SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
April 3, 1998 (March 25, 1998)
------------------------------
Date of Report (Date of Earliest Event Reported)
ZIONS BANCORPORATION
--------------------
(Exact Name of Registrant As Specified In Its Charter)
UTAH
(State or Other Jurisdiction of Incorporation)
0-2610 87-0227400
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(Commission File Number) (IRS Employer Identification No.)
One South Main, Suite 1380
Salt Lake City, Utah 84111
--------------------------------
(Address of Principal Executive Offices)(Zip Code)
(801) 524-4787
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(Registrant's Telephone Number, including Area Code)
-------------------------------------------------------------
(Former Name or Former Address, If Changed Since Last Report)
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Item 5. Other Events.
On March 25, 1998, Zions Bancorporation ("Zions") entered into an
Agreement and Plan of Merger (the "Merger Agreement"), by and among Zions, SBC
Acquisition Corp. ("SBC") and Sumitomo Bank of California ("Sumitomo"), pursuant
to which SBC, an indirect wholly owned subsidiary of Zions, will merge with and
into Sumitomo (the "Merger"). The Merger Agreement and the joint press release
issued March 25, 1998 by Zions and Sumitomo regarding the Merger appear as
exhibits to this report and are incorporated herein by reference. The foregoing
summary is qualified in its entirety by reference to such documents.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits
The following exhibits are filed with this Current Report on Form 8-K:
Exhibit
Number Description
- ------- -----------
2 Agreement and Plan of Merger, dated as of March 25, 1998, by and
among Zions Bancorporation, SBC Acquisition Corp. and Sumitomo
Bank of California.
99 Joint Press Release, dated March 25, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunder duly authorized.
Dated: April 3, 1998
ZIONS BANCORPORATION
By: /s/ Dale M. Gibbons
-----------------------------------
Name: Dale M. Gibbons
Title: Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
2 Agreement and Plan of Merger, dated as of March 25, 1998, by and
among Zions Bancorporation, SBC Acquisition Corp. and Sumitomo
Bank of California.
99 Joint Press Release, dated March 25, 1998.
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AGREEMENT AND PLAN OF MERGER
By and Among
ZIONS BANCORPORATION,
SBC ACQUISITION CORP.
and
SUMITOMO BANK OF CALIFORNIA
Dated as of March 25, 1998
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Page
TABLE OF CONTENTS
ARTICLE I
THE MERGER
1.1. The Merger..............................................................1
1.2. Effective Time..........................................................2
1.3. Effects of the Merger...................................................2
1.4. Conversion of Company Common Stock......................................2
1.5. Merger Sub Common Stock.................................................4
1.6. Articles of Incorporation...............................................4
1.7. By-Laws.................................................................4
1.8. Directors and Officers..................................................4
ARTICLE II
EXCHANGE OF SHARES
2.1. Buyer to Make Cash Available............................................5
2.2. Exchange of Shares......................................................5
2.3. Payment to Majority Stockholder.........................................7
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1. Disclosure Schedules....................................................7
3.2. Representations and Warranties of the
Company ................................................................7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1. Corporate Organization..................................................8
4.2. Capitalization..........................................................9
4.3. Authority; No Violation................................................11
4.4. Consents and Approvals.................................................12
4.5. Reports................................................................13
4.6. Financial Statements...................................................13
4.7. Broker's Fees..........................................................14
4.8. Absence of Certain Changes or Events...................................14
4.9. Legal Proceedings......................................................15
4.10. Taxes..................................................................15
4.11. Employees..............................................................17
4.12. FDIC Reports...........................................................19
4.13. Company Information....................................................19
4.14. Compliance with Applicable Law.........................................20
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4.15. Certain Contracts......................................................20
4.16. Agreements with Regulatory Agencies....................................21
4.17. Administration of Fiduciary Accounts...................................21
4.18. Environmental Matters..................................................22
4.19. Opinion................................................................23
4.20. Approvals..............................................................23
4.21. Loan Portfolio.........................................................23
4.22. Risk Management Instruments............................................24
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER
5.1. Corporate Organization.................................................25
5.2. Authority; No Violation................................................26
5.3. Consents and Approvals.................................................27
5.4. Broker's Fees..........................................................27
5.5. Access to Funds........................................................27
5.6. Approvals..............................................................28
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1. Covenants of the Company...............................................28
6.2. Covenants of Buyer.....................................................32
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Regulatory Matters.....................................................33
7.2. Access to Information..................................................34
7.3. Stockholder Meeting....................................................35
7.4. Legal Conditions to Merger.............................................35
7.5. Employees; Employee Benefit Plans......................................36
7.6. Indemnification........................................................37
7.7. Additional Agreements..................................................39
7.8. Redemption of Outstanding Securities...................................40
7.9. Name Change/Use of Name................................................40
7.10. Pro-Rata Dividend......................................................41
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation
To Effect the Merger...................................................41
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8.2. Conditions to Obligations of Buyer and
Merger Sub.............................................................42
8.3. Conditions to Obligations of the Company...............................43
ARTICLE IX
TERMINATION AND AMENDMENT
9.1. Termination............................................................44
9.2. Effect of Termination..................................................46
9.3. Amendment..............................................................46
9.4. Extension; Waiver......................................................47
ARTICLE X
GENERAL PROVISIONS
10.1. Closing................................................................47
10.2. Nonsurvival of Representations, Warranties and Agreements..............47
10.3. Expenses...............................................................48
10.4. Notices................................................................48
10.5. Interpretation.........................................................49
10.6. Counterparts...........................................................50
10.7. Entire Agreement.......................................................50
10.8. Governing Law..........................................................50
10.9. Enforcement of Agreement...............................................50
10.10. Severability...........................................................50
10.11. Publicity..............................................................51
10.12. Assignment; No Third Party Beneficiaries...............................51
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 25, 1998, by and among
Zions Bancorporation, a Utah corporation ("Buyer"), SBC Acquisition Corp., a
California corporation and an indirect wholly owned subsidiary of Buyer ("Merger
Sub"), and Sumitomo Bank of California, a banking corporation organized under
the laws of the State of California (the "Company"). (Merger Sub and the Company
are sometimes collectively referred to herein as the "Constituent
Corporations".)
WHEREAS, the Boards of Directors of Buyer, Merger Sub and the Company
have determined that it is in the best interests of their respective companies
and their stockholders to consummate the business combination transaction
provided for herein in which Merger Sub will, subject to the terms and
conditions set forth herein, merge (the "Merger") with the Company; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Subject to the terms and conditions of this Agreement,
in accordance with the applicable provisions of the California Financial Code
(the "CFC") and the California General Corporation Law (the "CGCL") at the
Effective Time (as defined in Section 1.2 hereof), Merger Sub shall merge with
the Company. The Company shall be the surviving company (hereinafter sometimes
called the "Surviving Bank") in the Merger, and shall continue its corporate
existence under the laws of California. The name of the Surviving Bank shall be
a name to be designated by Buyer, but which name shall not
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include the name "Sumitomo". Upon consummation of the Merger, the separate
corporate existence of Merger Sub shall terminate.
1.2. Effective Time. The Merger shall become effective upon the filing
of the agreement of merger in accordance with Section 1103 of the CGCL on the
Closing Date (as defined in Section 10.1 hereof). The term "Effective Time"
shall be the date and time when the Merger becomes effective, as set forth in
the agreement of merger.
1.3. Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in Section 4903 of the CFC and Section 1107 of
the CGCL.
1.4. Conversion of Company Common Stock.
The aggregate purchase price to be paid by or on behalf of Buyer for all of the
outstanding shares of the common stock, par value $5.00 per share, of the
Company (the "Company Common Stock"), is approximately $545,706,913, payable as
follows:
(a) At the Effective Time, each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time (other than (x)
Dissenting Shares (as defined herein), (y) and other than shares of Company
Common Stock held directly or indirectly by Buyer or the Company or any of their
respective Subsidiaries (as defined below) (except for Trust Account Shares and
DPC shares, as such terms are defined in Section 1.4(b) hereof) and (z) the
Parent Shares (as defined herein)) shall, by virtue of this Agreement and
without any action on the part of the holder thereof, be converted into the
right to receive $38.25 in cash, without interest (the "Public Merger
Consideration"). At the Effective Time, each Parent Share shall, by virtue of
this Agreement and without any action on the part of the holder thereof, be
converted into the right to receive $32.36 in cash, without interest (the
"Parent Merger Consideration"). As used in this Agreement, (i) the term "Parent
Share" shall mean any share of Company Common Stock held of record by or on
behalf of The Sumitomo Bank, Limited ("Parent") as of the Effective Time, and
(ii) the term "Merger Consideration" shall mean, with respect to any Parent
Share,
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the Parent Merger Consideration and, with respect to any other issued and
outstanding share of Company Common Stock, the Public Merger Consideration. All
of the shares of Company Common Stock converted into the right to receive the
Merger Consideration pursuant to this Article I shall no longer be outstanding
and shall automatically be cancelled and shall cease to exist, and each
certificate (each a "Certificate") previously representing any such shares of
Company Common Stock shall thereafter only represent the right to receive the
cash into which the shares of Company Common Stock represented by such
Certificate have been converted pursuant to this Section 1.4(a). Certificates
previously representing shares of Company Common Stock shall be exchanged for
cash upon the surrender of such Certificates in accordance with Section 2.2
hereof, without any interest thereon.
(b) At the Effective Time, all shares of Company Common Stock that are
owned directly or indirectly by Buyer or the Company or any of their respective
Subsidiaries (other than shares of Company Common Stock (x) held directly or
indirectly in trust accounts, managed accounts and the like or otherwise held in
a fiduciary capacity for the benefit of third parties (any such shares, whether
held directly or indirectly by Buyer or the Company, as the case may be, being
referred to herein as "Trust Account Shares") and (y) held by Buyer or the
Company or any of their respective Subsidiaries in respect of a debt previously
contracted (any such shares of Company Common Stock, whether held directly or
indirectly by Buyer or the Company, being referred to herein as "DPC Shares"))
shall be cancelled and shall cease to exist and no consideration shall be
delivered in exchange therefor.
