As filed with the Securities and Exchange Commission on August 19, 1999
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
ZIONS BANCORPORATION
(Exact name of registrant as specified in its charter)
Utah 6712 87-0227400
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification
number)
----------------------------
One South Main, Suite 1380
Salt Lake City, Utah 84111
(801) 524-4787
(Address, including zip code, and
telephone number, including area
code, of registrant's principal
executive offices)
------------------------
DALE M. GIBBONS
Zions Bancorporation
One South Main, Suite 1380
Salt Lake City, Utah 84111
(801) 524-4787
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
With copies to:
STANLEY F. FARRAR GLENN T. DODD
Sullivan & Cromwell Coudert Brothers
1888 Century Park East, 21st Floor 303 Almaden Blvd., Suite 500
Los Angeles, California 90067 San Jose, California 95110
(310) 712-6600 (408) 297-9982
------------------------
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after the effective date of this Registration
Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
-------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================== ======================== =================== ======================== ======================
Proposed Proposed
Amount to be maximum maximum
Title of securities to be registered offering price per aggregate Amount of
registered share(3) offering price(3) registration fee(4)
- ------------------------------------ ------------------------ ------------------- ------------------------ ----------------------
<S> <C> <C> <C> <C>
Common Stock, no par value(1) 1,007,455(2) Shares $17.50 $54,532,818 $15,161
==================================== ======================== =================== ======================== ======================
</TABLE>
(1) Includes associated preferred share purchase rights.
(2) Represents the estimated maximum number of shares of Common Stock, no par
value ("Zions Common Stock"), of Zions Bancorporation ("Zions") that are
issuable in exchange for shares of Common Stock, no par value ("Regency
Common Stock"), of Regency Bancorp ("Regency") upon consummation of the
merger (the "Merger") of Regency with and into Zions.
(3) Pursuant to Rule 457(f)(1) and 457(c), the registration fee is based on
the average of the high and low sales prices of the Regency Common Stock
as reported on the NASDAQ National Market System on August 19, 1999 and
computed based on the estimated maximum number of shares of Regency
Common Stock (3,116,161) that may be converted into the shares of Zions
Common Stock to be registered.
(4) Pursuant to Rule 457(b), the amount of the registration fee has been
reduced by $10,549, the amount paid to the Securities and Exchange
Commission on July 13, 1999 with respect to this transaction. The
difference of $4,612 is paid herewith.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement becomes effective
on such date as the Commission, acting pursuant to said Section 8(a), may
determine.
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<PAGE>
PROSPECTUS OF
PROXY STATEMENT OF ZIONS BANCORPORATION
REGENCY BANCORP COMMON STOCK
MERGER PROPOSED - YOUR VOTE IS VERY IMPORTANT
Dear Regency Shareholders:
The board of directors of Regency Bancorp has called a special meeting of
shareholders for September 28, 1999, at which you will be asked to consider and
to vote upon the principal terms of a merger agreement providing for the merger
of Regency with and into Zions Bancorporation.
In the Zions/Regency merger, each of your shares of Regency common stock
will be converted into the right to receive 0.3233 of a share of Zions common
stock, subject to adjustment as described in the accompanying proxy
statement/prospectus.
The Zions/Regency merger is intended to be tax-free to Regency
shareholders, except for taxes due on cash received for fractional shares.
Your vote is very important. We cannot complete the Zions/Regency merger
unless the Regency shareholders approve the principal terms of the Zions/Regency
merger agreement at the special meeting.
Since the date of the Zions/Regency merger agreement, Zions and First
Security Corporation have entered into a merger agreement. In the Zions/First
Security merger and related transactions, each share of Zions common stock will
be converted into one share of First Security common stock and, immediately
prior to the Zions/First Security merger, each share of First Security will be
converted into 0.442 of a share of First Security common stock.
Your board of directors has considered the change in circumstances
occasioned by the execution of the First Security merger agreement and has
unanimously reconfirmed its approval of the Zions/Regency merger agreement. The
Regency board of directors believes that the Zions/Regency merger is in the best
interests of Regency and its shareholders and strongly encourages you to vote
"FOR" the merger proposal.
Whether or not you plan to attend the special meeting, please take the time
to complete and mail the enclosed proxy card. If you sign, date and mail your
proxy card without indicating how you want to vote, your proxy will be voted in
favor of the principal terms of the Zions/Regency merger agreement. If you fail
to return your proxy card, the effect will be the same as a vote against the
principal terms of the Zions/Regency merger agreement.
/s/Steven F. Hertel
-----------------------------
Steven F. Hertel
Chairman, President and
Chief Executive Officer
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the Zions common stock to be issued under
this proxy statement/prospectus or determined if this proxy statement/prospectus
is accurate or adequate. Any representation to the contrary is a criminal
offense.
------------------
The date of this proxy statement/prospectus is August 27, 1999, and it
is being mailed or otherwise delivered to Regency shareholders on or about such
date.
<PAGE>
Regency Bancorp
7060 North Fresno Street
Fresno, California 93720
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 28, 1999
To the Shareholders of Regency Bancorp:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of
Regency Bancorp will be held at September 28, 1999 at 9:00 a.m. for the purpose
of voting upon the principal terms of an Agreement and Plan of Merger, dated as
of April 27, 1999, as amended, among Zions Bancorporation, Regency Bancorp and
Regency Bank, pursuant to which Regency will merge into Zions.
In the Zions/Regency merger, each of your shares of Regency common
stock will be converted into the right to receive 0.3233 of a share of Zions
common stock. However, that exchange ratio will be adjusted in the event that
the Zions common stock price determined as of averaging periods near the signing
of the Zions/Regency merger agreement and the closing of the Zions/Regency
merger increases more on a percentage basis than does the KBW 50 Index measured
over the same averaging periods plus 5%. In addition, the exchange ratio will be
adjusted in the event that the Zions common stock price determined as of the
same averaging periods decreases more on a percentage basis than does the KBW 50
Index measured over the same averaging periods minus 5%. See "The
Merger--General" in the accompanying proxy statement/prospectus for a more
complete discussion of the exchange ratio and how it may be adjusted. A copy of
the Zions/Regency merger agreement is set forth as Appendix A to the
accompanying proxy statement/prospectus.
Only shareholders of record at the close of business on July 30, 1999
are entitled to receive notice of and to vote at the special meeting or any
adjournments or postponements thereof. Approval of the Zions/Regency merger
requires that a majority of the outstanding shares of Regency be voted at the
special meeting in favor of the principal terms of the Zions/Regency merger
agreement. The directors, executive officers and certain affiliates of Regency,
who are entitled to vote approximately 33.08% of the outstanding shares of
Regency common stock, have agreed to vote their shares in favor of the principal
terms of the Zions/Regency merger agreement.
Regency's board of directors unanimously recommends that shareholders
vote "FOR" approval of the principal terms of the Zions/Regency merger
agreement.
To ensure that your vote will be counted, please complete, date and
sign the enclosed proxy card and return it promptly in the enclosed postage-paid
envelope, whether or not you currently plan to attend the special meeting. You
may revoke your proxy in the manner described in the accompanying proxy
statement/prospectus at any time before it is voted at the special meeting.
If holders of five percent or more of the outstanding shares of Regency
common stock vote against the merger proposal and make a written demand on
Regency for the purchase of dissenting shares and if certain other conditions
are satisfied, such holders will be entitled to receive cash in an amount equal
to the fair market value of their shares of Regency common stock as of April 27,
1999, in lieu of receiving the Zions common stock in the Zions/Regency merger.
In order to do so, shareholders must comply with procedures specified by
California law. See "The Merger--Dissenters' Rights" in the accompanying proxy
statement/prospectus. The complete text of Chapter 13 of the California General
Corporation Law, which relates to dissenters' rights, is set forth as Appendix C
to the proxy statement/prospectus.
By Order of the Board of Directors,
Secretary
Fresno, California
August 27, 1999
<PAGE>
REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and
financial information about Zions and Regency from documents that are not
included in or delivered with this document. You can obtain documents
incorporated by reference in this proxy statement/prospectus, other than certain
exhibits to those documents, by requesting them in writing or by telephone from
the appropriate company at the following addresses:
Zions Bancorporation Regency Bancorp
One South Main, Suite 1380 7060 North Fresno Street
Salt Lake City, Utah 84111 Fresno, California 93720
Attention: Dale M. Gibbons Attention: Steven F. Hertel
Telephone: (801) 524-4787 Telephone: (559) 438-2600
You will not be charged for any of these documents that you request. If
you would like to request documents, please do so by September 22, 1999 in order
to receive them before the special meeting.
See "Where You Can Find More Information" on page 79.
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<PAGE>
TABLE OF CONTENTS
Page
REFERENCES TO ADDITIONAL INFORMATION..........................................i
QUESTIONS AND ANSWERS ABOUT THE ZIONS/REGENCY MERGER..........................1
SUMMARY .....................................................................2
Comparison of Unaudited Per Share Data...............................8
Selected Financial Data of Zions ...................................10
Selected Financial Data of Regency .................................12
Unaudited Pro Forma Zions/First Security Financial Data.............13
FORWARD-LOOKING STATEMENTS...................................................15
SPECIAL MEETING..............................................................17
General ...........................................................17
Record Date.........................................................17
Solicitation and Revocability of Proxies............................17
Vote Required.......................................................18
Recommendation of Board of Directors................................18
THE MERGER...................................................................19
General ...........................................................19
Background of the Zions/Regency Merger..............................20
Reasons of Regency for the Zions/Regency Merger and
Recommendation of the Regency Board........................20
Opinion of Regency Financial Advisor................................21
Effective Time......................................................27
Distribution of Zions Certificates..................................27
Fractional Shares...................................................28
Federal Income Tax Considerations of the Zions/Regency Merger ......28
Management and Operations After the Zions/Regency Merger............30
Post-Merger Compensation and Benefits...............................31
Treatment of Outstanding Options....................................31
Interests of Certain Persons in the Merger..........................31
Conditions to Completion............................................32
Regulatory Approvals................................................34
Amendment, Waiver and Termination...................................36
Conduct of Business Pending the Zions/Regency Merger................37
Expenses and Fees...................................................39
Accounting Treatment................................................39
NASDAQ Listing of Zions Common Stock................................39
Resales of Zions Common Stock.......................................39
Stock Option Agreement..............................................40
Shareholder Agreements..............................................43
Dissenters' or Appraisal Rights.....................................43
ii
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS..................46
THE ZIONS/FIRST SECURITY MERGER..............................................57
General ...........................................................57
First Security......................................................58
Governance of First Security After the Zions/First Security Merger..58
DESCRIPTION OF ZIONS CAPITAL STOCK...........................................62
Authorized Capital Stock............................................62
Voting Rights.......................................................62
The Zions Board.....................................................63
Shareholder Rights Plan.............................................64
Shareholder Meetings................................................64
Amendment of Zions Articles and Bylaws..............................64
Miscellaneous.......................................................65
CERTAIN DIFFERENCES IN THE RIGHTS OF ZIONS
SHAREHOLDERS, REGENCY SHAREHOLDERS AND
NEW FIRST SECURITY STOCKHOLDERS.....................................66
COMPARATIVE MARKET PRICES AND DIVIDENDS......................................77
Zions ...........................................................77
Regency ...........................................................77
EXPERTS ....................................................................78
VALIDITY OF ZIONS COMMON STOCK...............................................79
OTHER MATTERS................................................................79
WHERE YOU CAN FIND MORE INFORMATION..........................................79
APPENDICES:
Appendix A -- Agreement and Plan of Merger, dated as of April 27, 1999,
by and among Zions Bancorporation, Regency Bancorp and Regency
Bank, as amended
Appendix B -- Stock Option Agreement, dated as of April 27, 1999, by
and between Zions Bancorporation and Regency Bancorp
Appendix C -- Chapter 13 of the CGCL
Appendix D -- Opinion of The Findley Group
iii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE ZIONS/REGENCY MERGER
Q: What do I need to do now?
A: Just indicate on your proxy card how you want your shares to be voted, then
sign and mail it in the enclosed prepaid return envelope marked "Proxy" as
soon as possible, so that your shares may be represented and voted at the
special meeting to be held on September 28, 1999.
Your vote is very important. A majority of the outstanding shares of
Regency common stock must be voted at the special meeting in favor of the
principal terms of the Zions/Regency merger agreement in order for the
Zions/Regency merger to take place, and therefore you should return your
signed proxy card as soon as possible.
The Regency board of directors unanimously recommends voting "FOR" the
principal terms of the proposed Zions/Regency merger.
Q: If my shares are held in "street name" by my broker, will my broker vote my
shares for me?
A: No. Your broker will vote your shares only if you provide instructions on
how to vote. You should follow the directions provided by your broker.
Without instructions, your shares will not be voted on the merger proposal.
Q: Can I change my vote after I have mailed my signed proxy card?
A: Yes. There are three ways for you to revoke your proxy and change your
vote. First, you may send a written notice to the person to whom you
submitted your proxy stating that you would like to revoke your proxy.
Second, you may complete and submit a new proxy card. Third, you may vote
in person at the special meeting. If you have instructed a broker to vote
your shares, you must follow directions received from your broker to change
your vote.
Q: Should I send in my stock certificates now?
A: No. After the Zions/Regency merger is completed, Zions will send you
written instructions for exchanging your stock certificates for the
consideration to be received.
Q: When do you expect to merge?
A: We are working towards completing the Zions/Regency merger as quickly as
possible. In addition to the approval of the Regency shareholders, we must
also obtain certain regulatory approvals. We expect to complete the
Zions/Regency merger in the fourth quarter of 1999.
Q: Whom should I call with questions or to obtain additional copies of this
proxy statement/prospectus?
A: You should contact either:
Zions Bancorporation
One South Main, Suite 1380
Salt Lake City, Utah 84111
Attention: Dale M. Gibbons
Telephone: (801) 524-4787
or
Regency Bancorp
7060 North Fresno Street
Fresno, California 93720
Attention: Steven F. Hertel
Telephone: (559) 438-2600
1
<PAGE>
SUMMARY
This brief summary highlights selected information from the proxy
statement/prospectus. It does not contain all of the information that is
important to you. We urge you to read carefully the entire proxy
statement/prospectus and the other documents to which we refer to fully
understand the Zions/Regency merger. See "Where You Can Find More Information"
on page 79. Each item in this summary refers to the page where that subject is
discussed in more detail, if applicable. The Zions/Regency merger agreement is
attached as Appendix A to this proxy statement/prospectus. We encourage you to
read the Zions/Regency merger agreement because it is the legal document that
governs the Zions/Regency merger.
Merger Consideration will be 0.3233 of a Share of Zions Common Stock, Subject to
Adjustment (see page 19)
When the Zions/Regency merger is complete, each share of Regency common
stock will be converted into the right to receive 0.3233 of a share of Zions
common stock. However, that exchange ratio will be adjusted in the event that
the Zions common stock price, as compared to the KBW 50 Index price, increases
or decreases on a percentage basis beyond specified thresholds, as described in
the next paragraph.
The exchange ratio will be adjusted in the event that the closing Zions
common stock price stated as a percentage of $67.33 is greater than the closing
KBW 50 Index price stated as a percentage of 579.47 plus 5%. In that event, the
exchange ratio will be adjusted by multiplying 0.3233 by a fraction, the
numerator of which is $67.33 multiplied by 1.05 and the denominator of which is
the closing Zions common stock price. The exchange ratio will be increased in
the event that the closing Zions common stock price stated as a percentage of
$67.33 is less than the closing KBW 50 Index price stated as a percentage of
579.47 minus 5%. In that event, the exchange ratio will be adjusted by
multiplying 0.3233 by a fraction, the numerator of which is $67.33 multiplied by
0.95 and the denominator of which is the closing Zions common stock price.
When we refer to the closing Zions common stock price or the closing KBW
50 Index price, we mean the average of the Zions common stock price or the KBW
50 Index over a 15 day trading period ending on the third day before the date on
which we complete the Zions/Regency merger. The KBW 50 Index is made up of 50 of
the nation's most important banking companies, including both money center and
major regional banks, and is considered to be representative of the price
performance of the nation's largest banks.
Generally, these adjustments protect a shareholder of Regency from having
to absorb the effect of a significant decrease in the value of Zions common
stock prior to the closing of the Zions/Regency merger if other bank holding
company stocks whose prices are used to calculate the KBW 50 Index price do not
similarly decline. However, these adjustments also prevent a shareholder of
Regency from benefitting from the effect of a significant increase in the value
of Zions common stock prior to the closing of the Zions/Regency merger if those
other bank holding company stocks do not similarly increase.
Treatment of Regency Options and Warrants (see page 31)
At the completion of the Zions/Regency merger, each outstanding option to
acquire shares of Regency common stock, whether exercisable or not, will be
canceled in exchange for a payment to the holder of such option in shares of
Zions common stock. Zions is also providing this proxy statement/prospectus to
holders of Regency options as a prospectus for the offer and sale by Zions of
shares of Zions common stock in connection with the cancellation of Regency
options.
Tax Treatment (see page 28)
We expect that for U.S. federal income tax purposes, you generally will
not recognize any gain or loss upon the conversion of your shares of Regency
common stock into shares of Zions common stock. You will, however, recognize
income or gain to the extent your shares of Regency common stock are converted
into cash in lieu of fractional shares of Zions common stock.
2
<PAGE>
We have conditioned the Zions/Regency merger on our receipt of legal
opinions that the Zions/Regency merger will be treated as a reorganization for
federal income tax purposes.
This tax treatment may not apply to certain Regency shareholders,
including shareholders who are non-U.S. persons. You should consult your own tax
advisor for a full understanding of the Zions/Regency merger's tax consequences
in your particular circumstances.
Regency Board Recommends Shareholder Approval (see page 18)
Regency's board of directors has considered the change in circumstances
occasioned by the execution of the Zions/First Security merger agreement and has
unanimously reconfirmed its approval of the Zions/Regency merger agreement.
Regency's board of directors believes that the Zions/Regency merger is in your
best interests and recommends that Regency shareholders vote "FOR" approval of
the principal terms of the Zions/Regency merger agreement.
Financial Advisor Says Exchange Ratio Fair to Regency Shareholders (see page 21)
The Findley Group has served as financial advisor to Regency in connection
with the Zions/Regency merger and has rendered an opinion to the Regency board
of directors that the terms of the Zions/Regency merger are fair, from a
financial point of view, to Regency shareholders. A copy of the opinion
delivered by The Findley Group is attached to this document as Appendix D. You
should read the opinion completely to understand the assumptions made, matters
considered and limitations of the review undertaken by The Findley Group in
providing this opinion.
Special Meeting to Be Held on September 28, 1999 (see page 17)
The special meeting of Regency share holders will be held at 9:00 a.m. on
September 28, 1999, at Piccadilly Inn Hotels, Regency Rooms A and D, 2305 W.
Shaw Avenue, Fresno, California. At the special meeting, Regency shareholders
will be asked to vote to approve the principal terms of the Zions/Regency merger
agreement that provides for the merger of Regency into Zions. Record Date Set at
July 30, 1999; Majority Vote of Shareholders Required (see page 17)
You can vote at the special meeting if you owned Regency common stock at
the close of business on July 30, 1999. As of that date, there were 2,627,249
shares of Regency common stock entitled to be voted at the special meeting.
Approval of the principal terms of the Zions/Regency merger agreement requires
that a majority of the outstanding shares of Regency common stock be voted at
the special meeting in favor of the merger proposal.
Certain Shareholders Have Agreed to Vote in Favor of Zions/Regency Merger
(see page 43)
The directors, executive officers and certain affiliates of Regency, who
are entitled to vote approximately 33.08% of Regency's outstanding common stock,
have entered into shareholder agreements with Zions. The shareholder agreements
provide that these shareholders will vote their shares of Regency common stock
in favor of the merger proposal.
The directors and executive officers entered into the shareholder
agreements in order to induce Zions to enter into the Zions/Regency merger
agreement. The shareholder agreements could discourage other companies from
trying to acquire Regency.
Dissenters' Rights (see page 43)
If holders of five percent or more of the outstanding shares of Regency
common stock vote against the merger proposal and make a written demand upon
Regency for the purchase of dissenting shares and if certain other conditions
are met, holders of Regency common stock may be entitled to dissenters' rights
under Chapter 13 of the California General Corporation Law; Chapter 13 is
attached to this proxy statement/prospectus as Appendix C. In that event,
shareholders who vote against the merger proposal and who comply with the
provisions of Chapter 13 will have the right to require the purchase of their
shares of Regency common stock held by them for cash at the fair market value of
those shares on the day before the merger was first publicly announced, or April
27, 1999. Under Chapter 13, the fair market
3
<PAGE>
value of those shares will exclude any appreciation or depreciation that results
from the Zions/Regency merger. If you choose to exercise dissenters'
rights with respect to your shares of Regency common stock, your failure to
comply strictly with the provisions of Chapter 13 may result in a waiver or
forfeiture of those dissenters' rights.
Information Regarding Zions and Regency
Zions Bancorporation
One South Main
Salt Lake City, Utah 84111
Zions is a Utah corporation. It is the parent holding company for
California Bank & Trust, the bank with which Regency Bank will merge at the
closing of the Zions/Regency merger. Zions is also the parent holding company
for Zions First National Bank, headquartered in Salt Lake City, Utah, and
several other subsidiaries that engage in banking or banking-related services.
Through its banking subsidiaries, Zions operated 340 branches in the states of
Arizona, California, Colorado, Idaho, Nevada, New Mexico, Utah and Washington as
of June 30, 1999. At that date, Zions had consolidated assets of $17.6 billion,
deposits of $13.1 billion and shareholders' equity of $1.1 billion.
Regency Bancorp
7060 North Fresno Street
Fresno, California 93720
Regency is a California corporation. Its principal subsidiary is Regency
Bank, a California state-chartered bank which has served small and medium-sized
businesses, professionals, merchants and individuals in and around Fresno,
California since 1980. Regency Bank offers a full range of commercial banking
services, including the acceptance of demand, savings and time deposits, and the
making of commercial real estate (including real estate construction and
residential mortgage), Small Business Administration, personal, home
improvement, automobile and other installment and term loans. Regency is also
the holding company for Regency Investment Advisors, a company that provides
investment management and consulting services. At June 30, 1999, Regency had
consolidated assets of $229.7 million, deposits of $202.8 million and
shareholders' equity of $23.5 million.
Zions to Continue As Surviving Corporation (see page 19)
Zions will be the surviving corporation immediately following the
Zions/Regency merger. The directors and officers of Zions in office before the
merger will initially serve as the directors and officers of Zions after the
Zions/Regency merger.
Bank Merger to Occur Simultaneously With Closing (see page 19)
Simultaneously with the completion of the merger of Regency with Zions,
Regency Bank will be merged with California Bank & Trust. California Bank &
Trust will be the surviving corporation in the bank merger. The bank merger
cannot be completed until the regulatory approvals described below are received.
Zions To Merge With First Security (see page 57)
Since the date of the Zions/Regency merger agreement, Zions and First
Security Corporation have entered into a merger agreement as a result of which
Zions will merge with and into First Security. In the Zions/First Security
merger and related transactions, each share of Zions common stock will be
converted into one share of First Security common stock and, immediately prior
to the First Security merger, each share of First Security common stock will be
converted into 0.442 of a share of First Security common stock.
First Security is the nation's oldest multistate bank holding company and
is the parent corporation for First Security Bank, N.A. and several other
banking subsidiaries and subsidiaries that engage in banking-related services.
Through its subsidiaries, First Security operated 333 branches in the states of
California, Idaho, Nevada, New Mexico, Oregon, Utah and Wyoming as of June 30,
1999. At that date, First Security had consolidated assets of $22.1 billion,
deposits of $13.0 billion and stockholders' equity of $1.7 billion.
Effect of Zions/First Security Merger. If both the Zions/First Security
merger and the Zions/Regency merger are completed, each share of Regency common
stock ultimately would be converted into 0.3233 of a share of First Security
common stock, subject to the same adjustments described above. If the
4
<PAGE>
Zions/First Security merger were completed prior to the Zions/Regency
merger, First Security would assume the rights and obligations of Zions under
the Zions/Regency merger agreement. If, however, the Zions/Regency merger is
completed prior to the Zions/First Security merger, the shares of Regency common
stock would first be converted into shares of Zions common stock at the 0.3233
exchange ratio, as it may be adjusted, and then into shares of First Security
common stock on a one share-for-one share basis. Finally, if the Zions/First
Security merger is not completed after the Zions/Regency merger, the shares of
Zions common stock received by Regency shareholders in the Zions/Regency merger
will remain as such.
We currently expect that the Zions/First Security merger, if it closes,
will close after the Zions/Regency merger. If all conditions to the completion
of the Zions/First Security merger are met, Regency shareholders would become
stockholders of First Security. However, you will not be entitled to vote on the
merger of Zions with First Security because you will not be shareholders of
Zions on the record date for the special meeting of shareholders of Zions.
Therefore, when voting on the principal terms of the Zions/Regency merger
agreement and deciding whether to exercise dissenters' rights with respect to
the Zions/Regency merger, you must consider the possibility that you will become
stockholders of First Security.
Conditions That Must Be Satisfied for the Zions/First Security Merger to
Occur. The Zions/First Security merger is subject to various conditions,
including:
o approval of the First Security merger agreement by the First Security
stockholders and the Zions shareholders;
o receipt of all governmental and other consents and approvals that are
necessary to permit completion of the Zions/First Security merger; and
o other usual conditions.
Zions cannot guarantee when or if the merger with First Security will be
completed.
Zions To Acquire Pioneer Bancorporation
Pioneer Bancorporation has entered into a merger agreement with Zions.
Pioneer Bancorporation is the holding company for Pioneer Citizens Bank of
Nevada, a Nevada state-chartered bank headquartered in Reno, Nevada. In the
Zions/Pioneer merger, each share of Pioneer common stock will be converted into
the right to receive a fraction of a share of Zions common stock having a value
of $35.70, although that value is subject to adjustment. Based upon a price of
$54.69 per share of Zions common stock as of August 25, 1999 (the latest
practicable date prior to the mailing of this proxy statement/prospectus), Zions
anticipates issuing up to approximately 5,400,000 shares of Zions common stock
in the Zions/Pioneer merger with an approximate total value of $295,326,000
million. The Zions/Pioneer merger is subject to various conditions, including:
o approval of the Pioneer merger agreement by the Pioneer shareholders;
o receipt of all governmental and other consents and approvals that are
necessary to permit completion of the Zions/Regency merger; and
o other usual conditions.
Zions cannot guarantee when or if the merger with Pioneer will be
completed.
Zions to Use Pooling-of-Interests Accounting Treatment (see page 39)
Zions anticipates accounting for the Zions/Regency merger as a pooling of
interests for financial reporting purposes. Zions has conditioned the
Zions/Regency merger on receipt of the opinion of its independent auditors that
the Zions/Regency merger will qualify for pooling-of-interests accounting
treatment. However, the ability of Zions to account for the Zions/Regency merger
as a pooling of interests is not a condition to the obligation of Zions to
complete the merger.
Monetary Benefits to Management in the Zions/Regency Merger (see page 31)
The directors and executive officers of Regency have interests in the
Zions/Regency merger in addition to their interests as shareholders of Regency
generally. For example:
5
<PAGE>
o Some officers have entered into severance agreements and salary
continuation agreements with Regency pursuant to which each may receive one
or more payments as a result of the Zions/Regency merger.
o Some officers of Regency will enter into employment agreements with
California Bank & Trust.
o Following the Zions/Regency merger, Zions will indemnify and provide
liability insurance to the officers and directors of Regency.
The Regency board of directors was aware of these interests and took them
into account in approving the Zions/Regency merger agreement.
Conditions That Must be Satisfied for the Merger to Occur (see page 32)
Completion of the Zions/Regency merger is subject to various conditions,
including:
o approval of the principal terms of the Zions/Regency merger agreement by
the Regency shareholders;
o receipt of all governmental and other consents and approvals that are
necessary to permit completion of the Zions/Regency merger; and
o other usual conditions.
Certain of these conditions to the Zions/Regency merger may be waived by
Zions or Regency, as applicable.
Regulatory Approvals We Must Obtain for the Zions/Regency Merger (see page 34)
We cannot complete the Zions/Regency merger unless it is approved by the
Board of Governors of the Federal Reserve System and unless the bank merger is
approved by the Federal Deposit Insurance Corporation. Zions has submitted
notices to the Federal Reserve regarding the Zions/Regency merger, and
California Bank & Trust has filed an application with the Federal Deposit
Insurance Corporation seeking approval of the bank merger. The bank merger also
cannot be completed unless it is approved by the California Commissioner of
Financial Institutions. California Bank & Trust has filed an application with
the California Department of Financial Institutions seeking approval of the bank
merger.
Although we do not know of any reason why we cannot obtain these regulatory
approvals in a timely manner, we cannot be certain when or if we will obtain
them.
Zions/Regency Merger Expected to Occur in Fourth Quarter of 1999
The Zions/Regency merger will occur shortly after all of the conditions to
its completion have been satisfied. It is currently anticipated that the
Zions/Regency merger will occur in the fourth quarter of 1999.
Termination of the Merger Agreement (see page 35).
Regency and Zions can agree to abandon the Zions/Regency merger (and
terminate the Zions/Regency merger agreement) at any time prior to the time the
Zions/Regency merger is completed, even if Regency's shareholders have approved
the principal terms of the Zions/Regency merger agreement. Also, either Regency
or Zions can decide, without the consent of the other, to abandon the
Zions/Regency merger if any of the following occurs:
o The other party breaches a provision contained in the Zions/Regency merger
agreement and does not (or cannot) correct the breach within 30 days.
o The Zions/Regency merger has not been completed by December 31, 1999.
o Any regulatory authority denies an approval we need to complete the
Zions/Regency merger or issues any order preventing the Zions/Regency
merger.
o Regency's shareholders vote not to approve the principal terms of the
Zions/Regency merger agreement.
In addition, Zions may abandon the Zions/Regency merger if Regency's board
of directors fails to make or withdraws its recommendation to Regency
shareholders to approve the Zions/Regency merger agreement or modifies its
recommendation in any way adverse to Zions or if Regency breaks its agreements
not to initiate or negotiate an alternative transaction. Regency may abandon the
6
<PAGE>
Zions/Regency merger if the Regency board determines to approve a definitive
agreement with a third party which has made an acquisition proposal superior to
Zions' proposal, so long as Regency provides written notice of its intention to
terminate at least two business days in advance and pays Zions a termination fee
of $1.8 million. The termination would also allow Zions to exercise its option
to purchase up to 19.9% of Regency's common stock.
Stock Option Agreement (see page 40)
In connection with the Zions/Regency merger agreement, Regency granted to
Zions an option to purchase shares of Regency common stock under certain
circumstances. Under the option, Zions may purchase up to 19.9% of the
outstanding shares of Regency common stock at a price of $17.08 per share.
Zions cannot exercise this option unless certain events occur. These events
can generally be described as business combinations or acquisition transactions
relating to Regency and certain related events (other than the merger we are
proposing in this proxy statement/ prospectus). We do not know of any event that
has occurred as of the date of this proxy statement/prospectus that would allow
Zions to exercise this option.
Regency agreed to grant the option to Zions in order to induce Zions to
enter into the Zions/Regency merger agreement. The option could have the effect
of discouraging other companies from trying to acquire Regency.
The option agreement is attached to this document as Appendix B.
Share Information and Market Prices (see page 77)
Zions common stock is quoted on the NASDAQ National Market under the symbol
"ZION". Regency common stock is quoted on the NASDAQ National Market under the
symbol "REFN". The following table sets forth the last sales prices of Zions
common stock and Regency common stock and the equivalent price per share on
April 27, 1999, the last trading day before we announced the Zions/Regency
merger, and on August 25, 1999, the latest practicable date prior to the mailing
of this proxy statement/prospectus.
Zions Regency
Common Common
Stock Stock
------- -------
April 27,
1999 $ 70.00 $ 20.00
August 18, $ 54.69 $ 17.50
1999
Equivalent Price Per
Share of Regency Common Stock
-----------------------------
Giving Effect to
Giving Effect Zions/Regency
to and Zions/First
Zions/Regency Security Merger
Merger (a) (b)
------------- ----------------
April 27,
1999 $ 22.63 $ 22.63
August 18, $ 17.68 $ 17.68
1999
(a) Computed by multiplying the last sales price of a share of Zions common
stock on the relevant date by an assumed exchange ratio of 0.3233.
(b) Computed based on the one share-for-one share exchange contemplated by the
Zions/First Security merger.
The market prices of Zions, First Security and Regency common stock will
fluctuate prior to the merger. You should obtain current market quotations for
the common stock of Zions, First Security and Regency.
7
<PAGE>
Comparison of Unaudited Per Share Data
The following table shows information about our per share net income,
cash dividends and book value, after giving effect to the merger, which we refer
to as "pro forma" information. In presenting the pro forma information for
certain time periods, we assumed that we merged as of the beginning of the
period presented. The pro forma information gives effect to the merger under the
pooling-of-interests method of accounting in accordance with generally accepted
accounting principles. The pro forma equivalent per share data is derived by
multiplying the pro forma comparative per share amounts by hypothetical exchange
ratios based upon assumed stock and index prices.
We expect that we will incur merger and integration charges. The pro
forma information, while helpful in illustrating the financial characteristics
of the combined company under one set of assumptions, does not reflect these
expenses and, accordingly, does not attempt to predict or suggest future
results. It also does not necessarily reflect what the historical results of the
combined company would have been had our companies been combined.
The information in the following table should be read together with the
historical financial information that we have presented in our prior filings
with the Securities and Exchange Commission. We have incorporated this material
into this document by reference to those other filings. See "Where You Can Find
More Information" on page 79.
8
<PAGE>
<TABLE>
<CAPTION>
Historical
----------------
Zions Regency Pro Forma Combined Equivalent Pro Forma
------- ------- ----------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net income - basic:
Six Months Ended June 30, 1999 ..... $ 1.29 $0.93 $ 1.31(1) $ 1.30(2) $ 1.31(3) $0.42(1) $0.46(2) $0.40(3)
Year Ended December 31, 1998 ....... 1.93 1.40 1.96 1.96 1.96 0.63 0.70 0.60
Year Ended December 31, 1997 ....... 1.88 (0.68) 1.85 1.85 1.85 0.60 0.66 0.56
Year Ended December 31, 1996 ....... 1.69 0.55 1.69 1.69 1.69 0.55 0.60 0.52
Net income - diluted:
Six Months Ended June 30, 1999 ..... $ 1.27 $0.86 $ 1.29(1) $ 1.28(2) $ 1.29(3) $0.42(1) $0.46(2) $0.39(3)
Year Ended December 31, 1998 ....... 1.91 1.31 1.93 1.93 1.93 0.62 0.69 0.59
Year Ended December 31, 1997 ....... 1.84 (0.68) 1.79 1.79 1.79 0.58 0.64 0.55
Year Ended December 31, 1996 ....... 1.66 0.54 1.65 1.65 1.65 0.53 0.59 0.50
Cash dividends per share of common stock:
Six Months Ended June 30, 1999 ..... $ 0.43 $0.20 $ 0.43(1) $ 0.43(2) $ 0.43(3) $0.14(1) $0.15(2) $0.13(3)
Year Ended December 31, 1998 ....... 0.54 0.00 0.54 0.54 0.54 0.17 0.19 0.16
Year Ended December 31, 1997 ....... 0.47 0.00 0.47 0.47 0.47 0.15 0.17 0.14
Year Ended December 31, 1996 ....... 0.425 0.24 0.425 0.425 0.425 0.14 0.15 0.13
Book value per share of common stock
(period end):
Six Months Ended June 30, 1999 ..... $ 13.81 $8.95 $ 13.96(1) $ 13.94(2) $ 13.97(3) $4.51(1) $4.96(2) $4.26(3)
Year Ended December 31, 1998 ....... 12.89 8.56 13.04 13.02 13.04 4.22 4.63 3.98
Year Ended December 31, 1997 ....... 10.40 7.15 10.54 10.52 10.54 3.41 3.74 3.22
Year Ended December 31, 1996 ....... 9.04 7.41 9.15 9.15 9.16 2.96 3.26 2.80
</TABLE>
(1) Assumes on exchange ratio of 0.3233.
(2) Assumes an exchange ratio of 0.3558, which is what the exchange ratio would
be based on a hypothetical closing Zions common stock price of $52 and a
hypothetical closing KBW 50 Index price of $550.
(3) Assumes an exchange ratio of 0.3053, which is what the exchange ratio would
be based on a hypothetical closing Zions common stock price of $82 and a
hypothetical closing KBW 50 Index price of $600.
9
<PAGE>
Selected Financial Data of Zions
The following table presents selected historical financial data of Zions
derived from Zions' previously filed financial statements. The interim financial
information has been derived from unaudited financial statements of Zions. Zions
believes that these financial statements include all adjustments of a normal,
recurring nature and all disclosures that are necessary for a fair statement of
the results for the unaudited interim periods. Results for the interim periods
do not necessarily indicate results which may be expected for any other interim
or annual period.
The information in the following table should be read together with the
historical financial information that Zions has presented in its prior filings
with the SEC. Zions has incorporated this material into this proxy
statement/prospectus by reference to those other filings. See "Where You Can
Find More Information" on page 79.
<TABLE>
<CAPTION>
At or For the
Six Months Ended
June 30, At or For the Year Ended December 31,
------------------------- -------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- ----------- -----------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statements
of Income Data:
Interest income ............ $ 615,806 $ 433,285 $ 976,044 $ 779,531 $ 594,740 $ 504,345 $ 405,219
Interest expense ........... 274,359 194,989 432,281 367,000 257,015 231,854 172,514
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income ..... 341,447 238,296 543,763 412,531 337,725 272,491 232,705
Provision for loan
losses ................ 7,864 6,819 12,179 7,758 6,526 4,727 3,119
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income
after provision for
loan losses ............. 333,583 231,477 531,584 404,773 331,199 267,764 229,586
Noninterest income ......... 124,088 92,558 200,713 146,374 122,007 95,771 79,030
Noninterest expense ........ 299,909 218,169 514,057 344,629 273,124 229,654 207,191
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before income
taxes ................... 157,762 105,866 218,240 206,518 180,082 133,881 101,425
Income taxes ............... 54,029 33,886 70,862 72,218 59,664 43,818 32,643
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income before
minority interest ....... 103,733 71,980 147,378 134,300 120,418 90,063 68,782
Minority interest .......... 2,074 -- 531 -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income ................. $ 101,659 $ 71,980 $ 146,847 $ 134,300 $ 120,418 $ 90,063 $ 68,782
=========== =========== =========== =========== =========== =========== ===========
Earnings per common
share:
Basic ................... $ 1.29 $ 0.98 $ 1.93 $ 1.88 $ 1.69 $ 1.38 $ 1.10
Diluted ................. $ 1.27 $ 0.96 $ 1.91 $ 1.84 $ 1.66 $ 1.36 $ 1.08
Shares on which earnings
per common share were
based:
Basic ................... 78,879 73,582 75,868 70,535 70,389 64,713 62,069
Diluted ................. 80,017 74,688 76,988 72,813 72,158 65,960 63,109
Cash dividends paid per
common share ............... $ 0.43 $ 0.26 $ 0.54 $ 0.47 $ 0.425 $ 0.3525 $ 0.29
Consolidated Balance
Sheet Data:
Total assets ............... $17,605,736 $12,120,421 $16,648,921 $10,869,204 $ 8,224,326 $ 6,904,198 $ 5,713,717
Loans, net of unearned ..... 11,046,662 6,279,359 10,633,492 5,668,902 4,503,153 3,533,366 2,791,396
Deposits ................... 13,070,724 8,551,900 13,321,163 7,956,234 6,009,304 5,148,756 4,250,800
Total shareholders'
equity .................. 1,091,272 946,924 1,013,656 742,052 641,323 534,993 412,932
</TABLE>
10
<PAGE>
Selected Financial Data of Regency
The following table presents selected historical financial data of
Regency derived from Regency's previously filed financial statements or, in the
case of the data as of and for the year ended December 31, 1994, from Regency
Bank's financial statements. The interim financial information has been derived
from unaudited financial statements of Regency. Regency believes that these
financial statements include all adjustments of a normal, recurring nature and
all disclosures that are necessary for a fair statement of the results for the
unaudited interim periods. Results for the interim periods do not necessarily
indicate results which may be expected for any other interim or annual period.
The information in the following table should be read together with the
historical financial information that Regency has presented in its prior filings
with the SEC and with Regency Bank's historical audited financial statements.
This material is incorporated into this proxy statement/prospectus by reference
to those other filings. See "Where You Can Find More Information" on page 79.
<TABLE>
<CAPTION>
At or For the
Six Months Ended
June 30, At or For the Year Ended December 31,
------------------------- -------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- ----------- -----------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statements of
Operations Data:
Interest income ............ $ 9,743 $ 8,818 $ 18,636 $ 15,286 $ 13,227 $ 12,841 $ 10,708
Interest expense ........... 2,856 2,596 5,452 5,321 4,694 5,092 2,989
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income ..... 6,887 6,222 13,184 9,965 8,533 7,749 7,719
Provision for credit losses 125 275 375 1,353 -- 470 487
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income after
provision for credit
losses .................. 6,762 5,947 12,809 8,612 8,533 7,279 7,232
Noninterest income ......... 1,339 1,163 2,962 2,687 3,109 1,883 4,026
Noninterest expense ........ 4,362 5,119 9,455 13,406 9,902 12,105 8,327
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before
income taxes ......... 3,739 1,991 6,316 (2,107) 1,740 (2,943) 2,931
Income taxes (benefit) .... 1,286 843 2,643 (833) 732 (1,176) 1,195
Net income (loss) .......... $ 2,453 $ 1,148 $ 3,673 $ (1,274) $ 1,008 $ (1,767) $ 1,736
=========== =========== =========== =========== =========== =========== ===========
Earnings per common
share:
Basic ................... $ 0.93 $ 0.44 $ 1.40 $ (0.68) $ 0.55 $ (0.98) $ 1.00
Diluted ................. $ 0.86 $ 0.41 $ 1.31 $ (0.68) $ 0.54 $ (0.98) $ 0.94
Shares on which earnings
(loss) per common
share were based:
Basic ................... 2,625 2,623 2,624 1,860 1,818 1,805 1,734
Diluted ................. 2,853 2,796 2,800 1,860 1,872 1,805 1,841
Cash dividends paid per
common share ............... $ 0.20 -- -- -- $ 0.24 $ 0.20 $ 0.10
Consolidated Balance
Sheets Data:
Total assets ............... $ 229,680 $ 205,632 $ 231,967 $ 198,241 $ 181,058 $ 163,682 $ 155,802
Loans, net of unearned ..... 153,972 141,402 147,588 126,430 99,770 94,529 89,589
Deposits ................... 202,849 182,318 206,637 176,279 159,802 143,745 137,889
Shareholders' equity ....... 23,503 19,918 22,449 18,734 13,470 12,942 14,327
</TABLE>
11
<PAGE>
Unaudited Pro Forma Zions/First Security Financial Data
The following table presents summary financial data for Zions and First
Security after giving effect to the Zions/First Security merger, which we refer
to as "pro forma" information. The pro forma financial data gives effect to the
Zions/First Security merger under the pooling-of-interests accounting method in
accordance with generally accepted accounting principles. In presenting the pro
forma information for certain time periods, Zions assumed that Zions and First
Security had been merged throughout those periods. Net income per share amounts
and weighted average shares have been adjusted to reflect the conversion of each
outstanding share of First Security common stock into 0.442 of a share of the
combined company common stock to take place immediately prior to the completion
of the Zions/First Security merger. The pro forma combined statement of income
data for the year ended December 31, 1998 includes results of operations for The
Sumitomo Bank of California for the nine months ended September 30, 1998, after
giving effect to certain pro forma adjustments. Zions acquired Sumitomo in a
transaction accounted for as a purchase on October 1, 1998.
Zions expects that it will incur reorganization and restructuring
expenses as a result of combining Zions and First Security. The unaudited pro
forma statement of income information does not reflect any anticipated
reorganization and restructuring expenses resulting from the Zions/First
Security merger. Zions also anticipates that the Zions/First Security merger
will provide the combined company with certain financial benefits that include
reduced operating expenses and opportunities to earn more revenue. However,
Zions does not reflect any of these anticipated cost savings or benefits in the
pro forma information. Finally, the pro forma financial information does not
reflect any divestitures of branches or deposits that may be required in
connection with the merger. Therefore, the pro forma information, while helpful
in illustrating the financial characteristics of the combined company under one
set of assumptions, does not attempt to predict or suggest future results. The
pro forma information also does not attempt to show how the combined company
would actually have performed had the companies been combined throughout these
periods. All adjustments, consisting of only normal recurring adjustments,
necessary for a fair statement of results of the unaudited historical interim
periods have been included.
Zions bases the information in the following tables on the historical
financial information of Zions and First Security that Zions and First Security
have presented in their prior filings with the SEC. When you read the summary
financial information provided in the following tables, you should also read the
historical financial information and the more detailed financial information we
provide in this proxy statement/prospectus, which you can find beginning at page
46, as well as the historical financial information in the other documents to
which we refer. See "Where You Can Find More Information" on page 79. The
information in the following table does not give effect to the Zions/Regency
merger, the Zions/Pioneer merger or merger transactions that First Security
expects to complete prior to the completion of the Zions/Regency merger or has
recently completed, none of which are material to the pro forma financial
information set forth below.
