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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
dated as of December 29, 1997
by and between
Zions Bancorporation
and
FP Bancorp, Inc.
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TABLE OF CONTENTS
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RECITALS................................................................................1
ARTICLE I
Certain Definitions
1.01 Certain Definitions...............................................................1
ARTICLE II
The Merger
2.01 The Merger........................................................................6
2.02 Effective Date and Effective Time.................................................7
2.03 Plan of Merger....................................................................7
ARTICLE III
Consideration; Exchange Procedures
3.01 Merger Consideration..............................................................7
3.02 Rights as Stockholders; Stock Transfers...........................................8
3.03 Fractional Shares.................................................................8
3.04 Exchange Procedures...............................................................8
3.05 Anti-Dilution Provisions.........................................................10
3.06 Options..........................................................................10
ARTICLE IV
Actions Pending Acquisition
4.01 Forebearances of Company.........................................................11
4.02 Company Debenture Conversion and Redemption......................................13
4.03 Forebearances of Zions...........................................................13
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ARTICLE V
Representations and Warranties
5.01 Disclosure Schedules.............................................................14
5.02 Standard.........................................................................14
5.03 Representations and Warranties of Company........................................14
5.04 Representations and Warranties of Zions..........................................23
ARTICLE VI
Covenants
6.01 Reasonable Best Efforts..........................................................26
6.02 Stockholder Approval.............................................................27
6.03 Registration Statements..........................................................27
6.04 Press Releases...................................................................28
6.05 Access; Information..............................................................28
6.06 Acquisition Proposals............................................................29
6.07 Affiliate Agreements.............................................................30
6.08 Takeover Laws....................................................................30
6.09 Certain Policies.................................................................30
6.10 NASDAQ Listing...................................................................30
6.11 Regulatory Applications..........................................................30
6.12 Indemnification; Director and Officers' Insurance................................31
6.13 Benefit Plans....................................................................32
6.14 Accountants' Letters.............................................................33
6.15 Notification of Certain Matters..................................................33
6.16 Stockholder Agreements...........................................................33
6.17 Directors of Grossmont Bank......................................................33
ARTICLE VII
Conditions to Consummation of the Merger
7.01 Conditions to Each Party's Obligation to Effect the Merger.......................34
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7.02 Conditions to Obligation of Company..............................................34
7.03 Conditions to Obligation of Zions................................................36
ARTICLE VIII
Termination
8.01 Termination......................................................................36
8.02 Effect of Termination and Abandonment............................................38
ARTICLE IX
Miscellaneous
9.01 Survival.........................................................................38
9.02 Waiver; Amendment................................................................39
9.03 Counterparts.....................................................................39
9.04 Governing Law; Waiver of Jury Trial..............................................39
9.05 Expenses.........................................................................39
9.06 Notices..........................................................................39
9.07 Entire Understanding; No Third Party Beneficiaries...............................40
9.08 Interpretation; Effect...........................................................40
EXHIBIT A Form of Affiliate Agreement
EXHIBIT B Form of Stockholder's Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of December 29, 1997 (this
"Agreement"), by and between FP Bancorp, Inc. ("Company") and Zions
Bancorporation ("Zions").
RECITALS
A. FP Bancorp, Inc. Company is a Delaware corporation, having its
principal place of business in Escondido, California.
▇. ▇▇▇▇▇ Bancorporation. Zions is a Utah corporation, having its
principal place of business in Salt Lake City, Utah.
C. Intentions of the Parties. It is the intention of the parties to this
Agreement that the business combination contemplated hereby be accounted for
under the "pooling-of-interests" accounting method and be treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986 as
amended (the "Code").
D. Board Action. The respective Boards of Directors of each of Zions and
Company have determined that it is in the best interests of their respective
companies and their stockholders to consummate the strategic business
combination transaction provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions. The following terms are used in this Agreement
with the meanings set forth below:
"Acquisition Proposal" means any tender or exchange offer for 25% or
more of the Company Common Stock, proposal for a merger, consolidation or
other business combination involving Company or any of its Subsidiaries or
any proposal or offer to acquire 25% or more of the Company Common Stock, or
a substantial portion of the assets or deposits of, Company or any of its
Subsidiaries, other than the transactions contemplated by this Agreement.
"Agreement" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"Bank Merger" means the merger of Company Bank with and into Grossmont
Bank.
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"Benefit Plans" has the meaning set forth in Section 5.03(m).
"Business Combination" has the meaning set forth in Section 3.05.
"Code" has the meaning set forth in the recitals.
"Company" has the meaning set forth in the preamble to this Agreement.
"Company Affiliate" has the meaning set forth in Section 6.07(a).
"Company Bank" means First Pacific National Bank, a national banking
association and a wholly owned subsidiary of Company.
"Company Board" means the Board of Directors of Company.
"Company By-Laws" means the By-laws of Company.
"Company Certificate" means the Certificate of Incorporation of Company.
"Company Common Stock" means the common stock, par value $.001 per
share, of Company.
"Company Meeting" has the meaning set forth in Section 6.02.
"Company Stock Option" has the meaning set forth in Section 3.06.
"Company Stock Plan" means Company's Amended and Restated 1988 Stock
Option Plan.
"Costs" has the meaning set forth in Section 6.12(a).
"Debentures" has the meaning set forth in Section 4.02.
"Delaware Secretary" means the Delaware Secretary of State.
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"DGCL" means the Delaware General Corporation Law.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" means the effective time of the Merger, as provided for
in Section 2.02.
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"Employees" has the meaning set forth in Section 5.03(m).
"Environmental Law" has the meaning set forth in Section 5.03(p).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(m).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04.
"Exchange Fund" has the meaning set forth in Section 3.04.
"Exchange Ratio" has the meaning set forth in Section 3.01.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Reserve" means the Board of Governors of the Federal Reserve
System.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Grossmont Bank" means a California state-chartered bank and a wholly
owned subsidiary of Zions.
"Hazardous Substance" has the meaning set forth in Section 5.03(p).
"Indemnified Party" has the meaning set forth in Section 6.12(a).
"Insurance Policy" has the meaning set forth in Section 5.03(t).
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance.
"Material Adverse Effect" means, with respect to Zions or Company, any
effect that (i) is material and adverse to the financial position, results
of operations or business of Zions and its Subsidiaries taken as a whole or
Company and its Subsidiaries taken as a whole, respectively, or (ii) would
materially impair the ability of either Zions or Company to perform its
obligations under this Agreement or otherwise materially threaten or
materially impede the consummation of the Merger and the other transactions
contemplated by this
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Agreement; provided, however, that Material Adverse Effect shall not be
deemed to include the impact of (a) changes in banking and similar laws of
general applicability or interpretations thereof by courts or governmental
authorities, (b) changes in generally accepted accounting principles or
regulatory accounting requirements applicable to banks and their holding
companies generally (c) any modifications or changes to valuation policies
and practices in connection with the Merger or restructuring charges taken
in connection with the Merger, in each case in accordance with generally
accepted accounting principles, (d) changes agreed to in writing by Zions
and Company and (e) changes resulting from general economic conditions
throughout the United States affecting banks and their holding companies.
"Maximum Amount" has the meaning set forth in Section 6.12(c).
"Merger" has the meaning set forth in Section 2.01.
"Merger Consideration" has the meaning set forth in Section 2.01.
"Multiemployer Plans" has the meaning set forth in Section 5.03(m).
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market System.
"New Certificate" has the meaning set forth in Section 3.04.
"OCC" means the Office of the Comptroller of the Currency.
"Old Certificate" has the meaning set forth in Section 3.04.
"Person" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated
organization.
"Pension Plan" has the meaning set forth in Section 5.03(m).
"Plans" has the meaning set forth in Section 5.03(m).
"Previously Disclosed" by a party shall mean information set forth in
its Disclosure Schedule.
"Proxy Statement" has the meaning set forth in Section 6.03.
"Registration Statement" has the meaning set forth in Section 6.03.
"Regulatory Authority" has the meaning set forth in Section 5.03(i).
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"Regulatory Documents" means documents filed with the SEC, the Federal
Reserve or the OCC, as applicable, of the types referred to in Section
5.03(g) and Section 5.04(f).
"Replacement Option" has the meaning set forth in Section 3.06.
"Representatives" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person
any right to subscribe for or acquire, or any options, calls or commitments
relating to, or any stock appreciation right or other instrument the value
of which is determined in whole or in part by reference to the market price
or value of, shares of capital stock of such Person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and rules
and regulations thereunder.
"Stockholder Agreements" has the meaning set forth in Section 6.16.
"Subsidiary" and "Significant Subsidiary" have the meanings ascribed to
them in Rule 1-02 of Regulation S-X of the SEC.
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts,
sales, use, ad valorem, goods and services, capital, production, transfer,
franchise, windfall profits, license, withholding, payroll, employment,
disability, employer health, excise, estimated, severance, stamp,
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.
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"Treasury Stock" shall mean shares of Company Common Stock held by
Company or any of its Subsidiaries or by Zions or any of its Subsidiaries,
in each case other than in a fiduciary (including custodial or agency)
capacity or as a result of debts previously contracted in good faith.
"UBCA" means the Utah Business Corporation Act.
"Zions" has the meaning set forth in the preamble to this Agreement.
"Zions Board" means the Board of Directors of Zions.
"Zions Common Stock" means the common stock, no par value per share, of
Zions together with any rights attached thereto under or by virtue of the
Shareholder Protection Rights Agreement, dated September 27, 1996, between
Zions and Zions First National Bank, as rights agent.
"Zions Preferred Stock" means the preferred stock, no par value per
share, of Zions.
ARTICLE II
THE MERGER
2.01 The Merger. (a) At the Effective Time, Company shall merge with and
into Zions (the "Merger"), the separate corporate existence of Company shall
cease and Zions shall survive and continue to exist as a Utah corporation
(Zions, as the surviving corporation in the Merger, sometimes being referred to
herein as the "Surviving Corporation"). Zions may at any time prior to the
Effective Time change the method of effecting the combination with Company
(including, without limitation, the provisions of this Article II) if and to the
extent it deems such change to be necessary, appropriate or desirable; provided,
however, that no such change shall (i) alter or change the amount or kind of
consideration to be issued to holders of Company Common Stock as provided for in
this Agreement (the "Merger Consideration"), (ii) adversely affect the tax
treatment of Company's stockholders as a result of receiving the Merger
Consideration or (iii) materially impede or delay consummation of the
transactions contemplated by this Agreement.
