Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
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dated as of April 27, 1999
by and among
Zions Bancorporation,
Regency Bancorp
and
Regency Bank
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TABLE OF CONTENTS
PAGE
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RECITALS ................................................................. 1
ARTICLE I Certain Definitions
1.01 CERTAIN DEFINITIONS .............................................. 1
ARTICLE II The Merger
2.01 THE MERGER ....................................................... 8
2.02 EFFECTIVE DATE AND EFFECTIVE TIME ................................ 9
2.03 PLAN OF MERGER ................................................... 9
ARTICLE III Consideration; Exchange Procedures
3.01 MERGER CONSIDERATION ............................................. 9
3.02 RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS .......................... 10
3.03 FRACTIONAL SHARES ................................................ 10
3.04 EXCHANGE PROCEDURES .............................................. 10
3.05 ANTI-DILUTION PROVISIONS ......................................... 12
3.06 OPTIONS .......................................................... 12
ARTICLE IV Actions Pending Acquisition
4.01 FOREBEARANCES OF COMPANY ......................................... 13
4.02 FOREBEARANCES OF ZIONS ........................................... 15
ARTICLE V Representations and Warranties
5.01 DISCLOSURE SCHEDULES ............................................. 16
5.02 STANDARD ......................................................... 16
5.03 REPRESENTATIONS AND WARRANTIES OF COMPANY AND COMPANY BANK ....... 16
5.04 REPRESENTATIONS AND WARRANTIES OF ZIONS .......................... 26
ARTICLE VI Covenants
6.01 REASONABLE BEST EFFORTS .......................... ............... 29
6.02 SHAREHOLDER APPROVAL ............................................. 29
6.03 REGISTRATION STATEMENTS .......................................... 29
6.04 PRESS RELEASES ................................................... 30
6.05 ACCESS; INFORMATION .............................................. 31
6.06 ACQUISITION PROPOSALS ............................................ 31
6.07 AFFILIATE AGREEMENTS ............................................. 33
6.08 [RESERVED] ....................................................... 33
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6.09 CERTAIN POLICIES ................................................. 33
6.10 NASDAQ LISTING ................................................... 33
6.11 REGULATORY APPLICATIONS .......................................... 33
6.12 INDEMNIFICATION; DIRECTOR AND OFFICERS' INSURANCE ................ 34
6.13 BENEFIT PLANS .................................................... 35
6.14 ACCOUNTANTS' LETTERS ............................................. 35
6.15 NOTIFICATION OF CERTAIN MATTERS .................................. 35
6.16 SHAREHOLDER AGREEMENTS ........................................... 35
6.17 BANK MERGER ...................................................... 36
6.18 REPORTING ........................................................ 36
ARTICLE VII Conditions to Consummation of the Merger
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER ....... 36
7.02 CONDITIONS TO OBLIGATION OF COMPANY .............................. 37
7.03 CONDITIONS TO OBLIGATION OF ZIONS ................................ 38
ARTICLE VIII Termination
8.01 TERMINATION ...................................................... 39
8.02 EFFECT OF TERMINATION AND ABANDONMENT ............................ 41
ARTICLE IX Miscellaneous
9.01 SURVIVAL ......................................................... 42
9.02 WAIVER; AMENDMENT ................................................ 42
9.03 COUNTERPARTS ..................................................... 42
9.04 GOVERNING LAW; WAIVER OF JURY TRIAL .............................. 42
9.05 EXPENSES ......................................................... 42
9.06 NOTICES .......................................................... 42
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES ............... 43
9.08 INTERPRETATION; EFFECT ........................................... 44
EXHIBIT A Form of Stock Option Agreement
EXHIBIT B Form of Agreement of Bank Merger
EXHIBIT C Form of Affiliate Agreement
EXHIBIT D Form of Shareholder Agreement
EXHIBIT E Form of Employment Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of April __, 1999 (this
"AGREEMENT"), by and among REGENCY BANCORP ("COMPANY"), REGENCY BANK (the
"Company Bank") and ZIONS BANCORPORATION ("Zions").
RECITALS
A. REGENCY BANCORP. Company is a California corporation, having its
principal place of business in Fresno, California.
B. ZIONS BANCORPORATION. Zions is a Utah corporation, having its
principal place of business in Salt Lake City, Utah.
C. REGENCY BANK. Company Bank is a California state-chartered member
bank and is a wholly-owned subsidiary of Company.
D. INTENTIONS OF THE PARTIES. It is the intention of the parties to
this Agreement that the business combination contemplated hereby be accounted
for under the "pooling-of-interests" accounting method and be treated as a
"reorganization" under Section 368 of the Internal Revenue Code of 1986 as
amended (the "CODE").
E. BOARD ACTION. The respective Boards of Directors of each of Zions
and Company have determined that it is in the best interests of their respective
companies and their shareholders to consummate the strategic business
combination transaction provided for herein.
F. STOCK OPTION AGREEMENT. As an inducement to the willingness of Zions
to consummate the transactions contemplated by this Agreement, the Company will
grant to Zions an option pursuant to the Stock Option Agreement, substantially
in the form of Exhibit A hereto (the "STOCK OPTION AGREEMENT").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
I.1 CERTAIN DEFINITIONS. The following terms are used in this Agreement
with the meanings set forth below:
"ACQUISITION PROPOSAL" means any tender or exchange offer for 25% or
more of the Company Common Stock, proposal for a merger, consolidation or other
business combination involving Company or any of its Subsidiaries or any
proposal or offer to acquire 25% or more of the Company Common Stock, or a
substantial portion of the assets or deposits of, Company or any of its
Subsidiaries, other than the transactions contemplated by this Agreement.
"AFFILIATES" of or a Person "Affiliated" with a specific Person is a
Person that directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified.
"AGREEMENT" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"AGREEMENT OF BANK MERGER" means the Agreement of Bank Merger to be
entered into between California Bank & Trust and the Company Bank substantially
in the form of Exhibit B hereto, but subject to any changes that may be
necessary to conform to any requirements of any Governmental Authority having
authority over the Bank Merger.
"BANK MERGER" means the merger of Company Bank with and into California
Bank & Trust.
"BENEFIT PLANS" has the meaning set forth in Section 5.03(m).
"BUSINESS DAY" means any Monday, Tuesday, Wednesday, Thursday or Friday
or any other day which is not a day on which banking institutions in Utah or
California are authorized or obligated by law or executive order to close.
"BUSINESS COMBINATION" has the meaning set forth in Section 3.05.
"CGCL" means the California General Corporation Law.
"CALIFORNIA BANK & TRUST" means a California state-chartered bank and a
wholly owned subsidiary of Zions.
"CALIFORNIA SECRETARY" means the California Secretary of State.
"CODE" has the meaning set forth in the recitals.
"COMMISSIONER" means the California Commissioner of Financial
Institutions.
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"COMPANY" has the meaning set forth in the preamble to this Agreement.
"COMPANY AFFILIATE" has the meaning set forth in Section 6.07(a).
"COMPANY ARTICLES" means the Articles of Incorporation of Company.
"COMPANY BANK" means Regency Bank, a California state-chartered member
bank and a wholly owned subsidiary of Company.
"COMPANY BOARD" means the Board of Directors of Company.
"COMPANY BY-LAWS" means the By-laws of Company.
"COMPANY COMMON STOCK" means the common stock, no par value, of
Company.
"COMPANY MEETING" has the meaning set forth in Section 6.02.
"COMPANY REPRESENTATIVES" has the meaning set forth in Section 6.06.
"COMPANY STOCK OPTION" has the meaning set forth in Section 3.06.
"COMPANY STOCK PLAN" means Company's 1990 Stock Option Plan, as
amended.
"COSTS" has the meaning set forth in Section 6.12(a).
"DFI" means the California Department of Financial Institutions.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 5.01.
"EFFECTIVE DATE" means the date on which the Effective Time occurs.
"EFFECTIVE TIME" means the effective time of the Merger, as provided
for in Section 2.02.
"EFFECTIVE TIME OF THE BANK MERGER" means the date and time the
Commissioner specifies for the Bank Merger.
"EMPLOYEES" has the meaning set forth in Section 5.03(m).
"ENVIRONMENTAL LAW" has the meaning set forth in Section 5.03(o).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"ERISA AFFILIATE" has the meaning set forth in Section 5.03(m).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"EXCHANGE AGENT" has the meaning set forth in Section 3.04.
"EXCHANGE FUND" has the meaning set forth in Section 3.04.
"EXCHANGE RATIO" has the meaning set forth in Section 3.01.
"FDIC" means the Federal Deposit Insurance Corporation.
"FEDERAL RESERVE" means the Board of Governors of the Federal Reserve
System.
"GOVERNMENTAL AUTHORITY" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"HAZARDOUS SUBSTANCE" has the meaning set forth in Section 5.03(o).
"INDEMNIFIED PARTY" has the meaning set forth in Section 6.12(a).
"INSURANCE POLICY" has the meaning set forth in Section 5.03(s).
"KBW 50 INDEX" means the KBW 50 Index of Keefe, Bruyette & Woods, Inc.
(as provided by Keefe, Bruyette & Woods, Inc. upon request).
"KBW INDEX CLOSING AVERAGE" means the average of the KBW 50 Index for
the fifteen (15) consecutive NASDAQ trading day period ending on the third (3rd)
day prior to the Effective Date.
"KBW INDEX STARTING AVERAGE" means the average of the KBW 50 Index for
the five (5) consecutive NASDAQ trading day period commencing on the first full
trading day following the first public announcement of the Merger by the
parties.
"KNOWLEDGE" means, with respect to any Person, the actual knowledge of
any executive officer of such Person or of any other employee of such Person
with responsibility for the particular subject area or subject matter.
