<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 20, 1998
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
ZIONS BANCORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
UTAH 6712 87-0227400
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION) --------------------------
ONE SOUTH MAIN, SUITE 1380
SALT LAKE CITY, UTAH 84111
(801) 524-4787
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
DALE M. GIBBONS
ZIONS BANCORPORATION
ONE SOUTH MAIN, SUITE 1380
SALT LAKE CITY, UTAH 84111
(801) 524-4787
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------
WITH COPIES TO:
STANLEY F. FARRAR KURT L. KICKLIGHTER
SULLIVAN & CROMWELL HIGGS, FLETCHER & MACK LLP
444 SOUTH FLOWER STREET 401 WEST "A" STREET, SUITE 2000
LOS ANGELES, CALIFORNIA 90071 SAN DIEGO, CALIFORNIA 92101
(213) 955-8000 (619) 236-1551
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION
STATEMENT.
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. [_]
---------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED(2) PER SHARE OFFERING PRICE FEE(3)(4)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par
value(1).............. 2,058,531 shares N/A N/A $31,478
17,606
-------
$13,872
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Includes associated preferred share purchase rights. Prior to the
occurrence of certain events, such rights will not be evidenced or traded
separately from the shares of common stock, no par value ("Zions Common
Stock"), of Zions Bancorporation ("Zions").
(2) Represents the estimated maximum number of Zions Common Stock that is
issuable in exchange for shares of common stock, par value $.001 per share
("FP Common Stock") of FP Bancorp, Inc. ("FP") upon consummation of the
merger (the "Merger") of FP with and into Zions.
(3) Pursuant to Rule 457(f)(1) and 457(c), the registration fee is based on
the average of the high and low sales prices of the FP Common Stock as
reported on the Nasdaq National Market System on April 15, 1998 and
computed based on the estimated maximum number of shares of FP Common
Stock that may be converted into the shares of Zions Common Stock to be
registered.
(4) A registration fee of $31,478 is payable hereunder; however, a
registration fee of $17,606 was previously paid in connection with the
filing by FP of preliminary proxy solicitation materials, under Section
14(g) and Rule 0-11(a)(2) of the Securities Exchange Act of 1934, as
amended, which fee, pursuant to Rule 457(b) under the Securities Act of
1933, as amended, has been credited against the registration fee paid
hereunder.
---------------
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
BECOMES EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
[LOGO OF FP BANCORP, INC.]
April 20, 1998
To the stockholders of FP Bancorp, Inc.:
You are cordially invited to attend a Special Meeting of stockholders of FP
Bancorp, Inc. ("FP") to be held on Friday, May 22, 1998 at 10:00 a.m., local
time, at the California Center for the Arts, Escondido, located at 340 North
Escondido Boulevard, Escondido, California. At the Special Meeting, you will be
asked to consider and vote on a proposal to approve the proposed merger of FP
with and into Zions Bancorporation ("Zions"), pursuant to an Agreement and Plan
of Merger, dated as of December 29, 1997, by and between Zions and FP. Upon the
merger becoming effective, each issued and outstanding share of common stock of
FP will be converted into the right to receive 0.627 (the "Exchange Ratio")
shares of common stock, no par value, of Zions.
THE BOARD OF DIRECTORS OF FP HAS CONCLUDED THAT THE MERGER IS FAIR TO AND IN
THE BEST INTERESTS OF FP AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT
FP STOCKHOLDERS VOTE FOR THE APPROVAL OF THE MERGER. Sandler O'Neill &
Partners, L.P., FP's financial advisor, has delivered to the FP Board of
Directors its opinion, dated April 20, 1998, that the Exchange Ratio is fair,
from a financial point of view, to the FP stockholders.
Consummation of the merger is subject to certain conditions, including the
approval of the merger by the FP stockholders and various regulatory
authorities and the receipt of an opinion of counsel and an opinion of KPMG
Peat Marwick LLP in respect of certain federal income tax consequences of the
merger. Subject to satisfaction or waiver of the foregoing conditions, the
merger currently is expected to close in the second quarter of 1998.
The enclosed Notice of Special Meeting of Stockholders and Proxy Statement-
Prospectus describe the merger and provide specific information concerning the
Special Meeting. Please read these materials carefully and consider the
information contained in them.
It is important that your shares be represented and voted at the Special
Meeting regardless of the number of shares you own and whether or not you plan
to attend the Special Meeting. The affirmative vote of the holders of a
majority of the outstanding shares of FP common stock entitled to vote at the
Special Meeting is required for approval of the merger. Your failure to vote
for approval of the merger has the same effect as a vote against the merger.
We urge each of you to sign, date and mail the enclosed proxy promptly in the
enclosed postage-paid envelope, whether or not you currently plan to attend the
Special Meeting. Returning your proxy card now will not prevent you from voting
in person at the Special Meeting, but will assure that your vote is counted if
you are unable to attend. If you decide to attend the Special Meeting and wish
to vote in person, you may withdraw your proxy at that time. Please do not send
in certificates for your shares of FP common stock at this time. Instructions
for exchange of stock certificates will be sent to FP stockholders upon
consummation of the merger.
/s/ MARK N. BAKER /s/ HARVEY L. WILLIAMSON
Mark N. Baker Harvey L. Williamson
Chairman President and Chief Executive Officer
<PAGE>
FP BANCORP, INC.
613 WEST VALLEY PARKWAY
ESCONDIDO, CALIFORNIA 92025-4929
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 1998
----------------
NOTICE IS HEREBY GIVEN that a Special Meeting of stockholders of FP Bancorp,
Inc., a Delaware corporation ("FP"), has been called by the Board of Directors
of FP and will be held at the California Center for the Arts, Escondido,
located at 340 North Escondido Boulevard, Escondido, California, on Friday,
May 22, 1998 at 10:00 a.m., local time.
The purposes of the Special Meeting are:
(1) to consider and vote on a proposal to approve the proposed merger
(the "Merger") of FP with and into Zions Bancorporation, a Utah corporation
("Zions"), pursuant to an Agreement and Plan of Merger, dated as of
December 29, 1997, by and between Zions and FP. As a result of the Merger,
FP would be merged with and into Zions with Zions being the surviving
corporation, and the separate existence of FP shall cease; and
(2) to transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.
Holders of record of shares of FP common stock at the close of business on
April 13, 1998, the record date for the Special Meeting, are entitled to
notice of and to vote at the Special Meeting or at any postponements or
adjournments thereof. The affirmative vote of the holders of a majority of the
outstanding shares of common stock of FP is required to approve the Merger.
The Board of Directors of FP has concluded that the Merger is fair to and in
the best interests of FP and its stockholders and unanimously recommends that
the FP stockholders vote for the approval of the Merger.
The terms of the Merger and the Zions common stock to be issued in
connection therewith are described in detail in the accompanying Proxy
Statement-Prospectus. To ensure that your vote will be counted, please
complete, date and sign the enclosed proxy card and return it promptly in the
enclosed postage-paid envelope, whether or not you currently plan to attend
the Special Meeting. You may revoke your proxy in the manner described in the
accompanying Proxy Statement-Prospectus at any time before it is voted at the
Special Meeting.
By Order of the Board of Directors,
/s/ Gary W. Deems
Gary W. Deems
Secretary
Escondido, California
April 20, 1998
----------------
YOUR VOTE IS IMPORTANT. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE
SPECIAL MEETING, YOU SHOULD DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD AS
PROMPTLY AS POSSIBLE. IF YOU ATTEND THE SPECIAL MEETING, YOU WILL BE ENTITLED
TO VOTE IN PERSON EVEN IF YOU PREVIOUSLY SUBMITTED A PROXY.
YOU SHOULD NOT SEND IN CERTIFICATES FOR YOUR SHARES OF FP COMMON STOCK AT
THIS TIME.
----------------
<PAGE>
PROXY STATEMENT
FP BANCORP, INC.
SPECIAL MEETING TO BE HELD ON MAY 22, 1998
---------------
PROSPECTUS
ZIONS BANCORPORATION
COMMON STOCK
(NO PAR VALUE PER SHARE)
---------------
This Proxy Statement-Prospectus is being furnished to the holders (the "FP
Stockholders") of common stock, par value $.001 per share (the "FP Common
Stock") of FP Bancorp, Inc., a Delaware corporation ("FP"), in connection with
the solicitation of proxies by the Board of Directors of FP (the "FP Board")
from holders of outstanding shares of FP Common Stock, for use at a special
meeting of stockholders of FP to be held at the California Center for the
Arts, Escondido, located at 340 North Escondido Boulevard, Escondido,
California, on Friday, May 22, 1998 at 10:00 a.m., local time, and at any
adjournments and postponements thereof (the "Special Meeting").
At the Special Meeting, FP Stockholders will be asked to consider and vote
to approve the proposed merger (the "Merger") of FP with and into Zions
Bancorporation, a Utah corporation ("Zions"), with Zions being the corporation
surviving the Merger (sometimes hereinafter referred to as the "Surviving
Corporation"), pursuant to an Agreement and Plan of Merger, dated as of
December 29, 1997 (as it may be amended, supplemented or otherwise modified
from time to time, the "Merger Agreement"), by and between Zions and FP, which
is attached as Appendix A to this Proxy Statement-Prospectus and is
incorporated herein by reference.
Under the Merger Agreement, each share of FP Common Stock issued and
outstanding at the Effective Time (as defined herein) (other than shares of FP
Common Stock owned by FP or any of its subsidiaries or by Zions or any of its
subsidiaries ("Treasury Stock")) will be converted automatically at the
Effective Time into the right to receive 0.627 of a share (the "Exchange
Ratio") of common stock of Zions ("Zions Common Stock"), with any rights
attached thereto under or by virtue of the Zions Rights Plan (as defined
herein). Based upon the representations and warranties of FP in the Merger
Agreement regarding the number of shares of FP Common Stock (and options to
acquire FP Common Stock) outstanding as of the date thereof, assuming no cash
is paid in lieu of fractional shares, and not including shares held by Zions
or its affiliates, 2,058,531 shares of Zions Common Stock would be issued in
the Merger. The Merger Agreement also provides for the conversion upon
consummation of the Merger of all stock options (the "FP Stock Options")
outstanding under the FP Stock Plan (as defined herein) into options to
acquire shares of Zions Common Stock, appropriately adjusted to reflect the
Exchange Ratio.
This Proxy Statement-Prospectus constitutes a prospectus of Zions in respect
of up to 2,058,531 shares of Zions Common Stock to be issued upon consummation
of the Merger pursuant to the Merger Agreement.
The outstanding shares of Zions Common Stock are traded on the Nasdaq
National Market ("NASDAQ"). The last reported closing price of Zions Common
Stock on NASDAQ on April 17, 1998 was $51.625 per share.
This Proxy Statement-Prospectus and the accompanying proxy cards are first
being mailed to stockholders of FP on or about April 20, 1998.
---------------
THESE SECURITIES 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 SHARES OF ZIONS COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY GOVERNMENTAL AGENCY.
---------------
THE DATE OF THIS PROXY STATEMENT-PROSPECTUS IS APRIL 20, 1998.
<PAGE>
AVAILABLE INFORMATION
Zions and FP are each subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act"), and each, in accordance therewith, files
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information can be inspected and copied at the public reference
facilities of the Commission maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices at 7 World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
at prescribed rates. Copies of such materials can also be obtained at
prescribed rates by mail addressed to the Commission, Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, Zions
Common Stock and FP Common Stock are quoted on NASDAQ, and such reports, proxy
statements and other information can also be inspected at the offices of
NASDAQ Operations, 1735 K Street, N.W., Washington, D.C. 20006. Such material
may also be accessed electronically by means of the Commission's home page on
the Internet at http://www.sec.gov.
This Proxy Statement-Prospectus constitutes a part of a registration
statement on Form S-4 (together with all amendments and exhibits, the
"Registration Statement") filed by Zions with the Commission under the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act"), with respect to the shares of Zions Common Stock to be
issued in connection with the Merger. As permitted by the rules and
regulations of the Commission, this Proxy Statement-Prospectus omits certain
information, exhibits and undertakings contained in the Registration
Statement. The statements contained in this Proxy Statement-Prospectus as to
the contents of any contract or other document filed as an exhibit to the
Registration Statement are of necessity brief descriptions and are qualified
in their entirety by reference to the copy of such contract or document filed
as an exhibit to the Registration Statement. The Registration Statement and
the exhibits thereto can be inspected at the public reference facilities of
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C., and
copies of such material can be obtained at prescribed rates by mail addressed
to the Commission, Public Reference Section, Washington, D.C. 20549.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission by Zions are hereby
incorporated herein by reference and made a part hereof:
(a) Zions' Annual Report on Form 10-K for the year ended December 31,
1997, filed on March 27, 1998.
(b) Zions' Current Reports on Form 8-K filed on February 6, 1998, April
3, 1998 and April 15, 1998.
(c) Zions' Registration Statement on Form 8-A dated January 20, 1998.
(d) The description of Zions Common Stock (which is registered under
Section 12 of the Exchange Act) which is contained in Zions' registration
statement on Form 10, and any amendment or report filed for the purpose of
updating such description.
(e) The description of the Zions Rights Plan contained in Zions'
Registration Statement on Form 8-A dated October 10, 1996, and any
amendment or report filed for the purpose of updating such description.
(f) Zions' Proxy Statement dated March 25, 1998.
The following documents filed with the Commission by FP are hereby
incorporated herein by reference and made a part hereof:
(a) FP's Annual Report on Form 10-KSB for the year ended December 31,
1997, filed on March 13, 1998.
(b) FP's Current Reports on Form 8-K filed on January 6, 1998, and
February 11, 1998.
(c) FP's Proxy Statement for the Annual Meeting of stockholders held on
May 27, 1997.
2
<PAGE>
All documents and reports filed by Zions or FP pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and prior
to the Special Meeting shall be deemed to be incorporated herein by reference
and to be a part hereof from the date of such filing and any statement
contained herein or in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained herein or in any other
subsequently filed document which also is, or is deemed to be, incorporated
herein by reference, modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed to constitute a part hereof,
except as so modified or superseded. Such incorporation by reference shall not
be deemed specifically to incorporate by reference the information referred to
in Item 402(a)(8) of Regulation S-K.
----------------
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES BY REFERENCE CERTAIN DOCUMENTS
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF SUCH DOCUMENTS
ARE AVAILABLE UPON REQUEST AND WITHOUT CHARGE TO ANY PERSON TO WHOM THIS PROXY
STATEMENT-PROSPECTUS HAS BEEN DELIVERED. REQUESTS FOR SUCH DOCUMENTS SHOULD BE
DIRECTED TO ZIONS BANCORPORATION, ONE SOUTH MAIN, SUITE 1380, SALT LAKE CITY,
UTAH 84111, ATTENTION: DALE M. GIBBONS, CHIEF FINANCIAL OFFICER (801-524-
4787), AS TO ZIONS DOCUMENTS; AND FP BANCORP, INC., 613 WEST VALLEY PARKWAY,
ESCONDIDO, CALIFORNIA 92025-4929, ATTENTION: MICHAEL J. PERDUE, CHIEF
OPERATING OFFICER (760-739-6501) AS TO FP DOCUMENTS. IN ORDER TO ENSURE TIMELY
DELIVERY OF SUCH DOCUMENTS PRIOR TO THE SPECIAL MEETING, ANY REQUEST SHOULD BE
MADE NOT LATER THAN MAY 12, 1998.
All information contained in this Proxy Statement-Prospectus with respect to
Zions and its subsidiaries has been supplied by Zions, and all information
with respect to FP and its subsidiaries has been supplied by FP.
----------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS
IN CONNECTION WITH THE SOLICITATION OF PROXIES OR THE OFFERING OF SECURITIES
MADE HEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. 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, BY ANY PERSON IN ANY JURISDICTION IN WHICH SUCH AN
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH AN OFFER, OR SOLICITATION OF AN OFFER, OR PROXY
SOLICITATION. NEITHER DELIVERY OF THIS PROXY STATEMENT-PROSPECTUS NOR ANY
DISTRIBUTION OF THE SECURITIES BEING OFFERED PURSUANT TO THIS PROXY STATEMENT-
PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR THEREIN SINCE THE
DATE OF THIS PROXY STATEMENT-PROSPECTUS.
----------------
FORWARD-LOOKING STATEMENTS
Certain statements included or incorporated by reference in this Proxy
Statement-Prospectus, including without limitation statements containing the
words "believes," "anticipates," "intends," "expects" and words of similar
import, constitute forward-looking statements. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements of Zions or FP to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general economic conditions in Zions' or FP's
market areas; variances in interest rates; changes in or amendments to
regulatory authorities capital requirements or other regulations applicable to
Zions' or FP's banking subsidiaries; increased competition for loans and
deposits; and other factors referred to elsewhere in this Proxy Statement-
Prospectus and the documents incorporated by reference herein. GIVEN THESE
UNCERTAINTIES, FP STOCKHOLDERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON
SUCH FORWARD-LOOKING STATEMENTS. Zions and FP disclaim any obligation to
update any such factors or to publicly announce the result of any revisions to
any of the forward-looking statements included or incorporated by reference
herein to reflect future events or developments.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION...................................................... 2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.......................... 2
SUMMARY.................................................................... 6
The Companies............................................................ 6
The Special Meeting...................................................... 7
The Merger............................................................... 8
The Merger Agreement..................................................... 10
Comparison of Shareholder Rights; "Anti-Takeover" Provisions............. 11
Markets and Market Prices................................................ 11
Selected Financial Information........................................... 12
Comparative Per Share Data............................................... 13
THE COMPANIES.............................................................. 14
Zions.................................................................... 14
FP....................................................................... 14
THE SPECIAL MEETING........................................................ 16
Date, Time and Place..................................................... 16
Matters to be Considered at the Special Meeting.......................... 16
Record Date; Stock Entitled to Vote...................................... 16
Votes Required; Quorum................................................... 16
Voting of Proxies........................................................ 16
Revocability of Proxies.................................................. 17
Solicitation of Proxies.................................................. 17
Security Ownership of Certain Beneficial Owners and Management........... 17
THE MERGER................................................................. 18
Background of the Merger................................................. 18
Effect of Merger......................................................... 20
Reasons for the Merger; Recommendation of the Board of Directors......... 21
Opinion of Financial Advisor............................................. 23
Certain Federal Income Tax Consequences.................................. 28
Regulatory Approvals..................................................... 29
Resale of Zions Common Stock............................................. 31
Interests of Certain Persons in the Merger............................... 31
Accounting Treatment..................................................... 35
THE MERGER AGREEMENT....................................................... 36
The Merger............................................................... 36
Conversion of FP Common Stock............................................ 36
Effective Time........................................................... 36
Exchange of Stock Certificates........................................... 36
Conduct of Business Prior to the Merger.................................. 37
Certain Covenants........................................................ 38
Conditions............................................................... 40
Waiver and Amendment..................................................... 41
Termination.............................................................. 41
THE STOCKHOLDER AGREEMENTS................................................. 42
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF FP......................... 44
</TABLE>
4
<PAGE>
TABLE OF CONTENTS--(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CERTAIN DIFFERENCES IN THE RIGHTS OF ZIONS SHAREHOLDERS AND FP
STOCKHOLDERS............................................................. 47
VALIDITY OF ZIONS COMMON STOCK............................................ 51
EXPERTS................................................................... 51
</TABLE>
LIST OF APPENDICES
<TABLE>
<C> <S>
Appendix A --Agreement and Plan of Merger, dated as of December 29, 1997,
between Zions and FP (as amended by the First Amendment to
Agreement and Plan of Merger, dated as of February 27,
1998, between Zions and FP).
Appendix B --Opinion of Sandler O'Neill & Partners, L.P.
</TABLE>
5
<PAGE>
SUMMARY
The following summary is not intended to be complete and is qualified in all
respects by the more detailed information included in this Proxy Statement-
Prospectus, the Appendices and the documents incorporated by reference. FP
Stockholders are urged to read carefully this Proxy Statement-Prospectus,
including the Appendices and the documents incorporated by reference, in its
entirety. Unless the context otherwise requires, references to "Zions" herein
shall be to Zions and its subsidiaries and references to "FP" herein shall be
to FP and its subsidiary.
THE COMPANIES
Zions
Zions is a bank holding company registered under the Bank Holding Company Act
of 1956, as amended (the "BHCA"), and organized under the laws of Utah, engaged
primarily in the commercial banking business through its banking subsidiaries.
Zions' principal executive offices are located at One South Main, Suite 1380,
Salt Lake City, Utah 84111 (telephone: 801-524-4787). Zions is the second
largest bank holding company headquartered in Utah. Zions' principal banking
subsidiary is Zions First National Bank ("ZFNB"), located in Salt Lake City,
Utah, which as of December 31, 1997 had 129 offices located throughout the
States of Utah and Idaho, plus one foreign office, for a total of 130 banking
offices, including its head office. ZFNB is the second largest commercial
banking organization headquartered in the State of Utah.
Under local management teams, Zions also operates the following full-service
community banking offices:
<TABLE>
<S> <C> <C>
NAME GENERAL TOTAL NUMBER
---- MARKET AREA OF BRANCHES
------------ ------------
Nevada State Bank..................... Nevada 40
National Bank of Arizona.............. Arizona 30
Centennial Savings Bank, F.S.B........ Western Colorado,
Northwest New Mexico 7
Pitkin County Bank and Trust Co....... Aspen, Colorado 4
Valley National Bank of Cortez, Western Colorado 3
Colorado.............................
Vectra Bank........................... Denver/Boulder, Colorado 16
The First National Bank in Alamosa.... Alamosa, Colorado 3
Tri-State Bank........................ Denver, Colorado 2
Grossmont Bank........................ San Diego, California 15
</TABLE>
On December 22, 1997, Zions agreed to purchase SBT Bankshares Inc., a
Colorado corporation ("SBT"), pursuant to which SBT will merge with and into a
subsidiary of Zions; State Bank and Trust, a subsidiary of SBT, operates two
branches in Colorado Springs, Colorado. On January 22, 1998, Zions agreed to
acquire Routt County National Bank Corporation ("Routt") and its banking
subsidiary, First National Bank of Colorado ("FNBC"), in exchange for Zions
Common Stock.
On March 25, 1998, Zions entered into an agreement and plan of merger by and
among Zions, SBC Acquisition Corp. ("SBC") and The Sumitomo Bank of California,
pursuant to which SBC, an indirect wholly owned subsidiary of Zions, will merge
with and into The Sumitomo Bank of California ("Sumitomo Merger"). Thereafter,
The Sumitomo Bank of California will merge with and into Grossmont Bank, a
wholly-owned subsidiary of Zions ("Grossmont"). Assuming the Sumitomo Merger is
approved by the stockholders of The Sumitomo Bank of California and all
applicable regulatory authorities, and if all other conditions to the Sumitomo
Merger are satisfied, the Sumitomo Merger is expected to be consummated in the
third quarter of 1998. Audited balance sheets for the years ended December 31,
1997 and 1996 and audited statements of income,
6
<PAGE>
changes in shareholders' equity and cash flows for the years ended December 31,
1997, 1996 and 1995 for The Sumitomo Bank of California and unaudited summary
pro forma condensed balance sheet and income statement information for the
Sumitomo Merger have been filed by Zions in a Current Report on Form 8-K dated
April 15, 1998 and are incorporated herein by reference. The unaudited pro
forma condensed financial statements for the Sumitomo Merger do not give effect
to the proposed acquisition by Zions of SBT, Routt and FP.
At December 31, 1997, Zions had total consolidated assets of approximately
$9.522 billion, deposits of $6.854 billion, shareholders' equity of $655
million and long-term debt of $259 million, as compared with corresponding
amounts of $7.116 billion, $5.120 billion, $555 million and $252 million,
respectively at December 31, 1996. See "The Companies--Zions."
FP
FP, a Delaware corporation, was organized in 1995 and is registered as a bank
holding company under the BHCA. FP is the successor to FP Bancorp, a California
corporation, organized in 1984. FP is headquartered in Escondido, California, a
city in northern San Diego County, approximately 35 miles north of downtown
San Diego. FP conducts all of its business activities through branches of its
wholly-owned subsidiary bank, First Pacific National Bank ("FPNB"), which
operates five branches in northern San Diego County and three branches in
southern Riverside County. Unless otherwise indicated, all references to the
business and assets of FP include the business and assets of FPNB. FP's
administrative offices are located at 613 West Valley Parkway, Escondido,
California 92025-4929, telephone (760) 741-3312.
FPNB focuses on providing commercial banking services in northern San Diego
County and southern Riverside County. From the time FPNB was formed, management
has worked to build a reputation for service to businesses and professionals
and, through efforts of its board of directors and management, has sought to
maintain an identity as a community-oriented commercial bank.
Since 1993, through a series of debt and securities offerings and
acquisitions of other institutions and branches, FP has grown considerably. As
of December 31, 1993, FP had assets of $165,441,000 and as of December 31, 1997
FP had assets of $353,204,000. As of December 31, 1997, FP had total deposits
of $309,502,000 and total stockholders' equity of $26,189,000. Net earnings for
the year ended December 31, 1997 were $4,383,000 as compared to net earnings of
$4,208,000 for the year ended December 31, 1996, and net earnings of $1,911,000
for the year ended December 31, 1995. See "The Companies--FP."
THE SPECIAL MEETING
Date, Time and Place
The Special Meeting is scheduled to be held at the California Center for the
Arts, Escondido, located at 340 North Escondido Boulevard, Escondido,
California, on Friday, May 22, 1998 at 10:00 a.m., local time.
Matters to be Considered at the Special Meeting
The purposes of the Special Meeting are (a) to consider and vote upon the
approval of the Merger and (b) to transact such other business as may properly
come before the Special Meeting or any adjournments or postponements thereof.
See "The Special Meeting--Matters to be Considered at the Special Meeting."
Record Date; Stock Entitled to Vote
Only holders of record of FP Common Stock at the close of business on April
13, 1998 (the "Record Date") will be entitled to receive notice of, and to vote
at, the Special Meeting and any postponements or adjournments thereof. As of
the Record Date, there were 3,129,215 shares of FP Common Stock issued and
outstanding. See "The Special Meeting--Record Date; Stock Entitled to Vote."
7
<PAGE>
Votes Required; Quorum
The affirmative vote of the holders of at least a majority of the total
number of outstanding shares of FP Common Stock entitled to vote at the Special
Meeting is required to approve the Merger. Each holder of shares of FP Common
Stock outstanding on the Record Date will be entitled to one vote for each
share held of record upon each matter properly submitted at the Special Meeting
and any postponement or adjournment thereof. A majority of all shares of FP
Common Stock entitled to vote, represented in person or by proxy, constitutes a
quorum. Abstentions and broker non-votes are each included in the determination
of the number of shares present; however, they are not counted as votes in
favor of the Merger. See "The Special Meeting--Votes Required; Quorum."
Security Ownership of Certain Beneficial Owners and Management
As of the Record Date, the directors, officers and one stockholder of FP
beneficially held, in the aggregate, the ability to direct the voting with
respect to 1,213,710 shares of FP Common Stock, comprising approximately 38.79%
of the voting power of the FP Common Stock outstanding on the Record Date. In
addition, pursuant to stockholder agreements (the "Stockholder Agreements"),
all of the directors and one non-director in their capacity as FP Stockholders,
together holding or controlling an aggregate of 1,213,710 shares of FP Common
Stock (or approximately 38.79% of the shares of FP Common Stock outstanding on
the Record Date) have agreed to vote their shares in favor of the Merger. See
"The Special Meeting--Security Ownership of Certain Beneficial Owners and
Management" and "The Stockholder Agreements."
THE MERGER
Effect of Merger
At the Effective Time, FP will merge with and into Zions, and Zions will be
the Surviving Corporation in the Merger and will continue its corporate
existence under Utah law. The separate corporate existence of FP will then
cease. In addition, as promptly as practicable after the consummation of the
Merger, FPNB will be merged with and into Grossmont (the "Bank Merger"), and
Grossmont will be the resulting bank upon consummation of the Bank Merger.
Upon the Merger becoming effective, each share of FP Common Stock issued and
outstanding at the Effective Time (other than Treasury Stock) will be converted
automatically into the right to receive 0.627 of a share of Zions Common Stock,
with any rights attached thereto under or by virtue of the Zions Rights Plan.
FP Stockholders will receive cash in lieu of fractional shares of Zions Common
Stock. FP Stockholders who vote against the Merger will not be entitled to
appraisal or dissenters' rights. See "The Merger Agreement-- Effective Time,"
"--The Merger" and "Certain Differences in the Rights of Zions Shareholders and
FP Stockholders--Dissenters' Rights."
Reasons for the Merger; Recommendation of the Board of Directors
FP. The FP Board has unanimously approved the Merger Agreement and the
transactions contemplated thereby. THE MEMBERS OF THE FP BOARD UNANIMOUSLY
BELIEVE THAT THE MERGER AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER
AGREEMENT ARE FAIR TO, AND ARE IN THE BEST INTERESTS OF, THE FP STOCKHOLDERS
AND UNANIMOUSLY RECOMMEND A VOTE "FOR" THE MATTERS TO BE VOTED UPON BY THE FP
STOCKHOLDERS IN CONNECTION WITH THE MERGER. THE CONCLUSION OF THE FP BOARD WITH
RESPECT TO THE MERGER IS BASED UPON A NUMBER OF FACTORS. See "The Merger--
Background of the Merger," "--Reasons for the Merger; Recommendation of the
Board of Directors" and "--Opinion of Financial Advisor."
Zions. The Board of Directors of Zions (the "Zions Board") has unanimously
approved the Merger Agreement and determined that the Merger and the issuance
of the Zions Common Stock pursuant thereto are in
8
<PAGE>
the best interests of Zions and its shareholders. The approval of the Merger
Agreement by the shareholders of Zions is not required.
Opinion of Financial Advisor
Sandler O'Neill & Partners, L.P. ("Sandler O'Neill") has served as financial
advisor to FP in connection with the Merger and has delivered its opinion to
the FP Board that, as of December 29, 1997, the Exchange Ratio was fair, from a
financial point of view, to the FP Stockholders. Sandler O'Neill has also
delivered its written opinion to the FP Board that, as of the date of this
Proxy Statement-Prospectus, the Exchange Ratio is fair, from a financial point
of view, to the FP Stockholders. The opinion of Sandler O'Neill, dated as of
the date of this Proxy Statement-Prospectus, is attached as Appendix B to this
Proxy Statement-Prospectus. FP Stockholders are urged to read such opinion in
its entirety for a description of the procedures followed, assumptions made,
matters considered and qualifications and limitations on the review undertaken
in connection therewith. See "The Merger--Opinion of Financial Advisor."
Certain Federal Tax Consequences
The Merger is intended to be a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
Consummation of the Merger is conditional, among other things, on delivery to
FP, immediately prior to the Effective Time, of the opinion of KPMG Peat
Marwick LLP to the effect that (i) the Merger constitutes a "reorganization"
within the meaning of Section 368 of the Code and (ii) no gain or loss will be
recognized by FP Stockholders who receive shares of Zions Common Stock in
exchange for shares of FP Common Stock, except with respect to cash received in
lieu of fractional share interests, and on delivery to Zions, immediately prior
to the Effective Time, of the opinion of Sullivan & Cromwell to the effect that
the Merger constitutes a "reorganization" under Section 368 of the Code. See
"The Merger--Certain Federal Income Tax Consequences" and "The Merger
Agreement--Conditions."
Because of the complexity of the tax laws and the individual nature of the
tax consequences of the Merger to each FP Stockholder, each FP Stockholder
should consult a tax advisor concerning certain other federal and all state,
local and foreign tax consequences of the Merger that may be applicable.
Regulatory Approvals
The Merger is subject to prior approval by the Board of Governors of the
Federal Reserve System or the Federal Reserve Bank of San Francisco, acting
under delegated authority (the "Federal Reserve Board") under Section 3 of the
BHCA, and the Bank Merger is subject to prior approval by the Federal Deposit
Insurance Corporation (the "FDIC") and the Commissioner of the California
Department of Financial Institutions (the "Commissioner"). Zions submitted a
notice to the Federal Reserve Board (the "FRB Notice") seeking approval of the
Merger. Grossmont submitted applications to the FDIC and the Commissioner
seeking approval of the Bank Merger and related matters. On March 11, 1998,
Grossmont received approval for the Bank Merger from the Commissioner. On March
12, 1998, Zions received approval for the Merger from the Federal Reserve
Board. On April 14, 1998, Grossmont received approval for the Bank Merger from
the FDIC. See "The Merger--Regulatory Approvals" and "The Merger Agreement--
Conditions."
Interests of Certain Persons in the Merger
In considering the recommendation of the FP Board, FP Stockholders should be
aware that certain members of the Board of Directors and management of FP have
certain interests in the transactions contemplated by the Merger Agreement that
are in addition to the interests of FP Stockholders generally and which may
create potential conflicts of interest. These interests include, among other
things, the following: (i) FP has entered into employment agreements with
Harvey L. Williamson, President and Chief Executive Officer of FP, Michael J.
Perdue, Executive Vice President and Chief Operating Officer of FP and Gary W.
Deems, Executive Vice President and Chief Administrative Officer of FP which
contain, among other things, change of control provisions that would be
triggered by the Merger; (ii) FP has entered into salary continuation
agreements with Mr. Perdue and Mr. Deems which contain change of control
provisions that would be triggered by the Merger;
9
<PAGE>
(iii) at the Effective Time the employment agreement and salary continuation
agreement of Mr. Perdue shall lapse and be replaced with an employment
agreement between Mr. Perdue and Grossmont, which was entered into at the
request of Zions; (iv) Messrs. Williamson and Deems have entered into non-
competition agreements with Grossmont and Zions at the request of Zions, which
become effective upon their resignation; (v) Zions will indemnify the directors
and officers of FP and its subsidiaries from certain liabilities and provide
them with directors' and officers' liability insurance; (vi) stock options with
respect to FP Common Stock held by FP Stockholders, including directors and
certain officers of FP will be converted into stock options with respect to
Zions Common Stock; and (vii) three members of the FP Board, Mark N. Baker,
Robert W. Klemme and Randall C. Luce will continue as members of the Grossmont
board of directors (the "Grossmont Board") after consummation of the Bank
Merger. In addition, if the proposed Sumitomo Merger and the transactions
contemplated thereby are approved and consummated, Robert G. Sarver, the
chairman of the board of Grossmont, and a limited partnership, of which Mr.
Sarver is the general partner, will hold, in equal proportions, an aggregate 5%
interest in the resultant bank (a combination of Grossmont and The Sumitomo
Bank of California). See "The Merger--Interests of Certain Persons in the
Merger" and "The Merger Agreement--Certain Covenants."
Accounting Treatment
For accounting and financial reporting purposes, it is intended that the
Merger will be accounted for as a pooling-of-interests in accordance with
generally accepted accounting principles. See "The Merger--Accounting
Treatment."
THE MERGER AGREEMENT
Effective Time
The Merger will become effective (the "Effective Time") on the date and at
the time that articles of merger and related documents are filed with the Utah
Division of Corporations and Commercial Code and the Secretary of State of the
State of Delaware or such later date as may be specified in such articles (such
date on which the Effective Time occurs, the "Effective Date"). Subject to
satisfaction or waiver of the conditions specified in the Merger Agreement, the
parties expect the Merger to become effective in the second quarter of 1998,
although there can be no assurance as to whether or when the Merger will occur.
See "The Merger Agreement--Effective Time" and "--Conditions."
Conditions to the Merger
Consummation of the Merger is subject to various conditions, including
receipt of the stockholder approval solicited hereby, receipt of the necessary
regulatory approvals, receipt of an opinion of counsel and an opinion of KPMG
Peat Marwick LLP in respect of certain federal income tax consequences of the
Merger and other matters and satisfaction of other closing conditions. See "The
Merger Agreement--Conditions."
Waiver and Amendment
Prior to the Effective Time, any provision of the Merger Agreement may be
waived by the party benefitted by the provision, or amended or modified at any
time (including the structure of the transaction) by an agreement in writing
between the parties and approved by the respective Boards of Directors, except
that after the Special Meeting, the Merger Agreement may not be amended if it
would violate the Delaware General Corporation Law (the "DGCL") or reduce the
consideration to be received by FP Stockholders in the Merger. See "The Merger
Agreement--Waiver and Amendment."