(c) Notwithstanding anything in this Agreement to the contrary, shares
of Company Common Stock which are outstanding immediately prior to the Effective
Time and which constitute "dissenting shares" as defined in Section 1300 of the
CGCL (such shares are referred to herein as "Dissenting Shares") shall not be
converted into the right to receive the Merger Consideration but, instead, the
holders thereof shall be entitled to receive payment of the fair market value of
such Dissenting Shares in accordance with the provisions of Sections 1300-1312
("Sections 1300 et seq.") of the CGCL; provided, however, that (i) if any
holder of Dissenting Shares
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shall subsequently withdraw, with the consent of the Surviving Bank, his demand
for purchase of such shares, or (ii) if any holder of Dissenting Shares fails to
establish or otherwise loses his entitlement to payment of the fair market value
of such shares as provided in Sections 1300 et seq. such holder or holders (as
the case may be) shall not be entitled to receive payment of the fair market
value of such shares of Company Common Stock as contemplated by Sections 1300 et
seq., and each of such shares shall thereupon be deemed to have been converted
into the right to receive, as of the Effective Time, the Merger Consideration
without any interest thereon, as provided in Section 1.4(a) and Article II
hereof.
1.5. Merger Sub Common Stock. Each of the 100 shares of the common
stock, par value $0.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall automatically and without any
action on the part of Merger Sub be converted into and become one share of
common stock of the Surviving Bank, which shares shall thereafter constitute
all of the issued and outstanding shares of the Surviving Bank.
1.6. Articles of Incorporation. At the Effective Time, the Articles of
Incorporation of the Company as in effect at the Effective Time, shall be the
Articles of Incorporation of the Surviving Bank.
1.7. By-Laws. At the Effective Time, the By-Laws of the Company, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Bank until thereafter amended in accordance with applicable law.
1.8. Directors and Officers. The directors and officers of Merger Sub
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Bank, each to hold office in accordance with the Articles of
Incorporation and By-Laws of the Surviving Bank until their respective
successors are duly elected or appointed and qualified.
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ARTICLE II
EXCHANGE OF SHARES
2.1. Buyer to Make Cash Available. At or prior to the Effective Time,
Buyer shall deposit, or shall cause to be deposited, with a bank or trust
company (which may be a Subsidiary of Buyer) (the "Exchange Agent") selected by
Buyer and reasonably satisfactory to the Company, for the benefit of the holders
of Certificates, for exchange in accordance with this Article II, the requisite
amount of cash to be paid pursuant to Section 2.2(a) (other than the cash
constituting the Merger Consideration to be paid by Buyer pursuant to Section
2.3 hereof) in exchange for outstanding shares of Company Common Stock at the
Effective Time (such cash being hereinafter referred to as the "Exchange Fund").
2.2. Exchange of Shares. (a) As soon as practicable after the Effective
Time, and in no event more than three business days thereafter, the Exchange
Agent shall mail to each holder of record of a Certificate or Certificates a
form letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent) and instructions for use in effecting
the surrender of the Certificates in exchange for the cash into which the shares
of Company Common Stock represented by such Certificate or Certificates shall
have been converted pursuant to this Agreement. The Company shall have the right
to review both the letter of transmittal and the instructions prior to the
Effective Time and provide reasonable comments thereon. Upon surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor a check representing the amount of
cash which such holder has the right to receive in respect of the Certificate
surrendered pursuant to the provisions of this Article II, and the Certificate
so surrendered shall forthwith be cancelled. No interest will be paid or accrued
on the cash payable to holders of Certificates.
(b) If any payment for shares of Company Common Stock is to be made in
a name other than
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that in which the Certificate surrendered in exchange therefor is registered, it
shall be a condition of such payment that the Certificate so surrendered shall
be properly endorsed (or accompanied by an appropriate instrument of transfer)
and otherwise in proper form for transfer, and that the person requesting such
exchange shall pay to the Exchange Agent in advance any transfer or other taxes
required by reason of the payment of the Merger Consideration to a person other
than the registered holder of the Certificate surrendered, or required for any
other reason, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not payable.
(c) After the Effective Time, there shall be no transfers on the stock
transfer books of the Company of the shares of Company Common Stock which were
issued and outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates representing such shares are presented for
transfer to the Exchange Agent, they shall be cancelled and exchanged for the
Merger Consideration as provided in this Article II.
(d) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of the Company for twelve months after the Effective Time shall be
paid to Buyer. Any stockholders of the Company who have not theretofore complied
with this Article II shall thereafter look only to Buyer for payment of the cash
payable in respect of each share of Company Common Stock such stockholder holds
as determined pursuant to this Agreement, without any interest thereon.
Notwithstanding the foregoing, none of Buyer, the Company, the Exchange Agent or
any other person shall be liable to any former holder of shares of Company
Common Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(e) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Buyer, the
posting by such person of a bond in such amount as Buyer may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate a
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check for the cash payable in respect thereof pursuant to this Agreement.
2.3. Payment to Majority Stockholder. Notwithstanding anything to the
contrary contained in this Agreement, on the Closing Date, immediately follow-
ing the Effective Time and upon the surrender to Buyer of the Certificates
representing all shares of Company Common Stock owned by Parent, Buyer shall pay
to Parent, by wire transfer of immediately available funds to an account
designated by Parent, the aggregate amount of cash constituting the Merger
Consideration which Parent shall be entitled to receive pursuant to Section
1.4(a).
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1. Disclosure Schedules. Prior to the execution and delivery of this
Agreement, the Company has delivered to Buyer and Merger Sub a schedule (the
"Company 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 of the Company's representations or warranties contained in Article IV
or to one or more of the Company's covenants contained in Article VI; provided,
however, that notwithstanding anything in this Agreement to the contrary (a) no
such item is required to be set forth in the Company Disclosure Schedule as an
exception to a representation or warranty if its absence would not result in the
related representation or warranty being deemed untrue or incorrect under the
standard established by Section 3.2, and (b) the mere inclusion of an item in
the Company Disclosure Schedule as an exception to a representation or warranty
shall not be deemed an admission by the Company that such item represents a
material exception or material fact, event or circumstance or that such item has
had or would have a Material Adverse Effect (as defined herein).
3.2. Representations and Warranties of the Company. (a) No
representation or warranty of the Company contained in Article IV shall be
deemed untrue or
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incorrect for any purpose under this Agreement, and the Company shall not be
deemed to have breached a representation or warranty for any purpose under this
Agreement, in any case as a consequence of the existence or absence of any fact,
circumstance or event unless such fact, circumstance or event, individually or
when taken together with all other facts, circumstances or events inconsistent
with any representations or warranties contained in Article IV, has had or is
reasonably likely to have a Material Adverse Effect.
(b) As used in this Agreement, the term "Material Adverse Effect" means
a material adverse effect on (i) the business, results of operations or
financial condition of the Company and its Subsidiaries taken as a whole, other
than any such effect attributable to or resulting from (w) any change in banking
or similar laws, rules or regulations of general applicability or
interpretations thereof by courts or governmental authorities, (x) any change in
GAAP (as defined herein) or regulatory accounting principles applicable to
banks, thrifts or their holding companies generally, (y) any action or omission
of the Company or any of its Subsidiaries taken with the prior written consent
of Buyer, or (z) any expenses reasonably incurred by the Company in connection
with this Agreement or the transactions contemplated hereby or (ii) the ability
of the Company and its Subsidiaries to perform its obligations under this
Agreement or consummate the Merger and the other transactions contemplated
hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to Article III, the Company hereby represents and warrants to
Buyer and Merger Sub as follows:
4.1. Corporate Organization. (a) The Company is a banking corporation
duly organized, validly existing and in good standing under the laws of the
State of California. The deposit accounts of the Company are insured by the
Federal Deposit Insurance Corporation (the "FDIC") through the Bank Insurance
Fund to the fullest extent permitted by law, and all premiums and assessments
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required to be paid in connection therewith have been paid when due. The Company
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the nature
of the business conducted by it or the character or location of the properties
and assets owned or leased by it makes such licensing or qualification
necessary. The copies of the Articles of Incorporation and By-laws of the
Company which have previously been made available to Buyer are true and correct
copies of such documents as in effect as of the date of this Agreement.
(b) Each of the Company's Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of the Company's Subsidiaries has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or the location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
The copies of the articles of incorporation, by-laws and similar governing
documents of each Subsidiary of the Company which have previously been made
available to Buyer are true and correct copies of such documents as in effect as
of the date of this Agreement. As used in this Agreement, the word "Subsidiary"
when used with respect to any party means any corporation, partnership or other
organization, whether incorporated or unincorporated, which is consolidated with
such party for financial reporting purposes.
(c) The minute books of the Company and each of its Subsidiaries
contain true and correct records of all meetings and other corporate actions
held or taken since December 31, 1995 of their respective stockholders and
Boards of Directors (including committees of their respective Boards of
Directors).
4.2. Capitalization. (a) The authorized capital stock of the Company
consists of 25,000,000 shares of Company Common Stock and 5,000,000 shares of
preferred stock, no par value (the "Company Preferred
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Stock"). As of the date of this Agreement, there were (i) 16,421,402 shares of
Company Common Stock outstanding, (ii) no shares of Company Common Stock
reserved for issuance upon exercise of outstanding stock options or otherwise,
(iii) 750,000 shares of 8-1/8% Noncumulative Preferred Stock, Series A, of the
Company (the "Series A Preferred Stock") issued and outstanding (evidenced by
3,000,000 depositary shares, each representing a one-fourth interest in a share
of Series A Preferred Stock), and (iv) no shares of Company Preferred Stock held
in the Company's treasury or reserved for issuance upon exercise of outstanding
stock options or otherwise. All of the issued and outstanding shares of Company
Common Stock and Company Preferred Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. Except as reflected in
Section 4.2(a) of the Company Disclosure Schedule, the Company does not have and
is not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of Company Common Stock or Company Preferred Stock or any other
equity security of the Company or any securities representing the right to
purchase or otherwise receive any shares of Company Common Stock or any other
equity security of the Company. As of the date of this Agreement, Parent is the
record holder of 13,991,802 shares of Company Common Stock.
(b) Section 4.2(b) of the Company Disclosure Schedule sets forth a
true and correct list of all of the Subsidiaries of the Company. Except as set
forth in Section 4.2(b) of the Company Disclosure Schedule, the Company owns,
directly or indirectly, all of the issued and outstanding shares of the capital
stock of each of such Subsidiaries, free and clear of all liens, charges,
encumbrances and security interests whatsoever, and all of such shares are duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. No Subsidiary of the Company has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or
any other equity security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital
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stock or any other equity security of such Subsidiary. Except as provided in
Section 4.2(b) of the Company Disclosure Schedule, at the Effective Time, there
will not be any outstanding subscriptions, options, warrants, calls, commitments
or agreements of any character by which the Company or any of its Subsidiaries
will be bound calling for the purchase or issuance of any shares of the capital
stock of the Company or any of its Subsidiaries. The 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, other than its
Subsidiaries.