"LIENS" means any charge, mortgage, pledge, security interest,
restriction, claim, lien or encumbrance.
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"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 the Agreement of Bank Merger or
otherwise materially threaten or materially impede the consummation of the
Merger, the Bank Merger and the other transactions contemplated by this
Agreement; PROVIDED, HOWEVER, that Material Adverse Effect shall not be
deemed to include the impact of (a) changes in banking and similar laws
affecting financial institutions generally or interpretations thereof by
courts or governmental authorities, (b) changes in generally accepted
accounting principles or regulatory accounting requirements applicable to
banks and their holding companies generally (c) any modifications or
changes to valuation policies and practices in connection with the Merger
or restructuring charges taken in connection with the Merger, in each case
in accordance with generally accepted accounting principles, (d) changes
agreed to in writing by Zions and Company and (e) changes resulting from
general economic conditions throughout the United States affecting banks
and their holding companies.
"MAXIMUM AMOUNT" has the meaning set forth in Section 6.12(c).
"MERGER" has the meaning set forth in Section 2.01.
"MERGER CONSIDERATION" has the meaning set forth in Section 2.01.
"MULTIEMPLOYER PLANS" has the meaning set forth in Section 5.03(m).
"NASDAQ" means The Nasdaq Stock Market, Inc.'s National Market System.
"NEW CERTIFICATE" has the meaning set forth in Section 3.04.
"OLD CERTIFICATE" has the meaning set forth in Section 3.04.
"OPTION CONSIDERATION" means, with respect to each Company Stock
Option, an amount in shares of Zions Common Stock equal to the quotient obtained
by dividing (a) the Option Delta by (b) the Zions Closing Average.
"OPTION DELTA" means, with respect to each Company Stock Option, the
difference between (a) the product of (i) the Zions Closing Average and (ii) the
Exchange Ratio and (b) the exercise price with respect to such Company Stock
Option.
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"PERSON" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated organization.
"PENSION PLAN" has the meaning set forth in Section 5.03(m).
"PLANS" has the meaning set forth in Section 5.03(m).
"PREVIOUSLY DISCLOSED" by a party shall mean information set forth in
its Disclosure Schedule.
"PROXY STATEMENT" has the meaning set forth in Section 6.03.
"REGISTRATION STATEMENT" has the meaning set forth in Section 6.03.
"REGULATORY AUTHORITY" has the meaning set forth in Section 5.03(i).
"REGULATORY DOCUMENTS" means documents filed with the SEC, the Federal
Reserve or the FDIC, as applicable, of the types referred to in Section 5.03(g)
and Section 5.04(f).
"REPLACEMENT OPTION" has the meaning set forth in Section 3.06.
"REPRESENTATIVES" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"RIGHTS" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price or value of,
shares of capital stock of such Person.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
rules and regulations thereunder.
"STOCK OPTION AGREEMENT" has the meaning set forth in the recitals.
"SHAREHOLDER AGREEMENTS" has the meaning set forth in Section 6.16.
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"SUBSIDIARY" AND "SIGNIFICANT SUBSIDIARY" have the meanings ascribed to
them in Rule 1-02 of Regulation S-X of the SEC.
"SUPERIOR PROPOSAL" means any BONA FIDE Acquisition Proposal to
effect a merger, consolidation or sale of all or substantially all of the
assets or capital stock of Company which is on terms which the Company Board
determines by a majority vote of its directors in their good faith judgment
(based on the written opinion, with only customary qualifications, of a
financial advisor of nationally recognized reputation that the consideration
provided in such Acquisition Proposal likely exceeds the value of the
consideration provided for in the Merger), after taking into account all
relevant factors, including any conditions to such Acquisition Proposal, the
timing of the closing thereof, the risk of nonconsummation, the ability of
the Person making the Acquisition Proposal to finance the transaction
contemplated thereby and any required governmental or other consents, filings
and approvals, to be more favorable to the shareholders of Company than the
Merger (or any revised proposal made by Zions).
"SURVIVING CORPORATION" has the meaning set forth in Section 2.01.
"TAX" AND "TAXES" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts,
sales, use, ad valorem, goods and services, capital, production, transfer,
franchise, windfall profits, license, withholding, payroll, employment,
disability, employer health, excise, estimated, severance, stamp, occupation,
property, environmental, unemployment or other taxes, customs duties, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any taxing
authority whether arising before, on or after the Effective Date.
"TAX RETURNS" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with respect to any Tax.
"TREASURY STOCK" shall mean shares of Company Common Stock held by
Company or any of its Subsidiaries or by Zions or any of its Subsidiaries, in
each case other than in a fiduciary (including custodial or agency) capacity or
as a result of debts previously contracted in good faith.
"UBCA" means the Utah Business Corporation Act.
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"WARRANTS" means any of the 176,211 warrants to purchase 176,211 shares
of Company Common Stock, the resale of which shares was registered May 11, 1998
with the SEC pursuant to Company's registration statement on Form S-3 No.
333-52505.
"ZIONS" has the meaning set forth in the preamble to this Agreement.
"ZIONS BOARD" means the Board of Directors of Zions.
"ZIONS CLOSING AVERAGE" means the average of the last sales price per
share for Zions Common Stock for the fifteen (15) consecutive NASDAQ trading day
period ending on the third (3rd) day prior to the Effective Date.
"ZIONS STARTING AVERAGE" means the average of the last sales price per
share for Zions Common Stock for the five (5) consecutive NASDAQ trading day
period commencing on the first full trading day following the first public
announcement of the Merger by the parties.
"ZIONS COMMON STOCK" means the common stock, no par value per share, of
Zions together with any rights attached thereto under or by virtue of the
Shareholder Protection Rights Agreement, dated September 27, 1996, between Zions
and Zions First National Bank, as rights agent.
"ZIONS PREFERRED STOCK" means the preferred stock, no par value per
share, of Zions.
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ARTICLE II
THE MERGER
II.1 THE MERGER. (a) Subject to the terms and conditions of this
Agreement, in accordance with the applicable provisions of the CGCL and the UBCA
at the Effective Time, Company shall merge with and into Zions (the "MERGER"),
the separate corporate existence of Company shall cease and Zions shall survive
and continue to exist as a Utah corporation (Zions, as the surviving corporation
in the Merger, sometimes being referred to herein as the "SURVIVING
CORPORATION"). Zions may at any time prior to the Effective Time change the
method of effecting the combination with Company (including, without limitation,
the provisions of this Article II) if and to the extent it deems such change to
be necessary, appropriate or desirable; PROVIDED, HOWEVER, that no such change
shall (i) alter or change the amount or kind of consideration to be issued to
holders of Company Common Stock as provided for in this Agreement (the "MERGER
CONSIDERATION"), (ii) adversely affect the tax treatment of Company's
shareholders as a result of receiving the Merger Consideration, including,
without limitation, any adverse effect upon the tax-free treatment, holding
period or tax basis, or (iii) materially impede or delay consummation of the
transactions contemplated by this Agreement.
(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
California Secretary of an agreement of merger in accordance with Section
1103 of the CGCL or such later date and time as may be set forth in such
articles and such agreement. The Merger shall have the effects prescribed
in the UBCA and the CGCL.
(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.
II.2 EFFECTIVE DATE AND EFFECTIVE TIME. On such date on or after August
15, 1999 as Zions selects (and promptly provides notice thereof to Company),
which shall be within ten days after the last to occur of the 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
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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.
II.3 PLAN OF MERGER. At the request of Zions, Zions and Company shall
enter into a separate agreement of merger or articles of merger reflecting the
terms hereof for purposes of any filing requirement of the CGCL or the UBCA.
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
III.1 MERGER CONSIDERATION. Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the Merger and
without any action on the part of any Person:
(a) OUTSTANDING COMPANY COMMON STOCK. (i) Each share, excluding
Treasury Stock, of Company Common Stock issued and outstanding immediately
prior to the Effective Time shall become and be converted into 0.3233 of a
share of Zions Common Stock (the "EXCHANGE RATIO"), subject to adjustment
as set forth in clause (ii) below and as set forth in Section 3.05.
(ii) In the event that the Zions Closing Average stated as a percentage
of the Zions Starting Average is greater than the sum of (A) the KBW Index
Closing Average stated as a percentage of the KBW Index Starting Average
and (B) fifteen percent (15%), then the Exchange Ratio shall equal the
product of (y) 0.3233 and (z) a fraction, the numerator of which is the
product of (I) 1.15 and (II) the Zions Starting Average and the denominator
of which is the Zions Closing Average. In the event that the Zions Closing
Average stated as a percentage of the Zions Starting Average is less than
the difference between (I) the KBW Index Closing Average stated as a
percentage of the KBW Index Starting Average and (II) fifteen percent
(15%), then the Exchange Ratio shall equal the product of (y) 0.3233 and
(z) a fraction, the numerator of which is the product of (I) .85 and (II)
the Zions Starting Average and the denominator of which is the Zions
Closing Average.
(b) OUTSTANDING ZIONS COMMON STOCK. Each share of Zions Common Stock
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding and unaffected by the Merger.
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(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.
III.2 RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS. At the Effective Time,
holders of Company Common Stock shall cease to be, and shall have no rights as,
shareholders of 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.
III.3 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of Zions Common Stock and no certificates or scrip therefor,
or other evidence of ownership thereof, will be issued in the Merger; instead,
Zions shall pay to each holder of Company Common Stock who would otherwise be
entitled to a fractional share of Zions Common Stock (after taking into account
all Old Certificates delivered by such holder) an amount in cash (without
interest) determined by multiplying such fraction by the average of the closing
prices of Zions Common Stock, as reported on NASDAQ (as reported in THE WALL
STREET JOURNAL or, if not reported therein, in another authoritative source),
for the fifteen (15) NASDAQ trading days immediately preceding the Effective
Date.
