<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON APRIL 10, 1996 REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
U. S. BANCORP
(Exact name of Registrant as specified in its charter)
OREGON 6711 93-0571730
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Identification No.)
organization) Classification Code)
111 S.W. FIFTH AVENUE, PORTLAND, OREGON 97204
(503) 275-6111
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
DWIGHT V. BOARD
U. S. BANCORP
111 S.W. Fifth Avenue, Portland, Oregon 97204
(503) 275-3706
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
Copies to:
JOHN J. DeMOTT, ESQ. EDWARD D. HERLIHY
Miller, Nash, Wiener, Wachtell, Lipton,
Hager & Carlsen Rosen & Katz
111 S.W. Fifth Avenue, Suite 3500 51 West 52nd Street
Portland, Oregon 97204 New York, New York 10019
<PAGE>
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Securities Amount To Be Offering Price Aggregate Amount of
To be Registered Registered (1) Per Share Offering Price (2) Registration Fee
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $5
par value 10,202,939 shares (2) $338,979,230 $116,889.39
</TABLE>
(1) This Registration Statement covers the maximum number of shares of the
Registrant's common stock issuable pursuant to the transaction to which
this Registration Statement relates.
(2) The registration fee was computed pursuant to Rule 457(f)(1) and
Rule 457(c) under the Securities Act of 1933, as amended, based on the
average of the high ($31.75) and low ($31.375) sales prices of California
Bancshares, Inc. ("CBI") common stock as reported on the NASDAQ National
Market System on April 3, 1996, multiplied by the maximum number of shares
to be canceled in the merger (10,739,936 shares of CBI common stock,
consisting of 10,107,647 shares of CBI common stock outstanding at April 3,
1996, and 632,289 shares of CBI common stock issuable upon exercise of
stock options outstanding at April 3, 1996).
(3) $66,049.53 of the registration fee was previously paid by CBI in connection
with its filing of preliminary proxy materials with the Securities and
Exchange Commission under cover of Schedule 14A on March 29, 1996.
----------------------------
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after the effective date of this
Registration Statement and all other conditions precedent to the merger of CBI
with and into the Registrant have been satisfied or waived as described in the
enclosed Proxy Statement/Prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
- 2 -
<PAGE>
U. S. BANCORP
CROSS-REFERENCE SHEET FOR REGISTRATION STATEMENT ON FORM S-4
AND
PROXY STATEMENT/PROSPECTUS
<TABLE>
<CAPTION>
LOCATION IN PROXY
STATEMENT/PROSPECTUS
S-4 ITEM
- ------------------------------------- --------------------------------------
<S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus.... Facing Page of Registration
Statement; Cross-Reference
Sheet; Cover Page of Proxy
Statement/Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus............................. Available Information;
Information Incorporated by
Reference; Table of
Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges, and Other Information............ Summary; Market Prices of
Common Stock; Selected
Historical Financial Data;
Comparison of Certain
Unaudited Per Common Share
Data
4. Terms of the Transaction.................. Summary; The Merger;
Background of and Reasons
for the Merger; Comparison
of Shareholders' Rights
5. Pro Forma Financial Information........... Unaudited Pro Forma
Combined Condensed
Financial Information
6. Material Contacts with the Company being
Acquired.................................. Background of and Reasons
for the Merger
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters........................ Not Applicable
8. Interests of Named Experts and Counsel.... Experts; Legal Opinions
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................... Not Applicable
10. Information with Respect to S-3
Registrants............................... Not Applicable
11. Incorporation of Certain Information by
Reference................................. Information Incorporated by
Reference
12. Information with Respect to S-2 or S-3
Registrants............................... Not Applicable
13. Incorporation of Certain Information by
Reference................................. Not Applicable
14. Information with Respect to Registrants
Other Than S-2 or S-3 Registrants......... Not Applicable
15. Information with Respect to S-3
Companies................................. Information Incorporated by
Reference
16. Information with Respect to S-2 or S-3
Companies................................. Not Applicable
- 3 -
<PAGE>
17. Information with Respect to Companies
Other Than S-2 or S-3 Companies........... Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited........ Cover Page of Proxy
Statement/Prospectus;
Information Incorporated by
Reference; Summary;
Special Meeting of CBI
Stockholders; The
Merger; Board of Directors,
Management and Business
Operations of U. S. Bancorp
Following the Merger;
Interests of Certain
Persons in the Merger
19. Information if Proxies, Consents or
Authorizations are not to be Solicited, or
in an Exchange Offer...................... Not Applicable
</TABLE>
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<PAGE>
CALIFORNIA BANCSHARES, INC.
100 PARK PLACE, SUITE 140
SAN RAMON, CALIFORNIA 94583
(510) 743-4200
April 17, 1996
Dear Stockholder:
You are cordially invited to attend a special meeting of the stockholders of
California Bancshares, Inc., a Delaware corporation ("CBI"), to be held on
Wednesday, May 22, 1996, at 11:00 a.m., local time, at the San Ramon Marriott,
2600 Bishop Drive, San Ramon, California.
At the special meeting, CBI stockholders will be asked to consider and vote
upon a proposal to approve a Restated Agreement and Plan of Merger dated as of
February 11, 1996 (the "Merger Agreement"), between U. S. Bancorp, an Oregon
corporation, and CBI, pursuant to which CBI will be merged with and into U. S.
Bancorp.
If the merger is approved and consummated, each outstanding share of CBI
common stock will be converted into the right to receive 0.95 shares of U. S.
Bancorp common stock.
The merger is expected to allow CBI to join one of the 30 largest banking
organizations in the United States, positioning it to meet the competitive
challenges of the rapidly consolidating banking industry in the United States.
The California deposit base of the combined company will be approximately twice
that of CBI and U. S. Bancorp individually, making CBI part of an institution
with a substantially enhanced presence in our region.
THE BOARD OF DIRECTORS OF CBI RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF
APPROVAL OF THE MERGER AGREEMENT.
A Notice of Special Meeting of Stockholders and a Proxy Statement/Prospectus
which describes the merger and the background to the transaction are enclosed.
You are urged to read all of these materials carefully.
A proxy card is enclosed. Please indicate your voting instructions and sign,
date, and mail the proxy card promptly in the return envelope provided. Whether
or not you plan to attend the special meeting in person, it is important that
you return the enclosed proxy card so that your shares are voted. FAILURE TO
VOTE WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT.
Promptly after the merger, a letter of transmittal will be mailed to each
holder of record of shares of CBI common stock. PLEASE DO NOT SEND YOUR STOCK
CERTIFICATES TO THE EXCHANGE AGENT UNLESS AND UNTIL YOU RECEIVE THE LETTER OF
TRANSMITTAL, WHICH WILL INCLUDE INSTRUCTIONS REGARDING THE PROCEDURE TO BE USED
IN SENDING YOUR STOCK CERTIFICATES.
Thank you, and I look forward to seeing you at the special meeting.
Sincerely,
DONALD J. GEHB
CHAIRMAN OF THE BOARD
<PAGE>
CALIFORNIA BANCSHARES, INC.
100 PARK PLACE, SUITE 140
SAN RAMON, CALIFORNIA 94583
(510) 743-4200
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 1996
Notice is hereby given that a special meeting of stockholders of California
Bancshares, Inc., a Delaware corporation ("CBI"), will be held on Wednesday, May
22, 1996, at 11:00 a.m., local time, at the San Ramon Marriott, 2600 Bishop
Drive, San Ramon, California, for the purpose of voting on the approval and
adoption of a Restated Agreement and Plan of Merger dated as of February 11,
1996 (the "Merger Agreement"), by and between U. S. Bancorp, an Oregon
corporation, and CBI and approval of the transactions contemplated thereby, as
described in the accompanying Proxy Statement/Prospectus, and addressing all
other matters properly coming before the meeting. If the merger contemplated by
the Merger Agreement is consummated, then CBI will be merged into U. S. Bancorp.
Only stockholders whose names appeared of record on the books of CBI at the
close of business on April 10, 1996, will be entitled to notice of and to vote
at the special meeting.
A copy of the Merger Agreement is attached as Appendix 1 to the accompanying
Proxy Statement/ Prospectus.
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING IN PERSON. WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO COMPLETE, DATE, SIGN,
AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE.
THE BOARD OF DIRECTORS OF CBI RECOMMENDS THAT YOU MARK YOUR PROXY FOR THE MERGER
AGREEMENT.
BY ORDER OF THE BOARD OF DIRECTORS
DIANE M. MIETZEL
SECRETARY
Dated: April 17, 1996
San Ramon, California
<PAGE>
PROXY STATEMENT OF
CALIFORNIA BANCSHARES, INC.
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 1996
------------------------
PROSPECTUS OF
U. S. BANCORP
SHARES OF COMMON STOCK, PAR VALUE $5 PER SHARE
This Proxy Statement/Prospectus is being furnished to holders of common
stock, par value $2.50 per share ("CBI Common Stock"), of California Bancshares,
Inc., a Delaware corporation ("CBI"), in connection with the solicitation of
proxies by the CBI Board of Directors for use at the Special Meeting of
Stockholders of CBI to be held at 11:00 a.m., local time, on May 22, 1996, at
the San Ramon Marriott, 2600 Bishop Drive, San Ramon, California, and at any
adjournments or postponements thereof (the "Special Meeting").
At the Special Meeting, the holders of CBI Common Stock will be asked to
vote upon approval of the Restated Agreement and Plan of Merger between U. S.
Bancorp, an Oregon corporation, and CBI dated as of February 11, 1996 (the
"Merger Agreement"), providing for the merger (the "Merger") of CBI with and
into U. S. Bancorp, with U. S. Bancorp as the surviving corporation. The Merger
Agreement is attached hereto as Appendix 1 and is incorporated herein by
reference.
This Proxy Statement/Prospectus also constitutes a prospectus of U. S.
Bancorp for up to 10,202,239 shares of the common stock, par value $5 per share
("U. S. Bancorp Common Stock"), of U. S. Bancorp to be issued to holders of CBI
Common Stock in connection with the Merger. Upon consummation of the Merger,
except as described herein, each outstanding share of CBI Common Stock will be
converted into the right to receive 0.95 shares of U. S. Bancorp Common Stock
(the "Exchange Ratio").
CBI's obligation to consummate the Merger is not conditioned upon U. S.
Bancorp Common Stock continuing to trade at any specified minimum price during
any period prior to consummation of the Merger. Because the Exchange Ratio is
fixed and because the market price of U. S. Bancorp Common Stock is subject to
fluctuation, the value of the shares of U. S. Bancorp Common Stock that holders
of CBI Common Stock will receive in the Merger may increase or decrease prior to
and following the Merger.
U. S. Bancorp Common Stock is traded on the NASDAQ National Market System.
The last reported sale price of U. S. Bancorp Common Stock on the NASDAQ
National Market System on April 12, 1996, was $ per share.
This Proxy Statement/Prospectus and accompanying proxy card are first being
mailed to CBI stockholders on or about April 17, 1996.
THE SECURITIES OF U. S. BANCORP HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is April , 1996.
<PAGE>
AVAILABLE INFORMATION
Each of CBI and U. S. Bancorp is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements, and other information with
the Securities and Exchange Commission (the "SEC"). U. S. Bancorp has filed with
the SEC a registration statement on Form S-4 (the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"), covering U.
S. Bancorp Common Stock to be issued by U. S. Bancorp in connection with the
Merger. The Registration Statement and the exhibits thereto, as well as the
reports, proxy statements, and other information filed with the SEC by CBI and
U. S. Bancorp under the Exchange Act, may be inspected and copied at prescribed
rates at the public reference facilities maintained by the SEC at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the SEC located at Seven World Trade Center, Suite 1300, New
York, New York 10048, and The Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material may also be obtained at
prescribed rates from the Public Reference Section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549. As permitted by the rules and regulations
of the SEC, this Proxy Statement/ Prospectus omits certain information,
exhibits, and undertakings contained in the Registration Statement. Reference is
made to the Registration Statement and to the exhibits thereto for further
information.
With respect to statements contained herein or in any document incorporated
herein by reference as to the contents of any contract or other document
referred to herein or therein, reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement or such other
document incorporated herein by reference. Each such statement is qualified in
its entirety by such reference.
All information contained in this Proxy Statement/Prospectus relating to CBI
has been furnished by CBI and U. S. Bancorp is relying upon the accuracy of that
information. All information contained in this Proxy Statement/Prospectus
relating to U. S. Bancorp has been furnished by U. S. Bancorp and CBI is relying
upon the accuracy of that information.
This Proxy Statement/Prospectus includes a discussion of certain estimates
of future performance of U. S. Bancorp and CBI which are forward-looking
statements, including without limitation future earnings results, projected cost
savings, the discounted present value analysis performed by CBI's financial
adviser, the assumptions underlying the unaudited pro forma combined condensed
financial statements included herein, and other financial consequences of the
proposed Merger. Such estimates were based on numerous variables and assumptions
that are inherently uncertain, including without limitation factors related to
transaction costs, the market price of U. S. Bancorp Common Stock, the future
interest rate environment, general economic and competitive conditions,
difficulties and costs associated with the integration of operations, and the
effects of accounting policies. Accordingly, actual future results or values may
be significantly more or less favorable than such estimates.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY CBI OR U. S. BANCORP. THIS PROXY STATEMENT/ PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE
SECURITIES OFFERED BY THIS PROXY STATEMENT/PROSPECTUS, OR THE SOLICITATION OF A
PROXY, IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER,
SOLICITATION OF AN OFFER, OR PROXY SOLICITATION. NEITHER THE DELIVERY OF THIS
PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES OFFERED
PURSUANT TO THIS PROXY STATEMENT/PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET
FORTH HEREIN OR IN THE AFFAIRS OF CBI OR U. S. BANCORP OR ANY OF THEIR
RESPECTIVE SUBSIDIARIES SINCE THE DATE OF THIS PROXY STATEMENT/PROSPECTUS OR
THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
2
<PAGE>
INFORMATION INCORPORATED BY REFERENCE
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS,
OTHER THAN EXHIBITS THERETO, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS
DELIVERED UPON WRITTEN OR ORAL REQUEST TO THE FOLLOWING:
<TABLE>
<S> <C>
U. S. BANCORP DOCUMENTS CBI DOCUMENTS
U. S. Bancorp California Bancshares, Inc.
Attn: Investor Relations Attn: Secretary
P.O. Box 8837 100 Park Place, Suite 140
Portland, Oregon 97208 San Ramon, California 94583
(503) 275-5834 (510) 743-4200
</TABLE>
IN ORDER TO ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, A REQUEST MUST BE
RECEIVED NO LATER THAN MAY 15, 1996.
The following U. S. Bancorp documents are incorporated by reference herein:
(1) U. S. Bancorp's Annual Report on Form 10-K for the year ended
December 31, 1995;
(2) U. S. Bancorp's Current Report on Form 8-K dated December 26, 1995,
as amended by Amendment No. 1 filed February 6, 1996;
(3) U. S. Bancorp's Current Report on Form 8-K dated January 31, 1996;
(4) U. S. Bancorp's Current Report on Form 8-K dated March 11, 1996; and
(5) The description of the U. S. Bancorp Common Stock contained in
Exhibit 28 to U. S. Bancorp's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1992.
Such incorporation by reference shall not be deemed to specifically
incorporate by reference the information referred to in Item 402(a)(8) of
Regulation S-K.
The following CBI documents are incorporated by reference herein:
(1) CBI's Annual Report on Form 10-K for the year ended December 31,
1995;
(2) CBI's Current Report on Form 8-K dated February 11, 1996; and
(3) The description of the CBI Common Stock set forth at pages 50 and
52-53 of CBI's Registration Statement on Form S-18 filed on August 13, 1980
and in Exhibit 1(a) to Amendment No. 1 to the Registration Statement on Form
S-18 filed on September 15, 1980; the description of CBI Series A Junior
Participating Preferred Stock, no par value, and Preferred Stock Purchase
Rights set forth in Exhibit 4 to CBI's Registration Statement on Form 8-A
dated July 5, 1995; and any amendment or report filed for the purpose of
updating any such description.
Such incorporation by reference shall not be deemed to specifically
incorporate by reference the information referred to in Item 402(a)(8) of
Regulation S-K.
All documents filed with the SEC by U. S. Bancorp and CBI pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Proxy Statement/Prospectus and prior to the date of the Special Meeting are
incorporated herein by reference and such documents shall be deemed to be a part
hereof from the date of filing of such documents. Any statement contained in
this Proxy Statement/Prospectus or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement/Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Proxy
Statement/Prospectus.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
AVAILABLE INFORMATION...................................................................................... 2
INFORMATION INCORPORATED BY REFERENCE...................................................................... 3
SUMMARY.................................................................................................... 6
MARKET PRICES OF COMMON STOCK.............................................................................. 10
SELECTED HISTORICAL FINANCIAL DATA......................................................................... 11
SELECTED FINANCIAL RATIOS.................................................................................. 12
COMPARISON OF CERTAIN UNAUDITED PER COMMON SHARE DATA...................................................... 13
SPECIAL MEETING OF CBI STOCKHOLDERS........................................................................ 14
General.................................................................................................. 14
Date, Time, and Place.................................................................................... 14
Purpose of Meeting....................................................................................... 14
Shares Outstanding and Entitled to Vote; Record Date..................................................... 14
Vote Required............................................................................................ 14
Voting, Solicitation, and Revocation of Proxies.......................................................... 14
U. S. BANCORP.............................................................................................. 15
CALIFORNIA BANCSHARES, INC................................................................................. 16
BACKGROUND OF AND REASONS FOR THE MERGER................................................................... 16
Background of the Merger................................................................................. 16
Reasons for the Merger................................................................................... 17
Opinion of CBI's Financial Adviser....................................................................... 20
THE MERGER................................................................................................. 24
General.................................................................................................. 24
Structure of the Merger.................................................................................. 24
Conversion of CBI Common Stock; Treatment of CBI Stock Options........................................... 24
Exchange of Certificates; Fractional Shares.............................................................. 25
Effective Time........................................................................................... 26
Representations and Warranties........................................................................... 26
Conduct of Business Pending the Merger and Other Agreements.............................................. 26
Conditions to the Consummation of the Merger............................................................. 29
Regulatory Approvals Required for the Merger............................................................. 30
Certain Federal Income Tax Consequences.................................................................. 32
Accounting Treatment..................................................................................... 33
Termination of the Merger Agreement...................................................................... 33
Waiver and Amendment of the Merger Agreement............................................................. 33
Stock Option Agreement................................................................................... 34
The CBI Rights Agreement................................................................................. 37
Employee Benefits and Plans.............................................................................. 38
NASDAQ National Market System Trading.................................................................... 38
Expenses................................................................................................. 38
Dividends................................................................................................ 38
Resales of U. S. Bancorp Common Stock Received in the Merger............................................. 38
U. S. Bancorp Dividend Reinvestment and Stock Purchase Plan.............................................. 39
Absence of Appraisal Rights.............................................................................. 39
BOARD OF DIRECTORS, MANAGEMENT AND BUSINESS OPERATIONS OF U. S. BANCORP FOLLOWING THE MERGER............... 39
Board of Directors and Management........................................................................ 39
Business Operations...................................................................................... 40
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PAGE
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INTERESTS OF CERTAIN PERSONS IN THE MERGER................................................................. 40
<S> <C>
New Employment Agreement................................................................................. 40
Existing CBI Employment Agreements....................................................................... 41
Director Retirement Agreements........................................................................... 41
CBI Stock Options........................................................................................ 41
Indemnification of CBI Officers and Directors............................................................ 42
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION............................................... 42
COMPARISON OF SHAREHOLDERS' RIGHTS......................................................................... 49
Corporate Charter and Bylaw Amendments................................................................... 49
Special Meetings of Shareholders......................................................................... 49
Corporate Action Without a Meeting....................................................................... 49
Dividends................................................................................................ 50
Capital Stock............................................................................................ 50
Dissenters' and Appraisal Rights......................................................................... 51
Provisions Relating to Directors......................................................................... 52
Certain Antitakeover Provisions.......................................................................... 53
EXPERTS.................................................................................................... 57
LEGAL OPINIONS............................................................................................. 57
STOCKHOLDER PROPOSALS...................................................................................... 57
APPENDIX 1 -- RESTATED AGREEMENT AND PLAN OF MERGER........................................................
APPENDIX 2 -- OPINION OF GOLDMAN, SACHS & CO...............................................................
</TABLE>
5
<PAGE>
SUMMARY
The following material summarizes certain information contained elsewhere in
this Proxy Statement/Prospectus. This summary is not intended to be complete and
is qualified in its entirety by reference to the more detailed information
appearing elsewhere in this Proxy Statement/Prospectus, the Appendices hereto,
and the Registration Statement. Each stockholder is urged to read the Proxy
Statement/Prospectus and the Appendices in their entirety and with care.
THE SPECIAL MEETING AND VOTE REQUIRED
THE SPECIAL MEETING. A Special Meeting of CBI stockholders, at which the
proposal to approve the Merger Agreement will be considered and voted on, will
be held on Wednesday, May 22, 1996, at 11:00 a.m., local time, at the San Ramon
Marriott, 2600 Bishop Drive, San Ramon, California. Only holders of record of
shares of CBI Common Stock at the close of business on April 10, 1996 (the
"Record Date"), will be entitled to vote at the Special Meeting. At such date,
there were outstanding and entitled to vote 10,108,847 shares of CBI Common
Stock. Holders of shares of CBI Common Stock are entitled to one vote per share
on each matter that properly comes before the Special Meeting.
VOTE REQUIRED. Approval of the Merger Agreement by the stockholders of CBI
requires the affirmative vote of a majority of the votes entitled to be cast by
the holders of record of CBI Common Stock. Abstentions or failures to vote
(including broker non-votes) will have the same effect as votes against the
proposal to approve the Merger Agreement.
CBI's directors and executive officers have indicated that they will vote
their shares of CBI Common Stock in favor of the proposal to approve the Merger
Agreement. As of the Record Date, CBI's directors and executive officers and
their affiliates had voting power with respect to 450,593 shares or 4.5% of the
outstanding shares of CBI Common Stock entitled to vote at the Special Meeting.
Approval of the Merger by the shareholders of U. S. Bancorp is not required.
For additional information relating to the Special Meeting, see "Special
Meeting of CBI Stockholders."
PARTIES TO THE MERGER
CBI. California Bancshares, Inc., was incorporated under the laws of the
state of California in 1969, reincorporated under the laws of the state of
Delaware in 1971 and approved as a bank holding company subject to regulation
under the Bank Holding Company Act of 1956, as amended (the "BHCA"), in 1971.
Its principal executive offices are located at 100 Park Place, Suite 140, San
Ramon, California 94583 ((510) 743-4200). CBI operates nine commercial bank
subsidiaries with $1.6 billion in total assets at December 31, 1995, and a total
of 38 branches serving the east San Francisco Bay Area and the central valley of
Northern California. See "California Bancshares, Inc."
U. S. BANCORP. U. S. Bancorp is an Oregon corporation incorporated in 1968
as a bank holding company subject to regulation under the BHCA. Its principal
executive offices are located at 111 S.W. Fifth Avenue, Portland, Oregon 97204
((503) 275-6111). At December 31, 1995, U. S. Bancorp had consolidated assets of
$31.8 billion, placing it among the 30 largest bank holding companies in the
United States. U. S. Bancorp operates banking subsidiaries in Oregon,
Washington, Idaho, California, Nevada, and Utah. The principal subsidiaries of
U. S. Bancorp are United States National Bank of Oregon, headquartered in
Portland, Oregon, and the largest commercial bank in Oregon in terms of
deposits, U. S. Bank of Washington, National Association, headquartered in
Seattle, Washington and, in terms of deposits, the third largest commercial bank
in the state of Washington, and West One Bank, Idaho, headquartered in Boise,
Idaho and, in terms of deposits, the largest commercial bank in Idaho. Another
U. S. Bancorp banking subsidiary, U. S. Bank of California, operates through 57
full-service banking offices and certain other banking facilities in its
30-county market area of Northern California. U. S. Bank of California,
headquartered in Sacramento, California, had $2.0 billion of assets at December
31, 1995. See "U. S. Bancorp."
6
<PAGE>
REASONS FOR THE MERGER; RECOMMENDATION OF THE CBI BOARD OF DIRECTORS
The Merger will allow CBI stockholders to join one of the 30 largest bank
holding companies in the United States and become part of a company that enjoys
a stronger competitive position in Northern California and a leading market
position throughout a wide region including the Pacific Northwest, as well as
being well-positioned to meet the competitive challenges of the rapidly
consolidating banking industry and changing financial services industry in the
United States. The Merger is expected to permit CBI stockholders to benefit from
the increased dividend potential of, and more liquid trading market for, the
common stock of the resulting company. The combination of the scale,
considerable financial resources and broad product array of U. S. Bancorp with
CBI's established high-quality distribution network and commercial lending
experience in Northern California is expected to permit the combined company to
offer a broader range of products and services through an expanded Northern
California distribution network and to capitalize on developing opportunities in
the banking and financial services industries.
THE BOARD OF DIRECTORS OF CBI RECOMMENDS THAT THE CBI STOCKHOLDERS APPROVE
THE MERGER AGREEMENT.
See "Background of and Reasons for the Merger -- Reasons for the Merger."
OPINION OF CBI'S FINANCIAL ADVISER
Goldman, Sachs & Co. ("Goldman Sachs") have delivered their written opinions
to the CBI Board of Directors that, as of February 11, 1996, the date the CBI
Board of Directors approved the Agreement and Plan of Merger dated as of
February 11, 1996 (as confirmed orally to the CBI Board of Directors on March 8,
1996), and as of the date of this Proxy Statement/Prospectus, the Exchange Ratio
(as defined in "Terms of the Merger" below) is fair to the holders of CBI Common
Stock.
A copy of the opinion of Goldman Sachs dated the date of this Proxy
Statement/Prospectus is attached hereto as Appendix 2. The opinion should be
read in its entirety for a discussion of the assumptions made, other matters
considered and limitations on the reviews undertaken in connection with such
opinion. The opinions of Goldman Sachs are directed only to the fairness, as of
the date thereof, of the Exchange Ratio to CBI stockholders, do not address any
other aspect of the proposed Merger or any related transaction and do not
constitute a recommendation to any stockholder as to how such stockholder should
vote at the Special Meeting.
See "Background of and Reasons for the Merger -- Opinion of CBI's Financial
Adviser."
TERMS OF THE MERGER
Pursuant to the Merger Agreement, at the time and date the Merger is
consummated (the "Effective Time"), CBI will be merged with and into U. S.
Bancorp, with U. S. Bancorp as the surviving corporation. See "The Merger --
General." At the Effective Time, outstanding shares of U. S. Bancorp Common
Stock and of 8 1/8% cumulative preferred stock, Series A ("U. S. Bancorp
Preferred Stock"), of U. S. Bancorp will remain outstanding and shares of CBI
Common Stock will be converted into the right to receive shares of U. S. Bancorp
Common Stock at the rate of 0.95 shares of U. S. Bancorp Common Stock for each
share of CBI Common Stock (the "Exchange Ratio"), with cash being paid in lieu
of issuing fractional shares of U. S. Bancorp Common Stock. For information as
to how CBI stockholders will be able to exchange certificates representing
shares of CBI Common Stock, see "The Merger -- Conversion of CBI Common Stock;
Treatment of CBI Stock Options."
EFFECTIVE TIME
The Merger is presently expected to be consummated during the second half of
1996, subject to the receipt of regulatory approvals and the satisfaction of
other conditions. The Merger will be consummated after approval of the Merger
Agreement by the CBI stockholders, receipt of regulatory approvals, and
satisfaction or waiver of all of the other conditions in the Merger Agreement.
See "The
7
<PAGE>
Merger -- Effective Time of the Merger." The Merger Agreement provides that if
the Merger has not been consummated by January 31, 1997, at any time after such
date, the Board of Directors of either U. S. Bancorp or CBI may vote to abandon
the Merger.
BOARD OF DIRECTORS AND MANAGEMENT
As the surviving corporation in the Merger, U. S. Bancorp will continue to
be managed by its Board of Directors and executive officers following the
Effective Time. The Merger Agreement provides that the board of directors of the
surviving corporation will consist of the members of the U. S. Bancorp Board of
Directors immediately prior to the Merger. See "Board of Directors, Management
and Business Operations of U. S. Bancorp Following the Merger -- Board of
Directors and Management."
STOCK OPTION AGREEMENT
CBI and U. S. Bancorp entered into a Stock Option Agreement dated February
12, 1996 (the "Option Agreement"), pursuant to which CBI granted U. S. Bancorp
an option (the "Option") to purchase from CBI up to 2,002,076 shares of CBI
Common Stock (or approximately 19.9 percent of the outstanding shares as of
February 12, 1996), at a price of $25.75 per share. U. S. Bancorp may exercise
the Option only upon the occurrence of certain events which generally relate to
attempts by third parties to acquire a significant interest in CBI (none of
which has occurred) and upon obtaining any regulatory approvals necessary for
the acquisition of the CBI Common Stock subject to the Option. At the request of
U. S. Bancorp, under limited circumstances (none of which has occurred), CBI
will repurchase for a formula price the Option and any shares of CBI Common
Stock purchased upon exercise of the Option and beneficially owned by U. S.
Bancorp at that time. See "The Merger -- Stock Option Agreement."
ABSENCE OF APPRAISAL RIGHTS
Because the CBI Common Stock is designated as a National Market System
security on the NASDAQ interdealer quotation system, holders of CBI Common Stock
do not have any appraisal rights under Delaware law in connection with the
Merger. See "The Merger -- Absence of Appraisal Rights."
NASDAQ NATIONAL MARKET SYSTEM TRADING
The U. S. Bancorp Common Stock to be issued in the Merger is expected to be
traded on the NASDAQ National Market System under the symbol "USBC." See "The
Merger -- NASDAQ National Market System Trading."
CONDITIONS; REGULATORY APPROVALS
Consummation of the Merger is conditioned upon approval of the Merger
Agreement by the requisite vote of holders of shares of CBI Common Stock as set
forth herein; receipt of all required approvals of the Merger by regulatory
agencies, including the Board of Governors of the Federal Reserve System
("Federal Reserve Board"); receipt by each party of a favorable tax opinion of
its respective legal counsel; the continuing accuracy of the representations and
warranties of each party; the performance of specified obligations by each
party; and other conditions. U. S. Bancorp filed an application for approval of
the Merger with the Federal Reserve Board on March 29, 1996. See "The Merger --
Conditions to the Consummation of the Merger" and "-- Regulatory Approvals
Required for the Merger."
