) $ 66,548 $(28,465)
======= =======
Net income (loss) applicable to
common shareholders $63,501 $(31,512)
Per common share:
Net income (loss) $.65 $(.32)
Cash dividends declared .25 .22
Average number of common
shares outstanding 98,152 99,730
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
U.S. BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
First Quarter Ended
March 31,
-------------------
In Thousands 1995 1994
- ------------ ------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 66,548 $ (28,465)
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Depreciation, amortization and accretion 21,662 23,583
Provision for credit losses 20,414 19,754
Noncash portion of restructuring charge - (99,553)
Equity investment (income) loss (2,180) 1,187
Gain on sales of securities available for sale (35) (324)
Gain on sales of trading securities (4,107) (1,702)
Net gain on sales of loans and property (2,430) (5,205)
Net loss on sales of mortgage loan servicing
rights - (362)
Change in loans held for sale (227,037) 367,014
Change in trading account securities (16,572) (8,774)
Change in deferred loan fees, net of amortization 1,770 130
Change in accrued interest receivable 3,176 5,258
Change in accrued interest payable 10,188 3,873
Change in other assets and liabilities, net 43,482 62,917
---------- ---------
Net cash provided by (used in) operating activities (85,121) 339,331
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of interest-earning
deposits of nonbank subsidiaries 2,601 741
Purchase of interest-earning deposits by
nonbank subsidiaries (1,967) (2,622)
Net increase in investments in interest-
earning deposits by banking subsidiaries (74) (13,421)
Proceeds from maturities of securities
held to maturity 64,108 255,799
Purchase of securities held to maturity - (184,771)
Proceeds from maturities of securities available
for sale 120,244 49,014
Purchase of securities available for sale (98,329) (151,130)
Proceeds from sale of securities available for sale 93,230 107,415
Proceeds from sales of equity investments 990 -
Purchase of equity investments (7,498) (1,331)
Principal collected on loans by nonbank subsidiaries 185,345 532,250
Loans made to customers by nonbank subsidiaries (199,026) (492,632)
Net increase in loans by banking subsidiaries (76,795) (96,778)
Proceeds from sales of loans 3,226 10,540
Proceeds from sales of premises and equipment 1,677 904
Purchase of premises and equipment (12,381) (36,279)
Proceeds from sales of foreclosed assets 10,781 5,773
Proceeds from sales of mortgage loan servicing rights - 24,303
Purchase of mortgage loan servicing rights - (1,000)
Acquisitions/dispositions, net of cash and cash
equivalents 11,389 -
---------- ---------
Net cash provided by investing activities 97,521 6,775
---------- ---------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
U.S. BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Continued)
<TABLE>
<CAPTION>
First Quarter Ended
March 31,
--------------------------
In Thousands 1995 1994
- ------------ -------- -------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits $ (225,767) $(325,557)
Net change in short-term borrowings (372,705) (22,645)
Proceeds from issuance of long-term debt 151,931 119,013
Repayment of long-term debt (79,171) (45,578)
Proceeds from issuance of stock 1,814 5,135
Common stock repurchased (2,352) -
Dividends paid (27,583) (24,929)
--------- ---------
Net cash used in financing activities (553,833) (294,561)
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS (541,433) 51,545
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,918,109 1,545,882
--------- ---------
CASH AND CASH EQUIVALENTS AT PERIOD END $1,376,676 $1,597,427
========= =========
Supplemental disclosures:
Cash paid during the period for:
Interest $153,100 $112,821
Income taxes 2,044 18,200
Non-cash investing activities:
Transfer from loans to loans held for sale 236,128 -
Transfer from loans to other real estate owned 11,915 5,007
Transfer of investments from available for sale to
held to maturity - 56,262
Fair value adjustment to securities available for
sale (26,655) 31,911
Income tax effect related to fair value adjustment (8,561) 12,560
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
U.S. BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
First Quarter Ended
March 31,
--------------------------
In Thousands 1995 1994
- ------------ --------- ---------
<S> <C> <C>
Shareholders' equity at beginning of period $1,777,285 $1,818,195
Net income 66,548 (28,465)
Common dividends declared (24,536) (21,974)
Common stock repurchased for employee benefit plans (2,352) -
Preferred dividends declared (3,047) (3,047)
Stock options exercised, dividends reinvested and
other transactions 2,167 6,899
Adjustment of available for sale securities to market value,
net of deferred taxes 14,850 (19,881)
--------- ---------
Shareholders' equity at end of period $1,830,915 $1,751,727
========= =========
</TABLE>
NOTES TO FINANCIAL STATEMENTS
1. Principles of Consolidation
The consolidated financial statements of U.S. Bancorp include the
accounts of U.S. Bancorp and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated. The
foregoing financial statements are unaudited; however, in the opinion
of management, all adjustments (comprised of normal recurring
accruals) necessary for a fair presentation of the interim financial
statements have been included. A summary of U.S. Bancorp's
significant accounting policies is set forth in Note 1 to the
Consolidated Financial Statements in U.S. Bancorp's 1994 Form 10-K.
The major banking subsidiaries of U.S. Bancorp include United States
National Bank of Oregon, U.S. Bank of Washington, N.A., U.S. Bank of
California, U.S. Bank of Nevada and U.S. Bank of Idaho, N.A.
2. Commitments and Contingent Liabilities
In the normal course of business there are various commitments and
contingent liabilities to extend credit and guarantees, which are not
reflected in the financial statements. Management does not anticipate
any material loss as a result of these transactions. Such commitments
and contingent liabilities include commitments to extend credit of
$11.5 billion and $14.0 billion and standby letters of credit of $735
million and $676 million at March 31, 1995 and December 31, 1994,
respectively.
9
<PAGE>
3. Recently Issued Accounting Pronouncements
Effective January 1, 1995, U. S. Bancorp adopted Statement of
Financial Accounting Standards (SFAS) No. 114, Accounting by Creditors
for Impairment of a Loan, as amended by SFAS No. 118. These
statements address the disclosure requirements and allocations of the
allowance for credit losses for certain impaired loans. A loan within
the scope of these statements is considered impaired when, based on
current information and events, it is probable that a creditor will be
unable to collect all amounts due according to the contractual terms
of the loan agreement, including scheduled interest payments.
When a loan has been identified as being impaired, the amount of the
impairment is measured by using discounted cash flows, except when it
is determined that the sole source of repayment for the loan is the
operation or liquidation of the underlying collateral. In such case,
the current fair value of the collateral, reduced by costs to sell, is
used. When the measurement of the impaired loan is less than the
recorded investment in the loan (including accrued interest, net
deferred loan fees or costs, and unamortized premium or discount), an
impairment is recognized by creating or adjusting an existing
allocation of the allowance for credit losses.
When a loan is identified as impaired, interest accrued but not
received is reversed against interest income. Subsequent cash
recorded by U. S. Bancorp related to impaired loans is generally
applied to reduce the principal balance, with only insignificant
amounts of cash receipts recognized as interest income.
At March 31, 1995, U. S. Bancorp's recorded investment in loans for
which an impairment has been recognized under the guidance of SFAS No.
114 totaled $156.0 million. Included in this amount is $10.7 million
of impaired loans for which the related allowance is $6.1 million.
The balance of the allowance for credit losses in excess of these
specific reserves is available to absorb losses from all loans,
although allocations have been made for certain loans and loan
categories as part of management's quarterly analysis of the
allowance. The average investment in impaired loans was approximately
$166 million during the first quarter of 1995.
4. Acquisitions and Divestitures
On May 8, 1995, U. S. Bancorp announced the signing of a definitive
agreement to merge, under the U. S. Bancorp name, with West One
Bancorp, a bank holding company headquartered in Boise, Idaho with
$8.7 billion in assets at March 31, 1995. Under the terms of the
agreement, each share of West One Bancorp common stock will be
exchanged for 1.47 shares of U. S. Bancorp common stock. The merger
is expected to be completed by year-end 1995, subject to shareholder
and regulatory approval.
In April 1995, U. S. Bancorp sold its AAA credit card portfolio
totaling approximately $236 million and entered into a joint marketing
arrangement with Mellon Bank to market financial services to AAA club
members. In anticipation of this sale, the credit card portfolio loan
balances were reclassified to loans held for sale at March 31, 1995.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
INTRODUCTION
- ------------
The focus of the following discussion is on U.S. Bancorp's financial
condition, changes in financial condition and results of operations. It is
a supplement to the consolidated financial statements and footnotes that
are presented elsewhere, and should be read in conjunction therewith.
SELECTED FINANCIAL DATA
- -----------------------
<TABLE>
<CAPTION>
First Quarter Ended
March 31,
Dollars in Millions, ------------------- Percent
Except Per Share 1995 1994 Change
- -------------------- ------- ------- -------
<S> <C> <C> <C>
Net interest income $247.3 $227.8 9 %
Provision for credit losses 20.4 19.8 3
Net income (loss) 66.5 (28.5) N/M
PER COMMON SHARE
Net income (loss) $.65 $(.32) N/M
Dividends declared .25 .22 14
Book value (period-end) 17.13 16.03 7
PERIOD-END BALANCES
Assets $21,439 $21,071 2
Interest-earning assets 18,921 18,579 2
Loans and lease financing 15,668 14,195 10
Deposits 14,822 15,185 (2)
Long-term debt 853 1,125 (24)
Common shareholders' equity 1,681 1,602 5
Preferred stock 150 150 -
Full-time equivalent employees 9,780 12,633 (23)
AVERAGE BALANCES
Average assets $21,319 $21,072 1
Interest-earning assets 18,879 18,564 2
Loans and lease financing 15,718 14,108 11
Deposits 14,880 15,263 (3)
Average common shareholders'
equity 1,642 1,674 (2)
SELECTED RATIOS
Return on average common
equity 15.68% (7.64)%
Return on average assets 1.27 (.55)
Overhead ratio 63.60 103.70
Net interest margin 5.45 5.14
Leverage ratio 7.96 7.47
Risk-based capital ratios
Tier 1 capital 8.36 8.46
Total capital 11.19 11.42
<FN>
N/M Not Meaningful
</TABLE>
11
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
OVERVIEW
- --------
For the first quarter of 1995, net income was $66.5 million compared with a
net loss of $28.5 million in the first quarter of 1994. The results for
the first quarter of 1994 included the impact of a $100 million pretax
restructuring charge. Operating income, as defined and presented in the
following table below, increased significantly over the same period a
year ago, as a result of the restructuring initiatives started in
March of 1994. In the highlights below, comparison is with the first
quarter 1994 unless otherwise noted; first quarter 1994 information below
is prior to the $100 million restructuring charge, net of tax:
- - Net income of $66 million, or $.65 per share, increased 65 percent
from $40 million, or $.37 per share.
- - Return on average assets and return on average common equity rose to
1.27 percent and 15.68 percent, respectively, from .77 percent and 9.00
percent.
- - Operating income (income before the provision for credit losses, items
determined to be noncore or nonrecurring, and income taxes) totaled $129
million, representing a 48 percent increase over first quarter 1994
operating income.
- - The ratio of nonperforming assets to loans and foreclosed property
improved to 1.16 percent from 1.81 percent.
- - Noninterest expenses declined to $225 million from $255 million,
representing an annualized reduction in noninterest expenses of $120
million.
12
<PAGE>
The table below presents U.S. Bancorp's major income and expense components
for the three month periods. A discussion of the major changes in each key
component follows.
<TABLE>
<CAPTION>
First Quarter Ended
March 31,
Dollars in Thousands, ------------------- Percent
Except Per Share 1995 1994 Change
- -------------------- ------- ------- -------
<S> <C> <C> <C>
Net interest income (1) $254,827 $ 236,080 8 %
Noninterest revenues 95,428 106,204 (10)
Noninterest expenses 221,695 255,172 (13)
------- --------
Operating income (1) 128,560 87,112 48
Provision for credit losses 20,414 19,754 3
OREO write-downs 93 250 (63)
------- --------
108,053 67,108 61
Equity investment income (loss) 2,276 (1,423)
Gain on sale of operations and loans 473 1,080
Gain on sale of securities available for sale 35 324
Nonrecurring noninterest revenue items - 485
Restructuring charge - (100,000)
Nonrecurring noninterest expense items (2,756) -
------- --------
Income before income taxes (1) 108,081 (32,426) N/M
Less tax-equivalent adjustment included above 7,515 8,238
Provision for income taxes 34,018 (12,199)
------- -------
Net income $ 66,548 $(28,465) N/M
======= ========
<FN>
(1) Tax-equivalent basis
N/M Not Meaningful
</TABLE>
NET INTEREST INCOME - TAX-EQUIVALENT BASIS
- ------------------------------------------
Net interest income, the principal source of U. S. Bancorp's operating
income, includes interest income and fees generated by interest-earning
assets, primarily loans and investment securities, less interest expense on
interest-bearing liabilities, primarily deposits, purchased funds and short-
and long-term debt. Net interest income is affected by the volume,
interest rates and relative mix of both earning assets and interest-bearing
and noninterest-bearing liabilities.
<TABLE>
<CAPTION>
Net
Analysis of Net Interest Income Interest Interest Interest
(In Millions) Income Expense Income
- ------------------------------- -------- -------- --------
<S> <C> <C> <C>
First quarter 1994 as reported $352.8 $116.7 $236.1
Increase due to:
Changes in balances 5.7 1.8 3.9
Changes in rates 59.6 44.8 14.8
----- ----- -----
First quarter 1995 as reported $418.1 $163.3 $254.8
===== ===== =====
</TABLE>
13
<PAGE>
On a tax-equivalent basis, net interest income was $254.8 million in the
first quarter of 1995, an increase of $18.7 million, or eight percent,
from first quarter 1994. The increase was primarily attributed to the
increase in earning assets and an increase in the net interest margin.
Average earning assets in the first quarter of 1995 totaled $18.9 billion,
an increase of $315 million, or two percent, from the first quarter of
1994. Average commercial loans increased $742 million, or 11 percent,
average consumer loans increased $461 million, or 14 percent, and average
real estate mortgage loans increased $361 million, or 14 percent, over the
first quarter of 1994. These increases in loans were partially offset by a
$447 million decline in average loans held for sale and a $685 million
decrease in average investment securities. The decline in loans held for
sale related to sale of a substantial portion of the mortgage loan
origination offices of the mortgage subsidiary in mid-1994.
Average interest-bearing liabilities in the first quarter of 1995 totaled
$15.2 billion, an increase of $224 million, or one percent, from the first
quarter of 1994. Average interest-bearing deposits declined $351 million
to $11.27 billion in the first quarter of 1995. Average savings, NOW and
interest checking accounts decreased $405 million in the first quarter of
1995 compared with the first quarter of 1994, and average time deposits
decreased $216 million. These decreases were partially offset by an
increase in average money market accounts of $270 million in the first
quarter of 1995.
Average long-term debt decreased $26 million in 1995 compared with the
first quarter of 1994. Offsetting the decrease in average interest-bearing
deposits and long-term debt were increases in average short-term
borrowings, including federal funds purchased and security repurchase
agreements, of $601 million, and an increase in average noninterest-bearing
deposits of $86 million in the first quarter of 1995.
The net interest margin on interest-earning assets increased 31 basis
points to 5.45 percent in 1995, as compared with the first quarter of 1994.
The increase in the net interest margin was primarily due to a higher
earning asset yield, mainly related to higher yields earned on variable
rate commercial loans. The higher earning asset yield reflected the increase
in interest rates in the financial markets in 1995 compared with the first
quarter of 1994.
The average cost of interest-bearing liabilities increased 120 basis points
as rates paid for deposits and the cost of short-term borrowings increased
in the first quarter of 1995 compared with the first quarter of 1994. The
increase in the cost of interest-bearing liabilities in 1995 was partially
offset by the higher value of noninterest-bearing sources of funds in a
rising rate environment.
<TABLE>
<CAPTION>
First Quarter Ended
March 31,
Net Interest Margin Analysis --------------------
(Tax-equivalent Basis) 1995 1994
- ---------------------------- ------- -------
<S> <C> <C>
Average rate earned on interest
earning assets 8.95% 7.68%
Average rate paid on interest-bearing
liabilities 4.34 3.14
---- ----
Rate spread 4.61% 4.54%
---- ----
Net interest margin 5.45% 5.14%
==== ====
</TABLE>
14
<PAGE>
NONINTEREST REVENUES
- --------------------
Noninterest revenues increased one percent in the first quarter of 1995
compared with the first quarter of 1994, excluding revenues associated with
activities affected by divestiture and other revenues identified below. The
principle components of noninterest revenue are shown in the table below.
<TABLE>
<CAPTION>
First Quarter Ended
March 31,
------------------- Percent
Dollars In Thousands 1995 1994 Change
- ------------ ------- ------- -------
<S> <C> <C> <C>
Service charges on deposit
accounts $38,012 $ 36,332 5%
Bank card revenue 14,437 14,088 2
Trust and investment
management 12,428 11,883 5
Exchange fees 8,046 6,932 16
Insurance revenue 3,473 5,172 (33)
ATM revenue 4,374 4,585 (5)
Brokerage and other
commissions 1,836 3,200 (43)
Trading account 4,110 1,702 141
All other 7,398 9,327 (21)
------ -------
94,114 93,221 1
Activities affected by divestitures:
Mortgage banking income, net 1,314 8,026 (84)
Credit reporting revenue - 4,957 (100)
------ -------
1,314 12,983 (90)
------ -------
95,428 106,204 (10)
Gain on sale of operations and loans 473 1,080
Equity investment income (loss) 2,276 (1,423)
Gain on sale of securities available for sale 35 324
Nonrecurring noninterest revenue items - 485
------ -------
2,784 466
------ -------
Total noninterest revenues $98,212 $106,670 (8)%
====== ======= ====
</TABLE>
The five percent increase in service charges on deposit accounts was attributed
to changes in the NSF and overdraft fee structure at the end of the first
quarter 1994.
Trust and investment management fees increased five percent in the first
quarter of 1995 compared with the first quarter of 1994 and primarily
reflected an increase in revenue received from the management of
employee benefit plan assets. Exchange fees increased 16 percent,
reflecting higher fees for several exchange services provided.
15
<PAGE>
Revenues from insurance and securities brokerage related products decreased
in the first quarter of 1995 compared with the first quarter of 1994 as
sales volumes of annuities and securities declined, the result of
recent volatility in the financial markets. Trading account revenues
increased in the first quarter of 1995 to $4.1 million from $1.7 million in the
first quarter of 1994. Trading revenues in 1994 included losses due to
unfavorable market conditions for collateralized mortgage obligations.
Activities affected by divestitures relate to the sale in mid-1994 of 50
mortgage loan orgination offices of the mortgage subsidiary and the sale of
U. S. Bancorp's credit reporting subsidiary at year-end 1994.
Equity investment income (loss) consisted primarily of market value
adjustments of equity investment in public companies and, on a smaller
scale, in venture capital investments in non-public companies.
In the first quarter of 1995, two bank branches were sold for a gain of
$473,000. The results for the first quarter of 1994 included gains on sale
of loans of $1.1 million, primarily available for sale consumer loans.
Nonrecurring noninterest revenue items in 1994 were gains on sale of
mortgage servicing rights, net of accelerated amortization of related
intangibles.
NONINTEREST EXPENSES
- --------------------
First quarter 1995 noninterest expenses, excluding the restructure charge
and other expenses identified in the table below, decreased $33.5 million,
or 13 percent, from the first quarter 1994.
16
<PAGE>
The principle components of noninterest expense are shown in the table
below.
<TABLE>
<CAPTION>
First Quarter Ended
March 31,
------------------- Percent
Dollars In Thousands 1995 1994 Change
- ------------ ------- ------- -------
<S> <C> <C> <C>
Employee compensation
and benefits $107,459 $130,090 (17)%
Net occupancy expense 15,938 16,332 (2)
Equipment rentals,
depreciation and
maintenance 23,408 24,786 (6)
Regulatory agency fees 9,765 10,027 (3)
Telecommunications 6,170 7,176 (14)
Amortization of intangibles 4,600 4,872 (6)
Contract personnel 2,139 4,127 (48)
Legal and accounting 2,647 2,744 (4)
Marketing and advertising 7,015 4,922 43
Other taxes and licenses 2,869 2,700 6
Stationery, supplies and
postage 11,469 11,559 (1)
Travel 1,518 3,378 (55)
All other 26,698 32,459 (18)
------- -------
221,695 255,172 (13)
Restructuring charge - 100,000
Loss on sale of premises 2,756 -
OREO write-downs 93 250
------- -------
Total noninterest expenses $224,544 $355,422 (37)%
======= ======= ===
</TABLE>
Employee compensation and benefits decreased 17 percent, or $22.6 million,
from $130.1 million in the first quarter of 1994 to $107.4 million in 1995.
This reduction primarily reflected the decrease in FTE employees to 9,780
at March 31, 1995 from 12,633 at March 31, 1994. Approximately $15 million of
the decrease is the result of business divestitures, and the balance was
related to the various staff reduction programs initiated in 1994.
Noninterest expenses decreased in most categories of expense in addition to
compensation and benefits in 1995, the result of cost reduction efforts and
the divestiture of the majority of the mortgage loan origination offices of
U. S. Bancorp's mortgage banking subsidiary in August of 1994, and the sale
of the credit reporting subsidiary at year-end 1994.
Marketing and advertising increased $2.1 million to $7.0 million in the first
quarter of 1995 due to new product introductions in 1995. The consolidation of
bank card processing led to a loss on sale of premises of $2.8 million in the
first quarter of 1995.
17
<PAGE>
The overhead ratio (defined as noninterest expenses as a percentage of tax-
equivalent net interest income and noninterest revenues) decreased to 63.6
percent from 74.6 percent in the first quarter of 1994 (excluding the
impact of the restructuring charge).
In first quarter 1994, a $100 million restructuring charge was recorded
related to a comprehensive program designed to allow U. S. Bancorp to
become an even more efficient, competitive and customer-focused financial
institution. The program included staff reductions accomplished through an
early retirement opportunity for certain employees, other severance
programs and attrition, divestiture of noncore activities, and the
consolidation and integration of certain operations and facilities that no
longer fit U. S. Bancorp's corporate objectives or the needs of its regional
customers. The program was completed by the end of the first quarter of 1995.
As of March 31, 1995, $10.6 million of the restructuring charge remained in
other liabilities which represented $6.4 million of severance pay related
to staff reductions that were initiated in 1994, $3.0 million related to
the consolidation and integration of facilities in process, and $1.2
million related to other cost reduction actions during 1994. At December 31,
1994, $48.8 million of employee benefit plan liabilities related to the
enhanced retirement programs were also included in other liabilities, and will
be funded over a 10 to 15 year period as contributions are made to the benefit
plans.
INCOME TAXES
- ------------
The effective tax rates for the three months ended March 31, 1995 and 1994
were 33.8 and 30.0 percent, respectively. The increase in the effective
tax rate mainly was due to the higher level of earnings in 1995 leading to
a corresponding decrease in the proportion of tax-exempt income in 1995
compared with 1994.
18
<PAGE>
FINANCIAL CONDITION
- -------------------
SECURITIES PORTFOLIOS
- ---------------------
Securities available for sale totaled $1.27 billion at March 31, 1995
compared with $1.37 billion at December 31, 1994. Maturities of U. S.
Government agency securities and collateralized mortgage obligations
accounted for the decline. Securities held to maturity totaled $1.34
billion at March 31, 1995, compared with $1.40 billion at December 31,
1994. Maturities of collateralized mortgage obligations and other asset-
backed securities accounted for the majority of the decrease.
LOAN PORTFOLIO
- --------------
Loans in most categories increased at March 31, 1995 from the totals
outstanding at December 31, 1994. On a linked quarter basis, average
total loans increased at an annualized rate of 8 percent over the
fourth quarter of 1994. Commercial loans, the largest category, increased
at an annualized rate of 14 percent. In anticipation of the sale of U. S.
Bancorp's AAA affinity credit card receivables in April 1995, consumer loans
totaling $236 million were reclassified to loans held for sale at March 31,
1995.
It is U. S. Bancorp's objective to maintain a loan portfolio that is
diverse in terms of type of loan, industry concentration, geographic
distribution and borrower concentration in order to reduce the overall
credit risk by minimizing the adverse impact of any single event or set of
occurrences. The Commercial Loan Distribution table below shows the
commercial loan portfolio stratified by significant Standard Industrial
Code classifications. It should be noted that within the indicated
classification, there are other subclassifications for which U. S.
Bancorp's reporting system monitors industry concentrations.
<TABLE>
<CAPTION>
March 31, December 31,
Commercial Loan Distribution 1995 1994
- ---------------------------- --------- ------------
<S> <C> <C>
Manufacturing 17.1% 17.3%
Retail 12.7 11.0
Service 11.9 11.4
Wholesale 10.6 10.7
Forest products 7.7 8.2
Agricultural 7.6 8.3
Brokers, dealers and insurance 5.5 5.8
Transportation 4.4 4.4
Financial, nonbank 4.4 4.7
Contractors 4.2 4.2
Other 13.9 14.0
----- -----
100.0% 100.0%
===== =====
</TABLE>
19
<PAGE>
Real estate mortgage loans increased $18 million to $2.96 billion at March
31, 1995 from December 31, 1994, primarily due to an increase in one-to-
four family residential real estate mortgage loans. This increase
reflected the continued growth of this portfolio due to expansion of the
Home Partner loan program in 1994. This program provides flexible
guidelines and down payment options for first-time and low-to-moderate
income borrowers.
The majority of U. S. Bancorp's real estate mortgage loans outstanding are
collateralized by properties located in the Pacific Northwest and Northern
California. U. S. Bancorp closely monitors the composition of its real
estate portfolio through prudent underwriting criteria and by monitoring
loan concentrations by geographic region and property type. An analysis of
the real estate portfolio is presented in the tables below (in millions):
<TABLE>
<CAPTION>
Real Estate Loans Outstanding
March 31, 1995 Residential Commercial Total
- ----------------------------- ----------- ---------- -----
<S> <C> <C> <C>
Real estate construction $ 225.1 $ 481.6 $ 706.7
Real estate mortgage 1,113.4 1,851.1 2,964.5
------- ------- -------
$1,338.5 $2,332.7 $3,671.2
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Real Estate Loans Outstanding
Concentrations by State
and Type of Collateral
March 31, 1995 Washington Oregon California Other Total
- ----------------------------- ---------- ------ ---------- ----- -------
<S> <C> <C> <C> <C> <C>
Residential $ 466.4 $259.1 $494.2 $118.9 $1,338.6
Commercial
Apartment/Condominium 208.0 80.0 75.0 44.8 407.8
Office 231.7 144.5 47.0 27.2 450.4
Retail 58.8 39.8 1.4 9.4 109.4
Hotel/Motel 180.8 157.9 84.0 51.1 473.8
Land 29.2 10.2 27.8 14.8 82.0
Other 306.1 266.6 145.8 90.7 809.2
------- ----- ----- ----- -------
Total Commercial 1,014.6 699.0 381.0 238.0 2,332.6
------- ----- ----- ----- -------
Total $1,481.0 $958.1 $875.2 $356.9 $3,671.2
======= ===== ===== ===== =======
</TABLE>
LIQUIDITY
- ---------
Liquidity is the ability to raise adequate and reasonably priced funds,
primarily through deposits, as well as purchased funds and the issuance of
debt and equity capital, and is managed through the selection of the asset
mix and the maturity mix of liabilities.
Core deposits, defined as deposits other than time deposits of $100,000 or
more, are U. S. Bancorp's primary source of funding. Core deposits provide
a sizable source of relatively stable and low-cost funds. Average core
deposits and shareholders' equity, which totaled $15.9 billion in the first
quarter of 1995 and $16.3 billion in the fourth quarter of 1994, funded 84
percent and 87 percent of average earning assets in these periods, respectively.
20
<PAGE>
Other sources of liquidity include purchased funds, comprised of time deposits
over $100,000 and short-term borrowings. Average purchased funds totaled
$3.9 billion in the first quarter of 1995 and was $3.4 billion in the fourth
quarter of 1994. Average senior and subordinated debt was $844 million in the
first quarter of 1995, and was $1.0 billion in the fourth quarter of 1994.
U.S. Bancorp's liquidity is enhanced by its accessibility to a diversity of
national market sources of funds. The following table summarizes U.S.
Bancorp's ratings by major statistical rating agencies at March 31, 1995;
such ratings are subject to revision or withdrawal at anytime.
<TABLE>
<CAPTION>
Standard Duff Thomson
& Poor's Moody's & Phelps BankWatch
-------- ------- -------- ---------
<S> <C> <C> <C> <C>
Commercial paper A-1 P-1 DUFF1+ TBW-1
Senior debt A A2 AA- A+
Subordinated debt A- A3 A+ A
Preferred stock BBB+ a2 A A-
</TABLE>
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
- -----------------------------------------
The provision for credit losses for the first quarter of 1995 was $20.4 million
compared with $19.8 million in the first quarter a year ago. The higher
provision is due to both loan growth and the increase in the ratio of the
allowance to loans to 1.96 percent at March 31, 1995 from 1.91 percent at
March 31, 1994. U.S. Bancorp's allowance for credit losses totaled $307.1
million at March 31, 1995, and was 195 percent of nonperforming loans. The
allowance as a percentage of nonperforming loans was 168 percent and 122
percent at December 31, 1994 and March 31, 1994, respectively.