Termination
The Merger Agreement may be terminated, and the Merger abandoned, prior to
the Effective Time, either before or after its approval by the FP Stockholders,
upon the occurrence of various events and under certain circumstances,
including by the mutual consent of Zions and FP, or by action of the board of
directors of either
10
<PAGE>
company under certain circumstances, including if the Merger is not consummated
by August 31, 1998, unless the failure to consummate by that time is due to
knowing action or inaction of the party seeking to terminate. In addition, if
the Merger Agreement is terminated under certain circumstances, FP may be
required to pay Zions a termination fee of $1.8 million (the "Break-Up Fee").
See "The Merger Agreement--Termination."
COMPARISON OF SHAREHOLDER RIGHTS; "ANTI-TAKEOVER" PROVISIONS
The rights of FP Stockholders currently are determined by reference to the
DGCL, FP's certificate of incorporation (the "FP Certificate") and FP's bylaws
(the "FP Bylaws"). At the Effective Time, FP Stockholders will become
shareholders of the Surviving Corporation. Their rights as shareholders will
then be determined by reference to the Utah Revised Business Corporation Act,
Zions' articles of incorporation (the "Zions Charter") and Zions' bylaws (the
"Zions Bylaws"). The Zions Charter and Zions Bylaws contain provisions which
may be considered to be anti-takeover in nature, including staggered terms of
office for directors, absence of cumulative voting and special shareholder vote
requirements for certain types of extraordinary corporate transactions.
Additionally, Zions has adopted a shareholders' rights plan which will have the
effect of encouraging entities interested in acquiring Zions to negotiate any
such transactions with Zions' management and of deterring or discouraging
unfriendly takeovers by making any such takeover substantially more expensive
to the entity sponsoring the unfriendly takeover. See "Certain Differences in
the Rights of Zions Shareholders and FP Stockholders."
MARKETS AND MARKET PRICES
Zions Common Stock and FP Common Stock are currently traded on NASDAQ under
the symbol "ZION" and "FPBN," respectively. The following table sets forth (i)
the closing price per share of Zions Common Stock; (ii) the closing price per
share of FP Common Stock; and (iii) the equivalent per share price for FP
Common Stock (based upon the Exchange Ratio); all at the close of business on
December 29, 1997, the last trading day immediately preceding public
announcement of the Merger, and April 17, 1998:
<TABLE>
<CAPTION>
EQUIVALENT
ZIONS FP PRICE PER
COMMON COMMON FP COMMON
STOCK STOCK SHARE(1)
------- ------- ----------
<S> <C> <C> <C>
December 29, 1997............................... $43.50 $23.375 $27.275
April 17, 1998.................................. $51.625 $32.625 $32.369
</TABLE>
- --------
(1) The equivalent price per share of FP Common Stock at the specified date
represents the closing price of a share of Zions Common Stock on such date
multiplied by the Exchange Ratio.
11
<PAGE>
SELECTED FINANCIAL INFORMATION
The following table sets forth certain historical financial information for
Zions and FP. This information is based on the respective audited historical
financial statements of Zions and FP incorporated by reference and should be
read in conjunction with such statements and information and the related notes.
The audited historical financial information for Zions for the years ended
December 31, 1997, 1996 and 1995 have been restated to give effect to the
merger of Zions with GB Bancorporation, which was completed on November 14,
1997 and accounted for as a pooling-of-interests, and a four-for-one split of
Zions Common Stock during the second quarter of 1997.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
ZIONS
Earnings
Net interest income... $ 351,799 $ 289,166 $ 233,547 $ 198,606 $ 174,657
Provision for loan
losses............... 6,175 4,640 3,000 2,181 2,993
Net income............ $ 122,362 $ 107,423 $ 82,385 $ 63,827 $ 58,205
========== ========== ========== ========== ==========
Per Share
Diluted earnings per
share................ 1.89 1.68 1.37 1.09 1.02
Cash Dividends........ 0.47 0.43 0.35 0.29 0.25
Statement of Condition
at Period End
Assets................ $9,521,770 $7,116,413 $6,095,515 $4,934,095 $4,801,054
Deposits.............. 6,854,462 5,119,692 4,511,184 3,705,976 3,432,289
Long-term debt........ 258,566 251,620 56,229 58,182 59,587
Shareholders' equity.. 655,460 554,610 469,678 365,770 312,592
FP
Earnings
Net interest income... $ 19,941 $ 15,726 $ 12,121 $ 9,573 $ 9,202
Provision for loan
losses............... 432 700 600 -- 3,106
Net earnings (loss)... $ 4,383 $ 4,208 $ 1,911 $ 332 $ (5,068)
========== ========== ========== ========== ==========
Per Share
Diluted earnings per
share................ $ 1.45 $ 1.41 $ 0.72 $ 0.26 $ (4.18)
Cash Dividends........ -- -- -- -- --
Balance Sheet at Period
End
Assets................ $ 353,204 $ 308,585 $ 208,797 $ 164,718 $ 165,441
Deposits.............. 309,502 264,521 185,664 146,443 153,004
Convertible
subordinated
debentures........... 4,575 4,575 4,575 4,575 4,575
Stockholders' equity.. 26,189 20,978 16,833 9,820 6,935
</TABLE>
12
<PAGE>
COMPARATIVE PER SHARE DATA
The following table sets forth for the periods indicated certain historical
and pro forma per share financial information. The data is based on the
respective audited historical financial statements of Zions and FP incorporated
by reference and should be read in conjunction with such financial statements
and such information and the related notes to each. The historical per share
financial information for Zions for the years 1996 and 1997 have been restated
to give effect to the merger of Zions with GB Bancorporation, which was
completed on November 14, 1997 and a four-for-one split of Zions Common Stock
during the second quarter of 1997.
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------------
1997 1996 1995
------ ----- -----
<S> <C> <C> <C>
Net Income Per Common Share(1)
Zions..................................................... $ 1.89 $1.68 $1.37
FP........................................................ 1.45 1.41 0.72
Pro Forma Combined Per Zions Common Share................. 1.91 1.70 1.37
Equivalent Pro Forma per FP Common Share.................. 1.20 1.07 0.86
Book Value Per Common Share
Zions..................................................... $10.25 $8.72 $7.46
FP........................................................ 9.42 7.91 6.35
Pro Forma Combined Per Zions Common Share................. 10.37 8.84 7.55
Equivalent Pro Forma per FP Common Share.................. 6.50 5.54 4.73
Cash Dividends Declared Per Common Share
Zions(2).................................................. $ 0.47 $0.43 $0.35
FP........................................................ -- -- --
Pro Forma Combined Per Zions Common Share................. 0.47 0.43 0.35
Equivalent Pro Forma per FP Common Share.................. 0.29 0.27 0.22
</TABLE>
- --------
(1) Diluted earnings per share.
(2) While Zions is not obligated to pay cash dividends, the Zions Board
presently intends to continue its policy of paying quarterly cash
dividends. Future dividends will depend, in part, upon the earnings and
financial condition of Zions.
13
<PAGE>
THE COMPANIES
ZIONS
Zions is a bank holding company registered under the BHCA, and organized
under the laws of Utah, engaged primarily in the commercial banking business
through its banking subsidiaries. Zions' principal executive offices are
located at One South Main, Suite 1380, Salt Lake City, Utah 84111 (telephone:
801-524-4787). Zions is the second largest bank holding company headquartered
in Utah. Zions' principal banking subsidiary is ZFNB, located in Salt Lake
City, Utah, which as of December 31, 1997 had 129 offices located throughout
the States of Utah and Idaho, plus one foreign office, for a total of 130
banking offices, including its head office. ZFNB is the second largest
commercial banking organization headquartered in the State of Utah.
Under local management teams, Zions also operates the following full-service
community banking offices:
<TABLE>
<CAPTION>
TOTAL
NUMBER OF
NAME GENERAL MARKET AREA BRANCHES
---- ------------------- ---------
<S> <C> <C>
Nevada State Bank.................... Nevada 40
National Bank of Arizona............. Arizona 30
Centennial Savings Bank, F.S.B....... Western Colorado, New Mexico 7
Pitkin County Bank and Trust Co...... Aspen, Colorado 4
Valley National Bank of Cortez,
Colorado............................ Western Colorado 3
Vectra Bank.......................... Denver/Boulder, Colorado 16
The First National Bank in Alamosa... Alamosa, Colorado 3
Tri-State Bank....................... Denver, Colorado 2
Grossmont Bank....................... San Diego, California 15
</TABLE>
On December 22, 1997, Zions agreed to purchase SBT, pursuant to which SBT
will merge with and into a subsidiary of Zions; State Bank and Trust, a
subsidiary of SBT, operates two branches in Colorado Springs, Colorado. On
January 22, 1998, Zions agreed to acquire Routt and its banking subsidiary,
FNBC, in exchange for Zions Common Stock.
On March 25, 1998, Zions entered into an agreement and plan of merger by and
among Zions, SBC and The Sumitomo Bank of California, pursuant to which SBC,
an indirect wholly owned subsidiary of Zions, will merge with and into The
Sumitomo Bank of California. Thereafter, The Sumitomo Bank of California will
merge with and into Grossmont. Assuming the Sumitomo Merger is approved by the
stockholders of The Sumitomo Bank of California and all applicable regulatory
authorities, and if all other conditions to the Sumitomo Merger are satisfied,
the Sumitomo Merger is expected to be consummated in the third quarter of
1998. Audited balance sheets for the years ended December 31, 1997 and 1996
and audited statements of income, changes in shareholders' equity and cash
flows for the years ended December 31, 1997, 1996 and 1995 for The Sumitomo
Bank of California and unaudited summary pro forma condensed balance sheet and
income statement information for the Sumitomo Merger have been filed by Zions
in a Current Report on Form 8-K dated April 15, 1998 and are incorporated
herein by reference. The unaudited pro forma condensed financial statements
for the Sumitomo Merger do not give effect to the proposed acquisition by
Zions of SBT, Routt and FP.
At December 31, 1997, Zions had total consolidated assets of approximately
$9.522 billion, deposits of $6.854 billion, shareholders' equity of $655
million and long-term debt of $259 million, as compared with corresponding
amounts of $7.116 billion, $5.120 billion, $555 million and $252 million,
respectively at December 31, 1996.
FP
FP, a Delaware corporation, was organized in 1995 and is registered as a
bank holding company under the BHCA. FP is the successor to FP Bancorp, a
California corporation, organized in 1984. FP is headquartered in Escondido,
California, a city in northern San Diego County, approximately 35 miles north
of downtown San Diego. FP conducts all of its business activities through
branches of its wholly-owned subsidiary bank,
14
<PAGE>
FPNB, which operates five branches in northern San Diego County and three
branches in southern Riverside County. Unless otherwise indicated, all
references to the business and assets of FP include the business and assets of
FPNB. FP's administrative offices are located at 613 West Valley Parkway,
Escondido, California 92025-4929, telephone (760) 741-3312.
FPNB focuses on providing commercial banking services in northern San Diego
County and southern Riverside County. From the time FPNB was formed,
management has worked to build a reputation for service to businesses and
professionals and, through efforts of its Board of Directors and management,
has sought to maintain an identity as a community-oriented commercial bank.
During 1993, FP completed the offering of $4,575,000 of its 9% Convertible
Subordinated Debentures due December 31, 1997 (the "Debentures"), $3,400,000
of the proceeds of which increased the capitalization of FPNB in mid-1993. The
terms of the Debentures provided that on December 31, 1997, the holders of the
Debentures would receive either cash in the principal amount of the Debentures
or shares of FP Common Stock under conversion rights included in the
Debentures. In light of the Merger Agreement between FP and Zions, FP extended
the time by which holders of the Debentures would be allowed to exercise their
conversion rights. FP also allowed those who had already exercised their
conversion rights to withdraw notices of conversion which may already have
been presented to FP if they wished to do so. Effective January 20, 1998, all
of the holders of the Debentures exercised their conversion rights and FP
issued 340,895 shares of FP Common Stock to the former holders of the
Debentures.
Pursuant to an Agreement and Plan of Reorganization dated October 12, 1994,
as amended, among FP, FPNB and Overland Bank ("Overland"), FP agreed to
exchange shares of FP Common Stock, for all of the outstanding shares of
Overland common stock and to merge Overland into FPNB (the "Overland Merger").
The Overland Merger was effective April 1, 1995.
Pursuant to an Agreement and Plan of Reorganization dated January 12, 1996,
by and among FP, FPNB, RB Bancorp and its wholly-owned subsidiary, The Bank of
Rancho Bernardo, FP acquired RB Bancorp and The Bank of Rancho Bernardo for
$7,350,000 in cash and merged RB Bancorp and The Bank of Rancho Bernardo with
and into FPNB (the "RB Merger"). The RB Merger was effective April 1, 1996.
In February 1997, FP acquired the Wells Fargo Bank, N.A. branch office
located in Valley Center, California. FP acquired the branch premises as well
as $16,838,000 of deposits and $1,630,000 in loans. A core deposit intangible
of $1,038,000 was recorded.
As of December 31, 1997, FP had total assets of $353,204,000, total deposits
of $309,502,000 and total stockholders' equity of $26,189,000. Net earnings
for the year ended December 31, 1997 were $4,383,000 as compared to net
earnings of $4,208,000 for the year ended December 31, 1996, and net earnings
of $1,911,000 for the year ended December 31, 1995.
Sandler O'Neill has served as financial advisor to FP in connection with the
Merger and has delivered its opinion to the FP Board that, as of December 29,
1997, the Exchange Ratio was fair, from a financial point of view, to the FP
Stockholders. Sandler O'Neill has also delivered its written opinion to the FP
Board that, as of the date of this Proxy Statement-Prospectus, the Exchange
Ratio is fair, from a financial point of view, to the FP Stockholders. The
opinion of Sandler O'Neill, dated as of the date of this Proxy Statement-
Prospectus, is attached as Appendix B to this Proxy Statement-Prospectus. FP
Stockholders are urged to read such opinion in its entirety for a description
of the procedures followed, assumptions made, matters considered and
qualifications and limitations on the review undertaken in connection
therewith. See "The Merger--Opinion of Financial Advisor."
15
<PAGE>
THE SPECIAL MEETING
DATE, TIME AND PLACE
The Special Meeting is scheduled to be held at the California Center for the
Arts, Escondido, located at 340 North Escondido Boulevard, Escondido,
California, on Friday, May 22, 1998 at 10:00 a.m., local time.
FP STOCKHOLDERS ARE REQUESTED TO PROMPTLY SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID PRE-ADDRESSED ENVELOPE.
FAILURE TO RETURN A PROPERLY EXECUTED PROXY CARD OR TO VOTE AT THE MEETING
WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
The purposes of the Special Meeting are (a) to consider and vote upon the
approval of the Merger and (b) to transact such other business as may properly
come before the Special Meeting or any adjournments or postponements thereof.
FOR THE REASONS SET FORTH HEREIN, THE FP BOARD HAS, BY UNANIMOUS VOTE,
APPROVED THE MERGER AGREEMENT AND RECOMMENDS A VOTE "FOR" APPROVAL OF THE
MERGER.
RECORD DATE; STOCK ENTITLED TO VOTE
Only holders of record of FP Common Stock on the Record Date will be
entitled to receive notice of, and to vote at, the Special Meeting and any
postponements or adjournments thereof.
VOTES REQUIRED; QUORUM
The affirmative vote of the holders of at least a majority of the total
number of outstanding shares of FP Common Stock entitled to vote at the
Special Meeting is required to approve the Merger.
As of the Record Date, there were 3,129,215 shares of FP Common Stock issued
and outstanding. Each holder of shares of FP Common Stock outstanding on the
Record Date will be entitled to one vote for each share held of record upon
each matter properly submitted at the Special Meeting and any postponement or
adjournment thereof. A majority of all shares of FP Common Stock entitled to
vote, represented in person or by proxy, constitutes a quorum. Abstentions and
broker non-votes are each included in the determination of the number of
shares present; however, they are not counted as votes in favor of the Merger.
THE FAILURE TO VOTE, AN ABSTENTION OR A BROKER NON-VOTE, THUS, HAS THE SAME
EFFECT AS A VOTE AGAINST THE MERGER.
If a quorum is not obtained, or fewer shares of FP Common Stock are voted in
favor of the Merger than the number required for approval, it is expected that
the Special Meeting will be postponed or adjourned for the purpose of allowing
additional time for obtaining additional proxies or votes, and at any
subsequent reconvening of the Special Meeting, all proxies will be voted in
the same manner as such proxies would have been voted at the original
convening of the Special Meeting (except for any proxies which have
theretofore effectively been revoked or withdrawn).
VOTING OF PROXIES
Shares represented by proxies properly executed and received in time to be
voted at the Special Meeting will be voted in accordance with the instructions
indicated on the proxies. Proxies which do not contain voting instructions
will be voted "FOR" the proposal to approve the Merger. All proxies voted
"FOR" such matters, including proxies on which no instructions are indicated,
may, at the discretion of the proxy holder, be voted "FOR" a motion to adjourn
or postpone the Special Meeting to another time and/or place for the purpose
of soliciting additional proxies or otherwise; provided, however, that no
proxy which is voted against approval of the Merger or on which the relevant
shareholder specifically abstains from voting with respect to such approval
will be voted in favor of any such adjournment or postponement.
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It is not expected that any matters other than as described herein will be
brought before the Special Meeting. If, however, other matters are properly
brought before the Special Meeting, persons appointed as proxies will have
discretion to vote or act thereon in their best judgment.
REVOCABILITY OF PROXIES
The presence of a FP Stockholder at the Special Meeting (or at any
postponement or adjournment thereof) will not automatically revoke such FP
Stockholder's proxy. However, a FP Stockholder may revoke a proxy at any time
prior to its exercise by (a) delivery to the Secretary of FP of a written
notice of revocation prior to the Special Meeting (or, if the Special Meeting
is adjourned or postponed, prior to the time the adjourned or postponed
meeting is actually held); (b) delivery to the Secretary of FP of a duly
executed proxy bearing a later date prior to the Special Meeting (or, if the
Special Meeting is adjourned or postponed, prior to the time the adjourned or
postponed meeting is actually held); or (c) attending the Special Meeting (or,
if the Special Meeting is adjourned or postponed, by attending the adjourned
or postponed meeting) and voting in person. Any written revocation of proxy or
other related communications should be addressed to Gary W. Deems, Secretary,
FP Bancorp, Inc., 613 West Valley Parkway, Escondido, California 92025-4929.
SOLICITATION OF PROXIES
In addition to solicitation by mail, directors, officers and employees of FP
may solicit proxies from FP Stockholders personally or by telephone or other
means without additional remuneration therefor. FP will also provide persons,
firms, banks and corporations holding shares in their names or in the names of
nominees, which in any case are beneficially owned by others, with proxy
materials for transmittal to such beneficial owners and will reimburse such
record owners for their expenses in doing so. FP will bear the cost of
solicitation of proxies from FP Stockholders.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of the Record Date, the directors, officers and one stockholder of FP
beneficially held, in the aggregate, the ability to direct the voting with
respect to 1,213,710 shares of FP Common Stock, comprising approximately
38.79% of the voting power of the FP Common Stock outstanding on the Record
Date. In addition, pursuant to the Stockholder Agreements, all of the
directors and one non-director in their capacity as FP Stockholders, together
holding or controlling an aggregate of 1,213,710 shares of FP Common Stock (or
approximately 38.79% of the shares of FP Common Stock outstanding on the
Record Date) have agreed to vote their shares in favor of the Merger. See "The
Stockholder Agreements."
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THE MERGER
This section of the Proxy Statement-Prospectus describes certain aspects of
the proposed Merger, and such information is qualified in its entirety by
reference to the other information contained elsewhere in this Proxy
Statement-Prospectus, including the Appendices hereto, and the documents
incorporated herein by reference. A copy of the Merger Agreement is set forth
as Appendix A to this Proxy Statement-Prospectus, and the text thereof is
incorporated herein by reference; reference is made thereto for a complete
description of the terms of the Merger. FP Stockholders are urged to read
carefully the Merger Agreement and each of the other Appendices hereto in
their entirety.
BACKGROUND OF THE MERGER
Merger activity among financial institutions has continued at a heightened
level during the past several years. From time to time during this period, FP
was approached informally by various parties to see if it would consider a
business combination. No substantive discussions resulted from these
approaches and FP continued its strategy of enhancing stockholder value
through internal growth and acquisitions, including its acquisitions of
Overland Bank on April 1, 1995, RB Bancorp and its wholly-owned subsidiary,
The Bank of Rancho Bernardo, on April 1, 1996 and the Valley Center branch of
Wells Fargo Bank, N.A., in February 1997.
On July 7, 1997, Zions announced that it had entered into an agreement to
acquire GB Bancorporation and its principal subsidiary, Grossmont. Over the
next few months, members of the Mergers and Acquisitions Committee of FP (the
"FP M&A Committee") and/or the FP Board, including Mr. Mark N. Baker,
Mr. Robert W. Klemme and Mr. Randall C. Luce and various executive officers
and/or members of the Board of Directors of Grossmont, including Mr. Robert G.
Sarver (who is also a member of the Zions Board) and Mr. Allan W. Severson,
discussed possible transactions involving the two institutions. The FP M&A
Committee is a committee of the FP Board and is responsible for exploring and
evaluating potential significant corporate transactions. The FP M&A Committee
is composed of Messrs. Baker (chairman), Klemme and Luce.
All of these early discussions were somewhat speculative because they
presumed that the transaction between Zions and Grossmont would be completed
and none of the persons included in the discussions professed to have any
authority to speak for Zions. Broad ranges of potential pricing were
discussed, potential cost savings as a result of a combination of FP and
Grossmont were analyzed, and the mechanics and structure of the transaction
between Zions and Grossmont were discussed. However, no confidential
information was exchanged and there was no direct contact between
representatives of FP and representatives of Zions. The FP M&A Committee did
not consult with counsel and reported to the FP Board that preliminary
discussions were ongoing but that serious negotiations with Zions had not
commenced.
In early September, 1997, as completion of the transaction between Zions and
Grossmont became imminent, the FP M&A Committee requested a meeting with
representatives of Zions. Mr. Baker called Mr. Severson to set up a meeting
between the two of them, Mr. Harris H. Simmons, a member of the Zions Board,
Mr. Sarver, Mr. Klemme and Mr. Luce for October 8, 1997. Mr. Baker did not
inform anyone other than other members of the FP M&A Committee of this
proposed meeting.
At Mr. Baker's invitation, on September 22, 1997, a representative of
Sandler O'Neill attended an FP Board meeting to present a general analysis of
the franchise value of FP. Among other things, the representative of Sandler
O'Neill discussed pro forma merger scenarios of FP merging with various
possible acquirers including Zions and advised that a transaction with Zions
would be potentially beneficial to the stockholders of FP because of the
acquisition premium which they would likely receive and because of the
relative valuation of Zions Common Stock.
Subsequently, on October 8, 1997, Mr. Severson, Mr. Sarver and Mr. Simmons
met with Mr. Baker, Mr. Klemme and Mr. Luce at the head office of Grossmont.
At this meeting, the discussion covered the valuation of FP, various
considerations that should affect the valuation and reasons as to why each
side thought its price range and multiple for FP was justified. At the
conclusion of the meeting, however, no definitive pricing formula was reached.
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The FP M&A Committee then decided to retain Sandler O'Neill to advise FP in
connection with any future transaction with a third party. On October 16,
1997, FP and Sandler O'Neill entered into an agreement under which Sandler
O'Neill would provide to FP specific advisory services, including advice
regarding business combinations and other strategic alternatives. A few days
later, on October 23, 1997, FP, Zions and Grossmont executed confidentiality
agreements.
On October 28, 1997, Mr. Baker reported to the FP Board at its regularly
scheduled board meeting that "both parties had a sufficient level of interest
in initial preliminary negotiations." He also reported that the FP M&A
Committee thought it would be beneficial to engage Sandler O'Neill to assess
all of the strategic alternatives available to FP and FPNB and had negotiated
an appropriate agreement with Sandler O'Neill. The FP Board then ratified the
agreement with Sandler O'Neill.
In order to assist FP in evaluating the potential opportunity with Zions,
Sandler O'Neill contacted other potential acquirers to see if there was any
interest in pursuing a transaction. However, such potential acquirers
generally responded that FP was too small to be of interest to them.
On November 3, 1998, Mr. Severson, Mr. Sarver, Mr. Simmons, Mr. Dale M.
Gibbons, Executive Vice President and Chief Financial Officer of Zions, Mr.
Baker, Mr. Perdue, Mr. Klemme and representatives of Sandler O'Neill met at
Zions head office and again discussed a pricing formula for FP. At the
conclusion of the meeting, Mr. Simmons conveyed a definitive pricing formula
to the FP representatives which the FP representatives took back to the FP
Board.
In meetings and telephone conversations during the week of November 10th,
representatives of Sandler O'Neill, the members of the FP M&A Committee, Mr.
Simmons, Mr. Gibbons and Mr. Severson had further discussions regarding price
and terms. On November 18, Sullivan & Cromwell, counsel to Zions, prepared and
distributed to Zions and FP a working draft agreement incorporating Zions'
proposed pricing, a "lock-up" option under the terms of which Zions would have
the right to purchase up to 19.9% of the outstanding shares of FP in the event
that FP terminated the transaction and concluded a transaction with another
acquirer, and other terms and conditions.
Between November 15, 1997 and November 25, 1997 the parties and their
counsel had numerous discussions amongst themselves and between each other
regarding the draft documents and the issues presented by the documents. Among
other things, the parties continued to address questions regarding pricing and
the terms of the "lock-up" option. Both sides were focusing on a proposed
formula under which FP stockholders would receive shares of Zions Common Stock
based on a fixed exchange ratio, but subject to a "floor" to the pricing that
would protect FP's stockholders in the event the price of Zions Common Stock
fell by more than an index of certain other bank stocks. FP's representatives
suggested that the "lock-up" option be eliminated in favor of a "break-up"
fee. This fee would be paid under roughly the same circumstances as those
under which the option would have been exercisable. In FP's view, payment of
such a fee would have been less likely to endanger pooling treatment of a
subsequent transaction than exercise of an option. Negotiations of the precise
terms of the formula, the "floor," the "break-up" fee and other terms of the
proposed agreement continued through November 25, 1997.
On November 25, 1997, Mr. Sarver and Mr. Severson called Mr. Baker. They
informed him that due to increases in the market price of Zions Common Stock,
Zions could not proceed with the transaction on the basis of the previously
discussed formula. Mr. Baker reported the conversation to the FP Board at a
regularly scheduled meeting that same day. That evening Mr. Severson called
Mr. Baker and suggested that the parties get together on December 1, 1997 to
see if there might be any basis on which the transaction could continue along
the lines of the prior negotiations.
On December 1, 1997, Mr. Baker and Mr. Severson met to discuss the recent
developments. At that meeting Mr. Severson and Mr. Baker discussed various
aspects of FP's and Grossmont's operations and recent increases in the price
of Zions Common Stock. At the conclusion of the meeting, Mr. Severson and Mr.
Baker could not agree on a new pricing formula and both confirmed that the
transaction was completely "off the table."
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Mr. Baker reported this to the FP Board and to representatives of Sandler
O'Neill. A representative of Sandler O'Neill called Mr. Gibbons and requested
a meeting with representatives of Zions, FP and Grossmont and a meeting was
arranged for December 8, 1997. Mr. Severson, Mr. Sarver, Mr. Christopher L.
Skillern, Executive Vice President and Chief Credit Officer of Grossmont, Mr.
Gerald J. Dent, Senior Vice President of Zions, Mr. Baker, Mr. Perdue, Mr.
Gary Votpka, Senior Vice President of FPNB, Mr. Klemme and Mr. Luce attended
that meeting. At the conclusion of the meeting, both sides determined that the
negotiations could not proceed.
During the next few weeks there was no contact between representatives of FP
and Zions regarding a potential transaction. FP's Board and management assumed
that the transaction would not proceed. However, representatives of Sandler
O'Neill continued to have conversations from time to time with Mr. Gibbons
about the transaction, which were reported to Mr. Baker.
On Monday, December 21, Mr. Baker received a call from Mr. Simmons, who was
later joined by Mr. Gibbons. They proposed that negotiations be reopened
around a proposed exchange ratio of .6235 with "dividend parity," a "floor"
and a "cap," provided that the transaction could be announced prior to
December 30, 1997. Mr. Baker agreed to present the proposal to the FP M&A
Committee, subject to replacement of the "lock-up" option with a "break-up"
fee of one and one-half to two percent and agreement that three members of the
FP Board be added to the Grossmont Board post-closing. Messrs. Simmons and
Gibbons agreed that a "break-up" fee of two percent would be appropriate and
that three mutually acceptable FP Board members could be added to the
Grossmont Board.
On December 22, 1997, a regularly scheduled meeting of the FP M&A Committee
and FP executive management was held at the Temecula branch of FPNB. After
consultations by telephone with representatives of Sandler O'Neill and
considerable discussions, the FP M&A Committee called Mr. Simmons and Mr.
Gibbons and proposed an exchange ratio of .63 with dividend parity and no
"floor" or "cap." Mr. Simmons responded that he did not have the authority to
go to .63, but that without dividend parity the exchange ratio could go to
.627 and reminded the FP M&A Committee that Zions would only enter into a
transaction if it could be announced prior to December 30, 1997.
The telephone call ended and the FP M&A Committee reconvened to consider the
ramifications of the call. After consultations with executive management and
representatives of Sandler O'Neill, the FP M&A Committee decided it could
support an exchange ratio of .627 without "dividend parity" and without a
"floor" or "cap," and communicated its decision to Mr. Simmons. Immediately
thereafter, it contacted FP's counsel and instructed counsel to assist in the
revived negotiations within the time frame stipulated by Zions.
The parties and their representatives and counsel negotiated steadily from
December 22, 1997 through December 29, 1997. On December 29, 1997, the FP
Board met with its counsel, representatives of Sandler O'Neill and
representatives of its independent auditors. The management of FP presented
the results of its due diligence on Zions and Grossmont. The FP Board reviewed
the final form of the Merger Agreement, financial accounting, and other
issues. It also reviewed the draft agreements proposed to be entered into by
Mr. Williamson, Mr. Deems and Mr. Perdue in connection with the transaction,
and the agreements regarding voting of shares proposed to be entered into by
the members of the FP Board and one stockholder. Sandler O'Neill delivered its
opinion to the effect that, as of such date, the Exchange Ratio was fair, from
a financial point view, to the stockholders of FP. After considering these
matters, the FP Board approved the execution and delivery of the Merger
Agreement.
EFFECT OF MERGER
At the Effective Time, FP will merge with and into Zions, and Zions will be
the Surviving Corporation in the Merger and will continue its corporate
existence under Utah law. The separate corporate existence of FP will then
cease. In addition, as promptly as practicable after the consummation of the
Merger, FPNB will be merged with and into Grossmont, and Grossmont will be the
resulting bank upon consummation of the Bank Merger.
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Upon the Merger becoming effective, each share of FP Common Stock issued and
outstanding at the Effective Time (other than Treasury Stock) will be
converted automatically into the right to receive 0.627 of a share of Zions
Common Stock, with any rights attached thereto under or by virtue of the Zions
Rights Plan. FP Stockholders will receive cash in lieu of fractional shares of
Zions Common Stock. FP Stockholders who vote against the Merger will not be
entitled to appraisal or dissenters' rights.
REASONS FOR THE MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS
Zions
The Board of Directors of Zions has unanimously approved the Merger
Agreement and has determined that the Merger and the issuance of the Zions
Common Stock pursuant thereto are fair to, and in the best interests of, the
shareholders of Zions. The approval of the Merger Agreement by the
shareholders of Zions is not required.
FP
The FP Board has unanimously approved the Agreement and the transactions
contemplated thereby and has determined that the Merger is fair to, and in the
best interests of, FP and the FP Stockholders. As a consequence, the FP Board
unanimously recommends that the FP Stockholders vote to approve the Merger
Agreement. The FP Board believes that the Merger will enable holders of FP
Common Stock to realize both increased value and liquidity. The FP Board also
believes that this business combination will provide additional opportunities
for the continued growth of FPNB as part of Grossmont, expansion of its
services to its customers and expansion of opportunities for its employees. In
considering its decision to approve the Merger Agreement, the FP Board
consulted with its outside counsel regarding the legal terms of the Merger and
the FP Board's fiduciary obligations in its consideration of the proposed
Merger. The FP Board also consulted with its financial advisor, Sandler
O'Neill, regarding the financial aspects and fairness of the proposed Exchange
Ratio.
In reaching its determination to approve the terms of the Merger, the FP
Board considered the following material factors from both a short-term and
long-term perspective:
(i) Financial and Other Terms. The FP Board considered the terms of the
Merger Agreement and the transactions contemplated thereby, including the
Break-Up Fee. The FP Board took into account the historical trading ranges
for FP Common Stock and Zions Common Stock, the Exchange Ratio (noting, in
particular, that such consideration reflected a 16% premium for FP
Stockholders based on the closing price of Zions Common Stock and FP Common
Stock on December 26, 1997), the potential impact of the Merger on the
price of Zions Common Stock over the short- and medium-term, and the amount
of the Merger consideration in comparison to other Zions' acquisitions as
well as recent comparably sized transactions. With respect to the Break-Up
Fee, the FP Board was aware that the existence of such a fee might
discourage third parties from seeking to acquire FP. See "The Merger
Agreement--Termination."
(ii) Advice of Financial Advisor and Fairness Opinion. The FP Board
considered the advice of its financial advisor, Sandler O'Neill, and
reviewed the financial analyses and other information presented by Sandler
O'Neill. The FP Board considered the opinion of Sandler O'Neill (including
the assumptions and financial information and projections relied upon by
them in arriving at such opinion) that, as of December 29, 1997 and based
upon the matters set forth in its written opinion as of that date, the
Exchange Ratio was fair, from a financial point of view, to the holders of
FP Common Stock. For a discussion of the opinion of Sandler O'Neill,
including a summary of the procedures followed, assumptions made, matters
considered and qualifications and limitations on the review undertaken, see
"--Opinion of Financial Advisor."
(iii) Opportunity for Increased Revenue and Cost Savings. The FP Board
considered the opportunity for revenue enhancement by offering Zions'
extensive array of commercial and consumer products through FP's branch
network. The FP Board took into account the expectation that the Merger
would result in economies of scale and cost synergies.
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(iv) Increased Resources and Market Presence. The FP Board considered
that FPNB would be combined with Grossmont to create a California-based
banking operation with approximately $1.3 billion in total assets. The FP
Board also considered that the combined organization would have total
assets of almost 10 billion and operations in Utah, Nevada, Arizona, Idaho,
California, Colorado and New Mexico, thus greatly increasing FP's
geographic diversity. The FP Board recognized that such an institution
would be likely to possess the financial resources to compete more
effectively in the rapidly changing marketplace for banking and financial
services and would be effective in fulfilling FP's long-term objective of
increasing its overall size and enhancing its market presence, while
maintaining its asset quality and credit standards. The FP Board also
considered the substantial technological capabilities of Zions and its
ability to provide improved products and services to FP's customers, and
the likelihood that such capabilities and ability would enhance the ability
of the combined company to compete in the future with other banks and non-
banking providers of financial services.
(v) Continuity of Management. The FP Board considered that three current
members of the FP Board would continue on the Board of Grossmont and that
one member of senior management, Mr. Perdue, would be expected to play a
continuing role in the combined entity and the Employment Agreement that
would be entered into with Mr. Perdue. See "The Merger--Interests of
Certain Persons in the Merger."
(vi) Impact on FP Constituencies. The FP Board considered the general
impact the Merger would have on the various constituencies served by FP,
including its customers, employees and others. The FP Board took into
account that the combined entity would be able to offer a more extensive
range of products and banking services.
(vii) Due Diligence Review. The FP Board considered the results of the
due diligence investigations conducted by FP senior management, including,
among other things, assessments of Zions' credit policies, asset quality,
adequacy of loan loss reserves and interest rate risk.
(viii) Tax and Accounting Treatment. The FP Board considered that the
Merger is expected to be tax-free (other than with respect to cash paid in
lieu of fractional shares) to FP Stockholders for federal income tax
purposes and to be accounted for under the pooling-of-interests method of
accounting for business combinations. See "--Certain Federal Income Tax
Consequences" and "--Accounting Treatment."
(ix) Regulatory Approvals. The FP Board considered the nature of, and
likelihood of obtaining, the regulatory approvals that would be required
with respect to the Merger. See "--Regulatory Approvals."
(x) Economic and Competitive Environment. The FP Board took into account
the current and prospective economic and competitive environment facing the
financial services industry generally and each institution in particular.
(xi) Alternatives to the Merger Agreement. The FP Board considered the
effect on stockholder value of FP continuing as a stand-alone entity or
combining with other potential merger partners, compared to the effect of
its combining with Zions pursuant to the proposed Merger Agreement, and
determined that the merger with Zions presented the best opportunity for
maximizing stockholder value and achieving FP's other strategic objectives.
