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Exhibit 99.1
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AGREEMENT AND PLAN OF MERGER
dated as of December 14, 2000
by and between
Zions Bancorporation
and
Eldorado Bancshares, Inc.
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TABLE OF CONTENTS
PAGE
RECITALS
ARTICLE I Certain Definitions
1.01 CERTAIN DEFINITIONS............................................2
ARTICLE II The Merger
2.01 THE MERGER.....................................................9
2.02 EFFECTIVE DATE AND EFFECTIVE TIME.............................10
ARTICLE III Consideration; Exchange Procedures
3.01 MERGER CONSIDERATION..........................................10
3.02 RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS.......................11
3.03 FRACTIONAL SHARES.............................................11
3.04 EXCHANGE PROCEDURES...........................................11
3.05 ANTI-DILUTION PROVISIONS......................................12
3.06 OPTIONS.......................................................13
3.07 WARRANTS......................................................13
3.08 SPIN OFF......................................................14
ARTICLE IV Actions Pending Acquisition
4.01 FOREBEARANCES OF THE COMPANY..................................14
4.02 FOREBEARANCES OF ZIONS........................................17
ARTICLE VRepresentations and Warranties
5.01 DISCLOSURE SCHEDULES..........................................18
5.02 STANDARD......................................................18
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5.03 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................18
5.04 REPRESENTATIONS AND WARRANTIES OF ZIONS.......................32
ARTICLE VICovenants
6.01 REASONABLE BEST EFFORTS.......................................36
6.02 SHAREHOLDER APPROVAL..........................................36
6.03 REGISTRATION STATEMENT........................................36
6.04 BANK MERGER...................................................37
6.05 PRESS RELEASES................................................37
6.06 ACCESS; INFORMATION...........................................38
6.07 ACQUISITION PROPOSALS.........................................38
6.08 RULE 145 RESTRICTIONS.........................................39
6.09 CERTAIN POLICIES..............................................39
6.10 NASDAQ LISTING................................................39
6.11 REGULATORY APPLICATIONS.......................................39
6.12 INDEMNIFICATION...............................................40
6.13 BENEFIT PLANS.................................................41
6.14 NOTIFICATION OF CERTAIN MATTERS...............................42
6.15 SHAREHOLDER AGREEMENTS........................................42
6.16 RESERVATION OF SHARES.........................................43
6.17 ACCOUNTANTS' LETTERS..........................................43
6.18 RESIGNATIONS..................................................43
ARTICLE VIIConditions to Consummation of the Merger
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER....43
7.02 CONDITIONS TO OBLIGATION OF THE COMPANY.......................44
7.03 CONDITIONS TO OBLIGATION OF ZIONS.............................45
ARTICLE VIIITermination
8.01 TERMINATION...................................................45
8.02 EFFECT OF TERMINATION AND ABANDONMENT.........................46
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ARTICLE IXMiscellaneous
9.01 SURVIVAL......................................................47
9.02 WAIVER; AMENDMENT.............................................47
9.03 COUNTERPARTS..................................................47
9.04 GOVERNING LAW.................................................47
9.05 EXPENSES......................................................47
9.06 NOTICES.......................................................47
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES............48
9.08 INTERPRETATION; EFFECT........................................49
EXHIBIT A Stock Option Agreement
EXHIBIT B Bank Merger Agreement
EXHIBIT C Form of Company Affiliate Letter
EXHIBIT D Form of Shareholder Agreement
Company Disclosure Schedule
Zions Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER, dated as of December 14, 2000 (this
"AGREEMENT"), by and between Zions Bancorporation ("ZIONS") and Eldorado
Bancshares, Inc. (the "COMPANY").
RECITALS
A. THE COMPANY. The Company is a Delaware corporation, having its
principal place of business in Laguna Hills, California.
B. ZIONS. Zions is a Utah corporation, having its principal place of
business in Salt Lake City, Utah.
C. INTENTIONS OF THE PARTIES. It is the intention of the parties to
this Agreement that the business combination of Zions and the Company
contemplated hereby be treated as a "reorganization" under Section 368 of the
Internal Revenue Code of 1986, as amended (the "CODE").
D. BOARD ACTION. The respective Boards of Directors of each of Zions
and the Company have determined that it is in the best interests of their
respective companies and their shareholders to consummate the strategic business
combination transaction provided for herein.
E. STOCK OPTION. As an inducement to Zions to enter into this
Agreement, the Company desires to, and immediately following the execution and
delivery hereof will, grant Zions a stock option to purchase up to 19.9% of the
outstanding shares of the Company, under certain circumstances, and pursuant to
that certain Stock Option Agreement attached hereto as Exhibit A (the "STOCK
OPTION AGREEMENT").
F. BANK MERGER. It is the intention of the parties to this Agreement
that, promptly following the business combination of Zions and the Company
contemplated hereby, the parties will cause the business combination of Antelope
Valley Bank and Eldorado Bank with and into California Bank & Trust pursuant to
the terms of the Bank Merger Agreement attached hereto as Exhibit B (the "BANK
MERGER").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
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ARTICLE I
CERTAIN DEFINITIONS
1.1 CERTAIN DEFINITIONS. The following terms are used in this Agreement
with the meanings set forth below:
"ACQUISITION PROPOSAL" means any tender or exchange offer,
proposal for a merger, consolidation or other business combination
involving the Company or any of its Significant Subsidiaries or any
proposal or offer to acquire in any manner a substantial equity
interest in, or a substantial portion of the assets or deposits of, the
Company or any of its Significant Subsidiaries, other than the
transactions contemplated by this Agreement or by the Bank Merger
Agreement.
"AGREEMENT" means this Agreement, as amended or modified from
time to time in accordance with Section 9.02.
"BANK MERGER" has the meaning set forth in the recitals.
"BANK MERGER AGREEMENT" means the agreement attached hereto as
Exhibit B.
"BHC ACT" means the Bank Holding Company Act of 1956, as
amended.
"BUSINESS DAY" means any Monday, Tuesday, Wednesday, Thursday
or Friday or any other day which is not a day on which banking
institutions in the States of Utah or California are authorized or
obligated by law to close.
"BUSINESS COMBINATION" has the meaning set forth in Section
3.05.
"CB&T" means California Bank & Trust, a majority-owned
subsidiary of Zions.
"CODE" has the meaning set forth in the recitals.
"COMMISSIONER" means the Commissioner of the California
Department of Financial Institutions.
"COMPANY" has the meaning set forth in the preamble to this
Agreement.
"COMPANY AFFILIATE" has the meaning set forth in Section
6.08(a).
"COMPANY BANKS" has the meaning set forth in Section 5.03(c).
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"COMPANY BOARD" means the Board of Directors of the Company.
"COMPANY BY-LAWS" means the By-laws of the Company.
"COMPANY CEO" means Robert Keller.
"COMPANY CERTIFICATE" means the Certificate of Incorporation
of the Company, as amended.
"COMPANY COMMON STOCK" means the Company Voting Common Stock
and the Company Non-Voting Common Stock.
"COMPANY'S KNOWLEDGE" means actual knowledge of one or more of
the officers (as defined in Rule 16a-1(f) as promulgated under the
Exchange Act) of the Company.
"COMPANY MEETING" has the meaning set forth in Section 6.02.
"COMPANY PREFERRED STOCK" means the preferred stock, $0.01 par
value, of the Company.
"COMPANY REGISTRATION RIGHTS AGREEMENT" means the Registration
Rights Agreement dated as of June 6, 1997, among Commerce Security
Bancorp, Inc., Madison Dearborn Capital Partners II, L.P., Olympus
Growth Fund II, L.P. and Olympus Executive Fund, L.P.).
"COMPANY SECURITIES" means the Company Common Stock and the
Company Preferred Stock.
"COMPANY STOCK OPTION" has the meaning set forth in Section
3.06, and for the avoidance of doubt, does not include Company
Warrants.
"COMPANY STOCK PLANS" means the 1997 Stock Option Plan and the
1999 Stock Option Plan for Non-Employee Directors of the Company.
"COMPANY NON-VOTING COMMON STOCK" means the non-voting common
stock, $0.01 par value, of the Company.
"COMPANY VOTING COMMON STOCK" means the voting common stock,
$0.01 par value, of the Company.
"COMPANY WARRANTS" has the meaning set forth in Section 3.07.
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"COMPENSATION AND BENEFIT PLANS" has the meaning set forth in
Section 5.03(m).
"COSTS" has the meaning set forth in Section 6.12(a).
"CURRENT EMPLOYEES" has the meaning set forth in Section 6.13.
"DELAWARE SECRETARY" means the Secretary of State of the State
of Delaware.
"DGCL" means the Delaware General Corporation Law.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section
5.01.
"EFFECTIVE DATE" means the effective date of the Merger, as
provided for in Section 2.02.
"EFFECTIVE TIME" means the effective time of the Merger, as
provided for in Section 2.02.
"EMPLOYEES" has the meaning set forth in Section 5.03(m).
"ENVIRONMENTAL LAWS" means all applicable local, state and
federal environmental, health and safety laws and regulations,
including, without limitation, the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation, and
Liability Act, the Clean Water Act, the Federal Clean Air Act, and the
Occupational Safety and Health Act, each as amended, regulations
promulgated thereunder, and state counterparts.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" has the meaning set forth in Section
5.03(m).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"EXCHANGE AGENT" has the meaning set forth in Section 3.04(a).
"EXCHANGE FUND" has the meaning set forth in Section 3.04(a).
"EXCHANGE RATIO" means 0.23.
"FDIC" means the Federal Deposit Insurance Corporation.
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"FEDERAL RESERVE BOARD" means the Board of Governors of the
Federal Reserve System.
"FHA" has the meaning set forth in Section 5.03(w).
"FHLMC" has the meaning set forth in Section 5.03(w).
"FNMA" has the meaning set forth in Section 5.03(w).
"GAAP" means generally accepted accounting principles.
"GNMA" has the meaning set forth in Section 5.03(w).
"GOVERNMENTAL AUTHORITY" means any court, administrative
agency or commission or other federal, state or local governmental
authority or instrumentality.
"HUD" has the meaning set forth in Section 5.03(w)
"INDEMNIFIED PARTY" has the meaning set forth in Section
6.12(a).
"INSURANCE AMOUNT" has the meaning set forth in Section
6.12(b).
"INSURANCE POLICY" has the meaning set forth in Section
5.03(s).
"INSURER" has the meaning set forth in Section 5.03(w).
"INVESTOR" has the meaning set forth in Section 5.03(w)(iii).
"LIENS" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"LOAN SERVICING AGREEMENT" has the meaning set forth in
Section 5.03(w).
"MATERIAL ADVERSE EFFECT" means, with respect to Zions or the
Company, any effect that (i) is material and adverse to the financial
position, results of operations or business of Zions and its
Subsidiaries taken as a whole or the Company and its Subsidiaries taken
as a whole, respectively, or (ii) would materially impair the ability
of either Zions or the Company to perform its obligations under this
Agreement or otherwise materially threaten or materially impede the
consummation of the Merger and the other transactions contemplated by
this Agreement; provided, HOWEVER, that Material Adverse Effect shall
not be deemed to include the impact of (a) any change in laws and
regulations or interpretations thereof by courts or governmental
authorities generally applicable to
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depository institutions and their holding companies (including changes
in insurance deposit assessment rates and special assessments with
respect thereto), (b) any change in GAAP or regulatory accounting
principles generally applicable to depository institutions and their
holding companies, (c) any change arising or resulting from general
industry, economic or capital market conditions (including changes in
the level of interest rates) that affects Zions or the Company, as
applicable (or the markets in which Zions or the Company, as
applicable, competes) in a manner not disproportionate to the manner in
which such conditions affect comparable companies in the industries or
markets in which Company or Zions, as applicable, competes, (d) any act
or omission of the Company (or any of its Subsidiaries) taken with the
prior written consent of Zions or (e) the expenses reasonably incurred
by the Company in entering into this Agreement and consummating the
transactions contemplated by this Agreement and the expenses associated
with the termination of any Compensation and Benefit Plan as and to the
extent contemplated herein.
"MATERIAL CONTRACT" has the meaning set forth in Section
5.03(k).
"MERGER" has the meaning set forth in Section 2.01(a).
"MERGER CONSIDERATION" has the meaning set forth in Section
2.01(a).
"MORTGAGE LOAN" means a loan primarily secured by a first or
second mortgage on a one-to-four family residential property other than
any loan originated in connection with a program administered by the
Small Business Administration (including without limitation so-called
Section 7(a) and Section 504 loans).
"MULTIEMPLOYER PLANS" has the meaning set forth in Section
5.03(m).
"NASDAQ" means the Nasdaq National Market.
"NEW CERTIFICATE" has the meaning set forth in Section
3.04(a).
"OLD CERTIFICATE" has the meaning set forth in Section
3.04(a).
"OPTION SPREAD" has the meaning set forth in Section 3.06(a).
"PENSION PLAN" has the meaning set forth in Section 5.03(m).
"PERSON" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated
organization.
"PLANS" has the meaning set forth in Section 5.03(m).
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"POOL" has the meaning set forth in Section 5.03(w).