4.3. Authority; No Violation. (a) The Company has full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of the Company. The Board of
Directors of the Company has directed that this Agreement and the transactions
contemplated hereby be submitted to the Company's stockholders for approval at a
meeting of such stockholders and, except for the adoption of this Agreement by
the affirmative vote of holders of a majority of the outstanding shares of
Common Stock, no other corporate proceedings on the part of the Company are
necessary to approve this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Company and (assuming due authorization, execution and delivery
by Buyer and Merger Sub) this Agreement constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
The Voting Agreement, dated as of the date hereof, between Buyer and Parent (the
"Voting Agreement") is in form sufficient pursuant to the Articles of
Incorporation and Bylaws of the Company to require Parent to vote the number of
shares covered by such agreement with respect to the matters described therein.
(b) Except as set forth in Section 4.3(b) of the Company Disclosure
Schedule, neither the
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execution and delivery of this Agreement by the Company, nor the consummation by
the Company of the transactions contemplated hereby, nor compliance by the
Company with any of the terms or provisions hereof, will (i) violate any
provision of the Articles of Incorporation or By-Laws of the Company or the
certificate of incorporation, by-laws or similar governing documents of any of
its Subsidiaries, or (ii) assuming that the consents and approvals referred to
in Section 4.4 hereof are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to the Company or any of its Subsidiaries, or any of their respective
properties or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of the
respective properties or assets of the Company or any of its Subsidiaries under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which the Company or any of its Subsidiaries is a party, or by
which they or any of their respective properties or assets may be bound or
affected.
4.4. Consents and Approvals. Except for (a) the filing of an
application with the FDIC under the Bank Merger Act and approval of such
application, (b) the filing of applications and notices, as applicable, with the
California Department of Financial Institutions (the "CDFI") (the "State Banking
Approvals"), (c) the filing with the FDIC of a proxy statement in definitive
form relating to the meeting of the Company's stockholders to be held in
connection with this Agreement and the transactions contemplated hereby (the
"Proxy Statement"), (d) the approval of this Agreement by the requisite vote of
the stockholders of the Company, (e) the filing of the agreement of merger with
the California Secretary of State pursuant to the CGCL, (f) the approval of the
CDFI for the redemption of the redemption Securities contemplated by Section 7.8
of this Agreement, and (g) such filings, authorizations or approvals as may be
set forth in Section 4.4 of the Company Disclosure Schedule, no
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consents or approvals of or filings or registrations with any court,
administrative agency or commission or other governmental authority or
instrumentality (each a "Governmental Entity") or with any third party are
necessary in connection with (1) the execution and delivery by the Company of
this Agreement and (2) the consummation by the Company of the Merger and the
other transactions contemplated hereby.
4.5. Reports. The Company and each of its Subsidiaries have timely
filed all reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
December 31, 1995 with (i) the FDIC, (ii) any state banking commissions or any
other state regulatory authority (each a "State Regulator") and (iii) any other
self-regulatory organization ("SRO") (collectively, the "Regulatory Agencies"),
and have paid all fees and assessments due and payable in connection therewith.
Except for normal examinations conducted by a Regulatory Agency in the regular
course of the business of the Company and its Subsidiaries, and except as set
forth in Section 4.5 of the Company Disclosure Schedule, no Regulatory Agency
has initiated any proceeding or, to the knowledge of the Company, investigation
into the business or operations of the Company or any of its Subsidiaries since
December 31, 1995. There is no unresolved violation, criticism, or exception by
any Regulatory Agency with respect to any report or statement relating to any
examinations of the Company or any of its Subsidiaries.
4.6. Financial Statements. The Company has previously made available to
Buyer copies of the consolidated balance sheets of the Company and its
Subsidiaries as of December 31 for the fiscal years 1995, 1996 and 1997, and the
related consolidated statements of income, changes in shareholders' equity and
cash flows for the fiscal years 1994 through 1997, inclusive, as reported in the
Company's Annual Report on Form F-2 for the fiscal year ended December 31, 1997
filed with the FDIC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), in each case accompanied by the audit report of Arthur Andersen
LLP, independent public accountants with respect to the Company. The December
31, 1997 consolidated balance sheet of the Company (including the related notes,
where applicable) fairly presents the consolidated financial position of the
Company and its
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Subsidiaries as of the date thereof, and the other financial statements
referred to in this Section 4.6 (including the related notes, where applicable)
fairly present, and the financial statements to be filed with the FDIC after the
date hereof will fairly present (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and amount), the
results of the consolidated operations and consolidated financial position of
the Company and its Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth; each of such statements (including the
related notes, where applicable) complies, and the financial statements to be
filed with the FDIC after the date hereof will comply, with applicable
accounting requirements and with the published rules and regulations of the
FDIC with respect thereto; and each of such statements (including the related
notes, where applicable) has been, and the financial statements to be filed with
the FDIC after the date hereof will be, prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied during the periods
involved, except as indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form F-4. The books and records of the Company and
its Subsidiaries have been, and are being, maintained in accordance with GAAP
and any other applicable legal and accounting requirements.
4.7. Broker's Fees. Except as set forth in Section 4.7 of Company
Disclosure Schedule, neither the Company nor any Subsidiary of the Company nor
any of their respective officers or directors has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement.
4.8. Absence of Certain Changes or Events. (a) Except as may be set
forth in Section 4.8(a) of the Company Disclosure Schedule, since December 31,
1997, there has been no change or development or combination of changes or
developments which, individually or in the aggregate, has had a Material Adverse
Effect.
(b) Except as set forth in Section 4.8(b) of the Company Disclosure
Schedule, since December 31, 1997, the Company and its Subsidiaries have carried
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on their respective businesses in the ordinary course consistent with their past
practices.
(c) Except as set forth in Section 4.8(c) of the Company Disclosure
Schedule, since December 31, 1997, neither the Company nor any of its
Subsidiaries has (i) increased the wages, salaries, compensation, pension, or
other fringe benefits or perquisites payable to any executive officer, employee,
or director from the amount thereof in effect as of December 31, 1997 (which
amounts have been previously disclosed to Buyer), granted any severance or
termination pay, entered into any contract to make or grant any severance or
termination pay, or paid any bonus (except for salary increases and bonus
payments made in the ordinary course of business consistent with past
practice), (ii) suffered any strike, work stoppage, slow-down, or other labor
disturbance, (iii) been a party to a collective bargaining agreement, contract
or other agreement or understanding with a labor union or organization, or (iv)
had any union organizing activities.
4.9. Legal Proceedings. (a) Except as set forth in Section 4.9(a) of
the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to any, and there are no pending or, to the Company's
knowledge, threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against the Company or any of its Subsidiaries or challenging the validity or
propriety of the transactions contemplated by this Agreement.
(b) Except as set forth in Section 4.9(b) of the Company Disclosure
Schedule, there is no injunction, order, judgment, decree, or regulatory
restriction imposed upon the Company, any of its Subsidiaries or the assets of
the Company or any of its Subsidiaries.
4.10. Taxes. Except as set forth in Section 4.10(a) of the Company
Disclosure Schedule: (a) Each of the Company and its Subsidiaries has (i) duly
and timely filed (including applicable extensions granted without penalty) all
material Tax Returns (as hereinafter defined) required to be filed at or prior
to the Effective Time, and such Tax Returns are true and correct in all
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material respects, and (ii) paid in full or made adequate provision in the
financial statements of the Company (in accordance with GAAP) for all material
Taxes (as hereinafter defined) whether or not shown to be due on such Tax
Returns. As of the date hereof neither the Company nor any of its Subsidiaries
has requested any extension of time within which to file any Tax Returns in
respect of any fiscal year which have not since been filed and no request for
waivers of the time to assess any Taxes are pending or outstanding.
There is no pending or threatened, in writing, audit, examination, assessment or
proposed assessment of a deficiency or refund litigation with respect to any
Taxes of the Company or its Subsidiaries. All Taxes due with respect to
completed and settled examinations or concluded litigation relating to the
Company or its Subsidiaries have been paid in full or adequate provision has
been made for any such Taxes (in accordance with GAAP) on the financial
statements of the Company. No power of attorney has been granted by or with
respect to the Company or any of its Subsidiaries with respect to any matter
relating to Taxes. There are no liens for Taxes upon the assets of the Company
or its Subsidiaries except liens for Taxes not yet due or payable. The Company
and its Subsidiaries have timely withheld, and paid over to the relevant
governmental authority or other appropriate payee, all material Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other person. Neither
the 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 the Company) or otherwise has any liability for the Taxes of any
person (other than the Company or its Subsidiaries). Neither the Company nor any
of its Subsidiaries has any deferred intercompany gain or loss arising as a
result of a deferred intercompany transaction within the meaning of Treasury
Regulation Section 1.1502-13 (or similar provision under state, local or
foreign law) or any excess loss accounts within the meaning of Treasury
Regulation Section 1.1502-19. The Company is not and has not been at any time
during the 5-year period ending on the Closing Date a United States real
property holding corpora tion (as defined in Section 897(c) of the Code), and on
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or prior to the Closing Date, the Company will provide the Buyer with a
statement meeting the requirements of Treasury Regulation Section 1.1445-2(c)(3)
confirming that the Company is not and has not been at any time during the
5-year period ending on the Closing Date a U.S. real property holding
corporation.
(b) For the purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies, penalties or other assessments imposed by any United
States federal, state, local or foreign taxing authority, including, but not
limited to income, excise, property, sales, transfer, franchise, payroll,
withholding, social security or other taxes, including any interest, penalties
or additions attributable thereto. For purposes of this Agreement, "Tax Return"
shall mean any return, report, information return or other document (including
any related or supporting information) with respect to Taxes.
4.11. Employees. (a) Section 4.11(a) of the Company Disclosure Schedule
sets forth a true and correct list of each deferred compensation plan, incentive
compensation plan, equity compensation plan, "welfare plan" (within the meaning
of section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")); "pension plan" (within the meaning of section 3(2) of
ERISA); each employment, termination or severance agreement; and each other
employee benefit plan, fund, program, agreement or arrangement, in each case,
that is sponsored, maintained or contributed to or required to be contributed to
(the "Plans") by the Company, any of its Subsidiaries or by any trade or
business, whether or not incorporated (an "ERISA Affiliate"), all of which
together with the Company would be deemed a "single employer" within the meaning
of Section 4001 of ERISA, for the benefit of any employee or former employee of
the Company, any Subsidiary or any ERISA Affiliate.
(b) The Company has heretofore made available to Buyer with respect to
each of the Plans true and correct copies of each of the following documents if
applicable: (i) the Plan document, (ii) the actuarial report for such Plan for
each of the last two years, (iii) the most recent determination letter from the
Internal Revenue Service for such Plan, (iv) the most
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recent Form 5500, and (v) the most recent summary plan description and related
summaries of material modifications.