The foregoing discussion of the information and factors considered by the FP
Board is not intended to be exhaustive, but constitutes the material factors
considered by the FP Board. In reaching its determination to approve and
recommend the Merger, the FP Board did not assign relative or specific weights
to the foregoing factors and individual directors may have weighed such
factors differently.
FOR THE REASONS SET FORTH ABOVE, THE FP BOARD HAS UNANIMOUSLY APPROVED THE
MERGER AS FAIR TO AND IN THE BEST INTERESTS OF FP AND THE FP STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT FP STOCKHOLDERS VOTE FOR THE APPROVAL OF THE
MERGER.
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OPINION OF FINANCIAL ADVISOR
Pursuant to a letter agreement dated as of October 16, 1997 (the "Sandler
O'Neill Agreement"), FP retained Sandler O'Neill as an independent financial
advisor in connection with FP's consideration of a possible business
combination with another institution. Sandler O'Neill is a nationally
recognized investment banking firm whose principal business specialty is banks
and savings institutions. In the ordinary course of its investment banking
business, Sandler O'Neill is regularly engaged in the valuation of such
businesses and their securities in connection with mergers and acquisitions
and other corporate transactions.
Pursuant to the terms of the Sandler O'Neill Agreement, Sandler O'Neill
acted as financial advisor to FP in connection with the Merger. In connection
therewith, the FP Board requested Sandler O'Neill to render its opinion as to
the fairness, from a financial point of view, of the Exchange Ratio to the
holders of FP Common Stock. At the December 29, 1997 meeting at which the FP
Board approved and adopted the Merger Agreement, Sandler O'Neill delivered its
written opinion to the FP Board that, as of such date, the Exchange Ratio was
fair, from a financial point of view, to the FP Stockholders. Sandler O'Neill
has also delivered to the FP Board a written opinion dated the date of this
Proxy Statement-Prospectus (the "Fairness Opinion") which is substantially
identical to the December 29, 1997 opinion. THE FULL TEXT OF THE FAIRNESS
OPINION, WHICH SETS FORTH THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS
CONSIDERED AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN
CONNECTION WITH SUCH OPINION, IS ATTACHED AS APPENDIX B TO THIS PROXY
STATEMENT-PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. THE DESCRIPTION
OF THE OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
APPENDIX B. HOLDERS OF FP COMMON STOCK ARE URGED TO READ THE FAIRNESS OPINION
IN ITS ENTIRETY IN CONNECTION WITH THEIR CONSIDERATION OF THE PROPOSED MERGER.
THE FAIRNESS OPINION WAS PROVIDED TO THE FP BOARD FOR ITS INFORMATION AND IS
DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE EXCHANGE
RATIO TO HOLDERS OF FP COMMON STOCK. IT DOES NOT ADDRESS THE UNDERLYING
BUSINESS DECISION OF FP TO ENGAGE IN THE MERGER OR ANY OTHER ASPECT OF THE
MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY HOLDER OF SHARES OF FP
COMMON STOCK AS TO HOW SUCH STOCKHOLDER SHOULD VOTE AT THE SPECIAL MEETING
WITH RESPECT TO THE MERGER OR ANY OTHER MATTER RELATED THERETO.
In connection with rendering its opinion dated December 29, 1997, Sandler
O'Neill performed several financial analyses. The following is a summary of
the material analyses performed by Sandler O'Neill. Such summary does not
purport to be a complete description of the analyses underlying Sandler
O'Neill's opinion. The preparation of a fairness opinion is a complex process
involving subjective judgments and is not necessarily susceptible to a partial
analysis or summary description. Sandler O'Neill believes that its analyses
must be considered as a whole and that selecting portions of such analyses and
the factors considered therein, without considering all factors and analyses,
could create an incomplete view of the analyses and processes underlying its
opinion. In performing its analyses, Sandler O'Neill made numerous assumptions
with respect to industry performance, business and economic conditions and
various other matters, many of which cannot be predicted and are beyond the
control of FP, Zions and Sandler O'Neill. Any estimates contained in Sandler
O'Neill's analyses are not necessarily indicative of future results or values,
which may be significantly more or less favorable than such estimates.
Estimates on the values of companies do not purport to be appraisals or
necessarily reflect the prices at which companies or their securities may
actually be sold. Because such estimates are inherently subject to
uncertainty, neither FP nor Sandler O'Neill assumes responsibility for their
accuracy.
Summary of Proposal. Sandler O'Neill reviewed the financial terms of the
proposed transaction. Based on the closing price of Zions Common Stock on
December 26, 1997 of $43.50, Sandler O'Neill calculated an implied transaction
value per share of FP Common Stock of $27.27. Based upon the closing price of
FP Common Stock on December 26, 1997 of $23.50, Sandler O'Neill calculated
that the implied transaction value represented a 16% market premium for
holders of FP Common Stock. Based upon FP's projected December 31, 1997
financial information, Sandler O'Neill calculated the price to tangible book
value, price to normalized last twelve months ("LTM") earnings and core
deposit premium. This analysis yielded a price to tangible book value multiple
of 321%, a price to normalized LTM earnings multiple of 19.2x and a core
deposit premium of 21.3%.
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Stock Trading History. Sandler O'Neill reviewed the history of the reported
trading prices and volume of FP Common Stock and Zions Common Stock, and the
relationship between the movements in the prices of FP Common Stock and Zions
Common Stock, respectively, to movements in certain stock indices, including
the Standard & Poor's 500 Index, the NASDAQ Banking Index and with respect to
FP, a composite group of publicly traded commercial banks in geographic
proximity and of similar asset size to FP, and with respect to Zions, a
composite group of nationwide publicly-traded commercial banks of similar
asset size. During the one-year period ended December 24, 1997, each of the FP
Common Stock and the Zions Common Stock outperformed each of the indices to
which it was compared.
Analysis of Selected Publicly-Traded Companies. Sandler O'Neill used
publicly available information to compare selected financial and market
information, including balance sheet composition, asset quality ratios, loan
loss reserve levels, profitability, capital adequacy, dividends and trading
multiples, for FP and two different groups of selected institutions. The first
group consisted of FP and the following 12 publicly-traded California
commercial banks (the "Regional Group") having total assets ranging from $235
million to $723 million: Bank of Commerce, Bank of Hemet, Civic BanCorp, Coast
Bancorp, Foothill Independent Bancorp, North County Bancorp, Pacific Bank NA,
Pacific Capital Bancorp, Professional Bancorp Inc., SierraWest Bancorp, SJNB
Financial Corp., and Valley Independent Bank. Sandler O'Neill also compared FP
to a group of 9 publicly-traded commercial banks having total assets ranging
from $241 million to $493 million, which had a return on average equity (based
on last twelve months' earnings) greater than 16% and a price to tangible book
value of greater than 300% (the "Highly-Valued Group"). The Highly-Valued
Group institutions were: Bank of Commerce, Belmont Bancorp., Cascade Bancorp,
Centennial Bancorp, Coast Bancorp, Prestige Financial Corp., S.Y. Bancorp
Inc., SJNB Financial Corp., and Summit Bancshares Inc. The analysis compared
publicly available financial information for each of the groups and FP as of
and for each of the years ended December 31, 1992 through December 31, 1996
and as of and for the twelve months ended September 30, 1997. The following
comparisons are based upon the September 30, 1997 financial information and
the data with respect to the Regional Group and the Highly-Valued Group
consists of the median data for such groups.
The total assets of FP were $359 million, compared to $359 million for the
Regional Group and $376 million for the Highly-Valued Group. The annual growth
rate of assets for FP was 23.0%, compared to 14.2% for the Regional Group and
21.2% for the Highly-Valued Group. The tangible equity to total assets ratio
was 5.80% for FP, compared to 8.64% for the Regional Group and 8.75% for the
Highly-Valued Group. The intangible assets to total equity ratio for FP was
16.4%, compared to 1.12% for the Regional Group and 0.80% for the Highly-
Valued Group. The net loans (excluding loans held for sale) to assets ratio
for FP was 59.4%, compared to 66.7% for the Regional Group and 62.8% for the
Highly-Valued Group. The cash and securities to total assets ratio was 30.5%
for FP, compared to 28.1% for the Regional Group and 31.1% for the Highly-
Valued Group. Total deposits were $315 million for FP, compared to $315
million for the Regional Group and $270 million for the Highly-Valued Group.
FP had a gross loans (excluding loans held for sale) to total deposits ratio
of 68.6%, compared to 75.4% for the Regional Group and 81.7% for the Highly-
Valued Group. The total borrowings to total assets ratio for FP was 4.6%,
compared to 0.1% for the Regional Group and 3.8% for the Highly-Valued Group.
The ratio of non-performing loans to gross loans (net of deferred fees and
purchase accounting adjustment) was 0.42% for FP, compared to 1.07% for the
Regional Group and 0.47% for the Highly-Valued Group. The ratio of non-
performing loans (excluding loans greater than 90 days past due and still
accruing interest) to total assets for FP was 0.25%, compared to 0.74% for the
Regional Group and 0.29% for the Highly-Valued Group. The ratio of non-
performing assets (excluding loans greater than 90 days past due and still
accruing interest) to total assets for FP was 0.68%, compared to 0.74% for the
Regional Group and 0.32% for the Highly-Valued Group. The ratio of loan loss
reserves to non-performing loans (excluding loans greater than 90 days past
due and still accruing interest) was 324.7% for FP, compared to 136.6% for the
Regional Group and 295.7% for the Highly-Valued Group. The ratio of loan loss
reserves to gross loans (excluding loans held for sale) for FP was 1.35%,
compared to 1.68% for the Regional Group and 1.40% for the Highly-Valued
Group. The net interest margin of FP was 6.78%, compared to 6.43% for the
Regional Group and 5.95% for the Highly-Valued Group. The ratio of non-
interest income to average assets for FP was 0.80%, compared to 1.17% for the
Regional Group and 1.02% for the Highly-Valued Group. The ratio of non-
interest expense to average assets
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was 4.54% for FP, compared to 4.54% for the Regional Group and 3.29% for the
Highly-Valued Group. The efficiency ratio of FP was 63.7%, compared to 65.6%
for the Regional Group and 51.1% for the Highly-Valued Group. The return on
average assets for the twelve months ended September 30, 1997 was 1.26% for
FP, compared to 1.28% for the Regional Group and 1.61% for the Highly-Valued
Group. The return on average equity for the twelve months ended September 30,
1997 was 18.46% for FP, compared to 13.26% for the Regional Group and 18.92%
for the Highly-Valued Group. Based on closing prices as of December 24, 1997,
the price to tangible book value for FP was 287%, compared to 262% for the
Regional Group and 364% for the Highly-Valued Group. Based on closing prices
as of December 24, 1997, the price to earnings per share multiple based upon
earnings for the twelve months ended September 30, 1997 was 16.4x for FP,
compared to 19.2x for the Regional Group and 20.9x for the Highly-Valued
Group. The dividend payout ratio was 0.00% for FP, compared to 5.13% for the
Regional Group and 21.1% for the Highly-Valued Group.
Sandler O'Neill also used publicly available information to perform a
similar comparison of selected financial and market information for Zions and
a group of selected peer institutions. The group consisted of Zions and the
following 16 publicly-traded commercial banks (the "Peer Group") having total
assets ranging from $5.4 billion to $15.7 billion: BOK Financial Corp.,
Centura Banks Inc., Compass Bancshares Inc., First American Corp., First
Commercial Corp., First Empire State Corp., First Tennessee National Corp.,
Marshall & Ilsley Corp., Mercantile Bankshares Corp., North Fork Bancorp.,
Provident Financial Group Inc., Old Kent Financial Corp., Star Banc Corp.,
Synovus Financial Corp., TCF Financial Corp., and Wilmington Trust Corp. The
analysis compared publicly available financial information for Zions and for
the peer group as of and for the years ended December 31, 1992 through
December 31, 1996, and as of and for the twelve months ended September 30,
1997. The following comparisons are based upon the September 30, 1997
financial information and the data described below with respect to the Peer
Group consists of the median data for that group.
The total assets of Zions were $9.1 billion, compared to $9.1 billion for
the Peer Group. The annual growth rate of assets for Zions was 33.6%, compared
to 9.1% for the Peer Group. The tangible equity to total assets ratio was 5.0%
for Zions, compared to 7.04% for the Peer Group. The intangible assets to
total equity ratio for Zions was 22.1%, compared to 12.60% for the Peer Group.
The net loans to total assets ratio for Zions was 43.5%, compared to 64.8% for
the Peer Group. The cash and securities to total assets ratio was 49.7% for
Zions, compared to 29.1% for the Peer Group. Total deposits were approximately
$5.7 billion for Zions, compared to $7.0 billion for the Peer Group. Zions had
a gross loans to total deposits ratio of 70.8%, compared to 88.3% for the Peer
Group. The total borrowings to total assets ratio for Zions was 29.9%,
compared to 16.8% for the Peer Group. The ratio of non-performing loans to
gross loans was 0.28% for Zions, compared to 0.52% for the Peer Group. The
ratio of non-performing loans to total assets for Zions was 0.12%, compared to
0.34% for the Peer Group. The non-performing assets to total assets ratio for
Zions was 0.18%, compared to 0.42% for the Peer Group. The ratio of loan loss
reserves to non-performing loans was 621.5% for Zions, compared to 327.5% for
the Peer Group. The ratio of loan loss reserves to gross loans for Zions was
1.75%, compared to 1.57% for the Peer Group. The net interest margin of Zions
was 4.21%, compared to 4.41% for the Peer Group. The ratio of non-interest
income to average assets for Zions was 1.64%, compared to 1.95% for the Peer
Group. The ratio of non-interest expense to average assets was 3.22% for
Zions, compared to 3.64% for the Peer Group. The efficiency ratio of Zions was
57.1%, compared to 58.4% for the Peer Group. The return on average assets for
the twelve months ended September 30, 1997 was 1.41% for Zions, compared to
1.45% for the Peer Group. The return on average equity for the twelve months
ended September 30, 1997 was 20.76% for Zions, compared to 18.44% for the Peer
Group. Based on the closing prices as of December 24, 1997, the price to
tangible book value for Zions was 573%, compared to 408% for the Peer Group.
Based on the closing prices as of December 24, 1997, the price to earnings per
share multiple based upon earnings for the twelve months ended September 30,
1997 was 23.5x for Zions, compared to 20.9x for the Peer Group. The dividend
payout ratio was 24.7% for Zions, compared to 35.1% for the Peer Group.
Analysis of Selected Merger Transactions. Sandler O'Neill reviewed 149
transactions announced between January 1, 1997 and December 26, 1997,
involving commercial banks nationwide as targets with transaction
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values over $15 million ("Nationwide Transactions"), and nine transactions
announced between January 1, 1997 and December 26, 1997, involving California
public commercial banks as targets with transaction values over $15 million
("California Transactions"). Sandler O'Neill reviewed the publicly reported
ratios of price to last twelve months' earnings, price to book value, price to
tangible book value, price to deposits, price to assets and core deposit
premium paid in each such transaction and computed high, low, mean and median
ratios and premiums for the respective groups of transactions. Based upon the
median multiples for Nationwide Transactions, Sandler O'Neill derived an
imputed range of values per share of FP Common Stock of $21.15 to $36.08.
Based upon the median multiples for California Transactions, Sandler O'Neill
derived an imputed range of values per share of FP Common Stock of $18.05 to
$36.89.
No company involved in the transactions included in the above analysis is
identical to FP and no transaction included in the above analysis is identical
to the Merger. Accordingly, an analysis of the results of the foregoing
analysis is not mathematical; rather, it involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and other factors that could affect the public trading value of
FP and Zions and the companies to which they are being compared.
Discounted Dividend Stream and Terminal Value Analysis. Sandler O'Neill also
performed an analysis which estimated the future stream of after-tax dividend
flows of FP through 2002 under various circumstances, assuming FP performed in
accordance with the earnings forecasts provided by its management. To
approximate the terminal value of FP Common Stock at the end of the five-year
period, Sandler O'Neill applied price to earnings multiples ranging from 10x
to 25x and applied multiples of tangible book value ranging from 75% to 325%.
The dividend income streams and terminal values were then discounted to
present values using different discount rates (ranging from 9% to 15%) chosen
to reflect different assumptions regarding required rates of return of holders
or prospective buyers of FP Common Stock. This analysis, assuming the current
dividend payout ratio, indicated an imputed range of values per share of FP
Common Stock of between $15.66 and $52.38 when applying the price to earnings
multiples, and an imputed range of values per share of FP Common Stock of
between $8.32 and $51.11 when applying multiples of tangible book value. In
connection with its analysis, Sandler O'Neill extensively used sensitivity
analyses (including variations with respect to the growth rate of assets, net
interest spread, non-interest income and non-interest expense) to illustrate
the effects changes in the underlying assumptions could have on the resulting
present value and discussed these changes with the FP Board. Sandler O'Neill
noted that the discounted dividend stream and terminal value analysis is a
widely used valuation methodology, but the results of such methodology are
highly dependent upon the numerous assumptions that must be made, and the
results thereof are not necessarily indicative of actual values or actual
future results.
Pro Forma Merger Analysis. Based upon earnings forecasts and expected cost
savings of the Merger discussed with Zions management, Sandler O'Neill
analyzed certain potential pro forma effects of the Merger on Zions. This
analysis indicated that the Merger would be accretive to projected earnings
per share of Zions Common Stock in the first full year following the Merger
and in each of the four years thereafter and accretive to tangible book value
for all periods analyzed. This analysis was based on numerous assumptions,
including assumptions with respect to the economic environment, accounting and
tax treatment of the Merger, anticipated expenses and non-recurring charges to
be incurred in connection with the Merger, operating efficiencies and other
matters. The actual results achieved by the combined company will vary from
the projected results and the variations may be material.
In connection with rendering its opinion of December 29, 1997, Sandler
O'Neill also reviewed, among other things: (i) the Merger Agreement and
exhibits thereto; (ii) the Stockholder Agreements, dated as of December 29,
1997, by and between certain FP Stockholders and Zions; (iii) Zions' audited
consolidated financial statements and management's discussion and analysis of
financial condition and results of operations as contained in its annual
report to stockholders for the year ended December 31, 1996; (iv) FP's audited
consolidated financial statements and management's discussion and analysis of
financial condition and results of operations as contained in its annual
report to stockholders for the year ended December 31, 1996; (v) Zions'
unaudited consolidated financial statements and management's discussion and
analysis of financial condition and results of operations contained in its
Quarterly Report on Form 10-Q for the quarters ended March 31, June 30, and
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September 30, 1997, respectively; (vi) FP's unaudited consolidated financial
statements and management's discussion and analysis of financial condition and
results of operations contained in its Quarterly Report on Form 10-QSB for the
quarters ended March 31, June 30, and September 30, 1997; (vii) certain
financial analyses and forecasts of FP prepared by and reviewed with
management of FP and the views of senior management of FP regarding FP's past
and current business operations, results thereof, financial condition and
future prospects; (viii) certain financial analyses and forecasts of Zions
prepared by and reviewed with management of Zions and the views of senior
management of Zions regarding Zions' past and current business operations,
results thereof, financial condition and future prospects; (ix) the pro forma
impact of the Merger on Zions; (x) the publicly reported historical price and
trading activity for Zions Common Stock and FP Common Stock, including a
comparison of certain financial and stock market information for Zions and FP
with similar publicly available information for certain other companies the
securities of which are publicly traded; (xi) the financial terms of recent
business combinations in the commercial banking industry, to the extent
publicly available; (xii) the current market environment generally and the
banking environment in particular; and (xiii) such other information,
financial studies, analyses and investigations and financial, economic and
market criteria as Sandler O'Neill considered relevant.
In connection with rendering the Fairness Opinion, Sandler O'Neill confirmed
the appropriateness of its reliance on the analyses used to render its
December 29, 1997 opinion by performing procedures to update certain of such
analyses and by reviewing the assumptions upon which such analyses were based
and the factors considered in connection therewith.
In performing its reviews, Sandler O'Neill assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information that was publicly available or
otherwise furnished to, reviewed by or discussed with it, and Sandler O'Neill
does not assume any responsibility or liability for the accuracy or
completeness of any such information. Sandler O'Neill did not make an
independent evaluation or appraisal of the specific assets, the collateral
securing assets or the liabilities (contingent or otherwise) of Zions or FP or
any of their subsidiaries, or the collectibility of any such assets, nor was
it furnished with any such evaluations or appraisals (relying, where relevant,
on the analyses and estimates of Zions and FP). Sandler O'Neill is not an
expert in the evaluation of allowances for loan losses and it has not made an
independent evaluation of the adequacy of the allowance for loan losses of FP
or Zions, nor has it reviewed any individual credit files of FP or Zions. With
FP's consent, Sandler O'Neill has assumed that the respective aggregate for
loan losses for both FP and Zions are adequate to cover such losses and will
be adequate on a pro forma basis for the combined entity. In addition, Sandler
O'Neill has not conducted any physical inspection of the properties or
facilities of FP or Zions. With respect to the information regarding potential
future financial performance provided by each company's management, Sandler
O'Neill assumed that they were reasonably prepared on bases reflecting the
best currently available estimates and judgments of the respective managements
of the respective future financial performances of Zions and FP and that such
performances will be achieved. Sandler O'Neill expressed no opinion as to such
financial projections or the assumptions on which they were based.
Sandler O'Neill's opinion was necessarily based upon market, economic and
other conditions as they existed on, and could be evaluated as of, the date of
such opinion. For purposes of rendering its opinion, Sandler O'Neill assumed,
in all respects material to its analysis, that all of the representations and
warranties contained in the Merger Agreement and all related agreements are
true and correct, that each party to such agreements will perform all of the
covenants required to be performed by such party under such agreements and
that the conditions precedent in the Merger Agreement are not waived. Sandler
O'Neill also assumed that there has been no material change in Zions' or FP's
assets, financial condition, results of operations, business or prospects
since September 30, 1997, the date of the last financial statements noted
above, that Zions will remain as a going concern for all periods relevant to
its analyses, and that the Merger will be accounted for as a pooling-of-
interests.
Under the Sandler O'Neill Agreement, FP has agreed to pay Sandler O'Neill a
transaction fee in connection with the Merger, a substantial portion of which
is contingent upon the consummation of the Merger. Under the
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terms of the Sandler O'Neill Agreement, FP has agreed to pay Sandler O'Neill a
transaction fee of 0.6% of the aggregate transaction value if the per share
transaction value is less than or equal to $26.50, plus, in the event the per
share transaction value exceeds $26.50, an additional amount equal to 5% of
the amount by which the actual aggregate transaction value exceeds the
aggregate transaction value of a transaction in which the per share
transaction value was $26.50 (the "Transaction Fee"). Based upon the closing
price of Zions Common Stock on April 17, 1998, the aggregate Transaction Fee
payable is approximately $1.6 million, of which $100,000 has been paid,
$100,000 will be paid upon approval of the Merger by FP Stockholders, and the
balance will be paid upon consummation of the Merger. Sandler O'Neill has also
received a fee of $50,000 for rendering its fairness opinion, which will be
credited against the Transaction Fee. FP has also agreed to reimburse Sandler
O'Neill for its reasonable out-of-pocket expenses incurred in connection with
its engagement and to indemnify Sandler O'Neill and its affiliates and their
respective partners, directors, officers, employees, agents and controlling
persons against certain expenses and liabilities, including liabilities under
securities laws.
Sandler O'Neill has in the past provided and continues to provide other
financial advisory services to FP and has received and will receive its
customary compensation for such services. In the ordinary course of its
business, Sandler O'Neill may actively trade the debt and/or equity securities
of FP and Zions and their respective affiliates for its own account and for
the accounts of customers and, accordingly, may at any time hold a long or
short position in such securities.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary of the material federal income tax consequences of the
Merger to holders who hold shares of FP Common Stock as capital assets deals
only with holders who are (i) citizens or residents of the United States, (ii)
domestic corporations, (iii) estates the income of which is subject to United
States federal income tax regardless of source or (iv) trusts if a court
within the United States is able to exercise primary supervision over such
trust and one or more United States persons have the authority to control all
substantial decisions of such trust ("U.S. Holders"). This summary may not
apply to certain classes of taxpayers, including, without limitation,
insurance companies, tax-exempt organizations, financial institutions, dealers
in securities, persons who acquired or acquire shares of FP Common Stock
pursuant to the exercise of employee stock options or otherwise as
compensation and persons who hold shares of FP Common Stock in a hedging
transaction or as part of a straddle or conversion transaction. Also, the
summary does not address state, local or foreign tax consequences of the
Merger. Consequently, each holder should consult such holder's own tax adviser
as to the specific tax consequences of the Merger to such holder.
This summary is based on current law and represents the opinion of Sullivan
& Cromwell, special counsel to Zions, and the opinion of KPMG Peat Marwick
LLP, FP's accountants. Future legislative, judicial or administrative changes
or interpretations, which may be retroactive, could alter or modify the
statements set forth herein. This summary is based on, among other things,
assumptions relating to certain facts and circumstances of, and the intentions
of the parties to, the Merger, which assumptions have been made with the
consent of Zions. Zions does not intend to request any ruling from the
Internal Revenue Service as to the United States federal income tax
consequences of the Merger.
Zions' obligation to consummate the Merger is conditioned upon, among other
things, the receipt of an opinion of Sullivan & Cromwell, dated the Effective
Date, to the effect that the Merger constitutes a "reorganization" under
Section 368 of the Code. FP's obligation to consummate the Merger is
conditioned upon, among other things, the receipt of an opinion of KPMG Peat
Marwick LLP dated the Effective Date, to the effect that (i) the Merger
constitutes a "reorganization" within the meaning of Section 368 of the Code
and (ii) no gain or loss will be recognized by FP Stockholders who receive
shares of Zions Common Stock in exchange for shares of FP Common Stock, except
with respect to cash received in lieu of fractional share interests. Such
opinions will be based upon facts, representations and assumptions set forth
therein. In rendering such opinions, Sullivan & Cromwell and KPMG Peat Marwick
LLP may require and rely upon representations contained in letters to be
received from FP, Zions and FP Stockholders.
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Assuming the Merger qualifies as a "reorganization" within the meaning of
Section 368(a) of the Code, the material federal income tax consequences of
the Merger to each of Zions, FP and U.S. Holders who exchange shares of FP
Common Stock for shares of Zions Common Stock pursuant to the Merger will be
as follows:
(i) in general, no gain or loss will be recognized by Zions or FP as a
result of the consummation of the Merger;
(ii) no gain or loss will be recognized by a U.S. Holder who receives
shares of Zions Common Stock in exchange for shares of FP Common Stock
pursuant to the Merger, except as described below with respect to a U.S.
Holder who receives cash in lieu of a fractional share interest in Zions
Common Stock;
(iii) the aggregate adjusted tax basis of shares of Zions Common Stock
(including a fractional share interest in Zions Common Stock deemed
received and redeemed as described below) received by a U.S. Holder
pursuant to the Merger will be the same as the aggregate adjusted tax basis
of the shares of FP Common Stock exchanged therefor;
(iv) the holding period of shares of Zions Common Stock (including a
fractional share interest in Zions Common Stock deemed received and
redeemed as described below) received by a U.S. Holder pursuant to the
Merger will include the holding period of the FP Common Stock exchanged
therefor; and
(v) a U.S. Holder of FP Common Stock who receives cash in lieu of a
fractional share interest in Zions Common Stock will be treated as having
received such fractional share interest and then as having received the
cash in redemption of such fractional share interest. Accordingly, a U.S.
Holder will generally recognize capital gain or loss equal to the
difference between the amount of cash received and the U.S. Holder's
adjusted tax basis in the fractional share interest (determined as
described in (iii) above), unless the cash received is considered
"essentially equivalent to a dividend" within the meaning of Section 302 of
the Code. Such capital gain or loss will be long-term capital gain or loss
if the U.S. Holder's holding period in the fractional share interest
(determined as described in (iv) above) is more than one year. Long-term
capital gain of an individual U.S. Holder is subject to a maximum tax rate
of 28% in respect of property held for more than one year. The maximum rate
is reduced to 20% for property held for more than 18 months.
Under the terms of the Merger Agreement, the conditions to the Merger,
including receipt by each party of opinions of counsel relating to tax
matters, may generally be waived by Zions or FP, as applicable. As of the date
of this Proxy Statement-Prospectus, neither Zions nor FP intends to waive the
conditions as to the receipt of opinions of counsel on tax matters. In the
event of a failure to obtain tax opinions, and a party's determination to
waive such condition to the consummation of the Merger, FP will resolicit the
votes of its stockholders to approve the Merger without such conditions and
update the information contained herein with respect to the tax consequences
of the Merger as necessary. See "The Merger Agreement--Conditions," "--Waiver
and Amendment" and "--Termination."
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON THE
PARTICULAR CIRCUMSTANCES OF EACH HOLDER OF FP COMMON STOCK AND OTHER FACTORS,
EACH SUCH HOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISER AS TO THE
SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH HOLDER (INCLUDING THE
APPLICATION AND EFFECT OF STATE AND LOCAL INCOME AND OTHER TAX LAWS).
REGULATORY APPROVALS
Federal Reserve Board Approval
The Merger is subject to prior approval by the Federal Reserve Board under
Section 3 of the BHCA, which requires that the Federal Reserve Board take into
consideration, among other things, competition, the financial and managerial
resources and future prospects of the holding companies and banks concerned
and the convenience and needs of the communities to be served. The BHCA
prohibits the Federal Reserve Board from
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approving the Merger if (a) it would result in a monopoly or would be in
furtherance of any combination or conspiracy to monopolize or attempt to
monopolize the business of banking in any part of the United States; or (b)
its effect in any section of the country may be substantially to lessen
competition or tend to create a monopoly, or if it would in any other manner
be in restraint of trade, unless the Federal Reserve Board finds that the
anti-competitive effects of the Merger 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. The Federal Reserve Board has the
authority to deny an application if it concludes that the combined
organization would have an inadequate capital structure, taking into account,
among other factors, the nature of the business and operations and plans for
expansion. Furthermore, the Federal Reserve Board must also assess the records
of the depository institution subsidiaries of Zions and FP under the Community
Reinvestment Act of 1977, as amended (the "CRA"). The CRA requires that the
Federal Reserve Board evaluate, when evaluating an application, each
depository institution's record of meeting the credit needs of its local
communities, including low- and moderate-income neighborhoods, consistent with
safe and sound operation and take such record into account when evaluating
certain regulatory applications.
Under the BHCA, the Merger may not be consummated until the thirtieth day
following the date of Federal Reserve Board approval. If the Federal Reserve
Board has not received any adverse comments from the Attorney General of the
United States relating to competitive factors, the waiting period may be
reduced to no less than 15 days.
Zions submitted the FRB Notice seeking approval of the Merger and related
matters to the Federal Reserve Board on February 2, 1998. On March 12, 1998,
Zions received approval for the Merger from the Federal Reserve Board.
Federal Deposit Insurance Corporation Approval
The Bank Merger is subject to the approval of the FDIC pursuant to Section
18(c) of the Federal Deposit Insurance Act. The FDIC is prohibited by law from
approving any merger that would tend to create or result in a monopoly, or
which would further a combination, conspiracy or attempt to monopolize the
business of banking in any part of the United States. In addition, the FDIC
may not approve a transaction whose effect in any section of the country may
be substantially to lessen competition. In considering an application, the
FDIC also considers the financial and managerial resources and future
prospects of the existing and proposed institutions, and the convenience and
needs of the community to be served.
Under the Federal Deposit Insurance Act, the Bank Merger may not be
consummated until the thirtieth day following the date of FDIC approval. If
the FDIC has not received any adverse comments from the Attorney General of
the United States relating to competitive factors, the waiting period may be
reduced to no less than 15 days. Grossmont submitted an application for
approval of the Bank Merger to the FDIC on February 10, 1998. On April 14,
1998, Grossmont received approval for the Bank Merger from the FDIC.
Approval of the Commissioner of the California Department of Financial
Institutions
The Bank Merger also requires the approval of the Commissioner of the
California Department of Financial Institutions. To approve an application,
the Commissioner must find that (a) the merger will not result in a monopoly
or cause a lessening of competition, (b) the shareholders' equity and
financial condition of the surviving bank will be adequate, (c) management of
the surviving bank will be satisfactory, (d) the surviving bank will afford
reasonable promise of successful operation and be operated in a safe and sound
manner and (e) the merger will be fair, just and equitable. Grossmont
submitted an application for approval of the Bank Merger to the Commissioner
on February 10, 1998. On March 11, 1998, Grossmont received approval for the
Bank Merger from the Commissioner.
Zions and FP are not aware of any material governmental approvals or actions
that are required for consummation of the Merger and the Bank Merger, except
as described above. Should any such approval or action be required, it is
currently contemplated that such approval or action would be sought.
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RESALE OF ZIONS COMMON STOCK
All shares of Zions Common Stock received by FP Stockholders in the Merger
will be freely transferrable, except that shares of Zions Common Stock
received by such FP Stockholders who are deemed to be "affiliates" (as defined
for purposes of Rule 145 under the Securities Act) of FP as of the date of the
Special Meeting may be resold by them only pursuant to an effective
registration statement under the Securities Act covering resales of such
shares or in transactions permitted by the resale provisions of Rule 145 of
the Securities Act (or pursuant to Rule 144 under the Securities Act in the
case of such persons who become affiliates of Zions) or as otherwise permitted
under the Securities Act. Persons who may be deemed to be affiliates of FP
generally include individuals or entities that control, are controlled by, or
are under common control with, such entities and may include certain officers
and directors of such entities as well as principal shareholders of such
entities.
FP has agreed in the Merger Agreement to use its reasonable best efforts to
obtain a written agreement from each person who may be deemed to be an
"affiliate" of FP providing that such person will not sell, transfer or
otherwise dispose of any shares of Zions Common Stock to be received by such
person in the Merger, except in compliance with the applicable provisions of
the Securities Act, and not to sell, transfer, pledge or otherwise dispose of
(i) any shares of FP Common Stock during the period commencing 30 days prior
to the Effective Date or (ii) any shares of Zions Common Stock received by the
undersigned in the Merger until after such time as results covering at least
30 days of combined operations of FP and Zions have been published by Zions,
in the form of a quarterly earnings report, a report to the Commission on Form
10-K, 10-Q, or 8-K, or any other public filing or announcement which includes
such combined results of operations. Certain of the persons likely to be
deemed affiliates have pledged their shares of FP Common Stock. Any such
agreement not to sell shares of FP Common Stock would, of course, be subject
to such pledge agreements. See "The Stockholder Agreements."
Commission guidelines indicate that the pooling-of-interests method
generally will not be challenged on the basis of selling of shares by
affiliates of the acquiring or the acquired company if such affiliates do not
dispose of any shares (other than a "de minimis" number of shares) of the
stock they received in connection with the Merger during the period beginning
30 days before the Merger and ending when financial results covering at least
30 days of post-merger operations of the combined enterprise have been
published. See "The Merger--Accounting Treatment."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
General
In considering the recommendation of the FP Board, FP Stockholders should be
aware that certain members of the Board of Directors and management of FP have
certain interests in the transactions contemplated by the Merger Agreement
that are in addition to the interests of FP Stockholders generally and which
may create potential conflicts of interest. These interests include, among
other things, the following: (i) FP has entered into employment agreements
with Harvey L. Williamson, President and Chief Executive Officer of FP,
Michael J. Perdue, Executive Vice President and Chief Operating Officer of FP
and Gary W. Deems, Executive Vice President and Chief Administrative Officer
of FP which contain, among other things, change of control provisions that
would be triggered by the Merger; (ii) FP has entered into salary continuation
agreements with Mr. Perdue and Mr. Deems which contain change of control
provisions that would be triggered by the Merger; (iii) at the Effective Time
the employment agreement and salary continuation agreement of Mr. Perdue shall
lapse and be replaced with an employment agreement between Mr. Perdue and
Grossmont, which was entered into at the request of Zions; (iv) Messrs.
Williamson and Deems have entered into non-competition agreements with
Grossmont and Zions at the request of Zions, which become effective upon their
resignation; (v) Zions will indemnify the directors and officers of FP and its
subsidiaries from certain liabilities and provide them with directors' and
officers' liability insurance; (vi) stock options with respect to FP Common
Stock held by FP Stockholders, including directors and certain officers of FP
will be converted into stock options with respect to Zions Common Stock; and
(vii) three members of the FP Board, Messrs. Baker, Klemme and Luce, will
continue as members of the Grossmont Board after consummation of the Bank
Merger. In addition, if the proposed Sumitomo Merger and the transactions
contemplated thereby are approved and consummated, Robert G. Sarver, the
chairman of the board of Grossmont, and a limited partnership, of which Mr.
