<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON NOVEMBER 27, 1996 REGISTRATION NO. 333-16147
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1 TO
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. JAMES R. KRUSE, ESQ.
Miller, Nash, Wiener, Kruse, Landa & Maycock L.L.C.
Hager & Carlsen LLC Eighth Floor, Bank One Tower
Suite 3500 50 West Broadway (300 South)
111 S.W. Fifth Avenue Salt Lake City, Utah 84101-2034
Portland, Oregon 97204
<PAGE>
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 Sun Capital 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.
=================================================================<PAGE>
U. S. BANCORP
CROSS-REFERENCE SHEET FOR REGISTRATION STATEMENT ON FORM S-4
AND
PROXY STATEMENT/PROSPECTUS
LOCATION IN PROXY
STATEMENT/PROSPECTUS
S-4 ITEM
- ------------------------------------- --------------------------------------
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........... Not Applicable
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................................. Consolidated Financial
Statements of Sun Capital
Bancorp and Subsidiary;
Selected Historical
Financial Data
16. Information with Respect to S-2 or S-3
Companies................................. Not Applicable
17. Information with Respect to Companies
Other Than S-2 or S-3 Companies........... Consolidated Financial
Statements of Sun Capital
Bancorp and Subsidiary:
Selected Historical
Financial Data
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 Sun
Capital 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
<PAGE>
SUN CAPITAL BANCORP
60 SOUTH 100 EAST
ST. GEORGE, UTAH 84770
(801) 673-6177
November 29, 1996
Dear Stockholder:
You are cordially invited to attend a special meeting of the
stockholders of Sun Capital Bancorp, a Utah corporation ("Sun Capital"), to be
held on Monday, December 30, 1996, at 7 p.m., local time, at the head office
of Sun Capital, 60 South 100 East, St. George, Utah.
At the special meeting, Sun Capital stockholders will be asked to
consider and vote upon a proposal to approve an Agreement and Plan of Merger
dated as of September 29, 1996 (the "Merger Agreement"), between U. S.
Bancorp, an Oregon corporation, and Sun Capital pursuant to which Sun Capital
will be merged with and into U. S. Bancorp.
If the merger is approved and consummated, each outstanding share of Sun
Capital 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 Sun Capital 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 BOARD OF DIRECTORS OF SUN CAPITAL 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 Sun Capital 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,
D. E. SCHMUTZ
Chairman of the Board
<PAGE>
SUN CAPITAL BANCORP
60 SOUTH 100 EAST
ST. GEORGE, UTAH 84770
(801) 673-6177
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 30, 1996
Notice is hereby given that a special meeting of stockholders of Sun
Capital Bancorp, a Utah corporation ("Sun Capital"), will be held on Monday,
December 30, 1996, at 7 p.m., local time, at the head office of Sun Capital,
60 South 100 East, St. George, Utah 84770, for the purpose of voting on the
approval and adoption of an Agreement and Plan of Merger dated as of
September 24, 1996 (the "Merger Agreement"), by and between U. S. Bancorp, an
Oregon corporation, and Sun Capital 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 (the
"Merger") is consummated, then Sun Capital will be merged into U. S. Bancorp.
Only stockholders whose names appeared of record on the books of Sun
Capital at the close of business on November 27, 1996 (the "Record Date"),
will be entitled to notice of and to vote at the special meeting.
A conformed copy of the Merger Agreement is attached as Appendix 1 to
the accompanying Proxy Statement/Prospectus.
All stockholders as of the Record Date are or may be entitled to assert
dissenters' rights under Section 16-10a-1301 et. seq. of the Utah Revised
Business Corporation Act (the "UBCA"). The dissenters rights of such
stockholders are set forth in the portion of the UBCA describing dissenters'
rights, a copy of which is attached as Appendix 2 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 SUN CAPITAL RECOMMENDS THAT YOU
MARK YOUR PROXY FOR THE MERGER AGREEMENT.
BY ORDER OF THE BOARD OF DIRECTORS
KENNETH SCHONE
Secretary
Dated: November 29, 1996
St. George, Utah
<PAGE>
PROXY STATEMENT/PROSPECTUS OF
SUN CAPITAL BANCORP
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 30, 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 $1.00 per share ("SCB Common Stock"), of Sun Capital Bancorp,
a Utah corporation ("Sun Capital"), in connection with the solicitation of
proxies by the Sun Capital Board of Directors for use at the Special Meeting
of Stockholders of Sun Capital to be held at 7 p.m., local time, on Monday,
December 30, 1996, at the head office of Sun Capital, 60 South 100 East, St.
George, Utah 84770, and at any adjournments or postponements thereof (the
"Special Meeting").
At the Special Meeting, the holders of SCB Common Stock will be asked to
vote upon approval of the Agreement and Plan of Merger between U. S. Bancorp,
an Oregon corporation, and Sun Capital dated as of September 24, 1996 (the
"Merger Agreement"), providing for the merger (the "Merger") of Sun Capital
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 400,635 shares of the common stock of U. S. Bancorp, par
value $5 per share ("U. S. Bancorp Common Stock"), to be issued to holders of
SCB Common Stock in connection with the Merger. Upon consummation of the
Merger, except as described herein, each outstanding share of SCB Common Stock
will be converted into the right to receive 0.95 shares (the "Exchange Ratio")
of U. S. Bancorp's Common Stock.
Sun Capital'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 SCB 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 November 22, 1996, was $41-3/16 per share.
There has not been any public market for shares of SCB Common Stock.
This Proxy Statement/Prospectus and accompanying proxy card are first
being mailed to Sun Capital stockholders on or about November 29, 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 November 27, 1996.
<PAGE>
AVAILABLE INFORMATION
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 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. The SEC
maintains a site on the World Wide Web that contains reports, proxy and
information statements, and other information regarding registrants that file
electronically with the SEC. The address of the SEC's Web site is:
http://www.sec.gov. 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
Sun Capital has been furnished by Sun Capital 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 Sun Capital 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 Sun Capital which are
forward-looking statements, including without limitation future earnings
results, 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 SUN CAPITAL BANCORP 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 SUN CAPITAL BANCORP 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.
<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:
U. S. BANCORP DOCUMENTS
U. S. Bancorp
Attn: Investor Relations
P.O. Box 8837
Portland, Oregon 97208
(503) 275-5834
IN ORDER TO ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, A REQUEST MUST BE
RECEIVED NO LATER THAN DECEMBER 20, 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 Form 10-Q for the quarters ended March 31, 1996,
June 30, 1996 (as amended by Amendment No. 1 on Form 10-Q/A filed August 23,
1996, and September 30, 1996).
(3) U. S. Bancorp's Current Reports on Form 8-K dated December 26,
1995 (as amended by Amendment No. 1 filed February 6, 1996), January 31, 1996,
and June 6, 1996.
(4) Proxy Statement of U. S. Bancorp dated March 11, 1996.
(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.
All documents filed with the SEC by U. S. Bancorp 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.<PAGE>
TABLE OF CONTENTS
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INFORMATION INCORPORATED BY REFERENCE. . . . . . . . . . . . . . . . . . . 5
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Special Meeting and Vote Required. . . . . . . . . . . . . . . . 2
Parties to the Merger. . . . . . . . . . . . . . . . . . . . . . . . 3
Reasons for the Merger; Recommendation of the Sun Capital
Board of Directors . . . . . . . . . . . . . . . . . . . . . . 4
Terms of the Merger. . . . . . . . . . . . . . . . . . . . . . . . . 4
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Dissenter's Rights . . . . . . . . . . . . . . . . . . . . . . . . . 5
Board of Directors and Management. . . . . . . . . . . . . . . . . . 6
NASDAQ National Market System Trading. . . . . . . . . . . . . . . . 6
Conditions; Regulatory Approvals . . . . . . . . . . . . . . . . . . 6
Termination and Amendment of the Merger Agreement. . . . . . . . . . 7
Tax and Accounting Treatment of the Merger . . . . . . . . . . . . . 7
Interests of Certain Persons in the Merger . . . . . . . . . . . . . 8
Employment Retention Agreements. . . . . . . . . . . . . . . . . . . 8
MARKET PRICES OF COMMON STOCK. . . . . . . . . . . . . . . . . . . . . . . 8
SELECTED HISTORICAL FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . 10
COMPARISON OF CERTAIN UNAUDITED PER COMMON SHARE DATA. . . . . . . . . . . 12
SPECIAL MEETING OF SUN CAPITAL STOCKHOLDERS. . . . . . . . . . . . . . . . 13
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Date, Time, and Place. . . . . . . . . . . . . . . . . . . . . . . . 13
Purpose of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . 13
Shares Outstanding and Entitled to Vote; Record Date . . . . . . . . 13
Vote Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Voting, Solicitation and Revocation of Proxies . . . . . . . . . . . 14
U. S. BANCORP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SUN CAPITAL BANCORP. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
BACKGROUND OF AND REASONS FOR THE MERGER . . . . . . . . . . . . . . . . . 16
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . 16
Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . 18
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Structure of the Merger. . . . . . . . . . . . . . . . . . . . . . . 19
Conversion of SCB Common Stock . . . . . . . . . . . . . . . . . . . 19
Exchange of Certificates; Fractional Shares. . . . . . . . . . . . . 20
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Representations and Warranties . . . . . . . . . . . . . . . . . . . 22
Conduct of Business Pending the Merger and Other Agreements. . . . . 23
Conditions to the Consummation of the Merger . . . . . . . . . . . . 27
Regulatory Approvals Required for the Merger . . . . . . . . . . . . 30
Certain Federal Income Tax Consequences. . . . . . . . . . . . . . . 32
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . 33
Termination of the Merger Agreement. . . . . . . . . . . . . . . . . 34
Waiver and Amendment of the Merger Agreement . . . . . . . . . . . . 35
NASDAQ National Market System Trading. . . . . . . . . . . . . . . . 36
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Resales of U. S. Bancorp Common Stock Received in the Merger . . . . 36
U. S. Bancorp Dividend Reinvestment and Stock Purchase Plan. . . . . 38
Dissenter's Rights . . . . . . . . . . . . . . . . . . . . . . . . . 38
BOARD OF DIRECTORS, MANAGEMENT AND BUSINESS OPERATIONS
OF U. S. BANCORP FOLLOWING THE MERGER. . . . . . . . . . . . . . . . . . . 41
Board of Directors and Management. . . . . . . . . . . . . . . . . . 41
Business Operations. . . . . . . . . . . . . . . . . . . . . . . . . 42
INTERESTS OF CERTAIN PERSONS IN THE MERGER . . . . . . . . . . . . . . . . 42
COMPARISON OF SHAREHOLDERS' RIGHTS . . . . . . . . . . . . . . . . . . . . 43
Corporate Charter and Bylaw Amendments . . . . . . . . . . . . . . . 43
Special Meetings of Shareholders . . . . . . . . . . . . . . . . . . 44
Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Dissenters' and Appraisal Rights . . . . . . . . . . . . . . . . . . 46
Provisions Relating to Directors . . . . . . . . . . . . . . . . . . 47
Certain Antitakeover Provisions. . . . . . . . . . . . . . . . . . . 49
LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
FINANCIAL STATEMENTS OF SUN CAPITAL BANCORP. . . . . . . . . . . . . . . F-1
Independent Auditor's Report . . . . . . . . . . . . . . . . . . . .F-2
Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . .F-3
Consolidated Statements of Income. . . . . . . . . . . . . . . . . .F-4
Consolidated Statements of Cash Flows. . . . . . . . . . . . . . . .F-7
Consolidated Statements of Changes in Stockholder's Equity . . . . .F-7
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . .F-8
Sun Capital Bancorp's Management Discussion and Analysis . . . . . F-17
Appendix 1: Agreement and Plan of Merger
Appendix 2: Utah Dissenter's Rights
<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 Sun Capital stockholders, at
which the proposal to approve the Merger Agreement will be considered and
voted on, will be held on Monday, December 30, 1996, at 7 p.m., local time, at
the head office of Sun Capital, 60 South 100 East, St. George, Utah. Only
holders of record of shares of SCB Common Stock at the close of business on
November 27, 1996 (the "Record Date"), will be entitled to vote at the Special
Meeting. At such date, there were outstanding and entitled to vote 421,721
shares of SCB Common Stock. Holders of shares of SCB 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
Sun Capital requires the affirmative vote of a majority of outstanding voting
shares of record of SCB 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.
Sun Capital's directors and executive officers have indicated that they
will vote their shares of SCB Common Stock in favor of the proposal to approve
the Merger Agreement. As of the Record Date, Sun Capital's directors and
executive officers and their affiliates had voting power with respect to
152,257 shares or 36.10% of the outstanding shares of SCB 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 "THE
MERGER-Special Meeting of Sun Capital Stockholders."
Parties to the Merger
Sun Capital Bancorp. Sun Capital Bancorp was incorporated under the
laws of Utah on March 22, 1995, and has been approved as a bank holding
company subject to regulation under the Bank Holding Company Act of 1956, as
amended (the "BHCA"). Its principal executive offices are located at 60 South
100 East, St. George, Utah 84770. The only business of Sun Capital is the
ownership of 100 percent of the stock of Sun Capital Bank with $74.8 million
in total assets at September 30, 1996, which operates a total of three
branches serving St. George, Utah, and Hurricane, Utah, and a lending office
in Mesquite, Nevada. See "SUN CAPITAL BANCORP."
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 September 30, 1996, U. S. Bancorp had
consolidated assets of $33.2 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 U. S. Bank of 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 in a 30-county market area of Northern
California. See "U. S. BANCORP."
Reasons for the Merger; Recommendation of the Sun Capital Board of Directors
The Board of Directors of Sun Capital believes the Merger is in the best
interests of the Sun Capital stockholders based on a number of factors. The
principal reason is that the directors believe that the exchange ratio, when
considered in light of recent trading prices for U. S. Bancorp Common Stock,
provides fair value to the Sun Capital stockholders from a financial point of
view.
Also, as a result of the Merger, Sun Capital will receive U. S. Bancorp
common stock which is traded on the NASDAQ National Market. See "Market
Prices for Common Stock." The Sun Capital Directors believe that the
existence of a trading market for the securities owned by the present Sun
Capital stockholders will provide them with additional flexibility in dealing
with their personal financial affairs.
The Merger will also provide an effective means of obtaining access to
rapidly developing technologies, provide Sun Capital Bank's customers with
access to a broader array of products and services, and permit Sun Capital
Bank to realize certain operating efficiencies and economies.
THE BOARD OF DIRECTORS OF SUN CAPITAL RECOMMENDS THAT THE SUN CAPITAL
STOCKHOLDERS APPROVE THE MERGER AGREEMENT.
See "BACKGROUND OF AND REASONS FOR THE MERGER."
Terms of the Merger
Pursuant to the Merger Agreement, at the time and date the Merger is
consummated (the "Effective Time"), Sun Capital 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, shares of SCB 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 SCB
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
Sun Capital stockholders will be able to exchange certificates representing
shares of SCB Common Stock, see "THE MERGER - Conversion of SCB Common Stock."
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. See "THE MERGER - General; Structure of the Merger;
Conversion of SCB Common Stock; Exchange of Certificates; Fractional Shares."
Effective Time
The Merger is presently expected to be consummated during the fourth
quarter 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 Sun Capital stockholders, receipt of
regulatory approvals, and satisfaction or waiver of all of the other
conditions in the Merger Agreement. See "THE MERGER - Effective Time of the
Merger." The Merger Agreement provides that if the Merger has not been
consummated by March 31, 1997, at any time after such date, the Board of
Directors of either U. S. Bancorp or Sun Capital may vote to abandon the
Merger. See "THE MERGER - Effective Time."
See "BOARD OF DIRECTORS, MANAGEMENT AND BUSINESS OPERATIONS OF U. S. BANCORP
FOLLOWING THEIR MERGER."
Dissenter's Rights
Under the Utah Revised Business Corporation Act (the "UBCA"), holders of
SCB Common Stock may dissent from, and obtain payment of the fair market value
of shares held by such holder in the event of the consummation of the Merger
upon compliance with the requirements of the UBCA. A copy of the portion of
the UBCA describing stockholders dissenters' rights is attached as Appendix 2
to the accompanying Proxy Statement/Prospectus. See "THE MERGER-DISSENTER'S
RIGHTS."
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.
NASDAQ National Market System Trading
U. S. Bancorp Common Stock is 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 SCB 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"); 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
October 16, 1996. See "THE MERGER - Conditions to the Consummation of the
Merger" and "THE MERGER - 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 Sun Capital (i) by the respective majority votes of the Boards
of Directors of both Sun Capital 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 March 31, 1997. Subject to
compliance with applicable law, the Merger Agreement may be amended by U. S.
Bancorp and Sun Capital by action taken or authorized by their respective
Boards of Directors at any time. After approval by the stockholders of Sun
Capital of the Merger Agreement, in the event 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, Sun Capital 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 Sun Capital stockholders in the Merger pursuant to the Merger
Agreement, Sun Capital will resolicit proxies from its stockholders to obtain
approval for such waiver or amendment. See "THE MERGER - Termination of the
Merger Agreement" and "THE MERGER - Waiver and Amendment of the Merger
Agreement."
Tax and Accounting Treatment of the Merger
U. S. Bancorp and Sun Capital have received opinions from their
respective independent accountants 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 shareholder of Sun Capital upon the
exchange of shares of U. S. Bancorp Common Stock for SCB Common Stock (except
in connection with cash received in lieu of fractional shares). Consummation
of the Merger is conditioned upon receipt by Sun Capital and U. S. Bancorp of
similar opinions from their respective independent accountants dated as of the
Effective Time. Upon consummation of the Merger, U. S. Bancorp will account
for the acquisition of Sun Capital using the purchase method of accounting.
See "THE MERGER--Certain Federal Income Tax Consequences" and "--Accounting
Treatment."
Interests of Certain Persons in the Merger
Employment Retention Agreements.
Certain executive officers of Sun Capital entered into employee
retention agreements with U. S. Bancorp, pursuant to which each such officer
agreed to be employed by U. S. Bancorp (or one of its subsidiaries) at a
specified base salary and U. S. Bancorp agreed to permit such officers to
participate in U. S. Bancorp's 1993 stock incentive plan. The executive
officers, their base salaries, and the number of shares of U. S. Bancorp
common stock in which the officers are granted an option are: John Allen
($115,000, 5,000); Leland Fife ($64,000,2,500); Kenneth Schone ($61,000,
2,500); Steve Isom ($42,000, 1,000); Allison McCoy ($53,500, 2,500); and Kevin
Bales ($48,500, 1,000).
MARKET PRICES OF COMMON STOCK
There is no organized market for SCB Common Stock. Therefore, no market
prices of SCB Common Stock are available. As of November 11, 1996, there were
approximately 374 holders of SCB Common Stock.
U. S. Bancorp Common Stock is traded over the counter on the NASDAQ
National Market System under the symbol "USBC." 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.
U.S. Bancorp Common Stock
High Low
1993 $28 7/8 $22
1994 28 5/8 22 1/8
1995 36 22
First Quarter of 1996 34 5/8 29 1/4
Second Quarter of 1996 37 3/8 31 5/8
Third Quarter of 1996 40 3/4 33
Fourth Quarter of 1996
through November 22, 1996 41 3/16 38 3/4
On September 24, 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 $39-1/4
($37.29 on an equivalent-share basis for each share of SCB Common Stock). On
November 22, 1996, the last sale price per share reported on the NASDAQ
National Market System for U. S. Bancorp Common Stock was $41-3/16 ($39.13 on
an equivalent-share basis for each share of SCB Common Stock). Stockholders
are urged to obtain current quotations for the market price of U. S. Bancorp
Common Stock.
No assurance can be given as to the market price 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 SCB Common Stock will receive in the Merger may increase or
decrease prior to and after the Effective Time.
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The following table sets forth selected consolidated historical
financial data for U. S. Bancorp and Sun Capital 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 Sun Capital
incorporated by reference into this Proxy Statement/Prospectus (see
"Information Incorporated by Reference") or attached hereto, and such data are
qualified in their entirety by reference thereto. In 1995, Sun Capital was
incorporated, approved as a bank holding company, and participated in a
reorganization with Sun Capital Bank pursuant to which Sun Capital Bank became
a wholly-owned subsidiary of Sun Capital. The financial statements presented
reflect the results of operations as if they had been combined since
inception, similar to a pooling of interest. See "FINANCIAL STATEMENTS OF SUN
CAPITAL BANCORP."
<PAGE>
<TABLE>
<CAPTION>
December 31, December 31, December 31, December 31, December 31, September 30, September 30,
1991 1992 1993 1994 1995 1995 1996
(Dollars in Thousands, except per share amounts)
----------- ----------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
U. S. Bancorp(1) Earnings
Summary:
Net interest income... $980,767 $1,119,489 $1,264,156 $1,335,707 $1,399,406 $1,048,243 $1,083,574
Provision for
credit losses....... 155,053 148,762 106,234 120,146 124,093 72,719 94,737
Noninterest revenue... 442,470 519,283 620,352 552,719 524,740 399,415 449,576
Income before
cumulative effect of
accounting changes.. 232,125 271,446 341,136 254,666 328,971 307,596 358,219
Net income............ 232,125 211,556 341,136 254,666 328,971 307,596 358,219
Per Common Share:
Income before
accounting changes. $ 1.68 $1.87(2) $2.23 $1.60 $2.09 $1.96 $2.30
Net income............ 1.68 1.45(2) $2.23 $1.60 $2.09 1.96 2.30
Cash dividends
declared............ .71 .76 .85 .94 1.06 .78 .87
Period End Balance Sheet
Data:
Total Assets.........$24,292,336 $27,874,784 $29,086,757 $30,609,108 $31,794,283 30,845,290 33,213,390
Total earning assets..21,582,825 24,643,243 25,945,928 27,004,341 27,883,285 27,445,865 29,318,357
Total deposits........17,360,760 21,061,615 21,447,682 21,859,189 23,264,629 22,616,891 24,563,178
Long-term debt........ 1,318,787 1,437,225 1,161,217 1,244,190 1,377,021 1,136,402 1,626,289
Total shareholders'
equity.............. 1,773,428 2,121,133 2,441,761 2,493,054 2,617,053 2,710,261 2,786,462
Common shareholders'
equity.............. 1,773,428 1,971,133 2,291,761 2,343,054 2,467,053 2,560,261 2,636,462
Preferred stock....... -- 150,000 150,000 150,000 150,000 150,000 150,000
Sun Capital
Earnings Summary:
Net interest income... $2,733 $1,686 $2,235 $3,508 $3,983 $2,775 $3,178
Provision for credit
losses.............. 237 205 4 20 100 60 75
Noninterest revenue... 450 703 782 797 939 766 932
Net income............ 265 314 729 1,120 1,363 978 1,162
Per Common Share:
Net income............ .68 1.02 1.88 2.66 3.23 2.32 2.76
Cash dividends
declared............ .10 .10 .43 .42 .51 .20 .20
Period End Balance Sheet Data:
Total assets.......... $28,175 $29,920 $44,758 $54,003 $62,089 $59,558 $74,751
Total deposits........ 26,051 27,589 39,313 44,314 54,898 53,453 67,280
Stockholders' equity.. 2,001 2,231 3,792 4,705 5,863 5,618 6,944
<PAGE>
(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, and $8.5 million of such costs were
recognized during the nine months ended September 30, 1995. During 1996,
$18.2 million of such merger integration costs were recognized.
(2) 1992 income before accounting changes per common stock 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.
</TABLE>
<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 Sun Capital and equivalent pro forma data per Sun
Capital common share. The pro forma amounts included in the table give effect
to the exchange of Sun Capital Common Stock for .95 shares of U. S. Bancorp
Common Stock pursuant to the Merger without other pro forma adjustments. The
data should be read in conjunction with the financial information with respect
to U. S. Bancorp and Sun Capital 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." The pro forma equivalent 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.