Net charge-offs in the first quarter of 1995 were .41 percent compared with
.55 percent for the first quarter of 1994. The net charge-off rate for
bank cards was higher at 3.49 percent in the first quarter of 1995 as
compared with 3.12 percent in the same quarter of 1994, while all other
charge-off rates were lower.
Management performs a quarterly analysis to establish the appropriate level
of the allowance, taking into consideration such factors as loan loss
experience, an evaluation of potential losses in the portfolio, credit
concentrations and trends in portfolio volume, maturity, delinquencies and
nonaccruals, risks associated with standby letters of credit which
guarantee the debt of others and other off-balance sheet commitments, and
prevailing and anticipated economic conditions. This analysis provides an
allowance consisting of two components, allocated and unallocated. The
allocated component reflects inherent losses resulting from the analysis
of individual loans and is developed through specific credit allocations for
individual loans and historical loss experience for each loan category and
risk classification within each category. The total of these allocations
is then supplemented by the unallocated component of the allowance. The
unallocated component reflects management's judgment and determination of
amounts necessary for loan concentrations, economic uncertainties and other
subjective factors.
21
<PAGE>
U.S. Bancorp continues to closely monitor credit risks in its portfolio.
U.S. Bancorp believes that its credit approval and review processes are
effective and operating in accordance with sound banking policy and that
the allowance for credit losses at March 31, 1995 was adequate to absorb
potential credit losses inherent in loans, leases, loan commitments and
standby letters of credit outstanding at that date.
The table below analyzes the change in the allowance for credit losses for
the periods indicated.
<TABLE>
<CAPTION>
First First
Quarter Quarter
Ended Year Ended Ended
Allowance for Credit Losses March 31, December 31, March 31,
In Thousands 1995 1994 1994
- --------------------------- ---------- ------------ ----------
<S> <C> <C> <C>
Loans (net of unearned income) $15,667,762 $15,605,717 $14,194,797
Daily average loans (net of unearned income) $15,718,481 $14,728,160 $14,108,061
Balance of allowance for credit losses
at beginning of period $305,802 $270,229 $270,229
Dispositions (3,392) (1,241) -
Charge-offs
Commercial 2,895 33,186 12,268
Lease financing - 1,027 -
Real estate construction 243 12,080 384
Real estate mortgage 5,914 4,237 1,746
Consumer 8,926 27,126 6,565
Bank card 8,125 28,356 7,484
------- ------- -------
26,103 106,012 28,447
------- ------- -------
Recoveries
Commercial 4,131 14,512 3,465
Lease financing 45 1,056 691
Real estate construction 1,558 1,234 290
Real estate mortgage 869 4,638 1,209
Consumer 2,546 9,508 2,542
Bank card 1,218 5,010 1,205
------- ------- -------
10,367 35,958 9,402
------- ------- -------
Net charge-offs 15,736 70,054 19,045
Provision for credit losses 20,414 106,868 19,754
------- ------- -------
Balance of allowance credit losses
at end of period $307,088 $305,802 $270,938
======= ======= =======
Net charge-offs to average loans and leases .41% .48% .55%
Allowance for credit losses to period-end loans 1.96% 1.96% 1.91%
Allowance as a % of nonperforming loans 195% 168% 122%
</TABLE>
22
<PAGE>
ASSET QUALITY
- -------------
During the first quarter of 1995, U. S. Bancorp continued to experience
positive asset quality trends. Nonperforming assets as a percentage of
loans and foreclosed assets decreased to 1.16 percent from 1.31 percent at
December 31, 1994 and 1.81 percent at March 31, 1994, and were at the lowest
level since 1981.
Nonperforming assets decreased $23.3 million since December 31, 1994 and
$76.5 million from a year ago, to $181 million at March 31, 1995.
Nonaccrual loans and restructured loans, as a percentage of total loans,
fell to 1.00 percent from 1.17 percent at December 31, 1994 and 1.57
percent at March 31, 1994. Nonaccrual loans were reduced by principal
payments, charge-offs and other transactions totaling $45.5 million,
partially offsetting new loans placed on nonaccrual during the first three
months of 1995 totaling $30.7 million, for a net decrease of $14.8 million.
In addition to the loans classified as nonperforming, U.S. Bancorp has other
loans which it has internally classified, largely due to weakening financial
strength of the borrowers or concern about specific industries. These loans,
although currently performing in accordance with contractual terms, are
monitored closely by management and have been considered in establishing the
level of the allowance for credit losses. U.S. Bancorp's lending procedures
and loan portfolio, including internally classified loans, are examined by
regulatory agencies as part of their supervisory activities.
The following table summarizes U.S. Bancorp's nonperforming assets and past
due loans. Past due loans are defined as loans contractually past due as to
interest or principal 90 days or more.
<TABLE>
<CAPTION>
March 31, December 31, March 31,
Dollars In Thousands 1995 1994 1994
--------- ------------ ---------
<S> <C> <C> <C>
Nonaccrual loans $155,988 $170,802 $221,532
Restructured loans 1,273 11,307 1,378
Other real estate and equipment owned
Other real estate owned 21,248 18,835 30,912
Equipment repossessed 2,977 3,841 4,173
------- -------- -------
24,225 22,676 35,085
------- -------- -------
Total nonperforming assets $181,486 $204,785 $257,995
======= ======= =======
Accruing loans past due 90 days or more $17,587 $15,612 $15,769
======= ======= =======
Total nonaccrual and restructured loans as
percentage of total loans 1.00% 1.17% 1.57%
Total nonperforming assets as a percentage of
outstanding loans and foreclosed assets 1.16% 1.31% 1.81%
</TABLE>
23
<PAGE>
The following table presents nonaccrual loans on both a contractually past
due and contractually current basis at March 31, 1995. Both book and
contractual balances are indicated, the difference reflecting charge-offs
and interest payments applied to principal. As of that date, $57.2
million, or 37 percent, of the loans on nonaccrual status were less than 90
days past due or contractually current as to principal and interest
payments. Of the nonaccrual loans that are contractually current, loans to
eight borrowers amounted to 80 percent of the total, and there was some
uncertainty that these loans will remain contractually current.
<TABLE>
<CAPTION>
Cumulative
Cash Interest
Book Payments Contractual
Principal Cumulative Applied to Principal
In Thousands, March 31, 1995 Balance Charge-Offs (5) Principal (5) Balance
- ---------------------------- --------- --------------- ------------- -----------
<S> <C> <C> <C> <C>
Contractually past due (1):
Payments not made (2):
90 days or more past due $ 26,985 $11,127 $ - $ 38,112
Less than 90 days past due - - - -
------- ------ ------ -------
26,985 11,127 - 38,112
------- ------ ------ -------
Payments made (3):
90 days or more past due 71,841 34,009 16,615 122,465
Less than 90 days past due 4,707 478 168 5,353
------- ------ ------ -------
76,548 34,487 16,783 127,818
------- ------ ------ -------
Total past due 103,533 45,614 16,783 165,930
------- ------ ------ -------
Contractually current (4) 52,455 4,283 5,734 62,472
------- ------ ------ -------
Total nonaccrual loans $155,988 $49,897 $22,517 $228,402
======= ====== ====== =======
<FN>
(1) Contractually past due is defined as loans past due as to principal or
interest 30 days or more.
(2) Borrower has made no payments since being placed on nonaccrual.
(3) Borrower has made some payments since being placed on nonaccrual.
(4) Contractually current is defined as a loan for which principal and
interest are being paid in accordance with its contractual terms. All
of the contractually current loans were placed on nonaccrual due to
uncertainty of receiving future required payments.
(5) Cumulative amounts recorded since loan was placed on nonaccrual.
</TABLE>
24
<PAGE>
CAPITAL AND DIVIDENDS
- ---------------------
The federal bank regulatory agencies have jointly issued rules which
implement a system of prompt corrective action for financial institutions
required by FDICIA. The rules define the relevant capital levels for the
five categories, ranging from "well capitalized" to "critically
undercapitalized". An insured depository institution is generally deemed
to be "well-capitalized" if it has a total risk-based capital ratio of at
least 10 percent, a Tier 1 risk-based capital ratio of at least six
percent, and a leverage ratio of at least five percent.
Risk-based capital guidelines issued by the Federal Reserve Board establish a
risk-adjusted ratio relating capital to different categories of assets and
off-balance sheet exposures for bank holding companies. The guidelines
require a minimum total risk-based capital ratio of eight percent, with half
of the total in the form of Tier 1 capital. U. S. Bancorp's Tier 1 capital is
comprised primarily of common equity and perpetual preferred stock, less
goodwill and certain other intangibles, and excludes the equity impact of
adjusting available for sale securities to market value. Total capital also
includes subordinated debt and a portion of the allowance for credit losses,
as defined.
The risk-based capital rules have been supplemented by a leverage ratio,
defined as Tier 1 capital to adjusted quarterly average total assets.
Banking organizations other than those which are most highly rated are
expected to maintain ratios at least 100 to 200 basis points above the
minimum three percent level, depending on their financial condition.
Each subsidiary bank is subjected to capital requirements similar to the
requirements for bank holding companies. At March 31, 1995, all of U. S.
Bancorp's banking subsidiaries met the risk-based capital ratio and
leverage ratio requirements for "well capitalized" banks. The banking
subsidiaries' ratios are expected to be maintained at the required levels
by the retention of earnings and, if necessary, the issuance of additional
capital-qualifying securities.
The risk-based capital and leverage ratios for U. S. Bancorp and its
significant bank subsidiaries at March 31, 1995 are presented in the table
below (assets in millions):
<TABLE>
<CAPTION>
Risk-based
Capital Ratios
----------------
Total Total Leverage
Assets Tier 1 Capital Ratio
------- ------ ------- --------
<S> <C> <C> <C> <C>
U. S. Bancorp (Consolidated) $21,439 8.36% 11.19% 7.96%
Bank Subsidiaries
U. S. Bank of Oregon 10,874 9.17 11.24 9.32
U. S. Bank of Washington 6,582 8.39 10.78 8.42
U. S. Bank of California 2,070 11.57 13.99 8.46
U. S. Bank of Nevada 889 10.22 13.24 6.77
U. S. Bank of Idaho 126 12.32 13.57 11.31
</TABLE>
25
<PAGE>
At March 31, 1995, common shareholders' equity was $1.8 billion. For the
first quarter of 1995, average common equity to average total assets
increased to 7.70 percent from 7.59 percent for the fourth quarter of 1994.
In April 1994, U. S. Bancorp initiated a program to repurchase up to six
million shares of U. S. Bancorp common stock over the next five years which
will be used to satisfy future awards made in connection with the 1993 stock
incentive plan. Through March 31, 1995, 2.3 million shares of stock were
acquired. The annual common dividend rate was $1.00 per share at March 31,
1995. Dividends of $.94 per common share were declared for the year 1994.
26
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
U. S. Bancorp held its 1995 annual meeting of shareholders on
April 18, 1995. The following directors were elected at the
annual meeting to serve until the next annual meeting:
<TABLE>
<CAPTION>
Abstentions and Broker
For Withheld Non-Votes
---------- -------- ----------------------
<S> <C> <C> <C>
Gerry B. Cameron 85,077,566 922,872 0
Carolyn Silva 85,061,009 939,429 0
Chambers
Franklin G. Drake 84,943,988 1,056,450 0
Robert L. Dryden 85,086,753 913,685 0
Joshua Green III 85,041,005 959,433 0
Paul A. Redmond 85,108,758 891,680 0
N. Stewart Rogers 85,074,743 925,695 0
Benjamin R. 85,100,679 899,759 0
Whiteley
</TABLE>
An amendment to the U. S. Bancorp 1993 Stock Incentive Plan as
amended and restated February 13, 1994 (the "Plan"), providing
for acceleration of the time of vesting or exercisability of
awards under the Plan upon the occurrence of a change in control,
except for a special provision relating to performance shares was
approved at the annual meeting by the following vote: 56,075,746
for; 17,665,174 against; and 576,095 abstentions and broker non-
votes.
The selection of Deloitte & Touche LLP as independent auditors
for the year 1995 was approved at the annual meeting by the
following votes: 85,111,094 for; 313,249 against; and 576,095
abstentions and broker non-votes.
Item 5. Other Information
On May 5, 1995, U. S. Bancorp, an Oregon corporation, entered
into an Agreement and Plan of Merger (the "Merger Agreement")
with West One Bancorp, an Idaho corporation ("West One"),
pursuant to which West One will be merged with and into
U. S. Bancorp (the "Merger"). As a result of the Merger, each
outstanding share of West One's common stock, par value $1.00 per
share ("West One Common Stock"), will be converted into 1.47
shares of U. S. Bancorp Common Stock, par value $5.00 per share
("U. S. Bancorp Common Stock"). The Merger is conditioned upon,
among other things, approval by shareholders of U. S. Bancorp and
by shareholders of West One, and upon certain regulatory
approvals. The Merger is expected to be completed by year-end
1995. The Merger Agreement is attached as Exhibit 2 hereto and
its terms are incorporated herein by reference.
<PAGE>
As a condition to entering into the Merger Agreement, on May 6,
1995, U. S. Bancorp and West One entered into (i) a Stock Option
Agreement between West One, as issuer, and U. S. Bancorp, as
grantee (the "West One Stock Option Agreement"), pursuant to
which West One granted to U. S. Bancorp the right, upon the terms
and subject to the conditions set forth therein, to purchase up
to 19.9% of the outstanding shares of West One Common Stock at a
price of $34.00 per share, and (ii) a Stock Option Agreement
between U. S. Bancorp, as issuer, and West One, as grantee (the
"U. S. Bancorp Stock Option Agreement "), pursuant to which U. S.
Bancorp granted to West One the right to purchase up to 19.9% of
the outstanding shares of U. S. Bancorp Common Stock at a price
of $28.00 per share. The West One Stock Option Agreement and the
U. S. Bancorp Stock Option Agreement are attached as Exhibits
10.1 and 10. 2 hereto, respectively, and their terms are
incorporated herein by reference.
The bank holding company resulting from the Merger will be
headquartered in Portland, Oregon, and operate under the U. S.
Bancorp name. Based on current data, it will have approximately
$30 billion in assets and $21 billion in deposits, placing it
among the 30 largest banking organizations in the United States.
Gerry B. Cameron will continue as Chairman and Chief Executive
Officer of the combined organization following the Merger, while
Daniel R. Nelson, presently West One's Chairman and Chief
Executive Officer, will become President and Chief Operating
Officer of U. S. Bancorp. The parties announced that, upon Mr.
Cameron's retirement presently anticipated at the end of 1998,
Mr. Nelson is expected to become chief executive officer of U. S.
Bancorp.
A one-time after-tax charge to earnings of approximately $60
million is anticipated to be taken at closing to reflect
restructuring expenses associated with the Merger. U. S. Bancorp
also expects to incur a one-time increase in its provision for
credit losses in the amount of approximately $9 million on an
after-tax basis to conform to its existing reserve policies.
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits filed herewith are listed in the Exhibit Index on
page 30 of this report.
(b) During the quarter ended March 31, 1995, no reports on
Form 8-K were filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
U. S. BANCORP
(Registrant)
Date: May 11, 1995 By: /s/ STEVEN P. ERWIN
-----------------------------
Steven P. Erwin
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
- --------
<S> <C>
2. Agreement and Plan of Merger dated as of May 5, 1995,
between U. S. Bancorp and West One Bancorp.
3. Bylaws of U. S. Bancorp as amended March 16, 1995.
10.1 Stock Option Agreement dated May 6, 1995, between U. S.
Bancorp and West One Bancorp.
10.2 Stock Option Agreement dated May 6, 1995, between West One
Bancorp and U. S. Bancorp.
12.1 U. S. Bancorp and Subsidiaries -
Computation of Ratios of Consolidated Earnings to Fixed Charges.
12.2 U. S. Bancorp and Subsidiaries -
Capital Ratios.
27. Financial Data Schedule.
</TABLE>
<PAGE>
================================================================================
AGREEMENT AND PLAN OF MERGER
between
U. S. BANCORP
and
WEST ONE BANCORP
===============================================================================
Dated as of May 5, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
THE MERGER . . . . . . . . . . . . . . . 1
1.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . 2
1.4 Conversion of West One Common Stock . . . . . . . . . . . . . . 2
1.5 Bancorp Common Stock; Bancorp Preferred Stock . . . . . . . . . 3
1.6 Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Convertible Debt. . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 Articles of Incorporation . . . . . . . . . . . . . . . . . . . 3
1.9 Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Tax Consequences. . . . . . . . . . . . . . . . . . . . . . . . 3
1.11 Board of Directors. . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
EXCHANGE OF SHARES . . . . . . . . . . . . . 4
2.1 Bancorp to Make Shares Available. . . . . . . . . . . . . . . . 4
2.2 Exchange of Shares. . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WEST ONE . . . . . . . 6
3.1 Corporate Organization. . . . . . . . . . . . . . . . . . . . . 6
3.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Authority; No Violation . . . . . . . . . . . . . . . . . . . . 8
3.4 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . 8
3.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 Financial Statements. . . . . . . . . . . . . . . . . . . . . . 9
3.7 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.8 Absence of Certain Changes or Events. . . . . . . . . . . . . . 10
3.9 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 11
3.10 Taxes and Tax Returns . . . . . . . . . . . . . . . . . . . . . 11
3.11 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.12 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.13 Compliance with Applicable Law. . . . . . . . . . . . . . . . . 14
3.14 Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . 14
3.15 Agreements with Regulatory Agencies . . . . . . . . . . . . . . 15
3.16 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . 15
3.17 State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C>
3.18 Rights Agreement. . . . . . . . . . . . . . . . . . . . . . . . 16
3.19 Pooling of Interests. . . . . . . . . . . . . . . . . . . . . . 16
3.20 Interest Rate Risk Management Instruments; Derivatives. . . . . 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCORP . . . . . . . 17
4.1 Corporate Organization. . . . . . . . . . . . . . . . . . . . . 17
4.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3 Authority; No Violation . . . . . . . . . . . . . . . . . . . . 18
4.4 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . 19
4.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.6 Financial Statements. . . . . . . . . . . . . . . . . . . . . . 20
4.7 Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.8 Absence of Certain Changes or Events. . . . . . . . . . . . . . 20
4.9 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 21
4.10 Taxes and Tax Returns . . . . . . . . . . . . . . . . . . . . . 21
4.11 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.12 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.13 Compliance with Applicable Law. . . . . . . . . . . . . . . . . 24
4.14 Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . 24
4.15 Agreements with Regulatory Agencies . . . . . . . . . . . . . . 25
4.16 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . 25
4.17 Pooling of Interests. . . . . . . . . . . . . . . . . . . . . . 26
4.18 Interest Rate Risk Management Instruments; Derivatives. . . . . 26
4.19 State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . 26
5.1 Conduct of West One Businesses Prior to the Effective Time. . . 26
5.2 West One Forbearances . . . . . . . . . . . . . . . . . . . . . 27
5.3 Bancorp Forbearances. . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI
ADDITIONAL AGREEMENTS . . . . . . . . . . . . 30
6.1 Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . 30
6.2 Access to Information . . . . . . . . . . . . . . . . . . . . . 31
6.3 Shareholders' Approvals . . . . . . . . . . . . . . . . . . . . 32
6.4 Legal Conditions to Merger. . . . . . . . . . . . . . . . . . . 32
6.5 Affiliates; Publication of Combined Financial Results . . . . . 32
6.6 Stock Exchange Listing of Shares. . . . . . . . . . . . . . . . 33
6.7 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . 33
6.8 Indemnification; Directors' and Officers' Insurance . . . . . . 34
6.9 Additional Agreements . . . . . . . . . . . . . . . . . . . . . 36
6.10 Advice of Changes . . . . . . . . . . . . . . . . . . . . . . . 36
6.11 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE VII
CONDITIONS PRECEDENT. . . . . . . . . . . . . 37
7.1 Conditions to Each Party's Obligation to Effect the Merger. . . 37
(a) Shareholder Approval . . . . . . . . . . . . . . . . . . . 37
(b) Nasdaq Listing . . . . . . . . . . . . . . . . . . . . . . 37
(c) Other Approvals. . . . . . . . . . . . . . . . . . . . . . 37
(d) Form S-4 . . . . . . . . . . . . . . . . . . . . . . . . . 37
(e) No Injunctions or Restraints; Illegality . . . . . . . . . 37
(f) Federal Tax Opinions . . . . . . . . . . . . . . . . . . . 38
(g) Pooling of Interests . . . . . . . . . . . . . . . . . . . 38
7.2 Conditions to Obligations of Bancorp. . . . . . . . . . . . . . 38
(a) Representations and Warranties . . . . . . . . . . . . . . 39
(b) Performance of Obligations of West One . . . . . . . . . . 39
(c) West One Rights Agreement. . . . . . . . . . . . . . . . . 39
7.3 Conditions to Obligations of West One . . . . . . . . . . . . . 39
(a) Representations and Warranties . . . . . . . . . . . . . . 39
(b) Performance of Obligations of Bancorp. . . . . . . . . . . 39
ARTICLE VIII
TERMINATION AND AMENDMENT . . . . . . . . . . . 40
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . 40
8.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE IX
GENERAL PROVISIONS . . . . . . . . . . . . . 41
9.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.2 Nonsurvival of Representations, Warranties, and Agreements. . . 41
9.3 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.5 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . 43
9.6 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.7 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 43
9.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.9 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.10 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.11 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 5, 1995, by and between U.
S. BANCORP, an Oregon corporation ("Bancorp"), and WEST ONE BANCORP, an Idaho
corporation ("West One").
WHEREAS the Boards of Directors of Bancorp and West One have determined
that it is in the best interests of their respective companies and their
shareholders to consummate the merger provided for herein in which West One
will, subject to the terms and conditions set forth herein, merge (the
"Merger") with and into Bancorp, so that Bancorp is the surviving corporation
in the Merger;
WHEREAS as a condition to, and on the day immediately after the date of
execution of, this Agreement, Bancorp and West One are entering into a
Bancorp Stock Option Agreement (the "Bancorp Option Agreement"); and
WHEREAS as a condition to, and on the day immediately after the date of
execution of, this Agreement, Bancorp and West One are entering into a West
One Stock Option Agreement (the "West One Option Agreement"; and together
with the Bancorp Option Agreement, the "Option Agreements"); and
WHEREAS the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger,
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to
be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement,
West One shall merge with and into Bancorp at the Effective Time (as defined
in Section 1.2 hereof) in accordance with the Oregon Business Corporation Act
(the "OBCA") and the Idaho Business Corporation Act (the "IBCA"). Bancorp
shall be the surviving corporation (hereinafter sometimes called the
"Surviving Corporation") in the Merger, and shall continue its corporate
existence under the laws of the State of Oregon. Upon consummation of the
Merger, the separate corporate existence of West One shall terminate.
1.2 EFFECTIVE TIME. The merger shall become effective as set forth in
articles of merger (the "Articles of Merger") which shall be filed with the
Secretary of State of the State of Oregon (the "Oregon Secretary") and the
Secretary of State of the State of Idaho (the "Idaho Secretary"), in each
case, on the Closing Date (as defined in Section 9.1 hereof). The date and
-1-
<PAGE>
time when the Merger becomes effective, as set forth in the Articles of
Merger, is herein referred to as the "Effective Time."
1.3 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger
shall have the effects set forth in Section 60.497 of the OBCA and Section
30-1-76 of the IBCA.
1.4 CONVERSION OF WEST ONE COMMON STOCK. At the Effective Time, subject
to Section 2.2(e) hereof, by virtue of the Merger, and without any action on
the part of Bancorp, West One or the holder of any share of the common stock,
$1.00 par value per share, of West One ("West One Common Stock"), each share
of West One Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares of West One Common Stock held (x) in West
One s treasury or (y) directly or indirectly by Bancorp or West One or any of
their respective Subsidiaries (as defined below) (except for Trust Account
Shares and DPC Shares, as such terms are defined below)) shall be converted
into the right to receive 1.47 shares (the "Exchange Ratio") of common stock,
$5.00 par value per share, of Bancorp ("Bancorp Common Stock"); provided,
however, that each share of West One Common Stock as to which a dissenting
shareholder has taken the actions required by Section 30-1-81 of the IBCA
shall be treated in accordance with the provisions of that section.
All of the shares of West One Common Stock converted into Bancorp Common
Stock pursuant to this Article I shall no longer be outstanding and shall
automatically be canceled and shall cease to exist as of the Effective Time,
and each certificate (each a "West One Certificate") previously representing
any such shares of West One Common Stock shall thereafter represent the right
to receive (i) a certificate representing the number of whole shares of
Bancorp Common Stock and (ii) cash in lieu of fractional shares into which
the shares of West One Common Stock represented by such West One Certificate
have been converted pursuant to this Section 1.4 and Section 2.2(e) hereof.
West One Certificates previously representing shares of West One Common Stock
shall be exchanged for certificates representing whole shares of Bancorp
Common Stock and cash in lieu of fractional shares issued in consideration
therefor upon the surrender of such West One Certificates in accordance with
Section 2.2 hereof, without any interest thereon. If prior to the Effective
Time (or as of a record date prior to the Effective Time) the outstanding
shares of Bancorp Common Stock shall have been increased, decreased, changed
into or exchanged for a different number or kind of shares or securities as a
result of a reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, or other similar change in
Bancorp s capitalization, then an appropriate and proportionate adjustment
shall be made to the Exchange Ratio.
At the Effective Time, all shares of West One Common Stock that are owned
by West One as treasury stock and all shares of West One Common Stock that
are owned directly or indirectly by Bancorp or West One or any of their
respective Subsidiaries (other than shares of West One Common Stock held
directly or indirectly in trust accounts, managed accounts and the like or
otherwise held in a fiduciary capacity that are beneficially owned by third
parties (any such shares, and shares of Bancorp Common Stock that are
similarly held, whether held directly or indirectly by Bancorp or West One,
as the case may be, being referred to herein as "Trust Account Shares") and
other than any shares of West One Common Stock held by Bancorp or
-2-
<PAGE>
West One or any of their respective Subsidiaries in respect of a debt previously
contracted (any such shares of West One Common Stock, and shares of Bancorp
Common Stock that are similarly held, whether held directly or indirectly by
Bancorp or West One or any of their respective Subsidiaries, being referred
to herein as "DPC Shares")) shall be canceled and shall cease to exist and no
stock of Bancorp or other consideration shall be delivered in exchange
therefor. All shares of Bancorp Common Stock that are owned by West One or
any of its Subsidiaries (other than Trust Account Shares and DPC Shares)
shall become authorized but unissued stock of Bancorp.
1.5 BANCORP COMMON STOCK; BANCORP PREFERRED STOCK. At and after the
Effective Time, each share of Bancorp Common Stock and each share of Series A
preferred stock, no par value, of Bancorp issued and outstanding immediately
prior to the Closing Date shall remain an issued and outstanding share of
common stock or preferred stock, as the case may be, of the Surviving
Corporation and shall not be affected by the Merger.
1.6 OPTIONS. Outstanding options to purchase West One Common Stock
shall be converted into options to purchase Bancorp Common Stock as provided
in Section 6.7(c).
1.7 CONVERTIBLE DEBT. The right of each holder of West One's 7 3/4 percent
Convertible Subordinated Debentures Due 2006 (the "Convertible Debentures"),
to receive West One Common Stock shall be converted into the right to receive
Bancorp Common Stock. The number of shares of Bancorp Common Stock that such
holder shall be entitled to receive shall be equal to the product of the
number of shares of West One Common Stock that such holder would have been
entitled to receive multiplied by the Exchange Ratio, as provided in the
indenture governing the Convertible Debentures.
1.8 ARTICLES OF INCORPORATION. At the Effective Time, the Articles of
Incorporation of Bancorp, as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation of the Surviving Corporation.
1.9 BYLAWS. At the Effective Time, the Bylaws of Bancorp, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended in accordance with applicable law.
1.10 TAX CONSEQUENCES. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Code and that this
Agreement shall constitute a "plan of reorganization" for the purposes of
Section 368 of the Code.
1.11 BOARD OF DIRECTORS. From and after the Effective Time, the Board of
Directors of the Surviving Corporation shall consist of not more than twelve
persons, including the members of the Board of Directors of Bancorp as
constituted immediately prior to the Effective Time, Mr. Daniel R. Nelson,
and three additional persons named prior to the mailing of the Joint Proxy
Statement (as defined below) by action of a majority of the Board of
Directors of West One.