III.4 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 three (3) days after the Effective Date, Zions shall send or
cause to be sent to each former holder of record of shares of Company
Common Stock immediately prior to the Effective Time transmittal materials
for use in exchanging such shareholder's Old Certificates for the
consideration set forth in this Article III. Zions shall use its reasonable
best efforts to cause the New Certificates into which shares of a
shareholder's Company Common Stock are
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converted on the Effective Date and/or any check in respect of any
fractional share interests or dividends or distributions which such person
shall be entitled to receive to be sent to the applicable former holder of
record within five (5) Business Days of, and shall cause such items to be
delivered to such former holder following, delivery to the Exchange Agent
of Old Certificates representing such shares of Company Common Stock (or an
affidavit of lost certificate and, if required by the Exchange Agent,
indemnity reasonably satisfactory to Zions and the Exchange Agent, if any
of such certificates are lost, stolen or destroyed) owned by such
shareholder. No interest will be paid on any such cash to be paid in lieu
of fractional share interests or in respect of dividends or distributions
which any such person shall be entitled to receive pursuant to this Article
III upon such delivery. In the event of a transfer of ownership of any
shares of Company Common Stock not registered in the transfer records of
Company, the exchange described in this Section 3.04(b) may nonetheless be
effected and a check for the cash to be paid in lieu of fractional shares
may be issued to the transferee if the Old Certificate representing such
Company Common Stock is presented to the Exchange Agent, accompanied by
documents sufficient, in the discretion of Zions and the Exchange Agent,
(i) to evidence and effect such transfer but for the provisions of Section
3.02 hereof and (ii) to evidence that all applicable stock transfer taxes
have been paid.
(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
shareholders of Company for one year after the Effective Time shall be
returned by the Exchange Agent to Zions. Any shareholders of Company who
have not theretofore complied with this Article III shall thereafter look
only to Zions for payment of the shares of Zions Common Stock, cash in lieu
of any fractional shares and unpaid dividends and distributions on Zions
Common Stock deliverable in respect of each share of Company Common Stock
such shareholder holds as determined pursuant to this Agreement, in each
case, without any interest thereon.
III.5 ANTI-DILUTION PROVISIONS. In the event Zions changes (or
establishes a record date for changing) the number of shares of Zions Common
Stock issued and outstanding prior to the Effective Date as a result of a stock
split, stock dividend, recapitalization, distributions of shares of Zions Common
Stock pursuant to Zions' rights plan or similar transaction with respect to the
outstanding Zions Common Stock and the record date therefor, if applicable,
shall be prior to the Effective Date, the Exchange Ratio shall be
proportionately adjusted. Subject to Section 2.01(a), if, between the date
hereof and the Effective Time, Zions shall consolidate with or into any other
corporation (a "BUSINESS COMBINATION") and the terms thereof shall provide that
Zions Common Stock shall be converted into or exchanged for the shares of any
other corporation or entity, then provision shall be made as part of the terms
of such Business Combination so that shareholders of Company who would be
entitled to receive shares of Zions Common Stock pursuant to this Agreement
shall be entitled to receive, in lieu of each share of Zions Common Stock
issuable to such shareholders as provided herein, the same kind and amount of
securities or assets as shall be distributable upon such Business Combination
with respect to one share of Zions Common Stock.
III.6 OPTIONS. Subject to paragraph (b) of this Section 3.06, at the
Effective Time, each holder of outstanding options to purchase shares of Company
Common Stock under the Company Stock Plan (each, a "COMPANY STOCK OPTION"),
whether vested or unvested, shall be canceled and only entitle the holder to
receive with respect to such Company Stock Options the product of (i) the Option
Consideration and (ii) the number of Company Stock Options held by such holder,
rounded down to the nearest whole share to be paid by Zions in the form of whole
shares of Zions Common Stock. At or prior to the Effective Time, Company shall
take all action, if any, necessary with respect to the cancellation of the
Company Stock Options, including obtaining any necessary consents of the holders
of Company Stock Options. The exchange of agreements representing Company Stock
Options for the Option Consideration shall take place upon substantially the
same terms as set forth in Section 3.04 with respect to the exchange of
certificates representing Company Common Stock for the Merger Consideration.
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ARTICLE IV
ACTIONS PENDING ACQUISITION
IV.1 FOREBEARANCES OF COMPANY. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of Zions, Company will not, and will cause each of its
Subsidiaries not to:
(a) ORDINARY COURSE. Conduct the business of Company and its
Subsidiaries other than in the ordinary and usual course consistent with
past practice or fail to use reasonable best efforts to preserve intact
their business organizations and assets and maintain in all material
respects their rights, franchises and existing relations with customers,
suppliers, employees and business associates, take any action that would
adversely affect or delay the ability of Company, Zions or any of their
Subsidiaries to perform any of their obligations on a timely basis under
this Agreement and the Agreement of Bank Merger, or take any action that is
reasonably likely to have a Material Adverse Effect with respect to
Company.
(b) CAPITAL STOCK. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (i) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of
Company Common Stock or any Rights, (ii) enter into any agreement with
respect to the foregoing or (iii) permit any additional shares of Company
Common Stock to become subject to new grants of employee or director stock
options, other Rights or similar stoc based employee rights.
(c) DIVIDENDS, ETC. (a) Make, declare, pay or set aside for payment any
dividend on or in respect of, or declare or make any distribution on any
shares of Company Common Stock (other than quarterly cash dividends on
Company Common Stock in an amount not to exceed $0.10 per share with record
and payment dates consistent with past practice) or (b) directly or
indirectly adjust, split, combine, redeem, reclassify, purchase or
otherwise acquire, any shares of its capital stock
(d) COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of Company or its
Subsidiaries, or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments), except (i) for normal
individual increases in compensation to employees in the ordinary course of
business consistent with past practice (including increases in the annual
bonus pool and reallocations pursuant thereto), (ii) for other changes that
are required by applicable law, (iii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof or (iv) for grants
of awards to newly hired employees consistent with past practice.
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(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 consistent with past practice and in a transaction that is not
material to it and its Subsidiaries taken as a whole.
(g) ACQUISITIONS. Except as Previously Disclosed, acquire (other than
by way of foreclosures or acquisitions of control in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in good faith,
in each case in the ordinary and usual course of business consistent with
past practice) all or any portion of, the assets, business, deposits or
properties of any other entity except in the ordinary course of business
consistent with past practice and in a transaction that is not material to
Company and its Subsidiaries, taken as a whole.
(h) CAPITAL EXPENDITURES. Except as Previously Disclosed, make any
capital expenditures, other than capital expenditures in the ordinary
course of business consistent with past practice in amounts not exceeding
$50,000 individually or $150,000 in the aggregate.
(i) GOVERNING DOCUMENTS. Amend the Company Articles, Company By-Laws or
the articles of incorporation or by-laws (or similar governing documents)
of any of Company's Subsidiaries.
(j) ACCOUNTING METHODS. Implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by
generally accepted accounting principles or applicable banking regulation.
(k) CONTRACTS. Except in the ordinary course of business consistent
with past practice, enter into or terminate any material contract (as
defined in Section 5.03(k)) or amend or modify in any material respect any
of its existing material contracts.
(l) CLAIMS. Except in the ordinary course of business consistent with
past practice, settle any claim, action or proceeding, except for any
claim, action or proceeding involving
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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.
IV.2 FOREBEARANCES OF ZIONS. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement, without the prior
written consent of Company, Zions will not, and will cause each of its
Subsidiaries not to:
(a) ORDINARY COURSE. Take any action that would adversely affect or
delay the ability of Company or Zions to perform any of their obligations
on a timely basis under this Agreement, or take any action that is
reasonably likely to have a Material Adverse Effect with respect to Zions.
(b) ADVERSE ACTIONS. (a) Take any action while knowing that such action
would, or is reasonably likely to, prevent or impede the Merger from
qualifying (i) for "pooling of interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368 of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to
result in (i) any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (ii) any of the conditions to the Merger
set forth in Article VII not being satisfied or (iii) a material
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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
V.1 DISCLOSURE SCHEDULES. On or prior to the date hereof, Company and
Company Bank have delivered to Zions a schedule or schedules (each, a
"DISCLOSURE SCHEDULE") setting forth, among other things, items the disclosure
of which is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to one or more
representations or warranties contained in Section 5.03; PROVIDED, that (a) no
such item is required to be set forth in a Disclosure Schedule as an exception
to a representation or warranty if its absence would not be reasonably likely to
result in the related representation or warranty being deemed untrue or
incorrect under the standard established by Section 5.02, and (b) the mere
inclusion of an item in a Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by a party that such
item represents a material exception or fact, event or circumstance or that such
item is reasonably likely to result in a Material Adverse Effect with respect to
the disclosing party.
V.2 STANDARD. No representation or warranty of Company and Company
Bank, on the one hand, or Zions, on the other, contained in Section 5.03 or 5.04
shall be deemed untrue or incorrect, and no party hereto shall be deemed to have
breached a representation or warranty, as a consequence of the existence of any
fact, event or circumstance unless such fact, circumstance or event,
individually or taken together with all other facts, events or circumstances
inconsistent with any representation or warranty contained in Section 5.03 or
5.04 has had or is reasonably likely to have a Material Adverse Effect on the
party making such representation or warranty.
V.3 REPRESENTATIONS AND WARRANTIES OF COMPANY AND COMPANY BANK. Subject
to Sections 5.01 and 5.02 and except as Previously Disclosed in a paragraph of
Company and Company Bank Disclosure Schedule corresponding to the relevant
paragraph below, Company and Company Bank hereby represent and warrant jointly
and severally to Zions:
(a) ORGANIZATION, STANDING AND AUTHORITY. Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of California. Company is duly qualified to do business and is in
good standing in the states of the United States and any foreign
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.