Year Ended Nine Months Ended
December 31, September 30,
1995 1996
(unaudited) (unaudited)
U. S. Bancorp Common Stock
Income per share: Historical $ 2.09 $ 2.30
Cash dividends declared 1.06 .87
per share: Historical
Book value per share 16.38 17.46
at period-end: Historical
Sun Capital Common Stock
Income per share: Historical $ 3.27 $ 2.76
Pro forma equivalent 1.99 2.19
Cash dividends declared
per share: Historical .51 .20
Pro forma equivalent 1.01 .83
Book value per share at
period end: Historical 13.88 16.45
Pro forma equivalent 15.56 16.59
<PAGE>
SPECIAL MEETING OF SUN CAPITAL STOCKHOLDERS
General
This Proxy Statement/Prospectus is being furnished to holders of SCB Common
Stock in connection with the solicitation of proxies by the Board of Directors
of Sun Capital for use at the Special Meeting and any adjournments or
postponements thereof at which the stockholders of Sun Capital 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 Sun Capital
stockholders is accompanied by the Notice of Special Meeting of Stockholders
of Sun Capital, and a proxy card.
This Proxy Statement/Prospectus is being offered by U. S. Bancorp to
each holder of SCB 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 Monday, December 30, 1996, commencing at
7 p.m., local time, at the head office of Sun Capital, 60 South 100 East,
St. George, Utah 84770.
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 Sun Capital has fixed the close of business on
November 27, 1996, as the Record Date for the determination of holders of
shares of SCB Common Stock entitled to notice of and to vote at the Special
Meeting. At the close of business on the Record Date, there were 421,721
shares of SCB Common Stock issued and outstanding held by approximately 374
holders of record. Holders of record of SCB 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 SCB Common Stock
outstanding on the Record Date is required to approve the Merger Agreement.
As of the Record Date, Sun Capital's directors and executive officers and
their affiliates owned and were entitled to vote 152,257 shares of SCB Common
Stock at the Special Meeting, representing approximately 36.10 percent of the
outstanding shares. Each such director and executive officer has indicated
his or her intention to vote the SCB 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 SCB Common Stock. A Sun Capital 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 Sun Capital, 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 SCB 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.
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 SCB Common Stock. Sun Capital 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.
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 September
30, 1996, U. S. Bancorp was among the 30 largest bank holding companies in the
United States in terms of total assets, with total assets of $33.2 billion,
deposits of $24.6 billion, and shareholders' equity of $2.8 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 $14.0 billion in total assets at September 30, 1996, U. S.
Bank of Washington, National Association, which had total assets of
$9.5 billion at that date, and U. S. Bank of Idaho, which had total assets of
$3.8 billion at September 30, 1996. 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. Bancorp recently acquired California Bancshares,
Inc., which operates 36 branches in northern California.
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.
SUN CAPITAL BANCORP
Sun Capital Bancorp was incorporated under the laws of Utah on March 22, 1995,
and has been approved as bank holding company subject to regulation under the
Bank Holding Company Act of 1956, as amended (the "BHCA"). Its principal
executive offices are located at 60 South 100 East, St. George, Utah 84770.
The only business of Sun Capital is the ownership of 100 percent of the stock
of Sun Capital Bank with $74.8 million in total assets at September 30, 1996,
that operates a total of three branches serving St. George, Utah, and
Hurricane, Utah, and a lending office in Mesquite, Nevada.
<PAGE>
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger
During the second quarter of 1994, the Board of Directors of Sun Capital
noted that from time to time Sun Capital had received unsolicited inquiries
respecting the possibility of acquiring Sun Capital Bank. Following a general
discussion and without considering any specific proposal, the Board of
Directors reached a general consensus that Sun Capital would entertain an
acquisition if the Board concluded that the terms were favorable.
Approximately a year later, in April 1995, representatives of West One
Bank, Salt Lake City, Utah, approached representatives of Sun Capital in
St. George, Utah, respecting a possible purchase of Sun Capital. However, in
approximately May 1995, without previously advising or consulting with
Sun Capital, West One publicly announced that it was being acquired
by U. S. Bancorp. Following such announcement, West One advised Sun Capital
that West One was no longer in a position to consider an acquisition of Sun
Capital, noting that if perhaps U. S. Bancorp subsequently became interested
in pursuing a possible transaction, it would contact Sun Capital directly.
On February 28, 1996, high level executives of U. S. Bancorp met with
certain executive officers and directors of Sun Capital in St. George to
discuss a potential merger of the two bank holding companies. Following
consideration by the board of directors of Sun Capital, the chairman of
Sun Capital wrote to the chairman of U. S. Bancorp on April 8, 1996,
expressing an interest in continuing with the negotiations. Pursuant to a
request from U. S. Bancorp, Sun Capital assembled and delivered
to U. S. Bancorp specific business and financial information so
that U. S. Bancorp could advance its detailed analysis of Sun Capital. On
April 26, 1996, U. S. Bancorp offered to acquire Sun Capital at the rate of
1.03 shares of U. S. Bancorp Common Stock for each share of SCB Common Stock
outstanding, subject to U. S. Bancorp's verification of certain property
values and concurrence in Sun Capital's projected profits for 1996. Pursuant
to authorization by the Board of Directors of Sun Capital on May 20, 1996, it
advised U. S. Bancorp that Sun Capital would agree to an acquisition on the
terms proposed, subject to U. S. Bancorp's further review of the business and
financial condition of Sun Capital, which continued through July and
August 1996. In late August and early September 1996, executives of Sun
Capital and U. S. Bancorp met in both Portland, Oregon and St. George, Utah to
discuss proposed merger terms, issues relating to the conduct of the business
of Sun Capital following the merger, open issues identified in U. S. Bancorp's
business and financial review, and other matters.
On September 12, 1996, U. S. Bancorp made a revised offer to acquire Sun
Capital at the rate of 0.95 the number of shares of U. S. Bancorp Common Stock
for each of SCB Common Stock exchanged. U. S. Bancorp advised that the
reduced number of shares of U. S. Bancorp Common Stock to be issued was based
upon U. S. Bancorp's analysis of the value of certain property and the
projected 1996 income for Sun Capital. At a meeting of the Board of Directors
on September 24, 1996, the offer was formally accepted and thereafter
communicated to representatives of U. S. Bancorp. A definitive agreement was
drafted and reviewed by the respective parties, and on September 24, 1996, was
signed. Since that time, the parties have moved forward positively to satisfy
the various conditions precedent to completing the Merger, including seeking
requisite consents of regulatory authorities and submitting the acquisition to
the Sun Capital stockholders for their approval. In addition, in anticipation
of completing the Merger at the earliest practicable date, representatives
of U. S. Bancorp and Sun Capital are proceeding with plans to integrate the
products, services, and operations of Sun Capital with those of U. S. Bancorp.
Reasons for the Merger
The Board of Directors of Sun Capital believes the Merger is in the best
interests of the Sun Capital stockholders, has unanimously approved the
Merger, and recommends that the Merger be approved by the Sun Capital
stockholders. The conclusions of the Board of Directors are based on a number
of factors. The principal reason for the Board's conclusion is that the
Directors believe that the exchange ratio, when considered in light of recent
trading prices for the U. S. Bancorp Common Stock, provides fair value to the
Sun Capital stockholders from a financial point of view and gives proper
recognition to Sun Capital's current profitability, its stockholders' equity,
and its positive competitive position in a growing banking market in
southwestern Utah.
Sun Capital Bank has been in existence for over 20 years, but there is
no existing trading market for SCB Common Stock, so that Sun Capital
stockholders have no practical liquidity for their investment in Sun Capital,
and it is unlikely that a viable trading market will develop. As a result of
the Merger, Sun Capital shareholders will receive U. S. Bancorp common stock
which is traded on the NASDAQ National Market. See "Market Prices for Common
Stock." The Sun Capital Directors believe that the existence of a trading
market for the securities owned by the present Sun Capital stockholders will
provide them with additional flexibility in dealing with their personal
financial affairs, planning their estates, and completing administration of
estates, including the payment of related estate taxes.
The Board of Directors believes that the Merger will provide an
effective means of obtaining access to rapidly developing technologies that
Sun Capital Bank must utilize effectively in order to maintain or improve its
current profitability. In addition, through the Merger, Sun Capital Bank will
have access to a broader array of products and services not presently
available to Sun Capital Bank's customers, such as corporate and private
banking, cash management services, trust services, insurance products, and
debit cards. Sun Capital also anticipates that it will be able to realize
operating efficiencies and economies by obtaining within the U. S. Bancorp
organization certain products and services currently obtained by Sun Capital
from outside sources.
THE MERGER
General
The Boards of Directors of U. S. Bancorp and Sun Capital 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 SCB 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.
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 Sun Capital 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 Utah Revised Business Corporation Act ("UBCA") and the Oregon
Business Corporation Act ("OBCA"), at the Effective Time, Sun Capital 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 Sun Capital
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 SCB Common Stock
At the Effective Time of the Merger, each share of SCB Common Stock
outstanding, other than shares held in Sun Capital's treasury or held directly
or indirectly by U. S. Bancorp or Sun Capital 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 .95 shares (the "Exchange Ratio") of U. S. Bancorp Common Stock.
Sun Capital'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 SCB Common Stock will receive in the Merger may increase or
decrease prior to and following the Merger.
Each outstanding share of SCB Common Stock owned by U. S. Bancorp or its
subsidiaries or by Sun Capital or its subsidiary (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 Sun Capital or any subsidiary will become authorized but unissued
stock of U. S. Bancorp.
Exchange of Certificates; Fractional Shares
At or prior to the Effective Time, U. S. Bancorp will deposit, or cause to be
deposited, with a bank or trust company selected by Bancorp and reasonably
acceptable to Sun Capital (which may be a subsidiary of U. S. Bancorp) (the
"Exchange Agent"), for the benefit of the holders of certificates of SCB
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 SCB 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 Sun Capital as of the Effective Time, a form of transmittal letter
will be mailed by the Exchange Agent to the holders of SCB Common Stock. The
form of transmittal letter will contain instructions with respect to the
surrender of certificates representing SCB Common Stock.
SUN CAPITAL 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 SCB 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 Sun Capital of shares of SCB Common Stock issued and
outstanding immediately prior to the Effective Time. If certificates
representing shares of SCB 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 SCB 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 Sun Capital nor any other person will be liable to
any former holder of SCB Common Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat, or similar
laws. If a certificate for SCB Common Stock has been lost, stolen, or
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 Sun Capital 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 articles of
merger that will be filed with the Division of Corporations and Commercial
Code of the state of Utah, 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 fourth quarter 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 March 31,
1997, the Merger Agreement may be terminated by either U. S. Bancorp or Sun
Capital, 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 "Merger -
Regulatory Approvals Required for the Merger."
Representations and Warranties
The Merger Agreement contains representations and warranties of U. S. Bancorp
and Sun Capital 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, 1995; (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; and
(xv) the absence of undisclosed liabilities.
Conduct of Business Pending the Merger and Other Agreements
Pursuant to the Merger Agreement, prior to the Effective Time Sun Capital has
agreed to, and to cause its subsidiary 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 Sun
Capital 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.
U. S. Bancorp and Sun Capital 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
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 Sun
Capital 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 Sun Capital 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 Sun Capital 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, Sun Capital has
agreed that, without the prior written consent of U. S. Bancorp, it will not,
and will not permit its subsidiary 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
Sun Capital or its subsidiary to Sun Capital or its subsidiary), 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 subsidiary of Sun
Capital; or issue any additional shares of capital stock except pursuant to
the exercise of stock options outstanding as of the date of the Merger
Agreement;
(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 $10,000 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 of $10,000 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 its subsidiary with any corporation or
other entity other than as provided by the Merger Agreement (and Sun Capital
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 Sun Capital 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 Sun Capital 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;
(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 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;
(vi)impose any stock transfer instructions or restrictive legends, except in
the case of shares received by persons who are "affiliates" (as that term is
defined in the Securities Act of 1933) or Bancorp or Sun Capital; or
(vii)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 SCB Common
Stock entitled to vote thereon;
(ii)the shares of U. S. Bancorp Common Stock that are to be issued to Sun
Capital 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;
(iv)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;
(v)U. S. Bancorp shall have received an opinion of Deloitte & Touche LLP, on
behalf of U. S. Bancorp, and Sun Capital shall have received an opinion of
Simpson & Company, on behalf of Sun Capital in form and substance reasonably
satisfactory to U. S. Bancorp and Sun Capital, 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 Sun Capital as a result of the
Merger; (B) no gain or loss will be recognized by the stockholders of Sun
Capital who exchange their SCB 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 tax
basis of the U. S. Bancorp Common Stock received by stockholders who exchange
all of their SCB Common Stock solely for U. S. Bancorp Common Stock in the
Merger will be the same as the tax basis of the SCB Common Stock surrendered
in exchange therefor (reduced by any amount allocable to a fractional share
interest for which cash is received) (see "MERGER - Certain Federal Income Tax
Consequences");
(vi)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;
(vii)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
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
March 31, 1997, the Merger Agreement may be terminated by either U. S. Bancorp
or Sun Capital, 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 Sun Capital have agreed to use their reasonable best efforts
to obtain the Requisite Regulatory Approvals, which include approval from the
Federal Reserve Board and the Utah bank regulatory authority. U. S. Bancorp
filed an application for approval of the Merger with the Federal Reserve Board
on October 16, 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.
U. S. Bancorp and Sun Capital 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 Section 3 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:
(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 Sun Capital, 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 Sun Capital 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 Sun Capital 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 other state and federal banking agencies. 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.
U. S. Bancorp and Sun Capital do not expect that the Federal Reserve Board or
the Justice Department will request that U. S. Bancorp or Sun Capital divest
any operations in order to alleviate an adverse competitive effect. Under the
Merger Agreement, however, U. S. Bancorp and Sun Capital 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.
State Regulatory Requirements. The Merger is also subject to approval by the
bank regulatory agency in the state of Utah. In addition, the Merger may be
reviewed by the Utah state attorney general.
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 SCB Common Stock pursuant to an employee stock option, or
exercises some form of control over Sun Capital. 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 Sun Capital
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 SCB Common Stock.
The Merger. No ruling from the IRS as to the tax consequences of the Merger
has been or will be requested. As a condition to closing, U. S. Bancorp and
Sun Capital will receive tax opinions from Deloitte & Touche LLP and Simpson &
Company, respectively, that for federal income tax purposes:
(i)no gain or loss will be recognized by U. S. Bancorp or by Sun Capital as a
result of the Merger;
(ii)no gain or loss will be recognized by stockholders upon their exchange of
SCB Common Stock for U. S. Bancorp Common Stock (except with respect to Sun
Capital stockholders who receive cash proceeds in lieu of a fractional share
interest in U. S. Bancorp Common Stock); and
(iii)the tax basis of the U. S. Bancorp Common Stock received by a Sun Capital
stockholder who exchanges his or her SCB Common Stock solely for U. S. Bancorp
Common Stock will be the same as such stockholder's tax basis in the Common
Stock surrendered in exchange therefor (reduced by any amount allocable to a
fractional share interest for which cash is received);
Such opinions have been filed as exhibits to the Registration Statement. 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.
The opinions described herein are subject to a number of assumptions and
qualifications that are critical to the opinions and are based on certain
factual information, representations, and warranties. If such factual
information or the representations, warranties, or assumptions are not true
when made or subsequently change, the opinions may be inapplicable, and the
Merger may be a taxable transaction to some or all of the participants.
An opinion does not provide the same degree of assurance with respect to the
tax consequences of a transaction as would a ruling from the IRS. An opinion,
unlike a ruling, does not have a binding effect on the IRS or the courts and
only represents the opinion giver's legal judgment as to the tax consequences
based on current provisions of the Code and Regulations and the judicial and
administrative interpretations thereof. The Code and the Regulations and the
interpretations thereof by the IRS and the courts are subject to change, which
may adversely affect the tax treatment of the Merger and which may be given
retroactive effect. The IRS may take a position contrary to the opinions
described herein and, if the matter is litigated, a court may reach a decision
contrary to the opinions.
Information Reporting and Backup Withholding. Payments in respect of SCB
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 Sun Capital 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 Sun Capital 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 Sun Capital prior to the Effective
Time will not be included in income of the combined company.
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 Sun
Capital stockholders:
(i)by mutual consent of U. S. Bancorp and Sun Capital 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 Sun Capital 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 Sun Capital if the
Merger shall not have been consummated on or before March 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 Sun Capital (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 Sun Capital if approval by the Sun Capital
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 Sun
Capital, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the 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 Sun Capital, 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 Sun Capital, Sun Capital 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 Sun Capital stockholders in the Merger
pursuant to the Merger Agreement, Sun Capital 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 Sun Capital by action taken or authorized
by their respective Boards of Directors at any time. After approval of the
Merger Agreement by the Sun Capital 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 Sun
Capital, Sun Capital 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 Sun Capital stockholders in the Merger
pursuant to the Merger Agreement, Sun Capital will resolicit proxies from its
stockholders to obtain approval for such amendment.
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 Sun Capital 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 Sun Capital will
coordinate the declaration and payment of dividends in respect of
U. S. Bancorp Common Stock and SCB 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. Sun Capital is permitted under the Merger Agreement to pay regular cash
dividends in the 1996 calendar year consistent with past practices up to the
lesser of (i) $.60 per share (which includes the $.20 per share dividend
declared and paid in June 1996) and (ii) 17 percent of Sun Capital's net
profits for the calendar year 1996.
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 Sun
Capital 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") or an
affiliate of Sun Capital 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 Sun Capital at the time of the Special Meeting or
(ii) U. S. Bancorp at or after the Effective Time. Each of Sun Capital 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 Sun Capital 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 Sun Capital 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 Sun Capital
who receive U. S. Bancorp Common Stock in the Merger will have the right to
participate in the Plan.
Dissenter's Rights
Dissenting holders of SCB Common Stock ("SCB Stockholders") who oppose
the proposed Merger will have the right to receive payment for the value of
their shares of SCB Common Stock held as set forth in part 13 of the Utah Law
("Part 13"), a copy of which is attached as Appendix 2. Any obligations that
Sun Capital may have to Dissenting SCB Stockholders as set forth below will
continue as obligations of U. S. Bancorp subsequent to the Merger. As used
herein, a "Dissenting SCB Stockholder" means a record holder of the dissenting
shares of SCB Common Stock and any appropriate transferee of record. The
following summary is qualified in its entirety by the more detailed referenced
provisions of the Utah Law that are attached; in the event of any
inconsistency, such provisions of the Utah Law shall prevail.
Under Part 13, a Dissenting SCB Stockholder wishing to assert
dissenters' rights:
(i) must cause Sun Capital to receive, before the vote of the
SCB Stockholders in regard to the proposed Merger is taken at the
SCB Stockholders' Meeting, written notice of such SCB
Stockholder's intent to demand payment for shares of Sun Capital
Stock held if the Merger is approved and effected; and
(ii) may not vote any of the shares of SCB Common Stock held in
favor of the Merger.
In order for a Dissenting SCB Stockholder to be entitled to payment for
shares of SCB Common Stock held, such SCB Stockholder must have been a
stockholder of Sun Capital with respect to the shares of SCB Common Stock for
which payment is demanded as of the date the Merger Agreement is approved by
the SCB Stockholders at the SCB Stockholders' Meeting. A Dissenting SCB
Stockholder who does not satisfy the above conditions is not entitled to
demand payment for his or her shares of SCB Common Stock.
If the Merger is approved by a majority of the shares of SCB Common
Stock and any Dissenting SCB Stockholder has caused Sun Capital to receive the
written notice indicated above and did not vote such stockholder's shares of
Sun Capital Common Stock in favor of the Merger, Sun Capital shall provide
written notice to all such Dissenting SCB Stockholders who satisfy the
foregoing conditions who will be entitled to demand payment for their shares
of Sun Capital Common Stock. Such written notice from Sun Capital shall be
sent no later than ten (10) days after the Effective Time and shall:
(i) state that the Merger was authorized and approved by holders
of a majority of the outstanding shares of Sun Capital Common
Stock and give notice of the Effective Time of the Merger;
(ii) state the address at which Sun Capital will receive payment
demands and the address at which certificates for shares of Sun
Capital Common Stock must be deposited;
(iii) supply a form for Dissenting SCB Stockholders to demand
payment, which form requests a Dissenting SCB Stockholder to state
an address to which payment is to be made;
(iv) set a date by which Sun Capital must receive the payment
demand and by which certificates for dissenting shares must be
deposited at the address indicated in the notice, which date may
not be fewer than 30 nor more than 70 days after the date the
dissenters' notice is given; and
(v) be accompanied by a copy of Part 13.
A Dissenting SCB Stockholder who is given the dissenters' notice
described above and wishes to assert dissenters' rights must, in accordance
with the terms of the dissenters' notice, cause Sun Capital to receive a
payment demand in the same form referred to above or in another writing and
must timely deposit certificates for dissenting shares of Sun Capital Stock as
provided above. A Dissenting SCB Stockholder who demands payment in
accordance with this paragraph retains all rights as a stockholder of Sun
Capital except the right to transfer the shares until the Effective Time and
thereafter has only the right to receive payments for such shares. A
Dissenting SCB Stockholder who does not meet the provisions of this paragraph
is not entitled to payment for shares pursuant to the dissenters' rights
described herein.
Upon compliance by the Dissenting SCB Stockholder with all the
requirements described above and in Part 13, Sun Capital shall pay the amount
Sun Capital estimates to be the fair value of the Dissenting SCB Stockholder's
shares of Sun Capital Stock, except for any shares acquired by any Dissenting
SCB Stockholder after the date of the notice of the Special Meeting to which
special provisions not summarized here apply, accompanied by Sun Capital's
balance sheet as of the end of the most recent fiscal year; an income
statement for that year; statements of changes in stockholders' equity and
cash flows for that year; and the latest available interim financial
statements, if any. Such financial statements need not be audited. Payment
shall also be accompanied by a statement of Sun Capital's estimate of the fair
value of the dissenting shares of Sun Capital Stock and the amount of interest
payable with respect to such shares, a statement of a dissatisfied dissenters;
right to demand payment, as discussed below, and a copy of Part 13.
If the Merger Agreement is not effected within 60 days after the date
set by Sun Capital as the date by which Sun Capital must receive payment
demands, then Sun Capital shall send a new dissenters' notice and the
provisions of Part 13 shall again be applicable.
A Dissenting SCB Stockholder may notify Sun Capital of such
stockholder's estimate of the value of the shares of Sun Capital Stock held
and demand that Sun Capital pay such amount if: (i) the dissenter believes
that the amount paid by Sun Capital is less than the fair value of the shares,
(ii) if Sun Capital fails to make payment within 60 days after the date set by
it as the date by which it must receive the payment demand, or (iii) if Sun
Capital, having not effected the Merger Agreement, fails to return timely the
Dissenting SCB Stockholder's shares of Sun Capital Common Stock. A dissenter
waives the right to demand payment according to this paragraph unless such
Dissenting SCB Stockholder causes Sun Capital to receive notice of his or her
estimate within 30 days after Sun Capital has made payment for the shares of
Sun Capital Common Stock.
If a demand for payment by the dissenter remains unresolved, Sun Capital
shall commence a proceeding in the Fifth District Court of Washington County,
Utah within 60 days after receiving the payment demand from the dissenter and
petition the court to determine the fair value of the shares. If Sun Capital
fails to commence such proceeding within such 60 days, it shall pay to each
dissenter whose demand remains unresolved the amount demanded. Each such
Dissenting SCB Stockholder is entitled to judgment for the amount, if any, by
which the court finds that the fair value of his or her shares, plus interest,
exceeds the amount paid by Sun Capital or the amount Sun Capital elected to
withhold payment under special provisions applicable to shares acquired after
the date of the notice of the SCB Stockholders Meeting of SCB's Stockholders.
The court is required to assess court costs, counsel fees, and appraisal costs
against Sun Capital, unless the court determines that the Dissenting SCB
Stockholder acted arbitrarily, vexatiously, or not in good faith.
<PAGE>
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 Sun Capital
directors to the U. S. Bancorp Board of Directors.