TERMINATION AND AMENDMENT OF THE MERGER AGREEMENT
The Merger Agreement may be terminated, and the Merger abandoned, prior to
the Effective Time, whether before or after its approval by the stockholders of
CBI (i) by the respective majority votes of the Boards of Directors of both CBI
and U. S. Bancorp or (ii) by the Board of Directors of either party under
certain specified circumstances, including if the Merger shall not have been
consummated by January 31, 1997. Subject to compliance with applicable law, the
Merger Agreement may be amended by U. S. Bancorp and CBI by action taken or
authorized by their respective Boards of Directors at any time. After approval
by the stockholders of CBI of the Merger Agreement, in the event
8
<PAGE>
the companies contemplate a waiver of, or amendment to, a provision of the
Merger Agreement of the type which by law may not be made without approval of
stockholders of either or both companies, CBI or U. S. Bancorp or both, as may
be required by law, will solicit proxies from each company's respective
stockholders to obtain such approval. In the event that the companies
contemplate a waiver or amendment which reduces the amount or changes the form
of the consideration to be received by CBI stockholders in the Merger pursuant
to the Merger Agreement, CBI will resolicit proxies from its stockholders to
obtain approval for such waiver or amendment. See "The Merger -- Termination of
the Merger Agreement" and "-- Waiver and Amendment of the Merger Agreement."
TAX AND ACCOUNTING TREATMENT OF THE MERGER
CBI and U. S. Bancorp have received opinions from their respective legal
counsel to the effect that the Merger will constitute a tax-free reorganization
within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended (the "Code"). Because the Merger will be a tax-free reorganization,
no income, gain, or loss will be recognized by a stockholder of CBI upon the
exchange of shares of U. S. Bancorp Common Stock for CBI Common Stock (except in
connection with cash received in lieu of fractional shares). Consummation of the
Merger is conditioned upon receipt by CBI and U. S. Bancorp of similar opinions
from their respective legal counsel dated as of the Effective Time. Upon
consummation of the Merger, U. S. Bancorp will account for the acquisition of
CBI using the purchase method of accounting. See "The Merger -- Certain Federal
Income Tax Consequences" and "-- Accounting Treatment."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
EXECUTIVE EMPLOYMENT AGREEMENTS. In connection with the execution of the
Merger Agreement, the parties have executed an Employment Agreement by and among
CBI, U. S. Bancorp and Joseph P. Colmery, President and Chief Executive Officer
of CBI. In addition, certain CBI employees are parties to employment agreements
which entitle each of them to certain payments in the event his or her
employment is terminated for specified reasons or certain other actions are
taken with respect to such employees following a change in control of CBI,
including consummation of the Merger. See "Interests of Certain Persons in the
Merger -- New Employment Agreement" and "-- Existing CBI Employment Agreements."
CBI STOCK OPTIONS. The execution of the Agreement and Plan of Merger dated
as of February 11, 1996, resulted in certain holders of unexercised options to
purchase CBI Common Stock being accorded the right to exercise such options
immediately prior to consummation of the Merger, whether or not such options are
otherwise vested at such time. Pursuant to the Merger Agreement, each stock
option issued by CBI to an employee or director under certain CBI stock plans
that is outstanding and unexercised at the Effective Time will be converted as
of the Effective Time into an option to purchase U. S. Bancorp Common Stock in
accordance with the Exchange Ratio. See "Interests of Certain Persons in the
Merger -- CBI Stock Options."
DIRECTOR RETIREMENT AGREEMENTS. Pursuant to a Directors' Retirement
Agreement entered into by CBI with certain directors, in the event of a merger
in which CBI will not be the surviving corporation, including the Merger, each
director who is party to such agreement may elect to require CBI to purchase an
annuity contract providing for payment when due of all future benefits owed to
such director. See "Interests of Certain Persons in the Merger -- Director
Retirement Agreements."
INDEMNIFICATION. The Merger Agreement provides that U. S. Bancorp will
indemnify and hold harmless each present and former director and officer of CBI,
or any subsidiary of CBI, to the fullest extent permissible under applicable law
and the articles of incorporation or bylaws of U. S. Bancorp or any agreement to
which U. S. Bancorp is a party as in effect on February 11, 1996. U. S.
Bancorp's indemnification obligations will continue in full force and effect for
a period of six years from the Effective Time. See "Interests of Certain Persons
in the Merger -- Indemnification of CBI Officers and Directors."
9
<PAGE>
MARKET PRICES OF COMMON STOCK
U. S. Bancorp Common Stock and CBI Common Stock are traded over the counter
on the NASDAQ National Market System. The following table sets forth for the
periods indicated the high and low sales prices as reported on the NASDAQ
National Market System for U. S. Bancorp Common Stock and CBI Common Stock.
<TABLE>
<CAPTION>
U. S. BANCORP
CBI COMMON
COMMON STOCK STOCK
-------------- --------------
CALENDAR QUARTER HIGH LOW HIGH LOW
- -------------------------------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
1993
First Quarter................................... $287/8 $ 241/2 $14 $ 93/4
Second Quarter.................................. 281/8 22 133/4 113/4
Third Quarter................................... 27 243/8 141/2 111/2
Fourth Quarter.................................. 271/8 223/4 153/4 14
1994
First Quarter................................... 285/8 231/2 16 141/2
Second Quarter.................................. 285/8 241/2 18 15
Third Quarter................................... 281/8 251/4 191/4 17
Fourth Quarter.................................. 257/8 221/8 181/2 151/2
1995
First Quarter................................... 263/4 22 181/2 161/2
Second Quarter.................................. 273/4 231/2 21 163/8
Third Quarter................................... 291/2 237/8 231/2 193/4
Fourth Quarter.................................. 36 283/8 271/4 203/4
1996
First Quarter................................... 345/8 291/4 321/4 251/2
Second Quarter (through April 12, 1996).........
</TABLE>
On February 9, 1996, the last trading day before the public announcement of
the proposed Merger, the last sale price reported on the NASDAQ National Market
System for U. S. Bancorp Common Stock was $34.25 ($32.54 on an equivalent-share
basis for each share of CBI Common Stock). The last sale price per share
reported on the NASDAQ National Market System for CBI Common Stock on February
9, 1996, was $27.75. On April 12, 1996, the last sale price per share reported
on the NASDAQ National Market System for U. S. Bancorp Common Stock was $
($ on an equivalent-share basis for each share of CBI Common Stock) and
for CBI Common Stock was $ . Stockholders are urged to obtain current
quotations for the market prices of U. S. Bancorp Common Stock and CBI Common
Stock.
No assurance can be given as to the market price of CBI Common Stock or U.
S. Bancorp Common Stock at the Effective Time of the Merger, or of U. S. Bancorp
Common Stock after the Effective Time of the Merger. Because the Exchange Ratio
is fixed and because the market price of the U. S. Bancorp Common Stock is
subject to fluctuation, the value of the shares of U. S. Bancorp Common Stock
that holders of CBI Common Stock will receive in the Merger may increase or
decrease prior to and after the Effective Time.
10
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The following table sets forth selected consolidated historical financial
data for U. S. Bancorp and CBI for the periods specified below. The data have
been derived in part from, and should be read in conjunction with, the
consolidated financial statements and notes thereto and other financial
information with respect to U. S. Bancorp and CBI incorporated by reference into
this Proxy Statement/ Prospectus (see "Information Incorporated by Reference"),
and such data are qualified in their entirety by reference thereto. Certain
amounts have been reclassified to conform CBI's financial information with U. S.
Bancorp's presentation.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------
1991 1992 1993 1994 1995
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
U. S. BANCORP(1)
Earnings Summary:
Interest income........................... $ 2,099,182 $ 1,944,719 $ 1,962,281 $ 2,074,398 $ 2,392,509
Interest expense.......................... 1,118,415 825,230 698,125 738,691 993,103
------------- ------------- ------------- ------------- -------------
Net interest income....................... 980,767 1,119,489 1,264,156 1,335,707 1,399,406
Provision for credit losses............... 155,053 148,762 106,234 120,146 124,093
Noninterest revenue....................... 442,470 519,283 620,352 552,719 524,740
Income before cumulative effect of
accounting changes....................... 232,125 271,446 341,136 254,666 328,971
Net income................................ 232,125 211,556 341,136 254,666 328,971
Per Common Share:
Income before accounting changes.......... $ 1.68 $ 1.87(3) $ 2.23 $ 1.60 $ 2.09
Net income................................ 1.68 1.45(3) 2.23 1.60 2.09
Cash dividends declared................... .71 .76 .85 .94 1.06
Period End Balance Sheet Data:
Total assets.............................. $ 24,292,336 $ 27,874,784 $ 29,086,757 $ 30,609,108 $ 31,794,283
Total earning assets...................... 21,582,825 24,643,243 25,945,928 27,004,341 27,883,285
Total deposits............................ 17,360,760 21,061,615 21,447,682 21,859,189 23,264,629
Long-term debt............................ 1,318,787 1,437,225 1,161,217 1,244,190 1,377,021
Total shareholders' equity................ 1,773,428 2,121,133 2,441,761 2,493,054 2,617,053
Common shareholders' equity............... 1,773,428 1,971,133 2,291,761 2,343,054 2,467,053
Preferred stock........................... -- 150,000 150,000 150,000 150,000
CBI
Earnings Summary:
Interest income (2)....................... $ 89,879 $ 74,494 $ 69,944 $ 79,562 $ 116,823
Interest expense.......................... 40,607 26,739 20,411 21,246 42,966
------------- ------------- ------------- ------------- -------------
Net interest income (2)................... 49,272 47,755 49,533 58,316 73,857
Provision for credit losses............... 4,855 4,065 3,425 1,895 1,485
Noninterest revenue....................... 7,971 8,143 8,807 7,506 9,479
Income before cumulative effect of
accounting changes....................... 6,328 6,415 8,789 11,636 18,035
Net income................................ 6,924 7,310 8,789 11,636 18,035
Per Common Share:
Income before accounting changes.......... $ .69 $ .69 $ .94 $ 1.24 $ 1.80
Net income................................ .76 .79 .94 1.24 1.80
Cash dividends declared................... .45 .52 .52 .55 .76
Period End Balance Sheet Data:
Total assets.............................. $ 967,016 $ 962,434 $ 1,046,495 $ 1,333,296 $ 1,570,458
Total earning assets...................... 878,798 882,928 974,391 1,225,686 1,445,383
Total deposits............................ 861,380 854,813 933,773 1,179,717 1,425,895
Long-term debt............................ -- -- -- -- --
Stockholders' equity...................... 96,875 100,650 105,984 112,243 130,761
</TABLE>
- --------------------------
(1) In March 1994, U. S. Bancorp's Board of Directors approved a major cost
reduction program. In connection therewith, a $100 million pre-tax
restructuring charge was recorded in the 1994 first quarter results of
operations. In connection with the merger of West One Bancorp with and into
U. S. Bancorp in December 1995, pre-tax merger and integration costs of
$98.9 million were recognized in 1995.
(2) CBI interest income and net interest income have been adjusted by $1,710,
$1,469, $1,374, $1,590 and $1,598 in 1991, 1992, 1993, 1994 and 1995,
respectively, to conform to U. S. Bancorp's financial presentation.
(3) 1992 income before accounting changes per common share on a primary and
fully diluted basis was $1.84 and $1.79, respectively. Net income per share
on a primary and fully diluted basis was $1.42 and $1.40, respectively.
Dilution was not material in the other periods presented.
11
<PAGE>
SELECTED FINANCIAL RATIOS
The following table presents unaudited information concerning certain
financial ratios for U. S. Bancorp and CBI on a historical basis. Certain
amounts have been reclassified to conform CBI's financial information with U. S.
Bancorp's presentation. The ratios are qualified in their entirety by reference
to, and should be read in conjunction with, the consolidated financial
statements and notes thereto and other financial information with respect to U.
S. Bancorp and CBI incorporated by reference into this Proxy
Statement/Prospectus. See "Information Incorporated by Reference."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1991 1992 1993 1994 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PERFORMANCE RATIOS:
Return on Average Total Assets
U. S. Bancorp(1)...................................................... .98% 1.07% 1.22% .87% 1.09%
CBI................................................................... .72 .76 .89 1.07 1.23
Return on Average Common Shareholders' Equity
U. S. Bancorp(1)...................................................... 13.74 14.06 15.71 10.62 12.90
CBI................................................................... 7.23 7.38 8.52 10.63 14.57
Net Interest Margin (tax-equivalent)
U. S. Bancorp......................................................... 4.89 5.17 5.31 5.35 5.38
CBI................................................................... 5.66 5.52 5.62 5.93 5.50
Overhead Ratio(2)
U. S. Bancorp......................................................... 63.11 65.03 65.71 72.34 65.38
CBI................................................................... 74.40 75.19 70.29 67.81 61.96
ASSET QUALITY RATIOS:
Allowance for Credit Losses to Period-End Loans
U. S. Bancorp......................................................... 1.63 1.81 1.77 1.79 1.91
CBI................................................................... 1.46 1.61 1.90 1.40 1.44
Allowance for Credit Losses to Nonperforming Loans
U. S. Bancorp......................................................... 83 117 144 192 336
CBI................................................................... 119 112 101 98 99
Nonperforming Assets to Period-End Loans and Foreclosed Assets
U. S. Bancorp......................................................... 2.52 1.77 1.44 1.06 .73
CBI................................................................... 2.73 2.45 2.33 1.69 1.75
Net Loans Charged-Off to Average Loans
U. S. Bancorp......................................................... .73 .70 .48 .39 .33
CBI................................................................... 1.03 .58 .47 .48 .18
CAPITAL RATIOS:
Average Common Shareholders' Equity to Average Assets
U. S. Bancorp......................................................... 7.14 7.24 7.48 7.83 8.13
CBI................................................................... 9.98 10.29 10.47 10.06 8.43
Leverage Ratio
U. S. Bancorp......................................................... 6.77 7.10 7.64 7.82 7.89
CBI................................................................... 10.21 10.46 10.60 10.27 7.98
Tier 1 Risk-based Capital Ratio
U. S. Bancorp......................................................... 7.79 8.63 8.95 8.72 8.44
CBI................................................................... 13.11 14.34 14.67 12.65 12.03
Total Risk-based Capital Ratio
U. S. Bancorp......................................................... 10.24 11.51 11.75 11.38 11.79
CBI................................................................... 14.21 15.55 15.92 13.90 13.28
</TABLE>
- --------------------------
(1) Returns for 1992 were computed before accounting changes. Net income for
1992 includes a $59.9 million after-tax charge from the adoption of
Statement of Financial Accounting Standards (FAS) No. 106, "Employees'
Accounting for Postretirement Benefits Other than Pensions" and FAS No. 112,
"Employers' Accounting for Postemployment Benefits." After accounting
changes, return on average total assets was .84% and return on average
common shareholders' equity was 11.25%.
(2) Overhead ratio is defined as noninterest expenses as a percentage of
tax-equivalent net interest income and noninterest revenues.
12
<PAGE>
COMPARISON OF CERTAIN UNAUDITED PER COMMON SHARE DATA
The following table sets forth selected historical per common share data for
U. S. Bancorp and CBI, pro forma combined data per U. S. Bancorp common share,
and equivalent pro forma data per CBI common share. The pro forma amounts
included in the table assume consummation of the Merger and are based on the
purchase method of accounting, a preliminary determination and allocation of the
total purchase price, and the assumptions described under "Unaudited Pro Forma
Combined Condensed Financial Information." The data should be read in
conjunction with the consolidated financial statements and notes thereto and
other financial information with respect to U. S. Bancorp and CBI incorporated
by reference into or set forth elsewhere in this Proxy Statement/ Prospectus,
and such data are qualified in their entirety by reference thereto. See
"Information Incorporated by Reference" and "Unaudited Pro Forma Combined
Condensed Financial Information." The pro forma amounts in the table below are
presented for informational purposes and are not necessarily indicative of the
financial position or the results of operations of the combined company that
actually would have occurred had the Merger been consummated as of the date or
for the period presented. The pro forma amounts are also not necessarily
indicative of the future financial position or future results of operations of
the combined company. No adjustment has been included in the pro forma amounts
for the positive effects of potential cost savings and revenue enhancements
which may be achieved subsequent to the Merger.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------
<S> <C>
U. S. BANCORP COMMON STOCK
Income per share before cumulative effect of accounting changes(1):
Historical......................................................................... $ 2.09
Pro forma combined(2).............................................................. 2.04
Cash dividends declared per share:
Historical......................................................................... 1.06
Pro forma combined................................................................. 1.06
Book value per share at period-end:
Historical......................................................................... 16.38
Pro forma combined(3).............................................................. 16.38
CBI COMMON STOCK
Income per share before cumulative effect of accounting changes:
Historical......................................................................... $ 1.80
Pro forma equivalent(4)............................................................ 1.94
Cash dividends declared per share:
Historical......................................................................... .76
Pro forma equivalent(4)............................................................ 1.01
Book value per share at period-end:
Historical......................................................................... 13.00
Pro forma equivalent(4)............................................................ 15.56
</TABLE>
- ------------------------
(1) In connection with the merger of West One Bancorp with and into U. S.
Bancorp in December 1995, pre-tax merger and integration costs of $98.9
million were recognized in 1995.
(2) The impact of common stock equivalents, such as common stock options, and
other potentially dilutive securities is not material; accordingly, they are
not included in the per share calculations.
(3) Amount is calculated by dividing total pro forma common shareholders' equity
by the sum of total outstanding shares of U. S. Bancorp Common Stock at
December 31, 1995, plus new shares of U. S. Bancorp Common Stock to be
issued in the Merger (approximately 9.6 million shares based on the number
of shares of CBI Common Stock outstanding at December 31, 1995). It is
anticipated that a number of shares approximately equal to the number of
shares to be issued in the Merger will be purchased on the open market under
U. S. Bancorp's share repurchase program, subject to market conditions or
other factors. U. S. Bancorp expects to obtain the funds for the purchase of
such shares from asset maturities and sales, the issuance of debt and other
sources of liquidity available to U. S. Bancorp.
(4) Amounts are calculated by multiplying U. S. Bancorp's pro forma amounts by
the Exchange Ratio.
13
<PAGE>
SPECIAL MEETING OF CBI STOCKHOLDERS
GENERAL
This Proxy Statement/Prospectus is being furnished to holders of CBI Common
Stock in connection with the solicitation of proxies by the Board of Directors
of CBI for use at the Special Meeting and any adjournments or postponements
thereof at which the stockholders of CBI will consider and vote upon a proposal
to approve the Merger Agreement. Each copy of this Proxy Statement/Prospectus
which is being mailed or delivered to CBI stockholders is accompanied by the
Notice of Special Meeting of Stockholders of CBI and a proxy card.
This Proxy Statement/Prospectus is also furnished by U. S. Bancorp to each
holder of CBI Common Stock as a prospectus in connection with the issuance by U.
S. Bancorp of shares of U. S. Bancorp Common Stock upon the consummation of the
Merger.
DATE, TIME, AND PLACE
The Special Meeting will be held on Wednesday, May 22, 1996, commencing at
11:00 a.m., local time, at the San Ramon Marriott, 2600 Bishop Drive, San Ramon,
California.
PURPOSE OF MEETING
The purpose of the Special Meeting is to consider and vote upon the Merger
Agreement and to conduct any other business that may properly come before the
Special Meeting. In the event of a vote to adjourn the Special Meeting to permit
further solicitation of proxies, no proxy which is voted against approval of the
Merger Agreement will be voted in favor of any such adjournment.
SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATE
The Board of Directors of CBI has fixed the close of business on April 10,
1996, as the Record Date for the determination of holders of shares of CBI
Common Stock entitled to notice of and to vote at the Special Meeting. At the
close of business on the Record Date, there were 10,108,847 shares of CBI Common
Stock issued and outstanding held by approximately 4,506 holders of record.
Holders of record of CBI Common Stock on the Record Date are entitled to one
vote per share.
VOTE REQUIRED
The affirmative vote of a majority of all shares of CBI Common Stock
outstanding on the Record Date is required to approve the Merger Agreement.
As of the Record Date, CBI's directors and executive officers and their
affiliates owned and were entitled to vote 450,593 shares of CBI Common Stock at
the Special Meeting, representing approximately 4.5 percent of the outstanding
shares. Each such director and executive officer has indicated his or her
intention to vote the CBI Common Stock beneficially owned by him or her for
approval of the Merger Agreement.
VOTING, SOLICITATION AND REVOCATION OF PROXIES
Proxy cards accompany this Proxy Statement/Prospectus for use at the Special
Meeting by record holders of CBI Common Stock. A CBI stockholder may use his or
her proxy if he or she is unable to attend the Special Meeting in person or
wishes to have his or her shares voted by proxy even if he or she attends the
meeting. The proxy may be revoked in writing by the person giving it at any time
before it is exercised by notice of such revocation to the Secretary of CBI, by
submitting a proxy having a later date, or by such person appearing at the
Special Meeting and electing to vote in person. All proxies validly submitted
and not revoked will be voted in the manner specified therein. IF NO
SPECIFICATION IS MADE, THE PROXIES WILL BE VOTED FOR APPROVAL OF THE MERGER
AGREEMENT.
The presence of a majority of the outstanding shares of CBI Common Stock in
person or by proxy is necessary to constitute a quorum of stockholders for the
Special Meeting. Shares for which duly-executed proxies have been received but
with respect to which holders of shares have abstained from voting are counted
in determining the shares present at a meeting.
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For voting purposes, only shares affirmatively voted for approval of the
Merger Agreement will be counted as favorable votes in determining whether the
Merger Agreement is approved by the holders of a majority of the outstanding
shares of CBI Common Stock. Under applicable stock exchange rules, brokers who
hold shares in street name for customers are prohibited from giving a proxy to
vote such customers' shares with respect to approval of the Merger Agreement in
the absence of specific instructions from such customers ("broker nonvotes").
Accordingly, abstentions and broker nonvotes will have the same effect as votes
against approval of the Merger Agreement.
CBI will bear the cost of soliciting proxies from its stockholders. In
addition to using the mails, proxies may be solicited by personal interview,
telephone, and wire. Banks, brokerage houses, other institutions, nominees and
fiduciaries will be requested to forward their proxy soliciting material to
their principals and obtain authorization for the execution of proxies. CBI will
reimburse such parties for their reasonable expenses in sending proxy materials
to the beneficial owners of the shares.
At the Special Meeting, representatives of KPMG Peat Marwick LLP, principal
accountants of CBI for the current year and most recently completed fiscal year,
are expected to be present, will have the opportunity to make a statement if
they desire to do so, and are expected to be available to respond to appropriate
questions.
U. S. BANCORP
U. S. Bancorp is a regional multibank holding company incorporated in the
state of Oregon in 1968 and headquartered in Portland, Oregon. At December 31,
1995, U. S. Bancorp was among the 30 largest bank holding companies in the
United States in terms of total assets, with total assets of $31.8 billion,
deposits of $23.3 billion, and shareholders' equity of $2.6 billion.
U. S. Bancorp is engaged in a general retail and commercial banking business
in the states of Oregon, Washington, California, Nevada, Idaho, and Utah through
its banking subsidiaries. On December 26, 1995, the merger of West One Bancorp,
a regional multibank holding company headquartered in Boise, Idaho, with total
assets of $9.2 billion at September 30, 1995, with and into U. S. Bancorp was
consummated, with U. S. Bancorp as the surviving corporation.
U. S. Bancorp's principal banking subsidiaries are United States National
Bank of Oregon, with $12.1 billion in total assets at December 31, 1995, U. S.
Bank of Washington, National Association, which had total assets of $7.0 billion
at that date, and West One Bank, Idaho, which had total assets of $4.7 billion
at year-end 1995. Another U. S. Bancorp banking subsidiary, U. S. Bank of
California, operates in Northern California through 57 full-service banking
offices and certain other banking facilities in its 30-county market area. U. S.
Bank of California, headquartered in Sacramento, California, had $2.0 billion of
assets at December 31, 1995.
Other subsidiaries of U. S. Bancorp provide financial services related to
banking, including lease financing, consumer and commercial finance, discount
brokerage, investment advisory services, and insurance agency and credit life
insurance services. U. S. Bancorp's principal activities are located in the
Pacific Northwest, but it has operations throughout the Far West and, to a
lesser extent, the rest of the United States. The principal executive offices of
U. S. Bancorp are located at 111 S.W. Fifth Avenue, Portland, Oregon 97204,
telephone number (503) 275-6111.
CALIFORNIA BANCSHARES, INC.
CBI is a multibank holding company incorporated under the laws of the state
of California in 1969 and reincorporated under the laws of the state of Delaware
in 1971 and headquartered in San Ramon, California. At December 31, 1995, CBI
had total assets of $1.6 billion, deposits of $1.4 billion, and stockholders'
equity of $130.8 million.
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CBI is engaged in a general retail and commercial banking business in the
east San Francisco Bay Area and the central valley of Northern California
through its nine banking subsidiaries with a total of 38 branches. The principal
executive offices of CBI are located at 100 Park Place, Suite 140, San Ramon,
California 94583, telephone number (510) 743-4200.
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND OF THE MERGER
CBI has experienced significant growth and change in the past decade. It was
incorporated under the laws of the state of California in 1969, reincorporated
under the laws of the state of Delaware in 1971, and was approved as a bank
holding company under the BHCA by the Federal Reserve Board in 1971. CBI was
known as Alameda Bancorporation until 1990 and as Northern California Community
Bancorporation from that point until its merger with Mission-Valley Bancorp in
1991, after which its name was changed to California Bancshares, Inc. During the
last two years, CBI grew further through various acquisitions, including the
Bank of Livermore, Modesto Banking Company, Old Stone Bank of California, and
First Community Bankshares, Inc., the holding company for Centennial Bank. As a
result of the growth described above, CBI presently has assets of approximately
$1.6 billion and operates 38 branches through nine commercial banking
subsidiaries in communities throughout Alameda, Contra Costa, Stanislaus and San
Joaquin counties, and including one branch in northern Santa Clara county.
As part of CBI's exploration of strategies to maximize shareholder value,
including through acquisitions in which revenue enhancement and operational
efficiencies could be realized, CBI's senior management has from time to time
held informal discussions with senior management of other banking institutions
regarding the possibility of a combination of CBI with such institutions or
other banking institutions. In early 1995, senior management of CBI and the
Board of Directors of CBI (the "CBI Board") held discussions regarding CBI's
business and the possible strategic alternatives available to it to increase
shareholder value, including without limitation earnings growth, dividends and
share liquidity, in light of the current banking environment and the trend
toward strategic consolidation in the banking industry.
Following these preliminary discussions and as part of such exploration,
representatives of Goldman Sachs, CBI's financial adviser, and senior management
of CBI held an informal meeting with the senior management of U. S. Bancorp in
April 1995. In addition, Goldman Sachs engaged in additional exploratory
discussions regarding the possibility of a strategic combination involving CBI
with U. S. Bancorp. Throughout this time, discussions remained preliminary and
no specific transactions were discussed. Further, as part of its consideration
of strategic alternatives, and based on its own experience and its view of
trends in the banking industry, the CBI Board had at this time determined that,
as a general matter, were it to pursue such a business combination transaction,
it would likely prefer to affiliate CBI with a substantially larger institution,
with the advantages of doing so envisioned as including, but not limited to, the
ability to increase the potential dividend to stockholders and the market
liquidity of their stock; access to a broader array of products, services,
experience and expertise that would match the needs of many of CBI's customers
and potential customers; the financial capability to invest in innovative
technology and customer delivery systems; competitive and marketing strength;
favorable expense ratios; and improved geographic diversification to reduce
dependence on the local economy.
During late 1995, senior management of CBI and representatives of Goldman
Sachs discussed with the CBI Board CBI's strategic plans to increase shareholder
value, the trend toward consolidation in the banking industry generally, and
certain recent events in the California banking and financial services market,
including the First Interstate Bancorp transaction. The CBI Board also discussed
the reasons for such consolidation and in particular the importance of achieving
institutional scale in order to realize appropriate levels of long-term
profitability and service and product delivery to customers. In light of such
trends and events and of CBI's goal of positioning CBI to
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maximize long-term shareholder value, Goldman Sachs then described for the CBI
Board certain strategic alternatives available to CBI, including both continued
independence (and continuing CBI's strategy of re-engineering coupled with
strategic acquisitions), and a possible combination with another banking
institution capable of achieving the advantages previously discussed as
desirable by the CBI Board. After deliberations on the matter the CBI Board
engaged Goldman Sachs in November 1995 for the purpose of initiating exploratory
contacts regarding potential interest in a business combination transaction with
CBI.
Pursuant to the CBI Board's authorization, Goldman Sachs represented CBI in
discussions with U. S. Bancorp in the following weeks regarding a potential
business combination with CBI. CBI entered into a customary confidentiality
agreement with U. S. Bancorp in December 1995.
Following preliminary discussions concerning the possibility of a business
combination between CBI and U. S. Bancorp, U. S. Bancorp conducted a due
diligence investigation of CBI during the first week of February 1996. Also at
this time, CBI and Goldman Sachs conducted a due diligence investigation of U.
S. Bancorp. Starting on February 5, 1996, U. S. Bancorp and CBI discussed
potential legal and other terms of a transaction between the parties, including
the structure of such a transaction. On February 7, 1996, CBI received a letter
from U. S. Bancorp formally proposing a merger of CBI with and into U. S.
Bancorp, substantially on the terms and conditions set forth in a proposed
merger agreement and stock option agreement.
On February 8, 1996, the CBI Board met and reviewed with CBI's senior
management and its legal and financial advisers the status of the discussions to
date, which as of that time were focused on U. S. Bancorp. The Board discussed
the terms of the merger agreement and the stock option agreement proposed by U.
S. Bancorp. Based on the foregoing and the matters discussed below under the
heading "-- Reasons for the Merger," the CBI Board authorized CBI senior
management and representatives to continue to pursue negotiations with U. S.
Bancorp.
The CBI Board held a special meeting on February 11, 1996, to further
consider U. S. Bancorp's merger proposal and the outcome of continued
negotiations. Based on the foregoing and the matters discussed below under the
headings "-- Reasons for the Merger" and "-- Opinion of CBI's Financial
Adviser," the CBI Board determined to approve the proposed Merger with U. S.
Bancorp. Following the meeting, the Agreement and Plan of Merger dated as of
February 11, 1996, and the Option Agreement were executed by each of CBI and U.