Sarver is the general partner, will hold, in equal proportions, an aggregate
5% interest in the resultant bank (a combination of Grossmont and The Sumitomo
Bank of California). These interests are more fully described below.
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Employment Agreements
The executive officers of FP, Harvey L. Williamson, Michael J. Perdue and
Gary W. Deems, have written employment agreements with FP and FPNB.
Williamson Employment Agreement. On August 1, 1997, Mr. Williamson entered
into a new Employment Agreement (the "CEO Employment Agreement") with FPNB
(replacing prior employment and change of control agreements with FPNB), under
which FP has certain obligations. The CEO Employment Agreement provides that
upon a change of control (as defined therein), Mr. Williamson is entitled to
the following severance benefits: (i) a lump sum payment of an amount equal to
the salary that would otherwise be payable at the then current salary rate
through December 31, 1998, plus the pro rata portion of the bonus that he
would have earned with respect to the portion of the calendar year elapsed
through the date of termination under the most recently in force executive
bonus plan and (ii) continuation of health insurance and the use of an
automobile provided by FPNB for a period of the lesser of one year or the time
until December 31, 1998. These severance benefits will be paid in the event
that, as expected, Mr. Williamson's employment is terminated on the Effective
Date.
Deems and Perdue Employment Agreements. In August, 1997, Mr. Deems and Mr.
Perdue (the "Executives," or individually, "Executive") each entered into a
new Employment Agreement (the "Executive Employment Agreements") with FP and
FPNB (replacing prior employment and change of control agreements with FPNB).
Each of the Executive Employment Agreements is effective through December 31,
1998.
The Executive Employment Agreements provide certain benefits if within two
years after a definitive agreement is executed causing a later change of
control (as defined therein) the Executive is terminated, his salary is
reduced or he is required to be based more than 35 miles from the executive
offices of FPNB. In such an event, the Executive is entitled to the following
benefits: (i) a lump sum payment of an amount equal to the lesser of (a) one
year's salary at the then current salary rate, or (b) the salary that would
otherwise be payable at the then current salary rate, through the Executive's
attainment of age 65, plus the pro rata portion of the bonus that the
Executive would have earned with respect to the portion of the calendar year
elapsed through the date of termination under the most recently in force
executive bonus plan and (ii) continuation of health insurance and the use of
an automobile provided by FPNB for a period of the lesser of one (1) year or
the time until the Executive attains the age of 65. At the Effective Time, if,
as expected, Mr. Deems is terminated, he will be entitled to these benefits.
Mr. Perdue has entered into an Employment Agreement with Grossmont that would
replace his Executive Employment Agreement upon consummation of the Merger.
See "--Employment Agreement between Mr. Perdue and Grossmont."
Salary Continuation Agreements
On August 1, 1997, Mr. Deems and Mr. Perdue each entered into a Salary
Continuation Agreement (the "Salary Continuation Agreement") with FP and FPNB.
Each Salary Continuation Agreement permits the Executive to defer compensation
to fund a portion of an annual benefit to be paid under schedules included in
the Salary Continuation Agreement. FPNB is responsible for funding other
benefits which vest over a period of time, subject to the discussion below.
Upon the retirement after age 65 or disability of the Executive, FPNB shall
pay to the Executive the annual sum of $120,000 if that the Executive has made
all of the scheduled deferrals (15 in the case of Mr. Deems and 22 in the case
of Mr. Perdue), for a period of 180 months following the date of retirement or
disability. If not all of the scheduled deferrals have been made, FPNB shall
pay to the Executive a lesser amount based upon the actual deferrals made by
the Executive and a benefit schedule setting forth the amount of FPNB's
responsibility for annual payments. If the Executive dies while employed, FPNB
shall pay his beneficiary the annual sum of $120,000 for a period of 180
months. If the Executive is terminated by FPNB for cause (using the same
definitions appearing in the Executive Employment Agreement) the Executive
will be entitled to receive only his vested benefit based on his deferrals,
for a period of 180 months beginning at age 65. If the Executive is terminated
by FPNB without cause he will also be entitled to receive the vested benefit
funded by FPNB, for a period of 180 months beginning at age 65.
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In the event of a Change of Control while the Executive is employed with FP
or FPNB, FPNB will be obligated to provide the annual sum of at least $60,000
for a period of 180 months beginning at age 65. In effect what this implies in
the context of the Merger is that if the Executive is terminated without cause
after the Merger he will be entitled to receive the amount vested based on his
deferrals, plus $60,000 per year, all for a period of 180 months, commencing
at age 65. If the Merger occurs in May 1998, Mr. Deems would be entitled to a
payment of approximately $68,000 per year for 180 months beginning in the year
2011. Mr. Perdue has agreed that he will give up his benefits under the Salary
Continuation Agreement if the Merger is completed. However, if the Merger
occurs in May 1998 and Mr. Perdue does not waive his rights under the Salary
Continuation Agreement, Mr. Perdue would be entitled to a payment of
approximately $63,000 per year for 180 months beginning in the year 2019.
Employment Agreement between Mr. Perdue and Grossmont
Mr. Perdue, FPNB and Grossmont have entered into an Employment Agreement
(the "Perdue Agreement"). Under the Perdue Agreement, Mr. Perdue's Executive
Employment Agreement and Salary Continuation Agreement will cease to be
effective upon completion of the Merger and he will receive only the benefits
provided under the Perdue Agreement. Mr. Perdue will serve as a Senior Vice
President of Grossmont for a period of three years (which may be extended for
an additional two years) or until his earlier death, disability or termination
and will be paid at least his current salary with FPNB. He will also be
provided with an automobile, reimbursement of reasonable expenses related to
his service to Grossmont and employee benefits, vacation and sick leave under
the policies of Grossmont applicable to an officer of his rank. However, if he
leaves his employment with Grossmont, he could receive the greater of the
payment he would have received under his Salary Continuation Agreement or
under the Perdue Agreement.
At the end of the term of employment or if Mr. Perdue is terminated due to
death, disability, termination "for cause" or self-termination, he will
receive only his salary through the date of termination, accrued rights under
employee benefit plans, rights to reimbursement, the right to be paid the cash
equivalent of accrued annual leave and sick leave, and monthly payments
totaling $50,000 per annum for a period of two years as consideration for
certain non-competition provisions described below.
If Mr. Perdue is terminated by Grossmont "without cause," is required to
relocate to another branch or office of Zions or Grossmont or their affiliates
more than 50 miles from Escondido for more than six months and he elects to
resign, or if Grossmont demotes him from the position of Senior Vice President
or he loses any significant duties or responsibilities attending such position
without his consent and he elects to resign, he will be entitled to certain
benefits. For a period of 12 months or until the end of his term of
employment, whichever is longer, he would receive his salary at the then-
effective rate. He would receive all accrued rights under employee benefit
plans, rights to reimbursement and the right to be paid the cash equivalent of
accrued annual leave and sick leave. He would also receive a payment based on
the average cash bonuses and amounts under profit sharing plans payable to him
during the three fiscal years preceding termination equal to the greater of
that amount or the amount prorated over the remainder of the three year term
of the Perdue Agreement. Finally, he would receive continued medical and
dental insurance benefits and continued use of the automobile for a period of
one year from the date of termination.
The Perdue Agreement contains provisions prohibiting Mr. Perdue from taking
certain actions after termination of employment with Grossmont that would be
deemed to be competitive with its business. In particular, for a period of two
years after termination he agrees that he will not (i) engage in the banking
business in Riverside or San Diego Counties (the "Market Area"), (ii) directly
or indirectly own, manage, operate, control, be employed by or provide
management or consulting services to any entity engaged in the banking
business in the Market Area or (iii) directly or indirectly solicit or
otherwise intentionally cause any employee, officer or member of the
respective boards of directors of Grossmont or any of its affiliates to engage
in any of the first two prohibited activities within the Market Area.
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Williamson and Deems Non-competition Agreements
Mr. Williamson and Mr. Deems have entered into non-competition agreements
with Zions and Grossmont effective upon completion of the Merger. In
particular, for a period of two years from the date of their respective
termination of employment, each of them agrees that he will not (i) engage in
the banking business in the Market Area, (ii) directly or indirectly own,
manage, operate, control, be employed by or provide management or consulting
services to any entity engaged in the banking business in the Market Area or
(iii) directly or indirectly solicit or otherwise intentionally cause any
employee, officer or member of the respective boards of directors of
Grossmont, Zions or any of their affiliates to engage in any of the first two
prohibited activities within the Market Area. Each of them will be paid the
amount of $70,000 per annum, payable monthly for the two-year period. Each of
them will also receive continued medical, disability, life and accidental
death insurance benefits for the two-year period.
Indemnification; Directors' and Officers' Insurance
The Merger Agreement provides that from and after the Effective Time through
the fourth anniversary of the Effective Time, Zions will indemnify each
director and officer of FP and FPNB, determined as of the Effective Time,
against certain liabilities arising out of matters existing or occurring at or
prior to the Effective Time (but excluding Costs (as defined herein) arising
out of any violation or alleged violation of the Exchange Act or the rules and
regulations thereunder with respect to insider trading) to the extent to which
such indemnified parties were entitled under Delaware law, the FP Certificate
and the FP Bylaws in effect on December 29, 1997. Zions will also advance
expenses as incurred to the extent permitted under Delaware law, the FP
Certificate and the FP Bylaws. In addition, for a period of three years after
the Effective Time, Zions has agreed to use its reasonable best efforts to
maintain in effect the current policies of directors' and officers' liability
insurance maintained by FP, provided that Zions is in no event obligated to
spend in connection therewith any amount per annum in excess of 150% of the
amount of annual premiums paid by FP for such insurance as of the date of the
Merger Agreement.
Stock Options
The directors and certain officers and employees of FP have previously
received FP Stock Options, which entitle them to purchase shares of FP Common
Stock under the Amended and Restated 1988 Stock Option Plan (the "FP Stock
Plan").
At the Effective Time, each outstanding FP Stock Option, whether vested or
unvested, would be converted into an option to acquire, on the same terms and
conditions as were applicable under such FP Stock Options, such number of full
shares of Zions Common Stock as the holder of such FP Stock Option would have
been entitled to receive pursuant to the Merger had such holder exercised such
FP Stock Option in full immediately prior to the Effective Time, at an
exercise per share equal to the aggregate exercise price per share of the
shares of FP Common Stock otherwise purchasable pursuant to such FP Stock
Option divided by the number of shares of Zions Common Stock subject to the
option. The FP Stock Options which are presently unexercisable and unvested
would, pursuant to the terms of the FP Stock Plan, automatically become
exercisable and vested upon the occurrence of a "change of control," as
defined in the FP Stock Plan. The Merger would constitute a "change of
control" for purposes of the FP Stock Plan.
Sumitomo Merger and the Sarver Transaction
If the proposed Sumitomo Merger and the transactions contemplated thereby
are approved by the stockholders of The Sumitomo Bank of California and all
applicable regulatory authorities, and if all other conditions to the Sumitomo
Merger are met, it is expected that Robert G. Sarver, the chairman of the
board of Grossmont, and a limited partnership, of which Mr. Sarver is the
general partner, will be allowed to purchase, for approximately $34 million,
an aggregate 5% interest in the resultant bank (a combination of Grossmont and
The Sumitomo Bank of California), such interest to be held by Mr. Sarver and
the limited partnership in equal proportions.
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ACCOUNTING TREATMENT
For accounting and financial reporting purposes, it is expected that the
Merger will be accounted for as a pooling-of-interests in accordance with
generally accepted accounting principles. Under this method of accounting, the
previously recorded assets and liabilities of Zions and FP would be carried
forward to the Surviving Corporation at their recorded amounts; income and
expenses of the Surviving Corporation would include income and expenses of
Zions and FP for the entire fiscal year in which the Merger occurs; and the
reported results of the separate corporations for prior periods would be
combined and restated as the results of the Surviving Corporation.
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THE MERGER AGREEMENT
Set forth below is a description of certain of the terms and conditions of
the Merger Agreement and related matters. This summary of the terms and
conditions of the Merger Agreement does not purport to be complete and is
qualified in its entirety by reference to the full text of the Merger
Agreement as set forth in Appendix A hereto and the text thereof is
incorporated by reference herein.
THE MERGER
The Merger Agreement was entered into by and between Zions and FP as of
December 29, 1997. Pursuant to the Merger Agreement, at the Effective Time, FP
will merge with and into Zions, and Zions will be the Surviving Corporation in
the Merger. The separate corporate existence of FP will then cease.
CONVERSION OF FP COMMON STOCK
Under the terms of the Merger Agreement, each share of FP Common Stock
issued and outstanding at the Effective Time (other than Treasury Stock) will
be converted automatically into the right to receive 0.627 of a share of Zions
Common Stock, with any rights attached thereto under or by virtue of the Zions
Rights Plan. FP Stockholders will receive cash in lieu of fractional shares of
Zions Common Stock.
EFFECTIVE TIME
The Merger will become effective upon the filing of articles of merger and
related documents with the Utah Division of Corporation and Commercial Code
and the Secretary of State of the State of Delaware or on such later date as
may be specified in such articles. At the Effective Time, FP shall be merged
with and into Zions. FP's separate corporate existence will thereupon cease.
In addition, as promptly as practicable after the consummation of the Merger,
FPNB will be merged with and into Grossmont, and Grossmont will be the
resulting bank upon consummation of the Bank Merger.
EXCHANGE OF STOCK CERTIFICATES
At or prior to the Effective Time, Zions will deposit, or will cause to be
deposited, with a bank or trust company (which may be a subsidiary of Zions)
selected by Zions and (except in the case of a Zions subsidiary) reasonably
acceptable to FP (the "Exchange Agent"), certificates representing the shares
of Zions Common Stock ("New Certificates") and an estimated amount of cash in
lieu of fractional shares to be paid in exchange for outstanding shares of FP
Common Stock (the "Merger Consideration").
As soon as practicable after the Effective Date, but not more than ten
business days thereafter, Zions will send or cause to be sent to each FP
Stockholder who holds of record immediately prior to the Effective Time shares
of FP Common Stock a letter of transmittal (the "Letter of Transmittal"), and
instructions for use in effecting the exchange of the certificates
representing shares of FP Common Stock (a "Certificate") for the Merger
Consideration.
Upon delivery to the Exchange Agent of a Certificate or Certificates Zions
will cause New Certificates and/or any check in respect of any fractional
share interests or dividends or distributions which such holder is entitled to
receive to be delivered to such holder. After the Effective Date and until
surrendered, each Certificate will be deemed to represent only the right to
receive the Merger Consideration.
At the election of Zions, no dividends or other distributions with respect
to Zions Common Stock with a record date occurring after the Effective Time
will be paid with respect to any shares of FP Common Stock represented by a
Certificate until such Certificate is delivered for exchange. Following
delivery of any such Certificate, the holder of such Certificate will be
entitled to receive only such dividends or other distributions, without
interest thereon, which theretofore had become payable with respect to shares
of Zions Common Stock such holder had the right to receive upon delivery of
the Certificate.
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CONDUCT OF BUSINESS PRIOR TO THE MERGER
FP
FP has agreed in the Merger Agreement, without the prior written consent of
Zions not to, and to cause each of its subsidiaries not to:
(a) conduct the business of FP and its subsidiaries other than in the
ordinary and usual course or fail to use reasonable best efforts to
preserve intact their business organizations and assets and maintain their
rights, franchises and existing relations with customers, suppliers,
employees and business associates, take any action that would adversely
affect or delay the ability of FP, Zions or any of their subsidiaries to
perform any of their obligations on a timely basis under the Merger
Agreement, or take any action reasonably likely to have a Material Adverse
Effect (as defined in the Merger Agreement) on FP or its subsidiaries,
taken as a whole;
(b) other than pursuant to the Debentures and rights previously disclosed
and outstanding on the date of the Merger Agreement, (i) issue, sell or
otherwise permit to become outstanding, or authorize the creation of, any
additional shares of, or rights to acquire, FP Common Stock, (ii) enter
into any agreement with respect to the foregoing or (iii) permit any
additional shares of FP Common Stock to become subject to new grants of
employee or director stock options, other rights or similar stock-based
employee rights;
(c)(i) make, declare, pay or set aside for payment any dividend on or in
respect of, or declare or make any distribution on, any shares of FP Common
Stock or (ii) directly or indirectly adjust, split, combine, redeem,
reclassify, purchase or otherwise acquire, any shares of its capital stock;
(d) enter into or amend or renew any employment, consulting, severance or
similar agreements or arrangements with any director, officer or employee
of FP or its subsidiaries, or grant any salary or wage increase or increase
any employee benefit, except (i) for normal individual increases in
compensation to employees in the ordinary course of business consistent
with past practices (including increases in the annual bonus pool and
reallocations pursuant thereto; provided that for 1998 such pool shall not
exceed the 1997 pool, prorated through the Effective Date), (ii) for other
changes that are required by applicable law, (iii) to satisfy previously
disclosed contractual obligations existing as of the date of the Merger
Agreement or (iv) for grants of awards to newly hired employees consistent
with past practice;
(e) enter into, establish, adopt or amend (except as may be required by
applicable law or to satisfy previously disclosed contractual obligations)
any benefit plan in respect of any director, officer or employee of FP or
its subsidiaries, or take any action to accelerate the vesting or
exercisability of stock options, restricted stock or other compensation or
benefits payable thereunder;
(f) sell, transfer, mortgage, encumber or otherwise dispose of or
discontinue any of its assets, deposits, business or properties except in
the ordinary course of business and in a transaction that is not material;
(g) acquire all or any portion of the assets, business, deposits or
properties of any other entity except in the ordinary course of business
and in a transaction that is not material;
(h) make any capital expenditures other than capital expenditures in the
ordinary course of business consistent with past practice and not to exceed
specified amounts;
(i) amend its or any subsidiary's articles or certificate of
incorporation or bylaws (or similar governing documents);
(j) implement or adopt any change in its accounting principles, practices
or methods, other than as may be required by generally accepted accounting
principles;
(k) except in the ordinary course of business consistent with past
practice or to reasonably comply with or ameliorate FP's obligations
pursuant to the Debentures, enter into or terminate any material contract
or amend or modify in any material respect any of its existing material
contracts;
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(l) except in the ordinary course of business consistent with past
practice (including increases in the annual bonus pool and reallocations
pursuant thereto; provided that for 1998 such pool shall not exceed the
1997 pool, prorated through the Effective Date), generally settle any
material claim, action or proceeding;
(m)(i) take any action while knowing that such action would or is
reasonably likely to prevent or impede the Merger from qualifying (A) for
"pooling-of-interests" accounting treatment or (B) as a reorganization for
tax purposes; or (ii) knowingly take any action that is intended or is
reasonably likely to result in (A) any of its representations and
warranties set forth in the Merger Agreement being or becoming untrue, (B)
any of the conditions to the Merger not being satisfied or (C) a material
violation of any provision of the Merger Agreement except, in each case, as
may be required by applicable law or regulation;
(n) except as required by applicable law or regulation, (i) implement or
adopt any material change in its interest rate and other risk management
policies, procedures or practices; (ii) fail to follow its existing
policies or practices with respect to managing its exposure to interest
rate and other risk; or (iii) fail to use commercially reasonable means to
avoid any material increase in its aggregate exposure to interest rate
risk;
(o) incur any indebtedness for borrowed money other than in the ordinary
course of business; or
(p) agree or commit to do any of the foregoing.
Notwithstanding anything to the contrary in these provisions, FP is not to
be deemed to be in breach of these provisions by taking appropriate actions to
redeem and/or convert its outstanding Debentures. The parties consented to
reasonable actions by FP to meet its obligations under the Debentures. All of
the Debentures were in fact converted effective January 20, 1998.
Zions
Zions has agreed in the Merger Agreement, without the prior written consent
of FP, not to, and cause each of its subsidiaries not to:
(a) take any action that would adversely affect or delay the ability of
FP or Zions to perform any of their obligations on a timely basis under the
Merger Agreement, or take any action that is reasonably likely to have a
Material Adverse Effect on Zions or its subsidiaries, taken as a whole; or
(b)(i) take any action while knowing that such action would or is
reasonably likely to prevent or impede the Merger from qualifying (A) for
pooling-of-interests accounting treatment or (B) as a reorganization for
tax purposes; or (ii) knowingly take any action that is intended or is
reasonably likely to result in (A) any of its representations and
warranties set forth in the Merger Agreement being or becoming untrue, (B)
any of the conditions to the Merger not being satisfied or (C) a material
violation of any provision of the Merger Agreement except, in each case, as
may be required by applicable law or regulation.
CERTAIN COVENANTS
Stockholder Meeting
FP has agreed to take, in accordance with applicable law and FP's
Certificate and FP Bylaws, all action necessary to convene an appropriate
meeting of the FP Stockholders to consider and vote upon the approval and
adoption of the Merger Agreement and any other matters required to be approved
by the FP Stockholders for consummation of the Merger. Except to the extent
the FP Board reasonably determines otherwise in the exercise of its fiduciary
duties following receipt of advice of FP's legal counsel, the FP Board will
recommend that the FP Stockholders approve the Merger and any other matters
required to be approved by the FP Stockholders for consummation of the Merger.
Acquisition Proposals
FP has agreed that it will not, and it will cause its subsidiaries and its
subsidiaries' officers, directors, agents, advisors and affiliates not to,
solicit or encourage inquiries or proposals with respect to, or engage in any
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negotiations concerning, or provide any confidential information to, or have
any discussions with, any person relating to, any tender or exchange offer,
proposal for a merger, consolidation or other business combination involving
FP or any of its subsidiaries or any proposal or offer to acquire in any
manner a substantial equity interest in, or a substantial position of the
assets or deposits of, FP or any of its subsidiaries (other than as
contemplated by the Merger Agreement) (an "Acquisition Proposal"), except in
the special circumstance where the FP Board (i) concludes in good faith that
the Acquisition Proposal, if consummated, would result in a transaction more
favorable to holders of FP Common Stock than the transaction contemplated by
the Merger Agreement; (ii) determines in good faith based upon the advice of
outside counsel that such action is legally necessary to discharge its
fiduciary duties; and (iii) prior to responding to the Acquisition Proposal,
notifies Zions of such Acquisition Proposal.
Indemnification of Directors and Officers; Insurance
Zions has agreed that from and after the Effective Date through the fourth
anniversary of the Effective Date, Zions will indemnify and hold harmless each
present and former director and officer of FP or any subsidiary of FP
determined as of the Effective Time (the "Indemnified Parties"), against any
costs or expenses, including reasonable attorneys' fees, judgments, fines,
losses, claims, damages or liabilities (collectively, "Costs"), incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of matters
existing or occurring at or prior to the Effective Time (including Costs
incurred in connection with the Merger Agreement or any of the transactions
contemplated thereby, but excluding any Costs arising out of any violation or
alleged violation of the Exchange Act or the rules and regulations thereunder
with respect to insider trading), whether asserted, claimed or arising prior
to, at or after the Effective Time, to the extent to which such Indemnified
Parties were entitled under Delaware law, the FP Certificate or the FP Bylaws
in effect on the date of the Merger Agreement.
In addition, for a period of three years after the Effective Time, Zions has
agreed to use its reasonable best efforts to cause to be maintained in effect
the current policies of directors' and officers' liability insurance
maintained by FP (provided that Zions may substitute therefor policies of
comparable coverage with respect to claims arising from facts or events which
occurred before the Effective Time); provided, however, that in no event will
Zions be obligated to expend in connection therewith any amount per annum in
excess of 150% of the amount of the annual premiums paid as of the date of the
Merger Agreement by FP for such insurance (the "Maximum Amount"). If the
amount of the annual premiums necessary to maintain or procure such insurance
coverage exceeds the Maximum Amount, Zions has agreed to use all reasonable
efforts to maintain the most advantageous policies of directors' and officers'
insurance obtainable for an annual premium equal to the Maximum Amount.
Notwithstanding the foregoing, prior to the Effective Time, Zions may request
FP to, and FP shall, purchase insurance coverage, on such terms and conditions
as shall be acceptable to Zions, extending for a period of three years FP's
directors' and officers' liability insurance coverage in effect as of the date
of the Merger Agreement (covering past or future claims with respect to
periods before the Effective Time).
Certain Filings, Consents and Arrangements
Pursuant to the Merger Agreement, Zions and FP have agreed to make filings
and applications with the Federal Reserve Board, the FDIC and the Commissioner
in order to obtain all approvals, consents and waivers of governmental
agencies or regulatory authorities necessary or appropriate for the
consummation of the transactions contemplated by the Merger Agreement.
Access to Information
Upon reasonable notice, each party has agreed to afford to the other party
and its representatives access during normal business hours throughout the
period prior to the Effective Time to the books, records, properties,
personnel and to such other information as the requesting party may reasonably
request; provided, however, that no investigation pursuant to such access
shall affect or be deemed to modify any representation or warranty made in the
Merger Agreement. Each party has agreed that it will not, and will cause its
representatives not to, use any
39
<PAGE>
information obtained pursuant to the access described above for any purpose
unrelated to the consummation of the transactions contemplated by the Merger
Agreement. In addition, subject to the requirements of law, each party has
agreed to keep confidential, and to cause its representatives to keep
confidential, all information and documents obtained pursuant to the access
described above, subject to customary exceptions.
Directors of Grossmont
Zions will cause Grossmont to add to the board of directors of Grossmont
three individuals from the FP Board who are reasonably acceptable to Zions.
CONDITIONS
The obligations of Zions and FP to consummate the Merger are subject to the
fulfillment or written waiver prior to the Effective Time of certain
conditions, including (a) the approval of FP Stockholders of the Merger by no
less than the requisite percentage of the outstanding voting stock of FP; (b)
all regulatory approvals required to consummate the Merger, the Bank Merger
and the other transactions contemplated by the Merger Agreement having been
obtained and remaining in full force and effect and all statutory waiting
periods in respect thereof having expired and no such approvals containing any
conditions, restrictions or requirements which the Board of Directors of Zions
reasonably determines would (i) following the Effective Time, have a Material
Adverse Effect (as defined in the Merger Agreement) on the Surviving
Corporation and its subsidiaries taken as a whole or (ii) reduce the benefits
of the transactions contemplated by the Merger Agreement to such a degree that
Zions would not have entered into the Merger Agreement had such conditions,
restrictions or requirements been known at the date of the Merger Agreement;
(c) no court, administrative agency or commission or other federal, state or
local governmental authority or instrumentality (a "Governmental Authority")
of competent jurisdiction having enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) which is in effect at the
Effective Time and which prohibits consummation of the transactions
contemplated by the Merger Agreement; (d) the Registration Statement having
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement having been issued and no
proceedings for that purpose having been initiated or threatened by the
Commission; and (e) all permits and other authorizations under state
securities laws necessary to consummate the transactions contemplated by the
Merger Agreement and to issue the shares of Zions Common Stock to be issued in
the Merger having been received and being in full force and effect.
The obligation of Zions to consummate the Merger is also subject to the
fulfillment or written waiver of Zions prior to the Effective Time of certain
additional conditions, including (a) subject to a materiality standard set
forth in the Merger Agreement, each of the representations and warranties of
FP contained in the Merger Agreement being true and correct as of the date of
the Merger Agreement and the Effective Time (except that representations and
warranties that by their terms speak only as of the date of the Merger
Agreement or some other date need be true and correct as of such date), and
Zions having received a certificate, dated the Effective Date, signed on
behalf of FP by the Chief Executive Officer and the Chief Financial Officer of
FP to such effect; (b) FP having 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 Zions having received a certificate, dated
the Effective Date, signed on behalf of FP by the Chief Executive Officer and
the Chief Financial Officer of FP to such effect; (c) Zions having received an
opinion of Sullivan & Cromwell, special counsel to Zions, dated the Effective
Date, to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, the Merger constitutes a reorganization
under Section 368 of the Code; (d) Zions having received letters from
FP's independent auditors, dated (i) the date on which the Registration
Statement shall become effective and (ii) a date shortly prior to the
Effective Date, addressed to Zions and Zions' directors and officers, in form
and substance customary for "comfort" letters delivered by independent
accountants in accordance with Statement of Accounting Standards No. 72; and
(e) Zions having received from KPMG Peat Marwick LLP, Zions' independent
auditors, letters, dated the date of or shortly prior to each of the mailing
date of this Proxy Statement-Prospectus and the Effective Date, stating its
opinion that the Merger shall qualify for pooling-of-interests accounting
treatment.
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<PAGE>
The obligation of FP to consummate the Merger is also subject to the
fulfillment or written waiver by FP prior to the Effective Time of certain
additional conditions, including (a) subject to a materiality standard set
forth in the Merger Agreement, each of the representations and warranties of
Zions contained in the Merger Agreement being true and correct as of the date
of the Merger Agreement and as of the Effective Date as though made on and as
of the Effective Date (except that representations and warranties that by
their terms speak only as of the date of the Merger Agreement or some other
date need only be true and correct as of such date), and FP having received a
certificate, dated the Effective Date, signed on behalf of Zions by the Chief
Executive Officer and the Chief Financial Officer of Zions to such effect; (b)
Zions having 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 FP having received a certificate, dated the Effective Date, signed on
behalf of Zions by the Chief Executive Officer and the Chief Financial Officer
of Zions to such effect; (c) FP having received an opinion of KPMG Peat
Marwick LLP, FP's accountants, dated the Effective Date, to the effect that,
on the basis of facts, representations and assumptions set forth in such
opinion, (i) the Merger constituting a "reorganization" within the meaning of
Section 368 of the Code and (ii) no gain or loss will be recognized by FP
Stockholders who receive shares of Zions Common Stock in exchange for shares
of FP Common Stock, except with respect to cash received in lieu of fractional
share interests; (d) FP having received letters from Zions' independent
auditors, dated (i) the date on which the Registration Statement becomes
effective and (ii) a date shortly prior to the Effective Date, addressed to
FP, in form and substance customary for "comfort" letters delivered by
independent accountants in accordance with Statement of Accounting Standards
No. 72; (e) no Stock Acquisition Date (as such term is defined in Zions'
Shareholder Protection Rights Plan) having occurred under the Shareholder
Protection Rights Plan prior to the Effective Time; (f) FP having received
from its independent auditors, letters, dated the date of or shortly prior to
each of the mailing date of this Proxy Statement-Prospectus and the Effective
Date, stating its opinion that the Merger shall qualify for pooling-of-
interests accounting treatment; and (g) the shares of Zions Common Stock to be
issued in the Merger having been approved for listing on NASDAQ, subject to
official notice of issuance.
WAIVER AND AMENDMENT
Prior to the Effective Time, any provision of the Merger Agreement may be
(i) waived by the party benefitted by the provision, or (ii) amended or
modified at any time, by an agreement in writing between Zions and FP, except
that after the Special Meeting, the Merger Agreement may not be amended if it
would violate the DGCL or reduce the consideration to be received by FP
Stockholders in the Merger.
TERMINATION
General
The Merger Agreement may be terminated, and the Merger abandoned (a) at any
time prior to the Effective Time, by the mutual consent of Zions and FP ; (b)
at any time prior to the Effective Time, by Zions or FP, in the event of
either: (i) a breach by the other party of any representation or warranty
contained in the Merger Agreement, which breach cannot be or has not been
cured within 30 days after the giving of written notice to the breaching party
of such breach; or (ii) a breach by the other party of any of the covenants or
agreements contained in the Merger Agreement, which breach cannot be or has
not been cured within 30 days after the giving of written notice to the
breaching party of such breach, provided that such breach (whether under (i)
or (ii)) would be reasonably likely, individually or in the aggregate with
other breaches, to result in a Material Adverse Effect; (c) at any time prior
to the Effective Time, by Zions or FP, in the event that the Merger is not
consummated by August 31, 1998, except to the extent that the failure of the
Merger to be consummated by August 31, 1998 arises out of or results from the
knowing action or inaction of the party seeking to terminate the Merger
Agreement pursuant to this clause; (d) by FP or Zions, in the event (i) the
approval of any Governmental Authority required for consummation of the Merger
and the other transactions contemplated by the Merger Agreement shall have
been denied by final nonappealable action of such Governmental Authority or
(ii) the FP Stockholder approval solicited hereby is not obtained at the
Special Meeting; (e) at any time prior to the Special Meeting, by Zions if the
FP Board fails to recommend approval of the Merger Agreement and any other
matters required to be approved by FP Stockholders for consummation of the
Merger, withdraws such recommendation
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<PAGE>
or modifies or changes such recommendation in a manner adverse in any respect
to the interests of Zions; (f) by Zions, if FP takes, causes to be taken or
allows to be taken any action that is prohibited under the Merger Agreement
covenant with respect to the Acquisition Proposals; or (g) by FP prior to the
approval by its stockholders of the Merger, if FP receives an Acquisition
Proposal on terms and conditions which the FP Board determines, after
receiving the advice of its outside counsel, (i) that to proceed with the
Merger would violate the fiduciary duties of the FP Board to FP's Stockholders
and (ii) to accept such proposal; provided, however, that FP would not be
entitled to terminate the Merger Agreement pursuant to this clause unless it
had provided Zions with written notice of such a possible determination (which
written notice shall inform Zions of the material terms and conditions of the
proposal, including the identity of the proponent) two business days prior to
such determination.
Effect of Termination; Liquidated Damages
In the event of the termination of the Merger Agreement by either Zions or
FP, as provided above, subject to the provisions set forth below, neither
Zions nor FP will have any liability or further obligation to the other party
except to the extent the Merger Agreement specifically provides that certain
covenants survive such termination and except that such termination will not
relieve a breaching party from liability for any willful breach of the Merger
Agreement giving rise to such termination.
Notwithstanding the foregoing, if the Merger Agreement is terminated (i) by
Zions pursuant to clause (b), (e) or (f) of the second preceding paragraph
and, at the time of the occurrence of the circumstances permitting termination
pursuant to such clause, there is in existence an Acquisition Proposal with
respect to FP or any of its subsidiaries, or (ii) by FP pursuant to clause
(d)(ii) or clause (g) of the second preceding paragraph and, at the time of
the occurrence of the circumstance permitting termination pursuant to such
clause, there is in existence an Acquisition Proposal with respect to FP or
any of its subsidiaries, then FP will promptly pay to Zions a Break-Up Fee
equal to $1.8 million, which (except in the case of termination pursuant to
clause (f) of the preceding subsection, in which case such amount will offset
any damages to Zions to the extent of payment) the parties agree will
represent liquidated and exclusive damages recoverable by Zions relating to
the actions resulting in termination.
FP and Zions have agreed that the agreements contained in the preceding
paragraph above are an integral part of the transactions contemplated by the
Merger Agreement, that without such agreements Zions would not have entered
into the Merger Agreement, and that such amount constitute reasonable
liquidated damages and reasonable compensation to Zions for the loss sustained
thereby and not a penalty. If FP fails to pay Zion the amount due under the
preceding paragraph within three business days of such termination, FP will
pay the costs and expenses (including legal fees and expenses) incurred by
Zions in connection with any action, including the filing of any lawsuit,
taken to collect payment of such amount, together with interest on the amount
of any such unpaid amount at the publicly announced prime rate of ZFNB from
the date of such termination.
THE STOCKHOLDER AGREEMENTS
Zions has entered into Stockholder Agreements with Messrs. Mark N. Baker,
Gary W. Deems, Earle W. Frey, Jr., Robert W. Klemme, Joseph J. Kuebler,
Randall C. Luce, Larry R. Markham, Richard W. McBride, Michael J. Perdue,
Richard S. Spanjian, Robert M. Spanjian, Richard B. Thomas, Michael W. Wexler
and Harvey L. Williamson, each a director and/or officer of FP, and Duane R.
Roberts, a stockholder of FP (collectively, the "Inside Stockholders"). The
Inside Stockholders, holding in the aggregate shares representing
approximately 38.79% of the total voting power of FP Common Stock as of the
Record Date, each agreed, in consideration of the substantial expenses
incurred by Zions in connection with the Merger Agreement and as a condition
to Zions entering into the Merger Agreement, to vote or to cause to be voted,
or execute a written consent with respect to, all of such Inside Stockholder's
shares of FP Common Stock in favor of adoption and approval of the principal
terms of the Merger Agreement and the Merger and all transactions relating
thereto at every meeting of FP Stockholders at which such matters are
considered and at every adjournment thereof and in connection with every
proposal to take action by written consent with respect thereto.