"PREVIOUSLY DISCLOSED" by a party shall mean information set
forth in its Disclosure Schedule.
"PROXY STATEMENT" has the meaning set forth in Section
6.03(a).
"REGISTRATION STATEMENT" has the meaning set forth in Section
6.03(a).
"REGULATORY AUTHORITY" has the meaning set forth in Section
5.03(i).
"REPLACEMENT OPTION" has the meaning set forth in Section
3.06.
"REPLACEMENT WARRANTS" has the meaning set forth in Section
3.07.
"REPRESENTATIVES" means, with respect to any Person, such
Person's directors, officers, employees, legal or financial advisors or
any representatives of such legal or financial advisors.
"RIGHTS" means, with respect to any Person, securities or
obligations convertible into or exercisable or exchangeable for, or
giving any person any right to subscribe for or acquire, or any
options, calls or commitments relating to, or any stock appreciation
right or other instrument the value of which is determined in whole or
in part by reference to the market price or value of, shares of capital
stock of such Person.
"SEC" means the Securities and Exchange Commission.
"SEC DOCUMENTS" has the meaning set forth in Sections 5.03(g)
and 5.04(g).
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
"SECURITIZATION INSTRUMENTS" has the meaning set forth in
Section 5.03(w).
"SECURITIZATION SERVICER" has the meaning set forth in Section
5.03(w).
"SECURITIZATION TRANSACTION" has the meaning set forth in
Section 5.03(w).
"SERVICED LOANS" has the meaning set forth in Section 5.03(w).
"SHAREHOLDER AGREEMENTS" has the meaning set forth in Section
6.15.
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"SPIN OFF" has the meaning set forth in Section 3.08.
"STOCK OPTION AGREEMENT" has the meaning set forth in the
recitals.
"SUBSIDIARY" and "SIGNIFICANT SUBSIDIARY" have the meanings
ascribed to them in Rule 1-02 of Regulation S-X of the SEC.
"SUBSIDIARY INTERESTS" has the meaning set forth in Section
3.08.
"SURVIVING CORPORATION" has the meaning set forth in Section
2.01(a).
"TAKEOVER LAWS" has the meaning set forth in Section 5.03(v).
"TAX" and "TAXES" means all federal, state, local or foreign
taxes, charges, fees, levies or other assessments, however denominated,
including, without limitation, all net income, gross income, gains,
gross receipts, sales, use, ad valorem, goods and services, capital,
production, transfer, franchise, windfall profits, license,
withholding, payroll, employment, disability, employer health, excise,
estimated, severance, stamp, occupation, property, environmental,
unemployment or other taxes, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts imposed by any taxing
authority whether arising before, on or after the Effective Date.
"TAX RETURNS" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates
and information returns) required to be filed with respect to any Tax.
"TREASURY STOCK" shall mean shares of Company Stock held by
the Company or any of its Subsidiaries or by Zions or any of its
Subsidiaries, in each case other than in a fiduciary (including
custodial or agency) capacity or as a result of debts previously
contracted in good faith.
"UBCA" means the Utah Revised Business Corporation Act.
"UTAH DIVISION" has the meaning set forth in Section 2.01(b).
"VA" has the meaning set forth in Section 5.03(w).
"ZIONS" has the meaning set forth in the preamble to this
Agreement.
"ZIONS AVERAGE CLOSING PRICE" means the average of the last
sales price per share for Zions Common Stock for the fifteen (15)
consecutive Nasdaq trading day period
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ending on the third Business Day prior to the Effective Date as
reported by Nasdaq (as reported in the Wall Street Journal or, if not
reported therein, in another authoritative source).
"ZIONS BOARD" means the Board of Directors of Zions.
"ZIONS COMMON STOCK" means the common stock, no par value per
share, of Zions together with any rights attached thereto under or by
virtue of the Shareholder Protection Rights Agreement dated September
27, 1996.
"ZIONS PREFERRED STOCK" means the preferred stock, no par
value per share, of Zions.
"ZIONS STOCK" means, collectively, Zions Common Stock and
Zions Preferred Stock.
ARTICLE II
THE MERGER
2.1 THE MERGER.
(a) THE COMBINATION. At the Effective Time, the Company shall merge
with and into Zions (the "MERGER"), the separate corporate existence of the
Company shall cease and Zions shall survive and continue to exist as a Utah
corporation (Zions, as the surviving corporation in the Merger, sometimes being
referred to herein as the "SURVIVING CORPORATION"). Zions may at any time prior
to the Effective Time (including after the Company's shareholders have approved
this Agreement) change the method of effecting the combination with the Company
(including, without limitation, the provisions of this Article II) if and to the
extent it deems such change to be necessary, appropriate or desirable; PROVIDED,
HOWEVER, that no such change shall (i) alter or change the amount or kind of
consideration to be issued to holders of Company Securities as provided for in
this Agreement (the "MERGER CONSIDERATION"), (ii) adversely affect the tax
treatment of the Company's shareholders as a result of receiving the Merger
Consideration or (iii) impede or delay consummation of the transactions
contemplated by this Agreement.
(b) EFFECT. Subject to the satisfaction or waiver of the conditions set
forth in Article VII, the Merger shall become effective upon the occurrence of
the filing, if required, in the office of the Utah Division of Corporations and
Commercial Code (the "UTAH DIVISIOn") of an agreement of merger in accordance
with the UBCA and the filing in the office of the Delaware Secretary of a
certificate of merger in accordance with the DGCL or such later date and time as
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may be set forth in such agreement and/or such certificate and the Merger shall
have the effects prescribed in the UBCA and, if applicable, the DGCL.
(c) ARTICLES OF INCORPORATION AND BY-LAWS. The articles of
incorporation and by-laws of Zions immediately after the Merger shall be those
of Zions as in effect immediately prior to the Effective Time.
(d) DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors
and officers of Zions immediately after the Merger shall be the directors and
officers of Zions immediately prior to the Effective Time, until such time as
their successors shall be duly elected and qualified.
2.2 EFFECTIVE DATE AND EFFECTIVE TIME. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the parties shall cause
filings contemplated by Section 2.01(b) to be made on (i) the fifth Business Day
to occur after the last of the conditions set forth in Section 7.01(a), (b),
(c), (d) and (e) shall have been satisfied or waived in accordance with the
terms of this Agreement or (ii) such other date to which the parties may agree
in writing and the Merger provided for herein shall become effective upon such
filing or filings or on such date as may be specified therein. The date of such
filing or such later effective date is herein called the "EFFECTIVE DATE". The
"EFFECTIVE TIME" of the Merger shall be the time of such filing or as set forth
in such filing.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.1 MERGER CONSIDERATION. Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the Merger and
without any action on the part of any Person:
(a) OUTSTANDING COMPANY COMMON STOCK. Each share, excluding Treasury
Stock, of Company Common Stock issued and outstanding immediately prior to the
Effective Time shall become and be converted into that number of shares of Zions
Common Stock equal to the Exchange Ratio. The Exchange Ratio shall be subject to
adjustment as set forth in Section 3.05.
(b) OUTSTANDING ZIONS STOCK. Each share of Zions Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding and unaffected by the Merger.
(c) TREASURY SHARES. Each share of Company Securities held as Treasury
Stock immediately prior to the Effective Time shall be canceled and retired at
the Effective Time and no consideration shall be issued in exchange therefor.
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3.2 RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS. At the Effective Time,
holders of Company Common Stock shall cease to be, and shall have no rights as,
shareholders of the Company, other than to receive any dividend or other
distribution with respect to such Company Securities with a record date
occurring prior to the Effective Time and the consideration provided under this
Article III. After the Effective Time, there shall be no transfers on the stock
transfer books of the Company or the Surviving Corporation of shares of Company
Common Stock.
3.3 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of Zions Common Stock and no certificates or scrip therefor,
or other evidence of ownership thereof, will be issued in the Merger; instead,
Zions shall pay to each holder of Company Common Stock who would otherwise be
entitled to a fractional share of Zions Common Stock (after taking into account
all Old Certificates delivered by such holder) an amount in cash (without
interest) determined by multiplying such fraction by the Zions Average Closing
Price.
3.4 EXCHANGE PROCEDURES.
(a) At or prior to the Effective Time, Zions shall deposit, or shall
cause to be deposited, with such bank or other entity as Zions shall select
(which entity may be a Subsidiary of Zions) (in such capacity, the "EXCHANGE
AGENT"), for the benefit of the holders of certificates formerly representing
shares of Company Securities ("OLD CERTIFICATES"), for exchange in accordance
with this Article III, certificates representing the shares of Zions Securities
("NEW CERTIFICATES") and an estimated amount of cash (such cash and New
Certificates, together with any dividends or distributions with a record date
occurring after the Effective Date with respect thereto (without any interest on
any such cash, dividends or distributions), being hereinafter referred to as the
"EXCHANGE FUND") to be paid pursuant to this Article III in exchange for
outstanding shares of Company Securities.
(b) After the Effective Date, Zions shall send or cause to be sent as
promptly as practicable to each former holder of record of shares of Company
Securities immediately prior to the Effective Time transmittal materials for use
in exchanging such shareholder's Old Certificates for the consideration set
forth in this Article III. Prior to the Effective Time, Zions shall afford the
Company a reasonable opportunity to review and comment on the transmittal
materials, and obtain the Company's approval of such transmittal materials,
which approval shall not be unreasonably withheld. Zions shall cause the New
Certificates into which shares of a shareholder's Company Securities are
converted on the Effective Date and/or any check in respect of any fractional
share interests or dividends or distributions which such person shall be
entitled to receive to be delivered to such shareholder upon delivery to the
Exchange Agent of Old Certificates representing such shares of Company
Securities (or indemnity reasonably satisfactory to Zions and the Exchange
Agent, if any of such certificates are lost, stolen or destroyed) owned by such
shareholder. The Exchange Agent shall process materials received and issue New
Certificates within three Business Days of the receipt of such materials. No
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interest will be paid on any such cash to be paid in lieu of fractional share
interests or in respect of dividends or distributions which any such person
shall be entitled to receive pursuant to this Article III upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to any former holder of Company Securities for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(d) At the election of Zions, no dividends or other distributions with
respect to Zions Stock with a record date occurring after the Effective Time
shall be paid to the holder of any unsurrendered Old Certificate representing
shares of Company Securities converted in the Merger into shares of such Zions
Stock until the holder thereof shall be entitled to receive New Certificates in
exchange therefor in accordance with the procedures set forth in this Section
3.04, and no such shares of Company Securities shall be eligible to vote until
the holder of Old Certificates is entitled to receive New Certificates in
accordance with the procedures set forth in this Section 3.04. After becoming so
entitled in accordance with this Section 3.04, the record holder thereof also
shall be entitled to receive any such dividends or other distributions, without
any interest thereon, which theretofore had become payable with respect to
shares of Zions Common Stock such holder had the right to receive upon surrender
of the Old Certificate.
(e) Any portion of the Exchange Fund that remains unclaimed by the
shareholders of the Company for six months after the Effective Time shall be
paid to Zions. Any shareholders of the Company who have not theretofore complied
with this Article III shall thereafter look only to Zions for payment of the
shares of Zions Common Stock, cash in lieu of any fractional shares and unpaid
dividends and distributions on Zions Common Stock deliverable in respect of each
share of Company Securities such shareholder holds as determined pursuant to
this Agreement, in each case, without any interest thereon.
3.5 ANTI-DILUTION PROVISIONS. In the event Zions changes (or
establishes a record date for changing) the number of shares of Zions Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding Zions Common Stock and the record date therefor shall be prior
to the Effective Date, the Exchange Ratio shall be proportionately adjusted. If,
between the date hereof and the Effective Time, Zions shall merge, be acquired
or consolidate with, by or into any other corporation (a "BUSINESS COMBINATION")
and the terms thereof shall provide that Zions Common Stock shall be converted
into or exchanged for the shares of any other corporation or entity, then
provision shall be made as part of the terms of such Business Combination so
that shareholders of the Company who would be entitled to receive shares of
Zions Common Stock pursuant to this Agreement shall be entitled to receive, in
lieu of each share of Zions Common Stock issuable to such shareholders as
provided herein, the same kind and amount of securities or assets as shall be
distributable upon such Business Combination with respect to one share of Zions
Common Stock (provided that nothing herein shall be construed so as to release
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the acquiring entity in any such Business Combination from its obligations under
this Agreement as the successor to Zions).
3.6 OPTIONS. Options to purchase shares of Company Common Stock that
are outstanding immediately prior to the Effective Time (each, a "COMPANY STOCK
OPTION") shall be treated as follows in the Merger:
(a) The Company Stock Options other than those owned by the Company
CEO, whether vested or unvested as of the Effective Time, will be cancelled and
terminated by the Company in exchange for an amount of cash equal to the
aggregate number of shares of Company Common Stock that may be purchased under
such Company Stock Options multiplied by the Option Spread. The "OPTION SPREAD"
for a Company Stock Option will be equal to the arithmetic difference between
(y) the weighted average exercise price of the Company Stock Options owned by
such employee and (z) the product of the Exchange Ratio multiplied by the Zions
Average Closing Price. With the consent of the holder of a Company Stock Option,
for purposes of this Section 3.06(a), any Company Stock Option share for which
the exercise price exceeds the product of the Exchange Ratio multiplied by the
Zions Average Closing Price shall be cancelled, and such Company Stock Option
share and exercise price shall not be reflected in the Option Spread.
