<PAGE>
<PAGE>
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR (15d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-9876
WEST ONE BANCORP
Idaho 82-0362647
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
101 South Capitol Boulevard, P.O. Box 8247, Boise, Idaho 83733
(Address of principal executive offices) (Zip Code)
(208) 383-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
At April 28, 1995, 36,870,767 shares of the registrant's common stock,
$1 par value, were outstanding.
EXHIBIT INDEX IS LOCATED ON PAGE 11
Page 1
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS (Unaudited)
WEST ONE BANCORP AND SUBSIDIARIES
<CAPTION>
March 31, December 31,
Dollars in thousands 1995 1994 1994
----------- ----------- -----------
<S> <C> <C> <C>
Assets
Cash and due from banks $509,088 $455,096 $632,577
Federal funds sold, securities purchased under
agreements to resell and other 72,704 133,152 112,516
----------- ----------- -----------
Securities:
Available for sale 1,117,852 994,006 1,139,765
Held to maturity 577,809 575,576 581,155
----------- ----------- -----------
Total securities 1,695,661 1,569,582 1,720,920
----------- ----------- -----------
Loans:
Real estate 2,558,954 2,185,034 2,526,475
Commercial and agricultural 2,194,036 2,024,951 2,205,459
Consumer 1,194,784 1,061,828 1,172,616
Leases 162,231 158,843 160,873
----------- ----------- -----------
Total loans 6,110,005 5,430,656 6,065,423
Allowance for credit losses (82,271) (77,204) (81,757)
----------- ----------- -----------
Net loans 6,027,734 5,353,452 5,983,666
----------- ----------- -----------
Premises and equipment 127,178 122,692 128,506
Interest receivable 65,376 53,352 66,605
Other assets 158,960 126,488 147,909
----------- ----------- -----------
Total assets $8,656,701 $7,813,814 $8,792,699
=========== =========== ===========
Liabilities
Deposits:
Noninterest bearing $1,352,827 $1,191,396 $1,397,843
Interest bearing demand 715,333 734,430 749,755
Regular and money market savings 2,118,658 2,030,402 2,086,718
Time certificates under $100,000 1,840,428 1,503,643 1,755,013
Time certificates $100,000 and over 843,616 619,703 821,553
----------- ----------- -----------
Total deposits 6,870,862 6,079,574 6,810,882
Federal funds purchased and securities
sold under agreements to repurchase 489,744 368,518 804,161
Other short-term borrowings 123,501 500,548 122,153
Long-term debt 309,926 115,112 253,073
Other liabilities 116,896 110,658 86,661
----------- ----------- -----------
Total liabilities 7,910,929 7,174,410 8,076,930
----------- ----------- -----------
Shareholders' equity
Common stock - $1.00 par value; 75,000,000 shares
authorized; 36,835,096, 34,967,500 and 36,745,368
shares outstanding 36,835 34,968 36,745
Capital surplus 329,488 313,850 327,879
Retained earnings 384,205 287,348 364,041
Unrealized gain (loss) on securities, net of tax (4,756) 3,238 (12,896)
----------- ----------- -----------
Total shareholders' equity 745,772 639,404 715,769
----------- ----------- -----------
Total liabilities and shareholders' equity $8,656,701 $7,813,814 $8,792,699
=========== =========== ===========
The accompanying notes are an integral part of the financial statements
</TABLE>
Page 2
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
WEST ONE BANCORP AND SUBSIDIARIES
<CAPTION>
For the quarter ended
March 31,
Dollars in thousands except per share data 1995 1994
--------- ---------
<S> <C> <C>
Interest income
Loans $137,608 $105,543
Short-term investments 1,734 441
Interest and dividends on securities:
United States Treasury and
Government agencies 10,511 6,615
State and municipal bonds 7,505 7,157
Mortgage-backed securities 3,866 3,509
Other 2,184 2,721
--------- ---------
Total interest income 163,408 125,986
--------- ---------
Interest expense
Deposits 58,998 37,862
Federal funds purchased and securities
sold under agreements to repurchase 7,731 3,684
Other short-term borrowings 2,191 2,177
Long-term debt 4,470 1,761
--------- ---------
Total interest expense 73,390 45,484
--------- ---------
Net interest income 90,018 80,502
Provision for credit losses 3,159 3,989
--------- ---------
Net interest income after
provision for credit losses 86,859 76,513
--------- ---------
Noninterest income
Trust fees and commissions 3,479 3,543
Service charges on deposit accounts 10,069 8,984
Other service charges, fees and commissions 13,763 10,624
Other 1,841 3,287
Loss on securities (115) (158)
--------- ---------
Total noninterest income 29,037 26,280
--------- ---------
Noninterest expense
Employee compensation and benefits 39,069 34,038
Outside services 8,384 7,464
Equipment 5,524 5,483
Net occupancy 5,355 4,718
Insurance and miscellaneous taxes 5,083 4,762
Marketing 2,389 2,474
Postage and courier 2,700 2,347
Supplies 1,865 1,799
Telephone 1,951 1,784
Other 4,576 5,604
--------- ---------
Total noninterest expense 76,896 70,473
--------- ---------
Income before taxes 39,000 32,320
Provision for income taxes 10,732 9,405
--------- ---------
Net income $28,268 $22,915
========= =========
Primary earnings per share $.76 $.65
Fully diluted earnings per share .72 .62
Dividends declared per share .22 .18
========= =========
The accompanying notes are an integral part of the financial statements
</TABLE>
Page 3
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
WEST ONE BANCORP AND SUBSIDIARIES (Unaudited)
<CAPTION>
For the three months ended
March 31,
Dollars in thousands 1995 1994
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $28,268 $22,915
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for credit losses 3,159 3,989
Depreciation of premises and equipment 4,370 3,986
Amortization and accretion of premiums and discounts 2,868 2,963
Amortization of intangible and other assets 2,733 2,734
Originations of real estate loans held for sale (37,737) (101,434)
Proceeds from real estate and other loans sold 39,624 116,160
Net gain on sale of real estate loans (333) (414)
Net loss on sale of securities 115 158
Purchase of trading account securities (18,842) (14,197)
Sale of trading account securities 18,258 14,406
Change in assets and liabilities:
Interest receivable 1,229 (2,663)
Other assets (6,097) (4,505)
Other liabilities 11,785 6,106
--------- ---------
Net cash provided by operating activities 49,400 50,204
--------- ---------
Cash flows from investing activities:
Change in short-term investments, maturities less than 90 days 40,680 (119,952)
Purchase of securities available for sale (141,032) (112,050)
Maturity of securities available for sale 78,449 101,752
Sale of securities available for sale 100,133 89,827
Purchase of securities held to maturity (8,817) (16,815)
Maturity of securities held to maturity 9,448 14,498
Sale of securities held to maturity 3,223 --
Change in net loans and leases (49,861) (77,866)
Purchase of premises and equipment (3,131) (2,755)
Sale of premises and equipment 39 65
Additions to intangible assets (1,327) (641)
Sale of other real estate owned 2,084 2,076
Cash provided by acquisition -- 10,251
--------- ---------
Net cash provided (used) by investing activities 29,888 (111,610)
Page 4
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Cash flows from financing activities:
Change in deposits 59,980 98,053
Change in short-term borrowings, maturities less than 90 days (313,585) (32,260)
Proceeds from short-term borrowings 1,721 5,277
Payments on short-term borrowings (1,195) (2,970)
Additions to long-term debt 70,105 --
Payments on long-term debt (13,087) (1,349)
Proceeds from issuance of common stock 1,268 2,616
Cash dividends paid (8,084) (6,249)
--------- ---------
Net cash provided (used) by financing activities (202,877) 63,118
--------- ---------
Net increase (decrease) in cash and due from banks (123,589) 1,712
Cash and due from banks - January 1 632,577 450,384
--------- ---------
Cash and due from banks - March 31 $508,988 $452,096
========= =========
Supplemental information:
Interest paid 72,260 44,511
Income taxes paid 195 2,035
Noncash activities:
Loans held for sale transferred to the loan portfolio 4,344 10,443
Loan charge-offs 4,731 4,509
Transfer of loans to other real estate owned 1,357 3,090
Tax benefit of stock options exercised 433 405
Dividends declared not paid 8,104 6,294
Securities purchased not settled 6,061 16,345
Acquisitions:
Securities and short-term investments -- 18,532
Net loans -- 17,331
Premises and equipment -- 1,191
Deposits -- 44,474
Other liabilities, net -- 745
Equity -- 2,086
========= =========
The accompanying notes are an integral part of the financial statements
</TABLE>
Page 5
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NOTES TO QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS
West One Bancorp and Subsidiaries
These statements are unaudited financial statements and should be read in
conjunction with the 1994 Annual Report of West One Bancorp and
Subsidiaries (West One). All adjustments (consisting only of normal
recurring accruals and the acquisitions as discussed below) which are, in
the opinion of management, necessary to present fairly the consolidated
financial position, results of operations and cash flows have been made in
the accompanying financial statements.
RECLASSIFICATION
Certain reclassifications of 1994 amounts were made in order to conform to
the 1995 presentation, none of which affect previously reported net income.
ACQUISITIONS
West One acquired the financial institutions listed below in transactions
accounted for as poolings of interests. The acquisitions were not material
to West One's financial position, results of operations and cash flows and
prior year financial statements have not been restated.
- - November 10, 1994, National Security Bank with assets of $132 million
in exchange for 1,101,832 shares of West One Bancorp common stock.
- - September 2, 1994, Valley Commercial Bank, a two-branch $64 million
bank headquartered in Clarkston, WA, in exchange for 404,523 shares of
West One Bancorp common stock.
- - January 21, 1994, Idaho State Bank with assets of $50 million in
exchange for 133,332 shares of West One Bancorp common stock.
On April 15, 1994, West One Bancorp acquired ten Far West Federal Savings
Bank branches in Oregon from the Resolution Trust Corporation. The
transaction included the receipt of $160 million in cash, $2 million of
premises and equipment, $11 million of intangible assets and the assumption
of $173 million of deposits and other liabilities. The transaction was
accounted for as a purchase.
OTHER EVENTS
On May 5, 1995, U. S. Bancorp, an Oregon corporation, entered into an
Agreement and Plan of Merger (the "Merger Agreement") with West One
Bancorp, an Idaho corporation ("West One"), pursuant to which West One will
be merged with and into U. S. Bancorp (the "Merger"). As a result of the
Merger, each outstanding share of West One's common stock, par value $1.00
per share ("West One Common Stock"), will be converted into 1.47 shares of
U. S. Bancorp Common Stock, par value $5.00 per share ("U. S. Bancorp
Common Stock"). The Merger is conditioned upon, among other things,
approval by shareholders of U. S. Bancorp and by shareholders of West One,
and upon certain regulatory approvals. The Merger is expected to be
completed by year-end 1995. The Merger Agreement is attached as Exhibit 2
hereto and its terms are incorporated herein by reference.
Page 6
<PAGE>
As a condition to entering into the Merger Agreement, on May 6, 1995, U. S.
Bancorp and West One entered into (i) a Stock Option Agreement between West
One, as issuer, and U. S. Bancorp, as grantee (the "West One Stock Option
Agreement"), pursuant to which West One granted to U. S. Bancorp the right
upon the terms and subject to the conditions set forth therein, to purchase
up to 19.9% of the outstanding shares of West One Common Stock at a price
of $34.00 per share, and (ii) a Stock Option Agreement between U. S.
Bancorp, as issuer, and West One as grantee (the "U. S. Bancorp Stock
Option Agreement"), pursuant to which U. S. Bancorp granted to West One the
right to purchase up to 19.9% of the outstanding shares of U. S. Bancorp
Common Stock at a price of $28.00 per share. The West One Stock Option
Agreement and the U. S. Bancorp Stock Option Agreement are attached as
Exhibits 10.1 and 10.2 hereto, respectively, and their terms are
incorporated herein by reference.
During the first quarter of 1995, West One implemented Statement of
Financial Accounting Standards (SFAS) No. 114, "Accounting by Creditors for
Impairment of a Loan," SFAS No. 116, "Accounting for Contributions Received
and Contributions Made" and SFAS No. 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures." None of these
statements had a material effect on West One's financial condition, results
of operations, cash flows or related disclosures.
Page 7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
PERFORMANCE SUMMARY
West One Bancorp reported net income of $28.3 million for the first quarter
of 1995, the highest quarterly earnings in the Corporation's history and a
23% increase from the $22.9 million earned in the first quarter of 1994.
Fully diluted net income per share was $.72 for the quarter compared to
$.62 for the same quarter last year. Loan growth and lower credit related
costs contributed to the earnings improvement in the current quarter. West
One earned a return on average assets of 1.34% and a return on average
shareholders' equity of 15.63% in the first quarter of 1995 compared to
1.22% and 14.91%, respectively, for the first quarter of 1994.
Strong banking fundamentals contributed to a successful first quarter of
1995. Loan growth, excellent asset quality and a stable net interest
margin, despite economic uncertainties and competitive pressures, favorably
impacted West One's performance. A fortress balance sheet, characterized
by a strong and growing capital base, reserves well in excess of problem
loans and core deposit growth, contributed to an excellent first quarter.
The regional economy served by West One Bancorp continued to expand during
the first quarter of 1995 but at a slower pace than experienced a year ago.
Nonfarm employment posted above average gains in Idaho, Washington, Oregon
and Utah, although the increases were more moderate than in 1994. Further
employment gains are expected in 1995 according to current state forecasts
and are expected to exceed the national average. Soil moisture and
snowpack accumulations are adequate throughout the region, assuring ample
water supplies for the region's important tourism and agricultural
industries after drought conditions in 1994. Export activity has been a
bright spot in the regional economy as the Pacific Northwest is favorably
situated to take advantage of the recently devalued dollar, particularly in
Pacific Rim trade. Export markets provide an additional measure of
strength and stability to the economies of Washington, Oregon and Idaho.
NET INTEREST INCOME AND MARGIN
Taxable equivalent net interest income was $95.1 million in the first
quarter of 1995, up $9.5 million or 11% from the same period of last year.
The increase included a $1.5 million interest income recovery from the
payoff of a hotel loan in Salt Lake City. Earning assets averaged $7.8
billion during the quarter, a 13% increase from the same quarter in 1994.
Average loans increased 12.5% over the same period due to growth in all
four states and in the key lending categories of real estate, consumer,
commercial and agricultural loans. Net interest margin was 4.93% in the
first quarter of 1995 compared to 5.00% in the same quarter of last year.
Excluding the interest income recovery, net interest margin was 4.86% in
the first quarter of 1995 compared to 4.88% in the fourth quarter of 1994.
Loans increased at an annualized rate of 7.5% from the fourth quarter of
1994 to the first quarter of 1995, despite the seasonal decline in
outstanding agricultural loan balances.
Page 8
<PAGE>
ASSET QUALITY
West One provided $3.2 million for credit losses and incurred $2.6 million
in net charge-offs for the first quarter of 1995. Net charge-offs amounted
to .18% of average loans during this period. During the first quarter of
1994, West One provided $4.0 million for credit losses. Nonperforming
assets totaled $26.9 million at March 31, 1995 compared to $26.4 million a
year ago. Nonperforming assets represented .31% of total assets and .44%
of loans and other real estate owned at March 31, 1995 compared to .35% and
.49%, respectively, a year ago. Accruing loans past due 90 days or more, a
precursor of problem loans, totaled only $1.7 million at March 31, 1995.
The allowance for credit losses was $82.3 million at March 31, 1995, up 7%
from $77.2 million a year ago. Credit loss allowance coverage of
nonperforming loans was 378% at March 31, 1995.
NONINTEREST INCOME AND EXPENSE
Noninterest income was $29.0 million in the first quarter of 1995, up 10.5%
from the first quarter of 1994. Other service charges, fees and
commissions included increases in real estate servicing fees and bankcard
income. Higher mortgage rates curtailed real estate loan originations
causing a decline in other income.
Noninterest expense was $76.9 million in the first quarter of 1995, up 9%
from the first quarter of 1994. Excluding the impact of 1994 acquisitions,
noninterest expense increased 7%. The provision for income taxes in the
first quarter of 1995 included $1.0 million of federal research and
experimental tax credits earned under new regulations applicable to prior
years.
CAPITAL ADEQUACY
Shareholders' equity was $746 million at March 31, 1995, a 17% increase
from a year ago. Equity represented 8.61% of assets at March 31, 1995
compared to 8.18% a year ago. Capital adequacy levels established by the
Federal Reserve Board require minimum leverage, tier one and total capital
ratios of 3%, 4% and 8%, respectively. In addition, regulators deem a
financial institution "well capitalized", the highest rating available,
when leverage, tier one and total capital ratios total at least 5%, 6% and
10%, respectively. West One's leverage, tier one and total capital ratios
were 8.44%, 10.50% and 12.51%, respectively, at March 31, 1995 compared to
7.87%, 9.85% and 12.13%, respectively, at March 31, 1994.
Page 9
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Various legal proceedings arising in the normal course of
business are pending against West One and its subsidiaries.
In the opinion of management, liability, if any, resulting
from these proceedings will not have a material impact on
West One's financial position, results of operations or cash
flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Shareholders' Meeting of West One Bancorp was
held on April 20, 1995. The following matters were voted on
by the shareholders:
Proposal No. 1: Election of four Class I members of the
Board of Directors with the votes cast as follows:
Broker
In Favor Withheld Non-votes
Harry Bettis 30,017,546 470,762 17,047
Norma Cugini 30,022,792 466,023 16,540
John B. Fery 30,019,001 469,307 17,047
Stuart A. Hall 30,023,173 465,134 17,048
The other directors whose terms of office continue after the
meeting are: William J. Deasy, Jack B. Little, Warren E.
McCain, Douglas W. McCallum, Daniel R. Nelson, Allen T.
Noble and Philip B. Soulen.
Proposal No. 2: Ratification of selection of Coopers &
Lybrand, L.L.P. as the Corporation's Independent Certified
Public Accountants for the current fiscal year ending
December 31, 1995.
In Favor Against Abstain
30,389,042 48,426 67,886
Page 10
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 2 - Agreement and Plan of Merger between
U. S. Bancorp and West One Bancorp dated May 5,
1995.
Exhibit 10.1 - West One Stock Option Agreement dated
May 6, 1995.
Exhibit 10.2 - U. S. Bancorp Stock Option Agreement
dated May 6, 1995.
Exhibit 11 - Statement regarding computation of per
share earnings.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K - No reports were filed on Form 8-K
for the quarter ended March 31, 1995.
Page 11
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
under-signed thereunto duly authorized.
WEST ONE BANCORP
Date: May 12, 1995
/s/ Scott M. Hayes
Executive Vice President and
Chief Financial Officer
/s/ Jim A. Peterson
Senior Vice President
and Controller
(Principal Accounting Officer)
Page 12
AGREEMENT AND PLAN OF MERGER
between
U. S. BANCORP
and
WEST ONE BANCORP
Dated as of May 5, 1995
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Time . . . . . . . . . . . . . . . . . . . . 1
1.3 Effects of the Merger. . . . . . . . . . . . . . . . . 2
1.4 Conversion of West One Common Stock. . . . . . . . . . 2
1.5 Bancorp Common Stock; Bancorp Preferred Stock. . . . . 3
1.6 Options. . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Convertible Debt . . . . . . . . . . . . . . . . . . . 3
1.8 Articles of Incorporation. . . . . . . . . . . . . . . 3
1.9 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Tax Consequences . . . . . . . . . . . . . . . . . . . 3
1.11 Board of Directors . . . . . . . . . . . . . . . . . . 3
ARTICLE II
EXCHANGE OF SHARES. . . . . . . . . . . 4
2.1 Bancorp to Make Shares Available . . . . . . . . . . . 4
2.2 Exchange of Shares . . . . . . . . . . . . . . . . . . 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WEST ONE. . . . . 6
3.1 Corporate Organization . . . . . . . . . . . . . . . . 6
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . 7
3.3 Authority; No Violation. . . . . . . . . . . . . . . . 8
3.4 Consents and Approvals . . . . . . . . . . . . . . . . 8
3.5 Reports. . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 Financial Statements . . . . . . . . . . . . . . . . . 9
3.7 Broker's Fees. . . . . . . . . . . . . . . . . . . . . 10
3.8 Absence of Certain Changes or Events . . . . . . . . . 10
3.9 Legal Proceedings. . . . . . . . . . . . . . . . . . . 11
3.10 Taxes and Tax Returns. . . . . . . . . . . . . . . . . 11
3.11 Employees. . . . . . . . . . . . . . . . . . . . . . . 12
3.12 SEC Reports. . . . . . . . . . . . . . . . . . . . . . 14
3.13 Compliance with Applicable Law . . . . . . . . . . . . 14
3.14 Certain Contracts. . . . . . . . . . . . . . . . . . . 14
3.15 Agreements with Regulatory Agencies. . . . . . . . . . 15
3.16 Undisclosed Liabilities. . . . . . . . . . . . . . . . 15
3.17 State Takeover Laws. . . . . . . . . . . . . . . . . . 16
- i -
3.18 Rights Agreement . . . . . . . . . . . . . . . . . . . 16
3.19 Pooling of Interests . . . . . . . . . . . . . . . . . 16
3.20 Interest Rate Risk Management Instruments;
Derivatives. . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCORP. . . . . 17
4.1 Corporate Organization . . . . . . . . . . . . . . . . 17
4.2 Capitalization . . . . . . . . . . . . . . . . . . . . 17
4.3 Authority; No Violation. . . . . . . . . . . . . . . . 18
4.4 Consents and Approvals . . . . . . . . . . . . . . . . 19
4.5 Reports. . . . . . . . . . . . . . . . . . . . . . . . 19
4.6 Financial Statements . . . . . . . . . . . . . . . . . 20
4.7 Brokers' Fees. . . . . . . . . . . . . . . . . . . . . 20
4.8 Absence of Certain Changes or Events . . . . . . . . . 20
4.9 Legal Proceedings. . . . . . . . . . . . . . . . . . . 21
4.10 Taxes and Tax Returns. . . . . . . . . . . . . . . . . 21
4.11 Employees. . . . . . . . . . . . . . . . . . . . . . . 22
4.12 SEC Reports. . . . . . . . . . . . . . . . . . . . . . 24
4.13 Compliance with Applicable Law . . . . . . . . . . . . 24
4.14 Certain Contracts. . . . . . . . . . . . . . . . . . . 24
4.15 Agreements with Regulatory Agencies. . . . . . . . . . 25
4.16 Undisclosed Liabilities. . . . . . . . . . . . . . . . 25
4.17 Pooling of Interests . . . . . . . . . . . . . . . . . 26
4.18 Interest Rate Risk Management Instruments;
Derivatives. . . . . . . . . . . . . . . . . . . . . . 26
4.19 State Takeover Laws. . . . . . . . . . . . . . . . . . 26
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS. . . . . 26
5.1 Conduct of West One Businesses Prior to the Effective
Time . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.2 West One Forbearances. . . . . . . . . . . . . . . . . 27
5.3 Bancorp Forbearances . . . . . . . . . . . . . . . . . 29
ARTICLE VI
ADDITIONAL AGREEMENTS. . . . . . . . . . 30
6.1 Regulatory Matters . . . . . . . . . . . . . . . . . . 30
6.2 Access to Information. . . . . . . . . . . . . . . . . 31
6.3 Shareholders' Approvals. . . . . . . . . . . . . . . . 32
6.4 Legal Conditions to Merger . . . . . . . . . . . . . . 32
6.5 Affiliates; Publication of Combined Financial
Results. . . . . . . . . . . . . . . . . . . . . . . . 32
6.6 Stock Exchange Listing of Shares . . . . . . . . . . . 33
6.7 Employee Benefit Plans . . . . . . . . . . . . . . . . 33
6.8 Indemnification; Directors' and Officers' Insurance. . 34
6.9 Additional Agreements. . . . . . . . . . . . . . . . . 36
6.10 Advice of Changes. . . . . . . . . . . . . . . . . . . 36
6.11 Dividends. . . . . . . . . . . . . . . . . . . . . . . 36
- ii -
ARTICLE VII
CONDITIONS PRECEDENT . . . . . . . . . . 37
7.1 Conditions to Each Party's Obligation to
Effect the Merger . . . . . . . . . . . . . . . . . . . 37
(a) Shareholder Approval. . . . . . . . . . . . . . . 37
(b) Nasdaq Listing. . . . . . . . . . . . . . . . . . 37
(c) Other Approvals . . . . . . . . . . . . . . . . . 37
(d) Form S-4. . . . . . . . . . . . . . . . . . . . . 37
(e) No Injunctions or Restraints; Illegality. . . . . 37
(f) Federal Tax Opinions. . . . . . . . . . . . . . . 38
(g) Pooling of Interests. . . . . . . . . . . . . . . 38
7.2 Conditions to Obligations of Bancorp . . . . . . . . . 38
(a) Representations and Warranties. . . . . . . . . . 39
(b) Performance of Obligations of West One. . . . . . 39
(c) West One Rights Agreement . . . . . . . . . . . . 39
7.3 Conditions to Obligations of West One. . . . . . . . . 39
(a) Representations and Warranties. . . . . . . . . . 39
(b) Performance of Obligations of Bancorp . . . . . . 39
ARTICLE VIII
TERMINATION AND AMENDMENT. . . . . . . . . 40
8.1 Termination. . . . . . . . . . . . . . . . . . . . . . 40
8.2 Effect of Termination. . . . . . . . . . . . . . . . . 40
8.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . 41
8.4 Extension; Waiver. . . . . . . . . . . . . . . . . . . 41
ARTICLE IX
GENERAL PROVISIONS. . . . . . . . . . . 41
9.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . 41
9.2 Nonsurvival of Representations,
Warranties, and Agreements . . . . . . . . . . . . . . 41
9.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . 42
9.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . 42
9.5 Interpretation . . . . . . . . . . . . . . . . . . . . 43
9.6 Counterparts . . . . . . . . . . . . . . . . . . . . . 43
9.7 Entire Agreement . . . . . . . . . . . . . . . . . . . 43
9.8 Governing Law. . . . . . . . . . . . . . . . . . . . . 44
9.9 Severability . . . . . . . . . . . . . . . . . . . . . 44
9.10 Publicity. . . . . . . . . . . . . . . . . . . . . . . 44
9.11 Assignment . . . . . . . . . . . . . . . . . . . . . . 44
- iii -
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 5, 1995, by and
between U. S. BANCORP, an Oregon corporation ("Bancorp"), and WEST ONE
BANCORP, an Idaho corporation ("West One").