Business Operations
Following the Merger, U. S. Bancorp intends to combine the operations of and,
subject to required regulatory approvals, to merge the subsidiary bank of Sun
Capital into one of U. S. Bancorp's banking subsidiaries. As of the date of
this Proxy Statement/Prospectus, no final determination with respect to such
matters had been made. 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 Sun Capital'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 Sun Capital. Conversion of Sun
Capital's bank operations is currently expected to occur in the first half of
1997.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of the Sun Capital Board and management may be deemed to have
certain interests in the Merger that are in addition to their interests
generally as Sun Capital stockholders. The Sun Capital 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 Sun Capital stockholders
will also constitute approval or ratification of the following benefits to be
received by Sun Capital directors, executive officers and other employees.
Certain executive officers of Sun Capital entered into employee
retention agreements with U. S. Bancorp, pursuant to which each such officer
agreed to be employed by U. S. Bancorp (or one of its subsidiaries) at a
specified base salary and U. S. Bancorp agreed to permit such officers to
participate in U. S. Bancorp's 1993 stock incentive plan. The executive
officers, their base salaries, and the number of shares of U. S. Bancorp
common stock in which the officers are granted an option are: John Allen
($115,000, 5,000); Leland Fife ($64,000,2,500); Kenneth Schone ($61,000,
2,500); Steve Isom ($42,000, 1000); Allison McCoy ($53,500, 2,500); and Kevin
Bales ($48,500, 1,000).
COMPARISON OF SHAREHOLDERS' RIGHTS
U. S. Bancorp and Sun Capital are incorporated in Oregon and Utah,
respectively. Stockholders of Sun Capital, whose rights as stockholders are
currently governed by the Utah Revised Business Corporation Act (the "UBCA"),
Sun Capital's Articles of Incorporation (the "SCB Articles") and Sun Capital's
bylaws (the "SCB 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 (the "OBCA"), 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
U. S. Bancorp Bylaws and the OBCA on the one hand and SCB stockholders under
the SCB Articles and SCB Bylaws and the UBCA 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 SCB Articles, the U. S. Bancorp Bylaws, and the SCB Bylaws.
Corporate Charter and Bylaw Amendments
Both the OBCA and the UBCA 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 the OBCA,
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.
Under the UBCA, a board of directors may adopt specified ministerial
amendments without shareholder approval. Other amendments may be proposed to
the shareholders and must be approved by a majority of votes entitled to be
cast on the amendment by any voting group with respect to which the amendment
would create dissenter's rights. Approval is also conditional on receiving
the majority of votes entitled to be cast on the amendment by each voting
group whose rights would be adversely affected by the amendment. Any
amendment which would impact personal liability of shareholders must be
approved by all of the shares affected.
Under the OBCA, a corporation's board of directors may amend or repeal the
corporation's bylaws unless the corporation's articles of incorporation or the
OBCA 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.
The SCB Bylaws provide that the board of directors and shareholders may adopt,
amend, or repeal bylaws.
Special Meetings of Shareholders
The OBCA and the UBCA provide 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. The SCB Bylaws permit
special meetings of shareholders to be called by the president or by the SCB
Board of Directors and require a special meeting to be called by the president
if requested by holders of 10 percent or more of all outstanding votes to be
cast on any issue at the meeting.
Capital Stock
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 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 the OBCA.
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 authorized capital stock of Sun Capital consists of 10,000,000 shares,
$1.00 par value, of SCB Common Stock. The Board of Directors of Sun Capital
is expressly authorized to designate preferences, limitations, and relative
rights of any class of shares before the issuance of any shares of that class;
create one or more shares with any class of shares, fix the number of shares
of each such series and designate the limitations, preferences, and relative
rights of the series, all before the issuance of any shares of that series;
alter or revoke the preferences, limitations, and relative rights granted to
or imposed upon any wholly unissued class of shares or any wholly unissued
series of any class of shares; or increase or decrease the number of shares
constituting any series, the number of shares of which was originally fixed by
the board of directors, either before or after the issuance of shares of the
series; provided that, the number may not be decreased below the number of
shares of the series then outstanding or increased above the total number of
authorized shares of the applicable class of shares available for designation
as a part of the series. Shares of any class of stock may be issued from time
to time as may from time to time be determined by the Board of Directors of
Sun Capital.
Dissenters' and Appraisal Rights
Under the Oregon Business Corporation Act (the"OBCA"), 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;
(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 the OBCA; 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.
For a discussion of the dissenter's rights of SCB stockholders, see "THE
MERGER - Dissenters' Rights."
Provisions Relating to Directors
Under both the OBCA and the UBCA, 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 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 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.
Under the UBCA, a board must consist of at least three individuals. The SCB
Bylaws provide that the Sun Capital Board of Directors shall consist of not
less than three directors, the exact number to be fixed by the shareholders or
the directors. The SCB Bylaws provide that vacancies of the Board of
Directors may be filled by the shareholders, except during such time that the
shareholders fail or are unable to fill such vacancies, which may then be
filled by the directors.
Under the OBCA, 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 the UBCA, any director or the entire board of directors of a corporation
may be removed, with or without cause unless the articles of incorporation
provide that directors may only be removed for cause.
Certain Antitakeover Provisions
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 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
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.
Sun Capital is subject to the Control Shares Acquisitions Act, which gives
Utah public corporations similar rights as those under the Oregon Control
Share Act. The Utah Control Shares Acquisition Act permits a corporation to
"opt-out" of the provisions of the Act. Sun Capital, pursuant to ARTICLE IV
of the SCB Articles, has opted out of the provisions of the Utah Control
Shares Acquisitions Act.
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, independent auditors, 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., independent auditors, 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.
The consolidated balance sheets of Sun Capital Bancorp and its subsidiary as
of December 31, 1995 and 1994, and related consolidated statements of income,
changes in stockholders' equity, and cash flows for the years then ended,
included herein, were audited by Simpson & Company, independent auditors, as
stated in its report, set forth herein. Such financial statements of Sun
Capital and its subsidiary are included herein in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
All of the foregoing firms are independent accountants.
LEGAL OPINIONS
The legality of the shares of U. S. Bancorp Common Stock to be issued to the
holders of SCB 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.
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS OF SUN CAPITAL BANCORP AND SUBSIDIARY
TOGETHER WITH INDEPENDENT AUDITORS' REPORT
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of Sun Capital Bancorp and Subsidiary
St. George, Utah
We have audited the consolidated balance sheets of Sun Capital Bancorp and
subsidiary as of December 31, 1995 and 1994, and related consolidated
statements of income, changes in stockholders' equity, and cash flows for the
years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Sun
Capital Bancorp and subsidiary as of December 31, 1995 and 1994, and the
results of their operations and cash flows for the years then ended in
conformity with generally accepted accounting principles.
Simpson & Company
Salt Lake City, Utah
January 19, 1996
<PAGE>
SUN CAPITAL BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
ASSETS
<TABLE>
<CAPTION>
December 31, September 30,
1994 1995 1996
(unaudited)
------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks (Note 1) $ 2,375 $ 2,027 $ 7,402
Investments (Notes 1 and 2)
Securities available for sale, at fair value 580 7,127 6,085
Securities held to maturity, at cost 12,058 2,619 1,881
Loans, less allowance for loan losses of
$498 in 1994 and $537 in 1995
(Notes 1, 3 and 4) 36,797 47,209 55,786
Bank premises and equipment (Notes 1 and 5) 1,271 2,033 2,461
Accrued interest receivable 471 601 590
Real estate acquired in settlement of loans
(Note 1) 70 70 59
Other assets 381 403 487
-------- -------- --------
TOTAL ASSETS $ 54,003 $ 62,089 $ 74,751
======== ======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Deposits (Note 7)
Noninterest-bearing $ 14,108 $ 14,656 $ 18,023
Interest-bearing 30,206 40,242 49,257
-------- -------- --------
Total deposits 44,314 54,898 67,280
Federal funds purchased 1,200 1,000 -
Securities sold under repurchase agreement
(Note 2) 3,500 - -
Accrued interest payable 85 164 209
Other liabilities 199 164 318
-------- -------- --------
Total Liabilities 49,298 56,226 67,807
-------- -------- --------
Commitments (Note 6)
STOCKHOLDERS' EQUITY (Note 9)
Common stock: $1 par value; authorized
800,000 shares, issued and outstanding
421,721 shares in 1995 and 1994 422 422 422
Capital surplus 1,592 1,592 1,592
Unrealized gain (loss) on securities available
for sale, net of tax (16) (30) (27)
Retained earnings 2,707 3,879 4,957
-------- -------- --------
Total Stockholders' Equity 4,705 5,863 6,944
-------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 54,003 $ 62,089 $ 74,751
======== ======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SUN CAPITAL BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Nine months ended
Years Ended December 31, September 30,
1994 1995 1995 1996
(Unaudited)
----------------------- --------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 3,744 $ 5,203 $ 3,675 $ 4,426
Interest on investment securities
Taxable 607 589 442 270
Exempt from federal income tax 187 130 110 82
Interest on federal funds sold 52 49 29 34
-------- -------- -------- --------
4,590 5,971 4,256 4,812
-------- -------- -------- --------
INTEREST EXPENSE
Interest on deposits 1,015 1,892 1,385 1,573
Interest on federal funds purchased 67 96 96 61
-------- -------- -------- --------
1,082 1,988 1,481 1,634
-------- -------- -------- --------
Net interest income 3,508 3,983 2,775 3,178
PROVISION FOR LOAN LOSSES (Note 4) 20 100 60 75
-------- -------- -------- --------
Net interest income after
provision for loan losses 3,488 3,883 2,715 3,103
-------- -------- -------- --------
OTHER INCOME
Service charges on deposit accounts 293 355 233 233
Mortgage loan origination and servicing
fees 386 396 240 307
Other income 126 188 293 392
Gain (loss) on sale of securities (8) - - -
-------- -------- -------- --------
797 939 766 932
-------- -------- -------- --------
OTHER EXPENSES
Salaries and employee benefits 1,487 1,590 1,042 1,198
Occupancy expenses, net 427 409 272 341
Other operating expenses 704 709 654 651
-------- -------- -------- --------
2,618 2,708 1,968 2,190
-------- -------- -------- --------
Net income before income taxes 1,667 2,114 1,513 1,845
PROVISION FOR INCOME TAXES (Note 8) 547 751 535 683
-------- -------- -------- --------
Net income $ 1,120 $ 1,363 $ 978 $ 1,162
======== ======== ======== ========
EARNINGS PER SHARE, based on 421,721
shares outstanding $ 2.66 $ 3.23 $ 2.32 $ 2.76
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
SUN CAPITAL BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share amounts)
<TABLE>
<CAPTION>
Nine months ended
Years Ended December 31, September 30,
1994 1995 1995 1996
(Unaudited)
----------------------- --------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 4,552 $ 5,904 $ 4,205 $ 4,823
Fees and other income received 819 913 767 920
Interest paid (1,043) (1,910) (1,409) (1,588)
Cash paid to suppliers and employees (2,374) (2,506) (1,687) (1,856)
Income taxes paid (523) (810) (518) (625)
--------- --------- --------- --------
Net cash provided by operating
activities 1,430 1,591 1,358 1,674
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Redemption of matured securities 2,508 2,813 2,336 1,711
Purchases of securities held to
maturity (500) - - -
Net increase in loans (10,240) (10,612) (5,322) (8,652)
Recovery of loans previously written
off 25 16 - -
Purchase of bank premises and equipment (807) (968) (514) (598)
Proceeds from sales of real estate
acquired in settlement of loans 92 79 - 93
Proceeds from sale of fixed assets 5 13 - -
(Increase) decrease in other assets (100) 18 (3) (121)
--------- --------- --------- --------
Net cash used in investing
activities (9,017) (8,641) (3,503) (7,567)
--------- --------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 5,001 10,584 9,147 12,381
Increase (decrease) in other borrowed
funds 3,300 (3,700) (4,700) (1,000)
Increase (decrease) in other
liabilities 2 9 6 (29)
Dividends paid (278) (191) (84) (84)
--------- --------- --------- --------
Net cash provided by financing
activities 8,025 6,702 4,369 11,268
--------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 438 (348) 2,224 5,375
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 1,937 2,375 2,375 2,027
--------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF
PERIOD $ 2,375 $ 2,027 $ 4,599 $ 7,402
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
SUN CAPITAL BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share amounts)
(Continued)
<TABLE>
<CAPTION>
RECONCILIATION OF NET INCOME TO CASH PROVIDED BY OPERATING ACTIVITIES
Nine months ended
Years Ended December 31, September 30,
1994 1995 1995 1996
(Unaudited)
------------------------ -------------------
<S> <C> <C> <C> <C>
NET INCOME $ 1,120 $ 1,363 $ 978 $ 1,162
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY OPERATING
ACTIVITIES
Depreciation 190 197 139 149
Provision for loan losses 20 100 60 75
Loss on sale of securities 8 - - -
(Gain) loss on sale of fixed assets - (4) - 21
(Gain) loss on sale of real estate
acquired in settlement of loans - 5 - (82)
(Increase) decrease in deferred tax
asset (4) 12 (5) (55)
Increase (decrease) in interest
receivable (111) (130) (53) 11
Increase in interest payable 39 78 72 46
(Increase) decrease in prepaid taxes - (43) - -
Increase (decrease) in taxes payable 28 (28) 22 113
Amortization of securities premiums 72 64 48 74
Increase in accrued expenses 53 13 96 111
(Increase) decrease in prepaid expenses 2 (9) 1 49
Increase (decrease) in deferred fee
income 13 (19) - -
Federal Home Loan Bank stock dividend - (8) - -
--------- --------- ---------- -------
Total adjustments 310 228 380 512
--------- --------- ---------- -------
NET CASH PROVIDED BY OPERATING
ACTIVITIES $ 1,430 $ 1,591 $ 1,358 $ 1,674
========= ========= ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
SUN CAPITAL BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(In thousands, except share amounts)
<TABLE>
<CAPTION>
Unrealized
Appreciation
Common Capital (Loss) On Retained
Stock Surplus Securities Earnings
--------- --------- ------------ -----------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1993 $ 422 $ 1,592 $ 15 $ 1,763
Cash dividends, $.42 per share - - - (176)
Net change in unrealized
appreciation (loss) on
securities held for sale, net
of tax (Note 2) - - (31) -
Net income - - - 1,120
-------- --------- -------- --------
BALANCE, December 31, 1994 422 1,592 (16) 2,707
Cash dividends, $.45 per share - - - (191)
Net change in unrealized
appreciation (loss) on
securities held for sale, net
of tax (Note 2) - - (14) -
Net income - - - 1,363
-------- --------- -------- ---------
BALANCE, December 31, 1995 422 1,592 (30) 3,879
Cash dividends, $.20 per share
(Unaudited) -
- - (84)
Net change in unrealized
appreciation (loss) on
securities held for sale, net
of tax (Unaudited) - - 3 -
Net income (Unaudited) - - - 1,162
-------- --------- -------- ---------
BALANCE, September 30, 1996
(Unaudited) $ 422 $ 1,592 $ (27) $ 4,957
======== ========= ======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
SUN CAPITAL BANCORP AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated December 31, 1995 and 1994 financial statements include
the accounts of Sun Capital Bancorp (the "Company") and the accounts of its
wholly-owned subsidiary, Sun Capital Bank (the "Bank"). The financial
statements presented reflect the results of operations as if they had been
combined since inception similar to a pooling of interest. All material
intercompany balances and transactions have been eliminated in
consolidation.
Basis of Financial Statement Presentation
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles and with general practice within
the banking industry. In preparing such financial statements, management
is required to make estimates and assumptions that affect the reported
amounts of assets and liabilities as of the date of the balance sheet and
revenues and expenses for the period. Actual results could differ
significantly from those estimates. Material estimates that are
particularly susceptible to significant change relate to the determination
of the allowance for loan losses.
Unaudited Financial Information
Information as of September 30, 1996, and for the nine month periods ended
September 30, 1996 and 1995 is unaudited. In the opinion of management the
accompanying unaudited consolidated financial statements contain all
adjustments (consisting of normal recurring items) necessary to present
fairly the consolidated financial position of the Company as of September
30, 1996 and the consolidated results of operations and cash flows for the
nine months ended September 30, 1995 and 1996. The results of operations
for the unaudited periods presented are not necessarily indicative of the
results to be expected for the full year.
Investment Securities
Investment securities are classified as either available for sale or held
to maturity. Those securities available for sale are stated at fair market
value while those held to maturity are stated at cost, adjusted for
amortization of premium and accretion of discount.
Unrealized gains or losses pertaining to securities available for sale are
recorded in the stockholder's equity section on the balance sheet net of
deferred income taxes. Actual gains or losses realized on the sale of
securities are determined using the specific-identification method and
recorded in the statement of income.
Loans and Allowance for Loan Losses
Loans are stated at the amount of unpaid principal reduced by an allowance
for loan losses. Interest on loans is generally calculated by using the
simple interest method on daily balances of the principal amount
outstanding.
The allowance for loan losses is established through a provision for loan
losses charged to expense. Loans are charged against the allowance for
loan losses when management believes that the collection of the principal
is unlikely. The allowance is an amount that management believes will be
adequate to absorb possible losses on existing loans that may become
uncollectible, based on evaluations of the collectibility of loans and
prior loan loss experience. The evaluations take into consideration such
factors as changes in the nature and volume of the loan portfolio, overall
portfolio quality, review of specific problem loans, and current economic
conditions that may affect the borrower's ability to pay. Accrual of
interest is discontinued on a loan that is over 90 days past due unless the
loan is well secured and in the process of collection.
Bank Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation.
Depreciation included in the operating expenses is computed on the
straight-line and declining-balance methods over the estimated useful lives
of the related assets.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, amounts due from banks, and federal funds sold. Generally,
federal funds are sold for one to three-day periods.
Off-Balance-Sheet Financial Instruments
In the ordinary course of business the Bank has entered into off-balance-
sheet financial instruments consisting of commitments to extend credit,
commitments under credit card arrangements, commercial letters of credit
and standby letters of credit. Such financial instruments are recorded in
the financial statements when they become payable. These instruments
involve, to varying degrees, elements of credit risk in excess of the
amounts recognized in the balance sheets.
Real Estate Acquired in Settlement of Loans
Real estate acquired by foreclosure is carried at the lower of the recorded
investment in the property or its fair value. At foreclosure, the value of
the underlying loan is written down to the fair market value of the real
estate being acquired by a charge to the reserve for loan losses, if
necessary. Operating expenses of such properties, net of related income,
and gains and losses on their disposition are included in other income and
expenses.
Income Taxes
Provisions for income taxes are based on amounts reported in the statements
of income (after exclusion of non-taxable income such as interest on state
and municipal securities) and include deferred taxes on temporary
differences in the recognition of income and expense for tax and financial
statement purposes. Deferred taxes are computed on the liability method as
prescribed in SFAS No. 109, "Accounting for Income Taxes." (See Note 6.)
Earnings Per Share
Earnings per share are calculated on the basis of the weighted average
number of shares outstanding during the year.
2. INVESTMENT SECURITIES
The amortized cost and estimated market value of investments in securities
were as follows (in thousands):
<PAGE>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ----------- ---------- ---------
December 31, 1994
Securities Held to Maturity
Obligations backed by U.S.
Government agencies $ 8,227 $ 1 $ (270) $ 7,958
Obligations of states
and political sub-
divisions 3,828 34 (34) -
Other securities 2 - - 2
-------- -------- -------- --------
12,057 35 (304) 11,788
-------- -------- -------- --------
Securities Available for Sale
Mortgage-backed securities 600 2 (22) 580
-------- -------- -------- --------
600 2 (22) 580
-------- -------- -------- --------
Total $ 12,657 $ 37 $ (326) $ 12,368
======== ======== ======== ========
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------- ---------- ---------- ---------
December 31, 1995
Securities Held to Maturity
Obligations backed by U.S.
Government agencies $ 1,401 $ 1 $ (117) $ 1,285
Obligations of states and
political subdivisions 1,218 11 (3) 1,226
-------- -------- -------- --------
2,619 12 (120) 2,511
-------- -------- -------- --------
Securities Available for Sale
Obligations backed by U.S.
Government agencies 5,681 21 (76) 5,626
Obligations of states and
political subdivisions 1,321 8 - 1,329
Other securities 172 - - 172
-------- -------- -------- --------
7,124 29 (76) 7,127
-------- -------- -------- --------
Total $ 9,793 $ 41 $ (196) $ 9,638
======== ======== ======== ========
The amortized cost and estimated market value of debt securities at
December 31, 1995, by contractual maturity, are shown below (in thousands).
Expected maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without
call or prepayment penalties.
<PAGE>
Estimated
Amortized Market
Cost Value
--------- --------
Securities Held to Maturity
Due in one year or less $ 652 $ 656
Due after one year through five years 1,081 1,065
Due after five years through ten years 886 790
Due after ten years - -
-------- --------
2,619 2,511
-------- --------
Estimated
Amortized Market
Cost Value
--------- --------
Securities Available for Sale
Due in one year or less $ 160 $ 162
Due after one year through five years 1,408 1,405
Due after five years through ten years 1,536 1,520
Due after ten years 3,898 3,868
-------- --------
7,002 6,955
-------- --------
Total debt securities $ 9,621 $ 9,466
======== ========
Securities, carried at approximately $3,500,000 at December 31, 1994 and
$4,772,000 at December 31, 1995, were pledged to secure public deposits and
for other purposes required or permitted by law.
During the year ended December 31, 1995, the Bank transferred securities
classified as Held-to-Maturity to the Available-for-Sale category. This
was done as allowed by the FASB Guide to Implementation of Statement 115.
The amortized cost of the securities transferred was $6,662,305. The
unrealized loss at the time of transfer was $51,160.
In addition, certain securities classified as Available-for-Sale were
transferred to the Held-to-Maturity category. The amortized cost of the
securities transferred was $1,400,723. The unrealized loss at the time of
transfer was $116,000.
3. LOANS
Major classifications of loans are as follows (in thousands):
December 31,
1994 1995
---------------------------
Commercial $ 22,140 $ 28,826
Consumer 6,389 8,035
Mortgage 690 2,327
Construction 7,525 7,852
Credit card 551 706
-------- -------
37,295 47,746
Allowance for loan losses (498) (537)
-------- -------
Loans, net $ 36,797 $ 47,209
======== ========
Loans at December 31, 1994 and 1995 included $37,000 and $67,000 of
nonperforming loans, respectively. When a loan is over 90 days past due,
it is placed on such status by management and interest is no longer
accrued. The amount of interest income for the years ended December 31,
1994 and 1995 that was not recorded on such nonperforming loans was not
material.
During 1994 and 1995, directors, officers, and employees of the Bank,
certain entities in which they hold financial interests, and their
immediate relatives were loan customers of the Bank. These loans were made
by the Bank in the ordinary course of business at the Bank's normal credit
terms, including interest rates and collateral. Such loans included in the
loan balance at December 31, 1994 and 1995 were approximately $292,000 and
$266,000, respectively.
The Bank grants commercial and real estate loans to customers throughout
Southern Utah. Although the Bank has a diversified loan portfolio, the
ultimate collectibility of such loans is particularly susceptible to
changes in economic conditions in its primary lending area.
4. ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses were as follows (in thousands):
December 31,
1994 1995
------------------------
Balance, beginning of year $ 503 $ 498
Provision charged to operating
expenses 20 100
Loans charged off (50) (77)
Recoveries 25 16
-------- --------
Balance, end of year $ 498 $ 537
======== ========
5. BANK PREMISES AND EQUIPMENT
Major classifications of bank premises and equipment are as follows (in
thousands):
December 31,
1994 1995
-----------------------
Land $ 522 $ 749
Bank premises 563 1,149
Leasehold improvements 44 34
Furniture, fixtures and equipment 1,026 1,152
-------- ---------
2,155 3,084
Accumulated depreciation (884) (1,051)
-------- ---------
$ 1,271 $ 2,033
======== =========
Depreciation and amortization expense was $190,212 and $197,427 for 1994
and 1995, respectively.
The Bank occupies a portion of its facilities under a long-term agreement
from a partnership which includes certain directors and officers. The
agreement expires February 28, 2005.
Future aggregate minimum lease payments required under this operating lease
as of December 31, 1995, are as follows:
<PAGE>
Year Ended
1996 $ 72,960
1997 72,960
1998 72,960
1999 72,960
2000 12,160
---------
Total $ 304,000
=========
Total rental expenses for 1994 and 1995 were $67,978 and $81,201,
respectively.