(b) Subject to the satisfaction or waiver of the conditions set forth in
Article VII, the Merger shall become effective upon the occurrence of the
filing in the office of the Utah Division of Corporation and Commercial Code
(the "Corporation Division") of articles of merger in accordance with
Section 16-10a-1105 of the UBCA and the filing in the office of the Delaware
Secretary of a certificate of merger in accordance with Section 252 of the
DGCL or such later date and time as may be set forth in such articles and
such certificates. The Merger shall have the effects prescribed in the UBCA
and the DGCL.
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(c) Articles of Incorporation and By-Laws. The articles of incorporation
and by-laws of Zions immediately after the Merger shall be those of Zions as
in effect immediately prior to the Effective Time.
(d) Directors and Officers of the Surviving Corporation. The directors
and officers of Zions immediately after the Merger shall be the directors
and officers of Zions immediately prior to the Effective Time, until such
time as their successors shall be duly elected and qualified.
2.02 Effective Date and Effective Time. On such date as Zions selects
(and promptly provides notice thereof to Company), which shall be within ten
days after the last to occur of the expiration of all applicable waiting periods
in connection with approvals of Governmental Authorities and the receipt of all
approvals of Governmental Authorities and all conditions to the consummation of
the Merger are satisfied or waived (or, at the election of Zions, on the last
business day of the month in which such tenth day occurs or, if such tenth day
occurs on one of the last five business days of such month, on the last business
day of the succeeding month), or on such earlier or later date as may be agreed
in writing by the parties, articles of merger shall be executed in accordance
with all appropriate legal requirements and shall be filed as required by law,
and the Merger provided for herein shall become effective upon such filing or on
such date as may be specified in such articles of merger. The date of such
filing or such later effective date is herein called the "Effective Date". The
"Effective Time" of the Merger shall be the time of such filing or as set forth
in such articles of merger.
2.03 Plan of Merger. At the request of Zions, Zions and Company shall
enter into a separate plan of merger or articles of merger reflecting the terms
hereof for purposes of any filing requirement of the DGCL or the UBCA.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 Merger Consideration. Subject to the provisions of this Agreement,
at the Effective Time, automatically by virtue of the Merger and without any
action on the part of any Person:
(a) Outstanding Company Common Stock. Each share, excluding Treasury
Stock, of Company Common Stock issued and outstanding immediately prior to
the Effective Time shall become and be converted into 0.627 of a share of
Zions Common Stock (the "Exchange Ratio"). The Exchange Ratio shall be
subject to adjustment as set forth in Section 3.05.
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(b) Outstanding Zions Common Stock. Each share of Zions Common Stock
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding and unaffected by the Merger.
(c) Treasury Shares. Each share of Company Common Stock held as Treasury
Stock immediately prior to the Effective Time shall be canceled and retired
at the Effective Time and no consideration shall be issued in exchange
therefor.
3.02 Rights as Stockholders; Stock Transfers. At the Effective Time,
holders of Company Common Stock shall cease to be, and shall have no rights as,
stockholders of Company, other than to receive any dividend or other
distribution with respect to such Company Common Stock with a record date
occurring prior to the Effective Time and the consideration provided under this
Article III. After the Effective Time, there shall be no transfers on the stock
transfer books of Company or the Surviving Corporation of shares of Company
Common Stock.
3.03 Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of Zions Common Stock and no certificates or scrip therefor,
or other evidence of ownership thereof, will be issued in the Merger; instead,
Zions shall pay to each holder of Company Common Stock who would otherwise be
entitled to a fractional share of Zions Common Stock (after taking into account
all Old Certificates delivered by such holder) an amount in cash (without
interest) determined by multiplying such fraction by the average of the closing
prices of Zions Common Stock, as reported on NASDAQ (as reported in The Wall
Street Journal or, if not reported therein, in another authoritative source),
for the five NASDAQ trading days immediately preceding the Effective Date.
3.04 Exchange Procedures. (a) At or prior to the Effective Time, Zions
shall deposit, or shall cause to be deposited, with such bank or trust company
as Zions shall elect, subject (except in the case of a Zions' Subsidiary) to the
approval of Company, which approval may not be unreasonably withheld, (which may
include a Subsidiary of Zions) (in such capacity, the "Exchange Agent"), for the
benefit of the holders of certificates formerly representing shares of Company
Common Stock ("Old Certificates"), for exchange in accordance with this Article
III, certificates representing the shares of Zions Common Stock ("New
Certificates") and an estimated amount of cash (such cash and New Certificates,
together with any dividends or distributions with a record date occurring after
the Effective Date with respect thereto (without any interest on any such cash,
dividends or distributions), being hereinafter referred to as the "Exchange
Fund") to be paid pursuant to this Article III in exchange for outstanding
shares of Company Common Stock.
(b) As soon as practicable after the Effective Date, and in any event no
later than 10 days after the Effective Date, Zions shall send or cause to be
sent to each former holder of record of shares of Company Common Stock
immediately prior to the Effective Time transmittal materials for use in
exchanging such stockholder's Old Certificates for the
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consideration set forth in this Article III. Zions shall cause the New
Certificates into which shares of a stockholder's Company Common Stock are
converted on the Effective Date and/or any check in respect of any
fractional share interests or dividends or distributions which such person
shall be entitled to receive to be delivered to such stockholder upon
delivery to the Exchange Agent of Old Certificates representing such shares
of Company Common Stock (or an affidavit of lost certificate and, if
required by the Exchange Agent, indemnity reasonably satisfactory to Zions
and the Exchange Agent, if any of such certificates are lost, stolen or
destroyed) owned by such stockholder. No interest will be paid on any such
cash to be paid in lieu of fractional share interests or in respect of
dividends or distributions which any such person shall be entitled to
receive pursuant to this Article III upon such delivery. In the event of a
transfer of ownership of any shares of Company Common Stock not registered
in the transfer records of Company, the exchange described in this Section
3.04(b) may nonetheless be effected and a check for the cash to be paid in
lieu of fractional shares may be issued to the transferee if the Old
Certificate representing such Company Common Stock is presented to the
Exchange Agent, accompanied by documents sufficient, in the discretion of
Zions and the Exchange Agent, (i) to evidence and effect such transfer but
for the provisions of Section 3.02 hereof and (ii) to evidence that all
applicable stock transfer taxes have been paid.
(c) If Old Certificates are not surrendered or the consideration
therefor is not claimed prior to the date on which such consideration would
otherwise escheat to or become the property of any governmental unit or
agency, the unclaimed consideration shall, to the extent permitted by
abandoned property and any other applicable law, become the property of the
Surviving Corporation (and to the extent not in its possession shall be paid
over to the Surviving Corporation), free and clear of all claims or interest
of any person previously entitled to such claims. Notwithstanding the
foregoing, neither the Exchange Agent nor any party hereto shall be liable
to any former holder of Company Common Stock for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(d) At the election of Zions, no dividends or other distributions with
respect to Zions Common Stock with a record date occurring after the
Effective Time shall be paid to the holder of any unsurrendered Old
Certificate representing shares of Company Common Stock converted in the
Merger into the right to receive shares of such Zions Common Stock until the
holder thereof shall be entitled to receive New Certificates in exchange
therefor in accordance with the procedures set forth in this Section 3.04,
and no such shares of Company Common Stock shall be eligible to vote until
the holder of Old Certificates is entitled to receive New Certificates in
accordance with the procedures set forth in this Section 3.04. After
becoming so entitled in accordance with this Section 3.04, the record holder
thereof also shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of Zions Common Stock such holder had the
right to receive upon surrender of the Old Certificate.
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(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Company for six months after the Effective Time shall be
returned by the Exchange Agent to Zions. Any stockholders of Company who
have not theretofore complied with this Article III shall thereafter look
only to Zions for payment of the shares of Zions Common Stock, cash in lieu
of any fractional shares and unpaid dividends and distributions on Zions
Common Stock deliverable in respect of each share of Company Common Stock
such stockholder holds as determined pursuant to this Agreement, in each
case, without any interest thereon.
3.05 Anti-Dilution Provisions. In the event Zions changes (or
establishes a record date for changing) the number of shares of Zions Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization or similar transaction with respect to
the outstanding Zions Common Stock and the record date therefor shall be prior
to the Effective Date, the Exchange Ratio shall be proportionately adjusted.
Subject to Section 2.01(a), if, between the date hereof and the Effective Time,
Zions shall consolidate with or into any other corporation (a "Business
Combination") and the terms thereof shall provide that Zions Common Stock shall
be converted into or exchanged for the shares of any other corporation or
entity, then provision shall be made as part of the terms of such Business
Combination so that (i) stockholders of Company who would be entitled to receive
shares of Zions Common Stock pursuant to this Agreement shall be entitled to
receive, in lieu of each share of Zions Common Stock issuable to such
stockholders as provided herein, the same kind and amount of securities or
assets as shall be distributable upon such Business Combination with respect to
one share of Zions Common Stock.
3.06 Options. At the Effective Time, each outstanding option to purchase
shares of Company Common Stock under the Company Common Stock Plan (each, a
"Company Stock Option"), whether vested or unvested, shall be converted into an
option to acquire, on the same terms and conditions as were applicable under
such Company Stock Option, the number of shares of Zions Common Stock equal to
(a) the number of shares of Company Common Stock subject to the Company Stock
Option, multiplied by (b) the Exchange Ratio (such product rounded down to the
nearest whole number) (a "Replacement Option"), at an exercise price per share
(rounded up to the nearest whole cent) equal to (y) the aggregate exercise price
for the shares of Company Common Stock which were purchasable pursuant to such
Company Stock Option divided by (z) the number of full shares of Zions Common
Stock subject to such Replacement Option in accordance with the foregoing.