WHEREAS the Boards of Directors of Bancorp and West One have
determined that it is in the best interests of their respective
companies and their shareholders to consummate the merger provided for
herein in which West One will, subject to the terms and conditions set
forth herein, merge (the "Merger") with and into Bancorp, so that
Bancorp is the surviving corporation in the Merger;
WHEREAS as a condition to, and on the day immediately after the
date of execution of, this Agreement, Bancorp and West One are
entering into a Bancorp Stock Option Agreement (the "Bancorp Option
Agreement"); and
WHEREAS as a condition to, and on the day immediately after the
date of execution of, this Agreement, Bancorp and West One are
entering into a West One Stock Option Agreement (the "West One Option
Agreement"; and together with the Bancorp Option Agreement, the
"Option Agreements"); and
WHEREAS the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to
prescribe certain conditions to the Merger,
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and
intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, West One shall merge with and into Bancorp at the Effective
Time (as defined in Section 1.2 hereof) in accordance with the
Oregon Business Corporation Act (the "OBCA") and the Idaho Business
Corporation Act (the "IBCA"). Bancorp shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation")
in the Merger, and shall continue its corporate existence under the
laws of the State of Oregon. Upon consummation of the Merger, the
separate corporate existence of West One shall terminate.
1.2 Effective Time. The merger shall become effective as set
forth in articles of merger (the "Articles of Merger") which shall be
filed with the Secretary of State of the State of Oregon (the "Oregon
Secretary") and the Secretary of State of the State of Idaho (the
"Idaho Secretary"), in each case, on the Closing Date (as defined in
Section 9.1 hereof). The date and time when the Merger becomes
- 1 -
effective, as set forth in the Articles of Merger, is herein referred
to as the "Effective Time."
1.3 Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in Section 60.497 of the OBCA
and Section 30-1-76 of the IBCA.
1.4 Conversion of West One Common Stock. At the Effective Time,
subject to Section 2.2(e) hereof, by virtue of the Merger, and without
any action on the part of Bancorp, West One or the holder of any share
of the common stock, $1.00 par value per share, of West One ("West One
Common Stock"), each share of West One Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares
of West One Common Stock held (x) in West One's treasury or
(y) directly or indirectly by Bancorp or West One or any of their
respective Subsidiaries (as defined below) (except for Trust Account
Shares and DPC Shares, as such terms are defined below)) shall be
converted into the right to receive 1.47 shares (the "Exchange Ratio")
of common stock, $5.00 par value per share, of Bancorp ("Bancorp
Common Stock"); provided, however, that each share of West One Common
Stock as to which a dissenting shareholder has taken the actions
required by Section 30-1-81 of the IBCA shall be treated in accordance
with the provisions of that section.
All of the shares of West One Common Stock converted into Bancorp
Common Stock pursuant to this Article I shall no longer be outstanding
and shall automatically be canceled and shall cease to exist as of the
Effective Time, and each certificate (each a "West One Certificate")
previously representing any such shares of West One Common Stock shall
thereafter represent the right to receive (i) a certificate
representing the number of whole shares of Bancorp Common Stock and
(ii) cash in lieu of fractional shares into which the shares of
West One Common Stock represented by such West One Certificate have
been converted pursuant to this Section 1.4 and Section 2.2(e) hereof.
West One Certificates previously representing shares of West One
Common Stock shall be exchanged for certificates representing whole
shares of Bancorp Common Stock and cash in lieu of fractional shares
issued in consideration therefor upon the surrender of such West One
Certificates in accordance with Section 2.2 hereof, without any
interest thereon. If prior to the Effective Time (or as of a record
date prior to the Effective Time) the outstanding shares of Bancorp
Common Stock shall have been increased, decreased, changed into or
exchanged for a different number or kind of shares or securities as
a result of a reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, or other similar
change in Bancorp's capitalization, then an appropriate and
proportionate adjustment shall be made to the Exchange Ratio.
At the Effective Time, all shares of West One Common Stock that
are owned by West One as treasury stock and all shares of West One
Common Stock that are owned directly or indirectly by Bancorp or
West One or any of their respective Subsidiaries (other than shares
of West One Common Stock held directly or indirectly in trust
accounts, managed accounts and the like or otherwise held in a
fiduciary capacity that are beneficially owned by third parties (any
such shares, and shares of Bancorp Common Stock that are similarly
held, whether held directly or indirectly by Bancorp or West One, as
the case may be, being referred to herein as "Trust Account Shares")
and other than any shares of West One Common Stock held by Bancorp or
- 2 -
West One or any of their respective Subsidiaries in respect of a debt
previously contracted (any such shares of West One Common Stock, and
shares of Bancorp Common Stock that are similarly held, whether held
directly or indirectly by Bancorp or West One or any of their
respective Subsidiaries, being referred to herein as "DPC Shares"))
shall be canceled and shall cease to exist and no stock of Bancorp or
other consideration shall be delivered in exchange therefor. All
shares of Bancorp Common Stock that are owned by West One or any of
its Subsidiaries (other than Trust Account Shares and DPC Shares)
shall become authorized but unissued stock of Bancorp.
1.5 Bancorp Common Stock; Bancorp Preferred Stock. At and after
the Effective Time, each share of Bancorp Common Stock and each share
of Series A preferred stock, no par value, of Bancorp issued and
outstanding immediately prior to the Closing Date shall remain an
issued and outstanding share of common stock or preferred stock, as
the case may be, of the Surviving Corporation and shall not be
affected by the Merger.
1.6 Options. Outstanding options to purchase West One Common
Stock shall be converted into options to purchase Bancorp Common Stock
as provided in Section 6.7(c).
1.7 Convertible Debt. The right of each holder of West One's
7 3/4 percent Convertible Subordinated Debentures Due 2006 (the
"Convertible Debentures"), to receive West One Common Stock shall be
converted into the right to receive Bancorp Common Stock. The number
of shares of Bancorp Common Stock that such holder shall be entitled
to receive shall be equal to the product of the number of shares of
West One Common Stock that such holder would have been entitled to
receive multiplied by the Exchange Ratio, as provided in the indenture
governing the Convertible Debentures.
1.8 Articles of Incorporation. At the Effective Time, the
Articles of Incorporation of Bancorp, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation
of the Surviving Corporation.
1.9 Bylaws. At the Effective Time, the Bylaws of Bancorp, as
in effect immediately prior to the Effective Time, shall be the
Bylaws of the Surviving Corporation until thereafter amended in
accordance with applicable law.
1.10 Tax Consequences. It is intended that the Merger shall
constitute a reorganization within the meaning of Section 368(a) of
the Code and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 of the Code.
1.11 Board of Directors. From and after the Effective Time,
the Board of Directors of the Surviving Corporation shall consist
of not more than twelve persons, including the members of the Board
of Directors of Bancorp as constituted immediately prior to the
Effective Time, Mr. Daniel R. Nelson, and three additional persons
named prior to the mailing of the Joint Proxy Statement (as defined
below) by action of a majority of the Board of Directors of
West One.
- 3 -
ARTICLE II
EXCHANGE OF SHARES
2.1 Bancorp to Make Shares Available. At or prior to the
Effective Time, Bancorp shall deposit, or shall cause to be
deposited, with a bank or trust company selected by Bancorp and
reasonably acceptable to West One (which may be a Subsidiary of
Bancorp) (the "Exchange Agent"), for the benefit of the holders of
West One Certificates, for exchange in accordance with this
Article II, certificates representing the shares of Bancorp Common
Stock and the cash in lieu of any fractional shares (such cash and
certificates for shares of Bancorp Common Stock, together with any
dividends or distributions with respect thereto, being hereinafter
referred to as the "Exchange Fund") to be issued pursuant to
Section 1.4 and paid pursuant to Section 2.2(a) in exchange for
outstanding shares of West One Common Stock.
2.2 Exchange of Shares. (a) As soon as practicable after
the Effective Time, and in no event later than five business days
after receipt from West One or its transfer agent of a list of
shareholders of record of West One as of the Effective Time, the
Exchange Agent shall mail to each holder of record of a West One
Certificate or Certificates a form letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
West One Certificates to the Exchange Agent) and instructions for
use in effecting the surrender of the West One Certificates in
exchange for certificates representing the shares of Bancorp Common
Stock and the cash in lieu of fractional shares, if any, into which
the shares of West One Common Stock represented by such West One
Certificate or Certificates shall have been converted pursuant to
this Agreement. Upon proper surrender of a West One Certificate
for exchange and cancellation to the Exchange Agent, together with
such properly completed letter of transmittal, duly executed, the
holder of such West One Certificate shall be entitled to receive in
exchange therefor, as applicable, (i) a certificate representing
that number of whole shares of Bancorp Common Stock into which the
shares of West One Common Stock theretofore represented by the
West One Certificate so surrendered shall have been converted
pursuant to the provisions of Article I hereof and (ii) a check
representing the amount of cash in lieu of fractional shares, if
any, that such holder has the right to receive in respect of the
West One Certificate surrendered pursuant to the provisions of this
Article II, and the West One Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on the
cash in lieu of fractional shares and unpaid dividends and
distributions, if any, payable to holders of West One Certificates.
Notwithstanding anything to the contrary contained herein, no
certificate representing Bancorp Common Stock or cash in lieu of a
fractional share interest shall be delivered to a person who is an
Affiliate (as defined in Section 6.5) of West One unless such
Affiliate has theretofore executed and delivered to Bancorp the
agreement referred to in Section 6.5.
(b) No dividends or other distributions declared after the
Effective Time with respect to Bancorp Common Stock shall be paid
to the holder of any unsurrendered West One Certificate until the
holder thereof shall surrender such West One Certificate in
accordance with this Article II. After the surrender of a West One
Certificate in accordance with this Article II, the record holder
thereof shall be entitled to receive any such dividends or other
- 4 -
distributions, without any interest thereon, that theretofore had
become payable with respect to shares of Bancorp Common Stock
represented by such West One Certificate.
(c) If any certificate representing shares of Bancorp Common
Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it
shall be a condition of the issuance thereof that the Certificate
so surrendered shall be properly endorsed (or accompanied by an
appropriate instrument of transfer) and otherwise in proper form
for transfer and that the person requesting such exchange shall pay
to the Exchange Agent in advance any transfer or other taxes
required by reason of the issuance of a certificate representing
shares of Bancorp Common Stock in any name other than that of the
registered holder of the West One Certificate surrendered, or
required for any other reason, or shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or
is not payable.
(d) After the Effective Time, there shall be no transfers on
the stock transfer books of West One of the shares of West One
Common Stock that were issued and outstanding immediately prior to
the Effective Time. If, after the Effective Time, West One
Certificates representing such shares are presented for transfer to
the Exchange Agent, they shall be canceled and exchanged for
certificates representing shares of Bancorp Common Stock as
provided in this Article II.
(e) Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of
Bancorp Common Stock shall be issued upon the surrender for
exchange of West One Certificates, no dividend or distribution with
respect to Bancorp Common Stock shall be payable on or with respect
to any fractional share, and such fractional share interests shall
not entitle the owner thereof to vote or to any other rights of a
shareholder of West One. In lieu of the issuance of any such
fractional share, Bancorp shall pay to each former shareholder of
West One who otherwise would be entitled to receive such fractional
share an amount in cash determined by multiplying (i) the average
of the closing-sale prices of Bancorp Common Stock on the NASDAQ
Stock Market National Market System as reported by The Wall Street
Journal for the five trading days immediately preceding the date of
the Effective Time by (ii) the fraction of a share of Bancorp
Common Stock which such holder would otherwise be entitled to
receive pursuant to Section 1.4.
(f) Any portion of the Exchange Fund that remains unclaimed
by the shareholders of West One for twelve months after the
Effective Time shall be paid to Bancorp. Any shareholders of
West One who have not theretofore complied with this Article II
shall thereafter look only to Bancorp for payment of the shares of
Bancorp Common Stock, cash in lieu of any fractional shares and
unpaid dividends and distributions on the Bancorp Common Stock
deliverable in respect of each share of West One Common Stock that
such shareholder is entitled to receive pursuant to this Agreement,
without any interest thereon. Notwithstanding the foregoing, none
of Bancorp, West One, the Exchange Agent or any other person shall
be liable to any former holder of shares of West One Stock for any
amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
- 5 -
(g) In the event any West One Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by Bancorp, the posting by such person
of a bond in such amount as Bancorp may determine is reasonably
necessary as indemnity against any claim that may be made against
it with respect to such West One Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed West One
Certificate the shares of Bancorp Common Stock and cash in lieu of
fractional shares deliverable in respect thereof pursuant to this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF WEST ONE
Except as set forth in the disclosure schedule of West One
delivered to Bancorp concurrently herewith (the "West One
Disclosure Schedule"), West One hereby represents and warrants to
Bancorp as follows:
3.1 Corporate Organization. (a) West One is a corporation
duly organized and validly existing under the laws of the State of
Idaho. West One has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business
as it is now being conducted, and is duly licensed or qualified to
do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed
or qualified would not have a Material Adverse Effect (as defined
below) on West One. As used in this Agreement, the term "Material
Adverse Effect" means, with respect to Bancorp, West One or the
Surviving Corporation, as the case may be, a material adverse
effect on the business, results of operations or financial
condition of such party and its Subsidiaries taken as a whole. As
used in this Agreement, the word "Subsidiary" when used with
respect to any party means any bank, corporation, partnership or
other organization, whether incorporated or unincorporated, that is
consolidated with such party for financial reporting purposes.
West One is duly registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended (the "BHC Act"). The
Articles of Incorporation and Bylaws of West One, copies of which
have previously been made available to Bancorp, are true, complete
and correct copies of such documents as in effect as of the date of
this Agreement.
(b) Each West One Subsidiary (i) is duly organized and
validly existing as a bank, corporation or partnership under the
laws of its jurisdiction of organization, (ii) is duly qualified to
do business and in good standing in all jurisdictions (whether
federal, state, local or foreign) where its ownership or leasing of
property or the conduct of its business requires it to be so
qualified and in which the failure to be so qualified would have a
Material Adverse Effect on West One, and (iii) has all requisite
corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
- 6 -
(c) The minute books of West One accurately reflect in all
material respects all corporate actions since January 1, 1993, of
its shareholders and Board of Directors (including committees of
the Board of Directors of West One).
3.2 Capitalization. (a) The authorized capital stock of
West One consists of 75,000,000 shares of West One Common Stock and
5,000,000 shares of preferred stock, $1.00 par value per share. At
the close of business on March 31, 1995, there were
36,835,096 shares of West One Common Stock outstanding and
no shares of West One preferred stock outstanding. On March 31,
1995, no shares of West One Common Stock or West One Preferred
Stock were reserved for issuance, except that (i) shares of
West One Common Stock were reserved for issuance pursuant to
West One's dividend reinvestment and stock purchase plan (the
"West One DRIP"), (ii) 2,687,450 shares of West One Common Stock
were reserved for issuance pursuant to the conversion of the
Convertible Debentures, (iii) zero shares of West One Common Stock
were reserved for issuance pursuant to the conversion of West One's
convertible subordinated capital notes due 1997,
(iv) 2,332,719 shares of West One Common Stock were reserved for
issuance upon the exercise of stock options pursuant to the
West One Stock Plans, (v) shares of West One Series A Junior
Participating Preferred Stock were reserved for issuance upon
exercise of the rights (the "West One Rights") distributed to
holders of West One Common Stock pursuant to the Rights Agreement,
dated as of October 19, 1989, between West One and Norwest Bank
Minnesota, National Association, as Rights Agent (the "West One
Rights Agreement"), and (vi) the shares of West One Common Stock
issuable pursuant to the West One Option Agreement. All of the
issued and outstanding shares of West One Common Stock have been
duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights with no personal
liability attaching to the ownership thereof. Except as stated
above, West One does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares
of West One Common Stock or West One Preferred Stock or any other
equity securities of West One or any securities representing the
right to purchase or otherwise receive any shares of West One
Common Stock or West One Preferred Stock. West One has previously
provided Bancorp with a list of the option holders, the date of
each option to purchase West One Common Stock granted, the number
of shares subject to each such option, the expiration date of each
such option, and the price at which each such option may be
exercised under the West One Stock Plans. Since December 31, 1994,
West One has not issued any shares of its capital stock or any
securities convertible into or exercisable for any shares of its
capital stock, other than pursuant to (i) the exercise of employee
stock options, (ii) the West One DRIP, and (iii) conversion of the
Convertible Debentures.
(b) West One owns, directly or indirectly, all of the issued
and outstanding shares of capital stock of each of the West One
Subsidiaries, free and clear of any liens, charges, encumbrances
and security interests whatsoever, and all of such shares are duly
authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to
the ownership thereof. No West One Subsidiary has or is bound by
any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase
or issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock
- 7 -
or any other equity security of such Subsidiary. Assuming
compliance by Bancorp with Section 1.6 hereof, at the Effective
Time, there will not be any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character by
which West One or any of its Subsidiaries will be bound calling for
the purchase or issuance of any shares of the capital stock of
West One or any of its Subsidiaries.
3.3 Authority; No Violation. (a) West One has full
corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of West One. The Board of
Directors of West One has directed that this Agreement and the
transactions contemplated hereby be submitted to West One's
shareholders for approval at a meeting of such shareholders and,
except for the adoption of this Agreement by the affirmative vote
of the holders of a majority of the outstanding shares of West One
Common Stock, no other corporate proceedings on the part of
West One are necessary to approve this Agreement and to consummate
the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by West One and (assuming due
authorization, execution and delivery by Bancorp) constitutes a
valid and binding obligation of West One, enforceable against
West One in accordance with its terms, except as enforcement may be
limited by general principles of equity whether applied in a court
of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(b) Neither the execution and delivery of this Agreement by
West One nor the consummation by West One of the transactions
contemplated hereby, nor compliance by West One with any of the
terms or provisions hereof, will (i) violate any provision of the
Articles of Incorporation or Bylaws of West One or (ii) assuming
that the consents and approvals referred to in Section 3.4 are duly
obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable
to West One or any of its Subsidiaries or any of their respective
properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under,
constitute a default (or an event that, with notice or lapse of
time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation
of any lien, pledge, security interest, charge or other encumbrance
upon any of the respective properties or assets of West One or any
of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to
which West One or any of its Subsidiaries is a party, or by which
they or any of their respective properties or assets may be bound
or affected, except (in the case of clause (y) above) for such
violations, conflicts, breaches or defaults that, either
individually or in the aggregate, will not have or be reasonably
likely to have a Material Adverse Effect on West One.
3.4 Consents and Approvals. Except for (i) the filing of
applications and notices, as applicable, with the Board of
Governors of the Federal Reserve System (the "Federal Reserve
Board") under the BHC Act, (ii) the filing of any requisite
applications with the Office of the Comptroller of the Currency
(the "OCC") or the Federal Deposit Insurance Corporation (the
- 8 -
"FDIC") in connection with the merger of Subsidiaries of West One
and Bancorp, (iii) the filing of any required applications or
notices with any state agencies and approval of such applications
and notices (the "State Approvals"), (iv) the filing with the SEC
of a joint proxy statement in definitive form relating to the
meetings of Bancorp's and West One's shareholders to be held in
connection with this Agreement and the transactions contemplated
hereby (the "Joint Proxy Statement") and the registration statement
on Form S-4 (the "S-4") in which the Joint Proxy Statement will be
included as a prospectus, (v) the filing of the Articles of Merger
with the Oregon Secretary pursuant to the OBCA, (vi) the filing of
the Articles of Merger with the Idaho Secretary pursuant to the
IBCA, (vii) such filings and approvals as are required to be made
or obtained under the securities or "Blue Sky" laws of various
states in connection with the issuance of the shares of Bancorp
Common Stock pursuant to this Agreement, (viii) the approval of
this Agreement by the requisite vote of the shareholders of Bancorp
and West One, and (ix) the consents and approvals set forth in
West One Disclosure Schedule, no consents or approvals of or
filings or registrations with any court, administrative agency or
commission or other governmental authority or instrumentality (each
a "Governmental Entity") or with any third party are necessary in
connection with (A) the execution and delivery by West One of this
Agreement and (B) the consummation by West One of the Merger and
the other transactions contemplated hereby.
3.5 Reports. West One and each of its Subsidiaries have
timely and properly filed all material reports, registrations and
statements, together with any amendments required to be made with
respect thereto, that they were required to file since January 1,
1993, with (i) the Federal Reserve Board, (ii) the Office of Thrift
Supervision (the "OTS") under the Home Owners' Loan Act ("HOLA"),
(iii) any state regulatory authority (each a "State Regulator),
(iv) the OCC, (v) the FDIC, and (vi) any other self-regulatory
organization ("SRO") (collectively, "Regulatory Agencies"), and all
other material reports and statements required to be filed by them
since January 1, 1993, and have paid all fees and assessments due
and payable in connection therewith. Except for normal
examinations conducted by a Regulatory Agency in the regular course
of the business of West One and its Subsidiaries, no Regulatory
Agency has initiated any proceeding or, to the best knowledge of
West One, investigation into the business or operations of West One
or any of its Subsidiaries since January 1, 1993. There is no
material unresolved violation, criticism, or exception by any
Regulatory Agency with respect to any report or statement relating
to any examinations of West One or any of its Subsidiaries.
3.6 Financial Statements. West One has previously delivered
to Bancorp copies of (a) the consolidated balance sheets of
West One and its Subsidiaries as of December 31, for the fiscal
years 1993 and 1994, and the related consolidated statements of
income, changes in shareholders' equity and cash flows for the
fiscal years 1992 through 1994, inclusive, as reported in
West One's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, filed with the SEC under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), in each case
accompanied by the audit report of Coopers & Lybrand L.L.P.,
independent public accountants, with respect to West One, and
(b) the unaudited consolidated balance sheets of West One and its
Subsidiaries as of March 31, 1995, and March 31, 1994, and the
related unaudited consolidated statements of income, cash flows and
changes in shareholders' equity for the three-month periods then
ended substantially in the form that is proposed to be reported in
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West One's Quarterly Report on Form 10-Q for the period ended
March 31, 1995, filed with the SEC under the Exchange Act. The
financial statements referred to in this Section 3.6 (including the
related notes, where applicable) fairly present (subject, in the
case of the unaudited statements, to recurring audit adjustments
normal in nature and amount), the results of the consolidated
operations and changes in shareholders' equity and consolidated
financial position of West One and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set
forth; each of such statements (including the related notes, where
applicable) comply in all material respects with applicable
accounting requirements and with the published rules and
regulations of the SEC with respect thereto and each of such
statements (including the related notes, where applicable) has been
prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied during the periods
involved, except in each case as indicated in such statements or in
the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. The allowances for credit losses contained
in the financial statements referred to in this Section 3.6 were
adequate as of their respective dates to absorb reasonably
anticipated losses in the loan portfolio of West One and its
Subsidiaries in view of the size and character of such portfolio,
the current economic conditions, and other pertinent factors and no
facts have subsequently come to the attention of management of
West One that would cause management to restate in any material way
the level of such allowance for credit losses. With respect to
other real estate owned by West One and its Subsidiaries, the value
attributed thereto for purposes of compiling such financial
statements does not exceed the aggregate fair market value of such
real estate as of the date of acquisition of such real estate or as
subsequently reduced, all in accordance with regulations of the
applicable Regulatory Agencies. The books and records of West One
and its Subsidiaries have been, and are being, maintained in all
material respects in accordance with GAAP and any other applicable
legal and accounting requirements and reflect only actual
transactions.