S. Bancorp. On March 8, 1996, the CBI Board approved the terms of the Restated
Agreement and Plan of Merger dated as of February 11, 1996, to permit U. S.
Bancorp to account for the Merger using the purchase rather than the pooling-of-
interests method of accounting.
REASONS FOR THE MERGER
CBI. On February 11, 1996, ten of the eleven CBI directors, constituting a
quorum of the CBI Board, convened to consider in detail the Merger and other
transactions contemplated by the proposed merger agreement and stock option
agreement. At the meeting, members of CBI management and CBI's outside financial
and legal advisers reviewed the terms of the proposed merger agreement and stock
option agreement and the transactions contemplated thereby with the CBI Board.
Also at the meeting, Goldman Sachs delivered their opinion that, as of that
date, the Exchange Ratio in the proposed merger agreement was fair to the
holders of CBI Common Stock. See "-- Opinion of CBI's Financial Adviser." After
deliberating with respect to the Merger and the other transactions contemplated
by the proposed merger agreement and stock option agreement, considering, among
other things, the matters set forth below and the opinion of Goldman Sachs
referred to above, the CBI Board, by unanimous vote of the directors present,
approved the Agreement and Plan of Merger dated as of February 11, 1996, the
Option Agreement and the transactions contemplated thereby. On March 8, 1996,
the CBI Board, after deliberation and consultation with its outside financial
and legal advisers, including oral confirmation by Goldman Sachs of their
opinion, dated as of February 11, 1996, as to the fairness of the Exchange Ratio
to holders of CBI Common Stock, approved the terms of
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the Restated Agreement and Plan of Merger dated as of February 11, 1996 (as
amended and restated, the "Merger Agreement"), to permit U. S. Bancorp to
account for the Merger using the purchase rather than the pooling-of-interests
method of accounting.
THE CBI BOARD BELIEVES THAT THE MERGER IS FAIR TO AND IN THE BEST INTERESTS
OF CBI AND ITS STOCKHOLDERS. THE CBI BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE APPROVAL OF THE MERGER AGREEMENT.
In connection with its approval of the Merger Agreement and the Option
Agreement, the CBI Board considered and approved the adoption of an amendment 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"), to
permit the execution of the Merger Agreement and the Option Agreement and the
consummation of the Merger without triggering the exercisability under the CBI
Rights Agreement of the rights issued thereunder. Additionally, for purposes of
the Delaware General Corporation Law ("DGCL"), and the Restated Certificate of
Incorporation of CBI (the "Certificate"), the CBI Board approved the execution
and delivery of the Merger Agreement and the Option Agreement and the
consummation of the Merger, and exempted such transactions from the application
of provisions of the DGCL and Article 11 of the Certificate.
In reaching its determination to approve and adopt the Merger Agreement and
the transactions contemplated thereby, the CBI Board considered a number of
factors, including, without limitation, the following:
(i) information regarding the financial condition, results of
operations, cash flow, business and purposes of CBI and of U. S. Bancorp;
(ii) the CBI Board's review of the operating environment, including, but
not limited to, the continued consolidation and increasing competition in
the banking and financial services industries, the prospect for further
changes in these industries and the importance of financial resources,
technological innovation and strategic geographic diversification to being
able to capitalize on developing opportunities in these industries. In this
regard, the CBI Board considered that the combined company would be
significantly more diversified in lines of business and geographically than
CBI on a stand-alone basis and that the combined company's vulnerability to
certain adverse developments, including exposure to the California economy,
would be less than would CBI's on a stand-alone basis;
(iii) the CBI Board's assessment that the combined entity resulting from
the Merger would better serve the convenience and needs of its customers and
the communities it serves as a result of being a substantially larger bank
(as compared to CBI remaining independent), thereby affording access to
financial and managerial resources, the ability to offer an expanded range
of potential products and services, and the advantage of technological
innovation in product and service delivery and in other areas, which
assessment was based on a number of factors, including information presented
to the CBI Board and the CBI Board's beliefs concerning the financial
strength, management depth, capital resources and product and service
offerings of the combined institution, the compatibility of the businesses
of U. S. Bancorp and CBI given the two companies' corporate cultures and the
strategic objectives and priorities of each company, the historical prices
and trading information with respect to the U. S. Bancorp Common Stock, the
general conditions of, and the likelihood of further consolidation in, the
banking industry, and the likelihood that the Merger would be approved by
the appropriate regulatory authorities;
(iv) the CBI Board's review of strategic alternatives to enhance
shareholder value, including remaining independent and potential
transactions with other institutions, which alternatives the CBI Board
believed were not likely to result in greater shareholder value than the
Merger based on, among other things, the CBI Board's assessment of CBI, U.
S. Bancorp, and the information presented to it at its February 11, 1996
meeting, as described herein;
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(v) the financial presentation of Goldman Sachs, including the analysis
with respect to premium-to-market price of the Exchange Ratio to the CBI
stockholders and the discounted present value analysis (which relied on
numerous assumptions, including asset and earnings growth rates, dividend
payout rates, terminal values and discount rates) which attempted to compare
the value of the Merger consideration to be received by CBI stockholders for
each share of CBI Common Stock to the long-term value of a share of CBI
Common Stock on a stand-alone basis (see "-- Opinion of CBI's Financial
Adviser");
(vi) the February 11, 1996 opinion of Goldman Sachs as to the fairness of
the Exchange Ratio to the stockholders of CBI as of such date and the oral
confirmation of such opinion by Goldman Sachs as of March 8, 1996 (see "--
Opinion of CBI's Financial Adviser");
(vii) the CBI Board's belief that the terms of the Merger Agreement are
attractive in that the agreement allows CBI stockholders to become
shareholders in an institution which is among the top 30 bank holding
companies in the United States (ranked by total assets) with a strong
position in key Northern California and Pacific Northwest markets and with
the financial strength to compete effectively in the current banking
environment, and to benefit from the possibility of increased dividends and
the characteristics of U. S. Bancorp's common stock, including its
liquidity;
(viii) the anticipated cost savings and operating efficiencies available
to the combined institution from the Merger, including consolidation of
administrative and back office operations and integration of common systems
(see "Board of Directors, Management and Business Operations of U. S.
Bancorp Following the Merger -- Business Operations");
(ix) the expectation that the Merger will generally be a tax-free
transaction to CBI and its stockholders (see "The Merger -- Certain Federal
Income Tax Consequences");
(x) the CBI Board's belief, after consultation with its legal counsel,
that the required regulatory approvals could be obtained to consummate the
Merger (see "The Merger -- Regulatory Approvals Required for the Merger");
(xi) the effect of the Merger on CBI's other constituencies, including
its employees and the communities served by CBI, including the CBI Board's
assessment that the Merger is not expected to result in closures of CBI
branches, and including the CBI Board's awareness and assessment of the
potential that the Merger could be expected to provide certain CBI employees
with employment and other benefits (see "Interests of Certain Persons in the
Merger"); and
(xii) U. S. Bancorp's prior experience in implementing and arranging
large-scale bank mergers and acquisitions.
The foregoing discussion of the information and factors considered by the
CBI Board is not intended to be exhaustive but is believed to include all
material factors considered by the CBI Board. In reaching its determination to
approve and recommend the Merger, the CBI Board did not assign any relative or
specific weights to the foregoing factors, and individual directors may have
given differing weights to different factors.
U. S. BANCORP. U. S. Bancorp entered the Northern California market in 1989
through its acquisition of the seven-branch Bank of Loleta; its Northern
California operations have grown steadily since that time through additional
acquisitions as well as internal growth. U. S. Bank of California, headquartered
in Sacramento, California, had 57 full-service banking offices and certain other
banking facilities in its 30-county market area and $2.0 billion in assets at
December 31, 1995. U. S. Bancorp views the acquisition of CBI as an excellent
opportunity to further its commitment to the growth and success of its
California franchise and to expand into densely-populated, attractive markets
contiguous to its present operations in Northern California.
The assimilation of CBI's expertise in commercial bank management will
bolster U. S. Bank of California's development of commercial banking products
and services. Access to CBI's desirable
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consumer and business customer base, including a high proportion of small and
middle market businesses, will afford opportunities for revenue enhancement
through an expanded audience for U. S. Bancorp's wider array of products and
services. The acquisition of CBI's respected, well-managed and profitable
community banks is also expected to be an excellent cultural fit within the U.
S. Bancorp franchise. For these reasons, U. S. Bancorp believes the Merger will
provide significant benefits to the shareholders and customers of both U. S.
Bancorp and CBI.
OPINION OF CBI'S FINANCIAL ADVISER
Goldman Sachs have rendered their written opinions to the CBI Board, dated
February 11, 1996 (which was confirmed orally to the CBI Board on March 8,
1996), and dated the date of this Proxy Statement/Prospectus, to the effect that
at the date of each such opinion the Exchange Ratio in the Merger was fair to
the holders of CBI Common Stock.
The full text of the opinion of Goldman Sachs dated the date of this Proxy
Statement/Prospectus, which sets forth, among other things, assumptions made,
procedures followed, matters considered and limits on the review undertaken by
Goldman Sachs, is attached as Appendix 2 to this Proxy Statement/Prospectus.
Holders of CBI Common Stock are urged to read this opinion in its entirety.
GOLDMAN SACHS' OPINIONS, WHICH ARE ADDRESSED TO CBI'S BOARD OF DIRECTORS, ARE
DIRECTED ONLY TO THE EXCHANGE RATIO IN THE MERGER AND DO NOT CONSTITUTE
RECOMMENDATIONS TO ANY CBI STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE AT
THE SPECIAL MEETING AND DO NOT ADDRESS ANY OTHER ASPECT OF THE PROPOSED MERGER
OR ANY RELATED TRANSACTION. The summary set forth in this Proxy
Statement/Prospectus of the opinions of Goldman Sachs is qualified in its
entirety by reference to the full text of the opinion attached hereto as
Appendix 2.
In connection with their opinion dated February 11, 1996, Goldman Sachs
reviewed, among other things: (a) the Agreement and Plan of Merger dated as of
February 11, 1996; (b) annual reports to shareholders and Annual Reports on Form
10-K of CBI and of U. S. Bancorp for the five years ended December 31, 1994; (c)
certain interim reports to shareholders and Quarterly Reports on Form 10-Q of
CBI and of U. S. Bancorp; (d) certain other communications from CBI and from U.
S. Bancorp to their respective shareholders; and (e) certain internal financial
analyses and forecasts for CBI prepared by CBI's management and certain internal
financial analyses for U. S. Bancorp prepared by U. S. Bancorp's management.
Goldman Sachs also held discussions with members of the senior managements of
CBI and U. S. Bancorp regarding their past and current business operations,
regulatory relations, financial condition and future prospects of their
respective companies. In addition, Goldman Sachs reviewed the reported price and
trading activity of CBI Common Stock and U. S. Bancorp Common Stock, compared
certain financial and stock market information for CBI and U. S. Bancorp with
similar information for certain other companies the securities of which are
publicly traded, reviewed the financial terms of certain recent business
combinations in the banking industry specifically and in other industries
generally and performed such other studies and analyses as Goldman Sachs
considered appropriate. No limitations were imposed by the CBI Board with
respect to the investigations made or the procedures followed by Goldman Sachs
in rendering their opinions.
Goldman Sachs relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by Goldman
Sachs for purposes of their opinions. Goldman Sachs are not experts in the
evaluation of loan and lease portfolios for the purpose of assessing the
adequacy of the allowances for losses with respect thereto and have assumed,
with the consent of the CBI Board, that such allowances for each of CBI and U.
S. Bancorp are in the aggregate adequate to cover all such losses. In addition,
Goldman Sachs have not reviewed the individual credit files and have not made an
independent evaluation or appraisal of the assets and liabilities of CBI or U.
S. Bancorp or any of their subsidiaries and Goldman Sachs have not been
furnished with any such evaluation or appraisal. In connection with the opinion
dated February 11, 1996, Goldman Sachs assumed, with the consent of the CBI
Board, that the Merger would be accounted for as a pooling-of-interests under
generally accepted accounting principles. Goldman Sachs were retained by the CBI
Board to express an opinion as to the fairness to the holders of CBI Common
Stock of the Exchange
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Ratio. Goldman Sachs did not address CBI's underlying business decision to
proceed with the Merger and did not make any recommendation to the CBI Board or
to the stockholders of CBI with respect to any approval of the Merger Agreement.
Each of Goldman Sachs' opinions is necessarily based upon conditions as they
existed and could be evaluated on the date thereof and the information made
available to Goldman Sachs through the date thereof. Goldman Sachs did not
express any opinion as to the price or range of prices at which U. S. Bancorp
Common Stock might trade subsequent to the Merger.
In connection with rendering their opinions to the CBI Board, Goldman Sachs
performed a variety of financial analyses which are summarized below. Goldman
Sachs believe that their analyses must be considered as a whole and that
selecting portions of their analyses and the factors considered by them, without
consideration of all factors and analyses, could create a misleading view of the
analyses and the processes underlying Goldman Sachs' opinions. Goldman Sachs
arrived at their ultimate opinion based on the results of all the analyses they
undertook assessed as a whole, and they did not draw conclusions from or with
regard to any one method of analysis. The preparation of a fairness opinion is a
complex process involving subjective judgments and is not necessarily
susceptible to partial analyses or summary description. With respect to the
comparable company analysis and bank merger transaction analysis summarized
below, no public company utilized as a comparison is identical to U. S. Bancorp
or CBI and such analyses necessarily involve complex considerations and
judgments concerning the differences in financial and operating characteristics
of the companies and other factors that could affect the acquisition or public
trading values of the companies concerned. The earnings estimates of the
management of CBI contained in or underlying Goldman Sachs' analyses are not
necessarily indicative of future results or values, which may be significantly
more or less favorable than such estimates. Estimates of values of companies or
assets do not purport to be appraisals or necessarily reflect the prices at
which companies or their securities actually may be sold. None of the analyses
performed by Goldman Sachs was assigned a greater significance by Goldman Sachs
than any other.
In conducting their analyses, Goldman Sachs discussed with the management of
CBI earnings estimates for each of U. S. Bancorp and CBI. Neither U. S. Bancorp
nor CBI publicly discloses internal management estimates of the type provided to
Goldman Sachs in connection with its review of the financial terms of the
Merger. The estimates were based on numerous variables and assumptions that are
inherently uncertain, including without limitation factors related to general
economic and com-petitive conditions. Accordingly, actual results could vary
significantly from those reflected in such estimates.
The following is a brief summary of the analyses performed by Goldman Sachs
in connection with their opinion dated February 11, 1996:
1. PROPOSED COMBINATION SUMMARY. Goldman Sachs analyzed the closing
prices for the U. S. Bancorp Common Stock and CBI Common Stock on February
9, 1996 (the last trading day prior to the announcement of the Merger) of
$34.25 and $27.75, as well as the Exchange Ratio of 0.95, resulting in value
per share of CBI Common Stock of $32.54, noting that the aggregate
combination value was $340 million (based on 10.061 million shares
outstanding as of December 31, 1995 and 710,297 options outstanding as of
September 30, 1995 with an average exercise price of $14.52). Goldman Sachs
noted that the Exchange Ratio represented a premium of 17% to the closing
price of CBI Common Stock on February 9, 1996. Goldman Sachs also noted
that, as a multiple of CBI's fully diluted earnings per share, the Exchange
Ratio, based on the price of U. S. Bancorp Common Stock on February 9, 1996,
represented 18.1x earnings per share for 1995 and 14.5x CBI's estimated
earnings per share for 1996. Goldman Sachs further noted that the Exchange
Ratio represented a multiple of 2.50x CBI's stated book value, 2.57x CBI's
tangible book value and 3.13x CBI's adjusted book value (adjusted for a 6%
tangible equity/tangible assets ratio), such values in each case as of
December 31, 1995. In addition, Goldman Sachs noted that the Exchange Ratio,
based on the price of U. S. Bancorp Common Stock on February 9, 1996,
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represented a premium to CBI's deposits of 14%. Goldman Sachs observed that
the current holders of CBI Common Stock would own 6.2%, and the current
holders of U. S. Bancorp Common Stock would own 93.8%, of the combined
entity after giving effect to the Merger.
2. COMPARABLE COMPANY ANALYSIS. Using publicly available information,
Goldman Sachs compared the financial performance, dividend policy and stock
market valuation of CBI with the following five selected banking companies
of comparable size (the "Mid-Cap Group") and two other banking companies
(the "Large Cap Group") deemed relevant by Goldman Sachs: CVB Financial,
City National, Imperial Bancorp, Silicon Valley Bancshares and ValliCorp
Holdings; and BankAmerica and Wells Fargo. Indications of such financial
performance, dividend policy and stock market valuation included, but were
not limited to: stock price and recent stock price performance expressed in
terms of February 9, 1996 stock price as a percent of the high stock price
during the previous 52 weeks; return on average assets for the quarter
ending December 31, 1995 (a median of 1.47% for the Mid-Cap Group, a median
of 1.36% for the Large Cap Group, and 1.31% for CBI); the ratio of tangible
equity to tangible assets (a median of 7.81% for the Mid-Cap Group, a median
of 5.48% for the Large Cap Group, and 8.14% for CBI); the ratio of
nonperforming assets to the sum of net loans and the value of other real
estate owned (a median of 3.20% for the Mid-Cap Group, a median of 1.68% for
the Large Cap Group, and 1.75% for CBI); dividend yields (a median of 2.1%
for the Mid-Cap Group, a median of 2.5% for the Large Cap Group, and 3.2%
for CBI); forecast price to earnings ratios (for 1996, a median of 10.5 for
the Mid-Cap Group, a median of 12.2 for the Large Cap Group, and 12.3 for
CBI (on a stand-alone basis) and for 1997, a median of 9.8 for the Mid-Cap
Group, a median of 10.9 for the Large Cap Group, and 11.3 for CBI (on a
stand-alone basis)); and price to tangible book ratios (a median of 1.7 for
the Mid-Cap Group, a median of 3.1 for the Large Cap Group, and 2.2 for
CBI). These indications are based on public financial statement information
as of December 31, 1995 (except for information pertaining to Imperial
Bancorp, Silicon Valley Bancshares and Vallicorp Holdings, which is based on
such information as of September 30, 1995), Institutional Brokers Estimate
System estimates as of February 7, 1996 and closing stock market prices on
February 9, 1996.
3. ANALYSIS OF COMPARABLE COMMERCIAL BANK COMBINATIONS. Goldman Sachs
analyzed 21 selected other commercial bank merger and acquisition
transactions involving consideration to shareholders of between $100 and
$500 million for commercial banking institutions in the United States during
1994 and 1995. The transactions analyzed were: Norwest Corporation/Victoria
Bankshares; Mercantile Bancorp/Hawkeye Bancorp; NationsBank/Intercontinental
Bank; Union Planters/Capitol Bancorp; Meridian Bancorp/United Counties
Bancorp; First Commerce/Central Corp., Comerica/Metrobank; Mercantile
Bancorp/TCBankshares; CCB Financial/Security Capital; Synovus Financial/NBSC
Corp.; Key Corp/OmniBancorp; Norwest Corporation/Independent Bancorp;
Firstar Corporation/First Colonial; First Virginia Banks/Farmers National;
National Westminster/Central Jersey Bancorp; BB&T Financial/Commerce Bank;
Key Corp./Casco & Bank Vermont; Harris Bankcorp/Suburban Bancorp; First
Fidelity/Baltimore Bancorp; Keystone Financial/Frankford Corp. and First
Interstate Bancorp/San Diego Financial. This analysis, which was based on
publicly available financial information for the 12 months preceding the
announcement of the relevant transaction, showed that the Exchange Ratio
represented a multiple of: (i) 18.1x CBI's 1995 earnings per share, compared
to a high multiple of trailing 12 months earnings per share of 18.1x, a
median multiple of 15.7x and a low multiple of 14.3x for 1995 transactions
and a high multiple of 67.0x, a median multiple of 22.1x and a low multiple
of 10.3x for 1994 transactions; (ii) 2.50x CBI's stated book value, compared
to a high multiple of 2.71x, a median multiple of 1.90x and a low multiple
of 1.50x for 1995 transactions and a high multiple of 2.55x, a median
multiple of 2.10x and a low multiple of 1.13x for 1994 transactions; and
(iii) 2.57x CBI's tangible book value, compared to a high multiple of 2.75x,
a median multiple of 2.10x and a low multiple of 1.67x for 1995 transactions
and a high multiple of 2.64x, a median multiple of 2.40x and a low multiple
of 1.28x for 1994 transactions. This analysis also showed that the Exchange
Ratio represented a premium to the closing price of the CBI Common Stock on
the last trading day prior to announcement of the Merger of 17%, compared to
a high premium to market
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price of 42%, a median premium to market price of 23% and a low premium to
market price of 6% for 1995 transactions and a high premium to market price
of 160%, a median premium to market price of 45% and a low premium to market
price of 8% for 1994 transactions. Goldman Sachs noted that no transaction
reviewed was identical to the Merger and that, accordingly, any analysis of
comparable transactions necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics
of the parties to the transactions being compared.
4. DIVIDEND ANALYSIS. Goldman Sachs summarized certain pro forma
financial and market data for the combined institution, based on publicly
available financial information available as of December 31, 1995 and market
information available on February 9, 1996. Based on U. S. Bancorp's current
dividend rate, the dividend payable by the combined institution attributable
to a share of CBI Common Stock would be 21% higher than the dividend paid
with respect to such share prior to the Merger, assuming a dividend rate by
the combined institution that equals the current dividend rate of U. S.
Bancorp. Neither CBI nor U. S. Bancorp has indicated any intentions
regarding payments of future dividends. Goldman Sachs assumed for purposes
of their analysis that U. S. Bancorp would continue its historical practice
of paying dividends equal to or greater than past dividends.
5. DISCOUNTED PRESENT VALUE ANALYSIS. Goldman Sachs performed
discounted present value analyses to determine the present value per share
of CBI Common Stock on a stand-alone basis based on certain assumptions
concerning the growth rate of CBI earnings per share over the succeeding
five years (reflecting CBI's core earnings power absent acquisitions), the
applicable discount rate and the price to earnings ratio at the end of such
period. The purpose of these analyses was to compare the value of the
consideration to be received by CBI stockholders in the Merger to the
estimated value of a share of CBI Common Stock on a stand-alone basis. For
purposes of the analysis, Goldman Sachs assumed growth rates for CBI
earnings per share of 9.0%, 10.0% and 11.0%. Goldman Sachs utilized discount
rates ranging from 14.0% to 16.0% and terminal value multiples ranging from
10.0x to 15.0x to apply to forecasted earnings for 2001. These analyses
showed a range of stand-alone present values per share of CBI Common Stock
from $21.20 to $32.69 assuming a growth rate of 9.0% per year for CBI
earnings per share and from $23.12 to $35.76 assuming a growth rate of 11.0%
per year for CBI earnings per share, as compared to consideration in the
Merger (giving effect to the Exchange Ratio of 0.95 shares of U. S. Bancorp
Common Stock for each share of CBI Common Stock) and a closing price for U.
S. Bancorp Common Stock on February 9, 1996, of $34.25) of $32.54 as of
February 9, 1996. These analyses did not purport to be indicative of actual
values or expected values of the shares of CBI Common Stock before the
Merger. Goldman Sachs noted that the discounted present value analysis is a
widely used valuation methodology, but noted that it relies on numerous
assumptions, including asset and earnings growth rates, dividend payout
rates, terminal values and discount rates.
In connection with their opinion dated the date of this Proxy
Statement/Prospectus, Goldman Sachs confirmed the appropriateness of their
reliance on the analyses used to render their February 11, 1996 opinion by
performing procedures to update certain of such analyses and by reviewing
the assumptions upon which such analyses were based and the factors
considered in connection therewith. In connection with their opinion dated
the date of this Proxy Statement/ Prospectus, Goldman Sachs reviewed the
Restated Agreement and Plan of Merger. In connection with the March 8, 1996
oral confirmation of their opinion dated February 11, 1996 and their opinion
dated the date of this Proxy Statement/Prospectus, Goldman Sachs also have
assumed, with the consent of the CBI Board, that the Merger would be
accounted for as a purchase under generally accepted accounting principles.
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The CBI Board retained Goldman Sachs based upon the recognized experience
and expertise of the senior personnel in Goldman Sachs' financial institutions
group. Goldman Sachs are an internationally recognized investment banking and
advisory firm. Goldman Sachs, as part of their investment banking and advisory
business, are continually engaged in the valuation of businesses and securities
in connection with mergers and acquisitions, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes. At
various times, Goldman Sachs have conducted business with U. S. Bancorp.
CBI and Goldman Sachs have entered into letter agreements pursuant to which
CBI has agreed to pay Goldman Sachs a transaction fee of $3,397,268, payable in
cash upon consummation of the Merger, and to reimburse Goldman Sachs for their
reasonable out-of-pocket expenses, including the fees and disbursements of
counsel, plus any sales, use or similar taxes arising in connection with its
engagement, and to indemnify Goldman Sachs against certain liabilities relating
to or arising out of the engagement, including liabilities under the federal
securities laws.
THE MERGER
GENERAL
The Boards of Directors of U. S. Bancorp and CBI have adopted the Merger
Agreement, which provides for the Merger at the Effective Time, with U. S.
Bancorp as the surviving corporation. With certain limited exceptions described
below, each share of CBI Common Stock outstanding at the Effective Time will be
converted into the right to receive 0.95 shares of U. S. Bancorp Common Stock.
Shares of U. S. Bancorp Common Stock and U. S. Bancorp Preferred Stock
outstanding immediately prior to the Effective Time will remain outstanding
after the Merger.
This section of the Proxy Statement/Prospectus describes certain aspects of
the proposed Merger, including the principal terms of the Merger Agreement and
the Option Agreement. The Merger Agreement, a copy of which is attached to this
Proxy Statement/Prospectus as Appendix 1, is hereby incorporated herein by
reference. All stockholders of CBI are urged to read the Merger Agreement in its
entirety.
STRUCTURE OF THE MERGER
Subject to the terms and conditions of the Merger Agreement and in
accordance with the DGCL and the Oregon Business Corporation Act ("OBCA"), at
the Effective Time, CBI will merge with and into U. S. Bancorp. U. S. Bancorp
will be the surviving corporation in the Merger, and will continue its corporate
existence under the OBCA. At the Effective Time, the separate corporate
existence of CBI will terminate. The articles of incorporation and bylaws of U.
S. Bancorp, as in effect immediately prior to the Effective Time, will be the
articles of incorporation and bylaws of the surviving corporation.
CONVERSION OF CBI COMMON STOCK; TREATMENT OF CBI STOCK OPTIONS
At the Effective Time of the Merger, each share of CBI Common Stock
outstanding, other than shares held in CBI's treasury or held by U. S. Bancorp
or CBI or any subsidiary of either (except in both cases for shares held
directly or indirectly in trust accounts or managed accounts or otherwise held
in a fiduciary capacity that are beneficially owned by third parties ("Trust
Account Shares") or in respect of a debt previously contracted ("DPC Shares")),
will be converted into the right to receive 0.95 shares (the "Exchange Ratio")
of U. S. Bancorp Common Stock. CBI's obligation to consummate the Merger is not
conditioned upon U. S. Bancorp Common Stock continuing to trade at any specified
minimum price during any period prior to the Effective Time. Because the
Exchange Ratio is fixed and because the market price of U. S. Bancorp Common
Stock is subject to fluctuation, the value of the shares of U. S. Bancorp Common
Stock that holders of CBI Common Stock will receive in the Merger may increase
or decrease prior to and following the Merger.
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Each outstanding share of CBI Common Stock owned by U. S. Bancorp or its
subsidiaries or by CBI or its subsidiaries (other than Trust Account Shares or
DPC Shares) will be canceled at the Effective Time and shall cease to exist, and
no U. S. Bancorp Common Stock or other consideration will be delivered in
exchange therefor. All shares of U. S. Bancorp Common Stock that are owned by
CBI or any subsidiary will become authorized but unissued stock of U. S.
Bancorp.
Each stock option to acquire CBI Common Stock granted under CBI's 1990 Stock
Incentive Plan or its Directors Stock Option Plan (together, the "CBI Stock
Plans") that is outstanding and unexercised immediately prior to the Effective
Time will be converted at the Effective Time into, and will become, a stock
option to purchase U. S. Bancorp Common Stock. See "-- Employee Benefits and
Plans."
Shares of U. S. Bancorp Common Stock and U. S. Bancorp Preferred Stock
issued and outstanding immediately prior to the Effective Time will remain
issued and outstanding immediately after the Merger.
EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
At or prior to the Effective Time, U. S. Bancorp will deposit, or cause to
be deposited, with First Chicago Trust Company of New York (the "Exchange
Agent"), for the benefit of the holders of certificates of CBI Common Stock,
certificates representing the shares of U. S. Bancorp Common Stock and the cash
in lieu of any fractional shares (such certificates for shares of U. S. Bancorp
Common Stock and the cash in lieu of any fractional shares, together with any
dividends or distributions with respect thereto, being referred to as the
"Exchange Fund") to be issued pursuant to the Merger Agreement in exchange for
outstanding shares of CBI Common Stock.
As soon as is practicable after the Effective Time, and in no event later
than five business days after receipt by U. S. Bancorp of a list of stockholders
of record of CBI as of the Effective Time, a form of transmittal letter will be
mailed by the Exchange Agent to the holders of CBI Common Stock. The form of
transmittal letter will contain instructions with respect to the surrender of
certificates representing CBI Common Stock.
CBI STOCK CERTIFICATES SHOULD NOT BE RETURNED WITH THE ENCLOSED PROXY AND
SHOULD NOT BE FORWARDED TO THE EXCHANGE AGENT UNLESS AND UNTIL A LETTER OF
TRANSMITTAL IS RECEIVED FOLLOWING THE EFFECTIVE TIME.
Until the certificates representing CBI Common Stock are surrendered for
exchange after the Effective Time of the Merger, holders of such certificates
will accrue but will not be paid dividends or other distributions declared after
the Effective Time with respect to the U. S. Bancorp Common Stock into which
their shares have been converted. When such certificates are surrendered, any
unpaid dividends or other distributions will be paid, without interest. After
the Effective Time, there will be no transfers on the stock transfer books of
CBI of shares of CBI Common Stock issued and outstanding immediately prior to
the Effective Time. If certificates representing shares of CBI Common Stock are
presented after the Effective Time, they will be canceled and exchanged for
certificates representing the applicable shares of U. S. Bancorp Common Stock.