Notwithstanding the foregoing, each Company Stock Option which is intended to be
an "incentive stock option" (as defined in Section 422 of the Code) shall be
adjusted in accordance with the requirements of Section 424 of the Code. At or
prior to the Effective Time, Company shall take all action, if any, necessary
with respect to the Company Stock Plan to permit the replacement of the
outstanding Company Stock Options by Zions pursuant to this Section. At the
Effective Time, Zions shall assume the Company Stock Plan; provided, that such
assumption shall be only in respect of the Replacement Options and that Zions
shall have no obligation with respect to any awards under the Company
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Stock Plan other than the Replacement Options and shall have no obligation to
make any additional grants or awards under such assumed Company Stock Plan.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 Forebearances of Company. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of Zions, Company will not, and will cause each of its
Subsidiaries not to:
(a) Ordinary Course. Conduct the business of Zions and its Subsidiaries
other than in the ordinary and usual course or fail to use reasonable best
efforts to preserve intact their business organizations and assets and
maintain their rights, franchises and existing relations with customers,
suppliers, employees and business associates, take any action that would
adversely affect or delay the ability of Company, Zions or any of their
Subsidiaries to perform any of their obligations on a timely basis under
this Agreement, or take any action that is reasonably likely to have a
Material Adverse Effect on Company and its Subsidiaries, taken as a whole.
(b) Capital Stock. Other than pursuant to the Debentures and Rights
Previously Disclosed and outstanding on the date hereof, (i) issue, sell or
otherwise permit to become outstanding, or authorize the creation of, any
additional shares of Company Common Stock or any Rights, (ii) enter into any
agreement with respect to the foregoing or (iii) permit any additional
shares of Company Common Stock to become subject to new grants of employee
or director stock options, other Rights or similar stock-based employee
rights.
(c) Dividends, Etc. (a) Make, declare, pay or set aside for payment any
dividend on or in respect of, or declare or make any distribution on any
shares of Company Common Stock or (b) directly or indirectly adjust, split,
combine, redeem, reclassify, purchase or otherwise acquire, any shares of
its capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of Company or its
Subsidiaries, or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments), except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice (including increases in the annual
bonus pool and reallocations pursuant thereto; provided that for 1998 such
pool shall not exceed the 1997 pool, prorated through the Effective Date),
(ii) for other changes that are required by applicable law, (iii) to
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satisfy Previously Disclosed contractual obligations existing as of the date
hereof or (iv) for grants of awards to newly hired employees consistent with
past practice.
(e) Benefit Plans. Enter into, establish, adopt or amend (except (i) as
may be required by applicable law or (ii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof) any pension,
retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
(or similar arrangement) related thereto, in respect of any director,
officer or employee of Company or its Subsidiaries, or take any action to
accelerate the vesting or exercisability of stock options, restricted stock
or other compensation or benefits payable thereunder.
(f) Dispositions. Except as Previously Disclosed, sell, transfer,
mortgage, encumber or otherwise dispose of or discontinue any of its assets,
deposits, business or properties except in the ordinary course of business
and in a transaction that is not material to it and its Subsidiaries taken
as a whole.
(g) Acquisitions. Except as Previously Disclosed, acquire (other than by
way of foreclosures or acquisitions of control in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in good faith, in
each case in the ordinary and usual course of business consistent with past
practice) all or any portion of, the assets, business, deposits or
properties of any other entity except in the ordinary course of business
consistent with past practice and in a transaction that is not material to
Company and its Subsidiaries, taken as a whole.
(h) Capital Expenditures. Except as Previously Disclosed, make any
capital expenditures other than capital expenditures in the ordinary course
of business consistent with past practice in amounts not exceeding $50,000
individually or $150,000 in the aggregate.
(i) Governing Documents. Amend the Company Certificate, Company By-Laws
or the certificate of incorporation or by-laws (or similar governing
documents) of any of Company's Subsidiaries.
(j) Accounting Methods. Implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by generally
accepted accounting principles.
(k) Contracts. Except in the ordinary course of business consistent with
past practice or to reasonably comply with or ameliorate the Company's
obligations pursuant to the Debentures, enter into or terminate any material
contract (as defined in Section 5.03(k)) or amend or modify in any material
respect any of its existing material contracts.
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(l) Claims. Except in the ordinary course of business consistent with
past practice, settle any claim, action or proceeding, except for any claim,
action or proceeding involving solely money damages in an amount,
individually or in the aggregate for all such settlements, that is not
material to Company and its Subsidiaries, taken as a whole.
(m) Adverse Actions. (a) Take any action while knowing that such action
would, or is reasonably likely to, prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to result
in (i) any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect at any time at or prior to
the Effective Time, (ii) any of the conditions to the Merger set forth in
Article VII not being satisfied or (iii) a material violation of any
provision of this Agreement except, in each case, as may be required by
applicable law or regulation.
(n) Risk Management. Except as required by applicable law or regulation,
(i) implement or adopt any material change in its interest rate and other
risk management policies, procedures or practices; (ii) fail to follow its
existing policies or practices with respect to managing its exposure to
interest rate and other risk; or (iii) fail to use commercially reasonable
means to avoid any material increase in its aggregate exposure to interest
rate risk.
(o) Indebtedness. Incur any indebtedness for borrowed money other than
in the ordinary course of business consistent with past practice.
(p) Commitments. Agree or commit to do any of the foregoing.
4.02 Company Debenture Conversion and Redemption. Notwithstanding
anything to the contrary in Section 4.01, Company shall not be deemed to be in
breach of the provisions of Section 4.01 by taking appropriate actions to redeem
and/or convert its outstanding 9% Convertible Subordinated Debentures (the
"Debentures") due December 31, 1997. The parties understand and agree that such
redemption and/or conversion may be delayed as a result of the timing of and
pendency of the transactions contemplated by this Agreement and consent to
reasonable actions by Company to meet its obligations under the Debentures.
4.03 Forebearances of Zions. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of Company, Zions will not, and will cause each of its
Subsidiaries not to:
(a) Ordinary Course. Take any action that would adversely affect or
delay the ability of Company or Zions to perform any of their obligations on
a timely basis under this
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Agreement, or take any action that is reasonably likely to have a Material
Adverse Effect on Zions or its Subsidiaries, taken as a whole.
(b) Adverse Actions. (a) Take any action while knowing that such action
would, or is reasonably likely to, prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to result
in (i) any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect at any time at or prior to
the Effective Time, (ii) any of the conditions to the Merger set forth in
Article VII not being satisfied or (iii) a material violation of any
provision of this Agreement except, in each case, as may be required by
applicable law or regulation.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. On or prior to the date hereof, Company has
delivered to Zions a schedule (the "Disclosure Schedule") setting forth, among
other things, items the disclosure of which is necessary or appropriate either
in response to an express disclosure requirement contained in a provision hereof
or as an exception to one or more representations or warranties contained in
Section 5.03; provided, that (a) no such item is required to be set forth in a
Disclosure Schedule as an exception to a representation or warranty if its
absence would not be reasonably likely to result in the related representation
or warranty being deemed untrue or incorrect under the standard established by
Section 5.02, and (b) the mere inclusion of an item in a Disclosure Schedule as
an exception to a representation or warranty shall not be deemed an admission by
a party that such item represents a material exception or fact, event or
circumstance or that such item is reasonably likely to result in a Material
Adverse Effect.
5.02 Standard. No representation or warranty of Company or Zions
contained in Section 5.03 or 5.04 shall be deemed untrue or incorrect, and no
party hereto shall be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, event or circumstance unless such
fact, circumstance or event, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
contained in Section 5.03 or 5.04 has had or is reasonably likely to have a
Material Adverse Effect on the party making such representation or warranty.
5.03 Representations and Warranties of Company. Subject to Sections 5.01
and 5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, Company hereby
represents and warrants to Zions:
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(a) Organization, Standing and Authority. Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. Company is duly qualified to do business and is in good
standing in the states of the United States and any foreign jurisdictions
where its ownership or leasing of property or assets or the conduct of its
business requires it to be so qualified.
(b) Company Common Stock. As of the date hereof, the authorized capital
stock of Company consists solely of 4,000,000 shares of Company Common
Stock, of which no more than 2,778,823 shares were outstanding as of the
date hereof. As of the date hereof, no shares of Company Common Stock were
held in treasury by Company or otherwise owned by Company or its
Subsidiaries. The outstanding shares of Company Common Stock have been duly
authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued in
violation of any preemptive rights). As of the date hereof, there are no
shares of Company Common Stock authorized and reserved for issuance, Company
does not have any Rights issued or outstanding with respect to Company
Common Stock, and Company does not have any commitment to authorize, issue
or sell any Company Common Stock or Rights, except pursuant to this
Agreement, the Debentures, any Company Stock Option and the Company Stock
Plan. The number of shares of Company Common Stock which are issuable and
reserved for issuance upon exercise of Company Stock Options as of the date
hereof are Previously Disclosed in Company's Disclosure Schedule.
(c) Subsidiaries. (i)(A) Company has Previously Disclosed a list of all
of its Subsidiaries together with the jurisdiction of organization of each
such Subsidiary, (B) Company owns, directly or indirectly, all the issued
and outstanding equity securities of each of its Subsidiaries, (C) no equity
securities of any of its Subsidiaries are or may become required to be
issued (other than to it or its wholly owned Subsidiaries) by reason of any
Right or otherwise, (D) there are no contracts, commitments, understandings
or arrangements by which any of such Subsidiaries is or may be bound to sell
or otherwise transfer any equity securities of any such Subsidiaries (other
than to it or its wholly-owned Subsidiaries), (E) there are no contracts,
commitments, understandings, or arrangements relating to its rights to vote
or to dispose of such securities and (F) all the equity securities of each
Subsidiary held by Company or its Subsidiaries are fully paid and
nonassessable and are owned by Company or its Subsidiaries free and clear of
any Liens.