(c) Except as set forth in Section 4.11(c) of the Company Disclosure
Schedule: Each of the Plans has been maintained in compliance with its terms and
the applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), and ERISA; each of the Plans intended to be "qualified" within the
meaning of section 401(a) of the Code has received a favorable determination
letter from the IRS; no Plan has an accumulated or waived funding deficiency
within the meaning of section 412 of the Code; neither the Company nor any ERISA
Affiliate has incurred, directly or indirectly, any liability to or on account
of a Plan pursuant to Title IV of ERISA that has not been satisfied in full
(other than PBGC premiums for the current plan year); to the knowledge of the
Company no proceedings have been instituted to terminate any Plan that is
subject to Title IV of ERISA; no "reportable event," as such term is defined in
section 4043(c) of ERISA, has occurred with respect to any Plan (other than a
reportable event with respect to which the thirty day notice period has been
waived); no condition exists that presents a material risk to the Company of
incurring a liability to or on account of a Plan pursuant to Title IV of ERISA;
no Plan is a multiemployer plan (within the meaning of section 4001(a)(3) of
ERISA and no Plan is a multiple employer plan as defined in Section 413 of the
Code; and there are no pending or, to the knowledge of the Company, threatened
or anticipated claims (other than routine claims for benefits) by, on behalf of
or against any of the Plans or any trusts related thereto; neither the 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 the Company or any Subsidiary to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) of ERISA; 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 accrued liabilities (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
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adverse change in the financial condition of such Plan since the last day of the
most recent Plan year; neither the Company nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Plan; and the
consummation of the transactions contemplated by this Agreement will not (x)
entitle any employees of the 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 Plans or (z) result in any breach or
violation of, or a default under, any of the Plans.
4.12. FDIC Reports. The Company has previously made available to Buyer
a true and correct copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since December 31, 1995 by
the Company with the FDIC pursuant to the Securities Act of 1933, as amended
(the "Securities Act") or the Exchange Act (the "Company Reports") and (b)
communication mailed by the Company to its stockholders since December 31, 1995,
and no such registration statement, prospectus, report, schedule, proxy
statement or communication contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading, except that information as of a later date shall
be deemed to modify information as of an earlier date. The Company has timely
filed all Company Reports and other documents required to be filed by it under
the Securities Act and the Exchange Act, and, as of their respective dates, all
Company Reports complied with the published rules and regulations of the FDIC
with respect thereto.
4.13. Company Information. The information to be contained in the Proxy
Statement or in any other document filed by Parent or the Company with any other
regulatory agency in connection herewith (except for information that relates
only to Buyer or any of its Subsidiaries) will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances in which they are made, not
misleading. The Proxy Statement (except for such portions thereof that
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relate only to Buyer or any of its Subsidiaries) will comply with the provisions
of the Exchange Act and the applicable rules and regulations thereunder.
4.14. Compliance with Applicable Law. The Company and each of its
Subsidiaries hold, and have at all times held, all licenses, franchises, permits
and authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, and have complied with and are not in
default in any respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to the
Company or any of its Subsidiaries, and neither the Company nor any of its
Subsidiaries has received notice of any violations of any of the above.
4.15. Certain Contracts. (a) Except as set forth in Section 4.15(a) of
the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
is a party to or bound by any contract (whether written or oral) (i) with
respect to the employment of any directors or consultants, (ii) which, upon the
consummation of the transactions contemplated by this Agreement, will (either
alone or upon the occurrence of any additional acts or events) result in any
payment or benefits (whether of severance pay or otherwise) becoming due, or the
acceleration or vesting of any rights to any payment or benefits, from Buyer,
the Company, the Surviving Bank or any of their respective Subsidiaries to any
director or consultant thereof, (iii) which is a material contract (as defined
in Item 601(b)(10) of Regulation S-K of the Securities and Exchange Commission
(the "SEC")) to be performed after the date of this Agreement that has not been
filed or incorporated by reference in the Company Reports, (iv) which is a
consulting agreement (including data processing, software programming and
licensing contracts) not terminable on 90 days or less notice involving the
payment of more than $500,000 per annum, or (v) which materially restricts the
conduct of any line of business by the Company or any of its Subsidiaries. Each
contract, arrangement, commitment or understanding of the type described in this
Section 4.15(a), whether or not set forth in Section 4.15(a) of the Company
Disclosure Schedule, is referred to herein as a "Company Contract". The Company
has previously made available to Buyer true and correct copies of each Company
Contract.
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(b) Except as set forth in Section 4.15(b) of the Company Disclosure
Schedule, (i) each Company Contract described in clause (iii) of Section 4.15(a)
is valid and binding and in full force and effect, (ii) the Company and each of
its Subsidiaries has performed all obligations required to be performed by it to
date under each Company Contract described in clause (iii) of Section 4.15(a),
(iii) no event or condition exists which constitutes or, after notice or lapse
of time or both, would constitute, a default on the part of the Company or any
of its Subsidiaries under any Company Contract described in clause (iii) of
Section 4.15(a), and (iv) no other party to any Company Contract described in
clause (iii) of Section 4.15(a) is, to the knowledge of the Company, in default
in any respect thereunder.
4.16. Agreements with Regulatory Agencies. Except as set forth in
Section 4.16 of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries is subject to any cease-and-desist or other order issued by, or
is a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any board resolutions
at the request of (each, whether or not set forth on Section 4.16 of the Company
Disclosure Schedule, a "Regulatory Agreement"), any Regulatory Agency or other
Governmental Entity that restricts the conduct of its business or that in any
manner relates to its capital adequacy, its credit policies, its management or
its business, nor has the Company or any of its Subsidiaries been advised by any
Regulatory Agency or other Governmental Entity that it is considering issuing or
requesting any Regulatory Agreement.
4.17. Administration of Fiduciary Accounts. Each of the Company and its
Subsidiaries has properly administered all accounts for which it acts as a
fiduciary, including but not limited to accounts for which it serves as a
trustee, agent, custodian, personal representative, guardian, conservator or
investment advisor, in accordance with the terms of the governing documents and
applicable state and federal law and regulation and common law. To the knowledge
of the Company, neither the Company nor any of its Subsidiaries nor any of their
respective directors, officers or employees has committed
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any breach of trust with respect to any such fiduciary account, and the
accountings for each such fiduciary account are true and correct and accurately
reflect the assets of such fiduciary account.
4.18. Environmental Matters. Except as set forth in Section 4.18 of the
Company Disclosure Schedule:
(a) Each of the Company and its Subsidiaries and, to the knowledge of
the Company, each of the Participation Facilities and the Loan Properties (each
as hereinafter defined), are in compliance with all applicable federal, state
and local laws, including common law, regulations and ordinances, and with all
applicable decrees, orders and contractual obligations relating to pollution or
the discharge of, or exposure to, Hazardous Materials (as hereinafter defined)
in the environment or workplace ("Environmental Laws");
(b) There is no suit, claim, action or proceeding, pending or, to the
knowledge of the Company, threatened, before any Governmental Entity or other
forum in which the Company, any of its Subsidiaries, any Participation Facility
or any Loan Property, has been or, with respect to threatened proceedings, may
be, named as a defendant (x) for alleged noncompliance (including by any
predecessor) with any Environmental Laws, or (y) relating to the release,
threatened release or exposure to any Hazardous Material whether or not
occurring at or on a site owned, leased or operated by the Company or any of its
Subsidiaries, any Participation Facility or any Loan Property;
(c) To the knowledge of the Company, during the period of (x) the
Company's or any of its Subsidiaries' ownership or operation of any of their
respective current or former properties, (y) the Company's or any of its
Subsidiaries' participation in the management of any Participation Facility, or
(z) the Company's or any of its Subsidiaries' interest in a Loan Property, there
has been no release of Hazardous Materials in, on, under or affecting any such
property. To the knowledge of the Company, prior to the period of (x) the
Company's or any of its Subsidiaries' ownership or operation of any of their
respective current or former properties, (y) the Company's or any of its
Subsidiaries' participation in the management of any Participation Facili-
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ty, or (z) the Company's or any of its Subsidiaries' interest in a Loan
Property, there was no release of Hazardous Materials in, on, under or affecting
any such property, Participation Facility or Loan Property; and
(d) The following definitions apply for purposes of this Section 4.18:
(x) "Hazardous Materials" means any chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum or other regulated substances or materials; (y)
"Loan Property" means any property in which the Company or any of its
Subsidiaries holds a security interest, and, where required by the context, said
term means the owner or operator of such property; and (z) "Participation
Facility" means any facility in which the Company or any of its Subsidiaries
participates in the management and, where required by the context, said term
means the owner or operator of such property.
4.19. Opinion. Prior to the execution of this Agreement, the Company
has received an opinion from NationsBanc Montgomery Securities LLC to the effect
that as of the date thereof and based upon and subject to the matters set forth
therein, the consideration to be received by the stockholders of the Company
(other than Parent) pursuant to this Agreement is fair, from a financial point
of view, to such stockholders. Such opinion has not been amended or rescinded as
of the date of this Agreement.
4.20. Approvals. As of the date of this Agreement, the Company knows of
no reason why all regulatory approvals required for the consummation of the
transactions contemplated hereby (including, without limitation, the Merger)
should not be obtained.
4.21. Loan Portfolio. (a) Except as set forth in Section 4.21(a) of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to any written or oral (i) loan agreement, note or borrowing arrangement
(including, without limitation, leases, credit enhancements, commitments,
guarantees and interest-bearing assets) (collectively, "Loans"), other than
Loans the unpaid principal balance of which does not exceed $250,000, under the
terms of which the obligor was, as of December 31, 1997, over 90 days delinquent
in payment of principal or interest or in default of any
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other provision, or (ii) Loan with any director, executive officer or five
percent or greater stockholder of the Company or any of its Subsidiaries, or to
the knowledge of the Company, any person, corporation or enterprise
controlling, controlled by or under common control with any of the foregoing.
Section 4.21(a) of the Company Disclosure Schedule sets forth (i) all of the
Loans in original principal amount in excess of $250,000 of the Company or any
of its Subsidiaries that as of December 31, 1997, were classified by any bank
examiner (whether regulatory or internal) as "Other Loans Specially Mentioned",
"Special Mention", "Substandard", "Doubtful", "Loss", "Classified",
"Criticized", "Credit Risk Assets", "Concerned Loans" or words of similar
import, together with the principal amount of and accrued and unpaid interest on
each such Loan and the identity of the borrower thereunder, (ii) by category of
Loan (i.e., commercial, consumer, etc.), all of the other Loans of the Company
and its Subsidiaries that as of December 31, 1997, were classified as such,
together with the aggregate principal amount of and accrued and unpaid interest
on such Loans by category and (iii) each asset of the Company that as of
December 31, 1997, was classified as "Other Real Estate Owned" and the book
value thereof.