3.7 Broker's Fees. Neither West One nor any West One
Subsidiary nor any of their respective officers or directors has
employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any
of the transactions contemplated by this Agreement or the Option
Agreements.
3.8 Absence of Certain Changes or Events. (a) Except as
publicly disclosed in West One Reports (as defined below) filed
prior to the date hereof, since December 31, 1994, (i) neither
West One nor any of its Subsidiaries has incurred any material
liability, except in the ordinary course of their business
consistent with their past practices, and (ii) no event has
occurred that has had, or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
West One.
(b) Except as publicly disclosed in West One Reports filed
prior to the date hereof, since December 31, 1994, West One and its
Subsidiaries have carried on their respective businesses in the
ordinary and usual course consistent with their past practices.
(c) Since January 1, 1995, neither West One nor any of its
Subsidiaries has (i) except for normal increases in the ordinary
course of business consistent with past practice or except as
required by applicable law, increased the wages, salaries,
compensation, pension, or other fringe benefits or perquisites
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payable to any executive officer, employee, or director from the
amount thereof in effect as of January 1, 1995, granted any
severance or termination pay, entered into any contract to make or
grant any severance or termination pay, or paid any bonus other
than customary year-end bonuses for fiscal 1994, (ii) suffered any
strike, work stoppage, slowdown, or other labor disturbance, or
(iii) been the subject of any organizing activities known to
West One.
3.9 Legal Proceedings. (a) Except as publicly disclosed in
West One Reports filed prior to the date hereof, neither West One
nor any of its Subsidiaries is a party to any, and there are no
pending or, to the best of West One's knowledge, threatened,
material legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any
nature (i) against West One or any of its Subsidiaries as to which
there is a reasonable possibility of an adverse determination and
which, if adversely determined, would, individually or in the
aggregate, have a Material Adverse Effect on West One or
(ii) challenging the validity or propriety of the transactions
contemplated by this Agreement or the West One Option Agreement.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon West One, any of its
Subsidiaries or the assets of West One or any of its Subsidiaries
that has had, or might reasonably be expected to have, a Material
Adverse Effect on West One.
3.10 Taxes and Tax Returns. (a) Each of West One and its
Subsidiaries has duly filed all material federal, state and, to the
best of West One's knowledge, material local information returns
and tax returns required to be filed by it (all such returns being
accurate and complete in all material respects) and has duly paid
or made provisions for the payment of all material Taxes (as
defined below) and other governmental charges which have been
incurred or are due or claimed to be due from it by federal, state,
county or local taxing authorities (including, without limitation,
if and to the extent applicable, those due in respect of its
properties, income, business, capital stock, deposits, franchises,
licenses, sales and payrolls) other than Taxes or other charges
that (1) are not yet delinquent or are being contested in good
faith and (2) have not been finally determined. The income tax
returns of West One and its Subsidiaries have been examined by the
Internal Revenue Service (the "IRS"), and any liability with
respect thereto has been satisfied for all years to and including
1985, and no material deficiencies were asserted as a result of
such examination or all such deficiencies were satisfied. To the
best of West One's knowledge, there are no material disputes
pending, or claims asserted for, Taxes or assessments upon West One
or any of its Subsidiaries, nor has West One or any of its
Subsidiaries been requested to give any currently effective waivers
extending the statutory period of limitation applicable to any
Federal, state, county or local income tax return for any period.
In addition, (i) proper and accurate amounts have been withheld by
West One and its Subsidiaries from their employees for all prior
periods in compliance in all material respects with the tax
withholding provisions of applicable federal, state and local laws,
except where failure to do so would not have a Material Adverse
Effect on West One, (ii) federal, state, county and local returns
that are accurate and complete in all material respects have been
filed by West One and its Subsidiaries for all periods for which
returns were due with respect to income tax withholding,
Social Security and unemployment taxes, except where failure to do
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so would not have a Material Adverse Effect on West One, (iii) the
amounts shown on such federal, state, local or county returns to be
due and payable have been paid in full or adequate provision
therefor has been included by West One in its consolidated
financial statements as of December 31, 1994, except where failure
to do so would not have a Material Adverse Effect on West One and
(iv) there are no tax liens upon any property or assets of the
West One or its Subsidiaries except liens for current taxes not yet
due. To the knowledge of West One, no property of West One or any
of its Subsidiaries is property that West One or any of its
Subsidiaries is or will be required to treat as being owned by
another person pursuant to the provisions of Section 168(f)(8) of
the Code (as in effect prior to its amendment by the Tax Reform Act
of 1986) or is "tax-exempt use property" within the meaning of
Section 169(h) of the Code. Neither West One nor any of its
Subsidiaries has been required to include in income any adjustment
pursuant to Section 481 of the Code by reason of a voluntary change
in accounting method initiated by West One or any of its
Subsidiaries, and the Internal Revenue Service has not initiated or
proposed any such adjustment or change in accounting method.
Except as set forth in the financial statements described in
Section 3.6 hereof, neither West One nor any of its Subsidiaries
has entered into a transaction which is being accounted for as an
installment obligation under Section 453 of the Code, which would
be reasonably likely to have a Material Adverse Effect on West One.
(b) As used in this Agreement, the term "Tax" or "Taxes"
means all federal, state, county, local, and foreign income,
excise, gross receipts, ad valorem, profits, gains, property,
sales, transfer, use, payroll, employment, severance, withholding,
duties, intangibles, franchise, and other taxes, charges, levies or
like assessments together with all penalties and additions to tax
and interest thereon.
(c) Any amount that could be received (whether in cash or
property or the vesting of property) as a result of any of the
transactions contemplated by this Agreement by any employee,
officer or director of West One or any of its affiliates who is a
"Disqualified Individual" (as such term is defined in proposed
Treasury Regulation Section 1.280G-1) under any employment,
severance or termination agreement, other compensation arrangement
or West One Benefit Plan (as defined below) currently in effect
would not be characterized as an "excess parachute payment" (as
such term is defined in Section 280G(b)(1) of the Code).
(d) No disallowance of a deduction under Section 162(m) of
the Code for employee remuneration of any amount paid or payable by
West One or any Subsidiary of West One under any contract, plan,
program, arrangement or understanding is reasonably likely.
3.11 Employees. (a) The West One Disclosure Schedule sets
forth a true and complete list of each material plan, arrangement
or agreement regarding compensation or benefits for any employees,
former employees, directors, or former directors that is maintained
as of the date of this Agreement (the "West One Benefit Plans") by
West One or any of its Subsidiaries or by any trade or business,
whether or not incorporated (an "ERISA Affiliate"), all of which
together with West One would be deemed a "single employer" within
the meaning of Section 4001 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
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(b) West One has heretofore delivered to Bancorp true and
complete copies of each of the West One Benefit Plans and all
related documents, including but not limited to (i) the actuarial
report for such Plan (if applicable) for each of the last two
years, and (ii) the most recent determination letter from the
Internal Revenue Service (if applicable) for such Plan.
(c) (i) Each of the West One Benefit Plans has been operated
and administered in all material respects in compliance with
applicable laws, including but not limited to ERISA and the Code,
(ii) each of the West One Benefit Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified,
(iii) with respect to each West One Benefit Plan that is subject to
Title IV of ERISA, the present value of accrued benefits under such
West One Benefit Plan, based upon the actuarial assumptions used
for funding purposes in the most recent actuarial report prepared
by such West One Benefit Plan's actuary with respect to such
West One Benefit Plan, did not, as of its latest valuation date,
exceed the then current value of the assets of such West One
Benefit Plan allocable to such accrued benefits, (iv) no West One
Benefit Plan provides benefits, including, without limitation,
death or medical benefits (whether or not insured), with respect to
current or former employees of West One, its Subsidiaries or any
ERISA Affiliate beyond their retirement or other termination of
service, other than (w) coverage mandated by applicable law,
(x) death benefits or retirement benefits under any "employee
pension plan," as that term is defined in Section 3(2) of ERISA,
(y) deferred compensation benefits accrued as liabilities on the
books of West One, its Subsidiaries or the ERISA Affiliates or
(z) benefits the full cost of which is borne by the current or
former employee (or his beneficiary), (v) no liability under
Title IV of ERISA has been incurred by West One, its Subsidiaries
or any ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to West One, its
Subsidiaries or any ERISA Affiliate of incurring a material
liability thereunder, (vi) no West One Benefit Plan is a
"multiemployer pension plan," as such term is defined in
Section 3(37) of ERISA, (vii) all contributions or other amounts
payable by West One or its Subsidiaries as of the Effective Time
with respect to each West One Benefit Plan in respect of current or
prior plan years have been paid or accrued in accordance with
generally accepted accounting practices and Section 412 of the
Code, (viii) neither West One, its Subsidiaries nor any ERISA
Affiliate has engaged in a transaction in connection with which
West One, its Subsidiaries or any ERISA Affiliate could be subject
to either a material civil penalty assessed pursuant to Section 409
or 502(i) of ERISA or a material tax imposed pursuant to
Section 4975 or 4976 of the Code, and (ix) to the best knowledge of
West One there are no pending, threatened or anticipated claims
(other than routine claims for benefits) by, on behalf of or
against any of the West One Benefit Plans or any trusts related
thereto.
(d) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will
(i) result in any material payment including, without limitation,
severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or any employee of West One
or any of its affiliates from West One or any of its affiliates
under any West One Benefit Plan or otherwise, (ii) materially
increase any benefits otherwise payable under any West One Benefit
Plan or (iii) result in any acceleration of the time of payment or
vesting of any such benefits to any material extent.
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3.12 SEC Reports. West One has previously made available to
Bancorp an accurate and complete copy of each (a) final
registration statement, prospectus, report, schedule and definitive
proxy statement filed since January 1, 1993, by West One with the
SEC pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act (the "West One Reports") and
prior to the date hereof and (b) communication mailed by West One
to its shareholders since January 1, 1993, and no such registration
statement, prospectus, report, schedule, proxy statement or
communication contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except
that information as of a later date shall be deemed to modify
information as of an earlier date. West One has timely filed all
West One Reports and other documents required to be filed by it
under the Securities Act and the Exchange Act, and, as of their
respective dates, all West One Reports complied in all material
respects with the published rules and regulations of the SEC with
respect thereto.
3.13 Compliance with Applicable Law. (a) West One and each
of its Subsidiaries hold, and have at all times held, all material
licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses under and pursuant to
all, and have complied with and are not in default in any material
respect under any, applicable laws, statutes, orders, rules,
regulations of any Governmental Entity relating to West One or any
of its Subsidiaries, except where the failure to hold such license,
franchise, permit or authorization or such noncompliance or default
would not, individually or in the aggregate, have a Material
Adverse Effect on West One, and neither West One nor any of its
Subsidiaries knows of, or has received notice of, any material
violations of any of the above.
(b) Except as would not have a Material Adverse Effect,
(i) no real property presently or previously owned, operated, or
leased by West One or any of its Subsidiaries or, to the best of
their knowledge, securing any obligations owed to them has been
used as a storage or disposal site for hazardous substances within
the meaning of any applicable federal, state, or local statute,
law, rule, or regulation, and no hazardous substances have been
transferred from or to such real property, (ii) no governmental
entity has issued any citation or notice of violation relating to
any environmental matter concerning any real property owned,
operated, or leased by West One or any of its Subsidiaries or, to
the best of their knowledge securing any obligations owed to them,
and neither West One nor any of its Subsidiaries has received any
notice that any such real property may or will be included on any
list of areas affected by any release of any hazardous substance or
that it has or may be named as a responsible or potentially
responsible party with respect to any hazardous substance site, and
(iii) neither West One nor any of its Subsidiaries has received any
notice of any threatened investigation, proceeding, or litigation
concerning any such real property with respect to any environmental
matter or knows of any basis for any such investigation,
proceeding, or litigation.
3.14 Certain Contracts. (a) Neither West One nor any of its
Subsidiaries is a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i) with
respect to the employment of any directors, officers, employees or
consultants, (ii) that, upon the consummation of the transactions
contemplated by this Agreement will (either alone or upon the
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occurrence of any additional acts or events) result in any payment
(whether of severance pay or otherwise) becoming due from Bancorp,
West One, the Surviving Corporation, or any of their respective
Subsidiaries to any officer or employee thereof, (iii) that is a
material contract (as defined in Item 601(b)(10) of Regulation S-K
of the SEC) to be performed after the date of this Agreement that
has not been filed or incorporated by reference in the West One
Reports, (iv) that materially restricts the conduct of any line of
business by West One, (v) with or to a labor union or guild
(including any collective bargaining agreement) or (vi) (including
any stock option plan, stock appreciation rights plan, restricted
stock plan or stock purchase plan) any of the benefits of which
will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits
of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. West One has previously delivered
to Bancorp true and correct copies of all employment, consulting,
and deferred compensation agreements that are in writing and a
written summary of all such contracts that are material to West One
and not in writing. Each contract, arrangement, commitment or
understanding of the type described in this Section 3.14(a),
whether or not set forth in the West One Disclosure Schedule, is
referred to herein as a "West One Contract." Neither West One nor
any of its Subsidiaries knows of, or has received notice of, any
violation of any West One Contract by any of the other parties
thereto that, individually or in the aggregate, would have a
Material Adverse Effect on West One.
(b) (i) Each West One Contract is valid and binding and in
full force and effect, (ii) West One and each of its Subsidiaries
has in all material respects performed all obligations required to
be performed by it to date under each West One Contract, except
where such noncompliance, individually or in the aggregate, would
not have a Material Adverse Effect on West One, and (iii) no event
or condition exists that constitutes or, after notice or lapse of
time or both, would constitute, a material default on the part of
West One or any of its Subsidiaries or, to the knowledge of
West One, on the part of any other party under any such West One
Contract, except where such default, individually or in the
aggregate, would not have a Material Adverse Effect on West One.
3.15 Agreements with Regulatory Agencies. Neither West One
nor any of its Subsidiaries is subject to any cease-and-desist or
other order issued by, or is a party to any written agreement,
consent agreement or memorandum of understanding with, or is a
party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or is a recipient of any
supervisory letter from, or has adopted any board resolutions at
the request of (each, whether or not set forth in the West One
Disclosure Schedule, a "Regulatory Agreement"), any Regulatory
Agency or other Governmental Entity that restricts the conduct of
its business or that in any manner relates to its capital adequacy,
its credit policies, its management or its business, nor has
West One or any of its Subsidiaries been advised by any Regulatory
Agency or other Governmental Entity that it is considering issuing
or requesting any Regulatory Agreement.
3.16 Undisclosed Liabilities. Except for those liabilities
that are fully reflected or reserved against on the consolidated
balance sheet of West One as of December 31, 1994 and for
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liabilities incurred in the ordinary course of business consistent
with past practice, since December 31, 1994, neither West One nor
any of its Subsidiaries has incurred any liability of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and
whether due or to become due) that, either alone or when combined
with all similar liabilities, has had, or could reasonably be
expected to have, a Material Adverse Effect on West One.
3.17 State Takeover Laws. The Board of Directors of West One
has taken such actions as are necessary such that the provisions of
the Idaho Business Combination Law (Sections 30-1701 to 30-1710)
and the Idaho Control Share Acquisition Law (Sections 30-1601 to
30-1614) will not apply to this Agreement or the Option Agreements
or any of the transactions contemplated hereby or thereby.
3.18 Rights Agreement. West One has taken all action
(including, if required, redeeming all of the outstanding preferred
stock purchase rights issued pursuant to the West One Rights
Agreement or amending or terminating the West One Rights Agreement)
so that the entering into of this Agreement and the Option
Agreements, the Merger, the acquisition of shares pursuant to the
Option Agreements and the other transactions contemplated hereby
and thereby do not and will not result in the grant of any rights
to any person under the West One Rights Agreement or enable or
require the West One Rights to be exercised, distributed or
triggered.
3.19 Pooling of Interests. As of the date of this Agreement,
West One has no reason to believe that the Merger will not qualify
as a pooling of interests for accounting purposes.
3.20 Interest Rate Risk Management Instruments; Derivatives.
(a) West One has heretofore delivered to Bancorp an accurate and
complete list of (A) all interest rate swaps, caps, floors, option
agreements, and other interest rate risk management arrangements
and other instruments generally known as "derivatives" to which
West One or any of its Subsidiaries is a party or to which any of
their properties or assets may be subject and (B) all securities
owned by West One or its Subsidiaries that are generally known as
"structured note," "high risk mortgage derivatives," "capped
floating rate notes," or "capped floating rate mortgage
derivatives" (instruments or agreements of the type referred to in
clauses (A) and (B), collectively, "Derivative Securities").
Neither West One nor any of its Subsidiaries has purchased any
Derivative Security for, or invested in any Derivative Security any
assets of, any account or person for which it or any such
subsidiary acts as a trustee, fiduciary, or investment advisor.
(b) All Derivative Securities to which West One or any of its
Subsidiaries is a party or to which any of their properties or
assets may be subject were entered into in the ordinary course of
business and, to its knowledge, in accordance with prudent banking
practice and applicable rules, regulations, and policies of the
Regulatory Agencies and with counterparties believed to be
financially responsible at the time and are legal, valid, and
binding obligations enforceable in accordance with their terms
(except as may be limited by bankruptcy, insolvency, moratorium,
reorganization, or similar laws affecting the rights of creditors
generally, and the availability of equitable remedies), and are in
full force and effect. West One and each of its Subsidiaries has
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duly performed in all material respects all of its obligations
thereunder, and, to its knowledge, there are no breaches,
violations, or defaults or allegations or assertions of such by any
party thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BANCORP
Except as set forth in the disclosure schedule of Bancorp
delivered to West One concurrently herewith (the "Bancorp
Disclosure Schedule"), Bancorp hereby represents and warrants to
West One as follows:
4.1 Corporate Organization. (a) Bancorp is a corporation
duly organized, validly existing under the laws of the State of
Oregon. Bancorp has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business
as it is now being conducted, and is duly licensed or qualified to
do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed
or qualified would not have a Material Adverse Effect on Bancorp.
Bancorp is duly registered as a bank holding company under the
BHC Act. The Articles of Incorporation and Bylaws of Bancorp,
copies of which have previously been made available to West One,
are true, complete and correct copies of such documents as in
effect as of the date of this Agreement.
(b) Each Bancorp Subsidiary (i) is duly organized and validly
existing as a bank, corporation or partnership under the laws of
its jurisdiction of organization, (ii) is duly qualified to do
business and in good standing in all jurisdictions (whether
federal, state, local or foreign) where its ownership or leasing of
property or the conduct of its business requires it to be so
qualified and in which the failure to be so qualified would have a
Material Adverse Effect on Bancorp, and (iii) has all requisite
corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted.
(c) The minute books of Bancorp accurately reflect in all
material respects all corporate actions since January 1, 1993, of
its shareholders and Board of Directors (including committees of
the Board of Directors of Bancorp).
4.2 Capitalization. (a) The authorized capital stock of
Bancorp consists of (i) 250,000,000 shares of Bancorp Common Stock,
of which as of May 1, 1995, 98,202,805 shares were issued and
outstanding and (ii) 50,000,000 shares of Preferred Stock, no par
value ("Bancorp Preferred Stock"), of which as of May 1, 1995,
6,000,000 shares designated as Series A were issued and
outstanding. All of the issued and outstanding shares of Bancorp
Common Stock and Bancorp Preferred Stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the
ownership thereof. As of the date of this Agreement, except for
(i) the Bancorp Option Agreement, (ii) shares of Bancorp Common
Stock reserved for issuance pursuant to the Bancorp Benefit Plans
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(as defined below), and (iii) Bancorp's dividend reinvestment and
stock purchase plan (the "Bancorp DRIP"), Bancorp does not have and
is not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of Bancorp Common Stock or
Bancorp Preferred Stock or any other equity securities of Bancorp
or any securities representing the right to purchase or otherwise
receive any shares of Bancorp Common Stock or Bancorp Preferred
Stock. As of December 31, 1994, 9,541,838 shares of Bancorp Common
Stock were reserved for issuance pursuant to the Bancorp DRIP and
Bancorp Benefit Plans and no shares of Bancorp Preferred Stock were
reserved for issuance. As of the date of this Agreement, since
December 31, 1994, Bancorp has not issued any shares of its capital
stock or any securities convertible into or exercisable for any
shares of its capital stock, other than pursuant to (i) the
exercise of employee stock options granted prior to such date,
(ii) the Bancorp Option Agreement, (iii) the Bancorp DRIP, (iv) the
Bancorp Employee Investment Plan, and (v) the grant of options to
non-employee directors. The shares of Bancorp Capital Stock to be
issued pursuant to the Merger will be duly authorized and validly
issued and, at the Effective Time, all such shares will be fully
paid, nonassessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof.
(b) Bancorp owns, directly or indirectly, all of the issued
and outstanding shares of capital stock of each of the Bancorp
Subsidiaries, free and clear of any liens, charges, encumbrances
and security interests whatsoever, and all of such shares are duly
authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to
the ownership thereof. No Bancorp Subsidiary has or is bound by
any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase
or issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock
or any other equity security of such Subsidiary.
4.3 Authority; No Violation. (a) Bancorp has full corporate
power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly approved by the
Board of Directors of Bancorp. The Board of Directors of Bancorp
has directed that this Agreement and the transactions contemplated
hereby be submitted to Bancorp's shareholders for approval at a
meeting of such shareholders and except for the adoption of this
Agreement by the affirmative vote of the holders of a majority of
the outstanding shares of Bancorp Common Stock, no other corporate
proceedings on the part of Bancorp are necessary to approve this
Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by
Bancorp and (assuming due authorization, execution and delivery by
West One) constitutes a valid and binding obligation of Bancorp,
enforceable against Bancorp in accordance with its terms, except as
enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and
remedies generally.
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(b) Neither the execution and delivery of this Agreement by
Bancorp, nor the consummation by Bancorp of the transactions
contemplated hereby, nor compliance by Bancorp with any of the
terms or provisions hereof, will (i) violate any provisions of the
Articles of Incorporation or Bylaws of Bancorp or (ii) assuming
that the consents and approvals referred to in Section 4.4 are duly
obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable
to Bancorp or any of its Subsidiaries or any of their respective
properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation
of any lien, pledge, security interest, charge or other encumbrance
upon any of the respective properties or assets of Bancorp or any
of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to
which Bancorp or any of its Subsidiaries is a party, or by which
they or any of their respective properties or assets may be bound
or affected, except (in the case of clause (y) above) for such
violations, conflicts, breaches or defaults which either
individually or in the aggregate will not have or be reasonably
likely to have a Material Adverse Effect on Bancorp.
4.4 Consents and Approvals. Except for (i) the filing of
applications and notices, as applicable, with the Federal Reserve
Board under the BHC Act, (ii) the filing of any requisite
applications with the OCC or the FDIC in connection with the merger
of Subsidiaries of West One and Bancorp, (iii) the filing of the
State Approvals, (iv) the filing with the SEC of the Joint Proxy
Statement and the S-4, (v) the filing of the Articles of Merger
with the Oregon Secretary pursuant to the OBCA, (vi) the filing of
the Articles of Merger with the Idaho Secretary pursuant to the
IBCA, (vii) such filings and approvals as are required to be made
or obtained under the securities or "Blue Sky" laws of various
states in connection with the issuance of the shares of Bancorp
Common Stock pursuant to this Agreement, and (viii) the approval of
this Agreement by the requisite vote of the shareholders of Bancorp
and West One, no consents or approvals of or filings or
registrations with any Governmental Entity or with any third party
are necessary in connection with (A) the execution and delivery by
Bancorp of this Agreement and (B) the consummation by Bancorp of
the Merger and the other transactions contemplated hereby.