No fractional shares of U. S. Bancorp Common Stock will be issued to any
holder of CBI Common Stock upon consummation of the Merger. For each fractional
share that would otherwise be issued, U. S. Bancorp will pay cash in an amount
equal to such fraction multiplied by the average of the closing sale prices of
U. S. Bancorp Common Stock on the NASDAQ National Market System as reported by
THE WALL STREET JOURNAL for the five trading days immediately preceding the date
of the Effective Time. No interest will be paid or accrued on the cash in lieu
of fractional shares payable to holders of such certificates.
Neither U. S. Bancorp nor CBI nor any other person will be liable to any
former holder of CBI Common Stock for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws. If
a certificate for CBI Common Stock has been lost, stolen or
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destroyed, the Exchange Agent will issue the consideration properly payable in
accordance with the Merger Agreement upon the making of an affidavit of the
loss, theft, or destruction of such certificate by the person claiming such
loss, theft, or destruction and, if required by U. S. Bancorp, the posting by
such person of a bond in such amount as U. S. Bancorp may determine is
reasonably necessary as indemnity against any claim that may be made against it
with respect to the loss, theft, or destruction of such certificate.
For a description of the differences between the rights of the holders of U.
S. Bancorp capital stock and CBI capital stock, see "Comparison of Shareholders'
Rights."
EFFECTIVE TIME
The Effective Time will be as set forth in the articles of merger that will
be filed with the Secretary of State of the state of Oregon and the certificate
of merger that will be filed with the Secretary of State of the state of
Delaware, in each case on the closing date of the Merger (the "Closing Date").
The Closing Date will occur 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 precedent to the Merger
set forth in Article VII of the Merger Agreement. The Merger is presently
expected to be consummated during the second half of 1996, subject to the
receipt of regulatory approvals and the satisfaction of other conditions. The
consummation of the Merger may be delayed as a result of delays in obtaining the
necessary regulatory approvals. There can be no assurances as to if or when such
approvals will be obtained or that the Merger will be consummated. If the Merger
is not effected on or before January 31, 1997, the Merger Agreement may be
terminated by either U. S. Bancorp or CBI, unless the failure to effect the
Merger by such date is due to the failure of the party seeking to terminate the
Merger Agreement to perform or observe the covenants and agreements of such
party set forth therein. See "The Merger -- Conditions to the Consummation of
the Merger" and "-- Regulatory Approvals Required for the Merger."
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains representations and warranties of U. S.
Bancorp and CBI as to, among other things, (i) the corporate organization and
existence of each party and its subsidiaries; (ii) the capitalization of each
party and its subsidiaries; (iii) the corporate power and authority of each
party; (iv) the compliance of the Merger Agreement with (A) the charter and
bylaws of each party, (B) applicable law, and (C) certain material agreements;
(v) governmental and third party approvals; (vi) the timely filing of required
regulatory reports; (vii) each party's financial statements and filings with the
SEC; (viii) the absence of certain changes in each party's business since
December 31, 1994; (ix) the absence of material legal proceedings; (x) the
filing and accuracy of each party's tax returns; (xi) each party's employee
benefit plans and related matters; (xii) each party's compliance with applicable
law; (xiii) the absence of material defaults under certain contracts; (xiv)
agreements between each party and regulatory agencies; (xv) the absence of
undisclosed liabilities; (xvi) the inapplicability to the Merger of the Delaware
or Oregon takeover laws; and (xvii) interest rate risk management arrangements.
CONDUCT OF BUSINESS PENDING THE MERGER AND OTHER AGREEMENTS
Pursuant to the Merger Agreement, prior to the Effective Time CBI has agreed
to, and to 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 either U. S. Bancorp or CBI to obtain any necessary
governmental or regulatory approvals required for the transactions contemplated
by the Merger Agreement or to perform its covenants and agreements under the
Merger Agreement or the Option Agreement.
U. S. Bancorp and CBI have agreed to 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, and
to obtain as promptly as practicable all permits, consents, approvals and
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authorizations of all third parties and governmental entities that are necessary
or advisable to consummate the transactions contemplated by the Merger Agreement
and to comply with the terms and conditions of all such permits, consents,
approvals and authorizations. U. S. Bancorp and CBI have each agreed upon
request to furnish to the other party all information concerning themselves and
their subsidiaries, directors, officers and shareholders and such other matters
as may be reasonably necessary or advisable in connection with the Merger. U. S.
Bancorp and CBI have also agreed, subject to the terms and conditions of the
Merger Agreement, to use their reasonable best efforts to take, or cause to be
taken, all actions necessary, proper or advisable to comply promptly with all
legal requirements that may be imposed on such party or its subsidiaries and to
consummate the Merger. U. S. Bancorp also agreed to cause the shares of U. S.
Bancorp Common Stock to be issued in the Merger to be approved for listing on
the NASDAQ National Market System.
Each of U. S. Bancorp and CBI has further agreed to give the other party
access to all of its properties, books, contracts, commitments and records and
to furnish information concerning its businesses, properties and personnel to
the other party, subject to the restrictions set forth in the Merger Agreement.
Except as expressly contemplated by the Merger Agreement or specified in a
schedule thereto or as contemplated by the Option Agreement, CBI has agreed
that, without the prior written consent of U. S. Bancorp, it will not, and will
not permit any of its subsidiaries to, among other things:
(i) 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),
assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any individual, corporation or other
entity, or make any loan or advance;
(ii) 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 any stock
appreciation rights or grant to any individual, corporation or other entity
any right to acquire any shares of its capital stock (except for regular
quarterly cash dividends at a rate not in excess of the rate being paid at
the date of the Merger 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 the wholly owned subsidiaries of CBI or any of their wholly
owned subsidiaries); or issue any additional shares of capital stock except
pursuant to (A) the exercise of stock options outstanding as of the date of
the Merger Agreement, (B) the Option Agreement, (C) the CBI Rights
Agreement, or (D) the CBI Dividend Reinvestment and Stock Purchase Plan
until such plan is terminated;
(iii) 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 the
Merger Agreement;
(iv) 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;
(v) except for loans, deposits, letters of credit, and similar
transactions in the ordinary course of business consistent with past
practice, (A) 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, (B)
terminate or materially modify any contract or agreement that involves an
amount in excess
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of $100,000 or that has a remaining term in excess of one year, or (C)
commit to any capital expenditure, or make any capital expenditure not
committed to prior to the date of the Merger Agreement, in excess of
$10,000;
(vi) 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;
(vii) 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 the Merger
Agreement (and CBI will promptly notify U. S. 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;
(viii) settle any claim, action or proceeding involving money damages,
except in the ordinary course of business consistent with past practice;
(ix) take any action that would prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368 of the
Code;
(x) amend its certificate of incorporation or its bylaws;
(xi) other than in prior consultation with U. S. 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;
(xii) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in the Merger
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 not being
satisfied or in a violation of any provision of the Merger Agreement,
except, in every case, as may be required by applicable law; or
(xiii) agree to, or make any commitment to, take any of the actions listed
above.
Except as expressly contemplated by the Merger Agreement, U. S. Bancorp has
agreed that without the prior written consent of CBI it will not, and will not
permit any of its subsidiaries to, among other things:
(i) 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 U. S. 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);
(ii) take any action that would prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368 of the
Code; provided, however, that nothing contained in the Merger Agreement
shall limit the ability of U. S. Bancorp to exercise its rights under the
Option Agreement;
(iii) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in the Merger
Agreement being or becoming untrue in
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any material respect at any time prior to the Effective Time, or in any of
the conditions to the Merger not being satisfied or in a violation of any
provision of the Merger Agreement, except, in every case, as may be required
by applicable law;
(iv) 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 the Merger Agreement;
(v) amend its articles of incorporation except with respect to the
establishment of one or more series of preferred stock; or
(vi) agree to, or make any commitment to, take any of the actions listed
above.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Each party's obligation to effect the Merger is subject to the satisfaction
or waiver, where permissible, of the following conditions at or prior to the
Effective Time:
(i) the Merger Agreement and the transactions contemplated thereby shall
have been approved by the requisite affirmative vote of the holders of CBI
Common Stock entitled to vote thereon;
(ii) the shares of U. S. Bancorp Common Stock that are to be issued to
CBI stockholders upon consummation of the Merger shall have been authorized
for listing on the NASDAQ National Market System;
(iii) all regulatory approvals required to consummate the transactions
contemplated by the Merger Agreement shall have been obtained without the
imposition of any conditions that are, in U. S. Bancorp's reasonable
judgment, unduly burdensome and shall remain in full force and effect and
all statutory waiting periods with respect to such approvals shall have
expired (the "Requisite Regulatory Approvals"), and all other material
consents or approvals of any third party required in connection with the
consummation of the Merger shall have been obtained; provided that, for
purposes of this condition, a divestiture required as a condition to any
regulatory approval shall not be deemed unduly burdensome if consistent with
the recent practices of the Federal Reserve Board and the United States
Department of Justice (the "Justice Department");
(iv) the registration statement of which this Proxy Statement/Prospectus
forms a part shall have become effective and no stop order suspending the
effectiveness shall have been issued and no proceedings for that purpose
shall have been initiated or threatened by the SEC;
(v) no order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger or any of the other transactions contemplated
by the Merger Agreement shall be in effect and no statute, rule, regulation,
order, injunction or decree shall have been enacted, entered, promulgated or
enforced by any court, administrative agency or commission or other
governmental authority or instrumentality which prohibits, restricts or
makes illegal consummation of the Merger;
(vi) U. S. Bancorp shall have received an opinion of Miller, Nash,
Wiener, Hager & Carlsen, counsel to U. S. Bancorp, and CBI shall have
received an opinion of Wachtell, Lipton, Rosen & Katz, counsel to CBI, in
form and substance reasonably satisfactory to U. S. Bancorp and CBI, each
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 (A) no gain or loss will be recognized by U. S. Bancorp or by
CBI as a result of the Merger; (B) no gain or loss will be recognized by the
stockholders of CBI who exchange their CBI Common Stock for U. S. Bancorp
Common Stock pursuant to the Merger (except with respect to cash received in
lieu of a fractional share interest in U. S. Bancorp Common Stock); and (C)
the
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tax basis of the U. S. Bancorp Common Stock received by stockholders who
exchange all of their CBI Common Stock solely for U. S. 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) (see "-- Certain
Federal Income Tax Consequences");
(vii) the representations and warranties of the other party to the Merger
Agreement shall be true and correct in all material respects as of the date
of the Merger Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Effective Time as though
made at the Effective Time;
(viii) each party shall have performed in all material respects all
obligations required to be performed by it under the Merger Agreement at or
prior to the Effective Time; and
(ix) the rights issued pursuant to the CBI Rights Agreement shall not
have become nonredeemable, exercisable, distributed or triggered pursuant to
the terms of such agreement (see
"-- The CBI Rights Agreement").
No assurance can be provided as to if or when the Requisite Regulatory
Approvals necessary to consummate the Merger will be obtained or whether all of
the other conditions precedent to the Merger will be satisfied or waived by the
party permitted to do so. If the Merger is not effected on or before January 31,
1997, the Merger Agreement may be terminated by either U. S. Bancorp or CBI,
unless the failure to effect the Merger by such date is due to the failure of
the party seeking to terminate the Merger Agreement to perform or observe
covenants and agreements of such party set forth therein.
REGULATORY APPROVALS REQUIRED FOR THE MERGER
U. S. Bancorp and CBI have agreed to use their reasonable best efforts to
obtain the Requisite Regulatory Approvals, which include approval from the
Federal Reserve Board and the California bank regulatory authority. U. S.
Bancorp filed an application for approval of the Merger with the Federal Reserve
Board on March 29, 1996. The parties intend to file additional required
information and applications for Requisite Regulatory Approvals in due course.
The Merger cannot proceed in the absence of the Requisite Regulatory Approvals.
There can be no assurance as to when or if such Requisite Regulatory Approvals
will be obtained and, if obtained, there can be no assurance as to the absence
of any conditions or requirements in such approvals or any litigation
challenging such approvals. There can likewise be no assurance that the Justice
Department or the California state attorney general will not attempt to
challenge the Merger on antitrust grounds or, if such a challenge is made, as to
the outcome.
U. S. Bancorp and CBI are not aware of any other governmental approvals or
actions that are required prior to the parties' consummation of the Merger other
than those described below. It is presently contemplated that if any such
additional governmental approvals or actions are required, such approvals or
actions will be sought. There can be no assurance, however, that any such
approvals or actions will be obtained.
FEDERAL RESERVE BOARD. The Merger is subject to approval by the Federal
Reserve Board pursuant to Sections 3 and 4 of the BHCA. Assuming Federal Reserve
Board approval, the Merger may not be consummated until 30 days after such
approval, during which time the Justice Department may challenge the Merger on
antitrust grounds and seek the divestiture of certain assets and liabilities.
With the approval of the Federal Reserve Board and the Justice Department, this
waiting period may be reduced to not less than 15 days.
The Federal Reserve Board is prohibited from approving any transaction under
the applicable statutes which:
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(i) would result in a monopoly or which would be in furtherance of any
combination or conspiracy to monopolize or to attempt to monopolize the
business of banking in any part of the United States; or
(ii) may have the effect in any area of the United States of
substantially lessening competition, or tending to create a monopoly, or
resulting in a restraint of trade, unless the Federal Reserve Board finds
that the anti-competitive effects of the transaction are clearly outweighed
in the public interest by the probable effect of the transaction in meeting
the convenience and needs of the communities to be served.
In reviewing a transaction under the applicable statutes, the Federal
Reserve Board will consider the financial and managerial resources of the
companies and their subsidiary banks and the convenience and needs of the
communities to be served. As part of, or in addition to, consideration of the
above factors, it is anticipated that the Federal Reserve Board will consider
the regulatory status of U. S. Bancorp and CBI, and the overall capital and
safety and soundness standards established by the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") and the regulations promulgated
thereunder.
In addition, under the Community Reinvestment Act of 1977, as amended (the
"CRA"), the Federal Reserve Board must take into account the record of
performance of each of U. S. Bancorp and CBI in meeting the credit needs of the
entire community, including low and moderate income neighborhoods, served by
each company. All of the banking subsidiaries of both U. S. Bancorp and CBI have
received a rating of either "satisfactory" or "outstanding" in their most recent
CRA examinations by their respective supervising banking regulator.
The Federal Reserve Board will furnish notice and a copy of the application
for approval of the Merger to the Office of the Comptroller of the Currency (the
"OCC"), the Federal Deposit Insurance Corporation (the "FDIC"), and the
appropriate state regulatory authorities. These agencies have 30 days to submit
their views and recommendations to the Federal Reserve Board. The Federal
Reserve Board is required to hold a public hearing in the event it receives a
written recommendation of disapproval of the application from any of these
agencies within such 30-day period. Furthermore, the BHCA and Federal Reserve
Board regulations require publication of notice of, and the opportunity for
public comment on, the application submitted by U. S. Bancorp for approval of
the Merger and authorize the Federal Reserve Board to hold a public hearing in
connection therewith if the Federal Reserve Board determines that such a hearing
would be appropriate. Any such hearing or comments provided by third parties
could prolong the period during which the application is subject to review by
the Federal Reserve Board.
The commencement of an antitrust action by the Justice Department would stay
the effectiveness of Federal Reserve Board approval of the Merger unless a court
specifically orders otherwise. In reviewing the Merger, the Justice Department
could analyze the Merger's effect on competition differently than the Federal
Reserve Board, and thus it is possible that the Justice Department could reach a
different conclusion than the Federal Reserve Board regarding the Merger's
competitive effects. The Justice Department is likely to examine the impact of
the Merger on competition for loans to small and middle market businesses.
Failure of the Justice Department to object to the Merger may not prevent the
filing of an antitrust action by the California state attorney general.
Using the above standards, U. S. Bancorp and CBI do not expect that the
Federal Reserve Board or the Justice Department will request that U. S. Bancorp
or CBI divest any operations in order to alleviate an adverse competitive
effect. Under the Merger Agreement, however, U. S. Bancorp and CBI are not
obligated to consummate the Merger if any Requisite Regulatory Approval is
subject to the imposition of any conditions that are unduly burdensome in U. S.
Bancorp's reasonable judgment. A divestiture required as such a condition will
not be considered unduly burdensome if consistent with guidelines, policies and
practices of the Federal Reserve Board and Justice Department regarding the
merger of bank holding companies that have been utilized in transactions that
had recently been reviewed prior to the date of the Merger Agreement.
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U. S. Bancorp's right to exercise its Option under the Option Agreement is
also subject to the prior approval of the Federal Reserve Board, to the extent
that the exercise of the Option would result in U. S. Bancorp's owning more than
5 percent of the outstanding shares of CBI Common Stock. In considering whether
to approve U. S. Bancorp's exercise of the Option, including the right to
purchase more than 5 percent of the outstanding shares of CBI Common Stock, the
Federal Reserve Board would generally apply the same statutory criteria it would
apply to its consideration of approval of the Merger.
STATE REGULATORY REQUIREMENTS. The Merger is also subject to approval by
the bank regulatory agency in the state of California. In addition, the Merger
may be reviewed by the California state attorney general. There can be no
assurance that an antitrust action will not be filed to enjoin the Merger or
that CBI and U. S. Bancorp will agree to divest assets and liabilities or take
other actions to avoid or settle any such action.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL. The following is a summary description of the material federal
income tax consequences of the Merger. This summary is not a complete
description of all of the consequences of the Merger and, in particular, may not
address federal income tax considerations that may affect the treatment of a
stockholder which, at the Effective Time, already owns some U. S. Bancorp
capital stock, is not a U.S. person, is a tax-exempt entity or an individual who
acquired CBI Common Stock pursuant to an employee stock option, or exercises
some form of control over CBI. In addition, no information is provided herein
with respect to the tax consequences of the Merger under applicable foreign,
state or local laws. Consequently, each CBI stockholder is advised to consult a
tax adviser as to the specific tax consequences of the transaction to that
stockholder. The following discussion is based on the Code as in effect on the
date of this Proxy Statement/Prospectus, without consideration of the particular
facts or circumstances of any holder of CBI Common Stock.
THE MERGER. U. S. Bancorp has received the opinion of Miller, Nash, Wiener,
Hager & Carlsen, its outside general counsel, and CBI has received the opinion
of Wachtell, Lipton, Rosen & Katz, its special counsel, to the effect that for
federal income tax purposes:
(i) no gain or loss will be recognized by U. S. Bancorp or by CBI as a
result of the Merger;
(ii) no gain or loss will be recognized by stockholders upon their
exchange of CBI Common Stock for U. S. Bancorp Common Stock, except that a
CBI stockholder who receives cash proceeds in lieu of a fractional share
interest in U. S. Bancorp Common Stock will recognize gain or loss equal to
the difference between such proceeds and the tax basis allocated to the
fractional share interest, and such gain or loss will constitute capital
gain or loss if such stockholder's CBI Common Stock with respect to which
gain or loss is recognized is held as a capital asset at the Effective Time;
(iii) the tax basis of the U. S. Bancorp Common Stock received by a CBI
stockholder who exchanges his or her CBI Common Stock for U. S. Bancorp
Common Stock will be the same as such stockholder's tax basis in the Common
Stock surrendered in exchange therefor; and
(iv) the holding period of the U. S. Bancorp Common Stock received by a
CBI stockholder will include the period during which the CBI Common Stock
surrendered in exchange therefor was held (provided that such CBI Common
Stock was held by such CBI stockholder as a capital asset at the Effective
Time).
Such opinions have been filed as exhibits to the Registration Statement.
Receipt of substantively the same opinion by each party from its respective
legal counsel, each dated as of the Effective Time, is a non-waivable condition
to consummation of the Merger. The opinions filed as exhibits to the
Registration Statement are, and the opinions to be given as of the Effective
Time will be, based on certain customary assumptions and representations set
forth therein.
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INFORMATION REPORTING AND BACKUP WITHHOLDING. Payments in respect of CBI
Common Stock may be subject to information reporting to the Internal Revenue
Service and to a 31% backup withholding tax. Backup withholding will not apply,
however, to a payment to a CBI stockholder or other payee if such stockholder or
payee completes and signs the substitute Form W-9 that will be included as part
of the transmittal letter or otherwise proves to U. S. Bancorp and the Exchange
Agent that it is exempt from backup withholding.
ACCOUNTING TREATMENT
Upon consummation of the Merger, U. S. Bancorp will account for the
acquisition of CBI using the purchase method of accounting. Accordingly, the
consideration to be paid in the Merger will be allocated to assets acquired and
liabilities assumed based on their estimated fair values at the Effective Time.
Income (or loss) of CBI prior to the Effective Time will not be included in
income of the combined company.
The purchase method of accounting will permit U. S. Bancorp to repurchase
shares of U. S. Bancorp Common Stock from time to time in the open market, up to
the approximately 9.6 million shares to be issued in the Merger. U. S. Bancorp
expects to obtain the funds for the purchase of such shares from asset
maturities and sales, the issuance of debt and other sources of liquidity
available to U. S. Bancorp.
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement provides that the Merger may be terminated at any time
prior to the Effective Time, whether before or after approval by the CBI
stockholders:
(i) by mutual consent of U. S. 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;
(ii) by the Board of Directors of either U. S. Bancorp or CBI if any
governmental entity which must grant a Requisite Regulatory Approval has
denied approval of the Merger and such denial has become final and
non-appealable or any governmental entity of competent jurisdiction shall
have issued a final non-appealable order enjoining or otherwise prohibiting
the consummation of the transactions contemplated by the Merger Agreement;
(iii) by the Board of Directors of either U. S. Bancorp or CBI if the
Merger shall not have been consummated on or before January 31, 1997, unless
the failure of the Effective Time of the Merger to occur by such date shall
be due to the failure of the party seeking to terminate the Merger Agreement
to perform or observe the covenants and agreements of such party set forth
therein;
(iv) by the Board of Directors of either U. S. Bancorp or CBI (provided
that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained therein) 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 the
Merger Agreement on the part of the other party, which breach is not cured
within 45 days following written notice to the party committing such breach,
or which breach, by its nature, cannot be cured prior to the Effective Time;
or
(v) by either U. S. Bancorp or CBI if approval by the CBI stockholders
has not been obtained by reason of the failure to obtain the required vote
at a duly held meeting of stockholders or any adjournment or postponement
thereof.
Whether or not the Merger is consummated, all fees and expenses incurred in
connection with the Merger and the transactions contemplated thereby will be
paid by the party incurring such expenses.
WAIVER AND AMENDMENT OF THE MERGER AGREEMENT
WAIVER. At any time prior to the Effective Time, U. S. Bancorp and CBI, by
action taken or authorized by their respective Boards of Directors, may, to the
extent legally allowed, (i) extend the
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time for the performance of any of the obligations or other acts of the other
party; (ii) waive any inaccuracies in the representations and warranties of the
other party contained in the Merger Agreement or in any document delivered
pursuant to the Merger Agreement; or (iii) waive compliance by the other party
with any of its agreements or conditions contained in the Merger Agreement.
After approval of the Merger Agreement by the stockholders of CBI, in the event
the companies contemplate waiver of a provision of the Merger Agreement of the
type which by law may not be made without approval of the stockholders of either
or both companies, CBI or U. S. Bancorp or both, as may be required by law, will
solicit proxies from such company's respective stockholders to obtain such
approval. In the event that the companies contemplate a waiver which changes the
form or reduces the amount of consideration that is to be received by CBI
stockholders in the Merger pursuant to the Merger Agreement, CBI will resolicit
proxies from its stockholders to obtain approval for such waiver.
AMENDMENT. Subject to compliance with applicable law, the Merger Agreement
may be amended by U. S. Bancorp and CBI by action taken or authorized by their
respective Boards of Directors at any time. After approval of the Merger
Agreement by the CBI stockholders, in the event the companies contemplate an
amendment to a provision of the Merger Agreement of the type which by law may
not be made without approval of the stockholders of either or both companies,
CBI or U. S. Bancorp or both, as may be required by law, will solicit proxies
from such company's respective stockholders to obtain such approval. In the
event that the companies contemplate an amendment which changes the form or
reduces the amount of consideration that is to be received by CBI stockholders
in the Merger pursuant to the Merger Agreement, CBI will resolicit proxies from
its stockholders to obtain approval for such amendment.
STOCK OPTION AGREEMENT
The Option Agreement is filed as an exhibit to the Registration Statement of
which this Proxy Statement/Prospectus is a part and the summary of certain of
its terms set forth below is subject to, and qualified in its entirety by
reference to, such exhibit. Wherever particular sections or defined terms in the
Option Agreement are referred to, such sections or defined terms are
incorporated herein by reference. The Option Agreement is intended to increase
the likelihood that the Merger will be consummated in accordance with the terms
of the Merger Agreement. Consequently, certain aspects of the Option Agreement
may have the effect of discouraging persons who might now or prior to the
Effective Time be interested in acquiring all of or a significant interest in
CBI from considering or proposing such an acquisition, even if such persons were
prepared to offer to pay consideration to the CBI stockholders which had a
higher current market price than the shares of U. S. Bancorp Common Stock to be
received per share of CBI Common Stock pursuant to the Merger Agreement.
The Option Agreement provides for the purchase by U. S. Bancorp of up to
2,002,076 shares (the "Option Shares") of CBI Common Stock at an exercise price
of $25.75 per share, payable in cash. The Option Shares, if issued pursuant to
the Option Agreement, will in no event exceed 19.9% of the CBI Common Stock
issued and outstanding without giving effect to the issuance of any CBI Common
Stock subject to the Option. (Section 1)
The number of shares of CBI Common Stock subject to the Option will be
increased to the extent that additional shares of Common Stock are issued or
otherwise become outstanding (other than pursuant to exercise of the Option),
such that, after such issuance, the number of Option Shares will continue to
equal 19.9% of the CBI Common Stock then issued and outstanding without giving
effect to the issuance of any CBI Common Stock subject to the Option. (Section
1(b)) In the event of any change in, or distributions in respect of, the shares
of CBI Common Stock by reason of a stock dividend, split-up, merger,
recapitalization, combination, subdivision, conversion, exchange of shares,
distribution on or in respect of such CBI Common Stock or similar transaction,
the type and number of Option Shares purchasable upon exercise of the Option and
the option price will also be adjusted in such a manner as will fully preserve
the economic benefits of the Option. (Section 5)
The Option Agreement provides that U. S. Bancorp or any other holder or
holders of the Option (as used herein, collectively, the "Holder") may exercise
the Option, in whole or in part, subject to
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regulatory approval, if both an Initial Triggering Event (as defined below) and
a Subsequent Triggering Event (as defined below) shall have occurred prior to
the occurrence of an Exercise Termination Event (as defined below); provided
that the Holder shall have sent to CBI written notice of such exercise within 90
days following such Subsequent Triggering Event (subject to extension as
provided in the Option Agreement). The terms Initial Triggering Event and
Subsequent Triggering Event generally relate to attempts by one or more third
parties to acquire a significant interest in CBI. Any exercise of the Option
will be deemed to occur on the date such notice is sent. (Section 2(a))
For purposes of the Option Agreement:
(i) The term "Initial Triggering Event" means the occurrence of any of
the following events or transactions after February 12, 1996: (A) CBI or any
subsidiary of CBI, without U. S. Bancorp's prior written consent, shall have
entered into an agreement to engage in, or the CBI Board recommends
stockholder acceptance or approval of, an Acquisition Transaction (as
defined below) with any person or group (other than as contemplated by the
Merger Agreement); (B) the CBI Board shall have publicly withdrawn or
modified, or publicly announced its intention to withdraw or modify, in any
manner adverse to U. S. Bancorp its recommendation that its stockholders
approve the Merger Agreement; (C) any person, other than U. S. Bancorp or
any subsidiary of U. S. Bancorp, acting in a fiduciary capacity in the
ordinary course of business, acquires beneficial ownership, or the right to
acquire beneficial ownership, of 15% or more of the outstanding shares of
the CBI Common Stock; (D) any person other than U. S. Bancorp or any
subsidiary of U. S. Bancorp shall have made a bona fide proposal to CBI or
its stockholders by public announcement or written communication that shall
be or becomes the subject of public disclosure to engage in an Acquisition
Transaction; (E) CBI breaches any covenant or obligation in the Merger
Agreement after any person, other than U. S. Bancorp or any subsidiary of U.
S. Bancorp, has proposed an Acquisition Transaction and such breach (1)
would entitle U. S. Bancorp to terminate the Merger Agreement and (2) is not
remedied prior to the date of U. S. Bancorp's notice to CBI of the exercise
of the Option; or (F) any person other than U. S. Bancorp or any subsidiary
of U. S. Bancorp, 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. (Section
2(b))
(ii) The term "Acquisition Transaction" means (A) a merger or
consolidation, or any similar transaction with CBI or any of its Significant
Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the SEC); (B) a
purchase, lease or other acquisition of all or a substantial portion of the
assets of CBI or any of its Significant Subsidiaries; (C) a purchase or
other acquisition of securities representing 10% or more of the voting power
of CBI or any of its Significant Subsidiaries; or (D) any substantially
similar transaction; provided, however, that in no event shall any (x)
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% 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 (y) merger, consolidation, purchase or similar transaction involving only
CBI 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. (Section 2(b))
(iii) The term "Subsequent Triggering Event" means the occurrence of
either of the following events or transactions after February 12, 1996: (A)
the acquisition by any person of beneficial ownership of 25% or more of the
then outstanding shares of CBI Common Stock; or (B) the occurrence of the
Initial Triggering Event described above in clause (i)(A), except that the
percentage referred to in clause (ii)(C) of the definition of "Acquisition
Transaction" set forth above shall be 25%. (Section 2(c)) The Option will
expire upon the occurrence of an "Exercise
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Termination Event," defined as: (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 in the case of termination of the Merger Agreement
by U. S. Bancorp as a result of an uncured material breach by CBI of any of
its representations, warranties, covenants or agreements unless the breach
by CBI is non-volitional; or (iii) 12 months after the termination of the
Merger Agreement if such termination occurs after the occurrence of an
Initial Triggering Event or is a termination by U. S. Bancorp due to a
material, volitional breach by CBI of the Merger Agreement (provided that if
an Initial Triggering Event continues or occurs beyond such termination of
the Merger Agreement and prior to the passage of such 12-month period, 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 of the Merger Agreement). (Section 2(a))
As of the date of this Proxy Statement/Prospectus, to the best knowledge of
U. S. Bancorp and CBI, no Initial Triggering Event or Subsequent Triggering
Event has occurred.