12
<PAGE>
<TABLE>
<CAPTION>
At or For the
Six Months For the Year Ended December 31,
Ended ---------------------------------------
June 30, 1999 1998 1997 1996
----------- ----------- ----------- -----------
(In millions, except share and per share data)
<S> <C> <C> <C> <C>
Pro Forma Combined Statements of
Income Data:
Interest income ......................... $ 1,363.0 $ 2,652.4 $ 1,992.9 $ 1,634.1
Interest expense ........................ 651.7 1,273.3 954.4 742.3
Net interest income .................. 711.3 1,379.1 1,038.5 891.8
Provision for loan losses ............... 35.4 90.1 71.2 47.8
Net interest income after
provision for loan losses ............ 675.9 1,289.0 967.3 844.0
Noninterest income ...................... 421.3 735.9 519.6 440.3
Noninterest expense ..................... 738.4 1,427.9 949.6 816.2
Income before income taxes .............. 358.8 597.0 537.3 468.1
Income taxes ............................ 121.3 206.4 187.7 163.2
Net income before minority interest .. 237.5 390.6 349.6 304.9
Minority interest ....................... 2.1 1.1 -- --
Net income .............................. $ 235.4 $ 389.5 $ 349.6 $ 304.9
Earnings per common share:
Basic ................................ $ 1.45 $ 2.42 $ 2.30 $ 2.03
Diluted .............................. $ 1.42 $ 2.36 $ 2.23 $ 1.97
Shares on which earnings per common
share were based (in thousands):
Basic ................................ 162,684 159,978 151,078 149,839
Diluted .............................. 166,085 163,868 156,229 153,921
Pro Forma Combined Balance Sheet
Data:
Total assets ................................ $ 39,674
Loans, net of unearned income ............... 24,357
Deposits .................................... 26,054
Long-term borrowings ........................ 3,096
Total shareholders' equity .................. 2,610
</TABLE>
13
<PAGE>
FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus contains certain forward-looking
statements with respect to the financial condition, results of operations and
business of Zions, Regency and First Security. These statements may be made
directly in this document or may be incorporated in this document by reference
to other documents and may include statements regarding the projected
performance of Zions and First Security for the period following the completion
of the Zions/First Security merger. You can find many of these statements by
looking for words such as "believes", "expects", "anticipates", "estimates" or
similar words or expressions. These forward-looking statements involve
substantial risks and uncertainties. Some of the factors that may cause actual
results to differ materially from those contemplated by such forward-looking
statements include, but are not limited to, the following possibilities:
o the timing of the completion of the proposed Zions/Regency and
Zions/First Security mergers and new operations being delayed or
such activities being prohibited;
o there may be increases in competitive pressure among financial
institutions;
o general economic conditions, either nationally or locally in areas
in which Zions, First Security and Regency conduct their
operations or conditions in securities markets may be less
favorable than we currently anticipate;
o combining the businesses of Zions and First Security and/or Zions
and Regency may cost more than we expect or require greater than
expected divestitures of branches or deposits as a result of the
Zions/First Security merger;
o expected cost savings from the Zions/First Security merger or the
Zions/Regency merger not being fully realized or realized within
the expected time frame;
o legislation or regulatory changes which adversely affect the
ability of the combined company resulting from one or both of the
mergers to conduct, or the accounting for, business combinations
and new operations;
o the transition to the year 2000 may have an adverse impact on
Zions, First Security, Regency or the banking industry in general;
o integrating the businesses of Zions and First Security and/or
Zions and Regency and retaining key personnel may be more
difficult than we expect;
o our revenues after either or both of the mergers may be lower than
we expect;
o we may lose more business or customers after the merger than we
expect, or our operating costs may be higher than we expect; or
o changes in the interest rate environment may reduce interest
margins.
Because such statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by such
statements. Regency shareholders are cautioned not to place undue reliance on
such statements, which speak only as of the date of this proxy
statement/prospectus or the date of any document incorporated by reference.
All subsequent written and oral forward-looking statements attributable
to Regency or Zions or any person acting on their behalf are expressly qualified
in their entirety by the cautionary statements contained or referred to in this
section. Neither Regency nor Zions undertakes any obligation to release
14
<PAGE>
publicly any revisions of such forward-looking statements to reflect events or
circumstances after the date of this proxy statement/prospectus or to reflect
the occurrence of unanticipated events.
15
<PAGE>
SPECIAL MEETING
General
The board of directors of Regency is providing this proxy
statement/prospectus to the holders of Regency common stock for the solicitation
of proxies for use at the special meeting of Regency shareholders and at any
adjournments or postponements of that meeting. The special meeting is scheduled
to be held at Piccadilly Inn Hotels, Regency Rooms A and D, 2305 W. Shaw Avenue,
Fresno, California, 93711 at 9:00 a.m. on September 28, 1999. The purpose of the
meeting is to consider and vote on the approval of the principal terms of the
merger agreement.
Zions is also providing this proxy statement/prospectus to Regency
shareholders as a prospectus for the offer and sale by Zions of shares of Zions
common stock to Regency shareholders in connection with the merger of Regency
into Zions.
Record Date
The Regency board has fixed the close of business on July 30, 1999 as
the record date for determining which Regency shareholders are entitled to
receive notice of and to vote at the special meeting. As of the record date,
there were issued and outstanding 2,627,249 shares of Regency common stock. Only
holders of record of Regency common stock as of the record date are entitled to
notice of and to vote at the special meeting.
The presence, in person or by properly executed proxy, of the holders
of a majority of the outstanding shares is necessary to constitute a quorum at
the special meeting. Abstentions and broker non-votes (as described below) will
be counted solely for the purpose of determining whether a quorum is present.
Under the applicable rules of the National Association of Securities Dealers,
Inc., brokers or members who hold shares in street name for customers who are
the beneficial owners of such shares are prohibited from giving a proxy to vote
those shares with respect to the approval of the principal terms of the
Zions/Regency merger agreement in the absence of specific instructions from such
customers. We refer to these as "broker non-votes". Abstentions and broker
non-votes will not be deemed to be cast either "FOR" or "AGAINST" the principal
terms of the Zions/Regency merger agreement.
Solicitation and Revocability of Proxies
Proxies in the form accompanying this document are being solicited by
the Regency board. Shares represented by properly executed proxies, if such
proxies are received in time and are not revoked, will be voted in accordance
with the instructions indicated on the proxies. Except for broker non-votes, if
no instructions are indicated, such proxies will be voted "FOR" approval of the
principal terms of the Zions/Regency merger agreement and, as determined by a
majority of the Regency board, as to any other matter that may come before the
special meeting. Those other matters may include, among other things, a motion
to adjourn or postpone the special meeting to another time and/or place, for the
purpose of soliciting additional proxies or otherwise. No proxy with
instructions to vote against the proposal to approve the principal terms of the
Zions/Regency merger agreement, however, will be voted in favor of any
adjournment or postponement of the special meeting.
In addition to solicitation by mail, directors, officers and employees
of Regency, none of whom will be specifically compensated for such services but
may be reimbursed for reasonable out-of-pocket expenses in connection therewith,
may solicit proxies from shareholders of Regency personally or by telephone, fax
or other forms of communication. Brokerage houses, nominees, fiduciaries and
other custodians will be requested to forward soliciting materials to beneficial
owners and will be reimbursed for their reasonable expenses incurred in sending
such material to beneficial owners.
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A shareholder who has given a proxy may revoke it at any time prior to
its exercise at the special meeting by:
o giving written notice of revocation to the Secretary of Regency,
o properly submitting a duly executed proxy bearing a later date, or
o voting in person at the special meeting.
All written notices of revocation and other communications with respect to the
revocation of proxies should be addressed to Regency Bancorp, 7060 North Fresno
Street, Fresno, California 93720, Attention: Secretary. A shareholder whose
shares are held in street name should follow the instructions of his or her
broker regarding revocation of proxies. A proxy appointment will not be revoked
by the death or incapacity of the shareholder executing the proxy unless, before
the shares are voted, notice of such death or incapacity is filed with the
Secretary of Regency or other person responsible for tabulating votes on behalf
of Regency.
Vote Required
Approval of the principal terms of the Zions/Regency merger agreement
requires the affirmative vote at the special meeting of a majority of the
outstanding shares of Regency common stock.
As of the record date, Zions held no shares of Regency common stock and
none of Zions' directors or executive officers or their affiliates held any
shares of Regency common stock. The directors, executive officers and certain
affiliates of Regency are entitled to vote approximately 33.08% of the
outstanding shares of Regency common stock. As an inducement to Zions to enter
into the Zions/Regency merger agreement, these directors, executive officers and
affiliates have already agreed to vote their shares in favor of the merger
proposal.
Regency shareholders will not be able to vote directly on the
Zions/First Security merger if the Zions/Regency and Zions/First Security
mergers are completed on their expected time tables. For that reason, when
voting on the principal terms of the Zions/Regency merger agreement and deciding
whether to exercise dissenters' rights with respect to the Zions/Regency merger,
you must consider the possibility that you may become stockholders of First
Security.
Recommendation of Board of Directors
The Regency board of directors has unanimously approved the
Zions/Regency merger agreement and has determined that the Zions/Regency merger
is in the best interests of Regency and its shareholders. The Regency board has
also considered the change of circumstances occasioned by the execution of the
Zions/First Security merger agreement and has reconfirmed its approval of the
Zions/Regency merger in light of those circumstances. The Regency board,
therefore, recommends that shareholders of Regency vote "FOR" approval of the
merger proposal. Please see "The Merger--Reasons of Regency for the
Zions/Regency Merger and Recommendation of the Regency Board."
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THE MERGER
The following information describes certain information pertaining to
the merger. This description is not complete and is qualified in its entirety by
reference to the Appendices attached to this proxy statement/prospectus, which
are incorporated herein by reference. We urge you to read the Appendices in
their entirety.
General
The Zions/Regency merger agreement provides for a transaction in which
Regency will merge into Zions. Zions will be the surviving corporation of the
Zions/Regency merger and immediately following the Zions/Regency merger will
continue to operate under its existing articles of incorporation and by-laws and
initially with the same officers and directors. When the Zions/Regency merger is
completed, each share of issued and outstanding Regency common stock will cease
to be outstanding and (excluding any shares held by Regency or Zions or their
subsidiaries and excluding shares with respect to which dissenters' rights are
asserted) will be converted into the right to receive 0.3233 of a share of Zions
common stock, subject to adjustment. The exchange ratio will be subject to the
following adjustments:
o The exchange ratio will be adjusted in the event that the closing
Zions common stock price stated as a percentage of $67.33 is
greater than the closing KBW 50 Index price stated as a percentage
of $579.47 plus 5%. In that event, the exchange ratio will be
adjusted by multiplying 0.3233 by a fraction, the numerator of
which is $67.33 multiplied by 1.05 and the denominator of which is
the closing Zions common stock price.
o The exchange ratio will be adjusted in the event that the closing
Zions common stock price stated as a percentage of $67.33 is less
than the closing KBW 50 Index price stated as a percentage of
$579.47 minus 5%. In that event, the exchange ratio will be
adjusted by multiplying 0.3233 by a fraction, the numerator of
which is $67.33 multiplied by 0.95 and the denominator of which is
the closing Zions common stock price.
When we refer to the closing Zions common stock price or the closing KBW 50
Index price, we mean the average of the Zions common stock price or the KBW 50
Index over a 15 day trading period ending on the third day before the date on
which we complete the Zions/Regency merger. The KBW 50 Index is made up of 50 of
the nation's most important banking companies, including both money center and
major regional banks, and is considered to be representative of the price
performance of the nation's largest banks.
Generally, these adjustments protect a non-dissenting shareholder of
Regency from having to absorb the effect of a significant decrease in the value
of Zions common stock prior to the closing of the Zions/Regency merger if other
bank holding company stocks whose prices are used to calculate the KBW 50 Index
price do not similarly decline. However, these adjustments also prevent a
shareholder of Regency from benefitting from the effect of a significant
increase in the value of Zions common stock prior to the closing of the
Zions/Regency merger if those other bank holding company stocks do not similarly
increase.
The Zions/Regency merger agreement provides that Zions may change the
way it combines with Regency, provided that it cannot alter the consideration to
be received by Regency shareholders, adversely affect the tax treatment for
Regency shareholders or materially impede or delay the Zions/Regency merger.
Zions and Regency expect to merge Regency Bank with California Bank &
Trust on or about the time they complete the Zions/Regency merger.
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Background of the Zions/Regency Merger
The Regency board of directors has been considering various
alternatives to increase the value of Regency and provide a return to its
shareholders. To assist in exploring possible strategic alternatives for
increasing the value of Regency, the board of directors retained Belle Plaine
Financial LLC on July 23, 1998. Thereafter, the board of directors considered
various strategic alternatives with the assistance of Belle Plaine, including
the possibility of a business combination.
After considering such alternatives, the Regency board of directors
instructed Belle Plaine to investigate Zions' interest in acquiring Regency. The
parties executed a confidentiality agreement dated February 13, 1999 pursuant to
which certain information regarding Regency, Regency Bank and their respective
subsidiaries was provided to Zions. Zions expressed interest in making a
proposal to acquire Regency and commenced due diligence on April 9, 1999. After
Zions completed its due diligence reviews of Regency, Regency Bank and their
respective subsidiaries, Zions further expressed interest in proceeding with
negotiations for a possible merger transaction with Regency.
The Regency board of directors determined to proceed to negotiate with
Zions and authorized its management to commence negotiating a definitive
agreement with Zions. The board of directors also approved the engagement of The
Findley Group to act as financial advisor to evaluate the fairness of the terms
of the Zions/Regency merger, from a financial point of view, to the Regency
shareholders in connection with the proposed merger transaction pursuant to an
engagement letter dated April 21, 1999.
Negotiations continued and a draft definitive agreement was ultimately
presented to the boards of directors of Regency and Regency Bank for review at a
joint special meeting held on April 22, 1999. Various matters requiring
negotiation and resolution resulted in further negotiations and a further
revised definitive agreement was presented to the boards of directors for review
at a joint special meeting held the morning of April 27, 1999. Following review
and discussion, the additional remaining matters requiring resolution were
negotiated during the day and a subsequent joint special meeting of the boards
of directors was held the evening of April 27, 1999, after which the boards of
directors of Regency and Regency Bank authorized management to execute the
document, subject to receipt of a fairness opinion from Regency's financial
advisor. The Zions/Regency merger agreement was executed by Regency, Regency
Bank and thereafter by Zions the evening of April 27, 1999.
Reasons of Regency for the Zions/Regency Merger and Recommendation of the
Regency Board
The board of directors of Regency believes that the Zions/Regency
merger is fair to and in the best interests of the shareholders of Regency. In
reaching their conclusion to approve the Zions/Regency merger, the board of
directors of Regency considered numerous factors, including the following:
(1) The opinion of The Findley Group that the terms of the
Zions/Regency merger are fair, from a financial point of view,
to Regency shareholders; in this regard, the board of
directors considered the premium represented by the
consideration offered to Regency shareholders in relation to
the book value per share of Regency common stock;
(2) The Regency board of directors' review of the provisions of
the Zions/Regency merger agreement and related agreements and
the transactions contemplated by those agreements with Belle
Plaine, The Findley Group and with legal advisors and, as
applicable, accounting advisors, to Regency and Regency Bank;
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(3) The fact that the Zions/Regency merger will be tax-deferred
for federal income tax purposes to the holders of Regency
common stock, other than in respect of cash paid in lieu of
fractional shares and cash paid upon exercise, if any, of
dissenters' rights;
(4) The market liquidity and dividend history of Zions common
stock;
(5) The current financial condition and prospects of Zions;
(6) The current financial condition and prospects of Regency and
Regency Bank;
(7) The current and prospective economic and regulatory
environment, burdens and constraints affecting banking
organizations and commercial banks such as Regency and Regency
Bank and the changing competitive environment for banking
services;
(8) The probable impact of the Zions/Regency merger on customers
and employees and the communities served by Regency and
Regency Bank, and their respective subsidiaries; and
(9) The effect of the proposed Zions/First Security merger on each
of the foregoing factors.
The board of directors of Regency did not assign relative weights to
the factors above or determine that any factor was of particular importance.
Rather, the Regency board made recommendations based on the totality of the
information presented to and considered by them.
The Regency board of directors unanimously recommends that the
Zions/Regency merger agreement and related agreements and the transactions
contemplated by those agreements, including the Zions/Regency merger, be
approved by Regency shareholders.
Opinion of Regency Financial Advisor
Regency has retained The Findley Group to act as its financial advisor
in connection with the Zions/Regency merger pursuant to an engagement letter
dated April 21, 1999 that was amended on June 24, 1999 after the announcement of
the Zions/First Security merger. Findley initially rendered to the Regency board
of directors a written opinion dated April 27, 1999, pursuant to the terms of
the Zions/Regency merger agreement that, subject to the assumptions and
limitations set forth therein, the terms of the Zions/Regency merger were fair,
from a financial point of view, to the holders of the Regency common stock.
After the issuance of the April 27, 1999 written opinion, Zions announced the
proposed Zions/Pioneer merger and the Zions/First Security merger. Due to the
substantial impact on Zions of the Zions/First Security merger, Findley reviewed
publicly available information concerning the proposed Zions/First Security
merger and the impact on the holders of Regency common stock. On June 24, 1999,
Findley met with the Regency board of directors and representatives of Zions to
discuss the proposed Zions/First Security merger and expectations for the new
First Security after the completion of the Zions/First Security merger. As of
August 18, 1999, Zions and Regency amended the Zions/Regency merger agreement to
change the amount, from 15% to 5%, by which the closing Zions common stock price
stated as a percentage of $67.33 must deviate from the closing KBW Index price
stated as a percentage of $579.47 before an adjustment will be made to the
exchange ratio and eliminated as a condition to Zions' obligation to complete
the Zions/Regency merger that Zions receive a letter from its independent
accountants stating that the Zions/Regency merger will qualify for
pooling-of-interests accounting treatment. On August 27, 1999 Findley affirmed
his written opinion of April 27, 1999, pursuant to the terms of the
Zions/Regency merger agreement that, subject to the assumptions and limitations
set forth therein, the terms of the Zions/Regency merger are fair, from a
financial point of view, to the holders of the Regency common stock. A copy of
the Findley opinion dated August 27, 1999 is attached as Appendix D to this
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proxy statement/prospectus and should be read in its entirety. The following
summary is qualified in its entirety by reference to the full text of the
opinion. This opinion is addressed to the board of directors of Regency and does
not constitute a recommendation to any shareholder of Regency as to how such
shareholder should vote at the special meeting.
In connection with its fairness opinion, Findley, among other things:
(a) reviewed certain publicly available financial and other data
with respect to Regency and Zions, including the consolidated
financial statements for recent years and interim periods to
June 30, 1999, and certain other relevant financial and
operating data relating to Regency and Zions made available to
Findley from published sources and from the internal records
of Regency;
(b) reviewed the Zions/Regency merger agreement, as amended;
(c) reviewed certain historical market prices and trading volumes
of Regency and Zions common stock;
(d) compared Regency and Zions from a financial point of view with
certain other banks and bank holding companies that Findley
deemed to be relevant;
(e) considered the financial terms, to the extent publicly
available, of selected recent business combinations of banks
and bank holding companies that Findley deemed to be
comparable, in whole or in part, to the merger of Zions and
Regency;
(f) reviewed and discussed with representatives of the management
of Regency certain information of a business and financial
nature regarding Regency and Zions furnished to Findley by
Regency, including financial forecasts and related assumptions
of Regency and Zions;
(g) made inquiries regarding and discussed the Zions/Regency
merger and the Zions/Regency merger agreement, as amended, and
other matters related to the Zions/Regency merger and the
Zions/Regency merger agreement, as amended, with Regency's
counsel;
(h) reviewed publicly available information concerning the
Zions/Pioneer merger and the Zions/Pioneer merger agreement
related to the Zions/Pioneer merger;
(i) reviewed publicly available information concerning the
Zions/First Security merger, inclusive of the Zions/Regency
merger agreement related to the Zions/First Security merger
and publicly available earnings projections for the combined
company expected to result from the Zions/First Security
merger; and
(j) performed such other analyses and examinations as Findley
deemed appropriate.
For its evaluation, Findley used an assumed exchange ratio under the terms of
the Zions/Regency merger agreement of 0.3233, except as specifically noted.
Contribution Analysis. Findley analyzed the contribution of each of
Regency and Zions to, among other things, common equity and net income of the
pro forma combined company for the period ending December 31, 1998 before taking
into consideration either the Zions/Pioneer merger or the Zions/First Security
merger. The following table presents the results of this analysis with respect
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to the combined company's deposits, shareholder equity (before cost savings and
revenue enhancements), net loans and net income as of or for the year ended
December 31, 1998:
Zions Regency
------- -------
Deposits................................. 98.47% 1.53%
Shareholders' equity..................... 97.83 2.17
Net loans................................ 98.60 1.40
Net income............................... 97.56 2.44
Based upon the stock consideration to be paid in the Zions/Regency merger as
provided in the Zions/Regency merger agreement, as amended, prior to the
Zions/Pioneer merger or the Zions/First Security merger, the Regency
shareholders would own approximately 1.18% of the combined company before giving
effect to all outstanding options and warrants. While the Regency shareholders
would own less of the combined company than what was contributed, as identified
above, Findley determined that the liquidity of Zions common stock offset this
contribution dilution. Under the Zions/First Security merger, Regency
shareholders will benefit from the accretion of Zions shareholders' equity which
will reduce the gap between the deposits, shareholders' equity, net loans and
net income contributed to the combined company and the ownership of the Regency
shareholders in the combined company.
Discounted Cash Flow Analysis. Findley examined the results of a
discounted cash flow analysis designed to compare the exchange ratio with the
present value, under certain assumptions, that would be attained if Regency
remained independent through 2002 and was at that time then acquired by a larger
financial institution. The cash flows for the combined company assumed an
exchange ratio of 0.3233 of a share of Zions common stock for each share of
Regency common stock. The results produced in the analysis did not purport to be
indicative of actual values or expected values of Regency or the combined
company at such future date.
The discount rates used ranged from 10% to 14%. For the Regency
stand-alone analysis, the terminal price multiples applied to the 2002 estimated
earnings per share ranged from 12.0 to 20.0. The lower levels of the price to
earnings values multiples range reflected an estimated future trading range of
Regency or the combined company, while the higher levels of the price to
earnings value multiples range were more indicative of a future sale of Regency
or the combined companies to a larger financial institution.
For the Regency stand-alone analysis, the cash flows were comprised of
the projected stand-alone dividends of $0.40 per share in years 1999 through
2002 plus the terminal value of Regency common stock at the year-end 2002
(calculated by applying each one of the assumed terminal price to earnings value
multiples as stated above to the 2002 projected Regency earnings per share). An
analysis was done for Zions prior to the announcement of the Zions/Pioneer
merger and the Zions/First Security merger based upon a 10% to 25% increase in
Zions' market value per year from 1999 to 2002, assuming a starting price for
Zions stock of $67.50. The discount rates described above were then applied to
these cash flows to obtain the present values per share of Regency common stock.
Findley utilized this discounted cash flow analysis to make certain
comparisons regarding future potential values for Regency common stock. Findley
compared the equivalent per share value for a share of Regency common stock
implied by an assumed exchange ratio of 0.3233 with values for a share of
Regency common stock derived from the discounted cash flow analysis described
above based on the following sets of assumptions:
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o a most likely scenario, without giving effect to the
announcement of the Zions/Pioneer merger and the Zions/First
Security merger, that assumed that projected earnings for
Regency would be achieved, that Zions common stock would
increase at a minimum of 15% per annum, a present value
discount rate of 12% and a terminal price to earnings value
multiple of 18.0x and that Regency remains independent through
2002 and is then acquired by a larger financial institution at
an earnings value multiple of 18.0x ("Case I");
o a scenario that assumed that the Zions/Regency merger is
consummated, that the combined company remains independent
through 2002, that the value of Zions common stock increases
at a minimum of 15% per year from an assumed starting value
per share of $65.00 per share at closing and an increase in
the announced cash dividend level of Zions to $1.16 per share
per year ("Case II"); and
o a scenario that the Zions/Regency merger and the Zions/First
Security merger are consummated, that the combined company to
result from the Zions/First Security merger remains
independent through 2002, that the market value of Zions
common stock is trading at a price to last 12 months earnings
of 26, estimated earnings for 2002 for the combined company to
result from the Zions/First Security merger of $4.65 per share
and an increase in the announced cash dividend level of Zions
to $1.16 per share per year ("Case III").
The estimated earnings for 2002 are based on publicly available earnings
estimates for 2001 of $4.04 per share, increased by 15%. The following table
presents the results of that comparison:
Implied Value Based
on Exchange Ratio Case I Case II Case III
--------------------- ------ ------- --------
Value per share of
Regency common
stock........ $21.82(a) $19.91(b) $25.04 $23.71 $28.77
- ---------------
(a) Based on an assumed per share price for Zions common stock of $67.50.
(b) Based on an assumed per share price for Zions common stock of $54.00,
the price on August 13, 1999 and an assumed adjustment of the exchange
ratio to 0.3682.
These analyses do not purport to be indicative of actual values or
expected values of the shares of Regency common stock. Discounted present value
analysis is a widely used valuation methodology which relies on numerous
assumptions, including asset and earnings growth rates, dividend payout rates,
terminal values and discount rates. The analysis showed that use of a higher
(lower) level of projected earnings raised (lowered) the resulting present value
for a given level of Regency earnings, on a pro forma combined basis. The
analysis also showed that use of a lower (higher) discount rate or a higher
(lower) terminal price-to-earnings per share multiple raised (lowered) the
calculated present values.
Analysis of Selected Bank Merger Transactions. Findley reviewed the
consideration paid in recently completed transactions in which certain banks and
bank holding companies were acquired. Specifically, Findley reviewed 88
transactions involving acquisitions of selected banks in California completed
since January 1, 1996 (the "California Acquisitions"). Findley analyzed
California bank merger and acquisition transactions where the total target asset
size was at least $50 million and less
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than $250 million for the period January 1, 1998 to December 31, 1998. The
transactions analyzed were:
o Harbor Bancorp and City National Corporation
o California Community Bancshares Corp and Sierra West Bancorp
o DNB Financial Corp and BYL Bancorp
o Republic Bank and First Banks Inc.
o Bank of Los Angeles and Western Bancorp
o First Sate Bank of Southern California and Popular Inc.
o Downey Bancorp and California Financial Bancorp
o Channel Islands Bank and Americorp
o PNB Financial Group Inc. and Western Bancorp, and
o The Bank of Orange County and California Financial Bancorp
For each bank acquired in such transactions, Findley compiled figures
illustrating, among other things, the ratio of the premium (i.e., purchase price
in excess of book value) to deposits, purchase price to book value and purchase
price to previous year's earnings. Findley compared the information with respect
to those transactions to the ratios implied by the Zions/Regency merger based on
two sets of assumptions:
o that the exchange ratio would result in the receipt of a
fraction of a share of Zions common stock with a value of
$21.82 using a value for a share of Zions common stock of
$67.50, before the announcement of the Zions/Pioneer merger
and the Zions/First Security merger ("Case A"), and
o that the exchange ratios would result in the receipt of a
fraction of a share of Zions common stock with a value of
$19.91 using a value for a share of Zions common stock of
$54.06, after announcement of the Zions/Pioneer merger and the
Zions/First Security merger and an assumed adjustment of the
exchange ratio to 0.3682 pursuant to the Zions/Regency merger
agreement ("Case B").
The following table presents the results of that analysis:
Zions/Regency Merger
------------------------------------------
All 10 Selected
California California
Transactions Transactions Case A Case B
------------ ------------ ------ ------
Premium to deposits.................... 6.93% 11.45% 17.18% 15.02%
Ratio of purchase price to book value.. 1.68x 2.18x 2.31x 2.10x
Ratio of purchase price to previous
years earnings......................... 16.95 21.17 17.33 15.81
Findley determined that while the ratio of purchase price to book value and the
ratio of purchase price to 1998 earnings was below the median ratios for the 10
California bank merger and acquisition transactions identified above, the
location of Regency in the central valley of California and the size of Regency
would reduce Regency's overall value as compared to the 10 California
Acquisitions.
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No other company or transaction used in the above analysis as a
comparison is identical to Regency, Zions or the Zions/Regency merger.
Accordingly, an analysis of the results of the foregoing is not mathematical;
rather, it involves complex considerations and judgments concerning differences
in financial and operating characteristics of the companies and other factors
that could affect the public trading value of the companies to which Regency,
Zions and the Zions/Regency merger are being compared.
Comparable Company Analysis. Using public and other available information,
Findley compared certain financial ratios of Regency, including the ratio of net
income to average total assets ("return on average assets"), the ratio of net
income to average total equity ("return on average equity"), the ratio of
average equity to average assets and certain credit ratios for the year ending
December 31, 1998 to a peer group consisting of 20 selected banks and bank
holding companies located in California. No company used in the analysis is
identical to Regency or Zions. The analysis necessarily involved complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies. The results of this analysis indicated that
Regency performed ahead of peer group level on the basis of profitability in
1998. Regency's return on average assets and return on average equity for 1998
were ahead of peer group levels, inclusive of its interest spread factors
(interest earned on assets minus interest paid on liabilities). Regency's
performance in 1998 showed better than peer group levels concerning
non-performing assets. Regency's non-interest expense, inclusive of payroll
expense, facilities expense and other related non-interest expenses was lower
than peer group level.
The foregoing summarizes the material portions of Findley's report, but
does not purport to be a complete description of the presentation by Findley to
Regency's board of directors or of the analyses performed by Findley. The
preparation of a fairness opinion is not necessarily susceptible to partial
analysis or summary description. Findley believes that its analyses and the
summary set forth above must be considered as a whole and that selecting a
portion of its analyses and of the factors considered, without considering all
analyses and factors, would create an incomplete view of the process underlying
the analyses set forth in its presentation to the Regency board of directors.
In performing its analyses, Findley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Zions or Regency. The
analyses performed by Findley are not necessarily indicative of actual values or
actual future results, which may be significantly more or less favorable than
suggested by such analyses. Such analyses were prepared solely as part of
Findley's analysis of the fairness, from a financial standpoint, of the terms of
the Zions/Regency merger to Regency's shareholders and were provided to the
Regency board of directors in connection with the delivery of Findley's opinion.
The analyses do not purport to be appraisals or to reflect the prices at which
any securities may trade at the present time or at any time in the future.
Findley used in its analyses various projections of future performance prepared
by the management of Regency. The projections are based on numerous variables
and assumptions which are inherently unpredictable and must be considered not
certain of occurrence as projected. Accordingly, actual results could vary
significantly from those set forth in such projections.
In rendering its fairness opinion, Findley relied upon and assumed
without independent verification the accuracy and completeness of all of the
financial and other information reviewed by Findley for purposes of its opinion.
Findley did not make an independent evaluation or appraisal of the assets and
liabilities of Zions, Regency or any of their respective subsidiaries. Regency
did not impose any limitations or restrictions with respect to the scope of
Findley's investigation or the procedures or methods it followed, or with regard
to any other matters relating to Findley's rendering of the opinion regarding
the fairness of terms of the Zions/Regency merger. Findley did participate in
negotiations regarding the Zions/Regency merger agreement.
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Regency's board of directors selected and instructed Findley to render
an opinion with respect to the fairness of the terms of the Zions/Regency merger
to Regency's shareholders from a financial point of view based on its belief
that Findley is experienced and qualified in such matters. Findley has extensive
experience in the evaluation of banks in connection with mergers and
acquisitions, and valuations for corporate and other purposes. In over 40 years
of bank consulting, Findley has been involved in the creation, development,
merger and acquisition of hundreds of financial institutions.
Pursuant to its engagement letter with Findley which was amended on
June 24, 1999, Regency agreed to pay Findley a fee of $35,000 for Findley's
services rendered to Regency in connection with the fairness opinion plus time
and expenses identified with updates to the fairness opinion and commenting on
applications or the Registration Statement of which this proxy
statement/prospectus is a part. Regency has agreed to indemnify Findley against
certain liabilities and expenses in connection with its services as financial
advisor to Regency.
Effective Time
The Zions/Regency merger will be consummated if the principal terms of
Zions/Regency merger agreement are approved by the Regency shareholders, Zions
and Regency obtain all required consents and approvals and all other conditions
to the merger are either satisfied or waived. The Zions/Regency merger will
become effective on the date and at the time that articles of merger are filed
with the Utah Division of Corporation and Commercial Code and officers'
certificates of Zions and Regency, with a copy of the agreement of merger
attached, are filed with the Secretary of State of the State of California, or
such later date or time as may be indicated in such documents. Zions and Regency
have generally agreed to cause the Zions/Regency merger to be completed after
August 15, 1999 and within 10 days after the last of the conditions to the
consummation of the Zions/Regency merger have been satisfied or waived (or, at
Zions' election, on the last business day of the month in which such tenth day
occurs, or on any other date as Zions and Regency agree in writing). Zions and
Regency each has the right to terminate the Zions/Regency merger agreement if
the merger is not completed by December 31, 1999. See "The Merger--Amendment,
Waiver and Termination."
Distribution of Zions Certificates
Not later than three days after the completion of the Zions/Regency
merger, Zions will send transmittal materials to each Regency shareholder with
instructions for exchanging his or her certificates representing shares of
Regency common stock for shares of Zions common stock and cash in lieu of
fractional shares. The exchange agent will deliver certificates for Zions common
stock and/or a check for any fractional share interests or dividends or
distributions once it receives the certificates representing a holder's shares
of Regency common stock. No party will be liable to any shareholder for any
property delivered in good faith to a public official pursuant to any applicable
abandoned property, escheat or similar law.
Zions will not pay any dividends or other distributions with respect to
Zions common stock with a record date occurring after the completion of the
Zions/Regency merger to any former Regency shareholder who has not exchanged his
or her certificates representing Regency common stock. After exchanging his or
her certificates for Zions stock certificates, all paid dividends and other
distributions and, if applicable, a check for the amount to be paid for any
fractional shares will be delivered to such shareholder, in each case without
interest. In addition, no former Regency shareholder will be eligible to vote
the shares of Zions common stock, if any, he or she is entitled to receive until
he or she has exchanged his or her certificates representing Regency common
stock for Zions common stock.
After the completion of the Zions/Regency merger, there will be no
transfers of shares of Regency common stock on Regency's stock transfer books.
If certificates representing shares of Regency common stock are presented for
transfer after the completion of the Zions/Regency merger,
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the exchange agent or Zions will cancel and exchange them for certificates
representing shares of Zions common stock and a check for the amount to be paid
for fractional shares of Zions common stock, if any.
Fractional Shares
Zions will not issue any fractional shares of Zions common stock.
Instead, a Regency shareholder who would otherwise have received a fraction of a
share of Zions common stock will receive cash without interest for that
fractional share interest. The amount of cash received will be determined by
multiplying the fraction of Zions common stock the shareholder would have been
entitled to receive by the average of the closing prices of Zions common stock,
as reported on the NASDAQ National Market, for the 15 NASDAQ trading days
immediately preceding the date the Zions/Regency merger is completed. Holders
will not be entitled to dividends, voting rights or any other rights as a
shareholder with respect to any fractional shares.
Federal Income Tax Considerations of the Zions/Regency Merger
The following section describes the material U.S. federal income tax
consequences of the Zions/Regency merger to holders of Regency common stock who
hold Regency common stock as a capital asset within the meaning of Section 1221
of the Internal Revenue Code of 1986, as amended (the "Code"), and is the
opinion of Sullivan & Cromwell, counsel to Zions. This section does not apply to
particular classes of taxpayers, such as:
o financial institutions,
o insurance companies,
o tax-exempt organizations,
o dealers in securities or currencies,
o traders in securities that elect to use a mark to market method
of accounting,
o persons that hold Regency common stock as part of a straddle or
conversion transaction,
o persons who are not citizens or residents of the United States,
and
o shareholders who acquired their shares of Regency common stock
through the exercise of an employee stock option or otherwise as
compensation.
The following represents general information only and is based upon the Code,
its legislative history, existing and proposed regulations thereunder and
published rulings and decisions, all as currently in effect as of the date
hereof, and all of which are subject to change, possibly with retroactive
effect. Tax considerations under state, local and foreign laws are not addressed
in this proxy statement/prospectus. All shareholders should consult with their
own tax advisors as to the tax consequences of the Zions/Regency merger in their
particular circumstances, including the applicability and effect of the
alternative minimum tax and any state, local or foreign income and other tax
laws and of changes in those tax laws.
Tax Consequences of the Zions/Regency Merger Generally. It is a
condition to the Zions/Regency merger that Zions receive an opinion of its
counsel, Sullivan & Cromwell, that:
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o the Zions/Regency merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a)
of the Code, and
o each of Zions and Regency will be a party to that reorganization
within the meaning of Section 368(b) of the Code.
It is also a condition to the Zions/Regency merger that Regency receive an
opinion of Sullivan & Cromwell that:
o the Zions/Regency merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a)
of the Code,
o each of Zions and Regency will be a party to that reorganization
within the meaning of Section 368(b) of the Code,
o no gain or loss will be recognized by shareholders of Regency who
receive shares of Zions common stock in exchange for shares of
Regency common stock, except with respect to cash received in
lieu of fractional share interests,
o the holding period of Zions common stock received in exchange for
shares of Regency common stock will include the holding period of
the Regency common stock for which it is exchanged, assuming the
shares of Regency common stock are capital assets in the hands of
the holder thereof at the closing of the Zions/Regency merger,
and
o the basis of the Zions common stock received in the Zions/Regency
merger will be the same as the basis of the Regency common stock
for which it is exchanged, less any basis attributable to
fractional shares for which cash is received.
In rendering these opinions, Sullivan & Cromwell may require and rely upon
representations contained in letters to be received from Regency, Zions and
Regency shareholders. Neither of these tax opinions will be binding on the
Internal Revenue Service, but neither Zions nor Regency intends to request any
ruling from the Internal Revenue Service as to the U.S. federal income tax
consequences of the Zions/Regency merger.
Based on the above assumptions and qualifications and certain
representations of Zions and Regency, for U.S. federal income tax purposes:
o the Zions/Regency merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a)
of the Code,
o each of Zions and Regency will be a party to that reorganization
within the meaning of Section 368(b) of the Code,
o no gain or loss will be recognized by shareholders of Regency who
receive shares of Zions common stock in exchange for shares of
Regency common stock, except with respect to cash received in
lieu of fractional share interests,
o the holding period of Zions common stock received in exchange for
shares of Regency common stock will include the holding period of
the Regency common stock for which it is exchanged, assuming the
shares of Regency common stock are capital assets in the hands of
the holder thereof at the closing of the Zions/Regency merger,
and
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o the basis of the Zions common stock received in the Zions/Regency
merger will be the same as the basis of the Regency common stock
for which it is exchanged, less any basis attributable to
fractional shares for which cash is received.
Cash Received in Lieu of a Fractional Share of Zions Common Stock. A
shareholder of Regency who receives cash in lieu of a fractional share of Zions
common stock will be treated as having received the fractional share pursuant to
the Zions/Regency merger and then as having exchanged the fractional share for
cash in a redemption by Zions subject to Section 302 of the Code. As a result, a
Regency shareholder will generally recognize gain or loss equal to the
difference between the amount of cash received and the portion of the basis of
the shares of Zions common stock allocable to his or her fractional interest.
This gain or loss will generally be capital gain or loss, and will be long-term
capital gain or loss if, as of the date of the exchange, the holding period for
such shares is greater than one year. Long-term capital gain of a non-corporate
holder is generally subject to tax at a maximum federal tax rate of 20%.
Dissenters' Rights. Regency shareholders who exercise their dissenters'
rights and who receive cash in exchange for their shares of Regency common stock
will be treated as having received that payment in redemption of their shares.
In general, the holder will recognize capital gain or loss measured by the
difference between the amount of cash received and the holder's adjusted tax
basis for the shares. If, however, the holder owns, either actually or
constructively, any Regency common stock that is exchanged in the Zions/Regency
merger for Zions common stock, the payment for dissenting shares to the holder
could, in certain circumstances, be treated as dividend income. In general,
under the constructive ownership rules of the Code, a holder may be considered
to own stock that is owned, and in some cases constructively owned, by certain
related individuals or entities, as well as stock that the holder (or related
individuals or entities) has the right to acquire by exercising an option or
converting a convertible security. Each holder who contemplates exercising
dissenters' rights should consult his or her own tax advisor as to the
possibility that any payment to such holder will be treated as dividend income.
Backup Withholding and Information Reporting. Payments of cash to a
holder surrendering shares of Regency common stock will be subject to
information reporting and backup withholding (whether or not the holder also
receives Zions common stock) at a rate of 31% of the cash payable to the holder,
unless the holder furnishes its taxpayer identification number in the manner
prescribed in applicable Treasury Regulations, certifies that such number is
correct, certifies as to no loss of exemption from backup withholding and meets
certain other conditions. Any amounts withheld from payments to a holder under
the backup withholding rules will be allowed as a refund or credit against the
holder's U.S. federal income tax liability, provided the required information is
furnished to the Internal Revenue Service.
Management and Operations After the Zions/Regency Merger
Zions will be the surviving corporation resulting from the merger.
Except as contemplated by the Zions/First Security merger, it will continue to
be governed by the laws of the State of Utah and will operate in accordance with
its articles of incorporation and by-laws as in effect immediately prior to the
Effective Time.
Except as contemplated by the Zions/First Security merger, the
directors and officers of Zions before the merger will continue to be the
directors and officers of Zions after the Zions/Regency merger.
See "The Zions/First Security Merger" for a discussion of the
contemplated management and operations of the combined company following the
Zions/First Security merger.
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Post-Merger Compensation and Benefits
The Zions/Regency merger agreement provides that after the completion
of the Zions/Regency merger, Zions will provide employees of Regency and its
subsidiaries who become employees of Zions and any of its subsidiaries with
employee benefit plans which are no less favorable in the aggregate than those
provided to similarly situated employees of Zions. The Zions/Regency merger
agreement provides that those retained employees generally will receive credit
for their service with Regency or any of its subsidiaries prior to the
completion of the Zions/Regency merger to the extent Regency credited such
service under a comparable plan, for the purpose of determining eligibility to
participate and vesting, but not for the purpose of benefit accrual, under
Zions' employee benefit plans.
Treatment of Outstanding Options
At the completion of the Zions/Regency merger, each outstanding option
to acquire shares of Regency common stock, whether exercisable or not, will be
canceled. Each holder of a canceled option will be entitled to receive a number
of shares of Zions common stock equal to the product of:
(1) the number of options held by such holder, and
(2) the option consideration provided for in the Zions/Regency merger
agreement.
Under the Zions/Regency merger agreement, the option consideration for any
option is equal to the amount obtained by multiplying the closing Zions common
stock price by the exchange ratio and then subtracting from that product the
exercise price for such option. Prior to the completion of the Zions/Regency
merger, Regency will take all necessary action with respect to the cancellation
of the Regency stock options. Zions is also providing this proxy
statement/prospectus to holders of Regency options as a prospectus for the offer
and sale by Zions of shares of Zions common stock in connection with the
cancellation of Regency options.
Interests of Certain Persons in the Merger
Some members of Regency's management and the Regency board have
interests in the Zions/Regency merger in addition to their interests as Regency
shareholders. The Regency board was aware of these interests and considered
them, among other matters, in approving the Zions/Regency merger agreement.
Steven F. Hertel, Steven Canfield, Robert Longatti and Alan Graas each
have employment agreements with Regency that provide for payments by Regency in
the event of a "change in control" (as defined in those agreements) of Regency.
Under Mr. Hertel's agreement, in the event of a change in control of Regency,
the employment agreement terminates and Mr. Hertel is entitled to a payment
equal to two times the average of his last five years' compensation. The payment
to Mr. Hertel is to be made in 48 equal installments over two years. Under
Messrs. Canfield, Longatti and Grass' employment agreements, in the event of the
termination of employment or other actions constituting constructive termination
within one year after the change in control, the employee will be entitled to a
payment equal to the average of his last five years' compensation. Any payments
to Messrs. Canfield, Longatti or Grass are to be made in 24 equal installments
over one year. For purposes of each of these employment agreements, the
Zions/Regency merger would constitute a "change in control." The maximum amount
payable to Messrs. Hertel, Canfield, Longatti and Grass under their employment
agreements is $565,012, $118,591, $118,605 and $140,481, respectively. Payments
to the employees under these employment agreements will be reduced to the extent
that such payments considered alone or with other payments which the employees
have the right to receive from Regency would constitute "parachute payments"
under the Code.
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In addition, Messrs. Hertel, Canfield and Longatti each have salary
continuation agreements with Regency, the purpose of which was to provide
certain retirement benefits in exchange for securing the long-term continued
service of each such executive. Messrs. Hertel, Canfield and Longatti are each
vested to the extent of 60% of the benefits provided under the agreements. In
the case of Mr. Hertel, his vesting accelerates to 100% of the benefits under
his agreement upon such a change in control. Messrs. Hertel, Canfield and
Longatti will be entitled to receive annual payments for 15 years in the amounts
of $100,000, $36,000 and $36,000, respectively, under the agreements following a
change in control. The Zions/Regency merger would constitute a change in control
for purposes of these salary continuation agreements. Payments to such officers
under the salary continuation agreements will be reduced to the extent that such
payments considered alone or with other payments which the employees have a
right to receive from Regency would constitute "parachute payments" under the
Code.
Furthermore, California Bank & Trust has entered into two-year employment
agreements with Messrs. Hertel and Longatti, to be effective upon consummation
of the Zions/Regency merger, which Zions required as a condition to the
Zions/Regency merger. Under the agreements, Messrs. Hertel and Longatti will be
entitled to receive annual base compensation of $178,000 and $110,000,
respectively, payment of $65,000 and $50,000, respectively, each year during a
two-year period following a termination of employment for compliance with
certain non-competition requirements, and participation in the bonus plan of
California Bank & Trust. Payments to Messrs. Hertel and/or Longatti under the
bonus plan of California Bank & Trust could be substantial. Mr. Canfield and
Zions have agreed that Mr. Canfield will continue to provide services to Zions
and/or California Bank & Trust for a period of six months following the merger
in consideration for payment to him of compensation including base salary and
health, medical and other benefits as in effect immediately prior to the
consummation of the merger, and the payment of $100,000 upon expiration of the
six month period.
The Zions/Regency merger agreement provides that, for a period of four
years after the Effective Date, Zions will indemnify the directors and officers
of Regency and its subsidiaries against certain liabilities to the fullest
extent permitted under California law, Regency's articles of incorporation and
Regency's by-laws as of the date of the Zions/Regency merger agreement.
Furthermore, Zions agreed in the Zions/Regency merger agreement to use its
reasonable best efforts to provide, for a period of four years, subject to
certain limitations, directors' and officers' liability insurance coverage for
persons who were covered by such insurance maintained by Regency on the date of
the Zions/Regency merger agreement.
Certain directors and officers of Regency hold stock options which, if
not exercised prior to the completion of the Zions/Regency merger, will be
converted into the right to receive a payment in shares of Zions common stock.
See "--Treatment of Outstanding Options."