4.5 Reports. Bancorp and each of its Subsidiaries have
timely and properly filed all material reports, registrations and
statements, together with any amendments required to be made with
respect thereto, that they were required to file since January 1,
1993, with the Regulatory Agencies, and all other material reports
and statements required to be filed by them since January 1, 1993,
and have paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by
a Regulatory Agency in the regular course of the business of
Bancorp and its Subsidiaries, no Regulatory Agency has initiated
any proceeding or, to the best knowledge of Bancorp, investigation
into the business or operations of Bancorp or any of its
Subsidiaries since January 1, 1993. There is no material
unresolved violation, criticism, or exception by any Regulatory
Agency with respect to any report or statement relating to any
examinations of Bancorp or any of its Subsidiaries.
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4.6 Financial Statements. Bancorp has previously delivered
to West One copies of (a) the consolidated balance sheets of
Bancorp and its Subsidiaries as of December 31, for the fiscal
years 1993 and 1994, and the related consolidated statements of
income, changes in shareholders' equity and cash flows for the
fiscal years 1992 through 1994, inclusive, as reported in Bancorp's
Annual Report on Form 10-K for the fiscal year ended December 31,
1994, filed with the SEC under the Exchange Act, in each case
accompanied by the audit report of Deloitte & Touche LLP,
independent auditors with respect to Bancorp, (b) the unaudited
consolidated balance sheets of Bancorp and its Subsidiaries as of
March 31, 1995, and March 31, 1994, and the related unaudited
consolidated statements of income, cash flows and changes in
shareholders' equity for the three month periods then ended
substantially in the form that is proposed to be reported in
Bancorp's Quarterly Report on Form 10-Q for the period ended
March 31, 1995, filed with the SEC under the Exchange Act. The
financial statements referred to in this Section 4.6 (including the
related notes, where applicable) fairly present (subject, in the
case of the unaudited statements, to recurring audit adjustments
normal in nature and amount), the results of the consolidated
operations and changes in shareholders' equity and consolidated
financial position of Bancorp and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set
forth; each of such statements (including the related notes, where
applicable) complies in all material respects with applicable
accounting requirements and with the published rules and
regulations of the SEC with respect thereto, and each of such
statements (including the related notes, where applicable) has been
prepared in accordance with GAAP consistently applied during the
periods involved, except in each case as indicated in such
statements or in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q. The allowances for credit
losses contained in the financial statements referred to in this
Section 4.6 were adequate as of their respective dates to absorb
reasonably anticipated losses in the loan portfolio of Bancorp and
its Subsidiaries in view of the size and character of such
portfolio, the current economic conditions, and other pertinent
factors and no facts have subsequently come to the attention of
management of Bancorp that would cause management to restate in any
material way the level of such allowance for credit losses. With
respect to other real estate owned by Bancorp and its Subsidiaries,
the value attributed thereto for purposes of compiling such
financial statements does not exceed the aggregate fair market
value of such real estate as of the date of acquisition of such
real estate or as subsequently reduced, all in accordance with
regulations of the applicable Regulatory Agencies. The books and
records of Bancorp and its Subsidiaries have been, and are being,
maintained in all material respects in accordance with GAAP and any
other applicable legal and accounting requirements and reflect only
actual transactions.
4.7 Brokers' Fees. Neither Bancorp nor any Bancorp
Subsidiary nor any of their respective officers or directors has
employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with any
of the transactions contemplated by this Agreement or the Option
Agreements.
4.8 Absence of Certain Changes or Events. (a) Except as
publicly disclosed in Bancorp Reports (as defined below) filed
prior to the date hereof, since December 31, 1994, (i) neither
Bancorp nor any of its Subsidiaries has incurred any material
liability, except in the ordinary course of their business
consistent with their past practices, and (ii) no event has
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occurred that has had, or is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on
Bancorp.
(b) Except as publicly disclosed in Bancorp Reports filed
prior to the date hereof, from December 31, 1994, through the date
of this Agreement, Bancorp and its Subsidiaries have carried on
their respective businesses in the ordinary and usual course
consistent with their past practices.
(c) Since January 1, 1995, neither Bancorp nor any of its
Subsidiaries has (i) suffered any strike, work stoppage, slowdown,
or other labor disturbance or (ii) been the subject of any
organizing activities.
4.9 Legal Proceedings. (a) Except as publicly disclosed in
Bancorp Reports filed prior to the date hereof, neither Bancorp nor
any of its Subsidiaries is a party to any and there are no pending
or, to the best of Bancorp's knowledge, threatened, material legal,
administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature (i) against
Bancorp or any of its Subsidiaries as to which there is a
reasonable possibility of an adverse determination and which, if
adversely determined, would, individually or in the aggregate, have
a Material Adverse Effect on Bancorp or (ii) challenging the
validity or propriety of the transactions contemplated by this
Agreement or the Bancorp Option Agreement.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon Bancorp, any of its
Subsidiaries or the assets of Bancorp or any of its Subsidiaries
that has had, or might reasonably be expected to have, a Material
Adverse Effect on Bancorp or the Surviving Corporation.
4.10 Taxes and Tax Returns. (a) Each of Bancorp and its
Subsidiaries has duly filed all material federal, state and, to the
best of Bancorp's knowledge, material local information returns and
tax returns required to be filed by it on or prior to the date
hereof (all such returns being accurate and complete in all
material respects) and has duly paid or made provisions for the
payment of all material Taxes (as defined below) and other
governmental charges which have been incurred or are due or claimed
to be due from it by federal, state, county or local taxing
authorities on or prior to the date of this Agreement (including,
without limitation, if and to the extent applicable, those due in
respect of its properties, income, business, capital stock,
deposits, franchises, licenses, sales and payrolls) other than
Taxes or other charges (1) that are not yet delinquent or are being
contested in good faith and (2) have not been finally determined.
The income tax returns of Bancorp and its Subsidiaries have been
examined by the Internal Revenue Service (the "IRS") and any
liability with respect thereto has been satisfied for all years to
and including 1985, and no material deficiencies were asserted as
a result of such examination or all such deficiencies were
satisfied. To the best of Bancorp's knowledge, there are no
material disputes pending, or claims asserted for, Taxes or
assessments upon Bancorp or any of its Subsidiaries, nor has
Bancorp or any of its Subsidiaries been requested to give any
currently effective waivers extending the statutory period of
limitation applicable to any federal, state, county or local income
tax return for any period. In addition, (i) proper and accurate
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amounts have been withheld by Bancorp and its Subsidiaries from
their employees for all prior periods in compliance in all material
respects with the tax withholding provisions of applicable federal,
state and local laws, except where failure to do so would not have
a Material Adverse Effect on Bancorp, (ii) federal, state, county
and local returns that are accurate and complete in all material
respects have been filed by Bancorp and its Subsidiaries for all
periods for which returns were due with respect to income tax
withholding, Social Security and unemployment taxes, except where
failure to do so would not have a Material Adverse Effect on
Bancorp, (iii) the amounts shown on such federal, state, local or
county returns to be due and payable have been paid in full or
adequate provision therefor has been included by Bancorp in its
consolidated financial statements as of December 31, 1994, except
where failure to do so would not have a Material Adverse Effect on
Bancorp and (iv) there are no Tax liens upon any property or assets
of the Bancorp or its Subsidiaries except liens for current taxes
not yet due. To the knowledge of Bancorp, no property of Bancorp
or any of its Subsidiaries is property that Bancorp or any of its
Subsidiaries is or will be required to treat as being owned by
another person pursuant to the provisions of Section 168(f)(8) of
the Code (as in effect prior to its amendment by the Tax Reform Act
of 1986) or is "tax-exempt use property" within the meaning of
Section 169(h) of the Code. Neither Bancorp nor any of its
Subsidiaries has been required to include in income any adjustment
pursuant to Section 481 of the Code by reason of a voluntary change
in accounting method initiated by Bancorp or any of its
Subsidiaries, and the Internal Revenue Service has not initiated or
proposed any such adjustment or change in accounting method.
Except as set forth in the financial statements described in
Section 4.6 hereof, neither Bancorp nor any of its Subsidiaries has
entered into a transaction which is being accounted for as an
installment obligation under Section 453 of the Code, which would
be reasonably likely to have a Material Adverse Effect on Bancorp.
(b) Any amount that could be received (whether in cash or
property or the vesting of property) as a result of any of the
transactions contemplated by this Agreement by any employee,
officer or director of Bancorp or any of its affiliates who is a
"Disqualified Individual" (as such term is defined in proposed
Treasury Regulation Section 1.280G-1) under any employment,
severance or termination agreement, other compensation arrangement
or Bancorp Benefit Plan currently in effect would not be
characterized as an "excess parachute payment" (as such term is
defined in Section 280G(b)(1) of the Code).
(c) No disallowance of a deduction under Section 162(m) of
the Code for employee remuneration of any amount paid or payable by
Bancorp or any Subsidiary of Bancorp under any contract, plan,
program, arrangement or understanding is reasonably likely.
4.11 Employees. (a) The Bancorp Disclosure Schedule sets
forth a true and complete list of each material plan, arrangement
or agreement regarding compensation or benefits for any employees,
former employees, directors, or former directors that is maintained
as of the date of this Agreement (the "Bancorp Benefit Plans") by
Bancorp, any of its Subsidiaries or by any trade or business;
whether or not incorporated (a "Bancorp ERISA Affiliate"), all of
which together with Bancorp would be deemed a "single employer"
within the meaning of Section 4001 of ERISA.
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(b) Bancorp has heretofore delivered to West One true and
complete copies of each of the Bancorp Benefit Plans and all
related documents, including but not limited to (i) the actuarial
report for such Bancorp Benefit Plan (if applicable) for each of
the last two years, and (ii) the most recent determination letter
from the Internal Revenue Service (if applicable) for such Bancorp
Benefit Plan.
(c) (i) Each of the Bancorp Benefit Plans has been operated
and administered in all material respects in compliance with
applicable laws, including but not limited to ERISA and the Code,
(ii) each of the Bancorp Benefit Plans intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified,
(iii) with respect to each Bancorp Benefit Plan that is subject to
Title IV of ERISA, the present value of accrued benefits under such
Bancorp Benefit Plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by
such Bancorp Benefit Plan's actuary with respect to such Bancorp
Benefit Plan, did not, as of its latest valuation date, exceed the
then current value of the assets of such Bancorp Benefit Plan
allocable to such accrued benefits, (iv) no Bancorp Benefit Plan
provides benefits, including without limitation death or medical
benefits (whether or not insured), with respect to current or
former employees of Bancorp, its Subsidiaries or any Bancorp ERISA
Affiliate beyond their retirement or other termination of service,
other than (w) coverage mandated by applicable law, (x) death
benefits or retirement benefits under any "employee pension plan,"
as that term is defined in Section 3(2) of ERISA, (y) deferred
compensation benefits accrued as liabilities on the books of
Bancorp, its Subsidiaries or the Bancorp ERISA Affiliates or
(z) benefits the full cost of which is borne by the current or
former employee (or his beneficiary), (v) no liability under
Title IV of ERISA has been incurred by Bancorp, its Subsidiaries or
any Bancorp ERISA Affiliate that has not been satisfied in full,
and no condition exists that presents a material risk to Bancorp,
its Subsidiaries or any Bancorp ERISA Affiliate of incurring a
material liability thereunder, (vi) no Bancorp Benefit Plan is a
"multiemployer pension plan," as such term is defined in
Section 3(37) of ERISA, (vii) all contributions or other amounts
payable by Bancorp or its Subsidiaries as of the Effective Time
with respect to each Bancorp Benefit Plan in respect of current or
prior plan years have been paid or accrued in accordance with GAAP
and Section 412 of the Code, (viii) neither Bancorp, its
Subsidiaries nor any Bancorp ERISA Affiliate has engaged in a
transaction in connection with which Bancorp, its Subsidiaries or
any Bancorp ERISA Affiliate could be subject to either a material
civil penalty assessed pursuant to Section 409 or 502(i) of ERISA
or a material tax imposed pursuant to Section 4975 or 4976 of the
Code, and (ix) to the best knowledge of Bancorp there are no
pending, threatened or anticipated claims (other than routine
claims for benefits) by, on behalf of or against any of the Bancorp
Benefit Plans or any trusts related thereto.
(d) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will
(i) result in any material payment (including, without limitation,
severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or any employee of Bancorp
or any of its affiliates from Bancorp or any of its affiliates
under any Bancorp Benefit Plan or otherwise, (ii) materially
increase any benefits otherwise payable under any Bancorp Benefit
Plan, or (iii) result in any acceleration of the time of payment or
vesting of any such benefits to any material extent.
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4.12 SEC Reports. Bancorp has previously made available to
West One an accurate and complete copy of each (a) final
registration statement, prospectus, report, schedule and definitive
proxy statement filed since January 1, 1993, by Bancorp with the
SEC pursuant to the Securities Act or the Exchange Act (the
"Bancorp Reports") and prior to the date hereof and
(b) communication mailed by Bancorp to its shareholders since
January 1, 1993, and prior to the date hereof, and no such
registration statement, prospectus, report, schedule, proxy
statement or communication contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made,
not misleading, except that information as of a later date shall be
deemed to modify information as of an earlier date. Bancorp has
timely filed all Bancorp Reports and other documents required to be
filed by it under the Securities Act and the Exchange Act, and, as
of their respective dates, all Bancorp Reports complied in all
material respects with the published rules and regulations of the
SEC with respect thereto.
4.13 Compliance with Applicable Law. (a) Except as disclosed
in the Bancorp Disclosure Schedule, Bancorp and each of its
Subsidiaries hold, and have at all times held, all material
licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses under and pursuant to
all, and have complied with and are not in default in any material
respect under any, applicable laws, statutes, orders, rules, or
regulations of any Governmental Entity relating to Bancorp or any
of its Subsidiaries, except where the failure to hold such license,
franchise, permit or authorization or such noncompliance or default
would not, individually or in the aggregate, have a Material
Adverse Effect on Bancorp, and neither Bancorp nor any of its
Subsidiaries knows of, or has received notice of, any material
violations of any of the above.
(b) Except as would not have a Material Adverse Effect,
(i) no real property presently or previously owned, operated, or
leased by Bancorp or any of its Subsidiaries or, to the best of
their knowledge, securing any obligations owed to them has been
used as a storage or disposal site for hazardous substances within
the meaning of any applicable federal, state, or local statute,
law, rule, or regulation, and no hazardous substances have been
transferred from or to such real property, (ii) no governmental
entity has issued any citation or notice of violation relating to
any environmental matter concerning any real property owned,
operated, or leased by Bancorp or any of its Subsidiaries or, to
the best of their knowledge securing any obligations owed to them,
and neither Bancorp nor any of its Subsidiaries has received any
notice that any such real property may or will be included on any
list of areas affected by any release of any hazardous substance or
that it has or may be named as a responsible or potentially
responsible party with respect to any hazardous substance site, and
(iii) neither Bancorp nor any of its Subsidiaries has received any
notice of any threatened investigation, proceeding, or litigation
concerning any such real property with respect to any environmental
matter or knows of any basis for any such investigation,
proceeding, or litigation.
4.14 Certain Contracts. (a) Neither Bancorp nor any of its
Subsidiaries is a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i) with
respect to the employment of any directors, officers, employees or
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consultants, (ii) that, upon the consummation of the transactions
contemplated by this Agreement will (either alone or upon the
occurrence of any additional acts or events) result in any payment
(whether of severance pay or otherwise) becoming due from Bancorp,
West One, the surviving Corporation, or any of their respective
Subsidiaries to any officer or employee thereof, (iii) that is a
material contract (as defined in Item 601(b)(10) of Regulation S-K
of the SEC) to be performed after the date of this Agreement that
has not been filed or incorporated by reference in the Bancorp
Reports, (iv) that materially restricts the conduct of any line of
business by Bancorp, (including any collective bargaining agreement),
or (vi) (including any stock option plan, stock appreciation rights plan,
restricted stock plan or stock purchase plan) any of the benefits of which
will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits
of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. Each contract, arrangement,
commitment or understanding of the type described in this
Section 4.14(a), whether or not set forth in the Bancorp Disclosure
Schedule, is referred to herein as a "Bancorp Contract." Neither
Bancorp nor any of its Subsidiaries knows of, or has received
notice of, any violation of any Bancorp Contract by any of the
other parties thereto that, individually or in the aggregate, would
have a Material Adverse Effect on Bancorp.
(b) (i) Each Bancorp Contract is valid and binding and in
full force and effect, (ii) Bancorp and each of its Subsidiaries
has in all material respects performed all obligations required to
be performed by it to date under each Bancorp Contract, except
where such noncompliance, individually or in the aggregate, would
not have a Material Adverse Effect on Bancorp, and (iii) no event
or condition exists that constitutes or, after notice or lapse of
time, or both, would constitute, a material default on the part of
Bancorp or any of its Subsidiaries or, to the knowledge of Bancorp,
on the part of any other party under any such Bancorp Contract,
except where such default, individually or in the aggregate, would
not have a Material Adverse Effect on Bancorp.
4.15 Agreements with Regulatory Agencies. Neither Bancorp nor
any of its Subsidiaries is subject to any cease-and-desist or other
order issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any
order or directive by, or is a recipient of any supervisory letter
from, or has adopted any board resolutions at the request of (each,
whether or not set forth in the Bancorp Disclosure Schedule, a
"Bancorp Regulatory Agreement"), any Regulatory Agency or other
Governmental Entity that restricts the conduct of its business or
that in any manner relates to its capital adequacy, its credit
policies, its management or its business, nor has Bancorp or any of
its Subsidiaries been advised by any Regulatory Agency or other
Governmental Entity that it is considering issuing or requesting
any Regulatory Agreement.
4.16 Undisclosed Liabilities. Except for those liabilities
that are fully reflected or reserved against on the consolidated
balance sheet of Bancorp dated as of December 31, 1994, and for
liabilities incurred in the ordinary course of business consistent
with past practice, since December 31, 1994, neither Bancorp nor
any of its Subsidiaries has incurred any liability of any nature
- 25 -
whatsoever (whether absolute, accrued, contingent or otherwise and
whether due or to become due) that, either alone or when combined
with all similar liabilities, has had, or could reasonably be
expected to have, a Material Adverse Effect on Bancorp.
4.17 Pooling of Interests. As of the date of this Agreement,
Bancorp has no reason to believe that the Merger will not qualify
as a pooling of interests for accounting purposes.
4.18 Interest Rate Risk Management Instruments; Derivatives.
(a) Bancorp has heretofore delivered to West One an accurate and
complete list of all Derivative Securities to which Bancorp or any
of its Subsidiaries is a party or any of their properties may be
subject, or that are owned by Bancorp or any of its Subsidiaries.
Neither Bancorp nor any of its Subsidiaries has purchased any
Derivative Security for, or invested in any Derivative Security any
assets of, any account or person for which it or any such
Subsidiary acts as a trustee, fiduciary, or investment advisor.
(b) All Derivative Securities to which Bancorp or any of its
Subsidiaries is a party or to which any of their properties or
assets may be subject were entered into in the ordinary course of
business and, to its knowledge, in accordance with prudent banking
practice and applicable rules, regulations, and policies of the
Regulatory Agencies and with counterparties believed to be
financially responsible at the time and are legal, valid, and
binding obligations enforceable in accordance with their terms
(except as may be limited by bankruptcy, insolvency, moratorium,
reorganization, or similar laws affecting the rights of creditors
generally, and the availability of equitable remedies), and are in
full force and effect. Bancorp and each of its Subsidiaries has
duly performed in all material respects all of its obligations
thereunder, and, to its knowledge, there are no breaches,
violations, or defaults or allegations or assertions of such by any
party thereunder.
4.19 State Takeover Laws. The Board of Directors of Bancorp
has taken such actions as are necessary such that the provisions of
Sections 60.825 to 60.845 of the Oregon Business Corporation Act
regarding business combinations and the Oregon Control Share Act
(Sections 60.801 to 60.813) will not apply to this Agreement or the
Option Agreements or any of the transactions contemplated hereby or
thereby.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of West One Businesses Prior to the Effective
Time. During the period from the date of this Agreement to the
Effective Time, except as expressly contemplated or permitted by
this Agreement or the West One Option Agreement, West One shall,
and shall cause its Subsidiaries to, (i) conduct its business in
the usual, regular and ordinary course consistent with past
practice, (ii) use reasonable best efforts to maintain and preserve
intact its business organization, employees and advantageous
business relationships and retain the services of its officers and
key employees and (iii) take no action that would adversely affect
or delay the ability of West One or Bancorp to obtain any necessary
approvals of any Regulatory Agency or other governmental authority
- 26 -
required for the transactions contemplated hereby or to perform its
covenants and agreements under this Agreement or the West One
Option Agreement.
5.2 West One Forbearances. During the period from the date
of this Agreement to the Effective Time, except as expressly
contemplated or permitted by this Agreement or the West One Option
Agreement, West One shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Bancorp:
(a) other than in the ordinary course of
business consistent with past practice, incur any
indebtedness for borrowed money (other than short-term
indebtedness incurred to refinance short-term
indebtedness and indebtedness of West One or any of
its Subsidiaries to West One or any of its
Subsidiaries or fund redemption of debentures or
repurchases of stock related thereto; it being
understood and agreed that incurrence of indebtedness
in the ordinary course of business shall include,
without limitation, the creation of deposit
liabilities, purchases of federal funds, sales of
certificates of deposit and entering into repurchase
agreements), assume, guarantee, endorse or otherwise
as an accommodation become responsible for the
obligations of any other individual, corporation or
other entity, or make any loan or advance;
(b) adjust, split, combine or reclassify any
capital stock; make, declare or pay any dividend or
make any other distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any
shares of its capital stock or any securities or
obligations, convertible into or exchangeable for any
shares of its capital stock, or grant or issue any
stock appreciation rights or grant or issue to any
individual, corporation or other entity any right to
acquire any shares of its capital stock (except for
regular quarterly cash dividends at the rate not in
excess of the rate being paid at the date of this
Agreement as such rate may be increased at times and
in amounts as are consistent with past practice and
except for dividends paid by any of its wholly owned
Subsidiaries or any of their wholly owned
Subsidiaries); or issue any additional shares of
capital stock or securities or obligations convertible
into or exchangeable for shares of its capital stock
except pursuant to (A) the exercise of stock options
outstanding as of the date hereof, (B) the West One
Option Agreement, (C) the West One Rights Agreement;
(D) conversion of the Convertible Debentures, or
(E) the West One DRIP until the West One DRIP is
terminated, which shall occur as soon as practicable
after the date hereof;
(c) sell, transfer, mortgage, encumber or
otherwise dispose of any of its properties or assets
to any individual, corporation or other entity other
than a direct or indirect wholly owned Subsidiary, or
cancel, release or assign any indebtedness to any such
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person or any claims held by any such person, except in the
ordinary course of business consistent with past practice
or pursuant to contracts or agreements in force at the date
of this Agreement;
(d) except for transactions in the ordinary
course of business consistent with past practice, make
any material investment either by purchase of stock or
securities, contributions to capital, property
transfers, or purchase of any property or assets of
any other individual, corporation or other entity
other than a wholly owned Subsidiary thereof;
(e) except for transactions in the ordinary
course of business consistent with past practice,
enter into or terminate any material contract or
agreement, or make any change in any of its material
leases or contracts, other than renewals of contracts
and leases without material adverse changes of terms;
(f) increase in any manner the compensation or
fringe benefits of any of its employees other than
increases for employees in the ordinary course of
business consistent with past practice or pay any
pension or retirement allowance not required by any
existing plan or agreement to any such employees or
become a party to, amend or commit itself to any
pension, retirement, profit-sharing or welfare benefit
plan or agreement or employment agreement with or for
the benefit of any employee other than amendments
required to comply with applicable legal requirements
or accelerate the vesting of any stock options or
other stock-based compensation;
(g) solicit, encourage or authorize any
individual, corporation or other entity to solicit
from any third party any inquiries or proposals
relating to the disposition of its business or assets,
or the acquisition of its voting securities, or the
merger of it or any of its Subsidiaries with any
corporation or other entity other than as provided by
this Agreement (and West One shall promptly notify
Bancorp of all of the relevant details relating to all
inquiries and proposals which it may receive relating
to any of such matters) or unless West One shall have
determined based upon the written advice of counsel
that fiduciary duties under applicable law require
otherwise, participate in any negotiations concerning
or otherwise facilitate any such transaction;
(h) settle any claim, action or proceeding
involving material money damages, except in the
ordinary course of business consistent with past
practice;
(i) take any action that would prevent or impede
the Merger from qualifying (i) for pooling of
interests accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of
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the Code; provided, however, that nothing contained herein
shall limit the ability of West One to exercise its rights
under the Bancorp Option Agreement;
(j) amend its articles of incorporation or its
bylaws;
(k) other than in prior consultation with
Bancorp, restructure or materially change its
investment securities portfolio or its gap position,
through purchases, sales or otherwise, or the manner
in which the portfolio is classified or reported;
(l) take any action that is intended or may
reasonably be expected to result in any of its
representations and warranties set forth in this
Agreement being or becoming untrue in any material
respect at any time prior to the Effective Time, or in
any of the conditions to the Merger set forth in
Article VII not being satisfied or in a violation of
any provision of this Agreement, except, in every
case, as may be required by applicable law; or
(m) agree to, or make any commitment to, take
any of the actions prohibited by this Section 5.2.