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(b) COMPANY COMMON STOCK. As of the date hereof, the authorized capital
stock of Company consists solely of 5,000,000 shares of Company Common
Stock, of which no more than 2,624,999 shares were outstanding as of the
date hereof. As of the date hereof, no shares of Company Common Stock were
held in treasury by Company or otherwise owned by Company or its
Subsidiaries. The outstanding shares of Company Common Stock have been duly
authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued in
violation of any preemptive rights). As of the date hereof, there are no
shares of Company Common Stock authorized and reserved for issuance,
Company does not have any Rights issued or outstanding with respect to
Company Common Stock, and Company does not have any commitment to
authorize, issue or sell any Company Common Stock or Rights, except
pursuant to this Agreement, the Warrants, any Company Stock Option and the
Company Stock Plan. The number of shares of Company Common Stock which are
issuable and reserved for issuance upon exercise of Company Stock Options
as of the date hereof are Previously Disclosed in Company's Disclosure
Schedule.
(c) SUBSIDIARIES. (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 have been
duly authorized and are validly issued and outstanding, fully paid and
nonassessable and are owned by Company or its Subsidiaries free and clear
of any Liens.
(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 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
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properties and assets; and Company has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and the
Stock Option Agreement and to consummate the transactions contemplated
hereby and thereby. Company Bank has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and the
Agreement of Bank Merger and to consummate the transactions contemplated
hereby and thereby.
(e) CORPORATE AUTHORITY. Subject in the case of this Agreement to
receipt of the requisite approval of the agreement of merger set forth in
this Agreement by the holders of a majority of the outstanding shares of
Company Common Stock entitled to vote thereon (which is the only
shareholder vote required thereon), this Agreement and the Stock Option
Agreement and the transactions contemplated hereby and thereby have been
authorized by all necessary corporate action of Company and the Company
Board on or prior to the date hereof. Each of this Agreement and the Stock
Option Agreement is a valid and legally binding obligation of Company,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to
or affecting creditors' rights or by general equity principles). Each of
this Agreement and the Agreement of Bank Merger and the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action of Company Bank and its board of directors on or prior to
the date hereof. Each of this Agreement, and upon execution and delivery of
the Agreement of Bank Merger, the Agreement of Bank Merger, is or will be,
as the case may be, the valid and legally binding obligation of Company
Bank, enforceable in accordance with its terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general applicability
relating to or affecting creditors' rights or by general equity
principles). The Company Board has received the written opinion of The
Findley Group to the effect that as of the date hereof the Exchange Ratio
to be received by the holders of Company Common Stock in the Merger is fair
to the holders of Company Common Stock from a financial point of view.
(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 or Company Bank of this Agreement and the Agreement of Bank Merger
or to consummate the Merger or the Bank Merger except for (A) filings with
the SEC and state securities authorities and the approval of this Agreement
by the shareholders of Company and (B) the filing of articles of merger
with the Corporation Division pursuant to the UBCA and an agreement of
merger with the California Secretary pursuant to the CGCL. As of the date
hereof, Company has no knowledge of any reason why
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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 Agreement of Bank Merger and
the consummation of the transactions contemplated hereby and thereby do not
and will not (A) constitute a breach or violation of, or a default under,
or give rise to any Lien, any acceleration of remedies or any right of
termination under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or
instrument of Company or of any of its Subsidiaries or to which Company or
any of its Subsidiaries or properties is subject or bound, (B) constitute a
breach or violation of, or a default under, the Company Articles or the
Company By-Laws or the articles of incorporation or by-laws of Company
Bank, or (C) require any consent or approval under any such law, rule,
regulation, judgment, decree, order, governmental permit or license,
agreement, indenture or instrument.
(g) FINANCIAL REPORTS AND REGULATORY DOCUMENTS; MATERIAL ADVERSE
EFFECT. (i) Company's (or its predecessors') Annual Reports on Form 10-K
for the fiscal years ended December 31, 1998, 1997 and 1996, and all other
reports, registration statements, definitive proxy statements or
information statements filed or to be filed by it or any of its
Subsidiaries subsequent to December 31, 1996 under the Securities Act, or
under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act or under the
securities regulations of the SEC, in the form filed or to be filed
(collectively, the Company "REGULATORY DOCUMENTS") with the SEC as of the
date filed, (A) complied or will comply in all material respects as to form
with the applicable requirements under the Securities Act or the Exchange
Act, as the case may be, and (B) did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; and each
of the balance sheets contained in or incorporated by reference into any
such Regulatory Document (including the related notes and schedules
thereto) fairly presents, or will fairly present, in all material respects,
the financial position of Company and its Subsidiaries as of its date, and
each of the statements of income and changes in shareholders' equity and
cash flows or equivalent statements in such Regulatory Documents (including
any related notes and schedules thereto) fairly presents, or will fairly
present, in all material respects, the results of operations, changes in
shareholders' equity and changes in cash flows, as the case may be, of
Company and its Subsidiaries for the periods to which they relate, in each
case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as
may be noted therein, subject to normal year-end audit adjustments in the
case of unaudited statements.
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(ii) Since December 31, 1998, Company and its Subsidiaries have not
incurred any liability other than in the ordinary course of business
consistent with past practice.
(iii) Since December 31, 1998, (A) Company and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding the incurrence of expenses related
to this Agreement and the transactions contemplated hereby) and (B) no
event has occurred or circumstance arisen that, individually or taken
together with all other facts, circumstances and events (described in any
paragraph of Section 5.03 or otherwise), is reasonably likely to have a
Material Adverse Effect with respect to Company.
(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 written
order, decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment letter or similar submission to, or
extraordinary supervisory letter from, any federal or state governmental
agency or authority charged with the supervision or regulation of financial
institutions or issuers of securities or engaged in the insurance of
deposits (including, without limitation, the DFI, the Federal Reserve and
the FDIC) or the supervision or regulation of it or any of its Subsidiaries
(collectively, the "REGULATORY AUTHORITIES").
(ii) Neither Company nor any of its Subsidiaries has been advised by
any Regulatory Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such written order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar submission.
(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
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order to permit them to own or lease their properties and to conduct their
businesses as presently conducted; all such permits, licenses, certificates
of authority, orders and approvals are in full force and effect and, to
Company's knowledge, no suspension or cancellation of any of them is
threatened; and
(iii) has received, since December 31, 1998, no notification or
communication from any Governmental Authority (A) asserting that Company or
any of its Subsidiaries is not in compliance with any of the statutes,
regulations or ordinances which such Governmental Authority enforces or (B)
threatening to revoke any license, franchise, permit or governmental
authorization (nor, to Company's knowledge, do any grounds for any of the
foregoing exist).
(k) MATERIAL CONTRACTS; DEFAULTS. Except for those agreements and other
documents filed as exhibits to its Regulatory Documents, neither the
Company nor any of its Subsidiaries is a party to, bound by or subject to
any agreement, contract, arrangement, commitment or understanding (whether
written or oral) (i) that is a "material contract" within the meaning of
Item 601(b)(10) of the SEC's Regulation S-K or (ii) that materially
restricts the conduct of business by it or any of its Subsidiaries. Neither
Company nor any of its Subsidiaries is in default under any material
contract, agreement, commitment, arrangement, lease, insurance policy or
other instrument to which it is a party, by which its respective assets,
business, or operations may be bound or affected, or under which it or its
respective assets, business, or operations receives benefits, and there has
not occurred any event that, with the lapse of time or the giving of notice
or both, would constitute such a default
(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 Belle Plaine Financial LLC.
(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
Schedule. True and complete copies of all Benefit Plans, including, but not
limited to, any trust instruments and insurance contracts forming a part of
any Benefit Plans, and all amendments thereto have been provided or made
available to Zions.
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(ii) All employee benefit plans, other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA, covering Employees (the
"PLANS"), to the extent subject to ERISA, are in substantial compliance
with ERISA. Neither Company nor any of its Subsidiaries is a party to any
"employee pension benefit plan" within the meaning of Section 3(2) of ERISA
("PENSION PLAN"), which is intended to be qualified under Section 401(a) of
the Code. There is no material pending or, to the knowledge of Company,
threatened litigation relating to the Plans. Neither Company nor any of its
Subsidiaries has engaged in a transaction with respect to any Plan that,
assuming the taxable period of such transaction expired as of the date
hereof, could subject Company or any Subsidiary to a tax or penalty imposed
by either Section 4975 of the Code or Section 502(i) of ERISA in an amount
which would be material.
(iii) No liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by Company or any of its Subsidiaries with
respect to any ongoing, frozen or terminated "single-employer plan", within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity which
is considered one employer with Company under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA AFFILIATE"). Neither Company, any of its
Subsidiaries nor an ERISA Affiliate has contributed to a "multiemployer
plan", within the meaning of Section 3(37) of ERISA, at any time on or
after September 26, 1980. No notice of a "reportable event", within the
meaning of Section 4043 of ERISA for which the 30-day reporting requirement
has not been waived, has been required to be filed for any Pension Plan or
by any ERISA Affiliate within the 12-month period ending on the date hereof
or will be required to be filed in connection with the transactions
contemplated by this Plan.
(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.
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(vi) Neither Company nor any of its Subsidiaries has any obligations
for retiree health and life benefits under any Benefit Plan. Company or its
Subsidiaries may amend or terminate any such Benefit Plan at any time
without incurring any liability thereunder.