-3-
<PAGE>
ARTICLE II
EXCHANGE OF SHARES
2.1 BANCORP TO MAKE SHARES AVAILABLE. At or prior to the Effective
Time, Bancorp shall deposit, or shall cause to be deposited, with a bank or
trust company selected by Bancorp and reasonably acceptable to West One
(which may be a Subsidiary of Bancorp) (the "Exchange Agent"), for the
benefit of the holders of West One Certificates, for exchange in accordance
with this Article II, certificates representing the shares of Bancorp Common
Stock and the cash in lieu of any fractional shares (such cash and
certificates for shares of Bancorp Common Stock, together with any dividends
or distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund") to be issued pursuant to Section 1.4 and paid pursuant to
Section 2.2(a) in exchange for outstanding shares of West One Common Stock.
2.2 EXCHANGE OF SHARES. (a) As soon as practicable after the Effective
Time, and in no event later than five business days after receipt from West
One or its transfer agent of a list of shareholders of record of West One as
of the Effective Time, the Exchange Agent shall mail to each holder of record
of a West One Certificate or Certificates a form letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to
the Certificates shall pass, only upon delivery of the West One Certificates
to the Exchange Agent) and instructions for use in effecting the surrender of
the West One Certificates in exchange for certificates representing the
shares of Bancorp Common Stock and the cash in lieu of fractional shares, if
any, into which the shares of West One Common Stock represented by such West
One Certificate or Certificates shall have been converted pursuant to this
Agreement. Upon proper surrender of a West One Certificate for exchange and
cancellation to the Exchange Agent, together with such properly completed
letter of transmittal, duly executed, the holder of such West One Certificate
shall be entitled to receive in exchange therefor, as applicable, (i) a
certificate representing that number of whole shares of Bancorp Common Stock
into which the shares of West One Common Stock theretofore represented by the
West One Certificate so surrendered shall have been converted pursuant to the
provisions of Article I hereof and (ii) a check representing the amount of
cash in lieu of fractional shares, if any, that such holder has the right to
receive in respect of the West One Certificate surrendered pursuant to the
provisions of this Article II, and the West One Certificate so surrendered
shall forthwith be canceled. No interest will be paid or accrued on the cash
in lieu of fractional shares and unpaid dividends and distributions, if any,
payable to holders of West One Certificates. Notwithstanding anything to the
contrary contained herein, no certificate representing Bancorp Common Stock
or cash in lieu of a fractional share interest shall be delivered to a person
who is an Affiliate (as defined in Section 6.5) of West One unless such
Affiliate has theretofore executed and delivered to Bancorp the agreement
referred to in Section 6.5.
(b) No dividends or other distributions declared after the Effective
Time with respect to Bancorp Common Stock shall be paid to the holder of any
unsurrendered West One Certificate until the holder thereof shall surrender
such West One Certificate in accordance with this Article II. After the
surrender of a West One Certificate in accordance with this Article II, the
record holder thereof shall be entitled to receive any such dividends or
other distributions,
-4-
<PAGE>
without any interest thereon, that theretofore had
become payable with respect to shares of Bancorp Common Stock represented by
such West One Certificate.
(c) If any certificate representing shares of Bancorp Common Stock is to
be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance
thereof that the Certificate so surrendered shall be properly endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise in proper
form for transfer and that the person requesting such exchange shall pay to
the Exchange Agent in advance any transfer or other taxes required by reason
of the issuance of a certificate representing shares of Bancorp Common Stock
in any name other than that of the registered holder of the West One
Certificate surrendered, or required for any other reason, or shall establish
to the satisfaction of the Exchange Agent that such tax has been paid or is
not payable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of West One of the shares of West One Common Stock that were
issued and outstanding immediately prior to the Effective Time. If, after
the Effective Time, West One Certificates representing such shares are
presented for transfer to the Exchange Agent, they shall be canceled and
exchanged for certificates representing shares of Bancorp Common Stock as
provided in this Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Bancorp Common Stock
shall be issued upon the surrender for exchange of West One Certificates, no
dividend or distribution with respect to Bancorp Common Stock shall be
payable on or with respect to any fractional share, and such fractional share
interests shall not entitle the owner thereof to vote or to any other rights
of a shareholder of West One. In lieu of the issuance of any such fractional
share, Bancorp shall pay to each former shareholder of West One who otherwise
would be entitled to receive such fractional share an amount in cash
determined by multiplying (i) the average of the closing-sale prices of
Bancorp Common Stock on the NASDAQ Stock Market National Market System as
reported by The Wall Street Journal for the five trading days immediately
preceding the date of the Effective Time by (ii) the fraction of a share of
Bancorp Common Stock which such holder would otherwise be entitled to receive
pursuant to Section 1.4.
(f) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of West One for twelve months after the Effective Time shall be
paid to Bancorp. Any shareholders of West One who have not theretofore
complied with this Article II shall thereafter look only to Bancorp for
payment of the shares of Bancorp Common Stock, cash in lieu of any fractional
shares and unpaid dividends and distributions on the Bancorp Common Stock
deliverable in respect of each share of West One Common Stock that such
shareholder is entitled to receive pursuant to this Agreement, without any
interest thereon. Notwithstanding the foregoing, none of Bancorp, West One,
the Exchange Agent or any other person shall be liable to any former holder
of shares of West One Stock for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
-5-
<PAGE>
(g) In the event any West One Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Bancorp, the posting by such person of a bond in such amount as Bancorp may
determine is reasonably necessary as indemnity against any claim that may be
made against it with respect to such West One Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed West One
Certificate the shares of Bancorp Common Stock and cash in lieu of fractional
shares deliverable in respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WEST ONE
Except as set forth in the disclosure schedule of West One delivered to
Bancorp concurrently herewith (the "West One Disclosure Schedule"), West One
hereby represents and warrants to Bancorp as follows:
3.1 CORPORATE ORGANIZATION. (a) West One is a corporation duly
organized and validly existing under the laws of the State of Idaho. West
One has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it
makes such licensing or qualification necessary, except where the failure to
be so licensed or qualified would not have a Material Adverse Effect (as
defined below) on West One. As used in this Agreement, the term "Material
Adverse Effect" means, with respect to Bancorp, West One or the Surviving
Corporation, as the case may be, a material adverse effect on the business,
results of operations or financial condition of such party and its
Subsidiaries taken as a whole. As used in this Agreement, the word
"Subsidiary" when used with respect to any party means any bank, corporation,
partnership or other organization, whether incorporated or unincorporated,
that is consolidated with such party for financial reporting purposes. West
One is duly registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended (the "BHC Act"). The Articles of
Incorporation and Bylaws of West One, copies of which have previously been
made available to Bancorp, are true, complete and correct copies of such
documents as in effect as of the date of this Agreement.
(b) Each West One Subsidiary (i) is duly organized and validly existing
as a bank, corporation or partnership under the laws of its jurisdiction of
organization, (ii) is duly qualified to do business and in good standing in
all jurisdictions (whether federal, state, local or foreign) where its
ownership or leasing of property or the conduct of its business requires it
to be so qualified and in which the failure to be so qualified would have a
Material Adverse Effect on West One, and (iii) has all requisite corporate
power and authority to own or lease its properties and assets and to carry on
its business as now conducted.
-6-
<PAGE>
(c) The minute books of West One accurately reflect in all material
respects all corporate actions since January 1, 1993, of its shareholders and
Board of Directors (including committees of the Board of Directors of West
One).
3.2 CAPITALIZATION. (a) The authorized capital stock of West One
consists of 75,000,000 shares of West One Common Stock and 5,000,000 shares
of preferred stock, $1.00 par value per share. At the close of business on
March 31, 1995, there were 36,835,096 shares of West One Common Stock
outstanding and no shares of West One preferred stock outstanding. On March
31, 1995, no shares of West One Common Stock or West One Preferred Stock were
reserved for issuance, except that (i) shares of West One Common Stock were
reserved for issuance pursuant to West One s dividend reinvestment and stock
purchase plan (the "West One DRIP"), (ii) 2,687,450 shares of West One Common
Stock were reserved for issuance pursuant to the conversion of the
Convertible Debentures, (iii) zero shares of West One Common Stock were
reserved for issuance pursuant to the conversion of West One s convertible
subordinated capital notes due 1997, (iv) 2,332,719 shares of West One Common
Stock were reserved for issuance upon the exercise of stock options pursuant
to the West One Stock Plans, (v) shares of West One Series A Junior
Participating Preferred Stock were reserved for issuance upon exercise of the
rights (the "West One Rights") distributed to holders of West One Common
Stock pursuant to the Rights Agreement, dated as of October 19, 1989, between
West One and Norwest Bank Minnesota, National Association, as Rights Agent
(the "West One Rights Agreement"), and (vi) the shares of West One Common
Stock issuable pursuant to the West One Option Agreement. All of the issued
and outstanding shares of West One Common Stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive
rights with no personal liability attaching to the ownership thereof. Except
as stated above, West One does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of West One
Common Stock or West One Preferred Stock or any other equity securities of
West One or any securities representing the right to purchase or otherwise
receive any shares of West One Common Stock or West One Preferred Stock. West
One has previously provided Bancorp with a list of the option holders, the
date of each option to purchase West One Common Stock granted, the number of
shares subject to each such option, the expiration date of each such option,
and the price at which each such option may be exercised under the West One
Stock Plans. Since December 31, 1994, West One has not issued any shares of
its capital stock or any securities convertible into or exercisable for any
shares of its capital stock, other than pursuant to (i) the exercise of
employee stock options, (ii) the West One DRIP, and (iii) conversion of the
Convertible Debentures.
(b) West One owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of the West One Subsidiaries,
free and clear of any liens, charges, encumbrances and security interests
whatsoever, and all of such shares are duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. No West One Subsidiary has or
is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity security of such
Subsidiary or any securities representing the right to purchase or otherwise
receive any
-7-
<PAGE>
shares of capital stock or any other equity security of such
Subsidiary. Assuming compliance by Bancorp with Section 1.6 hereof, at the
Effective Time, there will not be any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character by which West One
or any of its Subsidiaries will be bound calling for the purchase or issuance
of any shares of the capital stock of West One or any of its Subsidiaries.
3.3 AUTHORITY; NO VIOLATION. (a) West One 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 the consummation of the transactions contemplated hereby have
been duly and validly approved by the Board of Directors of West One. The
Board of Directors of West One has directed that this Agreement and the
transactions contemplated hereby be submitted to West One s shareholders for
approval at a meeting of such shareholders and, except for the adoption of
this Agreement by the affirmative vote of the holders of a majority of the
outstanding shares of West One Common Stock, no other corporate proceedings
on the part of West One are necessary to approve this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by West One and (assuming due
authorization, execution and delivery by Bancorp) constitutes a valid and
binding obligation of West One, enforceable against West One in accordance
with its 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.
(b) Neither the execution and delivery of this Agreement by West One nor
the consummation by West One of the transactions contemplated hereby, nor
compliance by West One with any of the terms or provisions hereof, will (i)
violate any provision of the Articles of Incorporation or Bylaws of West One
or (ii) assuming that the consents and approvals referred to in Section 3.4
are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to West
One or any of its Subsidiaries or any of their respective properties or
assets, or (y) violate, conflict with, result in a breach of any provision of
or the loss of any benefit under, constitute a default (or an event that,
with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any
lien, pledge, security interest, charge or other encumbrance upon any of the
respective properties or assets of West One or any of its Subsidiaries under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which West One or any of its Subsidiaries is a party, or by
which they or any of their respective properties or assets may be bound or
affected, except (in the case of clause (y) above) for such violations,
conflicts, breaches or defaults that, either individually or in the
aggregate, will not have or be reasonably likely to have a Material Adverse
Effect on West One.
3.4 CONSENTS AND APPROVALS. Except for (i) the filing of applications
and notices, as applicable, with the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") under the BHC Act, (ii) the
filing of any requisite applications with the Office of the Comptroller of
the Currency (the "OCC") or the Federal Deposit Insurance Corporation (the
-8-
<PAGE>
"FDIC") in connection with the merger of Subsidiaries of West One and
Bancorp, (iii) the filing of any required applications or notices with any
state agencies and approval of such applications and notices (the "State
Approvals"), (iv) the filing with the SEC of a joint proxy statement in
definitive form relating to the meetings of Bancorp s and West One s
shareholders to be held in connection with this Agreement and the
transactions contemplated hereby (the "Joint Proxy Statement") and the
registration statement on Form S-4 (the "S-4") in which the Joint Proxy
Statement will be included as a prospectus, (v) the filing of the Articles of
Merger with the Oregon Secretary pursuant to the OBCA, (vi) the filing of the
Articles of Merger with the Idaho Secretary pursuant to the IBCA, (vii) such
filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the
issuance of the shares of Bancorp Common Stock pursuant to this Agreement,
(viii) the approval of this Agreement by the requisite vote of the
shareholders of Bancorp and West One, and (ix) the consents and approvals set
forth in West One Disclosure Schedule, no consents or approvals of or filings
or registrations with any court, administrative agency or commission or other
governmental authority or instrumentality (each a "Governmental Entity") or
with any third party are necessary in connection with (A) the execution and
delivery by West One of this Agreement and (B) the consummation by West One
of the Merger and the other transactions contemplated hereby.
3.5 REPORTS. West One and each of its Subsidiaries have timely and
properly 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, 1993, with (i) the Federal Reserve Board,
(ii) the Office of Thrift Supervision (the "OTS") under the Home Owners' Loan
Act ("HOLA"), (iii) any state regulatory authority (each a "State Regulator),
(iv) the OCC, (v) the FDIC, and (vi) any other self-regulatory organization
("SRO") (collectively, "Regulatory Agencies"), and all other material reports
and statements required to be filed by them since January 1, 1993, and have
paid all fees and assessments due and payable in connection therewith.
Except for normal examinations conducted by a Regulatory Agency in the
regular course of the business of West One and its Subsidiaries, no
Regulatory Agency has initiated any proceeding or, to the best knowledge of
West One, investigation into the business or operations of West One or any of
its Subsidiaries since January 1, 1993. There is no material unresolved
violation, criticism, or exception by any Regulatory Agency with respect to
any report or statement relating to any examinations of West One or any of
its Subsidiaries.
3.6 FINANCIAL STATEMENTS. West One has previously delivered to Bancorp
copies of (a) the consolidated balance sheets of West One and its
Subsidiaries as of December 31, for the fiscal years 1993 and 1994, and the
related consolidated statements of income, changes in shareholders equity
and cash flows for the fiscal years 1992 through 1994, inclusive, as reported
in West One s Annual Report on Form 10-K for the fiscal year ended December
31, 1994, filed with the SEC under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), in each case accompanied by the audit report of
Coopers & Lybrand L.L.P., independent public accountants, with respect to
West One, and (b) the unaudited consolidated balance sheets of West One and
its Subsidiaries as of March 31, 1995, and March 31, 1994, and the related
unaudited consolidated statements of income, cash flows and changes in
shareholders' equity for the three-month periods then ended substantially in
the form that is proposed to be
-9-
<PAGE>
reported in West One's Quarterly Report on Form 10-Q for the period ended
March 31, 1995, filed with the SEC under the Exchange Act. The
financial statements referred to in this Section 3.6 (including the
related notes, where applicable) fairly present (subject, in the case
of the unaudited statements, to recurring audit adjustments normal
in nature and amount), the results of the consolidated operations and changes
in shareholders' equity and consolidated financial position of West One 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) 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 prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied during the
periods involved, except in each case as indicated in such statements or in
the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q. The allowances for credit losses contained in the financial
statements referred to in this Section 3.6 were adequate as of their
respective dates to absorb reasonably anticipated losses in the loan
portfolio of West One and its Subsidiaries in view of the size and character
of such portfolio, the current economic conditions, and other pertinent
factors and no facts have subsequently come to the attention of management of
West One that would cause management to restate in any material way the level
of such allowance for credit losses. With respect to other real estate owned
by West One and its Subsidiaries, the value attributed thereto for purposes
of compiling such financial statements does not exceed the aggregate fair
market value of such real estate as of the date of acquisition of such real
estate or as subsequently reduced, all in accordance with regulations of the
applicable Regulatory Agencies. The books and records of West One 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 reflect only actual transactions.
3.7 BROKER'S FEES. Neither West One nor any West One Subsidiary nor any
of their respective officers or directors has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees
in connection with any of the transactions contemplated by this Agreement or
the Option Agreements.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as publicly
disclosed in West One Reports (as defined below) filed prior to the date
hereof, since December 31, 1994, (i) neither West One nor any of its
Subsidiaries has incurred any material liability, except in the ordinary
course of their business consistent with their past practices, and (ii) no
event has occurred that has had, or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on West One.
(b) Except as publicly disclosed in West One Reports filed prior to the
date hereof, since December 31, 1994, West One and its Subsidiaries have
carried on their respective businesses in the ordinary and usual course
consistent with their past practices.
(c) Since January 1, 1995, neither West One nor any of its Subsidiaries
has (i) except for normal increases in the ordinary course of business
consistent with past practice or except as required by applicable law,
increased the wages, salaries, compensation, pension, or other
-10-
<PAGE>
fringe benefits or perquisites payable to any executive officer, employee, or
director from the amount thereof in effect as of January 1, 1995, granted any
severance or termination pay, entered into any contract to make or grant any
severance or termination pay, or paid any bonus other than customary year-end
bonuses for fiscal 1994, (ii) suffered any strike, work stoppage, slowdown,
or other labor disturbance, or (iii) been the subject of any organizing
activities known to West One.
3.9 LEGAL PROCEEDINGS. (a) Except as publicly disclosed in West One
Reports filed prior to the date hereof, neither West One nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of
West One's knowledge, threatened, material legal, administrative, arbitral or
other proceedings, claims, actions or governmental or regulatory
investigations of any nature (i) against West One or any of its Subsidiaries
as to which there is a reasonable possibility of an adverse determination and
which, if adversely determined, would, individually or in the aggregate, have
a Material Adverse Effect on West One or (ii) challenging the validity or
propriety of the transactions contemplated by this Agreement or the West One
Option Agreement.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon West One, any of its Subsidiaries or the assets of
West One or any of its Subsidiaries that has had, or might reasonably be
expected to have, a Material Adverse Effect on West One.
3.10 TAXES AND TAX RETURNS. (a) Each of West One and its Subsidiaries
has duly filed all material federal, state and, to the best of West One's
knowledge, material local information returns and tax returns required to be
filed by it (all such returns being accurate and complete in all material
respects) and has duly paid or made provisions for the payment of all
material Taxes (as defined below) and other governmental charges which have
been incurred or are due or claimed to be due from it by federal, state,
county or local taxing authorities (including, without limitation, if and to
the extent applicable, those due in respect of its properties, income,
business, capital stock, deposits, franchises, licenses, sales and payrolls)
other than Taxes or other charges that (1) are not yet delinquent or are
being contested in good faith and (2) have not been finally determined. The
income tax returns of West One and its Subsidiaries have been examined by the
Internal Revenue Service (the "IRS"), and any liability with respect thereto
has been satisfied for all years to and including 1985, and no material
deficiencies were asserted as a result of such examination or all such
deficiencies were satisfied. To the best of West One's knowledge, there are
no material disputes pending, or claims asserted for, Taxes or assessments
upon West One or any of its Subsidiaries, nor has West One or any of its
Subsidiaries been requested to give any currently effective waivers extending
the statutory period of limitation applicable to any Federal, state, county
or local income tax return for any period. In addition, (i) proper and
accurate amounts have been withheld by West One and its Subsidiaries from
their employees for all prior periods in compliance in all material respects
with the tax withholding provisions of applicable federal, state and local
laws, except where failure to do so would not have a
-11-
<PAGE>
Material Adverse Effect on West One, (ii) federal, state, county and local
returns that are accurate and complete in all material respects have been filed
by West One and its Subsidiaries for all periods for which returns were due with
respect to income tax withholding, Social Security and unemployment taxes,
except where failure to do so would not have a Material Adverse Effect on West
One, (iii) the amounts shown on such federal, state, local or county returns to
be due and payable have been paid in full or adequate provision therefor has
been included by West One in its consolidated financial statements as of
December 31, 1994, except where failure to do so would not have a Material
Adverse Effect on West One and (iv) there are no tax liens upon any property or
assets of the West One or its Subsidiaries except liens for current taxes not
yet due. To the knowledge of West One, no property of West One or any of its
Subsidiaries is property that West One or any of its Subsidiaries is or will
be required to treat as being owned by another person pursuant to the
provisions of Section 168(f)(8) of the Code (as in effect prior to its
amendment by the Tax Reform Act of 1986) or is "tax-exempt use property"
within the meaning of Section 169(h) of the Code. Neither West One nor any
of its Subsidiaries has been required to include in income any adjustment
pursuant to Section 481 of the Code by reason of a voluntary change in
accounting method initiated by West One or any of its Subsidiaries, and the
Internal Revenue Service has not initiated or proposed any such adjustment or
change in accounting method. Except as set forth in the financial statements
described in Section 3.6 hereof, neither West One nor any of its Subsidiaries
has entered into a transaction which is being accounted for as an installment
obligation under Section 453 of the Code, which would be reasonably likely to
have a Material Adverse Effect on West One.
(b) As used in this Agreement, the term "Tax" or "Taxes" means all
federal, state, county, local, and foreign income, excise, gross receipts, ad
valorem, profits, gains, property, sales, transfer, use, payroll, employment,
severance, withholding, duties, intangibles, franchise, and other taxes,
charges, levies or like assessments together with all penalties and additions
to tax and interest thereon.
(c) Any amount that could be received (whether in cash or property or
the vesting of property) as a result of any of the transactions contemplated
by this Agreement by any employee, officer or director of West One or any of
its affiliates who is a "Disqualified Individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment,
severance or termination agreement, other compensation arrangement or West
One Benefit Plan (as defined below) currently in effect would not be
characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code).
(d) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by West One or any
Subsidiary of West One under any contract, plan, program, arrangement or
understanding is reasonably likely.
3.11 EMPLOYEES. (a) The West One Disclosure Schedule sets forth a true
and complete list of each material plan, arrangement or agreement regarding
compensation or benefits for any employees, former employees, directors, or
former directors that is maintained as of the date of this Agreement (the
"West One Benefit Plans") by West One or any of its Subsidiaries or by any
trade or business, whether or not incorporated (an "ERISA Affiliate"), all of
which together with West One would be deemed a "single employer" within the
meaning of Section 4001 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
-12-
<PAGE>
(b) West One has heretofore delivered to Bancorp true and complete
copies of each of the West One Benefit Plans and all related documents,
including but not limited to (i) the actuarial report for such Plan (if
applicable) for each of the last two years, and (ii) the most recent
determination letter from the Internal Revenue Service (if applicable) for
such Plan.
(c) (i) Each of the West One Benefit Plans has been operated and
administered in all material respects in compliance with applicable laws,
including but not limited to ERISA and the Code, (ii) each of the West One
Benefit Plans intended to be "qualified" within the meaning of Section 401(a)
of the Code is so qualified, (iii) with respect to each West One Benefit Plan
that is subject to Title IV of ERISA, the present value of accrued benefits
under such West One Benefit Plan, based upon the actuarial assumptions used
for funding purposes in the most recent actuarial report prepared by such
West One Benefit Plan's actuary with respect to such West One Benefit Plan,
did not, as of its latest valuation date, exceed the then current value of
the assets of such West One Benefit Plan allocable to such accrued benefits,
(iv) no West One Benefit Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured), with respect
to current or former employees of West One, its Subsidiaries or any ERISA
Affiliate beyond their retirement or other termination of service, other than
(w) coverage mandated by applicable law, (x) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in
Section 3(2) of ERISA, (y) deferred compensation benefits accrued as
liabilities on the books of West One, its Subsidiaries or the ERISA
Affiliates or (z) benefits the full cost of which is borne by the current or
former employee (or his beneficiary), (v) no liability under Title IV of
ERISA has been incurred by West One, its Subsidiaries or any ERISA Affiliate
that has not been satisfied in full, and no condition exists that presents a
material risk to West One, its Subsidiaries or any ERISA Affiliate of
incurring a material liability thereunder, (vi) no West One Benefit Plan is a
"multiemployer pension plan," as such term is defined in Section 3(37) of
ERISA, (vii) all contributions or other amounts payable by West One or its
Subsidiaries as of the Effective Time with respect to each West One Benefit
Plan in respect of current or prior plan years have been paid or accrued in
accordance with generally accepted accounting practices and Section 412 of
the Code, (viii) neither West One, its Subsidiaries nor any ERISA Affiliate
has engaged in a transaction in connection with which West One, its
Subsidiaries or any ERISA Affiliate could be subject to either a material
civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a
material tax imposed pursuant to Section 4975 or 4976 of the Code, and (ix)
to the best knowledge of West One there are no pending, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of
or against any of the West One Benefit Plans or any trusts related thereto.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
material payment including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or
any employee of West One or any of its affiliates from West One or any of its
affiliates under any West One Benefit Plan or otherwise, (ii) materially
increase any benefits otherwise payable under any West One Benefit Plan or
(iii) result in any acceleration of the time of payment or vesting of any
such benefits to any material extent.
-13-
<PAGE>
3.12 SEC REPORTS. West One has previously made available to Bancorp an
accurate and complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since
January 1, 1993, by West One with the SEC pursuant to the Securities Act of
1933, as amended (the "Securities Act"), or the Exchange Act (the "West One
Reports") and prior to the date hereof and (b) communication mailed by West
One to its shareholders since January 1, 1993, and no such registration
statement, prospectus, report, schedule, proxy statement or communication
contained any untrue statement of a material fact or omitted 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, except that information as of a later date shall be deemed to
modify information as of an earlier date. West One has timely filed all West
One Reports and other documents required to be filed by it under the
Securities Act and the Exchange Act, and, as of their respective dates, all
West One Reports complied in all material respects with the published rules
and regulations of the SEC with respect thereto.
3.13 COMPLIANCE WITH APPLICABLE LAW. (a) West One and each of its
Subsidiaries hold, and have at all times held, all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of
their respective businesses under and pursuant to all, and have complied with
and are not in default in any material respect under any, applicable laws,
statutes, orders, rules, regulations of any Governmental Entity relating to
West One or any of its Subsidiaries, except where the failure to hold such
license, franchise, permit or authorization or such noncompliance or default
would not, individually or in the aggregate, have a Material Adverse Effect
on West One, and neither West One nor any of its Subsidiaries knows of, or
has received notice of, any material violations of any of the above.
(b) Except as would not have a Material Adverse Effect, (i) no real
property presently or previously owned, operated, or leased by West One or
any of its Subsidiaries or, to the best of their knowledge, securing any
obligations owed to them has been used as a storage or disposal site for
hazardous substances within the meaning of any applicable federal, state, or
local statute, law, rule, or regulation, and no hazardous substances have
been transferred from or to such real property, (ii) no governmental entity
has issued any citation or notice of violation relating to any environmental
matter concerning any real property owned, operated, or leased by West One or
any of its Subsidiaries or, to the best of their knowledge securing any
obligations owed to them, and neither West One nor any of its Subsidiaries
has received any notice that any such real property may or will be included
on any list of areas affected by any release of any hazardous substance or
that it has or may be named as a responsible or potentially responsible party
with respect to any hazardous substance site, and (iii) neither West One nor
any of its Subsidiaries has received any notice of any threatened
investigation, proceeding, or litigation concerning any such real property
with respect to any environmental matter or knows of any basis for any such
investigation, proceeding, or litigation.
3.14 CERTAIN CONTRACTS. (a) Neither West One nor any of its
Subsidiaries is a party to or bound by any contract, arrangement, commitment
or understanding (whether written or oral) (i) with respect to the employment
of any directors, officers, employees or consultants, (ii) that, upon the
consummation of the transactions contemplated by this Agreement will (either
-14-
<PAGE>
alone or upon the occurrence of any additional acts or events) result in any
payment (whether of severance pay or otherwise) becoming due from Bancorp,
West One, the Surviving Corporation, or any of their respective Subsidiaries
to any officer or employee thereof, (iii) that is a material contract (as
defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed
after the date of this Agreement that has not been filed or incorporated by
reference in the West One Reports, (iv) that materially restricts the conduct
of any line of business by West One, (v) with or to a labor union or guild
(including any collective bargaining agreement) or (vi) (including any stock
option plan, stock appreciation rights plan, restricted stock plan or stock
purchase 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. West One has previously delivered to Bancorp
true and correct copies of all employment, consulting, and deferred
compensation agreements that are in writing and a written summary of all such
contracts that are material to West One and not in writing. Each contract,
arrangement, commitment or understanding of the type described in this
Section 3.14(a), whether or not set forth in the West One Disclosure
Schedule, is referred to herein as a "West One Contract." Neither West One
nor any of its Subsidiaries knows of, or has received notice of, any
violation of any West One Contract by any of the other parties thereto that,
individually or in the aggregate, would have a Material Adverse Effect on
West One.
(b) (i) Each West One Contract is valid and binding and in full force
and effect, (ii) West One and each of its Subsidiaries has in all material
respects performed all obligations required to be performed by it to date
under each West One Contract, except where such noncompliance, individually
or in the aggregate, would not have a Material Adverse Effect on West One,
and (iii) no event or condition exists that constitutes or, after notice or
lapse of time or both, would constitute, a material default on the part of
West One or any of its Subsidiaries or, to the knowledge of West One, on the
part of any other party under any such West One Contract, except where such
default, individually or in the aggregate, would not have a Material Adverse
Effect on West One.