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<PAGE>
Each Stockholder Agreement also provides that such Inside Stockholder will
not, and will not permit any entity under its control to, deposit any of such
Inside Stockholder's shares of FP Common Stock in a voting trust or subject
any such shares to any agreement, arrangement or understanding with respect to
the voting of such shares inconsistent with the Stockholder Agreement entered
into by that Inside Stockholder. In addition, the Inside Stockholders each
agreed not to sell, assign, pledge, encumber, transfer or otherwise dispose of
any of his or her shares of FP Common Stock during the term of the relevant
Stockholder Agreement except in connection with the exercise of rights.
The Stockholder Agreements will terminate upon the earlier to occur of the
Effective Time or the date on which the Merger Agreement is terminated in
accordance with its terms.
Notwithstanding the foregoing, the Stockholder Agreements bind the actions
of the signatories thereto only in their capacity as FP Stockholders. Those
directors of FP who signed Stockholder Agreements are not and cannot be
contractually bound to abrogate their fiduciary duties as directors of FP.
Accordingly, while such stockholders/directors are, under the Stockholder
Agreements executed by them, contractually bound to vote as a FP Stockholder
in favor of the Merger, their fiduciary duties as directors of FP nevertheless
required them to act in their capacity as directors in the best interest of FP
when they decided to approve the Merger. In addition, such
stockholders/directors will continue to be bound by their fiduciary duties as
directors of FP with respect to any decisions they may take in connection with
the Merger or otherwise.
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<PAGE>
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF FP
The following table lists the only stockholder known by FP to be the
beneficial owner of more than five percent of outstanding FP Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
BENEFICIAL COMMON
NAME AND ADDRESS (1) OWNERSHIP(1) STOCK(1)
-------------------- ----------- ----------
<S> <C> <C>
Duane R. Roberts................................... 551,999 16.81%
Entrepreneurial Corporate Group
3400 Central Avenue, #325
Riverside, CA 92506
</TABLE>
- --------
(1) Information based on Schedule 13D filed by Duane R. Roberts on June 14,
1995.
SECURITIES OWNERSHIP OF OFFICERS, DIRECTORS AND OTHERS
Following is a table which indicates as of the Record Date the amount and
the percent of beneficial ownership of FP Common Stock for each director, the
Chief Executive Officer and the two other executive officers, and all
directors and executive officers as a group.
<TABLE>
<CAPTION>
NAME OF NO. OF SHARES
BENEFICIAL OWNER OR BENEFICIALLY % OF
NO. OF PERSONS IN GROUP OWNED(1)(2) CLASS(3)
----------------------- ------------- --------
<S> <C> <C>
Mark N. Baker.................................. 81,350(4) 2.48%
Gary W. Deems.................................. 99,368(5) 3.03%
Earle W. Frey, Jr.............................. 82,066(6) 2.50%
Robert W. Klemme............................... 36,821(7) 1.12%
Joseph J. Kuebler.............................. 28,356(8) (19)
Randall C. Luce................................ 24,029(9) (19)
Larry R. Markham............................... 13,516(10) (19)
Richard W. McBride............................. 73,881(11) 2.25%
Michael J. Perdue.............................. 96,263(12) 2.93%
Richard S. Spanjian............................ 48,726(13) 1.48%
Robert M. Spanjian............................. 35,452(14) 1.08%
Richard B. Thomas.............................. 17,114(15) (19)
Michael W. Wexler.............................. 68,063(16) 2.07%
Harvey L. Williamson........................... 77,206(17) 2.35%
All executive officers and directors as a group
(14) persons.................................. 781,789(18) 23.81%(18)
</TABLE>
- --------
(1) Unless otherwise indicated, each person listed has sole voting and
investment power with respect to the shares listed.
(2) Includes all shares beneficially owned, whether directly or indirectly,
individually or together with associates. Includes any shares owned,
whether jointly or as community property with a spouse, or any stock of
which beneficial ownership may be acquired by the exercise of stock
options immediately following the consummation of the Merger.
(3) Any securities not outstanding which are subject to options, warrants,
rights or conversion privileges which may be exercised immediately
following the consummation of the Merger shall be deemed to be
outstanding for the purpose of computing the percentage of outstanding
securities of the class owned by such person but shall not be deemed to
be outstanding for the purpose of computing the percentage of the class
by any other person.
(4) Includes 21,414 shares held by Mark N. Baker as Trustee of the Trust
dated October 21, 1985; also includes 7,702 shares held by Mark N. Baker
as Custodian for the benefit of certain of his children under
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<PAGE>
the California Uniform Gift to Minors Act; also includes 104 shares held
by Margaret A. Baker as Custodian for the benefit of certain of her nieces
under the California Uniform Gift to Minors Act; also includes
40,592 shares held by the Baker Electric Profit Sharing Plan and the Tri-
Baker, Inc. Profit Sharing Plan; also includes 1,657 shares held by Kent
N. Baker, Mark N. Baker and Gerald N. Baker as Trustees of the December
21, 1989 Baker Trust; also includes 770 shares held in the name of Wedbush
Morgan Securities, Inc. for the benefit of Mark N. Baker under an
individual retirement account; also includes 8,000 shares which may be
acquired by the exercise of stock options immediately following the
consummation of the Merger.
(5) Includes 49,735 shares held by MLPF&S as Custodian for the benefit of
Gary W. Deems under an individual retirement account; also includes 2,909
shares held in the First Pacific National Bank 401(k) Savings Plan; also
includes 15,000 shares which may be acquired by the exercise of stock
options immediately following the consummation of the Merger.
(6) Includes 281 shares held by Earle W. Frey, Jr. as Trustee of the Frey
Family Trust; also includes 1,966 shares held by Earle W. Frey, Jr. as
Trustee under a Trust dated February 17, 1977; also includes 67,348
shares held in the name of MLPF&S for various Frey Family Trusts; also
includes 4,471 shares held by MLPF&S as Custodian for the benefit of
Earle W. Frey, Jr., under an individual retirement account; also includes
8,000 shares which may be acquired by the exercise of stock options
immediately following the consummation of the Merger.
(7) Includes 28,821 shares held by Robert W. Klemme as Trustee of the Klemme
Family Trust; also includes 8,000 shares which may be acquired by the
exercise of stock options immediately following the consummation of the
Merger.
(8) Includes 1,887 shares held by MLPF&S as Custodian for the benefit of
Krista Kuebler; also includes 20 shares held by Joseph J. Kuebler as
Custodian for the benefit of Amber Adams-Kuebler; also includes 1,859
shares held by MLPF&S as Custodian for the benefit of Sharon Kuebler
under an individual retirement account; also includes 6,890 shares held
by MLPF&S as Custodian for the benefit of Joseph J. Kuebler under an
individual retirement account; also includes 700 shares held by Wedbush
Morgan Securities, Inc. as Custodian for the benefit of Sharon Kuebler
under an individual retirement account; also includes 5,000 shares held
by Western Financial as Custodian for the benefit of Joseph J. Kuebler
under an individual retirement account; also includes 3,800 shares owned
by Kuebler Accounting Corporation; also includes 8,000 shares which may
be acquired by the exercise of stock options immediately following the
consummation of the Merger.
(9) Includes 8,000 shares which may be acquired by the exercise of stock
options immediately following the consummation of the Merger.
(10) Includes 5,499 shares held by Dean Witter Reynolds Custodian for the
benefit of Larry Markham under an individual retirement account rollover;
also includes 8,000 shares which may be acquired by the exercise of stock
options immediately following the consummation of the Merger.
(11) Includes 409 shares held by Darlene Y. McBride; also includes 47,700
shares held by Richard W. McBride as Trustee of the McBride Family Trust;
also includes 15,649 shares held by the Southern Contracting Company
Money Purchase Pension Plan & Trust Rollover Account; also includes
8,000 shares which may be acquired by the exercise of stock options
immediately following the consummation of the Merger immediately
following the consummation of the Merger.
(12) Includes 58,300 shares held by Michael J. Perdue, as Trustee of the
Perdue Family Trust; also includes 19,700 shares held by MLPF&S as
Custodian for the benefit of Michael J. Perdue under an individual
retirement account; also includes 15,000 shares which may be acquired by
the exercise of stock options immediately following the consummation of
the Merger; also includes 3,163 shares held in the First Pacific National
Bank 401(k) Savings Plan.
(13) Includes 39,699 shares held by Richard S. Spanjian as Trustee of the
Richard S. Spanjian Family Trust; also includes 1,027 shares held by
Richard S. Spanjian as Trustee of the Elizabeth Spanjian Family Trust;
also includes 8,000 shares which may be acquired by the exercise of stock
options immediately following the consummation of the Merger.
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<PAGE>
(14) Includes 27,452 shares held by Robert M. Spanjian as Trustee of the
Robert M. Spanjian Family Trust; also includes 8,000 shares which may be
acquired by the exercise of stock options immediately following the
consummation of the Merger.
(15) Includes 5,000 shares held by Richard B. Thomas in the name of U.S.
Clearing Corporation; includes 2,500 share held by Richard B. Thomas
Pension Plan; also includes 1,500 shares held by Richard B. Thomas as
Custodian for the benefit of Scott Thomas; also includes 8,000 shares
which may be acquired by the exercise of stock options immediately
following the consummation of the Merger.
(16) Includes 12,533 shares held by Michael W. Wexler as Custodian for the
benefit of certain of his children under the California Uniform Gift to
Minors Act; also includes 8,000 shares which may be acquired by the
exercise of stock options immediately following the consummation of the
Merger.
(17) Includes 59,191 shares held by Harvey L. Williamson as Trustee of the
Williamson Family Trust; also includes 4,116 shares held by Wedbush
Morgan Securities, Inc. as Custodian for the benefit of Tolly A.
Williamson under an individual retirement account; also includes 3,752
shares held by Wedbush Securities, Inc. as Custodian for the benefit of
Harvey L. Williamson under an individual retirement account; also
includes 4,112 shares held by Transcorp Pension Services as Custodian for
the benefit of Harvey L. Williamson under an individual retirement
account; also includes 2,500 shares which may be acquired by the exercise
of stock options immediately following the consummation of the Merger;
also includes 3,535 shares held in the First Pacific National Bank 401(k)
Savings Plan.
(18) Includes 153,926 shares which may be acquired by the exercise of stock
options immediately following the consummation of the Merger.
(19) Immaterial percentage of ownership.
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<PAGE>
CERTAIN DIFFERENCES IN THE RIGHTS OF
ZIONS SHAREHOLDERS AND FP STOCKHOLDERS
GENERAL
Upon consummation of the Merger, FP Stockholders will become shareholders of
Zions, a Utah corporation. Thus, the Utah Revised Business Corporation Act and
the Zions Charter and Zions Bylaws will govern the rights of the FP
Stockholders who become shareholders of Zions. Because the Zions Charter and
the Zions Bylaws and the FP Certificate and the FP Bylaws are not the same,
the Merger will result in certain differences in the rights of the holders of
FP Common Stock. The following is a summary of certain of the more significant
differences.
VOTING RIGHTS
General
The holders of Zions Common Stock, like the holders of FP Common Stock, are
generally entitled to one vote for each share held of record on all matters
submitted to a shareholder vote. The holders of Zions Common Stock do not have
cumulative voting rights. The absence of cumulative voting means that a Zions
nominee for director must receive the votes of a plurality of the shares voted
in order to be elected.
The holders of FP Common Stock have cumulative voting rights, which means
that at all elections of FP directors, each stockholder will be entitled to as
many votes as is equal to the number of such stockholder's common shares
multiplied by the number of directors to be elected, and may distribute such
votes among the nominees for director in any way such stockholder sees fit.
Special Votes for Certain Transactions
The Zions Charter contains provisions requiring special shareholder votes to
approve certain types of transactions. In the absence of these provisions,
either the transactions would require approval by a majority of the shares
voted at a meeting or no shareholder vote would be required.
The Zions Charter requires that certain "business transactions" between
Zions or a subsidiary and a "related person" be approved by the affirmative
votes of the holders of not less than 80% of the voting power of all
outstanding voting stock of Zions. A "related person" is generally defined by
the Zions Charter to mean a person, corporation, partnership, or group acting
in concert that beneficially owns 10% or more of the voting power of Zions'
outstanding stock.
The business transactions subject to Zions' special vote requirements
include (1) a merger or consolidation involving Zions or a subsidiary of Zions
with a related person; (2) the sale, lease, exchange, transfer or other
disposition of all or any substantial part of the assets of either Zions or a
subsidiary of Zions to, with or for the benefit of a related person; (3) the
issuance, sale, exchange or other disposition by Zions or a subsidiary of
Zions to a related person of securities of Zions or a subsidiary of Zions
having an aggregate fair market value of $5 million or more; (4) any
liquidation, spinoff, split-off, split-up or dissolution of Zions by or on
behalf of a related person; (5) any recapitalization or reclassification of
the securities of Zions or other transaction that would have the effect of
increasing the voting power of a related person or reducing the number of
shares of each class of voting securities outstanding; and (6) any agreement,
contract or other arrangement providing for any of the transactions set forth
above.
Such special shareholder vote requirements do not apply to any transaction
approved by a majority of the "continuing directors," or if various specified
conditions are met. A continuing director is any member of the Zions Board who
is not a related person or an interested shareholder or an affiliate or
associate of a related person and who (1) was a director on February 21, 1986
or (2) became a director subsequent to that date and whose election or
nomination for election by Zions' shareholders was approved by a majority of
the continuing directors then on the Board.
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<PAGE>
Under Section 203 of the DGCL, any person who acquires 15% or more of a
corporation's voting stock (an "Interested Stockholder") may not engage in a
wide range of "business combinations" with the corporation for a period of
three years unless certain approvals are obtained from the Board of Directors
or stockholders. A "business combination" is defined to include: (i) mergers
and sales or other dispositions of ten percent or more of the assets of a
corporation with or to an Interested Stockholder; (ii) certain transactions
resulting in the issuance or transfer to the Interested Stockholder of any
stock of the corporation or its subsidiaries; (iii) certain transactions which
would result in increasing the proportionate share of the stock of the
corporation or its subsidiaries owned by the Interested Stockholder; and (iv)
receipt by the Interested Stockholder of the benefit (except proportionately
as a stockholder) of any loans, advances, guarantees, pledges or other
financial benefits.
These restrictions do not apply under certain circumstances if the
corporation's certificate of incorporation or bylaws contain a provision
expressly electing not to be governed by Section 203. The FP Certificate
contains a provision electing not to be governed by the provisions of Section
203 of the DGCL.
SHAREHOLDER RIGHTS PLAN
In September 1996, Zions entered into the Shareholder Protection Rights
Agreement, dated September 27, 1996 (the "Zions Rights Plan"), with Zions
First National Bank, as rights agent, and the Zions Board declared a dividend
of one right (the "Rights") on each outstanding share of Zions Common Stock.
The Zions Rights Plan was not adopted in response to any specific effort to
acquire control of Zions. Rather, it was adopted to deter abusive takeover
tactics that can be used to deprive shareholders of the full value of their
investment.
Until it is announced that a person or group has acquired 10% or more of
Zions Common Stock (an "Acquiring Person") or commences a tender offer that
will result in such person or group owning 10% or more of Zions Common Stock,
the Rights will be evidenced by the Zions Common Stock certificates, will
automatically trade with the Zions Common Stock and will not be exercisable.
Thereafter, separate Rights certificates will be distributed and each Right
will entitle its holder to purchase Participating Preferred Stock of Zions
having economic and voting terms similar to those of one share of Common Stock
for an exercise price of $90.00.
Upon announcement that any person or group has become an Acquiring Person,
10 days thereafter (or such earlier or later date as the Zions Board may
decide) (the "Flip-in Date") each Right (other than Rights beneficially owned
by any Acquiring Person or transferees thereof, which Rights become void) will
entitle its holder to purchase, for the exercise price, a number of shares of
Zions Common Stock or Participating Preferred Stock having a market value of
twice the exercise price.
In addition, if, after an Acquiring Person controls the Zions Board, Zions
is involved in a merger or sells more than 50% of its assets or earning power
(or has entered into an agreement to do any of the foregoing) and, in the case
of a merger, the Acquiring Person will receive different treatment than all
other shareholders or the person with whom the merger occurs is the Acquiring
Person or a person affiliated or associated with the Acquiring Person, each
Right will entitle its holder to purchase, for the exercise price, a number of
shares of common stock of the Acquiring Person having a market value of twice
the exercise price. If any person or group acquires between 10% and 50% of the
Zions Common Stock, the Zions Board may, at its option, exchange one share of
Zions Common Stock for each Right.
FP has no such stockholder protection rights plan.
BOARD OF DIRECTORS
Director Liability
As permitted by Utah law, the Zions Charter provides that directors shall
not be liable for monetary damages to the corporation or its shareholders for
a breach of fiduciary duty as a director other than (i) a breach of a
director's duty of loyalty, (ii) acts or omissions not taken in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
authorizing the unlawful payment of dividends and (iv) transactions in which a
director receives an improper benefit.
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Delaware law provides that a corporation's certificate of incorporation may
set forth a provision that eliminates or limits the liability of a director to
the corporation for money damages for any action taken or any failure to take
any action as a director, except that any such provision shall not eliminate
or limit the liability of a director to the corporation or to its stockholders
for monetary damages for any breach of the director's duty of loyalty to the
corporation or to its stockholders, acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, voting for
or assenting to a distribution made in violation of Delaware law or such
corporation's certificate of incorporation, or any transaction from which the
director directly or indirectly derived an improper personal benefit.
Furthermore, the FP Certificate limits directors' personal liability to the
corporation or its stockholders for breach of fiduciary duty as a director to
the fullest extent provided for by Delaware law.
Classified Board
The Zions Charter and the Zions Bylaws provide that the number of directors
of Zions shall be not less than three nor more than fifteen. The current Zions
Board, consisting of eleven directors, is divided into three classes, each
consisting of one-third (or as near as may be) of the whole number of the
Zions Board. Utah law requires that each class contain as equal a number of
directors as possible. One class of directors is elected at each annual
meeting of shareholders, and each class serves for a term of three years.
The number of directors which constitute Zions' full Board of Directors may
be increased or decreased only by amendment of the Zions Bylaws, which
requires the affirmative vote of two-thirds of the total number of directors
constituting the entire Zions Board, or by the shareholders of Zions at a
regular or special meeting by the affirmative vote of two-thirds of the
outstanding and issued shares entitled by statute to vote. Except as otherwise
required by law, vacancies on the Zions Board, including vacancies resulting
from an increase in the size of the Zions Board, may be filled by the
affirmative vote of a majority of the remaining directors even if they should
constitute less than a quorum of the Zions Board. Zions directors elected by
the Zions Board to fill vacancies serve for the full remainder of the term of
the class to which they have been elected.
The FP Certificate and FP Bylaws provide for a fourteen member Board of
Directors, which is divided into two classes, each consisting of one-half (or
as near as may be) of the whole number of the FP Board. One class of directors
is elected at each annual meeting of stockholders, and each class serves for a
term of two years.
Vacancies in the FP Board, including vacancies resulting from an increase in
the size of the FP Board, are to be filled by the affirmative vote of a
majority of the remaining directors, even if they should constitute less than
a quorum, except (i) a vacancy created by the removal of a director by the
vote of the stockholders or by court order may be filled only by the
affirmative vote of a majority of the shares represented and voting at a duly
held meeting at which a quorum is present; (ii) a vacancy to be filled by a
specific class of FP stock may be filled by a majority of the directors
elected by such class then in office; and (iii) if the remaining directors
constitute less than a majority of the whole board immediately prior to the
vacancy, then upon application by holders of at least ten percent of the total
shares eligible to vote to fill such vacancy, a stockholder election to fill
such vacancy may be ordered by the Delaware Court of Chancery.
Removal of Directors
The Zions Charter provides that any director (or the entire Zions Board) may
be removed from office by shareholder vote only if such removal is approved by
the holders of two-thirds of the issued and outstanding shares then entitled
to vote at an election of directors.
The FP Bylaws provide that any director (or the entire FP Board) may be
removed, with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors; provided, however, that if
and so long as FP Stockholders are entitled to cumulative voting, if less than
the entire board is to be removed, no director may be removed without cause if
the votes cast against his removal would be sufficient to elect him if then
cumulatively voted at an election of the entire FP Board.
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<PAGE>
SHAREHOLDER MEETINGS
Utah law provides that special meetings of a corporation's shareholders may
be called by the board of directors or such other persons authorized by the
bylaws to call a special meeting or by the holders of at least 10% of all the
votes entitled to be cast on any issue proposed to be considered at the
special meeting. Under the Zions Bylaws, special meetings may also be called
by the president.
Under the FP Certificate and the FP Bylaws, a special meeting of the
stockholders may be called at any time by the FP Board, the chairman of the
board, the president or holders of at least ten percent of all shares entitled
to vote at such meeting.
AMENDMENT OF ARTICLES AND BYLAWS
The Zions Charter requires the affirmative vote of the holders of two-thirds
of all outstanding voting stock of Zions to approve any amendment to the Zions
Charter, provided that the provisions regarding a special shareholder vote for
business transactions may only be repealed or amended by the affirmative vote
of 80% of the issued and outstanding stock entitled to vote. The Zions Bylaws
may be amended by an affirmative vote of two-thirds of the total number of
directors constituting the entire Zions Board or by the affirmative vote of
two-thirds of the issued and outstanding shares entitled to vote.
Under Delaware law, the FP Certificate may be amended at an annual or
special shareholder meeting by an affirmative majority vote of all votes cast.
The FP Bylaws provide that they may be adopted, amended or repealed by a
majority of the stockholders entitled to vote. In addition, the FP Certificate
also authorizes the FP Board to adopt, alter, amend or repeal the FP Bylaws.
DISSENTERS' RIGHTS
Utah law provides for dissenters' rights in a variety of transactions
including: (i) any plan of merger to which a corporation is a party (other
than mergers or consolidations not requiring a shareholder vote); (ii) certain
sales, leases, exchanges or other dispositions of all or substantially all of
the assets of a corporation; and (iii) certain share exchanges. However,
shareholders of a Utah business corporation are not entitled to dissenters'
rights in any of the transactions mentioned above if their stock is either
listed on a national securities exchange or on NASDAQ or held of record by
2,000 or more shareholders. The aforementioned provisions do not apply if the
shareholder will receive for his shares anything except (a) shares of the
corporation surviving the consummation of the plan of merger or share
exchange, (b) shares of a corporation whose shares are listed on a national
securities exchange or NASDAQ or held of record by not less than 2,000
holders, or (c) cash in lieu of fractional shares. Zions Common Stock
currently is listed for trading on NASDAQ and has more than 2,000 shareholders
of record.
Under Delaware law, stockholders are entitled to demand appraisal of their
shares in the case of mergers or consolidations, except where: (i) they are
stockholders of the surviving corporation and the merger did not require their
approval under the DGCL; (ii) the corporation's shares are either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by The National Association of
Securities Dealers, Inc.; or (iii) the corporation's shares are held of record
by more than 2,000 stockholders. Appraisal rights are available in either (i),
(ii) or (iii) above, however, if the stockholders are required by the terms of
the merger or consolidation to accept any consideration other than (a) stock
of the corporation surviving or resulting from the merger or consolidation,
(b) shares of stock of another corporation which are either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association of
Securities Dealers, Inc. or held of record by more than 2,000 stockholders,
(c) cash in lieu of fractional shares or (d) any combination of the foregoing.
Appraisal rights are also not available in the case of a sale, lease, exchange
or other disposition by a corporation of all or substantially all of its
property and assets.
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FP Common Stock is currently listed for trading on the NASDAQ National
Market, and FP Stockholders will receive shares of Zions Common Stock and cash
in lieu of fractional shares for their shares of FP Common Stock. As a result,
FP Common Stockholders are not entitled to exercise any rights of dissenting
stockholders under Delaware law.
DIVIDEND RIGHTS
Utah law generally allows a corporation, subject to restrictions in its
certificate of incorporation, to declare and pay dividends in cash or
property, but only if the corporation is solvent and payment would not render
the corporation insolvent. The Zions Charter places no further restrictions on
distributions. Thus, the holders of Zions Common Stock are entitled to
dividends when, as and if declared by the Zions Board out of funds legally
available therefor. However, if Zions preferred stock is issued, the Zions
Board may grant preferential dividend rights to the holders of such stock
which would prohibit payment of dividends on Zions Common Stock unless and
until specified dividends on the preferred stock had been paid.
Like Utah law, Delaware law prohibits a corporation from making a
distribution to its stockholders if, after giving effect to the distribution,
the corporation would not be able to pay debts as they become due in the usual
course of business, or the corporation's total assets would be less than its
total liabilities (plus any amounts necessary to satisfy any preferential
rights). Dividends may be paid either (i) out of surplus (the excess at any
time of the net assets of the corporation over the amount of its capital) or
(ii) in case there is no surplus, out of the corporation's net profits for the
fiscal year in which the dividend is declared and/or its net profits for the
preceding fiscal year. The FP Certificate and Bylaws impose no additional
restrictions on distributions.
LIQUIDATION RIGHTS
Upon liquidation, dissolution or winding up of Zions, whether voluntary or
involuntary, the holders of Zions Common Stock are entitled to share ratably
in the assets of the corporation available for distribution after all
liabilities of the corporation have been satisfied. However, if preferred
stock is issued by Zions, the Zions Board may grant preferential liquidation
rights to the holders of such stock which would entitle them to be paid out of
the assets of Zions available for distribution before any distribution is made
to the holders of Zions Common Stock.
The rights of FP Stockholders in the event of a liquidation are
substantially similar to those applicable to holders of Zions Common Stock.
Under Delaware law, upon dissolution or liquidation by a court, after all
liabilities and obligations of the corporation have been satisfied, any
remaining assets or proceeds are distributed among its stockholders according
to their respective rights and interests.
VALIDITY OF ZIONS COMMON STOCK
The validity of the shares of Zions Common Stock to be issued in the Merger
has been passed upon by Sullivan & Cromwell, Los Angeles, California, counsel
for Zions.
EXPERTS
The consolidated financial statements of Zions as of December 31, 1997 and
1996, and for each of the years in the three-year period ended December 31,
1997, have been incorporated by reference herein in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein and upon the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements of FP at December 31, 1997 and 1996,
and for each of the years in the three-year period ended December 31, 1997,
have been incorporated by reference herein in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein and upon the authority of such firm as experts in accounting
and auditing.
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The balance sheets at December 31, 1997 and 1996 and the related statements
of income, changes in shareholders' equity and cash flows for the years ended
December 31, 1997, 1996 and 1995 for The Sumitomo Bank of California have been
audited by Arthur Andersen LLP, independent public accountants, as indicated
in their report (dated January 16, 1998) with respect thereto, and have been
incorporated by reference herein in reliance upon the report of said firm, and
upon the authority of such firm as experts in accounting and auditing.
52
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APPENDIX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 29, 1997
BY AND BETWEEN
ZIONS BANCORPORATION
AND
FP BANCORP, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
RECITALS................................................................. A-1
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions................................................ A-1
ARTICLE II
THE MERGER
2.01 The Merger......................................................... A-4
2.02 Effective Date and Effective Time.................................. A-4
2.03 Plan of Merger..................................................... A-5
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 Merger Consideration............................................... A-5
3.02 Rights as Stockholders; Stock Transfers............................ A-5
3.03 Fractional Shares.................................................. A-5
3.04 Exchange Procedures................................................ A-5
3.05 Anti-Dilution Provisions........................................... A-6
3.06 Options............................................................ A-7
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 Forebearances of Company........................................... A-7
4.02 Company Debenture Conversion and Redemption........................ A-9
4.03 Forebearances of Zions............................................. A-9
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules............................................... A-9
5.02 Standard........................................................... A-9
5.03 Representations and Warranties of Company.......................... A-10
5.04 Representations and Warranties of Zions............................ A-16
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts............................................ A-18
6.02 Stockholder Approval............................................... A-18
6.03 Registration Statements............................................ A-18
6.04 Press Releases..................................................... A-19
6.05 Access; Information................................................ A-19
</TABLE>
i
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TABLE OF CONTENTS--(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
6.06 Acquisition Proposals............................................... A-20
6.07 Affiliate Agreements................................................ A-20
6.08 Takeover Laws....................................................... A-20
6.09 Certain Policies.................................................... A-20
6.10 NASDAQ Listing...................................................... A-21
6.11 Regulatory Applications............................................. A-21
6.12 Indemnification; Director and Officers' Insurance................... A-21
6.13 Benefit Plans....................................................... A-22
6.14 Accountants' Letters................................................ A-22
6.15 Notification of Certain Matters..................................... A-22
6.16 Stockholder Agreements.............................................. A-23
6.17 Directors of Grossmont Bank......................................... A-23
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger.......... A-23
7.02 Conditions to Obligation of Company................................. A-23
7.03 Conditions to Obligation of Zions................................... A-24
ARTICLE VIII
TERMINATION
8.01 Termination......................................................... A-25
8.02 Effect of Termination and Abandonment............................... A-25
ARTICLE IX
MISCELLANEOUS
9.01 Survival............................................................ A-26
9.02 Waiver; Amendment................................................... A-26
9.03 Counterparts........................................................ A-26
9.04 Governing Law; Waiver of Jury Trial................................. A-26
9.05 Expenses............................................................ A-26
9.06 Notices............................................................. A-27
9.07 Entire Understanding; No Third Party Beneficiaries.................. A-27
9.08 Interpretation; Effect.............................................. A-27
</TABLE>
EXHIBIT A Form of Affiliate Agreement
EXHIBIT B Form of Stockholder's Agreement
ii
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AGREEMENT AND PLAN OF MERGER, dated as of December 29, 1997 (this
"Agreement"), by and between FP Bancorp, Inc. ("Company") and Zions
Bancorporation ("Zions").
RECITALS
A. FP Bancorp, Inc. Company is a Delaware corporation, having its principal
place of business in Escondido, California.
B. Zions Bancorporation. Zions is a Utah corporation, having its principal
place of business in Salt Lake City, Utah.
C. Intentions of the Parties. It is the intention of the parties to this
Agreement that the business combination contemplated hereby be accounted for
under the "pooling-of-interests" accounting method and be treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986 as
amended (the "Code").
D. Board Action. The respective Boards of Directors of each of Zions and
Company have determined that it is in the best interests of their respective
companies and their stockholders to consummate the strategic business
combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions. The following terms are used in this Agreement
with the meanings set forth below:
"Acquisition Proposal" means any tender or exchange offer for 25% or more of
the Company Common Stock, proposal for a merger, consolidation or other
business combination involving Company or any of its Subsidiaries or any
proposal or offer to acquire 25% or more of the Company Common Stock, or a
substantial portion of the assets or deposits of, Company or any of its
Subsidiaries, other than the transactions contemplated by this Agreement.
"Agreement" means this Agreement, as amended or modified from time to time
in accordance with Section 9.02.
"Bank Merger" means the merger of Company Bank with and into Grossmont Bank.
"Benefit Plans" has the meaning set forth in Section 5.03(m).
"Business Combination" has the meaning set forth in Section 3.05.
"Code" has the meaning set forth in the recitals.
"Company" has the meaning set forth in the preamble to this Agreement.
"Company Affiliate" has the meaning set forth in Section 6.07(a).
"Company Bank" means First Pacific National Bank, a national banking
association and a wholly owned subsidiary of Company.
"Company Board" means the Board of Directors of Company.
"Company By-Laws" means the By-laws of Company.
"Company Certificate" means the Certificate of Incorporation of Company.
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"Company Common Stock" means the common stock, par value $.001 per share, of
Company.
"Company Meeting" has the meaning set forth in Section 6.02.
"Company Stock Option" has the meaning set forth in Section 3.06.
"Company Stock Plan" means Company's Amended and Restated 1988 Stock Option
Plan.
"Costs" has the meaning set forth in Section 6.12(a).
"Debentures" has the meaning set forth in Section 4.02.
"Delaware Secretary" means the Delaware Secretary of State.
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"DGCL" means the Delaware General Corporation Law.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" means the effective time of the Merger, as provided for in
Section 2.02.
"Employees" has the meaning set forth in Section 5.03(m).
"Environmental Law" has the meaning set forth in Section 5.03(p).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(m).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04.
"Exchange Fund" has the meaning set forth in Section 3.04.
"Exchange Ratio" has the meaning set forth in Section 3.01.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Reserve" means the Board of Governors of the Federal Reserve
System.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Grossmont Bank" means a California state-chartered bank and a wholly owned
subsidiary of Zions.
"Hazardous Substance" has the meaning set forth in Section 5.03(p).
"Indemnified Party" has the meaning set forth in Section 6.12(a).
"Insurance Policy" has the meaning set forth in Section 5.03(t).
"Liens" means any charge, mortgage, pledge, security interest, restriction,
claim, lien or encumbrance.
"Material Adverse Effect" means, with respect to Zions or Company, any
effect that (i) is material and adverse to the financial position, results of
operations or business of Zions and its Subsidiaries taken as a whole or
Company and its Subsidiaries taken as a whole, respectively, or (ii) would
materially impair the ability of either Zions or Company to perform its
obligations under this Agreement or otherwise materially threaten or
materially impede the consummation of the Merger and the other transactions
contemplated by this Agreement; provided, however, that Material Adverse
Effect shall not be deemed to include the impact of (a) changes in banking and
similar laws of general applicability or interpretations thereof by courts or
governmental authorities, (b) changes in generally accepted accounting
principles or regulatory accounting requirements applicable to banks and their
holding companies generally (c) any modifications or changes to valuation
policies and practices
A-2
<PAGE>
in connection with the Merger or restructuring charges taken in connection
with the Merger, in each case in accordance with generally accepted accounting
principles, (d) changes agreed to in writing by Zions and Company and (e)
changes resulting from general economic conditions throughout the United
States affecting banks and their holding companies.
"Maximum Amount" has the meaning set forth in Section 6.12(c).
"Merger" has the meaning set forth in Section 2.01.
"Merger Consideration" has the meaning set forth in Section 2.01.
"Multiemployer Plans" has the meaning set forth in Section 5.03(m).
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market System.
"New Certificate" has the meaning set forth in Section 3.04.
"OCC" means the Office of the Comptroller of the Currency.
"Old Certificate" has the meaning set forth in Section 3.04.
"Person" means any individual, bank, corporation, partnership, association,
joint-stock company, business trust or unincorporated organization.
"Pension Plan" has the meaning set forth in Section 5.03(m).
"Plans" has the meaning set forth in Section 5.03(m).
"Previously Disclosed" by a party shall mean information set forth in its
Disclosure Schedule.
"Proxy Statement" has the meaning set forth in Section 6.03.
"Registration Statement" has the meaning set forth in Section 6.03.
"Regulatory Authority" has the meaning set forth in Section 5.03(i).
"Regulatory Documents" means documents filed with the SEC, the Federal
Reserve or the OCC, as applicable, of the types referred to in Section 5.03(g)
and Section 5.04(f).
"Replacement Option" has the meaning set forth in Section 3.06.
"Representatives" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments
relating to, or any stock appreciation right or other instrument the value of
which is determined in whole or in part by reference to the market price or
value of, shares of capital stock of such Person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and rules and
regulations thereunder.
"Stockholder Agreements" has the meaning set forth in Section 6.16.
"Subsidiary" and "Significant Subsidiary" have the meanings ascribed to them
in Rule 1-02 of Regulation S-X of the SEC.
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Tax" and "Taxes" means all federal, state, local or foreign taxes, charges,
fees, levies or other assessments, however denominated, including, without
limitation, all net income, gross income, gains, gross receipts, sales, use,
ad valorem, goods and services, capital, production, transfer, franchise,
windfall profits, license, withholding, payroll, employment, disability,
employer health, excise, estimated, severance, stamp,
A-3
<PAGE>
occupation, property, environmental, unemployment or other taxes, custom
duties, fees, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority whether arising before, on or after the Effective Date.
"Tax Returns" means any return, amended return or other report (including
elections, declarations, disclosures, schedules, estimates and information
returns) required to be filed with respect to any Tax.
"Treasury Stock" shall mean shares of Company Common Stock held by Company
or any of its Subsidiaries or by Zions or any of its Subsidiaries, in each
case other than in a fiduciary (including custodial or agency) capacity or as
a result of debts previously contracted in good faith.
"UBCA" means the Utah Business Corporation Act.
"Zions" has the meaning set forth in the preamble to this Agreement.
"Zions Board" means the Board of Directors of Zions.
"Zions Common Stock" means the common stock, no par value per share, of
Zions together with any rights attached thereto under or by virtue of the
Shareholder Protection Rights Agreement, dated September 27, 1996, between
Zions and Zions First National Bank, as rights agent.