Conditions to Completion
The obligations of Regency and Zions to consummate the Zions/Regency
merger are subject to the satisfaction or written waiver prior to the completion
of the Zions/Regency merger of the following conditions:
o the Zions/Regency merger agreement and the Zions/Regency merger
are approved by the shareholders of Regency;
o the required regulatory approvals described below under
"--Regulatory Approvals" are received, without any conditions,
restrictions or requirements that the Zions board of directors
reasonably determines would (1), following the completion of the
Zions/Regency merger, have a material adverse effect on Zions or
(2) impose upon Zions any materially burdensome terms or
conditions;
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o no court or regulatory authority has taken any action prohibiting
the consummation of the merger; and
o the Registration Statement of which this proxy
statement/prospectus constitutes a part is declared effective by
the SEC and is not subject to a stop order or any threatened stop
order.
The obligations of Regency to consummate the Zions/Regency merger are
also subject to the satisfaction or waiver prior to the completion of the
Zions/Regency merger of the following conditions:
o the representations and warranties of Zions are true and correct
at the completion of the Zions/Regency merger other than any
inaccuracies that would not be reasonably likely, individually or
in the aggregate, to have a material adverse effect on the
financial position, results of operations or business of Zions;
Zions has performed in all material respects all of the
obligations required to be performed by it pursuant to the
Zions/Regency merger agreement; and Zions shall have delivered
certificates confirming satisfaction of the foregoing
requirements;
o Regency receives an opinion of Sullivan & Cromwell as to the tax
matters described above under "--Certain Federal Tax
Considerations of the Merger";
o Regency receives a "comfort" letter from KPMG LLP, Zions'
independent public accountants, in accordance with the Financial
Accounting Standards Board's Statement of Accounting Standards
No. 72;
o the shares of Zions common stock issuable in the merger are
approved for listing on the NASDAQ National Market; and
o The Findley Group delivers to Regency an opinion to the effect
that as of the date of this proxy statement/prospectus the
consideration to be received by the Regency shareholders in the
merger is fair to the Regency shareholders from a financial point
of view.
The obligations of Zions to consummate the Zions/Regency merger are
also subject to the satisfaction or waiver prior to the completion of the
Zions/Regency merger of the following conditions:
o the representations and warranties of Regency and Regency Bank
are true and correct as of the completion of the Zions/Regency
merger other than any inaccuracies that would not be reasonably
likely, individually or in the aggregate, to have a material
adverse effect on the financial position, results of operations
or business of Regency; Regency and Regency Bank have performed
in all material respects all of the obligations required to be
performed by them pursuant to the Zions/Regency merger agreement;
and Regency and Regency Bank shall have delivered certificates
confirming satisfaction of the foregoing requirements;
o Zions receives an opinion of Sullivan & Cromwell as to the tax
matters described above under "--Certain Federal Tax
Considerations of the Merger";
o Zions receives a "comfort" letter from KPMG LLP, Regency's
independent public accountants, in accordance with the Financial
Accounting Standards Board's Statement of Accounting Standards
No. 72; and
o Steven F. Hertel and Robert Longatti enter into employment
agreements with California Bank & Trust.
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No assurances can be provided as to when or if all of the conditions to
the Zions/Regency merger can or will be satisfied or waived by the appropriate
party. As of the date of this proxy statement/prospectus, the parties have no
reason to believe that any of these conditions will not be satisfied.
Regulatory Approvals
Federal Authorities. The merger of Regency into Zions is subject to
prior notice to the Board of Governors of the Federal Reserve System (the
"Federal Reserve") under Sections 3 and 4 of the Bank Holding Company Act of
1956 (the "BHCA"). The BHCA requires the Federal Reserve, when considering a
transaction like the Zions/Regency merger, to take into consideration the
financial and managerial resources (including the competence, experience and
integrity of the officers, directors and principal shareholders) and future
prospects of the institutions and the convenience and needs of the communities
to be served. In addition, under the Community Reinvestment Act of 1977, the
Federal Reserve must take into account the record of performance of the
acquiring institution in meeting the credit needs of the entire community,
including low- and moderate-income neighborhoods, served by the institution.
Zions filed its notices regarding the merger with the Federal Reserve on July
15, 1999.
The BHCA also prohibits the Federal Reserve from approving a merger if
it would result in a monopoly or be in furtherance of any combination or
conspiracy to monopolize or to attempt to monopolize the business of banking in
any part of the United States, or if its effect would be substantially
to lessen competition or to tend to create a monopoly, or if it would in any
other manner result in a restraint of trade, unless the Federal Reserve finds
that the anticompetitive effects of the merger are clearly outweighed in the
public interest by the probable effect of the merger in meeting the convenience
and needs of the communities to be served.
Under Section 4 of the BHCA and related regulations, the Federal
Reserve must consider whether the performance of Zions' and Regency's nonbanking
activities on a combined basis can reasonably be expected to produce benefits to
the public (such as greater convenience, increased competition and gains in
efficiency) that outweigh possible adverse effects (such as undue concentration
of resources, decreased or unfair competition, conflicts of interest and unsound
banking practices). This consideration includes an evaluation of the financial
and managerial resources of Zions and Regency and the effect of the proposed
transaction on those resources.
Assuming Federal Reserve approval, the Zions/Regency merger may not be
consummated until 30 days after such approval, during which time the United
States Department of Justice may challenge the Zions/Regency merger on antitrust
grounds. The commencement of an antitrust action would stay the effectiveness of
the Federal Reserve approval unless a court specifically ordered otherwise. With
the approval of the Federal Reserve and the concurrences of the Department of
Justice, the waiting period may be reduced to no less than 15 days.
The merger of Regency Bank into California Bank & Trust is subject to
prior approval of the Federal Deposit Insurance Corporation (the "FDIC") under
Section 18(c) of the Bank Merger Act. The Bank Merger Act requires the FDIC to
consider with respect to the bank merger substantially the same factors as the
Federal Reserve considers with respect to the merger of Zions and Regency under
the BHCA as described above. The FDIC will be prohibited from approving the bank
merger if it would result in a monopoly or be in furtherance of any combination
or conspiracy to monopolize or attempt to monopolize the business of banking in
any part of the United States, or if its effect would be substantially to lessen
competition or to tend to create a monopoly, or if it would in any other manner
result in a restraint of trade, unless the FDIC finds that the anticompetitive
effects of the merger are clearly outweighed in the public interest by the
probable effect of the bank merger in meeting the convenience and needs of the
communities to be served. California Bank & Trust submitted an application for
prior approval of the bank merger by the FDIC on July 15, 1999.
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State Authorities. The bank merger is also subject to receipt of
approval of the California Commissioner of Financial Institutions. The
Commissioner is required to approve the bank merger if he or she finds the
following:
o that the merger will not result in a monopoly and will not be in
furtherance of any combination or conspiracy to monopolize or to
attempt to monopolize the banking, savings association, or
industrial loan business in any part of the state;
o that the merger will not have the effect in any section of the
state of substantially lessening competition, tending to create a
monopoly, or otherwise being in restraint of trade, or that the
anticompetitive effect is clearly outweighed in the public
interest by the probable effect of the merger in meeting the
convenience and needs of the community to be served;
o that the shareholders' equity of the surviving depository
corporation will be adequate and that the financial condition of
the surviving depository corporation will be satisfactory;
o that the directors and executive officers of the surviving
depository corporation will be satisfactory;
o that the surviving depository corporation will afford reasonable
promise of successful operation and that it is reasonable to
believe that the surviving depository corporation will be
operated in a safe and sound manner and in compliance with all
applicable laws; and
o that the bank merger will be fair, just and equitable.
California Bank & Trust submitted an application for prior approval of the bank
merger by the Commissioner on July 15, 1999.
Status of Regulatory Approvals and Other Information. Zions, Regency
and their respective subsidiaries have filed all applications and notices and
taken other appropriate action with respect to any necessary approvals or other
action of any governmental authority of which they have knowledge. The
Zions/Regency merger agreement provides that the obligation of each of Zions and
Regency to consummate the merger is conditioned upon:
o the receipt of all requisite regulatory approvals, including the
approvals of the FDIC and, to the extent necessary, other
authorities,
o the termination or expiration of all statutory or regulatory
waiting periods, and
o no such approvals containing conditions, restrictions or
requirements that the Zions board reasonably determines would
(a), after the completion of the Zions/Regency merger, have a
material adverse effect on Zions or (b) impose upon Zions any
materially burdensome terms or conditions.
The merger cannot proceed in the absence of the necessary regulatory
approvals. There can be no assurance that these regulatory approvals will be
obtained or as to the dates of such approvals. There can also be no assurance
that these approvals will not contain a condition, restriction or requirement
that fails to satisfy the conditions set forth in the Zions/Regency merger
agreement.
See "--Effective Time," "--Conditions to Completion" and "--Amendment,
Waiver and Termination."
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Amendment, Waiver and Termination
Prior to the completion of the Zions/Regency merger, provisions of the
Zions/Regency merger agreement may be waived by the party benefitted by such
provision or may be amended or modified, by written agreement between Zions and
Regency. However, after the special meeting the Zions/Regency merger agreement
may not be amended in violation of the California General Corporation Law (the
"CGCL").
The Zions/Regency merger agreement may be terminated, and the
Zions/Regency merger abandoned, at any time prior to the completion of the
Zions/Regency merger by mutual consent of Regency and Zions. In addition, the
Zions/Regency merger agreement may be terminated, and the merger abandoned,
prior to the completion of the Zions/Regency merger by either Zions or Regency
if:
o the other party breaches (a) a representation or warranty
contained in the Zions/Regency merger agreement, or (b) a covenant
or other agreement contained in the Zions/Regency merger
agreement, which is reasonably likely, individually or in the
aggregate, to have a material adverse effect on the breaching
party, and in either case (a) or (b), which cannot be or has not
been cured within 30 days after giving written notice to the
breaching party;
o the Zions/Regency merger is not completed by December 31, 1999;
o the approval of a governmental authority required for consummation
of the Zions/Regency merger and the other transactions
contemplated by the Zions/Regency merger agreement is denied by
final, nonappealable action of such authority; or
o the Regency shareholders fail to approve the principal terms of
the Zions/Regency merger agreement at the special meeting.
In addition, Zions may terminate the Zions/Regency merger agreement if
Regency's board withdraws its recommendation to approve the principal terms of
the Zions/Regency merger agreement or modifies in a manner adverse to Zions in
any respect such recommendation. Zions may also terminate the Zions/Regency
merger agreement if Regency violates provisions of the Zions/Regency merger
agreement that, in general terms, prohibit Regency from soliciting, encouraging,
participating in discussions or negotiations with respect to, or providing any
information to any person in connection with, an alternative proposal to acquire
Regency. Finally, Regency may terminate the Zions/Regency merger agreement prior
to the special meeting if Regency receives a proposal that the Regency board
determines in good faith (based on the written opinion of a financial advisor)
to be more favorable to the Regency shareholders than the Zions/Regency merger.
In that event, Regency must also receive the written opinion of counsel that
terminating the Zions/Regency merger agreement is required in order for the
Regency board to satisfy its fiduciary duties under state law and must comply
with other requirements set forth in the Zions/Regency merger agreement.
Regency will be required to pay to Zions a termination fee of $1.8
million if the Zions/Regency merger agreement is terminated for any of the
following reasons:
o Regency breaches a representation or warranty contained in the
Zions/Regency merger agreement or a covenant or other agreement
contained in the Zions/Regency merger agreement, which is not
cured or curable as described above, or the Regency shareholders
fail to approve the principal terms of the Zions/Regency merger
agreement, and prior to such vote there is publicly announced an
alternative proposal to acquire Regency;
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o Regency withdraws its recommendation to approve the principal
terms of the Zions/Regency merger agreement or modifies in a
manner adverse to Zions in any respect such recommendation;
o Regency violates the agreements described above not to solicit,
encourage, discuss, negotiate or provide information with respect
to an alternative acquisition; or
o the Regency board determines to accept a superior proposal, as
described in the immediately preceding paragraph.
Conduct of Business Pending the Zions/Regency Merger
The following is a general summary of the agreements Regency and Zions
have regarding actions prior to the Zions/Regency merger. We urge you to read
the Zions/Regency merger agreement (which is attached to this proxy
statement/prospectus as Appendix A) for a more complete description of these
agreements.
Regency. Regency has agreed that it will operate its business and the
businesses of its subsidiaries in the ordinary course through the completion of
the Zions/Regency merger. In addition, it has agreed not to engage in the
activities listed below.
o Issue any additional shares of Regency common stock or any rights
to acquire Regency common stock except pursuant to already
existing rights to acquire Regency common stock.
o Make any distributions with respect to Regency common stock or
change its capital structure.
o Repurchase, redeem or otherwise acquire, directly or indirectly,
any shares of Regency common stock.
o Enter into or amend any employment-related agreements, grant any
salary or wage increase or increase any employee benefits, except
for normal individual increases in the ordinary course of
business, as required by law, to satisfy contracts previously
disclosed to Zions prior to the date of the Zions/Regency merger
agreement, or as awards to newly hired employees consistent with
past practice.
o Enter into or amend (except as may be required by law or
contemplated by the Zions/Regency merger agreement or to satisfy
obligations previously disclosed to Zions and existing on the date
of the Zions/Regency merger agreement) any employee-related
benefit plan or take any action to accelerate the vesting or
exercisability of stock options, restricted stock or other
benefits payable under any employee-related benefit plans.
o Sell, encumber or otherwise dispose of any material amount of its
assets, business or properties, except in the ordinary course of
business.
o Acquire any material assets, business, deposits or properties of
any other entity, except in the ordinary course of business.
o Make any capital expenditures, other than those in the ordinary
course of business in amounts not exceeding $100,000 individually
or $300,000 in the aggregate.
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<PAGE>
o Amend Regency's articles of incorporation or by-laws or the
articles of incorporation or by-laws (or similar governing
documents) of any of Regency's subsidiaries.
o Make any change in its accounting principles, practices or
methods, other than as may be required by generally accepted
accounting principles or applicable banking regulations.
o Enter into, terminate, amend or modify any material contract,
except in the ordinary course of business.
o Settle any material claim, action or proceeding, except in the
ordinary course of business.
o Take any action which is reasonably likely to prevent or impede
the Zions/Regency merger from qualifying for pooling-of-interests
accounting treatment or as a reorganization under Section 368 of
the Code or knowingly take any action that would be reasonably
likely to interfere with the Zions/Regency merger agreement.
o Except as required by law, change or fail to follow its interest
rate risk management and hedging policies, procedures or
practices; or fail to use commercially reasonable means to avoid
materially increasing its exposure to interest rate risk.
o Borrow money, other than in the ordinary course of business.
o Agree or commit to do any of the foregoing.
Regency has also agreed that it will not (and it will not ask anyone
to) initiate or solicit any inquiries or any offer relating to a merger,
consolidation, sale of assets or similar transaction involving Regency or its
subsidiaries or a tender offer or exchange offer for or offer to acquire 25% or
more of the outstanding shares of Regency common stock (this type of proposal is
referred to in this document as an "acquisition proposal"). In addition, Regency
will not negotiate or provide any confidential information or data to, or have
any discussions with, any person relating to an acquisition proposal, or
otherwise facilitate an acquisition proposal. However, the Regency board may
take such actions if, among other things, the Regency board believes in good
faith based on such matters as it deems relevant, including the advice of its
financial advisor that the acquisition proposal constitutes a Superior Proposal,
as described above, and receives a written opinion of counsel to the effect that
taking such action is required to satisfy the fiduciary duties of the Regency
board.
Zions. Zions has agreed that it will not engage in any of the
activities listed below:
o take any action that would adversely affect or delay the ability
of Zions or Regency to timely comply with their agreements in the
Zions/Regency merger agreement;
o take any action that is reasonably likely to have a material
adverse effect on Zions; or
o take any action which is reasonably likely to prevent or impede
the Zions/Regency merger from qualifying for pooling of-interests
accounting treatment or as a reorganization under Section 368 of
the Code or knowingly take any action that would be reasonably
likely to interfere with the Zions/Regency merger agreement.
Expenses and Fees
Each party will be responsible for all expenses incurred by it in
connection with the negotiation and consummation of the transactions
contemplated by the Zions/Regency merger agreement.
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<PAGE>
Accounting Treatment
Zions expects to account for the Zions/Regency merger as a pooling of
interests in accordance with generally accepted accounting principles. However,
the ability of Zions to account for the Zions/Regency merger as a pooling of
interests is not a condition of the obligation of Zions to complete the merger.
Under the pooling-of-interests accounting method, the previously recorded assets
and liabilities of Zions and Regency would be carried forward to Zions at their
recorded amounts. In addition, in Zions' financial reporting following the
completion of the Zions/Regency merger, its income and expenses would include
income and expenses of Zions and Regency for the entire fiscal year in which the
Zions/Regency merger occurs and the reported results of the separate
corporations for prior periods would be combined and restated as the results of
Zions.
NASDAQ Listing of Zions Common Stock
Zions has agreed to use its reasonable best efforts to list, prior to
the completion of the Zions/Regency merger, on the NASDAQ National Market,
subject to official notice of issuance, the shares of Zions common stock to be
issued to the holders of Regency common stock in the Zions/Regency merger.
Resales of Zions Common Stock
The shares of Zions common stock to be issued in the Zions/Regency
merger will be freely transferable under the Securities Act of 1933, except for
shares issued to any shareholder who may be deemed to be an "affiliate" of
Regency for purposes of Rule 145 under the Securities Act as of the date of
the special meeting. Affiliates include, without limitation, directors,
executive officers and beneficial owners of 10% or more of any class of capital
stock. Affiliates may not sell their shares of Zions common stock acquired in
the Zions/Regency merger except pursuant to an effective registration statement
under the Securities Act or Rule 145 or other applicable exemption from the
registration requirements of the Securities Act.
Regency has agreed in the Zions/Regency merger agreement to use its
reasonable best efforts to cause each person who may be deemed to be an
"affiliate" of Regency to execute and deliver to Zions an agreement pursuant to
which such person will agree, among other things, not to offer to sell, transfer
or otherwise dispose of any of the shares of Zions common stock distributed to
them pursuant to the Zions/Regency merger except in compliance with Rule 145
under the Securities Act, or in a transaction that, in the opinion of counsel
reasonably satisfactory to Zions, is otherwise exempt from the registration
requirements of the Securities Act, or in an offering registered under the
Securities Act. Zions may place restrictive legends on certificates representing
Zions common stock issued to all persons who are deemed to be "affiliates" of
Regency under Rule 145. This proxy statement/prospectus does not cover resales
of Zions common stock received in the Zions/Regency merger.
Stock Option Agreement
As an inducement to Zion's entering into the Zions/Regency merger
agreement, Regency and Zions entered into a stock option agreement, dated as of
April 27, 1999. The following description of the stock option agreement is
qualified in its entirety by reference to the text of the stock option
agreement. For a more complete description, we urge you to read the text of the
stock option agreement, which is attached hereto as Appendix B, in its entirety.
Pursuant to the stock option agreement, Regency granted Zions an option
to purchase up to 522,374 shares of Regency common stock. Although the number of
shares Zions may purchase is subject to adjustment in certain cases (described
below), it will never exceed 19.9% of the number of shares of Regency common
stock outstanding immediately before exercise of the option. Shares that
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<PAGE>
are subject to or issued pursuant to the option are not taken into account in
determining the maximum number of shares that may be issued under the option.
The exercise price of the option is $17.08 per share, and is also subject to
adjustment in certain cases. We refer to such exercise price, as adjusted, as
the "Option Price".
So long as Zions is not in material breach of the Zions/Regency merger
agreement or stock option agreement and there is no court order preventing it
from doing so, Zions can exercise the option if a "Purchase Event" occurs prior
to the occurrence of an "Exercise Termination Event," as these terms are defined
below. The purchase of any shares of Regency common stock pursuant to the option
is subject to compliance with applicable law, including the prior approval of
the Federal Reserve.
The stock option agreement generally defines the term "Exercise
Termination Event" to mean the earliest to occur of:
o the effective time of the Zions/Regency merger;
o 12 months after the first occurrence of a Purchase Event, subject
to extension for up to six months to obtain required regulatory
approvals;
o 18 months after the termination of the Zions/Regency merger
agreement following the occurrence of a Preliminary Purchase
Event (which we define below);
o termination of the Zions/Regency merger agreement by Zions in
accordance with its terms, if it occurs prior to the occurrence
of a Purchase Event or a Preliminary Purchase Event; provided
that this would not include a termination by Zions if Regency
willfully breaches, and does not timely cure any breach of, a
representation, warranty, covenant or other agreement contained
in the Zions/Regency merger agreement and the breach would be
reasonably likely to result in a material adverse effect (as
defined in the Zions/Regency merger agreement), if the Regency
board fails to recommend approval of the Zions/Regency merger, or
withdraws or adversely modifies its recommendation to the Regency
shareholders or if Regency violates the provisions of the
Zions/Regency merger agreement that prohibit Regency, subject to
certain limitations, from seeking or acting on any acquisition
proposal from a third party; or
o 18 months after termination of the Zions/Regency merger agreement
by Zions if the termination follows the occurrence of a
Preliminary Purchase Event.
The stock option agreement generally defines the term "Preliminary
Purchase Event" to mean any of the following events or transactions:
o Regency or any of its subsidiaries enters into an agreement to
engage in an "Acquisition Transaction" (as defined below) with a
third party or the Regency board recommends that the Regency
shareholders approve or accept any Acquisition Transaction, other
than the Zions/Regency merger;
o a third party acquires beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the shares of
Regency common stock outstanding after such acquisition;
o a third party makes a bona fide proposal to Regency or its
shareholders to engage in an Acquisition Transaction and such
proposal has been publicly announced;
o a third party files with the SEC a registration statement or
tender offer materials with respect to a potential exchange offer
or tender offer that, if consummated, would result in
39
<PAGE>
the third party owning or controlling 10% or more of the shares
of Regency common stock outstanding after the exchange or tender
offer is completed;
o Regency breaches any covenant or obligation contained in the
Zions/Regency merger agreement after a third party has made a
proposal for an Acquisition Transaction, and following such
breach, Zions is entitled to terminate the Zions/Regency merger
agreement;
o the Regency shareholders vote but fail to approve the
Zions/Regency merger agreement at the special meeting or the
special meeting is canceled or otherwise not held in violation of
the Zions/Regency merger agreement and prior to the shareholder
vote or cancellation a third party publicly announces its
intention to engage in an Acquisition Transaction or commences a
tender offer or files a registration statement with the SEC with
respect to an exchange offer to acquire 10% or more of the shares
of Regency common stock outstanding;
o a third party files an application with the Federal Reserve or
another governmental authority for approval to engage in an
Acquisition Transaction; or
o the Regency board withdraws or adversely modifies its
recommendation that the Regency shareholders approve the
principal terms of the Zions/Regency merger agreement, or Regency
or any of its subsidiaries authorizes, recommends or proposes an
agreement to engage in an Acquisition Transaction with a third
party.
As used in the stock option agreement, the term "Acquisition
Transaction" means:
o a merger, consolidation or similar transaction involving Regency
or any of its subsidiaries, other than certain mergers involving
only Regency and its subsidiaries;
o a purchase, lease or other acquisition of all or substantially
all of the assets of or an assumption of all or substantially all
the deposits of Regency or any of its subsidiaries; or
o a purchase or other acquisition of securities representing 10% or
more of the voting power of the common stock of Regency or any of
its subsidiaries outstanding after such acquisition.
The stock option agreement generally defines the term "Purchase Event"
to mean any of the following events or transactions:
o the acquisition by a third party of beneficial ownership of 25%
or more of the Regency common stock outstanding after such
acquisition; or
o Regency or any of its subsidiaries enters into an agreement to
engage in an Acquisition Transaction with a third party or the
Regency board recommends that the Regency shareholders approve or
accept any Acquisition Transaction, other than the Zions/Regency
merger; however, if such Acquisition Transaction contemplates the
acquisition of securities of Regency, the acquisition must be of
securities representing 25% (not just 10%) or more of the voting
power of Regency or any of its subsidiaries.
Zions' right to exercise the option and certain other rights under the
stock option agreement are subject to extension for a period up to six months in
order to obtain required regulatory approvals, to comply with applicable
regulatory waiting periods and to avoid liability under Section 16(b) of the
Securities Exchange Act of 1934. The Option Price and the number of shares
issuable under the option
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<PAGE>
are subject to adjustment in the event of specified changes in the capital stock
of Regency or depending on the price or prices at which Regency issues
additional shares of its common stock.
Upon the occurrence of a Purchase Event that occurs prior to an
Exercise Termination Event, Zions will have the right, on two occasions, to
require Regency to file, at Regency's expense, a registration statement with the
SEC covering the shares of Regency common stock issued or issuable pursuant to
the option. The registration rights are more fully described in the stock option
agreement.
The stock option agreement also provides that, upon the occurrence of a
Purchase Event that occurs prior to an Exercise Termination Event, Zions may
require Regency to repurchase the option and all or any part of the shares then
issued under the option. The repurchase of the option shall be at a price per
share equal to the amount by which the market/offer price (as defined in the
stock option agreement) exceeds the Option Price. A repurchase of any shares
issued under the option will be at a price per share equal to the market/offer
price.
If, prior to an Exercise Termination Event, Regency enters into an
agreement:
(1) to merge with a third party and Regency is not the surviving
corporation;
(2) to merge into a third party and the Regency common stock is
converted into or exchanged for shares of a third party or cash
or other property or the shares of Regency common stock, after
the merger, represent less than 50% of the outstanding shares and
share equivalents of the merged company; or
(3) to sell all or substantially all of its or its subsidiaries'
assets,
the option will be converted into or exchangeable for a substitute option. The
substitute option will be issued by, at the election of Zions, either
(1) (A) the continuing or surviving person of a consolidation or
merger or (B) the transferee of all or substantially all of the
assets of Regency or any of its subsidiaries, or
(2) any person that controls any such entity.
The substitute option must have the same terms and conditions as the option.
However, if the terms of the substitute option cannot, for legal reasons, be the
same as those of the option, the terms of the substitute option must be as
similar as possible and in no event less advantageous to Zions.
Arrangements such as the stock option agreement are customarily entered
into in connection with corporate mergers and acquisitions in an effort to
increase the likelihood that the transactions will be consummated in accordance
with their terms, and to compensate the person granted the option for the
efforts undertaken and the expenses and losses incurred by it if the transaction
is not completed. The stock option agreement may have the effect of discouraging
offers by third parties to acquire Regency prior to the Zions/Regency merger,
even if such persons were prepared to offer to pay consideration to Regency
shareholders that has a higher current market price than the shares of Zions
common stock to be received by such holders pursuant to the Zions/Regency merger
agreement.
To the best knowledge of each of Zions and Regency, no event giving
rise to the right to exercise the option has occurred as of the date of this
proxy statement/prospectus.
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Shareholder Agreements
As a condition and an inducement to Zions' entering into the
Zions/Regency merger agreement, the directors, executive officers and certain
affiliates of Regency, who are entitled to vote approximately 33.08% of the
outstanding shares of Regency common stock, have entered into shareholder
agreements with Zions. Under the shareholder agreements, the directors,
executive officers and affiliates have agreed to vote their shares in favor of
approval of the Zions/Regency merger agreement. These persons have also agreed
not to sell or otherwise transfer any Regency shares owned by them.
Dissenters' or Appraisal Rights
In connection with the Zions/Regency merger, the Regency shareholders
may be entitled to dissenters' rights under Chapter 13 of the CGCL, attached
hereto as Appendix C. The description of dissenters' rights contained in this
proxy statement/prospectus is qualified in its entirety by reference to Chapter
13 of the CGCL. In order for a shareholder to exercise dissenters' rights, a
notice of such shareholder's intention to exercise his or her dissenters' rights
as provided in the CGCL must be received by Regency on or before the date of the
special meeting. In addition, such shareholder must vote against the approval of
the principal terms of the Zions/Regency merger agreement and comply with the
other procedures required by the CGCL, as more fully described below. Failure to
send such notice, to vote against the principal terms of the Zions/Regency
merger agreement or to follow such other procedures will result in a waiver of
such shareholder's dissenters' rights.
Any demands, notices, certificates or other documents delivered to
Regency prior to the Zions/Regency merger may be sent to Secretary, Regency
Bank, 7060 North Fresno Street, Fresno, California 93720. After such time, they
may be sent to Secretary, California Bank & Trust, 4320 La Jolla Village Drive,
Suite 355, San Diego, California 92122.
If no instructions are indicated on proxies received by Regency, such
proxies will be voted for the proposal to approve the principal terms of the
Zions/Regency merger agreement at the special meeting. Those Regency
shareholders who return their proxies without instructions, resulting in a vote
for the approval of the principal terms of the Zions/Regency merger agreement,
will not be entitled to dissenters' rights.
In addition, because the Regency common stock is quoted on the NASDAQ
National Market, Regency shareholders will not have dissenters' rights unless
demands for purchase in cash of such shares at their fair market value as of
April 27, 1999, without giving effect to any appreciation or depreciation
resulting from the Zions/Regency merger, are made with respect to five percent
or more of the outstanding shares of Regency common stock. Such demands must be
received by Regency or its transfer agent not later than the date of the special
meeting. In the event that demands are made with respect to five percent or more
of the outstanding shares of Regency common stock on or before the date of the
special meeting, the Regency shareholders who made demands will be entitled to
dissenters' rights. However, the shareholders who made such demands will still
need to perfect their dissenters' rights in accordance with Chapter 13 of the
CGCL.
Each demand must:
o be a written demand to purchase shares of Regency common stock
and make payment to the dissenting shareholder in cash of their
fair market value as of April 27, 1999;
o be received by Regency on or before the date of the special
meeting;
o state the number and class of the shares held of record by the
dissenting shareholder that the dissenting shareholder demands
that Regency purchase; and
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o contain a statement of what the dissenting shareholder claims to
be the fair market value of such shares as of April 27, 1999.
Such statement of the fair market value constitutes an offer by the dissenting
shareholder to sell such shares at that price. A dissenting shareholder who has
made such a demand for payment may not withdraw the demand unless Regency
consents to such withdrawal. A proxy or vote against the approval of the
principal terms of the Zions/Regency merger agreement does not in itself
constitute a demand.
Each dissenting shareholder must submit the certificates representing
the shares with respect to which the shareholder is exercising dissenters'
rights for endorsement as dissenting shares to Regency at its principal office
or at the office of its transfer agent within 30 days after the date on which
notice of approval of the principal terms of the Zions/Regency merger agreement
by Regency shareholders is mailed to such dissenting shareholder.
If any shareholder has dissenters' rights, Regency will mail to each
such shareholder a notice of the approval of the principal terms of the
Zions/Regency merger agreement by the Regency shareholders, within 10 days after
the date of such approval, accompanied by:
o a copy of Sections 1300, 1301, 1302, 1303 and 1304 of Chapter 13
of the CGCL;
o a statement of the price determined by Regency to represent the
fair market value as of April 27, 1999 of the dissenting shares;
and
o a brief description of the procedure to be followed if the
shareholder desires to exercise his or her dissenters' rights
under such sections.
The statement of price set forth in the notice of approval will constitute an
offer by Regency to purchase such dissenting shares at such price.
If Regency denies that shares submitted to it as dissenting shares are
dissenting shares, or if Regency and a dissenting shareholder fail to agree on
the fair market value of the dissenting shares, either such dissenting
shareholder or Regency may file a complaint in the Superior Court of the proper
county in California requesting that the court determine such issue. Such
complaint must be filed within six months after the date on which notice of the
approval of the principal terms of the Zions/Regency merger agreement is mailed
to dissenting shareholders.
On trial of the action, the court will first determine if the shares
are dissenting shares, and if so determined, the court will either determine the
fair market value or appoint one or more impartial appraisers to do so. If both
Regency and the dissenting shareholder fail to file a complaint within six
months after the date on which notice of the approval of the principal terms of
the Zions/Regency merger agreement was mailed to the dissenting shareholders,
such dissenting shareholder will lose his or her dissenters' rights. In
addition, if the dissenting shareholder transfers such dissenting shares prior
to their submission for the required endorsement, such shares will lose their
status as dissenting shares.
Failure to take any necessary step will result in a termination or
waiver of the rights of the holder under Chapter 13 of the CGCL. A person having
a beneficial interest in Regency common stock that is held of record in the name
of another person, such as a trustee or nominee, must act promptly to cause the
record holder to follow the requirements of Chapter 13 of the CGCL in a timely
manner if such person elects to demand payment of the fair market value of such
shares.
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Combined Balance Sheet as
of June 30, 1999 combines the historical consolidated balance sheets of Zions
and First Security as if the Zions/First Security merger had been effective on
June 30, 1999, after giving effect to certain adjustments described in the
attached Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
The Unaudited Pro Forma Condensed Combined Statements of Income for the six
months ended June 30, 1999 and the years ended December 31, 1998, 1997 and 1996
present the combined results of operations of Zions and First Security as if the
Zions/First Security merger had been effective at the beginning of each period
presented, after giving effect to certain adjustments described in the attached
Notes to Unaudited Pro Forma Condensed Combined Financial Statements. Zions'
historical financial statements are incorporated by reference in its Annual
Report on Form 10-K for the year ended December 31, 1998 and its Form 10-Q for
the quarter ended June 30, 1999. First Security's historical financial
statements are incorporated by reference in its Annual Report on Form 10-K for
the year ended December 31, 1998 and its Form 10-Q for the quarter ended June
30, 1999. The Unaudited Pro Forma Condensed Combined Statement of Income for the
year ended December 31, 1998 also includes historical results of operations for
The Sumitomo Bank of California for the nine months ended September 30, 1998,
after giving effect to certain adjustments described in the attached Notes to
Unaudited Pro Forma Condensed Combined Financial Statements. Zions acquired The
Sumitomo Bank of California on October 1, 1998 in a transaction accounted for as
a purchase. The Unaudited Pro Forma Condensed Combined Financial Statements
should be read in conjunction with the historical financial statements of Zions
and First Security.
The Unaudited Pro Forma Condensed Combined Financial Statements and
related notes reflect the application of the "pooling-of-interests" accounting
method. Under this method of accounting, the previously recorded assets and
liabilities of Zions and First Security are carried forward to the combined
company at their recorded amounts. In addition, in the combined company's
financial reporting following the completion of the Zions/First Security merger,
its income and expenses would include income and expenses of Zions and First
Security for the entire fiscal year in which the Zions/First Security merger
occurs and the reported results of the separate corporations for prior periods
would be combined and restated as the results of the combined company.
The Unaudited Pro Forma Condensed Combined Financial Statements and
related notes do not give effect to the Zions/Regency merger, the Zions/Pioneer
merger or merger transactions that First Security expects to complete prior to
the completion of the Zions/Regency merger or has recently completed, none of
which are material to the Unaudited Pro Forma Condensed Combined Financial
Statements and related notes.
Zions expects that it will incur reorganization and restructuring
expenses as a result of combining Zions and First Security. The Unaudited Pro
Forma Condensed Combined Statement of Income and related notes do not reflect
any anticipated reorganization and restructuring expenses resulting from the
Zions/First Security merger. Zions also anticipates that the Zions/First
Security merger will provide the combined company with certain financial
benefits that include reduced operating expenses and opportunities to earn more
revenue. However, Zions does not reflect any of these anticipated cost savings
or benefits in the Unaudited Pro Forma Condensed Combined Financial Statements
and related notes. Net income per share amounts and weighted average shares have
been adjusted to reflect the conversion of each outstanding share of First
Security common stock into 0.442 of a share of the combined company common stock
immediately prior to the completion of the Zions/First Security merger. Finally,
the Unaudited Pro Forma Condensed Combined Financial Statements do not reflect
the expected required divestiture of branches and deposits in connection with
the Zions/First Security merger. Therefore, the Unaudited Pro Forma Condensed
Combined Financial Statements and related notes, while helpful in illustrating
the financial characteristics of the combined company under one set of
assumptions, do not attempt to predict or suggest future results. The Unaudited
Pro Forma Condensed Combined Financial Statements and related notes also do not
attempt to show how the combined company would actually have performed had the
companies been combined throughout these periods.
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All adjustments, consisting of only normal recurring adjustments, necessary for
a fair statement of results of the unaudited historical interim periods have
been included.
45
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ZIONS BANCORPORATION AND FIRST SECURITY CORPORATION
PRO FORMA CONDENSED COMBINED BALANCE SHEET
June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Zions
Historical First Security
-------------------------- Pro Forma Pro Forma
Zions Security Adjustments Combined
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS (In millions)
Cash and due from banks .................................. $ 883 $ 949 $ 1,832
Money market investments ................................. 400 169 569
Investment securities:
Held to maturity, at cost ....................... 3,225 -- 3,225
Available for sale, at market ................... 466 5,923 (70)(A) 6,319
Trading ......................................... 416 148 564
Loans, net of unearned income ............................ 11,047 13,310 24,357
Allowance for loan losses ................................ 205 174 379
----------- ----------- ----------- -----------
Net loans ....................................... 10,842 13,136 -- 23,978
Intangible assets ........................................ 262 578 (197)(H) 643
Other assets ............................................. 1,112 1,232 200 (H)(B) 2,544
----------- ----------- ----------- -----------
Total assets .................................... $ 17,606 $ 22,135 (67) $ 39,674
=========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest-bearing deposits ............................. $ 3,077 $ 2,622 $ 5,699
Interest-bearing deposits ................................ 9,994 10,361 20,355
----------- ----------- ----------- -----------
Total deposits .................................. 13,071 12,983 -- 26,054
Federal funds purchased and securities
sold under repurchase agreements .................... 1,520 3,730 5,250
Other short-term borrowings .............................. 1,043 405 1,448
Long-term borrowings ..................................... 514 2,582 3,096
Other liabilities ........................................ 329 699 150 (G) 1,178
----------- ----------- ----------- -----------
Total liabilities ............................... 16,477 20,399 150 37,026
----------- ----------- ----------- -----------
Minority interest ........................................ 38 38
Shareholders' equity:
Preferred stock ................................. -- -- --
Common stock .................................... 329 246 (370)(C) 205
Surplus ......................................... -- 282 268 (D) 550
Accumulated other comprehensive income (loss) ... -- (67) (4)(F) (71)
Retained earnings ............................... 762 1,314 (150)(G) 1,926
Common treasury stock, at cost .................. -- (39) 39 (F) --
----------- ----------- ----------- -----------
Total shareholders' equity ...................... 1,091 1,736 (217) 2,610
----------- ----------- ----------- -----------
Total liabilities and shareholders' equity ...... $ 17,606 $ 22,135 (67) $ 39,674
=========== =========== =========== ===========
</TABLE>
See Notes to Pro Forma Condensed Combined Financial Statements
46
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ZIONS BANCORPORATION AND FIRST SECURITY CORPORATION
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Six Months Ended June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Zions
Historical First Security
------------------------- Pro Forma Pro Forma
Zions Security Adjustments Combined
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income: (In millions, except share and per share data)
Interest and fees on loans and leases ............... $ 465.1 $ 561.1 $ 1,026.2
Interest on money market investments ................ 30.5 3.7 34.2
Interest on securities .............................. 120.2 182.4 302.6
----------- ----------- ----------- -----------
Total interest income .................. 615.8 747.2 -- 1,363.0
----------- ----------- ----------- -----------
Interest expense:
Interest on deposits ................................ 189.8 196.9 386.7
Interest on borrowed funds .......................... 84.5 180.5 265.0
----------- ----------- ----------- -----------
Total interest expense ................. 274.3 377.4 -- 651.7
----------- ----------- ----------- -----------
Net interest income .................... 341.5 369.8 -- 711.3
Provision for loan losses ........................... 7.9 27.5 35.4
----------- ----------- ----------- -----------
Net interest income after provision for loan losses . 333.6 342.3 -- 675.9
----------- ----------- ----------- -----------
Noninterest income:
Service charges on deposit accounts ................. 35.5 43.2 78.7
Other service charges, commissions and fees ......... 32.6 77.4 110.0
Trust income ........................................ 6.8 16.1 22.9
Loan sales and servicing income ..................... 27.6 114.3 28.7(O) 170.6
Other ............................................... 21.6 17.5 39.1
----------- ----------- ----------- -----------
Total noninterest income ............... 124.1 268.5 28.7 421.3
----------- ----------- ----------- -----------
Noninterest expense:
Salaries and employee benefits ...................... 164.9 237.3 402.2
Occupancy, net ...................................... 22.7 23.0 45.7
Furniture and equipment ............................. 20.1 32.7 52.8
Amortization of goodwill and core deposit
intangibles ........................... 6.8 8.1 14.9
Other ............................................... 85.4 108.7 28.7(O) 222.8
----------- ----------- ----------- -----------
Total noninterest expense .............. 299.9 409.8 28.7 738.4
----------- ----------- ----------- -----------
Income before income taxes and minority interest ......... 157.8 201.0 -- 358.8
Income taxes ............................................. 54.0 67.3 121.3
----------- ----------- ----------- -----------
Net income before minority interest ...................... 103.8 133.7 -- 237.5
Minority interest ........................................ 2.1 -- 2.1
----------- ----------- ----------- -----------
Net income ............................................... $ 101.7 $ 133.7 -- $ 235.4
=========== =========== =========== ===========
Net income per share (basic) - See Note 3 ................ $ 1.29 $ 1.59 $ 1.45
Net income per share (diluted) - See Note 3 .............. $ 1.27 $ 1.55 $ 1.42
Weighted-average common and common-equivalent shares
outstanding during the period (in thousands) -See Note 3.. 80,017 86,151 166,085
</TABLE>
See Notes to Pro Forma Condensed Combined Financial Statements
47
<PAGE>
ZIONS BANCORPORATION AND FIRST SECURITY CORPORATION
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Year Ended December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Historical Historical
------------------- ---------- Zions,
Sumitomo Zions and Sumitomo and
Nine Months Sumitomo First Security
Ended Pro Forma Pro Forma First Pro Forma Pro Forma
Zions 9/30/98 Adjustments Combined Security Adjustments Combined
---------- ------ ------ ---------- ---------- --------- -----------
(In millions, except share and per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income:
Interest and fees on loans and leases $ 681.2 $233.6 $ 0.7 (I) $ 915.5 $ 1,111.4 $ 2,026.9
Interest on money market investments 88.5 18.1 (16.8)(J) 89.8 5.7 95.5
Interest on securities .............. 206.4 20.0 226.4 303.6 530.0
---------- ------ ------ ---------- ---------- --------- -----------
Total interest income ........... 976.1 271.7 (16.1) 1,231.7 1,420.7 -- 2,652.4
---------- ------ ------ ---------- ---------- --------- -----------
Interest expense:
Interest on deposits ................ 293.7 121.3 415.0 403.9 818.9
Interest on borrowed funds .......... 138.6 2.7 141.3 313.1 454.4
---------- ------ ------ ---------- ---------- --------- -----------
Total interest expense .......... 432.3 124.0 -- 556.3 717.0 -- 1,273.3
---------- ------ ------ ---------- ---------- --------- -----------
Net interest income ............. 543.8 147.7 (16.1) 675.4 703.7 -- 1,379.1
Provision for loan losses ........... 12.2 6.0 18.2 71.9 90.1
---------- ------ ------ ---------- ---------- --------- -----------
Net interest income after provision for
loan losses ..................... 531.6 141.7 (16.1) 657.2 631.8 -- 1,289.0
---------- ------ ------ ---------- ---------- --------- -----------
Noninterest income:
Service charges on deposit accounts . 58.2 3.8 62.0 90.8 152.8
Other service charges, commissions
and fees ........................ 54.7 7.0 61.7 120.0 181.7
Trust income ........................ 9.4 2.7 12.1 29.5 41.6
Loan sales and servicing income ..... 50.4 1.9 52.3 221.7 41.5(O) 315.5
Other ............................... 28.0 3.9 31.9 12.4 44.3
---------- ------ ------ ---------- ---------- --------- -----------
Total noninterest income ........ 200.7 19.3 -- 220.0 474.4 41.5 735.9
---------- ------ ------ ---------- ---------- --------- -----------
Noninterest expense:
Salaries and employees benefits ..... 249.6 66.6 316.2 386.7 702.9
Occupancy, net ...................... 30.1 12.5 0.1 (K) 42.7 39.1 81.8
Furniture and equipment ............. 36.2 5.7 41.9 58.2 100.1
Amortization of goodwill and core
deposit intangibles ............. 10.7 -- 3.2 (L) 13.9 11.7 25.6
Other ............................... 187.5 61.1 248.6 227.4 41.5(O) 517.5
---------- ------ ------ ---------- ---------- --------- -----------
Total noninterest expense ....... 514.1 145.9 3.3 663.3 723.1 41.5 1,427.9
---------- ------ ------ ---------- ---------- --------- -----------
Income before income taxes and minority
interest ............................ 218.2 15.1 (19.4) 213.9 383.1 597.0
Income taxes ................................. 70.9 5.4 (5.3)(M) 71.0 135.4 206.4
---------- ------ ------ ---------- ---------- --------- -----------
Net income before minority interest .......... 147.3 9.7 (14.1) 142.9 247.7 390.6
Minority interest ............................ 0.5 -- 0.6 (N) 1.1 -- 1.1
---------- ------ ------ ---------- ---------- --------- -----------
Net income ................................... $ 146.8 $ 9.7 $(14.7) $ 141.8 $ 247.7 -- $ 389.5
========== ====== ====== ========== ========== ========= ===========
Net income per share (basic) - See Note 3 .... $ 1.93 $ 1.81 $ 2.99 $ 2.42
Net income per share (diluted) - See Note 3 .. $ 1.91 $ 1.79 $ 2.89 $ 2.36
Weighted-average common and common-
equivalent shares outstanding during the year
in thousands) - See Note 3 ................... 76,988 78,198 85,677 163,868
See Notes to Pro Forma Condensed Combined Financial Statements
</TABLE>
48
<PAGE>
ZIONS BANCORPORATION AND FIRST SECURITY CORPORATION
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Year Ended December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Zions
Historical First Security
------------------------- Pro Forma Pro Forma
Zions Security Adjustments Combined
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income: (In millions, except share and per share data)
Interest and fees on loans and leases ........... $ 500.5 $ 955.0 $ 1,455.5
Interest on money market investments ............ 85.5 4.3 89.8
Interest on securities .......................... 193.5 254.1 447.6
----------- ----------- ----------- -----------
Total interest income .................. 779.5 1,213.4 -- 1,992.9
----------- ----------- ----------- -----------
Interest expense:
Interest on deposits ............................ 208.0 352.6 560.6
Interest on borrowed funds ...................... 159.0 234.8 393.8
----------- ----------- ----------- -----------
Total interest expense ................. 367.0 587.4 -- 954.4
----------- ----------- ----------- -----------
Net interest income .................... 412.5 626.0 1,038.5
Provision for loan losses ....................... 7.8 63.4 71.2
----------- ----------- ----------- -----------
Net interest income after provision for loan losses 404.7 562.6 -- 967.3
----------- ----------- ----------- -----------
Noninterest income:
Service charges on deposit accounts ............. 48.5 90.8 139.3
Other service charges, commissions and fees ..... 40.5 106.7 147.2
Trust income .................................... 6.8 26.2 33.0
Loan sales and servicing income ................. 40.4 119.3 16.1 (O) 175.8
Other ........................................... 10.2 14.1 24.3
----------- ----------- ----------- -----------
Total noninterest income ............... 146.4 357.1 16.1 519.6
----------- ----------- ----------- -----------
Noninterest expense:
Salaries and employee benefits .................. 184.7 304.9 489.6
Occupancy, net .................................. 18.9 36.7 55.6
Furniture and equipment ......................... 28.1 46.3 74.4
Amortization of goodwill and core deposit intangible 6.7 7.5 14.2
Other ........................................... 106.2 193.5 16.1 (O) 315.8
----------- ----------- ----------- -----------
Total noninterest expense .............. 344.6 588.9 16.1 949.6
----------- ----------- ----------- -----------
Income before income taxes and minority interest ......... 206.5 330.8 -- 537.3
Income taxes ............................................. 72.2 115.5 187.7
----------- ----------- ----------- -----------
Net income before minority interest ...................... 134.3 215.3 -- 349.6
Minority interest ........................................ -- -- --
----------- ----------- ----------- -----------
Net income ............................................... $ 134.3 $ 215.3 -- $ 349.6
=========== =========== =========== ===========
Net income per share (basic) - See Note 3 ................ $ 1.88 $ 2.67 $ 2.30
Net income per share (diluted) - See Note 3 .............. $ 1.84 $ 2.58 $ 2.23
Weighted-average common and common-equivalent shares
outstanding during the year (in thousands) - See Note 3 .. 72,813 83,423 156,229
</TABLE>
See Notes to Pro Forma Condensed Combined Financial Statements
49
<PAGE>
ZIONS BANCORPORATION AND FIRST SECURITY CORPORATION
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Year Ended December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Zions
Historical First Security
------------------------- Pro Forma Pro Forma
Zions Security Adjustments Combined
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
(In millions, except shares and per share data)
Interest income:
Interest and fees on loans and leases ........... $ 395.3 $ 830.6 $ 1,225.9
Interest on money market investments ............ 52.7 6.8 59.5
Interest on securities .......................... 146.7 202.0 348.7
----------- ----------- ----------- -----------
Total interest income .................. 594.7 1,039.4 -- 1,634.1
----------- ----------- ----------- -----------
Interest expense:
Interest on deposits ............................ 168.9 326.8 495.7
Interest on borrowed funds ...................... 88.1 158.5 246.6
----------- ----------- ----------- -----------
Total interest expense ................. 257.0 485.3 -- 742.3
----------- ----------- ----------- -----------
Net interest income .................... 337.7 554.1 891.8
Provision for loan losses ....................... 6.5 41.3 47.8
----------- ----------- ----------- -----------
Net interest income after provision for loan losses 331.2 512.8 -- 844.0
----------- ----------- ----------- -----------
Noninterest income:
Service charges on deposit accounts ............. 39.5 83.9 123.4
Other service charges, commissions and fees ..... 30.5 92.0 122.5
Trust income .................................... 5.2 23.1 28.3
Loan sales and servicing income ................. 36.6 88.4 11.9(O) 136.9
Other ...................................... 10.2 19.0 29.2
----------- ----------- ----------- -----------
Total noninterest income ................... 122.0 306.4 11.9 440.3
----------- ----------- ----------- -----------
Noninterest expense:
Salaries and employee benefits ...................... 150.4 277.7 428.1
Occupancy, net ...................................... 15.5 33.1 48.6
Furniture and equipment ............................. 21.0 43.3 64.3
Amortization of goodwill and core deposit intangibles 3.3 9.2 12.5
Other ............................................... 82.9 167.9 11.9(O) 262.7
----------- ----------- ----------- -----------
Total noninterest expense .................. 273.1 531.2 11.9 816.2
----------- ----------- ----------- -----------
Income before income taxes and minority interest ......... 180.1 288.0 468.1
Income taxes ............................................. 59.7 103.5 163.2
----------- ----------- ----------- -----------
Net income before minority interest ...................... 120.4 184.5 -- 304.9
Minority interest ........................................ -- -- --
----------- ----------- ----------- -----------
Net income ............................................... $ 120.4 $ 184.5 -- $ 304.9
=========== =========== =========== ===========
Net income per share (basic) - See Note 3 ................ $ 1.69 $ 2.32 $ 2.03
Net income per share (diluted) - See Note 3 .............. $ 1.66 $ 2.26 $ 1.97
Weighted average common and common-equivalent shares
outstanding during the year (in thousands) - See Note 3 .. 72,158 81,770 153,921
</TABLE>
See Notes to Pro Forma Condensed Combined Financial Statements
50
<PAGE>
ZIONS BANCORPORATION AND FIRST SECURITY CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(unaudited)
Note (1): Basis of Presentation
The Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30,
1999 combines the historical consolidated balance sheets of Zions and First
Security as if the Zions/First Security merger had taken place on June 30, 1999.