(ii) Company does not own beneficially, directly or indirectly, any
equity securities or similar interests of any Person, or any interest in a
partnership or joint venture of any kind, other than its Subsidiaries.
(iii) Each of Company's Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to
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do business and in good standing in the jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified.
(d) Corporate Power. Company and each of its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and Company has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby and thereby.
(e) Corporate Authority. Subject in the case of this Agreement to
receipt of the requisite approval of the agreement of merger set forth in
this Agreement by the holders of a majority of the outstanding shares of
Company Common Stock entitled to vote thereon (which is the only stockholder
vote required thereon), this Agreement and the transactions contemplated
hereby have been authorized by all necessary corporate action of Company and
the Company Board on or prior to the date hereof. This Agreement is a valid
and legally binding obligation of Company, enforceable in accordance with
its terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar laws
of general applicability relating to or affecting creditors' rights or by
general equity principles). The Company Board has received the written
opinion of Sandler ▇'▇▇▇▇▇ & Partners, LP to the effect that as of the date
hereof the Exchange Ratio to be received by the holders of Company Common
Stock in the Merger is fair to the holders of Company Common Stock from a
financial point of view.
(f) Regulatory Approvals; No Defaults. (i) No consents or approvals of,
or filings or registrations with, any Governmental Authority or with any
third party are required to be made or obtained by Company or any of its
Subsidiaries in connection with the execution, delivery or performance by
Company of this Agreement or to consummate the Merger except for (A) filings
of applications or notices with federal banking authorities, (B) filings
with the SEC and state securities authorities and the approval of this
Agreement by the stockholders of Company, and (C) the filing of articles of
merger with the Corporation Division pursuant to the UBCA and a certificate
of merger with the Delaware Secretary pursuant to the DGCL. As of the date
hereof, Company is not aware of any reason why the approvals set forth in
Section 7.01(b) will not be received without the imposition of a condition,
restriction or requirement of the type described in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph, and the expiration of related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby and thereby do not and will not (A)
constitute a breach or violation of, or a default under, or give rise to any
Lien, any acceleration of remedies or any right of termination under, any
law, rule or regulation or any judgment, decree, order, governmental permit
or license, or agreement, indenture or
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instrument of Company or of any of its Subsidiaries or to which Company or
any of its Subsidiaries or properties is subject or bound, (B) constitute a
breach or violation of, or a default under, the Company Certificate or the
Company By-Laws, or (C) require any consent or approval under any such law,
rule, regulation, judgment, decree, order, governmental permit or license,
agreement, indenture or instrument.
(g) Financial Reports and Regulatory Documents. (i) Company's (or its
predecessors') Annual Reports on Form 10-KSB for the fiscal years ended
December 31, 1994, 1995 and 1996, and all other reports, registration
statements, definitive proxy statements or information statements filed or
to be filed by it or any of its Subsidiaries subsequent to December 31, 1994
under the Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act or under the securities regulations of the OCC, in the form
filed or to be filed (collectively, the Company "Regulatory Documents") with
the SEC or the OCC, as applicable, as of the date filed, (A) complied or
will comply in all material respects as to form with the applicable
requirements under the Securities Act, the Exchange Act or the securities
regulations of the OCC, as the case may be, and (B) did not and will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and each of the balance sheets contained in or incorporated by
reference into any such Regulatory Document (including the related notes and
schedules thereto) fairly presents, or will fairly present, in all material
respects, the financial position of Company and its Subsidiaries as of its
date, and each of the statements of income and changes in stockholders'
equity and cash flows or equivalent statements in such Regulatory Documents
(including any related notes and schedules thereto) fairly presents, or will
fairly present, in all material respects, the results of operations, changes
in stockholders' equity and changes in cash flows, as the case may be, of
Company and its Subsidiaries for the periods to which they relate, in each
case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as may
be noted therein, subject to normal year-end audit adjustments in the case
of unaudited statements.
(ii) Since December 31, 1996, Company and its Subsidiaries have not
incurred any liability other than in the ordinary course of business
consistent with past practice.
(iii) Since December 31, 1996, (A) Company and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of expenses related
to this Agreement and the transactions contemplated hereby) and (B) no event
has occurred or circumstance arisen that, individually or taken together
with all other facts, circumstances and events (described in any paragraph
of Section 5.03 or otherwise), is reasonably likely to have a Material
Adverse Effect with respect to Company.
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(h) Litigation. No litigation, claim or other proceeding before any
court or governmental agency is pending against Company or any of its
Subsidiaries and, to Company's knowledge, no such litigation, claim or other
proceeding has been threatened.
(i) Regulatory Matters. (i) Neither Company nor any of its Subsidiaries
or any of their properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary supervisory
letter from, any federal or state governmental agency or authority charged
with the supervision or regulation of financial institutions or issuers of
securities or engaged in the insurance of deposits (including, without
limitation, the OCC, the Federal Reserve and the FDIC) or the supervision or
regulation of it or any of its Subsidiaries (collectively, the "Regulatory
Authorities").
(ii) Neither Company nor any of its Subsidiaries has been advised by any
Regulatory Authority that such Regulatory Authority is contemplating issuing
or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(j) Compliance with Laws. Company and each of its Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure
Act and all other applicable fair lending laws and other laws relating to
discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and approvals of,
and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own or
lease their properties and to conduct their businesses as presently
conducted; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to Company's knowledge, no
suspension or cancellation of any of them is threatened; and
(iii) has received, since December 31, 1996, no notification or
communication from any Governmental Authority (A) asserting that Company or
any of its Subsidiaries is not in compliance with any of the statutes,
regulations or ordinances which such Governmental Authority enforces or (B)
threatening to revoke any license, franchise, permit or governmental
authorization (nor, to Company's knowledge, do any grounds for any of the
foregoing exist).
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(k) Material Contracts; Defaults. Except for those agreements and other
documents filed as exhibits to its Regulatory Documents, neither it nor any
of its Subsidiaries is a party to, bound by or subject to any agreement,
contract, arrangement, commitment or understanding (whether written or oral)
(i) that is a "material contract" within the meaning of Item 601(b)(10) of
the SEC's Regulation S-K or (ii) that materially restricts the conduct of
business by it or any of its Subsidiaries. Neither Company nor any of its
Subsidiaries is in default under any material contract, agreement,
commitment, arrangement, lease, insurance policy or other instrument to
which it is a party, by which its respective assets, business, or operations
may be bound or affected, or under which it or its respective assets,
business, or operations receives benefits, and there has not occurred any
event that, with the lapse of time or the giving of notice or both, would
constitute such a default.
(l) No Brokers. No action has been taken by Company that would give rise
to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, excluding a Previously Disclosed fee to be
paid to Sandler ▇'▇▇▇▇▇ & Partners, LP.
(m) Employee Benefit Plans.
(i) All benefit and compensation plans, contracts, policies or
arrangements covering current employees or former employees of Company and
its subsidiaries (the "Employees") and current or former directors of
Company, including, but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of ERISA, and deferred compensation, stock option,
stock purchase, stock appreciation rights, stock based, incentive and bonus
plans (the "Benefit Plans"), are Previously Disclosed in the Disclosure
Letter. True and complete copies of all Benefit Plans, including, but not
limited to, any trust instruments and insurance contracts forming a part of
any Benefit Plans, and all amendments thereto have been provided or made
available to Zions.
(ii) All employee benefit plans, other than "multiemployer plans" within
the meaning of Section 3(37) of ERISA, covering Employees (the "Plans"), to
the extent subject to ERISA, are in substantial compliance with ERISA.
Company is not a party to any "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA ("Pension Plan") and which is intended to
be qualified under Section 401(a) of the Code. There is no material pending
or threatened litigation relating to the Plans. Neither Company nor any of
its Subsidiaries has engaged in a transaction with respect to any Plan that,
assuming the taxable period of such transaction expired as of the date
hereof, could subject Company or any Subsidiary to a tax or penalty imposed
by either Section 4975 of the Code or Section 502(i) of ERISA in an amount
which would be material.
(iii) No liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by Company or any of its Subsidiaries with
respect to any ongoing, frozen or
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terminated "single-employer plan", within the meaning of Section 4001(a)(15)
of ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one employer with
Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). Neither Company, any of its Subsidiaries nor an ERISA Affiliate
has contributed to a "multiemployer plan", within the meaning of Section
3(37) of ERISA, at any time on or after September 26, 1980. No notice of a
"reportable event", within the meaning of Section 4043 of ERISA for which
the 30-day reporting requirement has not been waived, has been required to
be filed for any Pension Plan or by any ERISA Affiliate within the 12-month
period ending on the date hereof or will be required to be filed in
connection with the transactions contemplated by this Plan.
(iv) All contributions required to be made under the terms of any Plan
have been timely made or have been reflected on the consolidated financial
statements of Company included in the Regulatory Documents. Neither any
Pension Plan nor any single-employer plan of an ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA and no ERISA Affiliate
has an outstanding funding waiver. Neither Company nor any of its
Subsidiaries has provided, or is required to provide, security to any
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant
to Section 401(a)(29) of the Code.
(v) Under each Pension Plan which is a single-employer plan, as of the
last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities", within
the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of
the actuarial assumptions contained in the Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such
Plan, and there has been no material change in the financial condition of
such Plan since the last day of the most recent plan year.
(vi) Neither Company nor any of its Subsidiaries has any obligations for
retiree health and life benefits under any Benefit Plan. Company or its
Subsidiaries may amend or terminate any such Benefit Plan at any time
without incurring any liability thereunder.
(vii) The consummation of the transactions contemplated by this
Agreement will not (x) entitle any employees of Company or any of its
Subsidiaries to severance pay, (y) accelerate the time of payment or vesting
or trigger any payment of compensation or benefits under, increase the
amount payable or trigger any other material obligation pursuant to, any of
the Benefit Plans or (z) result in any breach or violation of, or a default
under, any of the Benefit Plans. Without limiting the foregoing, as a result
of the consummation of the transactions contemplated by this Agreement, none
of Zions, Company, or any of its Subsidiaries will be obligated to make a
payment to an individual that would be a "parachute payment" to a
disqualified individual" as those terms are defined in Section 280G of the
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Code, without regard to whether such payment is reasonable compensation for
personal services performed or to be performed in the future.
