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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
CALIFORNIA BANCSHARES, INC.
(Name of Issuer)
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Common Stock, $2.50 Par Value Per Share
(Title of Class of Securities)
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129904 10 8
(CUSIP Number)
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Dwight V. Board
Executive Vice President
U. S. Bancorp
111 S.W. Fifth Avenue
Portland, Oregon 97204
(503) 275-3706
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
With copies to:
John J. DeMott
Miller, Nash, Wiener, Hager & Carlsen
111 S.W. Fifth Avenue, Suite 3500
Portland, Oregon 97204
(503) 224-5858
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February 12, 1996
(Date of Event Which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Check the following box if a fee is being paid with the statement: [X].
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 (the "Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act.
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SCHEDULE 13D
CUSIP No. 129904 10 8
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1 NAME OF REPORTING PERSON
S.S OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
U. S. BANCORP
IRS Employer Identification No. 93-0571730
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)[ ]
(b)[ ]
Not applicable
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC, 00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) OR 2(e) [ ]
Not applicable
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Oregon
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NUMBER OF 7 SOLE VOTING POWER
SHARES 2,002,076*
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 2,002,076*
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,002,076*
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.6%**
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14 TYPE OF REPORTING PERSON
CO
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* Beneficial ownership of these shares is being reported solely as a result
of the Option Agreement described in Items 4 and 6 hereof. The option
granted to U. S. Bancorp ("Option") pursuant to the Option Agreement has
not yet become exercisable. U. S. Bancorp expressly disclaims beneficial
ownership of these shares pursuant to Rule 13d-4 under the Securities
Exchange Act of 1934, as amended. See Item 5 hereof.
** Gives effect to issuance of shares of California Bancshares, Inc., Common
Stock subject to the Option.
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Item 1. Security and Issuer.
This Schedule 13D relates to the common stock, $2.50 par value per share
(the "CBI Common Stock"), of California Bancshares, Inc. ("CBI"). The
principal executive offices of CBI, a corporation organized and existing under
the laws of the State of Delaware and registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended (the "BHC Act"), are
located at 100 Park Place, Suite 140, San Ramon, California 94583.
Item 2. Identity and Background.
(a),(b),(c),(f) This Schedule 13D is being filed by U. S. Bancorp, a
corporation organized and existing under the laws of the State of Oregon and
registered as a bank holding company under the BHC Act. U. S. Bancorp is
engaged, through its banking subsidiaries and various banking-related
subsidiaries, in a broad range of banking operations and banking related
business--principally in the states of Oregon, Washington, California, Nevada,
Idaho, and Utah. U. S. Bancorp's principal offices are located at 111 S.W.
Fifth Avenue, Portland, Oregon 97204.
Each executive officer and each director of U. S. Bancorp is a citizen of
the United States. The name, business address, and present principal
occupation of each executive officer and director is set forth in Exhibit 1.A
to this Schedule 13D and specifically incorporated herein by reference.
Other than executive officers and directors, there are no persons or
corporations controlling or ultimately in control of U. S. Bancorp.
(d),(e) During the last five years, to the best of U. S. Bancorp's
knowledge, neither U. S. Bancorp nor any of its executive officers or
directors has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or has been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction as a result of
which U. S. Bancorp or such person was or is subject to a judgment, decree, or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws, or finding any
violation with respect to such laws, and which judgment, decree or final order
was not subsequently vacated.
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to a Stock Option Agreement dated as of February 12, 1996, between
CBI and U. S. Bancorp (the "Option Agreement"), CBI has granted to U. S.
Bancorp an irrevocable option to purchase the shares of CBI Common Stock
covered by this Schedule 13D (the "Option"). Specifically, the Option grants
to U. S. Bancorp the right to purchase up to 2,002,076 shares, subject to
certain adjustments, of CBI Common Stock at a price, subject to certain
adjustments, of $25.75 per share. The Option was granted by CBI as a
condition of and in consideration for U. S. Bancorp's entering into the
Agreement and Plan of Merger, dated February 11, 1996, between U. S. Bancorp
and CBI (the "Merger Agreement").
The exercise of the Option for the full number of shares currently covered
thereby would require aggregate funds of $51,553,457. U. S. Bancorp currently
anticipates that, should the Option become exercisable and should U. S.
Bancorp decide to exercise the Option, U. S. Bancorp would obtain the funds
for purchase from U. S. Bancorp's general corporate funds.
A copy of the Option Agreement is included as Exhibit 1.B to this
Schedule 13D and is specifically incorporated herein by reference.
Item 4. Purpose of Transaction.
(a),(b),(c),(f),(j)
The Merger.
One day prior to the execution of the Option Agreement, U. S. Bancorp and
CBI entered into the Merger Agreement, pursuant to which CBI would be merged
with and into U. S. Bancorp (the "Merger"). Under the Merger Agreement, each
share of CBI Common Stock outstanding immediately prior to the effective time
of the Merger (the "Effective Time") will be converted into the right to
receive 0.95 shares (the "Exchange Ratio") of U. S. Bancorp Common Stock, par
value $5.00 per share ("U. S. Bancorp Common Stock"). A copy of the Merger
Agreement is included as Exhibit 1.C to this Schedule 13D and is specifically
incorporated herein by reference.
Consummation of the transactions contemplated by the Merger Agreement is
subject to the terms and conditions contained in the Merger Agreement,
including the receipt of approval of the Merger by the stockholders of CBI and
the receipt of certain regulatory approvals. The Merger Agreement and the
transactions contemplated by the Merger will be submitted for approval at a
meeting of the stockholders of CBI that is expected to take place during the
second quarter of 1996.
Option Agreement.
The Option was granted by CBI as a condition of and in consideration for
U. S. Bancorp's entering into the Merger Agreement. Reference is made to
Item 6 hereof for a more detailed summary of the terms of the Option
Agreement.
(d) Pursuant to the Merger Agreement, U. S. Bancorp will be the surviving
corporation in the Merger and, accordingly, the issuer will be managed by
U. S. Bancorp's board of directors and executive officers following the
Merger. The Merger Agreement provides that the board of directors of the
surviving corporation shall consist of the members of the U. S. Bancorp board
of directors immediately prior to the Merger. There are no present plans to
add any directors of CBI to the U. S. Bancorp board of directors. U. S.
Bancorp has entered into an employment agreement with Joseph P. Colmery, chief
executive officer of CBI, to employ Mr. Colmery as an executive vice president
of the U. S. Bancorp entity which operates the CBI branches.
(e) The Merger Agreement provides that, prior to the Effective Time, CBI
generally may not pay dividends on CBI Common Stock except regular quarterly
dividends. Such regular dividends may be increased to the extent consistent
with past practice. After completion of the Merger, U. S. Bancorp's board of
directors may review the ongoing dividend policy of the combined organization.
(g) At the Effective Time, the articles of incorporation and bylaws of the
combined organization will be those of U. S. Bancorp as in effect immediately
preceding the Effective Time.
(h),(i) Upon consummation of the Merger, the CBI Common Stock will become
eligible for termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"). In addition,
the CBI Common Stock will cease to be authorized for quotation on the NASDAQ
system.
Item 5. Interest in Securities of the Issuer.