Immediately prior to the occurrence of a Repurchase Event (as defined
below), (i) following a request of a Holder, delivered prior to an Exercise
Termination Event, CBI (or any successor thereto) will 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 exercise
price of the Option, 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"), delivered within 90 days of such occurrence (or such
later period as provided in Section 10 of the Option Agreement), CBI will
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.
(Section 7)
The term "market/offer price" means the highest of (i) the price per share
of CBI Common Stock at which a tender offer or exchange offer therefor has been
made, (ii) the price per share of CBI Common Stock to be paid by any third party
pursuant to an agreement with CBI, (iii) 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 the Option Shares, as the case may be, or
(iv) 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 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 CBI Common Stock outstanding at the time of
such sale. In determining the market/offer price, the value of consideration
other than cash will be determined by a nationally-recognized investment banking
firm selected by the Holder or Owner, as the case may be. However, if CBI at any
time after delivery of a notice of repurchase as described in this paragraph 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, 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, CBI will
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
CBI is not prohibited from delivering and (ii) deliver, as appropriate, (A) to
the Holder, a new Option Agreement evidencing the right of the Holder to
purchase that number of shares of CBI Common Stock obtained by multiplying the
number of shares of CBI Common Stock for which the surrendered 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, and (B) to the Owner, a certificate for the Option
Shares it is then so prohibited from repurchasing. A
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"Repurchase Event" is deemed to have occurred (i) upon the consummation of an
Acquisition Transaction or (ii) upon the acquisition by any person of beneficial
ownership of 50% or more of the then outstanding CBI Common Stock, provided that
a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event. (Section 7)
In the event that prior to an Exercise Termination Event, CBI enters into
any agreement (i) to consolidate with or merge into any person, other than U. S.
Bancorp or one of its subsidiaries, such that CBI is not the continuing or
surviving corporation of such consolidation or merger; (ii) to permit any
person, other than U. S. Bancorp or one of its subsidiaries, to merge into CBI
and CBI is the continuing or surviving corporation, but in connection with such
consolidation or merger, the outstanding shares of CBI Common Stock are 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 CBI Common Stock after
such merger shall represent less than 50% 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 U. S.
Bancorp or any of its subsidiaries, then, and in each such case, the agreement
governing such transaction must provide that, upon consummation of such
transaction and upon the terms and conditions set forth in the Option Agreement,
the Option will be converted into, or exchanged for, an option having
substantially the same terms as the Option (the "Substitute Option") to purchase
securities, at the election of the Holder, of either the acquiring person or any
person that controls the acquiring person. At the request of the Holder of the
Substitute Option, the issuer of the Substitute Option will repurchase it at a
price, and subject to such other terms and conditions, as set forth in the
Option Agreement. (Sections 8 and 9)
Within 90 days after the occurrence of a Subsequent Triggering Event that
occurs prior to an Exercise Termination Date (subject to extension as provided
in the Option Agreement), U. S. Bancorp may request CBI to prepare, file and
keep current with respect to the Option Shares, a registration statement with
the SEC. CBI is required to use its reasonable best efforts to cause such
registration statement to become effective and then to remain effective for 180
days or such shorter time as may be reasonably necessary to effect such sales or
other dispositions of the Option Shares. U. S. Bancorp has the right to demand
two such registrations. (Section 6)
Neither CBI nor U. S. Bancorp may assign any of its rights and obligations
under the Option Agreement or the Option to any other person without the express
written consent of the other party, except that if a Subsequent Triggering Event
occurs prior to an Exercise Termination Event, U. S. Bancorp, subject to the
terms of the Option Agreement, may assign in whole or in part its rights and
obligations thereunder, within 90 days (subject to extension as provided in the
Option Agreement) of such Subsequent Triggering Event; provided that until the
date 15 days after the date on which 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% 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. (Section 13)
Certain rights and obligations of U. S. Bancorp and CBI under the Option
Agreement are subject to receipt of required regulatory approvals. The approval
of the Federal Reserve Board is required for the acquisition by U. S. Bancorp of
more than 5 percent of the outstanding shares of CBI Common Stock. See "--
Regulatory Approvals Required for the Merger."
THE CBI RIGHTS AGREEMENT
On June 30, 1995, the CBI Board of Directors declared a dividend of one
preferred share purchase right (a "Right") for each outstanding share of CBI
Common Stock payable to stockholders of record on that date. Each Right, when
exercisable, will entitle the registered holder to purchase from CBI one
one-hundredth of a share of Series A Junior Participating Preferred Stock (the
"Preferred Shares") of CBI at a purchase price of $75 per one one-hundredth of a
Preferred Share, subject to adjustment. The
37
<PAGE>
Rights are not currently exercisable. A description of the terms of the Rights
is set forth in the CBI Rights Agreement, a copy of which was filed as Exhibit 4
to CBI's Registration Statement on Form 8-A, filed with the SEC on July 5, 1995,
and incorporated by reference to CBI's Annual Report on Form 10-K for the year
ended December 31, 1995. See "Information Incorporated By Reference."
Immediately prior to the execution of the Merger Agreement, the CBI Board
amended the CBI Rights Agreement to permit the execution of the Merger Agreement
and the Option Agreement and the consummation of the Merger without triggering
the exercisability of the Rights.
EMPLOYEE BENEFITS AND PLANS
The Merger Agreement requires U. S. Bancorp to honor all employment,
severance and other compensation agreements disclosed to U. S. Bancorp in the
Merger Agreement in accordance with their terms, including any provisions for
termination. See "Interests of Certain Persons in the Merger." The Merger
Agreement also provides that, within a reasonable time after the Effective Time,
U. S. Bancorp shall provide to U. S. Bancorp employees who were formerly
employees of CBI employee benefits substantially the same as those provided to
similarly situated employees of U. S. Bancorp. Also, employees of U. S. Bancorp
who were formerly employees of CBI shall receive full credit for all purposes
under U. S. Bancorp's employee benefit plans, except the accrual of benefits,
for their length of service with CBI or any of its subsidiaries (and any
predecessors thereto) to the extent recognized under the plans of either U. S.
Bancorp or CBI.
Pursuant to the Merger Agreement, provision has been made such that each
stock option to acquire CBI Common Stock granted under the CBI Stock Plans which
is outstanding and unexercised immediately prior to the Effective Time will be
converted at the Effective Time into, and will become, a stock option to
purchase U. S. Bancorp Common Stock, rather than CBI Common Stock, in a form
substantially as provided pursuant to the U. S. Bancorp 1993 Stock Incentive
Plan. The number of shares of U. S. Bancorp Common Stock subject to such stock
options shall be equal to the product of the number of shares of CBI Common
Stock subject to each CBI stock option times the Exchange Ratio, rounded down to
the next whole share, and the exercise price per share of U. S. Bancorp Common
Stock subject to such options will be equal to the exercise price per share of
CBI Common Stock under each CBI stock option divided by the Exchange Ratio,
rounded up to the next cent. CBI stock options will 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 the Merger
Agreement.
NASDAQ NATIONAL MARKET SYSTEM TRADING
It is a condition to the consummation of the Merger that the shares of U. S.
Bancorp Common Stock issuable pursuant to the Merger be authorized for listing
on the NASDAQ National Market System.
EXPENSES
The Merger Agreement provides that U. S. Bancorp and CBI will each pay its
own expenses in connection with the Merger and the transactions contemplated
thereby.
DIVIDENDS
The Merger Agreement provides that U. S. Bancorp and CBI will coordinate the
declaration and payment of dividends in respect of U. S. Bancorp Common Stock
and CBI Common Stock so that holders thereof will not receive two dividends for
a single quarter or fail to receive one dividend which they would otherwise
receive in the absence of the Merger. Dividends on the U. S. Bancorp Preferred
Stock will be payable in accordance with its terms.
RESALES OF U. S. BANCORP COMMON STOCK RECEIVED IN THE MERGER
The U. S. Bancorp Common Stock issued pursuant to the Merger will be freely
transferable under the Securities Act, except for shares issued to any CBI
stockholder who may be deemed to be an affiliate of U. S. Bancorp for purposes
of Rule 144 promulgated under the Securities Act ("Rule 144")
38
<PAGE>
or an affiliate of CBI for purposes of Rule 145 promulgated under the Securities
Act ("Rule 145") (each an "Affiliate"). Affiliates will include persons
(generally executive officers, directors and ten percent stockholders) who
control, are controlled by, or are under common control with (i) U. S. Bancorp
or CBI at the time of the Special Meeting or (ii) U. S. Bancorp at or after the
Effective Time. Each of CBI and U. S. Bancorp has agreed in the Merger Agreement
to use its best efforts to cause each person who is an Affiliate of such party
to deliver to the other party a written agreement intended to ensure compliance
with the Securities Act.
Rules 144 and 145 will restrict the sale of U. S. Bancorp Common Stock
received in the Merger by Affiliates and certain of their family members and
related interests. Generally speaking, during the two years following the
Effective Time, those persons who are Affiliates of CBI at the time of the
Special Meeting, provided they are not Affiliates of U. S. Bancorp at or
following the Effective Time, may publicly resell any U. S. Bancorp Common Stock
received by them in the Merger, subject to certain limitations as to, among
other things, the amount of U. S. Bancorp Common Stock sold by them in any
three-month period and as to the manner of sale. After the two-year period, such
Affiliates may resell their shares without such restrictions so long as there is
adequate current public information with respect to U. S. Bancorp as required by
Rule 144. Persons who become Affiliates of U. S. Bancorp prior to, at or after
the Effective Time may publicly resell the U. S. Bancorp Common Stock received
by them in the Merger subject to similar limitations and subject to certain
filing requirements specified in Rule 144.
The ability of Affiliates to resell shares of U. S. Bancorp Common Stock
received in the Merger under Rule 144 or 145 as summarized herein generally will
be subject to U. S. Bancorp's having satisfied its Exchange Act reporting
requirements for specified periods prior to the time of sale. Affiliates also
would be permitted to resell U. S. Bancorp Common Stock received in the Merger
pursuant to an effective registration statement under the Securities Act or
another available exemption from the Securities Act registration requirements.
This Proxy Statement/Prospectus does not cover any resales of U. S. Bancorp
Common Stock received by persons who may be deemed to be Affiliates of U. S.
Bancorp or CBI in the Merger.
U. S. BANCORP DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
U. S. Bancorp has a Dividend Reinvestment and Stock Purchase Plan (the
"Plan"). The Plan provides, in substance, for those shareholders who elect to
participate, that dividends on U. S. Bancorp Common Stock and optional cash
payments of not less than $25 per payment, up to a maximum of $75,000 per
calendar year, will be invested in shares of U. S. Bancorp Common Stock. The
purchase price for U. S. Bancorp Common Stock purchased under the Plan is 100
percent of the market price. U. S. Bancorp may amend, suspend or terminate the
Plan at any time. After the Effective Time, stockholders of CBI who receive U.
S. Bancorp Common Stock in the Merger will have the right to participate in the
Plan.
ABSENCE OF APPRAISAL RIGHTS
Because the CBI Common Stock is designated as a National Market System
security on the NASDAQ interdealer quotation system, holders of CBI Common Stock
do not have any appraisal rights under the DGCL in connection with the Merger.
BOARD OF DIRECTORS, MANAGEMENT AND BUSINESS OPERATIONS
OF U. S. BANCORP FOLLOWING THE MERGER
BOARD OF DIRECTORS AND MANAGEMENT
As the surviving corporation in the Merger, U. S. Bancorp will continue to
be managed by its Board of Directors and executive officers following the
Effective Time. The Merger Agreement provides that the board of directors of the
surviving corporation will consist of the members of the U. S. Bancorp Board of
Directors immediately prior to the Merger. Directors of U. S. Bancorp at the
Effective Time will serve until the U. S. Bancorp annual shareholders meeting in
1997 and until their successors are duly elected and qualified. U. S. Bancorp
has no present intention to appoint any of the CBI directors to the U. S.
Bancorp Board of Directors.
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<PAGE>
BUSINESS OPERATIONS
Following the Merger, U. S. Bancorp intends to combine the operations of
and, subject to required regulatory approvals, to merge the subsidiary banks of
CBI into one or more U. S. Bancorp banking subsidiaries. As of the date of this
Proxy Statement/Prospectus, no final determination with respect to such matters
had been made. As there is no overlap of branches between CBI and U. S. Bank of
California, U. S. Bancorp does not presently anticipate consolidating any
branches. U. S. Bancorp has estimated that cost savings may be realized in an
amount approximating 15 to 20 percent of CBI's noninterest expenses annually
through the consolidation of administrative and back office operations. Enhanced
revenues are also expected to be realized through the marketing of U. S.
Bancorp's broader array of products and services not presently available to
CBI's customers, such as corporate and private banking, cash management
services, trust services, insurance products and debit cards, as well as through
bringing in-house certain products and services currently outsourced by CBI.
Conversion of CBI's bank operations is currently expected to occur in the first
quarter of 1997.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of the CBI Board and management may be deemed to have
certain interests in the Merger that are in addition to their interests
generally as CBI stockholders. The CBI Board was aware of these interests and
considered them, among other matters, in approving the Merger Agreement and the
transactions contemplated thereby.
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT BY THE CBI STOCKHOLDERS WILL
ALSO CONSTITUTE APPROVAL OR RATIFICATION OF THE FOLLOWING BENEFITS TO BE
RECEIVED BY CBI DIRECTORS, EXECUTIVE OFFICERS AND OTHER EMPLOYEES.
NEW EMPLOYMENT AGREEMENT
Concurrently with the execution of the Agreement and Plan of Merger dated as
of February 11, 1996, CBI entered into an employment agreement (the "Employment
Agreement") by and among CBI, U. S. Bancorp and Joseph P. Colmery, President and
Chief Executive Officer of CBI. Certain provisions of the Employment Agreement
became effective as of the execution of such Employment Agreement, and certain
other provisions become effective as of the Effective Time. The provisions that
became effective upon execution of the Employment Agreement provide that CBI
will not terminate Mr. Colmery's employment without cause, that Mr. Colmery will
not voluntarily terminate his employment with CBI, and that Mr. Colmery will
continue in his current position until the Effective Time.
From and after the Effective Time of the Merger, the Employment Agreement
supersedes Mr. Colmery's existing agreement with CBI. The Employment Agreement
provides that Mr. Colmery will serve as an Executive Vice President of U. S.
Bancorp or of the U. S. Bancorp subsidiary responsible for the operations of CBI
purchased by U. S. Bancorp in the Merger. During the period commencing at the
Effective Time and ending on March 1, 1998 (the "Employment Period"), the
Employment Agreement provides for a minimum annual base salary of $200,000;
eligibility for an annual bonus, beginning in 1997, pursuant to an incentive
compensation plan to be established by U. S. Bancorp; participation in benefit
plans applicable to peer executives; and reimbursement of certain reasonable
expenses and receipt of certain fringe benefits, office and support staff and
vacation applicable to peer executives of U. S. Bancorp.
If, during the Employment Period, U. S. Bancorp terminates Mr. Colmery other
than for cause (as defined therein) or disability or Mr. Colmery terminates his
employment for good reason (as defined therein), Mr. Colmery is entitled to
receive a lump sum cash payment consisting of the sum of Mr. Colmery's annual
base salary and, under certain circumstances, a pro rata bonus, each through the
date of termination and to the extent not already paid, plus an amount equal to
three times the sum of Mr. Colmery's annual base salary, the average of the
annual bonuses paid to Mr. Colmery by CBI and U. S. Bancorp with respect to the
three prior calendar years, and the contributions made by U. S. Bancorp or CBI
in the 12 months preceding termination to profit sharing, 401(k) or retirement
40
<PAGE>
plans. In addition, for three years after the date of such termination, Mr.
Colmery and his family generally would be entitled to the continuation of
specified employee welfare benefits. During the period between the first
anniversary of the Effective Time and March 1, 1998, termination of Mr.
Colmery's employment for any reason other than cause, death or disability shall
be deemed to be a termination for good reason for purposes of the Employment
Agreement.
EXISTING CBI EMPLOYMENT AGREEMENTS
During the period from July 1993 through December 1995, CBI entered into
agreements (the "Existing Employment Agreements") with Chairman of the Board
Donald J. Gehb and certain key employees, including John W. Larsen, Vincent M.
Leveroni, Ted Teruo Kitada, James A. Mayer and Diane M. Mietzel. These
agreements provide for severance compensation to such employees in the event
their employment with CBI or a subsidiary of CBI is terminated subsequent to a
change in control (as defined therein) of CBI under the circumstances set forth
in the agreements. Consummation of the Merger will constitute a change in
control for purposes of the agreements.
Each such employment agreement provides that if a person, firm or
corporation acquiring control of CBI seeks to vary the terms of the employment
agreement, transfers the executive to an area outside the county or counties in
which he or she currently works, unduly harasses him or her, or seeks to
terminate the benefits and privileges provided for him or her under his or her
employment agreement, then the executive shall be entitled to receive an amount
equal to the compensation required by the terms and conditions of the employment
agreement, but in no event less than his or her monthly compensation, including
bonuses and contributions to certain benefit and pension plans, for a period of
36 months for Mr. Gehb, 24 months for Messrs. Larsen and Leveroni, and 12 months
for Messrs. Kitada and Mayer and Ms. Mietzel, from the effective date of the
acquisition of CBI. Mr. Gehb would also be entitled to the continuation of
certain life and health insurance benefits for a period of three years following
the date of the change in control.
DIRECTOR RETIREMENT AGREEMENTS
In June 1991, CBI entered into a Directors' Retirement Agreement with each
of its retired directors and directors who then had vested benefits under the
Directors' Retirement Plan, which was terminated at that time. The persons who
are parties to such a Directors' Retirement Agreement and who have been officers
or directors of CBI at any time since the beginning of CBI's 1995 fiscal year
are current directors Ralph N. Mendelson, A. Steve Simi and James L. McKenna.
The agreement provides that, in the event CBI enters into, among other
transactions described therein, an agreement providing for a merger in which CBI
will not be the surviving corporation, CBI must give each of the above directors
notice of such event and each such director may elect to require that CBI
purchase at its own expense and deliver to such director (or such director's
designee) an annuity contract providing for payment when due of all future
benefits owed to such director. The signing of the Agreement and Plan of Merger
dated as of February 11, 1996, constituted the entering into of such an
agreement.
CBI STOCK OPTIONS
Holders of the options to purchase CBI Common Stock granted under the CBI
Stock Plans have the right to exercise such options, notwithstanding otherwise
applicable vesting requirements, (i) immediately prior to a dissolution or
liquidation of CBI or a merger or consolidation, such as the Merger, in which
CBI will not be the surviving corporation, or (ii) upon the commencement of an
offer to all CBI stockholders to purchase any or all shares of CBI Common Stock.
Accordingly, the holders of such options will have the right to exercise them
effective immediately prior to the Effective Time.
Pursuant to the Merger Agreement, provision has been made such that each
stock option granted under the CBI Stock Plans which is outstanding and
unexercised immediately prior to the Effective Time will be converted at the
Effective Time into, and will become, a stock option to purchase U. S. Bancorp
Common Stock in accordance with the Exchange Ratio and in a form substantially
as provided in the U. S. Bancorp 1993 Stock Incentive Plan. See "The Merger --
Employee Benefits and Plans."
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<PAGE>
INDEMNIFICATION OF CBI OFFICERS AND DIRECTORS
The Merger Agreement provides that, in the event of any threatened or actual
claim or proceeding in which any person who is or has been a director, officer,
or employee of CBI, its subsidiaries, or any of their predecessors (the
"Indemnified Parties") is, or is threatened to be, made a party based in whole
or in part on, or pertaining to (i) the fact that such person was a director or
officer of CBI, its subsidiaries, or any of their predecessors or (ii) the
Merger Agreement, the Option Agreement, or the transactions contemplated
thereby, U. S. Bancorp will, subject to the conditions set forth in the Merger
Agreement, indemnify such person to the fullest extent permitted by law against
any liability or expense incurred in connection with any such claim or
proceeding. The Merger Agreement provides that U. S. Bancorp's obligation to
indemnify any Indemnified Party will continue for a period of six years
following the Effective Time provided that rights to indemnification in respect
of any claim asserted or made within such period will continue until final
disposition of such claim. The Merger Agreement further provides that U. S.
Bancorp will, subject to the conditions set forth in the Merger Agreement, use
its best efforts to cause the persons serving as officers and directors of CBI
immediately prior to the Merger to be covered for a period of six years
following the Effective Time by U. S. Bancorp's directors and officers liability
insurance policy (or any equivalent substitute therefor), provided that U. S.
Bancorp will not be required to expend more than 200 percent of the current
amount expended by CBI to procure such insurance.
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma combined condensed financial statements
were prepared in connection with the Merger (in which each outstanding share of
CBI Common Stock will be exchanged for 0.95 shares of U. S. Bancorp Common
Stock) and give effect to the purchase accounting adjustments and other
assumptions described in the accompanying notes. The unaudited pro forma
combined condensed balance sheet is based upon the consolidated balance sheets
of U. S. Bancorp and CBI as if the Merger had become effective on December 31,
1995. The unaudited pro forma combined condensed statement of income is based on
the consolidated statements of income of U. S. Bancorp and CBI as if the Merger
had become effective on January 1, 1995.
The adjustments included in the unaudited pro forma combined condensed
financial statements are subject to updating as additional information becomes
available. An increase in the unallocated portion of the purchase price
remaining after fair value adjustments would result in a greater final
allocation to goodwill, which would have a corresponding effect on amortization
expense and would reduce tangible common equity. A decrease in the unallocated
portion of the purchase price remaining after fair value adjustments would have
the opposite effects. Accordingly, the final pro forma combined amounts will
differ from those set forth in the unaudited pro forma combined condensed
financial statements.
The information shown below should be read in conjunction with the
consolidated historical financial statements of U. S. Bancorp and CBI, which are
incorporated by reference in this Proxy Statement/Prospectus, and the unaudited
pro forma combined per share financial data which appear elsewhere in this Proxy
Statement/Prospectus. See "Information Incorporated by Reference" and
"Comparison of Certain Unaudited Per Common Share Data." The pro forma data are
presented for comparative purposes only and are not necessarily indicative of
the combined financial position or results of operations in the future. The pro
forma data are also not necessarily indicative of the combined financial
position or results of operations which would have been realized had the Merger
been consummated during the period or as of the date for which the pro forma
financial statements are presented.
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<PAGE>
U. S. BANCORP AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
DECEMBER 31, 1995 (A)
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
-------------------------- PRO FORMA PRO FORMA
U. S. BANCORP CBI ADJUSTMENTS COMBINED
------------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks......................... $ 2,417,503 $ 81,606 $ $ 2,499,109
Federal funds sold, security resell agreements,
and other short-term investments............... 515,225 76,175 591,400
Trading account securities...................... 279,656 -- 279,656
Loans held for sale............................. 159,986 7,468 167,454
Securities available for sale, at fair
value.......................................... 3,276,723 73,876 3,350,599
Securities held to maturity, at amortized
cost........................................... 865,126 264,552 1,023(C) 1,130,701
Loans and lease financing, net of unearned
income......................................... 22,785,275 1,023,312 23,808,587
Allowance for credit losses..................... (434,508) (14,836) (449,344)
------------- ---------- ------------- -----------
Net loans and lease financing................... 22,350,767 1,008,476 -- 23,359,243
Goodwill (U. S. Bancorp only)................... 153,377 -- 182,020(C) 335,397
Other assets (including CBI goodwill)........... 1,775,920 58,305 34,213(D) 1,868,438
------------- ---------- ------------- -----------
$ 31,794,283 $1,570,458 $ 217,256 $33,581,997
------------- ---------- ------------- -----------
------------- ---------- ------------- -----------
LIABILITIES
Noninterest-bearing deposits.................... $ 6,009,728 $ 291,435 $ $ 6,301,163
Interest-bearing deposits....................... 17,254,901 1,134,460 18,389,361
------------- ---------- ------------- -----------
Total deposits................................ 23,264,629 1,425,895 24,690,524
Federal funds purchased and security repurchase
agreements..................................... 2,731,116 -- 2,731,116
Short-term borrowings........................... 868,230 90 80,000(E) 948,320
Long-term debt.................................. 1,377,021 -- 244,898(E) 1,621,919
Other liabilities............................... 936,234 13,712 23,119(D) 973,065
------------- ---------- ------------- -----------
Total liabilities............................. 29,177,230 1,439,697 348,017 30,964,944
------------- ---------- ------------- -----------
SHAREHOLDERS' EQUITY
Preferred stock................................. 150,000 -- 150,000
Common shareholders' equity..................... 2,467,053 130,761 (130,761)(C) 2,467,053
------------- ---------- ------------- -----------
Total shareholders' equity.................... 2,617,053 130,761 (130,761) 2,617,053
------------- ---------- ------------- -----------
$ 31,794,283 $1,570,458 $ 217,256 $33,581,997
------------- ---------- ------------- -----------
------------- ---------- ------------- -----------
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
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<PAGE>
U. S. BANCORP AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995 (A)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
-------------------------- PRO FORMA PRO FORMA
U. S. BANCORP CBI ADJUSTMENTS COMBINED
------------- ---------- ----------------- -----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans, lease financing and loans held for sale,
including fees................................... $ 2,116,907 $ 95,275 $ 2,212,182
Securities........................................ 249,914 17,326 $ (205)(F) 267,035
Trading account securities........................ 10,469 -- 10,469
Interest-bearing deposits and short-term
investments...................................... 15,219 4,222 19,441
------------- ---------- -------- -----------
Total interest income......................... 2,392,509 116,823 (205) 2,509,127
------------- ---------- -------- -----------
INTEREST EXPENSE
Deposits.......................................... 710,044 42,237 752,281
Short-term borrowings............................. 199,712 729 4,600 (E,F) 205,041
Long-term debt.................................... 83,347 -- 15,400 (E,F) 98,747
------------- ---------- -------- -----------
Total interest expense........................ 993,103 42,966 20,000 1,056,069
------------- ---------- -------- -----------
NET INTEREST INCOME............................... 1,399,406 73,857 (20,205) 1,453,058
Provision for credit losses....................... 124,093 1,485 125,578
------------- ---------- -------- -----------
Net interest income after provision for credit
losses........................................... 1,275,313 72,372 (20,205) 1,327,480
NONINTEREST REVENUES
Service charges on deposit accounts............... 189,541 5,625 195,166
Bank card revenue, net............................ 73,393 -- 73,393
Trust and investment management................... 65,826 -- 65,826
Exchange fees..................................... 42,595 -- 42,595
Mortgage banking income, net...................... 16,927 1,204 18,131
Other operating revenue........................... 130,282 2,650 132,932
Equity investment income.......................... 3,177 -- 3,177
Securities gains, net............................. 2,999 -- 2,999
------------- ---------- -------- -----------
Total noninterest revenues.................... 524,740 9,479 534,219
------------- ---------- -------- -----------
NONINTEREST EXPENSE
Employee compensation and benefits................ 602,134 29,470 631,604
Net occupancy expense............................. 85,430 4,635 563(F) 90,628
Equipment rentals, depreciation and maintenance... 127,354 3,779 (280)(F) 130,853
Regulatory agency fees............................ 35,525 2,102 37,627
Merger and integration costs...................... 98,940 -- 98,940
Other operating expense........................... 341,431 12,440 15,244(F) 369,115
------------- ---------- -------- -----------
Total noninterest expense..................... 1,290,814 52,426 15,527 1,358,767
------------- ---------- -------- -----------
Income before income taxes........................ 509,239 29,425 (35,732) 502,932
Provision for income taxes........................ 180,268 11,390 (10,652)(F) 181,006
------------- ---------- -------- -----------
Net income........................................ $ 328,971 $ 18,035 $ (25,080) $ 321,926
------------- ---------- -------- -----------
------------- ---------- -------- -----------
Net income available to common shareholders:
U. S. Bancorp................................... $ 316,784
CBI............................................. $ 18,035
Pro Forma....................................... $ (25,080) $ 309,739
Weighted average common shares outstanding:
U. S. Bancorp................................... 151,554
CBI............................................. 10,014
Pro Forma....................................... (10,014) 151,554
Earnings per common share:
U. S. Bancorp................................... $ 2.09
CBI............................................. $ 1.80
Pro Forma....................................... $ 2.04
</TABLE>
See accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
Statements.
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<PAGE>
U. S. BANCORP AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
(A) BASIS OF PRESENTATION
UNAUDITED PRO FORMA COMBINATION
The unaudited pro forma combined condensed balance sheet combines the
historical consolidated balance sheets of U. S. Bancorp and CBI as if the Merger
had become effective on December 31, 1995. The unaudited pro forma combined
condensed statement of income for the year ended December 31, 1995 combines the
historical consolidated statements of income of U. S. Bancorp and CBI as if the
Merger had become effective on January 1, 1995. Certain amounts in the
historical financial statements of CBI have been reclassified in the unaudited
pro forma combined condensed financial statements to conform to U. S. Bancorp's
historical financial statements.
COST SAVINGS
The positive effects of potential cost savings and revenue enhancements
which may be achieved subsequent to the Merger have not been reflected in the
unaudited pro forma combined condensed financial statements.
METHOD OF ACCOUNTING
The Merger is accounted for as a purchase. Under this method of accounting,
assets and liabilities of CBI are adjusted to their estimated fair value and
combined with the recorded book values of the assets and liabilities of U. S.
Bancorp. Applicable income tax effects of such adjustments are included as a
component of U. S. Bancorp's net deferred tax liability with a corresponding
offset to goodwill.
For purposes of the unaudited pro forma combined condensed financial
statements, estimates of the fair value of CBI assets and liabilities as of
December 31, 1995 have been combined with the recorded values of the assets and
liabilities of U. S. Bancorp. Fair value adjustments are subject to update as
additional information becomes available.
STOCK REPURCHASE
U. S. Bancorp will issue 0.95 shares of U. S. Bancorp Common Stock for each
outstanding share of CBI Common Stock other than fractional shares and certain
shares held by CBI or U. S. Bancorp. It is anticipated that a number of shares
approximately equal to the number of shares to be issued in the Merger will be
purchased on the open market under U. S. Bancorp's share repurchase program,
subject to market conditions or other factors.
COMMON STOCK EQUIVALENTS
The impact of common stock equivalents, such as common stock options, and
other potentially dilutive securities is not material; accordingly, they are not
included in the per share calculations.