(b) Each Company Stock Option owned by the Company CEO, whether vested
or unvested immediately prior to the Effective Time shall be converted into an
option to acquire, on the same terms and conditions as were applicable under
such Company Stock Option, the number of shares of Zions Common Stock equal to
(a) the number of shares of Company Common Stock subject to the Company Stock
Option, multiplied by (b) the Exchange Ratio (such product rounded down to the
nearest whole number) (a "REPLACEMENT OPTION"), at an exercise price per share
(rounded up to the nearest whole cent) equal to (y) the aggregate exercise price
for the shares of Company Common Stock which were purchasable pursuant to such
Company Stock Option divided by (z) the number of full shares of Zions Common
Stock subject to such Replacement Option in accordance with the foregoing.
Notwithstanding the foregoing, each Company Stock Option which is intended to be
an "incentive stock option" (as defined in Section 422 of the Code) shall be
adjusted in accordance with the requirements of Section 424 of the Code. At or
prior to the Effective Time, the Company shall take all action, if any,
necessary with respect to the Company Stock Plans to permit the cancellation or
replacement of the outstanding Company Stock Options held by the Company CEO by
Zions pursuant to this Section. At the Effective Time, Zions shall assume the
Company Stock Plans; PROVIDED, that such assumption shall be only in respect of
the Replacement Options and that Zions shall have no obligation with respect to
any awards under the Company Stock Plans other than the Replacement Options and
shall have no obligation to make any additional grants or awards under such
assumed Company Stock Plans. No later than the Effective Time, Zions shall file
a registration statement on Form S-8 with respect to the shares of Zions Common
Stock issuable in connection with the Replacement Options. Such registration
statement shall be kept effective at
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least for so long as Replacement Options remain outstanding under the Company
Stock Option Plans. As soon as practicable after the Effective Time, Zions shall
deliver to the holders of Company Stock Options appropriate notices setting
forth such holders' rights pursuant to the Company Stock Option Plans and the
agreements evidencing the grants of such Company Stock Options and that such
Company Stock Options and agreements, subject to this Section 3.06, have been
assumed by Zions and shall continue in effect on the same terms and conditions
(subject to this Section 3.06).
3.7 WARRANTS. At the Effective Time, each outstanding warrant to
purchase shares of Company Common Stock (each, a "COMPANY WARRANT"), shall be
converted into a warrant to acquire, on the same terms and conditions as were
applicable under such Company Warrant, the number of shares of Zions Common
Stock equal to (a) the number of shares of Company Common Stock subject to the
Company Warrant, multiplied by (b) the Exchange Ratio (such product rounded down
to the nearest whole number) (a "REPLACEMENT WARRANT"), at an exercise price per
share (rounded down to the nearest whole cent) equal to (y) the aggregate
exercise price for the shares of Company Common Stock which were purchasable
pursuant to such Company Warrant divided by (z) the number of full shares of
Zions Common Stock subject to such Replacement Warrant in accordance with the
foregoing.
3.8 SPIN OFF. If prior to the Effective Time, Zions distributes as a
dividend or otherwise issues to holders of Zions Common Stock, or fixes a record
date for such a dividend or issuance that is prior to the Effective Time (a
"Spin Off"), shares of any Zions Subsidiary, including, without limitation,
Digital Signature Trust Co., or any form of interest in the assets or business
thereof (collectively, "Subsidiary Interests"), then upon completion of the
Merger, (i) each holder of Company Common Stock at the Effective Time will be
entitled to receive, in addition to the Merger Consideration as described in
this Article III, such Subsidiary Interests as the Company Stockholder would
have been entitled to receive had the Effective Time occurred immediately before
the record date set by the Zions Board of Directors for the determination of
holders of Zions Common Stock entitled to receive Subsidiary Interests in
connection with any such Spin Off and (ii) each holder of a Company Stock Option
or Company Warrant will be entitled to receive, in addition to consideration
provided in Section 3.06 and 3.07, such Subsidiary Interests as the holder would
have been entitled to receive had the Company Stock Option or Company Warrant
been exercised in full immediately prior to the Effective Time. Solely for the
purposes of clause (ii) of the immediately preceding sentence, no effect shall
be given to the provisions of the Company Warrants requiring that the Company
Warrants be exercised on a cashless basis.
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ARTICLE IV
ACTIONS PENDING ACQUISITION
4.1 FOREBEARANCES OF THE COMPANY. From the date hereof until the
Effective Time, except as contemplated by this Agreement, without the prior
written consent of Zions (which consent shall not be unreasonably withheld), the
Company will not, and will cause each of its Subsidiaries not to:
(a) ORDINARY COURSE. Conduct the business of the Company and its
Subsidiaries other than in the ordinary and usual course consistent with past
practice or fail to use commercially reasonable efforts to preserve intact their
business organizations and assets and maintain their rights, franchises and
existing relations with customers, suppliers, employees and business associates,
or take any action reasonably likely to have a material adverse effect upon the
Company's ability to perform any of its material obligations under this
Agreement.
(b) CAPITAL STOCK. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (i) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of
Company Common Stock, Company Preferred Stock or any Rights, (ii) enter into any
agreement with respect to the foregoing, or (iii) permit any additional shares
of Company Common Stock or Company Preferred Stock to become subject to new
grants of employee or director stock options, other Rights or similar
stock-based employee rights.
(c) DIVIDENDS, ETC. (a) Directly or indirectly adjust, split, combine,
redeem, reclassify, purchase or otherwise acquire, any shares of its capital
stock, or (b) make, declare, pay or set aside for payment any dividend (other
than dividends from wholly owned Subsidiaries to the Company or another wholly
owned Subsidiary of the Company) on or in respect of, or declare or make any
distribution on any shares of Company Securities, except that Zions and the
Company agree that the Company may (i) pay a cash dividend not to exceed $0.05
per share payable to holders of record of Company Common Stock in the fourth
quarter of 2000 the payment date for which may be in the fourth quarter of 2000
or the first quarter of 2001, and (ii) pay quarterly cash dividends during 2001,
provided, that (1) the record date for any such dividend is prior to the
Effective Date, (2) the record date and payment date in any quarter are the same
as the record date and payment date for Zion's dividend with respect to Zions
Common Stock, or as nearly the same as is practicable, and (3) the amount of the
dividend paid with respect to each share of Company Common Stock, is not greater
than the pro forma equivalent, rounded to the nearest cent, of the amount of the
dividend paid with respect to the Zions Common Stock giving effect to the
Exchange Ratio as of such record date for such dividend. In addition,
notwithstanding the foregoing, (y) the Company may continue to satisfy its
obligations to make interest and other payments as required under the terms of
the outstanding junior subordinated debentures, held by
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its subsidiary CSBI Capital Trust I and (z) CSBI Capital Trust I may continue to
satisfy its obligations to make required payments under the terms of the Series
A Capital Securities.
(d) COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of the Company or its
Subsidiaries, or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments), except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice, (ii) for other changes that are required
by applicable law, (iii) to satisfy Previously Disclosed contractual
obligations, (iv) for grants of awards to newly hired employees consistent with
past practice or (v) bonuses Previously Disclosed.
(e) BENEFIT PLANS. Enter into, establish, adopt or amend (except as may
be required by applicable law) any pension, retirement, stock option, stock
purchase, savings, profit sharing, deferred compensation, consulting, bonus,
group insurance or other employee benefit, incentive or welfare contract, plan
or arrangement, or any trust agreement (or similar arrangement) related thereto,
in respect of any director, officer or employee of the Company or its
Subsidiaries, or take any action to accelerate the vesting or exercisability of
stock options, restricted stock or other compensation or benefits payable
thereunder.
(f) DISPOSITIONS. Sell, transfer, mortgage, encumber or otherwise
dispose of or discontinue any of its assets, deposits, business or properties
except in the ordinary course of business consistent with past practice and in a
transaction that is not material to it and its Subsidiaries taken as a whole.
(g) ACQUISITIONS. Acquire (other than by way of foreclosures or
acquisitions of control in a bona fide fiduciary capacity or in satisfaction of
debts previously contracted in good faith or to satisfy Previously Disclosed
obligations, in each case in the ordinary and usual course of business
consistent with past practice) all or any portion of, the assets, business,
deposits or properties of any other entity.
(h) GOVERNING DOCUMENTS. Amend the Company Certificate, Company By-laws
or the certificate of incorporation or by-laws (or similar governing documents)
of any of the Company's Subsidiaries.
(i) ACCOUNTING METHODS. Implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by GAAP or
regulatory accounting principles.
(j) CONTRACTS. Except in the ordinary course of business consistent
with past practice, amend or enter into or terminate any Material Contract (as
defined in Section 5.03(k)) or amend or modify in any material respect any of
its existing Material Contracts.
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(k) CLAIMS. Except in the ordinary course of business consistent with
past practice, settle any claim, action or proceeding, except for any claim,
action or proceeding involving solely money damages in an amount, individually
or in the aggregate for all such settlements, that is not material to the
Company and its Subsidiaries, taken as a whole.
(l) ADVERSE ACTIONS. (a) Take any action while knowing that such action
would, or is reasonably likely to, prevent or impede the Merger from qualifying
as a reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to result in
(i) any of its representations and warranties set forth in this Agreement being
or becoming untrue in any material respect at any time at or prior to the
Effective Time, (ii) any of the conditions to the Merger set forth in Article
VII not being satisfied, (iii) a material violation of any provision of this
Agreement or (iv) a material delay in the consummation of the Merger except, in
each case, as may be required by applicable law or regulation.
(m) INDEBTEDNESS. Incur any indebtedness for borrowed money other than
in the ordinary course of business consistent with past practice.
(n) CAPITAL EXPENDITURES. Except as Previously Disclosed, make any
capital expenditures other than capital expenditures in the ordinary course of
business consistent with past practice in amounts not exceeding $100,000
individually or $500,000 in the aggregate.
(o) RISK MANAGEMENT. Except as Previously Disclosed or as required by a
Governmental Authority, (i) implement or adopt any material change in its
interest rate and other risk management policies, procedures or practices; (ii)
fail to follow its existing policies or practices with respect to managing its
exposure to interest rate and other risk in any material respect; (iii) fail to
use commercially reasonable means to avoid any material increase in its
aggregate exposure to interest rate risk; or (iv) materially alter its methods
or policies of underwriting, pricing, originating, warehousing, selling and
servicing, or buying or selling rights to service loans.
(p) LOANS. Make any loan, loan commitment or renewal or extension
thereof to any person in an amount greater than $100,000 which would, when
aggregated with all outstanding loans, commitments for loans or renewals or
extensions thereof made by the Company and the Company Banks to such person and
any affiliate or immediate family member of such person, exceed $2.0 million
without submitting loan package information to the chief credit officer of CB&T
for review with a right of comment at least two full Business Days prior to
taking such action.
(q) TAX ELECTIONS. Make or change any material Tax election.
(r) COMMITMENTS. Agree or commit to do any of the foregoing in this
Section 4.01.
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4.2 FOREBEARANCES OF ZIONS. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of the Company, Zions will not, and will cause each of its
Subsidiaries not to:
(a) ORDINARY COURSE. Take any action reasonably likely to have an
adverse effect on Zions' ability to perform any of its material obligations
under this Agreement.
(b) ADVERSE ACTIONS. (a) Take any action while knowing that such action
would, or is reasonably likely to, prevent or impede the Merger from qualifying
as a reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to result in
(i) any of its representations and warranties set forth in this Agreement being
or becoming untrue in any material respect at any time at or prior to the
Effective Time, (ii) any of the conditions to the Merger set forth in Article
VII not being satisfied, (iii) a material violation of any provision of this
Agreement or (iv) a material delay in the consummation of the Merger except, in
each case, as may be required by applicable law or regulation.
(c) COMMITMENTS. Agree or commit to do any of the foregoing in this
Section 4.02.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 DISCLOSURE SCHEDULES. On or prior to the date hereof, Zions has
delivered to the Company a schedule and the Company has delivered to Zions a
schedule (respectively, its "DISCLOSURE SCHEDULE") setting forth, among other
things, items the disclosure of which is necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof or
as an exception to one or more representations or warranties contained in
Section 5.03 or 5.04 or to one or more of its covenants contained in Article IV;
PROVIDED, that (a) no such item is required to be set forth in a Disclosure
Schedule as an exception to a representation or warranty if its absence would
not be reasonably likely to result in the related representation or warranty
being deemed untrue or incorrect under the standard established by Section 5.02,
(b) the mere inclusion of an item in a Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by a party that such
item represents a material exception or fact, event or circumstance or that such
item is reasonably likely to result in a Material Adverse Effect, and (c) the
disclosures contained in any portion of a Disclosure Schedule shall be deemed a
disclosure in each other section of such Disclosure Schedule, provided a
reasonable person would determine that the disclosure contained in such
paragraph could qualify or otherwise apply to other sections of such Disclosure
Schedule.