The Unaudited Pro Forma Condensed Combined Statements of Income for the six
months ended June 30, 1999, and each of the years ended December 31, 1998, 1997
and 1996, combine the historical statements of income for Zions and First
Security as if the Zions/First Security merger had been consummated at the
beginning of each period presented. On October 1, 1998, Zions acquired The
Sumitomo Bank of California in a transaction accounted for as a purchase. The
Unaudited Pro Forma Condensed Combined Statement of Income for the year ended
December 31, 1998 includes historical results of operations for The Sumitomo
Bank of California for the nine months ended September 30, 1998, after giving
effect to certain adjustments as described in Note 2.
The Unaudited Pro Forma Condensed Combined Financial Statements give
effect to the merger of Zions and First Security under the pooling-of-interests
accounting method. The Unaudited Pro Forma Condensed Combined Statements of
Income do not give effect to nonrecurring merger charges related to the
transaction or anticipated cost savings resulting from the centralization of
administrative functions, consolidation of data processing operations or
optimization of delivery systems. It is expected that the combined company will
incur a one-time pre-tax merger charge of approximately $210 million. Pre-tax
noninterest expense reductions expected are approximately $108 million annually
with approximately half the savings to be achieved in 2000 and the remainder in
2001.
Under the terms of the Zions/First Security merger agreement, Zions
will be merged with and into First Security with First Security as the surviving
corporation. On the effective date of the Zions/First Security merger, each
outstanding share of Zions common stock will be converted into one share of
common stock, par value $1.25 per share, of First Security. Immediately prior to
the effectiveness of the Zions/First Security merger, First Security will effect
a reverse stock split in which each outstanding share of common stock of First
Security will be reclassified and converted into 0.442 of a share of First
Security common stock. Each share of any treasury stock of First Security at the
Zions/First Security merger date will be canceled and retired.
Note (2): Description of Pro Forma Adjustments
The following pro forma adjustments were made to the June 30, 1999
Unaudited Pro Forma Condensed Combined Balance Sheet to reflect the merger of
Zions and First Security:
(shares in thousands)
(dollar amounts in
millions)
(A) Investment securities available for sale, at market
Adjustment for First Security common stock owned
by Zions treated as treasury stock in the pooling
transaction (70)
(B) Other assets
Adjustment to the net deferred tax asset to
eliminate the deferred income tax liability
related to unrealized gain on First Security
common stock owned by Zions 3
(C) Common stock:
First Security common shares issued June 30, 1999 196,692
51
<PAGE>
ZIONS BANCORPORATION AND FIRST SECURITY CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS-(Continued)
(unaudited)
Less: First Security shares owned by Zions (2,580)
Less: Treasury stock shares on June 30, 1999 (1,607)
-------
192,505
Times reverse stock split conversion rate 0.442
-------
First Security common shares outstanding
after reverse stock split and retirement
of treasury shares 85,087
Zions common shares outstanding June 30, 1999 79,011
-------
Total First Security common shares outstanding
effected for the Zions/First Security merger 164,098
Times par value of First Security common stock 1.25
-------
Pro forma balance of First Security common
stock, par value $1.25 per share, after merger $ 205
Combined Zions and First Security common stock
amount prior to pro forma adjustments 575
-------
Pro forma adjustment to common stock $(370)
=======
(D) Surplus:
Pro forma adjustment to common stock $ 370
Retirement of treasury stock owned by First
Security at June 30, 1999 (39)
First Security common stock owned by Zions
at June 30, 1999 63
-------
Pro forma adjustment to surplus $ 268
=======
(E) Accumulated other comprehensive income (loss)
Adjustment for unrealized gain on First
Security common stock owned by Zions $ (4)
=======
(F) Common treasury stock to be retired:
First Security treasury stock at June 30, 1999 $ 39
=======
(G) Other liabilities and retained earnings:
Adjustment for estimated $210 million of
pre-tax merger charges, net of estimated
tax benefit of $60 million on deductible
charges $ 150
=======
(H) Intangible assets and other assets:
Reclassification of First Security loan
servicing rights to reflect the planned
future combined classification $ 197
=======
The following pro forma adjustments were made to the Unaudited Pro
Forma Condensed Combined Statements of Income:
52
<PAGE>
ZIONS BANCORPORATION AND FIRST SECURITY CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS-(Continued)
(unaudited)
Adjustments to the Unaudited Pro Forma Condensed Combined Statement of
Income for the year ended December 31, 1998 to reflect the acquisition
of The Sumitomo Bank of California by Zions.
(I) Interest and fees on loans and leases
The $0.7 million adjustment increasing interest and fees on loans
represents the interest income for the nine months ended September 30,
1998 from a $14.9 million loan made by Zions to Robert G. Sarver, a
director of Zions and the chief executive officer of California Bank &
Trust, a subsidiary of Zions. The loan was made to finance a portion of
a 5% equity investment made by Mr. Sarver in California Bank & Trust in
connection with the acquisition of The Sumitomo Bank of California.
(J) Interest on money market investments
The $16.8 million adjustment reducing interest income on money
market investments represents the decrease in interest for the nine
months ended September 30, 1998 as the result of reducing approximately
$397 million of money market investments to obtain part of the cash
consideration paid by Zions for The Sumitomo Bank of California.
(K) Occupancy, net
The $0.1 million increase in occupancy, net represents depreciation
expense for the nine months ended September 30, 1998 on approximately
$6.3 million of excess purchase price allocated to premises and
equipment in The Sumitomo Bank of California acquisition.
(L) Amortization of goodwill and core deposit intangibles
The $3.2 million adjustment increasing amortization of goodwill
represents the amortization expense for the nine months ended September
30, 1998 on approximately $107 million of goodwill recorded in The
Sumitomo Bank of California purchase. The amortization is calculated
using the straight line method over a life of 25 years.
(M) Income taxes
The $5.3 million adjustment reducing income taxes represents the
income tax provision reduction resulting from the previous adjustments
affecting taxable earnings.
(N) Minority interest
The $0.6 million adjustment increasing minority interest represents
the 5% California Bank & Trust minority shareholders' interest in
adjusted earnings of California Bank & Trust including The Sumitomo
Bank of California for the nine months ended September 30, 1998.
Adjustments to the Unaudited Pro Forma Condensed Combined Statements of
Income to reclassify First Security amortization of loan servicing
rights to reflect the planned future combined classification.
53
<PAGE>
ZIONS BANCORPORATION AND FIRST SECURITY CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS-(Continued)
(unaudited)
(O) Loan sales and servicing income and other noninterest expense
Six months ended June 30, 1999 $28.7
Year ended December 31, 1998 41.5
Year ended December 31, 1997 16.1
Year ended December 31, 1996 11.9
Note (3): Earnings per Share
In connection with the purchase of The Sumitomo Bank of California,
Zions completed a stock offering in June 1998 and issued 2,760,000 shares of
common stock. Weighted average shares used in the calculation of basic and fully
diluted earnings per share for the year ended December 31, 1998 have been
increased by 1,210,000 shares to include the shares as if they were issued on
January 1, 1998.
Weighted-average shares used in the calculation of pro forma combined
and First Security historical basic and diluted net income per share for all
periods presented have been determined by adjusting average shares for the
reverse stock split to be effected by First Security immediately prior to the
effectiveness of the Zions/First Security merger. Weighted-average common and
common-equivalent shares of First Security have been adjusted to reflect the
conversion of each outstanding share of First Security into 0.442 shares of new
First Security common stock.
Weighted-average shares used in the calculation of pro forma combined
basic and diluted net income per share for all periods presented have been
adjusted for average First Security common shares owned by Zions, converted
using the 0.442 exchange ratio. Average shares have been reduced by 83,000
shares for the six months ended June 30, 1999 and 7,000 shares for each of the
years ended December 31, 1998, 1997 and 1996.
54
<PAGE>
THE ZIONS/FIRST SECURITY MERGER
The following information describes certain information pertaining to
the Zions/First Security merger. This description is not complete and is
qualified in its entirety by reference to the more detailed information
contained in Zions' Current Report on Form 8-K filed on June 7, 1999 and to the
First Security merger agreement and stock option agreement filed as exhibits to
Zions' Schedule 13D dated June 16, 1999. The Form 8-K and the Zions/First
Security merger agreement and stock option agreement are incorporated herein by
reference.
General
On June 6, 1999, Zions and First Security entered into a merger
agreement as a result of which Zions will merge with and into First Security. In
the Zions/First Security merger and related transactions, each shareholder of
Zions common stock will receive one share of First Security common stock in
exchange for each share of Zions common stock which they own. In addition, Zions
and First Security have agreed that, immediately prior to the Zions/First
Security merger, First Security will change its common stock in what is legally
known as a "reclassification". This reclassification will reduce the number of
shares of common stock that are held by First Security stockholders. In the
reclassification, First Security stockholders will receive 0.442 of a share of
First Security common stock for each share of First Security common stock they
own.
If both the Zions/First Security merger and the Zions/Regency merger
are completed, each share of Regency common stock ultimately would be converted
into 0.3233 of a share of First Security common stock, subject to the same
adjustments described above under "The Merger--General". If the Zions/First
Security merger were completed prior to the Zions/Regency merger, First Security
would assume the rights and obligations of Zions under the Zions/Regency merger
agreement. If, however, the Zions/Regency merger is completed prior to the
Zions/First Security merger, the shares of Regency common stock would first be
converted into shares of Zions common stock at a 0.3233 exchange ratio, subject
to adjustment as described above, and then into shares of First Security common
stock on a one share-for-one share basis. Finally, if the Zions/First Security
merger is not completed after the Zions/Regency merger, the shares of Zions
common stock received by Regency shareholders in the Zions/Regency merger will
remain as such.
We currently expect that the Zions/First Security merger, if it closes,
will close after the Zions/Regency merger. If all conditions to the completion
of the Zions/First Security merger are met, Regency shareholders would become
stockholders of First Security. However, they would not be entitled to vote on
the merger of Zions with First Security because they would not be shareholders
of Zions on the record date for the special meeting of shareholders of Zions.
Therefore, when voting on the principal terms of the Zions/Regency merger
agreement and deciding whether to exercise dissenters' rights with respect to
the Zions/Regency merger, you must consider the possibility that you will become
stockholders of First Security.
The Zions/First Security merger is subject to various conditions,
including:
o approval of the Zions/First Security merger agreement by the
First Security stockholders and the Zions shareholders;
o receipt of all governmental and other consents and approvals that
are necessary to permit completion of the Zions/First Security
merger; and
o other usual conditions.
Zions cannot guarantee when or if the merger with First Security will be
completed.
55
<PAGE>
First Security
First Security is the nation's oldest multistate bank holding company
and is the parent corporation for First Security Bank, N.A. and several other
banking subsidiaries and subsidiaries that engage in banking-related services.
Like Zions, First Security is headquartered in Salt Lake City, Utah. Through its
subsidiaries, First Security operated 333 branches in the states of California,
Idaho, Nevada, New Mexico, Oregon, Utah and Wyoming as of June 30, 1999. At that
date, First Security had consolidated assets of $22.1 billion, deposits of $13.0
billion and stockholders' equity of $1.7 billion.
Through its subsidiaries, First Security provides commercial and
agricultural loans, consumer banking, trust services, capital markets advice and
municipal underwriting services, treasury management, investment management,
data processing, leasing and securities brokerage services. First Security
common stock is quoted on the NASDAQ National Market System, and First Security
files regular reports with the SEC. First Security has paid dividends regularly
on its common stock since 1928. First Security's principal subsidiaries are
First Security Bank, N.A., the largest bank in Utah with branches in Idaho,
Oregon and Wyoming; First Security Bank of New Mexico, N.A., the third largest
bank in New Mexico and the second largest bank in the Albuquerque market; and
First Security Van Kasper, Inc., a registered investment advisor and broker
dealer. First Security also owns banks in Nevada, California and southern New
Mexico. First Security's executive offices are located at 79 South Main Street,
Salt Lake City, Utah 84111 and its telephone number is (801) 246-6000.
Governance of First Security After the Zions/First Security Merger
In the Zions/First Security merger agreement, the parties agreed to
various governance arrangements for First Security following completion of the
Zions/First Security merger, the terms of some of which are set forth in Exhibit
B to the Zions/First Security merger agreement and some of which have been
incorporated into the form of First Security amended and restated certificate of
incorporation and the form of First Security amended and restated by-laws. As
part of the transactions related to the Zions/First Security merger, First
Security will amend and restate its certificate of incorporation and by-laws in
accordance with those forms immediately prior to the Zions/First Security
merger. In the following discussion, references to the First Security
certificate are to the First security certificate of incorporation as so amended
and restated and references to the First Security by-laws are to the First
Security by-laws as so amended and restated.
Board of Directors
The amended and restated First Security certificate provides that until
the annual meeting of stockholders in the year 2000, the number of directors of
the First Security board of directors will be 22, consisting of 11 members
designated by Zions pursuant to the Zions/First Security merger agreement and 11
members designated by First Security pursuant to the Zions/First Security merger
agreement. Commencing with the annual meeting of stockholders in the year 2000,
the number of directors will be 18, consisting of an even number of directors
originally designated by Zions and First Security, respectively, under the
Zions/First Security merger agreement. Commencing with the annual meeting of
stockholders in the year 2001, the number of directors will be 16, consisting of
an even number of directors originally designated by Zions and First Security,
respectively, under the Zions/First Security merger agreement. The First
Security certificate provides that if any director originally appointed by Zions
or First Security is unable to serve as a director for any reason, the
nominating committee of the First Security board of directors will nominate a
replacement.
The First Security certificate provides that the directors of First
Security will be divided into three classes. The first class will initially
consist of 10 directors, the second class, seven, and the third class, five. At
and after the annual meeting of stockholders in the year 2000 when the number of
directors is reduced to 18, the first class will consist of six directors, and
the other two classes will remain unchanged. Finally, at and after the annual
meeting of stockholders in the year 2001 when the number of directors is reduced
to 16, the first class will consist of six directors, the second class, five,
and the third class five. The Zions/First Security merger agreement provides
that Zions will initially have the right to designate five directors to the
first class, three directors to the second class and three directors to the
third class, and First Security will initially have the
56
<PAGE>
right to designate five directors to the first class, four directors to the
second class and two directors to the third class.
Set forth below is a table of the persons expected to serve as senior
executive officers of First Security immediately following the Zions/First
Security merger:
Name Title
---- -----
Spencer F. Eccles.......... Chairman of the Board, Co-Chief Executive Officer
and Co-Chairman of the Executive Committee of the
Board of Directors
Harris H. Simmons.......... Co-Chief Executive Officer, President, Chief
Operating Officer, Co-Chairman of the Executive
Committee of the Board of Directors and President of
the combined company's principal banking subsidiary
Morgan J. Evans............ Senior Executive Vice President
Dale M. Gibbons............ Executive Vice President and Chief Financial Officer
A. Scott Anderson.......... Executive Vice President
Danne L. Buchanan.......... Executive Vice President
Michael P. Caughlin........ Executive Vice President
David R. Golden............ Executive Vice President
Brad D. Hardy.............. Executive Vice President
W. David Hemingway......... Executive Vice President
Mark D. Howell............. Executive Vice President
J. Patrick McMurray........ Executive Vice President
L. Scott Nelson............ Executive Vice President
Robert G. Sarver........... Executive Vice President
Scott C. Ulbrich........... Executive Vice President
Nominating Committee
Pursuant to the First Security by-laws, the First Security board of
directors will designate a nominating committee, which will have all the powers
and authority of the board of directors in respect of the nomination of persons
to be recommended to the stockholders for election to the board of directors.
Until the annual meeting of stockholders in the year 2002, the nominating
committee will consist of two directors, one initially designated by Zions
pursuant to the Zions/First Security merger agreement and one initially
designated by First Security pursuant to the Zions/First Security merger
agreement. In the event that either the Zions designee or the First Security
designee cannot serve on the nominating committee for any reason, then Harris H.
Simmons, as the Zions-appointed Co-Chief Executive Officer and Spencer F. Eccles
as the First Security Co-Chief Executive Officer will mutually select a
replacement. If the Co-Chief Executive Officers cannot agree upon
57
<PAGE>
a replacement, then the replacement member of the nominating committee will be
(1) a director initially appointed by Zions pursuant to the Zions/First Security
merger agreement, if the director to be replaced was appointed by Zions pursuant
to the Zions/First Security merger agreement, or (ii) a director initially
appointed by First Security pursuant to the Zions/First Security merger
agreement, if the director to be replaced was appointed by First Security
pursuant to the Zions/First Security merger agreement. The replacement will be
selected by the remaining members of the board of directors initially nominated
by Zions or First Security, respectively, pursuant to the Zions/First Security
merger agreement.
Executive Committee
Pursuant to the First Security by-laws, the First Security board of
directors will also designate an executive committee, consisting of six
directors including both Harris H. Simmons, the current Zions Chief Executive
Officer, and Spencer F. Eccles, the current First Security Chief Executive
Officer, each of whom will be Co-Chairman of the executive committee. The four
remaining members of the executive committee will be comprised of an equal
number of directors appointed to the board by Zions pursuant to the Zions/First
Security merger agreement and by First Security pursuant to the Zions/First
Security merger agreement. Each of the Zions Chief Executive Officer and the
First Security Chief Executive Officer will be a Chairman or a Co-Chairman of
the executive committee for so long as he serves as a Chief Executive Officer or
a Co-Chief Executive Officer of First Security. In addition, the First Security
Chief Executive Officer will continue to serve as a member of the executive
committee after he ceases to serve as Co-Chief Executive Officer at his
discretion for so long as he is a director of First Security.
Pursuant to the First Security by-laws, until the annual meeting of
stockholders in the year 2002, any vacancy in the executive committee resulting
from the removal, resignation, death or disability of a member who was appointed
by Zions pursuant to the Zions/First Security merger agreement will be filled by
the Zions Chief Executive Officer or by the affirmative vote of a majority of
the continuing directors appointed by Zions pursuant to the Zions/First Security
merger agreement, and any vacancy in the executive committee resulting from the
removal, resignation, death or disability of a member who was appointed by First
Security pursuant to the Zions/First Security merger agreement will be filled by
the First Security Chief Executive Officer or by the affirmative vote of a
majority of the continuing directors appointed by First Security pursuant to the
Zions/First Security merger agreement.
The executive committee, when the board of directors is not in session,
will have and may exercise all the powers and authority of the board of
directors except to the extent, if any, that such authority may be limited by
the resolution appointing the members of the executive committee, except to the
extent any such powers and authority have been delegated to any other committee
of the board of directors, or reserved by the board of directors to itself, and
except that the executive committee will not have the authority of the board of
directors in reference to amending the certificate of incorporation, adopting a
plan of merger or consolidation, recommending to the stockholders the sale,
lease or other disposition of all or substantially all the property and assets
of First Security otherwise than in the usual and regular course of its business
or amending the First Security by-laws.
Amendment of Corporate Governance Arrangements
In order to amend the provisions of the First Security certificate and
the First Security by-laws that incorporate the governance arrangements
described above and to take certain other actions, the First Security
certificate and the First Security by-laws require the affirmative vote of (1)
two-thirds of the directors of First Security and (ii) the holders of not less
than two-thirds of the voting power of all outstanding shares of capital stock
of First Security entitled to vote generally in the election of directors,
considered for these purposes as a single class.
58
<PAGE>
DESCRIPTION OF ZIONS CAPITAL STOCK
The following summary of certain provisions of the Amended and Restated
Articles of Incorporation of Zions, Zions' by-laws and the Zions rights plan is
not intended to be complete and is qualified in its entirety by reference to
such documents, each of which is an exhibit to the Registration Statement filed
with the SEC of which this proxy statement/prospectus is a part. See "Where You
Can Find More Information" on page 79.
Authorized Capital Stock
The authorized capital stock of Zions consists of 200,000,000 shares of
common stock, and 3,000,000 shares of preferred stock. As of June 30, 1999,
there were 79,010,705 shares of Zions common stock and no shares of preferred
stock issued and outstanding and Zions had approximately 6,113 holders of record
of its common stock.
The authorized shares of preferred stock are issuable in one or more
series on the terms set by resolution or resolutions of the board of directors
of Zions. Each series of preferred stock may have such dividend rate, which
might or might not be cumulative, such voting rights, which might be general or
special, and such liquidation preferences, redemption and sinking funds
provisions, conversion rights or other rights and preferences, if any, as the
board of directors of Zions may determine. Except for such rights as may be
granted to the holders of any series of preferred stock in the resolution
establishing such series or as required by law, all of the voting and other
rights of the shareholders of Zions belong exclusively to the holders of Zions
common stock.
Voting Rights
General
The holders of Zions common stock are generally entitled to one vote
for each share held of record on all matters submitted to a shareholder vote.
The holders of Zions common stock do not have cumulative voting rights.
Special Votes for Specified Transactions
Zions' restated articles of incorporation, which we refer to as the
Zions articles, contain provisions requiring special shareholder votes to
approve specified transactions. In the absence of these provisions, under Utah
law either the transactions would require approval by a majority of the shares
voted at a meeting or no shareholder vote would be required.
The Zions articles require that certain "business transactions" between
Zions or a subsidiary and a "related person" be approved by the affirmative
votes of the holders of not less than 80% of the voting power of all outstanding
voting stock of Zions. A "related person" means, in general, a person,
corporation, partnership or group acting in concert that beneficially owns 10%
or more of the voting power of Zions' outstanding voting stock.
The business transactions with a related person subject to such special
vote requirements include:
o a merger or consolidation involving Zions or a subsidiary of
Zions with a related person;
o the sale, lease, exchange, transfer or other disposition of all
or any substantial part of the assets of either Zions or a
subsidiary of Zions to, with or for the benefit of a related
person;
59
<PAGE>
o the issuance, sale, exchange or other disposition by Zions or a
subsidiary of Zions to a related person of securities of Zions or
a subsidiary of Zions having an aggregate fair market value of $5
million or more;
o any liquidation, spinoff, splitoff, splitup or dissolution of
Zions by or on behalf of a related person;
o any recapitalization or reclassification of the securities of
Zions or other transaction that would have the effect of
increasing the voting power of a related person or reducing the
number of shares of each class of voting securities outstanding;
and
o any agreement, contract, or other arrangement providing for any
of the transactions set forth above.
The Zions Board
Director Liability
The Zions articles provide that a director will not be liable to Zions
or its shareholders for monetary damages for a breach of fiduciary duty as a
director other than:
o a breach of a director's duty of loyalty;
o acts or omissions not taken in good faith or which involve
intentional misconduct or a knowing violation of law;
o the authorization of the unlawful payment of dividends; and
o transactions in which a director receives an improper benefit.
Classified Board
The Zions articles provide that the board of directors of Zions shall
have three classes, each consisting of one-third (or as near as may be) of the
whole number of the board of directors of Zions. Utah law requires that each
class contain as equal a number of directors as possible. One class of directors
is elected at each annual meeting of shareholders, and each class serves for a
term of three years.
The range of the number of directors of Zions may be increased or
decreased only by amendment of the by-laws, which requires the affirmative vote
of two-thirds of the total number of directors constituting the entire board of
directors of Zions, or by the shareholders of Zions at a regular or special
meeting by the affirmative vote of two-thirds of the outstanding and issued
shares entitled by statute to vote. Except as otherwise required by law,
vacancies on the board of directors of Zions, including vacancies resulting from
an increase in the size of the board of directors of Zions, may be filled by the
affirmative vote of a majority of the remaining directors even though less than
a quorum of the board of directors of Zions. The directors elected by the board
of directors of Zions to fill vacancies serve for the full remainder of the term
of the class to which they have been elected. Any directorship filled by reason
of an increase in the number of directors may be filled for a term of office
continuing only until the next election of directors by the shareholders.
60
<PAGE>
Removal of Directors
The Zions articles provide that any director (or the entire board of
directors of Zions) may be removed from office by shareholder vote only if such
removal is approved by the holders of two-thirds of the issued and outstanding
shares then entitled to vote at an election of directors.
Shareholder Rights Plan
In September 1996, the board of directors of Zions adopted a
shareholder protection rights plan, dated September 21, 1996, with Zions First
National Bank, as rights agent, and declared a dividend of one right on each
outstanding share of Zions common stock. The rights plan was not adopted in
response to any specific effort to acquire control of Zions. Rather, it was
adopted to deter abusive takeover tactics that can be used to deprive
shareholders of the full value of their investment.
Under the rights plan, until it is announced that a person or group has
acquired 10% or more of the Zions common stock (an "Acquiring Person") or
commences a tender offer that will result in such person or group owning 10% or
more of the Zions common stock, the rights will be evidenced by the Zions common
stock certificates, will automatically trade with the Zions common stock and
will not be exercisable. Thereafter, separate rights certificates will be
distributed and each right will entitle its holder to purchase participating
preferred stock having economic and voting terms similar to those of one share
of Zions common stock for an exercise price of $90.00.
Upon announcement that any person or group has become an Acquiring
Person, then 10 days thereafter (or such earlier or later date as the board of
directors of Zions may decide) (the "Flip-in Date") each right (other than
rights beneficially owned by any Acquiring Person or transferees thereof, which
rights become void) will entitle its holder to purchase for the exercise price,
a number of shares of Zions common stock or participating preferred stock having
a market value of twice the exercise price.
Also, if after an Acquiring Person controls the board of directors of
Zions, Zions is involved in a merger or sells more than 50% of its assets or
earning power (or has entered an agreement to do any of the foregoing) and, in
the case of a merger, the Acquiring Person will receive different treatment than
all other shareholders or the person with whom the merger occurs is the
Acquiring person or a person affiliated or associated with the Acquiring Person,
each right will entitle its holder to purchase, for the exercise price, a number
of shares of common stock of the Acquiring Person having a market value of twice
the exercise price. If any person or group acquires between 10% and 50% of the
common stock, the board of directors of Zions may, at its option, exchange one
share of Zions common stock for each right.
The rights may be redeemed by the board of directors of Zions for $0.01
per right prior to the Flip-in Date.
Shareholder Meetings
Utah law provides that special meetings of a corporation's shareholders
may be called by the board of directors or such other persons authorized by the
by-laws to call a special meeting or by the holders of at least 10% of all the
votes entitled to be cast on any issue proposed to be considered at the special
meeting. Under Zions' by-laws, special meetings may be called by the president
or by the board of directors of Zions.
Amendment of Zions Articles and Bylaws
The Zions articles require the affirmative votes of the holders of
two-thirds of all outstanding voting stock of Zions to approve any amendment to
the Zions articles, except that to repeal or amend the provisions in the Zions
articles regarding business transactions set forth under "--Voting
Rights--Specific Votes for Certain Transactions" above requires the affirmative
vote of 80% of the issued and outstanding stock entitled to vote. Zions' by-laws
may be amended by an affirmative vote of two-thirds of the total number of
directors
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<PAGE>
constituting the entire board of directors of Zions or by the
affirmative vote of two-thirds of the issued and outstanding shares entitled to
vote.
Miscellaneous
There are no preemptive rights, sinking fund provisions, conversion
rights or redemption provisions applicable to the Zions common stock. Holders of
fully paid shares of Zions common stock are not subject to any liability for
further calls or assessments.
Zions First National Bank is the transfer agent and registrar for the
Zions common stock.
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<PAGE>
CERTAIN DIFFERENCES IN THE RIGHTS OF ZIONS
SHAREHOLDERS, REGENCY SHAREHOLDERS AND
NEW FIRST SECURITY STOCKHOLDERS
At the completion of the Zions/Regency merger, Regency shareholders who
receive Zions common stock automatically will become shareholders of Zions, and
their rights as shareholders will be determined by the Zions articles, Zions'
by-laws and the Utah Revised Business Corporation Act (the "UBCA"), instead of
by Regency's articles of incorporation, Regency's by-laws and the CGCL. If both
the Zions/Regency merger and the Zions/First Security merger are completed,
shareholders of Regency common stock ultimately will become stockholders of
First Security corporation and their rights as stockholders will be determined
by the First Security certificate and the First Security by-laws, in each case
as contemplated to be amended and restated pursuant to the Zions/First Security
merger agreement, and by the Delaware General Corporation Law (the "DGCL"). The
following is a summary of the material differences in the rights of shareholders
of Zions and Regency and First Security stockholders following the Zions/First
Security merger. The information concerning First Security will only be
applicable to Regency shareholders if the Zions/First Security merger is
consummated. This summary is necessarily general and does not purport to be a
complete discussion of, and is qualified in its entirety by reference to, the
UBCA, the CGCL, the DGCL and the other documents described below.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
First Security After the
Regency Zions Zions/First Security Merger
- ----------------------------------------------------------------------------------------------------------
CAPITAL STOCK
- ----------------------------------------------------------------------------------------------------------
Authorized Capital
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
20,000,000 common shares 200,000,000 common shares 425,000,000 common shares
authorized, no par value. authorized, no par value. authorized, par value $1.25 per
share.
1,000,000 shares of preferred 3,000,000 shares of preferred 10,000,000 shares of preferred
stock authorized, no par value. stock authorized, no par value. stock authorized, no par value.
As of August 9, 1999, As of June 30, 1999, Based on the number of shares
2,627,249 shares of Regency 79,010,705 shares of Zions of Zions and First Security
common stock were issued and common stock were issued and common stock outstanding as
outstanding. outstanding. of June 30, 1999, approximately
165,948,569 sharesof the combined
company would be issued and
outstanding after the
Zions/First Security merger.
63
<PAGE>
- ----------------------------------------------------------------------------------------------------------
First Security After the
Regency Zions Zions/First Security Merger
- ----------------------------------------------------------------------------------------------------------
BOARD OF DIRECTORS
- ----------------------------------------------------------------------------------------------------------
Classification
- ----------------------------------------------------------------------------------------------------------
All directors are elected Directors are divided into three Directors are divided into three
annually. classes as nearly equal in classes. Following the initial
number as possible. Each class two annual meetings of
is elected for a term of three stockholders, each class is
years, and only one class is elected for a term of three
elected each year. years. For a description of the
classes prior to such time, see
"The Zions/First Security
Merger".
- ----------------------------------------------------------------------------------------------------------
Number of Directors
- ----------------------------------------------------------------------------------------------------------
Until changed by vote of a No fewer than three and no more Immediately following
majority of the outstanding than 15, as fixed by the board of completion of the Zions/First
shares, the number of directors directors. Currently fixed at 11. Security Merger, fixed by the
is required to be fixed at not First Security certificate at 22.
less than 8 and not more than Commencing with the
15. The fixed number of stockholder meeting in 2000,
directors is currently 10; this there will be 18. Commencing
number may be changed from with the stockholder meeting in
time to time by a resolution 2001, there will be 16. After
duly adopted by a vote of a the annual stockholder meeting
majority of the shares entitled in the year 2002, the number of
to vote represented at a duly directors will be one or more as
held meeting at which a quorum fixed from time to time by the
is present, or by the written board of directors.
consent of the holders of a
majority of the outstanding
shares entitled to vote, or by the
board of directors.
- ----------------------------------------------------------------------------------------------------------
Removal
- ----------------------------------------------------------------------------------------------------------
Under the CGCL, directors Any director may be removed at Under the First Security
may be removed without cause any time, but only by the certificate, directors may be
if the removal is approved by affirmative vote of the holders of removed only for cause
the affirmative vote of a at least two-thirds of the issued (defined as a felony conviction
majority of the outstanding and outstanding shares of capital or adjudication that a director is
shares entitled to vote, except stock then entitled to vote at an liable for gross negligence or
that no director may be election of directors. In misconduct in the performance
removed when the shares voted addition, a majority of the board of his or her duties to the
against removal would be of directors may remove a combined company) and in that
sufficient to elect the director if director if such removal is event only by the holders of a
voted cumulatively in an directed by a federal banking majority of the shares then
election in which the same agency. entitled to vote at an election of
number of votes were cast. directors.
- ----------------------------------------------------------------------------------------------------------
64
<PAGE>
- ----------------------------------------------------------------------------------------------------------
First Security After the
Regency Zions Zions/First Security Merger
- ----------------------------------------------------------------------------------------------------------
Vacancies and Newly Created Directorships
- ----------------------------------------------------------------------------------------------------------
Filled by vote of a majority of Filled by a majority of the Prior to the annual meeting of
directors remaining in office, or remaining directors. stockholders in the year 2002,
by the shareholders. Vacancies any vacancy created by the
caused by removal of a director resignation, removal, death or
may be filled only by approval disability of a director will be
of the shareholders. filled by the Co-Chief Executive
Officer designated by the same
party (Zions or First Security) in
the Zions/First Security merger
or, in his absence, by a majority
of the continuing directors
appointed by that party. After the
annual meeting of stockholders in
the year 2002, a majority of the
remaining directors may fill
vacancies.
- ----------------------------------------------------------------------------------------------------------
Executive Committee
- ----------------------------------------------------------------------------------------------------------
The executive committee Under the by-laws, the executive Pursuant to the by-laws, the
consisting of two or more committee consists of three combined company will have an
members of the board, serves at members of the board of executive committee which,
the pleasure of the entire board directors and shall have and among other things, will have
and has the authority of the may, when the board of directors all the powers and authority of
board except with respect to is not in session, exercise all of the board of directors when it is
certain fundamental matters. the authority of the board of not in session, except that such
directors except that such authority may be limited in
authority may be limited in certain circumstances. See
certain circumstances. "The Zions/First Security
Merger" for a description of the
initial composition of the
executive committee.
- ----------------------------------------------------------------------------------------------------------
Special Meetings of the Board
- ----------------------------------------------------------------------------------------------------------
May be called by the chairman May be called by the president May be called by the president
of the board, the president, the or by a majority of the board of or by a majority of the board of
secretary or by any two directors. directors.
directors.
65
<PAGE>
- ----------------------------------------------------------------------------------------------------------
First Security After the
Regency Zions Zions/First Security Merger
- ----------------------------------------------------------------------------------------------------------
Director Liability
- ----------------------------------------------------------------------------------------------------------
Liability for monetary damages Under the Zions articles, no Under the First Security
is eliminated to the fullest liability for monetary damages certificate, no liability for
extent permissible under for breach of fiduciary duty monetary damages for breach
California law. The CGCL except: 1) for any breach of the of fiduciary duty except to the
does not permit limiting or director's duty of loyalty; 2) for extent that such exemption
eliminating liability: 1) for acts knowing violation of law; or 3) from liability or limitation is
or omissions involving for any transaction from which not permitted under the DGCL.
intentional misconduct or a the director derived improper
knowing and culpable violation personal benefit.
of law; 2) for acts or omissions
a director believes to be
contrary to the best interest of
the corporation or its
shareholders or that involve
absence of good faith; 3) for
any transaction from which a
director derived an improper
personal benefit; 4) for acts or
omissions that show a reckless
disregard for the directors duty
to the corporation or its
shareholders when the director
was aware that it might cause
injury to the corporation; 5) for
acts or omissions that
constitute an unexcused pattern
of inattention amounting to an
abdication of the director's
duties; 6) for contracts
between the corporation and
director not entered into in
compliance with the CGCL;
and 7) for unlawful
distributions.
- ----------------------------------------------------------------------------------------------------------
Shareholder/Stockholder Action by Written Consent
- ----------------------------------------------------------------------------------------------------------
Permitted if a written consent is Permitted if written consents to Action by written consent of
obtained which sets forth the taking an action without a stockholders not permitted.
action to be taken and is signed meeting are given by holders of
by holders of outstanding shares having not less than the
shares having not less than the minimum number of shares
minium number of votes required to take such action at a
necessary to authorize or take meeting.
such action at a meeting at
which all shares entitled to vote
thereon were present and voted.
66
<PAGE>
- ----------------------------------------------------------------------------------------------------------
First Security After the
Regency Zions Zions/First Security Merger
- ----------------------------------------------------------------------------------------------------------
Special Meeting of Shareholders/Stockholders
- ----------------------------------------------------------------------------------------------------------
Special meetings of Special meetings of shareholders Special meetings of
shareholders may be called by may be called by the president or shareholders may be called by
the board of directors, the by the board of directors, unless the board of directors.
chairman of the board, by the otherwise prescribed by statute.
president or by one or more
shareholders holding not less
than 10% of the outstanding
shares entitled to vote.
- ----------------------------------------------------------------------------------------------------------
Voting Rights and Requirements
- ----------------------------------------------------------------------------------------------------------
Elections for the board of Under Utah law, unless Elections for the board of
directors are decided by otherwise provided in the directors are decided by a
electing those candidates who articles of incorporation (1) plurality of the votes cast. In
receive the highest number of directors are elected by a all other matters, unless
votes cast in their favor; every plurality of the votes cast by the otherwise provided by law or
shareholder has the right to shares entitled to vote and (2) by the certificate of
cumulate his votes in director shareholders do not have a right incorporation or the by-laws,
elections. In all other matters, to cumulate their votes. the affirmative vote of the
the affirmative vote of a Shareholders are entitled to one holders of a majority of the
majority of the shares cast will vote for each share on record for shares cast shall be the act of
be the act of the shareholders, all matters. the stockholders. Stockholders
unless otherwise provided by are entitled to one vote for each
law. Shareholders are entitled share on record for all matters.
to one vote for each share on
record for all matters.
- ----------------------------------------------------------------------------------------------------------
Stockholder Proposals and Nominations of Directors
- ----------------------------------------------------------------------------------------------------------
Shareholder nominations of Notice of any shareholder Stockholder nominations of
directors and proposals must be nominations of directors and directors and proposals must be
stated in writing and delivered proposals shall be delivered to delivered to the secretary of the
to the principal executive the secretary of the corporation combined company at its
offices of the corporation not at its principal office not less principal executive office not
less than 60 days (120 in the than 120 days prior to the date less than 90 nor more than 120
case of proposals) prior to the of the meeting. days prior to the date of the
date on which, during the meeting. However, if the date
previous year, management's of the annual meeting is first
proxy statement for the publicly announced or disclosed
previous year's annual meeting less than 100 days prior to the
was first distributed to date of meeting, such advance
shareholders. notice shall be given not more
than 10 days after such date is
first so announced.
67
<PAGE>
- ----------------------------------------------------------------------------------------------------------
First Security After the
Regency Zions Zions/First Security Merger
- ----------------------------------------------------------------------------------------------------------
Dividend Rights
- ----------------------------------------------------------------------------------------------------------
Under the CGCL, a corporation Under Utah law, a corporation is Under the DGCL, the directors
may make a distribution to its generally permitted, subject to of every corporation, subject to
shareholders if either of two restriction in its articles of any restrictions contained in its
tests is met. First, a incorporation, to declare and pay certificate of incorporation,
corporation may make a dividends in cash or property, may declare and pay dividends
distribution out of retained but only if the corporation is upon the shares of its capital
earnings. Second, if there are solvent and payment would not stock either 1) out of its surplus
no retained earnings, a render the corporation insolvent. or 2) in case there is no surplus,
corporation may make a The Zions Articles place no out of its net profits for the
distribution provided that after further restrictions on fiscal year in which the
giving effect to the distribution distributions. dividend is declared and/or the
the assets of the corporation are preceding fiscal year. If the
at least equal to one and one- capital of the corporation shall
quarter times its liabilities and have been diminished to an
its current assets are at least amount less than the aggregate
equal to its current liabilities. amount of the capital stock, the
A corporation may not make directors shall not pay any
any distribution if it would dividends out of such net
result in an inability to meet its profits until the deficiency in
liabilities as they mature. the amount of capital shall have
been repaired.
- ----------------------------------------------------------------------------------------------------------
Liquidation Rights
- ----------------------------------------------------------------------------------------------------------
Under the CGCL, upon Upon liquidation, dissolution or Upon liquidation, dissolution or
dissolution or liquidation by the winding up, whether voluntary winding up of the combined
court, after all known liabilities or involuntary, the holders of company, the holders of Series
and obligations of the common stock are entitled to A preferred shares of First
corporation have been satisfied, share ratably in the assets of the Security are entitled to receive
any remaining assets or corporation available for out of the assets $52.50 per
proceeds would be distributed distribution after all liabilities of share, if the liquidation is
among its shareholders the corporation have been involuntary, and the applicable
according to their respective satisfied. redemption value (as specified
rights and preferences. in the certificate) if the liquidation
is voluntary. In addition to such
amount, the holders will also
receive a further amount equal to
unpaid accumulated dividends
before any distributions are made
to the common share holders. The
assets remaining after such
distribution shall be paid to the
common share holders.
68
<PAGE>
- ----------------------------------------------------------------------------------------------------------
First Security After the
Regency Zions Zions/First Security Merger
- ----------------------------------------------------------------------------------------------------------
Inspection Rights
- ----------------------------------------------------------------------------------------------------------
Inspection rights exist for Under Utah law, inspection Any records maintained by the
inspection of accounting books rights exist for certain corporate combined company in the
and records, the record of records only if (1) the demand to regular course of its business,
shareholders and minutes of inspect is made in good faith, (2) including its stock ledger,
proceedings of the the shareholder demanding books of account and minute
corporation's various meetings inspection describes the purpose books, will be provided upon
upon written demand by a of the inspection and the records the request of any person
shareholder or holder of a to be inspected, and (3) the entitled to inspect them.
voting trust certificate, records directly related to the
provided that this shareholder purpose of the investigation.
holds at least 5% in the
aggregate of the outstanding
voting shares of the corporation
(or 1% of such voting shares if
such shareholder has filed a
Schedule 14B with the
Securities and Exchange
Commission).