3.15 AGREEMENTS WITH REGULATORY AGENCIES. Neither West One nor any of
its Subsidiaries is subject to any cease-and-desist or other order issued by,
or is a party to any written agreement, consent agreement or memorandum of
understanding with, or is 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 supervisory letter from, or has adopted any board resolutions at the
request of (each, whether or not set forth in the West One Disclosure
Schedule, a "Regulatory Agreement"), any Regulatory Agency or other
Governmental Entity that restricts the conduct of its business or that in any
manner relates to its capital adequacy, its credit policies, its management
or its business, nor has West One or any of its Subsidiaries been advised by
any Regulatory Agency or other Governmental Entity that it is considering
issuing or requesting any Regulatory Agreement.
3.16 UNDISCLOSED LIABILITIES. Except for those liabilities that are
fully reflected or reserved against on the consolidated balance sheet of West
One as of December 31, 1994 and
-15-
<PAGE>
for liabilities incurred in the ordinary course of business consistent with
past practice, since December 31, 1994, neither West One nor any of its
Subsidiaries has incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due)
that, either alone or when combined with all similar liabilities, has had, or
could reasonably be expected to have, a Material Adverse Effect on West One.
3.17 STATE TAKEOVER LAWS. The Board of Directors of West One has taken
such actions as are necessary such that the provisions of the Idaho Business
Combination Law (Sections 30-1701 to 30-1710) and the Idaho Control Share
Acquisition Law (Sections 30-1601 to 30-1614) will not apply to this
Agreement or the Option Agreements or any of the transactions contemplated
hereby or thereby.
3.18 RIGHTS AGREEMENT. West One has taken all action (including, if
required, redeeming all of the outstanding preferred stock purchase rights
issued pursuant to the West One Rights Agreement or amending or terminating
the West One Rights Agreement) so that the entering into of this Agreement
and the Option Agreements, the Merger, the acquisition of shares pursuant to
the Option Agreements and the other transactions contemplated hereby and
thereby do not and will not result in the grant of any rights to any person
under the West One Rights Agreement or enable or require the West One Rights
to be exercised, distributed or triggered.
3.19 POOLING OF INTERESTS. As of the date of this Agreement, West One
has no reason to believe that the Merger will not qualify as a pooling of
interests for accounting purposes.
3.20 INTEREST RATE RISK MANAGEMENT INSTRUMENTS; DERIVATIVES. (a) West
One has heretofore delivered to Bancorp an accurate and complete list of (A)
all interest rate swaps, caps, floors, option agreements, and other interest
rate risk management arrangements and other instruments generally known as
"derivatives" to which West One or any of its Subsidiaries is a party or to
which any of their properties or assets may be subject and (B) all securities
owned by West One or its Subsidiaries that are generally known as "structured
note," "high risk mortgage derivatives," "capped floating rate notes," or
"capped floating rate mortgage derivatives" (instruments or agreements of the
type referred to in clauses (A) and (B), collectively, "Derivative
Securities"). Neither West One nor any of its Subsidiaries has purchased any
Derivative Security for, or invested in any Derivative Security any assets
of, any account or person for which it or any such subsidiary acts as a
trustee, fiduciary, or investment advisor.
(b) All Derivative Securities to which West One or any of its
Subsidiaries is a party or to which any of their properties or assets may be
subject were entered into in the ordinary course of business and, to its
knowledge, in accordance with prudent banking practice and applicable rules,
regulations, and policies of the Regulatory Agencies and with counterparties
believed to be financially responsible at the time and are legal, valid, and
binding obligations enforceable in accordance with their terms (except as may
be limited by bankruptcy, insolvency, moratorium, reorganization, or similar
laws affecting the rights of creditors generally, and the availability of
equitable remedies), and are in full force and effect. West One and each of its
-16-
<PAGE>
Subsidiaries has duly performed in all material respects all of its
obligations thereunder, and, to its knowledge, there are no breaches,
violations, or defaults or allegations or assertions of such by any party
thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCORP
Except as set forth in the disclosure schedule of Bancorp delivered to
West One concurrently herewith (the "Bancorp Disclosure Schedule"), Bancorp
hereby represents and warrants to West One as follows:
4.1 CORPORATE ORGANIZATION. (a) Bancorp is a corporation duly
organized, validly existing under the laws of the State of Oregon. Bancorp
has the corporate power and authority to own or lease all of its properties
and assets and to carry on its business as it is now being conducted, and is
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or
qualified would not have a Material Adverse Effect on Bancorp. Bancorp is
duly registered as a bank holding company under the BHC Act. The Articles of
Incorporation and Bylaws of Bancorp, copies of which have previously been
made available to West One, are true, complete and correct copies of such
documents as in effect as of the date of this Agreement.
(b) Each Bancorp Subsidiary (i) is duly organized and validly existing
as a bank, corporation or partnership under the laws of its jurisdiction of
organization, (ii) is duly qualified to do business and in good standing in
all jurisdictions (whether federal, state, local or foreign) where its
ownership or leasing of property or the conduct of its business requires it
to be so qualified and in which the failure to be so qualified would have a
Material Adverse Effect on Bancorp, and (iii) has all requisite corporate
power and authority to own or lease its properties and assets and to carry on
its business as now conducted.
(c) The minute books of Bancorp accurately reflect in all material
respects all corporate actions since January 1, 1993, of its shareholders and
Board of Directors (including committees of the Board of Directors of
Bancorp).
4.2 CAPITALIZATION. (a) The authorized capital stock of Bancorp
consists of (i) 250,000,000 shares of Bancorp Common Stock, of which as of
May 1, 1995, 98,202,805 shares were issued and outstanding and (ii)
50,000,000 shares of Preferred Stock, no par value ("Bancorp Preferred
Stock"), of which as of May 1, 1995, 6,000,000 shares designated as Series A
were issued and outstanding. All of the issued and outstanding shares of
Bancorp Common Stock and Bancorp Preferred Stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. As of
the date of this Agreement, except for (i) the Bancorp Option Agreement, (ii)
shares of Bancorp Common Stock reserved for issuance pursuant to the
-17-
<PAGE>
Bancorp Benefit Plans (as defined below), and (iii) Bancorp's dividend
reinvestment and stock purchase plan (the "Bancorp DRIP"), Bancorp does not have
and is not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or
issuance of any shares of Bancorp Common Stock or Bancorp Preferred Stock or
any other equity securities of Bancorp or any securities representing the
right to purchase or otherwise receive any shares of Bancorp Common Stock or
Bancorp Preferred Stock. As of December 31, 1994, 9,541,838 shares of
Bancorp Common Stock were reserved for issuance pursuant to the Bancorp DRIP
and Bancorp Benefit Plans and no shares of Bancorp Preferred Stock were
reserved for issuance. As of the date of this Agreement, since December 31,
1994, Bancorp has not issued any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital
stock, other than pursuant to (i) the exercise of employee stock options
granted prior to such date, (ii) the Bancorp Option Agreement, (iii) the
Bancorp DRIP, (iv) the Bancorp Employee Investment Plan, and (v) the grant of
options to non-employee directors. The shares of Bancorp Capital Stock to be
issued pursuant to the Merger will be duly authorized and validly issued and,
at the Effective Time, all such shares will be fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the
ownership thereof.
(b) Bancorp owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of the Bancorp Subsidiaries, free
and clear of any liens, charges, encumbrances and security interests
whatsoever, and all of such shares are duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. No Bancorp Subsidiary has or
is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity security of such
Subsidiary or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of such
Subsidiary.
4.3 AUTHORITY; NO VIOLATION. (a) Bancorp 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 the consummation of the transactions contemplated hereby have
been duly and validly approved by the Board of Directors of Bancorp. The
Board of Directors of Bancorp has directed that this Agreement and the
transactions contemplated hereby be submitted to Bancorp's shareholders for
approval at a meeting of such shareholders and except for the adoption of
this Agreement by the affirmative vote of the holders of a majority of the
outstanding shares of Bancorp Common Stock, no other corporate proceedings on
the part of Bancorp are necessary to approve this Agreement and to consummate
the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Bancorp and (assuming due authorization,
execution and delivery by West One) constitutes a valid and binding
obligation of Bancorp, enforceable against Bancorp in accordance with its
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.
-18-
<PAGE>
(b) Neither the execution and delivery of this Agreement by Bancorp, nor
the consummation by Bancorp of the transactions contemplated hereby, nor
compliance by Bancorp with any of the terms or provisions hereof, will (i)
violate any provisions of the Articles of Incorporation or Bylaws of Bancorp
or (ii) assuming that the consents and approvals referred to in Section 4.4
are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Bancorp
or any of its Subsidiaries or any of their respective properties or assets,
or (y) violate, conflict with, result in a breach of any provision of or the
loss of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result
in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any
lien, pledge, security interest, charge or other encumbrance upon any of the
respective properties or assets of Bancorp or any of its Subsidiaries under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Bancorp or any of its Subsidiaries is a party, or by
which they or any of their respective properties or assets may be bound or
affected, except (in the case of clause (y) above) for such violations,
conflicts, breaches or defaults which either individually or in the aggregate
will not have or be reasonably likely to have a Material Adverse Effect on
Bancorp.
4.4 CONSENTS AND APPROVALS. Except for (i) the filing of applications
and notices, as applicable, with the Federal Reserve Board under the BHC Act,
(ii) the filing of any requisite applications with the OCC or the FDIC in
connection with the merger of Subsidiaries of West One and Bancorp, (iii) the
filing of the State Approvals, (iv) the filing with the SEC of the Joint
Proxy Statement and the S-4, (v) the filing of the Articles of Merger with
the Oregon Secretary pursuant to the OBCA, (vi) the filing of the Articles of
Merger with the Idaho Secretary pursuant to the IBCA, (vii) such filings and
approvals as are required to be made or obtained under the securities or
"Blue Sky" laws of various states in connection with the issuance of the
shares of Bancorp Common Stock pursuant to this Agreement, and (viii) the
approval of this Agreement by the requisite vote of the shareholders of
Bancorp and West One, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary in
connection with (A) the execution and delivery by Bancorp of this Agreement
and (B) the consummation by Bancorp of the Merger and the other transactions
contemplated hereby.
4.5 REPORTS. Bancorp and each of its Subsidiaries have timely and
properly 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, 1993, with the Regulatory Agencies, and all
other material reports and statements required to be filed by them since
January 1, 1993, and have paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a
Regulatory Agency in the regular course of the business of Bancorp and its
Subsidiaries, no Regulatory Agency has initiated any proceeding or, to the
best knowledge of Bancorp, investigation into the business or operations of
Bancorp or any of its Subsidiaries since January 1, 1993. There is no
material unresolved violation, criticism, or exception by any Regulatory
Agency with respect to any report or statement relating to any examinations
of Bancorp or any of its Subsidiaries.
-19-
<PAGE>
4.6 FINANCIAL STATEMENTS. Bancorp has previously delivered to West One
copies of (a) the consolidated balance sheets of Bancorp and its Subsidiaries
as of December 31, for the fiscal years 1993 and 1994, and the related
consolidated statements of income, changes in shareholders equity and cash
flows for the fiscal years 1992 through 1994, inclusive, as reported in
Bancorp s Annual Report on Form 10-K for the fiscal year ended December 31,
1994, filed with the SEC under the Exchange Act, in each case accompanied by
the audit report of Deloitte & Touche LLP, independent auditors with respect
to Bancorp, (b) the unaudited consolidated balance sheets of Bancorp and its
Subsidiaries as of March 31, 1995, and March 31, 1994, and the related
unaudited consolidated statements of income, cash flows and changes in
shareholders equity for the three month periods then ended substantially in
the form that is proposed to be reported in Bancorp's Quarterly Report on
Form 10-Q for the period ended March 31, 1995, filed with the SEC under the
Exchange Act. The financial statements referred to in this Section 4.6
(including the related notes, where applicable) fairly present (subject, in
the case of the unaudited statements, to recurring audit adjustments normal
in nature and amount), the results of the consolidated operations and changes
in shareholders' equity and consolidated financial position of Bancorp 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 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 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 allowances for credit
losses contained in the financial statements referred to in this Section 4.6
were adequate as of their respective dates to absorb reasonably anticipated
losses in the loan portfolio of Bancorp and its Subsidiaries in view of the
size and character of such portfolio, the current economic conditions, and
other pertinent factors and no facts have subsequently come to the attention
of management of Bancorp that would cause management to restate in any
material way the level of such allowance for credit losses. With respect to
other real estate owned by Bancorp and its Subsidiaries, the value attributed
thereto for purposes of compiling such financial statements does not exceed
the aggregate fair market value of such real estate as of the date of
acquisition of such real estate or as subsequently reduced, all in accordance
with regulations of the applicable Regulatory Agencies. The books and
records of Bancorp 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 reflect only actual transactions.
4.7 BROKERS' FEES. Neither Bancorp nor any Bancorp Subsidiary nor any
of their respective officers or directors has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees
in connection with any of the transactions contemplated by this Agreement or
the Option Agreements.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Except as publicly
disclosed in Bancorp Reports (as defined below) filed prior to the date
hereof, since December 31, 1994, (i) neither Bancorp nor any of its
Subsidiaries has incurred any material liability, except in the ordinary course
of their business consistent with their past practices, and (ii) no event has
-20-
<PAGE>
occurred that has had, or is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Bancorp.
(b) Except as publicly disclosed in Bancorp Reports filed prior to the
date hereof, from December 31, 1994, through the date of this Agreement,
Bancorp and its Subsidiaries have carried on their respective businesses in
the ordinary and usual course consistent with their past practices.
(c) Since January 1, 1995, neither Bancorp nor any of its Subsidiaries
has (i) suffered any strike, work stoppage, slowdown, or other labor
disturbance or (ii) been the subject of any organizing activities.
4.9 LEGAL PROCEEDINGS. (a) Except as publicly disclosed in Bancorp
Reports filed prior to the date hereof, neither Bancorp nor any of its
Subsidiaries is a party to any and there are no pending or, to the best of
Bancorp's knowledge, threatened, material legal, administrative, arbitral or
other proceedings, claims, actions or governmental or regulatory
investigations of any nature (i) against Bancorp or any of its Subsidiaries
as to which there is a reasonable possibility of an adverse determination and
which, if adversely determined, would, individually or in the aggregate, have
a Material Adverse Effect on Bancorp or (ii) challenging the validity or
propriety of the transactions contemplated by this Agreement or the Bancorp
Option Agreement.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Bancorp, any of its Subsidiaries or the assets of
Bancorp or any of its Subsidiaries that has had, or might reasonably be
expected to have, a Material Adverse Effect on Bancorp or the Surviving
Corporation.
4.10 TAXES AND TAX RETURNS. (a) Each of Bancorp and its Subsidiaries has
duly filed all material federal, state and, to the best of Bancorp's
knowledge, material local information returns and tax returns required to be
filed by it on or prior to the date hereof (all such returns being accurate
and complete in all material respects) and has duly paid or made provisions
for the payment of all material Taxes (as defined below) and other
governmental charges which have been incurred or are due or claimed to be due
from it by federal, state, county or local taxing authorities on or prior to
the date of this Agreement (including, without limitation, if and to the
extent applicable, those due in respect of its properties, income, business,
capital stock, deposits, franchises, licenses, sales and payrolls) other than
Taxes or other charges (1) that are not yet delinquent or are being contested
in good faith and (2) have not been finally determined. The income tax
returns of Bancorp and its Subsidiaries have been examined by the Internal
Revenue Service (the "IRS") and any liability with respect thereto has been
satisfied for all years to and including 1985, and no material deficiencies
were asserted as a result of such examination or all such deficiencies were
satisfied. To the best of Bancorp's knowledge, there are no material
disputes pending, or claims asserted for, Taxes or assessments upon Bancorp
or any of its Subsidiaries, nor has Bancorp or any of its Subsidiaries been
requested to give any currently effective waivers extending the statutory
period of limitation applicable to any federal, state, county or local income
tax return for any period. In addition, (i) proper and accurate amounts
-21-
<PAGE>
have been withheld by Bancorp and its Subsidiaries from their employees for all
prior periods in compliance in all material respects with the tax withholding
provisions of applicable federal, state and local laws, except where failure
to do so would not have a Material Adverse Effect on Bancorp, (ii) federal,
state, county and local returns that are accurate and complete in all
material respects have been filed by Bancorp and its Subsidiaries for all
periods for which returns were due with respect to income tax withholding,
Social Security and unemployment taxes, except where failure to do so would
not have a Material Adverse Effect on Bancorp, (iii) the amounts shown on
such federal, state, local or county returns to be due and payable have been
paid in full or adequate provision therefor has been included by Bancorp in
its consolidated financial statements as of December 31, 1994, except where
failure to do so would not have a Material Adverse Effect on Bancorp and (iv)
there are no Tax liens upon any property or assets of the Bancorp or its
Subsidiaries except liens for current taxes not yet due. To the knowledge of
Bancorp, no property of Bancorp or any of its Subsidiaries is property that
Bancorp or any of its Subsidiaries is or will be required to treat as being
owned by another person pursuant to the provisions of Section 168(f)(8) of
the Code (as in effect prior to its amendment by the Tax Reform Act of 1986)
or is "tax-exempt use property" within the meaning of Section 169(h) of the
Code. Neither Bancorp nor any of its Subsidiaries has been required to
include in income any adjustment pursuant to Section 481 of the Code by
reason of a voluntary change in accounting method initiated by Bancorp or any
of its Subsidiaries, and the Internal Revenue Service has not initiated or
proposed any such adjustment or change in accounting method. Except as set
forth in the financial statements described in Section 4.6 hereof, neither
Bancorp nor any of its Subsidiaries has entered into a transaction which is
being accounted for as an installment obligation under Section 453 of the
Code, which would be reasonably likely to have a Material Adverse Effect on
Bancorp.
(b) Any amount that could be received (whether in cash or property or
the vesting of property) as a result of any of the transactions contemplated
by this Agreement by any employee, officer or director of Bancorp or any of
its affiliates who is a "Disqualified Individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment,
severance or termination agreement, other compensation arrangement or Bancorp
Benefit Plan currently in effect would not be characterized as an "excess
parachute payment" (as such term is defined in Section 280G(b)(1) of the
Code).
(c) No disallowance of a deduction under Section 162(m) of the Code for
employee remuneration of any amount paid or payable by Bancorp or any
Subsidiary of Bancorp under any contract, plan, program, arrangement or
understanding is reasonably likely.
4.11 EMPLOYEES. (a) The Bancorp Disclosure Schedule sets forth a true
and complete list of each material plan, arrangement or agreement regarding
compensation or benefits for any employees, former employees, directors, or
former directors that is maintained as of the date of this Agreement (the
"Bancorp Benefit Plans") by Bancorp, any of its Subsidiaries or by any trade
or business; whether or not incorporated (a "Bancorp ERISA Affiliate"), all
of which together with Bancorp would be deemed a "single employer" within the
meaning of Section 4001 of ERISA.
-22-
<PAGE>
(b) Bancorp has heretofore delivered to West One true and complete
copies of each of the Bancorp Benefit Plans and all related documents,
including but not limited to (i) the actuarial report for such Bancorp
Benefit Plan (if applicable) for each of the last two years, and (ii) the
most recent determination letter from the Internal Revenue Service (if
applicable) for such Bancorp Benefit Plan.
(c) (i) Each of the Bancorp Benefit Plans has been operated and
administered in all material respects in compliance with applicable laws,
including but not limited to ERISA and the Code, (ii) each of the Bancorp
Benefit Plans intended to be "qualified" within the meaning of Section 401(a)
of the Code is so qualified, (iii) with respect to each Bancorp Benefit Plan
that is subject to Title IV of ERISA, the present value of accrued benefits
under such Bancorp Benefit Plan, based upon the actuarial assumptions used
for funding purposes in the most recent actuarial report prepared by such
Bancorp Benefit Plan's actuary with respect to such Bancorp Benefit Plan, did
not, as of its latest valuation date, exceed the then current value of the
assets of such Bancorp Benefit Plan allocable to such accrued benefits, (iv)
no Bancorp Benefit Plan provides benefits, including without limitation death
or medical benefits (whether or not insured), with respect to current or
former employees of Bancorp, its Subsidiaries or any Bancorp ERISA Affiliate
beyond their retirement or other termination of service, other than (w)
coverage mandated by applicable law, (x) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in
Section 3(2) of ERISA, (y) deferred compensation benefits accrued as
liabilities on the books of Bancorp, its Subsidiaries or the Bancorp ERISA
Affiliates or (z) benefits the full cost of which is borne by the current or
former employee (or his beneficiary), (v) no liability under Title IV of
ERISA has been incurred by Bancorp, its Subsidiaries or any Bancorp ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a material risk to Bancorp, its Subsidiaries or any Bancorp ERISA
Affiliate of incurring a material liability thereunder, (vi) no Bancorp
Benefit Plan is a "multiemployer pension plan," as such term is defined in
Section 3(37) of ERISA, (vii) all contributions or other amounts payable by
Bancorp or its Subsidiaries as of the Effective Time with respect to each
Bancorp Benefit Plan in respect of current or prior plan years have been paid
or accrued in accordance with GAAP and Section 412 of the Code, (viii)
neither Bancorp, its Subsidiaries nor any Bancorp ERISA Affiliate has engaged
in a transaction in connection with which Bancorp, its Subsidiaries or any
Bancorp ERISA Affiliate could be subject to either a material civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA or a material tax imposed
pursuant to Section 4975 or 4976 of the Code, and (ix) to the best knowledge
of Bancorp there are no pending, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of the Bancorp
Benefit Plans or any trusts related thereto.
(d) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or
any employee of Bancorp or any of its affiliates from Bancorp or any of its
affiliates under any Bancorp Benefit Plan or otherwise, (ii) materially
increase any benefits otherwise payable under any Bancorp Benefit Plan, or
(iii) result in any acceleration of the time of payment or vesting of any
such benefits to any material extent.
-23-
<PAGE>
4.12 SEC REPORTS. Bancorp has previously made available to West One an
accurate and complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since
January 1, 1993, by Bancorp with the SEC pursuant to the Securities Act or
the Exchange Act (the "Bancorp Reports") and prior to the date hereof and (b)
communication mailed by Bancorp to its shareholders since January 1, 1993,
and prior to the date hereof, and no such registration statement, prospectus,
report, schedule, proxy statement or communication contained any untrue
statement of a material fact or omitted 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, except
that information as of a later date shall be deemed to modify information as
of an earlier date. Bancorp has timely filed all Bancorp Reports and other
documents required to be filed by it under the Securities Act and the
Exchange Act, and, as of their respective dates, all Bancorp Reports complied
in all material respects with the published rules and regulations of the SEC
with respect thereto.
4.13 COMPLIANCE WITH APPLICABLE LAW. (a) Except as disclosed in the
Bancorp Disclosure Schedule, Bancorp and each of its Subsidiaries hold, and
have at all times held, all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, and have complied with and are not in
default in any material respect under any, applicable laws, statutes, orders,
rules, or regulations of any Governmental Entity relating to Bancorp or any
of its Subsidiaries, except where the failure to hold such license,
franchise, permit or authorization or such noncompliance or default would
not, individually or in the aggregate, have a Material Adverse Effect on
Bancorp, and neither Bancorp nor any of its Subsidiaries knows of, or has
received notice of, any material violations of any of the above.
(b) Except as would not have a Material Adverse Effect, (i) no real
property presently or previously owned, operated, or leased by Bancorp or any
of its Subsidiaries or, to the best of their knowledge, securing any
obligations owed to them has been used as a storage or disposal site for
hazardous substances within the meaning of any applicable federal, state, or
local statute, law, rule, or regulation, and no hazardous substances have
been transferred from or to such real property, (ii) no governmental entity
has issued any citation or notice of violation relating to any environmental
matter concerning any real property owned, operated, or leased by Bancorp or
any of its Subsidiaries or, to the best of their knowledge securing any
obligations owed to them, and neither Bancorp nor any of its Subsidiaries has
received any notice that any such real property may or will be included on
any list of areas affected by any release of any hazardous substance or that
it has or may be named as a responsible or potentially responsible party with
respect to any hazardous substance site, and (iii) neither Bancorp nor any of
its Subsidiaries has received any notice of any threatened investigation,
proceeding, or litigation concerning any such real property with respect to
any environmental matter or knows of any basis for any such investigation,
proceeding, or litigation.
4.14 CERTAIN CONTRACTS. (a) Neither Bancorp nor any of its Subsidiaries
is a party to or bound by any contract, arrangement, commitment or
understanding (whether written or oral) (i) with respect to the employment of
any directors, officers, employees or consultants, (ii) that,
-24-
<PAGE>
upon the consummation of the transactions contemplated by this Agreement will
(either alone or upon the occurrence of any additional acts or events) result in
any payment (whether of severance pay or otherwise) becoming due from Bancorp,
West One, the surviving Corporation, or any of their respective Subsidiaries
to any officer or employee thereof, (iii) that is a material contract (as
defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed
after the date of this Agreement that has not been filed or incorporated by
reference in the Bancorp Reports, (iv) that materially restricts the conduct
of any line of business by Bancorp, (v) with or to a labor union or guild
(including any collective bargaining agreement), or (vi) (including any stock
option plan, stock appreciation rights plan, restricted stock plan or stock
purchase 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. Each contract, arrangement, commitment or
understanding of the type described in this Section 4.14(a), whether or not
set forth in the Bancorp Disclosure Schedule, is referred to herein as a
"Bancorp Contract." Neither Bancorp nor any of its Subsidiaries knows of, or
has received notice of, any violation of any Bancorp Contract by any of the
other parties thereto that, individually or in the aggregate, would have a
Material Adverse Effect on Bancorp.
(b) (i) Each Bancorp Contract is valid and binding and in full force and
effect, (ii) Bancorp and each of its Subsidiaries has in all material
respects performed all obligations required to be performed by it to date
under each Bancorp Contract, except where such noncompliance, individually or
in the aggregate, would not have a Material Adverse Effect on Bancorp, and
(iii) no event or condition exists that constitutes or, after notice or lapse
of time, or both, would constitute, a material default on the part of Bancorp
or any of its Subsidiaries or, to the knowledge of Bancorp, on the part of
any other party under any such Bancorp Contract, except where such default,
individually or in the aggregate, would not have a Material Adverse Effect on
Bancorp.
4.15 AGREEMENTS WITH REGULATORY AGENCIES. Neither Bancorp nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or
is a party to any written agreement, consent agreement or memorandum of
understanding with, or is 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 supervisory letter from, or has adopted any board resolutions at the
request of (each, whether or not set forth in the Bancorp Disclosure
Schedule, a "Bancorp Regulatory Agreement"), any Regulatory Agency or other
Governmental Entity that restricts the conduct of its business or that in any
manner relates to its capital adequacy, its credit policies, its management
or its business, nor has Bancorp or any of its Subsidiaries been advised by
any Regulatory Agency or other Governmental Entity that it is considering
issuing or requesting any Regulatory Agreement.
4.16 UNDISCLOSED LIABILITIES. Except for those liabilities that are
fully reflected or reserved against on the consolidated balance sheet of
Bancorp dated as of December 31, 1994, and for liabilities incurred in the
ordinary course of business consistent with past practice, since December 31,
1994, neither Bancorp nor any of its Subsidiaries has incurred any liability
of any
-25-
<PAGE>
nature whatsoever (whether absolute, accrued, contingent or otherwise
and whether due or to become due) that, either alone or when combined with
all similar liabilities, has had, or could reasonably be expected to have, a
Material Adverse Effect on Bancorp.
4.17 POOLING OF INTERESTS. As of the date of this Agreement, Bancorp has
no reason to believe that the Merger will not qualify as a pooling of
interests for accounting purposes.
4.18 INTEREST RATE RISK MANAGEMENT INSTRUMENTS; DERIVATIVES. (a)
Bancorp has heretofore delivered to West One an accurate and complete list of
all Derivative Securities to which Bancorp or any of its Subsidiaries is a
party or any of their properties may be subject, or that are owned by Bancorp
or any of its Subsidiaries. Neither Bancorp nor any of its Subsidiaries has
purchased any Derivative Security for, or invested in any Derivative Security
any assets of, any account or person for which it or any such Subsidiary acts
as a trustee, fiduciary, or investment advisor.
(b) All Derivative Securities to which Bancorp or any of its
Subsidiaries is a party or to which any of their properties or assets may be
subject were entered into in the ordinary course of business and, to its
knowledge, in accordance with prudent banking practice and applicable rules,
regulations, and policies of the Regulatory Agencies and with counterparties
believed to be financially responsible at the time and are legal, valid, and
binding obligations enforceable in accordance with their terms (except as may
be limited by bankruptcy, insolvency, moratorium, reorganization, or similar
laws affecting the rights of creditors generally, and the availability of
equitable remedies), and are in full force and effect. Bancorp and each of
its Subsidiaries has duly performed in all material respects all of its
obligations thereunder, and, to its knowledge, there are no breaches,
violations, or defaults or allegations or assertions of such by any party
thereunder.