(vii) The consummation of the transactions contemplated by this
Agreement and the Agreement of Bank Merger will not (x) entitle any
employees of Company or any of its Subsidiaries to severance pay, (y)
accelerate the time of payment or vesting or trigger any payment of
compensation or benefits under, increase the amount payable or trigger any
other material obligation pursuant to, any of the Benefit Plans or (z)
result in any breach or violation of, or a default under, any of the
Benefit Plans. Without limiting the foregoing, as a result of the
consummation of the transactions contemplated by this Agreement and the
Agreement of Bank Merger, none of Zions, Company, or any of its
Subsidiaries will be obligated to make a payment to an individual that
would be a "parachute payment" to a "disqualified individual" as those
terms are defined in Section 280G of the Code, without regard to whether
such payment is reasonable compensation for personal services performed or
to be performed in the future.
(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 to the knowledge of
Company is there any activity involving its or any of its Subsidiaries'
employees seeking to certify a collective bargaining unit or engaging in
other organizational activity.
(o) ENVIRONMENTAL MATTERS. To the best knowledge of Company, neither
the conduct nor operation of Company or its Subsidiaries nor any condition
of any property presently or previously owned, leased or operated by any of
them (including, without limitation, in a fiduciary or agency capacity),
violates or violated Environmental Laws and no condition has existed or
event has occurred with respect to any of them or any such property that,
with notice or the passage of time, or both, is reasonably likely to result
in liability under Environmental Laws. To the knowledge of Company, no
property on which Company or any of its Subsidiaries holds a Lien, violates
or violated Environmental Laws and no condition has existed or event has
occurred with respect to any such property that, with notice or the passage
of time, or both, is reasonably likely to result in liability under
Environmental Laws. Neither Company nor any of its Subsidiaries has
received any notice from any person or entity that Company or its
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
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were in violation of or otherwise are alleged to have liability under any
Environmental Law, including, but not limited to, responsibility (or
potential responsibility) for the cleanup or other remediation of any
pollutants, contaminants, or hazardous or toxic wastes, substances or
materials at, on, beneath, or originating from, any such property.
As used herein, the term "ENVIRONMENTAL LAW" means any federal, state
or local law, regulation, order, decree, permit, authorization, opinion,
common law or agency requirement relating to: (A) the protection or
restoration of the environment, health, safety, or natural resources, (B)
the handling, use, presence, disposal, release or threatened release of any
Hazardous Substance or (C) noise, odor, wetlands, indoor air, pollution,
contamination or any injury or threat of injury to persons or property in
connection with any Hazardous Substance. As used herein, the term
"HAZARDOUS SUBSTANCE" means any substance in any concentration that is: (A)
listed, classified or regulated pursuant to any Environmental Law; (B) any
petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (C) any other substance which is or may be the
subject of regulatory action by any Governmental Authority in connection
with any Environmental Law.
(p) 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 and timely
filed, and all such Tax Returns are complete and accurate in all material
respects, (B) all Taxes shown to be due on the Tax Returns referred to in
clause (A) have been paid in full, (C) all Taxes that Company or any of its
Subsidiaries is obligated to withhold from amounts owing to any employee,
creditor or third party have been paid over to the proper Governmental
Authority in a timely manner, to the extent due and payable, (D) the Tax
Returns referred to in clause (A) have been examined by the Internal
Revenue Service or the appropriate Tax authority or the period for
assessment of the Taxes in respect of which such Tax Returns were required
to be filed has expired, (E) all deficiencies asserted or assessments made
as a result of such examinations have been paid in full, (F) no issues that
have been raised by the relevant taxing authority in connection with the
examination of any of the Tax Returns referred to in clause (A) are
currently pending, and (G) no extensions or waivers of statutes of
limitation have been given by or requested with respect to any Taxes of
Company or its Subsidiaries. Company has made available to Zions true and
correct copies of the United States federal income Tax Returns filed by
Company and its Subsidiaries for each of the three most recent fiscal years
ended on or before December 31, 1998. Neither Company nor any of its
Subsidiaries has any liability with respect to Taxes that accrued on or
before the end of the most recent period covered by Company's Regulatory
Documents filed prior to the date hereof in excess of the amounts accrued
with respect thereto that are reflected in the financial statements
included in Company's Regulatory Documents filed on or prior to the date
hereof. Neither Company nor any of its Subsidiaries is a party to any Tax
allocation or sharing agreement, is or has been a
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member of an affiliated group filing consolidated or combined Tax returns
(other than a group the common parent of which is or was Company) or
otherwise has any liability for the Taxes of any person (other than Company
and its Subsidiaries). As of the date hereof, neither Company nor any of
its Subsidiaries has any reason to believe that any conditions exist that
might prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368 of the Code. No Liens for Taxes exist
with respect to any of the assets or properties of Company or its
Subsidiaries, except for statutory Liens for Taxes not yet due and payable
or that are being contested in good faith and reserved for in accordance
with United States generally accepted accounting principles. Neither of
Company nor any of its Subsidiaries has been a party to any distribution
occurring during the last three (3) years in which the parties to such
distribution treated the distribution as one to which Section 355 of the
Code applied.
(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.
(q) RISK MANAGEMENT INSTRUMENTS. All interest rate swaps, caps, floors,
option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for 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 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.
(r) 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.
(s) INSURANCE. Company has Previously Disclosed all of the insurance
policies, binders, or bonds maintained by Company or its Subsidiaries
("INSURANCE POLICIES"). Company and its Subsidiaries are insured with
reputable insurers against such risks and in such amounts as the management
of Company reasonably has determined to be prudent in accordance with
industry practices. All the Insurance Policies are in full force and
effect; Company and its Subsidiaries are not in material default
thereunder; and all claims thereunder for which a
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basis is known, or reasonably should be known, by Company have been filed
in due and timely fashion.
(t) ACCOUNTING TREATMENT. As of the date hereof, to the Company's
knowledge, there is no reason why the Merger will fail to qualify for
"pooling of interests" accounting treatment.
(u) YEAR 2000. To the knowledge of Company, the mission critical
computer software operated by Company and/or any of its Subsidiaries is
currently capable of providing, or is being adapted to provide,
uninterrupted millennium functionality to record, store, process and
present calendar dates falling on or after January 1, 2000 in substantially
the same manner and with substantially the same functionality as such
mission critical software records, stores, processes and presents such
calendar dates falling on or before December 31, 1999. To the knowledge of
the Company, the costs of adaptations referred to in this clause will not
have a Material Adverse Effect with respect to Company. Neither the Company
nor any of its Subsidiaries has received, and does not reasonably expect to
receive, any deficiency notice from any federal or California banking
authority. Company has Previously Disclosed to Zions a complete and
accurate copy of its and its Subsidiaries' plan, including an estimate of
anticipated associated costs, for addressing the issues set forth in all
Federal Financial Institutions Examination Council Interagency Statements
as such issues affect Company and/or its Subsidiaries. Between the date of
this Agreement and the Effective Time, Company and Company Bank shall use
commercially reasonable and practicable efforts to implement such plan.
V.4 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 200,000,000 shares of Zions Common Stock,
of which no more than 80,000,000 shares were outstanding as of the date
hereof and 3,000,000 shares of Zions Preferred Stock, of which no shares
were outstanding as of the date hereof.
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(c) CORPORATE POWER. Zions and each of its Significant Subsidiaries has
the corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and Zions has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
(d) CORPORATE AUTHORITY. This Agreement and the transactions
contemplated hereby have been authorized by all necessary corporate action
of Zions and the Zions Board. This Agreement is a valid and legally binding
agreement of Zions enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general
equity principles).
(e) REGULATORY APPROVALS; NO DEFAULTS. (i) No consents or approvals of,
or filings or registrations with, any Governmental Authority or with any
third party are required to be made or obtained by Zions or any of its
Subsidiaries in connection with the execution, delivery or performance by
Zions of this Agreement or to consummate the Merger except for (A) the
filing of applications and notices, as applicable, with the federal and
state banking authorities; (B) approval of the listing on the NASDAQ of
Zions Common Stock to be issued in the Merger; (C) the filing and
declaration of effectiveness of the Registration Statement; (D) the filing
of articles of merger with the Corporation Division pursuant to the UBCA
and an agreement of merger with the California Secretary pursuant to the
CGCL; (E) such filings as are required to be made or approvals as are
required to be obtained under the securities or "Blue Sky" laws of various
states in connection with the issuance of Zions Common Stock in the Merger;
and (F) receipt of the approvals set forth in Section 7.01(b). As of the
date hereof, Zions has no knowledge of any reason why the approvals set
forth in Section 7.01(b) will not be received without the imposition of a
condition, restriction or requirement of the type described in Section
7.01(b).
(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 (of the types specified in Section
5.03(g)), as of the date filed, (A) complied or will comply in all material
respects as to form with the applicable requirements under the Securities
Act or the Exchange Act, as the case may be, and (B) did not and will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and each of the balance sheets contained in or incorporated by
reference into any such Regulatory Document (including the related notes
and schedules thereto) fairly presents, or will fairly present, the
financial position of Zions and its Subsidiaries as of its date, and each
of the statements of income and changes in shareholders' equity and cash
flows or equivalent statements in such Regulatory Documents (including any
related notes and schedules thereto) fairly presents, or will fairly
present, the results of operations, changes in shareholders' equity and
changes in cash flows, as the case may be, of Zions and its Subsidiaries
for the periods to which they relate, in each case in accordance with
generally accepted accounting principles consistently applied during the
periods involved, except in each case as may be noted therein, subject to
normal year-end audit adjustments in the case of unaudited statements.
(ii) Since December 31, 1998, no event has occurred or circumstance
arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 5.04 or
otherwise), is reasonably likely to have a Material Adverse Effect with
respect to Zions.
(g) NO BROKERS. No action has been taken by Zions that would give rise
to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions
contemplated by this Agreement or the Agreement of Bank Merger.