(a),(b),(c) U. S. Bancorp may be deemed to be the beneficial owner of
2,002,076 shares of CBI Common Stock that are subject to the Option. As
provided in the Option Agreement, U. S. Bancorp may exercise the Option only
upon the happening of one or more events, none of which has occurred. See
Item 6 hereof. Because the Option is not presently exercisable, U. S. Bancorp
expressly disclaims beneficial ownership of any of the shares of CBI Common
Stock that are subject to the Option. The shares of CBI Common Stock that are
subject to the Option represent approximately 19.9% of the currently
outstanding shares of CBI Common Stock, or approximately 16.6% of the shares
of CBI Common Stock that would be outstanding if the Option were exercised in
full. U. S. Bancorp has no right to vote or dispose of any of the shares of
CBI Common Stock that are subject to the Option unless and until such time as
the Option is exercised, in which event U. S. Bancorp would have sole power to
vote and sole power to direct the disposition of such shares of CBI Common
Stock, subject to the right of CBI under the terms of the Option Agreement to
repurchase such shares under the circumstances described in Item 6 hereof. To
the best knowledge of U. S. Bancorp, none of the persons listed in Exhibit 1.A
hereto beneficially owns any shares of CBI Common Stock. Neither U. S.
Bancorp nor, to the best of its knowledge, any of the persons listed in
Exhibit 1.A hereto has effected any transactions in CBI Common Stock during
the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
Option Agreement.
Set forth below is a description of selected provisions of the Option
Agreement. Such description is qualified in its entirety by reference to the
copy of the Option Agreement filed as Exhibit 1.B hereto and specifically
incorporated by reference herein.
The Option Agreement provides for the purchase by U. S. Bancorp of up to
2,002,076 shares, subject to certain adjustments, of CBI Common Stock (the
"Option Shares") at an exercise price, subject to certain adjustments, of
$25.75 per share, payable in cash. The Option Shares, if issued pursuant to
the Option Agreement, would represent approximately 19.9% of the CBI Common
Stock issued and outstanding at the date of the Option Agreement without
giving effect to the issuance of any shares pursuant to an exercise of the
Option.
The number of shares of CBI Common Stock subject to the Option will be
increased to the extent that CBI issues additional shares of CBI Common Stock
(otherwise than pursuant to an exercise of the Option) such that the number of
Option Shares continues to equal 19.9% of the shares of CBI Common Stock then
issued and outstanding, without giving effect to the issuance of shares
pursuant to an exercise of the Option. The number of shares of CBI Common
Stock subject to the Option, and the applicable exercise price per Option
Share, will also be appropriately adjusted in the event of any change in, or
distributions in respect of, the CBI Common Stock by reason of stock dividend,
split-up, merger, recapitalization, combination, subdivision, conversion,
exchange of shares, distributions on or in respect of the CBI Common Stock
that would be prohibited under the terms of the Merger Agreement, or similar
event relating to CBI.
U. S. Bancorp or any other holder or holders of the Option (collectively,
the "Holder") may exercise the Option, in whole or in part, subject to
regulatory approval, at any time within 90 days (subject to extension as
provided in the Option Agreement) after both an "Initial Triggering Event" and
a "Subsequent Triggering Event" occur prior to termination of the Option. The
term "Initial Triggering Event" is defined as the occurrence of any of the
following events:
(i) CBI or any of its subsidiaries (each a "CBI Subsidiary"),
without having received U. S. Bancorp'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 the Option Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the 1934 Act and the rules and
regulations thereunder) other than U. S. Bancorp or any of its
subsidiaries (each a "U. S. Bancorp Subsidiary") or the board of
directors of CBI shall have recommended that the stockholders of CBI
approve or accept any such Acquisition Transaction. For purposes of the
Option Agreement, "Acquisition Transaction" means (w) a merger or
consolidation, or any similar transaction, involving CBI or any
Significant Subsidiary (as defined in Rule 1-02 of Regulation S-X
promulgated by the Securities and Exchange Commission (the "SEC")) of
CBI, (x) a purchase, lease, or other acquisition of all or a substantial
portion of the assets of CBI or any Significant Subsidiary of CBI, (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 CBI or any Significant
Subsidiary of CBI, or (z) any substantially similar transaction;
provided, however, that in no event shall any (i) merger, consolidation,
or similar transaction involving CBI or any Significant Subsidiary in
which the voting securities of CBI 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 CBI or the surviving entity outstanding immediately
after the consummation of such merger, consolidation, or similar
transaction, or (ii) any merger, consolidation, purchase, or similar
transaction involving only CBI and one or more CBI Subsidiaries or
involving only any two or more CBI 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) CBI or any CBI Subsidiary, without having received U. S.
Bancorp'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 U. S. Bancorp or a U. S. Bancorp Subsidiary, or the board of
directors of CBI shall have publicly withdrawn or modified, or publicly
announced its intent to withdraw or modify, in any manner adverse to
U. S. Bancorp, its recommendation that the stockholders of CBI approve
the transactions contemplated by the Merger Agreement;
(iii) Any person other than U. S. Bancorp, any U. S. Bancorp
Subsidiary, or any CBI 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 CBI Common Stock (the term "beneficial
ownership" for purposes of the 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 U. S. Bancorp or any U. S. Bancorp
Subsidiary shall have made a bona fide proposal to CBI 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 CBI or its
stockholders to engage in an Acquisition Transaction, CBI shall have
breached any covenant or obligation contained in the Merger Agreement
and such breach (x) would entitle U. S. Bancorp to terminate the Merger
Agreement and (y) shall not have been cured prior to the Notice Date (as
defined); or
(vi) Any person other than U. S. Bancorp or any U. S. Bancorp
Subsidiary, other than in connection with a transaction to which U. S.
Bancorp 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.
"Subsequent Triggering Event" is defined as either (A) the acquisition by
any person of beneficial ownership of 25 percent or more of the then
outstanding CBI Common Stock, or (B) the occurrence of the Initial Triggering
Event described in clause (i) above, except that the percentage referred to in
subclause (y) thereof shall be 25 percent.
Within 90 days (subject to extension as provided in the Option Agreement)
after a Subsequent Triggering Event prior to the termination of the Option,
U. S. Bancorp (on behalf of itself or any subsequent Holder) may demand that
the Option and the related Option Shares be registered under the Securities
Act of 1933, as amended (the "Securities Act"). Upon such demand, CBI must
effect such registration promptly subject to certain exceptions. U. S.
Bancorp is entitled to demand two such registrations.
The Option terminates upon the earliest to occur of (i) the Effective Time,
(ii) termination of the Merger Agreement in accordance with the terms thereof,
with certain exceptions, prior to the occurrence of an Initial Triggering
Event, (iii) the passage of 12 months after termination of the Merger
Agreement following the occurrence of an Initial Triggering Event (provided
that if an Initial Triggering Event occurs after or continues beyond such
termination, the Option will terminate 12 months from the expiration of the
last Initial Triggering Event to expire, but in no event more than 18 months
after such termination), or (iv) February 12, 1999.
Within 90 days (subject to extension as provided in the Option Agreement)
after a Subsequent Triggering Event and prior to termination of the Option,
subject to regulatory approval, CBI is required (i) at the request of the
Holder, to repurchase the Option from the Holder at a price ("Option
Repurchase Price") equal to the amount by which (x) the "market/offer price"
(as hereinafter defined) exceeds (y) the then applicable Option exercise
price, multiplied by the number of shares for which the Option may then be
exercised; and (ii) at the request of the owner of Option Shares from time to
time (the "Owner") to repurchase such number of Option Shares from the Owner
as the Owner designates at a price per share (the "Option Share Repurchase
Price") equal to the "market/offer price." "Market/offer price" means the
highest of (A) the price per share of CBI Common Stock at which a tender offer
or exchange offer therefor has been made, (B) the price per share of CBI
Common Stock to be paid by any third party pursuant to an agreement with CBI,
(C) the highest closing price for shares of CBI Common Stock within the six-
month period immediately preceding the date the Holder gives notice of the
required repurchase of the Option or the Owner gives notice of the required
repurchase of Option Shares, as the case may be, and (D) in the event of a
sale of all or a substantial portion of CBI's assets, the sum of the price
paid in such sale for such assets and the current market value of the
remaining assets of CBI divided by the number of shares of CBI Common Stock
then outstanding.