"Zions Preferred Stock" means the preferred stock, no par value per share,
of Zions.
ARTICLE II
THE MERGER
2.01 The Merger. (a) At the Effective Time, Company shall merge with and
into Zions (the "Merger"), the separate corporate existence of Company shall
cease and Zions shall survive and continue to exist as a Utah corporation
(Zions, as the surviving corporation in the Merger, sometimes being referred
to herein as the "Surviving Corporation"). Zions may at any time prior to the
Effective Time change the method of effecting the combination with Company
(including, without limitation, the provisions of this Article II) if and to
the extent it deems such change to be necessary, appropriate or desirable;
provided, however, that no such change shall (i) alter or change the amount or
kind of consideration to be issued to holders of Company Common Stock as
provided for in this Agreement (the "Merger Consideration"), (ii) adversely
affect the tax treatment of Company's stockholders as a result of receiving
the Merger Consideration or (iii) materially impede or delay consummation of
the transactions contemplated by this Agreement.
(b) Subject to the satisfaction or waiver of the conditions set forth in
Article VII, the Merger shall become effective upon the occurrence of the
filing in the office of the Utah Division of Corporation and Commercial Code
(the "Corporation Division") of articles of merger in accordance with Section
16-10a-1105 of the UBCA and the filing in the office of the Delaware Secretary
of a certificate of merger in accordance with Section 252 of the DGCL or such
later date and time as may be set forth in such articles and such
certificates. The Merger shall have the effects prescribed in the UBCA and the
DGCL.
(c) Articles of Incorporation and By-Laws. The articles of incorporation and
by-laws of Zions immediately after the Merger shall be those of Zions as in
effect immediately prior to the Effective Time.
(d) Directors and Officers of the Surviving Corporation. The directors and
officers of Zions immediately after the Merger shall be the directors and
officers of Zions immediately prior to the Effective Time, until such time as
their successors shall be duly elected and qualified.
2.02 Effective Date and Effective Time. On such date as Zions selects (and
promptly provides notice thereof to Company), which shall be within ten days
after the last to occur of the expiration of all applicable waiting periods in
connection with approvals of Governmental Authorities and the receipt of all
approvals of Governmental Authorities and all conditions to the consummation
of the Merger are satisfied or waived (or, at the election of Zions, on the
last business day of the month in which such tenth day occurs or, if such
tenth day
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occurs on one of the last five business days of such month, on the last
business day of the succeeding month), or on such earlier or later date as may
be agreed in writing by the parties, articles of merger shall be executed in
accordance with all appropriate legal requirements and shall be filed as
required by law, and the Merger provided for herein shall become effective
upon such filing or on such date as may be specified in such articles of
merger. The date of such filing or such later effective date is herein called
the "Effective Date". The " Effective Time" of the Merger shall be the time of
such filing or as set forth in such articles of merger.
2.03 Plan of Merger. At the request of Zions, Zions and Company shall enter
into a separate plan of merger or articles of merger reflecting the terms
hereof for purposes of any filing requirement of the DGCL or the UBCA.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 Merger Consideration. Subject to the provisions of this Agreement, at
the Effective Time, automatically by virtue of the Merger and without any
action on the part of any Person:
(a) Outstanding Company Common Stock. Each share, excluding Treasury
Stock, of Company Common Stock issued and outstanding immediately prior to
the Effective Time shall become and be converted into 0.627 of a share of
Zions Common Stock (the "Exchange Ratio"). The Exchange Ratio shall be
subject to adjustment as set forth in Section 3.05.
(b) Outstanding Zions Common Stock. Each share of Zions Common Stock
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding and unaffected by the Merger.
(c) Treasury Shares. Each share of Company Common Stock held as Treasury
Stock immediately prior to the Effective Time shall be canceled and retired
at the Effective Time and no consideration shall be issued in exchange
therefor.
3.02 Rights as Stockholders; Stock Transfers. At the Effective Time, holders
of Company Common Stock shall cease to be, and shall have no rights as,
stockholders of Company, other than to receive any dividend or other
distribution with respect to such Company Common Stock with a record date
occurring prior to the Effective Time and the consideration provided under
this Article III. After the Effective Time, there shall be no transfers on the
stock transfer books of Company or the Surviving Corporation of shares of
Company Common Stock.
3.03 Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of Zions Common Stock and no certificates or scrip therefor,
or other evidence of ownership thereof, will be issued in the Merger; instead,
Zions shall pay to each holder of Company Common Stock who would otherwise be
entitled to a fractional share of Zions Common Stock (after taking into
account all Old Certificates delivered by such holder) an amount in cash
(without interest) determined by multiplying such fraction by the average of
the closing prices of Zions Common Stock, as reported on NASDAQ (as reported
in The Wall Street Journal or, if not reported therein, in another
authoritative source), for the five NASDAQ trading days immediately preceding
the Effective Date.
3.04 Exchange Procedures. (a) At or prior to the Effective Time, Zions shall
deposit, or shall cause to be deposited, with such bank or trust company as
Zions shall elect, subject (except in the case of a Zions' Subsidiary) to the
approval of Company, which approval may not be unreasonably withheld, (which
may include a Subsidiary of Zions) (in such capacity, the "Exchange Agent"),
for the benefit of the holders of certificates formerly representing shares of
Company Common Stock ("Old Certificates"), for exchange in accordance with
this Article III, certificates representing the shares of Zions Common Stock
("New Certificates") and an estimated amount of cash (such cash and New
Certificates, together with any dividends or distributions with a record date
occurring after the Effective Date with respect thereto (without any interest
on any such cash, dividends or distributions), being hereinafter referred to
as the "Exchange Fund") to be paid pursuant to this Article III in exchange
for outstanding shares of Company Common Stock.
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(b) As soon as practicable after the Effective Date, and in any event no
later than 10 days after the Effective Date, Zions shall send or cause to
be sent to each former holder of record of shares of Company Common Stock
immediately prior to the Effective Time transmittal materials for use in
exchanging such stockholder's Old Certificates for the consideration set
forth in this Article III. Zions shall cause the New Certificates into
which shares of a stockholder's Company Common Stock are converted on the
Effective Date and/or any check in respect of any fractional share
interests or dividends or distributions which such person shall be entitled
to receive to be delivered to such stockholder upon delivery to the
Exchange Agent of Old Certificates representing such shares of Company
Common Stock (or an affidavit of lost certificate and, if required by the
Exchange Agent, indemnity reasonably satisfactory to Zions and the Exchange
Agent, if any of such certificates are lost, stolen or destroyed) owned by
such stockholder. No interest will be paid on any such cash to be paid in
lieu of fractional share interests or in respect of dividends or
distributions which any such person shall be entitled to receive pursuant
to this Article III upon such delivery. In the event of a transfer of
ownership of any shares of Company Common Stock not registered in the
transfer records of Company, the exchange described in this Section 3.04(b)
may nonetheless be effected and a check for the cash to be paid in lieu of
fractional shares may be issued to the transferee if the Old Certificate
representing such Company Common Stock is presented to the Exchange Agent,
accompanied by documents sufficient, in the discretion of Zions and the
Exchange Agent, (i) to evidence and effect such transfer but for the
provisions of Section 3.02 hereof and (ii) to evidence that all applicable
stock transfer taxes have been paid.
(c) If Old Certificates are not surrendered or the consideration therefor
is not claimed prior to the date on which such consideration would
otherwise escheat to or become the property of any governmental unit or
agency, the unclaimed consideration shall, to the extent permitted by
abandoned property and any other applicable law, become the property of the
Surviving Corporation (and to the extent not in its possession shall be
paid over to the Surviving Corporation), free and clear of all claims or
interest of any person previously entitled to such claims. Notwithstanding
the foregoing, neither the Exchange Agent nor any party hereto shall be
liable to any former holder of Company Common Stock for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(d) At the election of Zions, no dividends or other distributions with
respect to Zions Common Stock with a record date occurring after the
Effective Time shall be paid to the holder of any unsurrendered Old
Certificate representing shares of Company Common Stock converted in the
Merger into the right to receive shares of such Zions Common Stock until
the holder thereof shall be entitled to receive New Certificates in
exchange therefor in accordance with the procedures set forth in this
Section 3.04, and no such shares of Company Common Stock shall be eligible
to vote until the holder of Old Certificates is entitled to receive New
Certificates in accordance with the procedures set forth in this Section
3.04. After becoming so entitled in accordance with this Section 3.04, the
record holder thereof also shall be entitled to receive any such dividends
or other distributions, without any interest thereon, which theretofore had
become payable with respect to shares of Zions Common Stock such holder had
the right to receive upon surrender of the Old Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Company for six months after the Effective Time shall be
returned by the Exchange Agent to Zions. Any stockholders of Company who
have not theretofore complied with this Article III shall thereafter look
only to Zions for payment of the shares of Zions Common Stock, cash in lieu
of any fractional shares and unpaid dividends and distributions on Zions
Common Stock deliverable in respect of each share of Company Common Stock
such stockholder holds as determined pursuant to this Agreement, in each
case, without any interest thereon.
3.05 Anti-Dilution Provisions. In the event Zions changes (or establishes a
record date for changing) the number of shares of Zions Common Stock issued
and outstanding prior to the Effective Date as a result of a stock split,
stock dividend, recapitalization or similar transaction with respect to the
outstanding Zions Common Stock and the record date therefor shall be prior to
the Effective Date, the Exchange Ratio shall be proportionately adjusted.
Subject to Section 2.01(a), if, between the date hereof and the Effective
Time, Zions shall consolidate with or into any other corporation (a "Business
Combination") and the terms thereof shall
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provide that Zions Common Stock shall be converted into or exchanged for the
shares of any other corporation or entity, then provision shall be made as
part of the terms of such Business Combination so that (i) stockholders of
Company who would be entitled to receive shares of Zions Common Stock pursuant
to this Agreement shall be entitled to receive, in lieu of each share of Zions
Common Stock issuable to such stockholders as provided herein, the same kind
and amount of securities or assets as shall be distributable upon such
Business Combination with respect to one share of Zions Common Stock.
3.06 Options. At the Effective Time, each outstanding option to purchase
shares of Company Common Stock under the Company Common Stock Plan (each, a
"Company Stock Option"), whether vested or unvested, shall be converted into
an option to acquire, on the same terms and conditions as were applicable
under such Company Stock Option, the number of shares of Zions Common Stock
equal to (a) the number of shares of Company Common Stock subject to the
Company Stock Option, multiplied by (b) the Exchange Ratio (such product
rounded down to the nearest whole number) (a "Replacement Option"), at an
exercise price per share (rounded up to the nearest whole cent) equal to (y)
the aggregate exercise price for the shares of Company Common Stock which were
purchasable pursuant to such Company Stock Option divided by (z) the number of
full shares of Zions Common Stock subject to such Replacement Option in
accordance with the foregoing. Notwithstanding the foregoing, each Company
Stock Option which is intended to be an "incentive stock option" (as defined
in Section 422 of the Code) shall be adjusted in accordance with the
requirements of Section 424 of the Code. At or prior to the Effective Time,
Company shall take all action, if any, necessary with respect to the Company
Stock Plan to permit the replacement of the outstanding Company Stock Options
by Zions pursuant to this Section. At the Effective Time, Zions shall assume
the Company Stock Plan; provided, that such assumption shall be only in
respect of the Replacement Options and that Zions shall have no obligation
with respect to any awards under the Company Stock Plan other than the
Replacement Options and shall have no obligation to make any additional grants
or awards under such assumed Company Stock Plan.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 Forebearances of Company. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of Zions, Company will not, and will cause each of its
Subsidiaries not to:
(a) Ordinary Course. Conduct the business of Zions and its Subsidiaries
other than in the ordinary and usual course or fail to use reasonable best
efforts to preserve intact their business organizations and assets and
maintain their rights, franchises and existing relations with customers,
suppliers, employees and business associates, take any action that would
adversely affect or delay the ability of Company, Zions or any of their
Subsidiaries to perform any of their obligations on a timely basis under
this Agreement, or take any action that is reasonably likely to have a
Material Adverse Effect on Company and its Subsidiaries, taken as a whole.
(b) Capital Stock. Other than pursuant to the Debentures and Rights
Previously Disclosed and outstanding on the date hereof, (i) issue, sell or
otherwise permit to become outstanding, or authorize the creation of, any
additional shares of Company Common Stock or any Rights, (ii) enter into
any agreement with respect to the foregoing or (iii) permit any additional
shares of Company Common Stock to become subject to new grants of employee
or director stock options, other Rights or similar stock-based employee
rights.
(c) Dividends, Etc. (a) Make, declare, pay or set aside for payment any
dividend on or in respect of, or declare or make any distribution on any
shares of Company Common Stock or (b) directly or indirectly adjust, split,
combine, redeem, reclassify, purchase or otherwise acquire, any shares of
its capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of
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Company or its Subsidiaries, or grant any salary or wage increase or
increase any employee benefit (including incentive or bonus payments),
except (i) for normal individual increases in compensation to employees in
the ordinary course of business consistent with past practice (including
increases in the annual bonus pool and reallocations pursuant thereto;
provided that for 1998 such pool shall not exceed the 1997 pool, prorated
through the Effective Date), (ii) for other changes that are required by
applicable law, (iii) to satisfy Previously Disclosed contractual
obligations existing as of the date hereof or (iv) for grants of awards to
newly hired employees consistent with past practice.
(e) Benefit Plans. Enter into, establish, adopt or amend (except (i) as
may be required by applicable law or (ii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof) any pension,
retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
(or similar arrangement) related thereto, in respect of any director,
officer or employee of Company or its Subsidiaries, or take any action to
accelerate the vesting or exercisability of stock options, restricted stock
or other compensation or benefits payable thereunder.
(f) Dispositions. Except as Previously Disclosed, sell, transfer,
mortgage, encumber or otherwise dispose of or discontinue any of its
assets, deposits, business or properties except in the ordinary course of
business and in a transaction that is not material to it and its
Subsidiaries taken as a whole.
(g) Acquisitions. Except as Previously Disclosed, acquire (other than by
way of foreclosures or acquisitions of control in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in good faith,
in each case in the ordinary and usual course of business consistent with
past practice) all or any portion of, the assets, business, deposits or
properties of any other entity except in the ordinary course of business
consistent with past practice and in a transaction that is not material to
Company and its Subsidiaries, taken as a whole.
(h) Capital Expenditures. Except as Previously Disclosed, make any
capital expenditures other than capital expenditures in the ordinary course
of business consistent with past practice in amounts not exceeding $50,000
individually or $150,000 in the aggregate.
(i) Governing Documents. Amend the Company Certificate, Company By-Laws
or the certificate of incorporation or by-laws (or similar governing
documents) of any of Company's Subsidiaries.
(j) Accounting Methods. Implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by
generally accepted accounting principles.
(k) Contracts. Except in the ordinary course of business consistent with
past practice or to reasonably comply with or ameliorate the Company's
obligations pursuant to the Debentures, enter into or terminate any
material contract (as defined in Section 5.03(k)) or amend or modify in any
material respect any of its existing material contracts.
(l) Claims. Except in the ordinary course of business consistent with
past practice, settle any claim, action or proceeding, except for any
claim, action or proceeding involving solely money damages in an amount,
individually or in the aggregate for all such settlements, that is not
material to Company and its Subsidiaries, taken as a whole.
(m) Adverse Actions. (a) Take any action while knowing that such action
would, or is reasonably likely to, prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material violation
of any provision of this Agreement except, in each case, as may be required
by applicable law or regulation.
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(n) Risk Management. Except as required by applicable law or regulation,
(i) implement or adopt any material change in its interest rate and other
risk management policies, procedures or practices; (ii) fail to follow its
existing policies or practices with respect to managing its exposure to
interest rate and other risk; or (iii) fail to use commercially reasonable
means to avoid any material increase in its aggregate exposure to interest
rate risk.
(o) Indebtedness. Incur any indebtedness for borrowed money other than in
the ordinary course of business consistent with past practice.
(p) Commitments. Agree or commit to do any of the foregoing.
4.02 Company Debenture Conversion and Redemption. Notwithstanding anything
to the contrary in Section 4.01, Company shall not be deemed to be in breach
of the provisions of Section 4.01 by taking appropriate actions to redeem
and/or convert its outstanding 9% Convertible Subordinated Debentures (the
"Debentures") due December 31, 1997. The parties understand and agree that
such redemption and/or conversion may be delayed as a result of the timing of
and pendency of the transactions contemplated by this Agreement and consent to
reasonable actions by Company to meet its obligations under the Debentures.
4.03 Forebearances of Zions. From the date hereof until the Effective Time,
except as expressly contemplated by this Agreement, without the prior written
consent of Company, Zions will not, and will cause each of its Subsidiaries
not to:
(a) Ordinary Course. Take any action that would adversely affect or delay
the ability of Company or Zions to perform any of their obligations on a
timely basis under this Agreement, or take any action that is reasonably
likely to have a Material Adverse Effect on Zions or its Subsidiaries,
taken as a whole.
(b) Adverse Actions. (a) Take any action while knowing that such action
would, or is reasonably likely to, prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material violation
of any provision of this Agreement except, in each case, as may be required
by applicable law or regulation.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. On or prior to the date hereof, Company has
delivered to Zions a schedule (the "Disclosure Schedule") setting forth, among
other things, items the disclosure of which is necessary or appropriate either
in response to an express disclosure requirement contained in a provision
hereof or as an exception to one or more representations or warranties
contained in Section 5.03; provided, that (a) no such item is required to be
set forth in a Disclosure Schedule as an exception to a representation or
warranty if its absence would not be reasonably likely to result in the
related representation or warranty being deemed untrue or incorrect under the
standard established by Section 5.02, and (b) the mere inclusion of an item in
a Disclosure Schedule as an exception to a representation or warranty shall
not be deemed an admission by a party that such item represents a material
exception or fact, event or circumstance or that such item is reasonably
likely to result in a Material Adverse Effect.
5.02 Standard. No representation or warranty of Company or Zions contained
in Section 5.03 or 5.04 shall be deemed untrue or incorrect, and no party
hereto shall be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, event or circumstance unless such
fact, circumstance or event, individually or taken together with all other
facts, events or circumstances inconsistent with any
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representation or warranty contained in Section 5.03 or 5.04 has had or is
reasonably likely to have a Material Adverse Effect on the party making such
representation or warranty.
5.03 Representations and Warranties of Company. Subject to Sections 5.01 and
5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, Company hereby
represents and warrants to Zions:
(a) Organization, Standing and Authority. Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. Company is duly qualified to do business and is in good
standing in the states of the United States and any foreign jurisdictions
where its ownership or leasing of property or assets or the conduct of its
business requires it to be so qualified.
(b) Company Common Stock. As of the date hereof, the authorized capital
stock of Company consists solely of 4,000,000 shares of Company Common
Stock, of which no more than 2,778,823 shares were outstanding as of the
date hereof. As of the date hereof, no shares of Company Common Stock were
held in treasury by Company or otherwise owned by Company or its
Subsidiaries. The outstanding shares of Company Common Stock have been duly
authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued in
violation of any preemptive rights). As of the date hereof, there are no
shares of Company Common Stock authorized and reserved for issuance,
Company does not have any Rights issued or outstanding with respect to
Company Common Stock, and Company does not have any commitment to
authorize, issue or sell any Company Common Stock or Rights, except
pursuant to this Agreement, the Debentures, any Company Stock Option and
the Company Stock Plan. The number of shares of Company Common Stock which
are issuable and reserved for issuance upon exercise of Company Stock
Options as of the date hereof are Previously Disclosed in Company's
Disclosure Schedule.
(c) Subsidiaries. (i)(A) Company has Previously Disclosed a list of all
of its Subsidiaries together with the jurisdiction of organization of each
such Subsidiary, (B) Company owns, directly or indirectly, all the issued
and outstanding equity securities of each of its Subsidiaries, (C) no
equity securities of any of its Subsidiaries are or may become required to
be issued (other than to it or its wholly owned Subsidiaries) by reason of
any Right or otherwise, (D) there are no contracts, commitments,
understandings or arrangements by which any of such Subsidiaries is or may
be bound to sell or otherwise transfer any equity securities of any such
Subsidiaries (other than to it or its wholly-owned Subsidiaries), (E) there
are no contracts, commitments, understandings, or arrangements relating to
its rights to vote or to dispose of such securities and (F) all the equity
securities of each Subsidiary held by Company or its Subsidiaries are fully
paid and nonassessable and are owned by Company or its Subsidiaries free
and clear of any Liens.
(ii) Company does not own beneficially, directly or indirectly, any
equity securities or similar interests of any Person, or any interest in a
partnership or joint venture of any kind, other than its Subsidiaries.
(iii) Each of Company's Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and in good standing in
the jurisdictions where its ownership or leasing of property or the conduct
of its business requires it to be so qualified.
(d) Corporate Power. Company and each of its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and Company has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby and thereby.
(e) Corporate Authority. Subject in the case of this Agreement to receipt
of the requisite approval of the agreement of merger set forth in this
Agreement by the holders of a majority of the outstanding shares of Company
Common Stock entitled to vote thereon (which is the only stockholder vote
required thereon),
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this Agreement and the transactions contemplated hereby have been
authorized by all necessary corporate action of Company and the Company
Board on or prior to the date hereof. This Agreement is a valid and legally
binding obligation of Company, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditors' rights or
by general equity principles). The Company Board has received the written
opinion of Sandler O'Neill & Partners, LP to the effect that as of the date
hereof the Exchange Ratio to be received by the holders of Company Common
Stock in the Merger is fair to the holders of Company Common Stock from a
financial point of view.
(f) Regulatory Approvals; No Defaults. (i) No consents or approvals of,
or filings or registrations with, any Governmental Authority or with any
third party are required to be made or obtained by Company or any of its
Subsidiaries in connection with the execution, delivery or performance by
Company of this Agreement or to consummate the Merger except for (A)
filings of applications or notices with federal banking authorities,
(B) filings with the SEC and state securities authorities and the approval
of this Agreement by the stockholders of Company, and (C) the filing of
articles of merger with the Corporation Division pursuant to the UBCA and a
certificate of merger with the Delaware Secretary pursuant to the DGCL. As
of the date hereof, Company is not aware of any reason why the approvals
set forth in Section 7.01(b) will not be received without the imposition of
a condition, restriction or requirement of the type described in Section
7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph, and the expiration of related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby and thereby do not and will not (A)
constitute a breach or violation of, or a default under, or give rise to
any Lien, any acceleration of remedies or any right of termination under,
any law, rule or regulation or any judgment, decree, order, governmental
permit or license, or agreement, indenture or instrument of Company or of
any of its Subsidiaries or to which Company or any of its Subsidiaries or
properties is subject or bound, (B) constitute a breach or violation of, or
a default under, the Company Certificate or the Company By-Laws, or (C)
require any consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental permit or license, agreement,
indenture or instrument.
(g) Financial Reports and Regulatory Documents. (i) Company's (or its
predecessors') Annual Reports on Form 10-KSB for the fiscal years ended
December 31, 1994, 1995 and 1996, and all other reports, registration
statements, definitive proxy statements or information statements filed or
to be filed by it or any of its Subsidiaries subsequent to December 31,
1994 under the Securities Act, or under Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act or under the securities regulations of the OCC, in the
form filed or to be filed (collectively, the Company "Regulatory
Documents") with the SEC or the OCC, as applicable, as of the date filed,
(A) complied or will comply in all material respects as to form with the
applicable requirements under the Securities Act, the Exchange Act or the
securities regulations of the OCC, as the case may be, and (B) did not and
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and each of the balance sheets contained in or
incorporated by reference into any such Regulatory Document (including the
related notes and schedules thereto) fairly presents, or will fairly
present, in all material respects, the financial position of Company and
its Subsidiaries as of its date, and each of the statements of income and
changes in stockholders' equity and cash flows or equivalent statements in
such Regulatory Documents (including any related notes and schedules
thereto) fairly presents, or will fairly present, in all material respects,
the results of operations, changes in stockholders' equity and changes in
cash flows, as the case may be, of Company and its Subsidiaries for the
periods to which they relate, in each case in accordance with generally
accepted accounting principles consistently applied during the periods
involved, except in each case as may be noted therein, subject to normal
year-end audit adjustments in the case of unaudited statements.
(ii) Since December 31, 1996, Company and its Subsidiaries have not
incurred any liability other than in the ordinary course of business
consistent with past practice.
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(iii) Since December 31, 1996, (A) Company and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of expenses related
to this Agreement and the transactions contemplated hereby) and (B) no
event has occurred or circumstance arisen that, individually or taken
together with all other facts, circumstances and events (described in any
paragraph of Section 5.03 or otherwise), is reasonably likely to have a
Material Adverse Effect with respect to Company.
(h) Litigation. No litigation, claim or other proceeding before any court
or governmental agency is pending against Company or any of its
Subsidiaries and, to Company's knowledge, no such litigation, claim or
other proceeding has been threatened.
(i) Regulatory Matters. (i) Neither Company nor any of its Subsidiaries
or any of their properties is a party to or is subject to any order,
decree, agreement, memorandum of understanding or similar arrangement with,
or a commitment letter or similar submission to, or extraordinary
supervisory letter from, any federal or state governmental agency or
authority charged with the supervision or regulation of financial
institutions or issuers of securities or engaged in the insurance of
deposits (including, without limitation, the OCC, the Federal Reserve and
the FDIC) or the supervision or regulation of it or any of its Subsidiaries
(collectively, the "Regulatory Authorities").
(ii) Neither Company nor any of its Subsidiaries has been advised by any
Regulatory Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(j) Compliance with Laws. Company and each of its Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders
or decrees applicable thereto or to the employees conducting such
businesses, including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the Home
Mortgage Disclosure Act and all other applicable fair lending laws and
other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and approvals of,
and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own
or lease their properties and to conduct their businesses as presently
conducted; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to Company's knowledge, no
suspension or cancellation of any of them is threatened; and
(iii) has received, since December 31, 1996, no notification or
communication from any Governmental Authority (A) asserting that Company or
any of its Subsidiaries is not in compliance with any of the statutes,
regulations or ordinances which such Governmental Authority enforces or
(B) threatening to revoke any license, franchise, permit or governmental
authorization (nor, to Company's knowledge, do any grounds for any of the
foregoing exist).
(k) Material Contracts; Defaults. Except for those agreements and other
documents filed as exhibits to its Regulatory Documents, neither it nor any
of its Subsidiaries is a party to, bound by or subject to any agreement,
contract, arrangement, commitment or understanding (whether written or
oral) (i) that is a "material contract" within the meaning of Item
601(b)(10) of the SEC's Regulation S-K or (ii) that materially restricts
the conduct of business by it or any of its Subsidiaries. Neither Company
nor any of its Subsidiaries is in default under any material contract,
agreement, commitment, arrangement, lease, insurance policy or other
instrument to which it is a party, by which its respective assets,
business, or operations may be bound or affected, or under which it or its
respective assets, business, or operations receives benefits, and there has
not occurred any event that, with the lapse of time or the giving of notice
or both, would constitute such a default.
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(l) No Brokers. No action has been taken by Company that would give rise
to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, excluding a Previously Disclosed fee to be
paid to Sandler O'Neill & Partners, LP.
(m) Employee Benefit Plans.
(i) All benefit and compensation plans, contracts, policies or
arrangements covering current employees or former employees of Company and
its subsidiaries (the "Employees") and current or former directors of
Company, including, but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of ERISA, and deferred compensation, stock option,
stock purchase, stock appreciation rights, stock based, incentive and bonus
plans (the "Benefit Plans"), are Previously Disclosed in the Disclosure
Letter. True and complete copies of all Benefit Plans, including, but not
limited to, any trust instruments and insurance contracts forming a part of
any Benefit Plans, and all amendments thereto have been provided or made
available to Zions.
(ii) All employee benefit plans, other than "multiemployer plans" within
the meaning of Section 3(37) of ERISA, covering Employees (the "Plans"), to
the extent subject to ERISA, are in substantial compliance with ERISA.
Company is not a party to any "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA ("Pension Plan") and which is intended to
be qualified under Section 401(a) of the Code. There is no material pending
or threatened litigation relating to the Plans. Neither Company nor any of
its Subsidiaries has engaged in a transaction with respect to any Plan
that, assuming the taxable period of such transaction expired as of the
date hereof, could subject Company or any Subsidiary to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) of ERISA in an
amount which would be material.
(iii) No liability under Subtitle C or D of Title IV of ERISA has been or
is expected to be incurred by Company or any of its Subsidiaries with
respect to any ongoing, frozen or terminated "single-employer plan", within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity which
is considered one employer with Company under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA Affiliate"). Neither Company, any of its
Subsidiaries nor an ERISA Affiliate has contributed to a "multiemployer
plan", within the meaning of Section 3(37) of ERISA, at any time on or
after September 26, 1980. No notice of a "reportable event", within the
meaning of Section 4043 of ERISA for which the 30-day reporting requirement
has not been waived, has been required to be filed for any Pension Plan or
by any ERISA Affiliate within the 12-month period ending on the date hereof
or will be required to be filed in connection with the transactions
contemplated by this Plan.
(iv) All contributions required to be made under the terms of any Plan
have been timely made or have been reflected on the consolidated financial
statements of Company included in the Regulatory Documents. Neither any
Pension Plan nor any single-employer plan of an ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA and no ERISA Affiliate
has an outstanding funding waiver. Neither Company nor any of its
Subsidiaries has provided, or is required to provide, security to any
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant
to Section 401(a)(29) of the Code.
(v) Under each Pension Plan which is a single-employer plan, as of the
last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities", within
the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of
the actuarial assumptions contained in the Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such
Plan, and there has been no material change in the financial condition of
such Plan since the last day of the most recent plan year.
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(vi) Neither Company nor any of its Subsidiaries has any obligations for
retiree health and life benefits under any Benefit Plan. Company or its
Subsidiaries may amend or terminate any such Benefit Plan at any time
without incurring any liability thereunder.
(vii) The consummation of the transactions contemplated by this Agreement
will not (x) entitle any employees of Company or any of its Subsidiaries to
severance pay, (y) accelerate the time of payment or vesting or trigger any
payment of compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any of the Benefit Plans
or (z) result in any breach or violation of, or a default under, any of the
Benefit Plans. Without limiting the foregoing, as a result of the
consummation of the transactions contemplated by this Agreement, none of
Zions, Company, or any of its Subsidiaries will be obligated to make a
payment to an individual that would be a "parachute payment" to a
"disqualified individual" as those terms are defined in Section 280G of the
Code, without regard to whether such payment is reasonable compensation for
personal services performed or to be performed in the future.
(n) Labor Matters. Neither Company nor any of its Subsidiaries is a party
to or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is
Company or any of its Subsidiaries the subject of a proceeding asserting
that it or any such Subsidiary has committed an unfair labor practice
(within the meaning of the National Labor Relations Act) or seeking to
compel Company or any such Subsidiary to bargain with any labor
organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving it or any of its Subsidiaries
pending or, to Company's knowledge, threatened, nor is Company aware of any
activity involving its or any of its Subsidiaries' employees seeking to
certify a collective bargaining unit or engaging in other organizational
activity.
(o) Appraisal Rights. The holders of Company Common Stock do not have
appraisal rights in connection with the Merger pursuant to DGCL (S)
262(b)(1), assuming that the consideration to be received by such holders
satisfies the requirements of DGCL (S) 262(b)(2).
(p) Environmental Matters. To the best knowledge of Company, neither the
conduct nor operation of Company or its Subsidiaries nor any condition of
any property presently or previously owned, leased or operated by any of
them (including, without limitation, in a fiduciary or agency capacity),
violates or violated Environmental Laws and no condition has existed or
event has occurred with respect to any of them or any such property that,
with notice or the passage of time, or both, is reasonably likely to result
in liability under Environmental Laws. To the knowledge of Company's
executive officers, no property on which Company or any of its Subsidiaries
holds a Lien, violates or violated Environmental Laws and no condition has
existed or event has occurred with respect to any such property that, with
notice or the passage of time, or both, is reasonably likely to result in
liability under Environmental Laws. Neither Company nor any of its
Subsidiaries has received any notice from any person or entity that Company
or its Subsidiaries or the operation or condition of any property ever
owned, leased, operated, or held as collateral or in a fiduciary capacity
by any of them are or were in violation of or otherwise are alleged to have
liability under any Environmental Law, including, but not limited to,
responsibility (or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from, any such
property.
As used herein, the term "Environmental Law" means any federal, state or
local law, regulation, order, decree, permit, authorization, opinion, common
law or agency requirement relating to: (A) the protection or restoration of
the environment, health, safety, or natural resources, (B) the handling, use,
presence, disposal, release or threatened release of any Hazardous Substance
or (C) noise, odor, wetlands, indoor air, pollution, contamination or any
injury or threat of injury to persons or property in connection with any
Hazardous Substance and the term "Hazardous Substance" means any substance in
any concentration that is: (A) listed, classified or regulated pursuant to any
Environmental Law; (B) any petroleum product or by-product, asbestos-
containing material, lead-containing paint or plumbing, polychlorinated
biphenyls, radioactive materials or radon;
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or (C) any other substance which is or may be the subject of regulatory action
by any Governmental Authority in connection with any Environmental Law.
(q) Tax Matters. (i) (A) All Tax Returns that are required to be filed
(taking into account any extensions of time within which to file) by or
with respect to Company and its Subsidiaries have been duly filed, (B) all
Taxes shown to be due on the Tax Returns referred to in clause (A) have
been paid in full, (C) the Tax Returns referred to in clause (A) have been
examined by the Internal Revenue Service or the appropriate Tax authority
or the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired, (D) all deficiencies
asserted or assessments made as a result of such examinations have been
paid in full, (E) no issues that have been raised by the relevant taxing
authority in connection with the examination of any of the Tax Returns
referred to in clause (A) are currently pending, and (F) no waivers of
statutes of limitation have been given by or requested with respect to any
Taxes of Company or its Subsidiaries. Company has made available to Zions
true and correct copies of the United States federal income Tax Returns
filed by Company and its Subsidiaries for each of the three most recent
fiscal years ended on or before December 31, 1996. Neither Company nor any
of its Subsidiaries has any liability with respect to income, franchise or
similar Taxes that accrued on or before the end of the most recent period
covered by Company's Regulatory Documents filed prior to the date hereof in
excess of the amounts accrued with respect thereto that are reflected in
the financial statements included in Company's Regulatory Documents filed
on or prior to the date hereof. Neither Company nor any of its Subsidiaries
is a party to any Tax allocation or sharing agreement, is or has been a
member of an affiliated group filing consolidated or combined Tax returns
(other than a group the common parent of which is or was Company) or
otherwise has any liability for the Taxes of any person (other than Company
and its Subsidiaries). As of the date hereof, neither Company nor any of
its Subsidiaries has any reason to believe that any conditions exist that
might prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368 of the Code.
(ii) No Tax is required to be withheld pursuant to Section 1445 of the
Code as a result of the transfer contemplated by this Agreement.
(r) Risk Management Instruments. All interest rate swaps, caps, floors,
option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for Company's own account, or
for the account of one or more of Company's Subsidiaries or their customers
(all of which are listed on Company's Disclosure Schedule), if any, were
entered into (i) in accordance with prudent business practices and all
applicable laws, rules, regulations and regulatory policies and (ii) with
counterparties believed to be financially responsible at the time; and each
of them constitutes the valid and legally binding obligation of Company or
one of its Subsidiaries, enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles), and are in full force and effect. Neither Company nor
its Subsidiaries, nor to Company's knowledge, any other party thereto, is
in breach of any of its obligations under any such agreement or
arrangement.
(s) Books and Records. The books and records of Company and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein, and they fairly present the
financial position of Company and its Subsidiaries.
(t) Insurance. Company has Previously Disclosed all of the insurance
policies, binders, or bonds maintained by Company or its Subsidiaries
("Insurance Policies"). Company and its Subsidiaries are insured with
reputable insurers against such risks and in such amounts as the management
of Company reasonably has determined to be prudent in accordance with
industry practices. All the Insurance Policies are in full force and
effect; Company and its Subsidiaries are not in material default
thereunder; and all claims thereunder have been filed in due and timely
fashion.
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(u) Accounting Treatment. As of the date hereof, Company is not aware of
any reason why the Merger will fail to qualify for "pooling of interests"
accounting treatment.
5.04 Representations and Warranties of Zions. Subject to Section 5.02, Zions
hereby represents and warrants to Company as follows:
(a) Organization, Standing and Authority. Zions is duly organized,
validly existing and in good standing under the laws of the State of Utah.