(h) ACCOUNTING TREATMENT; TAX MATTERS. As of the date hereof, Zions has
no knowledge of any reason why the Merger will fail to qualify for "pooling
of interests" accounting treatment. As of the date hereof, neither Zions
nor any of its Subsidiaries has any reason to believe that any conditions
exist that might prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368 of the Code.
(i) REGULATORY MATTERS. (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.
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(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 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, 1998, no notification or
communication from any Governmental Authority (A) asserting that Zions or
any of its Subsidiaries is not in compliance with any of the statutes,
regulations or ordinances which such Governmental Authority enforces or (B)
threatening to revoke any license, franchise, permit or governmental
authorization (nor, to Zions' knowledge, do any grounds for any of the
foregoing exist).
ARTICLE VI
COVENANTS
VI.1 REASONABLE BEST EFFORTS. Subject to the terms and conditions of
this Agreement, each of Company, Company Bank and Zions agrees to use its
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
each of the Merger and the Bank Merger as promptly as practicable and otherwise
to enable consummation of the transactions contemplated hereby and shall
cooperate fully with the other party hereto to that end.
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VI.2 SHAREHOLDER APPROVAL. Company agrees to take, in accordance with
applicable law and the Company Articles and the Company By-Laws, all action
necessary to convene an appropriate meeting of its shareholders to consider and
vote upon the approval and adoption of this Agreement and any other matters
required to be approved by Company's shareholders for consummation of the Merger
(including any adjournment or postponement, the "COMPANY MEETING"), in each case
as promptly as reasonably practicable after the Registration Statement is
declared effective. Except to the extent otherwise permitted pursuant to Section
6.06, the Company Board shall recommend at the Company Meeting that all such
matters be approved by its shareholders, shall not cancel the Company Meeting
and Company shall take all reasonable, lawful action to solicit such approval by
its shareholders.
VI.3 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 use its best efforts to furnish to Zions
all information concerning Company, its Subsidiaries, officers, directors and
shareholders as may be reasonably requested in connection with the foregoing.
(b) Each of Company, Company Bank and Zions agrees, as to itself and
its Subsidiaries, that the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement
will not, at the time the Registration Statement and each amendment or
supplement thereto, if any, becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Proxy Statement and any
amendment or supplement thereto will not, at the date of mailing to
shareholders and at the time of the Company Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of
Company, Company Bank and Zions further agrees that if it shall become
aware prior to the Effective Date of any information furnished by it
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that would cause any of the statements in the Proxy Statement to be false
or misleading with respect to any material fact, or to omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not false or misleading, promptly
to inform the other party thereof and to take the necessary steps to
correct the Proxy Statement.
(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.
VI.4 PRESS RELEASES. Each of Company, Company Bank and Zions agrees
that it will not, without the prior approval of the other party, issue any press
release or written statement for general circulation relating to the
transactions contemplated hereby, except as otherwise required by applicable law
or regulation or NASDAQ rules (provided that the issuing party shall
nevertheless provide the other party with notice of, and the opportunity to
review, any such press release or written statement).
VI.5 ACCESS; INFORMATION. (a) Each of Company, Company Bank and Zions
agrees that upon reasonable notice and subject to applicable laws relating to
the exchange of information, each party shall afford the other party and the
other party's officers, employees, counsel, accountants and other authorized
representatives, such access during normal business hours throughout the period
prior to the Effective Time to its books, records (including, without
limitation, tax returns and work papers of independent auditors), properties,
personnel and to such other information as the requesting party may reasonably
request and, during such period, the providing party shall furnish promptly to
the requesting party (i) a copy of each material report, schedule and other
document filed by it pursuant to the requirements of federal or state securities
or banking laws, and (ii) all other information concerning the business,
properties and personnel of it as the requesting party may reasonably request.
(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
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to be bound by a confidentiality obligation, (iii) is disclosed with the
prior written approval of the providing party or (iv) is or becomes readily
ascertainable from publicly available sources. In the event that this
Agreement is terminated or the transactions contemplated by this Agreement
shall otherwise fail to be consummated, each party shall promptly cause all
copies of documents or extracts thereof containing information and data as
to the other party to be returned to the other party. No investigation by
either party of the business and affairs of the other party shall affect or
be deemed to modify or waive any representation, warranty, covenant or
agreement in this Agreement, or the conditions to either party's obligation
to consummate the transactions contemplated by this Agreement.
VI.6 ACQUISITION PROPOSALS.
(a) From the date hereof until the earlier of the Effective Time or the
termination of this Agreement in accordance with its terms, Company shall not,
nor shall it permit any of its Affiliates or Subsidiaries to, nor shall it
authorize or permit any of its respective officers, directors, employees,
representatives or agents (collectively, the "COMPANY REPRESENTATIVES") directly
or indirectly, to (i) solicit, facilitate, initiate or encourage, or take any
action to solicit, facilitate, initiate or encourage, any inquiries or the
making of any proposal or offer that constitutes an Acquisition Proposal or (ii)
participate or engage in discussions or negotiations with, or provide any
information to, any Person concerning an Acquisition Proposal or which might
reasonably be expect to result in an Acquisition Proposal. Company shall
immediately cease and cause to be terminated and shall cause all Company
Representatives to terminate all existing discussions or negotiations with any
Person conducted heretofore with respect to, or that could reasonably be
expected to lead to, an Acquisition Proposal. Company shall promptly notify all
Company Representatives of its obligations under this Section 6.06.
(b) Notwithstanding the foregoing, Company may participate in
discussions or negotiations with, or furnish information with respect to Company
pursuant to a confidentiality agreement with terms no less favorable to Company
than those in effect between Company and Zions to any Person if and only if (x)
such Person has submitted an unsolicited BONA FIDE written Acquisition Proposal
to the Company Board and (y) neither Company nor any of Company Representatives
shall have violated Section 6.06(a) and the Company Board (i) believes in good
faith based on such matters as it deems relevant, including the advice of
Company's financial advisor, that such Acquisition Proposal constitutes a
Superior Proposal and (ii) receives a written opinion of outside counsel to the
effect that, and based on such advice the Company Board determines by a majority
vote in its good faith judgment that, taking such action is required to satisfy
the fiduciary duties of the Company Board under applicable law and (iii)
provides prior written notice to Zions of its decision to so participate or
furnish.
(c) Except as set forth in the following sentence, neither the Company
Board nor any committee thereof shall (1) approve or recommend, or propose to
approve or recommend, any
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Acquisition Proposal other than the Merger and the Bank Merger, (2) withdraw or
modify or propose to withdraw or modify in a manner adverse to Zions its
approval or recommendation of the Merger, this Agreement or the transactions
contemplated hereby, (3) enter, or cause any Subsidiary to enter, into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement related to any Acquisition Proposal, or (4) resolve or announce its
intention to do any of the foregoing. The immediately preceding sentence
notwithstanding, in the event that prior to the Company Meeting the Company
Board receives a Superior Proposal, the Company Board may (i) approve or
recommend, or propose to approve or recommend, such Superior Proposal, (ii)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Zions its recommendation of the Merger, this Agreement or the transactions
contemplated hereby, or (iii) resolve or announce its intention to do any the
actions set forth in the preceding clauses (i) and (ii), if (x) the Company
Board receives a written opinion of outside counsel to the effect that, and
based on such advice of outside counsel the Company Board determines by a
majority vote of directors in their good faith judgment that, taking such action
is required to satisfy the fiduciary duties of such directors and (y) Company
furnishes Zions two (2) Business Days' prior written notice of the taking of
such action (which notice shall include a description of the material terms and
conditions of the Superior Proposal and identify the person making the same).
(d) In addition to the other obligations of Company set forth in this
Section 6.06, Company shall immediately advise Zions orally and in writing of
any request for information with respect to any Acquisition Proposal, or any
inquiry with respect to or which could result in an Acquisition Proposal, the
material terms and conditions of such request, Acquisition Proposal or inquiry,
and the identity of the person making the same. Company shall inform Zions on a
prompt and current basis of the status and content of any discussions regarding
any Acquisition Proposal with a third party and as promptly as practicable of
any change in the price, structure or form of the consideration or material
terms of and conditions regarding any Acquisition Proposal or of any other
developments or circumstances which could reasonably be expected to culminate in
the taking of any of the actions referred to in Section 6.06(c).
VI.7 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 C.
VI.8 [RESERVED].
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VI.9 CERTAIN POLICIES. After all conditions to the consummation of the
Merger set forth in Article VII have been satisfied or waived, Company and
Company Bank shall, consistent with generally accepted accounting principles and
on a basis mutually satisfactory to them and Zions, modify and change its loan,
litigation and real estate valuation policies and practices (including loan
classifications and levels of reserves) so as to be applied on a basis that is
consistent with that of Zions.
VI.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.
VI.11 REGULATORY APPLICATIONS. (a) Zions, Company and Company Bank and
their respective Subsidiaries shall cooperate and use their respective
reasonable best efforts to prepare all documentation, to effect all filings and
to obtain all permits, consents, approvals and authorizations of all third
parties and Governmental Authorities necessary to consummate the transactions
contemplated by this Agreement. Zions, Company and Company Bank shall use their
reasonable best efforts to make all required bank regulatory filings, including
the appropriate filing with the Federal Reserve, within 30 days after the date
hereof. Each of Zions, Company and Company Bank shall have the right to review
in advance, and to the extent practicable each will consult with the other, in
each case subject to applicable laws relating to the exchange of information,
with respect to all material written information submitted to any third party or
any Governmental Authority in connection with the transactions contemplated by
this Agreement. In exercising the foregoing right, each of the parties hereto
agrees to act reasonably and as promptly as reasonably practicable. Each party
hereto agrees that it will consult with the other party hereto with respect to
the obtaining of all material permits, consents, approvals and authorizations of
all third parties and Governmental Authorities necessary or advisable to
consummate the transactions contemplated by this Agreement and each party will
keep the other party appraised of the status of material matters relating to
completion of the transactions contemplated hereby.