69
<PAGE>
- ----------------------------------------------------------------------------------------------------------
First Security After the
Regency Zions Zions/First Security Merger
- ----------------------------------------------------------------------------------------------------------
Dissenters' Rights
- ----------------------------------------------------------------------------------------------------------
Under the CGCL, dissenters' Under Utah law, dissenters' Under Delaware law, appraisal
rights exist only with respect to rights are available for: any plan rights are available for merger
certain types of corporate of merger to which a corporation and consolidation transactions
reorganizations (including is a party if a shareholder vote is effected pursuant to various
mergers), but are generally required; certain sales, leases, sections of the DGCL.
eliminated for shares listed on the exchanges or other dispositions However, appraisal rights are
NASDAQ National Market unless of all or substantially all the not permitted in these
a substantial proportion (5% or assets; and certain share transactions if the stock is
more) of the shareholders demand exchanges. However, listed on the NASDAQ or if the
dissenters' rights. Regency dissenters' rights are not stock is held by more than
common stock is currently listed permitted in these transactions if 2,000 stockholders. No
on the NASDAQ National Market. the stock is listed on the appraisal rights are available
See "The Merger-Dissenters' NASDAQ or if the stock is held for shares of stock of the
Rights." by 2,000 or more shareholders. constituent surviving
These provisions do not apply if corporation if the merger did
the shareholder receives for his not require the approval of the
shares anything except shares of stockholders of the surviving
the corporation surviving the corporation. These provisions
consummation of the plan of do not apply if the stockholder
merger or share exchange, receives for his shares anything
shares of a corporation whose except shares of the corporation
shares are listed on a national surviving the consummation of
exchange or NASDAQ or held the plan of merger or
of record by not less than 2,000 consolidation, shares of a
holders or cash in lieu of corporation whose shares are
fractional shares. Zions listed on a national exchange or
common stock currently trades NASDAQ or held of record by
on the NASDAQ and has more not less than 2,000 holders or
than 2,000 shareholders of cash in lieu of fractional shares.
record.
70
<PAGE>
- ----------------------------------------------------------------------------------------------------------
First Security After the
Regency Zions Zions/First Security Merger
- ----------------------------------------------------------------------------------------------------------
Amendment of Articles of Incorporation
- ----------------------------------------------------------------------------------------------------------
Under the CGCL, the Articles Under Zion's Articles of Under the Articles of
may be amended by a majority incorporation, an affirmative Incorporation of the combined
vote of outstanding shares. vote of two-thirds of the company, Article SEVENTH
outstanding and issued shares (classification and number of
entitled by statute to vote shall directors, term of office and
be required to amend, alter, removal of directors) may not
change or repeal Articles IX be amended, modified or
(number of directors, repealed except by the
classification and removal of affirmative vote of (1) two-
directors), X (director meetings, thirds of the directors of the
quorum, authority of the board) combined company and (2) the
and XVI (amendment of holders of not less than two-
Articles) or any other provision thirds of the voting power of all
in the Articles that would outstanding shares of capital
restrict, limit or alter the power stock entitled to vote in the
or authority of the board of election of directors. Article
directors or any other officer or EIGHTH (restrictions on
agent of the corporation; would certain business transactions
vest any powers of the with significant stockholders)
corporation in any other officer may not be amended, nor may it
or agent other than the board of be repealed in whole or in part,
directors, or officers and agents until authorized by the
appointed by the board of favorable vote of not less than
directors; would require the 80% of all of the votes entitled
approval of any shareholders in to vote in elections of directors.
order for the board of directors
or any officer or agent to take
any action; or would change the
number of directors, the quorum
requirements for any meeting of
the board of directors, the vote
by which it must act in
connection with any matter, the
manner of calling or conducting
meetings of directors, or the
place of such meetings.
71
<PAGE>
- ----------------------------------------------------------------------------------------------------------
First Security After the
Regency Zions Zions/First Security Merger
- ----------------------------------------------------------------------------------------------------------
Amendment of By-laws
- ----------------------------------------------------------------------------------------------------------
Regency's by-laws provide that Zions' by-laws provide that the The combined company's by-
new by-laws may be adopted or by-laws may be altered, laws provide that the by-laws
the current by-laws may be amended or repealed and new may be amended or repealed,
amended or repealed by the by-laws may be adopted by an and new by-laws adopted, by
affirmative vote of a majority affirmative vote of two-thirds of the board of directors, but the
of the outstanding shares the total number of directors stockholders entitled to vote
entitled to vote, or by written constituting the entire board. may adopt additional by-laws
assent of shareholders entitled Further, the shareholders may and may amend or repeal any
to vote or by the board of also amend the by-laws provided by-law whether or not adopted
directors. an affirmative vote of two-thirds by the board of directors.
of the outstanding and issued However, various sections of
shares entitled by statue to vote the by-laws (those pertaining to
shall be required under certain special stockholders' meetings;
circumstances. powers, number and qualifications
of directors; election, term of
office, resignation, removal and
vacancies of directors; special
director committees; executive and
nominating committees; officers
and election of officers; term of
office, resignation, removal and
vacancies of officers; and
amendment of by-laws) may not be
amended except upon the
affirmative vote of 1) two-thirds
of the directors of the combined
company and 2) the holders of not
less than two-thirds of the voting
power of all outstanding shares of
capital stock of the combined
company entitled to vote generally
in the election of directors.
72
<PAGE>
- ----------------------------------------------------------------------------------------------------------
First Security After the
Regency Zions Zions/First Security Merger
- ----------------------------------------------------------------------------------------------------------
Shareholder Rights Plan
- ----------------------------------------------------------------------------------------------------------
Regency does not have a rights As discussed under "Description First Security's current
plan. of Zions Capital stockholder rights plan will
Stock-Shareholder Rights Plan", survive the Zions/First Security
each share of Zions common merger. This plan, which
stock has attached to it one right expires on August 28, 1999,
issued pursuant to the Zions will be replaced by a new
rights plan. shareholders rights plan, which will
expire on October 27, 2008. The
current and replacement plans have
essentially identical terms as
follows. Each stockholder has one
right in respect to each share of
common stock owned to purchase
from First Security one
one-thousandth of a share of a
class of junior preferred stock at
an exercise price of $100.00
($85.00 for the replacement plan)
only after a person or group
acquires 15% or more of First
Security's common stock. The plans
also provide that, upon the
occurrence of certain specified
events, the holders of the rights
will be entitled to acquire
additional equity interests in
First Security having a market
value of two times the exercise
price of $100.00 ($85.00 for the
replacement plan).
73
<PAGE>
- ----------------------------------------------------------------------------------------------------------
First Security After the
Regency Zions Zions/First Security Merger
- ----------------------------------------------------------------------------------------------------------
Limitation on Business Transactions
- ----------------------------------------------------------------------------------------------------------
No provisions. Except under certain Except under certain
circumstances, business circumstances, business
transactions (defined as, among transactions (defined as, among
other things, mergers or other things, mergers or
consolidations of the consolidations of the
corporation, sale of a substantial corporation, sale of more than
part of the corporate assets or 20% of the corporate assets or
any recapitalization or any recapitalization or
reclassification of securities of reclassification of securities of
the corporation) are not the corporation) are not
permitted with a related person permitted with a related person
(defined as any person or entity (defined as any person or entity
which owns 10% of the votes of which owns 10% of the votes
the outstanding shares of stock of the outstanding shares of
of the corporation) or any stock of the corporation) except
interest except upon the upon the affirmative vote of
affirmative vote of the holders of 80% of all the shares of stock
not less than 80% of the voting entitled to vote in elections of
power of the voting stock. directors.
</TABLE>
74
<PAGE>
COMPARATIVE MARKET PRICES AND DIVIDENDS
Zions
Zions common stock is quoted on the NASDAQ National Market under the
symbol "ZION." The following table sets forth, for the indicated periods, the
high and low sale prices for Zions common stock as reported on the NASDAQ
National Market, and the cash dividends declared per share of Zions common
stock.
Cash
Price Range Dividends
--------------------- Paid Per
High Low Share
--------- --------- ---------
1997:
First ................... $ 34.88 $ 25.44 0.11
Second .................. 37.69 28.25 0.12
Third ................... 41.63 34.25 0.12
Fourth .................. 46.00 36.88 0.12
1998:
First ................... $ 55.50 $ 38.50 0.12
Second .................. 55.25 47.00 0.14
Third ................... 58.13 37.88 0.14
Fourth .................. 62.50 37.88 0.14
1999:
First ................... $ 68.50 $ 56.38 0.14
Second .................. 75.88 54.00 0.29
Third (through August 25) 64.63 52.25 --
On April 27, 1999, the last trading day before public announcement of
the merger, the last sales price per share of Zions common stock on the NASDAQ
National Market was $70.00. Past price performance is not necessarily indicative
of likely future price performance. Holders of Regency common stock are urged to
obtain current market quotations for shares of Zions common stock.
The holders of Zions common stock are entitled to receive dividends
when, as and if declared by the Zions board out of funds legally available
therefor. The Zions board periodically considers the payment of dividends on
Zions common stock, taking into account Zions' financial condition, Zions'
future prospects, economic conditions, industry practices and other factors,
including restrictions on the payment of dividends.
Regency
Since May 8, 1998, the Regency common stock has been quoted on the
NASDAQ National Market under the symbol "REFN." Prior to this date, the Regency
common stock was traded on the over-the-counter bulletin board. The following
table sets forth for the indicated periods the high and low sale prices for
Regency common stock as reported on the NASDAQ National Market or the
over-the-counter bulletin board, and the cash dividends declared per share of
Regency common stock.
75
<PAGE>
Price Range Cash Dividends
--------------------------- Declared Per
High Low Share
------------ ------------ ------------
1997:
First ................... $ 10.63 $ 9.13 --
Second .................. 10.00 9.00 --
Third ................... 10.13 8.25 --
Fourth .................. 11.00 9.25 --
1998:
First ................... $ 14.88 $ 10.25 --
Second .................. 14.88 13.63 --
Third ................... 17.00 11.00 --
Fourth .................. 15.50 12.75 --
1999:
First ................... $ 24.00 $ 14.00 $ 0.10
Second .................. 21.00 16.00 0.10
Third (through August 25) 20.50 16.38 0.10
The holders of Regency common stock are entitled to receive dividends
when, as and if declared by the Regency board out of funds legally available
therefore. The Regency board periodically considers the payment of dividends on
Regency common stock, taking into account Regency's financial condition,
Regency's future prospects, economic conditions, industry practices and other
factors, including restrictions on the payment of dividends.
EXPERTS
The consolidated financial statements of Zions as of December 31, 1998
and 1997 and for each of the years in the three-year period ended December 31,
1998, have been incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG LLP, independent certified public
accountants incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The consolidated financial statements of Regency as of December 31,
1998 and for the year then ended, included in Regency's 1998 Annual Report on
Form 10-K incorporated by reference in this proxy statement/prospectus, have
been incorporated by reference herein and in the Registration Statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
included in Regency's 1998 Annual Report on Form 10-K, and incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The consolidated financial statements of Regency Bancorp as of
December 31, 1997 and for each of the years in the two-year period ended
December 31, 1997, incorporated by reference in this proxy
statement/prospectus from Regency Bancorp's Annual Report on Form 10-K for
the year ended December 31, 1998, have been audited by Deloitte & Touche LLP,
independent auditors as stated in their report which is incorporated herein by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements of First Security as of December
31, 1998 and 1997 and for each of the years in the three-year period ended
December 31, 1998, incorporated by reference in this proxy
76
<PAGE>
statement/prospectus from First Security's 1998 Annual Report on Form 10-K, have
been audited by Deloitte & Touche LLP, independent auditors as stated in their
report which is incorporated by reference in this proxy statement/prospectus,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
VALIDITY OF ZIONS COMMON STOCK
The validity of the shares of Zions common stock being offered hereby
will be passed upon for Zions by Sullivan & Cromwell, Los Angeles, California.
OTHER MATTERS
As of the date of this proxy statement/prospectus, the Regency board
knows of no matters that will be presented for consideration at the special
meeting other than as described in this proxy statement/prospectus. However, if
any other matter shall come before the special meeting or any adjournments or
postponements thereof and shall be voted upon, the proposed proxy will be deemed
to confer authority to the individuals named as authorized therein to vote the
shares represented by such proxy as to any such matters that fall within the
purposes set forth in the notice of special meeting as determined by a majority
of the Regency board; provided, however, that no proxy that is voted against the
proposal to approve the principal terms of the Zions/Regency merger agreement
will be voted in favor of any adjournment or postponement.
WHERE YOU CAN FIND MORE INFORMATION
Zions has filed with the SEC a Registration Statement under the
Securities Act that registers the distribution to Regency shareholders of the
shares of Zions common stock to be issued in connection with the merger. The
Registration Statement, including the attached exhibits and schedules, contains
additional relevant information about Zions and Zions common stock. The rules
and regulations of the SEC allow us to omit certain information included in the
Registration Statement from this proxy statement/prospectus.
In addition, Zions, First Security and Regency file reports, proxy
statements and other information with the SEC under the Exchange Act. You may
read and copy this information at the following locations of the SEC:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. The SEC also maintains an Internet world wide
web site that contains reports, proxy statements and other information about
issuers, like Zions, First Security and Regency, who file electronically with
the SEC. The address of the site is http://www.sec.gov.
You should also be able to inspect reports, proxy statements and other
information about Zions, First Security and Regency at the offices of NASDAQ
Operations, 1735 K Street, N.W., Washington, D.C. 20006.
The SEC allows Zions and Regency to "incorporate by reference"
information into this proxy statement/prospectus. This means that Zions and
Regency can disclose important information to you by referring you to another
document filed separately with the SEC. The information incorporated by
reference is considered
77
<PAGE>
to be a part of this proxy statement/prospectus, except for any information that
is superseded by information that is included directly in this document.
This proxy statement/prospectus incorporates by reference the documents
listed below that Zions and Regency previously filed with the SEC. They contain
important information about the companies and their financial condition.
Zions SEC Filings Period/Filing Date
----------------- ------------------
Annual Report on Form 10-K...................... Year ended December 31, 1998
Quarterly Reports on Form 10-Q.................. Quarters ended March 31, 1999
and June 30, 1999
Current Report on Form 8-K...................... June 7, 1999
The descriptions of Zions common stock and rights
set forth in Zions' Registration Statements on Form 10 and Form 8-A filed
pursuant to Section 12 of the Exchange Act, including any amendment or report
filed with the SEC for the purpose of updating such descriptions.
Regency SEC Filings Period/Filing Date
------------------- ------------------
Annual Report on Form 10-K...................... Year ended December 31, 1998
Quarterly Reports on Form 10-Q.................. Quarters ended March 31, 1999
and June 30, 1999
Current Reports on Form 8-K..................... January 14, 1999
February 11, 1999
April 8, 1999
April 27, 1999
May 6, 1999
May 28, 1999
July 15, 1999
July 26, 1999
Zions incorporates by reference the audited consolidated balance sheets
of First Security as of December 31, 1998 and 1997 and the audited consolidated
statement of income, stockholders' equity and cash flows for the years ended
December 31, 1998, 1997 and 1996 and the related notes from First Security's
Annual Report on Form 10-K for the year ended December 31, 1998, and the
unaudited interim consolidated financial statements and the related notes as of
and for the six months ended June 30, 1999 of First Security from First
Security's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.
Zions and Regency each incorporate by reference additional documents
that it may file with the SEC between the date of this proxy
statement/prospectus and the date of the special meeting. These documents
include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
Zions has supplied all information contained or incorporated by
reference in this proxy statement/prospectus relating to Zions, as well as all
pro forma financial information, and Regency has supplied all information
relating to Regency.
78
<PAGE>
Documents incorporated by reference are available from Zions and
Regency without charge, excluding any exhibits to those documents unless the
exhibit is specifically incorporated by reference as an exhibit in this proxy
statement/prospectus. You can obtain documents incorporated by reference in this
proxy statement/prospectus by requesting them in writing or by telephone from
the appropriate company at the following addresses:
Zions Bancorporation Regency Bancorp
One South Main, Suite 1380 7060 North Fresno Street
Salt Lake City, Utah 84111 Fresno, California 93720
Attention: Dale M. Gibbons Attention: Steven F. Hertel
Telephone: (801) 524-4787 Telephone: (559) 438-2600
If you would like to request documents, please do so by September 22,
1999 to receive them before the special meeting. If you request any incorporated
documents from Zions or Regency, Zions or Regency will mail them to you by first
class mail, or another equally prompt means, within one business day after it
receives your request.
Neither Zions nor Regency has authorized anyone to give any information
or make any representation about the merger or our companies that is different
from, or in addition to, that contained in this proxy statement/prospectus or in
any of the materials that have been incorporated into this document. Therefore,
if anyone does give you information of this sort, you should not rely on it. If
you are in a jurisdiction where offers to exchange or sell, or solicitations of
offers to exchange or purchase, the securities offered by this document or the
solicitation of proxies is unlawful, or if you are a person to whom it is
unlawful to direct these types of activities, then the offer presented in this
document does not extend to you. The information contained in this document
speaks only as of the date of this document unless the information specifically
indicates that another date applies.
79
<PAGE>
APPENDIX A
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
dated as of April 27, 1999,
as amended,
by and among
Zions Bancorporation,
Regency Bancorp
and
Regency Bank
- --------------------------------------------------------------------------------
A-1
<PAGE>
TABLE OF CONTENTS
Page
----
RECITALS................................................................A-4
ARTICLE I
Certain Definitions
2.1.01 Certain Definitions.................................................A-4
ARTICLE II
The Merger
4.2.01 The Merger..........................................................A-9
5.2.02 Effective Date and Effective Time...................................A-9
6.2.03 Plan of Merger......................................................A-9
ARTICLE III
Consideration; Exchange Procedures
8.3.01 Merger Consideration................................................A-9
9.3.02 Rights as Shareholders; Stock Transfers............................A-10
10.3.03 Fractional Shares..................................................A-10
11.3.04 Exchange Procedures................................................A-10
12.3.05 Anti-Dilution Provisions...........................................A-11
13.3.06 Options............................................................A-11
ARTICLE IV
Actions Pending Acquisition
15.4.01 Forebearances of Company...........................................A-12
16.4.02 Forebearances of Zions.............................................A-13
ARTICLE V
Representations and Warranties
18.5.01 Disclosure Schedules...............................................A-14
19.5.02 Standard...........................................................A-14
20.5.03 Representations and Warranties of Company and Company Bank.........A-14
21.5.04 Representations and Warranties of Zions............................A-20
ARTICLE VI
Covenants
23.6.01 Reasonable Best Efforts............................................A-22
24.6.02 Shareholder Approval...............................................A-22
25.6.03 Registration Statements............................................A-22
26.6.04 Press Releases.....................................................A-23
27.6.05 Access; Information................................................A-23
28.6.06 Acquisition Proposals..............................................A-24
29.6.07 Affiliate Agreements...............................................A-25
30.6.08 [Reserved].........................................................A-25
6.09 Certain Policies..............................................A-25
A-2
<PAGE>
Page
----
6.10 NASDAQ Listing.....................................................A-25
6.11 Regulatory Applications............................................A-25
6.12 Indemnification; Director and Officers' Insurance..................A-25
6.13 Benefit Plans......................................................A-26
6.14 Accountants' Letters...............................................A-26
6.15 Notification of Certain Matters....................................A-26
6.16 Shareholder Agreements.............................................A-26
6.17 Bank Merger........................................................A-26
6.18 Reporting..........................................................A-27
ARTICLE VII
Conditions to Consummation of the Merger
7.01 Conditions to Each Party's Obligation to Effect the Merger.........A-27
7.02 Conditions to Obligation of Company................................A-27
7.03 Conditions to Obligation of Zions..................................A-28
ARTICLE VIII
Termination
8.01 Termination........................................................A-29
8.02 Effect of Termination and Abandonment..............................A-30
ARTICLE IX
Miscellaneous
9.01 Survival...........................................................A-30
9.02 Waiver; Amendment..................................................A-30
9.03 Counterparts.......................................................A-30
9.04 Governing Law; Waiver of Jury Trial................................A-30
9.05 Expenses...........................................................A-31
9.06 Notices............................................................A-31
9.07 Entire Understanding; No Third Party Beneficiaries.................A-31
9.08 Interpretation; Effect.............................................A-31
EXHIBIT A Form of Stock Option Agreement
EXHIBIT B Form of Agreement of Bank Merger
EXHIBIT C Form of Affiliate Agreement
EXHIBIT D Form of Shareholder Agreement
EXHIBIT E Form of Employment Agreement
A-3
<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of April 27, 1999 (this
"Agreement"), by and among REGENCY BANCORP ("Company"), REGENCY BANK (the
"Company Bank") and ZIONS BANCORPORATION ("Zions").
RECITALS
A. Regency Bancorp. Company is a California corporation, having its
principal place of business in Fresno, California.
B. Zions Bancorporation. Zions is a Utah corporation, having its principal
place of business in Salt Lake City, Utah.
C. Regency Bank. Company Bank is a California state-chartered member bank
and is a wholly- owned subsidiary of Company.
D. Intentions of the Parties. It is the intention of the parties to this
Agreement that the business combination contemplated hereby be accounted for
under the "pooling-of-interests" accounting method and be treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986 as
amended (the "Code").
E. Board Action. The respective Boards of Directors of each of Zions and
Company have determined that it is in the best interests of their respective
companies and their shareholders to consummate the strategic business
combination transaction provided for herein.
F. Stock Option Agreement. As an inducement to the willingness of Zions to
consummate the transactions contemplated by this Agreement, the Company will
grant to Zions an option pursuant to the Stock Option Agreement, substantially
in the form of Exhibit A hereto (the "Stock Option Agreement").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
ARTICLE I
Certain Definitions
1.01 Certain Definitions. The following terms are used in this Agreement
with the meanings set forth below:
"Acquisition Proposal" means any tender or exchange offer for 25% or
more of the Company Common Stock, proposal for a merger, consolidation or
other business combination involving Company or any of its Subsidiaries or
any proposal or offer to acquire 25% or more of the Company Common Stock,
or a substantial portion of the assets or deposits of, Company or any of
its Subsidiaries, other than the transactions contemplated by this
Agreement.
"Affiliates" of or a Person "Affiliated" with a specific Person is a
Person that directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified.
"Agreement" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"Agreement of Bank Merger" means the Agreement of Bank Merger to be
entered into between California Bank & Trust and the Company Bank
substantially in the form of Exhibit B hereto, but subject to any changes
that may be necessary to conform to any requirements of any Governmental
Authority having authority over the Bank Merger.
A-4
<PAGE>
"Bank Merger" means the merger of Company Bank with and into
California Bank & Trust.
"Benefit Plans" has the meaning set forth in Section 5.03(m).
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or Friday
or any other day which is not a day on which banking institutions in Utah
or California are authorized or obligated by law or executive order to
close.
"Business Combination" has the meaning set forth in Section 3.05.
"CGCL" means the California General Corporation Law.
"California Bank & Trust" means a California state-chartered bank and a
wholly owned subsidiary of Zions.
"California Secretary" means the California Secretary of State.
"Code" has the meaning set forth in the recitals.
"Commissioner" means the California Commissioner of Financial
Institutions.
"Company" has the meaning set forth in the preamble to this Agreement.
"Company Affiliate" has the meaning set forth in Section 6.07(a).
"Company Articles" means the Articles of Incorporation of Company.
"Company Bank" means Regency Bank, a California state-chartered member
bank and a wholly owned subsidiary of Company.
"Company Board" means the Board of Directors of Company.
"Company By-Laws" means the By-laws of Company.
"Company Common Stock" means the common stock, no par value, of
Company.
"Company Meeting" has the meaning set forth in Section 6.02.
"Company Representatives" has the meaning set forth in Section 6.06.
"Company Stock Option" has the meaning set forth in Section 3.06.
"Company Stock Plan" means Company's 1990 Stock Option Plan, as
amended.
"Costs" has the meaning set forth in Section 6.12(a).
"DFI" means the California Department of Financial Institutions.
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" means the effective time of the Merger, as provided
for in Section 2.02.
A-5
<PAGE>
"Effective Time of the Bank Merger" means the date and time the
Commissioner specifies for the Bank Merger.
"Employees" has the meaning set forth in Section 5.03(m).
"Environmental Law" has the meaning set forth in Section 5.03(o).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(m).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04.
"Exchange Fund" has the meaning set forth in Section 3.04.
"Exchange Ratio" has the meaning set forth in Section 3.01.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Reserve" means the Board of Governors of the Federal Reserve
System.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Hazardous Substance" has the meaning set forth in Section 5.03(o).
"Indemnified Party" has the meaning set forth in Section 6.12(a).
"Insurance Policy" has the meaning set forth in Section 5.03(s).
"KBW 50 Index" means the KBW 50 Index of Keefe, Bruyette & Woods, Inc.
(as provided by Keefe, Bruyette & Woods, Inc. upon request).
"KBW Index Closing Average" means the average of the KBW 50 Index for
the fifteen (15) consecutive NASDAQ trading day period ending on the third
(3rd) day prior to the Effective Date.
"KBW Index Starting Average" means the average of the KBW 50 Index for
the five (5) consecutive NASDAQ trading day period commencing on the first
full trading day following the first public announcement of the Merger by
the parties.
"Knowledge" means, with respect to any Person, the actual knowledge of
any executive officer of such Person or of any other employee of such
Person with responsibility for the particular subject area or subject
matter.
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance.
"Material Adverse Effect" means, with respect to Zions or Company, any
effect that (i) is material and adverse to the financial position, results
of operations or business of Zions and its Subsidiaries taken as a whole or
Company and its Subsidiaries taken as a whole, respectively, or (ii) would
materially impair
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the ability of either Zions or Company to perform its obligations under
this Agreement or the Agreement of Bank Merger or otherwise materially
threaten or materially impede the consummation of the Merger, the Bank
Merger and the other transactions contemplated by this Agreement; provided,
however, that Material Adverse Effect shall not be deemed to include the
impact of (a) changes in banking and similar laws affecting financial
institutions generally or interpretations thereof by courts or governmental
authorities, (b) changes in generally accepted accounting principles or
regulatory accounting requirements applicable to banks and their holding
companies generally (c) any modifications or changes to valuation policies
and practices in connection with the Merger or restructuring charges taken
in connection with the Merger, in each case in accordance with generally
accepted accounting principles, (d) changes agreed to in writing by Zions
and Company and (e) changes resulting from general economic conditions
throughout the United States affecting banks and their holding companies.
"Maximum Amount" has the meaning set forth in Section 6.12(c).
"Merger" has the meaning set forth in Section 2.01.
"Merger Consideration" has the meaning set forth in Section 2.01.
"Multiemployer Plans" has the meaning set forth in Section 5.03(m).
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market System.
"New Certificate" has the meaning set forth in Section 3.04.
"Old Certificate" has the meaning set forth in Section 3.04.
"Option Consideration" means, with respect to each Company Stock
Option, an amount in shares of Zions Common Stock equal to the quotient
obtained by dividing (a) the Option Delta by (b) the Zions Closing Average.
"Option Delta" means, with respect to each Company Stock Option, the
difference between (a) the product of (i) the Zions Closing Average and
(ii) the Exchange Ratio and (b) the exercise price with respect to such
Company Stock Option.
"Person" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated
organization.
"Pension Plan" has the meaning set forth in Section 5.03(m).
"Plans" has the meaning set forth in Section 5.03(m).
"Previously Disclosed" by a party shall mean information set forth in
its Disclosure Schedule.
"Proxy Statement" has the meaning set forth in Section 6.03.
"Registration Statement" has the meaning set forth in Section 6.03.
"Regulatory Authority" has the meaning set forth in Section 5.03(i).
"Regulatory Documents" means documents filed with the SEC, the Federal
Reserve or the FDIC, as applicable, of the types referred to in Section
5.03(g) and Section 5.04(f).
"Replacement Option" has the meaning set forth in Section 3.06.
"Representatives" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
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"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person
any right to subscribe for or acquire, or any options, calls or commitments
relating to, or any stock appreciation right or other instrument the value
of which is determined in whole or in part by reference to the market price
or value of, shares of capital stock of such Person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and
rules and regulations thereunder.
"Stock Option Agreement" has the meaning set forth in the recitals.
"Shareholder Agreements" has the meaning set forth in Section 6.16.
"Subsidiary" and "Significant Subsidiary" have the meanings ascribed to
them in Rule 1-02 of Regulation S-X of the SEC.
"Superior Proposal" means any bona fide Acquisition Proposal to effect
a merger, consolidation or sale of all or substantially all of the assets
or capital stock of Company which is on terms which the Company Board
determines by a majority vote of its directors in their good faith judgment
(based on the written opinion, with only customary qualifications, of a
financial advisor of nationally recognized reputation that the
consideration provided in such Acquisition Proposal likely exceeds the
value of the consideration provided for in the Merger), after taking into
account all relevant factors, including any conditions to such Acquisition
Proposal, the timing of the closing thereof, the risk of nonconsummation,
the ability of the Person making the Acquisition Proposal to finance the
transaction contemplated thereby and any required governmental or other
consents, filings and approvals, to be more favorable to the shareholders
of Company than the Merger (or any revised proposal made by Zions).
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts,
sales, use, ad valorem, goods and services, capital, production, transfer,
franchise, windfall profits, license, withholding, payroll, employment,
disability, employer health, excise, estimated, severance, stamp,
occupation, property, environmental, unemployment or other taxes, customs
duties, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts
imposed by any taxing authority whether arising before, on or after the
Effective Date.
"Tax Returns" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with respect to any Tax.
"Treasury Stock" shall mean shares of Company Common Stock held by
Company or any of its Subsidiaries or by Zions or any of its Subsidiaries,
in each case other than in a fiduciary (including custodial or agency)
capacity or as a result of debts previously contracted in good faith.
"UBCA" means the Utah Business Corporation Act.
"Warrants" means any of the 176,211 warrants to purchase 176,211 shares
of Company Common Stock, the resale of which shares was registered May 11,
1998 with the SEC pursuant to Company's registration statement on Form S-3
No. 333-52505.
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"Zions" has the meaning set forth in the preamble to this Agreement.
"Zions Board" means the Board of Directors of Zions.
"Zions Closing Average" means the average of the last sales price per
share for Zions Common Stock for the fifteen (15) consecutive NASDAQ
trading day period ending on the third (3rd) day prior to the Effective
Date.
"Zions Starting Average" means the average of the last sales price per
share for Zions Common Stock for the five (5) consecutive NASDAQ trading
day period commencing on the first full trading day following the first
public announcement of the Merger by the parties.
"Zions Common Stock" means the common stock, no par value per share, of
Zions together with any rights attached thereto under or by virtue of the
Shareholder Protection Rights Agreement, dated September 27, 1996, between
Zions and Zions First National Bank, as rights agent.
"Zions Preferred Stock" means the preferred stock, no par value per
share, of Zions.
ARTICLE II
The Merger
2.01 The Merger. Subject to the terms and conditions of this Agreement,
in accordance with the applicable provisions of the CGCL and the UBCA at the
Effective Time, Company shall merge with and into Zions (the "Merger"), the
separate corporate existence of Company shall cease and Zions shall survive and
continue to exist as a Utah corporation (Zions, as the surviving corporation in
the Merger, sometimes being referred to herein as the "Surviving Corporation").
Zions may at any time prior to the Effective Time change the method of effecting
the combination with Company (including, without limitation, the provisions of
this Article II) if and to the extent it deems such change to be necessary,
appropriate or desirable; provided, however, that no such change shall (i) alter
or change the amount or kind of consideration to be issued to holders of Company
Common Stock as provided for in this Agreement (the "Merger Consideration"),
(ii) adversely affect the tax treatment of Company's shareholders as a result of
receiving the Merger Consideration, including, without limitation, any adverse
effect upon the tax-free treatment, holding period or tax basis, or (iii)
materially impede or delay consummation of the transactions contemplated by this
Agreement.
(a) Subject to the satisfaction or waiver of the conditions set forth
in Article VII, the Merger shall become effective upon the
occurrence of the filing in the office of the Utah Division of
Corporation and Commercial Code (the "Corporation Division") of
articles of merger in accordance with Section 16-10a-1105 of the
UBCA and the filing in the office of the California Secretary of
an agreement of merger in accordance with Section 1103 of the
CGCL or such later date and time as may be set forth in such
articles and such agreement. The Merger shall have the effects
prescribed in the UBCA and the CGCL.
(b) Articles of Incorporation and By-Laws. The articles of
incorporation and by-laws of Zions immediately after the Merger
shall be those of Zions as in effect immediately prior to the
Effective Time.
(c) Directors and Officers of the Surviving Corporation. The
directors and officers of Zions immediately after the Merger
shall be the directors and officers of Zions immediately prior to
the Effective Time, until such time as their successors shall be
duly elected and qualified.
2.02 Effective Date and Effective Time. On such date on or after August
15, 1999 as Zions selects (and promptly provides notice thereof to Company),
which shall be within ten days after the last to occur of the
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expiration of all applicable waiting periods in connection with approvals
of Governmental Authorities and the receipt of all approvals of
Governmental Authorities and all conditions to the consummation of the
Merger are satisfied or waived (or, at the election of Zions, on the last
business day of the month in which such tenth day occurs or, if such tenth
day occurs on one of the last five business days of such month, on the last
business day of the succeeding month), or on such earlier or later date as
may be agreed in writing by the parties, articles of merger shall be
executed in accordance with all appropriate legal requirements and shall be
filed as required by law, and the Merger provided for herein shall become
effective upon such filing or on such date as may be specified in such
articles of merger. The date of such filing or such later effective date is
herein called the "Effective Date". The "Effective Time" of the Merger
shall be the time of such filing or as set forth in such articles of
merger.
2.03 Plan of Merger. At the request of Zions, Zions and Company shall
enter into a separate agreement of merger or articles of merger reflecting the
terms hereof for purposes of any filing requirement of the CGCL or the UBCA.
ARTICLE III
Consideration; Exchange Procedures
3.01 Merger Consideration. Subject to the provisions of this Agreement,
at the Effective Time, automatically by virtue of the Merger and without any
action on the part of any Person:
(a) Outstanding Company Common Stock. (as amended May 11, 1999) Each
share, excluding Treasury Stock and Dissenters' Shares, of
Company Common Stock issued and outstanding immediately prior to
the Effective Time shall become and be converted into 0.3233 of a
share of Zions Common Stock (the "Exchange Ratio"), subject to
adjustment as set forth in clause (ii) below and as set forth in
Section 3.05.
(i) In the event that the Zions Closing Average stated as a
percentage of the Zions Starting Average is greater than the sum of
(A) the KBW Index Closing Average stated as a percentage of the KBW
Index Starting Average and (B) five percent (5%), then the Exchange
Ratio shall equal the product of (y) 0.3233 and (z) a fraction, the
numerator of which is the product of (I) 1.05 and (II) the Zions
Starting Average and the denominator of which is the Zions Closing
Average. In the event that the Zions Closing Average stated as a
percentage of the Zions Starting Average is less than the difference
between (I) the KBW Index Closing Average stated as a percentage of
the KBW Index Starting Average and (II) five percent (5%), then the
Exchange Ratio shall equal the product of (y) 0.3233 and (z) a
fraction, the numerator of which is the product of (I) .95 and (II)
the Zions Starting Average and the denominator of which is the Zions
Closing Average.
(b) Outstanding Zions Common Stock. Each share of Zions Common Stock
issued and outstanding immediately prior to the Effective Time
shall remain issued and outstanding and unaffected by the Merger.
(c) Treasury Shares. Each share of Company Common Stock held as
Treasury Stock immediately prior to the Effective Time shall be
canceled and retired at the Effective Time and no consideration
shall be issued in exchange therefor.
3.02 Rights as Shareholders; Stock Transfers. At the Effective Time,
holders of Company Common Stock shall cease to be, and shall have no rights as,
shareholders of Company, other than to receive any dividend or other
distribution with respect to such Company Common Stock with a record date
occurring prior to the Effective Time, and the consideration provided under this
Article III. After the Effective Time, there shall be no transfers on the stock
transfer books of Company or the Surviving Corporation of shares of Company
Common Stock.
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3.03 Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of Zions Common Stock and no certificates or scrip therefor,
or other evidence of ownership thereof, will be issued in the Merger; instead,
Zions shall pay to each holder of Company Common Stock who would otherwise be
entitled to a fractional share of Zions Common Stock (after taking into account
all Old Certificates delivered by such holder) an amount in cash (without
interest) determined by multiplying such fraction by the average of the closing
prices of Zions Common Stock, as reported on NASDAQ (as reported in The Wall
Street Journal or, if not reported therein, in another authoritative source),
for the fifteen (15) NASDAQ trading days immediately preceding the Effective
Date.
3.04 Exchange Procedures. At or prior to the Effective Time, Zions
shall deposit, or shall cause to be deposited, with such bank or trust company
as Zions shall elect, subject (except in the case of a Zions' Subsidiary) to the
approval of Company, which approval may not be unreasonably withheld (which may
include a Subsidiary of Zions) (in such capacity, the "Exchange Agent"), for the
benefit of the holders of certificates formerly representing shares of Company
Common Stock ("Old Certificates"), for exchange in accordance with this Article
III, certificates representing the shares of Zions Common Stock ("New
Certificates") and an estimated amount of cash (such cash and New Certificates,
together with any dividends or distributions with a record date occurring after
the Effective Date with respect thereto (without any interest on any such cash,
dividends or distributions), being hereinafter referred to as the "Exchange
Fund") to be paid pursuant to this Article III in exchange for outstanding
shares of Company Common Stock.
(a) As soon as practicable after the Effective Date, and in any event
no later than three (3) days after the Effective Date, Zions
shall send or cause to be sent to each former holder of record of
shares of Company Common Stock immediately prior to the Effective
Time transmittal materials for use in exchanging such
shareholder's Old Certificates for the consideration set forth in
this Article III. Zions shall use its reasonable best efforts to
cause the New Certificates into which shares of a shareholder's
Company Common Stock are converted on the Effective Date and/or
any check in respect of any fractional share interests or
dividends or distributions which such person shall be entitled to
receive to be sent to the applicable former holder of record
within five (5) Business Days of, and shall cause such items to
be delivered to such former holder following, delivery to the
Exchange Agent of Old Certificates representing such shares of
Company Common Stock (or an affidavit of lost certificate and, if
required by the Exchange Agent, indemnity reasonably satisfactory
to Zions and the Exchange Agent, if any of such certificates are
lost, stolen or destroyed) owned by such shareholder. No interest
will be paid on any such cash to be paid in lieu of fractional
share interests or in respect of dividends or distributions which
any such person shall be entitled to receive pursuant to this
Article III upon such delivery. In the event of a transfer of
ownership of any shares of Company Common Stock not registered in
the transfer records of Company, the exchange described in this
Section 3.04(b) may nonetheless be effected and a check for the
cash to be paid in lieu of fractional shares may be issued to the
transferee if the Old Certificate representing such Company
Common Stock is presented to the Exchange Agent, accompanied by
documents sufficient, in the discretion of Zions and the Exchange
Agent, (i) to evidence and effect such transfer but for the
provisions of Section 3.02 hereof and (ii) to evidence that all
applicable stock transfer taxes have been paid.
(b) If Old Certificates are not surrendered or the consideration
therefor is not claimed prior to the date on which such
consideration would otherwise escheat to or become the property
of any governmental unit or agency, the unclaimed consideration
shall, to the extent permitted by abandoned property and any
other applicable law, become the property of the Surviving
Corporation (and to the extent not in its possession shall be
paid over to the Surviving Corporation), free and clear of all
claims or interest of any person previously entitled to such
claims. Notwithstanding the foregoing, neither the Exchange Agent
nor any party hereto shall be liable to any former holder of
Company Common Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property,
escheat or similar laws.
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(c) At the election of Zions, no dividends or other distributions
with respect to Zions Common Stock with a record date occurring
after the Effective Time shall be paid to the holder of any
unsurrendered Old Certificate representing shares of Company
Common Stock converted in the Merger into the right to receive
shares of such Zions Common Stock until the holder thereof shall
be entitled to receive New Certificates in exchange therefor in
accordance with the procedures set forth in this Section 3.04,
and no such shares of Company Common Stock shall be eligible to
vote until the holder of Old Certificates is entitled to receive
New Certificates in accordance with the procedures set forth in
this Section 3.04. After becoming so entitled in accordance with
this Section 3.04, the record holder thereof also shall be
entitled to receive any such dividends or other distributions,
without any interest thereon, which theretofore had become
payable with respect to shares of Zions Common Stock such holder
had the right to receive upon surrender of the Old Certificate.
(d) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of Company for one year after the Effective Time
shall be returned by the Exchange Agent to Zions. Any
shareholders of Company who have not theretofore complied with
this Article III shall thereafter look only to Zions for payment
of the shares of Zions Common Stock, cash in lieu of any
fractional shares and unpaid dividends and distributions on Zions
Common Stock deliverable in respect of each share of Company
Common Stock such shareholder holds as determined pursuant to
this Agreement, in each case, without any interest thereon.
3.05 Anti-Dilution Provisions. In the event Zions changes (or
establishes a record date for changing) the number of shares of Zions Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization, distributions of shares of Zions Common
Stock pursuant to Zions' rights plan or similar transaction with respect to the
outstanding Zions Common Stock and the record date therefor, if applicable,
shall be prior to the Effective Date, the Exchange Ratio shall be
proportionately adjusted. Subject to Section 2.01(a), if, between the date
hereof and the Effective Time, Zions shall consolidate with or into any other
corporation (a "Business Combination") and the terms thereof shall provide that
Zions Common Stock shall be converted into or exchanged for the shares of any
other corporation or entity, then provision shall be made as part of the terms
of such Business Combination so that shareholders of Company who would be
entitled to receive shares of Zions Common Stock pursuant to this Agreement
shall be entitled to receive, in lieu of each share of Zions Common Stock
issuable to such shareholders as provided herein, the same kind and amount of
securities or assets as shall be distributable upon such Business Combination
with respect to one share of Zions Common Stock.
3.06 Options. At the Effective Time, each holder of outstanding options
to purchase shares of Company Common Stock under the Company Stock Plan (each, a
"Company Stock Option"), whether vested or unvested, shall be canceled and only
entitle the holder to receive with respect to such Company Stock Options the
product of (i) the Option Consideration and (ii) the number of Company Stock
Options held by such holder, rounded down to the nearest whole share to be paid
by Zions in the form of whole shares of Zions Common Stock. At or prior to the
Effective Time, Company shall take all action, if any, necessary with respect to
the cancellation of the Company Stock Options, including obtaining any necessary
consents of the holders of Company Stock Options. The exchange of agreements
representing Company Stock Options for the Option Consideration shall take place
upon substantially the same terms as set forth in Section 3.04 with respect to
the exchange of certificates representing Company Common Stock for the Merger
Consideration.
3.07 Dissenters' Rights. (as amended May 11, 1999) Any Dissenting
Shareholder (as defined below) who shall be entitled to be paid the "fair market
value" of his or her Dissenters' Shares (as defined below), as provided in
Section 1300 of the CGCL, shall not be entitled to the Merger Consideration in
respect thereof unless and until such Dissenting Shareholder shall have failed
to perfect or shall have effectively withdrawn or lost such Dissenting
Shareholder's right to dissent from the Merger under the CGCL, and shall be
entitled to receive only the payment provided for by Section 1300 of the CGCL
with respect to such Dissenters' Shares. If any Dissenting Shareholder shall
fail to perfect or shall have effectively withdrawn or lost such right to
dissent, the Dissenters' Shares held by such Dissenting Shareholder shall
thereupon be treated as though such Dissenters' Shares had been converted into
the right to receive the Merger Consideration pursuant to Section 3.01 hereof.
As used herein, "Dissenting Shareholder" means a shareholder who holds
Dissenters' Shares. As used herein, "Dissenters' Shares" means shares held by a
shareholder with respect to which such shareholder, in accordance with the CGCL,
delivers a written demand to Company or its transfer agent on or prior to the
date of the Company Meeting in accordance with Section 1301 of the CGCL.
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ARTICLE IV
Actions Pending Acquisition
4.01 Forebearances of Company. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of Zions, Company will not, and will cause each of its
Subsidiaries not to:
(a) Ordinary Course. Conduct the business of Company and its
Subsidiaries other than in the ordinary and usual course
consistent with past practice or fail to use reasonable best
efforts to preserve intact their business organizations and
assets and maintain in all material respects their rights,
franchises and existing relations with customers, suppliers,
employees and business associates, take any action that would
adversely affect or delay the ability of Company, Zions or any of
their Subsidiaries to perform any of their obligations on a
timely basis under this Agreement and the Agreement of Bank
Merger, or take any action that is reasonably likely to have a
Material Adverse Effect with respect to Company.
(b) Capital Stock. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (i) issue, sell or otherwise
permit to become outstanding, or authorize the creation of, any
additional shares of Company Common Stock or any Rights, (ii)
enter into any agreement with respect to the foregoing or (iii)
permit any additional shares of Company Common Stock to become
subject to new grants of employee or director stock options,
other Rights or similar stock-based employee rights.
(c) Dividends, Etc. (a) Make, declare, pay or set aside for payment
any dividend on or in respect of, or declare or make any
distribution on any shares of Company Common Stock (other than
quarterly cash dividends on Company Common Stock in an amount not
to exceed $0.10 per share with record and payment dates
consistent with past practice) or (b) directly or indirectly
adjust, split, combine, redeem, reclassify, purchase or otherwise
acquire, any shares of its capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into or amend or
renew any employment, consulting, severance or similar agreements
or arrangements with any director, officer or employee of Company
or its Subsidiaries, or grant any salary or wage increase or
increase any employee benefit (including incentive or bonus
payments), except (i) for normal individual increases in
compensation to employees in the ordinary course of business
consistent with past practice (including increases in the annual
bonus pool and reallocations pursuant thereto), (ii) for other
changes that are required by applicable law, (iii) to satisfy
Previously Disclosed contractual obligations existing as of the
date hereof or (iv) for grants of awards to newly hired employees
consistent with past practice.
(e) Benefit Plans. Enter into, establish, adopt or amend (except (i)
as may be required by applicable law or (ii) to satisfy
Previously Disclosed contractual obligations existing as of the
date hereof) any pension, retirement, stock option, stock
purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust
agreement (or similar arrangement) related thereto, in respect of
any director, officer or employee of Company or its Subsidiaries,
or take any action to accelerate the vesting or exercisability of
stock options, restricted stock or other compensation or benefits
payable thereunder.