(b) Except as set forth in Section 4.21(b) of the Company Disclosure
Schedule, each Loan in original principal amount in excess of $250,000 (i) is
evidenced by notes, agreements or other evidences of indebtedness which are
true, genuine and what they purport to be, (ii) to the extent secured, has been
secured by valid liens and security interests which have been perfected and
(iii) is the legal, valid and binding obligation of the obligor named therein,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
4.22. Risk Management Instruments. All interest rate swaps, caps,
floors, option agreements, futures and forward contracts and other similar risk
management instruments, whether entered into for the Company's own account or
for the account of one or more of the Subsidiaries or their customers (all of
which are listed on Section 4.22 of the Disclosure Schedule), if any, were
entered into (i) in accordance with prudent
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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 binding obligation of the
Company or one of its Subsidiaries, enforceable against the Company or such
Subsidiary in accordance with its terms, except as enforcement may be limited
by general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally. Neither the Company nor its Subsidiaries, nor to
the Company's knowledge, any other party thereto, is in breach of any of its
obligations under any such instrument.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER
Subject to Section 3.1, Buyer hereby represents and warrants to the
Company as follows:
5.1. Corporate Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Utah. Buyer
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not (i) prevent or
materially delay Buyer or Merger Sub from performing its obligations hereunder
or (ii) adversely affect the ability of Buyer or Merger Sub to consummate the
transactions contemplated hereby. Buyer is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended (the "BHC Act").
The copies of the Articles of Incorporation and By-laws of Buyer which have
previously been made available to the Company are true and correct copies of
such documents as in effect as of the date of this Agreement.
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5.2. Authority; No Violation. (a) Each of Buyer and Merger Sub has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly approved by the Board of Directors of each of Buyer and
Merger Sub and by Buyer in its capacity as the sole stockholder of Merger Sub
pursuant to the CGCL, and no other corporate proceedings on the part of Buyer or
Merger Sub are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Buyer and Merger Sub and (assuming due
authorization, execution and delivery by the Company) this Agreement constitutes
a valid and binding obligation of each of Buyer and Merger Sub, enforceable
against each of them in accordance with its terms, except as enforcement may be
limited by general principles of equity whether applied in a court of law or a
court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
(b) Except as set forth in Section 5.2(b) of the Buyer Disclosure
Schedule, neither the execution and delivery of this Agreement by Buyer or
Merger Sub, nor the consummation by Buyer or Merger Sub of the transactions
contemplated hereby, nor compliance by Buyer or Merger Sub with any of the terms
or provisions hereof, will (i) violate any provision of the Articles of
Incorporation or By-Laws of Buyer, or the articles of incorporation or by-laws
or similar governing documents of any of its Subsidiaries or (ii) assuming that
the consents and approvals referred to in Section 5.3 are duly obtained, (x)
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to Buyer or any of its Subsidiaries or any of
their respective properties or assets, or (y) violate, conflict with, result in
a breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of termi-
nation or cancellation under, accelerate the performance required by, or result
in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the respective properties or assets of Buyer
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or any of its Subsidiaries under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which Buyer or any of its Subsidiaries is a
party, or by which they or any of their respective properties or assets may be
bound or affected, except (in the case of clause (y) above) for such violations,
conflicts, breaches or defaults which either individually or in the aggregate
would not (i) prevent or materially delay Buyer or Merger Sub from performing
its obligations hereunder or (ii) adversely affect the ability of Buyer or
Merger Sub to consummate the transactions contemplated hereby.
5.3. Consents and Approvals. Except for (a) the filing of an
application with the FDIC under the Bank Merger Act and approval of such
application, (b) the State Banking Approvals, (c) the filing with the FDIC of
the Proxy Statement, (d) the filing of the agreement of merger with the
California Secretary of State pursuant to the CGCL, and (e) such filings,
authorizations or approvals as may be set forth in Section 5.3 of the Buyer
Disclosure Schedule, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary in connection
with (1) the execution and delivery by Buyer and Merger Sub of this Agreement
and (2) the consummation by Buyer and Merger Sub of the Merger and the other
transactions contemplated hereby. No vote of any stockholders of Buyer is
required to approve this Agreement or to consummate the transactions
contemplated hereby.
5.4. Broker's Fees. Neither Buyer nor any Subsidiary of Buyer, nor any
of their respective officers or directors, has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement, except
that Buyer has engaged, and will pay a fee or commission to, Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
5.5. Access to Funds. Buyer has, and on the Closing Date will have,
sufficient funds available to enable it to consummate the Merger and to pay the
aggregate Merger Consideration pursuant to the terms of this Agreement. Buyer's
and Merger Sub's obligations under this Agreement are not subject to any
condition regarding
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Buyer's ability to obtain funding for the consummation of the Merger and the
other transactions contemplated hereby.
5.6. Approvals. As of the date of this Agreement, Buyer knows of no
reason applicable to it or Merger Sub why all regulatory approvals required for
the consummation of the transactions contemplated hereby (including, without
limitation, the Merger) should not be obtained.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1. Covenants of the Company. During the period from the date of this
Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement or with the prior written consent of
Buyer, the Company and its Subsidiaries shall carry on their respective
businesses in the ordinary course consistent with past practice. Without
limiting the generality of the foregoing, and except as set forth in Section 6.1
of the Company Disclosure Schedule or as otherwise contemplated by this
Agreement or consented to in writing by Buyer, the Company shall not, and shall
not permit any of its Subsidiaries to:
(a) solely in the case of the Company, declare or pay any dividends on,
or make other distributions in respect of, any of its capital stock, other than
normal quarterly dividends not in excess of $.20 per share of Company Common
Stock and normal quarterly dividends on the Series A Preferred Stock;
(b) (i) repurchase, redeem or otherwise acquire (except for the
acquisition of Trust Account Shares and DPC Shares, as such terms are defined in
Section 1.4(b) hereof) any shares of the capital stock of the Company or any
Subsidiary of the Company, or any securities convertible into or exercisable for
any shares of the capital stock of the Company or any Subsidiary of the Company,
except for purchases of Company Common Stock pursuant to the Company's 401(k)
Plan (the "401(k) Plan") and pursuant to the Company's Dividend Reinvestment
Plan (the "DRIP"), in each case in a manner consistent with
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past practice, (ii) split, combine or reclassify any shares of its capital stock
or issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or (iii)
issue, deliver or sell, or authorize or propose the issuance, delivery or sale
of, any shares of its capital stock or any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any such shares,
or any stock appreciation or similar rights, or enter into any agreement with
respect to any of the foregoing, other than pursuant to the 401(k) Plan and
pursuant to the DRIP;
(c) amend its Articles of Incorporation, By-laws or other similar
governing documents;
(d) authorize or permit any of its officers, directors, employees or
agents to directly or indirectly solicit, initiate or encourage any inquiries
relating to, or the making of any proposal which constitutes, a "takeover
proposal" (as defined below), or, except in response to an unsolicited takeover
proposal with respect to which (i) an independent investment bank advises the
Board of Directors of the Company is reasonably likely to result in a higher
value to the stockholders of the Company than the transactions contemplated
hereby and (ii) the Board of Directors determines, based upon such advice and
the advice of outside counsel, that the failure to so respond or take the
specified action would constitute a breach of the fiduciary duties of the Board
of Directors of the Company, recommend or endorse any takeover proposal, or
participate in any discussions or negotiations, or provide third parties with
any nonpublic information, relating to any such inquiry or proposal or otherwise
facilitate any effort or attempt to make or implement a takeover proposal;
provided, however, that the Company may communicate information about any such
takeover proposal to its stockholders if, in the judgment of the Company's Board
of Directors, based upon the advice of outside counsel, such communication is
required under applicable law. The Company will immediately cease and cause to
be terminated any existing activities, discussions or negotiations previously
conducted with any parties other than Buyer with respect to any of the foregoing
and will promptly inform Buyer of any inquiries or proposals with respect to any
of the foregoing and the Company's response thereto. As used in
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this Agreement, "takeover proposal" shall mean any tender or exchange offer,
proposal for a merger, consolidation or other business combination involving the
Company or any Subsidiary of the Company or any proposal or offer to acquire in
any manner a substantial equity interest in, or a substantial portion of the
assets or deposits of, the Company or any Subsidiary of the Company other than
the transactions contemplated or permitted by this Agreement;
(e) make any capital expenditures other than those which are made in
the ordinary course of busi ness consistent with past practice or are necessary
to maintain existing assets in good repair or make any investments in securities
other than United States Treasury securities or United States Government Agency
securities, which in either case have maturities of six months or less from the
date of investment;
(f) enter into any new line of business;
(g) acquire or agree to acquire, by merging or consolidating with, or
by purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire any assets, which would be material, individually or in the aggregate,
to the Company, other than in connection with foreclosures, settlements in lieu
of foreclosure or troubled loan or debt restructurings in the ordinary course of
business consistent with past practices;
(h) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue, or in any of the conditions to the Merger set forth in
Article VIII not being satisfied;
(i) change its methods of accounting in effect at December 31, 1997,
except as required by changes in GAAP or regulatory accounting principles as
concurred to by the Company's independent auditors;
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(j) (i) except as required by applicable law or as required to maintain
qualification pursuant to the Code, adopt, amend, or terminate any employee
benefit plan (including, without limitation, any Plan) or any agreement,
arrangement, plan or policy between the Company or any Subsidiary of the Company
and one or more of its current or former directors, officers or employees,
except that the Company may pay retention bonuses as described in Section 6.1(j)
of the Company Disclosure Schedule, (ii) hire any additional senior officers or,
except for the filling of vacant positions in the ordinary course of business
consistent with past practice, other employees or (iii) except for normal
increases in the ordinary course of business consistent with past practice or
except as required by applicable law, increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any Plan or agreement as in effect as of the date hereof (including,
without limitation, the granting of stock options, stock appreciation rights,
restricted stock, restricted stock units or performance units or shares);
provided, however, that nothing contained herein shall prohibit the Company (x)
from paying 1997 bonuses under its incentive bonus plans listed in Section
6.1(j) of the Company Disclosure Schedule (the "Bonus Plans") consistent with
past practices, except that in determining the amounts of such bonuses, the
Company shall be entitled to disregard the effect (in cluding, without
limitation, the cost) of any actions taken by the Company or any of its
Subsidiaries in contemplation of the Merger or at the request of Buyer, or (y)
on or prior to the Closing Date, from paying pro-rata 1998 bonuses under the
Bonus Plans in respect of the period from January 1, 1998 through the Closing
Date based on the Company's annualized performance (without regard to the effect
(including, without limitation, the cost) of any actions taken by the Company or
any of its Subsidiaries in contemplation of the Merger or at the request of
Buyer) from January 1, 1998 through the end of the last full month prior to
consummation of the Merger;
(k) other than activities in the ordinary course of business consistent
with past practice, sell, lease, encumber, assign or otherwise dispose of, or
agree to sell, lease, encumber, assign or otherwise
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dispose of, any of its material assets, properties or other rights or
agreements;
(l) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity;
(m) file any application to relocate or terminate the operations of any
banking office of it or any of its Subsidiaries;
(n) create, renew, amend or terminate or give notice of a proposed
renewal, amendment or termination of, any material contract, agreement or lease
for goods, services or office space to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
their respective properties is bound, other than the renewal in the ordinary
course of business consistent with past practice of any lease the term of which
expires prior to the Closing Date;
(o) enter into any risk management instrument other than one that (i)
is consistent with the representation contained in Section 4.22 and (ii) has a
maturity of six months or less from the date of the instrument;
(p) settle or compromise any claims or litigation for an amount in
excess of $50,000;
(q) take any action or enter into any agreement that could reasonably
be expected to jeopardize or materially delay the receipt of any Requisite
Regulatory Approval (as defined in Section 8.1(b)); or
(r) agree to do any of the foregoing.