(b) Each party agrees, upon request, to use its best efforts to furnish
the other party with all information concerning itself, its Subsidiaries,
directors, officers and shareholders and such other matters as may be
reasonably necessary or advisable in connection with any filing, notice or
application made by or on behalf of such other party or any of its
Subsidiaries to any third party or Governmental Authority.
VI.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
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liabilities (collectively, "COSTS") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time (including with respect to this Agreement or any
of the transactions contemplated hereby) (but excluding any Costs arising out of
any violation or alleged violation of the Exchange Act or the rules and
regulations thereunder with respect to insider trading), whether asserted,
claimed or arising prior to, at or after the Effective Time, to the extent to
which such Indemnified Parties were entitled under California law and the
Company Articles or the Company By-Laws in effect on the date hereof, and Zions
shall also advance expenses as incurred to the extent permitted under California
law and the Company Articles and the Company By-Laws.
(b For a period of four years after the Effective Time, Zions shall use
its reasonable best efforts to cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by
Company (provided that Zions may substitute therefor policies of comparable
coverage with respect to claims arising from facts or events which occurred
before the Effective Time); PROVIDED, HOWEVER, that in no event shall Zions
be obligated to expend, in order to maintain or provide insurance coverage
pursuant to this Section 6.12(b), any amount per annum in excess of 150% of
the amount of the annual premiums paid as of the date hereof by Company for
such insurance (the "MAXIMUM AMOUNT"). If the amount of the annual premiums
necessary to maintain or procure such insurance coverage exceeds the
Maximum Amount, Zions shall use all reasonable efforts to maintain the most
advantageous policies of directors' and officers' insurance obtainable for
an annual premium equal to the Maximum Amount. Notwithstanding the
foregoing, prior to the Effective Time, Zions may request Company to, and
Company shall, purchase insurance coverage, on such terms and conditions as
shall be acceptable to Zions, extending for a period of four years
Company's directors' and officers' liability insurance coverage in effect
as of the date hereof (covering past or future claims with respect to
periods before the Effective Time) and such coverage shall satisfy Zions'
obligations under this subsection (b).
VI.13 BENEFIT PLANS. Zions shall, from and after the Effective Time,
(i) honor in accordance with their terms all agreements set forth in Company and
Company Bank Disclosure Schedule 6.13 and (ii) provide former employees of
Company who remain as employees of Zions with employee benefit plans no less
favorable in the aggregate than those provided to similarly situated employees
of Zions (including the medical and health benefits available to other similarly
situated employees of Zions and coverage of any pre-existing health or medical
conditions covered by Company benefit plans), subject, with respect to any
executive officer of Company, to the terms of any agreement(s) entered into by
or among that executive officer and Zions and/or California Bank & Trust on the
date of this Agreement or otherwise prior to the Effective Time, specifically
modifying, replacing or relinquishing some or all of his agreements, benefits or
plans. If any employee of Company or any Subsidiary of Company becomes a
participant in any employee benefit plan of the Surviving Corporation, such
employee shall be
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given credit under such plan for all service prior to the Effective Date with
Company or such Subsidiary of Company for purposes of eligibility and vesting,
but not for benefit accrual purposes, to the same extent such service is taken
into account or recognized under the applicable employee benefit plan of Company
or its Subsidiaries. Company shall terminate its existing 401(k) plan and
Employee Stock Ownership Plan on or before the Effective Date.
VI.14 ACCOUNTANTS' LETTERS. Each of Company and Zions shall use its
reasonable best efforts to cause to be delivered to the other party a letter of
their respective independent auditors, dated (i) the date on which the
Registration Statement shall become effective and (ii) a date shortly prior to
the Effective Date, and addressed to such other party, in form and substance
reasonably satisfactory and customary for "comfort" letters delivered by
independent accountants in accordance with Statement of Accounting Standards
No. 72.
VI.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.
VI.16 SHAREHOLDER AGREEMENTS. The directors and certain officers and
shareholders of Company, in their capacities as shareholders, in exchange for
good and valuable consideration, have executed and delivered to Zions
shareholder agreements substantially in the form of EXHIBIT D hereto (the
"SHAREHOLDER AGREEMENTS"), committing such persons, among other things, (i) to
vote their shares of Company Common Stock in favor of the Agreement at the
Company Meeting, (ii) to certain representations concerning the ownership of
Company Common Stock and Zions Common Stock to be received in the Merger and
(iii) certain other matters.
6.17 BANK MERGER. The Company and the Company Bank shall, at the
request of Zions (i) take all necessary corporate and other action, to adopt and
approve the Bank Merger; (ii) execute, deliver and, where appropriate, file any
and all documents necessary or desirable to permit the Bank Merger immediately
following consummation of the Merger; and (iii) take and cause to be taken any
other action to permit the consummation of any transactions contemplated in
connection with the Bank Merger. Neither the Company nor the Company Bank shall
take any action that would prevent performance of the Agreement of Bank Merger
or any other transactions contemplated in connection with the Bank Merger. Zions
and California Bank & Trust may at any time prior to the Effective Time of the
Bank Merger change the method of effecting the combination of California Bank &
Trust with the Company Bank (including, without limitation, this Section 6.17)
if and to the extent it deems such change to be necessary, appropriate or
desirable; PROVIDED, HOWEVER, that no such change shall (i) alter or change the
amount or kind of Merger Consideration to be issued to the holders of the
Company Stock as provided for in this Agreement, (ii) adversely affect the tax
treatment of the Company's
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shareholders as a result of receiving the Merger Consideration, including,
without limitation, any adverse effect upon the tax-free treatment, holding
period or tax basis, or (iii) materially impeded or delay consummation of the
transactions contemplated by this Agreement.
6.18 REPORTING. Zions shall publish thirty (30) days of post-Merger
results of combined operations as soon as reasonably practicable, but not later
than eighty-five (85) days after the Effective Date.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
VII.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each of Zions and Company to consummate the Merger is
subject to the fulfillment or written waiver by Zions and Company prior to the
Effective Time of each of the following conditions:
(a) SHAREHOLDER APPROVALS. This Agreement and the Merger shall have
been duly adopted by the requisite vote of the shareholders of Company.
(b) REGULATORY APPROVALS. All regulatory approvals required to
consummate the Merger, the Bank Merger and the other transactions
contemplated hereby shall have been obtained and shall remain in full force
and effect and all statutory waiting periods in respect thereof shall have
expired and no such approvals shall contain any conditions, restrictions or
requirements which the Zions Board reasonably determines would (i)
following the Effective Time, have a Material Adverse Effect with respect
to the Surviving Corporation or (ii) impose upon Zions or the Surviving
Corporation any materially burdensome terms or conditions. For purposes of
this Section 7.01(b), no condition, restriction or requirement shall be
deemed to be "materially burdensome" if such condition, restriction or
requirement, considered individually or in the aggregate with all other
such conditions, restrictions and requirements, does not materially differ
from conditions, restrictions or requirements that have been imposed by the
Federal Reserve or other Governmental Authorities in orders approving
acquisitions by Zions in the past and compliance with such condition,
restriction or requirement would not either (i) require the taking of any
action inconsistent with the manner in which Zions or any of its
Subsidiaries has conducted their businesses previously or (ii) have a
Material Adverse Effect with respect to Zions or Company or (iii) preclude
satisfaction of any of the conditions to consummation of the Merger.
(c) NO INJUNCTION. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment,
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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.
VII.2 CONDITIONS TO OBLIGATION OF COMPANY. The obligation of Company to
consummate the Merger is also subject to the fulfillment or written waiver by
Company prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Zions set forth in this Agreement (subject to the standard set forth in
Section 5.02) shall be true and correct as of the date of this Agreement
and as of the Effective Time as though made on and as of the Effective Date
(except that representations and warranties that by their terms speak only
as of the date of this Agreement or some other date shall be true and
correct as of such date), and Company shall have received a certificate,
dated the Effective Date, signed on behalf of Zions by an executive officer
of Zions to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF ZIONS. Zions shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Effective Time, and Company shall have
received a certificate, dated the Effective Date, signed on behalf of Zions
by an executive officer of Zions to such effect.
(c) OPINION OF COMPANY'S ACCOUNTANTS. Company shall have received an
opinion of KPMG 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 will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, (ii) each
of Zions and Company will be a party to that reorganization within the
meaning of Section 368(b) of the Code, (iii) no gain or loss will be
recognized by shareholders of Company who receive shares of Zions Common
Stock in exchange for shares of Company Common Stock, except with respect
to cash received in lieu of fractional share interests, (iv) the holding
period of Zions Common Stock exchanged for shares of Company Common Stock
will include the holding period of the Company Common Stock for which it is
exchanged, assuming the shares of Company Common Stock are capital assets
in the hands of the holder thereof at the Effective Time and (v) the basis
of the Zions Common Stock received in the Merger will be the same as the
basis of the Company Common Stock for which it is exchanged, less any basis
attributable to fractional shares for which cash is received. In rendering
its opinion, KPMG LLP may require and rely upon representations contained
in letters from Company, Zions and shareholders of Company.
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(d) ACCOUNTANTS' LETTERS. Company shall have received the letters
referred to in Section 6.14 from Zions' independent auditors.
(e) LISTING. The shares of Zions Common Stock to be issued in the
Merger shall have been approved for listing on the NASDAQ, subject to
official notice of issuance.
(f) FAIRNESS OPINION. Prior to the mailing of the Proxy Statement to
the shareholders of Company, Company shall have received an opinion of The
Findley Group dated the date of the Proxy Statement to the effect that, as
of such date, the consideration to be received by the holders of Company
Common Stock in the Merger is fair to the holders of Company Common Stock
from a financial point of view.