In the event that prior to termination of the Option, CBI enters into an
agreement (i) to consolidate with or merge into any entity, other than U. S.
Bancorp or a U. S. Bancorp Subsidiary, and shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) to permit any
entity, other than U. S. Bancorp or a U. S. Bancorp Subsidiary, to merge into
CBI with CBI as the continuing or surviving corporation, but, in connection
therewith, the then outstanding shares of CBI Common Stock are changed into or
exchanged for securities of any other person or cash or any other property, or
the then outstanding shares of CBI Common Stock 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 transfer all or
substantially all of its assets to any entity other than U. S. Bancorp or a
U. S. Bancorp Subsidiary, then the Option will be converted into or exchanged
for an option (the "Substitute Option") to purchase shares of common stock of,
at the Holder's election, either the continuing or surviving corporation of a
merger or a consolidation, the transferee of all or substantially all of CBI's
assets, or the person controlling such continuing or surviving corporation or
transferee. The number of shares subject to the Substitute Option and the
exercise price per share will be determined in accordance with a formula in
the Option Agreement. To the extent possible, the Substitute Option will
contain other terms and conditions that are the same as those in the Option.
Subject to regulatory approval, the issuer of a Substitute Option will be
required to repurchase such option at the request of the holder thereof and to
repurchase any shares of such issuer's common stock ("Substitute Common
Stock") issued upon exercise of a Substitute Option ("Substitute Shares") at
the request of the owner thereof. The repurchase price for a Substitute
Option will equal the amount by which (A) the "Highest Closing Price" (as
defined below) exceeds (B) the exercise price of the Substitute Option,
multiplied by the number of shares of Substitute Common Stock for which the
Substitute Option may be exercised. The repurchase price for Substitute
Shares shall equal the "Highest Closing Price" multiplied by the number of
Substitute Shares to be repurchased. As used herein, "Highest Closing Price"
means the highest closing price for shares of Substitute Common Stock within
the six-month period immediately preceding the date the holder gives notice of
the required repurchase of the Substitute Option or the owner gives notice of
the required repurchase of Substitute Shares, as the case may be.
Neither CBI nor U. S. Bancorp may assign any of its respective rights and
obligations under the Option Agreement or the Option to any other person
without the other party's written consent, except that if a Subsequent
Triggering Event occurs prior to termination of the Option, within 90 days
thereafter (subject to extension as provided in the Option Agreement), U. S.
Bancorp, subject to the express provisions of the Option Agreement, may assign
in whole or in part its rights and obligations thereunder. In addition, until
15 days after the Federal Reserve Board approves an application by U. S.
Bancorp to acquire the Option Shares, U. S. Bancorp 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 CBI, (iii) an assignment to a
single party for the purpose of conducting a widely dispersed public
distribution on U. S. Bancorp's behalf, or (iv) any other manner approved by
the Federal Reserve Board.
Notwithstanding any other provision of the Option Agreement, if a Holder,
an Owner, or certain related parties offer or propose to engage in an
Acquisition Transaction (other than as contemplated by the Merger Agreement),
then (i) in the case of a Holder or related party thereof, the Option held by
it will terminate immediately, and (ii) in the case of an Owner or a related
party thereof, the Option Shares held by it will be purchasable by CBI
immediately at the then applicable Option exercise price.
The rights and obligations of CBI and U. S. Bancorp under the Option
Agreement are subject to receipt of any required regulatory approvals.
Without the prior approval of the Federal Reserve Board, U. S. Bancorp may not
acquire more than 5 percent of the outstanding CBI Common Stock. U. S.
Bancorp intends to file an application for such approval as soon as
practicable.
Merger Agreement.
Set forth below is a description of certain provisions of the Merger
Agreement. Such description is qualified in its entirety by reference to the
copy of the Merger Agreement filed as Exhibit 1.C to this Schedule 13D and
specifically incorporated by reference herein.
Consummation of the Merger is subject to various conditions, including
approval of CBI's stockholders; obtaining regulatory approvals; the
effectiveness of a registration statement relating to and NASDAQ listing of
the shares of U. S. Bancorp Common Stock to be issued in the Merger; the
absence of any order, decree or injunction which enjoins or prohibits the
consummation of the Merger; the receipt of favorable legal opinions relating
to the tax consequences of the Merger; the receipt of letters regarding the
availability of "pooling of interests" accounting treatment; the
representations and warranties of each party must be true and correct in all
material respects; and each party must have performed its obligations under
the Merger Agreement in all material respects. None of the foregoing
approvals has yet been obtained, and there is no assurance as to if or when
such approvals will be obtained.
Pursuant to the Merger Agreement, CBI has generally agreed to operate its
business only in the usual and ordinary course consistent with past practice,
to use reasonable best efforts to preserve intact its business organization,
employees and advantageous business relationships, and to take no action that
would adversely affect the ability of CBI or U. S. Bancorp to obtain any
necessary approvals of governmental authorities or to perform its covenants
under the Merger Agreement. U. S. Bancorp and CBI also have agreed that prior
to the earlier of the Effective Time or termination of the Merger Agreement,
neither party may, except with the prior written consent of the other party or
as permitted by the Merger Agreement: (i) pay dividends or make any other
distribution on its capital stock (other than regular quarterly dividends);
(ii) take actions which would impede specified accounting or tax treatment,
(iii) take actions which cause any of their respective representations and
warranties to be or become false; or (iv) take any actions which would
adversely affect or delay obtaining regulatory approval. Additionally, except
with the prior written consent of U. S. Bancorp or as permitted in the Merger
Agreement, CBI may not: (i) solicit or authorize acquisition inquiries or
proposals from any party; (ii) incur indebtedness, other than in the ordinary
course of business consistent with past practice (the "ordinary course");
(iii) adjust, split, combine or reclassify its capital stock; (iv) sell or
encumber assets, other than in the ordinary course; (v) make investments,
other than in the ordinary course; (vi) except for loans, deposits, letters of
credit and similar transactions in the ordinary course, enter into, terminate
or materially modify any agreement involving in excess of $100,000 or having a
term in excess of one year; (vii) increase the compensation or fringe benefits
of its employees except in the ordinary course; (viii) settle claims other
than in the ordinary course; (ix) amend its certificate of incorporation or
bylaws; or (x) restructure its investment security portfolio.
U. S. Bancorp and CBI each will pay all expenses incurred by it in
connection with the transactions contemplated by the Merger Agreement.
Except as described above, none of U. S. Bancorp or, to the best of its
knowledge, any of the persons listed on Exhibit 1.A hereto, has any contract,
arrangement, understanding or relationship with any person with respect to any
securities of CBI, including the transfer or voting of any of the securities,
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
The following Exhibits are filed as part of this Schedule 13D:
Exhibit 1.A - Name, Business Address, and Present Principal Occupation of
Each Executive Officer and Director of U. S. Bancorp.
Exhibit 1.B - Stock Option Agreement, dated February 12, 1996, between
California Bancshares, Inc., as issuer, and U. S. Bancorp,
as grantee.
Exhibit 1.C - Agreement and Plan of Merger, dated February 11, 1996,
between U. S. Bancorp and California Bancshares, Inc.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete,
and correct.