(n) Labor Matters. Neither Company nor any of its Subsidiaries is a
party to or is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization,
nor is Company or any of its Subsidiaries the subject of a proceeding
asserting that it or any such Subsidiary has committed an unfair labor
practice (within the meaning of the National Labor Relations Act) or seeking
to compel Company or any such Subsidiary to bargain with any labor
organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving it or any of its Subsidiaries
pending or, to Company's knowledge, threatened, nor is Company aware of any
activity involving its or any of its Subsidiaries' employees seeking to
certify a collective bargaining unit or engaging in other organizational
activity.
(o) Appraisal Rights. The holders of Company Common Stock do not have
appraisal rights in connection with the Merger pursuant to DGCL ss.
262(b)(1), assuming that the consideration to be received by such holders
satisfies the requirements of DGCL ss. 262(b)(2).
(p) Environmental Matters. To the best knowledge of Company, neither the
conduct nor operation of Company or its Subsidiaries nor any condition of
any property presently or previously owned, leased or operated by any of
them (including, without limitation, in a fiduciary or agency capacity),
violates or violated Environmental Laws and no condition has existed or
event has occurred with respect to any of them or any such property that,
with notice or the passage of time, or both, is reasonably likely to result
in liability under Environmental Laws. To the knowledge of Company's
executive officers, no property on which Company or any of its Subsidiaries
holds a Lien, violates or violated Environmental Laws and no condition has
existed or event has occurred with respect to any such property that, with
notice or the passage of time, or both, is reasonably likely to result in
liability under Environmental Laws. Neither Company nor any of its
Subsidiaries has received any notice from any person or entity that Company
or its Subsidiaries or the operation or condition of any property ever
owned, leased, operated, or held as collateral or in a fiduciary capacity by
any of them are or were in violation of or otherwise are alleged to have
liability under any Environmental Law, including, but not limited to,
responsibility (or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from, any such
property.
As used herein, the term "Environmental Law" means any federal, state or
local law, regulation, order, decree, permit, authorization, opinion, common
law or agency requirement relating to: (A) the protection or restoration of
the environment, health, safety, or natural resources, (B) the handling,
use, presence, disposal, release or threatened release of any Hazardous
Substance or (C) noise, odor, wetlands, indoor air, pollution, contamination
or any injury or threat of injury to persons or property in connection with
any Hazardous Substance
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and the term "Hazardous Substance" means any substance in any concentration
that is: (A) listed, classified or regulated pursuant to any Environmental
Law; (B) any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (C) any other substance which is or may be the
subject of regulatory action by any Governmental Authority in connection
with any Environmental Law.
(q) Tax Matters. (i) (A) All Tax Returns that are required to be filed
(taking into account any extensions of time within which to file) by or with
respect to Company and its Subsidiaries have been duly filed, (B) all Taxes
shown to be due on the Tax Returns referred to in clause (A) have been paid
in full, (C) the Tax Returns referred to in clause (A) have been examined by
the Internal Revenue Service or the appropriate Tax authority or the period
for assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired, (D) all deficiencies asserted or
assessments made as a result of such examinations have been paid in full,
(E) no issues that have been raised by the relevant taxing authority in
connection with the examination of any of the Tax Returns referred to in
clause (A) are currently pending, and (F) no waivers of statutes of
limitation have been given by or requested with respect to any Taxes of
Company or its Subsidiaries. Company has made available to Zions true and
correct copies of the United States federal income Tax Returns filed by
Company and its Subsidiaries for each of the three most recent fiscal years
ended on or before December 31, 1996. Neither Company nor any of its
Subsidiaries has any liability with respect to income, franchise or similar
Taxes that accrued on or before the end of the most recent period covered by
Company's Regulatory Documents filed prior to the date hereof in excess of
the amounts accrued with respect thereto that are reflected in the financial
statements included in Company's Regulatory Documents filed on or prior to
the date hereof. Neither Company nor any of its Subsidiaries is a party to
any Tax allocation or sharing agreement, is or has been a member of an
affiliated group filing consolidated or combined Tax returns (other than a
group the common parent of which is or was Company) or otherwise has any
liability for the Taxes of any person (other than Company and its
Subsidiaries). As of the date hereof, neither Company nor any of its
Subsidiaries has any reason to believe that any conditions exist that might
prevent or impede the Merger from qualifying as a reorganization within the
meaning of Section 368 of the Code.
(ii) No Tax is required to be withheld pursuant to Section 1445 of the
Code as a result of the transfer contemplated by this Agreement.
(r) Risk Management Instruments. All interest rate swaps, caps, floors,
option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for Company's own account, or
for the account of one or more of Company's Subsidiaries or their customers
(all of which are listed on Company's Disclosure Schedule), if any, were
entered into (i) in accordance with prudent business practices and all
applicable laws, rules, regulations and regulatory policies and (ii) with
counterparties
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believed to be financially responsible at the time; and each of them
constitutes the valid and legally binding obligation of Company or one of
its Subsidiaries, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles), and are in full force and effect. Neither Company nor
its Subsidiaries, nor to Company's knowledge, any other party thereto, is in
breach of any of its obligations under any such agreement or arrangement.
(s) Books and Records. The books and records of Company and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, and there are no material inaccuracies or discrepancies
of any kind contained or reflected therein, and they fairly present the
financial position of Company and its Subsidiaries.
(t) Insurance. Company has Previously Disclosed all of the insurance
policies, binders, or bonds maintained by Company or its Subsidiaries
("Insurance Policies"). Company and its Subsidiaries are insured with
reputable insurers against such risks and in such amounts as the management
of Company reasonably has determined to be prudent in accordance with
industry practices. All the Insurance Policies are in full force and effect;
Company and its Subsidiaries are not in material default thereunder; and all
claims thereunder have been filed in due and timely fashion.
(u) Accounting Treatment. As of the date hereof, Company is not aware of
any reason why the Merger will fail to qualify for "pooling of interests"
accounting treatment.
5.04 Representations and Warranties of Zions. Subject to Section 5.02,
Zions hereby represents and warrants to Company as follows:
(a) Organization, Standing and Authority. Zions is duly organized,
validly existing and in good standing under the laws of the State of Utah.
Zions is duly qualified to do business and is in good standing in the states
of the United States and foreign jurisdictions where its ownership or
leasing of property or assets or the conduct of its business requires it to
be so qualified. Zions has in effect all federal, state, local, and foreign
governmental authorizations necessary for it to own or lease its properties
and assets and to carry on its business as it is now conducted.
(b) Zions Capital Stock. As of the date hereof, the authorized capital
stock of Zions consists solely of 100,000,000 shares of Zions Common Stock,
of which no more than 65,000,000 shares were outstanding as of the date
hereof and 3,000,000 shares of Zions Preferred Stock, of which no shares
were outstanding as of the date hereof.
(c) Corporate Power. Zions and each of its Significant Subsidiaries has
the corporate power and authority to carry on its business as it is now
being conducted and to own all its
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properties and assets; and Zions has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby.
(d) Corporate Authority. This Agreement and the transactions
contemplated hereby have been authorized by all necessary corporate action
of Zions and the Zions Board. This Agreement is a valid and legally binding
agreement of Zions enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles).
(e) Regulatory Approvals; No Defaults. (i) No consents or approvals of,
or filings or registrations with, any court, administrative agency or
commission or other governmental authority or instrumentality or with any
third party are required to be made or obtained by Zions or any of its
Subsidiaries in connection with the execution, delivery or performance by
Zions of this Agreement or to consummate the Merger except for (A) the
filing of applications and notices, as applicable, with the federal and
state banking authorities; (B) approval of the listing on the NASDAQ of
Zions Common Stock to be issued in the Merger; (C) the filing and
declaration of effectiveness of the Registration Statement; (D) the filing
of articles of merger with the Corporation Division pursuant to the UBCA and
a certificate of merger with the Delaware Secretary pursuant to the DGCL;
(E) such filings as are required to be made or approvals as are required to
be obtained under the securities or "Blue Sky" laws of various states in
connection with the issuance of Zions Common Stock in the Merger; and (F)
receipt of the approvals set forth in Section 7.01(b). As of the date
hereof, Zions is not aware of any reason why the approvals set forth in
Section 7.01(b) will not be received without the imposition of a condition,
restriction or requirement of the type described in Section 7.01(b).
(ii) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph and expiration of the related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (A) constitute a breach
or violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license,
or agreement, indenture or instrument of Zions or of any of its Subsidiaries
or to which Zions or any of its Subsidiaries or properties is subject or
bound, (B) constitute a breach or violation of, or a default under, the
certificate of incorporation or by-laws (or similar governing documents) of
Zions or any of its Subsidiaries, or (C) require any consent or approval
under any such law, rule, regulation, judgment, decree, order, governmental
permit or license, agreement, indenture or instrument.
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(f) Financial Reports and Regulatory Documents; Material Adverse Effect.
(i) Zions' Regulatory Documents, as of the date filed, (A) complied or will
comply in all material respects as to form with the applicable requirements
under the Securities Act or the Exchange Act, as the case may be, and (B)
did not and will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; and each of the balance sheets contained in or
incorporated by reference into any such Regulatory Document (including the
related notes and schedules thereto) fairly presents, or will fairly
present, the financial position of Zions and its Subsidiaries as of its
date, and each of the statements of income and changes in stockholders'
equity and cash flows or equivalent statements in such Regulatory Documents
(including any related notes and schedules thereto) fairly presents, or will
fairly present, the results of operations, changes in stockholders' equity
and changes in cash flows, as the case may be, of Zions and its Subsidiaries
for the periods to which they relate, in each case in accordance with
generally accepted accounting principles consistently applied during the
periods involved, except in each case as may be noted therein, subject to
normal year-end audit adjustments in the case of unaudited statements.
(ii) Since December 31, 1996, no event has occurred or circumstance
arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 5.04 or
otherwise), is reasonably likely to have a Material Adverse Effect with
respect to it.