4.19 STATE TAKEOVER LAWS. The Board of Directors of Bancorp has taken
such actions as are necessary such that the provisions of Sections 60.825 to
60.845 of the Oregon Business Corporation Act regarding business combinations
and the Oregon Control Share Act (Sections 60.801 to 60.813) will not apply
to this Agreement or the Option Agreements or any of the transactions
contemplated hereby or thereby.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 CONDUCT OF WEST ONE BUSINESSES PRIOR TO THE EFFECTIVE TIME. During
the period from the date of this Agreement to the Effective Time, except as
expressly contemplated or permitted by this Agreement or the West One Option
Agreement, West One shall, and shall cause its Subsidiaries to, (i) conduct
its business in the usual, regular and ordinary course consistent with past
practice, (ii) use reasonable best efforts to maintain and preserve intact
its business organization, employees and advantageous business relationships
and retain the services of its officers and key employees and (iii) take no
action that would adversely affect or delay the ability of West One or
Bancorp to obtain any necessary approvals of any Regulatory Agency
-26-
<PAGE>
or other governmental authority required for the transactions contemplated
hereby or to perform its covenants and agreements under this Agreement or the
West One Option Agreement.
5.2 WEST ONE FORBEARANCES. During the period from the date of this
Agreement to the Effective Time, except as expressly contemplated or
permitted by this Agreement or the West One Option Agreement, West One shall
not, and shall not permit any of its Subsidiaries to, without the prior
written consent of Bancorp:
(a) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money (other than
short-term indebtedness incurred to refinance short-term indebtedness
and indebtedness of West One or any of its Subsidiaries to West One or
any of its Subsidiaries or fund redemption of debentures or repurchases
of stock related thereto; it being understood and agreed that incurrence
of indebtedness in the ordinary course of business shall include, without
limitation, the creation of deposit liabilities, purchases of federal funds,
sales of certificates of deposit and entering into repurchase agreements),
assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or
other entity, or make any loan or advance;
(b) adjust, split, combine or reclassify any capital stock;
make, declare or pay any dividend or make any other distribution on,
or directly or indirectly redeem, purchase or otherwise acquire, any
shares of its capital stock or any securities or obligations,
convertible into or exchangeable for any shares of its capital stock,
or grant or issue any stock appreciation rights or grant or issue to
any individual, corporation or other entity any right to acquire any
shares of its capital stock (except for regular quarterly cash dividends
at the rate not in excess of the rate being paid at the date of this
Agreement as such rate may be increased at times and in amounts as are
consistent with past practice and except for dividends paid by any of
its wholly owned Subsidiaries or any of their wholly owned Subsidiaries);
or issue any additional shares of capital stock or securities or
obligations convertible into or exchangeable for shares of its capital
stock except pursuant to (A) the exercise of stock options outstanding
as of the date hereof, (B) the West One Option Agreement, (C) the West
One Rights Agreement; (D) conversion of the Convertible Debentures, or
(E) the West One DRIP until the West One DRIP is terminated, which shall
occur as soon as practicable after the date hereof;
(c) sell, transfer, mortgage, encumber or otherwise dispose of any
of its properties or assets to any individual, corporation or other
entity other than a direct or indirect wholly owned Subsidiary, or
cancel, release or assign any indebtedness to any such person or any
claims held by any such
-27-
<PAGE>
person, except in the ordinary course of business consistent with past
practice or pursuant to contracts or agreements in force at the date of
this Agreement;
(d) except for transactions in the ordinary course of business
consistent with past practice, make any material investment either by
purchase of stock or securities, contributions to capital, property
transfers, or purchase of any property or assets of any other
individual, corporation or other entity other than a wholly owned
Subsidiary thereof;
(e) except for transactions in the ordinary course of business
consistent with past practice, enter into or terminate any material
contract or agreement, or make any change in any of its material leases
or contracts, other than renewals of contracts and leases without
material adverse changes of terms;
(f) increase in any manner the compensation or fringe benefits
of any of its employees other than increases for employees in the
ordinary course of business consistent with past practice or pay any
pension or retirement allowance not required by any existing plan or
agreement to any such employees or become a party to, amend or commit
itself to any pension, retirement, profit-sharing or welfare benefit
plan or agreement or employment agreement with or for the benefit of
any employee other than amendments required to comply with applicable
legal requirements or accelerate the vesting of any stock options or
other stock-based compensation;
(g) solicit, encourage or authorize any individual, corporation
or other entity to solicit from any third party any inquiries or
proposals relating to the disposition of its business or assets, or the
acquisition of its voting securities, or the merger of it or any of its
Subsidiaries with any corporation or other entity other than as provided
by this Agreement (and West One shall promptly notify Bancorp of all of
the relevant details relating to all inquiries and proposals which it may
receive relating to any of such matters) or unless West One shall have
determined based upon the written advice of counsel that fiduciary duties
under applicable law require otherwise, participate in any negotiations
concerning or otherwise facilitate any such transaction;
(h) settle any claim, action or proceeding involving material money
damages, except in the ordinary course of business consistent with past
practice;
(i) take any action that would prevent or impede the Merger from
qualifying (i) for pooling of interests accounting treatment or (ii) as
a reorganization within the meaning of Section 368 of the Code; provided,
-28-
<PAGE>
however, that nothing contained herein shall limit the ability of West
One to exercise its rights under the Bancorp Option Agreement;
(j) amend its articles of incorporation or its bylaws;
(k) other than in prior consultation with Bancorp, restructure
or materially change its investment securities portfolio or its gap
position, through purchases, sales or otherwise, or the manner in which
the portfolio is classified or reported;
(l) take any action that is intended or may reasonably be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions to the Merger
set forth in Article VII not being satisfied or in a violation of any
provision of this Agreement, except, in every case, as may be required
by applicable law; or
(m) agree to, or make any commitment to, take any of the actions
prohibited by this Section 5.2.
5.3 BANCORP FORBEARANCES. During the period from the date of this
Agreement to the Effective Time, except as expressly contemplated or
permitted by this Agreement or the Bancorp Option Agreement, Bancorp
shall not, and shall not permit any of its Subsidiaries to, without the
prior written consent of West One:
(a) reclassify any of its capital stock or make, declare, or pay
any dividend or make any other distribution on, any shares of its capital
stock or any securities or obligations, convertible into or exchangeable
for any shares of its capital stock (except for regular quarterly cash
dividends at a rate not in excess of such rate as Bancorp from time to
time adopts as its regular quarterly dividend rate and except for
dividends paid by any of its wholly owned Subsidiaries or any of their
wholly owned Subsidiaries);
(b) take any action that would prevent or impede the Merger from
qualifying (i) for pooling of interests accounting treatment or (ii)
as a reorganization within the meaning of Section 368 of the Code;
provided, however, that nothing contained herein shall limit the ability
of Bancorp to exercise its rights under the West One Option Agreement;
(c) take any action that is intended or may reasonably be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions of the Merger set
forth in this Article VII not being satisfied or in a violation of any
provision
-29-
<PAGE>
of this Agreement, except, in every case, as may be required
by applicable law;
(d) take any action that would adversely affect or delay its
ability to obtain any necessary approvals of any Regulatory Agency or
other governmental authority required for the transactions contemplated
hereby or to perform its covenants and agreements under this Agreement or
the Bancorp Option Agreement;
(e) amend its articles of incorporation except with respect to the
establishment of one or more series of preferred stock; or
(f) agree to, or make any commitment to, take any of the actions
prohibited by this Section 5.3.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 REGULATORY MATTERS. (a) Bancorp and West One shall promptly prepare
and file with the SEC the Joint Proxy Statement and Bancorp shall promptly
prepare and file with the SEC the S-4, in which the Joint Proxy Statement
will be included as a prospectus. Each of Bancorp and West One shall use all
reasonable efforts to have the S-4 declared effective under the Securities
Act as promptly as practicable after such filing, and Bancorp and West One
shall thereafter mail the Joint Proxy Statement to their respective
shareholders. Bancorp shall also use all reasonable efforts to obtain all
necessary state securities law or "Blue Sky" permits and approvals required
to carry out the transactions contemplated by this Agreement, and West One
shall furnish all information concerning West One and the holders of West One
Common Stock as may be reasonably requested in connection with any such
action.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Merger), and to comply with the
terms and conditions of all such permits, consents, approvals and
authorizations of all such Governmental Entities. Bancorp and West One shall
have the right to review in advance, and to the extent practicable each will
consult the other on, in each case subject to applicable laws relating to the
exchange of information, all the information relating to West One or Bancorp,
as the case may be, and any of their respective Subsidiaries, which appear in
any filing made with, or written materials submitted to, any third party or
any Governmental Entity in connection with the transactions contemplated by
this Agreement. In exercising the foregoing right, each of the parties
hereto shall act reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and
-30-
<PAGE>
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and
each party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein.
(c) Bancorp and West One 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 Joint Proxy Statement, the S-4
or any other statement, filing, notice or application made by or on behalf of
Bancorp, West One or any of their respective Subsidiaries to any Governmental
Entity in connection with the Merger and the other transactions contemplated
by this Agreement.
(d) Bancorp and West One shall promptly advise each other upon receiving
any communication from any Governmental Entity whose consent or approval is
required for consummation of the transactions contemplated by this Agreement
which causes such party to believe that there is a reasonable likelihood that
any Requisite Regulatory Approval will not be obtained or that the receipt of
any such approval will be materially delayed.
6.2 ACCESS TO INFORMATION. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each of Bancorp and
West One shall, and shall cause each of their respective Subsidiaries to,
afford to the officers, employees, accountants, counsel and other
representatives of the other party, access, during normal business hours
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, each of Bancorp
and West One shall, and shall cause their respective Subsidiaries to, make
available to the other party (i) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of federal securities laws or federal or
state banking laws, savings and loan or savings association laws (other than
reports or documents which Bancorp or West One, as the case may be, is not
permitted to disclose under applicable law) and (ii) all other information
concerning its business, properties and personnel as such party may
reasonably request. Neither Bancorp nor West One nor any of their respective
Subsidiaries shall be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of Bancorp's or West One's, as the case may be, customers, jeopardize
the attorney-client privilege of the institution in possession or control of
such information or contravene any law, rule, regulation, order, judgment,
decree, fiduciary duty or binding agreement entered into prior to the date of
this Agreement. The parties hereto will make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply.
(b) Each of Bancorp and West One shall hold all information furnished by
the other party or any of such party's Subsidiaries or representatives
pursuant to Section 6.2(a) in confidence to the extent required by, and in
accordance with, the provisions of the confidentiality agreements, dated
March 31, 1995, between Bancorp and West One (the "Confidentiality
Agreements").
-31-
<PAGE>
(c) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other
set forth herein.
6.3 SHAREHOLDERS' APPROVALS. Each of Bancorp and West One shall call a
meeting of its shareholders to be held as soon as practicable for the purpose
of voting upon the requisite shareholder approvals required in connection
with this Agreement and the Merger, and each shall use its best efforts to
cause such meetings to occur on the same date. Subject to fiduciary
requirements under applicable law, the boards of directors of West One and
Bancorp shall recommend such approval to their respective shareholders and
shall use reasonable efforts to solicit such approval.
6.4 LEGAL CONDITIONS TO MERGER. Each of Bancorp and West One shall, and
shall cause its Subsidiaries to, use their reasonable best efforts (a) to
take, or cause to be taken, all actions necessary, proper, or advisable to
comply promptly with all legal requirements which may be imposed on such
party or its Subsidiaries with respect to the Merger or the Subsidiary Merger
and, subject to the conditions set forth in Article VII hereof, to consummate
the transactions contemplated by this Agreement and (b) 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 any other
third party which is required to be obtained by West One or Bancorp or any of
their respective Subsidiaries in connection with the Merger and the
Subsidiary Merger and the other transactions contemplated by this Agreement.
6.5 AFFILIATES; PUBLICATION OF COMBINED FINANCIAL RESULTS. (a) Each of
Bancorp and West One shall use its best efforts to cause each director,
executive officer and other person who is an "affiliate" (for purposes of
Rule 145 under the Securities Act and for purposes of qualifying the Merger
for "pooling-of-interests" accounting treatment) of such party to deliver to
the other party hereto, as soon as practicable after the date of this
Agreement, and prior to the date of the shareholders meetings called by
Bancorp and West One to approve this Agreement, a written agreement, in the
form of Exhibit 6.5(a) hereto, providing that such person will not sell,
pledge, transfer or otherwise dispose of any shares of Bancorp Common Stock
or West One Common Stock held by such "affiliate" and, in the case of the
"affiliates" of West One, the shares of Bancorp Common Stock to be received
by such "affiliate" in the Merger: (1) in the case of shares of Bancorp
Common Stock to be received by "affiliates" of West One in the Merger, except
in compliance with the applicable provisions of the Securities Act and the
rules and regulations thereunder; and (2) during the period commencing 30
days prior to the Merger and ending at the time of the publication of
financial results covering at least 30 days of combined operations of Bancorp
and West One. Notwithstanding any other provision of this Agreement, no
certificate for Bancorp Common Stock shall be delivered in exchange for West
One Certificates held by any such "affiliate" who shall not have executed and
delivered such an agreement.
(b) Bancorp shall use its best efforts to publish no later than ninety
(90) days after the end of the first month after the Effective Time in which
there are at least thirty (30) days of post-Merger combined operations (which
month may be the month in which the Effective
-32-
<PAGE>
Time occurs), combined sales and net income figures as contemplated by and in
accordance with the terms of SEC Accounting Series Release No. 135.
6.6 STOCK EXCHANGE LISTING OF SHARES. Bancorp shall use its best
efforts to cause the shares of Bancorp Common Stock to be issued in the
Merger to be approved for listing on the NASDAQ Stock Market National Market
System, subject to official notice of issuance, prior to the Effective Time.
6.7 EMPLOYEE BENEFIT PLANS. (a) Within a reasonable time after the
Effective Time, and subject to applicable law, Bancorp shall provide to the
employees of Bancorp and its Subsidiaries who formerly were employees of West
One and its Subsidiaries employee benefits, including but not limited to
pension plans, thrift plans, management incentive plans, group life plans,
accidental death and dismemberment plans, travel accident plans, medical and
hospitalization plans and long term disability plans, substantially the same
as those provided to similarly situated employees of Bancorp and its
Subsidiaries. From and after the Effective Time, and until Bancorp has
accomplished the actions contemplated by the preceding sentence, employees of
Bancorp or its Subsidiaries who were employees of West One or its
Subsidiaries immediately prior to the Effective Time shall be provided with
employee benefits under employee benefit plans of West One, employee benefit
plans of Bancorp, or some combination thereof, as Bancorp shall reasonably
deem appropriate in order to accomplish an orderly transition of benefits.
From and after the Effective Time, employees of Bancorp or its Subsidiaries
who were employees of the West One and its Subsidiaries immediately prior to
the Effective Time shall receive full credit for all purposes under such
plans, except the accrual of benefits, for their length of service prior to
the Effective Time with the West One or any of its Subsidiaries (and any
predecessors thereto) to the extent such service would be recognized under
such plans, if such service was with Bancorp and its Subsidiaries or if
greater, to the extent such service is recognized under similar plans of West
One and its Subsidiaries. From and after the Effective Time, Bancorp shall
maintain in effect the benefits provided as of the date of this Agreement to
employees of West One who are participants in the West One Bancorp Premier
Life Insurance Plan (the "Life Insurance Plan"). West One shall not permit
any additional employees to participate in the Life Insurance Plan or
increase the benefits provided to any participants thereunder after the date
of this Agreement.
(b) Bancorp agrees to honor in accordance with their terms (i) all West
One Benefit Plans and (ii) all contracts, arrangements, commitments, or
understandings described in Section 3.14(a)(i) disclosed on the West One
Disclosure Schedule, and (iii) all benefits vested thereunder as of the
Effective Time; provided, however, that nothing in this sentence shall be
interpreted as preventing Bancorp from amending, modifying or terminating any
West One Benefit Plans, contracts, arrangements, commitments or
understandings, in accordance with their terms. The provisions of this
Section 6.7 are intended to be for the benefit for, and enforceable by, each
of the beneficiaries of or parties to such plans, contracts, arrangements,
commitments, and understandings.
(c) West One shall take all action necessary to cause each outstanding
option to purchase West One Common Stock held by directors or employees of
West One and its
-33-
<PAGE>
Subsidiaries (and any related stock appreciation right),
together with the relevant stock option plans of West One, to be amended at
or prior to the Effective Time so that from and after the Effective Time, the
stock option plans shall continue and there shall be substituted for each
option (or stock appreciation right) an option to purchase (or the right to
receive appreciation in market value of) shares of Bancorp Common Stock
rather than West One Common Stock. The number of such shares of Bancorp
Common Stock covered by the substituted option (and stock appreciation right)
shall be computed by applying the Exchange Ratio to the shares of West One
Common Stock covered by the option (or stock appreciation right) with any
resulting fractional shares to be rounded down to the next whole share. The
exercise price per share of the substituted option shall be equal to the
exercise price per share of West One Common Stock under the original option
divided by the Exchange Ratio with the result rounded up to the next cent.
All such options (and stock appreciation rights) shall remain in full force
and effect without other alteration, including acceleration of exercisability
or conferring any right to receive cash by reason of the Merger, except as
provided by their terms. Bancorp shall cooperate as necessary to permit the
taking of the actions specified in this paragraph (c).
6.8 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a) In the
event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, including, without
limitation, any such claim, action, suit, proceeding or investigation in
which any person who is now, or has been at any time prior to the date of
this Agreement, or who becomes prior to the Effective Time, a director or
officer of West One or any of its Subsidiaries (the "Indemnified Parties")
is, or is threatened to be, made a party based in whole or in part on, or
arising in whole or in part out of, or pertaining to (i) the fact that he is
or was a director or officer of West One, any of the West One Subsidiaries or
any of their respective predecessors or (ii) this Agreement, the Option
Agreements or any of the transactions contemplated hereby or thereby, whether
in any case asserted or arising before or after the Effective Time, the
parties hereto agree to cooperate and use their best efforts to defend
against and respond thereto. It is understood and agreed that after the
Effective Time, Bancorp shall indemnify and hold harmless, as and to the
fullest extent permitted by law, each such Indemnified Party against any
losses, claims, damages, liabilities, costs, expenses (including reasonable
attorney s fees and expenses in advance of the final disposition of any
claim, suit, proceeding or investigation to each Indemnified Party to the
fullest extent permitted by law upon receipt of any undertaking required by
applicable law), judgments, fines and amounts paid in settlement in
connection with any such threatened or actual claim, action, suit, proceeding
or investigation and in the event of any such threatened or actual claim,
action, suit, proceeding, or investigation (whether asserted or arising
before or after the Effective Time), the Indemnified Parties may retain
counsel reasonably satisfactory to them after consultation with Bancorp;
provided, however, that (1) Bancorp shall have the right to assume the
defense thereof and upon such assumption Bancorp shall not be liable to any
Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by any Indemnified Party in connection with
the defense thereof, except that if Bancorp elects not to assume such defense
or counsel for the Indemnified Parties reasonably advises the Indemnified
Parties that there are issues which raise conflicts of interest between
Bancorp and the Indemnified Parties, the Indemnified Parties may retain
counsel reasonably satisfactory to them after consultation with Bancorp, and
Bancorp shall pay the reasonable fees and expenses of such counsel for the
-34-
<PAGE>
Indemnified Parties, (2) Bancorp shall be obligated pursuant to this
paragraph to pay for only one firm of counsel for all Indemnified Parties,
unless an Indemnified Party shall have reasonably concluded, based on the
advice of counsel, that in order to be adequately represented, separate
counsel is necessary for such Indemnified Party, in which case, Bancorp shall
be obligated to pay for such separate counsel, (3) Bancorp shall not be
liable for any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld) and (4) Bancorp shall have no
obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination
shall have become final and nonappealable, that indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. Any Indemnified Party wishing to claim Indemnification under
this Section 6.8, upon learning of any such claim, action, suit, proceeding
or investigation, shall notify Bancorp thereof, provided that the failure to
so notify shall not affect the obligations of Bancorp under this Section 6.8
except to the extent such failure to notify materially prejudices Bancorp.
Bancorp's obligations under this Section 6.8 continue in full force and
effect for a period of six (6) years from the Effective Time; provided,
however, that all rights to indemnification in respect of any claim (a
"Claim") asserted or made within such period shall continue until the final
disposition of such Claim and provided further that Bancorp shall have the
right of set-off against any payments required to be made by Bancorp to an
Indemnified Party pursuant to this Section 6.8(a) to the extent that such
Indemnified Party shall have received the indemnification to which such
Indemnified Party is entitled from an insurer under a directors' and officers'
liability insurance policy maintained by West One or Bancorp.
Notwithstanding the foregoing provisions of this Section 6.8(a), Bancorp
shall have no obligation to indemnify the Indemnified Parties (or advance
expenses to them) except to the extent they would be entitled to such
indemnification (or advance) under the provisions of Bancorp's Articles of
Incorporation or Bylaws or any agreement to which Bancorp is a party as in
effect on the date of this Agreement if such Indemnified Parties had been
officers or directors of Bancorp at the time of the event giving rise to such
indemnification.
(b) Bancorp shall use its best efforts to cause the persons serving as
officers and directors of West One immediately prior to the Effective Time to
be covered for a period of six (6) years from the Effective Time by the
directors' and officers' liability insurance policy maintained by Bancorp, if
any (provided that Bancorp may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions that are not less
advantageous than such policy) with respect to acts or omissions occurring
prior to the Effective Time which were committed by such officers and
directors in their capacity as such; provided, however, that in no event
shall Bancorp be required to expend more than 200 percent of the current
amount expended by West One (the "Insurance Amount") to maintain or procure
insurance coverage pursuant hereto and further provided that if Bancorp is
unable to maintain or obtain the insurance called for by this Section 6.8(b),
Bancorp shall use its best efforts to obtain as much comparable insurance as
is available for the Insurance Amount.
(c) In the event Bancorp or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to the
extent necessary, proper
-35-
<PAGE>
provision shall be made so that the successors and assigns of Bancorp assume
the obligations set forth in this section.
(d) The provisions of this Section 6.8 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
6.9 ADDITIONAL AGREEMENTS. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the purposes of
this Agreement (including, without limitation, any merger between a
Subsidiary of Bancorp and a Subsidiary of West One) or to vest the Surviving
Corporation with full title to all properties, assets, rights, approvals,
immunities and franchises of any of the parties to the Merger, the proper
officers and directors of each party to this Agreement and their respective
Subsidiaries shall take all such necessary action as may be reasonably
requested by, and at the sole expense of, Bancorp. Pending the Effective
Time, Bancorp and West One shall consult with one another and cooperate as
reasonably requested by Bancorp to facilitate the integration of their
respective operations as promptly as practicable after the Effective Time.
Such cooperation shall include, if requested, the entering into of merger
agreements between or among their respective Subsidiaries and the filing of
appropriate regulatory applications with respect thereto (conditioned upon
the effectiveness of the Merger), communicating with employees, consultation
regarding material contracts, renewals, and capital commitments to be entered
into by West One and its Subsidiaries, making arrangements for employee
training prior to the Effective Time and taking action to facilitate an
orderly conversion of data processing operations to occur promptly following
the Effective Time, provided that the cooperation required under this Section
6.9 shall not be deemed to require actions that would materially delay or
impede the Merger.
6.10 ADVICE OF CHANGES. Bancorp and West One shall promptly advise the
other party of any change or event having, or that would be reasonably likely
to have, 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.
6.11 DIVIDENDS. After the date of this Agreement, each of Bancorp and
West One shall coordinate with the other the declaration of any dividends in
respect of Bancorp Common Stock and West One Common Stock and the record
dates and payment dates relating thereto, it being the intention of the
parties hereto that holders of Bancorp Common Stock or West One Common Stock
shall not receive two dividends, or fail to receive one dividend, for any
single calendar quarter with respect to their shares of Bancorp Common Stock
and/or West One Common Stock and any shares of Bancorp Common Stock any such
holder receives in exchange therefor in the Merger.
-36-
<PAGE>
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following
conditions:
(a) SHAREHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the
respective requisite affirmative votes of the holders of West One Common
Stock and Bancorp Common Stock entitled to vote thereon.
(b) NASDAQ LISTING. The shares of Bancorp Common Stock that shall
be issued to the shareholders of West One upon consummation of the Merger
shall have been authorized for listing on the Nasdaq Stock Market National
Market System subject to official notice of issuance.
(c) OTHER APPROVALS. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained
without the imposition of any conditions that are in Bancorp s reasonable
judgment unduly burdensome and shall remain in full force and effect and
all statutory waiting periods in respect thereof shall have expired (all
such approvals and the expiration of all such waiting periods being
referred to herein as the "Requisite Regulatory Approvals"), and all
other material consents or approvals of any third party required in
connection with the consummation of the Merger as set forth in the West
One Disclosure Schedule or Bancorp Disclosure Schedule shall have been
obtained. For purposes of this paragraph, a divestiture required as a
condition to any regulatory approval shall not be unduly burdensome if
such divestiture is consistent with Department of Justice and Federal
Reserve Board guidelines, policies, and practices regarding the merger
of bank holding companies that have been utilized in transactions that
have recently been reviewed prior to the date of this Agreement.
(d) FORM S-4. The S-4 shall have become effective under the
Securities Act and no stop order 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.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order, injunction
or decree issued by any court or agency of competent jurisdiction or other
legal restraint or prohibition (an "Injunction") preventing the
consummation of the Merger or any of the other transactions contemplated
by this Agreement shall be in effect. No statute, rule, regulation,
order, injunction or decree shall have been enacted, entered, promulgated
or enforced by any
-37-
<PAGE>
Governmental Entity which prohibits, restricts or makes illegal consummation
of the Merger.
(f) FEDERAL TAX OPINIONS. Bancorp shall have received an opinion
of Miller, Nash, Wiener, Hager & Carlsen, counsel to Bancorp, and West
One shall have received an opinion of Wachtell, Lipton, Rosen & Katz,
counsel to West One, in form and substance reasonably satisfactory to
Bancorp and West One, dated as of the Effective Time, substantially to
the effect that, on the basis of facts, representations and assumptions
set forth in such opinion which are consistent with the state of facts
existing at the Effective Time, the Merger will be treated for Federal
income tax purposes as part of one or more reorganizations within the
meaning of Section 368 of the Code and that accordingly:
(i) No gain or loss will be recognized by Bancorp
or West One as a result of the Merger;
(ii) No gain or loss will be recognized by the
shareholders of West One who exchange their West One
Common Stock solely for Bancorp Common Stock pursuant
to the Merger (except with respect to cash received in lieu of
a fractional share interest in Bancorp Common Stock); and
(iii) The tax basis of the Bancorp Common Stock
received by shareholders who exchange all of their West One
Common Stock solely for Bancorp Common Stock in the
Merger will be the same as the tax basis of the West One
Common Stock surrendered in exchange therefor (reduced by
any amount allocable to a fractional share interest for which
cash is received).
In rendering such opinion, counsel may require and
rely upon representations contained in certificates of officers
of Bancorp, West One and others.
(g) POOLING OF INTERESTS. Bancorp and West One shall each have
received letters from Deloitte & Touche LLP and Coopers & Lybrand L.L.P.,
respectively, addressed to Bancorp and West One, respectively, to the
effect that the Merger will qualify for "pooling of interests" accounting
treatment.
7.2 CONDITIONS TO OBLIGATIONS OF BANCORP. The obligation of Bancorp
to effect the Merger is also subject to the satisfaction or waiver by
Bancorp at or prior to the Effective Time of the following conditions:
-38-
<PAGE>
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of West One 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. Bancorp shall have received a certificate signed on
behalf of West One by the Chief Executive Officer and the Chief Financial
Officer of West One to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF WEST ONE. West One 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 Bancorp shall have received a certificate signed on behalf of West
One by the Chief Executive Officer and the Chief Financial Officer of
West One to such effect.
(c) WEST ONE RIGHTS AGREEMENT. The rights issued pursuant to
the West One Rights Agreement shall not have been become nonredeemable,
exercisable, distributed or triggered pursuant to the terms of such
agreement.
7.3 CONDITIONS TO OBLIGATIONS OF WEST ONE. The obligation of West
One to effect the Merger is also subject to the satisfaction or waiver by
West One at or prior to the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Bancorp 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. West One shall have received a certificate signed on
behalf of Bancorp by the Chief Executive Officer and the Chief Financial
Officer of Bancorp to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF BANCORP. Bancorp 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 West One shall have received a certificate signed on behalf of
Bancorp by the Chief Executive Officer and the Chief Financial Officer
of Bancorp to such effect.