Date: February 22, 1996U. S. BANCORP
By: /s/ Dwight V. Board
Name: Dwight V. Board
Title: Executive Vice President
<PAGE>
EXHIBIT INDEX
Exhibit Description
1.A Name, Business Address, and
Present Principal Occupation
of Each Executive Officer and
Director of U. S. Bancorp.
1.B Stock Option Agreement, dated
February 12, 1996, between California
Bancshares, Inc., as issuer, and
U. S. Bancorp, as grantee.
1.C Agreement and Plan of Merger,
dated February 11, 1996, between
U. S. Bancorp and California
Bancshares, Inc.
<PAGE>
<PAGE>
Exhibit 1.A
DIRECTORS AND EXECUTIVE OFFICERS OF
U. S. BANCORP
The names, business addresses, and present principal occupations of
the directors and executive officers of U. S. Bancorp are set forth below. If
no address is given, the director's or officer's business address is
U. S. Bancorp, 111 S.W. Fifth Avenue, Portland, Oregon, 97204. The business
address of each of the directors of U. S. Bancorp is also the business address
of such director's employer, if any. All directors and officers listed below
are citizens of the United States.
DIRECTORS
Name and Business Address Present Principal Occupation or Employment
Harry Bettis Rancher
10775 Sucker Creek Road
Payette, Idaho 83661
Gerry B. Cameron Chairman of the Board and Chief
Executive Officer, U. S. Bancorp
Carolyn Silva Chambers Chairwoman and Chief Executive Officer,
2225 Coburg Road Chambers Communications Corp.
Post Office Box 7009 (a broadcast and television company);
Eugene, Oregon 97401 President and Chief Executive Officer,
Chambers Construction Company
(construction firm)
Franklin G. Drake President and Chief Executive Officer,
2121 S.W. Broadway, Ste. 320 Drake Management Company
Portland, Oregon 97201 (real estate investment and management)
Robert L. Dryden Executive Vice President,
Post Office Box 3707 Boeing Commercial Airplane Group,
M/S 75-11 The Boeing Company
Seattle, Washington 98124-2207 (airplane manufacturer)
John B. Fery Retired Chairman and Chief Executive
2700 Airport Way Officer, Boise Cascade Corporation
Post Office Box 15407 (forest products)
Boise, Idaho 83715
Joshua Green III Chairman of the Board and
1425 Fourth Avenue, Suite 420 Chief Executive Officer,
Seattle, Washington 98101 Joshua Green Corporation
(family investments)
Daniel R. Nelson President and Chief Operating Officer,
U. S. Bancorp
Allen T. Noble President
575 West Bannock Farm Development Corporation
Boise, Idaho 83702 (corporate agricultural management
company)
Paul A. Redmond Chairman of the Board and
East 1411 Mission Avenue Chief Executive Officer,
Spokane, Washington 99202 The Washington Water Power Company
(electric and gas utility)
N. Stewart Rogers Chairman of the Board,
Four Lindley Road Penwest, Ltd.
Mercer Island, Washington 98040 (investments)
Benjamin R. Whiteley Chairman of the Board,
Post Office Box 711 Standard Insurance Company
Portland, Oregon 97207 (life insurance)
<PAGE>
EXECUTIVE OFFICERS
Name and Business Address Present Principal Occupation or Employment
Dwight V. Board Executive Vice President, U. S. Bancorp
Gerry B. Cameron Chairman of the Board and Chief
Executive Officer, U. S. Bancorp
Phyllis J. Campbell President and Chief Executive Officer,
1420 Fifth Avenue U. S. Bank of Washington,
Seattle, Washington 98101 National Association
P.K. Chatterjee Executive Vice President, U. S. Bancorp
Thomas P. Ducharme Executive Vice President and Treasurer,
U. S. Bancorp
Gary T. Duim Executive Vice President,
U. S. Bancorp
Steven P. Erwin Executive Vice President and
Chief Financial Officer,
U. S. Bancorp
John D. Eskildsen President and Chief Executive Officer,
United States National Bank of Oregon
Jeffrey T. Grubb Executive Vice President, U. S. Bancorp
Arland D. Hatfield Executive Vice President and
Chief Credit Officer,
U. S. Bancorp
Robert J. Lane President and Chief Executive Officer,
101 S. Capitol Boulevard West One Bank, Idaho
Boise, Idaho 83702
Charles C. Langer President, U. S. Bancorp Leasing &
Financial
Daniel R. Nelson President and Chief Operating Officer,
U. S. Bancorp
Paul F. Oldshue Executive Vice President, U. S. Bancorp
Christian R. Rasmussen Executive Vice President, U. S. Bancorp
Judith L. Rice Executive Vice President,
555 S.W. Oak Street U. S. Bancorp
Portland, Oregon 97204
V. Lamoine Saunders Executive Vice President,
17650 N.E. Sandy Boulevard U. S. Bancorp
Gresham, Oregon 97230
Robert D. Sznewajs Vice Chairman, U. S. Bancorp
<PAGE>
Exhibit 1.B
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 February 12, 1996, between CALIFORNIA
BANCSHARES, INC., a Delaware 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 February 11, 1996 (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
2,002,076 fully paid and nonassessable shares of Issuer's Common Stock, $2.50
par value per share ("Common Stock"), at a price of $25.75 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 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, 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 intent 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:
(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 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 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 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 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 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.
(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.
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 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 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.
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 Delaware, 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.
<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.
CALIFORNIA BANCSHARES, INC.
Attest: Diane Mietzel By: Joseph P. Colmery
Title: President and Chief Executive
Officer
U. S. BANCORP
Attest: John J. DeMott By: Gerry B. Cameron
Secretary Title: Chairman and Chief Executive
Officer
<PAGE>
AGREEMENT AND PLAN OF MERGER
between
U. S. BANCORP
and
CALIFORNIA BANCSHARES, INC.