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5.2 STANDARD. No representation or warranty of the Company or Zions
contained in Section 5.03 or 5.04 shall be deemed untrue or incorrect, and no
party hereto shall be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, event or circumstance unless such
fact, circumstance or event, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
contained in Section 5.03 or 5.04, has had or is reasonably likely to have a
Material Adverse Effect on the party making such representation or warranty.
5.3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Subject to Sections
5.01 and 5.02 and except as Previously Disclosed, the Company hereby represents
and warrants to Zions:
(a) ORGANIZATION, STANDING AND AUTHORITY. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Company is duly qualified to do business and is in good
standing in the states of the United States and any foreign jurisdictions where
its ownership or leasing of property or assets or the conduct of its business
requires it to be so qualified.
(b) COMPANY SECURITIES. As of the date hereof, the authorized capital
stock of the Company consists solely of 35,000,000 shares of Company Common
Stock, of which 14,141,227 shares of Company Voting Common Stock and no shares
of Company Non-Voting Common Stock were outstanding as of the date hereof, and
1,500,000 shares of Company Preferred Stock, of which no shares were outstanding
as of the date hereof. As of the date hereof, 250,000 shares of Company Common
Stock were held in treasury by the Company or otherwise owned by the Company or
its Subsidiaries (other than in a fiduciary or agency capacity). The outstanding
shares of Company Securities have been duly authorized and are validly issued
and outstanding, fully paid and nonassessable, and were not issued in violation
of any preemptive rights. As of the date hereof, except for the shares of
Company Common Stock subject to the Stock Option Agreement, 633,513 shares of
Company Common Stock subject to stock options under the Company Stock Plans and
2,241,216 shares of Company Common Stock subject to the Company Warrants (with
the terms of each thereof Previously Disclosed), there are no shares of Company
Securities authorized and reserved for issuance, the Company does not have any
Rights issued or outstanding with respect to Company Securities, and the Company
does not have any commitment to authorize, issue or sell any Company Securities
or Rights.
(c) SUBSIDIARIES.
(i)(A) The Company's only subsidiaries are Antelope Valley
Bank and Eldorado Bank, each a California state chartered commercial
bank (collectively, "COMPANY BANKS"), and the other Subsidiaries set
forth on Schedule 5.03(c) hereto, (B) the Company owns, directly or
indirectly, all the issued and outstanding equity securities of each of
its Subsidiaries, (C) no equity securities of any of its Subsidiaries
are or may become required to be issued (other than to it or its wholly
owned Subsidiaries) by reason
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of any Right or otherwise, (D) there are no contracts, commitments,
understandings or arrangements by which any of such Subsidiaries is or
may be bound to sell or otherwise transfer any equity securities of any
such Subsidiaries (other than to it or its wholly owned Subsidiaries),
(E) there are no contracts, commitments, understandings, or
arrangements relating to its rights to vote or to dispose of such
securities and (F) all the equity securities of each Subsidiary held by
the Company or its Subsidiaries are fully paid and nonassessable and
are owned by the Company or its Subsidiaries free and clear of any
Liens.
(ii) The Company does not own beneficially, directly or
indirectly, any equity securities or similar interests of any Person,
or any interest in a partnership or joint venture of any kind, other
than its Subsidiaries.
(iii) Each of the Company's Subsidiaries has been duly
organized and is validly existing in good standing under the laws of
the jurisdiction of its organization, and is duly qualified to do
business and in good standing in the jurisdictions where its ownership
or leasing of property or the conduct of its business requires it to be
so qualified.
(d) CORPORATE POWER. The Company and each of its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and the Company has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement, and the Stock Option Agreement and to consummate the
transactions contemplated hereby and thereby.
(e) CORPORATE AUTHORITY. Subject in the case of this Agreement to
receipt of the requisite approval and adoption of the plan of merger set forth
in this Agreement by the holders of more than 50% of the outstanding shares of
Company Voting Common Stock entitled to vote thereon (which is the only
shareholder vote required thereon), this Agreement and the Stock Option
Agreement and the transactions contemplated hereby and thereby have been
authorized by all necessary corporate action of the Company and the Company
Board on or prior to the date hereof. Each of this Agreement and the Stock
Option Agreement is a valid and legally binding obligation of the Company,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles).
(f) REGULATORY APPROVALS; NO DEFAULTS.
(i) No consents or approvals of, or filings or registrations
with, any Governmental Authority or with any third party are required
to be made or obtained by the Company or any of its Subsidiaries in
connection with the execution, delivery or
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performance by the Company of this Agreement or for the Company to
consummate the Merger except for (A) filings with the SEC and state
securities authorities and the approval of this Agreement by the
stockholders of the Company, (B) the filing, if any, of an agreement of
merger with the Utah Division pursuant to the UBCA, (C) the filing of a
certificate of merger with the Delaware Secretary pursuant to the DGCL,
and (D) the filing of applications and notices, as applicable, with the
federal banking authorities and the Commissioner. As of the date
hereof, to the Company's knowledge, there is no fact or circumstance
pertaining to the Company or any of its Subsidiaries or Affiliates that
could reasonably be expected to cause the approvals set forth in
Section 7.01(b) not to be received in a timely manner and without the
imposition of a condition, restriction or requirement of the type
described in Section 7.01(b).
(ii) Subject to receipt, or the making, of the consents,
approvals and filings referred to in the preceding paragraph, and
expiration of related waiting periods, the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (A) constitute a breach or
violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law,
rule or regulation or any judgment, decree, order, governmental permit
or license, or agreement, indenture or instrument of the Company or of
any of its Subsidiaries or to which the Company or any of its
Subsidiaries or properties is subject or bound, (B) constitute a breach
or violation of, or a default under, the Company Certificate or the
Company By-Laws or (C) require any consent or approval under any such
law, rule, regulation, judgment, decree, order, governmental permit or
license, agreement, indenture or instrument.
(g) FINANCIAL REPORTS AND REGULATORY DOCUMENTS; MATERIAL ADVERSE
EFFECT.
(i) The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999, and all other reports, registration
statements, definitive proxy statements or information statements filed
or to be filed by it or any of its Subsidiaries subsequent to December
31, 1999 under the Securities Act, or under Section 13(a), 13(c), 14 or
15(d) of the Exchange Act, in the form filed or to be filed
(collectively, the Company's "SEC DOCUMENTS") with the SEC, as of the
date filed, (A) complied or will comply in all material respects as to
form with the applicable requirements under the Securities Act or the
Exchange Act, as the case may be, and (B) did not and will not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; and each of the balance sheets contained in or
incorporated by reference into any such SEC Document (including the
related notes and schedules thereto) fairly presents, or will fairly
present, the financial position of Company and its Subsidiaries as of
its date, and each of the statements of income and changes in
shareholders' equity and cash flows or equivalent statements in
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such SEC Document (including any related notes and schedules thereto)
fairly presents, or will fairly present, the results of operations,
changes in shareholders' equity and changes in cash flows, as the case
may be, of the Company and its Subsidiaries for the periods to which
they relate, in each case in accordance with GAAP consistently applied
during the periods involved, except in each case as may be noted
therein, subject to normal year-end audit adjustments in the case of
unaudited statements. The books and records of the Company have been,
and are being, maintained in accordance with GAAP and any other
applicable legal and accounting requirements.
(ii) Since December 31, 1998, the Company has timely filed all
material reports, registrations and statements, together with any
amendments required to be made with respect thereto, with any
Regulatory Authority, including without limitation, any report or
statement required to be filed pursuant to the laws of the United
States or the State of California and the rules and regulations of the
Federal Reserve Board and the Commissioner, and has paid all fees and
assessments due and payable in connection therewith. As of their
respective dates, such reports, registrations and statements complied
in all material respects with all the laws, rules and regulations of
the applicable Regulatory Authority with which they were filed.
(iii) Except as Previously Disclosed or set forth in the SEC
Documents, since June 30, 2000, the Company and its Subsidiaries have
not incurred any liability other than in the ordinary course of
business consistent with past practice.
(iv) Except as Previously Disclosed or set forth in the SEC
Documents, since June 30, 2000, (A) the Company and its Subsidiaries
have conducted their respective businesses in the ordinary and usual
course consistent with past practice (excluding the incurrence of
expenses related to this Agreement and the transactions contemplated
hereby) and (B) no event has occurred or circumstance arisen that,
individually or taken together with all other facts, circumstances and
events (described in any paragraph of Section 5.03 or otherwise), is
reasonably likely to have a Material Adverse Effect with respect to the
Company.
(h) LITIGATION. Except as Previously Disclosed or set forth in its
Annual Report on Form 10-K for the fiscal year ended December 31, 1999, there is
no suit, action or proceeding pending (and to the Company's Knowledge, no such
suit, action or proceeding has been threatened) that, individually or in the
aggregate, is (i) material to the Company and its Subsidiaries, taken as a
whole, or (ii) that is reasonably likely to prevent or delay the Company in any
material respect from performing its obligations under, or consummating the
transactions contemplated by, this Agreement or the Stock Option Agreement.
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(i) REGULATORY MATTERS.
(i) Neither the Company nor any of its Subsidiaries or
properties is a party to or is subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary
supervisory letter from, any federal or state governmental agency or
authority charged with the supervision or regulation of financial
institutions or issuers of securities or engaged in the insurance of
deposits (including, without limitation, the Commissioner, the Federal
Reserve Board and the FDIC) or the supervision or regulation of it or
any of its Subsidiaries (collectively, the "REGULATORY AUTHORITIES"),
except as set forth in Schedule 5.03 (i) hereto.
(ii) Neither the Company nor any of its Subsidiaries has been
advised by any Regulatory Authority that such Regulatory Authority is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, commitment letter, supervisory
letter or similar submission.
(j) COMPLIANCE WITH LAWS. The Company and each of its Subsidiaries:
(i) is in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting
such businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all other applicable fair lending
laws and other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to permit
them to own or lease their properties and to conduct their businesses
as presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to
the Company's Knowledge, no suspension or cancellation of any of them
is threatened; and
(iii) has received, since December 31, 1998, no notification
or communication from any Governmental Authority (A) asserting that the
Company or any of its Subsidiaries is not in compliance with any of the
statutes, regulations, or ordinances which such Governmental Authority
enforces or (B) threatening to revoke any license, franchise, permit,
or governmental authorization (nor, to the Company's Knowledge, do any
grounds for any of the foregoing exist).
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(k) MATERIAL CONTRACTS; DEFAULTS. Except as Previously Disclosed,
neither the Company nor any of its Subsidiaries is a party to, bound by or
subject to any agreement, contract, arrangement, commitment or understanding
(whether written or oral) (i) that is a "material contract" within the meaning
of Item 601(b)(10) of the SEC's Regulation S-K (a "Material Contract") or (ii)
that materially restricts the conduct of business by it or any of its
Subsidiaries. Neither it nor any of its Subsidiaries is in default under any
Material Contract to which it is a party, by which its respective assets,
business, or operations may be bound or affected, or under which it or its
respective assets, business, or operations receives benefits, and there has not
occurred any event that, with the lapse of time or the giving of notice or both,
would constitute such a default.
(l) NO BROKERS. No action has been taken by the Company that would give
rise to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions contemplated
by this Agreement, excluding a Previously Disclosed fee to be paid to Keefe,
Bruyette & Woods, Inc.
(m) EMPLOYEE BENEFIT PLANS.
(i) All material plans, contracts, policies or arrangements
that are maintained or funded by the Company and its Subsidiaries to
provide benefits and compensation to current employees or former
employees of the Company and its Subsidiaries (the "EMPLOYEES") and
current or former directors of the Company, including, but not limited
to, "employee benefit plans" within the meaning of Section 3(3) of
ERISA, and deferred compensation, stock option, stock purchase, stock
appreciation rights, stock based, incentive and bonus plans (the
"COMPENSATION AND BENEFIT Plans"), are listed in Section 5.03(m)(i) of
the Company's Disclosure Schedule. True and complete copies of all
written Compensation and Benefit Plans, including, but not limited to,
any trust instruments and insurance contracts forming a part of any
Compensation and Benefit Plan, and all amendments thereto have been
provided or made available to Zions.
(ii) All Compensation and Benefit Plans that constitute
"employee benefit plans" within the meaning of Section 3(3) of ERISA,
other than "multiemployer plans" within the meaning of Section 3(37) of
ERISA, covering Employees (the "PLANS"), to the extent subject to
ERISA, are in substantial compliance with ERISA. Except as set forth in
Schedule 5.03(m)(ii) hereto, each Plan which is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA ("PENSION
PLAN") and which is intended to be qualified under Section 401(a) of
the Code, has received a favorable determination letter from the
Internal Revenue Service, and to the Company's Knowledge no event or
circumstance has occurred that is reasonably likely to result in
revocation of any such favorable determination letter. There is no
material pending or, to the Company's Knowledge, threatened litigation
relating to the Plans. Neither the Company nor any of its Subsidiaries
has engaged in a transaction with respect to any Plan that, assuming
the
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taxable period of such transaction expired as of the date hereof, can
reasonably be expected to subject the Company or any Subsidiary to a
tax or penalty imposed by either Section 4975 of the Code or Section
502(i) of ERISA in an amount which would be material.