(B) PURCHASE PRICE
The purchase price is based on exchanging 0.95 shares of U. S. Bancorp
Common Stock for each outstanding share of CBI Common Stock. The per share
market price of U. S. Bancorp Common Stock used in the purchase price
calculation is $32.76, based on the market price of U. S. Bancorp Common Stock
over a reasonable period of time before and after the companies reached
agreement on the common stock exchange ratio. The fair value of outstanding CBI
stock options (based on the difference between the average exercise price and
the purchase price per share) is also included in the purchase price.
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<PAGE>
U. S. BANCORP AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(B) PURCHASE PRICE (CONTINUED)
The total estimated purchase price (in thousands of dollars, except per
share amounts) is calculated as follows:
<TABLE>
<S> <C> <C>
CBI Common Stock outstanding on December 31, 1995............ 10,061,000
Exchange Ratio............................................. 0.95
----------
U. S. Bancorp Common Stock to be issued...................... 9,557,950
Market price per share of U. S. Bancorp Common Stock......... $32.76
----------
Total market value of U. S. Bancorp Common Stock to be
issued...................................................... $ 313,119
Fair value of CBI stock options outstanding on December 31,
1995 (643,646 shares at $18.30 per share)................... 11,779
---------
Total purchase price......................................... $ 324,898
---------
---------
</TABLE>
(C) ALLOCATION OF PURCHASE PRICE AND GOODWILL CALCULATION
Certain matters are still pending that will have an effect on the ultimate
allocation of the purchase price. Accordingly, the allocation of the purchase
price as of the Merger date has not been finalized and the portions of the
purchase price allocated to fair value adjustments, goodwill, and identifiable
intangibles (discussed below) are subject to change.
Subject to the foregoing, the purchase price has been allocated and goodwill
has been calculated as described in the table below (in thousands):
<TABLE>
<S> <C> <C>
Total purchase price............................................ $ 324,898
Shareholders' equity of CBI at December 31, 1995................ 130,761
---------
Excess of purchase price over CBI shareholders' equity.......... 194,137
Adjustments to excess of purchase price over shareholders'
equity:
Fair value of securities held to maturity..................... (1,023)
Fair value of premises, net................................... (8,427)
Core deposit intangible....................................... (32,760)
Acquisition costs:
Severance pay............................................... 5,089
Direct acquisition costs (investment banking, legal,
accounting)................................................ 3,800
Other....................................................... 3,625
---------
Total acquisition costs................................... 12,514
Deferred taxes related to purchase accounting adjustments..... 14,016
Elimination of CBI existing identifiable intangibles, net of
related deferred tax amounts:
Goodwill...................................................... 6,074
Core deposit intangible....................................... 900
Negative goodwill............................................. (3,411)
---------
Total goodwill due to Merger.................................... $ 182,020
---------
---------
</TABLE>
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<PAGE>
U. S. BANCORP AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(D) ADJUSTMENTS TO OTHER ASSETS AND OTHER LIABILITIES
<TABLE>
<CAPTION>
Increase (decrease) in other assets are as follows (in thousands):
<S> <C>
Core deposit intangible due to Merger................................................... $ 32,760
Premises, net.......................................................................... 8,427
CBI existing goodwill.................................................................. (6,074)
CBI existing core deposit intangible................................................... (900)
-------------
Total adjustment to other assets....................................................... $ 34,213
-------------
-------------
Increase (decrease) in other liabilities are as follows:
Deferred tax liability related to purchase accounting adjustments...................... $ 14,016
Acquisition costs...................................................................... 12,514
Elimination of CBI negative goodwill................................................... (3,411)
-------------
Total adjustment to other liabilities.................................................. $ 23,119
-------------
-------------
</TABLE>
(E) FINANCING OF STOCK REPURCHASE
The financing of the cost of shares of U. S. Bancorp Common Stock to be
repurchased in the open market in connection with the issuance of shares in the
Merger will be accomplished through a variety of sources, including asset
maturities and sales, increases in debt outstanding and other sources of
liquidity. The actual balance sheet allocation will ultimately be determined
based on market conditions. For purposes of this pro forma analysis, the stock
repurchase is assumed to be financed by issuance of subordinated debt,
medium-term notes, and short-term borrowings. The total pro forma annual cost of
such financing is estimated to be $20 million.
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<PAGE>
U. S. BANCORP AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(F) PURCHASE ACCOUNTING INCOME STATEMENT ADJUSTMENTS
Goodwill due to the Merger is amortized on a straight-line basis over 20
years. Core deposit intangibles are amortized over the estimated period of
benefit (eight years) on an accelerated basis.
<TABLE>
<CAPTION>
INCOME STATEMENT
(INCREASE)
DECREASE
------------------
<S> <C> <C>
(IN THOUSANDS)
Amortization of securities held to maturity (mark-to-market adjustment).... $ 205
Interest expense on borrowed funds......................................... 20,000
Depreciation adjustment for premises (mark-to-market adjustment)........... 563
Depreciation adjustment for write-off of premises.......................... (280)
Other operating expense
Amortization of core deposit intangible.................................. 6,143
Amortization of goodwill................................................. 9,101
---------
Total other operating expense.......................................... 15,244
--------
Total income statement effect of purchase accounting adjustments before
taxes................................................................. $ 35,732
--------
--------
Total income statement adjustment.......................................... $ 35,732
Amortization of goodwill................................................... (9,101)
--------
Net expenses deductible for financial reporting purposes................... 26,631
Tax rate................................................................... 40%
--------
Income tax effect of purchase accounting adjustments....................... $ 10,652
--------
--------
</TABLE>
48
<PAGE>
COMPARISON OF SHAREHOLDERS' RIGHTS
U. S. Bancorp and CBI are incorporated in Oregon and Delaware, respectively.
Stockholders of CBI, whose rights as stockholders are currently governed by the
Delaware General Corporation Law ("Delaware law"), CBI's Restated Certificate of
Incorporation (the "CBI Certificate") and CBI's bylaws (the "CBI Bylaws") will,
upon consummation of the Merger, automatically become shareholders of U. S.
Bancorp, and their rights will be governed by the Oregon Business Corporation
Act ("Oregon law"), U. S. Bancorp's Restated Articles of Incorporation, as
amended (the "U. S. Bancorp Articles") and U. S. Bancorp's bylaws (the "U. S.
Bancorp Bylaws"). The following is a discussion of only those material
similarities and differences between the rights of U. S. Bancorp shareholders
under the U. S. Bancorp Articles and Bylaws and Oregon law on the one hand and
CBI stockholders under the CBI Certificate and Bylaws and Delaware law on the
other hand. This summary does not purport to be a complete discussion of, and is
qualified in its entirety by reference to, the governing law and the U. S.
Bancorp Articles, the CBI Certificate, the U. S. Bancorp Bylaws, and the CBI
Bylaws.
CORPORATE CHARTER AND BYLAW AMENDMENTS
Both Oregon and Delaware law generally provide that in order for an
amendment to a corporate charter to be adopted, the board of directors of the
corporation must adopt a resolution setting forth the proposed amendment and
directing that it be submitted to a vote at a meeting of shareholders. Under
Oregon law, in order for an amendment to a corporation's articles of
incorporation to be adopted, the amendment must be approved by a majority of the
votes entitled to be cast on the amendment by any voting group as to which the
amendment would create dissenters' rights and by every other voting group
entitled to vote on the amendment.
Delaware law requires that the amendment must receive the affirmative vote
of a majority of the outstanding stock entitled to vote thereon and of a
majority of the outstanding stock of each class of shares entitled to vote
thereon as a class.
Under Oregon law, a corporation's board of directors may amend or repeal the
corporation's bylaws unless the corporation's articles of incorporation or
Oregon law reserves the power to amend the bylaws exclusively to the
shareholders in whole or in part or the shareholders, in amending or repealing a
particular bylaw, provide expressly that the board of directors may not amend or
repeal that bylaw. The U. S. Bancorp Bylaws provide that they may be changed or
amended by a vote of a majority of the whole number of directors of U. S.
Bancorp.
Delaware law provides that the power to amend or repeal the bylaws or to
adopt new bylaws is vested in the stockholders of the corporation, provided that
the corporation may, in its certificate of incorporation, also confer the power
to adopt, amend or repeal bylaws upon the corporation's directors. The CBI
Certificate and the CBI Bylaws provide that the board of directors may adopt,
amend or repeal bylaws.
SPECIAL MEETINGS OF SHAREHOLDERS
Oregon law provides that a special meeting of shareholders may be called by
the board of directors or the holders of 10% or more of the votes entitled to be
cast on any issue proposed to be considered at the proposed special meeting, or
by such persons as are specified in the articles of incorporation or bylaws. The
U. S. Bancorp Bylaws permit special meetings of shareholders to be called by the
U. S. Bancorp Board of Directors, the chief executive officer, any vice chairman
or the president.
Under Delaware law, a special meeting of stockholders may be called by the
board of directors or such other persons as may be authorized by the certificate
of incorporation or the bylaws. The CBI Bylaws provide that special meetings may
be called by the president or the board of directors, or by one or more
stockholders holding not less than one-fifth of the voting power of CBI.
CORPORATE ACTION WITHOUT A MEETING
Oregon law permits action to be taken at a shareholders meeting to be taken
without a meeting upon the written consent of all the shareholders entitled to
vote on the action.
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<PAGE>
Delaware law permits corporate action without a stockholders meeting,
without prior notice and without a vote of stockholders upon receipt of written
consent of that number of shares that would be necessary to authorize the
proposed corporate action at a meeting at which all shares entitled to vote
thereon were present and voting, unless the charter expressly provides
otherwise. Prompt notice of the taking of action without a meeting by less than
unanimous written consent must be given to all stockholders who have not
consented in writing. The CBI Certificate permits corporate action without a
stockholders meeting in accordance with Delaware law, provided that the CBI
Board shall have previously approved any such action.
DIVIDENDS
Under Oregon law, the board of directors of a corporation may authorize and
the corporation may make distributions (including dividends) to shareholders
only if after giving effect to the distribution (i) the corporation would be
able to pay its debts as they become due in the usual course of business and
(ii) the corporation's total assets would at least equal the sum of its total
liabilities plus, unless the corporation's articles of incorporation permit
otherwise, the amount that would be needed if the corporation were to be
dissolved at the time of the distribution to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
Under Delaware law, the directors of a corporation are generally permitted
to declare and pay dividends out of surplus or out of net profits for the
current and/or preceding fiscal year, provided that such dividends will not
reduce capital below the amount of capital represented by all classes of issued
and outstanding stock having a preference upon the distribution of assets. Also
under Delaware law, a corporation may generally redeem or purchase shares of its
stock if such redemption or purchase will not impair the capital of the
corporation.
CAPITAL STOCK
The authorized capital stock of CBI consists of 16,000,000 shares of CBI
Common Stock and 2,000,000 shares of preferred stock. The authorized preferred
stock may be issued without a vote of the holders of CBI Common Stock. The CBI
Board is authorized to divide the preferred stock into series and, within the
limitations provided by Delaware law and the CBI Certificate, to fix the number,
designation, relative rights, preferences, and limitations of the shares of each
series so established. The authority of the CBI Board includes the right to fix
for each series the dividend rate, redemption price, liquidation rights, sinking
fund provisions, conversion rights, and voting rights. If the preferred stock
were to be issued, the rights of the holders of CBI Common Stock would be
subordinated in certain respects to the rights of the holders of the preferred
stock. CBI has no preferred stock outstanding.
The authorized capital stock of U. S. Bancorp consists of 50,000,000 shares
of preferred stock, without par value, and 250,000,000 shares of U. S. Bancorp
Common Stock. The Board of Directors of U. S. Bancorp is authorized, without
shareholder action, to issue preferred stock in one or more series and to fix
and determine all preferences, limitations, and relative rights of the shares of
preferred stock or of any series thereof prior to the issuance of said shares,
provided that the Board of Directors may not fix the voting rights of any shares
of preferred stock such that the holders would be entitled to more than one vote
for each share held on any matter submitted to the shareholders (except that the
Board of Directors may otherwise provide in the event of an arrearage in the
payment of dividends on any shares of preferred stock).
The only outstanding preferred stock of U. S. Bancorp is the series
designated 8 1/8% cumulative preferred stock, Series A (the "Series A Preferred
Stock") consisting of 6,000,000 shares issued on July 23, 1992. Unless full
dividends on the Series A Preferred Stock (including accumulated dividends) have
been paid or declared and set aside for payment, no dividends (other than
dividends or distributions paid in shares of, or options, warrants or rights to
subscribe for or purchase shares of, U. S. Bancorp Common Stock) may be declared
or paid or set aside for payment or any other distribution declared or made upon
the U. S. Bancorp Common Stock. No U. S. Bancorp Common Stock may be redeemed,
purchased or otherwise acquired for any consideration by U. S. Bancorp
50
<PAGE>
unless full dividends on the Series A Preferred Stock shall have been paid or
declared and set aside for payment. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of U. S. Bancorp, the holders of shares
of Series A Preferred Stock will be entitled to receive out of the assets of U.
S. Bancorp available for distribution to shareholders, before any distribution
of assets is made to the holders of U. S. Bancorp Common Stock, a liquidating
distribution of $25 per share plus accrued and unpaid dividends. After payment
of the full amount of the liquidating distribution plus accrued and unpaid
dividends, the holders of Series A Preferred Stock will have no right to any of
the remaining assets of U. S. Bancorp. The holders of Series A Preferred Stock
are not entitled to vote except under certain circumstances or as expressly
required by Oregon law. If at any time the equivalent of six quarterly
dividends, whether or not consecutive, payable on the Series A Preferred Stock
are unpaid or not declared and set aside for payment, the number of directors of
U. S. Bancorp will be increased by two, and the holders of the Series A
Preferred Stock outstanding at the time will have the right to elect two
directors to serve until all arrearages of dividends have been paid or declared
and set aside for payment. Any director so elected may be removed by, and shall
not be removed except by, the vote of the holders of shares of the Series A
Preferred Stock outstanding at the time. When holders of the Series A Preferred
Stock are entitled to vote, each holder is entitled to one vote per share.
The CBI Rights Agreement provides for the distribution of one Right for each
outstanding share of CBI Common Stock. Each Right, when exercisable, will
entitle the registered holder to purchase from CBI one one-hundredth of a
Preferred Share at a purchase price of $75 per one one-hundredth of a Preferred
Share, subject to adjustment. In the event that (i) any person or group of
affiliated or associated persons (an "Acquiring Person") becomes the beneficial
owner of 10% or more of the outstanding CBI Common Stock (unless such person
first acquires 10% or more of the outstanding CBI Common Stock by a purchase
pursuant to a tender offer for all of the CBI Common Stock which the independent
directors determine to be fair to and otherwise in the best interests of CBI and
its stockholders, employees, customers and communities in which CBI does
business), or (ii) during such time as there is an Acquiring Person, there shall
be a reclassification of securities or a recapitalization or reorganization of
CBI or other transaction or series of transactions involving CBI which has the
effect of increasing by more than 1% the proportionate share of the outstanding
shares of any class of equity securities of CBI or any of its subsidiaries
beneficially owned by the Acquiring Person, each holder of a Right, other than
the Rights beneficially owned by the Acquiring Person (which will thereafter be
void), will thereafter have the right to receive upon exercise that number of
shares of CBI Common Stock (or, in the event that there are insufficient
authorized shares of CBI Common Stock, substitute consideration such as cash,
property, or other securities of CBI) having a market value of two times the
exercise price of the Right. In the event that CBI is acquired in a merger or
other business combination transaction or 50% or more of its consolidated assets
or earning power are sold, each holder of a Right will thereafter have the right
to receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company which at
the time of such transaction will have a market value of two times the exercise
price of the Right. See "The Merger -- The CBI Rights Agreement."
U. S. Bancorp does not have a shareholder rights plan.
DISSENTERS' AND APPRAISAL RIGHTS
Under Oregon law, a shareholder is entitled to dissent from, and obtain
payment of the fair value of the shareholder's shares in the event of, any of
the following corporate acts:
(i) consummation of a plan of merger to which the corporation is a party
if shareholder approval is required and the shareholder is entitled to vote
on the merger, or if the corporation is a subsidiary that is merged with its
parent under applicable Oregon law providing for the merger of a 90% owned
subsidiary into its parent without shareholder approval;
(ii) consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
51
<PAGE>
(iii) consummation of a sale or exchange of all or substantially all of
the property of the corporation other than in the usual and regular course
of business if the shareholder is entitled to vote on the sale or exchange;
(iv) an amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it (A)
alters or abolishes a preemptive right of the holder of the shares to
acquire shares or other securities or (B) reduces the number of shares owned
by the shareholder to a fraction of a share if the fractional share so
created is to be acquired for cash under Oregon law; or
(v) any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
Unless the articles of incorporation provide otherwise, dissenters' rights
do not apply to the holders of shares of any class or series if the shares of
the class or series were registered on a national securities exchange or quoted
on the NASDAQ National Market System on the record date for the meeting of
shareholders at which the corporate action giving rise to dissenters' rights is
to be approved or on the date a copy or summary of the plan of merger is mailed
to shareholders pursuant to the procedures for short-form mergers of
subsidiaries.
Under Delaware law, appraisal rights are available in connection with a
statutory merger or consolidation in certain specified situations. Appraisal
rights are not available when a corporation is to be the surviving corporation
and no vote of its stockholders is required to approve the merger. In addition,
unless otherwise provided in the charter, no appraisal rights are available to
holders of shares of any class of stock which is either: (a) listed on a
national securities exchange or designated as a national market system security
on an inter-dealer quotation system by the National Association of Securities
Dealers, Inc., or (b) held of record by more than 2,000 stockholders, unless
such stockholders are required by the terms of the merger to accept anything
other than: (i) shares of stock of the surviving corporation; (ii) shares of
stock of another corporation which are or will be so listed on a national
securities exchange or designated as a national market system security in an
interdealer quotation system by the National Association of Securities Dealers,
Inc., or held of record by more than 2,000 stockholders; (iii) cash in lieu of
fractional shares of such stock; or (iv) any combination thereof. The CBI
Certificate has no provisions for appraisal rights. Holders of CBI Common Stock
will not have appraisal rights in connection with the Merger. See "The Merger --
Absence of Appraisal Rights."
PROVISIONS RELATING TO DIRECTORS
Under both Oregon law and Delaware law, a corporation must have a board of
directors consisting of at least one director. The U. S. Bancorp Bylaws provide
that the U. S. Bancorp Board of Directors shall consist of not less than five
nor more than twenty-five persons, the exact number to be fixed as determined
from time to time by a majority of the full board, and provided that a majority
of the full board may not increase the number of directors to a number that
exceeds by more than four the number of directors last elected by shareholders.
The number of directors of U. S. Bancorp is currently fixed at 12. The CBI
Bylaws provide that the number of directors of the corporation shall be 11.
The U. S. Bancorp Bylaws provide that vacancies in the U. S. Bancorp Board
of Directors may be filled in accordance with Oregon law, which allows vacancies
to be filled by the shareholders or the board of directors then in office. The
CBI Bylaws provide that vacancies may be filled by a majority of the directors
then in office and that the stockholders may fill any vacancies not filled by
the directors.
Oregon law permits classification of the board of directors if the articles
of incorporation or bylaws so provide. Delaware law permits classification of
the board of directors if the certificate of incorporation or an initial bylaw
or a bylaw adopted by a vote of the stockholders so provide. None of the U. S.
Bancorp Articles, the U. S. Bancorp Bylaws, the CBI Certificate or the CBI
Bylaws provide for classification of directors.
52
<PAGE>
The U. S. Bancorp Bylaws provide that nominations of persons for election to
the U. S. Bancorp Board of Directors may be made by the Board of Directors, or
by any holder of U. S. Bancorp securities entitled to vote thereon. Nominations,
other than those made by or on behalf of the U. S. Bancorp Board of Directors,
must be made in writing and delivered or mailed to the chairman of the board not
less than 25 nor more than 60 days prior to the shareholders meeting at which
the directors are to be elected. If less than 30 days' notice of the meeting is
given to shareholders, the nominations must be mailed or delivered to the
chairman of the board not later than the close of business on the fifth day
following the day on which the notice of meeting is given to shareholders.
The CBI Bylaws provide that nominations for election to the CBI Board may be
made by the CBI Board or by any stockholder entitled to vote for the election of
directors. Nominations for election to the CBI Board by any stockholder must be
made by notification in writing delivered or mailed to the president of CBI not
less than 14 or more than 50 days prior to any meeting of stockholders called
for the election of directors, except that if less than 21 days notice of the
meeting is given to stockholders, such nominations may be mailed or delivered to
the president not later than the close of business on the seventh day following
the day on which notice of the meeting was mailed.
Every nomination for the CBI Board at a meeting of stockholders must include
a statement setting forth certain information set forth in the CBI Bylaws
regarding each proposed nominee who is not an incumbent director and each
person, acting alone or in conjunction with one or more other persons, who makes
such nomination, or organizes, directs or finances such nomination or solicits
proxies to vote for the nominee.
Members of the CBI Board must meet certain qualifications set forth in the
CBI Bylaws which include provisions prohibiting any person who is a director,
officer, or employee of any other bank or bank holding company or who has a
conflict of interest that would prevent such person from acting in the best
interest of CBI from being a member of the CBI Board.
Under Oregon law, a director may be removed with or without cause unless the
articles of incorporation provide that directors may be removed only for cause.
The U. S. Bancorp Articles do not provide that the directors may be removed only
for cause. If a director is selected by a voting group of shareholders, only the
shareholders of that voting group may participate in the vote to remove the
director. If cumulative voting is authorized, a director may not be removed if
the number of votes sufficient to elect the director under cumulative voting is
voted against the director's removal. If cumulative voting is not authorized, a
director may be removed only if the number of votes cast to remove the director
exceeds the number of votes cast not to remove the director. A director may be
removed by the shareholders only at a meeting called for the purpose of removing
the director and the meeting notice must state that the purpose, or one of the
purposes, of the meeting is removal of the director.
Under Delaware law, any director or the entire board of directors of a
corporation may be removed, with or without cause, by the holders of a majority
of the shares then entitled to elect directors. In the case of a corporation
whose board is classified, stockholders may effect such removal only for cause
unless the charter provides otherwise.
CERTAIN ANTITAKEOVER PROVISIONS
Pursuant to Delaware law, a corporation shall not engage in any business
combination with an interested stockholder (generally defined as the holder of
15% or more of the corporation's voting stock) for a period of three years
following the date that such stockholder became an interested stockholder,
unless (a) the board of directors approved either the business combination or
transaction prior to the date that the interested stockholder became an
interested stockholder; (b) upon consummation of the transaction which resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned by (i) any
persons who are directors and also officers and (ii) employee
53
<PAGE>
stock plans in which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer, or (c) on or subsequent to the date the stockholder
became an interested stockholder, the board of directors approved the
transaction and the stockholders approved the transaction, not by written
consent, but at an annual or special meeting of stockholders, with an
affirmative vote of two-thirds of the outstanding voting stock, excluding any
stock owned by the interested stockholder. The restrictions prescribed by the
statute will not be applicable if (a) a corporation's charter or bylaws contain
a provision expressly providing that the corporation shall not be subject to
such statutory restrictions; (b) if the corporation does not have a class of
voting stock that is (i) listed on a national securities exchange; (ii)
authorized for quotation on an inter-dealer quotation system of a registered
national securities association; or (iii) held of record by more than 2,000
stockholders, unless any of the foregoing results from action taken directly or
indirectly by an interested stockholder or from a transaction in which a person
becomes an interested stockholder; or (c) a stockholder becomes an interested
stockholder inadvertently and divests sufficient shares so that the stockholder
ceases to be an interested stockholder and would not at any time during the
three-year period immediately prior to a business combination between the
corporation and the interested stockholder have been an interested stockholder
but for the inadvertent acquisition; or (d) the business combination is proposed
prior to the consummation or abandonment of and subsequent to the earlier of the
public announcement or required notice to interested stockholders of a proposed
transaction: (i) involving (A) a merger or consolidation (except a merger in
respect of which no vote of the stockholders of the corporation is required);
(B) a sale, lease, exchange, mortgage, pledge, transfer or other disposition of
assets of the corporation or of any direct or indirect majority-owned subsidiary
of the corporation having an aggregate market value equal to 50% or more of
either the aggregate market value of all the assets of the corporation
determined on a consolidated basis or the aggregate market value of all the
outstanding stock of the corporation; or (C) a proposed tender offer or exchange
offer for 50% or more of the outstanding voting stock of the corporation; (ii)
which is with or by a person who either was not an interested stockholder during
the previous three years or who became an interested stockholder with the
approval of the corporation's board of directors; and (iii) which is approved or
not opposed by a majority of the members of the board of directors who were
directors prior to any person becoming an interested stockholder during the
previous three years or were recommended for election or elected to succeed such
directors by a majority of directors. Neither the CBI Certificate nor the CBI
Bylaws contain any provision expressly providing that the corporation will not
be subject to the restrictions prescribed by the statute.
Under Article 11 of the CBI Certificate, certain business combination
transactions must be approved, except in certain circumstances, by 66 2/3% of
the then outstanding shares of capital stock of CBI entitled to vote generally
in the election of directors ("Voting Stock"). The transactions that are subject
to the approval requirement are: (i) any merger or consolidation of CBI or any
subsidiary with an Interested Stockholder (as defined below) or any other
corporation that is, or after such merger or consolidation would be, an
affiliate of an Interested Stockholder; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition to or with any Interested
Stockholder or any affiliate of any Interested Stockholder of any assets of CBI
or any subsidiary having an aggregate fair market value of $2,000,000 or more;
(iii) the issuance or transfer by CBI or any subsidiary of any securities of CBI
or any subsidiary to any Interested Stockholder in exchange for cash,
securities, or property having a fair market value of $2,000,000 or more; (iv)
the adoption of any plan or proposal for liquidation or dissolution of CBI by or
on behalf of any Interested Stockholder or any affiliate of any Interested
Stockholder; or (v) any reclassification of securities or recapitalization of
CBI or any merger or consolidation of CBI with any of its subsidiaries or any
other transaction that has the effect of increasing the proportionate share of
the outstanding shares of any class of equity security of CBI or any subsidiary
that is owned by any Interested Stockholder or any affiliate of any Interested
Stockholder. An "Interested Stockholder" is defined in Article 11 of the CBI
Certificate as any person (other than CBI or any of its subsidiaries) that (i)
is the beneficial owner of 5% or more of the voting power of the outstanding
Voting Stock, (ii) is an affiliate of CBI and at any time within the two-year
period immediately prior to the date in question was the beneficial owner of 5%
or more of the then
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outstanding Voting Stock, or (iii) is an assignee or has otherwise succeeded to
any shares of Voting Stock that were at any time during the two-year period
immediately prior to the date in question owned by an Interested Stockholder, if
such assignment or succession shall have occurred in the course of a transaction
or series of transactions not involving a public offering within the meaning of
the Securities Act.
The 66 2/3% approval requirement does not apply to a business combination
transaction if (i) the transaction is approved by a majority of "disinterested
directors" (a disinterested director is defined as a member of the CBI Board who
is unaffiliated with the Interested Stockholder and was a member of the CBI
Board prior to the time that the Interested Stockholder became an Interested
Stockholder); (ii) a state or federal regulatory authority having jurisdiction
under the circumstances determines that the business combination is fair to the
holders of the Voting Stock, or (iii) all of the following conditions are
satisfied: (a) the aggregate amount of cash and other consideration to be
received per share by holders of CBI Common Stock is at least equal to the
higher of (A) the highest per share price paid by the Interested Stockholder for
shares of CBI Common Stock, (x) within the two-year period immediately prior to
the first public announcement of the terms of the proposed business combination
(the "Announcement Date"), or (y) in the transaction in which the Interested
Stockholder became an Interested Stockholder, whichever is higher and (B) the
fair market value per share of CBI Common Stock on the Announcement Date or the
date on which the Interested Stockholder became an Interested Stockholder (the
"Determination Date"), whichever is higher; (b) the aggregate amount of cash and
other consideration to be received per share of any other class of outstanding
Voting Stock shall be at least equal to the highest of: (A) the highest per
share price paid by the Interested Stockholder for any shares of such class of
Voting Stock acquired by it (x) within the two-year period immediately prior to
the Announcement Date or (y) in the transaction in which it became an Interested
Stockholder, whichever is higher, (B) if applicable, the highest preferential
amount per share to which the holders of shares of such class of Voting Stock
are entitled in the event of any liquidation, dissolution, or winding up of CBI,
or (C) the fair market value per share of such class of Voting Stock on the
Announcement Date or the Determination Date, whichever is higher; (c) the
consideration to be received by holders of a particular class of Voting Stock
shall be in cash or the same form of consideration as the Interested Stockholder
used to acquire the largest number of shares of such class of Voting Stock; (d)
after such Interested Stockholder has become an Interested Stockholder and prior
to the consummation of the business combination, (A) except as approved by a
majority of the disinterested directors, there shall have been no failure to
declare and pay regular quarterly dividends on any preferred stock, (B) there
shall have been (x) no reduction in the annual rate of dividends paid on the CBI
Common Stock, except as approved by a majority of the disinterested directors
and (y) an increase in the annual rate of dividends shall have been made as
necessary to reflect any reclassification, reorganization or any similar
transaction that has the effect of reducing the number of outstanding shares of
CBI Common Stock unless the failure to so increase such annual rate is approved
by a majority of the disinterested directors, and (C) the Interested Stockholder
shall not have become the owner of any additional shares of Voting Stock except
as part of the transaction that results in such Interested Stockholder becoming
an Interested Stockholder; (e) the Interested Stockholder shall not have
received the benefit of any loans, advances, guarantees, pledges, or other
financial assistance or any tax credits or other tax advantages provided by CBI
or any subsidiary; and (f) a proxy or information statement describing the
business combination and complying with the requirements of the Exchange Act is
mailed at least 30 days prior to the consummation of the business combination
(whether or not such proxy or information statement is required to be mailed
pursuant to the Exchange Act).
Article 11 of the CBI Certificate also requires the affirmative vote of the
holders of 66 2/3% of the outstanding Voting Stock in order to amend, repeal, or
adopt any provisions inconsistent with Article 11.