6.2. Covenants of Buyer. Except as set forth in Section 6.2 of the
Buyer Disclosure Schedule or as otherwise contemplated by this Agreement or
consented to in writing by the Company, Buyer shall not, and shall not permit
any of its Subsidiaries to:
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(a) take any action that is intended or may reasonably be expected to
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue, or in any of the conditions to the Merger set forth in
Article VIII not being satisfied;
(b) take any action or enter into any agreement that could reasonably
be expected to jeopardize or materially delay the receipt of any Requisite
Regulatory Approval (as defined in Section 8.1(b)); or
(c) agree to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Regulatory Matters. (a) The Company shall promptly prepare and
file with the FDIC the Proxy Statement consistent with the representation
contained in Section 4.13 and the Company shall thereafter mail the Proxy
Statement to its stockholders.
(b) The parties hereto shall cooperate with each other and each shall
use its reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are neces-
sary or advisable to consummate the transactions contemplated by this Agreement
(including without limitation the Merger). The Company and Buyer shall have the
right to review in advance, and to the extent practicable each will consult the
other on, in each case subject to applicable laws relating to the exchange of
information, all the information relating to the Company or Buyer, as the case
may be, and any of their respective Subsidiaries, which appears in any filing
made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto shall
act reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the
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obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein.
(c) Buyer and the Company shall, upon request, furnish each other with
all information concerning themselves, their Subsidiaries, directors, officers
and stockholders and such other matters as may be reasonably necessary or
advisable in connection with the Proxy Statement or any other statement, filing,
notice or application made by or on behalf of Buyer, the Company or any of their
respective Subsidiaries to any Governmental Entity in connection with the Merger
and the other transactions contemplated by this Agreement.
(d) Buyer and the Company shall promptly furnish each other with copies
of written communications received by Buyer or the Company, as the case may be,
or any of their respective Subsidiaries, Affiliates or Associates (as such terms
are defined in Rule 12b-2 under the Exchange Act as in effect on the date of
this Agreement) from, or delivered by any of the foregoing to, any Governmental
Entity in respect of the transactions contemplated hereby.
7.2. Access to Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, the Company shall, and
shall cause each of its Subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of Buyer, access, during normal
business hours during the period prior to the Effective Time, to all its
properties, books, contracts, commitments, records, officers, employees,
accountants, counsel and other representatives and, during such period, the
Company shall, and shall cause its Subsidiaries to, make available to Buyer all
information concerning its business, properties and personnel as the other party
may reasonably request. Neither the Company nor any of its Subsidiaries shall be
required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of its customers, jeopardize
any attorney-client privilege or contravene any law, rule, regulation, order,
judgment, decree,
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fiduciary duty or binding agreement entered into prior to the date of this
Agreement. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply. All information furnished to Buyer pursuant to this Section
7.2(a) shall be subject to, and Buyer shall hold all such information in
confidence in accordance with, the provisions of the confidentiality agreement,
dated December 4, 1997 (the "Confidentiality Agreement"), between Buyer and the
Company.
(b) No investigation by either of the parties or their respective
representatives shall affect the representations, warranties, covenants or
agreements of the other set forth herein.
7.3. Stockholder Meeting. The Company shall take all steps necessary to
duly call, give notice of, convene and hold a meeting of its stockholders to be
held as soon as is reasonably practicable for the purpose of voting upon the
approval of this Agreement and the consummation of the transactions
contemplated hereby. The Company will, through its Board of Directors, unless
the Board of Directors determines, based upon the advice of outside counsel,
that doing so would constitute a breach of its fiduciary duties, recommend to
its stockholders approval of this Agreement and the transactions contemplated
hereby and such other matters as may be submitted to its stockholders in
connection with this Agreement.
7.4. Legal Conditions to Merger. Each of Buyer and the Company shall,
and shall cause its Subsidiaries to, use their reasonable best efforts (a) to
take, or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements which may be imposed on such party or its
Subsidiaries with respect to the Merger and, subject to the conditions set forth
in Article VIII hereof, to consummate the transactions contemplated by this
Agreement and (b) to obtain (and to cooperate with the other party to obtain)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party which is required to be obtained
by the Company or Buyer or any of their respective Subsidiaries in connection
with the Merger and the other transactions contemplated by this Agreement, and
to comply with the terms
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and conditions of such consent, authorization, order or approval.
7.5. Employees; Employee Benefit Plans. (a) As of and following the
Effective Time, the employees of the Company and its Subsidiaries as of the
Effective Time (the "Company Employees") shall be eligible to participate in
Buyer's employee benefit plans in which similarly situated employees of Buyer
participate, to the same extent as similarly situated employees of Buyer.
Notwithstanding the foregoing, Buyer agrees to provide or to cause one of its
Subsidiaries to provide Company Employees, from the Effective Time until the
later to occur of (x) the twelve-month anniversary of the Closing Date and (y)
December 31, 1999, with employee benefit plans or arrangements that are, in the
aggregate, no less favorable than those provided to Company Employees
immediately prior to the Effective Time to the same extent that such persons
would be entitled to benefits prior to the Effective Time.
(a) With respect to each employee benefit plan, program, policy or
arrangement maintained by Buyer or any of its Subsidiaries for the benefit of
current or former employees of Buyer or any of its Subsidiaries (each such plan,
program, policy or arrangement, a "Buyer Plan"), for purposes of determining
eligibility to participate and vesting (but not for benefit accrual purposes
other than severance and vacation entitlement), service with the Company (or
predecessor employers to the extent the Company provides past service credit)
shall be treated as service with Buyer; provided, however, that such service
shall not be recognized to the extent that such recognition would result in a
duplication of benefits. Buyer shall also cause each Buyer Plan to waive (i) any
pre-existing condition restriction which was waived under the terms of any
analogous Plan immediately prior to the Effective Time or (ii) any waiting
period limitation or evidence of insurability requirement which would otherwise
be applicable to a Company Employee on or after the Effective Time to the extent
such Company Employee had satisfied any similar limitation or requirement under
an analogous Plan prior to the Effective Time. Company Employees shall be given
credit for amounts paid under any analogous Plan for purposes of applying
deductibles, copayments and out-of-pocket maximums as though
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such amounts had been paid in accordance with the terms and conditions of the
Buyer Plan.
(b) As of the Effective Time, Buyer shall assume and honor and shall
cause the appropriate Subsidiaries of Buyer to assume and to honor in accordance
with their terms all employment, severance, retirement and other compensation
Plans, contracts, agreements and arrangements existing prior to the execution of
this Agreement which are between the Company or any of its Subsidiaries and any
officer or employee thereof and which have been disclosed in the Company
Disclosure Schedule. Buyer acknowledges and agrees that the Merger constitutes a
"Change in Control" for all purposes pursuant to such Plans, contracts,
agreements and arrangements and agrees to abide by the provisions of any
contract, agreement or arrangements which relate to a Change in Control. The
provisions of this Section 7.5(c) are intended to be for the benefit of, and
shall be enforceable by, each such officer or Company Employee.
(c) From and after the Effective Time, Buyer agrees to maintain or to
cause the Surviving Bank to maintain the severance plans set forth in Section
7.5(d) of the Company Disclosure Schedule, without modification, in accordance
with their terms. The provisions of this Section 7.5(d) are intended to be for
the benefit of, and shall be enforceable by, each of the Company Employees.
7.6. Indemnification. (a) In the event of any threatened or actual
claim, action, suit, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action, suit,
proceeding or investigation in which any person who is now, or has been at any
time prior to the date of this Agreement, or who becomes prior to the Effective
Time, a director, officer, employee or agent of the Company or any of its
Subsidiaries (the "Indemnified Parties") is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he is or was a director, officer or employee of
the Company, any of the Subsidiaries of the Company or any of their respective
predecessors or affiliates or (ii) this Agreement or any of the transactions
contemplated hereby, whether in any case asserted or arising before or after the
Effective
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Time, the parties hereto agree to cooperate and use their reasonable
best efforts to defend against and respond thereto. It is understood and agreed
that after the Effective Time, Buyer shall indemnify and hold harmless, as and
to the extent permitted by law, each such Indemnified Party against any losses,
claims, damages, liabilities, costs, expenses (including reasonable attorney's
fees and expenses in advance of the final disposition of any claim, suit,
proceeding or investigation to each Indemnified Party to the fullest extent
permitted by law upon receipt of any undertaking required by applicable law and
including reasonable attorney's fees and expenses incurred in connection with
prevailing in a suit by an Indemnified Party to enforce its rights under this
Section 7.6), judgments, fines and amounts paid in settlement in connection with
any such threatened or actual claim, action, suit, proceeding or investigation,
and in the event of any such threatened or actual claim, action, suit,
proceeding or investigation (whether asserted or arising before or after the
Effective Time), the Indemnified Parties may retain counsel reasonably
satisfactory to Buyer; provided, however, that (1) Buyer shall have the right to
assume the defense thereof and upon such assumption Buyer shall not be liable to
any Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by any Indemnified Party in connection with the
defense thereof, except that if Buyer elects not to assume such defense or
counsel for the Indemnified Parties reasonably advises that there are issues
which raise conflicts of interest between Buyer and the Indemnified Parties, the
Indemnified Parties may retain counsel reasonably satisfactory to them after
consultation with Buyer, and Buyer shall pay the reason able fees and expenses
of such counsel for the Indemnified Parties, (2) Buyer shall in all cases be
obligated pursuant to this paragraph to pay for only one firm of counsel for all
Indemnified Parties, (3) Buyer shall not be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld) and (4) Buyer shall have no obligation hereunder to any Indemnified
Party when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final and nonappealable, that
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law. Any Indemnified Party wishing to claim
indemnification under this Section 7.6, upon learning of any
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such claim, action, suit, proceeding or investigation, shall promptly notify
Buyer thereof, provided that the failure to so notify shall not affect the
obligations of Buyer under this Section 7.6 except to the extent such failure to
notify materially prejudices Buyer. Buyer's obligations under this Section 7.6
shall continue in full force and effect without time limit from and after the
Effective Time.