(iii) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by the Company or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one employer
with the Company under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA AFFILIATE"). The Company and the Subsidiaries have not
incurred and do not expect to incur any withdrawal liability with
respect to a multiemployer plan under Subtitle E of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate).
No notice of a "reportable event", within the meaning of Section 4043
of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pension Plan or by any
ERISA Affiliate within the 12-month period ending on the date hereof.
(iv) All contributions to any Compensation and Benefit Plan
required to be made under the terms of any such Compensation and
Benefit Plan and due as of the date hereof have been timely made or
have been reflected in the Company's financial statements. Neither any
Pension Plan nor any single-employer plan of an ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA and no ERISA
Affiliate has an outstanding funding waiver with respect to any Plan.
Neither the Company nor any of its Subsidiaries has provided, or is
required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(v) Neither the Company nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Compensation
and Benefit Plan (other than such obligations as may arise from or
relate to the group health plan coverage continuation provisions of
ERISA, the Code or state law), except as set forth in Section
5.03(m)(v) of the Company's Disclosure Schedule. Except as set forth in
Section 5.03(m)(v) of the Company's Disclosure Schedule, the Company or
the Subsidiaries may amend or terminate any Compensation and Benefit
Plan identified in response to the preceding sentence at any time to
the extent permitted by ERISA and the Code without incurring any
material liability thereunder. The Company or the Subsidiaries may
amend or terminate any such Compensation and Benefit Plan at any time
without incurring any liability thereunder other than incidental
attorney fees and administrative expenses customarily incurred in
connection with such termination.
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(vi) Except as set forth in Schedule 5.03(m)(vi) hereto, the
consummation of the transactions contemplated by this Agreement can not
reasonably be expected to (x) entitle any Employees to severance pay
under any Compensation and Benefit Plan, (y) accelerate the time of
payment or vesting or trigger any payment or funding (through a grantor
trust or otherwise) of compensation or benefits under, increase the
amount payable or trigger any other material obligation pursuant to,
any of the Compensation and Benefit Plans or (z) result in any payments
under any of the Compensation and Benefit Plans which would not be
deductible under Section 162(m) or Section 280G of the Code.
(n) LABOR MATTERS. Neither the Company nor any of its Subsidiaries is a
party to or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is the
Company or any of its Subsidiaries the subject of a proceeding asserting that it
or any such Subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel the Company or
any such Subsidiary to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other labor dispute
involving it or any of its Subsidiaries pending or, to the Company's Knowledge,
threatened, nor to the Company's Knowledge, has there been any activity
involving its or any of its Subsidiaries' employees since December 31, 1998
seeking to certify a collective bargaining unit or engaging in other
organizational activity.
(o) ENVIRONMENTAL MATTERS. Neither the conduct nor operation of the
Company or its Subsidiaries nor any condition of any property presently or
previously owned, leased or operated by any of them (including, without
limitation, in a fiduciary or agency capacity), or on which any of them holds a
Lien, violates or violated Environmental Laws and no condition has existed or
event has occurred with respect to any of them or any such property that, with
notice or the passage of time, or both, is reasonably likely to result in
liability under Environmental Laws. Neither the Company nor any of its
Subsidiaries has received any notice from any Person that the Company or its
Subsidiaries or the operation or condition of any property ever owned, leased,
operated, or held as collateral or in a fiduciary capacity by any of them are or
were in violation of or otherwise are alleged to have liability under any
Environmental Law, including, but not limited to, responsibility (or potential
responsibility) for the cleanup or other remediation of any pollutants,
contaminants, or hazardous or toxic wastes, substances or materials at, on,
beneath, or originating from any such property.
(p) TAX MATTERS. (A) All Tax Returns that are required to be filed
(taking into account any extensions of time within which to file) by or with
respect to the Company and its Subsidiaries have been duly filed and all such
Tax Returns are complete and accurate in all material respects, (B) all Taxes
(whether or not shown to be due on the Tax Returns referred to in clause (A))
have been or will be paid in full when due, (C) the Tax Returns referred to in
clause (A) have been examined by the relevant taxing authority or the period for
assessment of the Taxes in respect of which such Tax Returns were required to be
filed has expired, (D) all deficiencies asserted or assessments made as a result
of such examinations have been paid in full,
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(E) all Taxes that the Company or any of its Subsidiaries is obligated to
withhold from amounts owing to any employee, creditor or third party have been
paid over to the proper Governmental Authority in a timely manner, (F) no issues
that have been raised by the relevant taxing authority in connection with the
examination of any of the Tax Returns referred to in clause (A) are currently
pending, and (G) no extensions or waivers of statutes of limitation have been
given by or requested with respect to any Taxes of the Company or its
Subsidiaries. The Company has made available to Zions true and correct copies of
the Tax Returns filed by the Company and its Subsidiaries for each of the three
most recent fiscal years ended on or before December 31, 1999. Neither the
Company nor any of its Subsidiaries has any liability with respect to income,
franchise or similar Taxes that accrued on or before the end of the most recent
period covered by the Company's SEC Documents filed prior to the date hereof in
excess of the amounts accrued with respect thereto that are reflected in the
financial statements included in the Company's SEC Documents filed on or prior
to the date hereof. Neither the Company nor any of its Subsidiaries is a party
to any Tax sharing or allocation agreement, is or has been a member of an
affiliated group filing consolidated or combined Tax Returns (other than a group
the common parent of which is or was the Company) or otherwise has any liability
for the Taxes of any person (other than the Company and its Subsidiaries). No
Liens for Taxes exist with respect to any of the assets or properties of the
Company or its Subsidiaries, except for statutory Liens for Taxes not yet due
and payable or that are being contested in good faith and reserved for in
accordance with United States GAAP. Neither the Company nor any of its
Subsidiaries has been a party to any distribution occurring during the last
three (3) years in which the parties to such distribution treated the
distribution as one to which Section 355 of the Code applied. No Tax is required
to be withheld pursuant to Section 1445 of the Code as a result of the transfer
contemplated by this Agreement. As of the date hereof, neither the Company nor
any of its Subsidiaries has any reason to believe that any condition exists that
reasonably could be expected to prevent or impede the Merger from qualifying as
a reorganization within the meaning of Section 368 of the Code.
(q) RISK MANAGEMENT INSTRUMENTS. All interest rate swaps, caps, floors,
option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for the Company's own account, or
for the account of one or more of the Company's Subsidiaries or their customers
(all of such material arrangements are listed in Section 5.03(q) of the
Company's Disclosure Schedule), were entered into (i) in accordance with
reasonable business practices and all applicable laws, rules, regulations and
regulatory policies and (ii) with counterparties believed to be financially
responsible at the time; and each of them constitutes the valid and legally
binding obligation of the Company or one of its Subsidiaries, enforceable in
accordance with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors' rights
or by general equity principles), and are in full force and effect. Neither the
Company nor its Subsidiaries, nor to the Company's Knowledge, any other party
thereto, is in breach of any of its obligations under any such agreement or
arrangement.
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(r) BOOKS AND RECORDS. The books and records of the Company and its
Subsidiaries have been fully, properly and accurately maintained in all material
respects, and there are no material inaccuracies or discrepancies of any kind
contained or reflected therein, and they fairly present in all material respects
the financial position of the Company and its Subsidiaries.
(s) INSURANCE. The Company's Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by the Company or its
Subsidiaries ("INSURANCE POLICIES"). To the Company's Knowledge, the Company and
its Subsidiaries are insured with reputable insurers against such risks and in
such amounts as are prudent in accordance with industry practices. All the
Insurance Policies are in full force and effect; the Company and its
Subsidiaries are not in material default thereunder; and all claims thereunder
have been filed in due and timely fashion.
(t) ALLOWANCE FOR POSSIBLE LOAN LOSSES. To the Company's Knowledge, the
Company's (i) allowance for loan and lease losses and (ii) level of reserves is,
and will be as of the Effective Date, adequate and in accordance with GAAP in
all material respects and in accordance with all applicable regulatory
requirements.
(u) TRUST BUSINESS. Neither the Company nor either of the Company Banks
serves as a trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor for any fiduciary accounts.
(v) TAKEOVER LAWS; DISSENTERS RIGHTS. The Company has taken all action
required to be taken by it in order to exempt this Agreement, the Stock Option
Agreement and the transactions contemplated hereby and thereby from, and this
Agreement, the Stock Option Agreement and the transactions contemplated hereby
and thereby are exempt from, the requirements of any "moratorium", "control
share", "fair price", "affiliated transaction", "business combination" or other
anti-takeover laws and regulations of any state (collectively, "TAKEOVER LAWS"),
including, without limitation, the State of Delaware. Holders of the Company
Securities do not have dissenters or appraisal rights in connection with the
execution of this Agreement or the consummation of any of the transactions
contemplated hereby.
(w) MORTGAGE BANKING BUSINESS.
(i) LICENSES AND QUALIFICATIONS. Except as Previously
Disclosed, the Subsidiary identified on Schedule 5.03(w) hereto (A) is
(1) a mortgagee and servicer approved by the United States Department
of Housing and Urban Development ("HUD") for loans insured by the
Federal Housing Administration (the "FHA"), (2) an approved lender and
servicer for loans insured by the Veterans' Administration (the "VA"),
(3) an approved seller/servicer of one-to-four-family first and second
mortgage loans for the Federal National Mortgage Association (the
"FNMA") and the Federal Home Loan Mortgage Corporation (the "FHLMC"),
and (4) an issuer and servicer approved by the
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Government National Mortgage Association ("GNMA") of GNMA-guaranteed
mortgage-backed securities, (B) has all other certifications,
authorizations, licenses, permits and other approvals necessary to
conduct its current business, (C) is in good standing under all
applicable federal, state and local laws and regulations thereunder as
a lender and servicer and (D) is in good standing with all authorities
and servicers for the state bond programs in which it participates.
(ii) TITLE TO LOANS. All Mortgage Loans are owned by such
Subsidiary free and clear of any Lien. Each mortgage or deed of trust
securing a Mortgage Loan has been duly recorded or submitted for
recordation in due course in the appropriate filing office in the name
of the Company as mortgagee. Neither the Company nor any of its
Subsidiaries has released any security for any Mortgage Loan, except
upon receipt of reasonable consideration for such release (as
documented in the applicable loan file), or accepted prepayment of any
such Mortgage Loan which has not been promptly applied to such Mortgage
Loan.
(iii) COMPLIANCE. Except as Previously Disclosed, each
Mortgage Loan which is being serviced by the Company or any of its
Subsidiaries for the account of others (the "SERVICED LOANS") was
underwritten and originated, and the Mortgage Loan documents and
Mortgage Loan files maintained by the Company and each of its
Subsidiaries with respect thereto are being maintained by the Company
and such Subsidiary in compliance with all applicable laws and
regulations and, if applicable, the requirements of the "Investor"
(which term means (x) FHLMC, FNMA, GNMA, or any other person, as the
case may be, that owns any of the Mortgage Loans or any portion of a
Pool (as defined in Subsection (xi) below) of loans or holds beneficial
title to the Mortgage Loans or any portion of a Pool of Mortgage Loans,
but shall not mean the holder of mortgage-backed securities or mortgage
pass-through securities except to the extent that the consent of such
holder may be required in order for the Company and each of its
Subsidiaries to continue to have servicing rights with respect to the
Mortgage Loans related thereto and (y) any person who owns servicing
rights for loans serviced or master serviced by the Company or any of
its Subsidiaries pursuant to a Loan Servicing Agreement) acquiring such
Mortgage Loan (or, if there is no such Investor, in accordance with the
Company's underwriting standards then in effect) and the requirements
of each person who insures or guarantees all or any portion of the risk
of loss upon borrower default on any of the Mortgage Loans, including,
without limitation, the FHA, the VA and any private mortgage insurer,
and providers of life, hazard, flood, disability, title or other
insurance with respect to any of the Mortgage Loans or the collateral
therefor (each, an "INSURER"), if any, in effect and applicable at the
time such insurance was obtained. Except as Previously Disclosed, the
Company and each of its Subsidiaries have not done or failed to do, or
caused to be done or omitted to be done, any act, the effect of which
would operate to invalidate or materially impair (i) any approvals of
any Agency or the FHA to insure, (ii) any VA guarantee or commitment of
the VA to guarantee, (iii) any private mortgage
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insurance or commitment of any private mortgage insurer to insure, (iv)
any title insurance policy, (v) any hazard insurance policy, (vi) any
flood insurance policy, (vii) any fidelity bond, direct surety bond,
errors and omissions or other insurance policy required by any Agency,
Investor or Insurer, (viii) any surety or guaranty agreement, (ix) any
guaranty issued by GNMA, FNMA or FHLMC to the Company or any of its
Subsidiaries respecting mortgage backed securities issued by the
Company and other like guarantees or (x) the rights of the Company or
any of its Subsidiaries under any Loan Servicing Agreement or loan
purchase commitment.