-39-
<PAGE>
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented
in connection with the Merger by the shareholders of West One:
(a) by mutual consent of Bancorp and West One in a written
instrument, if the Board of Directors of each so determines by a vote
of a majority of the members of its entire Board;
(b) by either the Board of Directors of Bancorp or the Board of
Directors of West One (i) if any Governmental Entity which must grant a
Requisite Regulatory Approval has denied approval of the Merger and such
denial has become final and nonappealable or (ii) any Governmental Entity
of competent jurisdiction shall have issued a final nonappealable order
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement;
(c) by either the Board of Directors of Bancorp or the Board of
Directors of West One if the Merger shall not have been consummated on
or before April 30, 1996, unless the failure of the Closing to occur by
such date shall be due to the breach by the party seeking to terminate
this Agreement of any representation, warranty, covenant, or other
agreement of such party set forth herein;
(d) by either the Board of Directors of Bancorp or the Board of
Directors of West One (provided that the terminating party is not then in
material breach of any representation, warranty, covenant or other
agreement contained herein) if there shall have been a material breach
of any of the covenants or agreements or any of the representations or
warranties set forth in this Agreement on the part of the other party,
which breach is not cured within forty-five (45) days following written
notice to the party committing such breach, or which breach, by its
nature, cannot be cured prior to the Closing; or
(e) by either Bancorp or the West One if any approval of the
shareholders of Bancorp or the West One required for the consummation of
the Merger shall not have been obtained by reason of the failure to obtain
the required vote at a duly held meeting of shareholders or at any
adjournment or postponement thereof.
8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Bancorp or West One as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect, and none of
Bancorp, West One, any of their respective Subsidiaries or any
-40-
<PAGE>
of the officers or directors of any of them shall have any liability of any
nature whatsoever hereunder, or in connection with the transactions contemplated
hereby, except (i) Sections 6.2(b), 8.2, 9.2 and 9.3, shall survive any
termination of this Agreement, and (ii) notwithstanding anything to the
contrary contained in this Agreement, neither Bancorp nor West One shall be
relieved or released from any liabilities or damages arising out of its
intentional or willful breach of any provision of this Agreement.
8.3 AMENDMENT. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized
by their respective Boards of Directors, at any time before or after approval
of the matters presented in connection with the Merger by the shareholders of
West One; provided, however, that after any approval of the transactions
contemplated by this Agreement by West One's shareholders, there may not be,
without further approval of such shareholders, any amendment of this
Agreement that reduces the amount or changes the form of the consideration to
be delivered to the West One shareholders hereunder other than as
contemplated by this Agreement. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto.
8.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, and (c) waive
compliance with any of the agreements or conditions contained herein;
provided, however, that after any approval of the transactions contemplated
by this Agreement by West One's shareholders, there may not be, without
further approval of such shareholders, any extension or waiver of this
Agreement or any portion thereof which reduces the amount or changes the form
of the consideration to be delivered to the West One shareholders hereunder
other than as contemplated by this Agreement. 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, but such extension or
waiver or failure to insist on strict compliance with an obligation,
covenant, agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 CLOSING. Subject to the terms and conditions of this Agreement and
the Merger Agreement, the closing of the Merger (the "Closing") will take
place at 10 a.m. on a date to be specified by the parties, which shall be no
later than five business days after the satisfaction or waiver (subject to
applicable law) of the latest to occur of the conditions set forth in Article
VII hereof (the "Closing Date").
9.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, AND AGREEMENTS. None of
the representations, warranties, covenants, and agreements in this Agreement
or in any instrument delivered pursuant to this Agreement (other than
pursuant to the Option Agreements, which shall
-41-
<PAGE>
terminate in accordance with their terms), including any rights arising out of
any breach of such representations, warranties, covenants, and agreements, shall
survive the Effective Time, except for those covenants and agreements contained
herein and therein that by their terms apply in whole or in part after the
Effective Time.
9.3 EXPENSES. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense; provided, however, that the costs and expenses of
printing and mailing the Joint Proxy Statement, and all filing and other fees
paid to the SEC in connection with the Merger, shall be borne equally by
Bancorp and West One.
9.4 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt
requested), or delivered by an express courier (with confirmation) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Bancorp, to:
U. S. Bancorp
111 S.W. Fifth Avenue, T-31
Portland, Oregon 97204
Facsimile: (503) 275-3452
Attention: Gerry B. Cameron
with copies to:
U. S. Bancorp
111 S.W. Fifth Avenue, T-31
Portland, Oregon 97204
Facsimile: (503) 275-3452
Attention: Robert D. Geddes
Miller, Nash, Wiener, Hager & Carlsen
111 S.W. Fifth Avenue
Portland, Oregon 97204
Facsimile: (503) 224-0155
Attention: John J. DeMott, Esq.
and
-42-
<PAGE>
(b) if to West One, to:
West One Bancorp
101 South Capitol Boulevard
Post Office Box 8247
Boise, Idaho 83733
Facsimile: (208) 383-3858
Attention: Daniel R. Nelson
with copies to:
West One Bancorp
101 South Capitol Boulevard
Post Office Box 8247
Boise, Idaho 83733
Facsimile: (208) 383-3858
Attention: Dwight V. Board
Wachtell, Lipton, Rosen & Katz
51 West 52nd
New York, New York 10019
Facsimile: (212) 403-2000
Attention: Edward D. Herlihy, Esq.
9.5 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," and "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation." No provision of this Agreement shall be construed to
require West One, Bancorp, or any of their respective Subsidiaries or
affiliates to take any action that would violate any applicable law, rule, or
regulation. Any exception to the representations and warranties of West One
or Bancorp, respectively, contained in the West One Disclosure Schedule or
Bancorp Disclosure Schedule, as the case may be, shall be effective only as
to the particular sections of this Agreement specifically referenced in such
exception.
9.6 COUNTERPARTS. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
9.7 ENTIRE AGREEMENT. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and
-43-
<PAGE>
understandings, both written and oral, among the parties with respect to the
subject matter hereof other than the Option Agreements and the Confidentiality
Agreements.
9.8 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Oregon, without regard to any
applicable conflicts of law rules thereof.
9.9 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provision of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
9.10 PUBLICITY. Except as otherwise required by applicable law or the
rules of the Nasdaq Stock Market, neither Bancorp nor West One shall, or
shall permit any of its Subsidiaries to, issue or cause the publication of
any press release or other public announcement with respect to, or otherwise
make any public statement concerning, the transactions contemplated by this
Agreement without the consent of the other party, which consent shall not be
unreasonably withheld.
9.11 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations shall be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior written consent
of the other parties. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by the parties
and their respective successors and assigns. Except as otherwise
specifically provided in Section 6.7(b) and Section 6.8 hereof, this
Agreement (including the documents and instruments referred to herein) is not
intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
IN WITNESS WHEREOF, Bancorp and West One have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the
date first above written.
U. S. BANCORP
By /S/ GERRY B. CAMERON
Title Chairman of the Board and
Chief Executive Officer
WEST ONE BANCORP
By /S/ DANIEL R. NELSON
Title Chairman and Chief Executive Officer
-44-
<PAGE>
EXHIBIT 6.5(a) - FORM OF AFFILIATE LETTER
[Company]
[_____________________]
[_____________________]
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be
an "affiliate" of __________________ ("Company"), as the term "affiliate" is
(i) defined for purposes of paragraphs (c) and (d) of Rule 145 of the Rules
and Regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended
(the "Act"), and/or (ii) used in and for purposes of Accounting Series
Releases 130 and 135, as amended, of the Commission. Pursuant to the terms
of the Agreement and Plan of Merger dated as of May ___, 1995 (the
"Agreement"), between U. S. Bancorp ("Bancorp"), an Oregon corporation, and
West One Bancorp, an Idaho corporation ("West One"), West One will be merged
with and into Bancorp (the "Merger").
As a result of the Merger, I may receive shares of Common Stock, par
value $5 per share ("Bancorp Common Stock") in exchange for, respectively,
shares (or options for shares or rights to receive appreciation in market
value of shares) of West One Common Stock, par value $1 per share ("West One
Common Stock") owned by me.
I represent, warrant and covenant to Company that in the event I
receive any Bancorp Common Stock as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of
the Bancorp Common Stock in violation of the Act or the Rules and
Regulations.
B. I have carefully read this letter and the Agreement and
discussed its requirements and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of Bancorp Common Stock
to the extent I felt necessary, with my counsel or counsel for Company.
C. I have been advised that the issuance of Bancorp Common
Stock to me pursuant to the Merger has been registered with the Commission
under the Act on a Registration Statement on Form S-4. However, I
have also been advised that, since at the time the Merger was submitted
for a vote of the stockholders of Company, I may be deemed to have been
an affiliate of Company and the distribution by me of the Bancorp
Common Stock has not been registered under the Act, and that I may not
sell, transfer or
-1-
<PAGE>
otherwise dispose of Bancorp Common Stock issued to
me in the Merger unless (i) such sale, transfer or other disposition
has been registered under the Act, (ii) such sale, transfer or other
disposition is made in conformity with the volume and other limitations of
Rule 145 promulgated by the Commission under the Act, or (iii) in the
opinion of counsel reasonably acceptable to Bancorp, such sale, transfer
or other disposition is otherwise exempt from registration under the Act.
D. I understand that Bancorp is under no obligation to register the
sale, transfer or other disposition of the Bancorp Common Stock by me or on
my behalf under the Act or to take any other action necessary in order to
make compliance with an exemption from such registration available.
E. I also understand that stop transfer instructions will be given to
Bancorp's transfer agents with respect to the Bancorp Common Stock and that
there will be placed on the certificates for the Bancorp Common Stock issued to
me, or any substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act
of 1933 applies. The shares represented by this certificate may only
be transferred in accordance with the terms of an agreement dated
May ___, 1995 between the registered holder hereof and Bancorp, a
copy of which agreement is on file at the principal offices of Bancorp."
F. I also understand that unless the transfer by me of my Bancorp
Common Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, Bancorp reserves the right to
put the following legend on the certificates issued to my transferee:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and were acquired from
a person who received such shares in a transaction to which Rule 145
promulgated under the Securities Act of 1933 applies. The shares
have been acquired by the holder not with a view to, or for resale in
connection with, any distribution thereof within the meaning of
Securities Act of 1933 and may not be sold, pledged or otherwise
transferred except in accordance with an exemption from the
registration requirements of the Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraph
E and F above shall be removed by delivery of substitute certificates without
such legend if the undersigned shall have delivered to Bancorp a copy of a
letter from the staff of the Commission, or an
-2-
<PAGE>
opinion of counsel in form and substance reasonably satisfactory to Bancorp,
to the effect that such legend is not required for purposes of the Act.
I further represent to and covenant with Company that from the date
that is 30 days prior to the Effective Time (as defined in the Agreement) I
will not sell, transfer or otherwise dispose of the capital stock of West One
held by me and that I will not sell, transfer or otherwise dispose of any
shares of Bancorp Common Stock received by me in the Merger or other shares
of the capital stock of Bancorp until after such time as results covering at
least 30 days of combined operations of West One and Bancorp have been
published by Bancorp, in the form of a quarterly earnings report, an
effective registration statement filed with the Commission, a report to the
Commission on Form 10-K, 10-Q, or 8-K, or any other public filing or
announcement which includes the combined results of operations.
I understand that pursuant to the Merger Agreement, no certificate
for Bancorp Common Stock shall be delivered to me in exchange for
certificates representing West One Common Stock until I have executed and
delivered this agreement.
Very truly yours,
by
------------------------------------------
Name:
Accepted this ___ day of _______________, 1995, by
COMPANY
by
- -------------------------------
Name:
Title:
-3-
<PAGE>
OMITTED SCHEDULES
1. Disclosure schedule of U. S. Bancorp pursuant to Article IV of the Merger
Agreement sets forth the exceptions to the representations of U. S. Bancorp
included in Article IV and will be furnished to the Commission
supplementally upon request.
2. Disclosure schedule of West One Bancorp pursuant to Article III of the
Merger Agreement sets forth the exceptions to the representations of West
One Bancorp included in Article III and will be furnished to the Commission
supplementally upon request.
<PAGE>
BYLAWS EXHIBIT 3
of
U. S. BANCORP
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1.1. MEETINGS. The regular Annual Meeting of the Shareholders of
this Corporation for the election of directors and for the transaction of
such other business as properly may come before the meeting shall be held in
Portland, Oregon, or other place duly authorized by the Board of Directors,
on the third Tuesday of April at such time as the Board of Directors may
determine.
If for any cause an election of directors is not made on the same day as the
Annual Meeting, the Board of Directors shall order the election to be held on
some subsequent day as soon thereafter as practicable according to the
provisions of law, and notice thereof shall be given in the manner herein
provided for the Annual Meeting.
Business to be conducted at an Annual Meeting (other than procedural matters)
shall be limited to (i) business specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors,
(ii) business otherwise properly brought before the meeting by or at the
direction of the Board of Directors or the Chairman of the Board, or (iii)
business properly brought before the meeting by a shareholder of record of
any class of capital stock entitled to vote upon such business, provided that
such shareholder shall first have given written notice, in the time and
manner specified for shareholder notice of nominations for directors set
forth in Section 1.2 of these Bylaws, briefly describing such business and
stating his intention to present such business at the Annual Meeting.
Special meetings of the shareholders may be called by the Board of Directors,
the Chairman of the Board, the Chief Executive Officer, any Vice Chairman or
the President. A special meeting shall be called upon receipt of a written
demand therefor stating the purpose for which the meeting is to be called by
any shareholder or shareholders owning in the aggregate not less than ten
percent of the stock entitled to vote at such meeting. It shall be the duty
of the Secretary to send out notices of such meetings to be held in Portland,
Oregon, or other convenient place authorized by the Board of Directors and at
such time as may be fixed by the Board of Directors. If the Board of
Directors shall fail to fix a time or place, the meeting shall be held at
such time as shall be fixed by the Chairman of the Board, the Chief Executive
Officer, any Vice Chairman, the President, or the Secretary. Business
conducted at a special meeting (other than procedural matters) shall be
limited to the matters stated in the notice thereof (or any supplement
thereto).
<PAGE>
Notice of such annual and special meetings shall be mailed postage prepaid
not less than ten nor more than sixty days prior to the date thereof,
addressed to each shareholder of record at his or her address appearing on
the books of the Corporation.
The certificate of the Secretary of this Corporation shall be sufficient
proof of the giving of said notice.
The Board of Directors may adopt rules governing the order of business and
conduct of any shareholders' meeting. Subject to the effect of any such
rules, the Chairman of the Board (or other officer presiding at a
shareholders' meeting) shall have general authority to determine the order of
business and, in the Chairman's discretion, to regulate the conduct of such
meeting.
Section 1.2. NOMINATIONS FOR DIRECTOR. Nominations for election to the Board
of Directors may be made by the Board of Directors or by any shareholder of
record of any outstanding class of capital stock entitled to vote for the
election of directors. Nominations, other than those made by or on behalf of
the existing Board of Directors, shall be made in writing and shall be
delivered or mailed to the Chairman of the Board of the Corporation not less
than twenty-five days nor more than sixty days prior to any meeting of
shareholders called for the election of directors, provided, however, that if
less than thirty days' notice of the meeting is given to shareholders, such
nominations shall be mailed or delivered to the Chairman of the Board not
later than the close of business on the fifth day following the day on which
the notice of the meeting was mailed.
Section 1.3. DISPUTED BALLOTS. In the event a dispute arises regarding the
validity or tabulation of a ballot, vote, or proxy, the chairman of the
meeting may appoint a committee of three directors or other persons who are
not employees of the Corporation to resolve the dispute. The decision of the
committee shall be final and binding upon all parties to the dispute.
Section 1.4. PROXIES. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by his or her duly
authorized attorney-in-fact. Such proxy shall be filed with the Secretary of
the Corporation before or at the time of the meeting. No proxy shall be
valid after 11 months from the date of its execution unless otherwise
expressly provided in the proxy.
Section 1.5. QUORUM, MANNER OF ACTING. Shares entitled to vote as a
separate voting group may take action on a matter only if a quorum of those
shares exists with respect to the matter. A majority of the votes entitled
to be cast on the matter by a voting group, represented in person or by
proxy, shall constitute a quorum of that voting group for action on that
matter. If a quorum exists, action on a matter, other than the election of
directors, shall be approved by a voting group if the votes cast within the
voting group favoring the action exceed the votes cast opposing the action
unless the Oregon
<PAGE>
Business Corporation Act or the articles of incorporation require a greater
number of affirmative votes. Directors shall be elected by a plurality of
the votes cast by the shares entitled to vote in the election at a meeting at
which a quorum is present. Once a share is represented for any purpose at a
meeting, it shall be deemed present for quorum purposes for the remainder of
the meeting and for any adjournment of that meeting unless a new record date
is or must be set for that adjourned meeting.
ARTICLE II
DIRECTORS
Section 2.1. BOARD OF DIRECTORS. The Board of Directors (herein sometimes
referred to as the "Board") shall have power to manage and direct the
business and affairs of the Corporation.
Section 2.2. NUMBER. The Board shall consist of not less than five nor more
than twenty-five persons, the exact number within such minimum and maximum
limits to be fixed and determined from time to time by resolution of a
majority of the full Board; provided, however, that a majority of the full
Board of Directors may not increase the number of directors to a number which
exceeds by more than four the number of directors last elected by
shareholders, but in no event shall the number of directors exceed
twenty-five.
Section 2.3. ORGANIZATION MEETING. The Secretary, upon receiving the returns
of the Judges of Election as aforesaid, shall cause the same to be recorded
upon the minute book of the Corporation and shall notify the directors-elect
of their election. Promptly after the adjournment of the meeting of the
shareholders at which they were elected, the newly elected Board shall meet
at a convenient place for the purpose of organizing and to transact such
business as properly may come before the Board and no notice of such
organization meeting shall be required. If at that time there is not a
quorum in attendance, the members present may adjourn from time to time until
a quorum is secured.
Section 2.4. REGULAR MEETINGS. The Board of Directors may establish a
schedule of regular meetings for the transaction of business, the day and
hour of which may be specified by resolution adopted in advance of such
regular meetings. In the event of a failure of the Board of Directors to
designate such day and hour, the Chairman of the Board may designate the day
and hour upon which such meeting shall be held, which shall be specified in
the notice of such meeting.
Section 2.5. SPECIAL MEETINGS. The Board of Directors may also hold special
meetings upon call of any officer who is a member of the Board of Directors,
or any three or more directors. Notice of special meetings of the Board of
Directors shall be given by the Secretary or Assistant Secretary of the
Corporation, or in case of their absence, refusal or inability to act, by any
other officer who is a member of the Board of Directors, or by any three or
more directors by giving 24 hours' notice to the last known address of each
<PAGE>
director. Calls for such special meetings must state in general terms the
object of the meeting.
Section 2.6. RETIREMENT. Officer directors may be requested to resign from
the Board upon the date of their retirement as an officer of the Corporation.
Each other member of the Board of Directors will not be eligible for
re-election as a director at the Annual Meeting of the Shareholders following
the date on which such director shall reach the age of 70 years.
Section 2.7. QUORUM. A majority of the number of directors from time to time
fixed as constituting the Board of Directors pursuant to Section 2.2 shall
constitute a quorum at any meeting, except when otherwise provided by law;
but a lesser number may adjourn any meeting, from time to time, and the
meeting may be held, as adjourned, without further notice.
Section 2.8. VACANCIES. When any vacancy occurs among the directors, the
remaining members of the Board, in accordance with the laws of Oregon and
with the provisions of Section 2.2 of these Bylaws, may appoint a director to
fill such vacancy at any meeting of the Board.
Section 2.9. NOTICE. Notice of meetings of the Board of Directors or any
committee appointed by the Board of Directors may be written or oral, and may
be communicated in person, by telephone, telegraph, teletype, or other form
of wire or wireless communication, or by mail or private courier.
ARTICLE III
COMMITTEES
Section 3.1. EXECUTIVE COMMITTEE. The Board of Directors may appoint an
Executive Committee consisting of such number of members as the Board may
from time to time determine. The members may be officers or directors of the
Corporation, or both. A majority of the members shall constitute a quorum at
any meeting of the Executive Committee. The Executive Committee shall
continue to act until succeeded and shall have the general executive
management of the Corporation, subject to the Board of Directors. The
Executive Committee shall in addition have such other duties as may be
specifically delegated to it by these Bylaws or by specific action of the
Board of Directors. All acts done and powers and authority conferred by the
Executive Committee from time to time shall be deemed to be and may be
certified as being done or conferred under authority of the Board of
Directors; provided, however, that all acts of the Executive Committee shall
be reported to the Board of Directors and shall be subject to confirmation.
Unless specifically reversed as to prospective effect, actions of the
Executive Committee shall be considered as confirmed.
The Executive Committee shall have power to discount, purchase and sell
bills, notes and other evidences of debt, to buy and sell bills of exchange,
to buy and sell stocks
<PAGE>
and other securities (other than shares of the Corporation), to buy, hold,
sell and exchange coin, bullion and other commodities, to invest in other
property, real or personal, and to make reinvestments and changes of
investments, with full power to sell, exchange, transfer, assign, grant
options to buy, lease, encumber or otherwise alienate any of such property,
to issue letters of credit and otherwise to lend the credit of the
Corporation, to authorize loans and discounts and other extensions of credit,
to guarantee the obligations, undertakings and performance of others, to
establish and maintain with others accounts of all kinds, including but not
limited to banking, safekeeping, agency, custodial, trust and management
accounts, to make reports and applications to regulatory and supervisory
authorities, and to manage the Corporation, its affiliates and subsidiaries
in the expansion or restriction of their functions and activities and in the
establishment of new affiliates and subsidiaries, including obtaining any
required consent of regulatory and supervisory authorities, except such power
as the Board (or a committee of the Board) only, by law, is authorized to
perform, and shall have the power to delegate like authority, within such
limits as it may fix, to designated officers of the Corporation or to such
other committee or committees of the Corporation as may be appointed by the
Executive Committee or by the Board of Directors, and the power as well to
delegate authority for all administrative acts including, without limitation,
the fixing of salaries for officers below the level of President who are not
members of the Executive Committee, fixing rates of interest and like
matters, providing that nothing contained in this paragraph shall be
construed to limit or restrict the authority of the Chief Executive Officer,
any Vice Chairman, or the President to delegate powers regarding such matters
as authorized by Sections 4.3, 4.4 and 4.5 of these Bylaws.
Section 3.2. AUDIT COMMITTEE. There shall be an Audit Committee composed of
not less than three members of the Board of Directors, no one of whom shall
be an active officer of the Corporation or any of its subsidiaries and each
of whom shall be independent of management of the Corporation. The Committee
shall include at least two members with banking or related financial
management expertise, and shall not include any large customers of the
Corporation (as determined pursuant to the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"). The Committee shall be
appointed by the Board of Directors annually at its organization meeting or
more often.
It shall be the duty of the Committee to recommend to the Board of Directors
the accounting firm to be selected as independent auditor of the Corporation
and its subsidiaries: to act on behalf of the Board in discussing with the
appropriate corporate officers any termination of the independent auditor and
any significant disagreements between the independent auditor and management,
meeting and reviewing with the independent auditor and the appropriate
corporate officers, matters relating to disclosure, corporate practices,
regulatory and financial reporting, accounting procedures and policies, and
adequacy of financial and accounting controls; to review the planned scope of
the audits by the independent auditor; and to review, as appropriate, before
or after the fact, compliance of the Corporation and its subsidiaries
<PAGE>
with laws and regulations concerning loans to insiders, related party
transactions and other transactions involving potential conflicts of
interest, and applicable federal and state laws and regulations concerning
dividend restrictions. The Committee shall review (a) with the independent
auditor, the results of the annual audit, including the auditor's comment
letter; (b) with the appropriate corporate officers, the annual report to the
Securities and Exchange Commission, the annual report to shareholders, and
the Proxy Statement; and (c) with management and the independent auditor, the
basis for the reports issued by the Corporation under 12 CFR Part 363 and any
successor or substitute regulations implementing the provisions of Section
112 of FDICIA, and shall promptly report thereon to the Board of Directors.
The Audit Committee, in collaboration with the internal Auditor, shall set
the scope, nature and frequency of examinations of the Corporation and its
subsidiaries (with the exception of each subsidiary bank which has
established and appointed a separate audit committee composed entirely of
outside directors of such subsidiary bank in compliance with the requirements
of FDICIA (an "independent audit committee")), and other responsibilities of
the internal Auditor. The Committee shall monitor the internal audit group
including a review of the planned audit activities, audit scope, and the
degree of coordination with the independent auditors of the annual audit plan
for the Corporation and its subsidiaries. The Committee shall periodically
receive reports from the internal Auditor on results of audits on nonbank
subsidiaries and on each subsidiary bank which has not established and
appointed an independent audit committee, and on the status of audit coverage
of the Corporation. The Committee shall promptly submit its report thereon
and its recommendations to the Board of Directors of this Corporation and of
each applicable subsidiary.
The Committee shall perform such additional duties as may be requested or
directed by the Board of Directors from time to time. The Committee shall
additionally submit to the Board of Directors any recommendations relating to
the scope of its responsibilities it may have from time to time.
The Committee may at its discretion from time to time, without prior
permission of the Board of Directors or any corporate officers, consult or
retain legal counsel, whether internal counsel, this Corporation's regular
outside counsel, or such independent outside counsel as the Committee may
select.
The Committee shall meet on call of the chairperson and shall keep minutes of
all of its meetings showing all matters considered by it and the action taken
thereon, and shall submit a report of such meetings at the next regular
meeting of the Board of Directors.
Section 3.3. OTHER COMMITTEES. The Board of Directors may appoint from time
to time, either from its own members or from persons outside its membership,
other committees for such purposes and with such powers as the Board may
determine.
<PAGE>
ARTICLE IV
TITLES, DUTIES, QUALIFICATIONS AND TERMS OF OFFICERS
Section 4.1. OFFICERS. The officers of this Corporation shall be a Chief
Executive Officer, a President, one or more Vice Presidents (one or more of
whom may be designated an Executive Vice President or Senior Vice President),
a Secretary, and an Auditor, and may include one or more Vice Chairmen and
such other officers and assistant officers as from time to time may be
identified by the Corporation as in positions with legal authority to bind
the Corporation in its transactions with customers or other third parties by
executing contracts or other legal instruments on the Corporation's behalf
and whose decisionmaking authority relates to fundamental corporate
operations in such a way as to affect potentially the public's trust in the
Corporation. The same person may fill more than one office or position.
The Board of Directors shall designate a member of the Board of Directors to
be the Chairman of the Board and may appoint the Chairman of the Board an
officer of this Corporation. Other officers may also be members of the Board
of Directors.
The Chairman of the Board shall be designated by and if appointed an officer,
elected by, and the Chief Executive Officer shall be elected by, the Board of
Directors at its annual organization meeting and each shall hold office for
the year for which the Board of Directors was elected and until a successor
is designated or elected, unless the Chairman of the Board or Chief Executive
Officer resigns, becomes disqualified, or is removed, which removal may be at
the pleasure of the Board. Any vacancy occurring in the position of the
Chairman of the Board or in the office of the Chief Executive Officer shall
be filled by the remaining members of the Board.
Vice Chairmen, the President and Executive Vice Presidents, if there be any,
the Auditor and the Secretary shall be elected or appointed by the Board of
Directors to hold their offices respectively at the pleasure of the Board of
Directors. Vice Presidents (other than Executive Vice Presidents), Assistant
Vice Presidents and such other officers and assistant officers as may be
deemed necessary may be appointed by the Board of Directors or chosen in such
other manner as provided in these Bylaws or as the Board of Directors shall
by resolution provide, to hold their offices respectively at the pleasure of
the Board of Directors.
The Chief Executive Officer (or other officer-director as the Board of
Directors may designate by resolution) shall have authority to appoint or
remove or fill vacancies among all officers excepting the Chairman of the
Board (if an officer), the Chief Executive Officer, Vice Chairman, the
President, Executive Vice Presidents, Auditor, and Secretary; such
appointments or removals shall be subject to ratification or recision at the
next meeting of the Board of Directors. The provisions of this paragraph are
supplementary to any other provisions of these Bylaws.
<PAGE>
Section 4.2. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside
over meetings of shareholders and of the Board of Directors and shall perform
such duties as may be requested or directed by the Board of Directors.
Section 4.3. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be a
member of the Board of Directors. The Chief Executive Officer shall be the
principal executive officer of the Corporation and, subject to the control of
the Board of Directors, shall supervise the carrying out of the policies
adopted or approved by the Board of Directors. The Chief Executive Officer
shall exercise general supervision over the business and affairs and
personnel of the Corporation, including without limitation the fixing of
salaries for members of the Executive Management Committee whose salaries are
not fixed by the Board of Directors, provided the salaries so fixed shall be
reported to the Board of Directors.
Section 4.4. VICE CHAIRMAN. Each Vice Chairman shall perform such duties as
may be requested or directed by the Board of Directors or by the Chief
Executive Officer from time to time.