(b) Buyer shall cause the persons serving as officers and directors of
the Company immediately prior to the Effective Time to be covered for a period
of three years from the Effective Time by the directors' and officers' liability
insurance policy maintained by the Company (provided that Buyer may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are not less advantageous than such policy) with respect to
acts or omissions occurring prior to the Effective Time which were committed by
such officers and directors in their capacity as such; provided, however, that
in no event shall Buyer be required to expend on an annual basis more than 150%
of the current amount expended by the Company (the "Insurance Amount") to
maintain or procure insurance coverage, and further provided that if Buyer is
unable to maintain or obtain the insurance called for by this Section 7.6(b),
Buyer shall use all reasonable efforts to obtain as much comparable insurance as
is available for the Insurance Amount.
(c) In the event Buyer or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Buyer
assume the obligations set forth in this section.
(d) The provisions of this Section 7.6 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
7.7. Additional Agreements. In case at any time after the Effective
Time any further action is
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necessary or desirable to carry out the purposes of this Agreement or to vest
the Surviving Bank with full title to all properties, assets, rights, approvals,
immunities and franchises of any of the parties to the Merger, the proper
officers and directors of each party to this Agreement and their respective
Subsidiaries shall take all such necessary action as may be reasonably requested
by Buyer.
7.8. Redemption of Outstanding Securities. The Company agrees to use
its reasonable best efforts to, and to take all such actions as shall be
reasonably necessary to enable it to, redeem on or prior to the Closing Date all
of the outstanding shares of Series A Preferred Stock and all $40 million
aggregate principal amount of its Subordinated Floating Rate Notes due 2002 (the
"Floating Rate Notes") in accordance with the terms of such securities. The
Company shall redeem, in accordance with the terms thereof, all Luxembourg
Francs 750 million aggregate principal amount of its 9% Subordinated Notes due
March 24, 1998 (together with the Series A Preferred Stock and the Floating Rate
Notes, the "Redemption Securities").
7.9. Name Change/Use of Name. Immediately following the Closing, Buyer
shall, and shall cause the Company and each of its Subsidiaries to, take any and
all action necessary to effectuate a change of the name of the Company and each
such Subsidiary to eliminate any reference to the name "Sumitomo" or any
derivative thereof. Except to indicate that a subsidiary of Buyer is the
successor in interest to the Company, following the Effective Time Buyer shall
not, and shall cause each of its Subsidiaries not to, use the name "Sumitomo" or
any derivative thereof in connection with any advertising, marketing or
solicitation efforts. Furthermore, following the Effective Time Buyer will use
reasonable efforts consistent with its practices in its previous acquisitions to
remove such name or any derivative thereof or logo with respect thereto from any
signage, letterhead, or form as promptly as reasonably practicable. Buyer
acknowledges and agrees that it does not have, and that from and after the
Effective Time, none of the Company or any of its Subsidiaries nor any of their
respective successors shall have, any rights in the "Sumitomo" name or any
derivative thereof or in any
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trademark or servicemark using or incorporating such name or any derivative
thereof.
7.10. Pro-Rata Dividend. Notwithstanding anything in this Agreement to
the contrary, the Company may, at any time on or prior to the Closing Date,
declare and pay a pro rata cash dividend in respect of the fiscal quarter in
which the Closing occurs to the holders of Company Common Stock of record, as of
a record date set by the Board of Directors of the Company. Such pro rata
dividend per share shall not exceed an amount equal to (i) $0.20 times (ii) the
number of days that, as of the Closing Date, shall have elapsed in the fiscal
quarter in which the Closing occurs divided by the total number of days in such
fiscal quarter. If Company shall declare a pro-rata dividend pursuant to this
Section 7.10 and such dividend has not been paid as of the Closing Date, then
Buyer shall pay, or shall cause the Company to pay, such dividend to such record
holders on the Closing Date (such payment to be in addition to the Merger
Consideration payable pursuant to this Agreement).
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satis faction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by the requisite vote of the holders of the outstanding shares of
Company Common Stock under applicable law.
(b) Other Approvals. All regulatory approvals required to consummate
the transactions contemplated hereby (including the Merger) shall have been
obtained and shall remain in full force and effect and all statutory waiting
periods in respect thereof shall have expired (all such approvals and the
expiration of all such waiting periods being referred to herein as the
"Requisite Regulatory Approvals") and no such Requisite Regulatory Approvals
shall contain any conditions, re-
41
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strictions or requirements which the Board of Directors of Buyer reasonably
determines would following the Closing Date, have a material adverse effect on
the business, results of operations or financial condition of Buyer and its
subsidiaries taken as a whole, other than any such effect attributable to or
resulting from clauses (i)(w) through (z) of the definition of Material Adverse
Effect.
(c) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Merger shall be in effect. No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, restricts or makes illegal consummation of
the Merger.
8.2. Conditions to Obligations of Buyer and Merger Sub. The obligation
of Buyer and Merger Sub to effect the Merger is also subject to the satisfaction
or waiver by Buyer and Merger Sub at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. (i) Subject to Section 3.2, the
representations and warranties of the Company set forth in this Agreement (other
than those set forth in Sections 4.2, 4.8 and 4.13) shall be true and correct as
of the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made on
and as of the Closing Date; and (ii) the representations and warranties of the
Company set forth in Sections 4.2, 4.8 and 4.13 of this Agreement shall be true
and correct in all material respects (without giving effect to Section 3.2 of
this Agreement) as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date. Buyer shall have received a
certificate signed on behalf of the Company by the Chief Executive Officer and
the Chief Financial Officer of the Company to the foregoing effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all materi-
42
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al respects all obligations required to be performed by it under this Agreement
at or prior to the Closing Date, and Buyer shall have received a certificate
signed on behalf of the Company by the Chief Executive Officer and the Chief
Financial Officer of the Company to such effect.
(c) No Pending Governmental Actions. No proceeding initiated by any
Governmental Entity seeking an Injunction shall be pending.
(d) Redemption of Outstanding Securities. The Company shall have
redeemed on or prior to the Closing Date all of the Redemption Securities.
(e) Voting Agreement. The Voting Agreement shall be in full force and
effect and Parent shall have performed in all material respects all obligations
required to be performed by it under such agreement at or prior to the Effective
Time.
8.3. Conditions to Obligations of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Buyer set forth in this Agreement shall be true and correct as of the date of
this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date. The Company shall have received a certificate signed on behalf
of Buyer by the Chief Executive Officer and the Chief Financial Officer of Buyer
to the foregoing effect.
(b) Performance of Obligations of Buyer. Buyer shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and the Company shall have received a
certificate signed on behalf of Buyer by the Chief Executive Officer and the
Chief Financial Officer of Buyer to such effect.
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(c) No Pending Governmental Actions. No proceeding initiated by any
Governmental Entity seeking an Injunction shall be pending.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1. Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company:
(a) by mutual consent of the Company, Buyer and Merger Sub in a written
instrument, if the Board of Directors of each so determines by a vote of a
majority of the members of its entire Board;
(b) by either Buyer or the Company upon written notice to the other
party (i) 60 days after the date on which any request or application for a
Requisite Regulatory Approval shall have been denied or withdrawn at the request
or recommendation of the Governmental Entity which must grant such Requisite
Regulatory Approval, unless within the 60-day period following such denial or
withdrawal a petition for rehearing or an amended application has been filed
with the applicable Governmental Entity, provided, however, that no party shall
have the right to terminate this Agreement pursuant to this Section 9.1(b)(i) if
such denial or request or recommendation for withdrawal shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein or (ii) if any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the Merger;
(c) by either Buyer or the Company if the Merger shall not have been
consummated on or before December 31, 1998, unless the failure of the Closing to
occur by such date shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe the covenants and agreements of such party
set forth herein;
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(d) by either Buyer or the Company (provided that if the terminating
party is the Company, the Company shall not be in material breach of any of its
obligations under Section 7.3) if any approval of the stockholders of the
Company required for the consummation of the Merger shall not have been obtained
by reason of the failure to obtain the required vote at a duly held meeting of
such stockholders or at any adjournment or postponement thereof;
(e) by either Buyer or the Company (provided that the terminating party
is not then in material breach of any representation, warranty, covenant or
other agreement contained herein) if there shall have been a material breach of
any of the representations or warranties set forth in this Agreement on the part
of the other party, which breach is not cured within thirty days following
written notice to the party committing such breach, or which breach, by its
nature, cannot be cured prior to the Closing; provided, however, that neither
party shall have the right to terminate this Agreement pursuant to this Section
9.1(e) unless the breach of representation or warranty, together with all other
such breaches, would entitle the party receiving such representation not to
consummate the transactions contemplated hereby under Section 8.2(a) (in the
case of a breach of representation or warranty by the Company) or Section 8.3(a)
(in the case of a breach of representation or warranty by Buyer);
(f) by either Buyer or the Company (provided that the terminating party
is not then in material breach of any representation, warranty, covenant or
other agreement contained herein) if there shall have been a material breach of
any of the covenants or agreements set forth in this Agreement on the part of
the other party, which breach shall not have been cured within thirty days
following receipt by the breaching party of written notice of such breach from
the other party hereto, or which breach, by its nature, cannot be cured prior to
the Closing; or
(g) by the Company, upon the execution by the Company of a definitive
agreement relating to a takeover proposal (as defined in Section 6.1(d)),
provided that (i) the Company shall have complied with its obligations under
Section 6.1(d) hereof, and (ii) the
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Board of Directors of the Company shall have determined, after having received
the advice of outside legal counsel to the Company and the advice of the
Company's financial advisor, that such action is necessary for the Board of
Directors of the Company to act in a manner consistent with its fiduciary duties
under applicable law.
9.2. Effect of Termination. (a) In the event of termination of this
Agreement by either Buyer or the Company as provided in Section 9.1, this
Agreement shall forthwith become void and have no effect except that (i) the
last sentence of Section 7.2(a), the last sentence of Section 7.2(b), and each
of Sections 9.2, 10.3, 10.8 and 10.9 shall survive any termination of this
Agreement and (ii) notwithstanding anything to the contrary contained in this
Agreement, no party shall be relieved or released from any liabilities or
damages arising out of its willful breach of any provision of this Agreement.