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(f) Dispositions. Except as Previously Disclosed, sell, transfer,
mortgage, encumber or otherwise dispose of or discontinue any of
its assets, deposits, business or properties except in the
ordinary course of business consistent with past practice and in
a transaction that is not material to it and its Subsidiaries
taken as a whole.
(g) Acquisitions. Except as Previously Disclosed, acquire (other than
by way of foreclosures or acquisitions of control in a bona fide
fiduciary capacity or in satisfaction of debts previously
contracted in good faith, in each case in the ordinary and usual
course of business consistent with past practice) all or any
portion of, the assets, business, deposits or properties of any
other entity except in the ordinary course of business consistent
with past practice and in a transaction that is not material to
Company and its Subsidiaries, taken as a whole.
(h) Capital Expenditures. Except as Previously Disclosed, make any
capital expenditures, other than capital expenditures in the
ordinary course of business consistent with past practice in
amounts not exceeding $50,000 individually or $150,000 in the
aggregate.
(i) Governing Documents. Amend the Company Articles, Company By-Laws
or the articles of incorporation or by-laws (or similar governing
documents) of any of Company's Subsidiaries.
(j) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be
required by generally accepted accounting principles or
applicable banking regulation.
(k) Contracts. Except in the ordinary course of business consistent
with past practice, enter into or terminate any material contract
(as defined in Section 5.03(k)) or amend or modify in any
material respect any of its existing material contracts.
(l) Claims. Except in the ordinary course of business consistent with
past practice, settle any claim, action or proceeding, except for
any claim, action or proceeding involving solely money damages in
an amount, individually or in the aggregate for all such
settlements, that is not material to Company and its
Subsidiaries, taken as a whole.
(m) Adverse Actions. (a) Take any action while knowing that such
action would, or is reasonably likely to, prevent or impede the
Merger from qualifying (i) for "pooling of interests" accounting
treatment or (ii) as a reorganization within the meaning of
Section 368 of the Code; or (b) knowingly take any action that is
intended or is reasonably likely to result in (i) any of its
representations and warranties set forth in this Agreement being
or becoming untrue in any material respect at any time at or
prior to the Effective Time, (ii) any of the conditions to the
Merger set forth in Article VII not being satisfied or (iii) a
material violation of any provision of this Agreement except, in
each case, as may be required by applicable law or regulation.
(n) Risk Management. Except as required by applicable law or
regulation, (i) implement or adopt any material change in its
interest rate and other risk management policies, procedures or
practices; (ii) fail to follow its existing policies or practices
with respect to managing its exposure to interest rate and other
risk; or (iii) fail to use commercially reasonable means to avoid
any material increase in its aggregate exposure to interest rate
risk.
(o) Indebtedness. Incur any indebtedness for borrowed money other
than in the ordinary course of business consistent with past
practice.
(p) Commitments. Agree or commit to do any of the foregoing.
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4.02 Forebearances of Zions. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of Company, Zions will not, and will cause each of its
Subsidiaries not to:
(a) Ordinary Course. Take any action that would adversely affect or
delay the ability of Company or Zions to perform any of their
obligations on a timely basis under this Agreement, or take any
action that is reasonably likely to have a Material Adverse
Effect with respect to Zions.
(b) Adverse Actions. (a) Take any action while knowing that such
action would, or is reasonably likely to, prevent or impede the
Merger from qualifying (i) for "pooling of interests" accounting
treatment or (ii) as a reorganization within the meaning of
Section 368 of the Code; or (b) knowingly take any action that is
intended or is reasonably likely to result in (i) any of its
representations and warranties set forth in this Agreement being
or becoming untrue in any material respect at any time at or
prior to the Effective Time, (ii) any of the conditions to the
Merger set forth in Article VII not being satisfied or (iii) a
material violation of any provision of this Agreement except, in
each case, as may be required by applicable law or regulation.
ARTICLE V
Representations and Warranties
5.01 Disclosure Schedules. On or prior to the date hereof, Company and
Company Bank have delivered to Zions a schedule or schedules (each, a
"Disclosure Schedule") setting forth, among other things, items the disclosure
of which is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to one or more
representations or warranties contained in Section 5.03; provided, that (a) no
such item is required to be set forth in a Disclosure Schedule as an exception
to a representation or warranty if its absence would not be reasonably likely to
result in the related representation or warranty being deemed untrue or
incorrect under the standard established by Section 5.02, and (b) the mere
inclusion of an item in a Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by a party that such
item represents a material exception or fact, event or circumstance or that such
item is reasonably likely to result in a Material Adverse Effect with respect to
the disclosing party.
5.02 Standard. No representation or warranty of Company and Company
Bank, on the one hand, or Zions, on the other, contained in Section 5.03 or 5.04
shall be deemed untrue or incorrect, and no party hereto shall be deemed to have
breached a representation or warranty, as a consequence of the existence of any
fact, event or circumstance unless such fact, circumstance or event,
individually or taken together with all other facts, events or circumstances
inconsistent with any representation or warranty contained in Section 5.03 or
5.04 has had or is reasonably likely to have a Material Adverse Effect on the
party making such representation or warranty.
5.03 Representations and Warranties of Company and Company Bank.
Subject to Sections 5.01 and 5.02 and except as Previously Disclosed in a
paragraph of Company and Company Bank Disclosure Schedule corresponding to the
relevant paragraph below, Company and Company Bank hereby represent and warrant
jointly and severally to Zions:
(a) Organization, Standing and Authority. Company is a corporation
duly organized, validly existing and in good standing under the
laws of the State of California. Company is duly qualified to do
business and is in good standing in the states of the United
States and any foreign jurisdictions where its ownership or
leasing of property or assets or the conduct of its business
requires it to be so qualified.
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(b) Company Common Stock. As of the date hereof, the authorized
capital stock of Company consists solely of 5,000,000 shares of
Company Common Stock, of which no more than 2,624,999 shares were
outstanding as of the date hereof. As of the date hereof, no
shares of Company Common Stock were held in treasury by Company
or otherwise owned by Company or its Subsidiaries. The
outstanding shares of Company Common Stock have been duly
authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not
issued in violation of any preemptive rights). As of the date
hereof, there are no shares of Company Common Stock authorized
and reserved for issuance, Company does not have any Rights
issued or outstanding with respect to Company Common Stock, and
Company does not have any commitment to authorize, issue or sell
any Company Common Stock or Rights, except pursuant to this
Agreement, the Warrants, any Company Stock Option and the Company
Stock Plan. The number of shares of Company Common Stock which
are issuable and reserved for issuance upon exercise of Company
Stock Options as of the date hereof are Previously Disclosed in
Company's Disclosure Schedule.
(c) Subsidiaries. Company has Previously Disclosed a list of all of
its Subsidiaries together with the jurisdiction of organization
of each such Subsidiary, Company owns, directly or indirectly,
all the issued and outstanding equity securities of each of its
Subsidiaries, no equity securities of any of its Subsidiaries are
or may become required to be issued (other than to it or its
wholly owned Subsidiaries) by reason of any Right or otherwise,
there are no contracts, commitments, understandings or
arrangements by which any of such Subsidiaries is or may be bound
to sell or otherwise transfer any equity securities of any such
Subsidiaries (other than to it or its wholly- owned
Subsidiaries), there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote or
to dispose of such securities and all the equity securities of
each Subsidiary held by Company or its Subsidiaries have been
duly authorized and are validly issued and outstanding, fully
paid and nonassessable and are owned by Company or its
Subsidiaries free and clear of any Liens.
(i) Company does not own beneficially, directly or indirectly,
any equity securities or similar interests of any Person, or any
interest in a partnership or joint venture of any kind, other than its
Subsidiaries.
(ii) Each of Company's Subsidiaries has been duly organized and
is validly existing in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do business
and in good standing in the jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be
so qualified.
(d) Corporate Power. Company and each of its Subsidiaries has the
corporate power and authority to carry on its business as it is
now being conducted and to own all its properties and assets; and
Company has the corporate power and authority to execute, deliver
and perform its obligations under this Agreement and the Stock
Option Agreement and to consummate the transactions contemplated
hereby and thereby. Company Bank has the corporate power and
authority to execute, deliver and perform its obligations under
this Agreement and the Agreement of Bank Merger and to consummate
the transactions contemplated hereby and thereby.
(e) Corporate Authority. Subject in the case of this Agreement to
receipt of the requisite approval of the agreement of merger set
forth in this Agreement by the holders of a majority of the
outstanding shares of Company Common Stock entitled to vote
thereon (which is the only shareholder vote required thereon),
this Agreement and the Stock Option Agreement and the
transactions contemplated hereby and thereby have been authorized
by all necessary corporate action of Company and the Company
Board on or prior to the date hereof. Each of this Agreement and
the Stock Option Agreement is a valid and legally binding
obligation of Company, enforceable in accordance with its terms
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(except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles).
Each of this Agreement and the Agreement of Bank Merger and the
transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action of Company Bank and
its board of directors on or prior to the date hereof. Each of
this Agreement, and upon execution and delivery of the Agreement
of Bank Merger, the Agreement of Bank Merger, is or will be, as
the case may be, the valid and legally binding obligation of
Company Bank, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles). The Company
Board has received the written opinion of The Findley Group to
the effect that as of the date hereof the Exchange Ratio to be
received by the holders of Company Common Stock in the Merger is
fair to the holders of Company Common Stock from a financial
point of view.
5.04 Regulatory Approvals; No Defaults. No consents or approvals of, or
filings or registrations with, any Governmental Authority or with any third
party are required to be made or obtained by Company or any of its Subsidiaries
in connection with the execution, delivery or performance by Company or Company
Bank of this Agreement and the Agreement of Bank Merger or to consummate the
Merger or the Bank Merger except for (A) filings with the SEC and state
securities authorities and the approval of this Agreement by the shareholders of
Company and (B) the filing of articles of merger with the Corporation Division
pursuant to the UBCA and an agreement of merger with the California Secretary
pursuant to the CGCL. As of the date hereof, Company has no knowledge of any
reason why the approvals set forth in Section 7.01(b) will not be received
without the imposition of a condition, restriction or requirement of the type
described in Section 7.01(b).
(i) Subject to receipt of the regulatory approvals referred to in
the preceding paragraph, and the expiration of related waiting
periods, and required filings under federal and state securities laws,
the execution, delivery and performance of this Agreement and
Agreement of Bank Merger and the consummation of the transactions
contemplated hereby and thereby do not and will not (A) constitute a
breach or violation of, or a default under, or give rise to any Lien,
any acceleration of remedies or any right of termination under, any
law, rule or regulation or any judgment, decree, order, governmental
permit or license, or agreement, indenture or instrument of Company or
of any of its Subsidiaries or to which Company or any of its
Subsidiaries or properties is subject or bound, (B) constitute a
breach or violation of, or a default under, the Company Articles or
the Company By-Laws or the articles of incorporation or by-laws of
Company Bank, or (C) require any consent or approval under any such
law, rule, regulation, judgment, decree, order, governmental permit or
license, agreement, indenture or instrument.
(a) Financial Reports and Regulatory Documents; Material Adverse
Effect. Company's (or its predecessors') Annual Reports on Form
10-K for the fiscal years ended December 31, 1998, 1997 and 1996,
and all other reports, registration statements, definitive proxy
statements or information statements filed or to be filed by it
or any of its Subsidiaries subsequent to December 31, 1996 under
the Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act or under the securities regulations of the SEC,
in the form filed or to be filed (collectively, the Company
"Regulatory Documents") with the SEC as of the date filed, (A)
complied or will comply in all material respects as to form with
the applicable requirements under the Securities Act or the
Exchange Act, as the case may be, and (B) did not and will not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; and each of the
balance sheets contained in or incorporated by reference into any
such Regulatory Document (including the related notes and
schedules thereto) fairly presents, or will fairly present, in
all material respects, the financial position of Company and its
Subsidiaries as of its date, and each of the statements of income
and changes in shareholders' equity and cash flows or equivalent
statements in such Regulatory Documents (including any related
notes and schedules thereto) fairly presents, or will fairly
present, in all material respects, the results of operations,
changes in shareholders' equity and changes in cash flows, as the
case may be, of Company and its Subsidiaries for the periods to
which they relate, in each case in accordance with generally
accepted accounting principles consistently applied during the
periods involved, except in each case as may be noted therein,
subject to normal year-end audit adjustments in the case of
unaudited statements.
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(i) Since December 31, 1998, Company and its Subsidiaries have
not incurred any liability other than in the ordinary course of
business consistent with past practice.
(ii) Since December 31, 1998, (A) Company and its Subsidiaries
have conducted their respective businesses in the ordinary and usual
course consistent with past practice (excluding the incurrence of
expenses related to this Agreement and the transactions contemplated
hereby) and (B) no event has occurred or circumstance arisen that,
individually or taken together with all other facts, circumstances and
events (described in any paragraph of Section 5.03 or otherwise), is
reasonably likely to have a Material Adverse Effect with respect to
Company.
(b) Litigation. No litigation, claim or other proceeding before any
court or governmental agency is pending against Company or any of
its Subsidiaries and, to Company's knowledge, no such litigation,
claim or other proceeding has been threatened.
(c) Regulatory Matters. (i) Neither Company nor any of its
Subsidiaries or any of their properties is a party to or is
subject to any written order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter
or similar submission to, or extraordinary supervisory letter
from, any federal or state governmental agency or authority
charged with the supervision or regulation of financial
institutions or issuers of securities or engaged in the insurance
of deposits (including, without limitation, the DFI, the Federal
Reserve and the FDIC) or the supervision or regulation of it or
any of its Subsidiaries (collectively, the "Regulatory
Authorities").
(ii) Neither Company nor any of its Subsidiaries has been advised
by any Regulatory Authority that such Regulatory Authority is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such written order,
decree, agreement, memorandum of understanding, commitment letter,
supervisory letter or similar submission.
(d) Compliance with Laws. Company and each of its Subsidiaries:
(i) is in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting
such businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all other applicable fair lending
laws and other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to
permit them to own or lease their properties and to conduct their
businesses as presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in full force and
effect and, to Company's knowledge, no suspension or cancellation of
any of them is threatened; and
(iii) has received, since December 31, 1998, no notification or
communication from any Governmental Authority (A) asserting that
Company or any of its Subsidiaries is not in compliance with any of
the statutes, regulations or ordinances which such Governmental
Authority enforces or (B) threatening to revoke any license,
franchise, permit or governmental authorization (nor, to Company's
knowledge, do any grounds for any of the foregoing exist).
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<PAGE>
(e) Material Contracts; Defaults. Except for those agreements and
other documents filed as exhibits to its Regulatory Documents,
neither the Company nor any of its Subsidiaries is a party to,
bound by or subject to any agreement, contract, arrangement,
commitment or understanding (whether written or oral) (i) that is
a "material contract" within the meaning of Item 601(b)(10) of
the SEC's Regulation S-K or (ii) that materially restricts the
conduct of business by it or any of its Subsidiaries. Neither
Company nor any of its Subsidiaries is in default under any
material contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party, by
which its respective assets, business, or operations may be bound
or affected, or under which it or its respective assets,
business, or operations receives benefits, and there has not
occurred any event that, with the lapse of time or the giving of
notice or both, would constitute such a default.
(f) No Brokers. No action has been taken by Company that would give
rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to
the transactions contemplated by this Agreement, excluding a
Previously Disclosed fee to be paid to Belle Plaine Financial
LLC.
(g) Employee Benefit Plans.
(i) All benefit and compensation plans, contracts, policies or
arrangements covering current employees or former employees of Company
and its subsidiaries (the "Employees") and current or former directors
of Company, including, but not limited to, "employee benefit plans"
within the meaning of Section 3(3) of ERISA, and deferred
compensation, stock option, stock purchase, stock appreciation rights,
stock based, incentive and bonus plans (the "Benefit Plans"), are
Previously Disclosed in the Disclosure Schedule. True and complete
copies of all Benefit Plans, including, but not limited to, any trust
instruments and insurance contracts forming a part of any Benefit
Plans, and all amendments thereto have been provided or made available
to Zions.
(ii) All employee benefit plans, other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA, covering Employees (the
"Plans"), to the extent subject to ERISA, are in substantial
compliance with ERISA. Neither Company nor any of its Subsidiaries is
a party to any "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA ("Pension Plan"), which is intended to be
qualified under Section 401(a) of the Code. There is no material
pending or, to the knowledge of Company, threatened litigation
relating to the Plans. Neither Company nor any of its Subsidiaries has
engaged in a transaction with respect to any Plan that, assuming the
taxable period of such transaction expired as of the date hereof,
could subject Company or any Subsidiary to a tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of ERISA in an
amount which would be material.
(iii) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by Company or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one employer
with Company under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA Affiliate"). Neither Company, any of its Subsidiaries nor
an ERISA Affiliate has contributed to a "multiemployer plan", within
the meaning of Section 3(37) of ERISA, at any time on or after
September 26, 1980. No notice of a "reportable event", within the
meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed for any
Pension Plan or by any ERISA Affiliate within the 12-month period
ending on the date hereof or will be required to be filed in
connection with the transactions contemplated by this Plan.
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(iv) All contributions required to be made under the terms of any
Plan have been timely made or have been reflected on the consolidated
financial statements of Company included in the Regulatory Documents.
Neither any Pension Plan nor any single-employer plan of an ERISA
Affiliate has an "accumulated funding deficiency" (whether or not
waived) within the meaning of Section 412 of the Code or Section 302
of ERISA and no ERISA Affiliate has an outstanding funding waiver.
Neither Company nor any of its Subsidiaries has provided, or is
required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(v) Under each Pension Plan which is a single-employer plan, as
of the last day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in the
Plan's most recent actuarial valuation), did not exceed the then
current value of the assets of such Plan, and there has been no
material change in the financial condition of such Plan since the last
day of the most recent plan year.
(vi) Neither Company nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Benefit
Plan. Company or its Subsidiaries may amend or terminate any such
Benefit Plan at any time without incurring any liability thereunder.
(vii) The consummation of the transactions contemplated by this
Agreement and the Agreement of Bank Merger will not (x) entitle any
employees of Company or any of its Subsidiaries to severance pay, (y)
accelerate the time of payment or vesting or trigger any payment of
compensation or benefits under, increase the amount payable or trigger
any other material obligation pursuant to, any of the Benefit Plans or
(z) result in any breach or violation of, or a default under, any of
the Benefit Plans. Without limiting the foregoing, as a result of the
consummation of the transactions contemplated by this Agreement and
the Agreement of Bank Merger, none of Zions, Company, or any of its
Subsidiaries will be obligated to make a payment to an individual that
would be a "parachute payment" to a "disqualified individual" as those
terms are defined in Section 280G of the Code, without regard to
whether such payment is reasonable compensation for personal services
performed or to be performed in the future.
(h) Labor Matters. Neither Company nor any of its Subsidiaries is a
party to or is bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union
or labor organization, nor is Company or any of its Subsidiaries
the subject of a proceeding asserting that it or any such
Subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel
Company or any such Subsidiary to bargain with any labor
organization as to wages or conditions of employment, nor is
there any strike or other labor dispute involving it or any of
its Subsidiaries pending or, to Company's knowledge, threatened,
nor to the knowledge of Company is there any activity involving
its or any of its Subsidiaries' employees seeking to certify a
collective bargaining unit or engaging in other organizational
activity.
(i) Environmental Matters. To the best knowledge of Company, neither
the conduct nor operation of Company or its Subsidiaries nor any
condition of any property presently or previously owned, leased
or operated by any of them (including, without limitation, in a
fiduciary or agency capacity), violates or violated Environmental
Laws and no condition has existed or event has occurred with
respect to any of them or any such property that, with notice or
the passage of time, or both, is reasonably likely to result in
liability under Environmental Laws. To the knowledge of Company,
no property on which Company or any of its Subsidiaries holds a
Lien, violates or violated Environmental Laws and no condition
has existed or event has occurred with respect to any such
property that, with notice or the passage of time, or both, is
reasonably likely to result in liability under Environmental
Laws. Neither Company nor any of its Subsidiaries has received
any notice from any person or entity that Company or its
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Subsidiaries or the operation or condition of any property ever
owned, leased, operated, or held as collateral or in a fiduciary
capacity by any of them are or were in violation of or otherwise
are alleged to have liability under any Environmental Law,
including, but not limited to, responsibility (or potential
responsibility) for the cleanup or other remediation of any
pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from, any
such property.
As used herein, the term "Environmental Law" means any federal, state or
local law, regulation, order, decree, permit, authorization, opinion, common law
or agency requirement relating to: (A) the protection or restoration of the
environment, health, safety, or natural resources, (B) the handling, use,
presence, disposal, release or threatened release of any Hazardous Substance or
(C) noise, odor, wetlands, indoor air, pollution, contamination or any injury or
threat of injury to persons or property in connection with any Hazardous
Substance. As used herein, the term "Hazardous Substance" means any substance in
any concentration that is: (A) listed, classified or regulated pursuant to any
Environmental Law; (B) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (C) any other substance which is or may be
the subject of regulatory action by any Governmental Authority in connection
with any Environmental Law.
(j) Tax Matters. (A) All Tax Returns that are required to be filed
(taking into account any extensions of time within which to file)
by or with respect to Company and its Subsidiaries have been duly
and timely filed, and all such Tax Returns are complete and
accurate in all material respects, (B) all Taxes shown to be due
on the Tax Returns referred to in clause (A) have been paid in
full, (C) all Taxes that Company or any of its Subsidiaries is
obligated to withhold from amounts owing to any employee,
creditor or third party have been paid over to the proper
Governmental Authority in a timely manner, to the extent due and
payable, (D) the Tax Returns referred to in clause (A) have been
examined by the Internal Revenue Service or the appropriate Tax
authority or the period for assessment of the Taxes in respect of
which such Tax Returns were required to be filed has expired, (E)
all deficiencies asserted or assessments made as a result of such
examinations have been paid in full, (F) no issues that have been
raised by the relevant taxing authority in connection with the
examination of any of the Tax Returns referred to in clause (A)
are currently pending, and (G) no extensions or waivers of
statutes of limitation have been given by or requested with
respect to any Taxes of Company or its Subsidiaries. Company has
made available to Zions true and correct copies of the United
States federal income Tax Returns filed by Company and its
Subsidiaries for each of the three most recent fiscal years ended
on or before December 31, 1998. Neither Company nor any of its
Subsidiaries has any liability with respect to Taxes that accrued
on or before the end of the most recent period covered by
Company's Regulatory Documents filed prior to the date hereof in
excess of the amounts accrued with respect thereto that are
reflected in the financial statements included in Company's
Regulatory Documents filed on or prior to the date hereof.
Neither Company nor any of its Subsidiaries is a party to any Tax
allocation or sharing agreement, is or has been a member of an
affiliated group filing consolidated or combined Tax returns
(other than a group the common parent of which is or was Company)
or otherwise has any liability for the Taxes of any person (other
than Company and its Subsidiaries). As of the date hereof,
neither Company nor any of its Subsidiaries has any reason to
believe that any conditions exist that might prevent or impede
the Merger from qualifying as a reorganization within the meaning
of Section 368 of the Code. No Liens for Taxes exist with respect
to any of the assets or properties of Company or its
Subsidiaries, except for statutory Liens for Taxes not yet due
and payable or that are being contested in good faith and
reserved for in accordance with United States generally accepted
accounting principles. Neither of Company nor any of its
Subsidiaries has been a party to any distribution occurring
during the last three (3) years in which the parties to such
distribution treated the distribution as one to which Section 355
of the Code applied.
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(ii) No Tax is required to be withheld pursuant to Section 1445
of the Code as a result of the transfer contemplated by this
Agreement.
(k) Risk Management Instruments. All interest rate swaps, caps,
floors, option agreements, futures and forward contracts and
other similar risk management arrangements, whether entered into
for Company's own account, or for the account of one or more of
Company's Subsidiaries or their customers (all of which are
listed on Company's Disclosure Schedule), if any, were entered
into in accordance with prudent business practices and all
applicable laws, rules, regulations and regulatory policies and
with counterparties believed to be financially responsible at the
time; and each of them constitutes the valid and legally binding
obligation of Company or one of its Subsidiaries, enforceable in
accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by
general equity principles), and are in full force and effect.
Neither Company nor its Subsidiaries, nor to Company's knowledge,
any other party thereto, is in breach of any of its obligations
under any such agreement or arrangement.
(l) Books and Records. The books and records of Company and its
Subsidiaries have been fully, properly and accurately maintained
in all material respects, and there are no material inaccuracies
or discrepancies of any kind contained or reflected therein, and
they fairly present the financial position of Company and its
Subsidiaries.
(m) Insurance. Company has Previously Disclosed all of the insurance
policies, binders, or bonds maintained by Company or its
Subsidiaries ("Insurance Policies"). Company and its Subsidiaries
are insured with reputable insurers against such risks and in
such amounts as the management of Company reasonably has
determined to be prudent in accordance with industry practices.
All the Insurance Policies are in full force and effect; Company
and its Subsidiaries are not in material default thereunder; and
all claims thereunder for which a basis is known, or reasonably
should be known, by Company have been filed in due and timely
fashion.
(n) Accounting Treatment. As of the date hereof, to the Company's
knowledge, there is no reason why the Merger will fail to qualify
for "pooling of interests" accounting treatment.
(o) Year 2000. To the knowledge of Company, the mission critical
computer software operated by Company and/or any of its
Subsidiaries is currently capable of providing, or is being
adapted to provide, uninterrupted millennium functionality to
record, store, process and present calendar dates falling on or
after January 1, 2000 in substantially the same manner and with
substantially the same functionality as such mission critical
software records, stores, processes and presents such calendar
dates falling on or before December 31, 1999. To the knowledge of
the Company, the costs of adaptations referred to in this clause
will not have a Material Adverse Effect with respect to Company.
Neither the Company nor any of its Subsidiaries has received, and
does not reasonably expect to receive, any deficiency notice from
any federal or California banking authority. Company has
Previously Disclosed to Zions a complete and accurate copy of its
and its Subsidiaries' plan, including an estimate of anticipated
associated costs, for addressing the issues set forth in all
Federal Financial Institutions Examination Council Interagency
Statements as such issues affect Company and/or its Subsidiaries.
Between the date of this Agreement and the Effective Time,
Company and Company Bank shall use commercially reasonable and
practicable efforts to implement such plan.
5.05 Representations and Warranties of Zions. Subject to Section 5.02,
Zions hereby represents and warrants to Company as follows:
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(a) Organization, Standing and Authority. Zions is duly organized,
validly existing and in good standing under the laws of the State
of Utah. Zions is duly qualified to do business and is in good
standing in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or
assets or the conduct of its business requires it to be so
qualified. Zions has in effect all federal, state, local, and
foreign governmental authorizations necessary for it to own or
lease its properties and assets and to carry on its business as
it is now conducted.
(b) Zions Capital Stock. As of the date hereof, the authorized
capital stock of Zions consists solely of 200,000,000 shares of
Zions Common Stock, of which no more than 80,000,000 shares were
outstanding as of the date hereof and 3,000,000 shares of Zions
Preferred Stock, of which no shares were outstanding as of the
date hereof.
(c) Corporate Power. Zions and each of its Significant Subsidiaries
has the corporate power and authority to carry on its business as
it is now being conducted and to own all its properties and
assets; and Zions has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby.
(d) Corporate Authority. This Agreement and the transactions
contemplated hereby have been authorized by all necessary
corporate action of Zions and the Zions Board. This Agreement is
a valid and legally binding agreement of Zions enforceable in
accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by
general equity principles).
(e) Regulatory Approvals; No Defaults. (i) No consents or approvals
of, or filings or registrations with, any Governmental Authority
or with any third party are required to be made or obtained by
Zions or any of its Subsidiaries in connection with the
execution, delivery or performance by Zions of this Agreement or
to consummate the Merger except for (A) the filing of
applications and notices, as applicable, with the federal and
state banking authorities; (B) approval of the listing on the
NASDAQ of Zions Common Stock to be issued in the Merger; (C) the
filing and declaration of effectiveness of the Registration
Statement; (D) the filing of articles of merger with the
Corporation Division pursuant to the UBCA and an agreement of
merger with the California Secretary pursuant to the CGCL; (E)
such filings as are required to be made or approvals as are
required to be obtained under the securities or "Blue Sky" laws
of various states in connection with the issuance of Zions Common
Stock in the Merger; and (F) receipt of the approvals set forth
in Section 7.01(b). As of the date hereof, Zions has no knowledge
of any reason why the approvals set forth in Section 7.01(b) will
not be received without the imposition of a condition,
restriction or requirement of the type described in Section
7.01(b).
(i) Subject to receipt of the regulatory approvals referred to in
the preceding paragraph and expiration of the related waiting periods,
and required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will
not (A) constitute a breach or violation of, or a default under, or
give rise to any Lien, any acceleration of remedies or any right of
termination under, any law, rule or regulation or any judgment,
decree, order, governmental permit or license, or agreement, indenture
or instrument of Zions or of any of its Subsidiaries or to which Zions
or any of its Subsidiaries or properties is subject or bound, (B)
constitute a breach or violation of, or a default under, the
certificate of incorporation or by-laws (or similar governing
documents) of Zions or any of its Subsidiaries, or (C) require any
consent or approval under any such law, rule, regulation, judgment,
decree, order, governmental permit or license, agreement, indenture or
instrument.
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(f) Financial Reports and Regulatory Documents; Material Adverse
Effect. Zions' Regulatory Documents (of the types specified in
Section 5.03(g)), as of the date filed, (A) complied or will
comply in all material respects as to form with the applicable
requirements under the Securities Act or the Exchange Act, as the
case may be, and (B) did not and will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; and each of the balance sheets contained in
or incorporated by reference into any such Regulatory Document
(including the related notes and schedules thereto) fairly
presents, or will fairly present, the financial position of Zions
and its Subsidiaries as of its date, and each of the statements
of income and changes in shareholders' equity and cash flows or
equivalent statements in such Regulatory Documents (including any
related notes and schedules thereto) fairly presents, or will
fairly present, the results of operations, changes in
shareholders' equity and changes in cash flows, as the case may
be, of Zions and its Subsidiaries for the periods to which they
relate, in each case in accordance with generally accepted
accounting principles consistently applied during the periods
involved, except in each case as may be noted therein, subject to
normal year-end audit adjustments in the case of unaudited
statements.
(i) Since December 31, 1998, no event has occurred or
circumstance arisen that, individually or taken together with all
other facts, circumstances and events (described in any paragraph of
Section 5.04 or otherwise), is reasonably likely to have a Material
Adverse Effect with respect to Zions.
(g) No Brokers. No action has been taken by Zions that would give
rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to
the transactions contemplated by this Agreement or the Agreement
of Bank Merger.
(h) Accounting Treatment; Tax Matters. As of the date hereof, Zions
has no knowledge of any reason why the Merger will fail to
qualify for "pooling of interests" accounting treatment. As of
the date hereof, neither Zions nor any of its Subsidiaries has
any reason to believe that any conditions exist that might
prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368 of the Code.
(i) Regulatory Matters. Neither Zions nor any of its Subsidiaries
or any of their properties is a party to or is subject to any
order, decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment letter or similar submission
to, or extraordinary supervisory letter from, any Regulatory
Authority, which individually or in the aggregate would have a
Material Adverse Effect on Zions.
(i) Neither Zions nor any of its Subsidiaries has been advised by
any Regulatory Authority that such Regulatory Authority is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, commitment letter, supervisory
letter or similar submission.
(j) Compliance with Laws. Zions and each of its Subsidiaries:
(i) is in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting
such businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all other applicable fair lending
laws and other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
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with, all Governmental Authorities that are required to permit them to
own or lease their properties and to conduct their businesses as
presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to
Zions' knowledge, no suspension or cancellation of any of them is
threatened; and
(iii) has received, since December 31, 1998, no notification or
communication from any Governmental Authority (A) asserting that Zions
or any of its Subsidiaries is not in compliance with any of the
statutes, regulations or ordinances which such Governmental Authority
enforces or (B) threatening to revoke any license, franchise, permit
or governmental authorization (nor, to Zions' knowledge, do any
grounds for any of the foregoing exist).
ARTICLE VI
Covenants
6.01 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of Company, Company Bank and Zions agrees to use its
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
each of the Merger and the Bank Merger as promptly as practicable and otherwise
to enable consummation of the transactions contemplated hereby and shall
cooperate fully with the other party hereto to that end.
6.02 Shareholder Approval. Company agrees to take, in accordance with
applicable law and the Company Articles and the Company By-Laws, all action
necessary to convene an appropriate meeting of its shareholders to consider and
vote upon the approval and adoption of this Agreement and any other matters
required to be approved by Company's shareholders for consummation of the Merger
(including any adjournment or postponement, the "Company Meeting"), in each case
as promptly as reasonably practicable after the Registration Statement is
declared effective. Except to the extent otherwise permitted pursuant to Section
6.06, the Company Board shall recommend at the Company Meeting that all such
matters be approved by its shareholders, shall not cancel the Company Meeting
and Company shall take all reasonable, lawful action to solicit such approval by
its shareholders.
6.03 Registration Statements. Zions agrees to prepare a registration
statement on Form S-4 or other applicable form (the "Registration Statement") to
be filed by Zions with the SEC in connection with the issuance of Zions Common
Stock in the Merger (including the proxy statement and prospectus and other
proxy solicitation materials of Company constituting a part thereof (the "Proxy
Statement") and all related documents). Company agrees to cooperate, and to
cause its Subsidiaries to cooperate, with Zions, its counsel and its
accountants, in preparation of the Registration Statement and the Proxy
Statement. Company agrees to file the Proxy Statement in preliminary form with
the SEC as soon as reasonably practicable, and Zions agrees to file the
Registration Statement with the SEC as soon as reasonably practicable after any
SEC comments with respect to the preliminary Proxy Statement are resolved. Each
of Company and Zions agrees to use all reasonable efforts to cause the
Registration Statement to be declared effective under the Securities
Act as promptly as reasonably practicable after filing thereof. Zions also
agrees to use all reasonable efforts to obtain all necessary state securities
law or "Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement. Company agrees to use its best efforts to
furnish to Zions all information concerning Company, its Subsidiaries, officers,
directors and shareholders as may be reasonably requested in connection with the
foregoing.
(a) Each of Company, Company Bank and Zions agrees, as to itself and
its Subsidiaries, that the information supplied or to be supplied
by it for inclusion or incorporation by reference in the
Registration Statement will not, at the time the Registration
Statement and each amendment or supplement thereto, if any,
becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and the Proxy Statement and any amendment
or supplement thereto will not, at the date of mailing to
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shareholders and at the time of the Company Meeting, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading. Each of Company, Company Bank and
Zions further agrees that if it shall become aware prior to the
Effective Date of any information furnished by it that would
cause any of the statements in the Proxy Statement to be false or
misleading with respect to any material fact, or to omit to state
any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not false
or misleading, promptly to inform the other party thereof and to
take the necessary steps to correct the Proxy Statement.
(b) Zions agrees to advise Company, promptly after Zions receives
notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed,
of the issuance of any stop order or the suspension of the
qualification of Zions Common Stock for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for
any such purpose, or of any request by the SEC for the amendment
or supplement of the Registration Statement or for additional
information.
6.04 Press Releases. Each of Company, Company Bank and Zions agrees
that it will not, without the prior approval of the other party, issue any press
release or written statement for general circulation relating to the
transactions contemplated hereby, except as otherwise required by applicable law
or regulation or NASDAQ rules (provided that the issuing party shall
nevertheless provide the other party with notice of, and the opportunity to
review, any such press release or written statement).
6.05 Access; Information. Each of Company, Company Bank and Zions
agrees that upon reasonable notice and subject to applicable laws relating to
the exchange of information, each party shall afford the other party and the
other party's officers, employees, counsel, accountants and other authorized
representatives, such access during normal business hours throughout the period
prior to the Effective Time to its books, records (including, without
limitation, tax returns and work papers of independent auditors), properties,
personnel and to such other information as the requesting party may reasonably
request and, during such period, the providing party shall furnish promptly to
the requesting party (i) a copy of each material report, schedule and other
document filed by it pursuant to the requirements of federal or state securities
or banking laws, and (ii) all other information concerning the business,
properties and personnel of it as the requesting party may reasonably request.
(a) Each party agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to
this Section 6.05 (as well as any other information obtained
prior to the date hereof in connection with the entering into of
this Agreement) for any purpose unrelated to the consummation of
the transactions contemplated by this Agreement. Subject to the
requirements of law, each party will keep confidential, and will
cause its representatives to keep confidential, all information
and documents obtained pursuant to this Section 6.05 (as well as
any other information obtained prior to the date hereof in
connection with the entering into of this Agreement) unless such
information (i) was already known to such party, (ii) becomes
available to such party from other sources not known by such
party to be bound by a confidentiality obligation, (iii) is
disclosed with the prior written approval of the providing party
or (iv) is or becomes readily ascertainable from publicly
available sources. In the event that this Agreement is terminated
or the transactions contemplated by this Agreement shall
otherwise fail to be consummated, each party shall promptly cause
all copies of documents or extracts thereof containing
information and data as to the other party to be returned to the
other party. No investigation by either party of the business and
affairs of the other party shall affect or be deemed to modify or
waive any representation, warranty, covenant or agreement in this
Agreement, or the conditions to either party's obligation to
consummate the transactions contemplated by this Agreement.
6.06 Acquisition Proposals.
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(a) From the date hereof until the earlier of the Effective Time or
the termination of this Agreement in accordance with its terms,
Company shall not, nor shall it permit any of its Affiliates or
Subsidiaries to, nor shall it authorize or permit any of its
respective officers, directors, employees, representatives or
agents (collectively, the "Company Representatives") directly or
indirectly, to (i) solicit, facilitate, initiate or encourage, or
take any action to solicit, facilitate, initiate or encourage,
any inquiries or the making of any proposal or offer that
constitutes an Acquisition Proposal or (ii) participate or engage
in discussions or negotiations with, or provide any information
to, any Person concerning an Acquisition Proposal or which might
reasonably be expect to result in an Acquisition Proposal.
Company shall immediately cease and cause to be terminated and
shall cause all Company Representatives to terminate all existing
discussions or negotiations with any Person conducted heretofore
with respect to, or that could reasonably be expected to lead to,
an Acquisition Proposal. Company shall promptly notify all
Company Representatives of its obligations under this Section
6.06.
(b) Notwithstanding the foregoing, Company may participate in
discussions or negotiations with, or furnish information with
respect to Company pursuant to a confidentiality agreement with
terms no less favorable to Company than those in effect between
Company and Zions to any Person if and only if (x) such Person
has submitted an unsolicited bona fide written Acquisition
Proposal to the Company Board and (y) neither Company nor any of
Company Representatives shall have violated Section 6.06(a) and
the Company Board (i) believes in good faith based on such
matters as it deems relevant, including the advice of Company's
financial advisor, that such Acquisition Proposal constitutes a
Superior Proposal and (ii) receives a written opinion of outside
counsel to the effect that, and based on such advice the Company
Board determines by a majority vote in its good faith judgment
that, taking such action is required to satisfy the fiduciary
duties of the Company Board under applicable law and (iii)
provides prior written notice to Zions of its decision to so
participate or furnish.
(c) Except as set forth in the following sentence, neither the
Company Board nor any committee thereof shall (1) approve or
recommend, or propose to approve or recommend, any Acquisition
Proposal other than the Merger and the Bank Merger, (2) withdraw
or modify or propose to withdraw or modify in a manner adverse to
Zions its approval or recommendation of the Merger, this
Agreement or the transactions contemplated hereby, (3) enter, or
cause any Subsidiary to enter, into any letter of intent,
agreement in principle, acquisition agreement or other similar
agreement related to any Acquisition Proposal, or (4) resolve or
announce its intention to do any of the foregoing. The
immediately preceding sentence notwithstanding, in the event that
prior to the Company Meeting the Company Board receives a
Superior Proposal, the Company Board may (i) approve or
recommend, or propose to approve or recommend, such Superior
Proposal, (ii) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Zions its recommendation of the
Merger, this Agreement or the transactions contemplated hereby,
or (iii) resolve or announce its intention to do any the actions
set forth in the preceding clauses (i) and (ii), if (x) the
Company Board receives a written opinion of outside counsel to
the effect that, and based on such advice of outside counsel the
Company Board determines by a majority vote of directors in their
good faith judgment that, taking such action is required to
satisfy the fiduciary duties of such directors and (y) Company
furnishes Zions two (2) Business Days' prior written notice of
the taking of such action (which notice shall include a
description of the material terms and conditions of the Superior
Proposal and identify the person making the same).
(d) In addition to the other obligations of Company set forth in this
Section 6.06, Company shall immediately advise Zions orally and
in writing of any request for information with respect to any
Acquisition Proposal, or any inquiry with respect to or which
could result in an Acquisition Proposal, the material terms and
conditions of such request, Acquisition Proposal or inquiry, and
the identity of the person making the same. Company shall inform
Zions on a prompt and current basis of the status and content of
any discussions regarding any Acquisition Proposal with a third
party and as promptly as practicable of any change in the price,
structure or form of the consideration or material terms of and
conditions regarding any Acquisition Proposal or of any other
developments or circumstances which could reasonably be expected
to culminate in the taking of any of the actions referred to in
Section 6.06(c).
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6.07 Affiliate Agreements. Not later than the 15th day prior to the
mailing of the Proxy Statement, Company shall deliver to Zions a schedule of
each person that, to the best of its knowledge, is or is reasonably likely to
be, as of the date of the Company Meeting, deemed to be an "affiliate" of
Company (each, a "Company Affiliate") as that term is used in Rule 145 under the
Securities Act or SEC Accounting Series Releases 130 and 135.
(a) Company shall use its reasonable best efforts to cause each
person who may be deemed to be a Company Affiliate to execute and
deliver to Zions on or before the date of mailing of the Proxy
Statement an agreement in the form attached hereto as Exhibit C.
6.08 [Reserved].
6.09 Certain Policies. After all conditions to the consummation of the
Merger set forth in Article VII have been satisfied or waived, Company and
Company Bank shall, consistent with generally accepted accounting principles and
on a basis mutually satisfactory to them and Zions, modify and change its loan,
litigation and real estate valuation policies and practices (including loan
classifications and levels of reserves) so as to be applied on a basis that is
consistent with that of Zions.
6.10 NASDAQ Listing. Zions agrees to use its reasonable best efforts to
list, prior to the Effective Date, on the NASDAQ, subject to official notice of
issuance, the shares of Zions Common Stock to be issued to the holders of
Company Common Stock in the Merger.
6.11 Regulatory Applications. Zions, Company and Company Bank and their
respective Subsidiaries shall cooperate and use their respective reasonable best
efforts to prepare all documentation, to effect all filings and to obtain all
permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary to consummate the transactions contemplated
by this Agreement. Zions, Company and Company Bank shall use their reasonable
best efforts to make all required bank regulatory filings, including the
appropriate filing with the Federal Reserve, within 30 days after the date
hereof. Each of Zions, Company and Company Bank shall have the right to review
in advance, and to the extent practicable each will consult with the other, in
each case subject to applicable laws relating to the exchange of information,
with respect to all material written information submitted to any third party or
any Governmental Authority in connection with the transactions contemplated by
this Agreement. In exercising the foregoing right, each of the parties hereto
agrees to act reasonably and as promptly as reasonably practicable. Each party
hereto agrees that it will consult with the other party hereto with respect to
the obtaining of all material permits, consents, approvals and authorizations of
all third parties and Governmental Authorities necessary or advisable to
consummate the transactions contemplated by this Agreement and each party will
keep the other party appraised of the status of material matters relating to
completion of the transactions contemplated hereby.
(a) Each party agrees, upon request, to use its best efforts to
furnish the other party with all information concerning itself,
its Subsidiaries, directors, officers and shareholders and such
other matters as may be reasonably necessary or advisable in
connection with any filing, notice or application made by or on
behalf of such other party or any of its Subsidiaries to any
third party or Governmental Authority.
6.12 Indemnification; Director and Officers' Insurance. From and
after the Effective Time through the fourth anniversary of the Effective Date,
Zions agrees to indemnify and hold harmless each present and former director and
officer of Company or any Subsidiary of Company determined as of the Effective
Time (the "Indemnified Parties"), against any costs or expenses (including
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reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities (collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time (including with respect to this Agreement or any
of the transactions contemplated hereby) (but excluding any Costs arising out of
any violation or alleged violation of the Exchange Act or the rules and
regulations thereunder with respect to insider trading), whether asserted,
claimed or arising prior to, at or after the Effective Time, to the extent to
which such Indemnified Parties were entitled under California law and the
Company Articles or the Company By-Laws in effect on the date hereof, and Zions
shall also advance expenses as incurred to the extent permitted under California
law and the Company Articles and the Company By-Laws.
(a) For a period of four years after the Effective Time, Zions shall
use its reasonable best efforts to cause to be maintained in
effect the current policies of directors' and officers' liability
insurance maintained by Company (provided that Zions may
substitute therefor policies of comparable coverage with respect
to claims arising from facts or events which occurred before the
Effective Time); provided, however, that in no event shall Zions
be obligated to expend, in order to maintain or provide insurance
coverage pursuant to this Section 6.12(b), any amount per annum
in excess of 150% of the amount of the annual premiums paid as of
the date hereof by Company for such insurance (the "Maximum
Amount"). If the amount of the annual premiums necessary to
maintain or procure such insurance coverage exceeds the Maximum
Amount, Zions shall use all reasonable efforts to maintain the
most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Amount.
Notwithstanding the foregoing, prior to the Effective Time, Zions
may request Company to, and Company shall, purchase insurance
coverage, on such terms and conditions as shall be acceptable to
Zions, extending for a period of four years Company's directors'
and officers' liability insurance coverage in effect as of the
date hereof (covering past or future claims with respect to
periods before the Effective Time) and such coverage shall
satisfy Zions' obligations under this subsection (b).