U. S. Bancorp is subject to the Oregon Control Share Act, which provides
that a person (the "Oregon Acquiror") who acquires voting stock of a public
Oregon corporation (the "Oregon Acquired
55
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Corporation") in a transaction that results in such Oregon Acquiror holding more
than 20%, 33%, or 50% of the total voting power of the Oregon Acquired
Corporation (an "Oregon Control Share Acquisition") may not vote the shares it
acquires in the Oregon Control Share Acquisition ("Oregon Control Shares")
unless voting rights are accorded to such Oregon Control Shares by (i) a
majority of each voting group entitled to vote and (ii) the holders of a
majority of the outstanding voting shares, excluding the Oregon Control Shares
held by the Oregon Acquiror and all shares held by officers and employee
directors. The term "Oregon Acquiror" includes persons acting as a group.
The Oregon Acquiror may, but is not required to, submit to the Oregon
Acquired Corporation an "Acquiring Person Statement" setting forth certain
information about itself and its plans with respect to the Oregon Acquired
Corporation. The statement may also request that the Oregon Acquired Corporation
call a special meeting of shareholders to determine whether voting rights will
be restored to the Oregon Control Shares. If the Oregon Acquiror does not
request a special shareholders meeting, the issue of voting rights of Oregon
Control Shares will be considered at the next annual or special meeting of the
Oregon Acquired Corporation's shareholders. If the Oregon Acquiror's Oregon
Control Shares are accorded voting rights and represent a majority or more of
all voting power, the Oregon Acquired Corporation's shareholders who do not vote
in favor of voting rights for the Oregon Control Shares will have the right to
receive the appraised "fair value" of their shares, which may not be less than
the highest price paid per share by the Oregon Acquiror for the Oregon Control
Shares.
U. S. Bancorp is also subject to certain provisions of the Oregon Business
Corporation Act that govern "business combinations" between corporations and
"interested shareholders." The term "business combination" is defined generally
to include mergers or consolidations between an Oregon corporation and an
"interested shareholder," transactions with an interested shareholder involving
the assets or stock of the corporation or its majority-owned subsidiaries, and
transactions that increase an interested shareholder's percentage ownership of
stock. The term "interested shareholder" is defined generally as any shareholder
who becomes a beneficial owner of 15% or more of the corporation's voting stock.
Business combinations between corporations and interested shareholders are
prohibited for a three-year period following the date that such shareholder
became an interested shareholder, unless (i) the corporation has elected in its
articles of incorporation not to be governed by the Oregon business combination
law (U. S. Bancorp has not made such an election), (ii) prior to the
transaction, the corporation's board of directors approves either the business
combination or the transaction which resulted in the shareholder becoming an
interested shareholder, (iii) upon consummation of the transaction that made it
an interested shareholder, the interested shareholder owned at least 85% of the
voting stock of the corporation outstanding at the commencement of the
transaction (excluding voting stock owned by directors who are also officers or
held in employee benefit plans in which the employees do not have a confidential
right to tender or vote stock held by the plan), or (iv) the business
combination was approved by the corporation's board of directors and ratified by
at least 66 2/3% of the voting stock not owned by the interested shareholder.
A corporation may provide in its articles of incorporation and bylaws that
the statutory provisions described above do not apply to its shares. U. S.
Bancorp has not elected to "opt out" of such provisions. Therefore, the
statutory provisions described above will apply to acquisitions of shares of U.
S. Bancorp's voting stock. The effect of these statutes may be to discourage
unfriendly attempts to acquire control of U. S. Bancorp.
Under Article IX of the U. S. Bancorp Articles, any business combination
(defined to include various significant corporate actions such as a merger,
consolidation, or sale or other transfer of a substantial portion of U. S.
Bancorp's assets) involving U. S. Bancorp and a person ("Related Person") which,
together with its affiliates, is the beneficial owner of 20% or more of U. S.
Bancorp's capital stock entitled to vote generally in the election of directors,
must be approved by the affirmative vote of the holders of at least two-thirds
of the outstanding U. S. Bancorp Common Stock excluding shares beneficially
owned by the Related Person and its affiliates unless (i) the business
combination is a merger, consolidation or exchange of shares providing for the
conversion of U. S. Bancorp Common Stock into cash or other property having a
fair value per share not less than the highest consideration
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paid by the Related Person and its affiliates for any of their shares of U. S.
Bancorp Common Stock, (ii) the Related Person acquired all its shares of U. S.
Bancorp Common Stock by means of a cash tender offer in which it offered to
purchase any and all shares tendered at the same price, or (iii) the business
combination is approved by the U. S. Bancorp Board of Directors (A) before such
person became a Related Person or (B) when continuing directors of U. S. Bancorp
(defined as a director who was a member of the U. S. Bancorp Board of Directors
immediately prior to the time the Related Person became a Related Person and who
is not affiliated with the Related Person) constituted a majority of the Board
of Directors and at least two-thirds of the continuing directors voted to
approve the business combination. Approval by the holders of not less than
two-thirds of the outstanding U. S. Bancorp Common Stock excluding shares
beneficially owned by a Related Person is required to amend or repeal Article
IX.
EXPERTS
The consolidated financial statements of U. S. Bancorp and subsidiaries, as
of December 31, 1995 and 1994 and for each of the three years in the period
ended December 31, 1995, incorporated in this Proxy Statement/Prospectus by
reference from U. S. Bancorp's 1995 Annual Report on Form 10-K, have been
audited by Deloitte & Touche LLP as stated in their report, which is
incorporated herein by reference. The consolidated financial statements give
retroactive effect to the 1995 merger of U. S. Bancorp and subsidiaries and West
One Bancorp and subsidiaries, which has been accounted for as a
pooling-of-interests. The consolidated balance sheet of West One Bancorp and
subsidiaries as of December 31, 1994 and the related consolidated statements of
income, shareholders' equity, and cash flows for each of the two years in the
period ended December 31, 1994 (not presented separately in U. S. Bancorp's 1995
Annual Report on Form 10-K) were audited by Coopers & Lybrand L.L.P. as stated
in its report, which is incorporated herein by reference from U. S. Bancorp's
1995 Annual Report on Form 10-K. Such consolidated financial statements of U. S.
Bancorp and subsidiaries are incorporated by reference herein in reliance upon
the respective reports of such firms given upon their authority as experts in
accounting and auditing. Both of the foregoing firms are independent
accountants.
The consolidated financial statements of CBI as of December 31, 1995 and
1994, and for each of the years in the three-year period ended December 31,
1995, have been incorporated by reference herein in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
LEGAL OPINIONS
The legality of the shares of U. S. Bancorp Common Stock to be issued to the
holders of CBI Common Stock pursuant to the Merger and certain other legal
matters in connection with the Merger will be passed upon by Miller, Nash,
Wiener, Hager & Carlsen, Portland, Oregon. John J. DeMott, a partner of Miller,
Nash, Wiener, Hager & Carlsen, is secretary of U. S. Bancorp and beneficially
owns 200 shares of U. S. Bancorp Common Stock.
STOCKHOLDER PROPOSALS
CBI intends to hold an annual meeting of stockholders in 1997 only if the
Merger is not consummated on or before January 31, 1997. To the extent that an
annual meeting of stockholders in 1997 is scheduled, CBI anticipates that next
year's proxy statement will be mailed on or about April 9, 1997, and the annual
meeting will be held on May 14, 1997. Any eligible stockholder who wishes to
submit written proposals for possible inclusion in next year's proxy statement
must be sure that all such proposals are received by CBI on or before December
12, 1996. Any such proposal should be mailed to California Bancshares, Inc., 100
Park Place, Suite 140, San Ramon, California 94583, Attention: Secretary.
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APPENDIX 1
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- --------------------------------------------------------------------------------
RESTATED AGREEMENT AND PLAN OF MERGER
BETWEEN
U. S. BANCORP
AND
CALIFORNIA BANCSHARES, INC.
DATED AS OF FEBRUARY 11, 1996
- --------------------------------------------------------------------------------
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<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
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...................................................................... 1
1.5 Bancorp Common Stock; Bancorp Preferred Stock....................................................... 2
1.6 Options............................................................................................. 2
1.7 Articles of Incorporation........................................................................... 2
1.8 Bylaws.............................................................................................. 2
1.9 Tax Consequences.................................................................................... 2
1.10 Board of Directors.................................................................................. 3
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ARTICLE II
EXCHANGE OF SHARES
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2.1 Bancorp to Make Shares Available.................................................................... 3
2.2 Exchange of Shares.................................................................................. 3
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CBI
<S> <C> <C>
3.1 Corporate Organization.............................................................................. 4
3.2 Capitalization...................................................................................... 5
3.3 Authority; No Violation............................................................................. 6
3.4 Consents and Approvals.............................................................................. 6
3.5 Reports............................................................................................. 7
3.6 Financial Statements................................................................................ 7
3.7 Broker's Fees....................................................................................... 8
3.8 Absence of Certain Changes or Events................................................................ 8
3.9 Legal Proceedings................................................................................... 8
3.10 Taxes and Tax Returns............................................................................... 8
3.11 Employees........................................................................................... 9
3.12 SEC Reports......................................................................................... 10
3.13 Compliance with Applicable Law...................................................................... 11
3.14 Certain Contracts................................................................................... 11
3.15 Agreements with Regulatory Agencies................................................................. 12
3.16 Undisclosed Liabilities............................................................................. 12
3.17 State Takeover Laws................................................................................. 12
3.18 Rights Agreement.................................................................................... 12
3.19 INTENTIONALLY OMITTED............................................................................... 12
3.20 Interest Rate Risk Management Instruments; Derivatives.............................................. 12
3.21 Properties.......................................................................................... 13
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCORP
<S> <C> <C>
4.1 Corporate Organization.............................................................................. 13
4.2 Capitalization...................................................................................... 13
4.3 Authority; No Violation............................................................................. 14
4.4 Consents and Approvals.............................................................................. 15
4.5 Reports............................................................................................. 15
4.6 Financial Statements................................................................................ 15
4.7 Brokers' Fees....................................................................................... 16
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<TABLE>
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4.8 Absence of Certain Changes or Events................................................................ 16
<S> <C> <C>
4.9 Legal Proceedings................................................................................... 16
4.10 Taxes and Tax Returns............................................................................... 17
4.11 Employees........................................................................................... 17
4.12 SEC Reports......................................................................................... 18
4.13 Compliance with Applicable Law...................................................................... 19
4.14 Certain Contracts................................................................................... 19
4.15 Agreements with Regulatory Agencies................................................................. 20
4.16 Undisclosed Liabilities............................................................................. 20
4.17 INTENTIONALLY OMITTED............................................................................... 20
4.18 Interest Rate Risk Management Instruments; Derivatives.............................................. 20
4.19 State Takeover Laws................................................................................. 20
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ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
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5.1 Conduct of CBI Businesses Prior to the Effective Time............................................... 20
5.2 CBI Forbearances.................................................................................... 21
5.3 Bancorp Forbearances................................................................................ 22
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ARTICLE VI
ADDITIONAL AGREEMENTS
<S> <C> <C>
6.1 Regulatory Matters.................................................................................. 23
6.2 Access to Information............................................................................... 23
6.3 Shareholder Approval................................................................................ 24
6.4 Legal Conditions to Merger.......................................................................... 24
6.5 Affiliates.......................................................................................... 24
6.6 Stock Exchange Listing of Shares.................................................................... 24
6.7 Employee Benefit Plans.............................................................................. 25
6.8 Indemnification; Directors' and Officers' Insurance................................................. 25
6.9 Additional Agreements............................................................................... 27
6.10 Advice of Changes................................................................................... 27
6.11 Dividends........................................................................................... 27
<CAPTION>
ARTICLE VII
CONDITIONS PRECEDENT
<S> <C> <C>
7.1 Conditions to Each Party's Obligation to Effect the Merger.......................................... 27
(a) Shareholder Approval............................................................................ 27
(b) Nasdaq Listing.................................................................................. 28
(c) Other Approvals................................................................................. 28
(d) Form S-4........................................................................................ 28
(e) No Injunctions or Restraints; Illegality........................................................ 28
(f) Federal Tax Opinions............................................................................ 28
(g) INTENTIONALLY OMITTED........................................................................... 28
7.2 Conditions to Obligations of Bancorp................................................................ 28
(a) Representations and Warranties.................................................................. 29
(b) Performance of Obligations of CBI............................................................... 29
(c) CBI Rights Agreement............................................................................ 29
7.3 Conditions to Obligations of CBI.................................................................... 29
(a) Representations and Warranties.................................................................. 29
(b) Performance of Obligations of Bancorp........................................................... 29
</TABLE>
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<TABLE>
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ARTICLE VIII
TERMINATION AND AMENDMENT
<S> <C> <C>
8.1 Termination......................................................................................... 29
8.2 Effect of Termination............................................................................... 30
8.3 Amendment........................................................................................... 30
8.4 Extension; Waiver................................................................................... 30
<CAPTION>
ARTICLE IX
GENERAL PROVISIONS
<S> <C> <C>
9.1 Closing............................................................................................. 30
9.2 Nonsurvival of Representations, Warranties, and Agreements.......................................... 30
9.3 Expenses............................................................................................ 31
9.4 Notices............................................................................................. 31
9.5 Interpretation...................................................................................... 31
9.6 Counterparts........................................................................................ 32
9.7 Entire Agreement.................................................................................... 32
9.8 Governing Law....................................................................................... 32
9.9 Severability........................................................................................ 32
9.10 Publicity........................................................................................... 32
9.11 Assignment.......................................................................................... 32
</TABLE>
<PAGE>
RESTATED AGREEMENT AND PLAN OF MERGER
RESTATED 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");
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; and
WHEREAS the Boards of Directors of Bancorp and CBI on March 8, 1996,
authorized the amendment and restatement as set forth herein of the Agreement
and Plan of Merger originally executed on February 11, 1996, such amendment and
restatement to be effective as of February 11, 1996 (it being understood that
any references to this Agreement shall refer to this Restated Agreement and Plan
of Merger and any references to the date of this Agreement, including without
limitation any references to the date as of which the representations and
warranties of the parties herein are made (except as necessary to reflect the
authorization of the amendments effected on March 8, 1996), shall refer to
February 11, 1996).
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
1
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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.
2
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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
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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"
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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
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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
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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
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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
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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.
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(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
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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.
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(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 INTENTIONALLY OMITTED
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
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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
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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.
(b) Bancorp owns, directly or indirectly, all of the issued and outstanding
shares of capital stock of each of the Bancorp Subsidiaries, free and clear of
any liens, charges, encumbrances and security interests whatsoever, and all of
such shares are duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No Bancorp Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of capital
stock or any other equity security of such Subsidiary or any securities
representing the right to purchase or otherwise receive any shares of capital
stock or any other equity security of such Subsidiary.
4.3 AUTHORITY; NO VIOLATION. (a) Bancorp has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Bancorp 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,
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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
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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 BROKER'S 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.
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4.10 TAXES AND TAX RETURNS. (a) Each of Bancorp and its Subsidiaries has
duly filed all material federal, state and, to the best of Bancorp's knowledge,
material local information returns and tax returns required to be filed by it on
or prior to the date hereof (all such returns being accurate and complete in all
material respects) and has duly paid or made provisions for the payment of all
material Taxes (as defined below) and other governmental charges which have been
incurred or are due or claimed to be due from it by federal, state, county or
local taxing authorities on or prior to the date of this Agreement (including,
without limitation, if and to the extent applicable, those due in respect of its
properties, income, business, capital stock, deposits, franchises, licenses,
sales and payrolls) other than Taxes or other charges (1) that are not yet
delinquent or are being contested in good faith and (2) have not been finally
determined. The income tax returns of Bancorp and its Subsidiaries have been
examined by the Internal Revenue Service (the "IRS") and any liability with
respect thereto has been satisfied for all years to and including 1985, and no
material deficiencies were asserted as a result of such examination or all such
deficiencies were satisfied. To the best of Bancorp's knowledge, there are no
material disputes pending, or claims asserted for, Taxes or assessments upon
Bancorp or any of its Subsidiaries, nor has Bancorp or any of its Subsidiaries
been requested to give any currently effective waivers extending the statutory
period of limitation applicable to any federal, state, county or local income
tax return for any period. In addition, (i) proper and accurate amounts 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,
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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
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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
(iii) neither Bancorp nor any of its Subsidiaries has received any notice of any
threatened investigation, proceeding, or litigation concerning any such real
property with respect to any environmental matter or knows of any basis for any
such investigation, proceeding, or litigation.
4.14 CERTAIN CONTRACTS. (a) 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
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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 INTENTIONALLY OMITTED
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
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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
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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
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
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;
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(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
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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. 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) 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 to be received by such "affiliate" in the Merger,
except in compliance with the applicable provisions of the Securities Act and
the rules and regulations thereunder. 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.
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.
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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
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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
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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.
6.10 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.
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(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) INTENTIONALLY OMITTED
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:
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(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
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the covenants or agreements or any of the representations or warranties set
forth in this Agreement on the part of the other party, which breach is not
cured within forty-five (45) days following written notice to the party
committing such breach, or which breach, by its nature, cannot be cured
prior to the Closing; or
(e) by either Bancorp or the 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
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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
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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.
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.
<TABLE>
<S> <C>
U. S. BANCORP
Attest: /s/ John J. DeMott By: /s/ Gerry B. Cameron
-------------------------------------------
- ------------------------------------------ Title: Chairman and Chief Executive Officer
Secretary
CALIFORNIA BANCSHARES, INC.
Attest: /s/ Diane Mietzel By: /s/ Joseph P. Colmery
-------------------------------------------
- ------------------------------------------ Title: President and Chief Executive
Officer
</TABLE>
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APPENDIX 2
[GOLDMAN, SACHS & CO. LETTERHEAD]
CONFIDENTIAL
- ----------------
April , 1996
Board of Directors
California Bancshares, Inc.
100 Park Place, Suite 140
San Ramon, CA 94583
Gentlemen:
You have requested our opinion as to the fairness to the holders of the
outstanding shares of Common Stock, par value $2.50 per share (the "Shares"), of
California Bancshares, Inc. (the "Company") of the exchange ratio of 0.95 shares
of Common Stock, par value $5.00 per share, of U. S. Bancorp to be received for
each Share (the "Exchange Ratio") pursuant to the merger (the "Merger")
contemplated by the Restated Agreement and Plan of Merger dated as of February
11, 1996 between U. S. Bancorp and the Company (the "Agreement").
Goldman, Sachs & Co. as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company, having performed investment banking services for the
Company from time to time and having acted as its financial advisor in
connection with, and have participated in certain of the negotiations leading
to, the Agreement. We also have provided certain investment banking services to
U. S. Bancorp from time to time including, in 1995, acting as co-manager for U.
S. Bancorp's $300 million subordinated debt issue, and may provide investment
banking services to U. S. Bancorp in the future.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Registration Statement on Form S-4 (No. 33- ) of U. S.
Bancorp and the Proxy Statement/ Prospectus contained therein; Annual Reports to
Stockholders and Annual Reports on Form 10-K of the Company and of U. S. Bancorp
for the five years ended December 31, 1995; certain interim reports to
stockholders and Quarterly Reports on Form 10-Q of the Company and of U. S.
Bancorp; certain other communications from the Company and from U. S. Bancorp to
their respective stockholders and certain internal financial analyses and
forecasts for the Company prepared by its management and certain internal
financial analyses for U. S. Bancorp prepared by its management. We also have
held discussions with members of the senior managements of the Company and U. S.
Bancorp regarding their past and current business operations, regulatory
relations, financial condition and future prospects of their respective
companies. In addition, we have reviewed the reported price and trading activity
for the Shares and U. S. Bancorp Common Stock, compared certain financial and
stock market information for the Company and U. S. Bancorp with similar
information for certain other companies the securities of which are publicly
traded, reviewed the financial terms of certain recent business combinations in
the banking industry specifically and in other industries generally and
performed such other studies and analyses as we considered appropriate.
We have relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by us for
purposes of this opinion. We are not experts in the evaluation of loan and lease
portfolios for the purposes of assessing the adequacy of the allowances for
losses with respect thereto and have assumed, with your consent, that such
allowances for each of the Company and U. S. Bancorp are in the aggregate
adequate to cover all such losses. In addition, we have
<PAGE>
not reviewed the individual credit files nor have we made an independent
evaluation or appraisal of the assets and liabilities of the Company or U. S.
Bancorp or any of their subsidiaries and we have not been furnished with any
such evaluation or appraisal.
Based upon and subject to the foregoing and based upon such other matters as
we consider relevant, it is our opinion that as of the date hereof the Exchange
Ratio pursuant to the Agreement is fair to holders of the Shares.
Very truly yours,
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
ORS 60.367, a section of the Oregon Business Corporation Act (the
"Act"), provides that any director held liable for an unlawful distribution in
violation of ORS 60.367 is entitled to contribution from (i) every other
director who voted for or assented to the distribution without complying with
the applicable statutory standards of conduct and (ii) each shareholder for the
amount the shareholder accepted knowing the distribution was made in violation
of the Act or the corporation's articles of incorporation.
Under Sections 60.387 to 60.414 of the Act, a person who is made a
party to a proceeding because such person is or was an officer or director of a
corporation (an "Indemnitee") shall be indemnified by the corporation (unless
the corporation's articles of incorporation provide otherwise) against
reasonable expenses incurred by the Indemnitee in connection with the proceeding
if the Indemnitee is wholly successful on the merits or otherwise or if ordered
by a court of competent jurisdiction. In addition, under said sections, a
corporation is permitted to indemnify an Indemnitee against liability incurred
in a proceeding if (i) the Indemnitee's conduct was in good faith and in a
manner he or she reasonably believed was in the corporation's best interests or
at least not opposed to its best interests, (ii) the Indemnitee had no
reasonable cause to believe his or her conduct was unlawful if the proceeding
was a criminal proceeding, (iii) the Indemnitee was not adjudged liable to the
corporation if the proceeding was by or in the right of the corporation (in
which case indemnification is limited to the Indemnitee's reasonable expenses in
connection with the proceeding), and (iv) the Indemnitee was not adjudged liable
on the basis that he or she improperly received a personal benefit.
Article VI of the Registrant's Articles of Incorporation contains the
following provision:
"A. The Corporation shall indemnify each of its directors and
officers to the fullest extent permissible under the Oregon Business
Corporation Act, as the same exists or may hereafter be amended,
against all expense, liability, and loss (including, without
limitation, attorney fees) incurred or suffered by such person by
reason of or arising from the fact that such person is or was a
director or officer of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other
enterprise, and such indemnification shall continue as to a person who
has ceased to be a director or officer and shall inure to the benefit
of his or her heirs, executors, and administrators. The
indemnification provided in this paragraph A shall not be exclusive of
any other rights to which any person may be entitled under any
statute, bylaw, agreement, resolution of shareholders or directors,
contract, or otherwise."
The Registrant has entered into an indemnification agreement with each
of its directors. Each such agreement provides that the Registrant will
indemnify the director (i) to the full extent authorized or permitted by the Act
or any other applicable statute or the Registrant's Articles of Incorporation or
Bylaws or any amendment thereof and (ii) against any obligation to pay a
judgment, settlement, penalty, fine or reasonable expenses, including attorney
fees (any of the foregoing, a "Liability") incurred in connection with any claim
(as defined), including a claim by or in
II - 1
<PAGE>
the right of the Registrant; provided that no indemnity shall be paid by the
Registrant (A) if a final decision by a court having jurisdiction shall
determine that such indemnification is unlawful, (B) on account of acts or
omissions by the director which are finally adjudged to have been not in good
faith or to have involved intentional misconduct or a knowing violation of law
or (C) on account of Liability under Section 16(b) of the Exchange Act or any
similar provision of federal or state statutory law.
Each such agreement also provides that the Registrant will maintain in
effect, as long as the director continues to serve in such capacity and
thereafter so long as he or she is subject to any possible claim, directors' and
officers' liability insurance coverage at least comparable to the coverage
provided at the date the agreement was entered into unless such insurance is not
reasonably available or the premium cost is substantially disproportionate to
the amount or scope of coverage. In the event the Registrant does not maintain
such insurance coverage, the Registrant agrees to indemnify the director to the
full extent of the coverage in effect at the date the agreement was entered
into.
The Registrant maintains directors' and officers' liability insurance
under which the Registrant's directors and officers are insured against loss (as
defined) as a result of claims brought against them for their wrongful acts in
such capacities.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The exhibits to this Registration Statement required by Item 601
of Regulation S-K are listed in the accompanying index to exhibits.
(b) Financial Statement Schedules. None.
(c) An opinion of Goldman Sachs & Co. dated the date of the Proxy
Statement/Prospectus contained herein is set forth as Appendix 2 thereto.
ITEM 22. UNDERTAKINGS.
(a) The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II - 2
<PAGE>
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(d) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Items 4, 10(b), 11, or 13 of Form S-4, within one business day of
receipt of such request, and to send the incorporated documents by first-class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
(e) The undersigned Registrant hereby undertakes to supply by means
of a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
(f) (1) The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this Registration Statement, by any
person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the Registration Statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II - 3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Portland, State of
Oregon, on the 10th day of April, 1996.
U. S. BANCORP
(Registrant)
By DWIGHT V. BOARD
-------------------------
Dwight V. Board
Executive Vice President
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
on the 10th day of April, 1996.
Signature Title
--------- -----
1. Principal Executive Officer
and Director:
GERRY B. CAMERON* Chairman of the Board and
------------------------------ Chief Executive Officer
Gerry B. Cameron and Director
2. Principal Financial and
Accounting Officer:
STEVEN P. ERWIN* Executive Vice President
------------------------------- and Chief Financial
Steven P. Erwin Officer
3. A Majority of the Board of Directors:
HARRY BETTIS*
FRANKLIN G. DRAKE*
ROBERT L. DRYDEN*
JOHN B. FERY*
JOSHUA GREEN III*
DANIEL R. NELSON*
ALLEN T. NOBLE*
PAUL A. REDMOND*
N. STEWART ROGERS*
BENJAMIN R. WHITELEY*
*By DWIGHT V. BOARD
------------------------------
Dwight V. Board, attorney-in-fact
II - 4
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ---------- -------
2 Restated Agreement and Plan of Merger between the Registrant
and California Bancshares, Inc., dated as of February 11,
1996 (included in Part I as Appendix 1 to the Proxy
Statement/Prospectus included in this Registration
Statement). Exhibit 6.5(a) to Appendix 1 to the Proxy
Statement/Prospectus specifying the form of letter to be
executed by certain affiliates and the Disclosure Schedules
are omitted and will be furnished supplementally to the SEC
upon its request.
4.1 The Registrant has incurred long-term indebtedness as to
which the amount involved is less than ten percent of the
total assets of the Registrant and its subsidiaries on a
consolidated basis. The Registrant agrees to furnish copies
of the instruments relating to such indebtedness to the SEC
upon request.
4.2 Restated Articles of Incorporation of the Registrant, as
amended. Incorporated by reference to Exhibit 4.2 to the
registrant's Registration Statement on Form S-4
(No. 33-62067).
4.3 Bylaws of the Registrant, as amended February 15, 1996.
Incorporated by reference to Exhibit 3.2 to the Registrant's
Form 10-K for the year ended December 31, 1995.
5 Opinion of Miller, Nash, Wiener, Hager & Carlsen regarding
the securities being registered.
8.1 Opinion of Miller, Nash, Wiener, Hager & Carlsen as to
certain federal income tax matters.
8.2 Opinion of Wachtell, Lipton, Rosen & Katz as to certain
federal income tax matters.
10.1 Stock Option Agreement, dated as of February 12, 1996,
between U. S. Bancorp and California Bancshares, Inc.
10.2 Employment Agreement, dated as of February 11, 1996,
between the Registrant, California Bancshares, Inc., and
Joseph P. Colmery.
23.1 Consent of Coopers & Lybrand L.L.P., with respect to
financial statements of West One Bancorp.
23.2 Consent of Deloitte & Touche LLP with respect to financial
statements of the Registrant.
23.3 Consent of KPMG Peat Marwick LLP with respect to financial
statements of California Bancshares, Inc.
23.4 Consent of Miller, Nash, Wiener, Hager & Carlsen. Contained
in Exhibit 5.
II - 5
<PAGE>
Exhibit No. Exhibit
- ---------- -------
23.5 Consent of Miller, Nash, Wiener, Hager & Carlsen. Contained
in Exhibit 8.1.
23.6 Consent of Wachtell, Lipton, Rosen & Katz. Contained in
Exhibit 8.2.
23.7 Consent of Goldman, Sachs & Co.
24 Power of attorney of certain officers and directors of the
Registrant.
99.1 Form of proxy of California Bancshares, Inc.
_________________________________
Other exhibits listed in Item 601 of Regulation S-K are not applicable.
II - 6
<PAGE>
[MILLER, NASH, WIENER,
HAGER & CARLSEN LETTERHEAD]
April 10, 1996
Exhibit 5
U. S. Bancorp
111 S.W. Fifth Avenue
Portland, Oregon 97204
Subject: Registration Statement on Form S-4
Ladies and Gentlemen:
Reference is made to the registration statement on Form S-4 (the
"Registration Statement") being filed by U. S. Bancorp, an Oregon
corporation (the "Company"), with the Securities and Exchange Commission
for the purpose of registering under the Securities Act of 1933, as amended
(the "Securities Act"), 10,202,939 shares of the Company's common stock, $5
par value (the "Shares"), to be issued in connection with the merger (the
"Merger") between the Company and California Bancshares, Inc., as described
in the Registration Statement.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such corporate records, certificates of
public officials, and other documents as we have deemed necessary or relevant
as a basis for our opinion set forth herein.
Based on the foregoing, it is our opinion that:
1. The Company is a corporation duly organized and validly
existing under the laws of the state of Oregon.
2. When the Shares have been issued in the Merger in the manner
contemplated by the Registration Statement, while the Registration
Statement is effective and in compliance with applicable state securities
laws, the Shares will be validly issued, fully paid, and nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Opinions" in the Proxy Statement/Prospectus forming a part of the
Registration Statement. In giving this consent, we do not thereby admit that
we are in the category of persons whose consent is required under Section 7
of the Securities Act.
Very truly yours,
/s/ MILLER, NASH, WIENER, HAGER & CARLSEN
<PAGE>
[MILLER, NASH, WIENER,
HAGER & CARLSEN LETTERHEAD]
April 10, 1996
EXHIBIT 8.1
U. S. Bancorp
111 S.W. Fifth Avenue
Portland, Oregon 97204
Ladies and Gentlemen:
You have requested our opinion regarding the material
U. S. federal income tax consequences of the proposed merger (the
"Merger") of California Bancshares, Inc. ("CBI") with and into
U. S. Bancorp. Capitalized terms not otherwise defined in this
letter have the meanings given them in the Proxy
Statement/Prospectus (the "Proxy Statement") of CBI and U. S.