6. COMMITMENTS AND CONTINGENT LIABILITIES
At December 31, 1994 and 1995, financial instruments with off-balance-sheet
risk were as follows (in thousands):
December 31,
1994 1995
-----------------------
Standby letters of credit $ 302 $ 272
Undisbursed commercial real
estate and construction loans 5,800 3,757
Credit card lines 1,619 1,808
Other loan commitments to customers 4,556 3,699
-------- --------
$ 12,277 $ 9,536
======== ========
The Bank's exposure to credit loss in the event of nonperformance by the
other party to loan commitments and standby letters of credit is
represented by the contractual amount of those instruments. The Bank uses
the same credit policies in making commitments and conditional obligations
as they do for on-balance-sheet instruments.
7. DEPOSITS
Major classifications of deposits are as follows (in thousands):
December 31,
1994 1995
-----------------------
Noninterest-bearing demand
deposit accounts $ 14,108 $ 14,665
-------- --------
NOW and money market accounts 14,582 17,868
Savings 5,356 4,463
Time certificates of deposit
less than $100,000 7,162 13,034
Time certificates of deposit
of $100,000 or more 3,106 4,877
-------- --------
30,206 40,242
-------- --------
$ 44,314 $ 54,907
======== ========
8. INCOME TAXES
The Bank adopted SFAS No. 109 "Accounting for Income Taxes" which requires
the use of the liability method of accounting for income taxes. The
adjustments to the January 1, 1993 balance sheet to adopt SFAS 109 resulted
in a net addition of $120,000. This amount is also reflected in the 1993
net income as the cumulative effect of a change in accounting principle.
Income tax expense (benefit) consisted of the following (in thousands):
December 31,
1994 1995
-----------------------
Current expense
Federal $ 476 $ 638
State 82 105
-------- --------
558 743
-------- --------
Deferred expense
Federal (10) 7
State (1) 1
-------- --------
(11) 8
-------- --------
Total $ 547 $ 751
======== ========
Deferred taxes are created when temporary differences exist between income
and expense items allowed in computing the Bank's tax returns and those
used to compute income using generally accepted accounting principles.
These temporary differences were principally related to provision for loan
losses, cash basis accounting used for tax returns, and the write-down of
Other Real Estate Owned.
The provision for federal taxes is less than that computed by applying the
federal statutory rate of 34%. The major reconciling item causing this
difference is tax exempt interest income.
As of December 31, 1995, total deferred tax assets were $217,889 (including
$17,600 related to unrealized losses on available-for-sale securities) and
total deferred tax liabilities were $110,551.
9. CAPITAL REQUIREMENTS
The Bank is required to maintain minimum amounts of capital compared to
total "risk weighted" assets, as defined by the banking regulators. At
December 31, 1995, the Bank is required to have minimum Tier 1 and Total
Capital ratios of 4.00% and 8.00%, respectively. The Bank's ratios at that
date were approximately 12.82% and 13.99%, respectively. The Bank's
leverage ratio at December 31, 1995, was approximately 11.01%.
10.MORTGAGE SERVICING RIGHTS
As of December 31, 1994 and 1995, the Bank had unamortized mortgage
servicing rights of $10,115 and $2,694, respectively. The rights are being
amortized based on the original contract terms of the mortgagor and are
adjusted for prepayments. Amortization for 1994 was $8,334 and for 1995
was $7,421.
11.FAIR VALUES OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, Disclosures about Fair
Value of Financial Instruments, requires disclosure of fair value
information about financial instruments. In cases where quoted market
prices are not available, fair values are based on estimates using present
value or other valuation techniques. Those techniques are significantly
affected by the assumptions used, including the discount rate and estimates
of future cash flows. In that regard, the derived fair value estimates
cannot be substantiated by comparison to independent markets and, in many
cases, could not be realized in immediate settlement of the instruments.
Statement No. 107 excludes certain financial instruments and all
nonfinancial instruments from its disclosure requirements. Accordingly,
the aggregate fair value amounts presented do not represent the underlying
value of the Bank.
The following methods and assumptions were used by the Bank in estimating
its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amounts reported on the balance
sheet for cash and cash equivalents approximate those assets' fair
values.
Investment securities: Fair values for investment securities are based
on quoted market prices, where available. If quoted market prices are
not available, fair values are based on quoted market prices of
comparable instruments.
Loans: For variable-rate loans that reprice frequently and with no
significant change in credit risk, fair values are based on carrying
amounts. The fair values for other loans are estimated using discounted
cash flow analysis, based on interest rates currently being offered for
loans with similar terms to borrowers of similar credit quality. Loan
fair value estimates include judgments regarding future expected loss
experience and risk characteristics.
Deposits: The carrying amount of deposits with no stated maturity, such
as demand deposits, money market accounts, and savings accounts, is
considered a reasonable estimate of fair value. The fair values for
certificates of deposit are estimated using a discounted cash flow
calculation that applies interest rates currently being offered on
certificates to a schedule of aggregated contractual maturities on such
time deposits.
A summary of the estimated fair values for the Bank as of December 31, 1995
was as follows (in thousands):
Carrying Estimated
Amount Fair Value
-------- ----------
Financial Assets
Cash and cash equivalents $ 1,915 $ 1,915
Securities held to maturity 2,791 2,683
Securities available for sale 6,955 6,955
Loans, net 47,144 47,240
--------- ---------
Total financial assets 58,805 58,793
--------- ---------
Carrying Estimated
Amount Fair Value
-------- ----------
Financial Liabilities
Total deposits, excluding certificates $ 36,760 $ 36,760
Certificates of deposit 17,912 21,218
--------- ---------
Total financial liabilities 54,672 57,978
--------- ---------
Off-Balance-Sheet Financial Instruments
Letters of credit and other
commitments to extend credit $ -0- $ 272
--------- ---------
<PAGE>
12. RECLASSIFICATIONS
Certain items for 1994 have been reclassified to conform with the 1995
presentation. Such reclassifications had no effect on net earnings or
stockholder's equity as previously reported.
<PAGE>
SUN CAPITAL BANCORP'S MANAGEMENT DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996
Summary
In 1995, Sun Capital Bancorp was incorporated, approved as a bank holding
company, and participated in a reorganization with Sun Capital Bank pursuant
to which Sun Capital Bank became a wholly owned subsidiary of Sun Capital
Bancorp. The financial statements presented reflect the results of operations
as if they had been combined since inception similar to pooling of interest.
See "FINANCIAL STATEMENTS OF SUN CAPITAL --Footnote 1."
Sun Capital Bancorp's net income for the nine months ended September 30, 1996
totaled $1,162,000, which represents an increase of 18.8% over net income for
the same period in 1995, which totaled $978,000. Increase in net income is
due to increases in earning assets as well as increases in fee income for the
period.
At September 30, 1996, Sun Capital Bancorp's total assets were $74,751,000
compared to $59,566,000 on September 30, 1995 and $62,089,000 at year end
1995. This is an increase of 20.4% for the 9 months ended September 30, 1996,
and 25.8% for the period of September 30, 1995 to September 30, 1996.
Changes in Sun Capital Bancorp's balance sheet from September 30, 1995 to
September 30, 1996, include an increase of 32.67% in loans from $42,480,000 to
$56,360,000. Funding for this increase in loans came primarily from a 22.5%
reduction in Investment Securities from $10,280,000 to $7,966,000, and a 25.8%
increase in deposits from $53,461,000 to $67,280,000.
Reserve for loan losses is evaluated quarterly using numerous methods common
in the banking industry. Management has continued to increase the reserve for
loan losses as the evaluation indicates a need. The reserve has increased
from $504,000 on September 30, 1995 to $574,000 on September 30, 1996.
Interest Income for the first nine months of 1996 increased from $4,256,000 to
$4,812,000, an increase of 13.1% as compared with the same period of 1995.
Interest Expense increased from $1,481,000 to $1,634,000 or 10.3% for this
same period. Non-interest income was $932,000 for the first nine months of
1996 as compared to $766,000 for the first nine months of 1995, an increase of
21.7%. Non-interest expense increased by 11.3% during the period, from
$1,968,000 to $2,190,000.
Income tax expense increased from $535,000 for the first nine months of 1995
to $683,000 for the first nine months of 1996.
Nine Months Ended September 30,
----------------- -------------
1996 1995
------ ------
Net Interest Income $3,178 $2,775
Provision for Loan Losses 75 60
Non-Interest Income 932 766
Non-Interest Expense 2,190 1,968
Provision for Income Taxes 683 535
Net Income 1,162 978
Nonperforming assets, which consist of non-accrual loans and accruing loans 90
days or more past due, totaled $30,000 at September 30, 1995 and $63,000 at
September 30, 1996.
<PAGE>
Nine Months Ended September 30,
----------------- -------------
1996 1995
----------- -----------
Total Loans $56,360,000 $42,480,000
Non-accrual Loans 35,000 -0-
Loans 90 days past due 28,000 25,000
Allowance for Loan Losses 574,000 504,000
Allowance as a Percent of
Total Loans 1.02% 1.19%
SUN CAPITAL BANCORP'S MANAGEMENT DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS FOR THE
THREE YEARS ENDED DECEMBER 31, 1995
The following discussion of Sun Capital Bancorp's financial condition and
results of operations should be read in conjunction with the financial
statements and notes included in to this Prospectus/Proxy Statement.
Summary
In 1995, Sun Capital Bancorp was incorporated, approved as a bank holding
company, and participated in a reorganization with Sun Capital Bank pursuant
to which Sun Capital Bank became a wholly owned subsidiary of Sun Capital
Bancorp. The financial statements presented reflect the results of operations
as if they had been combined since inception similar to pooling of interest.
See "FINANCIAL STATEMENTS OF SUN CAPITAL--Footnote 1."
At December 31, 1995, Sun Capital Bancorp's total assets were $62,089,000
compared to $54,003,000 at December 31, 1994. Net loans increased from
$37,294,000 at December 31, 1994 to $47,746,000 at December 31, 1995.
Total deposits at December 31, 1995 were $54,898,000 compared to $44,314,000
at December 31, 1994.
Net income increased $243,000 in 1995, from $1,120,000 to $1,363,000. The
following table summarizes Sun Capital Bancorp's significant income and
expense categories (in thousands):
Year Ended December 31,
--------------------------------
1995 1994 1993
------ ------ ------
Net Interest Income $3,983 $3,508 $2,235
Provision for Loan Losses 100 20 4
Non-Interest Income 939 797 782
Non-Interest Expense 2,708 2,618 2,123
Provision for Income Taxes 751 547 281
Net Income 1,363 1,120 729
Results of Operations
Sun Capital Bancorp generated a net income during 1995 of $1,363,000 as a
result of increases in both net interest income and non-interest income.
Net interest income increased 13.5% to $3,983,000 in 1995 after increasing
51.3% in 1994. Interest income of $5,801,000 in 1995 represented an increase
of $1,341,000 over 1994, after increasing 48.1% from 1993 to 1994. Interest
expense increased 83.7% to $1,988,000 in 1995 after increasing 38.9% in 1994.
Non-interest income increased $142,000 or 19.3% in 1995 with an increase of
$56,000 or 7.6% in 1994. Non-interest expense increased $90,000 or 3.4% in
1995, compared with an increase of $478,000 or 22.3% in 1994.
Net Interest Income
Net interest income, the most significant component of earnings, represents
the difference between the interest earned on loan and investment portfolios
and loan fees, and the interest paid on interest-bearing deposits and
borrowings. This interest spread can be affected by economic factors
influencing general interest rates, loan demand, and deposit flows, as well as
the effects of competition for deposits and loans. Nonpayment of loans by
customers and the perceived creditworthiness of a customer can also affect the
interest spread.
Sun Capital Bancorp's net interest income increased from $2,235,000 in 1993 to
$3,508,000 in 1994 and $3,983,000 in 1995. This growth in net interest income
is due primarily to expansion in the loan portfolio and control of interest
rates paid on deposit liabilities.
Net interest income is determined primarily by net interest spread and the
average balance of earning assets and interest-bearing liabilities. Sun
Capital Bancorp's net interest spread was 6.26% in 1993, increasing to 7.06%
in 1994 and decreasing to 6.61% in 1995.
Interest and fees on loans increased $1,459,000 to $5,203,000 in 1995 after
increasing $1,370,000 to $3,744,000 in 1994. While loans outstanding
increased from $27,106,000 in 1993 to $37,295,000 in 1994 and to $47,746,000
in 1995, interest income, expressed as a percent of total assets, increased to
9.62% in 1995 from 8.5% in 1994, and 8.36% in 1993.
Interest expense increased $906,000 in 1995, after increasing $303,000 in
1994. As the volume of interest paying liabilities increased during each
year, the average interest rate paid increased from 2.1% in 1993 to 2.2% in
1994 and to 3.38% in 1995.
An analysis of net interest income is shown in the following table (in
thousands):
<PAGE>
<TABLE>
<CAPTION>
Analysis of Net Interest Income
Year Ended December 31
1995 1994 1993
----------------------- ------------------------ ------------------------
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost Balance Expense Cost
----------------------- ------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans $40,848 $5,033 12.3 $29,603 $3,614 12.2 $19,898 $2,244 11.3
Investments 11,535 719 6.2 14,111 794 5.6 11,357 714 6.3
Fed Funds Sold 655 49 7.5 960 52 5.4 1,914 53 2.8
Total Earning Assets 53,038 5,801 10.9 44,674 4,460 10.0 33,169 3,011 9.1
NOW 8,889 357 4.0 8,911 286 3.2 7,012 207 3.0
MMDA 7,602 384 5.0 7,666 248 3.2 6,156 196 3.2
Savings 4,977 143 2.9 5,625 170 3.0 4,016 124 3.1
Time Deposits of $100 4,073 297 7.3 1,663 82 4.9 851 36 4.2
Other Time Deposits 10,777 710 6.6 5,659 229 4.0 5,509 216 3.9
Borrowed Funds 1,844 97 5.2 1,103 67 6.1 277 -0- n/a
Total Int-Bearing 38,162 1,988 5.2 30,627 1,082 3.5 23,821 779 3.3
Liabilities
NET INTEREST INCOME $3,813 $3,378 $2,232
NET INTEREST $5.73 $6.45 $5.81
INTEREST EXPENSE/
INTEREST-BEARING LIAB. 5.21 3.53 3.27
NET INTEREST INCOME/
EARNING ASSETS 10.94 9.98 9.08
</TABLE>
<PAGE>
Non-Interest Income
Non-interest income increased 19.3% or $142,000 in 1995 after increasing 7.6%
or $56,000 in 1994. Non-interest income is comprised of Service Charges on
Deposit Accounts and other similar fee based income items. Service Charges on
Deposit Accounts was 28.2% of total non-interest income during 1995, 29%
during 1994 and 28.6% during 1993.
Non-Interest Expense
In 1995, non-interest expense increased $90,000 or 3.4% over 1994, compared to
an increase in 1994 of $478,000 or 22.3% over 1993. Full-time equivalent
employees increased from an average of 39 in 1993 to 41 in 1994 and 42 in
1995. Considerable efforts have been made during the past two years to
control growth in non-interest expense and the efforts have been rewarded with
assets growing at a rate of 14.9% during 1995 and 20.7% during 1994 while non-
interest expense grew at only 3.4% during 1995 and 22.3% during 1994. The
major components of non-interest expense are as follows (dollars in
thousands):
Year Ended December 31,
Percentage Change
1995 1994 1993 1995/1994 1994/1993
------ ------ ------ --------- --------
Salaries and Employee
Benefits $1,590 $1,487 $1,158 6.9% 28.4%
Occupancy 409 427 305 -4.4% 40.0%
Other Non-Interest Expenses 709 704 677 .7% 4.0%
Total Non-Interest Expenses 2,708 2,618 2,140 3.4% 22.3%
Reserve for Loan Losses
Sun Capital Bancorp maintains its reserve for loan losses at a level
that its Board of Directors believes is adequate to provide for potential
losses in its portfolio. The adequacy is analyzed and calculated by
management on a quarterly basis and is presented to the Board of Directors for
discussion and approval.
Sun Capital Bancorp calculates the reserve requirements using four methods of
evaluation. These methods include: 1. An analysis of "Historical Losses" in
Sun Capital Bancorp's loan portfolio; 2. A peer group comparison of the ratio
of reserves to total loans and to non-accrual loans; 3. An estimate of Sun
Capital Bancorp's loss exposure based on internal classifications of loans;
4. Sun Capital Bancorp grades each loan and assigns a percentage of potential
loss to each grade, ranging from .10% to 100%, adjusts for economic and
industry trends, etc.
All four of these methods are evaluated by management and by the Board of
Directors and a decision is made each quarter as to the level of the reserve.
Following this decision a transfer is made from current earnings to the
Reserve for Loan Losses to bring the reserve up to the required level.
<PAGE>
The following table summarizes changes in the loan loss reserve (in
thousands):
Year Ended December 31,
-----------------------
1995 1994 1993
---- ---- ----
Beginning Loan Loss Reserve $498 $503 $510
Provision for Loan Losses 100 20 4
Loans Charged Off 77 50 28
Loans Recovered 16 25 17
Ending Loan Loss Reserve 537 498 503
Reserve as a percent of
Total Loans 1.12% 1.33% 1.84%
Net Charge-offs as a percent
of Total Loans .12% .07% .04%
Investments
Investments decreased $2,133,000 or 14.4% from December 31, 1993 to
December 31, 1994, and decreased $2,864,000 or 22.8% from December 31, 1994 to
December 31, 1995. These changes were made as needed to maintain adequate
liquidity and to fund loan demand. This resulted in shifts to higher earning
assets which have had a positive effect on the income of Sun Capital Bancorp.
As of December 31, 1995 52.8% of the investment portfolio was in SBA Loan
Pools, fully guaranteed by the U.S. Government and carrying a floating rate of
interest to help match repricing horizons in the Sun Capital Bancorp's
asset/liability management procedures. The following tables show Sun Capital
Bancorp's investment portfolio at December 31, 1995, 1994 and 1993.
December 31, 1995 Book Value at December 31,
Book Market 1995 1994 1993
------ ------ ------ ------- ------
U.S. Agency Securities $6,570 $6,394 $6,570 $ 8,227 $ 9,560
Mortgage Backed Securities 512 517 512 580 850
Municipal Securities
General Obligation 1,608 1,620 1,608 2,110 2,689
Revenue Obligations 931 935 931 1,718 1,669
Other Securities 172 172 172 2 2
Total Investment Securities 9,793 9,638 9,793 12,657 14,770
December 31, 1995
Repricing Frequency
3 Mos. 3-12 1 Year- Over
Or Less Mos. 5 Years 5 Yrs Total
------- ------ ------ ---- ------
Fixed Rate Securities $ 185 $ 629 $2,033 $519 $3,366
Floating Rate Securities 5,409 800 -0- -0- 6,209
Other Securities 172 -0- -0- -0- 172
Total 5,766 1,429 2,033 519 9,747
Repricing Frequency includes the effect of net unrealized holding gains or
losses on available for sale securities.
Asset and Liability Management
The difference between the amount of interest-rate sensitive assets and
interest-rate sensitive liabilities in each time horizon is referred to as the
interest rate sensitivity or "GAP" for any given time period. This
measurement is sometimes used as an indicator of risk of changes in interest
margins due to changes in interest rates. The greater the difference between
the volume of interest-bearing assets that are repricing during a period and
the volume of interest-bearing liabilities that are repricing during the same
period the greater the effect each change on interest rates will have on Sun
Capital Bancorp's net interest margin.
Volatile interest rates have made the management of the interest rate risk of
all assets and liabilities very important to Sun Capital Bancorp. Sun Capital
Bancorp has a Funds Management Policy which specifies the types of
Asset/Liability Management procedures to be followed by management. These
procedures include "GAP" Management as well as other measurements and plans
deemed to be important to Sun Capital Bancorp. Sun Capital Bancorp tries to
keep asset and liability repricing opportunities fairly well matched to avoid
the risks associated with swings in interest rates. The following chart lists
Sun Capital Bancorp's estimated repricing opportunities for both Assets and
Liabilities and the estimated "GAPS" in each time horizon. Because only
current information is of value the chart uses September 30, 1996 calculations
instead of December 31, 1995 data (in thousands):
September 30, 1996
Repricing Periods for Assets/Liabilities
0-3 4-12 1-3
Months Months Months Other Total
------- ------- ------- ------- -------
Investments $ 4,695 $ 1,140 $ 693 $ 1,438 $ 7,966
Loans 45,892 2,163 3,384 4,347 55,786
Fed Funds Sold 3,600 3,600
Other Assets 7,399 7,399
Total Assets 50,587 3,303 4,077 16,784 74,751
Non Interest-Bearing
Deposits 18,023 18,023
Interest-Bearing
Deposits 32,639 14,071 2,294 253 49,257
Other Liabilities 527 527
Capital 6,944 6,944
Total Liab. & Cap. 32,639 14,071 2,294 25,747 74,751
GAP 17,948 (10,768) 1,783 (8,963)
Cum GAP 17,948 7,180 8,963
Cum % GAP 35.5% 13.3% 15.5%
Liquidity and Capital Resources
Maintaining liquidity at adequate levels is an essential element of proper
funds management for financial institutions. Sun Capital Bancorp has a
complete Liquidity Management Policy which defines how Sun Capital Bancorp's
liquidity will be measured and the sources of funds to be used to solve any
potential liquidity problem. Sun Capital Bancorp endeavors to manage its
assets and liabilities to provide sufficient liquidity to meet deposit
withdrawal and loan demands of its customers. Sun Capital Bancorp's base of
deposits is quite stable and loans usually represent less than 80% of total
assets. Overnight Federal Funds have provided an important part of Sun
Capital Bancorp's liquidity.
Sun Capital Bancorp has a stable capital base with a ratio as of December 31,
1995 of 9.43%, December 31, 1994 this ratio was 8.7%, and in 1993 it was 8.5%.
Bank regulatory agencies adopted risk-based capital guidelines effective
December 31, 1991. These guidelines address the difference in risk profiles
of assets and consider off-balance sheet exposure in assessing capital
adequacy. Sun Capital Bancorp has maintained risk-based capital ratios above
the regulatory minimum guidelines at all times since the regulation became
effective.
Loans
Various national and regional economic conditions affect the volume and credit
quality of loans and investments at Sun Capital Bancorp. In view of changing
conditions in the markets, federal deficits, legislative changes, and the
effect of actions by the monetary and fiscal authorities, no prediction can be
made as to possible future changes in interest rates, deposit levels, or loan
demands at Sun Capital Bancorp. These factors will also affect the earnings
potential of Sun Capital Bancorp.
Sun Capital Bancorp's loan portfolio as of December 31, 1995 totaled
$47,746,000 which was 76.9% of Sun Capital Bancorp's total assets. Total
loans on December 31, 1994 and 1993 were $37,294,000 and $27,103,000
respectively. The composition of Sun Capital Bancorp's loan portfolio on
these dates was as follows:
December 31,
1995 1994 1993
----------- ------------- -----------
Real Estate:
Construction & Land Dev. $ 9,349,000 $ 8,307,000 $ 6,511,000
Secured by Farmland 49,000 457,000 315,000
Secured by 1-4 Family Residential 12,181,000 10,186,000 6,459,000
Secured by multifamily Residential 737,000 735,000 825,000
Secured by other Real Estate 9,145,000 5,904,000 3,211,000
Commercial & Industrial Loans 9,810,000 7,396,000 6,048,000
Credit Card Loans 1,643,000 789,000 389,000
Consumer Loans 4,700,000 3,393,000 3,246,000
Other Loans 42,000 127,000 99,000
TOTAL 47,746,000 37,294,000 27,103,000
In the normal course of business, Sun Capital Bancorp enters into financial
instruments which, while not included as part of Sun Capital Bancorp's balance
sheet, subject Sun Capital Bancorp to some risk of disbursing funds at a
future date. These instruments include commitments to extend credit and
stand-by letters of credit. These instruments have fixed expiration dates and
do not necessarily represent future cash requirements since they often expire
without being drawn upon. These commitments are summarized in the following
table (in thousands):
December 31,
1995 1994 1993
------ ------- ------
Loan Commitments $9,264 $12,277 $7,523
Letters of Credit 272 341 348
Many of the Sun Capital Bancorp's commercial loans are loans to small
businesses or are secured with small business properties. Sun Capital Bancorp
does not have any concentrations of loans or commitments with any industry or
geographic areas experiencing unusual financial difficulty.