Section 4.5. PRESIDENT. The President shall perform such duties as may be
requested or directed by the Board of Directors or by the Chief Executive
Officer from time to time.
Section 4.6. VICE PRESIDENTS. Each Vice President shall have such powers and
duties as may be assigned by the Board of Directors, by the Chief Executive
Officer, or by the President. The Board of Directors shall designate a Vice
President to be the Chief Financial Officer of the Corporation, who shall be
the principal financial and accounting officer of the Corporation with
responsibility for keeping regular books of account, disbursement of
corporate funds, and preparation of financial reports. The Board of
Directors shall also designate a Vice President to be the Treasurer, who
shall have general responsibility for funding the operation of the
Corporation and its subsidiaries and shall, as and to the extent authorized
by the Board of Directors or the Executive Management Committee, borrow funds
and issue securities on behalf of the Corporation.
Section 4.7. SECRETARY. The Secretary shall be the recording officer of the
Board of Directors and keep in written form the minutes of the meetings of
the Board of Directors and of the shareholders. The Secretary shall attend
to the giving of all notices required by these Bylaws to be given, shall be
the custodian of the corporate seal of the Corporation, and shall make such
reports and perform such other duties as are incident to the office of
Secretary, or as are assigned by the Board of Directors.
Section 4.8. AUDITOR. The internal Auditor shall make periodic examinations
of the affairs of the Corporation and its subsidiaries, with the exception
that the examination of each subsidiary bank which has established and
appointed an independent audit committee shall be the responsibility of the
auditor appointed by the Board of Directors of each such subsidiary bank,
acting under the procedures and policies delineated in
<PAGE>
the Bylaws of the bank. The Auditor shall collaborate with the Audit
Committee in determining the scope, nature and frequency of such
examinations. The Auditor shall also perform such other duties as may be
assigned by the Board of Directors or the Chief Executive Officer of the
Corporation. The results of such examinations and recommendations of the
Auditor, if any, shall be submitted in writing by the Auditor to the Chief
Executive Officer and to the Audit Committee.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 5.1. TRANSFERS. Shares of stock shall be transferable on the books
of the Corporation, and a transfer book shall be kept in which all transfers
of stock shall be recorded. Every person becoming a shareholder by such
transfer shall, in proportion to his or her shares, succeed to all rights and
liabilities of the prior holder of such shares.
Section 5.2. STOCK CERTIFICATES. Certificates of stock shall bear the
signature of the Chief Executive Officer, the Chairman of the Board, or of
the President, or of a Vice President and the Secretary or an Assistant
Secretary of the Corporation, and shall be signed manually or by facsimile
process, and shall be countersigned by an authorized officer of First Chicago
Trust Company of New York as transfer agent, and the seal, manual or
facsimile, of the Corporation shall be set forth thereon. No transfer shall
be made of any certificate issued except on the surrender of the certificate
or certificates previously issued therefor, or on proof of their loss and the
furnishing of indemnity satisfactory to an appropriate officer of the
Corporation as designated in writing by the Chief Executive Officer or the
President of the Corporation.
The Board of Directors shall have power and authority to make all such rules
and regulations as it may deem expedient concerning the issue, transfer,
registration, and replacement of lost certificates for shares of the capital
stock of the Corporation.
Section 5.3. DIVIDENDS. All declarations of dividends shall fix the date for
the payment thereof, and period of closing of stock books, and a record date,
prior to the payment of dividends, for the purpose of determining the
shareholders entitled to the same.
The transfer books may be closed for the purpose of the annual election of
directors, before meetings of shareholders, before the payment of dividends,
for the purpose of obtaining written consents of shareholders, or for any
other purpose, for such period not exceeding twenty days as the Board of
Directors may by resolution direct. In lieu of closing the transfer books
the Board may in its discretion fix a day and hour not less than ten days nor
more than seventy days prior to the holding of any meeting of shareholders or
the day appointed for the payment of any dividend or for any other notice, as
the time as of which shareholders entitled to notice of and to vote at such
<PAGE>
meeting, or to receive such dividend or for such other purpose shall be
determined, and only shareholders of record at such time shall be entitled to
notice of or to vote at such meeting or to receive such dividend or to be
treated as shareholders for such other purposes.
ARTICLE VI
CORPORATE SEAL
The official seal of this Corporation shall be circular in form with the
words "corporate seal" and "Oregon" and the name of the Corporation appearing
thereon.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1. FISCAL YEAR. The fiscal year of the Corporation shall be the
calendar year.
Section 7.2. RECORDS. The organization papers of this Corporation, the
returns of the Judges of Election, the proceedings of all regular and special
meetings of the directors and of the shareholders, the Bylaws and any
amendments hereto, shall be recorded in a minute book; and the minutes of
each meeting shall be signed by the chairman and the secretary of the meeting.
ARTICLE VIII
BYLAWS
Section 8.1. INSPECTION. A copy of the Bylaws, with all amendments thereto,
shall at all times be kept in a convenient place at the principal office of
the Corporation and shall be open for inspection to all shareholders, during
business hours.
Section 8.2. AMENDMENTS. These Bylaws may be changed or amended by the vote
of a majority of the whole number of directors.
[As amended 03/16/95 - Article IV, Titles, Duties, Qualifications and Terms of
Officers.]
<PAGE>
STOCK OPTION AGREEMENT
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated May 6, 1995, between U. S. BANCORP, an
Oregon corporation ("Issuer"), and WEST ONE BANCORP, an Idaho corporation
("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger dated May 5, 1995 (the "Merger Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement
and in consideration therefor, Issuer has agreed to grant Grantee the Option
(as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to
19,542,378 fully paid and nonassessable shares of Issuer's Common Stock, $5
par value per share ("Common Stock"), at a price of $28.00 per share (the
"Option Price"); provided further that in no event shall the number of shares
of Common Stock for which this Option is exercisable exceed 19.9 percent of
the Issuer's issued and outstanding shares of Common Stock. The number of
shares of Common Stock that may be received upon the exercise of the Option
and the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are
issued or otherwise become outstanding after the date of this Agreement
(other than pursuant to this Agreement), the number of shares of Common Stock
subject to the Option shall be increased so that, after such issuance, it
equals 19.9 percent of the number of shares of Common Stock then issued and
outstanding without giving effect to any shares subject or issued pursuant to
the Option. Nothing contained in this Section 1(b) or elsewhere in this
Agreement shall be deemed to authorize Issuer or Grantee to breach any
provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or in part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event
(as hereinafter defined) shall have occurred prior to the occurrence of an
Exercise Termination Event (as hereinafter defined), provided that the Holder
shall have sent the written notice of such exercise (as provided in
subsection (e) of this
-1-
<PAGE>
Section 2) within 90 days following such Subsequent Triggering Event. Each
of the following shall be an Exercise Termination Event: (i) the Effective
Time of the Merger; (ii) termination of the Merger Agreement in accordance
with the provisions thereof if such termination occurs prior to the occurrence
of an Initial Triggering Event except a termination by Grantee pursuant to
Section 8.1(d) of the Merger Agreement (unless the breach by Issuer giving
rise to such right of termination is non-volitional); (iii) the passage of
12 months after termination of the Merger Agreement if such termination
follows the occurrence of an Initial Triggering Event or is a termination
by Grantee pursuant to Section 8.1(d) of the Merger Agreement (unless the
breach by Issuer giving rise to such right of termination is non-volitional)
(provided that if an Initial Triggering Event continues or occurs beyond
such termination and prior to the passage of such 12-month period, the
Exercise Termination Event shall be 12 months from the expiration of the
Last Triggering Event but in no event more than 18 months after such
termination) or (iv) the third anniversary of the date hereof. The "Last
Triggering Event" shall mean the last Initial Triggering Event to expire.
The term "Holder" shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer shall have
recommended that the stockholders of Issuer approve or accept any such
Acquisition Transaction. For purposes of this Agreement, "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any similar
transaction, involving Issuer or any Significant Subsidiary (as defined in
Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) of Issuer, (x) a purchase, lease, or other
acquisition of all or a substantial portion of the assets of Issuer or any
Significant Subsidiary of Issuer, (y) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
securities representing 10 percent or more of the voting power of Issuer or
any Significant Subsidiary of Issuer, or (z) any substantially similar
transaction; provided, however, that in no event shall any (i) merger,
consolidation, or similar transaction involving Issuer or any Significant
Subsidiary 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 65 percent of the combined voting power of the
voting securities of the Issuer or the surviving entity outstanding
immediately after the consummation of such merger, consolidation, or similar
transaction, or (ii) any merger,
-2-
<PAGE>
consolidation, purchase, or similar transaction involving only the Issuer
and one or more of its Subsidiaries or involving only any two or more of
such Subsidiaries, be deemed to be an Acquisition Transaction, provided any
such transaction is not entered into in violation of the terms of the
Merger Agreement;
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended,
proposed, or publicly announced its intention to authorize, recommend, or
propose, to engage in an Acquisition Transaction with any person other than
Grantee or a Grantee Subsidiary, or the Board of Directors of Issuer shall
have publicly withdrawn or modified, or publicly announced its interest to
withdraw or modify, in any manner adverse to Grantee, its recommendation
that the stockholders of Issuer approve the transactions contemplated by the
Merger Agreement;
(iii) Any person other than Grantee, any Grantee Subsidiary, or any
Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
its business shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 15 percent or more of the outstanding shares
of Common Stock (the term "beneficial ownership" for purposes of this Option
Agreement having the meaning assigned thereto in Section 13(d) of the 1934
Act, and the rules and regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary shall
have made a bona fide proposal to Issuer or its stockholders by public
announcement or written communication that is or becomes the subject of
public disclosure to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement and
such breach (x) would entitle Grantee to terminate the Merger Agreement and
(y) shall not have been cured prior to the Notice Date (as defined below);
or
(vi) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has given its
prior written consent, shall have filed an application or notice with the
Federal Reserve Board, or other federal or state bank regulatory authority,
which application or notice has been accepted for processing, for approval
to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
-3-
<PAGE>
(i) The acquisition by any person of beneficial ownership of
25 percent or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (y) shall be 25 percent.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event"), it being understood that the giving of such
notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and 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
shares it will purchase pursuant to such exercise and (ii) a place and date
not earlier than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided
that if prior notification to or approval of the Federal Reserve Board or any
other regulatory agency is required in connection with such purchase, the
Holder shall promptly file the required notice or application for approval
and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date
on which any required notification periods have expired or been terminated or
such approvals have been obtained and any requisite waiting period or periods
shall have passed. Any exercise of the Option shall be deemed to occur on
the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2,
the Holder shall pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a bank account
shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of shares of Common Stock purchased by the Holder and, if the
Option should be exercised in part only, a new Option evidencing the rights
of the Holder thereof to purchase the balance of the shares purchasable
hereunder, and the Holder shall deliver to Issuer a copy of this Agreement
and a letter agreeing that the Holder will not offer to sell or otherwise
dispose of such shares in violation of applicable law or the provisions of
this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the
-4-
<PAGE>
registered holder hereof and Issuer and to resale restrictions
arising under the Securities Act of 1933, as amended. A copy
of such agreement is on file at the principal office of Issuer and
will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933 Act"), in
the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the 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, to the effect that such legend
is not required for purposes of the 1933 Act; (ii) the reference to the
provisions to this Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the shares have been
sold or transferred in compliance with the provisions of this Agreement and
under circumstances that do not require the retention of such reference; and
(iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2
and the tender of the applicable purchase price in immediately available
funds, the Holder shall be deemed to be the holder of record of the shares of
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 Common Stock shall not then be actually delivered
to the 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, issue, and delivery of stock certificates
under this Section 2 in the name of the Holder or its assignee, transferee,
or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities, and other rights to purchase 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 (x) complying with all premerger notification,
reporting, and waiting period requirements specified in 15 USC Section 18 and
regulations promulgated thereunder and (y) in the event, under the Bank
Holding Company Act of 1956, as amended (the "BHCA"), or the Change in Bank
Control Act of 1978, as amended, or any state banking law, prior approval of
or notice to the Federal Reserve Board or to any state regulatory authority
is necessary before the Option may be exercised, cooperating fully with the
Holder in preparing such applications or notices and providing such
information to the Federal Reserve Board or such state regulatory authority
as they may require) in order to permit the Holder to exercise the Option and
Issuer
-5-
<PAGE>
duly and effectively to issue shares of Common Stock pursuant hereto;
and (iv) promptly to take all action provided herein to protect the rights of
the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the 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, on the same terms and subject to the same condition as are set
forth herein, in the aggregate the same number of shares of Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any Stock Option 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.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1
of this Agreement, the number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject to adjustment
from time to time as provided in this Section 5. In the event of any change
in, or distributions in respect of, the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares, distributions on or in respect of the
Common Stock that would be prohibited under the terms of the Merger
Agreement, or the like, the type and number of shares of Common Stock
purchasable upon exercise hereof and the Option Price shall be appropriately
adjusted in such manner as shall fully preserve the economic benefits
provided hereunder and proper provision shall be made in any agreement
governing any such transaction to provide for such proper adjustment and the
full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee delivered within 90 days of such Subsequent Triggering Event (whether
on its own behalf or on behalf of any subsequent holder of this Option (or
part thereof) or any of the shares of Common Stock issued pursuant hereto),
promptly prepare, file, and keep current a shelf registration statement under
the 1933 Act covering this Option and any shares issued and issuable pursuant
to this Option and shall use its reasonable best efforts to cause such
registration statement to become effective and remain current in order to
permit the sale or other disposition of this Option and any shares of Common
Stock issued upon total or partial exercise of this Option ("Option Shares")
in accordance with any plan of disposition requested by Grantee. Issuer will
use its reasonable best efforts to cause such registration statement first to
become effective and then to remain effective for such period not in excess
of 180 days from the date such registration statement first becomes effective
or such shorter time as may be reasonably necessary to effect such sales or
other dispositions. Grantee shall have the right to demand two such
registrations. The foregoing
-6-
<PAGE>
notwithstanding, if, at the time of any request by Grantee for registration
of the Option or Option Shares as provided above, Issuer is in registration
with respect to an underwritten public offering of shares of Common Stock,
and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering the inclusion of the Holder's Option or Option Shares would
interfere with the successful marketing of the shares of Common Stock offered
by Issuer, the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced; and provided,
however, that after any such required reduction the number of Option Shares
to be included in such offering for the account of the Holder shall
constitute at least 25 percent of the total number of shares to be sold by
the Holder and Issuer in the aggregate; and provided further, however, that
if such reduction occurs, then the Issuer shall file a registration statement
for the balance as promptly as practical and no reduction shall thereafter
occur. Each such Holder shall provide all information reasonably requested
by Issuer for inclusion in any registration statement to be field hereunder.
If requested by any such Holder in connection with such registration, Issuer
shall become a party to any underwriting agreement relating to the sale of
such shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities, and other agreements customarily
included in such underwriting agreements for the Issuer. Upon receiving any
request under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same,
postage prepaid, to the address of record of the persons entitled to receive
such copies. Notwithstanding anything to the contrary contained herein, in no
event shall Issuer be obligated to effect more than two registrations
pursuant to this Section 6 by reason of the fact that there shall be more
than one Grantee as a result of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event (as
defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall
repurchase the Option from the Holder at a price (the "Option Repurchase
Price") equal to the amount by which (A) the market/offer price (as defined
below) exceeds (B) the Option Price, multiplied by the number of shares for
which this Option may then be exercised and (ii) at the request of the owner
of Option Shares from time to time (the "Owner"), delivered within 90 days of
such occurrence (or such later period as provided in Section 10), Issuer
shall repurchase such number of the Option Shares from the Owner as the Owner
shall designate at a price (the "Option Share Repurchase Price") equal to the
market/offer price multiplied by the number of Option Shares so designated.
The term "market/offer price" shall mean the highest of the following amounts
with respect to the six-month period immediately preceding the date the
Holder gives notice of the required repurchase of this Option or the Owner
gives notice of the required repurchase of Option Shares, as the case may be
(i) the price per share of Common Stock at which a tender offer or exchange
offer therefor has been made, (ii) the price per share of Common Stock to be
paid by any third party pursuant to an agreement with Issuer, (iii) the
highest closing price for shares of Common Stock, or (iv) in the event of a
sale of all or a substantial portion of Issuer's assets, 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 the Holder or the Owner, as the case may
be, divided by the number of shares of Common Stock of Issuer
-7-
<PAGE>
outstanding at the time of such sale. In determining the market/offer price,
the value of consideration other than cash shall be determined by a
nationally recognized investment banking firm selected by the Holder or
Owner, as the case may be, and reasonably acceptable to Issuer.
Notwithstanding the foregoing, if the same person who has participated in a
Triggering Event has entered, or after such Triggering Event has occurred
enters, into any agreement or understanding with Grantee relating to Grantee
s rights under this Option or with respect to the Option Shares or directly
or indirectly relating to Issuer, Grantee shall, notwithstanding the terms of
such agreement or understanding, at any time upon the occurrence of a
Subsequent Triggering Event of the type set forth in Section 3(d)(i) without
Issuer s approval, recommendation or consent, promptly request that Issuer
repurchase the Option and any Option Shares held by Grantee as provided in
this Section 8 and Issuer shall do so.
(b) The Holder and the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares,
as applicable, accompanied by a written notice or notices stating that the
Holder or the Owner, as the case may be, elects to require Issuer to
repurchase this Option and/or the Option Shares in accordance with the
provisions of this Section 7. Within the latter to occur of (x) five
business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or notices relating
thereto and (y) the time that is immediately prior to the occurrence of a
Repurchase Event, Issuer shall deliver or cause to be delivered to Holder the
Option Repurchase Price and/or to the Owner the Option Share Repurchase Price
therefor or the portion thereof that Issuer is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation from repurchasing the Option and/or the Option Shares in full,
Issuer shall immediately so notify the Holder and/or the Owner and thereafter
deliver or cause to be delivered, from time to time, to the Holder and/or the
Owner, as appropriate, the portion of the Option Repurchase Price and the
Option Share Repurchase Price, respectively, that it is no longer prohibited
from delivering, within five business days after the date on which Issuer is
no longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to paragraph (b) of this Section
7 is prohibited under applicable law or regulation from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its best efforts to obtain all required regulatory and
legal approvals and file any required notices as promptly as practicable in
order to accomplish such repurchase), the Holder or Owner may revoke its
notice of repurchase of the Option or the Option Shares either in whole or to
the extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price or the Option Share Repurchase Price
that Issuer is not prohibited from delivering; and (ii) deliver, as
appropriate, either (A) to the Holder, a new Stock Option Agreement
evidencing the right of the Holder to purchase that number of shares of
Common Stock obtained by multiplying the number of shares of Common Stock for
which the surrendered Stock Option Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Option
-8-
<PAGE>
Repurchase Price less the portion thereof theretofore delivered to the Holder
and the denominator of which is the Option Repurchase Price, or (B) to the
Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall be
deemed to have occurred (i) upon the consummation of any merger,
consolidation, or similar transaction involving Issuer or any purchase,
lease, or other acquisition of all or a substantial portion of the assets of
Issuer, other than any such transaction which would not constitute an
Acquisition Transaction pursuant to the proviso to Section 2(b)(i) hereof or
(ii) upon the acquisition by any person of beneficial ownership of 50 percent
or more of the then outstanding shares of Common Stock, provided that no such
event shall constitute a Repurchase Event unless a Subsequent Triggering
Event shall have occurred prior to an Exercise Termination Event. The
parties hereto agree that Issuer's obligations to repurchase the Option or
Option Shares under this Section 7 shall not terminate upon the occurrence of
an Exercise Termination Event unless no Subsequent Triggering Event shall
have occurred prior to the occurrence of an Exercise Termination Event.
8. (a) In the event that prior to an Exercise Termination Event,
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 Common Stock
shall be changed into or exchanged for stock or other securities of any other
person or cash or any other property or the then outstanding shares of Common
Stock shall after such merger represent less than 50 percent of the
outstanding voting shares and voting share equivalents of the merged company,
or (iii) to sell or otherwise transfer all or substantially all of its assets
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
provision 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 the Holder, of either (x) the Acquiring Corporation (as hereinafter
defined) or (y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving person, and (iii) the transferee of all or substantially all of
Issuer's assets.
(2) "Substitute Common Stock" shall mean the common stock
issued by the Issuer of the Substitute Option upon exercise of the
Substitute Option.
-9-
<PAGE>
(3) "Assigned Value" shall mean the market/offer price, as defined
in Section 7.
(4) "Average Price" shall mean the average closing price of a share
of the 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 date 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 the person merging into Issuer or by any
company which controls or is controlled by such person, as the Holder may
elect.
(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 the Holder. The issuer of the
Substitute Option shall also enter into an agreement with the then Holder or
Holders of the Substitute Option 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 is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option is
then exercisable, divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal to
the Option Price multiplied by a fraction, the numerator of which shall be
the number of shares of Common Stock for which the Option is then exercisable
and the denominator of which shall be the number of shares of Substitute
Common Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9 percent of the shares
of Substitute Common Stock outstanding prior to the exercise of the
Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9 percent of the shares of Substitute Common
Stock outstanding prior to exercise but for this clause (e), the issuer of
the Substitute Option (the "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 this clause (e) over (ii)
the value of the Substitute Option after giving effect to the limitation in
this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder.
-10-
<PAGE>
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase
Price") equal to the amount by which (i) the Highest Closing Price (as
hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for
which the Substitute Option may then be exercised, and at the request of the
owner (the "Substitute Share Owner") of shares of Substitute Common Stock
(the "Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal
to the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of
the required repurchase of the Substitute Option or the Substitute Share
Owner gives notice of the required repurchase of the Substitute Shares, as
applicable.
(b) The Substitute Option Holder and the Substitute Share Owner, as
the case may be, may exercise its respective rights to require the Substitute
Option Issuer to repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose to the Substitute
Option Issuer, at its principal office, the agreement for such Substitute
Option (or, in the absence of such an agreement, a copy of this Agreement)
and certificates for Substitute Shares accompanied by a written notice or
notices stating that the Substitute Option Holder or the Substitute Share
Owner, as the case may be, elects to require the Substitute Option Issuer to
repurchase the Substitute Option and/or the Substitute Shares in accordance
with the provisions of this Section 9. As promptly as practicable, and in
any event within five business days after the surrender of the Substitute
Option and/or certificates representing Substitute Shares and the receipt of
such notice or notices relating thereto, the Substitute Option Issuer shall
deliver or cause to be delivered to the Substitute Option Holder the
Substitute Option Repurchase Price and/or to the Substitute Share Owner the
Substitute Share Repurchase Price therefor or the portion thereof which the
Substitute Option Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited
under applicable law or regulation from repurchasing the Substitute Option
and/or the Substitute Shares in part or in full, the Substitute Option Issuer
shall immediately so notify the Substitute Option Holder and/or the
Substitute Share Owner and thereafter deliver or cause to be delivered, from
time to time, to the Substitute Option Holder and/or the Substitute Share
Owner, as appropriate, the portion of the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from delivering, within five
business days after the date on which the Substitute Option Issuer is no
longer so prohibited; provided, however, that if the Substitute Option Issuer
is at any time after delivery of a notice of repurchase pursuant to
subsection (b) of this Section 9 prohibited under applicable law or
regulation from delivering to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and
the Substitute Option Issuer shall use its best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order
to accomplish such repurchase), the Substitute Option Holder or Substitute
-11-
<PAGE>
Share Owner may revoke its notice of repurchase of the Substitute Option or
the Substitute Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, the Substitute Option Issuer shall promptly
(i) deliver to the Substitute Option Holder or Substitute Share Owner, as
appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to
the Substitute Option Holder, a new Substitute Option evidencing the right of
the Substitute Option Holder to purchase that number of shares of the
Substitute Common Stock obtained by multiplying the number of shares of the
Substitute Common Stock for which the surrendered Substitute Option was
exercisable at the time of delivery of the notice of repurchase by a
fraction, the numerator of which is the Substitute Option Repurchase Price
less the portion thereof theretofore delivered to the Substitute Option
Holder and the denominator of which is the Substitute Option Repurchase
Price, or (B) to the Substitute Share Owner, a certificate for the Substitute
Option Shares it is then so prohibited from repurchasing.
10. The 90-day period for exercise of certain rights under Sections 2,
6, 7, and 13 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights and for the expiration
of all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) 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 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) Issuer has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock
at any time and from time to time issuable hereunder, and all such shares,
upon issuance pursuant hereto, will be duly authorized, validly issued, fully
paid, nonassessable, and will be delivered free and clear of all claims,
liens, encumbrances, and security interests and not subject to any preemptive
rights.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals or consents referred
to herein, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all
-12-
<PAGE>
necessary corporate action on the part of Grantee. This Agreement has been
duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or
other securities acquired by Grantee upon exercise of the Option will not be,
acquired 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.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to
any other person, without the express written consent of the other party,
except that in the event a Subsequent Triggering Event shall have occurred
prior to an Exercise Termination Event, Grantee, subject to the express
provisions hereof, may assign in whole or in part its rights and obligations
hereunder within 90 days following such Subsequent Triggering Event (or such
later period as provided in Section 10); provided, however, that until the
date 15 days following the date on which the Federal Reserve Board approves
an application by Grantee under the BHCA to acquire the shares of Common
Stock subject to the Option, Grantee may not assign its rights under the
Option except in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase in excess of 2
percent of the voting shares of Issuer, (iii) an assignment to a single party
(e.g., a broker or investment banker) for the purpose of conducting a widely
dispersed public distribution on Grantee's behalf, or (iv) any other manner
approved by the Federal Reserve Board.
14. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation making application to list the
shares of Common Stock issuable hereunder on the NASDAQ Stock Market National
Market System upon official notice of issuance and applying to the Federal
Reserve Board under the BHCA for approval to acquire the shares issuable
hereunder, but Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
15. Notwithstanding anything to the contrary herein, in the event that
the Holder or Owner or any Related Person (as hereinafter defined) thereof is
a person making an offer or proposal to engage in an Acquisition Transaction
(other than the transaction contemplated by the Merger Agreement), then (i)
in the case of a Holder or any Related Person thereof, the Option held by it
shall immediately terminate and be of no further force or effect, and (ii) in
the case of an Owner or any Related Person thereof, the Option Shares held by
it shall be immediately repurchasable by Issuer at the Option Price. A
"Related Person" of a Holder or Owner means any "affiliate" (as defined in
Rule 12b-2 of the rules and regulations under the 1934 Act) of the Holder or
Owner and any person that is the beneficial owner of 25% or more of the
voting power of the Holder or Owner, as the case may be.
-13-
<PAGE>
16. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
17. If any term, provision, covenant, or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void, or unenforceable, the remainder
of the terms, provisions, and covenants and restrictions contained in 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
regulatory agency determines that the Holder is not permitted to acquire, or
Issuer is not permitted to repurchase pursuant to Section 7, the full number
of shares of Common Stock provided in Section 1(a) hereof (as adjusted
pursuant to Section 1(b) or 5 hereof), it is the express intention of Issuer
to repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
18. All notices, requests, claims, demands, and other communications
hereunder shall be deemed to have been duly given when delivered in person,
by cable, telegram, telecopy, or telex, or by registered or certified mail
(postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Merger Agreement.
19. This Agreement shall be governed by and construed in accordance with
the laws of the State of Oregon, regardless of the laws hat might otherwise
govern under applicable principles of conflicts of laws thereof.
20. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
21. Except as otherwise expressly provided herein, 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.
22. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all
prior arrangements or understandings with respect thereof, written or oral.
The terms and conditions of this Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors except as assigns, any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided herein.
23. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
-14-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.