Dated as of February 11, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Effects of the Merger. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Conversion of CBI Common Stock . . . . . . . . . . . . . . . . . . . . 2
1.5 Bancorp Common Stock; Bancorp Preferred Stock. . . . . . . . . . . . . 2
1.6 Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Articles of Incorporation. . . . . . . . . . . . . . . . . . . . . . . 3
1.8 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
EXCHANGE OF SHARES
2.1 Bancorp to Make Shares Available . . . . . . . . . . . . . . . . . . . 3
2.2 Exchange of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CBI
3.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Authority; No Violation. . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . 8
3.5 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.7 Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.8 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . 10
3.9 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.10 Taxes and Tax Returns. . . . . . . . . . . . . . . . . . . . . . 10
3.11 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.12 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.13 Compliance with Applicable Law . . . . . . . . . . . . . . . . . 13
3.14 Certain Contracts. . . . . . . . . . . . . . . . . . . . . . . . 14
3.15 Agreements with Regulatory Agencies. . . . . . . . . . . . . . . 14
3.16 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . 15
3.17 State Takeover Laws. . . . . . . . . . . . . . . . . . . . . . . 15
3.18 Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . 15
3.19 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . 15
3.20 Interest Rate Risk Management Instruments; Derivatives . . . . . 15
3.21 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCORP
4.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . 16
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3 Authority; No Violation. . . . . . . . . . . . . . . . . . . . . . . . 18
4.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . 18
4.5 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.7 Brokers' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.8 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . 20
4.9 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.10 Taxes and Tax Returns. . . . . . . . . . . . . . . . . . . . . . 20
4.11 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.12 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.13 Compliance with Applicable Law . . . . . . . . . . . . . . . . . 23
4.14 Certain Contracts. . . . . . . . . . . . . . . . . . . . . . . . 24
4.15 Agreements with Regulatory Agencies. . . . . . . . . . . . . . . 24
4.16 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . 25
4.17 Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . 25
4.18 Interest Rate Risk Management Instruments; Derivatives . . . . . 25
4.19 State Takeover Laws. . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of CBI Businesses Prior to the Effective Time. . . . . . . . . 26
5.2 CBI Forbearances . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.3 Bancorp Forbearances . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.2 Access to Information. . . . . . . . . . . . . . . . . . . . . . . . . 30
6.3 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.4 Legal Conditions to Merger . . . . . . . . . . . . . . . . . . . . . . 31
6.5 Affiliates; Publication of Combined Financial Results. . . . . . . . . 31
6.6 Stock Exchange Listing of Shares . . . . . . . . . . . . . . . . . . . 31
6.7 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 32
6.8 Indemnification; Directors' and Officers' Insurance. . . . . . . . . . 33
6.9 Additional Agreements. . . . . . . . . . . . . . . . . . . . . . . . . 34
6.10 Advice of Changes. . . . . . . . . . . . . . . . . . . . . . . . 35
6.11 Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . 35
(a) Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . 35
(b) Nasdaq Listing . . . . . . . . . . . . . . . . . . . . . . . . . 35
(c) Other Approvals. . . . . . . . . . . . . . . . . . . . . . . . . 35
(d) Form S-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(e) No Injunctions or Restraints; Illegality . . . . . . . . . . . . 36
(f) Federal Tax Opinions . . . . . . . . . . . . . . . . . . . . . . 36
(g) Pooling of Interests . . . . . . . . . . . . . . . . . . . . . . 37
7.2 Conditions to Obligations of Bancorp . . . . . . . . . . . . . . . . . 37
(a) Representations and Warranties . . . . . . . . . . . . . . . . . 37
(b) Performance of Obligations of CBI. . . . . . . . . . . . . . . . 37
(c) CBI Rights Agreement . . . . . . . . . . . . . . . . . . . . . . 37
7.3 Conditions to Obligations of CBI . . . . . . . . . . . . . . . . . . . 37
(a) Representations and Warranties . . . . . . . . . . . . . . . . . 37
(b) Performance of Obligations of Bancorp. . . . . . . . . . . . . . 38
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . 39
8.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.4 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.2 Nonsurvival of Representations, Warranties, and Agreements . . . . . . 40
9.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.10 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.11 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 11, 1996, by and
between U. S. BANCORP, an Oregon corporation ("Bancorp"), and CALIFORNIA
BANCSHARES, INC., a Delaware corporation ("CBI").
WHEREAS the Boards of Directors of Bancorp and CBI 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 CBI 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 CBI are entering into a CBI Stock
Option Agreement (the "CBI Option Agreement"); 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,
CBI 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 Delaware General Corporation Law (the "DGCL"). 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 CBI 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 a
certificate of merger (the "Certificate of Merger") which shall be filed with
the Secretary of State of the state of Delaware (the "Delaware Secretary"), in
each case, on the Closing Date (as defined in Section 9.1 hereof). The date
and time when the Merger becomes effective, as set forth in the Articles of
Merger and the Certificate 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 Sections
259 and 261 of the DGCL.
1.4 Conversion of CBI 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, CBI or the holder of any share of the common stock, par value
$2.50 per share, of CBI ("CBI Common Stock"), each share of CBI Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares of CBI Common Stock held (x) in CBI's treasury or (y) directly or
indirectly by Bancorp or CBI 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 0.95 shares
(the "Exchange Ratio") of common stock, $5.00 par value per share, of Bancorp
("Bancorp Common Stock").
All of the shares of CBI 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 "CBI Certificate") previously representing any
such shares of CBI 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 CBI Common Stock represented by such CBI Certificate have been converted
pursuant to this Section 1.4 and Section 2.2(e) hereof. CBI Certificates
previously representing shares of CBI 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 CBI 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 CBI Common Stock that are owned by
CBI as treasury stock and all shares of CBI Common Stock that are owned
directly or indirectly by Bancorp or CBI or any of their respective
Subsidiaries (other than shares of CBI 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 CBI, as the case may be, being
referred to herein as "Trust Account Shares") and other than any shares of CBI
Common Stock held by Bancorp or CBI or any of their respective Subsidiaries in
respect of a debt previously contracted (any such shares of CBI Common Stock,
and shares of Bancorp Common Stock that are similarly held, whether held
directly or indirectly by Bancorp or CBI 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 CBI 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 CBI Common Stock shall be
exchanged at the Effective Time as provided in Section 6.7(c).
1.7 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.
1.8 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.
1.9 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.
1.10 Board of Directors. From and after the Effective Time, the Board
of Directors of the Surviving Corporation shall consist of members of the
Board of Directors of Bancorp as constituted immediately prior to the
Effective Time.
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 CBI (which may
be a Subsidiary of Bancorp) (the "Exchange Agent"), for the benefit of the
holders of CBI 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 CBI 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 CBI or its transfer agent of a list of shareholders of record of CBI as
of the Effective Time, the Exchange Agent shall mail to each holder of record
of a CBI 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 CBI Certificates to the
Exchange Agent) and instructions for use in effecting the surrender of CBI
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 CBI Common Stock represented by such the CBI Certificate or
Certificates shall have been converted pursuant to this Agreement. Upon
proper surrender of a CBI Certificate for exchange and cancellation to the
Exchange Agent, together with such properly completed letter of transmittal,
duly executed, the holder of such CBI 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 CBI
Common Stock theretofore represented by the CBI 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 CBI
Certificate surrendered pursuant to the provisions of this Article II, and the
CBI 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 CBI 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 CBI 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 CBI Certificate until the holder thereof shall surrender such
CBI Certificate in accordance with this Article II. After the surrender of a
CBI Certificate in accordance with this Article II, the record holder thereof
shall be entitled to receive any such dividends or other distributions,
without any interest thereon, that theretofore had become payable with respect
to shares of Bancorp Common Stock represented by such CBI Certificate.
(c) If any certificate representing shares of Bancorp Common Stock is
to be issued in a name other than that in which the CBI Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the CBI 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 CBI 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 CBI of the shares of CBI Common Stock that were issued and
outstanding immediately prior to the Effective Time. If, after the Effective
Time, CBI 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 CBI 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 CBI. In lieu of the issuance of any such fractional
share, Bancorp shall pay to each former shareholder of CBI 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 CBI for twelve months after the Effective Time shall be paid
to Bancorp. Any shareholders of CBI 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 CBI Common Stock that such shareholder is entitled to
receive pursuant to this Agreement, without any interest thereon.
Notwithstanding the foregoing, none of Bancorp, CBI, the Exchange Agent or any
other person shall be liable to any former holder of shares of CBI Stock for
any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(g) In the event any CBI Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such CBI 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 CBI Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed CBI 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 CBI
Except as set forth in the disclosure schedule of CBI delivered to
Bancorp concurrently herewith (the "CBI Disclosure Schedule"), CBI hereby
represents and warrants to Bancorp as follows:
3.1 Corporate Organization. (a) CBI is a corporation duly organized
and validly existing under the laws of the state of Delaware. CBI 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 CBI. As used in this
Agreement, the term "Material Adverse Effect" means, with respect to Bancorp,
CBI, 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. CBI is duly registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended (the "BHC Act"). The Certificate of
Incorporation and Bylaws of CBI, 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) CBI has previously delivered to Bancorp a schedule listing each CBI
Subsidiary and setting forth for each such CBI Subsidiary the (i) jurisdiction
in which it is organized, (ii) jurisdictions in which it is qualified to do
business, and (iii) office or agency having primary regulatory authority over
its business and operations. Each CBI 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 CBI, 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 CBI 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 CBI).