(iv) LOAN SERVICING AGREEMENTS. Except as Previously
Disclosed, all of the contracts pursuant to which the Company or such
Subsidiary has the right and/or obligation to service Mortgage Loans of
the Company (each, a "LOAN SERVICING AGREEMENT") are (A) valid and
binding obligations of the Company or such Subsidiary, and to the
Company's Knowledge, of all the other parties thereto, (B) in full
force and effect, (C) enforceable in accordance with their terms
(except where enforcement thereof may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of
creditors' rights generally and by general equity principles) and (D)
owned by the Company or such Subsidiary free and clear of any Lien,
except pursuant to the Mortgage Loan and security agreements Previously
Disclosed. There is no default by the Company or any Subsidiary or, to
the Company's Knowledge, claims of default against the Company or any
Subsidiary by any party under any such Loan Servicing Agreement, and,
except for the consummation of the transactions contemplated by this
Agreement, no event has occurred which with the passage of time or the
giving of notice or both would constitute a default by any party under
any such Loan Servicing Agreement or would result in any such mortgage
servicing agreement being terminable by any party thereto. There is no
pending or, to the Company's Knowledge, threatened cancellation of any
Loan Servicing Agreement and the obligations of the Company or any of
its Subsidiaries under each Loan Servicing Agreement are being
performed in all material respects by the Company or any Subsidiaries
in accordance with the terms of such Agreement and applicable rules or
regulations. Neither the Company nor any of its Subsidiaries is a
subservicer with respect to any of the Serviced Loans.
(v) SECURITIZATION TRANSACTIONS.
(A) The Company and its Subsidiaries, as servicer under the
applicable Loan Servicing Agreement (the "SECURITIZATION
SERVICER") of each outstanding transaction under which the
Company or its Subsidiaries have sold or pledged Mortgage
Loans in a securitization, whether sold under the Securities
Act or otherwise (a "SECURITIZATION TRANSACTION"), has
complied in all material respects with all contracts,
including the Loan Servicing Agreements, and all conditions to
be performed or satisfied by them with respect to all
agreements and arrangements
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pursuant to which such person is bound under such
Securitization Transaction (collectively, "SECURITIZATION
INSTRUMENTS").
(B) No Securitization Servicer or, to the Company's Knowledge,
no trustee or issuer with respect to any Securitization, has
taken any action which would reasonably be expected to
adversely affect the characterization or Tax treatment for
federal, state or local income or franchise Tax purposes of
the issuer or any securities issued in a Securitization
Transaction, and all required federal, state and local tax and
information returns relating to any Securitization Transaction
have been properly filed.
(C) Each representation and warranty made by the Company or
its Subsidiaries in each "Purchase Agreement," "Pooling and
Servicing Agreement," "Placement Agency Agreement,"
"Servicer's Indemnification Agreement" and any other
Securitization Instrument to which any of them was a party in
any Securitization Transaction was true and correct in all
material respects whenever made or reaffirmed by any of them
and the Company and its Subsidiaries have each fully performed
and carried out each covenant and agreement made by any of
them in any such Securitization Instrument.
(vi) MORTGAGE INSURANCE. Each Mortgage Loan which is indicated
in the related Mortgage Loan documents to have FHA insurance is insured
under the National Housing Act or qualifies for such insurance. Each
Mortgage Loan which is indicated in the related Mortgage Loan documents
to be guaranteed by the VA is guaranteed under the provisions of
Chapter 37 of Title 38 of the United States Code to the extent required
by the applicable Investor or qualifies for such guarantee. Except as
Previously Disclosed, as to each FHA insurance certificate, each VA
guarantee certificate, and each Mortgage Loan which is indicated in the
related Mortgage Loan file to be insured by private mortgage insurance,
the Company and its Subsidiaries have complied in all material respects
with applicable provisions of the insurance or guarantee contract and
applicable laws and regulations, the insurance or guarantee is in full
force and effect with respect to each such Mortgage Loan, and to the
Company's Knowledge, there does not exist any event or condition which,
but for the passage of time or the giving of notice or both, can result
in a revocation of any such insurance or guarantee or constitute
adequate grounds for the applicable Insurer to refuse to provide
insurance or guarantee payments thereunder.
(vii) TITLE INSURANCE. To the extent required by the
applicable Investor, each Mortgage Loan is covered by an ALTA lender's
title insurance policy or other generally acceptable form of policy of
insurance or opinion of title acceptable to the relevant Investor, and
each such title insurance policy is issued by an Insurer acceptable to
the applicable Investor and qualified to do business in the
jurisdiction where the collateral
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securing such Mortgage Loan is located, and insures the originator and
its successors and assigns as to the first priority lien of the
mortgage in the original principal amount of the Mortgage Loan (or, in
the case of a second mortgage, the second priority lien). The
applicable Investor, as assignee of the originator's rights, is an
insured of such lender's title insurance policy, and such lender's
policy is in full force and effect. The Company and its Subsidiaries
have not, nor, to the Company's Knowledge, has any prior servicer,
performed any act or omission which would impair the coverage of such
lender's policy.
(x) FAIRNESS OPINION. Prior to the execution of this Agreement, the
Company has received the written opinion of Keefe, Bruyette & Woods, Inc. to the
effect that, as of the date of this Agreement, and based upon and subject to the
matters set forth therein, the Exchange Ratio is fair to the holders of the
Company Common Stock from a financial point of view. Such opinion has not been
amended or rescinded as of the date of this Agreement.
5.4 REPRESENTATIONS AND WARRANTIES OF ZIONS. Subject to Sections 5.01
and 5.02 and except as Previously Disclosed, Zions hereby represents and
warrants to the Company as follows:
(a) ORGANIZATION, STANDING AND AUTHORITY. Zions is duly organized,
validly existing and in good standing under the laws of the State of Utah. Zions
is duly qualified to do business and is in good standing in the states of the
United States and foreign jurisdictions where its ownership or leasing of
property or assets or the conduct of its business requires it to be so
qualified. Zions has in effect all federal, state, local, and foreign
governmental authorizations necessary for it to own or lease its properties and
assets and to carry on its business as it is now conducted.
(b) ZIONS STOCK.
(i) As of the date hereof, the authorized capital stock of
Zions consists solely of 200,000,000 shares of Zions Common Stock, of
which no more than 88,000,000 shares were outstanding as of the date
hereof, and 3,000,000 shares of Zions Preferred Stock, of which no
shares were outstanding as of the date hereof.
(ii) The shares of Zions Common Stock to be issued in exchange
for shares of Company Securities in the Merger, when issued in
accordance with the terms of this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable and the issuance thereof
is not subject to any preemptive right.
(c) SUBSIDIARIES. Each of Zions's Significant Subsidiaries has been
duly organized and is validly existing in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do business and in
good standing in the jurisdictions where its ownership or leasing of property or
the conduct of its business requires it to be so qualified and Zions owns,
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directly or indirectly, all the issued and outstanding equity securities of each
of its Significant Subsidiaries.
(d) CORPORATE POWER. Zions and each of its Significant Subsidiaries has
the corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and Zions has the corporate
power and authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby.
(e) CORPORATE AUTHORITY. This Agreement and the transactions
contemplated hereby have been authorized by all necessary corporate action of
Zions and the Zions Board. This Agreement is a valid and legally binding
agreement of Zions enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles). Approval of the shareholders of Zions is not required in order to
consummate the transactions contemplated hereby.
(f) REGULATORY APPROVALS; NO DEFAULTS.
(i) No consents or approvals of, or filings or registrations
with, any Governmental Authority or with any third party are required
to be made or obtained by Zions or any of its Subsidiaries in
connection with the execution, delivery or performance by Zions of this
Agreement or to consummate the Merger except for (A) the filing of an
application or notice under Section 3 of the BHC Act and Regulation Y
of the Federal Reserve Board, and the approval or waiver thereof by the
Federal Reserve Bank of San Francisco; (B) the filing and approval of
an application with the Commissioner and the FDIC; (C) the approval of
the listing on the Nasdaq of Zions Common Stock to be issued in the
Merger; (D) the filing and declaration of effectiveness of the
Registration Statement; (E) such filings as are required to be made or
approvals as are required to be obtained under the securities or "Blue
Sky" laws of various states in connection with the issuance of Zions
Stock in the Merger; (F) the filing, if any, of an agreement of merger
with the Utah Division pursuant to the UBCA and (G) the filing of a
certificate of merger with the Delaware Secretary pursuant to the DGCL.
Zions intends to file a notice with the Federal Reserve Bank of San
Francisco pursuant to Section 225.12(d)(2) of Regulation Y. As of the
date hereof, Zions is not aware of any fact or circumstance pertaining
to Zions or any of its Subsidiaries or Affiliates that could reasonably
be expected to cause the approvals and waivers set forth in Section
7.01(b) not to received in a timely manner and without the imposition
of a condition, restriction or requirement of the type described in
Section 7.01(b).
(ii) Subject to receipt, or the making, of the consents,
approvals and filings referred to in the preceding paragraph and
expiration of the related waiting periods, the
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execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will
not (A) constitute a breach or violation of, or a default under, or
give rise to any Lien, any acceleration of remedies or any right of
termination under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or
instrument of Zions or of any of its Subsidiaries or to which Zions or
any of its Subsidiaries or properties is subject or bound, (B)
constitute a breach or violation of, or a default under, the articles
of incorporation or by-laws (or similar governing documents) of Zions
or any of its Subsidiaries, or (C) require any consent or approval
under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or instrument.
(g) FINANCIAL REPORTS AND SEC DOCUMENTS; MATERIAL ADVERSE EFFECT.
(i) Except as Previously Disclosed, Zions's Annual Reports on
Form 10-K for the fiscal years ended December 31, 1999, and all other
reports, registration statements, definitive proxy statements or
information statements filed or to be filed by it or any of its
Subsidiaries subsequent to December 31, 1999 under the Securities Act,
or under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the
form filed or to be filed (collectively, Zions's "SEC DOCUMENTS") with
the SEC, as of the date filed, (A) complied or will comply in all
material respects as to form with the applicable requirements under the
Securities Act or the Exchange Act, as the case may be, and (B) did not
and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; and each of the balance sheets
contained in or incorporated by reference into any such SEC Document
(including the related notes and schedules thereto) fairly presents, or
will fairly present, the financial position of Zions and its
Subsidiaries as of its date, and each of the statements of income and
changes in shareholders' equity and cash flows or equivalent statements
in such SEC Documents (including any related notes and schedules
thereto) fairly presents, or will fairly present, the results of
operations, changes in shareholders' equity and changes in cash flows,
as the case may be, of Zions and its Subsidiaries for the periods to
which they relate, in each case in accordance with GAAP consistently
applied during the periods involved, except in each case as may be
noted therein, subject to normal year-end audit adjustments in the case
of unaudited statements. The books and records of Zions have been, and
are being, maintained in accordance with GAAP and any other applicable
legal and accounting requirements.
(ii) Since June 30, 2000, (A) Zions and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of expenses
related to this Agreement and the transactions contemplated hereby) and
(B) no event has occurred or circumstance arisen that,
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individually or taken together with all other facts, circumstances and
events (described in any paragraph of Section 5.04 or otherwise), is
reasonably likely to have a Material Adverse Effect with respect to
Zions.
(iii) Since September 30, 2000, Zions and its Subsidiaries
have not incurred any liability other than in the ordinary
course of business consistent with past practice, except as
disclosed in Zion's SEC Documents or Previously Disclosed.
(h) TAX MATTERS. As of the date hereof, neither Zions nor any of its
Subsidiaries has any reason to believe that any condition exists that might
prevent or impede the Merger from qualifying as a reorganization within the
meaning of Section 368 of the Code.
(i) LITIGATION. Except as Previously Disclosed or set forth in the
Zion's SEC Documents, there is no suit, action or proceeding pending (and to the
knowledge of Zions, no such suit, action or proceeding has been threatened)
that, individually or in the aggregate, is (i) material to Zions and its
Subsidiaries, taken as a whole, or (ii) that is reasonably likely to prevent or
delay Zions in any material respect from performing its obligations under, or
consummating the transactions contemplated by, this Agreement.
(j) REGULATORY MATTERS. (i) Neither Zions nor any of its Subsidiaries
is a party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or similar
submission to, or extraordinary supervisory letter from, any Regulatory
Authority. (ii) Neither Zions nor any of its Subsidiaries has been advised by
any Regulatory Authority that such Regulatory Authority is contemplating issuing
or requesting (or is consideration the appropriateness of issuing or requesting)
any such order, decree, agreement, memorandum of understanding, commitment
letter, supervisory letter or similar submission.
ARTICLE VI
COVENANTS
6.1 REASONABLE BEST EFFORTS. Subject to the terms and conditions of
this Agreement, each of the Company and Zions agrees to use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Merger as promptly as
practicable and otherwise to enable consummation of the transactions
contemplated hereby, including the satisfaction of the conditions set forth in
Article VII hereof, and shall cooperate fully with the other party hereto to
that end.