6.13 Benefit Plans. Zions shall, from and after the Effective Time, (i)
honor in accordance with their terms all agreements set forth in Company and
Company Bank Disclosure Schedule 6.13 and (ii) provide former employees of
Company who remain as employees of Zions with employee benefit plans no less
favorable in the aggregate than those provided to similarly situated employees
of Zions (including the medical and health benefits available to other similarly
situated employees of Zions and coverage of any pre-existing health or medical
conditions covered by Company benefit plans), subject, with respect to any
executive officer of Company, to the terms of any agreement(s) entered into by
or among that executive officer and Zions and/or California Bank & Trust on the
date of this Agreement or otherwise prior to the Effective Time, specifically
modifying, replacing or relinquishing some or all of his agreements, benefits or
plans. If any employee of Company or any Subsidiary of Company becomes a
participant in any employee benefit plan of the Surviving Corporation, such
employee shall be given credit under such plan for all service prior to the
Effective Date with Company or such Subsidiary of Company for purposes of
eligibility and vesting, but not for benefit accrual purposes, to the same
extent such service is taken into account or recognized under the applicable
employee benefit plan of Company or its Subsidiaries. Company shall terminate
its existing 401(k) plan and Employee Stock Ownership Plan on or before the
Effective Date.
6.14 Accountants' Letters. Each of Company and Zions shall use its
reasonable best efforts to cause to be delivered to the other party a letter of
their respective independent auditors, dated (i) the date on which the
Registration Statement shall become effective and (ii) a date shortly prior to
the Effective Date, and addressed to such other party, in form and substance
reasonably satisfactory and customary for "comfort" letters delivered by
independent accountants in accordance with Statement of Accounting Standards No.
72.
6.15 Notification of Certain Matters. Each of Company and Zions shall
give prompt notice to the other of any fact, event or circumstance known to it
that (i) is reasonably likely, individually or taken together with all other
facts, events and circumstances known to it, to result in any Material Adverse
Effect with respect to it or (ii) would cause or constitute a material breach of
any of its representations, warranties, covenants or agreements contained
herein.
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6.16 Shareholder Agreements. The directors and certain officers and
shareholders of Company, in their capacities as shareholders, in exchange for
good and valuable consideration, have executed and delivered to Zions
shareholder agreements substantially in the form of Exhibit D hereto (the
"Shareholder Agreements"), committing such persons, among other things, (i) to
vote their shares of Company Common Stock in favor of the Agreement at the
Company Meeting, (ii) to certain representations concerning the ownership of
Company Common Stock and Zions Common Stock to be received in the Merger and
(iii) certain other matters.
6.17 Bank Merger. The Company and the Company Bank shall, at the
request of Zions (i) take all necessary corporate and other action, to adopt and
approve the Bank Merger; (ii) execute, deliver and, where appropriate, file any
and all documents necessary or desirable to permit the Bank Merger immediately
following consummation of the Merger; and (iii) take and cause to be taken any
other action to permit the consummation of any transactions contemplated in
connection with the Bank Merger. Neither the Company nor the Company Bank shall
take any action that would prevent performance of the Agreement of Bank Merger
or any other transactions contemplated in connection with the Bank Merger. Zions
and California Bank & Trust may at any time prior to the Effective Time of the
Bank Merger change the method of effecting the combination of California Bank &
Trust with the Company Bank (including, without limitation, this Section 6.17)
if and to the extent it deems such change to be necessary, appropriate or
desirable; provided, however, that no such change shall (i) alter or change the
amount or kind of Merger Consideration to be issued to the holders of the
Company Stock as provided for in this Agreement, (ii) adversely affect the tax
treatment of the Company's shareholders as a result of receiving the Merger
Consideration, including, without limitation, any adverse effect upon the
tax-free treatment, holding period or tax basis, or (iii) materially impeded or
delay consummation of the transactions contemplated by this Agreement.
6.18 Reporting. Zions shall publish thirty (30) days of post-Merger
results of combined operations as soon as reasonably practicable, but not later
than eighty-five (85) days after the Effective Date.
ARTICLE VII
Conditions to Consummation of the Merger
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of Zions and Company to consummate the Merger is
subject to the fulfillment or written waiver by Zions and Company prior to the
Effective Time of each of the following conditions:
(a) Shareholder Approvals. This Agreement and the Merger shall have
been duly adopted by the requisite vote of the shareholders of
Company.
(b) Regulatory Approvals. All regulatory approvals required to
consummate the Merger, the Bank Merger and the other transactions
contemplated hereby shall have been obtained and shall remain in
full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall
contain any conditions, restrictions or requirements which the
Zions Board reasonably determines would (i) following the
Effective Time, have a Material Adverse Effect with respect to
the Surviving Corporation or (ii) impose upon Zions or the
Surviving Corporation any materially burdensome terms or
conditions. For purposes of this Section 7.01(b), no condition,
restriction or requirement shall be deemed to be "materially
burdensome" if such condition, restriction or requirement,
considered individually or in the aggregate with all other such
conditions, restrictions and requirements, does not materially
differ from conditions, restrictions or requirements that have
been imposed by the Federal Reserve or other Governmental
Authorities in orders approving acquisitions by Zions in the past
and compliance with such condition, restriction or requirement
would not either (i) require the taking of any action
inconsistent with the manner in which Zions or any of its
Subsidiaries has conducted their businesses previously or (ii)
have a Material Adverse Effect with respect to Zions or Company
or (iii) preclude satisfaction of any of the conditions to
consummation of the Merger.
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(c) No Injunction. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree,
injunction or other order (whether temporary, preliminary or
permanent) which is in effect and prohibits consummation of the
transactions contemplated by this Agreement.
(d) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have
been initiated or threatened by the SEC.
7.02 Conditions to Obligation of Company. The obligation of Company to
consummate the Merger is also subject to the fulfillment or written waiver by
Company prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Zions set forth in this Agreement (subject to the
standard set forth in Section 5.02) shall be true and correct as
of the date of this Agreement and as of the Effective Time as
though made on and as of the Effective Date (except that
representations and warranties that by their terms speak only as
of the date of this Agreement or some other date shall be true
and correct as of such date), and Company shall have received a
certificate, dated the Effective Date, signed on behalf of Zions
by an executive officer of Zions to such effect.
(b) Performance of Obligations of Zions. Zions shall have performed
in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time, and
Company shall have received a certificate, dated the Effective
Date, signed on behalf of Zions by an executive officer of Zions
to such effect.
(c) Tax Opinion. Company shall have received an opinion of
Sullivan & Cromwell, special counsel to Zions, dated the
Effective Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion,
(i) the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section
368(a) of the Code, (ii) each of Zions and Company will be a
party to that reorganization within the meaning of Section
368(b) of the Code, (iii) no gain or loss will be recognized
by shareholders of Company who receive shares of Zions
Common Stock in exchange for shares of Company Common Stock,
except with respect to cash received in lieu of fractional
share interests, (iv) the holding period of Zions Common
Stock received in exchange for shares of Company Common
Stock will include the holding period of the Company Common
Stock for which it is exchanged, assuming the shares of
Company Common Stock are capital assets in the hands of the
holder thereof at the Effective Time and (v) the basis of
the Zions Common Stock received in the Merger will be the
same as the basis of the Company Common Stock for which it
is exchanged, less any basis attributable to fractional
shares for which cash is received. In rendering its opinion,
Sullivan & Cromwell may require and rely upon
representations contained in letters from the Company, Zions
and shareholders of Company.
(d) Accountants' Letters. Company shall have received the
letters referred to in Section 6.14 from Zions' independent
auditors.
(e) Listing. The shares of Zions Common Stock to be issued in
the Merger shall have been approved for listing on the
NASDAQ, subject to official notice of issuance.
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(f) Fairness Opinion. Prior to the mailing of the Proxy
Statement to the shareholders of Company, Company shall have
received an opinion of The Findley Group dated the date of
the Proxy Statement to the effect that, as of such date, the
consideration to be received by the holders of Company
Common Stock in the Merger is fair to the holders of Company
Common Stock from a financial point of view.
7.03 Conditions to Obligation of Zions. The obligation of Zions to
consummate the Merger is also subject to the fulfillment or written waiver by
Zions prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Company and Company Bank set forth in this
Agreement (subject to the standard set forth in Section
5.02) shall be true and correct as of the date of this
Agreement and as of the Effective Date as though made on and
as of the Effective Time (except that representations and
warranties that by their terms speak only as of the date of
this Agreement or some other date shall be true and correct
as of such date) and Zions shall have received a
certificate, dated the Effective Date, signed on behalf of
Company by an executive officer of Company and on behalf of
Company Bank by on executive officer of Company Bank to such
effect.
(b) Performance of Obligations of Company and Company Bank. Each
of Company and Company Bank shall have performed in all
material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective
Time, and Zions shall have received a certificate, dated the
Effective Date, signed on behalf of Company by an executive
officer of Company and on behalf of Company Bank by an
executive officer of Company Bank to such effect.
(c) Opinion of Zions' Counsel. Zions shall have received an
opinion of Sullivan & Cromwell, special counsel to Zions,
dated the Effective Date, to the effect that, on the basis
of facts, representations and assumptions set forth in such
opinion, (i) the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of
Section 368(a) of the Code and (ii) each of Zions and
Company will be a party to the reorganization within the
meaning of Section 368(b) of the Code. In rendering its
opinion, Sullivan & Cromwell may require and rely upon
representations contained in letters from Company, Zions and
shareholders of Company.
(d) Accountants' Letters. Zions shall have received the letters
referred to in Section 6.14 from Company's independent
auditors.
(e) Employment Agreement. Each of Steven F. Hertel and Robert
Longatti shall have executed and delivered to Zions or its
designee counterparts to the applicable form of employment
agreement attached hereto as Exhibit E.
ARTICLE VIII
Termination
8.01 Termination. This Agreement may be terminated, and the Merger may
be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by
the mutual consent of Zions and Company, if the Board of
Directors of each so determines by vote of a majority of the
members of its entire Board.
(b) Breach. At any time prior to the Effective Time, by Zions or
Company, if its Board of Directors so determines by vote of
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a majority of the members of its entire Board, in the event
of either: (i) a breach by Company or Company Bank, on the
one hand, or Zions, on the other, of any representation or
warranty contained herein (subject to the standard set forth
in Section 5.02), which breach cannot be or has not been
cured within 30 days after the giving of written notice to
the breaching party of such breach; or (ii) a breach by
Company or Company Bank, on the one hand, or Zions, on the
other, of any of the covenants or agreements contained
herein, which breach cannot be or has not been cured within
30 days after the giving of written notice to the breaching
party of such breach, provided that such breach (whether
under (i) or (ii)) would be reasonably likely, individually
or in the aggregate with other breaches, to result in a
Material Adverse Effect with respect to the breaching party.
(c) Delay. At any time prior to the Effective Time, by Zions or
Company, if its Board of Directors so determines by vote of
a majority of the members of its entire Board, in the event
that the Merger is not consummated by December 31, 1999,
except to the extent that the failure of the Merger then to
be consummated arises out of or results from the knowing
action or inaction of the party seeking to terminate
pursuant to this Section 8.01(c).
(d) No Approval. By Company or Zions, if its Board of Directors
so determines by a vote of a majority of the members of its
entire Board, in the event (i) the approval of any
Governmental Authority required for consummation of the
Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable
action of such Governmental Authority or (ii) the
shareholder approval required by Section 7.01(a) herein is
not obtained at the Company Meeting.
(e) Failure to Recommend, Etc. At any time prior to the Company
Meeting, by Zions if the Company Board shall have failed to
make its recommendation referred to in Section 6.02,
withdrawn such recommendation or modified or changed such
recommendation in a manner adverse in any respect to the
interests of Zions.
(f) By Zions. By Zions, by written notice to Company, if Company
takes, causes to be taken or allows to be taken any action
that would be prohibited under Section 6.06 hereof.
(g) By Company. By Company, by written notice to Zions prior to
the approval by the shareholders of Company of the Merger
and this Agreement, if (i) Company receives a Superior
Proposal, (ii) the Company Board receives a written opinion
of outside counsel to the effect that, and based on such
advice the Company Board determines by a majority vote in
its good faith judgment that, terminating this Agreement for
the purpose of entering into an agreement with respect to
such Superior Proposal is required to satisfy the fiduciary
duties of the Company Board under applicable law and (iii)
after receiving such advice, determines to accept such
proposal; provided, however, that Company shall not be
entitled to terminate this Agreement pursuant to this clause
(g) unless it shall have provided Zions with written notice
of such a possible determination (which written notice will
inform Zions of the material terms and conditions of the
proposal, including the identity of the proponent) two
Business Days prior to such determination.
8.02 Effect of Termination and Abandonment. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, subject to the provisions of Section 8.02(b) and Section 8.02(c),
no party to this Agreement shall have any liability or further obligation to any
other party hereunder except (i) as set forth in Section 9.01 and (ii) that
termination will not relieve a breaching party from liability for any breach of
this Agreement prior to such termination.
(a) If this Agreement shall be terminated (i) by Zions pursuant
to Section 8.01(b) or 8.01(d)(ii) (and, at the time of the
occurrence of the circumstance permitting termination
pursuant to such Section, there shall exist an Acquisition
Proposal with respect to Company or any of its Subsidiaries,
which, in the event of a termination pursuant to Section
8.01(d)(ii) shall have been publicly announced prior to the
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time of the Company Meeting) or Section 8.01(e) or Section
8.01(f) or (ii) by Company pursuant to Section 8.01(d)(ii)
(and, at the time of the occurrence of the circumstance
permitting termination pursuant to such Section, there shall
exist an Acquisition Proposal with respect to Company or any
of its Subsidiaries that shall have been publicly announced
prior to the time of the Company Meeting) or Section
8.01(g), then Company shall promptly pay to Zions a
termination fee equal to $1.8 million, which (except in the
case of termination pursuant to Section 8.01(f), in which
case such amount shall offset any damages to Zions to the
extent of payment) the parties agree shall represent
liquidated and exclusive damages recoverable by Zions
relating to the actions resulting in termination.
Notwithstanding the foregoing, Zions shall not be entitled
to any termination fee hereunder if Zions has exercised all
or any part of the Option (as defined in the Stock Option
Agreement).
(b) Company and Zions agree that the agreements contained in
paragraph (b) above are an integral part of the transactions
contemplated by this Agreement, that without such agreements
Zions would not have entered into this Agreement, and that
such amount constitute reasonable liquidated damages and
reasonable compensation to Zions for the loss sustained
thereby and not a penalty. If Company fails to pay Zions the
amount due under paragraph (b) within ten (10) Business Days
of such termination, Company shall pay the costs and
expenses (including legal fees and expenses) incurred by
Zions in connection with any action, including the filing of
any lawsuit, taken to collect payment of such amount,
together with interest on the amount of any such unpaid
amount at the publicly announced prime rate of Zions First
National Bank from the date of such termination.
ARTICLE IX
Miscellaneous
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than
Sections 6.12 and 6.13 and this Article IX which shall survive the Effective
Time) or the termination of this Agreement if this Agreement is terminated prior
to the Effective Time (other than Sections 6.03(b), 6.05(b), 8.02, and this
Article IX which shall survive such termination).
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of this
Agreement may be (i) waived by the party benefitted by the provision, or (ii)
amended or modified at any time, by an agreement in writing between the parties
hereto executed in the same manner as this Agreement, except that after the
Company Meeting, this Agreement may not be amended if it would violate the CGCL
or reduce the consideration to be received by Company shareholders in the
Merger.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law; Waiver of Jury Trial. This Agreement shall be
governed by, and interpreted in accordance with, the laws of the State of
California applicable to contracts made and to be performed entirely within such
State (except to the extent that mandatory provisions of Federal law or of the
UBCA are applicable). Each of the parties hereto hereby irrevocably waives any
and all right to trial by jury in any legal proceeding arising out of or related
to this Agreement or the transactions contemplated hereby. Venue for any action
between the parties to this Agreement shall be a court of competent jurisdiction
in the City of San Diego, California.
9.05 Expenses. Each party hereto will bear all expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby.
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9.06 Notices. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to Company, to:
Regency Bancorp
7060 North Fresno Street
Fresno, California 93720
Attention: Steven Hertel
Facsimile: (559) 438-2699
With a copy to:
Coudert Brothers
303 Almaden Boulevard
Suite 500
San Jose, California 95110
Attention: Glenn T. Dodd, Esq.
Facsimile: (408) 297-3191
If to Zions, to:
Zions Bancorporation
One South Main, Suite 1380
Salt Lake City, Utah 84111
Attention: Dale M. Gibbons
Facsimile: (801) 524-2129
With a copy to:
Sullivan & Cromwell
1888 Century Park East
Los Angeles, California 90067
Attention: Stanley F. Farrar
Facsimile: (310) 712-8800
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement
(together with all Exhibits hereto, the Company and Company Bank Disclosure
Schedules delivered in connection herewith and the Confidentiality Agreement,
dated February 17, 1999 by and between Zions and Company) represents the entire
understanding of the parties hereto with reference to the transactions
contemplated hereby and thereby and this Agreement supersedes any and all other
oral or written agreements heretofore made. Nothing in this Agreement expressed
or implied, is intended to confer upon any person, other than the parties hereto
or their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
9.08 Interpretation; Effect. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." No provision of this Agreement shall
be construed to require Company, Company Bank, Zions or any of their respective
Subsidiaries, affiliates or directors to take any action which would violate
applicable law (whether statutory or common law), rule or regulation.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
REGENCY BANCORP
By: /s/ Steven F. Hertel
------------------------------------
Name: Steven F. Hertel
Title: Chairman, President and Chief
Executive Officer
REGENCY BANK
By: /s/ Steven F. Hertel
------------------------------------
Name: Steven F. Hertel
Title: Chairman, President and Chief
Executive Officer
ZIONS BANCORPORATION
By: /s/ Dale M. Gibbons
------------------------------------
Name: Dale M. Gibbons
Title: Chief Financial Officer
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APPENDIX B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of April 27, 1999 (this "Agreement"),
between Zions Bancorporation, a Utah corporation ("Grantee"), and Regency
Bancorp, a California corporation ("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer are entering into an Agreement and Plan of
Merger dated as of the date hereof (the "Plan"), which is being executed by the
parties simultaneously with the execution of this Agreement; and
WHEREAS, as a condition and inducement to Grantee's entering into the
Plan and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Plan, the parties hereto
agree as follows:
SECTION 1. GRANT OF OPTION.
(a) Subject to the terms and conditions of this Agreement, Issuer hereby
grants to Grantee an unconditional, irrevocable option (the "Option") to
purchase, subject to the terms hereof, up to 522,374 fully paid and
nonassessable shares of Common Stock, no par value per share ("Common Stock"),
of Issuer at a price per share equal to $17.08 (the "Initial Price"); provided,
however, that in the event Issuer issues or agrees to issue (other than pursuant
to options and warrants to issue Common Stock outstanding as of the date hereof)
any shares of Common Stock at a price less than the Initial Price (as adjusted
pursuant to Section 5(b)), such price shall be equal to such lesser price (such
price, as adjusted as hereinafter provided, the "Option Price"); and, provided
further, however, that in no event shall the number of shares of Common Stock
for which the Option is exercisable exceed 19.9% of the number of shares of
Common Stock then issued and outstanding without giving effect to any shares
subject or issued pursuant to the Option. The number of shares of Common Stock
that may be received upon the exercise of the Option and the Option Price are
subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), the number of shares of Common Stock subject to the Option
shall be increased so that after such issuance such number together with any
shares of Common Stock previously issued pursuant hereto equals 19.9% of the
number of shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option. Nothing contained
in this Section l(b) or elsewhere in this Agreement shall be deemed to authorize
Issuer to issue shares in breach of any provision of the Plan.
SECTION 2. EXERCISE OF OPTION.
(a) Timing of Exercise, Termination. Provided that (i) Grantee shall not be
in material breach of the agreements or covenants contained in this Agreement or
the Plan and (ii) no preliminary or permanent injunction or other order against
delivery of shares covered by the Option issued by any court of competent
jurisdiction in the United States shall be in effect, Grantee may exercise the
Option, in whole or part, at any
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time and from time to time following the occurrence of a Purchase Event (as
defined below); provided that the Option shall terminate and be of no further
force and effect upon the earliest to occur of:
(i) the time immediately prior to the Effective Time;
(ii) 12 months after the first occurrence of a Purchase Event;
(iii) 18 months after the termination of the Plan following the
occurrence of a Preliminary Purchase Event (as defined below);
(iv) termination of the Plan in accordance with the terms thereof
prior to the occurrence of a Purchase Event or a Preliminary Purchase Event
(other than a termination of the Plan by Grantee pursuant to Section 8.01(b)(i)
or (ii) thereof or by Grantee and Issuer pursuant to Section 8.01(a) thereof if
Grantee shall at that time have been entitled to terminate the Plan pursuant to
Section 8.01(b)(i) or (ii) thereof (provided that the breach of Issuer giving
rise to such termination or such right to terminate was willful) or by Grantee
pursuant to Section 8.01(e) or Section 8.01(f)) thereof, or
(v) 18 months after the termination of the Plan by Grantee
pursuant to Section 8.01(b)(i) or (ii) thereof or by Grantee and Issuer pursuant
to Section 8.01(a) thereof if Grantee shall at that time have been entitled to
terminate the Plan pursuant to Section 8.01(b)(i) or (ii) thereof (provided that
the breach of Issuer giving rise to such termination or such right to terminate
was willful) or by Grantee pursuant to Section 8.01(e) or Section 8.01(f)
thereof.
The events described in clauses (i) - (v) in the preceding sentence are
hereinafter collectively referred to as an "Exercise Termination Event."
Anything herein to the contrary notwithstanding, any purchase of shares upon
exercise of the Option shall be subject to compliance with applicable law. The
rights set forth in Section 7 hereof shall terminate when the right to exercise
the Option terminates (other than as a result of a complete exercise of the
Option) as set forth herein.
(b) Preliminary Purchase Event. The term "Preliminary Purchase Event" shall
mean any of the following events or transactions occurring after the date
hereof:
(i) Issuer or any of its subsidiaries (each, an "Issuer
Subsidiary") shall have entered into an agreement to engage in an Acquisition
Transaction (as defined below) with any Person (the term "Person" for purposes
of this Agreement having the meaning assigned thereto in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange Act"), and the
rules and regulations thereunder) other than Grantee or any of its subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer shall have
recommended that the shareholders of Issuer approve or accept any Acquisition
Transaction with any Person other than Grantee or any Grantee Subsidiary. For
purposes of this Agreement, "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer or any Issuer
Subsidiary, (y) a purchase, lease or other acquisition of all or substantially
all of the assets of or assumption of all or substantially all the deposits of
Issuer or any Issuer Subsidiary or (z) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of Issuer or any Issuer
Subsidiary, provided that the term "Acquisition Transaction" does not include
any internal merger or consolidation involving only Issuer and/or Issuer
Subsidiaries;
(ii) Any Person (other than Grantee or any Grantee Subsidiary or
any Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
business) shall have acquired Beneficial Ownership or the right to acquire
Beneficial Ownership, of shares of Common Stock (the term "Beneficial Ownership"
for purposes of this Agreement having the meaning assigned thereto in Section
13(d) of the Exchange Act, and
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the rules and regulations thereunder) such that, upon the consummation of such
acquisition, such Person would have Beneficial Ownership, in the aggregate, of
10% or more of the then outstanding shares of Common Stock;
(iii) Any Person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its shareholders, by public
announcement or written communication that is or becomes the subject of public
disclosure, to engage in an Acquisition Transaction (including, without
limitation, any situation in which any Person other than Grantee or any Grantee
Subsidiary shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act) or shall have filed a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to, a tender offer
or exchange offer to purchase any shares of Common Stock such that, upon
consummation of such offer, such Person would own or control 10% or more of the
then outstanding shares of Common Stock (such an offer being referred to herein
as a "Tender Offer" or an "Exchange Offer", respectively));
(iv) After a proposal is made by a third party to Issuer or its
shareholders to engage in an Acquisition Transaction, or such third party states
its intention to make such a proposal if the Plan terminates and/or the Option
expires, Issuer shall have breached any covenant or obligation contained in the
Plan and such breach would entitle Grantee to terminate the Plan (without regard
to the cure period provided for therein unless such cure is promptly effected
without jeopardizing consummation of the Merger pursuant to the terms of the
Plan);
(v) (A) The holders of Common Stock shall not have approved the
Plan by the requisite vote at the meeting of such shareholders held for the
purpose of voting on the Plan or (B) such meeting shall not have been held or
shall have been canceled prior to termination of the Plan after it shall have
been publicly announced that any Person (other than Grantee or any Grantee
Subsidiary) shall have (x) made, or disclosed an intention to make, a bona fide
proposal to engage in an Acquisition Transaction, (y) commenced a Tender Offer
or filed a registration statement under the Securities Act with respect to an
Exchange Offer or (z) filed an application (or given a notice) with, whether in
draft of final form, the Board of Governors of the Federal Reserve System (the
"Federal Reserve") or any other governmental authority or regulatory or
administrative agency or commission (each, a "Governmental Authority"), for
approval to engage in an Acquisition Transaction;
(vi) Any Person (other than Grantee or any Grantee Subsidiary),
other than in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an application or notice with the Federal
Reserve or other Governmental Authority for approval to engage in an Acquisition
Transaction; or
(vii) The Issuer's Board of Directors shall have withdrawn or
modified (or publicly announced its intention to withdraw or modify) in any
manner adverse in any respect to Grantee its recommendation that the
shareholders of Issuer approve the transactions contemplated by the Plan, or
Issuer or any Issuer Subsidiary shall have authorized, recommended, proposed (or
publicly announced its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with any person other than
Grantee or a Grantee Subsidiary.
(c) Purchase Event. The term "Purchase Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any Person other than Grantee or any
Grantee Subsidiary of Beneficial Ownership of shares of Common Stock, such that,
upon the consummation of such acquisition, such Person would have Beneficial
Ownership, in the aggregate, of 25% or more of the then outstanding shares of
Common Stock; or
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(ii) The occurrence of a Preliminary Purchase Event described in
Section 2(b)(i) hereof except that the percentage referred to in clause (z)
shall be 25%.
(d) Notice by Issuer. Issuer shall notify Grantee promptly in writing of
the occurrence of any Preliminary Purchase Event or Purchase Event; provided,
however, that the giving of such notice by Issuer shall not be a condition to
the right of Grantee to exercise the Option.
(e) Notice of Exercise. In the event that Grantee is entitled to and wishes
to exercise the Option, it shall send to Issuer a written notice (the "Option
Notice" and the date of which being hereinafter referred to as the "Notice
Date") specifying (i) the total number of shares of Common Stock it will
purchase pursuant to such exercise, (ii) the aggregate purchase price as
provided herein, (iii) a date for the closing (that shall not be less than three
(3) Business Days nor more than thirty (30) Business Days) from the Notice Date
(the "Closing Date") and (iv) a place at which the closing of such purchase
shall take place (subject to Issuer's approval which shall not be unreasonably
withheld); provided, that, if prior notification to or approval of the Federal
Reserve or any other Governmental Authority is required in connection with such
purchase (each, a "Notification" or an "Approval," as the case may be), (a)
Grantee shall promptly file, or cause to be filed, the required notice or
application for approval ("Notice/Application"), (b) Grantee shall expeditiously
process, or cause to be expeditiously processed, the Notice/Application and (c)
for the purpose of determining the Closing Date pursuant to clause (iii) of this
sentence, the period of time that otherwise would run from the Notice Date shall
instead run from the later of (x) in connection with any Notification, the date
on which any required notification periods have expired or been terminated and
(y) in connection with any Approval, the date on which such approval has been
obtained and any requisite waiting period or periods shall have expired;
provided further that the Option Notice must be made, and the Notice Date must
be, no later than the date on which the Exercise Termination Event occurs. For
purposes of Section 2(a) hereof, any exercise of the Option shall be deemed to
occur on the Notice Date relating thereto. On or prior to the Closing Date,
Grantee shall have the right to revoke its exercise of the Option in the event
that the transaction constituting a Purchase Event that gives rise to such right
to exercise shall not have been consummated.
(f) Payments. At the closing referred to in Section 2(e) hereof, Grantee
shall present and surrender this Agreement and pay to Issuer the aggregate
Option Price for the shares of Common Stock specified in the Option Notice in
immediately available funds by wire transfer to a bank account designated by
Issuer; provided, however, that failure or refusal of Issuer to designate such a
bank account shall not preclude Grantee from exercising the Option.
(g) Delivery of Common Stock. At such closing, simultaneously with the
delivery of immediately available funds and surrender of this Agreement as
provided in Section 2(f) hereof, (i) Issuer shall deliver to Grantee a
certificate or certificates representing the number of shares of Common Stock
specified in the Option Notice and, if the Option should be exercised in part
only, a new Option evidencing the rights of Grantee thereof to purchase the
balance of the shares of Common Stock purchasable hereunder and (ii) Grantee
shall deliver to Issuer a letter reasonably satisfactory to both Grantee and
Issuer by which Grantee makes agreements customary in the issuance of privately
placed securities with respect to the sale, transfer or other disposition by it
of such common stock, including, without limitation, agreements not to transfer
such shares in violation of this Agreement or applicable federal or state
securities laws.
(h) Common Stock Certificates. Certificates for Common Stock delivered at a
closing hereunder shall be endorsed with a restrictive legend substantially as
follows:
The transfer of the shares represented by this certificate is subject to
resale restrictions arising under the Securities Act of 1933, as
amended, and to certain provisions of an agreement between Zions
Bancorporation and Regency Bancorp ("Issuer") dated as of April 27,
1999. A copy of such
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agreement is on file at the principal office of Issuer and will be
provided to the holder hereof without charge upon receipt by Issuer of a
written request therefor.
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if Grantee shall have delivered
to Issuer a copy of a letter from the staff of the Securities and Exchange
Commission (the "SEC"), or an opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the Securities Act; (ii) the reference to the
provisions of this Agreement in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Holder of Record. Upon the giving by Grantee to Issuer of an Option
Notice and the tender of the applicable purchase price in immediately available
funds on the Closing Date, Grantee shall be deemed to be the holder of record of
the number of shares of Common Stock specified in the Option Notice,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then
actually be delivered to Grantee. Issuer shall pay all expenses and any and all
United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of Grantee.
SECTION 3. ISSUER'S COVENANTS.
(a) Available Shares. The Issuer agrees that it shall at all times until
the termination of this Agreement have reserved for issuance upon the exercise
of the Option that number of authorized and reserved shares of Common Stock
equal to the maximum number of shares of Common Stock at any time and from time
to time issuable hereunder, all of which shares will, upon issuance pursuant
hereto, be duly authorized, validly issued, fully paid, nonassessable, and
delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights.
(b) Compliance. The Issuer agrees that it will not, by amendment of its
articles of incorporation or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or seek to
avoid the observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by Issuer.
(c) Certain Actions, Applications and Arrangements. Issuer shall promptly
take all action as may from time to time be required (including (i) complying
with all premerger notification, reporting and waiting period requirements
specified in 15 U.S.C. ss. 18a and regulations promulgated thereunder and (ii)
in the event, under the Bank Holding Company Act of 1956, as amended ("BHC
Act"), or the Change in Bank Control Act of 1978, as amended, or any state
banking law, prior approval of or notice to the Federal Reserve or to any other
Governmental Authority is necessary before the Option may be exercised,
cooperating with Grantee in preparing such applications or notices and providing
such information to each such Governmental Authority as it may require) in order
to permit Grantee to exercise the Option and Issuer duly and effectively to
issue shares of Common Stock pursuant hereto, and to protect the rights of
Grantee against dilution.
SECTION 4. EXCHANGE OF OPTION. This Agreement and the Option granted hereby are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer, for other
agreements providing for Options of different denominations entitling the holder
thereof to purchase, on the same terms and subject to the same conditions as are
set forth
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herein, in the aggregate the same number of shares of Common Stock purchasable
hereunder. The terms "Agreement" and "Option" as used in this Section 4 include
any agreements and related options for which this Agreement and the Option
granted hereby may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
SECTION 5. ADJUSTMENTS. The number of shares of Common Stock purchasable upon
the exercise of the Option shall be subject to adjustment from time to time as
follows:
(a) In the event of any change in the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares or the like, the type and number of shares of
Common Stock purchasable upon exercise hereof shall be appropriately adjusted
and proper provision shall be made so that, in the event that any additional
shares of Common Stock are to be issued or otherwise to become outstanding as a
result of any such change (other than pursuant to an exercise of the Option),
the number of shares of Common Stock that remain subject to the Option shall be
increased so that, after such issuance and together with shares of Common Stock
previously issued pursuant to the exercise of the Option (as adjusted on account
of any of the foregoing changes in the Common Stock), it represents the same
proportion of the number of shares of Common Stock then issued and outstanding
as such proportion before the applicable event described in this Section 5(a).
(b) Whenever the number of shares of Common Stock purchasable upon exercise
hereof is adjusted as provided in this Section 5, the Option Price shall be
adjusted by multiplying the Option Price by a fraction, the numerator of which
shall be equal to the number of shares of Common Stock purchasable prior to the
adjustment and the denominator of which shall be equal to the number of shares
of Common Stock purchasable after the adjustment.
SECTION 6. REGISTRATION RIGHTS. Upon the occurrence of a Purchase Event that
occurs prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee (whether on its own behalf or on behalf of any subsequent holder of the
Option (or part thereof) or any of the shares of Common Stock issued pursuant
hereto), promptly prepare, file and keep current a registration statement under
the Securities Act covering any shares issued and issuable pursuant to the
Option and shall use its best efforts to cause such registration statement to
become effective and remain current in order to permit the sale or other
disposition of any shares of Common Stock issued upon total or partial exercise
of the Option ("Option Shares") in accordance with any plan of disposition
requested by Grantee. The Issuer will use its best efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of one hundred and eighty (180) days from the day
such registration statement first becomes effective. Grantee shall have the
right to demand two (2) such registrations at the Issuer's expense. The
foregoing notwithstanding, if, at the time of any request by Grantee for
registration of Option Shares as provided above, Issuer is in the process of
registration with respect to an underwritten public offering of shares of Common
Stock, and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering, the offering or inclusion of the Option Shares would interfere
materially with the successful marketing of the shares of Common Stock offered
by Issuer, the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced; provided, however,
that after any such required reduction, the number of Option Shares to be
included in such offering for the account of Grantee shall constitute at least
thirty-three and one third percent (33 1/3%) of the total number of shares of
Common Stock held by Grantee and Issuer covered in such registration statement;
provided further, however, that if such reduction occurs, then Issuer shall file
a
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registration statement for the balance as promptly as practicable thereafter as
to which no reduction shall thereafter occur. In addition, if the Issuer
proposes to register its Common Stock or any other securities on a form that
would permit the registration of the Shares for public sale under the Securities
Act (whether proposed to be offered for sale by the Issuer or any other Person)
it will give prompt written notice to Grantee of its intention to do so,
specifying the relevant terms of such proposal, including the proposed maximum
offering price thereof. Upon the written notice of Grantee (whether on its own
behalf or on behalf of any subsequent holder of the Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto) delivered to the
Issuer within twenty (20) Business Days after the giving of any such notice,
which request shall specify the number of Shares desired to be disposed by
Grantee, the Issuer will use its best efforts to effect, in connection with its
proposed registration, the registration under the Securities Act of the Shares
set forth in such request. Grantee shall be entitled to two (2) such
registrations at the Issuer's expense. Grantee shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. In connection with any such registration, Issuer and Grantee
shall provide each other with representations, warranties, indemnities and other
agreements customarily given in connection with such registrations. If requested
by Grantee in connection with such registration, Issuer and Grantee shall become
a party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating themselves in respect of representations,
warranties, indemnities and other agreements customarily included in such
underwriting agreements.
(a) In the event that Grantee requests Issuer to file a registration
statement following the failure to obtain any approval required to exercise the
Option as described in Section 9 hereof, the closing of the sale or other
disposition of the Common Stock or other securities pursuant to such
registration statement shall occur substantially simultaneously with the
exercise of the Option.
(b) Except where applicable state law prohibits such payments, Issuer will
pay all expenses (including without limitation registration fees, qualification
fees, blue sky fees and expenses (including the fees and expenses of counsel),
legal expenses, including the reasonable fees and expenses of one counsel to the
holders whose Option Shares are being registered, printing expenses and the
costs of special audits or "cold comfort" letters, expenses of underwriters,
excluding discounts and commissions but including liability insurance if Issuer
so desires or the underwriters so require, and the reasonable fees and expenses
of any necessary special experts) in connection with each registration pursuant
to this Section 6 (including the related offerings and sales by holders of
Option Shares) and all other qualifications, notification or exemptions pursuant
to this Section 6.
(c) In connection with any registration under this Section 6, Issuer hereby
indemnifies the Grantee, and each officer, director and controlling person of
Grantee, and each underwriter thereof, including each person, if any who
controls such holder or underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, losses, claims, damages and liabilities
caused by any untrue, or alleged untrue, statement contained in any registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) or any preliminary prospectus, or caused by
any omission, or alleged omission, to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue statement
that was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Grantee, or by such underwriter, as the case may be, for all
such expenses, losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement, that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance
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upon, and in conformity with, information furnished in writing to Issuer by such
holder or such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section 6(d) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 6(d), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
Section 6(d). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and reasonably satisfactory
to such indemnified party. The indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless (i) the
indemnifying party either agrees to pay the same, (ii) the indemnifying party
fails to assume the defense of such action with counsel reasonably satisfactory
to the indemnified party or (iii) the indemnified party has been advised by
counsel that one or more legal defenses may be available to the indemnifying
party that may be contrary to the interests of the indemnified party. No
indemnifying party shall be liable for the fees and expenses of more than one
separate counsel for all indemnified parties or for any settlement entered into
without its consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 6(d) is unavailable
to a party otherwise entitled to be indemnified in respect of any expenses,
losses, claims, damages or liabilities referred to herein, then the indemnifying
party, in lieu of indemnifying such party otherwise entitled to be indemnified,
shall contribute to the amount paid or payable by such party to be indemnified
as a result of such expenses, losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of Issuer, the
Grantee and the underwriters in connection with the statements or omissions
which resulted in such expenses, losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The amount paid or payable by a
party as a result of the expenses, losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim; provided, however, that in no case shall the Grantee be
responsible, in the aggregate, for any amount in excess of the net offering
proceeds attributable to its Option Shares included in the offering. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Any obligation by any Grantee
to indemnify shall be several and not joint with other holders of Option Shares.
SECTION 7. OPTION REPURCHASE.
(a) Upon the occurrence of a Purchase Event that occurs prior to an
Exercise Termination Event, (i) at the request (the date of such request being
the "Request Date") of Grantee, delivered within thirty (30) days of the
Purchase Event (or such later period as may be provided pursuant to Section 9
hereof), Issuer shall repurchase the Option from Grantee at a price (the "Option
Repurchase Price") equal to (x) the amount by which (A) the market/offer price
(as defined below) exceeds (B) the Option Price, multiplied by the number of
shares for which the Option may then be exercised and (ii) at the request (the
date of such request being the "Request Date") of the owner of Option Shares
from time to time (the "Owner"), delivered within thirty (30) days of a Purchase
Event (or such later period as may be provided pursuant to Section 9 hereof),
Issuer shall repurchase such number of the Option Shares from the Owner as the
Owner shall designate at a price (the "Option Share Repurchase Price") equal to
(x) the market/offer price multiplied by the number of Option Shares so
designated. The term "market/offer price" shall mean the highest of (i) the
price per share
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of Common Stock at which a tender offer or exchange offer therefor has been made
after the date hereof and on or prior to the Request Date, (ii) the price per
share of Common Stock paid or to be paid by any third party pursuant to an
agreement with Issuer (whether by way of a merger, consolidation or otherwise),
(iii) the highest last sales price for shares of Common Stock within the 90-day
period ending on the Request Date as reported on NASDAQ (as reported in The Wall
Street Journal or, if not reported therein, in another mutually agreed upon
authoritative source) or (iv) in the event of a sale of all or substantially all
of Issuer's assets, the sum of the price paid in such sale for such assets and
the current market value of the remaining assets of Issuer as determined by a
nationally-recognized independent investment banking firm mutually selected by
Grantee or the Owner, as the case may be, on the one hand, and Issuer, on the
other hand, divided by the number of shares of Common Stock of Issuer
outstanding at the time of such sale. In determining the market/offer price, the
value of consideration other than cash shall be determined by a
nationally-recognized independent investment banking firm mutually selected by
Grantee or Owner, as the case may be, on the one hand, and Issuer, on the other
hand, whose determination shall be conclusive and binding on all parties.
(b) Grantee or the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and/or any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that Grantee or
the Owner, as the case may be, elects to require Issuer to repurchase the Option
and/or the Option Shares in accordance with the provisions of this Section 7. As
immediately as practicable, and in any event within five (5) Business Days after
the surrender of the Option and/or certificates representing Option Shares and
the receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to Grantee the Option Repurchase Price or to the Owner the
Option Share Repurchase Price or the portion thereof that Issuer is not then
prohibited from so delivering under applicable law and regulation or as a
consequence of administrative policy.
(c) Issuer hereby undertakes to use its best efforts to obtain all required
regulatory and legal approvals and to file any required notices as promptly as
practicable in order to accomplish any repurchase contemplated by this Section
7. Nonetheless, to the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify
Grantee and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to Grantee and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five (5) Business Days
after the date on which Issuer is no longer so prohibited; provided, however,
that if Issuer at any time after delivery of a notice of repurchase pursuant to
Section 7(b) is prohibited under applicable law or regulation, or as a
consequence of administrative policy, from delivering to Grantee and/or the
Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full Grantee or Owner may revoke its notice
of repurchase of the Option or the Option Shares either in whole or in part
whereupon, in the case of a revocation in part, Issuer shall promptly (i)
deliver to Grantee and/or the Owner, as appropriate, that portion of the Option
Purchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering after taking into account any such revocation and
(ii) deliver, as appropriate, either (A) to Grantee, a new Agreement evidencing
the right of Grantee to purchase that number of shares of Common Stock equal to
the number of shares of Common Stock purchasable immediately prior to the
delivery of the notice of repurchase less the number of shares of Common Stock
covered by the portion of the Option repurchased or (B) to the Owner, a
certificate for the number of Option Shares covered by the revocation.
(d) Issuer shall not enter into any agreement with any party (other than
Grantee or a Grantee Subsidiary) for an Acquisition Transaction unless the other
party thereto assumes all the obligations of Issuer pursuant to this Section 7
in the event that a Grantee or Owner elects, in its sole discretion, to require
such other party to perform such obligations.
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SECTION 8. SUBSTITUTE OPTION.
(a) Grant of Substitute Option. In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to consolidate or
merge with any Person, other than Grantee or a Grantee Subsidiary, and shall not
be the continuing or surviving corporation of such consolidation or merger, (ii)
to permit any Person, other than Grantee or a Grantee Subsidiary, to merge into
Issuer and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Common Stock shall
be changed into or exchanged for stock or other securities of any other Person
or cash or any other property or the then outstanding shares of Common Stock
shall after such merger represent less than fifty percent (50%) of the
outstanding shares and share equivalents of the merged company or (iii) to sell
or otherwise transfer all or substantially all of its or any Issuer Subsidiary's
assets to any Person, other than Grantee or a Grantee Subsidiary, then, and in
each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of such transaction
and upon the terms and conditions set forth herein, be converted into, or
exchanged for, an option (the "Substitute Option"), at the election of Grantee,
of either (x) the Acquiring Corporation (as defined below) or (y) any Person
that controls the Acquiring Corporation (the Acquiring Corporation and any such
controlling Person being hereinafter referred to as the "Substitute Option
Issuer").
(b) Exercise of Substitute Option. The Substitute Option shall be
exercisable for such number of shares of the Substitute Common Stock (as is
hereinafter defined) as is equal to the market/offer price (as defined in
Section 7 hereof), multiplied by the number of shares of the Common Stock for
which the Option was theretofore exercisable, divided by the Average Price (as
is hereinafter defined). The exercise price of the Substitute Option per share
of the Substitute Common Stock (the "Substitute Purchase Price") shall then be
equal to the product of the Option Price multiplied by a fraction in which the
numerator is the number of shares of Common Stock for which the Option was
theretofore exercisable and the denominator is the number of shares for which
the Substitute Option is exercisable.
(c) Terms of Substitute Option. The Substitute Option shall otherwise have
the same terms as the Option, provided, however, that if the terms of the
Substitute Option cannot, for legal reasons, be the same as the Option, such
terms shall be as similar as possible and in no event less advantageous to
Grantee.
(d) Substitute Option Definitions. The following terms have the meanings
indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or surviving
Person, and (iii) the transferee of all or any substantial part of the Issuer's
assets (or the assets of any Issuer Subsidiary);
(ii) "Substitute Common Stock" shall mean the common stock issued
by the Substitute Option Issuer upon exercise of the Substitute Option; and
(iii) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one (1) year immediately preceding
the consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of the Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided, however, that if such closing
price is not ascertainable due to an absence of a public market for the
Substitute Common Stock, "Average Price" shall mean the higher of (i) the price
per share of Substitute Common Stock paid or to be paid by any third party
pursuant to an agreement with the issuer of the Substitute Common Stock and (ii)
the book value per share, calculated in accordance with generally accepted
accounting principles, of the Substitute Common Stock immediately prior to
exercise of the Substitute Option; provided, further, that if Issuer is the
issuer of the Substitute Option, the Average Price shall be computed with
respect to a share of common stock issued by Issuer, the
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Person merging into Issuer or by any company which controls or is controlled by
such merging Person, as Grantee may elect.
(e) Cap on Substitute Option. In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more than that
proportion of the outstanding Substitute Common Stock equal to the proportion of
the outstanding Common Stock of the Issuer which Grantee had the right to
acquire immediately prior to the issuance of the Substitute Option. In the event
that the Substitute Option would be exercisable for more than the proportion of
the outstanding Substitute Common Stock referred to in the immediately preceding
paragraph but for this clause (e), the Substitute Option Issuer shall make a
cash payment to Grantee equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this clause (e) over (ii) the
value of the Substitute Option after giving effect to the limitation in this
clause (e). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Grantee and reasonably acceptable
to the Acquiring Corporation.
SECTION 9. EXTENSION OF EXERCISE RIGHT. Notwithstanding Sections 2, 6 and 7 and
11 hereof, if Grantee has given the notice referred to in one or more of such
Sections, the exercise of the rights specified in any such Section shall be
extended (a) if the exercise of such rights requires obtaining regulatory
approvals (including any required waiting periods) to the extent necessary to
obtain all regulatory approvals for the exercise of such rights, and (b) to the
extent necessary to avoid liability under Section 16(b) of the Exchange Act by
reason of such exercise; provided, however, that in no event shall any closing
date occur more than six (6) months after the related Notice Date, and, if the
closing date shall not have occurred within such period due to the failure to
obtain any required approval by the Federal Reserve or any other Governmental
Authority despite the best efforts of Issuer or the Substitute Option Issuer, as
the case may be, to obtain such approvals, the exercise of the Option shall be
deemed to have been rescinded as of the related Notice Date. In the event (a)
Granteen receives official notice that an approval of the Federal Reserve or any
other Governmental Authority required for the purchase and sale of the Option
Shares will not be issued or granted or (b) a closing date has not occurred
within six (6) months after the related Notice Date due to the failure to obtain
any such required approval, Grantee shall be entitled to exercise the Option in
connection with the resale of the Option Shares pursuant to a registration
statement as provided in Section 6.