5.3 Bancorp Forbearances. During the period from the date of
this Agreement to the Effective Time, except as expressly
contemplated or permitted by this Agreement or the Bancorp Option
Agreement, Bancorp shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of West One:
(a) reclassify any of its capital stock or make,
declare, or pay any dividend or make any other
distribution on, any shares of its capital stock or
any securities or obligations, convertible into or
exchangeable for any shares of its capital stock
(except for regular quarterly cash dividends at a rate
not in excess of such rate as Bancorp from time to
time adopts as its regular quarterly dividend rate and
except for dividends paid by any of its wholly owned
Subsidiaries or any of their wholly owned
Subsidiaries);
(b) take any action that would prevent or impede
the Merger from qualifying (i) for pooling of
interests accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of
the Code; provided, however, that nothing contained
herein shall limit the ability of Bancorp to exercise
its rights under the West One Option Agreement;
(c) take any action that is intended or may
reasonably be expected to result in any of its
representations and warranties set forth in this
Agreement being or becoming untrue in any material
respect at any time prior to the Effective Time, or in
any of the conditions of the Merger set forth in this
Article VII not being satisfied or in a violation of
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any provision of this Agreement, except, in every case, as
may be required by applicable law;
(d) take any action that would adversely affect
or delay its ability to obtain any necessary approvals
of any Regulatory Agency or other governmental
authority required for the transactions contemplated
hereby or to perform its covenants and agreements
under this Agreement or the Bancorp Option Agreement;
(e) amend its articles of incorporation except
with respect to the establishment of one or more
series of preferred stock; or
(f) agree to, or make any commitment to, take
any of the actions prohibited by this Section 5.3.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters. (a) Bancorp and West One shall
promptly prepare and file with the SEC the Joint Proxy Statement
and Bancorp shall promptly prepare and file with the SEC the S-4,
in which the Joint Proxy Statement will be included as a
prospectus. Each of Bancorp and West One shall use all reasonable
efforts to have the S-4 declared effective under the Securities Act
as promptly as practicable after such filing, and Bancorp and
West One shall thereafter mail the Joint Proxy Statement to their
respective shareholders. Bancorp shall also use all reasonable
efforts to obtain all necessary state securities law or "Blue Sky"
permits and approvals required to carry out the transactions
contemplated by this Agreement, and West One shall furnish all
information concerning West One and the holders of West One Common
Stock as may be reasonably requested in connection with any such
action.
(b) The parties hereto shall cooperate with each other and
use their reasonable best efforts to promptly prepare and file all
necessary documentation, to effect all applications, notices,
petitions and filings, to obtain as promptly as practicable all
permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable
to consummate the transactions contemplated by this Agreement
(including, without limitation, the Merger), and to comply with the
terms and conditions of all such permits, consents, approvals and
authorizations of all such Governmental Entities. Bancorp and
West One shall have the right to review in advance, and to the
extent practicable each will consult the other on, in each case
subject to applicable laws relating to the exchange of information,
all the information relating to West One or Bancorp, as the case
may be, and any of their respective Subsidiaries, which appear in
any filing made with, or written materials submitted to, any third
party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the
foregoing right, each of the parties hereto shall act reasonably
and as promptly as practicable. The parties hereto agree that they
will consult with each other with respect to the obtaining of all
permits, consents, approvals and authorizations of all third
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parties and Governmental Entities necessary or advisable to
consummate the transactions contemplated by this Agreement and each
party will keep the other apprised of the status of matters
relating to completion of the transactions contemplated herein.
(c) Bancorp and West One shall, upon request, furnish each
other with all information concerning themselves, their
Subsidiaries, directors, officers and shareholders and such other
matters as may be reasonably necessary or advisable in connection
with the Joint Proxy Statement, the S-4 or any other statement,
filing, notice or application made by or on behalf of Bancorp,
West One or any of their respective Subsidiaries to any
Governmental Entity in connection with the Merger and the other
transactions contemplated by this Agreement.
(d) Bancorp and West One shall promptly advise each other
upon receiving any communication from any Governmental Entity whose
consent or approval is required for consummation of the
transactions contemplated by this Agreement which causes such party
to believe that there is a reasonable likelihood that any Requisite
Regulatory Approval will not be obtained or that the receipt of any
such approval will be materially delayed.
6.2 Access to Information. (a) Upon reasonable notice and
subject to applicable laws relating to the exchange of information,
each of Bancorp and West One shall, and shall cause each of their
respective Subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of the other party,
access, during normal business hours during the period prior to the
Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, each of Bancorp
and West One shall, and shall cause their respective Subsidiaries
to, make available to the other party (i) a copy of each report,
schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of
federal securities laws or federal or state banking laws, savings
and loan or savings association laws (other than reports or
documents which Bancorp or West One, as the case may be, is not
permitted to disclose under applicable law) and (ii) all other
information concerning its business, properties and personnel as
such party may reasonably request. Neither Bancorp nor West One
nor any of their respective Subsidiaries shall be required to
provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of Bancorp's or
West One's, as the case may be, customers, jeopardize the attorney-
client privilege of the institution in possession or control of
such information or contravene any law, rule, regulation, order,
judgment, decree, fiduciary duty or binding agreement entered into
prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances
in which the restrictions of the preceding sentence apply.
(b) Each of Bancorp and West One shall hold all information
furnished by the other party or any of such party's Subsidiaries or
representatives pursuant to Section 6.2(a) in confidence to the
extent required by, and in accordance with, the provisions of the
confidentiality agreements, dated March 31, 1995, between Bancorp
and West One (the "Confidentiality Agreements").
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(c) No investigation by either of the parties or their
respective representatives shall affect the representations and
warranties of the other set forth herein.
6.3 Shareholders' Approvals. Each of Bancorp and West One
shall call a meeting of its shareholders to be held as soon as
practicable for the purpose of voting upon the requisite
shareholder approvals required in connection with this Agreement
and the Merger, and each shall use its best efforts to cause such
meetings to occur on the same date. Subject to fiduciary
requirements under applicable law, the boards of directors of
West One and Bancorp shall recommend such approval to their
respective shareholders and shall use reasonable efforts to solicit
such approval.
6.4 Legal Conditions to Merger. Each of Bancorp and West One
shall, and shall cause its Subsidiaries to, use their reasonable
best efforts (a) to take, or cause to be taken, all actions
necessary, proper, or advisable to comply promptly with all legal
requirements which may be imposed on such party or its Subsidiaries
with respect to the Merger or the Subsidiary Merger and, subject to
the conditions set forth in Article VII hereof, to consummate the
transactions contemplated by this Agreement and (b) to obtain (and
to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party which is required to
be obtained by West One or Bancorp or any of their respective
Subsidiaries in connection with the Merger and the Subsidiary
Merger and the other transactions contemplated by this Agreement.
6.5 Affiliates; Publication of Combined Financial Results.
(a) Each of Bancorp and West One shall use its best efforts to
cause each director, executive officer and other person who is an
"affiliate" (for purposes of Rule 145 under the Securities Act and
for purposes of qualifying the Merger for "pooling-of-interests"
accounting treatment) of such party to deliver to the other party
hereto, as soon as practicable after the date of this Agreement,
and prior to the date of the shareholders meetings called by
Bancorp and West One to approve this Agreement, a written
agreement, in the form of Exhibit 6.5(a) hereto, providing that
such person will not sell, pledge, transfer or otherwise dispose of
any shares of Bancorp Common Stock or West One Common Stock held by
such "affiliate" and, in the case of the "affiliates" of West One,
the shares of Bancorp Common Stock to be received by such
"affiliate" in the Merger: (1) in the case of shares of Bancorp
Common Stock to be received by "affiliates" of West One in the
Merger, except in compliance with the applicable provisions of the
Securities Act and the rules and regulations thereunder; and
(2) during the period commencing 30 days prior to the Merger and
ending at the time of the publication of financial results covering
at least 30 days of combined operations of Bancorp and West One.
Notwithstanding any other provision of this Agreement, no
certificate for Bancorp Common Stock shall be delivered in exchange
for West One Certificates held by any such "affiliate" who shall
not have executed and delivered such an agreement.
(b) Bancorp shall use its best efforts to publish no later
than ninety (90) days after the end of the first month after the
Effective Time in which there are at least thirty (30) days of
post-Merger combined operations (which month may be the month in
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which the Effective Time occurs), combined sales and net income
figures as contemplated by and in accordance with the terms of SEC
Accounting Series Release No. 135.
6.6 Stock Exchange Listing of Shares. Bancorp shall use its
best efforts to cause the shares of Bancorp Common Stock to be
issued in the Merger to be approved for listing on the NASDAQ Stock
Market National Market System, subject to official notice of
issuance, prior to the Effective Time.
6.7 Employee Benefit Plans. (a) Within a reasonable time
after the Effective Time, and subject to applicable law, Bancorp
shall provide to the employees of Bancorp and its Subsidiaries who
formerly were employees of West One and its Subsidiaries employee
benefits, including but not limited to pension plans, thrift plans,
management incentive plans, group life plans, accidental death and
dismemberment plans, travel accident plans, medical and
hospitalization plans and long term disability plans, substantially
the same as those provided to similarly situated employees of
Bancorp and its Subsidiaries. From and after the Effective Time,
and until Bancorp has accomplished the actions contemplated by the
preceding sentence, employees of Bancorp or its Subsidiaries who
were employees of West One or its Subsidiaries immediately prior to
the Effective Time shall be provided with employee benefits under
employee benefit plans of West One, employee benefit plans of
Bancorp, or some combination thereof, as Bancorp shall reasonably
deem appropriate in order to accomplish an orderly transition of
benefits. From and after the Effective Time, employees of Bancorp
or its Subsidiaries who were employees of the West One and its
Subsidiaries immediately prior to the Effective Time shall receive
full credit for all purposes under such plans, except the accrual
of benefits, for their length of service prior to the Effective
Time with the West One or any of its Subsidiaries (and any
predecessors thereto) to the extent such service would be
recognized under such plans, if such service was with Bancorp and
its Subsidiaries or if greater, to the extent such service is
recognized under similar plans of West One and its Subsidiaries.
From and after the Effective Time, Bancorp shall maintain in effect
the benefits provided as of the date of this Agreement to employees
of West One who are participants in the West One Bancorp Premier
Life Insurance Plan (the "Life Insurance Plan"). West One shall
not permit any additional employees to participate in the Life
Insurance Plan or increase the benefits provided to any
participants thereunder after the date of this Agreement.
(b) Bancorp agrees to honor in accordance with their terms
(i) all West One Benefit Plans and (ii) all contracts,
arrangements, commitments, or understandings described in
Section 3.14(a)(i) disclosed on the West One Disclosure Schedule,
and (iii) all benefits vested thereunder as of the Effective Time;
provided, however, that nothing in this sentence shall be
interpreted as preventing Bancorp from amending, modifying or
terminating any West One Benefit Plans, contracts, arrangements,
commitments or understandings, in accordance with their terms. The
provisions of this Section 6.7 are intended to be for the benefit
for, and enforceable by, each of the beneficiaries of or parties to
such plans, contracts, arrangements, commitments, and
understandings.
(c) West One shall take all action necessary to cause each
outstanding option to purchase West One Common Stock held by
directors or employees of West One and its Subsidiaries (and any
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related stock appreciation right), together with the relevant stock
option plans of West One, to be amended at or prior to the
Effective Time so that from and after the Effective Time, the stock
option plans shall continue and there shall be substituted for each
option (or stock appreciation right) an option to purchase (or the
right to receive appreciation in market value of) shares of Bancorp
Common Stock rather than West One Common Stock. The number of such
shares of Bancorp Common Stock covered by the substituted option
(and stock appreciation right) shall be computed by applying the
Exchange Ratio to the shares of West One Common Stock covered by
the option (or stock appreciation right) with any resulting
fractional shares to be rounded down to the next whole share. The
exercise price per share of the substituted option shall be equal
to the exercise price per share of West One Common Stock under the
original option divided by the Exchange Ratio with the result
rounded up to the next cent. All such options (and stock
appreciation rights) shall remain in full force and effect without
other alteration, including acceleration of exercisability or
conferring any right to receive cash by reason of the Merger,
except as provided by their terms. Bancorp shall cooperate as
necessary to permit the taking of the actions specified in this
paragraph (c).
6.8 Indemnification; Directors' and Officers' Insurance.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim,
action, suit, proceeding or investigation in which any person who
is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director
or officer of West One or any of its Subsidiaries (the "Indemnified
Parties") is, or is threatened to be, made a party based in whole
or in part on, or arising in whole or in part out of, or pertaining
to (i) the fact that he is or was a director or officer of
West One, any of the West One Subsidiaries or any of their
respective predecessors or (ii) this Agreement, the Option
Agreements or any of the transactions contemplated hereby or
thereby, whether in any case asserted or arising before or after
the Effective Time, the parties hereto agree to cooperate and use
their best efforts to defend against and respond thereto. It is
understood and agreed that after the Effective Time, Bancorp shall
indemnify and hold harmless, as and to the fullest extent permitted
by law, each such Indemnified Party against any losses, claims,
damages, liabilities, costs, expenses (including reasonable
attorney's fees and expenses in advance of the final disposition of
any claim, suit, proceeding or investigation to each Indemnified
Party to the fullest extent permitted by law upon receipt of any
undertaking required by applicable law), judgments, fines and
amounts paid in settlement in connection with any such threatened
or actual claim, action, suit, proceeding or investigation and in
the event of any such threatened or actual claim, action, suit,
proceeding, or investigation (whether asserted or arising before or
after the Effective Time), the Indemnified Parties may retain
counsel reasonably satisfactory to them after consultation with
Bancorp; provided, however, that (1) Bancorp shall have the right
to assume the defense thereof and upon such assumption Bancorp
shall not be liable to any Indemnified Party for any legal expenses
of other counsel or any other expenses subsequently incurred by any
Indemnified Party in connection with the defense thereof, except
that if Bancorp elects not to assume such defense or counsel for
the Indemnified Parties reasonably advises the Indemnified Parties
that there are issues which raise conflicts of interest between
Bancorp and the Indemnified Parties, the Indemnified Parties may
retain counsel reasonably satisfactory to them after consultation
with Bancorp, and Bancorp shall pay the reasonable fees and
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expenses of such counsel for the Indemnified Parties, (2) Bancorp
shall be obligated pursuant to this paragraph to pay for only one
firm of counsel for all Indemnified Parties, unless an Indemnified
Party shall have reasonably concluded, based on the advice of
counsel, that in order to be adequately represented, separate
counsel is necessary for such Indemnified Party, in which case,
Bancorp shall be obligated to pay for such separate counsel,
(3) Bancorp shall not be liable for any settlement effected without
its prior written consent (which consent shall not be unreasonably
withheld) and (4) Bancorp shall have no obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction
shall ultimately determine, and such determination shall have
become final and nonappealable, that indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited
by applicable law. Any Indemnified Party wishing to claim
Indemnification under this Section 6.8, upon learning of any such
claim, action, suit, proceeding or investigation, shall notify
Bancorp thereof, provided that the failure to so notify shall not
affect the obligations of Bancorp under this Section 6.8 except to
the extent such failure to notify materially prejudices Bancorp.
Bancorp's obligations under this Section 6.8 continue in full force
and effect for a period of six (6) years from the Effective Time;
provided, however, that all rights to indemnification in respect of
any claim (a "Claim") asserted or made within such period shall
continue until the final disposition of such Claim and provided
further that Bancorp shall have the right of set-off against any
payments required to be made by Bancorp to an Indemnified Party
pursuant to this Section 6.8(a) to the extent that such Indemnified
Party shall have received the indemnification to which such
Indemnified Party is entitled from an insurer under a directors'
and officers' liability insurance policy maintained by West One or
Bancorp. Notwithstanding the foregoing provisions of this
Section 6.8(a), Bancorp shall have no obligation to indemnify the
Indemnified Parties (or advance expenses to them) except to the
extent they would be entitled to such indemnification (or advance)
under the provisions of Bancorp's Articles of Incorporation or
Bylaws or any agreement to which Bancorp is a party as in effect on
the date of this Agreement if such Indemnified Parties had been
officers or directors of Bancorp at the time of the event giving
rise to such indemnification.
(b) Bancorp shall use its best efforts to cause the persons
serving as officers and directors of West One immediately prior to
the Effective Time to be covered for a period of six (6) years from
the Effective Time by the directors' and officers' liability
insurance policy maintained by Bancorp, if any (provided that
Bancorp may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions that are not
less advantageous than such policy) with respect to acts or
omissions occurring prior to the Effective Time which were
committed by such officers and directors in their capacity as such;
provided, however, that in no event shall Bancorp be required to
expend more than 200 percent of the current amount expended by
West One (the "Insurance Amount") to maintain or procure insurance
coverage pursuant hereto and further provided that if Bancorp is
unable to maintain or obtain the insurance called for by this
Section 6.8(b), Bancorp shall use its best efforts to obtain as
much comparable insurance as is available for the Insurance Amount.
(c) In the event Bancorp or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then,
and in each such case, to the extent necessary, proper provision
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shall be made so that the successors and assigns of Bancorp assume
the obligations set forth in this section.
(d) The provisions of this Section 6.8 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party
and his or her heirs and representatives.
6.9 Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement (including, without
limitation, any merger between a Subsidiary of Bancorp and a
Subsidiary of West One) or to vest the Surviving Corporation with
full title to all properties, assets, rights, approvals, immunities
and franchises of any of the parties to the Merger, the proper
officers and directors of each party to this Agreement and their
respective Subsidiaries shall take all such necessary action as may
be reasonably requested by, and at the sole expense of, Bancorp.
Pending the Effective Time, Bancorp and West One shall consult with
one another and cooperate as reasonably requested by Bancorp to
facilitate the integration of their respective operations as
promptly as practicable after the Effective Time. Such cooperation
shall include, if requested, the entering into of merger agreements
between or among their respective Subsidiaries and the filing of
appropriate regulatory applications with respect thereto
(conditioned upon the effectiveness of the Merger), communicating
with employees, consultation regarding material contracts,
renewals, and capital commitments to be entered into by West One
and its Subsidiaries, making arrangements for employee training
prior to the Effective Time and taking action to facilitate an
orderly conversion of data processing operations to occur promptly
following the Effective Time, provided that the cooperation
required under this Section 6.9 shall not be deemed to require
actions that would materially delay or impede the Merger.
6.10 Advice of Changes. Bancorp and West One shall promptly
advise the other party of any change or event having, or that would
be reasonably likely to have, a Material Adverse Effect on it or
which it believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations,
warranties or covenants contained herein.
6.11 Dividends. After the date of this Agreement, each of
Bancorp and West One shall coordinate with the other the
declaration of any dividends in respect of Bancorp Common Stock and
West One Common Stock and the record dates and payment dates
relating thereto, it being the intention of the parties hereto that
holders of Bancorp Common Stock or West One Common Stock shall not
receive two dividends, or fail to receive one dividend, for any
single calendar quarter with respect to their shares of Bancorp
Common Stock and/or West One Common Stock and any shares of Bancorp
Common Stock any such holder receives in exchange therefor in the
Merger.
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ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the
Merger shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) Shareholder Approval. This Agreement and
the transactions contemplated hereby shall have been
approved and adopted by the respective requisite
affirmative votes of the holders of West One Common
Stock and Bancorp Common Stock entitled to vote
thereon.
(b) Nasdaq Listing. The shares of Bancorp
Common Stock that shall be issued to the shareholders
of West One upon consummation of the Merger shall have
been authorized for listing on the Nasdaq Stock Market
National Market System subject to official notice of
issuance.
(c) Other Approvals. All regulatory approvals
required to consummate the transactions contemplated
hereby shall have been obtained without the imposition
of any conditions that are in Bancorp's reasonable
judgment unduly burdensome and shall remain in full
force and effect and all statutory waiting periods in
respect thereof shall have expired (all such approvals
and the expiration of all such waiting periods being
referred to herein as the "Requisite Regulatory
Approvals"), and all other material consents or
approvals of any third party required in connection
with the consummation of the Merger as set forth in
the West One Disclosure Schedule or Bancorp Disclosure
Schedule shall have been obtained. For purposes of
this paragraph, a divestiture required as a condition
to any regulatory approval shall not be unduly
burdensome if such divestiture is consistent with
Department of Justice and Federal Reserve Board
guidelines, policies, and practices regarding the
merger of bank holding companies that have been
utilized in transactions that have recently been
reviewed prior to the date of this Agreement.
(d) Form S-4. The S-4 shall have become
effective under the Securities Act and no stop order
suspending the effectiveness of the S-4 shall have
been issued and no proceedings for that purpose shall
have been initiated or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality.
No order, injunction or decree issued by any court or
agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing
the consummation of the Merger or any of the other
transactions contemplated by this Agreement shall be
in effect. No statute, rule, regulation, order,
injunction or decree shall have been enacted, entered,
promulgated or enforced by any Governmental Entity
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which prohibits, restricts or makes illegal consummation of
the Merger.
(f) Federal Tax Opinions. Bancorp shall have
received an opinion of Miller, Nash, Wiener, Hager &
Carlsen, counsel to Bancorp, and West One shall have
received an opinion of Wachtell, Lipton, Rosen & Katz,
counsel to West One, in form and substance reasonably
satisfactory to Bancorp and West One, dated as of the
Effective Time, substantially to the effect that, on
the basis of facts, representations and assumptions
set forth in such opinion which are consistent with
the state of facts existing at the Effective Time, the
Merger will be treated for Federal income tax purposes
as part of one or more reorganizations within the
meaning of Section 368 of the Code and that
accordingly:
(i) No gain or loss will be
recognized by Bancorp or West One as a
result of the Merger;
(ii) No gain or loss will be
recognized by the shareholders of
West One who exchange their West One
Common Stock solely for Bancorp Common
Stock pursuant to the Merger (except with
respect to cash received in lieu of a
fractional share interest in Bancorp
Common Stock); and
(iii) The tax basis of the
Bancorp Common Stock received by
shareholders who exchange all of their
West One Common Stock solely for Bancorp
Common Stock in the Merger will be the
same as the tax basis of the West One
Common Stock surrendered in exchange
therefor (reduced by any amount allocable
to a fractional share interest for which
cash is received).
In rendering such opinion, counsel
may require and rely upon representations
contained in certificates of officers of
Bancorp, West One and others.
(g) Pooling of Interests. Bancorp and West One
shall each have received letters from Deloitte &
Touche LLP and Coopers & Lybrand L.L.P., respectively,
addressed to Bancorp and West One, respectively, to
the effect that the Merger will qualify for "pooling
of interests" accounting treatment.
7.2 Conditions to Obligations of Bancorp. The obligation of
Bancorp to effect the Merger is also subject to the satisfaction or
waiver by Bancorp at or prior to the Effective Time of the
following conditions:
- 38 -
(a) Representations and Warranties. The
representations and warranties of West One set forth
in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and
(except to the extent such representations and
warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing
Date. Bancorp shall have received a certificate
signed on behalf of West One by the Chief Executive
Officer and the Chief Financial Officer of West One to
the foregoing effect.
(b) Performance of Obligations of West One.
West One shall have performed in all material respects
all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and
Bancorp shall have received a certificate signed on
behalf of West One by the Chief Executive Officer and
the Chief Financial Officer of West One to such
effect.
(c) West One Rights Agreement. The rights
issued pursuant to the West One Rights Agreement shall
not have been become nonredeemable, exercisable,
distributed or triggered pursuant to the terms of such
agreement.
7.3 Conditions to Obligations of West One. The obligation of
West One to effect the Merger is also subject to the satisfaction
or waiver by West One at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. The
representations and warranties of Bancorp set forth in
this Agreement shall be true and correct in all
material respects as of the date of this Agreement and
(except to the extent such representations and
warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing
Date. West One shall have received a certificate
signed on behalf of Bancorp by the Chief Executive
Officer and the Chief Financial Officer of Bancorp to
the foregoing effect.