Bancorp which constitutes a part of the Registration Statement on
Form S-4 in respect of the shares of U. S. Bancorp Common Stock
to be issued in connection with the Merger. This opinion is
delivered in accordance with the requirements of Item 601(b)(8)
of Regulation S-K under the Securities Act.
In rendering our opinion, we have reviewed the Merger
Agreement and the Proxy Statement and such other materials as we
have deemed necessary or appropriate as a basis for our opinion.
We have relied, with the consent of U. S. Bancorp and CBI, upon
certain representations contained, respectively, in
representation letters given us by U. S. Bancorp and CBI (copies
of which are attached to this opinion). We have also assumed
that the transactions contemplated by the Merger Agreement will
be consummated in accordance with the Merger Agreement and as
described in the Proxy Statement. In addition, we have
considered the applicable provisions of the Internal Revenue Code
of 1986, as amended, Treasury Regulations, pertinent judicial
authorities, rulings of the Internal Revenue Service, and such
other authorities as we have considered relevant.
<PAGE>
U.S. Bancorp - 2 - April 10, 1996
Based upon the foregoing, it is our opinion that, under
presently applicable law, for federal income tax purposes the
Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code. Accordingly, it is our opinion that
the material federal income tax consequences of the Merger will
be:
1. No gain or loss will be recognized by U. S. Bancorp
or by CBI as a result of the Merger;
2. No gain or loss will be recognized by CBI
stockholders upon their exchange of CBI Common Stock for
U. S. Bancorp Common Stock, except that a CBI shareholder
who receives cash proceeds in lieu of a fractional share
interest in U. S. Bancorp Common Stock will recognize gain
or loss equal to the difference between such proceeds and
the tax basis allocated to the fractional share interest,
and such gain or loss will constitute capital gain or loss
if such stockholder's CBI Common Stock with respect to which
gain or loss is recognized is held as a capital asset at the
Effective Time;
3. The tax basis of the U. S. Bancorp Common Stock
received by a CBI stockholder who exchanges CBI Common Stock
for U. S. Bancorp Common Stock will be the same as the
stockholder's tax basis in the CBI Common Stock surrendered
in exchange therefor; and
4. The holding period of the U. S. Bancorp Common
Stock received by a CBI stockholder will include the period
during which the CBI Common Stock surrendered in exchange
was held (provided that the CBI Common Stock was held by the
CBI stockholder as a capital asset at the Effective Time).
In addition, it is our opinion that the statements
regarding income tax consequences made under the captions
"Summary--Tax and Accounting Treatment of the Merger" and "The
Merger--Certain Federal Income Tax Consequences" in the Proxy
Statement, to the extent that they constitute matters of law or
legal conclusions, are correct in all material respects.
Our opinion may not be applicable to CBI stockholders
who received their CBI Common Stock pursuant to the exercise of
employee stock options or otherwise as compensation or who are
not citizens or residents of the United States.
This opinion is being furnished in connection with the
Registration Statement. You may rely upon and refer to the
<PAGE>
U.S. Bancorp - 3 - April 10, 1996
foregoing opinion in the Registration Statement. Any variation
or difference in the facts from those set forth or assumed either
in this opinion or in the Registration Statement may affect the
conclusions stated in this opinion.
We hereby consent to the use of our name under the
caption "The Merger--Certain Federal Income Tax Consequences" in
the Proxy Statement and to the filing of this opinion as an
Exhibit to the Registration Statement. In giving this consent,
we do not admit that we come within the category of persons whose
consent is required under Section 7 of the Securities Act or the
rules and regulations of the Commission thereunder.
Very truly yours,
/s/ MILLER, NASH, WIENER,
HAGER & CARLSEN
<PAGE>
[WACHTELL, LIPTON, ROSEN & KATZ LETTERHEAD]
April 10, 1996 EXHIBIT 8.2
California Bancshares, Inc.
100 Park Place, Suite 140
San Ramon, California 94583
Ladies/Gentlemen:
We have acted as special counsel to California
Bancshares, Inc., a Delaware corporation ("CBI"), in connection
with the proposed merger (the "Merger") of CBI with and into
U. S. Bancorp, an Oregon corporation ("USB"), upon the terms and
conditions set forth in the Restated Agreement and Plan of Merger
(the "Agreement") dated as of February 11, 1996, by and between
USB and CBI. At your request, and pursuant to the Agreement, we
are rendering our opinion concerning the material federal income
tax consequences of the Merger.
For purposes of the opinion set forth below, we have
relied, with the consent of USB and the consent of CBI, upon the
accuracy and completeness of the statements and representations
(which statements and representations we have neither
investigated nor verified) contained, respectively, in the
certificates of the officers of USB and of CBI (copies of which
are attached hereto and which are incorporated herein by
reference), and we have assumed that such certificates will be
complete and accurate as of the Effective Time. Any capitalized
term used and not defined herein has the meaning given to it in
the Proxy Statement-Prospectus of USB and CBI, as amended through
the date hereof (the "Proxy Statement-Prospectus").
We have also assumed that the transactions contemplated
by the Agreement will be consummated in accordance with the
Agreement and as described in the Proxy Statement-Prospectus and
that the Merger will qualify as a statutory merger under the
applicable laws of the States of Delaware and Oregon.
Based upon and subject to the foregoing, it is our
opinion that, under presently applicable law, the Merger will
constitute a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended, and that
accordingly the following will be all the material federal income
tax consequences of the Merger:
(i) No gain or loss will be recognized by the stockholders
of CBI upon the conversion of their shares of CBI
Common Stock into shares of USB Common Stock pursuant
to the terms of the Merger to the extent of such
conversion.
<PAGE>
California Bancshares, Inc. - 2 - April 10, 1996
(ii) The tax basis of the shares of USB Common Stock into
which shares of CBI Common Stock are converted pursuant
to the Merger, including any fractional interest, will
be the same as the basis of the shares of CBI Common
Stock exchanged therefor.
(iii) The holding period for shares of USB Common Stock,
including any fractional interest, into which shares of
CBI Common Stock are converted will include the period
that such shares of CBI Common Stock were held by the
holder, provided such shares were a capital asset of
the holder.
(iv) The receipt of cash in lieu of a fractional share of
USB Common Stock will be treated as if a CBI
shareholder were issued such stock and then had such
stock redeemed, and will generally result in
recognition of gain or loss equal to the difference
between the amount of cash received and the holder's
basis in the fractional share, as determined above.
The gain or loss will be capital gain or loss if the
shares of CBI Common Stock were held as capital assets,
and will be long-term capital gain or loss if the
holding period for the fractional shares, as determined
above, was more than one year.
(v) No gain or loss will be recognized by USB or CBI solely
as a result of the Merger.
This opinion may not be applicable to CBI stockholders
who received their CBI Common Stock pursuant to the exercise of
employee stock options or otherwise as compensation or who are
not citizens or residents of the United States.
We hereby consent to the filing of this opinion with
the Securities and Exchange Commission as an Exhibit to the
Registration Statement on Form S-4 in respect of the shares of
USB Common Stock to be issued in connection with the Merger,
and to the reference to this opinion under the caption "The
Merger--Certain Federal Income Tax Consequences" and elsewhere
in the Proxy Statement-Prospectus included therein. In giving
such consent, we do not hereby admit that we are in the
category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended.
Very truly yours,
/s/ WACHTELL, LIPTON, ROSEN & KATZ
<PAGE>
Exhibit 10.1
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:
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(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.
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(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
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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
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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
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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
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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
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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:
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(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
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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.
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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
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Exhibit 10.2
EMPLOYMENT AGREEMENT
AGREEMENT by and between U. S. Bancorp, an Oregon corporation
("Bancorp"), California Bancshares, Inc., a Delaware corporation ("CBI"), and
Joseph P. Colmery (the "Executive") dated as of the 11th day of February, 1996.
The Board of Directors of Bancorp (the "Board") has determined that it
is in the best interests of Bancorp and its shareholders to assure that CBI will
have the continued dedication of the Executive pending the merger of CBI and
Bancorp ("the Merger") and that Bancorp will have the services of the Executive
after the Merger to provide Bancorp with continuity of management of facilities
involved in the Merger. In order to accomplish these objectives, Bancorp and
CBI enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. EFFECTIVE DATE. The "Effective Date" shall mean the effective
date of the Merger. This Agreement is null and void if the Merger does not
occur on or before January 31, 1997.
2. EMPLOYMENT.
(a) BY CBI. CBI agrees to continue the Executive in its employ
and the Executive agrees to remain in the employ of CBI through the Effective
Date. CBI covenants that it will not terminate the Executive's employment under
section 8(a) of the employment agreement between CBI and the Executive dated
November 18, 1995 ("the CBI Agreement") without the written consent of Bancorp.
The Executive covenants that he will not terminate his employment with CBI under
section 8(c) of the CBI Agreement without the written consent of Bancorp. The
employment of the Executive by Bancorp is not a termination due to change of
control as defined in section 8(f) of the CBI Agreement and no benefits will be
paid under that section to the Executive as a result of the Merger or the
Executive's employment by Bancorp.
(b) BY BANCORP. Bancorp agrees to employ the Executive and the
Executive agrees to accept employment with Bancorp subject to the terms and
conditions of this Agreement, for the period commencing on the Effective Date
and ending March 1, 1998 ("the Employment Period"). During the Employment
Period the Executive's position will not be relocated outside a 35 mile radius
of San Ramon, California, without the Executive's consent. If neither party
gives notice to the other party to terminate their employment relationship on or
before March 1, 1998, the parties will execute a change of control agreement
with
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a two year term consistent with the change of control agreements that are then
generally applicable for peer executives.
3. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) Before the Effective Date, the Executive will continue
as President and Chief Executive Officer of CBI pursuant to the CBI agreement.
Except as provided in this Agreement, the CBI Agreement will continue in effect
until the Effective Date. The Executive will receive for 1996 a partial bonus
under section 6 of the CBI agreement. The partial bonus for 1996 will not
exceed $600,000 multiplied by the number of days in 1996 prior to the Effective
Date divided by 365. On the Effective Date, this Agreement supersedes the CBI
Agreement.
(ii) During the Employment Period, the Executive shall
serve as an Executive Vice President (of Bancorp or of the Bancorp subsidiary
responsible for the operations acquired by Bancorp from CBI in the Merger) with
such authority, duties, and responsibilities as are commensurate with such
position.
(iii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote substantially all of his attention and time during
normal business hours to the business and affairs of Bancorp and, to the extent
necessary, to discharge the responsibilities assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform faithfully
and efficiently such responsibilities. During the Employment Period, it shall
not be a violation of this Agreement for the Executive to (a) serve on
corporate, civic, or charitable boards or committees, (b) deliver lectures,
fulfill speaking engagements or teach at educational institutions, and (c)
manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of Bancorp in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to Bancorp.
(b) COMPENSATION.
(i) BASE SALARY. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary") of
$200,000. For calendar year 1998 the
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Annual Base Salary shall be reviewed. Any increase in the Annual Base Salary
shall not limit or reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be reduced after any such increase and
the term Annual Base Salary as utilized in this Agreement shall refer to Annual
Base Salary as so increased.
(ii) ANNUAL BONUS. The Executive will be eligible for an
annual bonus beginning calendar year 1997 pursuant to an incentive compensation
plan adopted by the Board. The bonus plan is anticipated to set a bonus target
of 35% of annual compensation, with a maximum bonus of $150,000. The annual
bonus for each such calendar year will be payable only if Executive remains an
employee of Bancorp (or its subsidiary) through the end of the calender year.
(iii) INCENTIVE, SAVINGS, AND RETIREMENT PLANS. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings, and retirement plans, practices, policies, and programs
applicable generally to other peer executives of Bancorp and any company
controlled by, controlling, or under common control in the Bancorp ("Affiliated
Companies"), except Bancorp plans which provide a severance benefit related to
termination of employment and plans which provide for annual incentive
compensation.
(iv) WELFARE BENEFIT PLANS. During the Employment Period,
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies, and programs provided by Bancorp and its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of Bancorp and its affiliated companies.
(v) EXPENSES. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with Bancorp's policies.
(vi) FRINGE BENEFITS. During the Employment Period, the
Executive shall be entitled to fringe benefits, including, without limitation,
payment of club dues, and, if applicable, use of an automobile and payment of
related expenses, to the extent applicable generally to other peer executives of
Bancorp and its affiliated companies.
(vii) OFFICE AND SUPPORT STAFF. During the Employment
Period, the Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments
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as provided generally at any time thereafter with respect to other peer
executives of Bancorp and its affiliated companies.
(viii) VACATION. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the plans, policies,
programs, and practices of Bancorp and its affiliated companies as in effect
generally at any time with respect to other peer executives of Bancorp and its
affiliated companies.
4. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period.
If Bancorp determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 10(b) of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with Bancorp shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within 30 days after
such receipt, the Executive shall not have returned to full-time performance of
the Executive's duties. For purposes of this Agreement, "Disability" shall mean
the absence of the Executive from the Executive's duties with Bancorp on a full-
time basis for 180 consecutive business days as a result of incapacity due to
mental or physical illness which is determined to be total and permanent by a
physician selected by Bancorp or its insurers and acceptable to the Executive or
the Executive's legal representative.
(b) CAUSE. Bancorp may terminate the Executive's employment
during the Employment Period for cause. For purposes of this Agreement, "Cause"
shall mean:
(i) the continued failure of the Executive to perform
substantially the Executive's duties with Bancorp or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of Bancorp which
specifically identifies the manner in which the Board or Chief Executive Officer
believes that the Executive has not substantially performed the Executive's
duties, or
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably injurious to
Bancorp, or
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(iii) conviction of a felony or guilty or nolo contendere
plea by the Executive with respect thereto, or
(iv) a material breach of the covenants contained in
Section 8.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of Bancorp. Any act,
or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of Bancorp or based upon the advice of counsel for Bancorp
shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of Bancorp. The termination
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than two-thirds of the entire
membership of the Board at a meeting of the Board called and held for such
purpose (after reasonable notice is provided to the Executive and the Executive
is given an opportunity, together with counsel, to be heard before the Board),
finding that, in the good faith opinion of the Board, the Executive is guilty of
the conduct described in subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
(c) GOOD REASON. The Executive's employment may be terminated
by the Executive for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean, in the absence of a written consent of the Executive, any material
failure by Bancorp to comply with any of the provisions of this Agreement, which
is not remedied by Bancorp promptly after receipt of notice thereof given by the
Executive, other than an isolated, insubstantial, and inadvertent failure not
occurring in bad faith.
Anything in this Agreement to the contrary notwithstanding a termination for any
reason other than Cause, death or disability between the first anniversary of
the Effective Date and March 1, 1998, shall be deemed to be a termination for
Good Reason for all purposes of this Agreement.
(d) NOTICE OF TERMINATION. Any termination by Bancorp for
Cause, or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 10(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and
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circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than 30 days after the
giving of such notice). The failure by the Executive or Bancorp to set forth in
the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive or
Bancorp, respectively, from asserting such fact or circumstance in enforcing the
Executive's or Bancorp's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by Bancorp for Cause, or by the Executive
for Good Reason, the date of receipt of the Notice of Termination or any later
date specified therein within 30 days of such notice, as the case may be, (ii)
if the Executive's employment is terminated by Bancorp other than for Cause or
Disability, the Date of Termination shall be the date on which Bancorp notifies
the Executive of such termination, and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.
5. OBLIGATIONS OF BANCORP UPON TERMINATION.
(a) GOOD REASON; OTHER THAN FOR CAUSE, DEATH, OR DISABILITY.
If, during the Employment Period, Bancorp shall terminate the Executive's
employment other than for Cause or Disability or the Executive shall terminate
employment for Good Reason:
(i) Bancorp shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the following
amounts:
A. The Executive's Annual Base Salary through the Date of
Termination to the extent not already paid.
B. In the event such termination occurs in calendar 1996,
a pro rata annual bonus calculated as follows: the excess, if
any, of (i) the average of the annual bonuses paid to the
Executive by CBI with respect to calendar years 1993, 1994, and
1995 multiplied by the number of days in 1996 through the date of
termination divided by 365 over (ii) the bonus actually paid by
CBI to Executive with respect to the portion of 1996 prior to the
Effective Date.
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C. An amount equal to three times the sum of
(i) Executive's Annual Base Salary; (ii) the Average Annual Bonus
(the average of the annual bonuses paid to the Executive by CBI
and Bancorp with respect to the prior three calendar years); and
(iii) the contributions made by Bancorp or CBI in the 12 months
prior to termination to profit sharing, 401k, and retirement
plans.
(ii) for three years after the Executive's Date of
Termination, or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, Bancorp shall continue benefits
to the Executive and/or the Executive's family at least equal to those which
would have been provided to them in accordance with the plans, programs,
practices, and policies described in Section 3(b)(iv) of this Agreement if the
Executive's employment had not been terminated or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of Bancorp and its affiliated companies and their families,
provided, however, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare benefits under
another employer-provided plan, the medical and other welfare benefits described
herein shall be secondary to those provided under such other plan during such
applicable period of eligibility. For purposes of determining eligibility (but
not the time of commencement of benefits) of the Executive for retiree benefits
pursuant to such plans, practices, programs, and policies, the Executive shall
be considered to have remained employed until three years after the Date of
Termination and to have retired on the last day of such period;
(iii) to the extent not theretofore paid or provided,
Bancorp shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice, or contract or agreement of
Bancorp and its affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits") except that the Executive is
not eligible to participate in Bancorp's severance benefits plans or any other
Bancorp employee benefits plans which are expressly superseded by this
Agreement.
(b) DEATH. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of
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Other Benefits, the term Other Benefits as utilized in this Section 5(b) shall
include death benefits as in effect on the date of the Executive's death with
respect to other peer executives of Bancorp and its affiliated companies and
their beneficiaries.
(c) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of Accrued Obligations and the timely payment or provision of
Other Benefits. Accrued Obligations shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination. With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this Section
5(c) shall include, and the Executive shall be entitled after the Disability
Effective Date to receive, disability and other benefits as in effect at any
time thereafter generally with respect to other peer executives of Bancorp and
its affiliated companies and their families.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause or the Executive terminates his
employment without Good Reason during the Employment Period, this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive any unpaid Annual Base Salary through the
Date of Termination, previously deferred compensation, and Other Benefits.
6. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy, or practice provided by Bancorp or any of its affiliated
companies and for which the Executive may qualify, except that the provisions of
this Agreement supersede the provisions of Bancorp's severance benefit plan and
the Executive waives any right to benefits under that plan. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan, policy, practice, or program of, or any contract or agreement with,
Bancorp or any of its affiliate companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice, or
program, or contract or agreement, except as explicitly modified by this
Agreement.
7. NO MITIGATION; LEGAL FEES. In no event shall the Executive be
obligated to seek other employment or take other action by way of mitigation of
the amounts payable to the Executive under any of the provisions of this
Agreement and, except as provided in Section 5(a)(ii), such amounts shall not be
reduced whether or not the Executive obtains other employment, Bancorp agrees to
pay as incurred, to the full extent permitted by law, all legal fees and
expenses that the Executive may
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reasonably incur as a result of any contest (regardless of the outcome thereof)
by Bancorp, the Executive, or others of the validity or enforceability of, or
liability under, any provisions of the Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement).
8. CONFIDENTIAL INFORMATION.
(a) The Executive shall hold in a fiduciary capacity for the
benefit of Bancorp all secret or confidential information, knowledge, or data
relating to Bancorp, CBI or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the Executive during
the Executive's employment by Bancorp, CBI or any of its affiliated companies
and which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with Bancorp, the Executive
shall not, without the prior written consent of Bancorp or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge, or data to anyone other than Bancorp and those designated by it. In
no event shall an asserted violation of the provisions of this Section 8
constitute a basis for deferring or withholding any amounts otherwise payable to
the Executive under this Agreement.
(b) In the event of a breach or threatened breach of this
Section 8, the Executive agrees that Bancorp shall be entitled to injunctive
relief in a court of appropriate jurisdiction to remedy any such breach or
threatened breach, the Executive acknowledges that damages would be inadequate
and insufficient.
(c) Any termination of the Executive's employment or of this
Agreement shall have no effect on the continuing operation of this Section 8.
9. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the
prior written consent of Bancorp shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon Bancorp and its successors and assigns. Bancorp may assign its rights and
obligations under this Agreement to its subsidiaries.
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(c) Bancorp will require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business and/or assets of Bancorp to assume expressly
and agree to perform this Agreement in the same manner and to the same extent
that Bancorp would be required to perform it if no such succession had taken
place. As used in this Agreement, "Bancorp" shall mean U. S. Bancorp and any
successor to its business and/or assets which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
10. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon, without reference to principles
of conflict of laws. The captions of this Agreement are not part of the
provisions and have no force or effect. This Agreement may only be amended or
modified by a written agreement executed by the parties or their respective
successors and legal representatives.
(b) All notices and other communications required under this
Agreement shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
If to Bancorp:
111 S.W. Fifth Avenue
Portland, Oregon 97204
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing. Notice and communications shall be effective when actually received by
the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) Bancorp may withhold from any amounts payable under this
Agreement such federal, state, local, or foreign taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
- 10 -
<PAGE>
(e) The Executive's or Bancorp's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or Bancorp may have under this Agreement shall not be deemed
to be a waiver of such provision or right or any of the provision or right of
this Agreement.
(f) The Executive and Bancorp acknowledge that, except as may
otherwise be provided under any other written agreement between them, the
employment of the Executive by Bancorp is "at will." From and after the
Effective Date, this Agreement shall supersede any other employment, severance,
or change of control agreement between the parties with respect to the subject
matter hereof.
(g) Notwithstanding any provision of this Agreement, Bancorp
shall have no obligation to make any payments to Executive if or to the extent
such payments are prohibited by any applicable law or regulations, including,
without limitation, the FDIC's regulation regarding golden parachute and
indemnification payments promulgated under the Comprehensive Thrift and Bank
Fraud Prosecution and Taxpayer Recover Act of 1990.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from their respective Boards of
Directors, Bancorp and CBI each has caused these presents to be executed in its
respective name on its behalf, all as of the day and year first above written.
/s/ JOSEPH P. COLMERY
----------------------------------------
Joseph P. Colmery
U. S. BANCORP
By /s/ ANDERS GILTVEDT
------------------------------------
CALIFORNIA BANCSHARES, INC.
By /s/ DONALD J. GEHB
------------------------------------
- 11 -
<PAGE>
EXHIBIT 23.1
Consent of Independent Accountants
We consent to the incorporation by reference in the Registration
Statement of U.S. Bancorp on Form S-4 of our report dated January
19, 1995, on our audits of the consolidated financial statements of
West One Bancorp and subsidiaries as of December 31, 1994, and for
each of the two years in the period ended December 31, 1994, which
report includes an explanatory paragraph relating to West One
Bancorp's change in accounting for investment securities in 1993
and is included in U.S. Bancorp's 1995 Annual Report on Form 10-K.
We also consent to the reference to our firm under the caption
"Experts."
COOPERS & LYBRAND L.L.P.
Boise, Idaho
April 5, 1996
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of U.S. Bancorp on Form S-4 of our report dated January 30, 1996 (February
11, 1996 as to the final paragraph of Note 2), appearing in the Annual Report
on Form 10-K of U.S. Bancorp for the year ended December 31, 1995 and to the
reference to us under the heading "Experts" in the Registration Statement.
DELOITTE & TOUCHE LLP
Portland, Oregon
April 5, 1996
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
California Bancshares, Inc.:
We consent to the incorporation by reference of our report dated January 17,
1996, except for Note 14, which is as of February 12, 1996, with respect to
the consolidated balance sheet of California Bancshares, Inc. and
subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for each
of the years in the three-year period ended December 31, 1995, which report
is incorporated by reference in the Joint Proxy/Prospectus of California
Bancshares, Inc. and U. S. Bancorp and to the reference to our firm under the
heading "Experts" in the Joint Proxy/Prospectus.
KPMG Peat Marwick LLP
San Francisco, California
April 5, 1996
<PAGE>
EXHIBIT 23.7
[GOLDMAN, SACHS & CO. LETTERHEAD]
CONFIDENTIAL
- ------------
April 10, 1996
Board of Directors
California Bancshares, Inc.
100 Park Place, Suite 140
San Ramon, California 94583
Re: Registration Statement on Form S-4 of U.S. Bancorp,
Including the Proxy Statement of California Bancshares,
Inc., and Prospectus of U.S. Bancorp
Gentlemen:
Reference is made to our opinion letter dated the date of the
Proxy Statement/Prospectus referred to below, with respect to the
fairness to the holders of the outstanding shares of Common
Stock, par value $2.50 per share (the "Shares"), of California
Bancshares, Inc. (the "Company"), of the exchange ratio of 0.95
shares of Common Stock, par value $5.00 per share, of U.S.
Bancorp to be received for each Share pursuant to the merger
contemplated by the Restated Agreement and Plan of Merger dated
as of February 11, 1996, between U.S. Bancorp and the Company.
The foregoing opinion letter is for the information and
assistance of the Board of Directors of the Company in connection
with its consideration of the transaction contemplated therein
and is not to be used, circulated, quoted or otherwise referred
to for any other purpose, nor is it to be filed with, included in
or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in accordance with
our prior written consent.
In that regard, we hereby consent to the reference to the opinion
of our Firm under the captions "Summary--Opinion of CBI's
Financial Adviser," "Background of and Reasons for the Merger--
Reasons for the Merger," and "Background of and Reasons for the
Merger--Opinion of CBI's Financial Adviser," and to the inclusion
of the foregoing opinion in the Proxy Statement/Prospectus
included in the above-mentioned Registration Statement. In
giving such consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7
<PAGE>
Californa Bancshares, Inc.
April 10, 1996
Page Two
of the Securities Act of 1933 or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
GOLDMAN, SACHS & CO.
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints GERRY B. CAMERON, STEVEN P. ERWIN,
DWIGHT V. BOARD, and SHERYL DAWSON, and each of them, such person's true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for such person and in his or her name, place, and stead, in
any and all such person's capacities with U. S. Bancorp, an Oregon
corporation, to sign a registration statement on Form S-4 relating to shares
of U. S. Bancorp to be issued in connection with the merger of California
Bancshares, Inc., into U. S. Bancorp, and any and all amendments (including
post-effective amendments) thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission under the Securities Act of 1933, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing and to execute any and all
instruments which they or each of them deem necessary or desirable in
connection with said registration statement as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or each of them, or
their or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof. This power of attorney may be executed in one or more
counterparts, which taken together shall constitute one and the same original.
IN WITNESS WHEREOF, this power of attorney has been executed by each
of the undersigned as of the 21st day of March, 1996.
Signature Title
--------- -----
/s/ GERRY B. CAMERON Chairman of the Board and Chief Executive
- -------------------------- Officer and Director
Gerry B. Cameron
/s/ STEVEN P. ERWIN Executive Vice President and
- -------------------------- Chief Financial Officer
Steven P. Erwin
/s/ HARRY BETTIS Director
- --------------------------
Harry Bettis
Director
- --------------------------
Carolyn Silva Chambers
<PAGE>
/s/ FRANKLIN G. DRAKE Director
- --------------------------
Franklin G. Drake
/s/ ROBERT L. DRYDEN Director
- --------------------------
Robert L. Dryden
/s/ JOHN B. FERY Director
- --------------------------
John B. Fery
/s/ JOSHUA GREEN III Director
- --------------------------
Joshua Green III
/s/ DANIEL R. NELSON Director
- --------------------------
Daniel R. Nelson
/s/ ALLEN T. NOBLE Director
- --------------------------
Allen T. Noble
/s/ PAUL A. REDMOND Director
- --------------------------
Paul A. Redmond
/s/ N. STEWART ROGERS Director
- --------------------------
N. Stewart Rogers
/s/ BENJAMIN R. WHITELEY Director
- --------------------------
Benjamin R. Whiteley
- 2 -
<PAGE>
CALIFORNIA BANCSHARES, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1996
The undersigned holder of Common Stock of California Bancshares, Inc. ("CBI")
hereby appoints James L. McKenna, Jr., and Richard J. Clancy, and each of
them, the proxies of the undersigned with full powers of substitution, to
represent and to vote all shares of common stock of CBI held of record by the
undersigned as of the close of business on April 10, 1996, at the special
meeting of stockholders of CBI, to be held at the San Ramon Marriott, 2600
Bishop Drive, San Ramon, California, on Wednesday, May 22, 1996, at 11:00
a.m. (local time) and at any adjournment or postponement of said meeting, with
all the powers the undersigned would possess if personally present, as follows:
- -------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
<PAGE>
Please mark /x/
your votes as
indicated in
this example
FOR AGAINST ABSTAIN
1. PROPOSAL TO APPROVE AND ADOPT THE RESTATED / / / / / /
AGREEMENT AND PLAN OF MERGER, dated as of
February 11, 1996, between U.S. Bancorp and
California Bancshares, Inc., and the
consummation of the transactions contemplated
thereby.
2. In their discretion, the proxies are authorized
to vote upon such other business as may properly
come before the meeting or any adjournment
thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED, OR IF
DIRECTIONS ARE NOT INDICATED, WILL BE VOTED FOR PROPOSAL 1. IF OTHER BUSINESS IS
PRESENTED, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE BEST JUDGMENT OF
THE PROXIES.
Said proxies or their substitutes (or if only one be present, the proxy
present) shall have and may exercise all of the powers of all said proxies
hereunder at said meeting or any adjournment or postponement thereof.
Receipt is acknowledged of the Notice of Special Meeting of Stockholders
and Proxy Statement/Prospectus dated April 17, 1996. The undersigned hereby
revokes all proxies heretofore given by the undersigned to vote at said meeting
or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE.
Signature (s)___________________________________ Dated: ______________, 1996
SIGNING INSTRUCTIONS (IMPORTANT): PLEASE SIGN EXACTLY AS YOUR NAME APPEARS
HEREON. (EXECUTORS, ADMINISTRATORS, TRUSTEES, GUARDIANS AND ATTORNEYS SHOULD
GIVE FULL TITLE. IF SIGNING ON BEHALF OF A CORPORATION, PLEASE SIGN THE FULL
CORPORATE NAME AND THE TITLE OF THE AUTHORIZED OFFICER SIGNING ON BEHALF OF THE
CORPORATION.) ALL JOINT OWNERS AND JOINT TRUSTEES SHOULD SIGN.
- -------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