SECTION 10. ISSUER'S REPRESENTATIONS AND WARRANTIES. Issuer hereby represents
and warrants to Grantee as follows:
(a) Corporate Authority. Issuer has full corporate power and authority to
execute and deliver this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of Issuer and no other corporate proceedings on the part of Issuer are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly authorized, executed and delivered by
the Issuer.
(b) Availability of Shares. Issuer has taken all necessary corporate action
to authorize and reserve and to permit it to issue, and at all times from the
date hereof through the termination of this Agreement in accordance with its
terms will have reserved for issuance upon the exercise of the Option, that
number of shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and all such shares,
upon issuance pursuant hereto, will be duly authorized, validly issued, fully
paid, non-assessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
(c) No Violations. The execution, delivery and performance of this
Agreement does not or will not, and the consummation by Issuer of any of the
transactions contemplated hereby will not, constitute or
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result in (A) a breach or violation of, or a default under, its articles of
incorporation or by-laws, or the comparable governing instruments of any of the
Issuer Subsidiaries, or (B) a breach or violation of, or a default under, any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation of it or any of the Issuer Subsidiaries (with or without the giving
of notice, the lapse of time or both) or under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or non-governmental
permit or license to which it or any of the Issuer Subsidiaries is subject, that
would, in any case give any other person the ability to prevent or enjoin
Issuer's performance under this Agreement in any material respect.
SECTION 11. Grantee's Representations and Warranties. Grantee hereby represents
and warrants to issuer as follows:
(a) Corporate Authority. Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been duly
authorized, executed and delivered by Grantee.
(b) Investment Intent. The Option is not being, and any shares of Common
Stock or other securities acquired by Grantee upon exercise of the Option will
not be, acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
SECTION 12. Assignment. Neither of the parties hereto may assign any of its
rights or delegate any of its obligations under this Agreement or the Option
created hereunder to any other Person without the express written consent of the
other party, except that Grantee may assign this Agreement to a wholly owned
subsidiary of Grantee and Grantee may assign its rights hereunder in whole or in
part after the occurrence of a Preliminary Purchase Event; provided, however,
that until the date at which the Federal Reserve has approved an application by
Grantee under the BHC Act to acquire the shares of Common Stock subject to the
Option, other than to a wholly owned subsidiary of Grantee, Grantee may not
assign its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of two percent (2%) of the voting shares of Issuer, (iii)
an assignment to a single party (e.g., a broker or investment banker) for the
purpose of conducting a widely dispersed public distribution on Grantee's behalf
or (iv) any other manner approved by the Federal Reserve and, in each case, in
compliance with all applicable federal or state securities laws. The term
"Grantee" as used in this Agreement shall also be deemed to refer to Grantee's
permitted assigns. Any attempted assignment prohibited by this Section 12 is
void and without effect.
SECTION 13. Filings and Consents. Each of Grantee and Issuer will use its
reasonable efforts to make all filings with, and to obtain consents of, all
third parties and Governmental Authorities necessary to the consummation of the
transactions contemplated by this Agreement, including, without limitation,
making application if necessary, for listing of the shares of Common Stock
issuable hereunder on any exchange or quotation system and applying to the
Federal Reserve under the BHC Act and to state banking authorities for approval
to acquire the shares issuable hereunder.
SECTION 14. Remedies. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties shall hereto be enforceable by either party
hereto through injunctive or other equitable relief. Both parties further agree
to waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
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SECTION 15 Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated.
SECTION 16 Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in Person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Plan. Either party may change the address to which
such notices or other communications may be sent by giving written notice
thereof in accordance with this Section 16.
SECTION 17 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement and shall be effective at the time
of execution.
SECTION 18 Expenses. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
SECTION 19 Entire Agreement. Except as otherwise expressly provided herein or in
the Plan or in the other documents or instruments referred to herein or therein,
this Agreement contains the entire agreement between the parties with respect to
the transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors except as assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.
SECTION 20 Definitions. Capitalized terms used in this Agreement and not defined
herein but defined in the Plan shall have the meanings assigned thereto in the
Plan.
SECTION 21 Effect on Plan. Nothing contained in this Agreement shall be deemed
to authorize Issuer or Grantee to breach any provision of the Plan.
SECTION 22 Selections. In the event that any selection or determination is to be
made by Grantee hereunder and at the time of such selection or determination
there is more than one Grantee, such selection shall be made by a majority in
interest of such Grantees.
SECTION 23 Further Assurances. In the event of any exercise of the option by
Grantee, Issuer and such Grantee shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such exercise.
SECTION 24 Voting. Except to the extent Grantee exercises the Option, Grantee
shall have no rights to vote or receive dividends or have any other rights as a
shareholder with respect to shares of Common Stock covered hereby.
SECTION 25 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
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SECTION 26 Waiver and Amendment. Any provision of this Agreement may be waived
at any time by the party that is entitled to the benefits of such provision,
provided such waiver is set forth in writing and signed by such party. No
modification, amendment or supplement to this Agreement shall be effective
unless set forth in writing and signed by both parties hereto.
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IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
ZIONS BANCORPORATION
By: /s/ Dale M. Gibbons
-----------------------------------
Name: Dale M. Gibbons
Title: Chief Financial Officer
REGENCY BANCORP
By: /s/ Steven F. Hertel
-----------------------------------
Name: Steven F. Hertel
Title: Chairman, President and
Chief Executive Officer
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APPENDIX C
CHAPTER 13. DISSENTERS' RIGHTS
1300 [Reorganization or short form merger; corporate purchase at fair
market value; definitions].--(a) If the approval of the outstanding shares
(Section 152) of a corporation is required for a reorganization under
subdivisions (a) and (b) or subdivision (e) or (f) of Section 1201, each
shareholder of the corporation entitled to vote on the transaction and each
shareholder of a subsidiary corporation in a short-form merger may, by complying
with this chapter, require the corporation in which the shareholder holds shares
to purchase for cash at their fair market value the shares owned by the
shareholder which are dissenting shares as defined in subdivision (b). The fair
market value shall be determined as of the day before the first announcement of
the terms of the proposed reorganization or short-firm merger, excluding any
appreciation or depreciation in consequence of the proposed action, but adjusted
for any stock split, reverse stock split, or share dividend which becomes
effective thereafter.
(b) As used in this chapter, "dissenting shares" means shares which
come within all of the following descriptions:
(1) Which were not immediately prior to the reorganization or
short-form merger either (A) listed on any nationals securities exchange
certified by the Commissioner of Corporations under subdivision (o) of Section
25100 or (B) listed on the list of OTC margin stocks issued by the Board of
Governors of the Federal Reserve System, and the notice of meeting of
shareholders to act upon the reorganization summarizes this section and Sections
1301, 1302, 1303 and 1304; provided, however, that this provision does not apply
to any shares with respect to which there exists any restriction on transfer
imposed by the corporation or by any law or regulation; and provided, further,
that this provision does not apply to any class of shares described in
subparagraph (A) or (B) if demands for payment are filed with respect to 5
percent or more of the outstanding shares of that class.
(2) Which were outstanding on the date for the determination of
shareholders entitled to vote on the reorganization and (A) were not voted in
favor of the reorganization or, (B) if described in subparagraph (A) or (B) of
paragraph (1) (without regard to the provisos in that paragraph), were voted
against the reorganization, or which were held of record on the effective date
of a short-form merger; provided, however, that subparagraph (A) rather than
subparagraph (B) of this paragraph applies in any case where the approval
required by Section 1201 is sought by written consent rather than at a meeting.
(3) Which the dissenting shareholder has demanded that the corporation
purchase at their fair market value, in accordance with Section 1301.
(4) Which the dissenting shareholder has submitted for endorsement, in
accordance with Section 1302.
(c) As used in this chapter, "dissenting shareholder" means the
recordholder of dissenting shares and includes a transferee of record.
1301 [Notice to holders of dissenting shares in reorganizations; demand
for purchase; time; contents].--(a) If, in the case of a reorganization, any
shareholders of a corporation have a right under Section 1300, subject to
compliance with paragraphs (3) and (4) of subdivision (b) thereof, to require
the corporation to purchase their shares for cash, such corporation shall mail
to each such shareholder a notice of the approval of the reorganization by its
outstanding shares (Section 152) within 10 days after the date of
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such approval, accompanied by a copy of Sections 1300, 1302, 1303, 1304 and this
section, a statement of the price determined by the corporation to represent the
fair market value of the dissenting shares, and a brief description of the
procedure to be followed if the shareholder desires to exercise the
shareholder's right under such sections. The statement of price constitutes an
offer by the corporation to purchase at the price stated any dissenting shares
as defined in subdivision (b) of Section 1300, unless they lose their status as
dissenting shares under Section 1309.
(b) Any shareholder who has a right to require the corporation to
purchase the shareholder's shares for cash under Section 1300, subject to
compliance with paragraphs (3) and (4) of subdivision (b) thereof, and who
desires the corporation to purchase such shares shall make written demand upon
the corporation for the purchase of such shares and payment to the shareholder
in cash of their fair market value. The demand is not effective for any purpose
unless it is received by the corporation or any transfer agent thereof (1) in
the case of shares described in clause (i) or (ii) of paragraph (1) of
subdivision (b) of Section 1300 (without regard to the provisos in that
paragraph), not later than the date of the shareholders' meeting to vote upon
the reorganization, or (2) in any other case within 30 days after the date on
which the notice of the approval by the outstanding shares pursuant to
subdivision (a) or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder.
(c) The demand shall state the number and class of the shares held of
record by the shareholder which the shareholder demands that the corporation
purchase and shall contain a statement of what such shareholder claims to be the
fair market value of those shares as of the day before the announcement of the
proposed reorganization or short-form merger. The statement of fair market value
constitutes an offer by the shareholder to sell the shares at such price.
1302. [Submission of share certificates for endorsement, uncertificated
securities].--Within 30 days after the date on which notice of the approval by
the outstanding shares or the notice pursuant to subdivision (i) of Section 1110
was mailed to the shareholder, the shareholder shall submit to the corporation
at its principal office or at the office of any transfer agent thereof, (a) if
the shares are certificated securities, the shareholder's certificates
representing any shares which the shareholder demands that the corporation
purchase, to be stamped or endorsed with a statement that the shares are
dissenting shares or to be exchanged for certificates of appropriate
denomination so stamped or endorsed or (b) if the shares are uncertificated
securities, written notice of the number of shares which the shareholder demands
that the corporation purchase. Upon subsequent transfers of the dissenting
shares on the books of the corporation the new certificates, initial transaction
statement, and other written statements issued therefor shall bear a like
statement, together with the name of the original dissenting holder of the
shares.
1303 [Payment of agreed price with interest; agreement fixing fair
market value; time of payment].--(a) If the corporation and the shareholder
agree that the shares are dissenting shares and agree upon the price of the
shares, the dissenting shareholder is entitled to the agreed price with interest
thereon at the legal rate on judgments from the date of the agreement. Any
agreements fixing the fair market value of any dissenting shares as between the
corporation and the holders thereof shall be filed with the secretary of the
corporation.
(b) Subject to the provisions of Section 1306, payment of the fair
market value of dissenting shares shall be made within 30 days after the amount
thereof has been agreed or within 30 days after any statutory or contractural
conditions to the reorganization are satisfied, whichever is later, and in the
case of certificated securities, subject to surrender of the certificates
therefor, unless provided otherwise by agreement.
1304 [Action to determine whether shares are dissenting shares or fair
market value; limitation; joinder; consolidation; determination of issues;
appointment of appraisers].--(a) If the corporation denies that the shares are
dissenting shares, or the corporation and the shareholder fail to agree
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upon the fair market values of the shares, then the shareholder demanding
purchase of such shares as dissenting shares or any interested corporation,
within six months after the date on which notice of the approval by the
outstanding shares (Section 152) or notice pursuant to subdivision (i) of
Section 1110 was mailed to the shareholder, but not thereafter, may file a
complaint in the superior court of the proper county praying the court to
determine whether the shares are dissenting shares or the fair market value of
the dissenting shares or both or may intervene in any action pending on such a
complaint.
(b) Two or more dissenting shareholders may join as plaintiffs or be
joined as defendants in any such action and two or more such actions may be
consolidated.
(c) On the trial of the action, the court shall determine the issues.
If the status of the shares as dissenting shares is in issue, the court shall
first determine that issue. If the fair market value of the dissenting shares is
in issue, the court shall determine, or shall appoint one or more impartial
appraisers to determine, the fair market value of the shares.
1305 [Report of appraisers; confirmation; determination by court;
judgment; payment; appeal; costs].--(a) If the court appoints an appraiser or
appraisers, they shall proceed forthwith to determine the fair market value per
share. Within the time fixed by the court, the appraisers, or a majority of
them, shall make and file a report in the office of the clerk of the court.
Thereupon, on the motion of any party, the report shall be submitted to the
court and considered on such evidence as the court considers relevant. If the
court finds the report reasonable, the court may confirm it.
(b) If a majority of the appraisers appointed fail to make and file a
report within 10 days from the date of their appointment or within such further
time as may be allowed by the court or the report is not confirmed by the court,
the court shall determine the fair market value of the dissenting shares.
(c) Subject to the provisions of Section 1306, judgment shall be
rendered against the corporation for payment of an amount equal to the fair
market value of each dissenting share multiplied by the number of dissenting
shares which any dissenting shareholder who is a party, or who has intervened,
is entitled to require the corporation to purchase, with interest thereon at the
legal rate from the date on which judgment was entered.
(d) Any such judgment shall be payable forthwith with respect to
uncertificated securities and, with respect to certificated securities, only
upon the endorsement and delivery to the corporation of the certificates for the
shares described in the judgment. Any party may appeal from the judgment.
(e) The costs of the action, including reasonable compensation to the
appraisers to be fixed by the court, shall be assessed or apportioned as the
court considers equitable, but, if the appraisal exceeds the price offered by
the corporation, the corporation shall pay the costs (including in the
discretion of the court attorneys' fees, fees of expert witnesses and interest
at the legal rate on judgments from the date of compliance with Sections 1300,
1301 and 1302 if the value awarded by the court for the shares is more than 125
percent of the price offered by the corporation under subdivision (a) of Section
1301).
1306 [Prevention of immediate payment; status as creditors;
interest].--To the extent that the provisions of Chapter 5 prevent the payment
to any holders of dissenting shares of their fair market value, they shall
become creditors of the corporation for the amount thereof together with
interest at the legal rate on judgments until the date of payment, but
subordinate to all other creditors in any liquidation proceeding, such debt to
be payable when permissible under the provisions of Chapter 5.
1307 [Dividends on dissenting shares].--Cash dividends declared and
paid by the corporation upon the dissenting shares after the date of approval of
the reorganization by the outstanding shares (Section 152)
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and prior to payment for the shares by the corporation shall be credited against
the total amount to be paid by the corporation therefor.
1308 [Rights of dissenting shareholders pending valuation; withdrawal
or demand for payment].--Except as expressly limited in this chapter, holders of
dissenting shares continue to have all the rights and privileges incident to
their shares, until the fair market value of their shares is agreed upon or
determined. A dissenting shareholder may not withdraw a demand for payment
unless the corporation consents thereto.
1309 [Termination of dissenting share and shareholder
status].--Dissenting shares lose their status as dissenting shares and the
holders thereof cease to be dissenting shareholders and cease to be entitled to
require the corporation to purchase their shares upon the happening of any of
the following:
(a) The corporation abandons the reorganization. Upon abandonment of
the reorganization, the corporation shall pay on demand to any dissenting
shareholder who has initiated proceedings in good faith under this chapter all
necessary expenses incurred in such proceedings and reasonable attorneys' fees.
(b) The shares are transferred prior to their submission for
endorsement in accordance with Section 1302 or are surrendered for conversion
into shares of another class in accordance with the articles.
(c) The dissenting shareholder and the corporation do not agree upon
the status of the shares as dissenting shares or upon the purchase price of the
shares, and neither files a complaint or intervenes in a pending action as
provided in Section 1304, within six months after the date on which notice of
the approval by the outstanding shares or notice pursuant to subdivision (i) of
Section 1110 was mailed to the shareholder.
(d) The dissenting shareholder, with the consent of the corporation,
withdraws the shareholder's demand for purchase of the dissenting shares.
1310 [SUSPENSION OF CERTAIN PROCEEDINGS WHILE LITIGATION IS
PENDING].--If litigation is instituted to test the sufficiency or regularity of
the votes of the shareholders in authorizing a reorganization, any proceedings
under Sections 1304 and 1305 shall be suspended until final determination of
such litigation.
1311 [CHAPTER INAPPLICABLE TO CERTAIN CLASSES OF SHARES].-- This
chapter, except Section 1312, does not apply to classes of shares whose terms
and provisions specifically set forth the amount to be paid in respect to such
shares in the event of a reorganization or merger.
1312 [VALIDITY OF REORGANIZATION OR SHORT FORM MERGER, ATTACK ON;
SHAREHOLDERS' RIGHTS; BURDEN OF PROOF].-- (a) No shareholder of a corporation
who has a right under this chapter to demand payment of cash for the shares held
by the shareholder shall have any right at law or in equity to attack the
validity of the reorganization or short-form merger, or to have the
reorganization or short-form merger set aside or rescinded, except in an action
to test whether the number of shares required to authorize or approve the
reorganization have been legally voted in favor thereof; but any holder of
shares of a class whose terms and provisions specifically set forth the amount
to be paid in respect to them in the event of a reorganization or short-form
merger is entitled to payment in accordance with those terms and provisions or,
if the principal terms of the reorganization are approved pursuant to
subdivision (b) of Section 1202, is entitled to payment in accordance with the
terms and provisions of the approved reorganization.
(b ) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, subdivision (a)
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shall not apply to any shareholder of such party who has not demanded payment of
cash for such shareholder's shares pursuant to this chapter; but if the
shareholder institutes any action to attack the validity of the reorganization
or short-form merger or to have the reorganization or short-form merger set
aside or rescinded, the shareholder shall not thereafter have any right to
demand payment of cash for the shareholder's shares pursuant to this chapter.
The court in any action attacking the validity of the reorganization or
short-form merger or to have the reorganization or short-form merger set aside
or rescinded shall not restrain or enjoin the consummation of the transaction
except upon 10 days, prior notice to the corporation and upon a determination by
the court that clearly no other remedy will adequately protect the complaining
shareholder or the class of the shareholders of which such shareholder is a
member.
(c) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, in any action to attack the
validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded, (1) a party to a
reorganization or short-form merger which controls another party to the
reorganization or short-form merger shall have the burden of proving that the
transaction is just and reasonable as to the shareholders of the controlled
party, and (2) a person who controls two or more parties to a reorganization
shall have the burden of proving that the transaction is just and reasonable as
to the shareholders of any party so controlled.
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APPENDIX D
August 27, 1999
Members of the Board of Directors
Regency Bancorp
7060 North Fresno Street
Fresno, California 93720
Members of the Board:
You have requested our opinion as investment bankers as to the fairness,
from a financial point of view, to the shareholders of Regency Bancorp, Fresno,
California ("Company") of the terms of the proposed merger of Company with Zions
Bancorporation, Salt Lake City, Utah ("Zions") and Company shareholders
receiving shares of common stock of Zions as defined in the Agreement and Plan
of Merger entered into as of April 27, 1999, as amended (the "Agreement").
Pursuant to the Agreement and subject to the terms and conditions therein, each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time of the Merger shall, on and at the Effective Time of the Merger,
pursuant to the Agreement and without any further action on the part of Company
or the holders of Company Common Stock, be exchanged for and converted into the
right to receive shares of Zions Common Stock which is equal to the Exchange
Ratio. The Exchange Ratio shall be 0.3233 unless modified pursuant to the
Agreement.
As part of its investment banking business, The Findley Group is continually
engaged in the valuation bank, bank holding company and thrift securities in
connection with mergers and acquisitions nationwide.
In arriving at our opinion, we have reviewed and analyzed, among other things,
the following: (i) the Agreement; (ii) certain publicly available financial and
other data with respect to Company and Zions, including consolidated financial
statements for recent years; (iii) certain other publicly available financial
and other information concerning Company and Zions and the trading markets for
the publicly traded securities of Company and Zions; (iv) publicly available
information concerning other banks and bank holding companies, the trading
markets for their securities and the nature and terms of certain other merger
transactions we believe relevant to our inquiry; and (v) evaluations and
analyses prepared and presented to the Board of Directors of Company or a
committee thereof in connection with the Merger. We have held discussions with
senior management of Company concerning their past and current operations,
financial condition and prospects.
We have reviewed with the senior management of Company earnings projections for
Company, provided by Company, as a stand-alone entity, assuming the Merger does
not occur. We also reviewed with the senior management of Company the earnings
projections for Zions that are publicly available. Certain financial projections
for the combined companies and for Company as a stand-alone entity were derived
by us based partially upon the projections and information described above, as
well as our own assessment of general economic, market and financial conditions.
In conducting our review and in arriving at our opinion, we have relied upon and
assumed the accuracy and completeness of the financial and other information
provided to us or publicly available, and we have not assumed any responsibility
for independent verification of the same. We have relied upon the management of
Company as to the reasonableness of the financial and operating forecasts,
projections and projected
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operating cost savings and earnings enhancement opportunities (and the
assumptions and bases therefor) provided to us, and we have assumed that such
forecasts, projections and projected operating cost savings and earnings
enhancement opportunities reflect the best currently available estimates and
judgements of Company management. We have also assumed, without assuming any
responsibility for the independent verification of the same, that the aggregate
allowance for loan losses for Company and Zions are adequate to cover such
losses. We have not made or obtained any evaluations or appraisals of the
property of Company or Zions, nor have we examined any individual loan credit
files. For purposes of this opinion, we have assumed that the Merger will have
the tax, accounting and legal effects described in the Agreement and assumed the
accuracy of the disclosures set forth in the Agreement. Our opinion as expressed
herein is limited to the fairness, from a financial point of view, to the
holders of the shares of Company Common Stock of the terms of the proposed
merger of Company with and into Zions, with Company shareholders receiving
shares of Zions Common Stock and does not address Company's underlying business
decision to proceed with the Merger.
We have considered such financial and other factors as we have deemed
appropriate under the circumstances, including among others the following: (i)
the historical and current financial position and results of operations of
Company and Zions, including interest income, interest expense, net interest
income, net interest margin, provision for loan losses, non-interest income,
non-interest expense, earnings, dividends, internal capital generation, book
value, intangible assets, return on assets, return on shareholders' equity,
capitalization, the amount and type of non-performing assets, loan losses and
the reserve for loan losses, all as set forth in the financial statements for
Company and Zions; (ii) the assets and liabilities of Company and Zions,
including the loan and investment portfolios, deposits, other liabilities,
historical and current liability sources and costs and liquidity; and (iii) the
nature and terms of certain other merger transactions involving banks and bank
holding companies. We have also taken into account our assessment of general
economic, market and financial conditions and our experience in other
transactions, as well as our experience in securities valuation and our
knowledge of the banking industry generally. Our opinion is necessarily based
upon conditions as they exist and can be evaluated on the date hereof.
Based upon and subject to the foregoing, we are of the opinion as investment
bankers that, as of the date hereof, the terms of the Merger of Company with and
into Zions, with Company shareholders receiving Zions Common Stock as set forth
in the Agreement, are fair, from a financial point of view, to the holders of
the shares of Company Common Stock.
This opinion may not be used or referred to by Company or quoted or disclosed to
any person in any manner without our prior written consent, with the exception
of submission to the regulatory agencies as part of the applications and
included in the proxy materials provided to shareholders of Company in relation
to approval of the Merger. This opinion is not intended to be a recommendation
to any shareholder of Company as to how such shareholder should vote with
respect to the Merger.
Respectfully submitted,
THE FINDLEY GROUP
/s/Gary Findley
Gary Steven Findley
Director
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Utah law provides for indemnification of directors and officers as
follows:
16-l0a-902 AUTHORITY TO INDEMNIFY DIRECTORS.
(1) Except as provided in Subsection (4), a corporation may
indemnify an individual made a party to a proceeding because he is or was a
director, against liability incurred in the proceeding if:
(a) his conduct was in good faith; and
(b) he reasonably believed that his conduct was in, or not
opposed to, the corporation's best interests; and
(c) in the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful.
(2) A director's conduct with respect to any employee benefit plan
for a purpose he reasonably believed to be in or not opposed to the interests of
the participants in and beneficiaries of the plan is conduct that satisfies the
requirement of Subsection (1)(b).
(3) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this section.
(4) A corporation may not indemnify a director under this section:
(a) in connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation; or
(b) in connection with any other proceeding charging that the
director derived an improper personal benefit, whether or not
involving action in his official capacity, in which proceeding he
was adjudged liable on the basis that he derived an improper
personal benefit.
(5) Indemnification permitted under this section in connection with
a proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
16-10a-903 MANDATORY INDEMNIFICATION OF DIRECTORS.
Unless limited by its articles of incorporation, a corporation
shall indemnify a director who was successful, on the merits or otherwise, in
the defense of any proceeding, or in the defense of any claim, issue, or matter
in the proceeding, to which he was a party because he is or was a director of
the corporation, against reasonable expenses incurred by him in connection with
the proceeding or claim with respect to which he has been successful.
16-10a-907 INDEMNIFICATION OF OFFICERS, EMPLOYEES, FIDUCIARIES, AND AGENTS.
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Unless a corporation's articles of incorporation provide otherwise:
(1) an officer of the corporation is entitled to mandatory
indemnification under Section 16- 10a-903, and is entitled to apply
for court-ordered indemnification under Section 16-10a-905, in each
case to the same extent as a director;
(2) the corporation may indemnify and advance expenses to an
officer, employee, fiduciary, or agent of the corporation to the
same extent as to a director; and
(3) a corporation may also indemnify and advance expenses to an
officer, employee, fiduciary, or agent who is not a director to a
greater extent, if not inconsistent with public policy, and if
provided for by its articles of incorporation, bylaws, general or
specific action of its board of directors, or contract.
16-10a-908 INSURANCE.
A corporation may purchase and maintain liability insurance on
behalf of person who is or was a director, officer, employee, fiduciary, or
agent of the corporation, or who, while serving as a director, officer,
employee, fiduciary, or agent of the corporation, is or was serving at the
request of the corporation as a director, officer, partner, trustee, employee,
fiduciary, or agent of another foreign or domestic corporation or other person,
or of an employee benefit plan, against liability asserted against or incurred
by him in that capacity or arising from his status as a director, officer,
employee, fiduciary, or agent, whether or not the corporation would have power
to indemnify him against the same liability under Sections 16-10a-902, 16-
10a-903, or 16-10a-907. Insurance may be procured from any insurance company
designated by the board of directors, whether the insurance company is formed
under the laws of this state or any other jurisdiction of the United States or
elsewhere, including any insurance company in which the corporation has an
equity or any other interest through stock ownership or otherwise.
16-10a-909 LIMITATIONS OF INDEMNIFICATION OF DIRECTORS.
(1) A provision treating a corporation's indemnification of, or
advance for expenses to, directors that is contained in its
articles of incorporation or bylaws, in a resolution of its
shareholders or board of directors, or in a contract (except an
insurance policy) or otherwise, is valid only if and to the extent
the provision is not inconsistent with this part. If the articles
of incorporation limit indemnification or advance of expenses,
indemnification and advance of expenses are valid only to the
extent not inconsistent with the articles of incorporation.
(2) This part does not limit a corporation's power to pay or
reimburse expenses incurred by a director in connection with the
director's appearance as a witness in a proceeding at a time when
the director has not been made a named defendant or respondent to
the proceeding.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits. An Exhibit Index, containing a list of all
exhibits filed with this Registration Statement, is included
beginning on page II-7.
(b) Financial Statement Schedules. Not applicable.
(c) Report, Opinion or Appraisal. Not applicable.
II-2
<PAGE>
Item 22. Undertakings.
The undersigned registrant hereby undertakes as follows:
(1) that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(2) that prior to any public reoffering of the securities
registered hereunder through the use of a prospectus which is a
part of this registration statement, by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c), such
reoffering prospectus will contain the information called for by
the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(3) that every prospectus (i) that is filed pursuant to
paragraph (2) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act of 1933,
as amended, and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(4) that insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to the
provisions described under Item 20 above, or otherwise, the
registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
(5) to respond to requests for information that is incorporated
by reference into the Proxy Statement-Prospectus pursuant to Items
4, 10(b), 11 or 13 of Form S-4, within one business day of receipt
of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the Effective Date of
the registration statement through the date of responding to the
request.
(6) to supply by means of a post-effective amendment all
information concerning a transaction, and the company being
acquired involved therein, that was not the subject of and included
in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Salt Lake City, Utah,
on the 10th day of August, 1999.
ZIONS BANCORPORATION
By: /s/Harris H. Simmons
-----------------------------
Harris H. Simmons, President
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Harris H. Simmons and Dale M. Gibbons,
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or either of them, or their or his
substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Capacity Date
President, Chief Executive June 18, 1999
/s/ Harris H. Simmons Officer and Director
- -------------------------
Harris H. Simmons
Executive Vice President June 18, 1999
/s/ Dale M. Gibbons Chief Financial Officer
- -------------------------
Dale M. Gibbons
/s/ Nolan X. Bellon Controller June 18, 1999
- -------------------------
Nolan X. Bellon
/s/ Roy W. Simmons Chairman and Director June 18, 1999
- -------------------------
Roy W. Simmons
/s/ Jerry C. Atkin Director June 18, 1999
- -------------------------
Jerry C. Atkin
/s/ R. D. Cash Director June 18, 1999
- -------------------------
R.D. Cash
/s/ L. E. Simmons Director June 18, 1999
- -------------------------
L.E. Simmons
II-5
<PAGE>
/s/ Grant R. Caldwell Director June 18, 1999
- -------------------------
Grant R. Caldwell
/s/ I. J. Wagner Director June 18, 1999
- -------------------------
I.J. Wagner
/s/ Roger B. Porter Director June 18, 1999
- -------------------------
Roger B. Porter
/s/ Richard H. Madsen Director June 18, 1999
- -------------------------
Richard H. Madsen
/s/ Robert G. Sarver Director June 18, 1999
- -------------------------
Robert G. Sarver
/s/ Shelley Thomas Director June 18, 1999
- -------------------------
Shelley Thomas
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
(Pursuant to Item 601 of Regulation S-K)
Exhibit No. Description and Method of Filing
- ----------- --------------------------------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of April 27, 1999, as amended,
by and among Zions Bancorporation, Regency Bancorp and Regency Bank
(included as Appendix A to the Proxy Statement-Prospectus and
incorporated by reference herein)
3.1 Restated Articles of Incorporation of Zions Bancorporation dated
November 8, 1993, and filed with the Department of Business Regulation,
Division of Corporations of the State of Utah on November 9, 1993
(incorporated by reference to Exhibit 3.1 to the Registrant's Form S-4
Registration Statement, File No. 33-51145, filed on November 22, 1993)
3.2 Restated Bylaws of Zions Bancorporation, dated November 8, 1993
(incorporated by reference to Exhibit 3.2 to the Registrant's Form S-4
Registration Statement, File No. 33-51145, filed November 22, 1993)
3.3 Amendment to the Restated Bylaws of Zions Bancorporation, dated
September 18, 1998 (incorporated by reference to Exhibit 3 to Zions
Bancorporation's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998, File No. 0-02610)
3.4 Articles of Amendment to the Restated Articles of Incorporation of Zions
Bancorporation dated April 30, 1997 and filed with the Department of
Business Regulation, Division of Corporations of the State of Utah on May
2, 1997 (incorporated by reference to Exhibit 3.1 of Zions
Bancorporation's Quarterly Report on Form 10-Q for the quarter ended
Jun 30, 1997, File No. 0-2610)
3.5 Articles of Amendment to the Restated Articles of Incorporation of Zions
Bancorporation dated April 24, 1998 and filed with the Utah Division of
Corporations and Commercial Code on April 27, 1998 (incorporated by
reference to Exhibit 3 of Zions Bancorporation's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1998, File No. 0-02610)
4.1 Shareholder Protection Rights Agreement, dated as of September 27, 1996,
between Zions Bancorporation and Zions First National Bank
(incorporated by reference to Exhibit 4 to the Registrant's Form 8-K, filed
October 12, 1996)
5.1 Opinion of Sullivan & Cromwell regarding the
validity of the shares of Common Stock being
registered (filed herewith)
5.2 Opinion of Callister, Nebeker & McCullough, a Professional Corporation,
regarding the validity of the shares of Zions Common Stock being
registered (filed herewith)
8.1 Opinion of Sullivan & Cromwell regarding tax matters (filed herewith)
II-7
<PAGE>
23.1 Consent of KPMG LLP, independent certified public accountants for Zions
Bancorporation (filed herewith)
23.2 Consent of KPMG LLP, independent certified public accountants for
Regency Bancorp (filed herewith)
23.3 Consent of Sullivan & Cromwell (contained in their opinions filed as
Exhibits 5.1 and 8.1)
23.4 Consent of Callister, Nebeker & McCullough, a
Professional Corporation (contained in their
opinion filed as Exhibit 5.2)
23.5 Consent of Deloitte & Touche, LLP, independent auditors for Regency
Bancorp (filed herewith)
23.6 Consent of The Findley Group (filed herewith)
23.7 Consent of Deloitte & Touche, LLP, independent auditors for First
Security Corporation (filed herewith)
24.1 Power of Attorney (set forth on Page II-5 of the Registration Statement)
99.1 Stock Option Agreement, dated as of April 27, 1999, between Zions
Bancorporation and Regency Bancorp (included as Appendix B to the
Proxy Statement-Prospectus and incorporated by reference herein)
99.2 Form of Proxy of Regency Bancorp (filed herewith)
</TABLE>
II-8
[LETTERHEAD OF SULLIVAN & CROMWELL]
August 25, 1999
Zions Bancorporation,
One South Main, Suite 1380,
Salt Lake City, Utah 84111.
Dear Sirs:
In connection with the registration under the Securities Act
of 1933 (the "Act") of 1,007,455 shares (the "Securities") of Common Stock,
without par value, of Zions Bancorporation, a Utah corporation (the "Company"),
we, as your counsel, have examined such corporate records, certificates and
other documents, and such questions of law, as we have considered necessary or
appropriate for the purposes of this opinion. Upon the basis of such examina
tion, we advise you that, in our opinion, when the registration statement
relating to the Securities (the "Registration Statement") has become effective
under the Act, the terms of the sale of the Securities have been duly
established in conformity with the Company's articles of
<PAGE>
Zions Bancorporation -2-
incorporation, and the Securities have been duly issued as contemplated by the
Registration Statement and the merger of Regency Bancorp, a California
corporation, with and into the Company has been consummated, the Securities will
be validly issued, fully paid and non-assessable.
The foregoing opinion is limited to the Federal laws of the
United States and the laws of the State of Utah, and we are expressing no
opinion as to the effect of the laws of any other jurisdiction. With respect to
all matters of Utah law, we have relied upon the opinion, dated August 25, 1999,
of Callister Nebeker & McCullough, a Professional Corporation, and our opinion
is subject to the same assump tions, qualifications and limitations with respect
to such matters as are contained in such opinion of Callister Nebeker &
McCullough, a Professional Corporation.
Also, we have relied as to certain matters on information
obtained from public officials, officers of the Company and other sources
believed by us to be responsible.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to us under the heading
"Validity of Securities" in the Prospectus. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Act.
Very truly yours,
/s/Sullivan & Cromwell
[LETTERHEAD OF CALLISTER NEBEKER & McCULLOUGH]
25 August 1999
VIA HAND DELIVERY
Zions Bancorporation
One South Main, Suite 1380
Salt Lake City, Utah 84111
Ladies and Gentlemen:
We have acted as special Utah counsel to Zions Bancorporation, a Utah
corporation (the "Company"), in providing this opinion with respect to the
registration under the Securities Act of 1933 (the"Act") of 1,007,455 shares
(the "Shares") of the Company's common stock, no par value. This opinion is
being delivered to you pursuant to your request.
In connection with this representation, we have examined the original,
or copies identified to our satisfaction, of such minutes, agreements, corporate
records and filings and other documents necessary to or appropriate for our
opinion contained in this letter (the "Transaction Documents"). In our
examination of the Transaction Documents, we have assumed the genuineness of all
signatures which existed on those documents and have assumed the authenticity
and regularity of each of the Transaction Documents submitted to us. We have
also relied as to certain matters of fact upon representations made to us by
public officials, officers and agents of the Company, and other sources we
believe to be responsible.
Based upon and in reliance on the foregoing, it is our opinion that
the Shares will be, when issued in accordance with the Transaction Documents
including the registration statement relating to the Shares (the "Registration
Statement"), duly and validly issued and fully paid and nonassessable under the
Utah Revised Business Corporation Act.
Although we have reviewed the Transaction Documents, and have made such
inquiries as we deem appropriate under the circumstances, we have not verified
independently the existence or absence of all of the facts set forth in each
such Transaction Document.
Our opinion, as set forth herein, is subject to the following further
qualifications:
<PAGE>
Zions Bancorporation
10 August 1999
Page 2
(A) This opinion speaks only as of its date and you understand that
this firm has no obligation to advise you of any changes of law or fact that
occur after the date of this opinion, even if the change may affect the legal
analysis, a legal conclusion or any informational confirmation in this opinion.
(B) Members of our firm are admitted to the Bar in the State of Utah.
This opinion is limited to the laws of the State of Utah (excluding the
securities laws of the State of Utah), and we have not been asked to address nor
have we addressed or expressed an opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinion
is rendered only with respect to Utah laws and the rules, regulations and orders
thereunder that are currently in effect.
We consent to Sullivan & Cromwell's relying as to matters of Utah law
upon this opinion in connection with the opinion to be rendered by them in
conjunction with the registration statement. We also hereby consent to the
filing of this opinion as an exhibit to the Registration Statement. In giving
such consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Act.
This opinion is furnished to you solely for your benefit in connection
with the closing of the transactions contemplated by the Registration Statement,
may not be relied upon by any other person, and its not to be used, circulated,
quoted or otherwise referred to for any other purpose without our express prior
written permission.
Very truly yours,
/s/CALLLISTER NEBEKER & McCULLOUGH
A Professional Corporation
August 25, 1999
Zions Bancorporation,
One South Main, Suite 1380,
Salt Lake City, Utah 84111.
Regency Bancorp,
7060 North Fresno Street,
Fresno, California 93720.
Ladies and Gentlemen:
We have acted as special counsel to Zions Bancorporation, a Utah
corporation ("Zions"), in connection with the planned merger of Regency Bancorp,
a California Corporation ("Regency") with and into Zions, pursuant to the
Agreement and Plan of Merger, dated as of April 27, 1999, as amended May 11,
1999, August 9, 1999 and August 18, 1999 by and among Zions, Regency and Regency
Bank (the "Agreement"). We render this opinion to you, in part, in connection
with the registration of Zions Common Stock to be issued in connection with the
Merger. All capitalized terms used and not otherwise defined herein shall have
the meanings provided in the Agreement.
For purposes of this opinion, we have reviewed the Agreement and such other
documents and matters of law and fact as we have considered necessary or
appropriate, and we have assumed, with your consent, the following:
(i) The Merger will be completed in the manner set forth in the
Agreement and the Proxy Statement/Prospectus of Zions and Regency (the
"Proxy/Prospectus").
(ii) The representations contained in the letters of
representation from Zions and Regency to us, both dated August [11],
1999, will be true and complete at the Effective Time.
<PAGE>
Zions Bancorporation -2-
Regency Bancorp
On the basis of the foregoing, and our consideration of such other matters
of fact and law as we have deemed necessary or appropriate, it is our opinion,
under presently applicable federal income tax law, that:
(1) The Merger will be treated for federal income tax purposes
as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
(2) Each of Zions and Regency will be a party to the
reorganization within the meaning of Section 368(b) of the Code;
(3) No gain or loss will be recognized by shareholders of
Regency who receive shares of Zions Common Stock in exchange for shares
of Company Common Stock, except with respect to cash received in lieu
of fractional share interests;
(4) The holding period of Zions Common Stock received in
exchange for shares of Company Common Stock will include the holding
period of the Company Common Stock for which it is exchanged, assuming
the shares of Company Common Stock are capital assets in the hands of
the holder thereof at the Effective Time; and
(5) The basis of the Zions Common Stock received in the Merger
will be the same as the basis of the Company Common Stock for which it
is exchanged, less any basis attributable to fractional shares for
which cash is received.
<PAGE>
Zions Bancorporation -3-
Regency Bancorp
The tax consequences described in (3), (4) and (5) above may not be
applicable to financial institutions, insurance companies, tax-exempt
organizations, dealers in securities or currencies, traders in securities that
elect to use a mark to market method of accounting, persons who hold Company
Common Stock as part of a "straddle", "hedge" or "conversion" transaction,
persons who are not citizens or residents of the United States, persons who
acquired or acquire shares of Company Common Stock pursuant to the exercise of
employee stock options or otherwise as compensation, or persons who do not hold
their shares of Company Common Stock as a capital asset.
This opinion is limited to the federal income tax laws of the United States
and does not purport to discuss the consequences or effectiveness of the Merger
under any other laws.
We also hereby confirm to you that the discussions set forth under the
heading "THE MERGER Federal Income Tax Considerations of the Zions/Regency
Merger" in the Proxy/Prospectus which form a part of the Registration Statement
of Zions to which this opinion is filed as an exhibit is our opinion, subject to
the limitations set forth therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "THE MERGER
- - Federal Income Tax Considerations of the Zions/Regency Merger" in the
Proxy/Prospectus. In giving such consent, we do not
<PAGE>
Zions Bancorporation -4-
Regency Bancorp
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act.
Very truly yours,
/s/Sullivan & Cromwell
[LETTERHEAD OF KPMG LLP]
Consent of Independent Certified Public Accountants
The Board of Directors
Zions Bancorporation:
We consent to the use of our report dated January 26, 1999, with respect to the
consolidated financial statements of Zions Bancorporation as of December 31,
1998 and 1997, and for each of the years in the three-year period ended December
31, 1998 incorporated herein by reference, and to the reference to our firm
under the heading "Experts" in the proxy statement/prospectus.
/s/KPMG LLP
KPMG LLP
Salt Lake City, Utah
August 25, 1999
[LETTERHEAD OF KPMG LLP]
Independent Auditors' Consent
The Board of Directors
Regency Bancorp:
We consent to the inclusion in the Registration Statement Form S-4 of Zions
Bancorporation of our report dated February 5, 1999 relating to the consolidated
balance sheet of Regency Bancorp and subsidiaries as of December 31, 1998 and
the related consolidated statements of operations, changes in shareholders'
equity and cash flows for the year ended December 31, 1998, which report appears
in the 1998 Form 10-K of Regency Bancorp incorporated by reference herein and to
the reference to our firm under the caption "Experts" and "Conditions to
Completion" in the prospectus.
/s/KPMG LLP
KPMG LLP
Sacramento, California
August 24, 1999
[LETTERHEAD of DELOITTE & TOUCHE, LLP]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Zions Bancorporation on Form S-4 of our report dated February 4, 1998, appearing
in the Annual Report on Form 10-K of Regency Bancorp for the year ended December
31, 1998 and to the reference to us under the heading "Experts" in the
Prospectus/Proxy, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Fresno, California
August 24, 1999
[THE FINDLEY GROUP LETTERHEAD]
August 25, 1999
Zions Bancorporation
One South Main, Suite 1380
Salt Lake City, Utah 84111
Gentlemen:
We hereby consent to the inclusion of the Fairness Opinion of The Findley Group
in the Registration Statement of Zions Bancorporation in connection with the
acquisition of Regency Bancorp. We also consent to the references made in such
Registration Statement to The Findley Group.
Sincerely,
/S/Gary Steven Findley
----------------------
Gary Steven Findley
Director
[LETTERHEAD of DELOITTE & TOUCHE, LLP]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Zions Bancororporation on Form S-4 of our report dated February 24, 1999,
appearing in the Annual Report on Form 10-K of First Security Corporation for
the year ended December 31, 1998 and to the reference to us under the heading
"Experts" in the Prospectus/Proxy, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Salt Lake City, Utah
August 25, 1999
|X|Please mark your
vote as this
REGENCY BANCORP
Proxy Solicited on behalf of the Board of Directors
for Special Meeting of Shareholders--September 28, 1999
The undersigned shareholder of Regency Bancorp, a California
corporation (the "Company"), acknowledges receipt of the Notice of Special
Meeting of Shareholders and Proxy Statement/Prospectus, dated August 27, 1999,
and the undersigned revokes all other proxies and appoints Steven F. Hertel and
Roy Jura, and each of them, the attorneys and proxies for the undersigned, each
with full power of substitution, to attend and act for the undersigned at the
Company's Special Meeting of Shareholders at 9 a.m., local time, September 28,
1999 and at any adjournments or postponements thereof and in connection
therewith to vote and represent all of the shares of the Company's Common Stock
covered by this proxy which the undersigned would be entitled to vote.
1. To approve the principal terms of the Agreement and Plan of Merger, dated
as of April 27, 1999, as amended, by and among Zions Bancorporation, the
Company and Regency Bank.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. Each of the above-named
proxies present at said meeting, either in person or by substitute, shall
have and exercise all the powers of said proxies hereunder.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE CHOICES SPECIFIED BY THE
UNDERSIGNED. IF NO SPECIFICATIONS TO THE CONTRARY ARE INDICATED HEREON, THIS
PROXY WILL BE TREATED AS A GRANT OF AUTHORITY TO VOTE FOR PROPOSAL 1 AND IN THE
DISCRETION OF THE PROXIES ON ANY OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING. PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE POSTAGE PREPAID
ENVELOPE PROVIDED.
Dated: ________________________________
Signature(s) ________________________________
________________________________
NOTE: Please sign exactly as your
name appears hereon. When signing
as attorney, executor, administrator,
trustee or guardian, please give full
title as such. If shares are held
jointly, each holder should sign.