(b) Performance of Obligations of Bancorp.
Bancorp shall have performed in all material respects
all obligations required to be performed by it under
this Agreement at or prior to the Closing Date, and
West One shall have received a certificate signed on
behalf of Bancorp by the Chief Executive Officer and
the Chief Financial Officer of Bancorp to such effect.
- 39 -
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval
of the matters presented in connection with the Merger by the
shareholders of West One:
(a) by mutual consent of Bancorp and West One in
a written instrument, if the Board of Directors of
each so determines by a vote of a majority of the
members of its entire Board;
(b) by either the Board of Directors of Bancorp
or the Board of Directors of West One (i) if any
Governmental Entity which must grant a Requisite
Regulatory Approval has denied approval of the Merger
and such denial has become final and nonappealable or
(ii) any Governmental Entity of competent jurisdiction
shall have issued a final nonappealable order
enjoining or otherwise prohibiting the consummation of
the transactions contemplated by this Agreement;
(c) by either the Board of Directors of Bancorp
or the Board of Directors of West One if the Merger
shall not have been consummated on or before April 30,
1996, unless the failure of the Closing to occur by
such date shall be due to the breach by the party
seeking to terminate this Agreement of any
representation, warranty, covenant, or other agreement
of such party set forth herein;
(d) by either the Board of Directors of Bancorp
or the Board of Directors of West One (provided that
the terminating party is not then in material breach
of any representation, warranty, covenant or other
agreement contained herein) if there shall have been
a material breach of any of the covenants or
agreements or any of the representations or warranties
set forth in this Agreement on the part of the other
party, which breach is not cured within forty-five
(45) days following written notice to the party
committing such breach, or which breach, by its
nature, cannot be cured prior to the Closing; or
(e) by either Bancorp or the West One if any
approval of the shareholders of Bancorp or the
West One required for the consummation of the Merger
shall not have been obtained by reason of the failure
to obtain the required vote at a duly held meeting of
shareholders or at any adjournment or postponement
thereof.
8.2 Effect of Termination. In the event of termination of
this Agreement by either Bancorp or West One as provided in
Section 8.1, this Agreement shall forthwith become void and have no
effect, and none of Bancorp, West One, any of their respective
- 40 -
Subsidiaries or any of the officers or directors of any of them
shall have any liability of any nature whatsoever hereunder, or in
connection with the transactions contemplated hereby, except
(i) Sections 6.2(b), 8.2, 9.2 and 9.3, shall survive any
termination of this Agreement, and (ii) notwithstanding anything to
the contrary contained in this Agreement, neither Bancorp nor
West One shall be relieved or released from any liabilities or
damages arising out of its intentional or willful breach of any
provision of this Agreement.
8.3 Amendment. Subject to compliance with applicable law,
this Agreement may be amended by the parties hereto, by action
taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in
connection with the Merger by the shareholders of West One;
provided, however, that after any approval of the transactions
contemplated by this Agreement by West One's shareholders, there
may not be, without further approval of such shareholders, any
amendment of this Agreement that reduces the amount or changes the
form of the consideration to be delivered to the West One
shareholders hereunder other than as contemplated by this
Agreement. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties
hereto.
8.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their
respective Board of Directors, may, to the extent legally allowed,
(a) extend the time for the performance of any of the obligations
or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein
or in any document delivered pursuant hereto, and (c) waive
compliance with any of the agreements or conditions contained
herein; provided, however, that after any approval of the
transactions contemplated by this Agreement by West One's
shareholders, there may not be, without further approval of such
shareholders, any extension or waiver of this Agreement or any
portion thereof which reduces the amount or changes the form of the
consideration to be delivered to the West One shareholders
hereunder other than as contemplated by this Agreement. Any
agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument
signed on behalf of such party, but such extension or waiver or
failure to insist on strict compliance with an obligation,
covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this
Agreement and the Merger Agreement, the closing of the Merger (the
"Closing") will take place at 10 a.m. on a date to be specified by
the parties, which shall be no later than five business days after
the satisfaction or waiver (subject to applicable law) of the
latest to occur of the conditions set forth in Article VII hereof
(the "Closing Date").
9.2 Nonsurvival of Representations, Warranties, and
Agreements. None of the representations, warranties, covenants,
and agreements in this Agreement or in any instrument delivered
pursuant to this Agreement (other than pursuant to the Option
- 41 -
Agreements, which shall terminate in accordance with their terms),
including any rights arising out of any breach of such
representations, warranties, covenants, and agreements, shall
survive the Effective Time, except for those covenants and
agreements contained herein and therein that by their terms apply
in whole or in part after the Effective Time.
9.3 Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expense; provided, however,
that the costs and expenses of printing and mailing the Joint Proxy
Statement, and all filing and other fees paid to the SEC in
connection with the Merger, shall be borne equally by Bancorp and
West One.
9.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered
personally, telecopied (with confirmation), mailed by registered or
certified mail (return receipt requested), or delivered by an
express courier (with confirmation) to the parties at the following
addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Bancorp, to:
U. S. Bancorp
111 S.W. Fifth Avenue, T-31
Portland, Oregon 97204
Facsimile: (503) 275-3452
Attention: Gerry B. Cameron
with copies to:
U. S. Bancorp
111 S.W. Fifth Avenue, T-31
Portland, Oregon 97204
Facsimile: (503) 275-3452
Attention: Robert D. Geddes
Miller, Nash, Wiener, Hager & Carlsen
111 S.W. Fifth Avenue
Portland, Oregon 97204
Facsimile: (503) 224-0155
Attention: John J. DeMott, Esq.
and
- 42 -
(b) if to West One, to:
West One Bancorp
101 South Capitol Boulevard
Post Office Box 8247
Boise, Idaho 83733
Facsimile: (208) 383-3858
Attention: Daniel R. Nelson
with copies to:
West One Bancorp
101 South Capitol Boulevard
Post Office Box 8247
Boise, Idaho 83733
Facsimile: (208) 383-3858
Attention: Dwight V. Board
Wachtell, Lipton, Rosen & Katz
51 West 52nd
New York, New York 10019
Facsimile: (212) 403-2000
Attention: Edward D. Herlihy, Esq.
9.5 Interpretation. When a reference is made in this
Agreement to Sections, Exhibits, or Schedules, such reference shall
be to a Section of or Exhibit or Schedule to this Agreement unless
otherwise indicated. The table of contents and headings contained
in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes," and "including" are used
in this Agreement, they shall be deemed to be followed by the words
"without limitation." No provision of this Agreement shall be
construed to require West One, Bancorp, or any of their respective
Subsidiaries or affiliates to take any action that would violate
any applicable law, rule, or regulation. Any exception to the
representations and warranties of West One or Bancorp,
respectively, contained in the West One Disclosure Schedule or
Bancorp Disclosure Schedule, as the case may be, shall be effective
only as to the particular sections of this Agreement specifically
referenced in such exception.
9.6 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each of the parties and delivered to the other parties,
it being understood that all parties need not sign the same
counterpart.
9.7 Entire Agreement. This Agreement (including the
documents and the instruments referred to herein) constitutes the
entire agreement and supersedes all prior agreements and
- 43 -
understandings, both written and oral, among the parties with
respect to the subject matter hereof other than the Option
Agreements and the Confidentiality Agreements.
9.8 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Oregon,
without regard to any applicable conflicts of law rules thereof.
9.9 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or provision of this
Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall
be interpreted to be only so broad as is enforceable.
9.10 Publicity. Except as otherwise required by applicable
law or the rules of the Nasdaq Stock Market, neither Bancorp nor
West One shall, or shall permit any of its Subsidiaries to, issue
or cause the publication of any press release or other public
announcement with respect to, or otherwise make any public
statement concerning, the transactions contemplated by this
Agreement without the consent of the other party, which consent
shall not be unreasonably withheld.
9.11 Assignment. Neither this Agreement nor any of the
rights, interests, or obligations shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement will be binding upon, inure to
the benefit of, and be enforceable by the parties and their
respective successors and assigns. Except as otherwise
specifically provided in Section 6.7(b) and Section 6.8 hereof,
this Agreement (including the documents and instruments referred to
herein) is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
IN WITNESS WHEREOF, Bancorp and West One have caused this
Agreement to be executed by their respective officers thereunto
duly authorized as of the date first above written.
U. S. BANCORP
By /S/ GERRY B. CAMERON
Title Chairman of the Board and
Chief Executive Officer
WEST ONE BANCORP
By /S/ DANIEL R. NELSON
Title Chairman and Chief Executive
Officer
- 44 -
EXHIBIT 6.5(a) - FORM OF AFFILIATE LETTER
[Company]
[_____________________]
[_____________________]
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be
deemed to be an "affiliate" of __________________ ("Company"), as
the term "affiliate" is (i) defined for purposes of paragraphs (c)
and (d) of Rule 145 of the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the
"Act"), and/or (ii) used in and for purposes of Accounting Series
Releases 130 and 135, as amended, of the Commission. Pursuant to
the terms of the Agreement and Plan of Merger dated as of May ___,
1995 (the "Agreement"), between U. S. Bancorp ("Bancorp"), an
Oregon corporation, and West One Bancorp, an Idaho corporation
("West One"), West One will be merged with and into Bancorp (the
"Merger").
As a result of the Merger, I may receive shares of Common
Stock, par value $5 per share ("Bancorp Common Stock") in exchange
for, respectively, shares (or options for shares or rights to
receive appreciation in market value of shares) of West One Common
Stock, par value $1 per share ("West One Common Stock") owned by
me.
I represent, warrant and covenant to Company that in the
event I receive any Bancorp Common Stock as a result of the Merger:
A. I shall not make any sale, transfer or other
disposition of the Bancorp Common Stock in violation
of the Act or the Rules and Regulations.
B. I have carefully read this letter and the
Agreement and discussed its requirements and other
applicable limitations upon my ability to sell,
transfer or otherwise dispose of Bancorp Common Stock
to the extent I felt necessary, with my counsel or
counsel for Company.
C. I have been advised that the issuance of
Bancorp Common Stock to me pursuant to the Merger has
been registered with the Commission under the Act on
a Registration Statement on Form S-4. However, I have
also been advised that, since at the time the Merger
was submitted for a vote of the stockholders of
Company, I may be deemed to have been an affiliate of
Company and the distribution by me of the Bancorp
Common Stock has not been registered under the Act,
and that I may not sell, transfer or otherwise dispose
- 1 -
of Bancorp Common Stock issued to me in the Merger unless
(i) such sale, transfer or other disposition has been
registered under the Act, (ii) such sale, transfer or other
disposition is made in conformity with the volume and other
limitations of Rule 145 promulgated by the Commission under
the Act, or (iii) in the opinion of counsel reasonably
acceptable to Bancorp, such sale, transfer or other
disposition is otherwise exempt from registration under the
Act.
D. I understand that Bancorp is under no
obligation to register the sale, transfer or other
disposition of the Bancorp Common Stock by me or on my
behalf under the Act or to take any other action
necessary in order to make compliance with an
exemption from such registration available.
E. I also understand that stop transfer
instructions will be given to Bancorp's transfer
agents with respect to the Bancorp Common Stock and
that there will be placed on the certificates for the
Bancorp Common Stock issued to me, or any
substitutions therefor, a legend stating in substance:
"The shares represented by this
certificate were issued in a transaction to
which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares
represented by this certificate may only be
transferred in accordance with the terms of an
agreement dated May ___, 1995 between the
registered holder hereof and Bancorp, a copy
of which agreement is on file at the principal
offices of Bancorp."
F. I also understand that unless the transfer
by me of my Bancorp Common Stock has been registered
under the Act or is a sale made in conformity with the
provisions of Rule 145, Bancorp reserves the right to
put the following legend on the certificates issued to
my transferee:
"The shares represented by this
certificate have not been registered under the
Securities Act of 1933 and were acquired from
a person who received such shares in a
transaction to which Rule 145 promulgated
under the Securities Act of 1933 applies. The
shares have been acquired by the holder not
with a view to, or for resale in connection
with, any distribution thereof within the
meaning of Securities Act of 1933 and may not
be sold, pledged or otherwise transferred
except in accordance with an exemption from
the registration requirements of the
Securities Act of 1933."
It is understood and agreed that the legends set forth in
paragraph E and F above shall be removed by delivery of substitute
certificates without such legend if the undersigned shall have
delivered to Bancorp a copy of a letter from the staff of the
- 2 -
Commission, or an opinion of counsel in form and substance
reasonably satisfactory to Bancorp, to the effect that such legend
is not required for purposes of the Act.
I further represent to and covenant with Company that
from the date that is 30 days prior to the Effective Time (as
defined in the Agreement) I will not sell, transfer or otherwise
dispose of the capital stock of West One held by me and that I will
not sell, transfer or otherwise dispose of any shares of Bancorp
Common Stock received by me in the Merger or other shares of the
capital stock of Bancorp until after such time as results covering
at least 30 days of combined operations of West One and Bancorp
have been published by Bancorp, in the form of a quarterly earnings
report, an effective registration statement filed with the
Commission, a report to the Commission on Form 10-K, 10-Q, or 8-K,
or any other public filing or announcement which includes the
combined results of operations.
I understand that pursuant to the Merger Agreement, no
certificate for Bancorp Common Stock shall be delivered to me in
exchange for certificates representing West One Common Stock until
I have executed and delivered this agreement.
Very truly yours,
by
Name:
Accepted this ___ day of _______________, 1995, by
COMPANY
by
Name:
Title:
- 3 -
OMITTED SCHEDULES
1. Disclosure schedule of U. S. Bancorp pursuant to Article IV of
the Merger Agreement sets forth the exceptions to the
representations of U. S. Bancorp included in Article IV and
will be furnished to the Commission supplementally upon
request.
2. Disclosure schedule of West One Bancorp pursuant to Article
III of the Merger Agreement sets forth the exceptions to the
representations of West One Bancorp included in Article III
and will be furnished to the Commission supplementally upon
request.
STOCK OPTION AGREEMENT
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated May 6, 1995, between WEST ONE
BANCORP, an Idaho corporation ("Issuer"), and U. S. BANCORP, an
Oregon corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and
Plan of Merger dated May 5, 1995 (the "Merger Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, Issuer has agreed to grant
Grantee the Option (as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Merger
Agreement, the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms
hereof, up to 7,330,184 fully paid and nonassessable shares of
Issuer's Common Stock, $5 par value per share ("Common Stock"), at
a price of $34.00 per share (the "Option Price"); provided further
that in no event shall the number of shares of Common Stock for
which this Option is exercisable exceed 19.9 percent of the
Issuer's issued and outstanding shares of Common Stock. The number
of shares of Common Stock that may be received upon the exercise of
the Option and the Option Price are subject to adjustment as herein
set forth.
(b) In the event that any additional shares of Common
Stock are issued or otherwise become outstanding after the date of
this Agreement (other than pursuant to this Agreement), the number
of shares of Common Stock subject to the Option shall be increased
so that, after such issuance, it equals 19.9 percent of the number
of shares of Common Stock then issued and outstanding without
giving effect to any shares subject or issued pursuant to the
Option. Nothing contained in this Section 1(b) or elsewhere in
this Agreement shall be deemed to authorize Issuer or Grantee to
breach any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the
Option, in whole or in part, and from time to time, if, but only
if, both an Initial Triggering Event (as hereinafter defined) and a
Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event
(as hereinafter defined), provided that the Holder shall have sent
the written notice of such exercise (as provided in
subsection (e) of this Section 2) within 90 days following such
- 1 -
Subsequent Triggering Event. Each of the following shall be an
Exercise Termination Event: (i) the Effective Time of the Merger;
(ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the
occurrence of an Initial Triggering Event except a termination by
Grantee pursuant to Section 8.1(d) of the Merger Agreement (unless
the breach by Issuer giving rise to such right of termination is
non-volitional); (iii) the passage of 12 months after termination
of the Merger Agreement if such termination follows the occurrence
of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(d) of the Merger Agreement (unless the
breach by Issuer giving rise to such right of termination is non-
volitional) (provided that if an Initial Triggering Event continues
or occurs beyond such termination and prior to the passage of such
12-month period, the Exercise Termination Event shall be 12 months
from the expiration of the Last Triggering Event but in no event
more than 18 months after such termination) or (iv) the third
anniversary of the date hereof. The "Last Triggering Event" shall
mean the last Initial Triggering Event to expire. The term
"Holder" shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an
"Issuer Subsidiary"), without having received
Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition
Transaction (as hereinafter defined) with any person
(the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder) other than Grantee or
any of its Subsidiaries (each a "Grantee
Subsidiary") or the Board of Directors of Issuer
shall have recommended that the stockholders of
Issuer approve or accept any such Acquisition
Transaction. For purposes of this Agreement,
"Acquisition Transaction" shall mean (w) a merger or
consolidation, or any similar transaction, involving
Issuer or any Significant Subsidiary (as defined in
Rule 1-02 of Regulation S-X promulgated by the
Securities and Exchange Commission (the "SEC")) of
Issuer, (x) a purchase, lease, or other acquisition
of all or a substantial portion of the assets of
Issuer or any Significant Subsidiary of Issuer,
(y) a purchase or other acquisition (including by
way of merger, consolidation, share exchange or
otherwise) of securities representing 10 percent or
more of the voting power of Issuer or any
Significant Subsidiary of Issuer, or (z) any
substantially similar transaction; provided,
however, that in no event shall any (i) merger,
consolidation, or similar transaction involving
Issuer or any Significant Subsidiary in which the
voting securities of Issuer outstanding immediately
prior thereto continue to represent (by either
remaining outstanding or being converted into the
voting securities of the surviving entity of any
such transaction) at least 65 percent of the
combined voting power of the voting securities of
the Issuer or the surviving entity outstanding
immediately after the consummation of such merger,
consolidation, or similar transaction, or (ii) any
- 2-
merger, consolidation, purchase, or similar
transaction involving only the Issuer and one or more of
its Subsidiaries or involving only any two or more of
such Subsidiaries, be deemed to be an Acquisition
Transaction, provided any such transaction is not
entered into in violation of the terms of the Merger
Agreement;
(ii) Issuer or any Issuer Subsidiary, without
having received Grantee's prior written consent,
shall have authorized, recommended, proposed, or
publicly announced its intention to authorize,
recommend, or propose, to engage in an Acquisition
Transaction with any person other than Grantee or a
Grantee Subsidiary, or the Board of Directors of
Issuer shall have publicly withdrawn or modified, or
publicly announced its interest to withdraw or
modify, in any manner adverse to Grantee, its
recommendation that the stockholders of Issuer
approve the transactions contemplated by the Merger
Agreement;
(iii) Any person other than Grantee, any
Grantee Subsidiary, or any Issuer Subsidiary acting
in a fiduciary capacity in the ordinary course of
its business shall have acquired beneficial
ownership or the right to acquire beneficial
ownership of 15 percent or more of the outstanding
shares of Common Stock (the term "beneficial
ownership" for purposes of this Option Agreement
having the meaning assigned thereto in Section 13(d)
of the 1934 Act, and the rules and regulations
thereunder);
(iv) Any person other than Grantee or any
Grantee Subsidiary shall have made a bona fide
proposal to Issuer or its stockholders by public
announcement or written communication that is or
becomes the subject of public disclosure to engage
in an Acquisition Transaction;
(v) After an overture is made by a third party
to Issuer or its stockholders to engage in an
Acquisition Transaction, Issuer shall have breached
any covenant or obligation contained in the Merger
Agreement and such breach (x) would entitle Grantee
to terminate the Merger Agreement and (y) shall not
have been cured prior to the Notice Date (as defined
below); or
(vi) Any person other than Grantee or any
Grantee Subsidiary, other than in connection with a
transaction to which Grantee has given its prior
written consent, shall have filed an application or
notice with the Federal Reserve Board, or other
federal or state bank regulatory authority, which
application or notice has been accepted for
processing, for approval to engage in an Acquisition
Transaction.
(c) The term "Subsequent Triggering Event" shall mean
either of the following events or transactions occurring after
the date hereof:
- 3 -
(i) The acquisition by any person of
beneficial ownership of 25 percent or more of the
then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering
Event described in clause (i) of subsection (b) of
this Section 2, except that the percentage referred
to in clause (y) shall be 25 percent.
(d) Issuer shall notify Grantee promptly in writing of
the occurrence of any Initial Triggering Event or Subsequent
Triggering Event (together, a "Triggering Event"), it being
understood that the giving of such notice by Issuer shall not be
a condition to the right of the Holder to exercise the Option.
(e) In the event the Holder is entitled to and wishes
to exercise the Option, it shall send to Issuer a written notice
(the date of which being herein referred to as the "Notice Date")
specifying (i) the total number of shares it will purchase
pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing
Date"); provided that if prior notification to or approval of the
Federal Reserve Board or any other regulatory agency is required
in connection with such purchase, the Holder shall promptly file
the required notice or application for approval and shall
expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead
from the date on which any required notification periods have
expired or been terminated or such approvals have been obtained
and any requisite waiting period or periods shall have passed.
Any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto.
(f) At the closing referred to in subsection (e) of
this Section 2, the Holder shall pay to Issuer the aggregate
purchase price for the shares of Common Stock purchased pursuant
to the exercise of the Option in immediately available funds by
wire transfer to a bank account designated by Issuer, provided
that failure or refusal of Issuer to designate such a bank
account shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery
of immediately available funds as provided in subsection (f) of
this Section 2, Issuer shall deliver to the Holder a certificate
or certificates representing the number of shares of Common Stock
purchased by the Holder and, if the Option should be exercised in
part only, a new Option evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable
hereunder, and the Holder shall deliver to Issuer a copy of this
Agreement and a letter agreeing that the Holder will not offer to
sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a
closing hereunder may be endorsed with a restrictive legend that
shall read substantially as follows:
"The transfer of the shares represented by
this certificate is subject to certain
provisions of an agreement between the
- 4 -
registered holder hereof and Issuer and to resale
restrictions arising under the Securities Act of
1933, as amended. A copy of such agreement is on
file at the principal office of Issuer and will be
provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the
resale restrictions of the Securities Act of 1933, as amended
(the "1933 Act"), in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if
the Holder shall have delivered to Issuer a copy of a letter from
the staff of the SEC, or an opinion of counsel, in form and
substance reasonably satisfactory to Issuer, to the effect that
such legend is not required for purposes of the 1933 Act;
(ii) the reference to the provisions to this Agreement in the
above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been
sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the
retention of such reference; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by Holder to Issuer of the written
notice of exercise of the Option provided for under
subsection (e) of this Section 2 and the tender of the applicable
purchase price in immediately available funds, the Holder shall
be deemed to be the holder of record of the shares of Common
Stock issuable upon such exercise, notwithstanding that the stock
transfer books of Issuer shall then be closed or that
certificates representing such shares of Common Stock shall not
then be actually delivered to the Holder. Issuer shall pay all
expenses, and any and all United States federal, state, and local
taxes and other charges that may be payable in connection with
the preparation, issue, and delivery of stock certificates under
this Section 2 in the name of the Holder or its assignee,
transferee, or designee.
3. Issuer agrees: (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but
unissued or treasury shares of Common Stock so that the Option
may be exercised without additional authorization of Common Stock
after giving effect to all other options, warrants, convertible
securities, and other rights to purchase Common Stock; (ii) that
it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution, or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations, or conditions
to be observed or performed hereunder by Issuer; (iii) promptly
to take all action as may from time to time be required
(including (x) complying with all premerger notification,
reporting, and waiting period requirements specified in 15 USC
Section 18 and regulations promulgated thereunder and (y) in the
event, under the Bank Holding Company Act of 1956, as amended
(the "BHCA"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or notice to
the Federal Reserve Board or to any state regulatory authority is
necessary before the Option may be exercised, cooperating fully
with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such
state regulatory authority as they may require) in order to
permit the Holder to exercise the Option and Issuer duly and
- 5 -
effectively to issue shares of Common Stock pursuant hereto; and
(iv) promptly to take all action provided herein to protect the
rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal
office of Issuer, for other Agreements providing for Options of
different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same condition as are set
forth herein, in the aggregate the same number of shares of
Common Stock purchasable hereunder. The terms "Agreement" and
"Option" as used herein include any Stock Option Agreements and
related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction, or
mutilation of this Agreement, and (in the case of loss, theft, or
destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Agreement, if mutilated,
Issuer will execute and deliver a new Agreement of like tenor and
date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of
Issuer, whether or not the Agreement so lost, stolen, destroyed,
or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares
of Common Stock that are purchasable upon exercise of the Option
pursuant to Section 1 of this Agreement, the number of shares of
Common Stock purchasable upon the exercise of the Option and the
Option Price shall be subject to adjustment from time to time as
provided in this Section 5. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, distributions on
or in respect of the Common Stock that would be prohibited under
the terms of the Merger Agreement, or the like, the type and
number of shares of Common Stock purchasable upon exercise hereof
and the Option Price shall be appropriately adjusted in such
manner as shall fully preserve the economic benefits provided
hereunder and proper provision shall be made in any agreement
governing any such transaction to provide for such proper
adjustment and the full satisfaction of the Issuer's obligations
hereunder.