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6.2 SHAREHOLDER APPROVAL. The Company agrees to take, in accordance
with applicable law and its charter documents and by-laws, all action necessary
to convene an appropriate meeting of its stockholders (the "Company Meeting") to
consider and vote upon the approval and adoption of this Agreement and any other
matters required to be approved by the Company's stockholders for consummation
of the Merger, in each case as promptly as practicable after the Registration
Statement is declared effective. Except to the extent that the Company Board
determines after consultation with its counsel that to do otherwise is legally
required for the discharge of its fiduciary duties, the Company Board shall
recommend such approval and shall take all reasonable lawful action to solicit
such approval by its stockholders.
6.3 REGISTRATION STATEMENT.
(a) Zions agrees to prepare a registration statement on Form S-4 or
other applicable form (the "REGISTRATION STATEMENT") to be filed by Zions with
the SEC in connection with the issuance of Zions Common Stock in the Merger
(including the proxy statement and prospectus and other proxy solicitation
materials of Company constituting a part thereof (the "PROXY STATEMENT") and all
related documents). Company agrees to cooperate, and to cause its Subsidiaries
to cooperate, with Zions, its counsel and its accountants, in preparation of the
Registration Statement and the Proxy Statement. Company agrees to file the Proxy
Statement in preliminary form with the SEC as soon as reasonably practicable,
and Zions agrees to file the Registration Statement with the SEC as soon as
reasonably practicable after any SEC comments with respect to the preliminary
Proxy Statement are resolved. Each of Zions and the Company shall use all
reasonable efforts to have the Registration Statement declared effective under
the Securities Act as promptly as practicable after such filing, and the Company
shall thereafter mail the definitive Proxy Statement to its stockholders. Zions
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 the Company shall furnish all information
concerning the Company and the holders of Company Securities as may be
reasonably requested in connection with any such action. As of the date of this
Agreement, Zions represents that it is not aware of any reason why the SEC will
not declare the Registration Statement effective in a timely manner and without
the imposition of a condition, restriction or requirement of the type described
in Section 7.01(b).
(b) At the Effective Time, Zions will assume any registration
obligations with respect to the Company Warrants provided for in the Company
Registration Rights Agreement.
(c) Each of the Company and Zions agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (iA the Registration Statement will,
at the time the Registration Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (ii) the
Proxy Statement and any
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amendment or supplement thereto will, at the date of mailing to shareholders and
at the time of the Company Meeting, as the case may be, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading or any
statement which, in the light of the circumstances under which such statement is
made, will be false or misleading with respect to any material fact, or which
will omit to state any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in any
earlier statement in the Proxy Statement or any amendment or supplement thereto.
Each of the Company and Zions further agrees that if it shall become aware prior
to the time of the Company Meeting or the Effective Date of any information
furnished by it that would cause any of the statements in the Proxy Statement to
be false or misleading with respect to any material fact, or to omit to state
any material fact necessary to make the statements therein not false or
misleading, to promptly inform the other party thereof and to take the necessary
steps to correct the Proxy Statement.
6.4 BANK MERGER. Each of the Company and Zions agrees that it will use
its reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit the Bank Merger
contemplated by the Bank Merger Agreement to occur immediately after the Merger.
6.5 PRESS RELEASES. Each of the Company and Zions agrees that it will
not, without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or Nasdaq rules. Notwithstanding the foregoing, in the event that
either Zions or the Company determines that a press release or written statement
for general circulation relating to the transactions contemplated hereby is
required by law or Nasdaq rules, such party shall first notify the other of the
press release or written statement, afford the other party a reasonable
opportunity to review and comment on the press release or written statement, and
obtain the other party's approval of such disclosure, which approval shall not
be withheld or delayed in any manner that is unreasonable under the
circumstances.
6.6 ACCESS; INFORMATION.
(a) Each of the Company and Zions agrees that upon reasonable notice
and subject to applicable laws relating to the exchange of information, it shall
afford the other party and the other party's officers, employees, counsel,
accountants and other authorized representatives, such access during normal
business hours throughout the period prior to the Effective Time to the books,
records (including, without limitation, Tax Returns and, to the extent permitted
by its auditors, work papers of independent auditors), properties, personnel and
to such other information as any party may reasonably request and, during such
period, it shall furnish promptly to such other party all information concerning
the business, properties and personnel of it as the other may reasonably
request.
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(b) Each agrees that it will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 6.06 (as well as
any other information obtained prior to the date hereof in connection with the
entering into of this Agreement) for any purpose unrelated to the consummation
of the transactions contemplated by this Agreement. Subject to the requirements
of law, each party will keep confidential, and will cause its representatives to
keep confidential, all information and documents obtained pursuant to this
Section 6.06 (as well as any other information obtained prior to the date hereof
in connection with the entering into of this Agreement) unless such information
(i) was already known to such party, (ii) becomes available to such party from
other sources not known by such party to be bound by a confidentiality
obligation, (iii) is disclosed with the prior written approval of the party to
which such information pertains or (iv) is or becomes readily ascertainable from
published information or trade sources. In the event that this Agreement is
terminated or the transactions contemplated by this Agreement shall otherwise
fail to be consummated, each party shall promptly cause all copies of documents
or extracts thereof containing information and data as to another party hereto
to be returned to the party which furnished the same. No investigation by either
party of the business and affairs of the other shall affect or be deemed to
modify or waive any representation, warranty, covenant or agreement in this
Agreement, or the conditions to either party's obligation to consummate the
transactions contemplated by this Agreement.
6.7 ACQUISITION PROPOSALS. The Company agrees that neither it nor any
of its Subsidiaries nor any of the respective officers and directors of the
Company or its Subsidiaries shall, and the Company shall direct and use its
reasonable best efforts to cause its and its subsidiaries' employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it or any of its Subsidiaries) not to, initiate,
solicit or encourage, directly or indirectly, any inquiries or the making of any
proposal or offer (including, without limitation, any proposal or offer to
shareholders of the Company) with respect to an Acquisition Proposal or, except
to the extent that the Company Board determines after consultation with its
counsel that to do otherwise is required for the discharge of its fiduciary
duties, engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to an
Acquisition Proposal or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal. The Company shall immediately cease and cause
to be terminated any activities, discussions or negotiations conducted prior to
the date of this Agreement with any parties other than Zions with respect to any
of the foregoing and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to an Acquisition Proposal. The
Company shall promptly (within 24 hours) advise Zions following the receipt by
the Company of any Acquisition Proposal and the substance thereof (including
without limitation the identity of the person or persons making such Acquisition
Proposal) and advise Zions of any developments with respect to such Acquisition
Proposal upon the occurrence thereof.
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6.8 RULE 145 RESTRICTIONS
(a) Not later than the 15th day prior to the mailing of the Proxy
Statement, the Company shall deliver to Zions a schedule of each Person that, to
the best of the Company's Knowledge, is or is reasonably likely to be, as of the
date of the Company Meeting, deemed to be an "affiliate" of the Company (each, a
"COMPANY AFFILIATE") as that term is used in Rule 145 under the Securities Act.
(b) The Company shall use its reasonable best efforts to cause each
person who may be deemed to be a Company Affiliate to execute and deliver to the
Company on or before the date of mailing of the Proxy Statement an agreement in
the form attached hereto as Exhibit D.
6.9 CERTAIN POLICIES. Prior to the Effective Date, the Company shall,
consistent with GAAP and on a basis mutually satisfactory to it and Zions,
modify and change its loan, litigation and real estate valuation policies and
practices (including loan classifications and levels of reserves) so as to be
applied on a basis that is consistent with that of Zions; PROVIDED, HOWEVER,
that the Company shall not be obligated to take any such action pursuant to this
Section 6.09 unless and until Zions acknowledges and to the extent appropriate
certifies that all conditions to the Company's obligation to consummate the
Merger have been satisfied and all such conditions are so satisfied.
6.10 NASDAQ LISTING. Zions will file with Nasdaq and any securities
exchange on which Zions Common Stock is listed prior to the Effective Date the
Notification Form for Change in Number of Shares Outstanding and any other
applicable form concerning the shares of Zions Common Stock to be issued to the
holders of Company Common Stock in the Merger and upon exercise of the
Replacement Options and the Replacement Warrants.
6.11 REGULATORY APPLICATIONS.
(a) Zions and the Company and their respective Subsidiaries shall
cooperate and use their respective reasonable best efforts to prepare all
documentation, to effect all filings and to obtain all permits, consents,
approvals and authorizations of all third parties and Governmental Authorities
necessary to consummate the transactions contemplated by this Agreement,
including the Bank Merger. Each of Zions and the Company shall have the right to
review in advance, and to the extent practicable each will consult with the
other, in each case subject to applicable laws relating to the exchange of
information, with respect to all material written information submitted to any
third party or any Governmental Authority in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto agrees to act reasonably and as promptly as practicable. Each
party hereto agrees that it will consult with the other party hereto with
respect to the obtaining of all material permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will
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keep the other party apprised of the status of matters relating to completion of
the transactions contemplated hereby. Prior to the Effective Time, except to the
extent prohibited by applicable law, Zions shall furnish promptly to the
Company's counsel a copy of each report, schedule, correspondence and other
document that Zions or its representatives delivers to or files with, or Zions
or any of its representatives receives from, any Governmental Authority in
connection with the transactions contemplated by this Agreement, including,
without limitation, any document or portion thereof designated as confidential
by Zions.
(b) Each party agrees, upon request, to furnish the other party with
all information concerning itself, its Subsidiaries, directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries to any third party or Governmental
Authority.
6.12 INDEMNIFICATION.
(a) Following the Effective Date, Zions shall indemnify, defend and
hold harmless any person who immediately prior to the Effective Time is a
current or former director or officer of the Company and its Subsidiaries (each,
an "INDEMNIFIED PARTY") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "COSTS") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement or any related agreement, but excluding any Costs arising out of
any violation of the Exchange Act or the rules and regulations thereunder with
respect to insider trading) to the fullest extent that the Company is permitted
to indemnify (and advance expenses to) its directors and officers under the laws
of the State of Delaware, the Company Certificate and the Company By-Laws as in
effect on the date hereof; PROVIDED that any determination required to be made
with respect to whether an officer's or director's conduct complies with the
standards set forth under Delaware law, the Company Certificate and the Company
By-Laws shall be made by independent counsel (which shall not be counsel that
provides material services to Zions) selected by Zions and reasonably acceptable
to such officer or director; and PROVIDED, FURTHER, that in the absence of
applicable Delaware judicial precedent to the contrary, such counsel, in making
such determination, shall presume such officer's or director's conduct complied
with such standard and Zions shall have the burden to demonstrate that such
officer's or director's conduct failed to comply with such standard. Zions shall
pay promptly expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party unless such advancement of expenses is
expressly prohibited by law.
(b) Zions shall obtain, not later than the Effective Time, so-called
"tail insurance" with respect to that portion of the Company's director's and
officer's liability insurance policy that serves to reimburse the present and
former directors and officers (determined as of the
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Effective Time) of the Company or any of its Subsidiaries (as opposed to the
portion that serves to reimburse the Company) with respect to any claim brought
against any such director or officer during the four-year period beginning as of
the Effective Time and arising from facts or events which occurred before the
Effective Time, which insurance shall contain at least the same coverage and
amounts, and contain terms and conditions no less advantageous, as that coverage
currently provided by the Company; PROVIDED, HOWEVER, that in no event shall
Zions be required to expend more than 150% of the current amount expended by the
Company (the "INSURANCE AMOUNT") to maintain or procure such directors and
officers insurance coverage; PROVIDED, FURTHER, that if Zions is unable to
maintain or obtain the insurance called for by this Section 6.12(b), Zions shall
use its reasonable best efforts to obtain as much comparable insurance as is
available for the Insurance Amount; PROVIDED, FURTHER, that officers and
directors of the Company or any Subsidiary may be required to make application
and provide customary representations and warranties to Zions's insurance
carrier for the purpose of obtaining such insurance.
(c) Any Indemnified Party wishing to claim indemnification under
Section 6.12(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify Zions thereof; PROVIDED
that the failure so to notify shall not affect the obligations of Zions under
Section 6.12(a) unless and to the extent that Zions is actually materially
prejudiced as a result of such failure.
(d) If after the date hereof Zions or any of its successors or assigns
shall enter into an agreement to consolidate with or merge into any other entity
and shall not be the continuing or surviving entity of such consolidation or
merger or shall enter into an agreement to transfer all or substantially all of
its assets to any other entity, then and in each case, proper provision shall be
made so that such successors and assigns of Zions shall assume the obligations
set forth in this Section 6.12.
6.13 BENEFIT PLANS. It is acknowledged by the parties that, by virtue
of the Merger, all employees of the Company and its Subsidiaries immediately
prior to the Effective Time ("CURRENT EMPLOYEES") shall be employees of a
Subsidiary of Zions immediately after the Effective Time; PROVIDED, HOWEVER,
that nothing contained in this sentence shall limit the ability of Zions to
terminate the employment of any Current Employee after the Effective Time. Zions
shall, from and after the Effective Time, (i) provide Current Employees who
remain as employees of Zions or any of its Significant Subsidiaries with
benefits under employee benefit plans which are no less favorable in the
aggregate than those provided to similarly situated employees of Zions, CB&T or
any other Significant Subsidiary of Zions including without limitation allowing
such employees to participate in Zions's stock option plans in accordance with
the policies of Zions with respect to such stock option plans, and (ii) with
respect to Current Employees who remain as employees of Zions or any of its
Significant Subsidiaries, cause each employee benefit plan of Zions or its
Significant Subsidiaries in which such employees are eligible to participate to
take into account for purposes of eligibility and vesting thereunder the service
of such employees with the Company or any Company Bank as if such service were
with
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Zions or its Significant Subsidiaries, to the same extent to which such service
was credited under a comparable plan of the Company or any Company Bank.