3.2 Capitalization. (a) The authorized capital stock of CBI consists
of 16,000,000 shares of CBI Common Stock and 2,000,000 shares of preferred
stock, no par value per share. At the close of business on December 31, 1995,
there were 10,060,685 shares of CBI Common Stock outstanding and no shares of
CBI preferred stock outstanding. On December 31, 1995, no shares of CBI
Common Stock or CBI preferred stock were reserved for issuance, except that
(i) 305,846 shares of CBI Common Stock were reserved for issuance pursuant to
CBI's dividend reinvestment and stock purchase plan (the "CBI DRIP"),
(ii) 2,125,110 shares of CBI Common Stock were reserved for issuance upon the
exercise of stock options pursuant to the 1990 Stock Incentive Plan and the
Directors Stock Option Plan (the "CBI Stock Plans"), (iii) 400,000 shares of
CBI Series A junior participating preferred stock, no par value, were reserved
for issuance upon exercise of the rights (the "CBI Rights") distributed to
holders of CBI Common Stock pursuant to the Rights Agreement, dated as of
June 30, 1995, between CBI and First Interstate Bank of California, as Rights
Agent (the "CBI Rights Agreement"), and (iv) the shares of CBI Common Stock
issuable pursuant to the CBI Option Agreement. All of the issued and
outstanding shares of CBI 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, CBI 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 CBI Common Stock or CBI
preferred stock or any other equity securities of CBI or any securities
representing the right to purchase or otherwise receive any shares of CBI
Common Stock or CBI preferred stock. CBI has previously provided Bancorp with
a list of the option holders, the date of each option to purchase CBI 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 CBI Stock Plans. As reflected on such list,
options for 677,555 shares were outstanding at December 31, 1995, all of which
will be exercisable prior to the Effective Time in accordance with their
terms. Since December 31, 1995, CBI 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 the exercise of employee stock options.
(b) CBI owns directly all of the issued and outstanding shares of
capital stock of each of the CBI 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 CBI 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. 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 CBI or any of its Subsidiaries will be bound calling
for the purchase or issuance of any shares of the capital stock of CBI or any
of its Subsidiaries.
3.3 Authority; No Violation. (a) CBI 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 CBI. The Board of
Directors of CBI has directed that this Agreement and the transactions
contemplated hereby be submitted to CBI'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
CBI Common Stock, no other corporate proceedings on the part of CBI are
necessary to approve this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by CBI and (assuming due authorization, execution and delivery by
Bancorp) constitutes a valid and binding obligation of CBI, enforceable
against CBI 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 CBI nor the
consummation by CBI of the transactions contemplated hereby, nor compliance by
CBI with any of the terms or provisions hereof, will (i) violate any provision
of the Certificate of Incorporation or Bylaws of CBI 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 CBI 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 CBI 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 CBI 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 CBI.
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 "FDIC") in connection
with the merger of Subsidiaries of CBI and Bancorp, (iii) the filing of any
required applications or notices with any state bank regulatory agencies (the
"State Approvals"), (iv) the filing with the SEC of a proxy statement in
definitive form relating to the meeting of CBI's shareholders to be held in
connection with this Agreement and the transactions contemplated hereby (the
"Proxy Statement") and the registration statement on Form S-4 (the "S-4") in
which the 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 Certificate of Merger with the Delaware Secretary
pursuant to the DGCL, (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 CBI, and (ix) the consents and approvals set forth in CBI
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 CBI
of this Agreement and (B) the consummation by CBI of the Merger and the other
transactions contemplated hereby.
3.5 Reports. CBI 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 CBI and its Subsidiaries, no Regulatory Agency has
initiated any proceeding or, to the best knowledge of CBI, investigation into
the business or operations of CBI 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 CBI or any of its Subsidiaries.
3.6 Financial Statements. CBI has previously delivered to Bancorp
copies of (a) the consolidated balance sheets of CBI and its Subsidiaries as
of December 31, for the fiscal years 1993 and 1994, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the fiscal years 1992 through 1994, inclusive, as reported in CBI'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 KPMG Peat
Marwick LLP, independent public accountants, with respect to CBI, (b) the
unaudited consolidated balance sheet of CBI and its Subsidiaries as of
December 31, 1995, and the related unaudited consolidated statements of
income, cash flows and changes in stockholders' equity for the fiscal year
1995 substantially in the form that is proposed to be reported in CBI's Annual
Report on Form 10-K for the period ended December 31, 1995, filed with the SEC
under the Exchange Act, and (c) the unaudited consolidated balance sheets of
CBI as of September 30, 1995, and September 30, 1994, and the related
unaudited consolidated statements of income, cash flows, and changes in
stockholders' equity for the nine months then ended as reported in CBI's
Quarterly Report on Form 10-Q for the period ended September 30, 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 stockholders' equity and consolidated financial
position of CBI 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 quarterly
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 CBI 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 CBI 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 CBI 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 CBI 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. Except for the services of Goldman Sachs & Co.
pursuant to an agreement dated November 21, 1995, a copy of which has
previously been provided to Bancorp, neither CBI nor any CBI 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 CBI Option Agreement.
3.8 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in CBI Reports (as defined below) filed prior to the date hereof,
since December 31, 1994, (i) neither CBI 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 CBI.
(b) Except as publicly disclosed in CBI Reports filed prior to the date
hereof, since December 31, 1994, CBI 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 CBI 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 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,
(ii) suffered any strike, work stoppage, slowdown, or other labor disturbance,
or (iii) been the subject of any organizing activities known to CBI.
3.9 Legal Proceedings. (a) Except as publicly disclosed in CBI
Reports filed prior to the date hereof, neither CBI nor any of its
Subsidiaries is a party to any, and there are no pending or, to the best of
CBI's knowledge, threatened, material legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of
any nature (i) against CBI 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 CBI or (ii) challenging the validity or propriety of the
transactions contemplated by this Agreement or the CBI Option Agreement.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon CBI, any of its Subsidiaries or the assets of CBI or
any of its Subsidiaries that has had, or might reasonably be expected to have,
a Material Adverse Effect on CBI.
3.10 Taxes and Tax Returns. (a) Each of CBI and its Subsidiaries has
duly filed all material federal, state and, to the best of CBI'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 CBI 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 1981, and no material deficiencies were asserted as a
result of such examination or all such deficiencies were satisfied. To the
best of CBI's knowledge, there are no material disputes pending, or claims
asserted for, Taxes or assessments upon CBI or any of its Subsidiaries, nor
has CBI 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 CBI 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 CBI, (ii) federal, state, county and local returns that are
accurate and complete in all material respects have been filed by CBI 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 CBI, (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 CBI
in its consolidated financial statements as of December 31, 1995, except where
failure to do so would not have a Material Adverse Effect on CBI and
(iv) there are no tax liens upon any property or assets of the CBI or its
Subsidiaries except liens for current taxes not yet due. To the knowledge of
CBI, no property of CBI or any of its Subsidiaries is property that CBI 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 CBI
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 CBI 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 CBI 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 CBI.
(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 CBI 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 CBI 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 CBI or any Subsidiary
of CBI under any contract, plan, program, arrangement or understanding is
reasonably likely.