6. Upon the occurrence of a Subsequent Triggering Event
that occurs prior to an Exercise Termination Event, Issuer shall,
at the request of Grantee delivered within 90 days of such
Subsequent Triggering Event (whether on its own behalf or on
behalf of any subsequent holder of this Option (or part thereof)
or any of the shares of Common Stock issued pursuant hereto),
promptly prepare, file, and keep current a shelf registration
statement under the 1933 Act covering this Option and any shares
issued and issuable pursuant to this Option and shall use its
reasonable best efforts to cause such registration statement to
become effective and remain current in order to permit the sale
or other disposition of this Option and any shares of Common
Stock issued upon total or partial exercise of this Option
("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best
efforts to cause such registration statement first to become
effective and then to remain effective for such period not in
excess of 180 days from the date such registration statement
first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee
shall have the right to demand two such registrations. The
- 6 -
foregoing notwithstanding, if, at the time of any request by
Grantee for registration of the Option or Option Shares as
provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in
the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters,
of such offering the inclusion of the Holder's Option or Option
Shares would interfere with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option
Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; and provided, however, that
after any such required reduction the number of Option Shares to
be included in such offering for the account of the Holder shall
constitute at least 25 percent of the total number of shares to
be sold by the Holder and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then the Issuer
shall file a registration statement for the balance as promptly
as practical and no reduction shall thereafter occur. Each such
Holder shall provide all information reasonably requested by
Issuer for inclusion in any registration statement to be field
hereunder. If requested by any such Holder in connection with
such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of
representations, warranties, indemnities, and other agreements
customarily included in such underwriting agreements for the
Issuer. Upon receiving any request under this Section 6 from any
Holder, Issuer agrees to send a copy thereof to any other person
known to Issuer to be entitled to registration rights under this
Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary
contained herein, in no event shall Issuer be obligated to effect
more than two registrations pursuant to this Section 6 by reason
of the fact that there shall be more than one Grantee as a result
of any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a
Repurchase Event (as defined below), (i) following a request of
the Holder, delivered prior to an Exercise Termination Event,
Issuer (or any successor thereto) shall repurchase the Option
from the Holder at a price (the "Option Repurchase Price") equal
to the amount by which (A) the market/offer price (as defined
below) exceeds (B) the Option Price, multiplied by the number of
shares for which this Option may then be exercised and (ii) at
the request of the owner of Option Shares from time to time (the
"Owner"), delivered within 90 days of such occurrence (or such
later period as provided in Section 10), Issuer shall repurchase
such number of the Option Shares from the Owner as the Owner
shall designate at a price (the "Option Share Repurchase Price")
equal to the market/offer price multiplied by the number of
Option Shares so designated. The term "market/offer price" shall
mean the highest of the following amounts with respect to the
six-month period immediately preceding the date the Holder gives
notice of the required repurchase of this Option or the Owner
gives notice of the required repurchase of Option Shares, as the
case may be (i) the price per share of Common Stock at which a
tender offer or exchange offer therefor has been made, (ii) the
price per share of Common Stock to be paid by any third party
pursuant to an agreement with Issuer, (iii) the highest closing
price for shares of Common Stock, or (iv) in the event of a sale
of all or a substantial portion of Issuer's assets, the sum of
the price paid in such sale for such assets and the current
market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, divided by the number of
shares of Common Stock of Issuer outstanding at the time of such
- 7 -
sale. In determining the market/offer price, the value of
consideration other than cash shall be determined by a nationally
recognized investment banking firm selected by the Holder or
Owner, as the case may be, and reasonably acceptable to Issuer.
Notwithstanding the foregoing, if the same person who has
participated in a Triggering Event has entered, or after such
Triggering Event has occurred enters, into any agreement or
understanding with Grantee relating to Grantee's rights under
this Option or with respect to the Option Shares or directly or
indirectly relating to Issuer, Grantee shall, notwithstanding the
terms of such agreement or understanding, at any time upon the
occurrence of a Subsequent Triggering Event of the type set forth
in Section 3(d)(i) without Issuer's approval, recommendation or
consent, promptly request that Issuer repurchase the Option and
any Option Shares held by Grantee as provided in this Section 8
and Issuer shall do so.
(b) The Holder and the Owner, as the case may be, may
exercise its right to require Issuer to repurchase the Option and
any Option Shares pursuant to this Section 7 by surrendering for
such purpose to Issuer, at its principal office, a copy of this
Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the
Holder or the Owner, as the case may be, elects to require Issuer
to repurchase this Option and/or the Option Shares in accordance
with the provisions of this Section 7. Within the latter to
occur of (x) five business days after the surrender of the Option
and/or certificates representing Option Shares and the receipt of
such notice or notices relating thereto and (y) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer
shall deliver or cause to be delivered to Holder the Option
Repurchase Price and/or to the Owner the Option Share Repurchase
Price therefor or the portion thereof that Issuer is not then
prohibited under applicable law and regulation from so
delivering.
(c) To the extent that Issuer is prohibited under
applicable law or regulation from repurchasing the Option and/or
the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be
delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the
Option Share Repurchase Price, respectively, that it is no longer
prohibited from delivering, within five business days after the
date on which Issuer is no longer so prohibited; provided,
however, that if Issuer at any time after delivery of a notice of
repurchase pursuant to paragraph (b) of this Section 7 is
prohibited under applicable law or regulation from delivering to
the Holder and/or the Owner, as appropriate, the Option
Repurchase Price and the Option Share Repurchase Price,
respectively, in full (and Issuer hereby undertakes to use its
best efforts to obtain all required regulatory and legal
approvals and file any required notices as promptly as
practicable in order to accomplish such repurchase), the Holder
or Owner may revoke its notice of repurchase of the Option or the
Option Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, Issuer shall promptly
(i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering;
and (ii) deliver, as appropriate, either (A) to the Holder, a new
Stock Option Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by
multiplying the number of shares of Common Stock for which the
surrendered Stock Option Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator
- 8 -
of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which
is the Option Repurchase Price, or (B) to the Owner, a
certificate for the Option Shares it is then so prohibited from
repurchasing.
(d) For purposes of this Section 7, a Repurchase Event
shall be deemed to have occurred (i) upon the consummation of any
merger, consolidation, or similar transaction involving Issuer or
any purchase, lease, or other acquisition of all or a substantial
portion of the assets of Issuer, other than any such transaction
which would not constitute an Acquisition Transaction pursuant to
the proviso to Section 2(b)(i) hereof or (ii) upon the
acquisition by any person of beneficial ownership of 50 percent
or more of the then outstanding shares of Common Stock, provided
that no such event shall constitute a Repurchase Event unless a
Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event. The parties hereto agree that
Issuer's obligations to repurchase the Option or Option Shares
under this Section 7 shall not terminate upon the occurrence of
an Exercise Termination Event unless no Subsequent Triggering
Event shall have occurred prior to the occurrence of an Exercise
Termination Event.
8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into an agreement (i) to consolidate
with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge
into Issuer and Issuer shall be the continuing or surviving
corporation, but, in connection with such merger, the then
outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person or
cash or any other property or the then outstanding shares of
Common Stock shall after such merger represent less than
50 percent of the outstanding voting shares and voting share
equivalents of the merged company, or (iii) to sell or otherwise
transfer all or substantially all of its assets to any person,
other than Grantee or one of its Subsidiaries, then, and in each
such case, the agreement governing such transaction shall make
proper provision so that the Option shall, upon the consummation
of any such transaction and upon the terms and conditions set
forth herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of the Holder, of either
(x) the Acquiring Corporation (as hereinafter defined) or (y) any
person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a
consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is
the continuing or surviving person, and (iii) the
transferee of all or substantially all of Issuer's
assets.
(2) "Substitute Common Stock" shall mean the
common stock issued by the Issuer of the Substitute
Option upon exercise of the Substitute Option.
- 9 -
(3) "Assigned Value" shall mean the
market/offer price, as defined in Section 7.
(4) "Average Price" shall mean the average
closing price of a share of the Substitute Common
Stock for the one year immediately preceding the
consolidation, merger, or sale in question, but in
no event higher than the closing price of the shares
of Substitute Common Stock on the date preceding
such consolidation, merger or sale; provided that if
Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a
share of common stock issued by the person merging
into Issuer or by any company which controls or is
controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as
the Option, provided, that if the terms of the Substitute Option
cannot, for legal reasons, be the same as the Option, such terms
shall be as similar as possible and in no event less advantageous
to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this
Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for
such number of shares of Substitute Common Stock as is equal to
the Assigned Value multiplied by the number of shares of Common
Stock for which the Option is then exercisable, divided by the
Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the
Option Price multiplied by a fraction, the numerator of which
shall be the number of shares of Common Stock for which the
Option is then exercisable and the denominator of which shall be
the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more
than 19.9 percent of the shares of Substitute Common Stock
outstanding prior to the exercise of the Substitute Option. In
the event that the Substitute Option would be exercisable for
more than 19.9 percent of the shares of Substitute Common Stock
outstanding prior to exercise but for this clause (e), the issuer
of the Substitute Option (the "Substitute Option Issuer") shall
make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the
limitation in this clause (e) over (ii) the value of the
Substitute Option after giving effect to the limitation in this
clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably
acceptable to the Acquiring Corporation.
(f) Issuer shall not enter into any transaction
described in subsection (a) of this Section 8 unless the
Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer
hereunder.
- 10 -
9. (a) At the request of the holder of the Substitute
Option (the "Substitute Option Holder"), the issuer of the
Substitute Option (the "Substitute Option Issuer") shall
repurchase the Substitute Option from the Substitute Option
Holder at a price (the "Substitute Option Repurchase Price")
equal to the amount by which (i) the Highest Closing Price (as
hereinafter defined) exceeds (ii) the exercise price of the
Substitute Option, multiplied by the number of shares of
Substitute Common Stock for which the Substitute Option may then
be exercised, and at the request of the owner (the "Substitute
Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall
repurchase the Substitute Shares at a price (the "Substitute
Share Repurchase Price") equal to the Highest Closing Price
multiplied by the number of Substitute Shares so designated. The
term "Highest Closing Price" shall mean the highest closing price
for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives
notice of the required repurchase of the Substitute Option or the
Substitute Share Owner gives notice of the required repurchase of
the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute
Share Owner, as the case may be, may exercise its respective
rights to require the Substitute Option Issuer to repurchase the
Substitute Option and the Substitute Shares pursuant to this
Section 9 by surrendering for such purpose to the Substitute
Option Issuer, at its principal office, the agreement for such
Substitute Option (or, in the absence of such an agreement, a
copy of this Agreement) and certificates for Substitute Shares
accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the
case may be, elects to require the Substitute Option Issuer to
repurchase the Substitute Option and/or the Substitute Shares in
accordance with the provisions of this Section 9. As promptly as
practicable, and in any event within five business days after the
surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or
notices relating thereto, the Substitute Option Issuer shall
deliver or cause to be delivered to the Substitute Option Holder
the Substitute Option Repurchase Price and/or to the Substitute
Share Owner the Substitute Share Repurchase Price therefor or the
portion thereof which the Substitute Option Issuer is not then
prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation from repurchasing
the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer shall immediately so notify
the Substitute Option Holder and/or the Substitute Share Owner
and thereafter deliver or cause to be delivered, from time to
time, to the Substitute Option Holder and/or the Substitute Share
Owner, as appropriate, the portion of the Substitute Share
Repurchase Price, respectively, which it is no longer prohibited
from delivering, within five business days after the date on
which the Substitute Option Issuer is no longer so prohibited;
provided, however, that if the Substitute Option Issuer is at any
time after delivery of a notice of repurchase pursuant to
subsection (b) of this Section 9 prohibited under applicable law
or regulation from delivering to the Substitute Option Holder
and/or the Substitute Share Owner, as appropriate, the Substitute
Option Repurchase Price and the Substitute Share Repurchase
Price, respectively, in full (and the Substitute Option Issuer
shall use its best efforts to receive all required regulatory and
legal approvals as promptly as practicable in order to accomplish
such repurchase), the Substitute Option Holder or Substitute
- 11 -
Share Owner may revoke its notice of repurchase of the Substitute
Option or the Substitute Shares either in whole or to the extent
of the prohibition, whereupon, in the latter case, the Substitute
Option Issuer shall promptly (i) deliver to the Substitute Option
Holder or Substitute Share Owner, as appropriate, that portion of
the Substitute Option Repurchase Price or the Substitute Share
Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate,
either (A) to the Substitute Option Holder, a new Substitute
Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock
obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was
exercisable at the time of delivery of the notice of repurchase
by a fraction, the numerator of which is the Substitute Option
Repurchase Price less the portion thereof theretofore delivered
to the Substitute Option Holder and the denominator of which is
the Substitute Option Repurchase Price, or (B) to the Substitute
Share Owner, a certificate for the Substitute Option Shares it is
then so prohibited from repurchasing.
10. The 90-day period for exercise of certain rights under
Sections 2, 6, 7, and 13 shall be extended: (i) to the extent
necessary to obtain all regulatory approvals for the exercise of
such rights and for the expiration of all statutory waiting
periods; and (ii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has full corporate power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings
on the part of Issuer are necessary to authorize this Agreement
or to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by
Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times
from the date hereof through the termination of this Agreement in
accordance with its terms will have reserved for issuance upon
the exercise of the Option, that number of shares of Common Stock
equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares,
upon issuance pursuant hereto, will be duly authorized, validly
issued, fully paid, nonassessable, and will be delivered free and
clear of all claims, liens, encumbrances, and security interests
and not subject to any preemptive rights.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any
approvals or consents referred to herein, to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
- 12 -
corporate action on the part of Grantee. This Agreement has been
duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common
Stock or other securities acquired by Grantee upon exercise of
the Option will not be, acquired with a view to the public
distribution thereof and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from
registration under the Securities Act.
13. Neither of the parties hereto may assign any of its
rights or obligations under this Option Agreement or the Option
created hereunder to any other person, without the express
written consent of the other party, except that in the event a
Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express
provisions hereof, may assign in whole or in part its rights and
obligations hereunder within 90 days following such Subsequent
Triggering Event (or such later period as provided in
Section 10); provided, however, that until the date 15 days
following the date on which the Federal Reserve Board approves an
application by Grantee under the BHCA to acquire the shares of
Common Stock subject to the Option, Grantee may not assign its
rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party
acquires the right to purchase in excess of 2 percent of the
voting shares of Issuer, (iii) an assignment to a single party
(e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's
behalf, or (iv) any other manner approved by the Federal Reserve
Board.
14. Each of Grantee and Issuer will use its best efforts to
make all filings with, and to obtain consents of, all third
parties and governmental authorities necessary to the
consummation of the transactions contemplated by this Agreement,
including without limitation making application to list the
shares of Common Stock issuable hereunder on the NASDAQ Stock
Market National Market System upon official notice of issuance
and applying to the Federal Reserve Board under the BHCA for
approval to acquire the shares issuable hereunder, but Grantee
shall not be obligated to apply to state banking authorities for
approval to acquire the shares of Common Stock issuable hereunder
until such time, if ever, as it deems appropriate to do so.
15. Notwithstanding anything to the contrary herein, in the
event that the Holder or Owner or any Related Person (as
hereinafter defined) thereof is a person making an offer or
proposal to engage in an Acquisition Transaction (other than the
transaction contemplated by the Merger Agreement), then (i) in
the case of a Holder or any Related Person thereof, the Option
held by it shall immediately terminate and be of no further force
or effect, and (ii) in the case of an Owner or any Related Person
thereof, the Option Shares held by it shall be immediately
repurchasable by Issuer at the Option Price. A "Related Person"
of a Holder or Owner means any "affiliate" (as defined in
Rule 12b-2 of the rules and regulations under the 1934 Act) of
the Holder or Owner and any person that is the beneficial owner
of 25% or more of the voting power of the Holder or Owner, as the
case may be.
- 13 -
16. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations of the parties hereto shall be
enforceable by either party hereto through injunctive or other
equitable relief.
17. If any term, provision, covenant, or restriction
contained in this Agreement is held by a court or a federal or
state regulatory agency of competent jurisdiction to be invalid,
void, or unenforceable, the remainder of the terms, provisions,
and covenants and restrictions contained in this Agreement shall
remain in full force and effect, and shall in no way be affected,
impaired, or invalidated. If for any reason such court or
regulatory agency determines that the Holder is not permitted to
acquire, or Issuer is not permitted to repurchase pursuant to
Section 7, the full number of shares of Common Stock provided in
Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5
hereof), it is the express intention of Issuer to repurchase such
lesser number of shares as may be permissible, without any
amendment or modification hereof.
18. All notices, requests, claims, demands, and other
communications hereunder shall be deemed to have been duly given
when delivered in person, by cable, telegram, telecopy, or telex,
or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set
forth in the Merger Agreement.
19. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon, regardless of
the laws hat might otherwise govern under applicable principles
of conflicts of laws thereof.
20. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.
21. Except as otherwise expressly provided herein, each of
the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses
of its own financial consultants, investment bankers,
accountants, and counsel.
22. Except as otherwise expressly provided herein or in the
Merger Agreement, this Agreement contains the entire agreement
between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings
with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided
herein.
23. Capitalized terms used in this Agreement and not
defined herein shall have the meanings assigned thereto in the
Merger Agreement.
- 14 -
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto
duly authorized, all as of the date first above written.
U. S. BANCORP
By /S/ GERRY B. CAMERON
Title Chairman of the Board
Chief Executive Officer
WEST ONE BANCORP
By /S/ DANIEL R. NELSON
Title Chairman and Chief Executive
Officer
- 15 -
STOCK OPTION AGREEMENT
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated May 6, 1995, between U. S. BANCORP,
an Oregon corporation ("Issuer"), and WEST ONE BANCORP, an Idaho
corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and
Plan of Merger dated May 5, 1995 (the "Merger Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, Issuer has agreed to grant
Grantee the Option (as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement,
the parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms
hereof, up to 19,542,378 fully paid and nonassessable shares of
Issuer's Common Stock, $5 par value per share ("Common Stock"), at a
price of $28.00 per share (the "Option Price"); provided further that
in no event shall the number of shares of Common Stock for which this
Option is exercisable exceed 19.9 percent of the Issuer's issued and
outstanding shares of Common Stock. The number of shares of Common
Stock that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement), the number of
shares of Common Stock subject to the Option shall be increased so
that, after such issuance, it equals 19.9 percent of the number of
shares of Common Stock then issued and outstanding without giving
effect to any shares subject or issued pursuant to the Option.
Nothing contained in this Section 1(b) or elsewhere in this Agreement
shall be deemed to authorize Issuer or Grantee to breach any provision
of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the
Option, in whole or in part, and from time to time, if, but only if,
both an Initial Triggering Event (as hereinafter defined) and a
Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the
written notice of such exercise (as provided in subsection (e) of this
- 1 -
Section 2) within 90 days following such Subsequent Triggering Event.
Each of the following shall be an Exercise Termination Event: (i) the
Effective Time of the Merger; (ii) termination of the Merger Agreement
in accordance with the provisions thereof if such termination occurs
prior to the occurrence of an Initial Triggering Event except a
termination by Grantee pursuant to Section 8.1(d) of the Merger
Agreement (unless the breach by Issuer giving rise to such right of
termination is non-volitional); (iii) the passage of 12 months after
termination of the Merger Agreement if such termination follows the
occurrence of an Initial Triggering Event or is a termination by
Grantee pursuant to Section 8.1(d) of the Merger Agreement (unless the
breach by Issuer giving rise to such right of termination is non-
volitional) (provided that if an Initial Triggering Event continues
or occurs beyond such termination and prior to the passage of such 12-
month period, the Exercise Termination Event shall be 12 months from
the expiration of the Last Triggering Event but in no event more than
18 months after such termination) or (iv) the third anniversary of the
date hereof. The "Last Triggering Event" shall mean the last Initial
Triggering Event to expire. The term "Holder" shall mean the holder
or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an
"Issuer Subsidiary"), without having received
Grantee's prior written consent, shall have entered
into an agreement to engage in an Acquisition
Transaction (as hereinafter defined) with any person
(the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections
3(a)(9) and 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), and the rules and
regulations thereunder) other than Grantee or any of
its Subsidiaries (each a "Grantee Subsidiary") or the
Board of Directors of Issuer shall have recommended
that the stockholders of Issuer approve or accept any
such Acquisition Transaction. For purposes of this
Agreement, "Acquisition Transaction" shall mean (w) a
merger or consolidation, or any similar transaction,
involving Issuer or any Significant Subsidiary (as
defined in Rule 1-02 of Regulation S-X promulgated by
the Securities and Exchange Commission (the "SEC")) of
Issuer, (x) a purchase, lease, or other acquisition of
all or a substantial portion of the assets of Issuer
or any Significant Subsidiary of Issuer, (y) a
purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of
securities representing 10 percent or more of the
voting power of Issuer or any Significant Subsidiary
of Issuer, or (z) any substantially similar
transaction; provided, however, that in no event shall
any (i) merger, consolidation, or similar transaction
involving Issuer or any Significant Subsidiary in
which the voting securities of Issuer outstanding
immediately prior thereto continue to represent (by
either remaining outstanding or being converted into
the voting securities of the surviving entity of any
such transaction) at least 65 percent of the combined
voting power of the voting securities of the Issuer or
the surviving entity outstanding immediately after the
consummation of such merger, consolidation, or similar
transaction, or (ii) any merger,
- 2 -
consolidation, purchase, or similar transaction involving
only the Issuer and one or more of its Subsidiaries or
involving only any two or more of such Subsidiaries, be
deemed to be an Acquisition Transaction, provided any such
transaction is not entered into in violation of the terms
of the Merger Agreement;
(ii) Issuer or any Issuer Subsidiary, without
having received Grantee's prior written consent, shall
have authorized, recommended, proposed, or publicly
announced its intention to authorize, recommend, or
propose, to engage in an Acquisition Transaction with
any person other than Grantee or a Grantee Subsidiary,
or the Board of Directors of Issuer shall have
publicly withdrawn or modified, or publicly announced
its interest to withdraw or modify, in any manner
adverse to Grantee, its recommendation that the
stockholders of Issuer approve the transactions
contemplated by the Merger Agreement;
(iii) Any person other than Grantee, any
Grantee Subsidiary, or any Issuer Subsidiary acting in
a fiduciary capacity in the ordinary course of its
business shall have acquired beneficial ownership or
the right to acquire beneficial ownership of
15 percent or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of
this Option Agreement having the meaning assigned
thereto in Section 13(d) of the 1934 Act, and the
rules and regulations thereunder);
(iv) Any person other than Grantee or any Grantee
Subsidiary shall have made a bona fide proposal to
Issuer or its stockholders by public announcement or
written communication that is or becomes the subject
of public disclosure to engage in an Acquisition
Transaction;
(v) After an overture is made by a third party
to Issuer or its stockholders to engage in an
Acquisition Transaction, Issuer shall have breached
any covenant or obligation contained in the Merger
Agreement and such breach (x) would entitle Grantee to
terminate the Merger Agreement and (y) shall not have
been cured prior to the Notice Date (as defined
below); or
(vi) Any person other than Grantee or any Grantee
Subsidiary, other than in connection with a
transaction to which Grantee has given its prior
written consent, shall have filed an application or
notice with the Federal Reserve Board, or other
federal or state bank regulatory authority, which
application or notice has been accepted for
processing, for approval to engage in an Acquisition
Transaction.
(c) The term "Subsequent Triggering Event" shall mean
either of the following events or transactions occurring after the
date hereof:
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(i) The acquisition by any person of beneficial
ownership of 25 percent or more of the then
outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering
Event described in clause (i) of subsection (b) of
this Section 2, except that the percentage referred to
in clause (y) shall be 25 percent.