Notwithstanding the foregoing, the Company consents and covenants that from and
after the Effective Date, the Company's Compensation and Benefit Plans will be
governed, managed and/or terminated by Zions, all within Zions' sole discretion
subject to the terms of such plans and the applicable provisions of the Code and
ERISA. For a period of at least one (1) year after the Effective Date, Zions
shall provide severance benefits to Current Employees no less favorable than
those benefits set forth in the Company's Severance Pay Plan, as amended January
1, 1999, Previously Disclosed. The retention bonus payments contemplated by
Schedule 4.01(d)(v) of the Company's Disclosure Schedule will be in addition to,
and not in lieu of, any severance payments to which Current Employees shall
otherwise be entitled after the Effective Date. At all times after the Effective
Time, Zions will, and will cause its Subsidiaries to, honor in accordance with
their terms as in effect on the date hereof, or as amended after the date hereof
with prior written consent of Zions, any employment, severance, consulting,
supplemental retirement or other compensation contracts or arrangement with any
current or former director, officer or employee of the Company, provided such
contract or arrangement is listed in the Company's Disclosure Schedule.
6.14 NOTIFICATION OF CERTAIN MATTERS. Each of the Company and Zions
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) is reasonably likely, individually or taken together with all
other facts, events and circumstances known to it, to result in any Material
Adverse Effect with respect to it or (ii) would cause or constitute a material
breach of any of its representations, warranties, covenants or agreements
contained herein.
6.15 SHAREHOLDER AGREEMENTS. Certain shareholders of the Company
identified in the Company's Disclosure Schedule, in exchange for good and
valuable consideration, have executed and delivered to Zions shareholder
agreements substantially in the form of Exhibit D hereto (the "SHAREHOLDER
Agreements"), committing such persons, (i) to vote their shares of Company
Common Stock in favor of this Agreement at the Company Meeting and (ii) to
certain representations concerning the ownership of Company Common Stock and
Zions Common Stock to be received as a result of the Merger.
6.16 RESERVATION OF SHARES. Zions shall at all times from and after
the date of this Agreement maintain a sufficient number of duly authorized,
unissued and reserved shares of Zions Common Stock necessary to permit Zions to
satisfy its obligations under this Agreement without the need to seek approval
of Zions's shareholders.
6.17 ACCOUNTANTS' LETTERS. Each of the Company and Zions shall use its
reasonable best efforts to cause to be delivered to the other party a letter of
their respective independent auditors, dated (i) the date on which the
Registration Statement shall become effective and (ii) a date shortly prior to
the Effective Date, and addressed to such other party, and such directors and
officers, in form and substance customary for "comfort" letters delivered by
independent accountants in accordance with Statement of Accounting Standards No.
72.
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6.18 RESIGNATIONS. The Company will use its reasonable best efforts to
obtain the resignations of each director of the Company and the Company Banks on
or before the Effective Date, which resignations shall be effective at the
Effective Time.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each of Zions and the Company to consummate the Merger
is subject to the fulfillment or written waiver by Zions and the Company prior
to the Effective Time of each of the following conditions:
(a) SHAREHOLDER APPROVALS. This Agreement and the Merger shall have
been duly adopted by the requisite vote of the shareholders of the Company.
(b) REGULATORY APPROVALS. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain any
conditions, restrictions or requirements which reasonably could be expected to
(i) following the Effective Time, have a Material Adverse Effect on Zions and
its Subsidiaries taken as a whole or (ii) materially or adversely reduce the
economic and business benefits of the transactions contemplated hereby to such a
degree that Zions would not have entered into this Agreement had such
conditions, restrictions or requirements been known at the date hereof.
(c) NO INJUNCTION. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and prohibits consummation of the
transactions contemplated by this Agreement.
(d) REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
(e) NASDAQ. All action necessary or required to effect quotation and
listing of the shares of Zions Common Stock to be issued in the merger or
pursuant to the Replacement Warrants and Replacement Options on Nasdaq or any
applicable national securities exchange on which Zions Common Stock is quoted or
listed shall have been taken.
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7.2 CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the
Company to consummate the Merger is also subject to the fulfillment or written
waiver by the Company prior to the Effective Time of each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Zions set forth in this Agreement, subject in all cases to the standard set
forth in Section 5.02, shall be true and correct as of the date of this
Agreement and as of the Effective Date as though made on and as of the Effective
Date (except that representations and warranties that by their terms speak as of
the date of this Agreement or some other date shall be true and correct as of
such date), and the Company shall have received a certificate, dated the
Effective Date, signed on behalf of Zions by the Chief Executive Officer and the
Chief Financial Officer of Zions to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF ZIONS. Zions shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Effective Time, and the Company shall have received
a certificate, dated the Effective Date, signed on behalf of Zions by the Chief
Executive Officer and the Chief Financial Officer of Zions to such effect.
(c) OPINION OF THE COMPANY'S COUNSEL. The Company shall have received
an opinion of Nutter, McClennen & Fish, LLP, counsel to the Company, dated the
Effective Date, to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, (i) the Merger will be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Code, (ii) each of Zions and the Company will be a party to the
reorganization within the meaning of Section 368(a) of the Code and (iii) no
gain or loss will be recognized by shareholders of the Company who receive
shares of Zions Common Stock in exchange for shares of Company Common Stock,
except with respect to cash received in lieu of fractional share interests. In
rendering its opinion, Nutter, McClennen & Fish, LLP may require and rely upon
representations contained in letters from the Company, Zions and shareholders of
the Company.
7.3 CONDITIONS TO OBLIGATION OF ZIONS. The obligation of Zions to
consummate the Merger is also subject to the fulfillment or written waiver by
Zions prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company set forth in this Agreement, subject in all cases to the standard
set forth in Section 5.02, shall be true and correct as of the date of this
Agreement and as of the Effective Date as though made on and as of the Effective
Date (except that representations and warranties that by their terms speak as of
the date of this Agreement or some other date shall be true and correct as of
such date) and Zions shall have received a certificate, dated the Effective
Date, signed on behalf of the Company by the Chief Executive Officer and the
Chief Financial Officer of the Company to such effect.
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(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and Zions shall have
received a certificate, dated the Effective Date, signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of the
Company to such effect.
(c) OPINION OF ZIONS'S COUNSEL. Zions shall have received an opinion of
Sullivan & Cromwell, counsel to Zions, dated the Effective Date, to the effect
that, on the basis of facts, representations and assumptions set forth in such
opinion, (i) the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code and (ii) each of
Zions and the Company will be a party to the reorganization within the meaning
of Section 368(a) of the Code. In rendering its opinion, Sullivan & Cromwell may
require and rely upon representations contained in letters from the Company,
Zions and shareholders of the Company.
ARTICLE VIII
TERMINATION
8.1 TERMINATION. This Agreement may be terminated, and the
Acquisition may be abandoned:
(a) MUTUAL CONSENT. At any time prior to the Effective Time, by the
mutual consent of Zions and the Company, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b) BREACH. At any time prior to the Effective Time, by Zions or the
Company, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event of either: (i) a breach by the other
party of any representation or warranty contained herein (subject to the
standard set forth in Section 5.02), which breach cannot be or has not been
cured within 30 days after the giving of written notice to the breaching party
of such breach; or (ii) a breach by the other party of any of the covenants or
agreements contained herein, which breach cannot be or has not been cured within
30 days after the giving of written notice to the breaching party of such
breach, provided that such breach (whether under (i) or (ii)) would be
reasonably likely, individually or in the aggregate with other breaches, to
result in a Material Adverse Effect.
(c) DELAY. At any time prior to the Effective Time, by Zions or the
Company, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Merger is not consummated by
June 30, 2001, except to the extent that the failure of the Merger then to be
consummated arises out of or results from the knowing action or inaction of the
party seeking to terminate pursuant to this Section 8.01(c).
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(d) NO APPROVAL. By the Company or Zions, if its Board of Directors so
determines by a vote of a majority of the members of its entire Board, in the
event (i) the approval of any Governmental Authority required for consummation
of the Merger and the other transactions contemplated by this Agreement shall
have been denied by final nonappealable action of such Governmental Authority or
(ii) the stockholder approval required by Section 7.01(a) herein is not obtained
at the Company Meeting.
(e) FAILURE TO RECOMMEND. At any time prior to the Company Meeting, by
Zions if the Company Board shall have failed to make its recommendation referred
to in Section 6.02, withdrawn such recommendation or modified or changed such
recommendation in a manner adverse in any respect to the interests of Zions.
8.2 EFFECT OF TERMINATION AND ABANDONMENT. (a) Except for Zions'
rights, if any, pursuant to the Stock Option Agreement and the Company's rights,
if any, pursuant to Section 8.02(b), in the event of termination of this
Agreement and the abandonment of the Merger pursuant to this Article VIII, no
party to this Agreement shall have any liability or further obligation to any
other party hereunder except (i) as set forth in Section 9.01 and (ii) that
termination will not relieve a breaching party from liability for any breach of
this Agreement prior to such termination.
(b) If this Agreement shall be terminated by the Company or Zions
pursuant to Section 8.01(c) (except to the extent that the failure of the Merger
then to be consummated arises out of or results from the knowing action or
inaction of the Company) or Section 8.01(d)(i), then Zions shall promptly
reimburse the Company for all costs and expenses, including reasonable
attorney's fees, incurred in connection with the negotiation and preparation of
this Agreement and the satisfaction of the Company's obligations hereunder up to
$500,000 in the aggregate.
ARTICLE IX
MISCELLANEOUS
9.1 SURVIVAL. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than Article
III, Sections 6.12, 6.13 and 6.16 and this Article IX which shall survive the
Effective Time) or the termination of this Agreement if this Agreement is
terminated prior to the Effective Time (other than Sections 6.03(c), 6.05(b),
8.02, and this Article IX which shall survive such termination).
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9.2 WAIVER; AMENDMENT. Prior to the Effective Time, any provision of
this Agreement may be (i) waived by the party benefitted by the provision, or
(ii) amended or modified at any time, by an agreement in writing between the
parties hereto executed in the same manner as this Agreement, except that after
the Company Meeting, this Agreement may not be amended if it would violate the
UBCA or the DGCL or reduce the consideration to be received by the Company
shareholders in the Merger.
9.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original. The
delivery of a signature page of this Agreement by one party to the other via
facsimile transmission shall constitute the execution and delivery of this
Agreement by the transmitting party.
9.4 GOVERNING LAW. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of California applicable
to contracts made and to be performed entirely within such State (except to the
extent that mandatory provisions of Federal law or of the DGCL or the UBCA are
applicable).
9.5 EXPENSES. Each party hereto will bear all expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby,
except that all expenses relating to the printing and mailing of the Proxy
Statement will be borne equally by the parties.
9.6 NOTICES. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to the Company, to:
Eldorado Bancshares, Inc.
24012 Calle de la Plata, Suite 340
Laguna Hills, California 92653
Attention: Robert P. Keller
Facsimile: (949) 699-4348
With a copy to:
Nutter, McClennen & Fish, LLP
One International Place, Boston MA 02110
Attention: Michael K. Krebs, Esq.
Facsimile: (617) 310-9288
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If to Zions, to:
Zions Bancorporation
One South Main
Suite 1380
Salt Lake City, Utah 84111
Attention: Dale M. Gibbons
Facsimile: (801) 524-2129
With a copy to:
Sullivan & Cromwell
1888 Century Park East, Suite 2100
Los Angeles, California 90067-1725
Attention: Stanley F. Farrar
Facsimile: (310) 712-8800
9.7 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Agreement
represents the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and this Agreement supersedes any and all other
oral or written agreements heretofore made between the parties. Nothing in this
Agreement expressed or implied, is intended to confer upon any person, other
than the parties hereto or their respective successors, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except (i) that
the Company's present and former officers and directors (determined as of the
Effective Time) are intended third party beneficiaries with respect to the
provisions set forth in Section 6.12, (ii) holders of the Company Common Stock
are intended third party beneficiaries with respect to the provisions set forth
in Section 3.04 and Section 6.03(c), (iii) holders of Replacement Options and
Replacement Warrants are intended third party beneficiaries with respect to the
provisions set forth in Section 3.06, 3.07 and Section 6.03, and (iv) the
Current Employees are intended third party beneficiaries with respect to the
provisions set forth in Section 6.13.
9.8 INTERPRETATION; EFFECT. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
ELDORADO BANCSHARES, INC.
By: /s/ Robert P. Keller
----------------------------------
Name: Robert P. Keller
Title: President and Chief
Executive Officer
ZIONS BANCORPORATION
By: /s/ Dale Gibbons
-----------------------------------
Name: Dale Gibbons
Title: Executive Vice President and
Chief Financial Officer
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