(g) No Brokers. No action has been taken by Zions that would give rise
to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions
contemplated by this Agreement.
(h) Accounting Treatment; Tax Matters. As of the date hereof, it is
aware of no reason why the Merger will fail to qualify for "pooling of
interests" accounting treatment. As of the date hereof, neither Zions nor
any of its Subsidiaries has any reason to believe that any conditions exist
that might prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368 of the Code.
(i) Regulatory Matters. (i) Neither Zions nor any of its Subsidiaries or
any of their properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, or extraordinary supervisory
letter from, any Regulatory Authority, which individually or in the
aggregate would have a Material Adverse Effect on Zions.
(ii) Neither Zions nor any of its Subsidiaries has been advised by any
Regulatory Authority that such Regulatory Authority is contemplating issuing
or requesting (or is
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considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, commitment letter,
supervisory letter or similar submission.
(j) Compliance with Laws. Zions and each of its Subsidiaries:
(i) is in compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure
Act and all other applicable fair lending laws and other laws relating to
discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and approvals of,
and has made all filings, applications and registrations with, all
Governmental Authorities that are required to permit them to own or lease
their properties and to conduct their businesses as presently conducted; all
such permits, licenses, certificates of authority, orders and approvals are
in full force and effect and, to Zions' knowledge, no suspension or
cancellation of any of them is threatened; and
(iii) has received, since December 31, 1996, no notification or
communication from any Governmental Authority (A) asserting that Zions or
any of its Subsidiaries is not in compliance with any of the statutes,
regulations or ordinances which such Governmental Authority enforces or (B)
threatening to revoke any license, franchise, permit or governmental
authorization (nor, to Zions' knowledge, do any grounds for any of the
foregoing exist).
(k) Appraisal Rights. The consideration to be received by holders of
Company Common Stock in connection with the Merger satisfies the requirements of
DGCL ss. 262(b)(2).
ARTICLE VI
COVENANTS
6.01 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of Company and Zions agrees to use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of each of the Merger and the Bank
Merger as promptly as practicable and otherwise to enable consummation of the
transactions contemplated hereby and shall cooperate fully with the other party
hereto to that end.
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6.02 Stockholder Approval. Company agrees to take, in accordance with
applicable law and the Company Certificate and the Company By-Laws, all action
necessary to convene an appropriate meeting of its stockholders to consider and
vote upon the approval and adoption of this Agreement and any other matters
required to be approved by Company's stockholders for consummation of the Merger
(including any adjournment or postponement, the "Company Meeting"), in each case
as promptly as practicable after the Registration Statement is declared
effective. Except to the extent the Company Board reasonably determines
otherwise in the exercise of its fiduciary duties following receipt of advice of
Company's legal counsel, the Company Board shall recommend at the Company
Meeting that all such matters be approved by its stockholders, shall not cancel
the Company Meeting and Company shall take all reasonable, lawful action to
solicit such approval by its stockholders.
6.03 Registration Statements. (a) Zions agrees to prepare a registration
statement on Form S-4 or other applicable form (the "Registration Statement") to
be filed by Zions with the SEC in connection with the issuance of Zions Common
Stock in the Merger (including the proxy statement and prospectus and other
proxy solicitation materials of Company constituting a part thereof (the "Proxy
Statement") and all related documents). Company agrees to cooperate, and to
cause its Subsidiaries to cooperate, with Zions, its counsel and its
accountants, in preparation of the Registration Statement and the Proxy
Statement. Company agrees to file the Proxy Statement in preliminary form with
the SEC as soon as reasonably practicable, and Zions agrees to file the
Registration Statement with the SEC as soon as reasonably practicable after any
SEC comments with respect to the preliminary Proxy Statement are resolved. Each
of Company and Zions agrees to use all reasonable efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as reasonably practicable after filing thereof. Zions also agrees to
use all reasonable efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions contemplated
by this Agreement. Company agrees to furnish to Zions all information concerning
Company, its Subsidiaries, officers, directors and stockholders as may be
reasonably requested in connection with the foregoing.
(b) Each of Company and Zions agrees, as to itself and its Subsidiaries,
that none of the information supplied or to be supplied by it for inclusion
or incorporation by reference in (i) the Registration Statement will, at the
time the Registration Statement and each amendment or supplement thereto, if
any, becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and (ii) the Proxy Statement and any amendment or supplement
thereto will, at the date of mailing to stockholders and at the time of the
Company Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading or any statement which, in the light
of the circumstances under which such statement is made, will be false or
misleading with respect to any material fact, or which will omit to state
any material fact necessary in order to make
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the statements therein not false or misleading or necessary to correct any
statement in any earlier statement in the Proxy Statement or any amendment
or supplement thereto. Each of Company and Zions further agrees that if it
shall become aware prior to the Effective Date of any information furnished
by it that would cause any of the statements in the Proxy Statement to be
false or misleading with respect to any material fact, or to omit to state
any material fact necessary to make the statements therein not false or
misleading, promptly to inform the other party thereof and to take the
necessary steps to correct the Proxy Statement.
(c) Zions agrees to advise Company, promptly after Zions receives notice
thereof, of the time when the Registration Statement has become effective or
any supplement or amendment has been filed, of the issuance of any stop
order or the suspension of the qualification of Zions Common Stock for
offering or sale in any jurisdiction, of the initiation or threat of any
proceeding for any such purpose, or of any request by the SEC for the
amendment or supplement of the Registration Statement or for additional
information.
(d) Zions agrees to provide such reasonable cooperation as is required
to facilitate the filing and effectiveness of Company's registration
statement on Form S-3 with regard to the offering by Company of shares of
Company Common Stock upon conversion of the Debentures. The parties
understand that such cooperation is expected to take the form of review and
approval of language regarding Zions and the plan to be included in such
filing. Zions agrees to take other actions reasonably necessary in
cooperation with Company to cause the record date for stockholders entitled
to vote at the Company Meeting to occur after the date of conversion of the
Debentures.
6.04 Press Releases. Each of Company and Zions agrees that it will not,
without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NASDAQ rules (provided that the issuing party shall nevertheless
provide the other party with notice of, and the opportunity to review, any such
press release or written statement).
6.05 Access; Information. (a) Each of Company and Zions agrees that upon
reasonable notice and subject to applicable laws relating to the exchange of
information, each party shall afford the other party and the other party's
officers, employees, counsel, accountants and other authorized representatives,
such access during normal business hours throughout the period prior to the
Effective Time to the books, records (including, without limitation, tax returns
and work papers of independent auditors), properties, personnel and to such
other information as the requesting party may reasonably request and, during
such period, the providing party shall furnish promptly to the requesting party
(i) a copy of each material report, schedule and other document filed by it
pursuant to the requirements of federal or state securities or banking laws, and
(ii) all other information concerning the business, properties and personnel of
it as the requesting party may reasonably request.
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(b) Each party agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this
Section 6.05 (as well as any other information obtained prior to the date
hereof in connection with the entering into of this Agreement) for any
purpose unrelated to the consummation of the transactions contemplated by
this Agreement. Subject to the requirements of law, each party will keep
confidential, and will cause its representatives to keep confidential, all
information and documents obtained pursuant to this Section 6.05 (as well as
any other information obtained prior to the date hereof in connection with
the entering into of this Agreement) unless such information (i) was already
known to such party, (ii) becomes available to such party from other sources
not known by such party to be bound by a confidentiality obligation, (iii)
is disclosed with the prior written approval of the providing party or (iv)
is or becomes readily ascertainable from published information or trade
sources. In the event that this Agreement is terminated or the transactions
contemplated by this Agreement shall otherwise fail to be consummated, each
party shall promptly cause all copies of documents or extracts thereof
containing information and data as to the other party to be returned to the
other party. No investigation by either party of the business and affairs of
the other party shall affect or be deemed to modify or waive any
representation, warranty, covenant or agreement in this Agreement, or the
conditions to either party's obligation to consummate the transactions
contemplated by this Agreement.
6.06 Acquisition Proposals. Company agrees that it shall not, and shall
cause its Subsidiaries and its and its Subsidiaries' officers, directors,
agents, advisors and affiliates not to, solicit or encourage inquiries or
proposals with respect to, or engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any person
relating to, any Acquisition Proposal; provided, however, that nothing in this
Agreement shall (x) require the Company Board to recommend stockholder approval
of the Merger following an Acquisition Proposal or (y) prevent Company or the
Company Board from (i) engaging in any discussions or negotiations with, or
providing any information to, any Person in response to an unsolicited bona fide
written Acquisition Proposal by any such Person, (ii) recommending such an
unsolicited bona fide written Acquisition Proposal to the holders of Company
Common Stock or (iii) responding to a tender offer in compliance with applicable
law if and only if, with respect to the actions described in clause (x) or (y),
as applicable, (A) the Company Board concludes in good faith that the
Acquisition Proposal, if consummated, would result in a transaction more
favorable to holders of Company Common Stock than the transaction contemplated
by this Agreement; (B) the Company Board determines in good faith based upon the
advice of outside counsel that such action is legally necessary for it to act in
a manner consistent with its fiduciary duties under applicable law; and (C)
prior to providing any information or data to any person or entering into
discussions or negotiations with any Person, the Company Board notifies Zions
immediately of such inquiries, proposals or offers received by, any such
information requested from, or any such discussions or negotiations sought to be
initiated or continued with Company or any Subsidiary thereof. Company shall
immediately cease and cause to be terminated any activities, discussions or
negotiations conducted prior to the date of this Agreement with any parties
other than with respect to any of the foregoing and shall use its reasonable
best efforts to
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enforce any confidentiality or similar agreement relating to an Acquisition
Proposal. Company shall promptly (within 24 hours) advise Zions following the
receipt by Company of any Acquisition Proposal and the substance thereof
(including the identity of the person making such Acquisition Proposal and the
terms, conditions and status thereof), and advise Zions of any developments with
respect to such Acquisition Proposal immediately upon the occurrence thereof.