(b) Within two business days following termination of this Agreement by
the Company as provided in Section 9.1(g), the Company shall pay to Buyer an
amount in immediately available funds equal to $20 million plus all reasonable
out-of-pocket expenses of Buyer. The Company acknowledges that the agreements
contained in this Section 9.2(b) are an integral part of the transactions
contemplated in this Agreement, and that, without these agreements, Buyer and
Merger Sub would not enter into this Agreement; accordingly, if the Company
fails to pay the amount due pursuant to this Section 9.2(b), and, in order to
obtain such payment, Buyer or Merger Sub commences a suit which results in a
judgment against the Company for the fee set forth in this paragraph (b), the
Company shall pay to Buyer or Merger Sub its costs and expenses (including
attorney's fees) in connection with such suit, together with interest on the
amount of the fee at the prime rate of Citibank, N.A., set forth in The Wall
Street Journal on the date such payment was required to be made.
9.3. Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Merger by the stockholders of the
Company; provided, however, that after any approval of the trans-
46
<PAGE>
actions contemplated by this Agreement by the Company's stockholders, there may
not be, without further approval of such stockholders, any amendment of this
Agreement which reduces the amount or changes the form of the consideration to
be delivered to the Company stockholders hereunder or which otherwise changes
any of the principal terms of this Agreement. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
9.4. Extension; Waiver. At any time prior to the Effective Time, each
of the parties hereto, by action taken or authorized by its Board of Directors,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions of the other party contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
ARTICLE X
GENERAL PROVISIONS
10.1. Closing. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") will take place at 10:00 a.m. on the
first day which is (a) the last business day of month and (b) at least two
business days after the satisfaction or waiver (subject to applicable law) of
the latest to occur of the conditions set forth in Article VIII hereof (other
than those conditions which relate to actions to be taken at the Closing)(the
"Closing Date"), at the offices of Sullivan & Cromwell, 444 South Flower Street,
Los Angeles, California 90071 unless another time, date or place is agreed to in
writing by the parties hereto.
10.2. Nonsurvival of Representations, Warranties and Agreements. None
of the representations, war-
47
<PAGE>
ranties, covenants and agreements in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time, except
for those covenants and agreements contained herein and therein which by their
terms apply in whole or in part after the Effective Time.
10.3. Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
10.4. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt
requested) or delivered by an express courier (with confirmation) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Buyer, to:
Zions Bancorporation
One Main Street
Salt Lake City, Utah 84111
Attention: Chief Executive Officer
with a copy to:
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Attn: Stanley F. Farrar, Esq.
and
(b) if to the Company, to:
Sumitomo Bank of California
320 California Street
San Francisco, California 94104
48
<PAGE>
Attention: Chief Executive Officer
and
The Sumitomo Bank, Limited
277 Park Avenue
New York, New York 10172
Attention: General Counsel
with copies to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attn: William S. Rubenstein, Esq.
and
Brobeck Phleger & Harrison LLP
One Market Street
San Francisco, California 94105
Attn: J. Michael Shepherd, Esq.
10.5. Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The phrases "the date of this Agreement", "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to March 25, 1998. No provision of this Agreement shall be construed to
require the Company, Buyer or any of their respective Subsidiaries or affiliates
to take any action that would violate any applicable law, rule or regulation,
but shall be construed to require only such action to the extent that it would
not cause any such violation and a best efforts obligation to take such other
action that would not cause any such violation and is required to provide the
benefits of the provision to the other party.
49
<PAGE>
10.6. Counterparts. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
10.7. Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreement.
10.8. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of California, without regard to any
applicable conflicts of law.
10.9. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that the provisions contained in the
last sentence of Section 7.2(a) were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed the Company
shall be entitled to an injunction or injunctions to prevent breaches of the
agreement contained in the last sentence of Section 7.2(a) of this Agreement and
to enforce specifically the terms and provisions thereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
10.10. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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10.11. Publicity. Except as otherwise required by law or by the rules
of the Nasdaq Stock Market's National Market, so long as this Agreement is in
effect, neither Buyer nor the Company shall, or shall permit any of its
Subsidiaries to, issue or cause the publication of any press release or other
public announcement with respect to, or otherwise make any public statement
concerning, the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld.
10.12. Assignment; No Third Party Beneficiaries. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Except as otherwise
expressly provided herein, this Agreement (including the documents and
instruments referred to herein) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
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<PAGE>
IN WITNESS WHEREOF, each of Buyer, Merger Sub and the Company have
caused this Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
ZIONS BANCORPORATION
By /S/ HARRIS H. SIMMONS
----------------------------
Name: Harris H. Simmons
Title: President and CEO
Attest:
/S/ DALE M. GIBBONS
- ----------------------------
Name: Dale M. Gibbons
Title: CFO
SBC ACQUISITION CORP.
By /S/ DALE M. GIBBONS
--------------------------
Name: Dale M. Gibbons
Title: CFO
Attest:
/S/ HARRIS H. SIMMONS
- ----------------------------
Name: Harris H. Simmons
Title: President and CEO
SUMITOMO BANK OF CALIFORNIA
By /S/ TSUNEO ONDA
----------------------------
Name: Tsuneo Onda
Title: President and CEO
Attest:
/S/ TOMOYUKI KATO
- ----------------------------
Name: Tomoyuki Kato
Title: Senior Executive VP
and Director
52
ZIONS BANCORPORATION
*** FOR IMMEDIATE RELEASE ***
FOR: ZIONS BANCORPORATION ZIONS BANCORPORATION
One South Main, Suite 1380 Contact: Dale Gibbons
Salt Lake City, Utah One South Main, Suite 1380
Harris H. Simmons Salt Lake City, Utah 84111
President/Chief Executive Officer Tel: (801) 524-4787
FOR: SUMITOMO BANK OF CALIFORNIA SUMITOMO BANK OF CALIFORNIA
320 California Street Contact: Kyle Tatsumoto
San Francisco, California 94104 320 California Street
San Francisco, California 94104
Tel: 415-445-8167
March 25, 1998
ZIONS BANCORPORATION AND SUMITOMO BANK OF CALIFORNIA
ANNOUNCE MERGER AGREEMENT
SALT LAKE CITY, Utah and SAN FRANCISCO, California - March 25, 1998 - Zions
Bancorporation ("Zions") (Nasdaq: ZION) and Sumitomo Bank of California
("Sumitomo") (Nasdaq: SUMI), announced today that a definitive agreement has
been signed under which Sumitomo will merge with a subsidiary of Zions. Zions
will pay approximately $546 million for Sumitomo, approximately 85% of the
common stock of which is held by The Sumitomo Bank, Limited ("Sumitomo, Ltd.").
Sumitomo, Ltd. will receive $32.36 for each share held by it, and the other
shareholders of Sumitomo will receive $38.25 per share. Zions will combine its
present Grossmont Bank subsidiary with Sumitomo and First Pacific National Bank
when these acquisitions have been completed. The combined company, with assets
of over $6 billion and 71 banking offices in California, will rank as the fifth
largest commercial bank in the state.
The merger is subject to the approval of Sumitomo shareholders and banking
regulators and is expected to close in the third quarter of 1998. Sumitomo, Ltd.
has agreed to vote 49.99% (the limit as provided in California law) of the
outstanding shares of Sumitomo in favor of the transaction. Zions, Sumitomo and
Sumitomo, Ltd. have agreed to continued cooperation to ensure the ongoing
provision of the financial services that have been accessible to Sumitomo and
Sumitomo, Ltd. customers.
The transaction is valued at approximately $546 million, which is 1.27 times
Sumitomo's tangible book value at December 31, 1997, or 14.1 times its net
income available for common shareholders for 1997 (as adjusted for the pending
redemption of Sumitomo's preferred stock). Zions expects to finance the purchase
with existing resources as well as the issuance of securities in the capital
markets. There are no financing contingencies regarding this transaction. The
acquisition will be accounted for as a purchase and is expected to be
immediately accretive to Zions' cash and GAAP earnings per share.
<PAGE>
ZIONS BANCORPORATION
Press Release - Page 2
March 25, 1998
"This is a very significant opportunity for us to establish a strong presence in
the some of the largest markets in the western United States," stated Harris
Simmons, president and chief executive officer of Zions. "We are delighted to be
able to extend our community banking operations across the state of California,
and look forward to providing personal banking services and an expanded product
offering to Sumitomo's customers."
Mr. Simmons stated that Robert Sarver, chairman of Grossmont Bank and a director
of Zions, is expected to be named chief executive officer of the combined
enterprise. Mr. Sarver said, "Our goal is to become California's super-community
bank. The bank will be divided into regions, such as the Grossmont and First
Pacific operation in San Diego, to be run with a strong community orientation
committed to high customer service and local decision making with customer
access to senior management. Sumitomo has done a fine job at retaining good
employees to serve their customers and we are committed to maintaining their
excellent customer base and providing the same degree of hands-on service." In
order to provide an appropriate incentive to Mr. Sarver to expand Zions'
California franchise, Zions has agreed to sell to him a portion of Sumitomo at
its cost basis. When Sumitomo is combined with Grossmont Bank and First Pacific
National Bank, he will control 5% of the combined company at a purchase price of
approximately $34 million. Zions will retain the exclusive right to repurchase
this ownership interest.
Under local management teams and community identities, Zions Bancorporation
operates full-service banking offices in Arizona, California, Colorado, Idaho,
Nevada, New Mexico, and Utah. It also offers a comprehensive array of
investment, mortgage, insurance, and electronic commerce services and is a
leader in providing innovative financing solutions for small businesses
nationwide. Investor information can be accessed on the Internet at
www.zionsbank.com. Zions Bancorporation's common shares are traded on The Nasdaq
Stock Market under the symbol "ZION."
FORWARD-LOOKING INFORMATION This news release contains statements regarding the
projected performance of Zions and Sumitomo on a stand-alone and pro forma
combined basis. These statements constitute forward-looking information within
the meaning of the Private Securities Litigation Reform Act of 1995. Actual
results may differ materially from the projections discussed in this release
since such projections involve significant risks and uncertainties. Factors that
might cause such differences include, but are not limited to: (1) revenues
following the merger being lower than expected and/or expenses being higher than
expected; (2) costs or difficulties related to the integration of Zions,
Grossmont Bank, First Pacific National Bank, and Sumitomo being greater than
expected; (3) competitive pressures among financial institutions increasing
significantly; (4) economic conditions, either nationally or locally in areas in
which the combined company will conduct its operations, being less favorable
than expected; (5) legislation or regulatory changes adversely affecting the
businesses in which the company would be engaged.
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