Nonperforming Assets
Nonperforming assets, which consist of non-accrual loans and accruing loans 90
days or more past due totaled $74,000 at December 31, 1995, $72,000 at
December 31, 1994, and $81,000 at December 31, 1993.
Deposits
Total deposits increased 23.8% to $54,907 at December 31, 1995, compared to a
12.8% increase at December 31, 1994. It is the policy of Sun Capital Bancorp
to not accept "brokered" deposits and Sun Capital Bancorp does not actively
solicit deposits from out-of-state entities. The following table shows
deposits at December 31, 1995 and 1994 (in thousands):
Year Ended December 31,
1995 1994
------- -------
Non-Interest Bearing $14,656 $14,108
Interest-Bearing 40,242 30,206
TOTAL 54,898 44,314
The bulk of Sun Capital Bancorp's deposit growth in the past year has been in
interest-bearing deposits. These include Now Accounts, Money Market Accounts
and Certificates of Deposit. Of these deposits the Certificates of Deposit
are most sensitive to changes in interest rates, but Money Market Accounts are
becoming more volatile as well.
Income Taxes
Income Taxes for December 31, 1995 were $751,000 while they were $547,000 and
$281,000 for December 31, 1994 and 1993, respectively.
Return on Equity and Assets
Sun Capital Bancorp has shown excellent earnings during the past three years,
and has been ranked in the top 100 Large Community Banks in the nation for
1994 and 1995. The following table shows Sun Capital Bancorp's return on
average assets, return on average equity and various other ratios over the
past three years.
Year Ended December 31,
1995 1994 1993
----- ----- -----
Return on Average Assets 2.35% 2.27% 1.96%
Return on Average Equity 26.01% 26.31% 21.86%
Cash Dividends Declared
(Per Share) $.51 $.42 $.43
Equity to Asset Ratio 9.43% 8.71% 8.47%
Impact of Inflation and Changing Prices
Virtually all of the assets and liabilities of a financial institution are
monetary in nature and, as a result, interest rates generally have a more
significant impact on a financial institution's performance than does
inflation. However, inflation does affect Sun Capital Bank's operating
expenses. The effects of inflation on premises and equipment, and non-
interest expenses during 1993, 1994 and 1995 have not been significant.
<PAGE>
Appendix 1
==============================================================================
AGREEMENT AND PLAN OF MERGER
between
U. S. BANCORP
and
SUN CAPITAL BANCORP
==============================================================================
Dated as of September 24, 1996
<PAGE>
TABLE OF CONTENTS
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 Sun Capital Common Stock . . . . . . . . . . . . . . . .1
1.5 Bancorp Common Stock; Bancorp Preferred Stock. . . . . . . . . . . . .2
1.6 Articles of Incorporation. . . . . . . . . . . . . . . . . . . . . . .2
1.7 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.8 Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.9 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . .3
ARTICLE II
EXCHANGE OF SHARES
2.1 Bancorp to Make Shares Available . . . . . . . . . . . . . . . . . . .3
2.2 Exchange of Shares . . . . . . . . . . . . . . . . . . . . . . . . . .3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SUN CAPITAL
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.8 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . .7
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 . . . . . . . . . . . . . . . . . . . 10
3.14 Certain Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.15 Agreements with Regulatory Agencies. . . . . . . . . . . . . . . . . 11
3.16 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . 12
3.17 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCORP
4.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3 Authority; No Violation. . . . . . . . . . . . . . . . . . . . . . . 13
4.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . 14
4.5 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 14
4.7 Brokers' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.8 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . 15
4.9 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.10 Taxes and Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . 16
4.11 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.12 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.13 Compliance with Applicable Law . . . . . . . . . . . . . . . . . . . 18
4.14 Certain Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.15 Agreements with Regulatory Agencies. . . . . . . . . . . . . . . . . 19
4.16 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . 19
<PAGE>
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Sun Capital Businesses Prior to the Effective Time. . . . 19
5.2 Sun Capital Forbearances . . . . . . . . . . . . . . . . . . . . . . 19
5.3 Bancorp Forbearances . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 Access to Information. . . . . . . . . . . . . . . . . . . . . . . . 22
6.3 Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . 23
6.4 Legal Conditions to Merger . . . . . . . . . . . . . . . . . . . . . 23
6.5 Exchange Listing of Shares . . . . . . . . . . . . . . . . . . . . . 23
6.6 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 23
6.7 Indemnification; Directors' and Officers' Insurance. . . . . . . . . 24
6.8 Additional Agreements. . . . . . . . . . . . . . . . . . . . . . . . 25
6.9 Advice of Changes. . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.10 Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.11 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . 26
(a) Shareholder Approval . . . . . . . . . . . . . . . . . . . . . 26
(b) NASDAQ Listing . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Other Approvals. . . . . . . . . . . . . . . . . . . . . . . . 27
(d) No Injunctions or Restraints; Illegality . . . . . . . . . . . 27
(e Federal Tax Opinions . . . . . . . . . . . . . . . . . . . . . 27
7.2 Conditions to Obligations of Bancorp . . . . . . . . . . . . . . . . 27
(a) Representations and Warranties . . . . . . . . . . . . . . . . 27
(b) Performance of Obligations of Sun Capital. . . . . . . . . . . 28
7.3 Conditions to Obligations of Sun Capital . . . . . . . . . . . . . . 28
(a) Representations and Warranties . . . . . . . . . . . . . . . . 28
(b) Performance of Obligations of Bancorp. . . . . . . . . . . . . 28
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . 29
8.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.4 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.2 Nonsurvival of Representations, Warranties, and Agreements . . . . . 29
9.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.5 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.10 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.11 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 24, 1996, by and
between U. S. BANCORP, an Oregon corporation ("Bancorp"), and SUN CAPITAL
BANCORP, a Utah corporation ("Sun Capital").
WHEREAS the Boards of Directors of Bancorp and Sun Capital 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 Sun
Capital 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.
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, Sun Capital shall merge with and into Bancorp at the Effective Time
(as defined in section 1.2 hereof). 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 Sun Capital 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
Articles of merger (the "Utah Articles of Merger") which shall be filed with
the Utah Division of Corporations and Commercial Code (the "Utah Division of
Corporations and Commercial Code"), in each case, on the Closing Date (as
defined herein). The date and time when the Merger becomes effective, as set
forth in the Articles of Merger and the Utah Articles of Merger, is herein
referred to as the "Effective Time."
1.3 Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects as set forth under the laws of the states of
Oregon and Utah.
1.4 Conversion of Sun Capital 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, Sun Capital or the holder of any share of the
common stock, par value $1.00 per share, of Sun Capital ("Sun Capital Common
Stock"), each share of Sun Capital Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares of Sun Capital
Common Stock held (x) in Sun Capital's treasury or (y) directly or indirectly
by Bancorp or Sun Capital or any of their respective Subsidiaries (as defined
below) (except for Trust Account Shares and DPC Shares, as such terms are
defined below)) shall be converted into the right to receive .95 shares (the
"Exchange Ratio") of common stock, $5.00 par value per share, of Bancorp
("Bancorp Common Stock"). As used in this Agreement, the words "Subsidiary" or
"Subsidiaries" 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.
All of the shares of Sun Capital 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 "Sun Capital Certificate") previously
representing any such shares of Sun Capital 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 Sun Capital Common Stock represented by such
Sun Capital Certificate have been converted pursuant to this section 1.4 and
section 2.2(e) hereof. Sun Capital Certificates previously representing
shares of Sun Capital 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
Sun Capital 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 Sun Capital Common Stock that are
owned by Sun Capital as treasury stock and all shares of Sun Capital Common
Stock that are owned directly or indirectly by Bancorp or Sun Capital or any
of their respective Subsidiaries (other than shares of Sun Capital 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 Sun Capital,
as the case may be, being referred to herein as "Trust Account Shares") and
other than any shares of Sun Capital Common Stock held by Bancorp or Sun
Capital or any of their respective Subsidiaries in respect of a debt
previously contracted (any such shares of Sun Capital Common Stock, and shares
of Bancorp Common Stock that are similarly held, whether held directly or
indirectly by Bancorp or Sun Capital 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 Sun
Capital or its Subsidiary (other than Trust Account Shares and DPC Shares)
shall become authorized but unissued stock of Bancorp.
For the purposes of this section, DPC Stock or stock acquired in
connection with a debt previously contracted shall mean stock acquired or
obtained prior to the Effective Time in settlement or resolution of a debt
dispute.
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. For the purposes of this
agreement, "debt previously contracted" with respect to stock shall be stock
acquired in settlement or resolution of a dispute in connection with a debt
arising prior to the date of this Agreement.
1.6 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.
1.7 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.
1.8 Tax Consequences. It is intended that the Merger shall constitute
a reorganization within the meaning of section 368(a) of the Code and that
this Agreement shall constitute a "plan of reorganization" for the purposes of
section 368 of the Code.
1.9 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 Sun Capital
(which may be a Subsidiary of Bancorp) (the "Exchange Agent"), for the benefit
of the holders of Sun Capital 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 Sun Capital 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 Sun Capital or its transfer agent of a list of shareholders of record of
Sun Capital as of the Effective Time, the Exchange Agent shall mail to each
holder of record of a Sun Capital 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 Sun
Capital Certificates to the Exchange Agent) and instructions for use in
effecting the surrender of Sun Capital Certificates (or certificate of Sun
Capital Subsidiary not heretofore tendered in exchange for Sun Capital
Certificates in accordance with the Sun Capital organization in 1995) 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 Sun
Capital Common Stock represented by such Sun Capital Certificate or
Certificates shall have been converted pursuant to this Agreement. Upon
proper surrender of a Sun Capital Certificate for exchange and cancellation to
the Exchange Agent, together with such properly completed letter of
transmittal, duly executed, the holder of such Sun Capital 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 Sun Capital Common Stock theretofore represented by the Sun
Capital 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 Sun Capital Certificate surrendered pursuant to the
provisions of this Article II, and the Sun Capital 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 Sun Capital Certificates. The procedural exchange of
shares of Sun Capital Stock for Bancorp Common Stock shall be at no expense to
the holders of Sun Capital Certificates.
(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 Sun Capital Certificate until the holder thereof shall surrender
such Sun Capital Certificate in accordance with this Article II. After the
surrender of a Sun Capital 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 Sun
Capital Certificate.
(c) If any certificate representing shares of Bancorp Common Stock is
to be issued in a name other than that in which the Sun Capital Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof that the Sun Capital Certificate so surrendered shall be
properly endorsed (or accompanied by an appropriate instrument of transfer)
and otherwise in proper form for transfer and that the person requesting such
exchange shall pay to the Exchange Agent in advance any transfer or other
taxes required by reason of the issuance of a certificate representing shares
of Bancorp Common Stock in any name other than that of the registered holder
of the Sun Capital 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 Sun Capital of the shares of Sun Capital Common Stock that
were issued and outstanding immediately prior to the Effective Time. If,
after the Effective Time, Sun Capital 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 Sun Capital 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 Sun Capital. In lieu of the issuance of any such
fractional share, Bancorp shall pay to each former shareholder of Sun Capital
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 Sun Capital for twelve months after the Effective Time shall
be paid to Bancorp. Any shareholders of Sun Capital 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 Sun Capital Common Stock that such
shareholder is entitled to receive pursuant to this Agreement, without any
interest thereon. Notwithstanding the foregoing, none of Bancorp, Sun
Capital, the Exchange Agent or any other person shall be liable to any former
holder of shares of Sun Capital Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(g) In the event any Sun Capital Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Sun Capital 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 Sun Capital
Certificate, the Exchange Agent will issue in exchange for such lost, stolen
or destroyed Sun Capital 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 SUN CAPITAL
Except as set forth in the disclosure schedule of Sun Capital delivered
to Bancorp concurrently herewith (the "Sun Capital Disclosure Schedule"), Sun
Capital hereby represents and warrants to Bancorp as follows:
3.1 Corporate Organization. (a) Sun Capital is a corporation duly
organized and validly existing under the laws of the state of Utah. Sun
Capital 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. Sun Capital 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, the Articles of
Incorporation, and Bylaws of Sun Capital, 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) Sun Capital's only subsidiary is Sun Capital Bank, a nonmember
commercial bank organized under the laws of the state of Utah. Sun Capital
has not organized any other Subsidiary or owned the shares of any corporation
or entity other than Sun Capital Bank. Sun Capital Bank has not organized any
subsidiary and has not owned the shares of any corporation or entity. Sun
Capital has previously delivered to Bancorp a schedule listing each Sun
Capital Subsidiary and setting forth for each such Sun Capital 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 Sun Capital 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 Sun
Capital, 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 Sun Capital accurately reflect in all material
respects all corporate actions since March 22, 1995, of its shareholders and
Board of Directors (including committees of the Board of Directors of Sun
Capital). The minute books of the Sun Capital Subsidiary 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 Subsidiary).
3.2 Capitalization. (a) The authorized capital stock of Sun Capital
consists of 10,000,000 shares of Sun Capital Common Stock, $1.00 par value per
share. At the close of business on August 30, 1996, there were 421,721 shares
of Sun Capital Common Stock outstanding. On August 30, 1996, no shares of Sun
Capital Common Stock were reserved for issuance. All of the issued and
outstanding shares of Sun Capital 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. Sun Capital
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 Sun Capital Common Stock or any other
equity securities of Sun Capital or any securities representing the right to
purchase or otherwise receive any shares of Sun Capital Common Stock or Sun
Capital preferred stock.
(b) The Board of Directors of Sun Capital has not: (i) designated in
whole or in part, any preferences, limitations, or relative rights, of any
class of issued or to-be-issued shares of Sun Capital; or (ii) created one or
more series within a class of shares. The only class of authorized shares of
Sun Capital is the Common Stock of Sun Capital.
(c) Sun Capital owns directly all of the issued and outstanding shares
of capital stock of each of the Sun Capital Subsidiary, 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. The Sun Capital Subsidiary has no or 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 capital stock or any other equity security of the
Subsidiary or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of the
Subsidiary. At the Effective Time, there will not be any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character by which Sun Capital or its Subsidiary will be bound calling for the
purchase or issuance of any shares of the capital stock of Sun Capital or any
of its Subsidiary.
3.3 Authority; No Violation. (a) Sun Capital 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 Sun Capital. The
Board of Directors of Sun Capital has directed that this Agreement and the
transactions contemplated hereby be submitted to Sun Capital'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 Sun Capital Common Stock, no other corporate proceedings
on the part of Sun Capital are necessary to approve this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Sun Capital and (assuming due
authorization, execution and delivery by Bancorp) constitutes a valid and
binding obligation of Sun Capital, enforceable against Sun Capital 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 Sun
Capital nor the consummation by Sun Capital of the transactions contemplated
hereby, nor compliance by Sun Capital with any of the terms or provisions
hereof, will (i) violate any provision of the Certificate of Incorporation or
Bylaws of Sun Capital 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 Sun Capital or its Subsidiary 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 Sun Capital or its Subsidiary 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 Sun Capital or its Subsidiary is a party, or by which they
or any of their respective properties or assets may be bound or affected.
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 Federal Deposit Insurance Corporation (the
"FDIC") in connection with the merger of the Subsidiary of Sun Capital into a
Subsidiary of Bancorp, (iii) the filing of any required applications or
notices with any state bank regulatory agencies (the "State Approvals"), (iv)
any filings required under applicable state or federal securities, (v) the
filing of the Articles of Merger with the Oregon Secretary of State, (vi) the
filing of the Utah Articles of Merger with the Utah Division of Corporations
and Commercial Code, (vii) the approval of this Agreement by the requisite
vote of the shareholders of Sun Capital, and (viii) the consents and approvals
set forth in Sun Capital 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 Sun Capital of this Agreement and (B) the
consummation by Sun Capital of the Merger and the other transactions
contemplated hereby.
3.5 Reports. Sun Capital 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) any state regulatory authority (each a "State Regulator), (iii) the FDIC,
and (iv) any other such 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 Sun Capital and its Subsidiary, no Regulatory Agency has initiated
any proceeding or, to the best knowledge of Sun Capital, investigation into
the business or operations of Sun Capital or its Subsidiary 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 Sun Capital or its Subsidiary.
3.6 Financial Statements. Sun Capital has previously delivered to
Bancorp copies of (a) the consolidated balance sheets of Sun Capital as of
December 31, for fiscal 1995, and the related consolidated statements of
income, changes in shareholders' equity and cash flows for the fiscal year
1995 as reported in Sun Capital's Annual Reports to shareholders accompanied
by the audit report of Sun Capital's independent public accountants, with
respect to Sun Capital, (b) the balance sheets of the Sun Capital Subsidiary
as of December 31, for the fiscal year 1994, and the related statement of
income, changes in shareholders' equity and cash flows for the fiscal years
1993 through 1994, as reported in the Subsidiary's Annual Reports to
shareholders accompanied by the audit report of the Subsidiary's independent
public accountants, with respect to the Subsidiary, and (c) the unaudited
consolidated balance sheets of Sun Capital and its Subsidiary as of June 30,
1996, and June 30, 1995, and the related unaudited consolidated statements of
income, cash flows and changes in shareholders' equity for the three month
periods then ended. The financial statements referred to in this section 3.6
(including the related notes, where applicable) fairly present (subject, in
the case of the unaudited statements, to recurring audit adjustments normal in
nature and amount), the results of the consolidated operations and changes in
shareholders' equity and consolidated financial position of Sun Capital and
its Subsidiary for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) have 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. 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 Sun Capital and its Subsidiary 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 Sun Capital
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 Sun
Capital and its Subsidiary, 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 Sun Capital and its Subsidiary
have been, and are being, maintained in all material respects in accordance
with GAAP and any other applicable legal and accounting requirements.
3.7 Broker's Fees. Neither Sun Capital nor any Sun Capital 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.
3.8 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in Sun Capital Reports (as defined below) filed prior to the date
hereof, since December 31, 1995, (i) neither Sun Capital nor its Subsidiary
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 Sun Capital.
(b) Except as publicly disclosed in Sun Capital Reports filed prior to
the date hereof, since December 31, 1995, Sun Capital and its Subsidiary have
carried on their respective businesses in the ordinary and usual course
consistent with their past practices.
(c) Since January 1, 1996, neither Sun Capital nor its Subsidiary 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, 1996, 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 Sun Capital.
3.9 Legal Proceedings. (a) Except as publicly disclosed in Sun
Capital Reports filed prior to the date hereof, neither Sun Capital nor its
Subsidiary is a party to any, and there are no pending or, to the best of Sun
Capital's knowledge, threatened, material legal, administrative, arbitral or
other proceedings, claims, actions or governmental or regulatory
investigations of any nature (i) against Sun Capital or its Subsidiary 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 Sun Capital 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 Sun Capital, its Subsidiary or the assets of Sun
Capital or its Subsidiary that has had, or might reasonably be expected to
have, a material adverse effect on Sun Capital.
3.10 Taxes and Tax Returns. (a) Each of Sun Capital and its
Subsidiaries has duly filed all federal, state and, to the best of Sun
Capital's knowledge, material local returns (including, without limitation,
estimated tax returns, income tax returns, franchise tax returns, information
returns, and withholding/employment 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 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 Sun
Capital 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 up to and including 1995, and no material deficiencies were
asserted as a result of such examination or all such deficiencies were
satisfied. To the best of Sun Capital's knowledge, there are no material
disputes pending, or claims asserted, for Taxes or assessments upon Sun
Capital or its Subsidiary, nor has Sun Capital or its Subsidiary 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 Sun Capital and its Subsidiaries from their employees for all
periods in compliance in all respects with the tax withholding provisions of
applicable federal, state and local laws, (ii) federal, state, county and
local returns that are accurate and complete in all material respects have
been filed by Sun Capital and its Subsidiaries for all periods for which
returns were due with respect to income tax withholding, Social Security and
unemployment taxes, (iii) the amounts shown on all federal, state, local or
county returns to be due and payable have been paid in full or adequate
provision therefor has been included by Sun Capital in its consolidated
financial statements as of December 31, 1995, and (iv) there are no tax liens
upon any property or assets of the Sun Capital or its Subsidiaries except
liens for current taxes not yet due. To the knowledge of Sun Capital, no
property of Sun Capital or its Subsidiary is property that Sun Capital or its
Subsidiary 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 Sun
Capital nor its Subsidiary 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 Sun Capital or its Subsidiary, 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 Sun Capital nor its Subsidiary has
entered into a transaction which is being accounted for as an installment
obligation under section 453 of the Code.
(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 Sun Capital 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 Sun
Capital 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 Sun Capital or the
Subsidiary of Sun Capital under any contract, plan, program, arrangement or
understanding is reasonably likely.
3.11 Employees. (a) The Sun Capital 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 "Sun Capital Benefit Plans") by Sun Capital or its Subsidiary
or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), all of which together with Sun Capital 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) Sun Capital has heretofore delivered to Bancorp true and complete
copies of each of the Sun Capital Benefit Plans and all related documents,
including but not limited to (i) the actuarial report for such Plan (if
applicable) for each of the last two years, and (ii) the most recent
determination letter from the Internal Revenue Service (if applicable) for
such Plan.
(c) (i) Each of the Sun Capital 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 Sun Capital
Benefit Plans intended to be "qualified" within the meaning of section 401(a)
of the Code is so qualified, (iii) with respect to each Sun Capital Benefit
Plan that is subject to Title IV of ERISA, the present value of accrued
benefits under such Sun Capital Benefit Plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such Sun Capital Benefit Plan's actuary with respect to such Sun
Capital Benefit Plan, did not, as of its latest valuation date, exceed the
then current value of the assets of such Sun Capital Benefit Plan allocable to
such accrued benefits, (iv) no Sun Capital Benefit Plan provides benefits,
including, without limitation, death or medical benefits (whether or not
insured), with respect to current or former employees of Sun Capital, its
Subsidiary 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 Sun Capital, its Subsidiary 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 Sun Capital, its Subsidiary or any ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a material risk to Sun Capital, its Subsidiary or any ERISA Affiliate
of incurring a material liability thereunder, (vi) no Sun Capital 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 Sun Capital or its
Subsidiary as of the Effective Time with respect to each Sun Capital 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 Sun Capital, its Subsidiary nor any ERISA Affiliate has
engaged in a transaction in connection with which Sun Capital, its Subsidiary
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 Sun Capital there are no pending, threatened or anticipated claims (other
than routine claims for benefits) by, on behalf of or against any of the Sun
Capital 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 Sun Capital or its Subsidiary from Sun Capital or its
Subsidiary under any Sun Capital Benefit Plan or otherwise, (ii) materially
increase any benefits otherwise payable under any Sun Capital Benefit Plan or
(iii) result in any acceleration of the time of payment or vesting of any such
benefits to any material extent.
(e) Sun Capital has previously delivered to Bancorp a schedule setting
forth for each management employee of Sun Capital or its Subsidiary 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 Reports. Sun Capital has previously made available to Bancorp an
accurate and complete copy of) all communication, reports, and statements
mailed by Sun Capital to its shareholders since January 1, 1994, and no
shareholder communication, reports, and statements 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. Sun Capital has timely filed all Sun Capital Reports and
other documents required to be filed under applicable federal and state law.
3.13 Compliance with Applicable Law. (a) Sun Capital and its
Subsidiary 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
Sun Capital or its Subsidiary, 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 Sun
Capital, and neither Sun Capital nor its Subsidiary knows of, or has received
notice of, any material violations of any of the above.