6.07 Affiliate Agreements. (a) Not later than the 15th day prior to the
mailing of the Proxy Statement, Company shall deliver to Zions a schedule of
each person that, to the best of its knowledge, is or is reasonably likely to
be, as of the date of the Company Meeting, deemed to be an "affiliate" of
Company (each, a "Company Affiliate") as that term is used in Rule 145 under the
Securities Act or SEC Accounting Series Releases 130 and 135.
(b) Company shall use its reasonable best efforts to cause each person
who may be deemed to be a Company Affiliate to execute and deliver to Zions
on or before the date of mailing of the Proxy Statement an agreement in the
form attached hereto as Exhibit A.
6.08 Takeover Laws. No party hereto shall take any action that would
cause the transactions contemplated by this Agreement to be subject to
requirements imposed by any Takeover Law and each of them shall take all
necessary steps within its control to exempt (or ensure the continued exemption
of) the transactions contemplated by this Agreement from, or if necessary
challenge the validity or applicability of, any applicable Takeover Law, as now
or hereafter in effect.
6.09 Certain Policies. Prior to the Effective Date, Company shall,
consistent with generally accepted accounting principles and on a basis mutually
satisfactory to it and Zions, modify and change its loan, litigation and real
estate valuation policies and practices (including loan classifications and
levels of reserves) so as to be applied on a basis that is consistent with that
of Zions.
6.10 NASDAQ Listing. Zions agrees to use its reasonable best efforts to
list, prior to the Effective Date, on the NASDAQ, subject to official notice of
issuance, the shares of Zions Common Stock to be issued to the holders of
Company Common Stock in the Merger.
6.11 Regulatory Applications. (a) Zions and Company and their respective
Subsidiaries shall cooperate and use their respective reasonable best efforts to
prepare all documentation, to effect all filings and to obtain all permits,
consents, approvals and authorizations of all third parties and Governmental
Authorities necessary to consummate the transactions contemplated by this
Agreement. Zions and Company shall use their reasonable best efforts to make all
required bank regulatory filings, including the appropriate filing with the
Federal Reserve, within 30 days after the date hereof. Each of Zions and Company
shall have the right to review in advance, and to the extent practicable each
will consult with the other, in each case subject to applicable laws
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relating to the exchange of information, with respect to all material written
information submitted to any third party or any Governmental Authority in
connection with the transactions contemplated by this Agreement. In exercising
the foregoing right, each of the parties hereto agrees to act reasonably and as
promptly as practicable. Each party hereto agrees that it will consult with the
other party hereto with respect to the obtaining of all material permits,
consents, approvals and authorizations of all third parties and Governmental
Authorities necessary or advisable to consummate the transactions contemplated
by this Agreement and each party will keep the other party appraised of the
status of material matters relating to completion of the transactions
contemplated hereby.
(b) Each party agrees, upon request, to furnish the other party with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or
advisable in connection with any filing, notice or application made by or on
behalf of such other party or any of its Subsidiaries to any third party or
Governmental Authority.
6.12 Indemnification; Director and Officers' Insurance. (a) From and
after the Effective Time through the fourth anniversary of the Effective Date,
Zions agrees to indemnify and hold harmless each present and former director and
officer of Company or any Subsidiary of Company determined as of the Effective
Time (the "Indemnified Parties"), against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities (collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time (including with respect to this Agreement or any
of the transactions contemplated hereby) (but excluding any Costs arising out of
any violation or alleged violation of the Exchange Act or the rules and
regulations thereunder with respect to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇), whether asserted,
claimed or arising prior to, at or after the Effective Time, to the extent to
which such Indemnified Parties were entitled under Delaware law and the Company
Certificate or the Company By-Laws in effect on the date hereof, and Zions shall
also advance expenses as incurred to the extent permitted under Delaware law and
the Company Certificate and the Company By-Laws.
(b) Any Indemnified Party wishing to claim indemnification under Section
6.12(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall as promptly as possible notify Zions thereof, but the
failure to so notify shall not relieve Zions of any liability it may have to
such Indemnified Party if such failure does not materially prejudice Zions.
In the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), (i) Zions shall have
the right to assume the defense thereof and Zions shall not be liable to
such Indemnified Parties for any legal expenses of other counsel or any
other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if Zions elects not to
assume such defense or counsel for the Indemnified Parties advises in
writing that there are issues which
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raise conflicts of interest between Zions and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them, and Zions shall
pay the reasonable fees and expenses of one such counsel for the Indemnified
Parties in any jurisdiction promptly as statements thereof are received,
(ii) the Indemnified Parties will cooperate in the defense of any such
matter and (iii) Zions shall not be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld); and provided, further, that Zions shall not have any obligation
hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and nonappealable, that the indemnification of such Indemnified
Party in the manner contemplated hereby is not permitted or is prohibited by
applicable law.
(c) For a period of three years after the Effective Time, Zions shall
use its reasonable best efforts to cause to be maintained in effect the
current policies of directors' and officers' liability insurance maintained
by Company (provided that Zions may substitute therefor policies of
comparable coverage with respect to claims arising from facts or events
which occurred before the Effective Time); provided, however, that in no
event shall Zions be obligated to expend, in order to maintain or provide
insurance coverage pursuant to this Section 6.12(c), any amount per annum in
excess of 150% of the amount of the annual premiums paid as of the date
hereof by Company for such insurance (the "Maximum Amount"). If the amount
of the annual premiums necessary to maintain or procure such insurance
coverage exceeds the Maximum Amount, Zions shall use all reasonable efforts
to maintain the most advantageous policies of directors' and officers'
insurance obtainable for an annual premium equal to the Maximum Amount.
Notwithstanding the foregoing, prior to the Effective Time, Zions may
request Company to, and Company shall, purchase insurance coverage, on such
terms and conditions as shall be acceptable to Zions, extending for a period
of three years Company's directors' and officers' liability insurance
coverage in effect as of the date hereof (covering past or future claims
with respect to periods before the Effective Time) and such coverage shall
satisfy Zions' obligations under this Subsection (c).
(d) If Zions or any of its successors or assigns (i) shall consolidate
with or merge into any other corporation or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then and in each such
case, proper provision shall be made so that the successors and assigns of
Zions shall assume the obligations set forth in this Section 6.12.
6.13 Benefit Plans. Zions shall, from and after the Effective Time, (i)
honor in accordance with their terms all employment or severance agreements
entered into prior to the date hereof and Previously Disclosed and (ii) provide
former employees of Company who remain as employees of Zions with employee
benefit plans no less favorable in the aggregate than those provided to
similarly situated employees of Zions (including the medical and health benefits
available to other similarly situated employees of Zions and coverage of any
pre-existing health
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or medical conditions covered by Company benefit plans), subject, with respect
to any executive officer of Company, to the terms of any agreement(s) entered
into by or among that executive officer and Zions and/or Grossmont Bank on the
date of this Agreement or otherwise prior to the Effective Time, specifically
modifying, replacing or relinquishing some or all of his agreements, benefits or
plans. If any employee of Company or any Subsidiary of Company becomes a
participant in any employment benefit plan, practice or policy of the Surviving
Corporation, such employee shall be given credit under such plan, practice or
policy for all service prior to the Effective Date with Company or such
Subsidiary of Company for purposes of eligibility and vesting, but not for
benefit accrual purposes, for which such service is taken into account or
recognized, provided that there be no duplication of such benefits as are
provided under any employee benefit plans, practices, or policies of Company or
any Subsidiary of Company that continue in effect following the Effective Time.
In addition, Zions shall roll Company's existing 401(k) plan into Zions' 401(k)
plan.
6.14 Accountants' Letters. Each of Company and Zions shall use its
reasonable best efforts to cause to be delivered to the other party, and to
Zions' directors and officers who sign the Registration Statement, a letter of
their respective independent auditors, dated (i) the date on which the
Registration Statement shall become effective and (ii) a date shortly prior to
the Effective Date, and addressed to such other party, and such directors and
officers, in form and substance customary for "comfort" letters delivered by
independent accountants in accordance with Statement of Accounting Standards No.
72.
6.15 Notification of Certain Matters. Each of Company and Zions shall
give prompt notice to the other of any fact, event or circumstance known to it
that (i) is reasonably likely, individually or taken together with all other
facts, events and circumstances known to it, to result in any Material Adverse
Effect with respect to it or (ii) would cause or constitute a material breach of
any of its representations, warranties, covenants or agreements contained
herein.
6.16 Stockholder Agreements. The directors and certain officers and
stockholders of Company, in their capacities as stockholders, in exchange for
good and valuable consideration, have executed and delivered to Zions
stockholder agreements substantially in the form of Exhibit B hereto (the
"Stockholder Agreements"), committing such persons, among other things, (i) to
vote their shares of Company Common Stock in favor of the Agreement at the
Company Meeting, (ii) to certain representations concerning the ownership of
Company Common Stock and Zions Common Stock to be received in the Merger and
(iii) certain other matters.
6.17 Directors of Grossmont Bank. Zions agrees to cause Grossmont Bank
to add to the board of directors of Grossmont Bank three individuals from the
Company Board who are reasonably acceptable to Zions.
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ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of Zions and Company to consummate the Merger is
subject to the fulfillment or written waiver by Zions and Company prior to the
Effective Time of each of the following conditions:
(a) Stockholder Approvals. This Agreement and the Merger shall have been
duly adopted by the requisite vote of the stockholders of Company.
(b) Regulatory Approvals. All regulatory approvals required to
consummate the Merger, the Bank Merger and the other transactions
contemplated hereby shall have been obtained and shall remain in full force
and effect and all statutory waiting periods in respect thereof shall have
expired and no such approvals shall contain any conditions, restrictions or
requirements which the Zions Board reasonably determines would (i) following
the Effective Time, have a Material Adverse Effect on the Surviving
Corporation and its Subsidiaries taken as a whole or (ii) reduce the
benefits of the transactions contemplated hereby to such a degree that Zions
would not have entered into this Agreement had such conditions, restrictions
or requirements been known at the date hereof.
(c) No Injunction. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the transactions contemplated by this Agreement.