3.11 Employees. (a) The CBI 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 "CBI
Benefit Plans") by CBI or any of its Subsidiaries or by any trade or business,
whether or not incorporated (an "ERISA Affiliate"), all of which together with
CBI would be deemed a "single employer" within the meaning of Section 4001 of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(b) CBI has heretofore delivered to Bancorp true and complete copies of
each of the CBI 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 CBI 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 CBI Benefit
Plans intended to be "qualified" within the meaning of Section 401(a) of the
Code is so qualified, (iii) with respect to each CBI Benefit Plan that is
subject to Title IV of ERISA, the present value of accrued benefits under such
CBI Benefit Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such CBI Benefit
Plan's actuary with respect to such CBI Benefit Plan, did not, as of its
latest valuation date, exceed the then current value of the assets of such CBI
Benefit Plan allocable to such accrued benefits, (iv) no CBI Benefit Plan
provides benefits, including, without limitation, death or medical benefits
(whether or not insured), with respect to current or former employees of CBI,
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 CBI, 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 CBI, its Subsidiaries or any ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a material risk to CBI, its Subsidiaries or any ERISA Affiliate of
incurring a material liability thereunder, (vi) no CBI 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 CBI or its
Subsidiaries as of the Effective Time with respect to each CBI 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 CBI, its Subsidiaries nor any ERISA Affiliate has engaged in a
transaction in connection with which CBI, 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 CBI
there are no pending, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against any of the CBI 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 CBI or any of its affiliates from CBI or any of its affiliates
under any CBI Benefit Plan or otherwise, (ii) materially increase any benefits
otherwise payable under any CBI Benefit Plan or (iii) result in any
acceleration of the time of payment or vesting of any such benefits to any
material extent.
(e) CBI has previously delivered to Bancorp a schedule setting forth
for each management employee of CBI or its Subsidiaries who is a party to any
employment, golden parachute, or severance agreement, the approximate maximum
amount of payments and benefits other than vested retirement benefits and
previously deferred compensation to which each such employee will become
entitled in the event that such employee's employment is terminated following
the consummation of the Merger.
3.12 SEC Reports. CBI 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, 1994, by CBI with the SEC pursuant to the Securities Act of 1933,
as amended (the "Securities Act"), or the Exchange Act (the "CBI Reports") and
prior to the date hereof and (b) communication mailed by CBI to its
shareholders since January 1, 1994, 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. CBI has timely filed all CBI
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 CBI 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) CBI 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
CBI 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 CBI, and
neither CBI 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 CBI 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 CBI or any
of its Subsidiaries or, to the best of their knowledge securing any
obligations owed to them, and neither CBI 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 CBI 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 CBI 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 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, CBI, 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
CBI Reports, (iv) that materially restricts the conduct of any line of
business by CBI, (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. CBI has delivered to Bancorp a complete list as of the date
of this Agreement of each contract to which CBI or any of its Subsidiaries is
a party that involves an amount in excess of $100,000 or that has an unexpired
term in excess of one year from the date of this Agreement other than loans,
deposits, letters of credit, and similar transactions entered into by CBI in
the ordinary course of business. In addition, CBI 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 CBI 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 CBI Disclosure Schedule, is
referred to herein as a "CBI Contract." Neither CBI nor any of its
Subsidiaries knows of, or has received notice of, any violation of any CBI
Contract by any of the other parties thereto that, individually or in the
aggregate, would have a Material Adverse Effect on CBI.
(b) (i) Each CBI Contract is valid and binding and in full force and
effect, (ii) CBI and each of its Subsidiaries has in all material respects
performed all obligations required to be performed by it to date under each
CBI Contract, except where such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect on CBI, 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 CBI or any of its
Subsidiaries or, to the knowledge of CBI, on the part of any other party under
any such CBI Contract, except where such default, individually or in the
aggregate, would not have a Material Adverse Effect on CBI.
3.15 Agreements with Regulatory Agencies. Neither CBI 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 CBI 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 CBI 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 CBI
as of December 31, 1995, and for liabilities incurred in the ordinary course
of business consistent with past practice, since December 31, 1995, neither
CBI 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 CBI.
3.17 State Takeover Laws. The Board of Directors of CBI has taken such
actions as are necessary such that the provisions of Section 203 of the DGCL
will not apply to this Agreement or the CBI Option Agreement or any of the
transactions contemplated hereby or thereby.
3.18 Rights Agreement. CBI has taken all action (including, if
required, redeeming all of the outstanding preferred stock purchase rights
issued pursuant to the CBI Rights Agreement or amending or terminating the CBI
Rights Agreement) so that the entering into of this Agreement and the CBI
Option Agreement, the Merger, the acquisition of shares pursuant to the CBI
Option Agreement 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 CBI
Rights Agreement or enable or require the CBI Rights to be exercised,
distributed or triggered.
3.19 Pooling of Interests. As of the date of this Agreement, CBI 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) CBI
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 CBI 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 CBI 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 CBI 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 CBI 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. CBI 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.
3.21 Properties. Except as would not have a Material Adverse Effect on
CBI, (i) except for assets disposed of in the ordinary course of business, CBI
and each of its Subsidiaries possess good and marketable title to and own,
free of any encumbrances (other than liens for taxes not yet due, statutory
rights of redemption with respect to properties acquired in the course of
collecting loans, liens securing indebtedness of not more than $100,000, and
easements or rights of way of public utilities or similar encumbrances not
materially interfering with the conduct of business), all of their material
real, personal, and intangible properties and other assets; (ii) the leases
pursuant to which CBI or any of its Subsidiaries lease real or personal
property are valid and effective in accordance with their respective terms
and, to the knowledge of CBI, there is not, under any such lease, any material
existing default or any event which, with the giving of notice or lapse of
time or otherwise, would constitute a default; (iii) the material properties
owned or leased by CBI and each of its Subsidiaries are in good condition,
free from any defects that would materially interfere with the continued use
thereof in the conduct of their normal operations; and (iv) CBI and its
Subsidiaries own or lease all property upon which their continued business
operations are materially dependent (except for properties securing loans by
CBI).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCORP
Except as set forth in the disclosure schedule of Bancorp delivered to
CBI concurrently herewith (the "Bancorp Disclosure Schedule"), Bancorp hereby
represents and warrants to CBI 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 CBI, 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, 1994, 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
December 31, 1995, 150,592,468 shares were issued and outstanding and
(ii) 50,000,000 shares of Preferred Stock, no par value ("Bancorp Preferred
Stock"), of which as of December 31, 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 shares of Bancorp
Common Stock reserved for issuance pursuant to the 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, 1995, 12,277,723 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, 1995, 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.
(a) 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 and 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 CBI) 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.
(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 CBI and Bancorp, (iii) the
filing of the State Approvals, (iv) the filing with the SEC of the 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 Certificate of
Merger with the Delaware Secretary pursuant to the DGCL, (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 CBI,
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, 1994, with the Regulatory Agencies, and all
other material reports and statements required to be filed by them since
January 1, 1994, 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, 1994. 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.
4.6 Financial Statements. Bancorp has previously delivered to CBI
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 sheet of Bancorp and its
subsidiaries as of December 31, 1995, and the related consolidated statements
of income, cash flows, and changes in shareholders' equity for the fiscal year
ended December 31, 1995, substantially in the form that is proposed to be
reported in Bancorp's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, filed with the SEC under the Exchange Act, and (c) the
unaudited consolidated balance sheets of Bancorp and its Subsidiaries as of
September 30, 1995, and September 30, 1994, and the related unaudited
consolidated statements of income, cash flows and changes in shareholders'
equity for the nine months then ended as reported in Bancorp's Quarterly
Report on Form 10-Q for the period ended September 30, 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 quarterly 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
CBI Option Agreement.
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) as of the date of this Agreement, 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 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.
(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.
4.1 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 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, 1995, 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.
(b) Bancorp has heretofore delivered to CBI 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.