(b) (i) No real property presently or previously owned, operated, or
leased by Sun Capital or its Subsidiary or, to the best of their knowledge,
currently 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 Sun Capital or its Subsidiary or, to the best of their knowledge
securing any obligations owed to them, and neither Sun Capital nor its
Subsidiary 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 Sun Capital nor its Subsidiary 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 Sun Capital nor its Subsidiary 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, Sun Capital, the
Surviving Corporation, or any of their respective Subsidiaries to any officer
or employee thereof, (iii) that materially restricts the conduct of any line
of business by Sun Capital, (iv) with or to a labor union or guild (including
any collective bargaining agreement) or (v) (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. Sun Capital has delivered to Bancorp a complete list as of
the date of this Agreement of each contract to which Sun Capital or its
Subsidiary is a party that involves an amount in excess of $10,000 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 Sun Capital in the ordinary course of business. In addition, Sun Capital
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 Sun Capital 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 Sun
Capital Disclosure Schedule, is referred to herein as a "Sun Capital
Contract." Neither Sun Capital nor its Subsidiary knows of, or has received
notice of, any violation of any Sun Capital Contract by any of the other
parties thereto that, individually or in the aggregate, would have a material
adverse effect on Sun Capital.
(b) (i) Each Sun Capital Contract is valid and binding and in full
force and effect, (ii) Sun Capital and its Subsidiary has in all material
respects performed all obligations required to be performed by it to date
under each Sun Capital Contract, except where such noncompliance, individually
or in the aggregate, would not have a material adverse effect on Sun Capital,
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 Sun
Capital or its Subsidiary or, to the knowledge of Sun Capital, on the part of
any other party under any such Sun Capital Contract, except where such
default, individually or in the aggregate, would not have a material adverse
effect on Sun Capital.
3.15 Agreements with Regulatory Agencies. Neither Sun Capital nor its
Subsidiary 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 Sun Capital 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 Sun Capital or its Subsidiary 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 Sun
Capital as of December 31, 1995, and for liabilities incurred in the ordinary
course of business consistent with past practice, since December 31, 1995,
neither Sun Capital nor its Subsidiary 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 Sun Capital.
3.17 Properties. Except as would not have a material adverse effect on
Sun Capital, (i) except for assets disposed of in the ordinary course of
business, Sun Capital 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
$10,000, 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 Sun Capital or its Subsidiary lease real or
personal property are valid and effective in accordance with their respective
terms and, to the knowledge of Sun Capital, 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 Sun Capital and its Subsidiary 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) Sun
Capital and its Subsidiary own or lease all property upon which their
continued business operations are materially dependent (except for properties
securing loans by Sun Capital).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCORP
Except as set forth in the disclosure schedule of Bancorp delivered to
Sun Capital concurrently herewith (the "Bancorp Disclosure Schedule"), Bancorp
hereby represents and warrants to Sun Capital 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 Sun Capital, 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
June 30, 1996, 155,625,665 shares were issued and outstanding and (ii)
50,000,000 shares of Preferred Stock, no par value ("Bancorp Preferred
Stock"), of which as of December 31, 1995, 6,000,000 shares designated as
Series A were issued and outstanding. All of the issued and outstanding
shares of Bancorp Common Stock and Bancorp Preferred Stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, except for (i) shares of Bancorp
Common Stock reserved for issuance pursuant to the Bancorp Benefit Plans (as
defined below), and (ii) 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
June 30, 1996, 11,736,115 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 June 30, 1996, 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 grant of options to
employees, (ii) the exercise of employee stock options granted prior to such
date, (iii) the Bancorp DRIP, (iv) the Bancorp Employee Investment Plan, (v)
the grant of options to non-employee directors, and (vi) the exercise of non-
employee director stock options granted prior to such date. 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 enter into an agreement with Sun Capital providing for the
acquisition of Sun Capital by Bancorp and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby shall be duly and validly
approved by the Board of Directors of Bancorp prior to the consummation of
this Agreement and, once approved, 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 Sun Capital) 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 its
Subsidiary or any of their respective properties or assets, or (y) violate,
conflict with, result in a breach of any provision of or the loss of any
benefit under, constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the respective properties or assets of
Bancorp or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Bancorp or any of
its Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in the case of clause
(y) above) for such violations, conflicts, breaches or defaults which either
individually or in the aggregate will not have or be reasonably likely to have
a material adverse effect on Bancorp.
4.4 Consents and Approvals. Except for (i) the filing of applications
and notices, as applicable, with the Federal Reserve Board under the BHC Act,
(ii) the filing of any requisite applications with the FDIC in connection with
the merger of Subsidiaries of Sun Capital and Bancorp, (iii) the filing of the
State Approvals, (iv) any filings required under applicable state or federal
securities (v) the filing of the Articles of Merger with the Oregon Secretary
of State, (vi) the filing of the Utah Articles of Merger with the Utah
Division of Corporations and Commercial Code, and (vii) the approval of this
Agreement by the requisite vote of the shareholders of Sun Capital, 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, 1996, with the Regulatory Agencies, and all
other material reports and statements required to be filed by them since
January 1, 1996, 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, 1995. 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 Sun
Capital copies of (a) the consolidated balance sheets of Bancorp and its
Subsidiaries as of December 31, for the fiscal years 1994 and 1995, and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the fiscal years 1993 through 1995, inclusive, as reported in
Bancorp's Annual Report on Form 10-K for the fiscal year ended December 31,
1995, 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 DeLoitte
& Touche L.L.P., independent public accountants, with respect to Bancorp, and
(b) the unaudited consolidated balance sheets of Bancorp and its Subsidiaries
as of June 30, 1996, and June 30, 1995, and the related unaudited consolidated
statements of income, cash flows and changes in shareholders' equity for the
three month periods then ended substantially in the form that is proposed to
be reported in Bancorp's Quarterly Report on Form 10-Q for the period ended
June 30, 1996, filed with the SEC under the Exchange Act. The financial
statements referred to in this Section 3.6 (including the related notes, where
applicable) fairly present (subject, in the case of the unaudited statements,
to recurring audit adjustments normal in nature and amount), the results of
the consolidated operations and changes in shareholders' equity and
consolidated financial position of 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) comply
in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto and each of
such statements (including the related notes, where applicable) has been
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied during the periods involved, except in each case as
indicated in such statements or in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q. The allowances for credit
losses contained in the financial statements referred to in this Section 4.6
were adequate as of their respective dates to absorb reasonably anticipated
losses in the loan portfolio of Bancorp and its Subsidiaries in view of the
size and character of such portfolio, the current economic conditions, and
other pertinent factors and no facts have subsequently come to the attention
of management of Bancorp that would cause management to restate in any
material way the level of such allowance for credit losses. With respect to
other real estate owned by Bancorp and its Subsidiaries, the value attributed
thereto for purposes of compiling such financial statements does not exceed
the aggregate fair market value of such real estate as of the date of
acquisition of such real estate or as subsequently reduced, all in accordance
with regulations of the applicable Regulatory Agencies. The books and records
of Bancorp and its Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions.
4.7 Brokers' Fees. Neither Bancorp nor any Bancorp Subsidiary nor any
of their respective officers or directors has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement.
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, 1995, (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, 1995, 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, 1996, neither Bancorp nor any of its Subsidiaries
has (i) suffered any strike, work stoppage, slowdown, or other labor
disturbance or (ii) been the subject of any organizing activities.
4.9 Legal Proceedings. (a) Except as publicly disclosed in Bancorp
Reports filed prior to the date hereof, neither Bancorp nor any of its
Subsidiaries is a party to any and there are no pending or, to the best of
Bancorp's knowledge, threatened, material legal, administrative, arbitral or
other proceedings, claims, actions or governmental or regulatory
investigations of any nature (i) against Bancorp or any of its Subsidiaries as
to which there is a reasonable possibility of an adverse determination and
which, if adversely determined, would, individually or in the aggregate, have
a material adverse effect on Bancorp or (ii) challenging the validity or
propriety of the transactions contemplated by this Agreement.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Bancorp, any of its Subsidiaries or the assets of
Bancorp or any of its Subsidiaries that has had, or might reasonably be
expected to have, a material adverse effect on Bancorp or the Surviving
Corporation.
4.10 Taxes and Tax Returns. (a) Each of Bancorp and its Subsidiaries
has duly filed all federal, state and, to the best of Bancorp's knowledge,
material local 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 herein) 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) to the best of Bancorp's knowledge there are no
material Tax liens upon any property or assets of the Bancorp or its
Subsidiaries except liens for current taxes not yet due. To the knowledge of
Bancorp, no property of Bancorp or any of its Subsidiaries is property that
Bancorp or any of its Subsidiaries is or will be required to treat as being
owned by another person pursuant to the provisions of section 168(f)(8) of the
Code (as in effect prior to its amendment by the Tax Reform Act of 1986) or is
"tax-exempt use property" within the meaning of section 169(h) of the Code.
Neither Bancorp nor any of its Subsidiaries has been required to include in
income any adjustment pursuant to section 481 of the Code by reason of a
voluntary change in accounting method initiated by Bancorp or any of its
Subsidiaries, and the Internal Revenue Service has not initiated or proposed
any such adjustment or change in accounting method. Except as set forth in
the financial statements described in section 4.6 hereof, neither Bancorp nor
any of its Subsidiaries has entered into a transaction which is being
accounted for as an installment obligation under section 453 of the Code,
which would be reasonably likely to have a material adverse effect on Bancorp.
(b) Any amount that could be received (whether in cash or property or
the vesting of property) as a result of any of the transactions contemplated
by this Agreement by any employee, officer or director of Bancorp or any of
its affiliates who is a "Disqualified Individual" (as such term is defined in
proposed Treasury Regulation section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or Bancorp Benefit
Plan currently in effect would not be characterized as an "excess parachute
payment" (as such term is defined in section 280G(b)(1) of the Code).
(c) No disallowance of a deduction under section 162(m) of the Code
for employee remuneration of any amount paid or payable by Bancorp or any
Subsidiary of Bancorp under any contract, plan, program, arrangement or
understanding is reasonably likely.
4.11 Employees. (a) The Bancorp Disclosure Schedule sets forth a true
and complete list of each material plan, arrangement or agreement regarding
compensation or benefits for any employees, former employees, directors, or
former directors that is maintained as of the date of this Agreement (the
"Bancorp Benefit Plans") by Bancorp, any of its Subsidiaries or by any trade
or business; whether or not incorporated (a "Bancorp ERISA Affiliate"), all of
which together with Bancorp would be deemed a "single employer" within the
meaning of section 4001 of ERISA.
(b) Bancorp has heretofore delivered or made available to Sun Capital
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 Sun Capital
an accurate and complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since
January 1, 1995, 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, 1995, and
prior to the date hereof, and no such registration statement, prospectus,
report, schedule, proxy statement or communication contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that information as of a later date shall be deemed to modify information as
of an earlier date. Bancorp has timely filed all Bancorp Reports and other
documents required to be filed by it under the Securities Act and the Exchange
Act, and, as of their respective dates, all Bancorp Reports complied in all
material respects with the published rules and regulations of the SEC with
respect thereto.
4.13 Compliance with Applicable Law. (a) Bancorp and each of its
Subsidiaries hold, and have at all times held, all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of
their respective businesses under and pursuant to all, and have complied with
and are not in default in any material respect under any, applicable laws,
statutes, orders, rules, or regulations of any Governmental Entity relating to
Bancorp or any of its Subsidiaries, except where the failure to hold such
license, franchise, permit or authorization or such noncompliance or default
would not, individually or in the aggregate, have a material adverse effect on
Bancorp, and neither Bancorp nor any of its Subsidiaries knows of, or has
received notice of, any material violations of any of the above.
(b) Except as would not have a material adverse effect, (i) no real
property presently or previously owned, operated, or leased by Bancorp or any
of its Subsidiaries or, to the best of their knowledge, securing any
obligations owed to them has been used as a storage or disposal site for
hazardous substances within the meaning of any applicable federal, state, or
local statute, law, rule, or regulation, and no hazardous substances have been
transferred from or to such real property, (ii) no governmental entity has
issued any citation or notice of violation relating to any environmental
matter concerning any real property owned, operated, or leased by Bancorp or
any of its Subsidiaries or, to the best of their knowledge securing any
obligations owed to them, and neither Bancorp nor any of its Subsidiaries has
received any notice that any such real property may or will be included on any
list of areas affected by any release of any hazardous substance or that it
has or may be named as a responsible or potentially responsible party with
respect to any hazardous substance site, and (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, Sun Capital, the surviving Corporation, or any of
their respective Subsidiaries to any officer or employee thereof, (iii) that
is a material contract (as defined in Item 601(b)(10) of Regulation S-K of the
SEC) to be performed after the date of this Agreement that has not been filed
or incorporated by reference in the Bancorp Reports, (iv) that materially
restricts the conduct of any line of business by Bancorp, (v) with or to a
labor union or guild (including any collective bargaining agreement), or (vi)
(including any stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan) any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement. Each contract,
arrangement, commitment or understanding of the type described in this section
4.14(a), whether or not set forth in the Bancorp Disclosure Schedule, is
referred to herein as a "Bancorp Contract." Neither Bancorp nor any of its
Subsidiaries knows of, or has received notice of, any violation of any Bancorp
Contract by any of the other parties thereto that, individually or in the
aggregate, would have a material adverse effect on Bancorp.
(b) (i) Each Bancorp Contract is valid and binding and in full force
and effect, (ii) Bancorp and each of its Subsidiaries has in all material
respects performed all obligations required to be performed by it to date
under each Bancorp Contract, except where such noncompliance, individually or
in the aggregate, would not have a material adverse effect on Bancorp, and
(iii) no event or condition exists that constitutes or, after notice or lapse
of time, or both, would constitute, a material default on the part of Bancorp
or any of its Subsidiaries or, to the knowledge of Bancorp, on the part of any
other party under any such Bancorp Contract, except where such default,
individually or in the aggregate, would not have a material adverse effect on
Bancorp.
4.15 Agreements with Regulatory Agencies. Neither Bancorp nor any of
its Subsidiaries is subject to any cease-and-desist or other order issued by,
or is a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient
of any supervisory letter from, or has adopted any board resolutions at the
request of (each, whether or not set forth in the Bancorp Disclosure Schedule,
a "Bancorp Regulatory Agreement"), any Regulatory Agency or other Governmental
Entity that restricts the conduct of its business or that in any manner
relates to its capital adequacy, its credit policies, its management or its
business, nor has Bancorp or any of its Subsidiaries been advised by any
Regulatory Agency or other Governmental Entity that it is considering issuing
or requesting any Regulatory Agreement.
4.16 Undisclosed Liabilities. As of the date of this Agreement, except
for those liabilities that are fully reflected or reserved against on the
consolidated balance sheet of Bancorp dated as of December 31, 1995, and for
liabilities incurred in the ordinary course of business consistent with past
practice, since December 31, 1995, neither Bancorp nor any of its Subsidiaries
has incurred any liability of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether due or to become due) that,
either alone or when combined with all similar liabilities, has had, or could
reasonably be expected to have, a material adverse effect on Bancorp.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Sun Capital 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, Sun Capital
shall, and shall cause its Subsidiary 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 Sun Capital 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.
5.2 Sun Capital Forbearances. During the period from the date of this
Agreement to the Effective Time, except as expressly contemplated or permitted
by this Agreement, Sun Capital shall not, and shall not permit its Subsidiary
to, without the prior written consent of Bancorp (which consent shall not be
unreasonably withheld with respect to Section 5.2(c) of this Agreement):
(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 Sun Capital or its Subsidiary to Sun Capital or its
Subsidiary; 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), or 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
dividends paid by its Subsidiary) and regular quarterly cash dividends
consistent with past practice but in no event shall the dividends declared or
paid by Sun Capital for the calendar year 1996 exceed an amount equal to the
lesser of (i) $.60 per share (which amount shall include the $.20 per share
dividend declared or paid in June 1996), or (ii) 17 percent of Sun Capital's
net profits for the calendar year 1996); or issue any additional shares of
capital stock or securities or obligations convertible into or exchangeable
for shares of its capital stock;
(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 of any such person or any claims of Sun Capital or its
Subsidiary against 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 its Subsidiary;
(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
$10,000 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 $10,000 or that has a remaining term in excess of one year, or (iii) commit
to any capital expenditure, or make any capital expenditure not committed to
prior to the date of this Agreement, in excess of $10,000;
(f) increase in any manner the compensation or fringe benefits
of any of its employees other than increases for employees in the ordinary
course of business consistent with past practice or pay any pension or
retirement allowance not required by any existing plan or agreement to any
such employees or become a party to, amend or commit itself to any pension,
retirement, profit-sharing or welfare benefit plan or agreement or employment
agreement with or for the benefit of any employee other than amendments
required to comply with applicable legal requirements or accelerate the
vesting of any stock 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 its Subsidiary with any
corporation or other entity other than as provided by this Agreement (and Sun
Capital 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 Sun Capital 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 Sun Capital:
(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,
(c) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any time
prior to the Effective Time, or in any of the conditions of the Merger set
forth in Article VII not being satisfied or in a violation of any provision of
this Agreement, except, in every case, as may be required by applicable law;
(d) take any action that would adversely affect or delay its
ability to obtain any necessary approvals of any Regulatory Agency or other
governmental authority required for the transactions contemplated hereby or to
perform its covenants and agreements under this Agreement;
(e) amend its articles of incorporation except with respect to
the establishment of one or more series of preferred stock;
(f) impose any stock transfer instructions or restrictive
legends, excepts in the case of shares received by persons who are
"affiliates" (as that term is defined in the Securities Act of 1933) of
Bancorp or Sun Capital, or
(g) 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 Sun Capital shall promptly
prepare and file all filings, notices, reports, documents and information
under applicable state or federal securities laws required to carry out the
transactions contemplated by this Agreement, and Sun Capital shall furnish all
information concerning Sun Capital and the holders of Sun Capital 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 Sun Capital
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 Sun Capital 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 Sun Capital 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 any statement, filing, notice or
application made by or on behalf of Bancorp, Sun Capital 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 Sun Capital 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. (a) Upon reasonable notice and subject to applicable laws
relating to the exchange of information, each of Bancorp and Sun Capital
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,
records, and employees and, during such period, each of Bancorp and Sun
Capital shall, and shall cause their respective Subsidiaries to, make
available to the other party (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period
pursuant to the requirements of federal securities laws or federal or state
banking laws, savings and loan or savings association laws (other than reports
or documents which Bancorp or Sun Capital, 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 Sun Capital 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 Sun Capital'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 Sun Capital 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
agreement dated August 8, 1996, between Bancorp and Sun Capital (the
"Confidentiality Agreement").
(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. Sun Capital 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. Sun Capital may, in lieu of holding a shareholder meeting,
obtain approval of the merger through a majority written consent of its
shareholders provided such written approval of the majority of the
shareholders is in accordance with the laws of the state of Utah as well as
the current articles of incorporation and bylaws of Sun Capital. Subject to
fiduciary requirements under applicable law, the Board of Directors of Sun
Capital 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 Sun Capital
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 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 Sun Capital or Bancorp or any of their respective
Subsidiaries in connection with the Merger and the other transactions
contemplated by this Agreement.
6.5 Stock Exchange Listing of Shares. If required by applicable
federal or state law, Bancorp shall use its best efforts to cause the shares
of Bancorp Common Stock to be issued in the Merger to be included for listing
on the NASDAQ Stock Market National Market System, subject to official notice
of issuance, prior to the Effective Time.
6.6 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 Sun
Capital and its Subsidiary 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 Sun Capital or its
Subsidiary immediately prior to the Effective Time shall be provided with
employee benefits under employee benefit plans of Sun Capital, 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 Sun Capital and its Subsidiary 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 Sun Capital or its Subsidiary (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 Sun
Capital Benefit Plans and (ii) all contracts, arrangements, commitments, or
understandings described in section 3.14(a)(i) disclosed on the Sun Capital
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
Sun Capital Benefit Plans, contracts, arrangements, commitments or
understandings, in accordance with their terms. The provisions of this
section 6.6 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.
6.7 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 Sun Capital or its Subsidiary (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 Sun Capital, the Sun Capital Subsidiary or any of
their respective predecessors or (ii) this Agreement, or any of the
transactions contemplated hereby or thereby, whether in any case asserted or
arising before or after the Effective Time, the parties hereto agree to
cooperate and use their best efforts to defend against and respond thereto.
It is understood and agreed that after the Effective Time, Bancorp shall
indemnify and hold harmless, as and to the fullest extent permitted by law,
each such Indemnified Party against any losses, claims, damages, liabilities,
costs, expenses (including reasonable attorney's fees and expenses in advance
of the final disposition of any claim, suit, proceeding or investigation to
each Indemnified Party to the fullest extent permitted by law upon receipt of
any undertaking required by applicable law), judgments, fines and amounts paid
in settlement in connection with any such threatened or actual claim, action,
suit, proceeding or investigation and in the event of any such threatened or
actual claim, action, suit, proceeding, or investigation (whether asserted or
arising before or after the Effective Time), the Indemnified Parties may
retain counsel reasonably satisfactory to them after consultation with
Bancorp; provided, however, that (1) Bancorp shall have the right to assume
the defense thereof and upon such assumption Bancorp shall not be liable to
any Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by any Indemnified Party in connection with the
defense thereof, except that if Bancorp elects not to assume such defense or
counsel for the Indemnified Parties reasonably advises the Indemnified Parties
that there are issues which raise conflicts of interest between Bancorp and
the Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with Bancorp, and Bancorp shall pay
the reasonable fees and expenses of such counsel for the Indemnified Parties,
(2) Bancorp shall be obligated pursuant to this paragraph to pay for only one
firm of counsel for all Indemnified Parties, unless an Indemnified Party shall
have reasonably concluded, based on the advice of counsel, that in order to be
adequately represented, separate counsel is necessary for such Indemnified
Party, in which case, Bancorp shall be obligated to pay for such separate
counsel, (3) Bancorp shall not be liable for any settlement effected without
its prior written consent (which consent shall not be unreasonably withheld)
and (4) Bancorp shall have no obligation hereunder to any Indemnified Party
when and if a court of competent jurisdiction shall ultimately determine, and
such determination shall have become final and nonappealable, that
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law. Any Indemnified Party wishing to claim
Indemnification under this section 6.7, 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 6.7 except to the extent such failure to notify
materially prejudices Bancorp. Bancorp's obligations under this section 6.7
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 6.7(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 Sun Capital or Bancorp.
Notwithstanding the foregoing provisions of this section 6.7(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 Sun Capital 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 Sun Capital (the "Insurance Amount") to maintain or procure
insurance coverage pursuant hereto and further provided that if Bancorp is
unable to maintain or obtain the insurance called for by this section 6.7(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 6.7 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
6.8 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 Sun Capital) 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 Sun Capital 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 Sun Capital 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 6.8 shall not be deemed to require actions that would
materially delay or impede the Merger.
6.9 Advice of Changes. Bancorp and Sun Capital 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.
6.10 Dividends. After the date of this Agreement, each of Bancorp and
Sun Capital shall coordinate with the other the declaration of any dividends
in respect of Bancorp Common Stock and Sun Capital 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 Sun Capital 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 Sun Capital Common Stock and any shares of Bancorp Common Stock
any such holder receives in exchange therefor in the Merger. Notwithstanding
anything herein to the contrary, Sun Capital is permitted to declare and pay
regular cash dividends consistent with past practice provided the dividends
declared or paid by Sun Capital in the calendar year 1996 do not exceed an
amount equal to the lesser of (i) $.60 per share (which amount shall include
the $.20 per share dividend declared or paid in June 1996), or (ii) 17 percent
of Sun Capital's net profits for the calendar year 1996.
6.11 Affiliates. Each of Bancorp and Sun Capital 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 Sun
Capital to approve this Agreement, a written agreement, in a form mutually
acceptable to Bancorp and Sun Capital, 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 of Bancorp Common Stock shall be delivered in
exchange for Sun Capital Certificates held by any such "affiliate" who shall
not have executed and delivered such an agreement.
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 Sun Capital Common Stock entitled to vote
thereon.
(b) NASDAQ Listing. The shares of Bancorp Common Stock that
shall be issued to the shareholders of Sun Capital 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 Sun Capital Disclosure Schedule
or Bancorp Disclosure Schedule shall have been obtained
(d) 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.