(d) Registration Statement. The Registration Statement shall have become
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) Blue Sky Approvals. All permits and other authorizations under state
securities laws necessary to consummate the transactions contemplated hereby
and to issue the shares of Zions Common Stock to be issued in the Merger
shall have been received and be in full force and effect.
7.02 Conditions to Obligation of Company. The obligation of Company to
consummate the Merger is also subject to the fulfillment or written waiver by
Company prior to the Effective Time of each of the following conditions:
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(a) Representations and Warranties. The representations and warranties
of Zions set forth in this Agreement (subject to the standard set forth in
Section 5.02) shall be true and correct as of the date of this Agreement and
as of the Effective Date as though made on and as of the Effective Date
(except that representations and warranties that by their terms speak only
as of the date of this Agreement or some other date shall be true and
correct as of such date), and Company shall have received a certificate,
dated the Effective Date, signed on behalf of Zions by the Chief Executive
Officer and the Chief Financial Officer of Zions to such effect.
(b) Performance of Obligations of Zions. Zions shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Effective Time, and Company shall have
received a certificate, dated the Effective Date, signed on behalf of Zions
by the Chief Executive Officer and the Chief Financial Officer of Zions to
such effect.
(c) Opinion of Company's Accountants. Company shall have received an
opinion of KPMG Peat Marwick LLP, dated the Effective Date, to the effect
that, on the basis of facts, representations and assumptions set forth in
such opinion, (i) the Merger constitutes a "reorganization" within the
meaning of Section 368 of the Code and (ii) no gain or loss will be
recognized by stockholders of Company who receive shares of Zions Common
Stock in exchange for shares of Company Common Stock, except with respect to
cash received in lieu of fractional share interests. In rendering its
opinion, KPMG Peat Marwick LLP may require and rely upon representations
contained in letters from Company, Zions and stockholders of Company.
(d) Accountants' Letters. Company shall have received the letters
referred to in Section 6.14 from Zions' independent auditors.
(e) Rights Plan. No Stock Acquisition Date (as such term is defined in
the Shareholder Protection Rights Plan) shall have occurred under the
Shareholder Protection Rights Plan prior to the Effective Time.
(f) Accounting Treatment. Company shall have received from its
independent auditors, letters, dated the date of or shortly prior to each of
the mailing date of the Proxy Statement and the Effective Date, stating its
opinion that the Merger shall qualify for pooling-of-interests accounting
treatment.
(g) Listing. The shares of Zions Common Stock to be issued in the Merger
shall have been approved for listing on the NASDAQ, subject to official
notice of issuance.
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7.03 Conditions to Obligation of Zions. The obligation of Zions to
consummate the Merger is also subject to the fulfillment or written waiver by
Zions prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Company set forth in this Agreement (subject to the standard set forth in
Section 5.02) shall be true and correct as of the date of this Agreement and
as of the Effective Date as though made on and as of the Effective Date
(except that representations and warranties that by their terms speak only
as of the date of this Agreement or some other date shall be true and
correct as of such date) and Zions shall have received a certificate, dated
the Effective Date, signed on behalf of Company by the Chief Executive
Officer and the Chief Financial Officer of Company to such effect.
(b) Performance of Obligations of Company. Company shall have performed
in all material respects all obligations required to be performed by it
under this Agreement at or prior to the Effective Time, and Zions shall have
received a certificate, dated the Effective Date, signed on behalf of
Company by the Chief Executive Officer and the Chief Financial Officer of
Company to such effect.
(c) Opinion of Zions' Counsel. Zions shall have received an opinion of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel to Zions, dated the Effective Date, to
the effect that, on the basis of facts, representations and assumptions set
forth in such opinion, the Merger constitutes a reorganization under Section
368 of the Code. In rendering its opinion, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ may require
and rely upon representations contained in letters from Company, Zions and
stockholders of Company.
(d) Accountants' Letters. Zions shall have received the letters referred
to in Section 6.14 from Company's independent auditors.
(e) Accounting Treatment. Zions shall have received from KPMG Peat
Marwick LLP, Zions' independent auditors, letters, dated the date of or
shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated, and the Acquisition
may be abandoned:
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(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of Zions and Company, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b) Breach. At any time prior to the Effective Time, by Zions or
Company, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event of either: (i) a breach by the
other party of any representation or warranty contained herein (subject to
the standard set forth in Section 5.02), which breach cannot be or has not
been cured within 30 days after the giving of written notice to the
breaching party of such breach; or (ii) a breach by the other party of any
of the covenants or agreements contained herein, which breach cannot be or
has not been cured within 30 days after the giving of written notice to the
breaching party of such breach, provided that such breach (whether under (i)
or (ii)) would be reasonably likely, individually or in the aggregate with
other breaches, to result in a Material Adverse Effect.
(c) Delay. At any time prior to the Effective Time, by Zions or Company,
if its Board of Directors so determines by vote of a majority of the members
of its entire Board, in the event that the Merger is not consummated by
August 31, 1998, except to the extent that the failure of the Merger then to
be consummated arises out of or results from the knowing action or inaction
of the party seeking to terminate pursuant to this Section 8.01(c).
(d) No Approval. By Company or Zions, if its Board of Directors so
determines by a vote of a majority of the members of its entire Board, in
the event (i) the approval of any Governmental Authority required for
consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority or (ii) the stockholder approval required by Section
7.01(a) herein is not obtained at the Company Meeting.
(e) Failure to Recommend, Etc. At any time prior to the Company Meeting,
by Zions if the Company Board shall have failed to make its recommendation
referred to in Section 6.02, withdrawn such recommendation or modified or
changed such recommendation in a manner adverse in any respect to the
interests of Zions.
(f) By Zions. By Zions, by written notice to Company, if Company takes,
causes to be taken or allows to be taken any action that would be prohibited
under Section 6.06 hereof; or
(g) By Company. By Company, by written notice to Zions prior to the
approval by the stockholders of Company of the principal terms of this
Agreement, if Company receives an Acquisition Proposal on terms and
conditions which the Company Board determines, after receiving the advice of
its outside counsel, (i) that to proceed with the Merger will violate the
fiduciary duties of the Company Board to Company's shareholders and (ii) to
accept such proposal; provided, however, that Company shall not be entitled
to terminate this Agreement
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pursuant to this clause (g) unless it shall have provided Zions with written
notice of such a possible determination (which written notice will inform
Zions of the Material terms and conditions of the proposal, including the
identity of the proponent) two business days prior to such determination.
8.02 Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, subject to the provisions of Section 8.02(b) and Section 8.02(c),
no party to this Agreement shall have any liability or further obligation to any
other party hereunder except (i) as set forth in Section 9.01 and (ii) that
termination will not relieve a breaching party from liability for any willful
breach of this Agreement giving rise to such termination.
(b) If this Agreement shall be terminated (i) by Zions pursuant to
Section 8.01(b), Section 8.01(e) or Section 8.01(f) and, at the time of the
occurrence of the circumstance permitting termination pursuant to such
Section, there shall exist an Acquisition Proposal with respect to Company
or any of its Subsidiaries, or (ii) by Company pursuant to Section
8.01(d)(ii) or Section 8.01(g) and, at the time of the occurrence of the
circumstance permitting termination pursuant to such Section, there shall
exist an Acquisition Proposal with respect to Company or any of its
Subsidiaries, then Company shall promptly pay to Zions a termination fee
equal to $1.8 million, which (except in the case of termination pursuant to
Section 8.01(f), in which case such amount shall offset any damages to Zions
to the extent of payment) the parties agree shall represent liquidated and
exclusive damages recoverable by Zions relating to the actions resulting in
termination.
(c) Company and Zions agree that the agreements contained in paragraph
(b) above are an integral part of the transactions contemplated by this
Agreement, that without such agreements Zions would not have entered into
this Agreement, and that such amount constitute reasonable liquidated
damages and reasonable compensation to Zions for the loss sustained thereby
and not a penalty. If Company fails to pay Zions the amount due under
paragraph (b) within three business days of such termination, Company shall
pay the costs and expenses (including legal fees and expenses) incurred by
Zions in connection with any action, including the filing of any lawsuit,
taken to collect payment of such amount, together with interest on the
amount of any such unpaid amount at the publicly announced prime rate of
Zions First National Bank from the date of such termination.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than
Sections 6.12 and 6.13 and this
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Article IX which shall survive the Effective Time) or the termination of this
Agreement if this Agreement is terminated prior to the Effective Time (other
than Sections 6.03(b), 6.05(b), 8.02, and this Article IX which shall survive
such termination).
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of
this Agreement may be (i) waived by the party benefitted by the provision, or
(ii) amended or modified at any time, by an agreement in writing between the
parties hereto executed in the same manner as this Agreement, except that after
the Company Meeting, this Agreement may not be amended if it would violate the
DGCL or reduce the consideration to be received by Company stockholders in the
Merger.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law; Waiver of Jury Trial. This Agreement shall be
governed by, and interpreted in accordance with, the laws of the State of
Delaware applicable to contracts made and to be performed entirely within such
State (except to the extent that mandatory provisions of Federal law or of the
UBCA are applicable). Each of the parties hereto hereby irrevocably waives any
and all right to trial by jury in any legal proceeding arising out of or related
to this Agreement or the transactions contemplated hereby. Venue for any action
between the parties to this Agreement shall be a court of competent jurisdiction
in the City of San Diego, California.
9.05 Expenses. Each party hereto will bear all expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby.
9.06 Notices. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to Company, to:
Tri-▇▇▇▇▇ Enterprises
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Zions, to:
Zions Bancorporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement
represents the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and thereby and this Agreement supersedes any
and all other oral or written agreements heretofore made. Nothing in this
Agreement expressed or implied, is intended to confer upon any person, other
than the parties hereto or their respective successors, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
9.08 Interpretation; Effect. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." No provision of this Agreement shall
be construed to require Company, Zions or any of their respective Subsidiaries,
affiliates or directors to take any action which would violate applicable law
(whether statutory or common law), rule or regulation.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
FP BANCORP, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman
ZIONS BANCORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name:▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title Chief Financial Officer
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