U. S. BANCORP
By /S/ GERRY B. CAMERON
Title Chairman of the Board
Chief Executive Officer
WEST ONE BANCORP
By /S/ DANIEL R. NELSON
Title Chairman and Chief Executive Officer
<PAGE>
STOCK OPTION AGREEMENT
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated May 6, 1995, between WEST ONE BANCORP,
an Idaho corporation ("Issuer"), and U. S. BANCORP, an Oregon corporation
("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger dated May 5, 1995 (the "Merger Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement
and in consideration therefor, Issuer has agreed to grant Grantee the Option
(as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to
7,330,184 fully paid and nonassessable shares of Issuer's Common Stock, $5
par value per share ("Common Stock"), at a price of $34.00 per share (the
"Option Price"); provided further that in no event shall the number of shares
of Common Stock for which this Option is exercisable exceed 19.9 percent of
the Issuer's issued and outstanding shares of Common Stock. The number of
shares of Common Stock that may be received upon the exercise of the Option
and the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are
issued or otherwise become outstanding after the date of this Agreement
(other than pursuant to this Agreement), the number of shares of Common Stock
subject to the Option shall be increased so that, after such issuance, it
equals 19.9 percent of the number of shares of Common Stock then issued and
outstanding without giving effect to any shares subject or issued pursuant to
the Option. Nothing contained in this Section 1(b) or elsewhere in this
Agreement shall be deemed to authorize Issuer or Grantee to breach any
provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option,
in whole or in part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event
(as hereinafter defined) shall have occurred prior to the occurrence of an
Exercise Termination Event (as hereinafter defined), provided that the Holder
shall have sent the written notice of such exercise (as provided in
subsection (e) of this
-1-
<PAGE>
Section 2) within 90 days following such Subsequent Triggering Event. Each of
the following shall be an Exercise Termination Event: (i) the Effective Time
of the Merger; (ii) termination of the Merger Agreement in accordance with
the provisions thereof if such termination occurs prior to the occurrence of
an Initial Triggering Event except a termination by Grantee pursuant to
Section 8.1(d) of the Merger Agreement (unless the breach by Issuer giving
rise to such right of termination is non-volitional); (iii) the passage of 12
months after termination of the Merger Agreement if such termination follows
the occurrence of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(d) of the Merger Agreement (unless the breach by
Issuer giving rise to such right of termination is non-volitional) (provided
that if an Initial Triggering Event continues or occurs beyond such
termination and prior to the passage of such 12-month period, the Exercise
Termination Event shall be 12 months from the expiration of the Last
Triggering Event but in no event more than 18 months after such termination)
or (iv) the third anniversary of the date hereof. The "Last Triggering
Event" shall mean the last Initial Triggering Event to expire. The term
"Holder" shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition Transaction (as hereinafter
defined) with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer shall
have recommended that the stockholders of Issuer approve or accept any such
Acquisition Transaction. For purposes of this Agreement, "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any similar
transaction, involving Issuer or any Significant Subsidiary (as defined in
Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) of Issuer, (x) a purchase, lease, or other
acquisition of all or a substantial portion of the assets of Issuer or any
Significant Subsidiary of Issuer, (y) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
securities representing 10 percent or more of the voting power of Issuer or
any Significant Subsidiary of Issuer, or (z) any substantially similar
transaction; provided, however, that in no event shall any (i) merger,
consolidation, or similar transaction involving Issuer or any Significant
Subsidiary 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 65 percent of the combined voting power of the
voting securities of the Issuer or the surviving entity outstanding
immediately after the consummation of such merger, consolidation, or
similar transaction, or
-2-
<PAGE>
(ii) any merger, consolidation, purchase, or similar transaction involving
only the Issuer and one or more of its Subsidiaries or involving only any
two or more of such Subsidiaries, be deemed to be an Acquisition
Transaction, provided any such transaction is not entered into in violation
of the terms of the Merger Agreement;
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended,
proposed, or publicly announced its intention to authorize, recommend, or
propose, to engage in an Acquisition Transaction with any person other than
Grantee or a Grantee Subsidiary, or the Board of Directors of Issuer shall
have publicly withdrawn or modified, or publicly announced its interest to
withdraw or modify, in any manner adverse to Grantee, its recommendation
that the stockholders of Issuer approve the transactions contemplated by
the Merger Agreement;
(iii) Any person other than Grantee, any Grantee Subsidiary, or
any Issuer Subsidiary acting in a fiduciary capacity in the ordinary course
of its business shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 15 percent or more of the outstanding
shares of Common Stock (the term "beneficial ownership" for purposes of
this Option Agreement having the meaning assigned thereto in Section 13(d)
of the 1934 Act, and the rules and regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary shall
have made a bona fide proposal to Issuer or its stockholders by public
announcement or written communication that is or becomes the subject of
public disclosure to engage in an Acquisition Transaction;
(v) After an overture is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Merger Agreement and
such breach (x) would entitle Grantee to terminate the Merger Agreement and
(y) shall not have been cured prior to the Notice Date (as defined below);
or
(vi) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has given its
prior written consent, shall have filed an application or notice with the
Federal Reserve Board, or other federal or state bank regulatory authority,
which application or notice has been accepted for processing, for approval
to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean either of
the following events or transactions occurring after the date hereof:
-3-
<PAGE>
(i) The acquisition by any person of beneficial ownership of
25 percent or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection (b) of this Section 2, except that the percentage
referred to in clause (y) shall be 25 percent.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event"), it being understood that the giving of such
notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and 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
shares it will purchase pursuant to such exercise and (ii) a place and date
not earlier than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided
that if prior notification to or approval of the Federal Reserve Board or any
other regulatory agency is required in connection with such purchase, the
Holder shall promptly file the required notice or application for approval
and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date
on which any required notification periods have expired or been terminated or
such approvals have been obtained and any requisite waiting period or periods
shall have passed. Any exercise of the Option shall be deemed to occur on
the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section
2, the Holder shall pay to Issuer the aggregate purchase price for the shares
of Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated by
Issuer, provided that failure or refusal of Issuer to designate such a bank
account shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of shares of Common Stock purchased by the Holder and, if the
Option should be exercised in part only, a new Option evidencing the rights
of the Holder thereof to purchase the balance of the shares purchasable
hereunder, and the Holder shall deliver to Issuer a copy of this Agreement
and a letter agreeing that the Holder will not offer to sell or otherwise
dispose of such shares in violation of applicable law or the provisions of
this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the
-4-
<PAGE>
registered holder hereof and Issuer and to resale restrictions
arising under the Securities Act of 1933, as amended. A copy
of such agreement is on file at the principal office of Issuer and
will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933 Act"), in
the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the 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, to the effect that such legend
is not required for purposes of the 1933 Act; (ii) the reference to the
provisions to this Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the shares have been
sold or transferred in compliance with the provisions of this Agreement and
under circumstances that do not require the retention of such reference; and
(iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2
and the tender of the applicable purchase price in immediately available
funds, the Holder shall be deemed to be the holder of record of the shares of
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 Common Stock shall not then be actually delivered
to the 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, issue, and delivery of stock certificates
under this Section 2 in the name of the Holder or its assignee, transferee,
or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities, and other rights to purchase 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 (x) complying with all premerger notification,
reporting, and waiting period requirements specified in 15 USC Section 18 and
regulations promulgated thereunder and (y) in the event, under the Bank
Holding Company Act of 1956, as amended (the "BHCA"), or the Change in Bank
Control Act of 1978, as amended, or any state banking law, prior approval of
or notice to the Federal Reserve Board or to any state regulatory authority
is necessary before the Option may be exercised, cooperating fully with the
Holder in preparing such applications or notices and providing such
information to the Federal Reserve Board or such state regulatory authority
as they may require) in order to permit the Holder to exercise the Option and
Issuer
-5-
<PAGE>
duly and effectively to issue shares of Common Stock pursuant hereto; and
(iv) promptly to take all action provided herein to protect the rights of the
Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the 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, on the same terms and subject to the same condition as are set
forth herein, in the aggregate the same number of shares of Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any Stock Option 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.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1
of this Agreement, the number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject to adjustment
from time to time as provided in this Section 5. In the event of any change
in, or distributions in respect of, the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares, distributions on or in respect of the
Common Stock that would be prohibited under the terms of the Merger
Agreement, or the like, the type and number of shares of Common Stock
purchasable upon exercise hereof and the Option Price shall be appropriately
adjusted in such manner as shall fully preserve the economic benefits
provided hereunder and proper provision shall be made in any agreement
governing any such transaction to provide for such proper adjustment and the
full satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee delivered within 90 days of such Subsequent Triggering Event (whether
on its own behalf or on behalf of any subsequent holder of this Option (or
part thereof) or any of the shares of Common Stock issued pursuant hereto),
promptly prepare, file, and keep current a shelf registration statement under
the 1933 Act covering this Option and any shares issued and issuable pursuant
to this Option and shall use its reasonable best efforts to cause such
registration statement to become effective and remain current in order to
permit the sale or other disposition of this Option and any shares of Common
Stock issued upon total or partial exercise of this Option ("Option Shares")
in accordance with any plan of disposition requested by Grantee. Issuer will
use its reasonable best efforts to cause such registration statement first to
become effective and then to remain effective for such period not in excess
of 180 days from the date such registration statement first becomes effective
or such shorter time as may be reasonably necessary to effect such sales or
other dispositions. Grantee shall have the right to demand two such
registrations. The foregoing
-6-
<PAGE>
notwithstanding, if, at the time of any request by Grantee for registration
of the Option or Option Shares as provided above, Issuer is in registration
with respect to an underwritten public offering of shares of Common Stock,
and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering the inclusion of the Holder's Option or Option Shares would
interfere with the successful marketing of the shares of Common Stock offered
by Issuer, the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced; and provided,
however, that after any such required reduction the number of Option Shares
to be included in such offering for the account of the Holder shall
constitute at least 25 percent of the total number of shares to be sold by
the Holder and Issuer in the aggregate; and provided further, however, that
if such reduction occurs, then the Issuer shall file a registration statement
for the balance as promptly as practical and no reduction shall thereafter
occur. Each such Holder shall provide all information reasonably requested
by Issuer for inclusion in any registration statement to be field hereunder.
If requested by any such Holder in connection with such registration, Issuer
shall become a party to any underwriting agreement relating to the sale of
such shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities, and other agreements customarily
included in such underwriting agreements for the Issuer. Upon receiving any
request under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same,
postage prepaid, to the address of record of the persons entitled to receive
such copies. Notwithstanding anything to the contrary contained herein, in no
event shall Issuer be obligated to effect more than two registrations
pursuant to this Section 6 by reason of the fact that there shall be more
than one Grantee as a result of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase Event (as
defined below), (i) following a request of the Holder, delivered prior to an
Exercise Termination Event, Issuer (or any successor thereto) shall
repurchase the Option from the Holder at a price (the "Option Repurchase
Price") equal to the amount by which (A) the market/offer price (as defined
below) exceeds (B) the Option Price, multiplied by the number of shares for
which this Option may then be exercised and (ii) at the request of the owner
of Option Shares from time to time (the "Owner"), delivered within 90 days of
such occurrence (or such later period as provided in Section 10), Issuer
shall repurchase such number of the Option Shares from the Owner as the Owner
shall designate at a price (the "Option Share Repurchase Price") equal to the
market/offer price multiplied by the number of Option Shares so designated.
The term "market/offer price" shall mean the highest of the following amounts
with respect to the six-month period immediately preceding the date the
Holder gives notice of the required repurchase of this Option or the Owner
gives notice of the required repurchase of Option Shares, as the case may be
(i) the price per share of Common Stock at which a tender offer or exchange
offer therefor has been made, (ii) the price per share of Common Stock to be
paid by any third party pursuant to an agreement with Issuer, (iii) the
highest closing price for shares of Common Stock, or (iv) in the event of a
sale of all or a substantial portion of Issuer's assets, 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 the Holder or the Owner, as the case may
be, divided by the number of shares of Common Stock of Issuer
-7-
<PAGE>
outstanding at the time of such sale. In determining the market/offer price,
the value of consideration other than cash shall be determined by a
nationally recognized investment banking firm selected by the Holder or
Owner, as the case may be, and reasonably acceptable to Issuer.
Notwithstanding the foregoing, if the same person who has participated in a
Triggering Event has entered, or after such Triggering Event has occurred
enters, into any agreement or understanding with Grantee relating to Grantee
s rights under this Option or with respect to the Option Shares or directly
or indirectly relating to Issuer, Grantee shall, notwithstanding the terms of
such agreement or understanding, at any time upon the occurrence of a
Subsequent Triggering Event of the type set forth in Section 3(d)(i) without
Issuer s approval, recommendation or consent, promptly request that Issuer
repurchase the Option and any Option Shares held by Grantee as provided in
this Section 8 and Issuer shall do so.
(b) The Holder and the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares,
as applicable, accompanied by a written notice or notices stating that the
Holder or the Owner, as the case may be, elects to require Issuer to
repurchase this Option and/or the Option Shares in accordance with the
provisions of this Section 7. Within the latter to occur of (x) five
business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or notices relating
thereto and (y) the time that is immediately prior to the occurrence of a
Repurchase Event, Issuer shall deliver or cause to be delivered to Holder the
Option Repurchase Price and/or to the Owner the Option Share Repurchase Price
therefor or the portion thereof that Issuer is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law
or regulation from repurchasing the Option and/or the Option Shares in full,
Issuer shall immediately so notify the Holder and/or the Owner and thereafter
deliver or cause to be delivered, from time to time, to the Holder and/or the
Owner, as appropriate, the portion of the Option Repurchase Price and the
Option Share Repurchase Price, respectively, that it is no longer prohibited
from delivering, within five business days after the date on which Issuer is
no longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to paragraph (b) of this Section
7 is prohibited under applicable law or regulation from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its best efforts to obtain all required regulatory and
legal approvals and file any required notices as promptly as practicable in
order to accomplish such repurchase), the Holder or Owner may revoke its
notice of repurchase of the Option or the Option Shares either in whole or to
the extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price or the Option Share Repurchase Price
that Issuer is not prohibited from delivering; and (ii) deliver, as
appropriate, either (A) to the Holder, a new Stock Option Agreement
evidencing the right of the Holder to purchase that number of shares of
Common Stock obtained by multiplying the number of shares of Common Stock for
which the surrendered Stock Option Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Option
-8-
<PAGE>
Repurchase Price less the portion thereof theretofore delivered to the Holder
and the denominator of which is the Option Repurchase Price, or (B) to the
Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall be
deemed to have occurred (i) upon the consummation of any merger,
consolidation, or similar transaction involving Issuer or any purchase,
lease, or other acquisition of all or a substantial portion of the assets of
Issuer, other than any such transaction which would not constitute an
Acquisition Transaction pursuant to the proviso to Section 2(b)(i) hereof or
(ii) upon the acquisition by any person of beneficial ownership of 50 percent
or more of the then outstanding shares of Common Stock, provided that no such
event shall constitute a Repurchase Event unless a Subsequent Triggering
Event shall have occurred prior to an Exercise Termination Event. The
parties hereto agree that Issuer's obligations to repurchase the Option or
Option Shares under this Section 7 shall not terminate upon the occurrence of
an Exercise Termination Event unless no Subsequent Triggering Event shall
have occurred prior to the occurrence of an Exercise Termination Event.
8. (a) In the event that prior to an Exercise Termination Event,
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 Common Stock
shall be changed into or exchanged for stock or other securities of any other
person or cash or any other property or the then outstanding shares of Common
Stock shall after such merger represent less than 50 percent of the
outstanding voting shares and voting share equivalents of the merged company,
or (iii) to sell or otherwise transfer all or substantially all of its assets
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
provision 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 the Holder, of either (x) the Acquiring Corporation (as hereinafter
defined) or (y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, and (iii) the transferee of all or
substantially all of Issuer's assets.
(2) "Substitute Common Stock" shall mean the common stock
issued by the Issuer of the Substitute Option upon exercise of the
Substitute Option.
-9-
<PAGE>
(3) "Assigned Value" shall mean the market/offer price, as
defined in Section 7.
(4) "Average Price" shall mean the average closing price of a
share of the 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 date 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 the person merging into Issuer or by any
company which controls or is controlled by such person, as the
Holder may elect.
(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 the Holder. The issuer of the
Substitute Option shall also enter into an agreement with the then Holder or
Holders of the Substitute Option 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 is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option is
then exercisable, divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal to
the Option Price multiplied by a fraction, the numerator of which shall be
the number of shares of Common Stock for which the Option is then exercisable
and the denominator of which shall be the number of shares of Substitute
Common Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9 percent of the
shares of Substitute Common Stock outstanding prior to the exercise of the
Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9 percent of the shares of Substitute Common
Stock outstanding prior to exercise but for this clause (e), the issuer of
the Substitute Option (the "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 this clause (e) over (ii)
the value of the Substitute Option after giving effect to the limitation in
this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder.
-10-
<PAGE>
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall repurchase the Substitute Option from the
Substitute Option Holder at a price (the "Substitute Option Repurchase
Price") equal to the amount by which (i) the Highest Closing Price (as
hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for
which the Substitute Option may then be exercised, and at the request of the
owner (the "Substitute Share Owner") of shares of Substitute Common Stock
(the "Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal
to the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of
the required repurchase of the Substitute Option or the Substitute Share
Owner gives notice of the required repurchase of the Substitute Shares, as
applicable.
(b) The Substitute Option Holder and the Substitute Share Owner,
as the case may be, may exercise its respective rights to require the
Substitute Option Issuer to repurchase the Substitute Option and the
Substitute Shares pursuant to this Section 9 by surrendering for such purpose
to the Substitute Option Issuer, at its principal office, the agreement for
such Substitute Option (or, in the absence of such an agreement, a copy of
this Agreement) and certificates for Substitute Shares accompanied by a
written notice or notices stating that the Substitute Option Holder or the
Substitute Share Owner, as the case may be, elects to require the Substitute
Option Issuer to repurchase the Substitute Option and/or the Substitute
Shares in accordance with the provisions of this Section 9. As promptly as
practicable, and in any event within five business days after the surrender
of the Substitute Option and/or certificates representing Substitute Shares
and the receipt of such notice or notices relating thereto, the Substitute
Option Issuer shall deliver or cause to be delivered to the Substitute Option
Holder the Substitute Option Repurchase Price and/or to the Substitute Share
Owner the Substitute Share Repurchase Price therefor or the portion thereof
which the Substitute Option Issuer is not then prohibited under applicable
law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited
under applicable law or regulation from repurchasing the Substitute Option
and/or the Substitute Shares in part or in full, the Substitute Option Issuer
shall immediately so notify the Substitute Option Holder and/or the
Substitute Share Owner and thereafter deliver or cause to be delivered, from
time to time, to the Substitute Option Holder and/or the Substitute Share
Owner, as appropriate, the portion of the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from delivering, within five
business days after the date on which the Substitute Option Issuer is no
longer so prohibited; provided, however, that if the Substitute Option Issuer
is at any time after delivery of a notice of repurchase pursuant to
subsection (b) of this Section 9 prohibited under applicable law or
regulation from delivering to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the Substitute Option Repurchase
Price and the Substitute Share Repurchase Price, respectively, in full (and
the Substitute Option Issuer shall use its best efforts to receive all
required regulatory and legal approvals as promptly as practicable in order
to accomplish such repurchase), the Substitute Option Holder or Substitute
-11-
<PAGE>
Share Owner may revoke its notice of repurchase of the Substitute Option or
the Substitute Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, the Substitute Option Issuer shall promptly
(i) deliver to the Substitute Option Holder or Substitute Share Owner, as
appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to
the Substitute Option Holder, a new Substitute Option evidencing the right of
the Substitute Option Holder to purchase that number of shares of the
Substitute Common Stock obtained by multiplying the number of shares of the
Substitute Common Stock for which the surrendered Substitute Option was
exercisable at the time of delivery of the notice of repurchase by a
fraction, the numerator of which is the Substitute Option Repurchase Price
less the portion thereof theretofore delivered to the Substitute Option
Holder and the denominator of which is the Substitute Option Repurchase
Price, or (B) to the Substitute Share Owner, a certificate for the Substitute
Option Shares it is then so prohibited from repurchasing.
10. The 90-day period for exercise of certain rights under Sections 2,
6, 7, and 13 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights and for the expiration
of all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) 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 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) Issuer has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and at all times from the date hereof
through the termination of this Agreement in accordance with its terms will
have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock
at any time and from time to time issuable hereunder, and all such shares,
upon issuance pursuant hereto, will be duly authorized, validly issued, fully
paid, nonassessable, and will be delivered free and clear of all claims,
liens, encumbrances, and security interests and not subject to any preemptive
rights.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals or consents referred
to herein, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all
-12-
<PAGE>
necessary corporate action on the part of Grantee. This Agreement has been
duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or
other securities acquired by Grantee upon exercise of the Option will not be,
acquired 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.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to
any other person, without the express written consent of the other party,
except that in the event a Subsequent Triggering Event shall have occurred
prior to an Exercise Termination Event, Grantee, subject to the express
provisions hereof, may assign in whole or in part its rights and obligations
hereunder within 90 days following such Subsequent Triggering Event (or such
later period as provided in Section 10); provided, however, that until the
date 15 days following the date on which the Federal Reserve Board approves
an application by Grantee under the BHCA to acquire the shares of Common
Stock subject to the Option, Grantee may not assign its rights under the
Option except in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase in excess of 2
percent of the voting shares of Issuer, (iii) an assignment to a single party
(e.g., a broker or investment banker) for the purpose of conducting a widely
dispersed public distribution on Grantee's behalf, or (iv) any other manner
approved by the Federal Reserve Board.
14. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation making application to list the
shares of Common Stock issuable hereunder on the NASDAQ Stock Market National
Market System upon official notice of issuance and applying to the Federal
Reserve Board under the BHCA for approval to acquire the shares issuable
hereunder, but Grantee shall not be obligated to apply to state banking
authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.
15. Notwithstanding anything to the contrary herein, in the event that
the Holder or Owner or any Related Person (as hereinafter defined) thereof is
a person making an offer or proposal to engage in an Acquisition Transaction
(other than the transaction contemplated by the Merger Agreement), then (i)
in the case of a Holder or any Related Person thereof, the Option held by it
shall immediately terminate and be of no further force or effect, and (ii) in
the case of an Owner or any Related Person thereof, the Option Shares held by
it shall be immediately repurchasable by Issuer at the Option Price. A
"Related Person" of a Holder or Owner means any "affiliate" (as defined in
Rule 12b-2 of the rules and regulations under the 1934 Act) of the Holder or
Owner and any person that is the beneficial owner of 25% or more of the
voting power of the Holder or Owner, as the case may be.
-13-
<PAGE>
16. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
17. If any term, provision, covenant, or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void, or unenforceable, the remainder
of the terms, provisions, and covenants and restrictions contained in 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
regulatory agency determines that the Holder is not permitted to acquire, or
Issuer is not permitted to repurchase pursuant to Section 7, the full number
of shares of Common Stock provided in Section 1(a) hereof (as adjusted
pursuant to Section 1(b) or 5 hereof), it is the express intention of Issuer
to repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
18. All notices, requests, claims, demands, and other communications
hereunder shall be deemed to have been duly given when delivered in person,
by cable, telegram, telecopy, or telex, or by registered or certified mail
(postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Merger Agreement.
19. This Agreement shall be governed by and construed in accordance
with the laws of the State of Oregon, regardless of the laws hat might
otherwise govern under applicable principles of conflicts of laws thereof.
20. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
21. Except as otherwise expressly provided herein, 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.
22. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all
prior arrangements or understandings with respect thereof, written or oral.
The terms and conditions of this Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors except as assigns, any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided herein.
23. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
-14-
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.
U. S. BANCORP
By /S/ GERRY B. CAMERON
Title Chairman of the Board
Chief Executive Officer
WEST ONE BANCORP
By /S/ DANIEL R. NELSON
Title Chairman and Chief Executive Officer
<PAGE>
U.S. BANCORP AND SUBSIDIARIES Exhibit 12.1
COMPUTATION OF RATIOS OF CONSOLIDATED EARNINGS TO FIXED CHARGES
(In Thousands)
<TABLE>
<CAPTION>
For Three Months
Ended March 31, For the Years Ended December 31,
-------------------- --------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Considering Interest on Deposits as
an Operating Expense
- -----------------------------------
Net income $ 66,548 $(28,465) $151,495 $257,949 $148,184 $190,926 $190,791
Accounting changes - - - - 59,890 - -
Income taxes 34,018 (12,199) 64,601 126,300 92,548 84,534 75,058
------- ------- ------- ------- ------- ------- -------
Earnings before income taxes
and accounting changes 100,566 (40,664) 216,096 384,249 300,622 275,460 265,849
------- ------- ------- ------- ------- ------- -------
Add fixed charges
Interest on borrowed funds
including capitalized interest 59,039 35,720 173,826 139,890 183,214 245,685 313,807
Interest income from federal
funds sold (A) (787) (572) (2,591) (4,233) (10,851) (23,207) (23,129)
Interest component of leases (B) 3,424 3,463 15,174 13,985 12,888 11,932 10,505
------- ------- ------- ------- ------- ------- -------
Total fixed charges 61,676 38,611 186,409 149,642 185,251 234,410 301,183
Less capitalized interest - - (93) (96) (470) (1,532) (77)
------- ------- ------- ------- ------- ------- -------
Fixed charges 61,676 38,611 186,316 149,546 184,781 232,878 301,106
------- ------- ------- ------- ------- ------- -------
Earnings before income taxes,
accounting changes and
fixed charges $162,242 ($2,053) $402,412 $533,795 $485,403 $508,338 $566,955
======= ======= ======= ======= ======= ======= =======
Ratio of earnings to total fixed
charges 2.63 -(C) 2.16x 3.57x 2.62x 2.17x 1.88x
==== = ==== ==== ==== ==== ====
</TABLE>
<PAGE>
U.S. BANCORP AND SUBSIDIARIES Exhibit 12.1.1
COMPUTATION OF RATIOS OF CONSOLIDATED EARNINGS TO FIXED CHARGES (Continued)
(In Thousands)
<TABLE>
<CAPTION>
For Three Months
Ended March 31, For the Years Ended December 31,
------------------ ----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Considering Interest on Deposits as
Fixed Charges (A)
- -----------------------------------
Fixed charges as shown above $ 61,676 $ 38,611 $186,316 $149,642 $185,251 $ 234,410 $ 301,183
Interest on deposits 104,233 80,974 344,194 365,791 448,372 625,166 712,103
------- ------- ------- ------- ------- --------- ---------
Total fixed charges 165,909 119,585 530,510 515,433 633,623 859,576 1,013,286
Less capitalized interest - - (93) (96) (470) (1,532) (77)
------- ------- ------- ------- ------- --------- ---------
Fixed charges 165,909 119,585 530,417 515,337 633,153 858,044 1,013,209
Add earnings before income
taxes and accounting changes 100,566 (40,664) 216,096 384,249 300,622 275,460 265,849
------- ------- ------- ------- ------- --------- ---------
Earnings before income taxes,
accounting changes and fixed
charges $266,475 $ 78,921 $746,513 $899,586 $933,775 $1,133,504 $1,279,058
======= ======= ======= ======= ======= ========= =========
Ratio of earnings to total fixed
charges 1.61x -(C) 1.41x 1.75x 1.47x 1.32x 1.26x
==== = ==== ==== ==== ==== ====
<FN>
- ------------------------------------
(A) Approximates interest expense related to federal funds purchased
transactions for purposes other than the funding of banking subsidiaries'
operations.
(B) Interest component of leases includes imputed interest on capitalized
leases and approximately one-third of rental expense, which approximates
the interest component of operating leases.
(C) For the first quarter 1994, fixed charges exceeded earnings (as defined) as
the result of a $100 million restructuring charge for staff reduction,
facilities closures and divestiture of noncore activities.
</TABLE>
<PAGE>
U.S. BANCORP AND SUBSIDIARIES Exhibit 12.2
CAPITAL RATIOS
(In Thousands)
<TABLE>
<CAPTION>
March 31,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
Total assets as reported $21,438,970 $21,071,415
Shareholders' equity as reported 1,830,915 1,751,727
Tier 1 capital 1,679,078 1,564,537
Total capital 2,245,991 2,111,926
Weighted risk assets 20,079,149 18,495,503
Adjusted quarterly average assets 21,096,638 20,948,135
Ratios
Tier 1 capital to weighted risk assets 8.36% 8.46%
Total capital to weighted risk assets 11.19% 11.42%
Tier 1 capital to adjusted average assets (leverage ratio) 7.96% 7.47%
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,276,957
<INT-BEARING-DEPOSITS> 1,118
<FED-FUNDS-SOLD> 99,719
<TRADING-ASSETS> 158,194
<INVESTMENTS-HELD-FOR-SALE> 1,271,550
<INVESTMENTS-CARRYING> 1,340,175
<INVESTMENTS-MARKET> 1,313,482
<LOANS> 15,667,762
<ALLOWANCE> 307,088
<TOTAL-ASSETS> 21,438,970
<DEPOSITS> 14,821,934
<SHORT-TERM> 3,190,842
<LIABILITIES-OTHER> 449,401
<LONG-TERM> 852,664
<COMMON> 490,778
0
150,000
<OTHER-SE> 1,190,137
<TOTAL-LIABILITIES-AND-EQUITY> 21,438,970
<INTEREST-LOAN> 363,172
<INTEREST-INVEST> 39,490
<INTEREST-OTHER> 7,922
<INTEREST-TOTAL> 410,584
<INTEREST-DEPOSIT> 104,233
<INTEREST-EXPENSE> 163,272
<INTEREST-INCOME-NET> 247,312
<LOAN-LOSSES> 20,414
<SECURITIES-GAINS> 35
<EXPENSE-OTHER> 224,544
<INCOME-PRETAX> 100,566
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,548
<EPS-PRIMARY> .65
<EPS-DILUTED> .65
<YIELD-ACTUAL> 5.45
<LOANS-NON> 155,988
<LOANS-PAST> 17,587
<LOANS-TROUBLED> 1,273
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 305,802
<CHARGE-OFFS> 26,103
<RECOVERIES> 10,367
<ALLOWANCE-CLOSE> 307,088
<ALLOWANCE-DOMESTIC> 198,252
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 108,837
</TABLE>