(e) Federal Tax Opinions. Bancorp shall have received an
opinion of DeLoitte & Touche, on behalf of Bancorp, and Sun Capital shall have
received an opinion of Savage & Esplin, on behalf of Sun Capital, in form and
substance reasonably satisfactory to Bancorp and Sun Capital, 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 Sun
Capital as a result of the Merger;
(ii) No gain or loss will be recognized by the shareholders
of Sun Capital who exchange their Sun Capital 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 Sun Capital Common Stock solely for
Bancorp Common Stock in the Merger will be the same as the tax basis of the
Sun Capital 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, such firms may require and rely upon
representations contained in certificates of officers of Bancorp, Sun Capital
and others.
7.2 Conditions to Obligations of Bancorp. The obligation of Bancorp
to effect the Merger is also subject to the satisfaction or waiver by Bancorp
at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Sun Capital 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 Sun Capital by the Chief
Executive Officer and the Chief Financial Officer of Sun Capital to the
foregoing effect.
(b) Performance of Obligations of Sun Capital. Sun Capital
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 Sun Capital by
the Chief Executive Officer and the Chief Financial Officer of Sun Capital to
such effect.
7.3 Conditions to Obligations of Sun Capital. The obligation of Sun
Capital to effect the Merger is also subject to the satisfaction or waiver by
Sun Capital 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. Sun Capital
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 Sun Capital 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 Sun Capital:
(a) by mutual consent of Bancorp and Sun Capital 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 Sun Capital (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 Sun Capital if the Merger shall not have been consummated on or
before March 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 Sun Capital (provided that the terminating party is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein) if there shall have been a material breach of any of the
covenants or agreements or any of the representations or warranties set forth
in this Agreement on the part of the other party, which breach is not cured
within forty-five (45) days following written notice to the party committing
such breach, or which breach, by its nature, cannot be cured prior to the
Closing; or
(e) by either Bancorp or the Sun Capital if any approval of the
shareholders of Sun Capital 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 Sun Capital as provided in section 8.1, this
Agreement shall forthwith become void and have no effect, and none of Bancorp,
Sun Capital, 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 Sun Capital 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
Sun Capital; provided, however, that after any approval of the transactions
contemplated by this Agreement by Sun Capital'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 Sun Capital 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 Sun Capital'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 Sun Capital 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 Bancorp, which shall be no
earlier than five business days after the satisfaction or waiver (subject to
applicable law) of the latest to occur of the conditions set forth in Article
VII hereof (the "Closing Date").
9.2 Nonsurvival of Representations, Warranties, and Agreements. None
of the representations, warranties, covenants, and agreements in this
Agreement or in any instrument delivered pursuant to this Agreement, 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) 275-3706
Attention: Dwight V. Board
with copies to:
U. S. Bancorp
111 S.W. Fifth Avenue, T-31
Portland, Oregon 97204
Facsimile: (503) 275-7268
Attention: Jaqluin M. Bickmore Lloyd, Esq.
(b) if to Sun Capital Bancorp to:
Sun Capital Bancorp
60 South 100 East
St. George, Utah 84770
Facsimile: (801) 628-3398
Attention: John Allen
with copies to:
Kruse, Landa & Maycock, LLC
8th Floor, Bank One Tower
50 West Broadway (300 South)
Salt Lake City, Utah 84101
Attention: James R. Kruse, Esq.
9.5 Interpretation. When a reference is made in this Agreement to
sections, Exhibits, or Schedules, such reference shall be to a section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes," and "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." No provision of this Agreement shall be construed to
require Sun Capital, 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 Sun
Capital or Bancorp, respectively, contained in the Sun Capital 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
Confidentiality Agreement.
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 Sun Capital shall, or
shall permit its Subsidiary 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 6.6(b) and section 6.7 hereof, this Agreement (including
the documents and instruments referred to herein) is not intended to confer
upon any person other than the parties hereto any rights or remedies
hereunder.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
U. S. BANCORP
Attest: /s/ Sheryl W. Dawson By: /s/ Dwight B. Board
Sheryl W. Dawson Dwight B. Board
Assistant Secretary Executive Vice President
SUN CAPITAL BANCORP
Attest: /s/ Kenneth Schone By: /s/ John Allen
Kenneth Schone John Allen
Secretary President
<PAGE>
Appendix 2
Part 13. Dissenters' Rights
16-10a-1301 DEFINITIONS.--For purposes of Part 13:
(1) "Beneficial shareholder" means the person who is a beneficial
owner of shares held in a voting trust or by a nominee as the record
shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Section 16-10a-1302 and who exercises that right when
and in the manner required by Sections 16-10a-1320 through 16-10a-1328.
(4) "Fair value" with respect to a dissenter's shares, means the value
of the shares immediately before the effectuation of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the statutory rate set forth in Section
15-1-1, compounded annually.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares
that are registered in the name of a nominee to the extent the beneficial
owner is recognized by the corporation as the shareholder as provided in
Section 16-10a-723.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
16-10a-1302 RIGHT TO DISSENT.--(1) A shareholder, whether or not entitled to
vote, is entitled to dissent from, and obtain payment of the fair value of
shares held by him in the event of, any of the following corporate actions:
(a) consummation of a plan of merger to which the corporation is a
party if:
(i) shareholder approval is required for the merger by
Section 16-10a-1103 or the articles of incorporation; or
(ii) the corporation is a subsidiary that is merged with its parent
under Section 16-10a-1104;
(b) consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired;
(c) consummation of a sale, lease, exchange, or other disposition of
all, or substantially all, of the property of the corporation for which a
shareholder vote is required under Subsection 16-10a-1202(1), but not
including a sale for cash pursuant to a plan by which all or substantially all
of the net proceeds of the sale will be distributed to the shareholders within
one year after the date of sale; and
(d) consummation of a sale, lease, exchange, or other disposition of
all, or substantially all, of the property of an entity controlled by the
corporation if the shareholders of the corporation were entitled to vote upon
the consent of the corporation to the disposition pursuant to Subsection
16-10a-1202(2).
(2) A shareholder is entitled to dissent and obtain payment of the
fair value of his shares in the event of any other corporate action to the
extent the articles of incorporation, bylaws, or a resolution of the board of
directors so provides.
(3) Notwithstanding the other provisions of this part, except to the
extent otherwise provided in the articles of incorporation, bylaws, or a
resolution of the board of directors, and subject to the limitations set forth
in Subsection (4), a shareholder is not entitled to dissent and obtain payment
under Subsection (1) of the fair value of the shares of any class or series of
shares which either were listed on a national securities exchange registered
under the federal Securities Exchange Act of 1934, as amended, or on the
National Mark-et System of the National Association of Securities Dealers
Automated Quotation System, or were held of record by more than 2,000
shareholders, at the time of:
(a) the record date fixed under Section 16-10a-707 to determine the
shareholders entitled to receive notice of the shareholders' meeting at which
the corporate action is submitted to a vote;
(b) the record date fixed under Section 16-10a-704 to determine
shareholders entitled to sign writings consenting to the proposed corporate
action; or
(c) the effective date of the corporate action if the corporate action
is authorized other than by a vote of shareholders.
(4) The limitation set forth in Subsection (3) does not apply if the
shareholder will receive for his shares, pursuant to the corporate action,
anything except:
(a) shares of the corporation surviving the consummation of the plan
of merger or share exchange;
(b) shares of a corporation which at the effective date of the plan of
merger or share exchange either will be listed on a national securities
exchange registered under the federal Securities Exchange Act of 1934, as
amended, or on the National Market System of the National Association of
Securities Dealers Automated Quotation System, or will be held of record by
more than 2,000 shareholders;
(c) cash in lieu of fractional shares; or
(d) any combination of the shares described in Subsection (4), or cash
in lieu of fractional shares.
(5) A shareholder entitled to dissent and obtain payment for his
shares under this part may not challenge the corporate action creating the
entitlement unless the action is unlawful or fraudulent with respect to him or
to the corporation.
16-10a-1303 DISSENT BY NOMINEES AND BENEFICIAL OWNERS.--(1) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if the shareholder dissents with respect to all
shares beneficially owned by any one person and causes the corporation to
receive written notice which states the dissent and the name and address of
each person on whose behalf dissenters' rights are being asserted. The rights
of a partial dissenter under this subsection are determined as if the shares
as to which the shareholder dissents and the other shares held of record by
him were registered in the names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to
shares held on his behalf only if:
(a) the beneficial shareholder causes the corporation to receive the
record shareholder's written consent to the dissent not later than the time
the beneficial shareholder asserts dissenters' rights; and
(b) the beneficial shareholder dissents with respect to all shares of
which he is the beneficial shareholder.
(3) The corporation may require that, when a record shareholder
dissents with respect to the shares held by any one or more beneficial
shareholders, each beneficial shareholder must certify to the corporation that
both he and the record shareholders of all shares owned beneficially by him
have asserted, or will timely assert, dissenters' rights as to all the shares
unlimited on the ability to exercise dissenters' rights. The certification
requirement must be stated in the dissenters' notice given pursuant to
Section 16-10a-1322.
16-10a-1320 NOTICE OF DISSENTERS' RIGHTS.--(1) If a proposed corporate
action creating dissenters' rights under Section 16-10a-1302 is submitted to a
vote at a shareholders' meeting, the meeting notice must be sent to all
shareholders of the corporation as of the applicable record date, whether or
not they are entitled to vote at the meeting. The notice shall state that
shareholders are or may be entitled to assert dissenters' rights under this
part. The notice must be accompanied by a copy of this part and the
materials, if any, that under this chapter are required to be given the
shareholders entitled to vote on the proposed action at the meeting. Failure
to give notice as required by this subsection does not affect any action taken
at the shareholders' meeting for which the notice was to have been given.
(2) If a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is authorized without a meeting of shareholders pursuant
to Section 16-10a-704, any written or oral solicitation of a shareholder to
execute a written consent to the action contemplated by Section 16-10a-704
must be accompanied or preceded by a written notice stating that shareholders
are or may be entitled to assert dissenters' rights under this part, by a copy
of this part, and by the materials, if any, that under this chapter would have
been required to be given to shareholders entitled to vote on the proposed
action if the proposed action were submitted to a vote at a shareholders'
meeting. Failure to give written notice as provided by this subsection does
not affect any action taken pursuant to Section 16-10a-704 for which the
notice was to have been given.
16-10a-1321 DEMAND FOR PAYMENT--ELIGIBILITY AND NOTICE OF INTENT.--(1)
If a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights:
(a) must cause the corporation to receive, before the vote is taken,
written notice of his intent to demand payment for shares if the proposed
action is effectuated; and
(b) may not vote any of his shares in favor of the proposed action.
(2) If a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is authorized without a meeting of shareholders pursuant
to Section 16-10a-704, a shareholder who wishes to assert dissenters' rights
may not execute a writing consenting to the proposed corporate action.
(3) In order to be entitled to payment for shares under this part,
unless otherwise provided in the articles of incorporation, bylaws, or a
resolution adopted by the board of directors, a shareholder must have been a
shareholder with respect to the shares for which payment is demanded as of the
date the proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is approved by the shareholders, if shareholder approval
is required, or as of the effective date of the corporate action if the
corporate action is authorized other than by a vote of shareholders.
(4) A shareholder who does not satisfy the requirements of
Subsections (1) through (3) is not entitled to payment for shares under this
part.
16-10a-1322 DISSENTERS' NOTICE.--(1) If a proposed corporate action
creating dissenters' rights under Section 16-10a-1302 is authorized, the
corporation shall give a written dissenters' notice to all shareholders who
are entitled to demand payment for their shares under this part.
(2) The dissenters' notice required by Subsection (1) must be sent no
later than ten days after the effective date of the corporate action creating
dissenters' rights under Section 16-10a-1302, and shall:
(a) state that the corporate action was authorized and the effective
date or proposed effective date of the corporate action;
(b) state an address at which the corporation will receive payment
demands and an address at which certificates for certificated shares must be
deposited;
(c) inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(d) supply a form for demanding payment, which form requests a
dissenter to state an address to which payment is to be made;
(e) set a date by which the corporation must receive the payment
demand and by which certificates for certificated shares must be deposited at
the address indicated in the dissenters' notice, which dates may not be fewer
than 30 nor more than 70 days after the date the dissenters' notice required
by Subsection (1) is given;
(f) state the requirement contemplated by Subsection 16-10a-1303(3),
if the requirement is imposed; and
(g) be accompanied by a copy of this part.
16-10a-1323 PROCEDURE TO DEMAND PAYMENT.--(1) A shareholder who is
given a dissenters' notice described in Section 16-10a-1322, who meets the
requirements of Section 16-10a-1321, and wishes to assert dissenters' rights
must, in accordance with the terms of the dissenters' notice:
(a) cause the corporation to receive a payment demand, which may be
the payment demand form contemplated in Subsection 16-10a-1322(2)(d), duly
completed, or may be stated in another writing;
(b) deposit certificates for his certificated shares in accordance
with the terms of the dissenters' notice; and
(c) if required by the corporation in the dissenters' notice described
in Section 16-10a-1322, as contemplated by Section 16-10a-1327, certify in
writing, in or with the payment demand, whether or not he or the person on
whose behalf he asserts dissenters' rights acquired beneficial ownership of
the shares before the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action creating
dissenters' rights under Section 16-10a-1302.
(2) A shareholder who demands payment in accordance with Subsection
(1) retains all rights of a shareholder except the right to transfer the
shares until the effective date of the proposed corporate action giving rise
to the exercise of dissenters' rights and has only the right to receive
payment for the shares after the effective date of the corporate action.
(3) A shareholder who does not demand payment and deposit share
certificates as required, by the date or dates set in the dissenters' notice,
is not entitled to payment for shares under this part.
16-10a-1324 UNCERTIFICATED SHARES.--(1) Upon receipt of a demand for
payment under Section 16-10a-1323 from a shareholder holding uncertificated
shares, and in lieu of the deposit of certificates representing the shares,
the corporation may restrict the transfer of the shares until the proposed
corporate action is taken or the restrictions are released under
Section 16-10a-1326.
(2) In all other respects, the provisions of Section 16-10a-1323 apply
to shareholders who own uncertificated shares.
16-10a-1325 PAYMENT.--(1) Except as provided in Section 16-10a-1327,
upon the later of the effective date of the corporate action creating
dissenters' rights under Section 16-10a-1302, and receipt by the corporation
of each payment demand pursuant to Section 16-1Oa-1323, the corporation shall
pay the amount the corporation estimates to be the fair value of the
dissenters' shares, plus interest to each dissenter who has complied with
Section 16-10a-1323, and who meets the requirements of Section 16- 10a-1321,
and who has not yet received payment.
(2) Each payment made pursuant to Subsection (1) must be accompanied
by:
(a) (i) (A) the corporation's balance sheet as of the end of its most
recent fiscal year, or if not available, a fiscal year ending not more than 16
months before the date of payment;
(B) an income statement for that year;
(C) a statement of changes in shareholders' equity for that year and a
statement of cash flow for that year, if the corporation customarily provides
such statements to shareholders; and
(D) the latest available interim financial statements, if any;
(ii) the balance sheet and statements referred to in Subsection (i)
must be audited if the corporation customarily provides audited financial
statements to shareholders;
(b) a statement of the corporation's estimate of the fair value of the
shares and the amount of interest payable with respect to the shares;
(c) a statement of the dissenter's right to demand payment under
Section 16-10a-1328; and
(d) a copy of this part.
16-10a-1326 FAILURE TO TAKE ACTION.--(1) If the effective date of the
corporate action creating dissenters' rights under Section 16-10a-1302 does
not occur within 60 days after the date set by the corporation as the date by
which the corporation must receive payment demands as provided in
Section 16-10a-1322, the corporation shall return all deposited certificates
and release the transfer restrictions imposed on uncertificated shares, and
all shareholders who submitted a demand for payment pursuant to
Section 116-10a-1323 shall thereafter have all rights of a shareholder as if
no demand for payment had been made.
(2) If the effective date of the corporate action creating dissenters'
rights under Section 16-10a-1302 occurs more than 60 days after the date set
by the corporation as the date by which the corporation must receive payment
demands as provided in Section 16-10a-1322, then the corporation shall send a
new dissenters' notice, as provided in Section 16-10a-1322, and the provisions
of Sections 16-10a-1323 through 16-10a-1328 shall again be applicable.
16-10a-1327 SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER
ANNOUNCEMENT OF PROPOSED CORPORATE ACTION.--(1) A corporation may, with the
dissenters' notice given pursuant to Section 16-10a-1302, state the date of
the first announcement to news media or to shareholders of the terms of the
proposed corporate action creating dissenters' rights under
Section 16-10a-1302 and state that a shareholder who asserts dissenters'
rights must certify in writing, in or with the payment demand, whether or not
he or the person on whose behalf he asserts dissenters' rights acquired
beneficial ownership of the shares before that date. With respect to any
dissenter who does not certify in writing, in or with the payment demand that
he or the person on whose behalf the dissenters' rights are being asserted,
acquired beneficial ownership of the shares before that date, the corporation
may, in lieu of making the payment provided in Section 16-10a-1325, offer to
make payment if the dissenter agrees to accept it in full satisfaction of the
demand.
(2) An offer to make payment under Subsection (1) shall include or be
accompanied by the information required by Subsection 16-10a-1325 (2).
16-10a-1328 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR
OFFER.--(1) A dissenter who has not accepted an offer made by a corporation
under Section 16-10a-1327 may notify the corporation in writing of his own
estimate of the fair value of his shares and demand payment of the estimated
amount, plus interest, less any payment made under Section 16-10a-1325, if:
(a) the dissenter believes that the amount paid under
Section 16-10a-1325 or offered under Section 16-10a-1327 is less than the fair
value of the shares;
(b) the corporation fails to make payment under Section 16-10a-1325
within 60 days after the date set by the corporation as the date by which it
must receive the payment demand; or
(c) the corporation, having failed to take the proposed corporate
action creating dissenters' rights, does not return the deposited certificates
or release the transfer restrictions imposed on uncertificated shares as
required by Section 16-10a-1326.
(2) A dissenter waives the right to demand payment under this section
unless he causes the corporation to receive the notice required by Subsection
(1) within 30 days after the corporation made or offered payment for his
shares.
16-10a-1330 JUDICIAL APPRAISAL OF SHARES-COURT ACTION.--(1) If a
demand for payment under Section 16-10a-1328 remains unresolved, the
corporation shall commence a proceeding within 60 days after receiving the
payment demand contemplated by Section 16-10a-1328, and petition the court to
determine the fair value of the shares and the amount of interest. If the
corporation does not commence the proceeding within the 60-day period, it
shall pay each dissenter whose demand remains unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in
Subsection (1) in the district court of the county in this state where the
corporation's principal office, or if it has no principal office in this
state, the county where its registered office is located. If the corporation
is a foreign corporation without a registered office in this state, it shall
commence the proceeding in the county in this state where the registered
office of the domestic corporation merged with, or whose shares were acquired
by, the foreign corporation was located.
(3) The corporation shall make all dissenters who have satisfied the
requirements of Sections 16-10a-1321, 16-10a-1323, and 16-10a-1328, whether or
not they are residents of this state whose demands remain unresolved, parties
to the proceeding commenced under Subsection (2) as an action against their
shares. All such dissenters who are named as parties must be served with a
copy of the petition. Service on each dissenter may be registered or
certified mail to the address stated in his payment demand made pursuant to
Section 16-10a-1328. If no address is stated in the payment demand, service
may be made at the address stated in the payment demand given pursuant to
Section 16-10a-1323. If no address is stated in the payment demand, service
may be made at the address shown on the corporation's current record of
shareholders for the record shareholder holding the dissenter's shares.
Service may also be made otherwise as provided by law.
(4) The jurisdiction of the court in which the proceeding is commenced
under Subsection (2) is plenary and exclusive. The court may appoint one or
more persons as appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or in any amendment to it. The dissenters are entitled to
the same discovery rights as parties in other civil proceedings.
(5) Each dissenter made a party to the proceeding commenced under
Subsection (2) is entitled to judgment:
(a) for the amount, if any, by which the court finds that the fair
value of his shares, plus interest, exceeds the amount paid by the corporation
pursuant to Section 16-10a-1325; or
(b) for the fair value, plus interest, of the dissenter's
after-acquired shares for which the corporation elected to withhold payment
under Section 16-10a-1327.
16-10a-1331 COURT COSTS AND COUNSEL FEES.--(1) The court in an ap-
praisal proceeding commenced under Section 16-10a-1330 shall determine all
costs of the proceeding, including the reasonable compensation and expenses of
appraisers appointed by the court. The court shall assess the costs against
the corporation, except that the court may assess costs against all or some of
the dissenters, in amounts the court finds equitable, to the extent the court
finds that the dissenters acted arbitrarily, vexatiously, or not in good faith
in demanding payment under Section 16-10a-1328.
(2) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of Sections 16-10a-1320 through 16-10a-1328; or
(b) against either the corporation or one or more dissenters, in favor
of any other party, if the court finds that the party against whom the fees
and expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this part.
(3) If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that
the fees for those services should not be assessed against the corporation,
the court may award to those counsel reasonable fees to be paid out of the
amounts awarded the dissenters who were benefited.
Part 14. Dissolution
16-10a-1401 AUTHORIZATION TO DISSOLUTION PRIOR TO ISSUANCE OF SHARES.--
If a corporation has not yet issued shares, a majority of its directors, or if
no directors have been elected or if elected directors are no longer serving,
a majority of its incorporators may authorize the dissolution of the
corporation.
16-10a-1402 AUTHORIZATION OF DISSOLUTION AFTER ISSUANCE OF SHARES.--(1)
After shares have been issued, dissolution of a corporation may be authorized
in the manner provided in Subsection (2).
(2) For a proposal to dissolve the corporation to be authorized:
(a) the board of directors must recommend dissolution to the
shareholders unless the board of directors determines that because of a
conflict of interest or other special circumstances it should make no
recommendation and communicates the basis for its determination to the
shareholders; and
(b) the shareholders entitled to vote on the proposal must approve the
proposal to dissolve as provided in Subsection (5).
(3) The board of directors may condition the effectiveness of the
dissolution on any basis.
(4) The corporation shall give notice in accordance with
Section 16-10a-705 to each shareholder entitled to vote on the proposal to
dissolve, of the proposed shareholders' meeting at which the proposal to
dissolve will be voted upon. The notice must state that the purpose or one of
the purposes of the meeting is to consider the proposal to dissolve the
corporation.
(5) The proposal to dissolve must be approved by each voting group
entitled to vote separately on the proposal, by a majority of all the votes
entitled to be cast on the proposal by that voting group, unless a greater
vote is required by the articles of incorporation, the initial bylaws or the
bylaws amended pursuant to Section 16-10a-1021, or the board of directors
acting pursuant to Subsection (3).
16-10a-1403 ARTICLES OF DISSOLUTION.--(1) At any time after
dissolution is authorized, the corporation may dissolve by delivering to the
division for filing articles of dissolution setting forth:
(a) the name of the corporation;
(b) the address of the corporation's principal office or, if none is
to be maintained, a statement that the corporation will not maintain a
principal office, and, if different from the address of the principal office
or if no principal office is to be maintained, the address to which service of
process may be mailed pursuant to Section 16-10a-1409;
(c) the date dissolution was authorized;
(d) if dissolution was authorized by the directors or the
incorporators pursuant to Section 16-10a-1401, a statement to that effect;
(e) if dissolution was approved by the shareholders pursuant to
Section 16-10a-1402:
(i) the number of votes entitled to be cast on the proposal to
dissolve by each voting group entitled to vote separately thereon; and
(ii) either the total number of votes cast for and against dissolution
by each voting group or the total number of undisputed votes cast for
dissolution by each voting group and a statement that the number cast for
dissolution was sufficient for approval; and
(f) any additional information the division determines is necessary or
appropriate.
(2) A corporation is dissolved upon the effective date of its articles
of dissolution.
16-10a-1404 REVOCATION OF DISSOLUTION.--(1) A corporation may revoke
its dissolution within 120 days after the effective date of the dissolution.
(2) Revocation of dissolution must be authorized in the same manner as
the dissolution was authorized unless, in the case of authorization pursuant
to Section 16-10a-1402, that authorization permitted revocation by action of
the board of directors alone, in which event the board of directors may revoke
the dissolution without shareholder action.