4.12 SEC Reports. Bancorp has previously made available to CBI an
accurate and complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since
January 1, 1994, 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, 1994,
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) 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 (a) 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) As of the date of this Agreement, 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, 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, CBI, 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. As of the date of this Agreement, except
for those liabilities that are fully reflected or reserved against on the
consolidated balance sheet of Bancorp dated as of December 31, 1995, and for
liabilities incurred in the ordinary course of business consistent with past
practice, since December 31, 1995, neither Bancorp 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 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 CBI 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 to any of the transactions contemplated hereby or thereby.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of CBI 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 CBI Option
Agreement, CBI 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 CBI or Bancorp 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 CBI Option Agreement.
5.2 CBI 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 CBI Option Agreement, CBI 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 CBI or any of its Subsidiaries to
CBI or any of its Subsidiaries; 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 CBI Option Agreement, (C) the CBI Rights Agreement; or
(D) the CBI DRIP until the CBI 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 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 loans, deposits, letters of credit, and
similar transactions in the ordinary course of business consistent
with past practice, (i) enter into any contract or agreement that
involves an amount in excess of $100,000 or that will have a term in
excess of one year or (ii) terminate or materially modify any
contract or agreement that involves an amount in excess of $100,000
or that has a remaining term in excess of one year, or (iii) commit
to any capital expenditure, or make any capital expenditure not
committed to prior to the date of this Agreement, in excess of
$10,000;
(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 CBI 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 CBI 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;
(j) amend its certificate 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, Bancorp shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of CBI:
(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 CBI 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 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;
(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;
(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 CBI shall promptly prepare and
file with the SEC the Proxy Statement and Bancorp shall promptly prepare and
file with the SEC the S-4, in which the Proxy Statement will be included as a
prospectus. Each of Bancorp and CBI 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 CBI shall thereafter mail the 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 CBI shall furnish all information concerning CBI and the
holders of CBI 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 CBI 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 CBI 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 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 CBI shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably necessary or
advisable in connection with the Proxy Statement, the S-4 or any other
statement, filing, notice or application made by or on behalf of Bancorp, CBI
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 CBI 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
CBI 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 CBI 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
CBI, 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 CBI 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 CBI'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 CBI 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 December 13,
1995, between Bancorp and CBI (the "Confidentiality Agreements").
(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 Shareholder Approval. CBI shall call a meeting of its shareholders
to be held as soon as practicable for the purpose of voting upon the requisite
shareholder approval required in connection with this Agreement and the
Merger. Subject to fiduciary requirements under applicable law, the board of
directors of CBI shall recommend such approval to its shareholders and shall
use reasonable efforts to solicit such approval.
6.4 Legal Conditions to Merger. Each of Bancorp and CBI 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 CBI 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 CBI 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 shareholder meeting called by CBI 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 CBI Common Stock held by such "affiliate" and, in the
case of the "affiliates" of CBI, 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 CBI 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 CBI. Notwithstanding any other provision of this Agreement, no
certificate for Bancorp Common Stock shall be delivered in exchange for CBI
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 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 CBI
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 CBI or its Subsidiaries
immediately prior to the Effective Time shall be provided with employee
benefits under employee benefit plans of CBI, 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 CBI 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 CBI 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.
(b) Bancorp agrees to honor in accordance with their terms (i) all CBI
Benefit Plans and (ii) all contracts, arrangements, commitments, or
understandings described in Section 3.14(a)(i) disclosed on the CBI 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 CBI 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) CBI shall cause each outstanding option to purchase CBI Common
Stock held by directors or employees of CBI and its Subsidiaries (and any
related stock appreciation right) to be amended at or prior to the Effective
Time so that at the Effective Time, there shall be exchanged and substituted
for each such 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 CBI Common Stock, in a form substantially as provided in
the Bancorp 1993 Stock Incentive Plan. The number of 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 CBI 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 CBI 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 with the
same remaining term and without any acceleration of exercisability or
conferring any right to receive cash by reason of the Merger, except as
provided by their terms as in effect prior to the date of this Agreement.
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 CBI 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 CBI, any of the CBI Subsidiaries or any of their
respective predecessors or (ii) this Agreement, the CBI Option Agreement, 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 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 CBI 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 CBI 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 CBI (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 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 CBI) 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 CBI
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 CBI and its
Subsidiaries, coordination regarding third-party service agreements with a
view to providing common products and services as expeditiously as practicable
following the Effective Time, 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.
6.1 Advice of Changes. Bancorp and CBI 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
CBI shall coordinate with the other the declaration of any dividends in
respect of Bancorp Common Stock and CBI 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 CBI 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 CBI Common Stock
and any shares of Bancorp Common Stock any such holder receives in exchange
therefor in the Merger.
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 requisite affirmative vote of the holders of CBI
Common Stock entitled to vote thereon.
(b) Nasdaq Listing. The shares of Bancorp Common Stock that
shall be issued to the shareholders of CBI 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 CBI 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
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 CBI shall have received an opinion of Wachtell, Lipton,
Rosen & Katz, counsel to CBI, in form and substance reasonably
satisfactory to Bancorp and CBI, 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 CBI as a result of the Merger;
(ii) No gain or loss will be recognized by the
shareholders of CBI who exchange their CBI 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 CBI
Common Stock solely for Bancorp Common Stock in the
Merger will be the same as the tax basis of the CBI
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, CBI and others.
(g) Pooling of Interests. Bancorp and CBI shall each have
received letters from Deloitte & Touche LLP and KPMG Peat Marwick
LLP, respectively, addressed to Bancorp and CBI, 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:
(a) Representations and Warranties. The representations and
warranties of CBI 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 CBI by the Chief Executive Officer and the Chief
Financial Officer of CBI to the foregoing effect.
(b) Performance of Obligations of CBI. CBI 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 CBI by the Chief Executive Officer and the Chief Financial
Officer of CBI to such effect.
(c) CBI Rights Agreement. The rights issued pursuant to the
CBI 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 CBI. The obligation of CBI to effect
the Merger is also subject to the satisfaction or waiver by CBI 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. CBI 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 CBI 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.
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 CBI:
(a) by mutual consent of Bancorp and CBI 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 CBI (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 CBI if the Merger shall not have been consummated on
or before January 31, 1997, 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 CBI (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
(c) by either Bancorp or the CBI if any approval of the
shareholders of CBI 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 CBI as provided in Section 8.1, this Agreement
shall forthwith become void and have no effect, and none of Bancorp, CBI, any
of their respective Subsidiaries or any 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 CBI 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
CBI; provided, however, that after any approval of the transactions
contemplated by this Agreement by CBI'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 CBI 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 CBI'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 CBI 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 CBI Option Agreement, which shall terminate in accordance
with its 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.
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 U. S. 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: Dwight V. Board
Miller, Nash, Wiener, Hager & Carlsen
111 S.W. Fifth Avenue
Portland, Oregon 97204
Facsimile: (503) 224-0155
Attention: John J. DeMott
and
(b) if to California Bancshares, Inc., to:
California Bancshares, Inc.
100 Park Place, Suite 140
San Ramon, California 94583
Facsimile: (510) 838-3990
Attention: Joseph P. Colmery
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd
New York, New York 10019
Facsimile: (212) 403-2000
Attention: Edward D. Herlihy
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 CBI, 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 CBI or Bancorp,
respectively, contained in the CBI 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 understandings, both written and oral,
among the parties with respect to the subject matter hereof other than the CBI
Option Agreement 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 CBI 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.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
U. S. BANCORP
Attest: John J. DeMott By: Gerry B. Cameron
Secretary Title: Chairman and Chief Executive
Officer
CALIFORNIA BANCSHARES, INC.
Attest: Diane Mietzel By: Joseph P. Colmery
Title: President and Chief Executive
Officer