Zions is duly qualified to do business and is in good standing in the
states of the United States and foreign jurisdictions where its ownership
or leasing of property or assets or the conduct of its business requires it
to be so qualified. Zions has in effect all federal, state, local, and
foreign governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as it is now conducted.
(b) Zions Capital Stock. As of the date hereof, the authorized capital
stock of Zions consists solely of 100,000,000 shares of Zions Common Stock,
of which no more than 65,000,000 shares were outstanding as of the date
hereof and 3,000,000 shares of Zions Preferred Stock, of which no shares
were outstanding as of the date hereof.
(c) Corporate Power. Zions and each of its Significant Subsidiaries has
the corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and Zions has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
(d) Corporate Authority. This Agreement and the transactions contemplated
hereby have been authorized by all necessary corporate action of Zions and
the Zions Board. This Agreement is a valid and legally binding agreement of
Zions enforceable in accordance with its terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general applicability
relating to or affecting creditors' rights or by general equity
principles).
(e) Regulatory Approvals; No Defaults. (i) No consents or approvals of,
or filings or registrations with, any court, administrative agency or
commission or other governmental authority or instrumentality or with any
third party are required to be made or obtained by Zions or any of its
Subsidiaries in connection with the execution, delivery or performance by
Zions of this Agreement or to consummate the Merger except for (A) the
filing of applications and notices, as applicable, with the federal and
state banking authorities; (B) approval of the listing on the NASDAQ of
Zions Common Stock to be issued in the Merger; (C) the filing and
declaration of effectiveness of the Registration Statement; (D) the filing
of articles of merger with the Corporation Division pursuant to the UBCA
and a certificate of merger with the Delaware Secretary pursuant to the
DGCL; (E) such filings as are required to be made or approvals as are
required to be obtained under the securities or "Blue Sky" laws of various
states in connection with the issuance of Zions Common Stock in the Merger;
and (F) receipt of the approvals set forth in Section 7.01(b). As of the
date hereof, Zions is not aware of any reason why the approvals set forth
in Section 7.01(b) will not be received without the imposition of a
condition, restriction or requirement of the type described in
Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph and expiration of the related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (A) constitute a
breach or violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule
or regulation or any judgment, decree, order, governmental permit or
license, or agreement, indenture or instrument of Zions or of any of its
Subsidiaries or to which Zions or any of its Subsidiaries or properties is
subject or bound, (B) constitute a breach or violation of, or a default
under, the certificate of incorporation or by-laws (or similar governing
documents) of Zions or any of its Subsidiaries, or (C) require any consent
or approval under any such law,
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rule, regulation, judgment, decree, order, governmental permit or license,
agreement, indenture or instrument.
(f) Financial Reports and Regulatory Documents; Material Adverse
Effect. (i) Zions' Regulatory Documents, as of the date filed, (A) complied
or will comply in all material respects as to form with the applicable
requirements under the Securities Act or the Exchange Act, as the case may
be, and (B) did not and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and each of the balance sheets
contained in or incorporated by reference into any such Regulatory Document
(including the related notes and schedules thereto) fairly presents, or
will fairly present, the financial position of Zions and its Subsidiaries
as of its date, and each of the statements of income and changes in
stockholders' equity and cash flows or equivalent statements in such
Regulatory Documents (including any related notes and schedules thereto)
fairly presents, or will fairly present, the results of operations, changes
in stockholders' equity and changes in cash flows, as the case may be, of
Zions and its Subsidiaries for the periods to which they relate, in each
case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as
may be noted therein, subject to normal year-end audit adjustments in the
case of unaudited statements.
(ii) Since December 31, 1996, no event has occurred or circumstance
arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 5.04 or
otherwise), is reasonably likely to have a Material Adverse Effect with
respect to it.
(g) No Brokers. No action has been taken by Zions that would give rise to
any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions
contemplated by this Agreement.
(h) Accounting Treatment; Tax Matters. As of the date hereof, it is aware
of no reason why the Merger will fail to qualify for "pooling of interests"
accounting treatment. As of the date hereof, neither Zions nor any of its
Subsidiaries has any reason to believe that any conditions exist that might
prevent or impede the Merger from qualifying as a reorganization within the
meaning of Section 368 of the Code.
(i) Regulatory Matters. (i) Neither Zions nor any of its Subsidiaries or
any of their properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary supervisory
letter from, any Regulatory Authority, which individually or in the
aggregate would have a Material Adverse Effect on Zions.
(ii) Neither Zions nor any of its Subsidiaries has been advised by any
Regulatory Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(j) Compliance with Laws. Zions and each of its Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders
or decrees applicable thereto or to the employees conducting such
businesses, including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act, the Home
Mortgage Disclosure Act and all other applicable fair lending laws and
other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and approvals of,
and has made all filings, applications and registrations with, all
Governmental Authorities that are required to permit them to own or lease
their properties and to conduct their businesses as presently conducted;
all such permits, licenses,
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certificates of authority, orders and approvals are in full force and
effect and, to Zions' knowledge, no suspension or cancellation of any of
them is threatened; and
(iii) has received, since December 31, 1996, no notification or
communication from any Governmental Authority (A) asserting that Zions or
any of its Subsidiaries is not in compliance with any of the statutes,
regulations or ordinances which such Governmental Authority enforces or
(B) threatening to revoke any license, franchise, permit or governmental
authorization (nor, to Zions' knowledge, do any grounds for any of the
foregoing exist).
(k) Appraisal Rights. The consideration to be received by holders of
Company Common Stock in connection with the Merger satisfies the
requirements of DGCL (S) 262(b)(2).
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts. Subject to the terms and conditions of this
Agreement, each of Company and Zions agrees to use its reasonable best efforts
in good faith to take, or cause to be taken, all actions, and to do, or cause
to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of each of the Merger and the
Bank Merger as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby and shall cooperate fully with the other
party hereto to that end.
6.02 Stockholder Approval. Company agrees to take, in accordance with
applicable law and the Company Certificate and the Company By-Laws, all action
necessary to convene an appropriate meeting of its stockholders to consider
and vote upon the approval and adoption of this Agreement and any other
matters required to be approved by Company's stockholders for consummation of
the Merger (including any adjournment or postponement, the "Company Meeting"),
in each case as promptly as practicable after the Registration Statement is
declared effective. Except to the extent the Company Board reasonably
determines otherwise in the exercise of its fiduciary duties following receipt
of advice of Company's legal counsel, the Company Board shall recommend at the
Company Meeting that all such matters be approved by its stockholders, shall
not cancel the Company Meeting and Company shall take all reasonable, lawful
action to solicit such approval by its stockholders.
6.03 Registration Statements. (a) Zions agrees to prepare a registration
statement on Form S-4 or other applicable form (the "Registration Statement")
to be filed by Zions with the SEC in connection with the issuance of Zions
Common Stock in the Merger (including the proxy statement and prospectus and
other proxy solicitation materials of Company constituting a part thereof (the
"Proxy Statement") and all related documents). Company agrees to cooperate,
and to cause its Subsidiaries to cooperate, with Zions, its counsel and its
accountants, in preparation of the Registration Statement and the Proxy
Statement. Company agrees to file the Proxy Statement in preliminary form with
the SEC as soon as reasonably practicable, and Zions agrees to file the
Registration Statement with the SEC as soon as reasonably practicable after
any SEC comments with respect to the preliminary Proxy Statement are resolved.
Each of Company and Zions agrees to use all reasonable efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as reasonably practicable after filing thereof. Zions also agrees to
use all reasonable efforts to obtain all necessary state securities law or
"Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement. Company agrees to furnish to Zions all
information concerning Company, its Subsidiaries, officers, directors and
stockholders as may be reasonably requested in connection with the foregoing.
(b) Each of Company and Zions agrees, as to itself and its Subsidiaries,
that none of the information supplied or to be supplied by it for inclusion or
incorporation by reference in (i) the Registration Statement will, at the time
the Registration Statement and each amendment or supplement thereto, if any,
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required
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to be stated therein or necessary to make the statements therein not
misleading, and (ii) the Proxy Statement and any amendment or supplement
thereto will, at the date of mailing to stockholders and at the time of the
Company Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading or any statement which, in the light of the
circumstances under which such statement is made, will be false or misleading
with respect to any material fact, or which will omit to state any material
fact necessary in order to make the statements therein not false or misleading
or necessary to correct any statement in any earlier statement in the Proxy
Statement or any amendment or supplement thereto. Each of Company and Zions
further agrees that if it shall become aware prior to the Effective Date of
any information furnished by it that would cause any of the statements in the
Proxy Statement to be false or misleading with respect to any material fact,
or to omit to state any material fact necessary to make the statements therein
not false or misleading, promptly to inform the other party thereof and to
take the necessary steps to correct the Proxy Statement.
(c) Zions agrees to advise Company, promptly after Zions receives notice
thereof, of the time when the Registration Statement has become effective or
any supplement or amendment has been filed, of the issuance of any stop order
or the suspension of the qualification of Zions Common Stock for offering or
sale in any jurisdiction, of the initiation or threat of any proceeding for
any such purpose, or of any request by the SEC for the amendment or supplement
of the Registration Statement or for additional information.
(d) Zions agrees to provide such reasonable cooperation as is required to
facilitate the filing and effectiveness of Company's registration statement on
Form S-3 with regard to the offering by Company of shares of Company Common
Stock upon conversion of the Debentures. The parties understand that such
cooperation is expected to take the form of review and approval of language
regarding Zions and the plan to be included in such filing. Zions agrees to
take other actions reasonably necessary in cooperation with Company to cause
the record date for stockholders entitled to vote at the Company Meeting to
occur after the date of conversion of the Debentures.
6.04 Press Releases. Each of Company and Zions agrees that it will not,
without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NASDAQ rules (provided that the issuing party shall nevertheless
provide the other party with notice of, and the opportunity to review, any
such press release or written statement).
6.05 Access; Information. (a) Each of Company and Zions agrees that upon
reasonable notice and subject to applicable laws relating to the exchange of
information, each party shall afford the other party and the other party's
officers, employees, counsel, accountants and other authorized
representatives, such access during normal business hours throughout the
period prior to the Effective Time to the books, records (including, without
limitation, tax returns and work papers of independent auditors), properties,
personnel and to such other information as the requesting party may reasonably
request and, during such period, the providing party shall furnish promptly to
the requesting party (i) a copy of each material report, schedule and other
document filed by it pursuant to the requirements of federal or state
securities or banking laws, and (ii) all other information concerning the
business, properties and personnel of it as the requesting party may
reasonably request.
(b) Each party agrees that it will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 6.05 (as well as
any other information obtained prior to the date hereof in connection with the
entering into of this Agreement) for any purpose unrelated to the consummation
of the transactions contemplated by this Agreement. Subject to the
requirements of law, each party will keep confidential, and will cause its
representatives to keep confidential, all information and documents obtained
pursuant to this Section 6.05 (as well as any other information obtained prior
to the date hereof in connection with the entering into of this Agreement)
unless such information (i) was already known to such party, (ii) becomes
available to such party from other sources not known by such party to be bound
by a confidentiality obligation, (iii) is disclosed with the prior written
approval of the providing party or (iv) is or becomes readily ascertainable
from published information or trade sources. In the event that this Agreement
is terminated or the transactions
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contemplated by this Agreement shall otherwise fail to be consummated, each
party shall promptly cause all copies of documents or extracts thereof
containing information and data as to the other party to be returned to the
other party. No investigation by either party of the business and affairs of
the other party shall affect or be deemed to modify or waive any
representation, warranty, covenant or agreement in this Agreement, or the
conditions to either party's obligation to consummate the transactions
contemplated by this Agreement.
6.06 Acquisition Proposals. Company agrees that it shall not, and shall
cause its Subsidiaries and its and its Subsidiaries' officers, directors,
agents, advisors and affiliates not to, solicit or encourage inquiries or
proposals with respect to, or engage in any negotiations concerning, or
provide any confidential information to, or have any discussions with, any
person relating to, any Acquisition Proposal; provided, however, that nothing
in this Agreement shall (x) require the Company Board to recommend stockholder
approval of the Merger following an Acquisition Proposal or (y) prevent
Company or the Company Board from (i) engaging in any discussions or
negotiations with, or providing any information to, any Person in response to
an unsolicited bona fide written Acquisition Proposal by any such Person, (ii)
recommending such an unsolicited bona fide written Acquisition Proposal to the
holders of Company Common Stock or (iii) responding to a tender offer in
compliance with applicable law if and only if, with respect to the actions
described in clause (x) or (y), as applicable, (A) the Company Board concludes
in good faith that the Acquisition Proposal, if consummated, would result in a
transaction more favorable to holders of Company Common Stock than the
transaction contemplated by this Agreement; (B) the Company Board determines
in good faith based upon the advice of outside counsel that such action is
legally necessary for it to act in a manner consistent with its fiduciary
duties under applicable law; and (C) prior to providing any information or
data to any person or entering into discussions or negotiations with any
Person, the Company Board notifies Zions immediately of such inquiries,
proposals or offers received by, any such information requested from, or any
such discussions or negotiations sought to be initiated or continued with
Company or any Subsidiary thereof. Company shall immediately cease and cause
to be terminated any activities, discussions or negotiations conducted prior
to the date of this Agreement with any parties other than with respect to any
of the foregoing and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to an Acquisition Proposal.
Company shall promptly (within 24 hours) advise Zions following the receipt by
Company of any Acquisition Proposal and the substance thereof (including the
identity of the person making such Acquisition Proposal and the terms,
conditions and status thereof), and advise Zions of any developments with
respect to such Acquisition Proposal immediately upon the occurrence thereof.
6.07 Affiliate Agreements. (a) Not later than the 15th day prior to the
mailing of the Proxy Statement, Company shall deliver to Zions a schedule of
each person that, to the best of its knowledge, is or is reasonably likely to
be, as of the date of the Company Meeting, deemed to be an "affiliate" of
Company (each, a "Company Affiliate") as that term is used in Rule 145 under
the Securities Act or SEC Accounting Series Releases 130 and 135.
(b) Company shall use its reasonable best efforts to cause each person who
may be deemed to be a Company Affiliate to execute and deliver to Zions on or
before the date of mailing of the Proxy Statement an agreement in the form
attached hereto as Exhibit A.
6.08 Takeover Laws. No party hereto shall take any action that would cause
the transactions contemplated by this Agreement to be subject to requirements
imposed by any Takeover Law and each of them shall take all necessary steps
within its control to exempt (or ensure the continued exemption of) the
transactions contemplated by this Agreement from, or if necessary challenge
the validity or applicability of, any applicable Takeover Law, as now or
hereafter in effect.
6.09 Certain Policies. Prior to the Effective Date, Company shall,
consistent with generally accepted accounting principles and on a basis
mutually satisfactory to it and Zions, modify and change its loan, litigation
and real estate valuation policies and practices (including loan
classifications and levels of reserves) so as to be applied on a basis that is
consistent with that of Zions.
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6.10 NASDAQ Listing. Zions agrees to use its reasonable best efforts to
list, prior to the Effective Date, on the NASDAQ, subject to official notice
of issuance, the shares of Zions Common Stock to be issued to the holders of
Company Common Stock in the Merger.
6.11 Regulatory Applications. (a) Zions and Company and their respective
Subsidiaries shall cooperate and use their respective reasonable best efforts
to prepare all documentation, to effect all filings and to obtain all permits,
consents, approvals and authorizations of all third parties and Governmental
Authorities necessary to consummate the transactions contemplated by this
Agreement. Zions and Company shall use their reasonable best efforts to make
all required bank regulatory filings, including the appropriate filing with
the Federal Reserve, within 30 days after the date hereof. Each of Zions and
Company shall have the right to review in advance, and to the extent
practicable each will consult with the other, in each case subject to
applicable laws relating to the exchange of information, with respect to all
material written information submitted to any third party or any Governmental
Authority in connection with the transactions contemplated by this Agreement.
In exercising the foregoing right, each of the parties hereto agrees to act
reasonably and as promptly as practicable. Each party hereto agrees that it
will consult with the other party hereto with respect to the obtaining of all
material permits, consents, approvals and authorizations of all third parties
and Governmental Authorities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
party appraised of the status of material matters relating to completion of
the transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other party with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or
advisable in connection with any filing, notice or application made by or on
behalf of such other party or any of its Subsidiaries to any third party or
Governmental Authority.
6.12 Indemnification; Director and Officers' Insurance. (a) From and after
the Effective Time through the fourth anniversary of the Effective Date, Zions
agrees to indemnify and hold harmless each present and former director and
officer of Company or any Subsidiary of Company determined as of the Effective
Time (the "Indemnified Parties"), against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities (collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring
at or prior to the Effective Time (including with respect to this Agreement or
any of the transactions contemplated hereby) (but excluding any Costs arising
out of any violation or alleged violation of the Exchange Act or the rules and
regulations thereunder with respect to insider trading), whether asserted,
claimed or arising prior to, at or after the Effective Time, to the extent to
which such Indemnified Parties were entitled under Delaware law and the
Company Certificate or the Company By-Laws in effect on the date hereof, and
Zions shall also advance expenses as incurred to the extent permitted under
Delaware law and the Company Certificate and the Company By-Laws.
(b) Any Indemnified Party wishing to claim indemnification under Section
6.12(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall as promptly as possible notify Zions thereof, but the
failure to so notify shall not relieve Zions of any liability it may have to
such Indemnified Party if such failure does not materially prejudice Zions. In
the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (i) Zions shall have the
right to assume the defense thereof and Zions shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if Zions elects not to assume such defense or
counsel for the Indemnified Parties advises in writing that there are issues
which raise conflicts of interest between Zions and the Indemnified Parties,
the Indemnified Parties may retain counsel satisfactory to them, and Zions
shall pay the reasonable fees and expenses of one such counsel for the
Indemnified Parties in any jurisdiction promptly as statements thereof are
received, (ii) the Indemnified Parties will cooperate in the defense of any
such matter and (iii) Zions shall not be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld); and provided, further, that Zions shall not have any 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
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nonappealable, that the indemnification of such Indemnified Party in the
manner contemplated hereby is not permitted or is prohibited by applicable
law.
(c) For a period of three years after the Effective Time, Zions shall use
its reasonable best efforts to cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by Company
(provided that Zions may substitute therefor policies of comparable coverage
with respect to claims arising from facts or events which occurred before the
Effective Time); provided, however, that in no event shall Zions be obligated
to expend, in order to maintain or provide insurance coverage pursuant to this
Section 6.12(c), any amount per annum in excess of 150% of the amount of the
annual premiums paid as of the date hereof by Company for such insurance (the
"Maximum Amount"). If the amount of the annual premiums necessary to maintain
or procure such insurance coverage exceeds the Maximum Amount, Zions shall use
all reasonable efforts to maintain the most advantageous policies of
directors' and officers' insurance obtainable for an annual premium equal to
the Maximum Amount. Notwithstanding the foregoing, prior to the Effective
Time, Zions may request Company to, and Company shall, purchase insurance
coverage, on such terms and conditions as shall be acceptable to Zions,
extending for a period of three years Company's directors' and officers'
liability insurance coverage in effect as of the date hereof (covering past or
future claims with respect to periods before the Effective Time) and such
coverage shall satisfy Zions' obligations under this Subsection (c).
(d) If Zions or any of its successors or assigns (i) shall consolidate with
or merge into any other corporation or entity and shall not be the continuing
or surviving corporation or entity of such consolidation or merger or
(ii) shall transfer all or substantially all of its properties and assets to
any individual, corporation or other entity, then and in each such case,
proper provision shall be made so that the successors and assigns of Zions
shall assume the obligations set forth in this Section 6.12.
6.13 Benefit Plans. Zions shall, from and after the Effective Time, (i)
honor in accordance with their terms all employment or severance agreements
entered into prior to the date hereof and Previously Disclosed and
(ii) provide former employees of Company who remain as employees of Zions with
employee benefit plans no less favorable in the aggregate than those provided
to similarly situated employees of Zions (including the medical and health
benefits available to other similarly situated employees of Zions and coverage
of any pre-existing health or medical conditions covered by Company benefit
plans), subject, with respect to any executive officer of Company, to the
terms of any agreement(s) entered into by or among that executive officer and
Zions and/or Grossmont Bank on the date of this Agreement or otherwise prior
to the Effective Time, specifically modifying, replacing or relinquishing some
or all of his agreements, benefits or plans. If any employee of Company or any
Subsidiary of Company becomes a participant in any employment benefit plan,
practice or policy of the Surviving Corporation, such employee shall be given
credit under such plan, practice or policy for all service prior to the
Effective Date with Company or such Subsidiary of Company for purposes of
eligibility and vesting, but not for benefit accrual purposes, for which such
service is taken into account or recognized, provided that there be no
duplication of such benefits as are provided under any employee benefit plans,
practices, or policies of Company or any Subsidiary of Company that continue
in effect following the Effective Time. In addition, Zions shall roll
Company's existing 401(k) plan into Zions' 401(k) plan.
6.14 Accountants' Letters . Each of Company and Zions shall use its
reasonable best efforts to cause to be delivered to the other party, and to
Zions' directors and officers who sign the Registration Statement, a letter of
their respective independent auditors, dated (i) the date on which the
Registration Statement shall become effective and (ii) a date shortly prior to
the Effective Date, and addressed to such other party, and such directors and
officers, in form and substance customary for "comfort" letters delivered by
independent accountants in accordance with Statement of Accounting Standards
No. 72.
6.15 Notification of Certain Matters. Each of Company and Zions shall give
prompt notice to the other of any fact, event or circumstance known to it that
(i) is reasonably likely, individually or taken together with all other facts,
events and circumstances known to it, to result in any Material Adverse Effect
with respect to it or (ii) would cause or constitute a material breach of any
of its representations, warranties, covenants or agreements contained herein.
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6.16 Stockholder Agreements. The directors and certain officers and
stockholders of Company, in their capacities as stockholders, in exchange for
good and valuable consideration, have executed and delivered to Zions
stockholder agreements substantially in the form of Exhibit B hereto (the
"Stockholder Agreements"), committing such persons, among other things, (i) to
vote their shares of Company Common Stock in favor of the Agreement at the
Company Meeting, (ii) to certain representations concerning the ownership of
Company Common Stock and Zions Common Stock to be received in the Merger and
(iii) certain other matters.
6.17 Directors of Grossmont Bank. Zions agrees to cause Grossmont Bank to
add to the board of directors of Grossmont Bank three individuals from the
Company Board who are reasonably acceptable to Zions.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of Zions and Company to consummate the Merger is
subject to the fulfillment or written waiver by Zions and Company prior to the
Effective Time of each of the following conditions:
(a) Stockholder Approvals. This Agreement and the Merger shall have been
duly adopted by the requisite vote of the stockholders of Company.
(b) Regulatory Approvals. All regulatory approvals required to consummate
the Merger, the Bank Merger and the other transactions contemplated hereby
shall have been obtained and shall remain in full force and effect and all
statutory waiting periods in respect thereof shall have expired and no such
approvals shall contain any conditions, restrictions or requirements which
the Zions Board reasonably determines would (i) following the Effective
Time, have a Material Adverse Effect on the Surviving Corporation and its
Subsidiaries taken as a whole or (ii) reduce the benefits of the
transactions contemplated hereby to such a degree that Zions would not have
entered into this Agreement had such conditions, restrictions or
requirements been known at the date hereof.
(c) No Injunction. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the transactions contemplated by this Agreement.
(d) Registration Statement. The Registration Statement shall have become
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) Blue Sky Approvals. All permits and other authorizations under state
securities laws necessary to consummate the transactions contemplated
hereby and to issue the shares of Zions Common Stock to be issued in the
Merger shall have been received and be in full force and effect.
7.02 Conditions to Obligation of Company. The obligation of Company to
consummate the Merger is also subject to the fulfillment or written waiver by
Company prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Zions set forth in this Agreement (subject to the standard set forth in
Section 5.02) shall be true and correct as of the date of this Agreement
and as of the Effective Date as though made on and as of the Effective Date
(except that representations and warranties that by their terms speak only
as of the date of this Agreement or some other date shall be true and
correct as of such date), and Company shall have received a certificate,
dated the Effective Date, signed on behalf of Zions by the Chief Executive
Officer and the Chief Financial Officer of Zions to such effect.
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(b) Performance of Obligations of Zions. Zions shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Effective Time, and Company shall have
received a certificate, dated the Effective Date, signed on behalf of Zions
by the Chief Executive Officer and the Chief Financial Officer of Zions to
such effect.
(c) Opinion of Company's Accountants. Company shall have received an
opinion of KPMG Peat Marwick LLP, dated the Effective Date, to the effect
that, on the basis of facts, representations and assumptions set forth in
such opinion, (i) the Merger constitutes a "reorganization" within the
meaning of Section 368 of the Code and (ii) no gain or loss will be
recognized by stockholders of Company who receive shares of Zions Common
Stock in exchange for shares of Company Common Stock, except with respect
to cash received in lieu of fractional share interests. In rendering its
opinion, KPMG Peat Marwick LLP may require and rely upon representations
contained in letters from Company, Zions and stockholders of Company.
(d) Accountants' Letters. Company shall have received the letters
referred to in Section 6.14 from Zions' independent auditors.
(e) Rights Plan. No Stock Acquisition Date (as such term is defined in
the Shareholder Protection Rights Plan) shall have occurred under the
Shareholder Protection Rights Plan prior to the Effective Time.
(f) Accounting Treatment. Company shall have received from its
independent auditors, letters, dated the date of or shortly prior to each
of the mailing date of the Proxy Statement and the Effective Date, stating
its opinion that the Merger shall qualify for pooling-of-interests
accounting treatment.
(g) Listing. The shares of Zions Common Stock to be issued in the Merger
shall have been approved for listing on the NASDAQ, subject to official
notice of issuance.
7.03 Conditions to Obligation of Zions. The obligation of Zions to
consummate the Merger is also subject to the fulfillment or written waiver by
Zions prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of
Company set forth in this Agreement (subject to the standard set forth in
Section 5.02) shall be true and correct as of the date of this Agreement
and as of the Effective Date as though made on and as of the Effective Date
(except that representations and warranties that by their terms speak only
as of the date of this Agreement or some other date shall be true and
correct as of such date) and Zions shall have received a certificate, dated
the Effective Date, signed on behalf of Company by the Chief Executive
Officer and the Chief Financial Officer of Company to such effect.
(b) Performance of Obligations of Company. Company shall have performed
in all material respects all obligations required to be performed by it
under this Agreement at or prior to the Effective Time, and Zions shall
have received a certificate, dated the Effective Date, signed on behalf of
Company by the Chief Executive Officer and the Chief Financial Officer of
Company to such effect.
(c) Opinion of Zions' Counsel. Zions shall have received an opinion of
Sullivan & Cromwell, special counsel to Zions, dated the Effective Date, to
the effect that, on the basis of facts, representations and assumptions set
forth in such opinion, the Merger constitutes a reorganization under
Section 368 of the Code. In rendering its opinion, Sullivan & Cromwell may
require and rely upon representations contained in letters from Company,
Zions and stockholders of Company.
(d) Accountants' Letters. Zions shall have received the letters referred
to in Section 6.14 from Company's independent auditors.
(e) Accounting Treatment. Zions shall have received from KPMG Peat
Marwick LLP, Zions' independent auditors, letters, dated the date of or
shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
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ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the Acquisition may
be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of Zions and Company, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b) Breach. At any time prior to the Effective Time, by Zions or Company,
if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event of either: (i) a breach by the
other party of any representation or warranty contained herein (subject to
the standard set forth in Section 5.02), which breach cannot be or has not
been cured within 30 days after the giving of written notice to the
breaching party of such breach; or (ii) a breach by the other party of any
of the covenants or agreements contained herein, which breach cannot be or
has not been cured within 30 days after the giving of written notice to the
breaching party of such breach, provided that such breach (whether under
(i) or (ii)) would be reasonably likely, individually or in the aggregate
with other breaches, to result in a Material Adverse Effect.
(c) Delay. At any time prior to the Effective Time, by Zions or Company,
if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Merger is not
consummated by August 31, 1998, except to the extent that the failure of
the Merger then to be consummated arises out of or results from the knowing
action or inaction of the party seeking to terminate pursuant to this
Section 8.01(c).
(d) No Approval. By Company or Zions, if its Board of Directors so
determines by a vote of a majority of the members of its entire Board, in
the event (i) the approval of any Governmental Authority required for
consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority or (ii) the stockholder approval required by Section
7.01(a) herein is not obtained at the Company Meeting.
(e) Failure to Recommend, Etc. At any time prior to the Company Meeting,
by Zions if the Company Board shall have failed to make its recommendation
referred to in Section 6.02, withdrawn such recommendation or modified or
changed such recommendation in a manner adverse in any respect to the
interests of Zions.
(f) By Zions. By Zions, by written notice to Company, if Company takes,
causes to be taken or allows to be taken any action that would be
prohibited under Section 6.06 hereof; or
(g) By Company. By Company, by written notice to Zions prior to the
approval by the stockholders of Company of the principal terms of this
Agreement, if Company receives an Acquisition Proposal on terms and
conditions which the Company Board determines, after receiving the advice
of its outside counsel, (i) that to proceed with the Merger will violate
the fiduciary duties of the Company Board to Company's shareholders and
(ii) to accept such proposal; provided, however, that Company shall not be
entitled to terminate this Agreement pursuant to this clause (g) unless it
shall have provided Zions with written notice of such a possible
determination (which written notice will inform Zions of the Material terms
and conditions of the proposal, including the identity of the proponent)
two business days prior to such determination.
8.02 Effect of Termination and Abandonment. (a) In the event of termination
of this Agreement and the abandonment of the Merger pursuant to this Article
8, subject to the provisions of Section 8.02(b) and Section 8.02(c), no party
to this Agreement shall have any liability or further obligation to any other
party hereunder except (i) as set forth in Section 9.01 and (ii) that
termination will not relieve a breaching party from liability for any willful
breach of this Agreement giving rise to such termination.
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(b) If this Agreement shall be terminated (i) by Zions pursuant to
Section 8.01(b), Section 8.01(e) or Section 8.01(f) and, at the time of the
occurrence of the circumstance permitting termination pursuant to such
Section, there shall exist an Acquisition Proposal with respect to Company
or any of its Subsidiaries, or (ii) by Company pursuant to Section
8.01(d)(ii) or Section 8.01(g) and, at the time of the occurrence of the
circumstance permitting termination pursuant to such Section, there shall
exist an Acquisition Proposal with respect to Company or any of its
Subsidiaries, then Company shall promptly pay to Zions a termination fee
equal to $1.8 million, which (except in the case of termination pursuant to
Section 8.01(f), in which case such amount shall offset any damages to
Zions to the extent of payment) the parties agree shall represent
liquidated and exclusive damages recoverable by Zions relating to the
actions resulting in termination.
(c) Company and Zions agree that the agreements contained in paragraph
(b) above are an integral part of the transactions contemplated by this
Agreement, that without such agreements Zions would not have entered into
this Agreement, and that such amount constitute reasonable liquidated
damages and reasonable compensation to Zions for the loss sustained thereby
and not a penalty. If Company fails to pay Zions the amount due under
paragraph (b) within three business days of such termination, Company shall
pay the costs and expenses (including legal fees and expenses) incurred by
Zions in connection with any action, including the filing of any lawsuit,
taken to collect payment of such amount, together with interest on the
amount of any such unpaid amount at the publicly announced prime rate of
Zions First National Bank from the date of such termination.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than
Sections 6.12 and 6.13 and this Article IX which shall survive the Effective
Time) or the termination of this Agreement if this Agreement is terminated
prior to the Effective Time (other than Sections 6.03(b), 6.05(b), 8.02, and
this Article IX which shall survive such termination).
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of this
Agreement may be (i) waived by the party benefitted by the provision, or (ii)
amended or modified at any time, by an agreement in writing between the
parties hereto executed in the same manner as this Agreement, except that
after the Company Meeting, this Agreement may not be amended if it would
violate the DGCL or reduce the consideration to be received by Company
stockholders in the Merger.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law; Waiver of Jury Trial. This Agreement shall be governed
by, and interpreted in accordance with, the laws of the State of Delaware
applicable to contracts made and to be performed entirely within such State
(except to the extent that mandatory provisions of Federal law or of the UBCA
are applicable). Each of the parties hereto hereby irrevocably waives any and
all right to trial by jury in any legal proceeding arising out of or related
to this Agreement or the transactions contemplated hereby. Venue for any
action between the parties to this Agreement shall be a court of competent
jurisdiction in the City of San Diego, California.
9.05 Expenses. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby.
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9.06 Notices. All notices, requests and other communications hereunder to a
party shall be in writing and shall be deemed given if personally delivered,
telecopied (with confirmation) or mailed by registered or certified mail
(return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to Company, to:
Tri-Baker Enterprises
613 West Valley Parkway, Suite 315
Escondido, California 92025
Attention: Mark N. Baker
Facsimile: (760) 747-4574
With a copy to:
Higgs, Fletcher & Mack LLP
401 West A Street, Suite 2000
San Diego, California 92101
Attention: Kurt L. Kicklighter, Esq.
Facsimile: (619) 696-1410
If to Zions, to:
Zions Bancorporation
One South Main, Suite 1380
Salt Lake City, Utah 84111
Attention: Dale M. Gibbons
Facsimile: (801) 524-2129
With a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Attention: Stanley F. Farrar
Facsimile: (213) 683-0457
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement
represents the entire understanding of the parties hereto with reference to
the transactions contemplated hereby and thereby and this Agreement supersedes
any and all other oral or written agreements heretofore made. Nothing in this
Agreement expressed or implied, is intended to confer upon any person, other
than the parties hereto or their respective successors, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
9.08 Interpretation; Effect. 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 are not part of this Agreement. Whenever the words
"include," "includes" or "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 Company, Zions or any of their
respective Subsidiaries, affiliates or directors to take any action which
would violate applicable law (whether statutory or common law), rule or
regulation.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
FP BANCORP, INC.
/s/ Mark N. Baker
By: _________________________________
Name: Mark N. Baker
Title: Chairman
ZIONS BANCORPORATION
/s/ Dale M. Gibbons
By: _________________________________
Name: Dale M. Gibbons
Title: Chief Financial Officer
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FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER
First Amendment, dated as of February 27, 1998, to the Agreement and Plan of
Merger, dated as of December 29, 1997 (the "Merger Agreement"), between FP
Bancorp, Inc. ("Company") and Zions Bancorporation ("Zions").
WHEREAS, Company and Zions have agreed to amend the Merger Agreement to make
certain modifications to certain provisions governing employee benefit
matters;
NOW, THEREFORE, the parties hereto agree as follows:
1. Amendment to the Merger Agreement. The last sentence of Section 6.13
of the Merger Agreement, which currently reads "In addition, Zions shall
roll Company's existing 401(k) plan into Zions' 401(k) plan", is hereby
amended to read "In addition, prior to the Effective Time, Company shall
terminate its 401(k) plan, but former employees of Company who remain as
employees of Zions shall be eligible to participate in Zions' 401(k) plan
and may roll over their Company Common Stock and cash distributions
resulting from the termination of Company's 401(k) plan into Zions' 401(k)
plan."
2. Miscellaneous. Except as expressly amended and modified hereby, the
Merger Agreement is reaffirmed and remains in full force and effect. This
Amendment may be executed in several counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, each of the parties hereto have executed this Amendment
on the date first above written.
FP BANCORP, INC.
/s/ Harvey L. Williamson
By: _________________________________
Name: Harvey L. Williamson
Title: President and CEO
ZIONS BANCORPORATION
/s/ Dale Gibbons
By: _________________________________
Name: Dale Gibbons
Title: Chief Financial Officer
<PAGE>
APPENDIX B
- --------------------------------------------------------------
SANDLER O'NEILL & PARTNERS, L.P. Telephone: 212-466-7700
Investment Banking Group 800-635-6855
Two World Trade Center, 104th Floor Facsimile: 212-466-7711
New York, New York 10048
Sandler O'Neill
April , 1998
Board of Directors
FP Bancorp, Inc.
613 W. Valley Parkway
Escondido, CA 92025-4929
Gentlemen:
FP Bancorp, Inc. ("FP Bancorp") and Zions Bancorporation ("Zions") have
entered into an Agreement and Plan of Merger, dated as of December 29, 1997
(the "Agreement"), pursuant to which FP Bancorp will be merged with and into
Zions (the "Merger"). Upon the Effective Time of the Merger (as defined in the
Agreement), each share of FP Bancorp common stock, par value $0.001 per share,
issued and outstanding immediately prior to the Effective Time (the "FP
Bancorp Shares"), other than certain shares specified in the Agreement, will
be converted into the right to receive .627 shares (the "Exchange Ratio") of
Zions common stock, no par value, together with the rights attached thereto
pursuant to the Shareholder Protection Rights Agreement, dated September 27,
1996, between Zions and Zions First National Bank, as rights agent. The terms
and conditions of the Merger are more fully set forth in the Agreement. You
have requested our opinion as to the fairness, from a financial point of view,
of the Exchange Ratio to the holders of the FP Bancorp Shares.
Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other
corporate transactions. In connection with this opinion, we have reviewed,
among other things: (i) the Agreement and exhibits thereto; (ii) the
Stockholders' Agreements, dated as of December 29, 1997, by and between
certain shareholders of FP Bancorp and Zions; (iii) FP Bancorp's audited
consolidated financial statements and management's discussion and analysis of
financial condition and results of operations as contained in its Annual
Report on Form 10-KSB for the years ended December 31, 1996 and 1997,
respectively; (iv) Zions' audited consolidated financial statements and
management's discussion and analysis of financial condition and results of
operations as contained in its Annual Reports on Form 10-K for the years ended
December 31, 1996 and 1997, respectively; (v) FP Bancorp's unaudited
consolidated financial statements and management's discussion and analysis of
financial condition and results of operations contained in its Quarterly
Report on Form 10-QSB for the quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997, respectively; (vi) Zions' unaudited consolidated financial
statements and management's discussion and analysis of financial condition and
results of operations contained in its Quarterly Report on Form 10-Q for the
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997,
respectively; (vii) certain financial analyses and forecasts of FP Bancorp
prepared by and reviewed with management of FP Bancorp and the views of senior
management of FP Bancorp regarding FP Bancorp's past and current business
operations, results thereof, financial condition and future prospects;
(viii) certain financial analyses and forecasts of Zions prepared by and
reviewed with management of Zions and the views of senior management of Zions
regarding Zions' past and current business operations, results thereof,
financial condition and future prospects, including the pro forma condensed
combined financial information of Zions and The Sumitomo Bank of California
contained in the Proxy Statement-Prospectus of FP and Zions relating to the
Merger; (ix) the pro forma impact of the Merger on Zions; (x) the publicly
reported historical price and trading activity for FP Bancorp's and Zions'
common stock, including a comparison of certain financial and stock market
information for FP Bancorp and Zions with similar publicly available
information for certain other companies the securities of which are publicly
traded; (xi) the financial terms of recent business
B-1
<PAGE>
combinations in the banking institution industry, to the extent publicly
available; (xii) the current market environment generally and the banking
environment in particular; and (xiii) such other information, financial
studies, analyses and investigations and financial, economic and market
criteria as we considered relevant.
In performing our review, we have assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information that was publicly available or
otherwise furnished to, reviewed by or discussed with us, and we do not assume
any responsibility or liability for the accuracy or completeness of any such
information. We did not make an independent evaluation or appraisal of the
specific assets, the collateral securing assets or the liabilities of FP
Bancorp or Zions or any of their subsidiaries, or the collectibility of any
such assets, nor have we been furnished with any such evaluations or
appraisals (relying, where relevant, on the analyses and estimates of FP
Bancorp and Zions). With respect to the financial projections reviewed with
management, we have assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the
respective managements of the respective future financial performances of FP
Bancorp and Zions and that such performances will be achieved. We have also
assumed that there has been no material change in FP Bancorp's or Zions'
assets, financial condition, results of operations, business or prospects
since December 31, 1997, the date of the last financial statements noted
above. We have assumed that FP Bancorp and Zions will remain as going concerns
for all periods relevant to our analyses, that all of the representations and
warranties contained in the Agreement and all related agreements are true and
correct, that each party to such agreements will perform all of the covenants
required to be performed by such party under such agreements, that the Merger
will be accounted for as a pooling of interests and that the conditions
precedent in the Agreement are not waived.
Our opinion is necessarily based on financial, economic, market and other
conditions as in effect on, and the information made available to us as of,
the date hereof. Events occurring after the date hereof could materially
affect this opinion. We have not undertaken to update, revise or reaffirm this
opinion or otherwise comment upon events occurring after the date hereof. We
are expressing no opinion herein as to what the value of Zions' common stock
will be when issued to FP Bancorp's shareholders pursuant to the Agreement or
the prices at which FP Bancorp's or Zions' common stock will trade at any
time.
We have acted as FP Bancorp's financial advisor in connection with the
Merger and will receive a fee for our services, a significant portion of which
is contingent upon consummation of the Merger. We have also received a fee for
rendering this opinion. In the past, we have also provided certain other
investment banking services for FP Bancorp and have received compensation for
such services.
In the ordinary course of our business, we may actively trade the debt and
equity securities of FP Bancorp and Zions for our own account and for the
accounts of our customers and, accordingly, may at any time hold a long or
short position in such securities.
Our opinion is directed to the Board of Directors of FP Bancorp in
connection with its consideration of the Merger and does not constitute a
recommendation to any stockholder of FP Bancorp as to how such stockholder
should vote at any meeting of stockholders called to consider and vote upon
the Merger. Our opinion is not to be quoted or referred to, in whole or in
part, in a registration statement, prospectus, proxy statement or in any other
document, nor shall this opinion be used for any other purposes, without
Sandler O'Neill's prior written consent; provided, however, that we hereby
consent to the inclusion of this opinion as an appendix to FP Bancorp's and
Zions' Proxy Statement-Prospectus dated the date hereof.
Based upon and subject to the foregoing, it is our opinion, as of the date
hereof, that the Exchange Ratio is fair, from a financial point of view, to
the holders of FP Bancorp Shares.
Very truly yours,
/s/ Sandler O'Neill & Partners, L.P.
B-2
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Utah law provides for indemnification of directors and officers as follows:
16-10A-902 AUTHORITY TO INDEMNIFY DIRECTORS.
(1) Except as provided in Subsection (4), a corporation may indemnify an
individual made a party to a proceeding because he is or was a director,
against liability incurred in the proceeding if:
(a) his conduct was in good faith; and
(b) he reasonably believed that his conduct was in, or not opposed to,
the corporation's best interests; and
(c) in the case of any criminal proceeding, he had no reasonable cause to
believe his conduct was unlawful.
(2) A director's conduct with respect to any employee benefit plan for a
purpose he reasonably believed to be in or not opposed to the interests of the
participants in and beneficiaries of the plan is conduct that satisfies the
requirement of Subsection (1)(b).
(3) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this section.
(4) A corporation may not indemnify a director under this section:
(a) in connection with a proceeding by or in the right of the corporation
in which the director was adjudged liable to the corporation; or
(b) in connection with any other proceeding charging that the director
derived an improper personal benefit, whether or not involving action in
his official capacity, in which proceeding he was adjudged liable on the
basis that he derived an improper personal benefit.
(5) Indemnification permitted under this section in connection with a
proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
16-10A-903 MANDATORY INDEMNIFICATION OF DIRECTORS.
Unless limited by its articles of incorporation, a corporation shall
indemnify a director who was successful, on the merits or otherwise, in the
defense of any proceeding, or in the defense of any claim, issue, or matter in
the proceeding, to which he was a party because he is or was a director of the
corporation, against reasonable expenses incurred by him in connection with
the proceeding or claim with respect to which he has been successful.
16-10A-907 INDEMNIFICATION OF OFFICERS, EMPLOYEES, FIDUCIARIES AND AGENTS.
Unless a corporation's articles of incorporation provide otherwise:
(1) an officer of the corporation is entitled to mandatory indemnification
under Section 16-10a-903, and is entitled to apply for court-ordered
indemnification under Section 16-10a-905, in each case to the same extent as a
director;
II-1
<PAGE>
(2) the corporation may indemnify and advance expenses to an officer,
employee, fiduciary, or agent of the corporation to the same extent as to a
director; and
(3) a corporation may also indemnify and advance expenses to an officer,
employee, fiduciary, or agent who is not a director to a greater extent, if
not inconsistent with public policy, and if provided for by its articles of
incorporation, bylaws, general or specific action of its board of directors,
or contract.
16-10A-908 INSURANCE.
A corporation may purchase and maintain liability insurance on behalf of
person who is or was a director, officer, employee, fiduciary or agent of the
corporation, or who, while serving as a director, officer, employee, fiduciary
or agent of the corporation, is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee, fiduciary or
agent of another foreign or domestic corporation or other person, or of an
employee benefit plan, against liability asserted against or incurred by him
in that capacity or arising from his status as a director, officer, employee,
fiduciary or agent, whether or not the corporation would have power to
indemnify him against the same liability under Sections 16-10a-902, 16-10a-903
or 16-10a-907. Insurance may be procured from any insurance company designated
by the board of directors, whether the insurance company is formed under the
laws of this state or any other jurisdiction of the United States or
elsewhere, including any insurance company in which the corporation has an
equity or any other interest through stock ownership or otherwise.
16-10A-909 LIMITATIONS OF INDEMNIFICATION OF DIRECTORS.
(1) A provision treating a corporation's indemnification of, or advance for
expenses to, directors that is contained in its articles of incorporation or
bylaws, in a resolution of its shareholders or board of directors, or in a
contract (except an insurance policy) or otherwise, is valid only if and to
the extent the provision is not inconsistent with this part. If the articles
of incorporation limit indemnification or advance of expenses, indemnification
and advance of expenses are valid only to the extent not inconsistent with the
articles of incorporation.
(2) This part does not limit a corporation's power to pay or reimburse
expenses incurred by a director in connection with the director's appearance
as a witness in a proceeding at a time when the director has not been made a
named defendant or respondent to the proceeding.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits. An Exhibit Index, containing a list of all exhibits filed with
this Registration Statement, is included beginning on page II-7.
(b) Financial Statement Schedules. Not applicable.
(c) Report, Opinion or Appraisal. Not applicable.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes as follows:
(1) that, for purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 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.
(2) to deliver or cause to be delivered with the prospectus, to each person
to whom the prospectus is sent or given, the latest annual report to security
holders that is incorporated by reference in the prospectus and furnished
pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Securities Exchange
II-2
<PAGE>
Act of 1934; and, where interim financial information required to be presented
by Article 3 of Regulation S-X is not set forth in the prospectus, to deliver,
or cause to be delivered to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
(3) that prior to any public reoffering of the securities registered
hereunder through the 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), 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.
(4) that every prospectus (i) that is filed pursuant to paragraph (3)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act of 1933, as amended, 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 of 1933, 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.
(5) that insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 20
above, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the 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 Act and will be governed by the final adjudication
of such issue.
(6) to respond to requests for information that is incorporated by reference
into the Proxy Statement-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.
(7) 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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Salt Lake City, Utah, on the 20th
day of April, 1998.
ZIONS BANCORPORATION
/s/ Harris H. Simmons
By: _________________________________
Harris H. Simmons,
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Harris H. Simmons, Roy W. Simmons, and Dale M.
Gibbons, and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or either
of them, or their or his substitutes, may lawfully do or cause to be done by
virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ Harris H. Simmons President, Chief Executive April 20, 1998
____________________________________ Officer and Director
Harris H. Simmons
/s/ Dale M. Gibbons Executive Vice President and April 20, 1998
____________________________________ Chief Financial Officer
Dale M. Gibbons
/s/ Walter E. Kelly Controller April 20, 1998
____________________________________
Walter E. Kelly
/s/ Roy W. Simmons Director April 20, 1998
____________________________________
Roy W. Simmons
/s/ Jerry C. Atkin Director April 20, 1998
____________________________________
Jerry C. Atkin
/s/ R.D. Cash Director April 20, 1998
____________________________________
R.D. Cash
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ L.E. Simmons Director April 20, 1998
____________________________________
L.E. Simmons
/s/ Grant R. Caldwell Director April 20, 1998
____________________________________
Grant R. Caldwell
/s/ I.J. Wagner Director April 20, 1998
____________________________________
I.J. Wagner
/s/ Roger B. Porter Director April 20, 1998
____________________________________
Roger B. Porter
/s/ Dale W. Westergard Director April 20, 1998
____________________________________
Dale W. Westergard
/s/ Richard H. Madsen Director April 20, 1998
____________________________________
Richard H. Madsen
/s/ Robert G. Sarver Director April 20, 1998
____________________________________
Robert G. Sarver
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
(Pursuant to Item 601 of Regulation S-K)
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION AND METHOD OF FILING
------- --------------------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of December 29, 1998, between
Zions Bancorporation and FP Bancorp, Inc. (as amended by the First
Amendment to Agreement and Plan of Merger, dated as of February 27,
1998, between Zions Bancorporation and FP Bancorp, Inc.) (included as
Appendix A to the Proxy Statement-Prospectus and incorporated by
reference herein)
3.1 Restated Articles of Incorporation of Zions Bancorporation dated
November 8, 1993, and filed with the Department of Business
Regulation, Division of Corporations of the State of Utah on
November 9, 1993 (incorporated by reference to Exhibit 3.1 to the
Registrant's Form S-4 Registration Statement, File No. 33-51145, filed
on November 22, 1993)
3.2 Articles of Amendment to the Restated Articles of Incorporation of
Zions Bancorporation dated April 30, 1997 and filed with the
Department of Business Regulation, Division of Corporations of the
State of Utah on May 2, 1997 (incorporated by reference to Exhibit 3.1
of Zions Bancorporation's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, File No. 0-2610)
3.3 Restated Bylaws of Zions Bancorporation, dated November 8, 1993
(incorporated by reference to Exhibit 3.2 to the Registrant's Form S-4
Registration Statement, File No. 33-51145, filed November 22, 1993)
4.1 Shareholder Protection Rights Agreement, dated as of September 27,
1996, between Zions Bancorporation and Zions First National Bank
(incorporated by reference to Exhibit 4 to the Registrant's Form 8-K,
filed October 12, 1996)
5.1 Opinion of Sullivan & Cromwell regarding the validity of the shares of
Zions Common Stock being registered (filed herewith)
5.2 Opinion of Callister, Nebeker & McCullough, a Professional
Corporation, regarding the validity of the shares of Zions Common
Stock being registered (filed herewith)
8.1 Opinion of Sullivan & Cromwell regarding tax matters (filed herewith)
8.2 Opinion of KPMG Peat Marwick LLP regarding tax matters (filed herewith)
23.1 Consent of KPMG Peat Marwick LLP, independent certified public
accountants for Zions Bancorporation (filed herewith)
23.2 Consent of KPMG Peat Marwick LLP, independent certified public
accountants for FP Bancorp, Inc. (filed herewith)
23.3 Consent of Arthur Andersen LLP, independent certified public
accountants for The Sumitomo Bank of California (filed herewith)
23.4 Consent of Sullivan & Cromwell (contained in their opinions filed as
Exhibits 5.1 and 8.1)
23.5 Consent of Callister, Nebeker & McCullough, a Professional Corporation
(contained in their opinion filed as Exhibit 5.2)
23.6 Consent of Sandler O'Neill & Partners, L.P. (filed herewith)
24.1 Power of Attorney (set forth on Page II-4 of the Registration
Statement)
99.1 Form of Proxy of FP Bancorp, Inc. (filed herewith)
</TABLE>
<PAGE>
EXHIBIT 5.1
SULLIVAN & CROMWELL LETTERHEAD
April 20, 1998
Zions Bancorporation,
One South Main, Suite 1380,
Salt Lake City, Utah 84111.
Dear Sirs:
In connection with the registration under the Securities Act of 1933 (the
"Act") of 2,058,531 shares (the "Securities") of Common Stock, without par
value, of Zions Bancorporation, a Utah corporation (the "Company"), we, as your
counsel, have examined such corporate records, certificates and other documents,
and such questions of law, as we have considered necessary or appropriate for
the purposes of this opinion. Upon the basis of such examination, we advise you
that, in our opinion, when the registration statement relating to the Securities
(the "Registration Statement") has become effective under the Act, the terms of
the sale of the Securities have been duly established in conformity with the
Company's articles of incorporation, and the Securities have been duly issued as
<PAGE>
Zions Bancorporation -2-
contemplated by the Registration Statement and the merger of FP Bancorp, Inc., a
Delaware corporation, with and into the Company has been consummated, the
Securities will be validly issued, fully paid and nonassessable.
The foregoing opinion is limited to the Federal laws of the United States
and the laws of the State of Utah, and we are expressing no opinion as to the
effect of the laws of any other jurisdiction. With respect to all matters of
Utah law, we have relied upon the opinion, dated April 20, 1998, of Callister
Nebeker & McCullough, a Professional Corporation, and our opinion is subject to
the same assumptions, qualifications and limitations with respect to such
matters as are contained in such opinion of Callister Nebeker & McCullough, a
Professional Corporation.
Also, we have relied as to certain matters on information obtained from
public officials, officers of the Company and other sources believed by us to be
responsible.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Validity of
Securities"
<PAGE>
Zions Bancorporation -3-
in the Prospectus. In giving such consent, we do not thereby admit that we are
in the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ Sullivan & Cromwell
<PAGE>
Exhibit 5.2
LETTERHEAD OF CALLISTER NEBEKER & McCULLOUGH
20 April 1998
VIA FEDERAL EXPRESS
- -------------------
Zions Bancorporation
One South Main Street, Suite 1380
Salt Lake City, Utah 84111
Ladies and Gentlemen:
We have acted as special Utah counsel to Zions Bancorporation, a Utah
corporation (the "COMPANY"), in providing this opinion with respect to the
registration under the Securities Act of 1933 (the "ACT") of 2,058,531 shares
(the "SHARES") of the Company's Common Stock, no par value. This opinion is
being delivered to you pursuant to your request.
In connection with this representation, we have examined the original, or
copies identified to our satisfaction, of such minutes, agreements, corporate
records and filings and other documents necessary to or appropriate for our
opinion contained in this letter (the "TRANSACTION DOCUMENTS"). We have also
relied as to certain matters of fact upon representations made to us by public
officials, officers and agents of the Company, and other sources we believe to
be responsible.
Based upon and in reliance on the foregoing, it is our opinion that the
Shares will be, when issued in accordance with the Transaction Documents
including the registration statement relating to the Shares (the "REGISTRATION
STATEMENT"), duly and validly issued and fully paid and nonassessable under the
Utah Revised Business Corporation Act, and the shareholders of the Company have
no pre-emptive right to acquire additional shares in respect of the Shares.
Although we have reviewed the Transaction Documents, and have made such
inquiries as we deem appropriate under the circumstances, we have not verified
independently the existence or absence of all of the facts set forth in each
such Transaction Document.
Our opinion, as set forth herein, is subject to the following further
qualifications:
A. This opinion speaks only as of its date and you understand that this firm
has no
<PAGE>
Zions Bancorporation Page 2
obligation to advise you of any changes of law or fact that occur after the date
of this opinion, even if the change may affect the legal analysis, a legal
conclusion or any informational confirmation in this opinion.
B. Members of our firm are admitted to the Bar in the State of Utah. This
opinion is limited to the laws of the State of Utah (excluding the securities
laws of the State of Utah), and we have not been asked to address nor have we
addressed or expressed an opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinion
is rendered only with respect to Utah laws and the rules, regulations and orders
thereunder that are currently in effect.
We consent to Sullivan & Cromwell's relying as to matters of Utah law upon
this opinion in connection with the opinion to be rendered by them pursuant to
the Registration Statement. We also hereby consent to the filing of this
opinion as an exhibit to the Registration Statement. In giving such consent, we
do not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Act.
This opinion is furnished to you solely for your benefit in connection with
the closing of the transactions contemplated by the Registration Statement, may
not be relied upon by any other person, and is not to be used, circulated,
quoted or otherwise referred to for any other purpose without our express prior
written permission.
Very truly yours,
/s/ CALLISTER NEBEKER & McCULLOUGH
CALLISTER NEBEKER & McCULLOUGH
A Professional Corporation
cc: Dale M. Gibbons
Stanley F. Farrar, Esq. (via Federal Express)
Albert Y. Liu, Esq. (via Federal Express)
Louis H. Callister, Esq.
<PAGE>
EXHIBIT 8.1
SULLIVAN & CROMWELL LETTERHEAD
April 20, 1998
Zions Bancorporation,
One South Main,
Suite 1380,
Salt Lake City, Utah 84111.
Dear Sirs:
We have acted as special U.S. tax counsel to Zions Bancorporation
("Zions") in connection with the Registration Statement on Form S-4 of Zions
filed with the Securities and Exchange Commission on April 20, 1998 (the
"Registration Statement") and hereby confirm to you our opinion as set forth
under the heading "Certain Federal Income Tax Consequences" in the Prospectus
included in the Registration Statement.
We hereby consent to the filing with the Securities and Exchange
Commission of this letter as an exhibit to the Registration Statement and the
reference to us under the heading "Certain Federal Income Tax Consequences". In
giving such consent, we do not thereby admit that we are within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,
/s/ Sullivan & Cromwell
<PAGE>
[LETTERHEAD OF KPMG PEAT MARWICK LLP]
EXHIBIT 8.2
April 20, 1998
The Board of Directors
FP Bancorp, Inc.
613 West Valley Parkway
Escondido, California 92025
Members of the Board of Directors:
You have requested our opinion as to certain federal and California income tax
consequences of the merger (the "Merger") of FP Bancorp, Inc. ("FP") into Zions
Bancorporation ("Zions"). Specifically, you have asked KPMG Peat Marwick LLP
(KPMG) to opine that the Merger should be treated as a nontaxable reorganization
within the meaning of section 368(a) of the Internal Revenue Code of 1986 ("IRC"
or the "Code"), as amended. Further, you have requested us to opine that, other
than for the cash received in exchange for fractional shares, no taxable gain or
loss should be recognized by FP or the shareholders of FP upon receipt of Zions
Common Stock solely in exchange for their FP Stock pursuant to the Merger.
You have submitted for our consideration certain representations as to the
proposed transaction and a copy of the Agreement and Plan of Merger dated as of
December 29, 1997. Capitalized terms not otherwise defined herein are intended
to have the same meaning as used in the Agreement and Plan of Merger. Our
opinion is based on the facts and representations set forth by management in the
Letter of Representation dated March 2, 1998. Our opinion is also based on
existing tax law and authorities that are subject to change. We have not
reviewed the legal documents necessary to effectuate the steps to be undertaken,
and we assume that all steps will be effectuated under state and federal law and
will be consistent with the documentation submitted to us.
FACTS
- -----
FP, a Delaware corporation, is a registered bank holding company headquartered
in Escondido, California. FP wholly owns First Pacific National Bank (FPNB), a
federally chartered bank subsidiary also headquartered in Escondido, California.
FP and FPNB file a consolidated federal income tax return. FP's authorized
capital stock consists of one class of voting common stock (see Agreement and
Plan of Merger dated December 27, 1997 Section 5.03(b)).
<PAGE>
FP Bancorp, Inc.
April 20, 1998
Page 2
Zions, a Utah corporation, is a registered bank holding company headquartered in
Salt Lake City, Utah. Zions' authorized capital stock consists of one class of
voting common stock and one class of authorized, but unissued, preferred stock
(see Agreement and Plan of Merger Section 5.04(b)).
For valid business purposes and pursuant to the Agreement and Plan of Merger, FP
will merge under applicable state or federal law with and into Zions, and Zions
will be the surviving entity. Each share of FP Stock will be converted into a
number of newly issued shares of Zions Common Stock based on the Exchange Ratio
(see Agreement and Plan of Merger Section 3.01(a)). The Exchange Ratio was
determined to be fair to the FP shareholders, from a financial point of view, as
opined by Sandler O'Neill & Partners, L.P. (see Agreement and Plan Merger
Section 5.03(e)).
Shareholders of FP will not have appraisal rights pursuant to Delaware General
Corporations Law ("DGCL") (S)262(b)(1) in connection with the Merger (see
Agreement and Plan of Merger Section 5.03(o)). The consideration to be received
by the FP shareholders in connection with the Merger will satisfy the
requirements of DGCL (S)262(b)(2) (see Agreement and Plan of Merger Section
5.04(k)).
No fractional shares of Zions Common Stock will be issued in connection with the
Merger. Cash will be paid in lieu of fractional shares in an amount equal to the
product of (a) the fraction of a share of Zions Common Stock which would have
been issuable, were fractional shares to be issued, multiplied by (b) the
average of the closing prices of Zions Common Stock as reported on NASDAQ for
the five NASDAQ trading days immediately preceding the Effective Date (see
Agreement and Plan of Merger Section 3.03).
The Merger is subject to the receipt of regulatory approval from appropriate
parties, including the Federal Reserve Board, the Federal Deposit Insurance
Corporation (FDIC) and the Commissioner of the Commissioner of the California
Department of Financial Institutions (see Securities and Exchange Commission
Form S-4 Registration Statement, pgs. 11 and 31).
Options for FP Common Stock (FP Options) are currently outstanding. As part of
the Reorganization, each outstanding option to purchase shares of FP Common
Stock, whether vested or unvested, shall be converted into an option (a
Replacement Option) to acquire the number of Zions Common Stock equal to (1) the
number of shares of FP Common Stock subject to the FP Option, multiplied by (2)
the Exchange Ratio. The exercise price of the Replacement Option shall equal
(a) the aggregate exercise price for
<PAGE>
FP Bancorp, Inc.
April 20, 1998
Page 3
the FP Common Stock purchasable pursuant the FP Options, divided by (b) the
number of full shares of Zions Common Stock subject to the Replacement Option
(see Agreement and Plan of Merger Section 3.06).
REPRESENTATIONS
- ---------------
In addition to the facts set forth above, FP makes the following
representations:
1. The fair market value of Zions Common Stock received by the shareholders
of FP will be approximately equal to the fair market value of FP Stock
surrendered in the Merger.
2. There is no plan or intention by the shareholders of FP to sell,
exchange, or otherwise dispose of any of the Zions Common Stock received
in the Merger.
3. Immediately after the merger, FP shareholders will not own 50% or more of
Zions voting stock, nor will they own 50% or more of the fair market
value of all Zions stock issued and outstanding.
4. Neither Zions nor any of its affiliates has a plan or intention to
reacquire any of the Zions Common Stock issued in the Merger.
5. Zions has no plan or intention to sell or otherwise dispose of any of the
assets of FP acquired in the Merger, except for dispositions made in the
ordinary course of business, transfers described in IRC (S)368(a)(2)(C),
or an exchange of FPNB stock for stock of a subsidiary of Zions pursuant
to a merger of FPNB into such subsidiary made pursuant to a
reorganization that qualifies as a reorganization within the meaning of
section 368 of the Code.
6. The liabilities of FP assumed by Zions and the liabilities to which the
transferred assets of FP are subject were incurred by FP in the ordinary
course of its business.
7. Following the Reorganization, Zions will continue the historical business
conducted by FP and will indirectly continue to conduct the historical
business of FPNB that FP conducted indirectly before the Merger.
8. FP, Zions, and the shareholders of FP will pay their respective expenses,
if any, incurred in connection with the Merger.
<PAGE>
FP Bancorp, Inc.
April 20, 1998
Page 4
9. There is no intercorporate indebtedness existing between FP and Zions
that was issued, acquired, or will be settled at a discount.
10. No two parties to the Merger are investment companies as defined in
section 368(a)(2)(F)(iii) and (iv) of the Code.
11. FP is not the subject of a proceeding or action in a Title 11 or similar
case within the meaning of section 368(a)(3)(A) of the Code.
12. The fair market value of FP's assets transferred to Zions will equal or
exceed the sum of the liabilities, if any, assumed by Zions, plus the
amount of liabilities, if any, to which the transferred assets are
subject.
13. The payment of cash in lieu of fractional shares of Zions Common Stock is
solely for the purpose of avoiding the expense and inconvenience to Zions
of issuing fractional shares and does not represent separately bargained-
for consideration. The total cash consideration that will be paid in the
transaction to the FP shareholders instead of issuing fractional shares
of Zions Common Stock will not exceed one percent of the total
consideration that will be issued in the transaction to the FP
shareholders in exchange for their shares of FP stock. The fractional
share interests of each FP shareholder will be aggregated, and no FP
shareholder will receive cash in an amount equal to or greater than the
value of one full share of Zions Common Stock.
14. None of the compensation received by any shareholder-employees of FP will
be separate consideration for, or allocable to, any of their shares of FP
Stock; none of the shares of Zions Common Stock received by any
shareholder-employee of FP will be separate consideration for, or
allocable to, any employment agreement; and the compensation to be paid
to any shareholder-employee of FP will be for services actually rendered
either prior to or following the Merger and will be commensurate with
amounts paid to third parties bargaining at arms-length for similar
services.
15. The Zions Options are being issued solely in exchange for FP Options and
do not represent additional consideration for FP Stock surrendered in the
Merger.
OPINION
- -------
Based solely on the above facts and representations, with respect to the federal
and California income tax consequences of the Merger, it is our opinion that:
<PAGE>
FP Bancorp, Inc.
April 20, 1998
Page 5
(a) Provided that the merger of FP with and into Zions qualifies, as
contemplated by the Plan, as a statutory merger under applicable federal or
state law, the Merger will constitute a reorganization within the meaning
of IRC (S)368(a)(1)(A).
(b) FP and Zions each will be a party to the reorganization within the meaning
of IRC (S)368(b).
(c) No taxable gain or loss will be recognized by FP upon the transfer of its
assets, subject to its liabilities, to Zions in the Merger.
(d) No taxable gain or loss will be recognized by Zions upon Zions' receipt of
the assets of FP, subject to FP's liabilities, in the Merger.
(e) No taxable gain or loss will be recognized by the shareholders of FP upon
receipt of Zions Common Stock solely in exchange for their FP Stock.
(f) The basis of the assets of Zions received by FP following the
Reorganization will be the same as the basis of such assets in the hands of
FP immediately prior to the Merger.
(g) The holding period of the assets of FP in the hands of Zions will include
the period during which such assets were held by FP immediately prior to
the Merger.
(h) The basis of the Zions Common Stock to be received by the shareholders of
FP will be the same as the basis in the FP Stock surrendered in the
exchange.
(i) The holding period of the Zions Common Stock received by the FP
shareholders will include the holding period of the FP Stock prior to the
exchange, provided that the FP Stock is held as a capital asset in the
hands of the FP shareholders on the date of the exchange.
(j) The payment of cash in lieu of fractional share interests of Zions Common
Stock will be treated as if the fractional shares of Zions Common Stock
were distributed as part of the exchange to FP shareholders and then
redeemed by Zions. The cash payments will be treated as having been
received as
<PAGE>
FP Bancorp, Inc.
April 20, 1998
Page 6
distributions in full payment in exchange for the stock redeemed as
provided in IRS (S)302(a).
(k) The tax attributes of FP enumerated in IRC (S)381(c), including any
earnings and profits or a deficit of earnings and profits, will be taken
into account by Zions following the Merger.
No opinion is expressed regarding the FP tax attributes inherited by Zions as a
result of the Merger. In addition, no opinion is to be expressed regarding any
tax consequences associated with the exchange of FP Warrants of Zions Warrants.
The opinions expressed above are rendered only with respect to the specific
matters discussed therein, and we express no opinion with respect to other
federal, state or local income tax or legal aspect of the transaction. We based
our opinion on the facts, representations and assumptions that you submitted and
did not independently verify this information. Inaccuracy or incompleteness of
the information you provided could have a material effect on our opinion. In
rendering our opinion, we are relying upon the applicable provisions of the
Internal Revenue Code of 1986, as amended, the regulations thereunder, and
judicial and administrative interpretations thereof, which are subject to change
or modification by subsequent legislative, regulatory, administrative, or
judicial decisions. Any such changes could also have an effect on the validity
of our opinion. The opinions contained herein are not binding upon the Internal
Revenue Service, any other tax authority or any court, and no assurance can be
given that a position contrary to that expressed herein will not be asserted by
a tax authority and ultimately sustained by a court. Unless you specifically
request otherwise, we will not update our opinion for subsequent changes or
modifications to the law and regulations, or to the judicial and administrative
interpretations thereof.
Very truly yours,
KPMG Peat Marwick LLP
/s/ Ronald W. Prins
Ronald W. Prins
Partner
RWP:tw
<PAGE>
EXHIBIT 23.1
Consent of Independent Public Accountants
The Board of Directors
Zions Bancorporation:
We consent to the use of our report dated January 26, 1998, with respect to the
consolidated financial statements of Zions Bancorporation and Subsidiaries as of
December 31, 1997 and 1996, and for each of the years in the three-year period
ended December 31, 1997 incorporated herein by reference, and to the reference
to our firm under the heading "Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Salt Lake City, Utah
April 20, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
FP Bancorp, Inc.
We consent to the incorporation by reference in the registration statement on
Form S-4 of Zions Bancorporation of our report dated January 20, 1998, relating
to the consolidated balance sheets of FP Bancorp, Inc. and subsidiary as of
December 31, 1997 and 1996, and the related consolidated statements of earnings,
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1997, which report appears in the December 31, 1997
annual report on Form 10-KSB of FP Bancorp, Inc., and to the reference to our
firm under the headings "Experts," "Selected Financial Information" and "Certain
Federal Income Tax Consequences" in the registration statement.
/s/ KPMG PEAT MARWICK LLP
San Diego, California
April 20, 1998
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference in this S-4 Registration Statement of Zions Bancorporation of our
report dated January 16, 1998 on Sumitomo Bank of California's 1997 financial
statements included in Zions Bancorporation's previously file Form 8-K (filed
April 15, 1998) and to all references to our firm included in this Registration
Statement.
/s/ Arthur Andersen LLP
San Francisco, California
April 14, 1998
<PAGE>
EXHIBIT 23.6
Sandler O'Neill
CONSENT OF SANDLER O'NEILL & PARTNERS, L.P.
We hereby consent to the inclusion of our opinion letter to the Board of
Directors of FP Bancorp, Inc. (the "Company") as Appendix B to the Proxy
Statement-Prospectus relating to the proposed merger of the Company with and
into Zions Bancorporation contained in the Registration Statement on Form S-4
dated the date hereof, and to the references to our firm and such opinion in
such Joint Proxy Statement-Prospectus. In giving such consent, we do not admit
that we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended (the "Act"), or the rules
and regulations of the Securities and Exchange Commission thereunder (the
"Regulations"), nor do we admit that we are experts with respect to any part of
such Registration Statement within the meaning of the term "experts" as used in
the Act or the Regulations.
/s/ Sandler O'Neill & Partners, L.P.
April __, 1998
<PAGE>
EXHIBIT 99.1
PROXY COMMON STOCK
FP BANCORP, INC.
613 West Valley Parkway
Escondido, California 92025-4929
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FP BANCORP,
INC. FOR THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 22, 1998.
The undersigned hereby constitutes and appoints Mark N. Baker and Harvey L.
Williamson or either of them, with full power of substitution, attorneys and
proxies of the undersigned, to represent the undersigned and vote all shares of
the common stock of FP Bancorp, Inc. ("FP") which the undersigned would be
entitled to vote if personally present at FP's Special Meeting of Stockholders
to be held at the California Center for the Arts, Escondido, located at 340
North Escondido Boulevard, Escondido, California, on May 22, 1998 at 10:00
a.m., local time, and at any postponement or adjournment thereof, in the
following manner:
1. APPROVAL OF THE MERGER
[_] FOR [_] AGAINST [_] ABSTAIN
Other Matters. The proxies are authorized to vote upon such other business as
may properly come before the Special Meeting, or at any postponement or
adjournment thereof.
THE BOARD OF DIRECTORS OF FP RECOMMENDS THAT YOU VOTE FOR APPROVAL OF ITEM 1.
(continued on reverse side)
WHEN THIS PROXY IS PROPERLY EXECUTED AND RETURNED, THE SHARES IT REPRESENTS
WILL BE VOTED AT THE MEETING IN ACCORDANCE WITH THE CHOICES SPECIFIED ABOVE. IF
NO CHOICES ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSAL ONE. THE PROXY
WILL BE VOTED IN ACCORDANCE WITH THE BEST JUDGMENT OF THE DESIGNATED
INDIVIDUALS WITH RESPECT TO MATTERS INCIDENT TO THE CONDUCT OF THE MEETING AND
ANY OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY
POSTPONEMENT OR ADJOURNMENT THEREOF.
Please date and sign exactly as your name or names appear hereon. If more
than one owner exists, all should sign. When signing as attorney, executor,
administrator, trustee or guardian, give your full title as such. If the
signatory is a corporation or partnership, sign the full corporate or
partnership name by a duly authorized officer or partner.
Dated: ___________________, 1998
--------------------------------
Signature
--------------------------------
Signature
--------------------------------
Type or Print
PLEASE PROMPTLY COMPLETE, DATE, SIGN AND RETURN THIS PROXY CARD USING THE
ENCLOSED ENVELOPE