(d) Issuer shall notify Grantee promptly in writing of
the occurrence of any Initial Triggering Event or Subsequent
Triggering Event (together, a "Triggering Event"), it being
understood that the giving of such notice by Issuer shall not be a
condition to the right of the Holder to exercise the Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date")
specifying (i) the total number of shares it will purchase pursuant
to such exercise and (ii) a place and date not earlier than three
business days nor later than 60 business days from the Notice Date
for the closing of such purchase (the "Closing Date"); provided
that if prior notification to or approval of the Federal Reserve
Board or any other regulatory agency is required in connection with
such purchase, the Holder shall promptly file the required notice
or application for approval and shall expeditiously process the
same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such
approvals have been obtained and any requisite waiting period or
periods shall have passed. Any exercise of the Option shall be
deemed to occur on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this
Section 2, the Holder shall pay to Issuer the aggregate purchase
price for the shares of Common Stock purchased pursuant to the
exercise of the Option in immediately available funds by wire
transfer to a bank account designated by Issuer, provided that
failure or refusal of Issuer to designate such a bank account shall
not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this
Section 2, Issuer shall deliver to the Holder a certificate or
certificates representing the number of shares of Common Stock
purchased by the Holder and, if the Option should be exercised in
part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and
the Holder shall deliver to Issuer a copy of this Agreement and a
letter agreeing that the Holder will not offer to sell or otherwise
dispose of such shares in violation of applicable law or the
provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by
this certificate is subject to certain
provisions of an agreement between the
- 4 -
registered holder hereof and Issuer and to resale
restrictions arising under the Securities Act of
1933, as amended. A copy of such agreement is on
file at the principal office of Issuer and will be
provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933
Act"), in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the Holder
shall have delivered to Issuer a copy of a letter from the staff of
the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not
required for purposes of the 1933 Act; (ii) the reference to the
provisions to this Agreement in the above legend shall be removed
by delivery of substitute certificate(s) without such reference if
the shares have been sold or transferred in compliance with the
provisions of this Agreement and under circumstances that do not
require the retention of such reference; and (iii) the legend shall
be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by Holder to Issuer of the written
notice of exercise of the Option provided for under subsection (e)
of this Section 2 and the tender of the applicable purchase price
in immediately available funds, the Holder shall be deemed to be
the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such
shares of Common Stock shall not then be actually delivered to the
Holder. Issuer shall pay all expenses, and any and all United
States federal, state, and local taxes and other charges that may
be payable in connection with the preparation, issue, and delivery
of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee, or designee.
3. Issuer agrees: (i) that it shall at all times maintain,
free from preemptive rights, sufficient authorized but unissued or
treasury shares of Common Stock so that the Option may be exercised
without additional authorization of Common Stock after giving
effect to all other options, warrants, convertible securities, and
other rights to purchase Common Stock; (ii) that it will not, by
charter amendment or through reorganization, consolidation, merger,
dissolution, or sale of assets, or by any other voluntary act,
avoid or seek to avoid the observance or performance of any of the
covenants, stipulations, or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all action as may from
time to time be required (including (x) complying with all
premerger notification, reporting, and waiting period requirements
specified in 15 USC Section 18 and regulations promulgated
thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHCA"), or the Change in Bank Control Act
of 1978, as amended, or any state banking law, prior approval of or
notice to the Federal Reserve Board or to any state regulatory
authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or
notices and providing such information to the Federal Reserve Board
or such state regulatory authority as they may require) in order to
permit the Holder to exercise the Option and Issuer
- 5 -
duly and effectively to issue shares of Common Stock pursuant
hereto; and (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal
office of Issuer, for other Agreements providing for Options of
different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same condition as are set
forth herein, in the aggregate the same number of shares of Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any Stock Option Agreements and related Options
for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation
of this Agreement, and (in the case of loss, theft, or destruction)
of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will execute
and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional
contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed, or mutilated shall at any
time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of
Common Stock that are purchasable upon exercise of the Option
pursuant to Section 1 of this Agreement, the number of shares of
Common Stock purchasable upon the exercise of the Option and the
Option Price shall be subject to adjustment from time to time as
provided in this Section 5. In the event of any change in, or
distributions in respect of, the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares, distributions on or
in respect of the Common Stock that would be prohibited under the
terms of the Merger Agreement, or the like, the type and number of
shares of Common Stock purchasable upon exercise hereof and the
Option Price shall be appropriately adjusted in such manner as
shall fully preserve the economic benefits provided hereunder and
proper provision shall be made in any agreement governing any such
transaction to provide for such proper adjustment and the full
satisfaction of the Issuer's obligations hereunder.
6. Upon the occurrence of a Subsequent Triggering Event that
occurs prior to an Exercise Termination Event, Issuer shall, at the
request of Grantee delivered within 90 days of such Subsequent
Triggering Event (whether on its own behalf or on behalf of any
subsequent holder of this Option (or part thereof) or any of the
shares of Common Stock issued pursuant hereto), promptly prepare,
file, and keep current a shelf registration statement under the
1933 Act covering this Option and any shares issued and issuable
pursuant to this Option and shall use its reasonable best efforts
to cause such registration statement to become effective and remain
current in order to permit the sale or other disposition of this
Option and any shares of Common Stock issued upon total or partial
exercise of this Option ("Option Shares") in accordance with any
plan of disposition requested by Grantee. Issuer will use its
reasonable best efforts to cause such registration statement first
to become effective and then to remain effective for such period
not in excess of 180 days from the date such registration statement
first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee
shall have the right to demand two such registrations. The
- 6 -
foregoing notwithstanding, if, at the time of any request by Grantee
for registration of the Option or Option Shares as provided above,
Issuer is in registration with respect to an underwritten public
offering of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or,
if none, the sole underwriter or underwriters, of such offering the
inclusion of the Holder's Option or Option Shares would interfere
with the successful marketing of the shares of Common Stock offered
by Issuer, the number of Option Shares otherwise to be covered in
the registration statement contemplated hereby may be reduced; and
provided, however, that after any such required reduction the
number of Option Shares to be included in such offering for the
account of the Holder shall constitute at least 25 percent of the
total number of shares to be sold by the Holder and Issuer in the
aggregate; and provided further, however, that if such reduction
occurs, then the Issuer shall file a registration statement for the
balance as promptly as practical and no reduction shall thereafter
occur. Each such Holder shall provide all information reasonably
requested by Issuer for inclusion in any registration statement to
be field hereunder. If requested by any such Holder in connection
with such registration, Issuer shall become a party to any
underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of
representations, warranties, indemnities, and other agreements
customarily included in such underwriting agreements for the
Issuer. Upon receiving any request under this Section 6 from any
Holder, Issuer agrees to send a copy thereof to any other person
known to Issuer to be entitled to registration rights under this
Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary
contained herein, in no event shall Issuer be obligated to effect
more than two registrations pursuant to this Section 6 by reason of
the fact that there shall be more than one Grantee as a result of
any assignment or division of this Agreement.
7. (a) Immediately prior to the occurrence of a Repurchase
Event (as defined below), (i) following a request of the Holder,
delivered prior to an Exercise Termination Event, Issuer (or any
successor thereto) shall repurchase the Option from the Holder at
a price (the "Option Repurchase Price") equal to the amount by
which (A) the market/offer price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which this
Option may then be exercised and (ii) at the request of the owner
of Option Shares from time to time (the "Owner"), delivered within
90 days of such occurrence (or such later period as provided in
Section 10), Issuer shall repurchase such number of the Option
Shares from the Owner as the Owner shall designate at a price (the
"Option Share Repurchase Price") equal to the market/offer price
multiplied by the number of Option Shares so designated. The term
"market/offer price" shall mean the highest of the following
amounts with respect to the six-month period immediately preceding
the date the Holder gives notice of the required repurchase of this
Option or the Owner gives notice of the required repurchase of
Option Shares, as the case may be (i) the price per share of Common
Stock at which a tender offer or exchange offer therefor has been
made, (ii) the price per share of Common Stock to be paid by any
third party pursuant to an agreement with Issuer, (iii) the highest
closing price for shares of Common Stock, or (iv) in the event of
a sale of all or a substantial portion of Issuer's assets, the sum
of the price paid in such sale for such assets and the current
market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, divided by the number of
shares of Common Stock of Issuer
- 7 -
outstanding at the time of such sale. In determining the
market/offer price, the value of consideration other than cash
shall be determined by a nationally recognized investment banking
firm selected by the Holder or Owner, as the case may be, and
reasonably acceptable to Issuer. Notwithstanding the foregoing, if
the same person who has participated in a Triggering Event has
entered, or after such Triggering Event has occurred enters, into
any agreement or understanding with Grantee relating to Grantee's
rights under this Option or with respect to the Option Shares or
directly or indirectly relating to Issuer, Grantee shall,
notwithstanding the terms of such agreement or understanding, at
any time upon the occurrence of a Subsequent Triggering Event of
the type set forth in Section 3(d)(i) without Issuer's approval,
recommendation or consent, promptly request that Issuer repurchase
the Option and any Option Shares held by Grantee as provided in
this Section 8 and Issuer shall do so.
(b) The Holder and the Owner, as the case may be, may
exercise its right to require Issuer to repurchase the Option and
any Option Shares pursuant to this Section 7 by surrendering for
such purpose to Issuer, at its principal office, a copy of this
Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to
repurchase this Option and/or the Option Shares in accordance with
the provisions of this Section 7. Within the latter to occur of
(x) five business days after the surrender of the Option and/or
certificates representing Option Shares and the receipt of such
notice or notices relating thereto and (y) the time that is
immediately prior to the occurrence of a Repurchase Event, Issuer
shall deliver or cause to be delivered to Holder the Option
Repurchase Price and/or to the Owner the Option Share Repurchase
Price therefor or the portion thereof that Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under
applicable law or regulation from repurchasing the Option and/or
the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be
delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the
Option Share Repurchase Price, respectively, that it is no longer
prohibited from delivering, within five business days after the
date on which Issuer is no longer so prohibited; provided, however,
that if Issuer at any time after delivery of a notice of repurchase
pursuant to paragraph (b) of this Section 7 is prohibited under
applicable law or regulation from delivering to the Holder and/or
the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer
hereby undertakes to use its best efforts to obtain all required
regulatory and legal approvals and file any required notices as
promptly as practicable in order to accomplish such repurchase),
the Holder or Owner may revoke its notice of repurchase of the
Option or the Option Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, Issuer shall promptly
(i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Holder, a new Stock
Option Agreement evidencing the right of the Holder to purchase
that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock
Option Agreement was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the
Option Repurchase Price less the portion thereof theretofore
delivered to the Holder and the denominator of which is the Option
- 8 -
Repurchase Price, or (B) to the Owner, a certificate for the Option
Shares it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a Repurchase Event
shall be deemed to have occurred (i) upon the consummation of any
merger, consolidation, or similar transaction involving Issuer or
any purchase, lease, or other acquisition of all or a substantial
portion of the assets of Issuer, other than any such transaction
which would not constitute an Acquisition Transaction pursuant to
the proviso to Section 2(b)(i) hereof or (ii) upon the acquisition
by any person of beneficial ownership of 50 percent or more of the
then outstanding shares of Common Stock, provided that no such
event shall constitute a Repurchase Event unless a Subsequent
Triggering Event shall have occurred prior to an Exercise
Termination Event. The parties hereto agree that Issuer's
obligations to repurchase the Option or Option Shares under this
Section 7 shall not terminate upon the occurrence of an Exercise
Termination Event unless no Subsequent Triggering Event shall have
occurred prior to the occurrence of an Exercise Termination Event.
8. (a) In the event that prior to an Exercise Termination
Event, Issuer shall enter into an agreement (i) to consolidate with
or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its Subsidiaries, to merge
into Issuer and Issuer shall be the continuing or surviving
corporation, but, in connection with such merger, the then
outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash
or any other property or the then outstanding shares of Common
Stock shall after such merger represent less than 50 percent of the
outstanding voting shares and voting share equivalents of the
merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Grantee
or one of its Subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provision so
that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option (the "Substitute
Option"), at the election of the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person
that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation
or merger with Issuer (if other than Issuer),
(ii) Issuer in a merger in which Issuer is the
continuing or surviving person, and (iii) the
transferee of all or substantially all of Issuer's
assets.
(2) "Substitute Common Stock" shall mean the
common stock issued by the Issuer of the Substitute
Option upon exercise of the Substitute Option.
- 9 -
(3) "Assigned Value" shall mean the market/offer
price, as defined in Section 7.
(4) "Average Price" shall mean the average
closing price of a share of the Substitute Common
Stock for the one year immediately preceding the
consolidation, merger, or sale in question, but in no
event higher than the closing price of the shares of
Substitute Common Stock on the date preceding such
consolidation, merger or sale; provided that if Issuer
is the issuer of the Substitute Option, the Average
Price shall be computed with respect to a share of
common stock issued by the person merging into Issuer
or by any company which controls or is controlled by
such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as
the Option, provided, that if the terms of the Substitute Option
cannot, for legal reasons, be the same as the Option, such terms
shall be as similar as possible and in no event less advantageous
to the Holder. The issuer of the Substitute Option shall also
enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this Agreement,
which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such
number of shares of Substitute Common Stock as is equal to the
Assigned Value multiplied by the number of shares of Common Stock
for which the Option is then exercisable, divided by the Average
Price. The exercise price of the Substitute Option per share of
Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock for which the Option is then
exercisable and the denominator of which shall be the number of
shares of Substitute Common Stock for which the Substitute Option
is exercisable.
(e) In no event, pursuant to any of the foregoing
paragraphs, shall the Substitute Option be exercisable for more
than 19.9 percent of the shares of Substitute Common Stock
outstanding prior to the exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than
19.9 percent of the shares of Substitute Common Stock outstanding
prior to exercise but for this clause (e), the issuer of the
Substitute Option (the "Substitute Option Issuer") shall make a
cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this
clause (e) over (ii) the value of the Substitute Option after
giving effect to the limitation in this clause (e). This
difference in value shall be determined by a nationally recognized
investment banking firm selected by the Holder or the Owner, as the
case may be, and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction
described in subsection (a) of this Section 8 unless the Acquiring
Corporation and any person that controls the Acquiring Corporation
assume in writing all the obligations of Issuer hereunder.
- 10 -
9. (a) At the request of the holder of the Substitute
Option (the "Substitute Option Holder"), the issuer of the
Substitute Option (the "Substitute Option Issuer") shall repurchase
the Substitute Option from the Substitute Option Holder at a price
(the "Substitute Option Repurchase Price") equal to the amount by
which (i) the Highest Closing Price (as hereinafter defined)
exceeds (ii) the exercise price of the Substitute Option,
multiplied by the number of shares of Substitute Common Stock for
which the Substitute Option may then be exercised, and at the
request of the owner (the "Substitute Share Owner") of shares of
Substitute Common Stock (the "Substitute Shares"), the Substitute
Option Issuer shall repurchase the Substitute Shares at a price
(the "Substitute Share Repurchase Price") equal to the Highest
Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the
highest closing price for shares of Substitute Common Stock within
the six-month period immediately preceding the date the Substitute
Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the
required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder and the Substitute
Share Owner, as the case may be, may exercise its respective rights
to require the Substitute Option Issuer to repurchase the
Substitute Option and the Substitute Shares pursuant to this
Section 9 by surrendering for such purpose to the Substitute Option
Issuer, at its principal office, the agreement for such Substitute
Option (or, in the absence of such an agreement, a copy of this
Agreement) and certificates for Substitute Shares accompanied by a
written notice or notices stating that the Substitute Option Holder
or the Substitute Share Owner, as the case may be, elects to
require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable, and in
any event within five business days after the surrender of the
Substitute Option and/or certificates representing Substitute
Shares and the receipt of such notice or notices relating thereto,
the Substitute Option Issuer shall deliver or cause to be delivered
to the Substitute Option Holder the Substitute Option Repurchase
Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor or the portion thereof which the
Substitute Option Issuer is not then prohibited under applicable
law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation from repurchasing the
Substitute Option and/or the Substitute Shares in part or in full,
the Substitute Option Issuer shall immediately so notify the
Substitute Option Holder and/or the Substitute Share Owner and
thereafter deliver or cause to be delivered, from time to time, to
the Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the portion of the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from delivering,
within five business days after the date on which the Substitute
Option Issuer is no longer so prohibited; provided, however, that
if the Substitute Option Issuer is at any time after delivery of a
notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation from delivering to
the Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the
Substitute Option Issuer shall use its best efforts to receive all
required regulatory and legal approvals as promptly as practicable
in order to accomplish such repurchase), the Substitute Option
- 11 -
Holder of Substitute Share Owner may revoke its notice of
repurchase of the Substitute Option or the Substitute Shares
either in whole or to the extent of the prohibition, whereupon,
in the latter case, the Substitute Option Issuer shall promptly
(i) deliver to the Substitute Option Holder or Substitute Share
Owner, as appropriate, that portion of the Substitute Option
Repurchase Price or the Substitute Share Repurchase Price that
the Substitute Option Issuer is not prohibited from delivering; and
(ii) deliver, as appropriate, either (A) to the Substitute Option
Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the
Substitute Common Stock obtained by multiplying the number of
shares of the Substitute Common Stock for which the surrendered
Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the
Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the
denominator of which is the Substitute Option Repurchase Price,
or (B) to the Substitute Share Owner, a certificate for the
Substitute Option Shares it is then so prohibited from repurchasing.
10. The 90-day period for exercise of certain rights under
Sections 2, 6, 7, and 13 shall be extended: (i) to the extent
necessary to obtain all regulatory approvals for the exercise of
such rights and for the expiration of all statutory waiting
periods; and (ii) to the extent necessary to avoid liability under
Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has full corporate power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on
the part of Issuer are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times
from the date hereof through the termination of this Agreement in
accordance with its terms will have reserved for issuance upon the
exercise of the Option, that number of shares of Common Stock equal
to the maximum number of shares of Common Stock at any time and
from time to time issuable hereunder, and all such shares, upon
issuance pursuant hereto, will be duly authorized, validly issued,
fully paid, nonassessable, and will be delivered free and clear of
all claims, liens, encumbrances, and security interests and not
subject to any preemptive rights.
12. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any
approvals or consents referred to herein, to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all
- 12 -
necessary corporate action on the part of Grantee. This Agreement
has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common
Stock or other securities acquired by Grantee upon exercise of the
Option will not be, acquired with a view to the public distribution
thereof and will not be transferred or otherwise disposed of except
in a transaction registered or exempt from registration under the
Securities Act.
13. Neither of the parties hereto may assign any of its
rights or obligations under this Option Agreement or the Option
created hereunder to any other person, without the express written
consent of the other party, except that in the event a Subsequent
Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions
hereof, may assign in whole or in part its rights and obligations
hereunder within 90 days following such Subsequent Triggering Event
(or such later period as provided in Section 10); provided,
however, that until the date 15 days following the date on which
the Federal Reserve Board approves an application by Grantee under
the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except
in (i) a widely dispersed public distribution, (ii) a private
placement in which no one party acquires the right to purchase in
excess of 2 percent of the voting shares of Issuer, (iii) an
assignment to a single party (e.g., a broker or investment banker)
for the purpose of conducting a widely dispersed public
distribution on Grantee's behalf, or (iv) any other manner approved
by the Federal Reserve Board.
14. Each of Grantee and Issuer will use its best efforts to
make all filings with, and to obtain consents of, all third parties
and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement, including without
limitation making application to list the shares of Common Stock
issuable hereunder on the NASDAQ Stock Market National Market
System upon official notice of issuance and applying to the Federal
Reserve Board under the BHCA for approval to acquire the shares
issuable hereunder, but Grantee shall not be obligated to apply to
state banking authorities for approval to acquire the shares of
Common Stock issuable hereunder until such time, if ever, as it
deems appropriate to do so.
15. Notwithstanding anything to the contrary herein, in the
event that the Holder or Owner or any Related Person (as
hereinafter defined) thereof is a person making an offer or
proposal to engage in an Acquisition Transaction (other than the
transaction contemplated by the Merger Agreement), then (i) in the
case of a Holder or any Related Person thereof, the Option held by
it shall immediately terminate and be of no further force or
effect, and (ii) in the case of an Owner or any Related Person
thereof, the Option Shares held by it shall be immediately
repurchasable by Issuer at the Option Price. A "Related Person" of
a Holder or Owner means any "affiliate" (as defined in Rule 12b-2
of the rules and regulations under the 1934 Act) of the Holder or
Owner and any person that is the beneficial owner of 25% or more of
the voting power of the Holder or Owner, as the case may be.
- 13 -
16. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations of the parties hereto shall be
enforceable by either party hereto through injunctive or other
equitable relief.
17. If any term, provision, covenant, or restriction
contained in this Agreement is held by a court or a federal or
state regulatory agency of competent jurisdiction to be invalid,
void, or unenforceable, the remainder of the terms, provisions, and
covenants and restrictions contained in this Agreement shall remain
in full force and effect, and shall in no way be affected,
impaired, or invalidated. If for any reason such court or
regulatory agency determines that the Holder is not permitted to
acquire, or Issuer is not permitted to repurchase pursuant to
Section 7, the full number of shares of Common Stock provided in
Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5
hereof), it is the express intention of Issuer to repurchase such
lesser number of shares as may be permissible, without any
amendment or modification hereof.
18. All notices, requests, claims, demands, and other
communications hereunder shall be deemed to have been duly given
when delivered in person, by cable, telegram, telecopy, or telex,
or by registered or certified mail (postage prepaid, return receipt
requested) at the respective addresses of the parties set forth in
the Merger Agreement.
19. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon, regardless of the
laws hat might otherwise govern under applicable principles of
conflicts of laws thereof.
20. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
21. Except as otherwise expressly provided herein, each of
the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own
financial consultants, investment bankers, accountants, and
counsel.
22. Except as otherwise expressly provided herein or in the
Merger Agreement, this Agreement contains the entire agreement
between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings
with respect thereof, written or oral. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is
intended to confer upon any party, other than the parties hereto,
and their respective successors except as assigns, any rights,
remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided herein.
23. Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned thereto in the Merger
Agreement.
- 14 -
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto
duly authorized, all as of the date first above written.
U. S. BANCORP
By /S/ GERRY B. CAMERON
Title Chairman of the Board
Chief Executive Officer
WEST ONE BANCORP
By /S/ DANIEL R. NELSON
Title Chairman and Chief Executive
Officer
- 15 -
<TABLE>
EXHIBIT 11 - Statement regarding computation of per share earnings
<CAPTION>
Computation for the quarter ended March 31,
Dollars in thousands except per share data 1995 1994
---------- ----------
<S> <C> <C>
Primary earnings per share:
Weighted average number of shares 36,807,474 34,911,936
Common stock equivalents computed under the
treasury stock method using average market price 359,271 461,078
---------- ----------
Total 37,166,745 35,373,014
========== ==========
Fully diluted earnings per share:
Weighted average number of shares 36,807,474 34,911,936
Common stock equivalents computed under the
treasury stock method using the greater of ending
or average market price 362,911 462,483
Other potentially dilutive securities 2,675,133 2,687,450
---------- ----------
Total 39,845,518 38,061,869
========== ==========
Net income $28,268 $22,915
Interest expense (net of tax) incurred for other
potentially dilutive securities $577 $579
Earnings per share:
Primary $.76 $.65
Fully diluted .72 .62
</TABLE>
<PAGE>
<TABLE> <S> <C>
<PAGE>
<PAGE>
<ARTICLE> 9
<CIK> 0000351155
<NAME> WEST ONE BANCORP
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1995
<PERIOD-END> Mar-31-1995
<CASH> 509,088
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 72,704
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,117,852
<INVESTMENTS-CARRYING> 577,809
<INVESTMENTS-MARKET> 0
<LOANS> 6,110,005
<ALLOWANCE> (82,271)
<TOTAL-ASSETS> 8,656,701
<DEPOSITS> 6,870,862
<SHORT-TERM> 613,245
<LIABILITIES-OTHER> 116,896
<LONG-TERM> 309,926
<COMMON> 36,835
0
0
<OTHER-SE> 708,937
<TOTAL-LIABILITIES-AND-EQUITY> 8,656,701
<INTEREST-LOAN> 137,608
<INTEREST-INVEST> 24,066
<INTEREST-OTHER> 1,734
<INTEREST-TOTAL> 163,408
<INTEREST-DEPOSIT> 58,998
<INTEREST-EXPENSE> 73,390
<INTEREST-INCOME-NET> 90,018
<LOAN-LOSSES> 3,159
<SECURITIES-GAINS> (115)
<EXPENSE-OTHER> 76,896
<INCOME-PRETAX> 39,000
<INCOME-PRE-EXTRAORDINARY> 39,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,268
<EPS-PRIMARY> .76
<EPS-DILUTED> .72
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