VII.3 CONDITIONS TO OBLIGATION OF ZIONS. The obligation of Zions to
consummate the Merger is also subject to the fulfillment or written waiver by
Zions prior to the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Company and Company Bank set forth in this Agreement (subject to the
standard set forth in Section 5.02) shall be true and correct as of the
date of this Agreement and as of the Effective Date as though made on and
as of the Effective Time (except that representations and warranties that
by their terms speak only as of the date of this Agreement or some other
date shall be true and correct as of such date) and Zions shall have
received a certificate, dated the Effective Date, signed on behalf of
Company by an executive officer of Company and on behalf of Company Bank by
on executive officer of Company Bank to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF COMPANY AND COMPANY BANK. Each of
Company and Company Bank shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior
to the Effective Time, and Zions shall have received a certificate, dated
the Effective Date, signed on behalf of Company by an executive officer of
Company and on behalf of Company Bank by an executive officer of Company
Bank to such effect.
(c) OPINION OF ZIONS' COUNSEL. Zions shall have received an opinion of
Sullivan & Cromwell, special counsel to Zions, dated the Effective Date, to
the effect that, on the basis of facts, representations and assumptions set
forth in such opinion, (i) the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a) of
the Code and (ii) each of Zions and Company will be a party to the
reorganization within the meaning of Section 368(b) of the Code. In
rendering its opinion, Sullivan & Cromwell may require and rely upon
representations contained in letters from Company, Zions and shareholders
of Company.
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(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 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.
(f) EMPLOYMENT AGREEMENT. Each of Steven F. Hertel and Robert Longatti
shall have executed and delivered to Zions or its designee counterparts to
the applicable form of employment agreement attached hereto as Exhibit E.
ARTICLE VIII
TERMINATION
VIII.1 TERMINATION. This Agreement may be terminated, and the Merger
may be abandoned:
(a) MUTUAL CONSENT. At any time prior to the Effective Time, by the
mutual consent of Zions and Company, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board.
(b) BREACH. At any time prior to the Effective Time, by Zions or
Company, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event of either: (i) a breach by
Company or Company Bank, on the one hand, or Zions, on the other, of any
representation or warranty contained herein (subject to the standard set
forth in Section 5.02), which breach cannot be or has not been cured within
30 days after the giving of written notice to the breaching party of such
breach; or (ii) a breach by Company or Company Bank, on the one hand, or
Zions, on the other, of any of the covenants or agreements contained
herein, which breach cannot be or has not been cured within 30 days after
the giving of written notice to the breaching party of such breach,
provided that such breach (whether under (i) or (ii)) would be reasonably
likely, individually or in the aggregate with other breaches, to result in
a Material Adverse Effect with respect to the breaching party.
(c) DELAY. At any time prior to the Effective Time, by Zions or
Company, if its Board of Directors so determines by vote of a majority of
the members of its entire Board, in the event that the Merger is not
consummated by December 31, 1999, except to the extent that the failure of
the Merger then to be consummated arises out of or results from the knowing
action or inaction of the party seeking to terminate pursuant to this
Section 8.01(c).
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(d) NO APPROVAL. By Company or Zions, if its Board of Directors so
determines by a vote of a majority of the members of its entire Board, in
the event (i) the approval of any Governmental Authority required for
consummation of the Merger and the other transactions contemplated by this
Agreement shall have been denied by final nonappealable action of such
Governmental Authority or (ii) the shareholder approval required by Section
7.01(a) herein is not obtained at the Company Meeting.
(e) FAILURE TO RECOMMEND, ETC. At any time prior to the Company
Meeting, by Zions if the Company Board shall have failed to make its
recommendation referred to in Section 6.02, withdrawn such recommendation
or modified or changed such recommendation in a manner adverse in any
respect to the interests of Zions.
(f) BY ZIONS. By Zions, by written notice to Company, if Company
takes, causes to be taken or allows to be taken any action that would be
prohibited under Section 6.06 hereof.
(g) BY COMPANY. By Company, by written notice to Zions prior to the
approval by the shareholders of Company of the Merger and this Agreement,
if (i) Company receives a Superior Proposal, (ii) the Company Board
receives a written opinion of outside counsel to the effect that, and based
on such advice the Company Board determines by a majority vote in its good
faith judgment that, terminating this Agreement for the purpose of entering
into an agreement with respect to such Superior Proposal is required to
satisfy the fiduciary duties of the Company Board under applicable law and
(iii) after receiving such advice, determines to accept such proposal;
PROVIDED, HOWEVER, that Company shall not be entitled to terminate this
Agreement pursuant to this clause (g) unless it shall have provided Zions
with written notice of such a possible determination (which written notice
will inform Zions of the material terms and conditions of the proposal,
including the identity of the proponent) two Business Days prior to such
determination.
VIII.2 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 breach of
this Agreement prior to such termination.
(b) If this Agreement shall be terminated (i) by Zions pursuant to
Section 8.01(b) or 8.01(d)(ii) (and, at the time of the occurrence of the
circumstance permitting termination pursuant to such Section, there shall
exist an Acquisition Proposal with respect to Company or any of its
Subsidiaries, which, in the event of a termination pursuant to Section
8.01(d)(ii) shall have been publicly announced prior to the time of the
Company Meeting) or
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Section 8.01(e) or Section 8.01(f) or (ii) by Company pursuant to Section
8.01(d)(ii) (and, at the time of the occurrence of the circumstance
permitting termination pursuant to such Section, there shall exist an
Acquisition Proposal with respect to Company or any of its Subsidiaries
that shall have been publicly announced prior to the time of the Company
Meeting) or Section 8.01(g), then Company shall promptly pay to Zions a
termination fee equal to $1.8 million, which (except in the case of
termination pursuant to Section 8.01(f), in which case such amount shall
offset any damages to Zions to the extent of payment) the parties agree
shall represent liquidated and exclusive damages recoverable by Zions
relating to the actions resulting in termination. Notwithstanding the
foregoing, Zions shall not be entitled to any termination fee hereunder if
Zions has exercised all or any part of the Option (as defined in the Stock
Option Agreement).
(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 ten (10) Business Days of such termination, Company
shall pay the costs and expenses (including legal fees and expenses)
incurred by Zions in connection with any action, including the filing of
any lawsuit, taken to collect payment of such amount, together with
interest on the amount of any such unpaid amount at the publicly announced
prime rate of Zions First National Bank from the date of such termination.
ARTICLE IX
MISCELLANEOUS
IX.1 SURVIVAL. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than
Sections 6.12 and 6.13 and this Article IX which shall survive the Effective
Time) or the termination of this Agreement if this Agreement is terminated prior
to the Effective Time (other than Sections 6.03(b), 6.05(b), 8.02, and this
Article IX which shall survive such termination).
IX.2 WAIVER; AMENDMENT. Prior to the Effective Time, any provision of
this Agreement may be (i) waived by the party benefitted by the provision, or
(ii) amended or modified at any time, by an agreement in writing between the
parties hereto executed in the same manner as this Agreement, except that after
the Company Meeting, this Agreement may not be amended if it would violate the
CGCL or reduce the consideration to be received by Company shareholders in the
Merger.
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IX.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
IX.4 GOVERNING LAW; WAIVER OF JURY TRIAL. This Agreement shall be
governed by, and interpreted in accordance with, the laws of the State of
California applicable to contracts made and to be performed entirely within such
State (except to the extent that mandatory provisions of Federal law or of the
UBCA are applicable). Each of the parties hereto hereby irrevocably waives any
and all right to trial by jury in any legal proceeding arising out of or related
to this Agreement or the transactions contemplated hereby. Venue for any action
between the parties to this Agreement shall be a court of competent jurisdiction
in the City of San Diego, California.
IX.5 EXPENSES. Each party hereto will bear all expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby.
IX.6 NOTICES. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
If to Company, to:
Regency Bancorp
7060 North Fresno Street
Fresno, California 93720
Attention: Steven Hertel
Facsimile: (559) 438-2699
With a copy to:
Coudert Brothers
303 Almaden Blvd.
Suite 500
San Jose, California 95110
Attention: Glenn T. Dodd, Esq.
Facsimile: (408) 297-3191
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If to Zions, to:
Zions Bancorporation
One South Main, Suite 1380
Salt Lake City, Utah 84111
Attention: Dale M. Gibbons
Facsimile: (801) 524-2129
With a copy to:
Sullivan & Cromwell
1888 Century Park East
Los Angeles, CA 90067
Attention: Stanley F. Farrar
Facsimile: (310) 712-8800
IX.7 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Agreement
(together with all Exhibits hereto, the Company and Company Bank Disclosure
Schedules delivered in connection herewith and the Confidentiality Agreement,
dated February 17, 1999 by and between Zions and Company) represents the entire
understanding of the parties hereto with reference to the transactions
contemplated hereby and thereby and this Agreement supersedes any and all other
oral or written agreements heretofore made. Nothing in this Agreement expressed
or implied, is intended to confer upon any person, other than the parties hereto
or their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
IX.8 INTERPRETATION; EFFECT. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." No provision of this Agreement shall
be construed to require Company, Company Bank, Zions or any of their respective
Subsidiaries, affiliates or directors to take any action which would violate
applicable law (whether statutory or common law), rule or regulation.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
REGENCY BANCORP
By:
-------------------------------
Name: Steven F. Hertel
Title: Chairman, President and
Chief Executive Officer
REGENCY BANK
By:
-------------------------------
Name: Steven F. Hertel
Title: Chairman, President and
Chief Executive Officer
ZIONS BANCORPORATION
By:
-------------------------------
Name: Dale M. Gibbons
Title: Chief Financial Officer
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