(3) After the revocation of dissolution is authorized, the corporation
may revoke the dissolution by delivering to the division for filing articles
of revocation of dissolution, together with a copy of its articles of
dissolution, that set forth:
(a) the name of the corporation;
(b) the effective date of the dissolution that was revoked;
(c) the date that the revocation of dissolution was authorized;
(d) if pursuant to Subsection (2) the corporation's board of directors
or incorporators revoked the dissolution authorized under Section 16-10a-1401,
a statement to that effect;
(e) if pursuant to Subsection (2) the corporation's board of directors
revoked a dissolution approved by the shareholders, a statement that the
revocation was permitted by action by the board of directors alone pursuant to
that authorization; and
(f) if the revocation of dissolution was approved pursuant to
Subsection (2) by the shareholders, the information required by Subsection
16-10a-1403(1)(e).
(4) Revocation of dissolution is effective as provided in Subsection
16-10a-123(1). A provision may not be made for a delayed effective date for
revocation pursuant to Subsection 16-10a-123(2).
(5) When the revocation of dissolution is effective, it relates back
to and takes effect as of the effective date of the dissolution and the
corporation may carry on its business as if dissolution had never occurred.
<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
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.
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.
(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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
has duly caused this Amendment No. 1 to Form S-4 Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Portland, State of Oregon, on the 20th day of November, 1996.
U. S. BANCORP
(Registrant)
By:DWIGHT V. BOARD
-----------------------------------
Dwight V. Board
Executive Vice President
Pursuant to the requirements of the Securities Act, this Amendment
No. 1 to Form S-4 Registration Statement has been signed by the following
persons in the capacities indicated on the 20th day of November, 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:
GERRY B. CAMERON*
CAROLYN SILVA CHAMBERS*
FRANKLIN G. DRAKE*
ROBERT L. DRYDEN*
JOSHUA GREEN III*
DANIEL R. NELSON*
ALLEN T. NOBLE*
PAUL A. REDMOND*
N. STEWART RODGERS*
BENJAMIN R. WHITELEY*
*By DWIGHT V. BOARD
---------------------------------
Dwight V. Board, attorney-in-fact
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ---------- -------
2 Agreement and Plan of Merger between the Registrant
and Sun Capital Bancshares, dated as of September 24,
1996 (included in Part I as Appendix 1 to the Proxy
Statement/Prospectus included in this Registration
Statement).
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 Deloitte & Touche LLP as to certain federal
income tax matters.
8.2 Opinion of Simpson & Company as to certain federal
income tax matters.
23.1 Consent of Deloitte & Touche LLP with respect to its
tax opinion and the financial statements of the
Registrant.
23.2 Consent of Simpson & Company with respect to its tax
opinion and the financial statements of Sun Capital
Bancorp.
23.3 Consent of Coopers & Lybrand LLP. with respect to
financial statements of West One Bancorp.
23.4 Consent of Miller, Nash, Wiener, Hager & Carlsen.
Contained in Exhibit 5.
24 Power of attorney of certain officers and directors of
the Registrant. (Included as an exhibit to
Registration Statement filed November 14, 1996.)
99.1 Form of proxy of Sun Capital Bancorp. (Included as an
exhibit to Registration Statement filed November 14,
1996.)
_________________________________
Other exhibits listed in Item 601 of Regulation S-K are not applicable.
<PAGE>
<PAGE>
MILLER, NASH, WIENER, HAGER & CARLSEN LLP
ATTORNEYS AND COUNSELORS AT LAW
3500 U. S. BANCORP TOWER
111 S.W. FIFTH AVENUE
PORTLAND, OREGON 97204-3699
TELEPHONE (503) 224-5858
FACSIMILE (503) 224-0155
November 22, 1996
EXHIBIT 5
U. S. Bancorp
111 S.W. Fifth Avenue
Portland, Oregon 97204
Subject: Registration Statement on Form S-4
Registration No. 333-16147
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"), 400,635 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 Sun Capital Bancorp, 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,
Miller, Nash, Wiener, Hager & Carlsen LLP
<PAGE>
[DELOITTE & TOUCHE, LLP LETTERHEAD]
November 11, 1996
U.S. Bancorp
111 S.W. Fifth Avenue, T-31
Portland, OR 97204
Attn: Dwight V. Board EXHIBIT 8.1
Dear Sirs:
You have requested our opinion as to the federal income tax consequences of a
proposed transaction involving a merger of Sun Capital Bancorp (Sun Capital)
with and into U.S. Bancorp (Bancorp) [hereinafter referred to simply as the
Merger]. More specifically, you have requested our opinion as to the federal
income tax consequences to Bancorp, Sun Capital and to those Sun Capital
shareholders who participate in the Merger and who receive Bancorp common
stock in exchange for the Sun Capital common stock surrendered in exchange
therefor.
As more fully described below, it is our opinion that for federal income tax
purposes, Bancorp and Sun Capital will each recognize no gain or loss in
connection with the Merger. Moreover, the shareholders of Sun Capital will
recognize no gain or loss in connection with their exchange of Sun Capital
shares for Bancorp shares. Our opinion is based upon the facts which have
been provided to us. In rendering this opinion, we have (with your
permission) reviewed and relied upon (a) the Agreement and Plan of Merger
between Bancorp and Sun Capital dated as of September 24, 1996 (the Agreement)
as well as the accompanying schedules thereto; and (b) certain assumptions
which we have deemed necessary and essential to our opinion and which are
contained herein. Any material variation or difference in the facts or
assumptions as stated or incorporated in the material just referred to might
affect our conclusions.
What follows is a summary of the essential facts relating to the transaction
which our opinion covers.
ESSENTIAL FACTS
Bancorp is an Oregon corporation engaged in the business of being a bank
holding company. Bancorp has several banking subsidiaries. Sun Capital is a
Utah corporation which is likewise engaged in the business of being a bank
holding company. Sun Capital has only common stock outstanding and its only
subsidiary is Sun Capital Bank, a Utah commercial bank. For valid business
reasons including, inter alia, business synergies, Bancorp and Sun Capital
intent to effectuate a business combination in the following manner:
In accordance with the Agreement, Sun Capital will merge with and into
Bancorp in accordance with Oregon corporate merger laws. Each share of
Sun Capital common stock issued and outstanding immediately prior to the
"Effective Time" as that term is defined in Article 1.2 of the Agreement
(other than dissenting shares and certain other shares specified in
Article 1.4 of the Agreement) will be converted into the right to receive
.95 share of $5.00 par value Bancorp common stock. Cash will be paid by
Bancorp to exchanging Sun Capital shareholders in lieu of issuing
fractional shares of Bancorp.
Bancorp will survive the Merger. Any Sun Capital shareholder who objects to
the Merger and who perfects his or her appraisal rights under Oregon law will
be entitled to consideration in accordance with such laws rather than have his
or her shares converted in accordance with the Agreement.
ESSENTIAL ASSUMPTIONS
1. Bancorp has no plan or intention to sell or otherwise dispose of the
stock of Sun Capital Bank.
2. The fair market value of the Bancorp stock to be received by the
exchanging Sun Capital shareholders will be approximately equal to the
fair market value of the Sun Capital shares surrendered in the Merger.
3. Bancorp has no plan or intention to merge Sun Capital Bank with any other
corporate entity.
4. Sun Capital Bank has no plan or intention to issue additional shares that
would result in Bancorp losing control of Sun Capital Bank within the
meaning of Section 368(c) of the Code.(2)
5. Bancorp has no plan or intention to reacquire the shares issued to the
shareholders of Sun Capital in the Merger.
6. Sun Capital will be a solvent entity on the date of the Merger.
7. Neither Bancorp nor Sun Capital will satisfy personal expenses of Sun
Capital shareholders, if any, incurred in connection with the Merger.
8. Immediately after the Merger, former shareholders of Sun Capital will not
own, directly or indirectly within the meaning of Section 318, 50 percent
of the value of Bancorp or 50 percent of the voting power of all classes
of Bancorp voting shares.
9. Either Bancorp or Sun Capital is not an "investment company" within the
meaning of Section 368(a)(2)(F)(iii) and (a)(2)(F)(iv) (i.e., a regulated
investment company, a real estate investment trust, or a corporation 50
percent or more of the value of whose assets (excluding cash and cash
equivalents) are stock and securities and 80 percent or more of whose
total assets are assets held for investment).
10. Management of Bancorp and Sun Capital each have no knowledge of any plan
or intention on the part of those Sun Capital exchanging shareholders
holding a majority of Sun Capital stock to sell or otherwise dispose of
the Bancorp shares which they will receive in the Merger.
11. Sun Capital Bank will continue its historic business subsequent to the
Merger.
12. Any cash paid by Bancorp in lieu of fractional shares will represent a
mere mechanical rounding-off of fractions and will not represent
separately bargained-for consideration.
ISSUE CONSIDERED
I. Whether the merger of Sun Capital with and into Bancorp whereupon the
non-dissenting Sun Capital shareholders will receive Bancorp common stock
in exchange for all of their Sun Capital shares constitutes a tax-free
"reorganization" within the meaning of Section 368.
- -----------------
(2) All statutory references are to the Internal Revenue Code of 1986,
as amended and to the regulations thereunder.
<PAGE>
CONCLUSIONS
I. (1) Provided that the merger of Sun Capital with and into Bancorp
qualifies as a statutory merger under applicable state law, the proposed
transaction will be treated as a "reorganization" within the meaning of
Section 368(a)(1)(A). Bancorp and Sun Capital will each be "a party to a
reorganization" within the meaning of Section 368(b). Accordingly, no
gain or loss will be recognized to Bancorp or Sun Capital in connection
with the Merger. Section 361; Section 1032.
(2) No gain or loss will be recognized by the exchanging Sun Capital
shareholders upon their exchange of Sun Capital shares for Bancorp
shares. Section 354. Exchanging Sun Capital shareholders will have a
basis in their Bancorp shares to be received which is the same as the
basis in their Sun Capital shares surrendered in exchange therefor
(reduced by any amount of basis allocable to a fractional share interest
for which cash is received). Section 358.
(3) Any Sun Capital shareholder who receives cash in lieu of fractional
shares of Bancorp will be treated for federal income tax purposes as if
the fractional shares were distributed as part of the exchange and then
redeemed by Bancorp in accordance with Rev.Rul. 66-365, 1966-2 C.B. 116.
These cash payments will, therefore, be treated as a distribution in
redemption of stock subject to the rules of Section 302. Ordinarily, any
amount so received will be treated as in full payment for the Bancorp
shares deemed received.
DISCUSSION
There should be little doubt as to the tax-free nature of the merger of Sun
Capital with and into Bancorp insofar as the statutory merger represents the
classic business combination which, precisely because it is undertaken in
accordance with rules governing mergers under state law, is granted tax-free
reorganization treatment under Section 368(a)(1)(A). Admittedly, even with a
reorganization governed by Section 368(a)(1)(A), like most reorganizations
described in Section 368, attention must be paid to the judicial and
regulatory requirements associated with reorganizations which seek non-
recognition treatment. These are:
(i) having a valid corporate business purpose for the Merger
(ii) maintaining the requisite continuity of business enterprise; and
(iii) maintaining continuity of shareholder interest.
There is a corporate business purpose for the Merger. A desire to achieve
business synergies, for example, as in the instant case, should meet the
requirement reflected in Regs. Section 1.368-1(b) that the reorganization
provisions of the Code are intended to cover exchanges incident to
readjustments of corporate structures as are required by business needs and
which effect only a readjustment of continuing interest in property under
modified forms. In accordance with Regs. Section 1.368-1(d)(2), continuity of
business enterprise is not an issue here insofar as the business of Sun
Capital (viz., that of a bank holding company) will be continued in a
relatively unchanged manner.
As for the continuity of interest test, Regs. Section 1.368-1(b) states that
requisite to a reorganization under the Code is a continuity of interest on
the part of those persons who, directly or indirectly, were the owners of the
enterprise prior to the reorganization.
In the instant case, the management of Sun Capital and Bancorp have no
knowledge of any plan or intention on the part of those exchanging Sun Capital
shareholders who own a majority of the Sun Capital stock to sell or otherwise
dispose of the Bancorp shares to be received in the Merger. This is similar
to the standard used by the Service in the context of its administrative
practice to determine if the continuity of interest requirement will be met.
See e.g., McDonald's of Zion v. Commissioner, 688 F.2d 520 (7th Cir. 1982),
rev'g 76 T.C. 972 (1981); Heintz v. Commissioner, 25 T.C. 132 (1955); Estate
of Elizabeth Christian v. Commissioner, 57 T.C.M. 1231 (1989). Even if as
many as 62 percent of the Bancorp shares received in the exchange are disposed
of pursuant to a prearranged plan, the remaining shares retained should
provide sufficient continuity for tax-free reorganization treatment. John A.
Nelson Co. v. Helvering, 296 U.S. 374 (1935).
Accordingly, there are no other impediments to tax-free treatment here.
No assurances are or can be given that the Service will agree with the
foregoing conclusions in whole or in part although it is our opinion that they
should. While this opinion represents our considered judgment as to the
proper tax treatment to the parties concerned based upon the law as it exists
at the time the transaction is consummated and the facts as they were
presented to us, it is not binding on the Service or the courts. In the event
of any change to the applicable law or relevant facts, we would, of necessity,
need to reconsider our views.
This opinion is for the sole benefit of Bancorp and may not be relied upon by
any other person. Furthermore, this opinion may not be referenced by any
person other than Bancorp without our express written consent.
Should you wish any further assistance in connection with this or any other
matter, we will be happy to provide it.
Very truly yours,
Deloitte & Touche LLP
<PAGE>
[Simpson & Company Letterhead]
November 11, 1996
Sun Capital Bancorp
60 South 100 East
St. George, Utah 84770
EXHIBIT 8.2
Attn: John W. Allen
Dear Sirs:
You have requested our opinion as to the federal income tax consequences of a
proposed transaction involving a merger of Sun Capital Bancorp (Sun Capital)
with and into U.S. Bancorp (Bancorp) [hereinafter referred to simply as the
Merger]. More specifically, you have requested our opinion as to the federal
income tax consequences to Bancorp, Sun Capital and to those Sun Capital
shareholders who participate in the Merger and who receive Bancorp common
stock in exchange for the Sun Capital common stock surrendered in exchange
therefor.
As more fully described below, it is our opinion that for federal income tax
purposes, Sun Capital and Bancorp will each recognize no gain or loss in
connection with the Merger. Moreover, the shareholders of Sun Capital will
recognize no gain or loss in connection with their exchange of Sun Capital
shares for Bancorp shares. Our opinion is based upon the facts which have
been provided to us. In rendering this opinion, we have (with your
permission) reviewed and relied upon (a) the Agreement and Plan of Merger
between Sun Capital and Bancorp dated as of September 24, 1996 (the Agreement)
as well as the accompanying schedules thereto; and (b) certain assumptions
which we have deemed necessary and essential to our opinion and which are
contained herein. Any material variation or difference in the facts or
assumptions as stated or incorporated in the material just referred to might
affect our conclusions.
What follows is a summary of the essential facts relating to the transaction
which our opinion covers.
ESSENTIAL FACTS
Sun Capital is a Utah corporation engaged in the business of being a bank
holding company. Bancorp is an Oregon corporation which is likewise engaged
in the business of being a bank holding company. Bancorp has several banking
subsidiaries. Sun Capital has only common stock outstanding and its only
subsidiary is Sun Capital Bank, a Utah commercial bank. For valid business
reasons including, inter alia, business synergies, Sun Capital and Bancorp
intent to effectuate a business combination in the following manner:
In accordance with the Agreement, Sun Capital will merge with and into
Bancorp in accordance with Oregon corporate merger laws. Each share of
Sun Capital common stock issued and outstanding immediately prior to the
"Effective Time" as that term is defined in Article 1.2 of the Agreement
(other than dissenting shares and certain other shares specified in
Article 1.4 of the Agreement) will be converted into the right to receive
.95 share of $5.00 par value Bancorp common stock. Cash will be paid by
Bancorp to exchanging Sun Capital shareholders in lieu of issuing
fractional shares of Bancorp.
Bancorp will survive the Merger. Any Sun Capital shareholder who objects to
the Merger and who perfects his or her appraisal rights under Oregon law will
be entitled to consideration in accordance with such laws rather than have his
or her shares converted in accordance with the Agreement.
<PAGE>
ESSENTIAL ASSUMPTIONS
1. Bancorp has no plan or intention to sell or otherwise dispose of the
stock of Sun Capital Bank.
2. The fair market value of the Bancorp stock to be received by the
exchanging Sun Capital shareholders will be approximately equal to the
fair market value of the Sun Capital shares surrendered in the Merger.
3. Bancorp has no plan or intention to merge Sun Capital Bank with any other
corporate entity.
4. Sun Capital Bank has no plan or intention to issue additional shares that
would result in Bancorp losing control of Sun Capital Bank within the
meaning of Section 368(c) of the Code.(1)
5. Bancorp has no plan or intention to reacquire the shares issued to the
shareholders of Sun Capital in the Merger.
6. Sun Capital will be a solvent entity on the date of the Merger.
7. Neither Sun Capital nor Bancorp will satisfy personal expenses of Sun
Capital shareholders, if any, incurred in connection with the Merger.
8. Immediately after the Merger, former shareholders of Sun Capital will not
own, directly or indirectly within the meaning of Section 318, 50 percent
of the value of Bancorp or 50 percent of the voting power of all classes
of Bancorp voting shares.
9. Either Sun Capital or Bancorp is not an "investment company" within the
meaning of Section 368(a)(2)(F)(iii) and (a)(2)(F)(iv) (i.e., a regulated
investment company, a real estate investment trust, or a corporation 50
percent or more of the value of whose assets (excluding cash and cash
equivalents) are stock and securities and 80 percent or more of whose
total assets are assets held for investment).
10. Management of Sun Capital and Bancorp each have no knowledge of any plan
or intention on the part of those Sun Capital exchanging shareholders
holding a majority of Sun Capital stock to sell or otherwise dispose of
the Bancorp shares which they will receive in the Merger.
11. Sun Capital Bank will continue its historic business subsequent to the
Merger.
12. Any cash paid by Bancorp in lieu of fractional shares will represent a
mere mechanical rounding-off of fractions and will not represent
separately bargained-for consideration.
ISSUE CONSIDERED
I. Whether the merger of Sun Capital with and into Bancorp whereupon the
non-dissenting Sun Capital shareholders will receive Bancorp common stock
in exchange for all of their Sun Capital shares constitutes a tax-free
"reorganization" within the meaning of Section 368.
CONCLUSIONS
I. (1) Provided that the merger of Sun Capital with and into Bancorp
qualifies as a statutory merger under applicable state law, the proposed
transaction will be treated as a "reorganization" within the meaning of
Section 368(a)(1)(A). Sun Capital and Bancorp will each be "a party to a
reorganization" within the meaning of Section 368(b). Accordingly, no
gain or loss will be recognized to Bancorp or Sun Capital in connection
with the Merger. Section 361; Section 1032.
(2) No gain or loss will be recognized by the exchanging Sun Capital
shareholders upon their exchange of Sun Capital shares for Bancorp
shares. Section 354. Exchanging Sun Capital shareholders will have a
basis in their Bancorp shares to be received which is the same as the
basis in their Sun Capital shares surrendered in exchange therefor
(reduced by any amount of basis allocable to a fractional share interest
for which cash is received). Section 358.
(3) Any Sun Capital shareholder who receives cash in lieu of fractional
shares of Bancorp will be treated for federal income tax purposes as if
the fractional shares were distributed as part of the exchange and then
redeemed by Bancorp in accordance with Rev.Rul. 66-365, 1966-2 C.B. 116.
These cash payments will, therefore, be treated as a distribution in
redemption of stock subject to the rules of Section 302. Ordinarily, any
amount so received will be treated as in full payment for the Bancorp
shares deemed received.
DISCUSSION
There should be little doubt as to the tax-free nature of the merger of Sun
Capital with and into Bancorp insofar as the statutory merger represents the
classic business combination which, precisely because it is undertaken in
accordance with rules governing mergers under state law, is granted tax-free
reorganization treatment under Section 368(a)(1)(A). Admittedly, even with a
reorganization governed by Section 368(a)(1)(A), like most reorganizations
described in Section 368, attention must be paid to the judicial and
regulatory requirements associated with reorganizations which seek non-
recognition treatment. These are:
(i) having a valid corporate business purpose for the Merger
(ii) maintaining the requisite continuity of business enterprise; and
(iii) maintaining continuity of shareholder interest.
There is a corporate business purpose for the Merger. A desire to achieve
business synergies, for example, as in the instant case, should meet the
requirement reflected in Regs. Section 1.368-1(b) that the reorganization
provisions of the Code are intended to cover exchanges incident to
readjustments of corporate structures as are required by business needs and
which effect only a readjustment of continuing interest in property under
modified forms. In accordance with Regs. Section 1.368-1(d)(2), continuity of
business enterprise is not an issue here insofar as the business of Sun
Capital (viz., that of a bank holding company) will be continued in a
relatively unchanged manner.
As for the continuity of interest test, Regs. Section 1.368-1(b) states that
requisite to a reorganization under the Code is a continuity of interest on
the part of those persons who, directly or indirectly, were the owners of the
enterprise prior to the reorganization.
In the instant case, the management of Sun Capital and Bancorp have no
knowledge of any plan or intention on the part of those exchanging Sun Capital
shareholders who own a majority of the Sun Capital stock to sell or otherwise
dispose of the Bancorp shares to be received in the Merger. This is similar
to the standard used by the Service in the context of its administrative
practice to determine if the continuity of interest requirement will be met.
See e.g., Rev. Proc. 87-64, 1987-1 C.B. 828. Assuming that those holding a
majority interest in Sun Capital have no such plan or intention to dispose of
their Bancorp shares, the "continuity of interest" requirement will be met.
See e.g., McDonald's of Zion v. Commissioner, 688 F.2d 520 (7th Cir. 1982),
rev'g 76 T.C. 972 (1981); Heintz v. Commissioner, 25 T.C. 132 (1955); Estate
of Elizabeth Christian v. Commissioner, 57 T.C.M. 1231 (1989). Even if as
many as 62 percent of the Bancorp shares received in the exchange are disposed
of pursuant to a prearranged plan, the remaining shares retained should
provide sufficient continuity for tax-free reorganization treatment. John A.
Nelson Co. v. Helvering, 296 U.S. 374 (1935).
Accordingly, there are no other impediments to tax-free treatment here.
No assurances are or can be given that the Service will agree with the
foregoing conclusions in whole or in part although it is our opinion that they
should. While this opinion represents our considered judgment as to the
proper tax treatment to the parties concerned based upon the law as it exists
at the time the transaction is consummated and the facts as they were
presented to us, it is not binding on the Service or the courts. In the event
of any change to the applicable law or relevant facts, we would, of necessity,
need to reconsider our views.
This opinion is for the sole benefit of Sun Capital and may not be relied upon
by any other person. Furthermore, this opinion may not be referenced by any
person other than Sun Capital without our express written consent.
Should you wish any further assistance in connection with this or any other
matter, we will be happy to provide it.
Very truly yours,
Simpson & Company
<PAGE>
EXHIBIT 23.1
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; to the
reference to us under the headings "Experts," "THE MERGER - Conditions to the
Consummation of the Merger," and "THE MERGER - Certain Federal Income Tax
Consequences" in the Proxy Statement/Prospectus which is a part of the
Registration Statement; and to the filing of our tax opinion dated
November 11, 1996, as an exhibit to the Registration Statement.
DELOITTE & TOUCHE LLP
November 14, 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 19, 1996, on our audit
of the financial statements of Sun Capital Bancorp and Subsidiary; to the
reference to us under the headings "Experts," "THE MERGER - Conditions to the
Consummation of the Merger," and "THE MERGER - Certain Federal Income Tax
Consequences," in the Proxy Statement/Prospectus which is a part of the
Registration Statement; and to the filing of our tax opinion dated November
20, 1996, as an exhibit to the Registration Statement.
SIMPSON & COMPANY
November 25, 1996
<PAGE>
EXHIBIT 23.3
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 (not presented separately in U. S. Bancorp's 1995 Annual
Report on Form 10-K), 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 LLP
Boise, Idaho
November 14, 1995
