SHAREHOLDER AGREEMENT
This Shareholder Agreement ("the Agreement") is entered into as of
October 1, 1998, among Zions Bancorporation, a Utah corporation ("Zions"),
Xxxxxx X. Xxxxxx, a director of Zions and Chairman of the Board of Directors
(the "Board") of Grossmont Bank (the "Bank"), a wholly owned subsidiary of
Zions, in his capacity as Trustee of the Xxxxxx X. Xxxxxx Separate Property
Trust dated September 29, 1997 ("Xxxxxx"), and CBT Holdings, a Wyoming general
partnership (the "Partnership" and together with Xxxxxx, the "Investors"), which
consists of two Delaware limited liability companies as partners (collectively,
the "Limited Liability Companies" and for both of which Xxxxxx, in his
individual capacity, is the sole manager).
RECITALS
A. Zions has entered into an Agreement and Plan of Merger dated as of
March 25, 1998 (the "Merger Agreement") providing for the acquisition of The
Sumitomo Bank of California ("Sumitomo").
B. The Merger Agreement provides for SBC Acquisition Corp., a wholly
owned subsidiary of the Bank, to be merged (the "First Merger") into Sumitomo,
with Sumitomo as the surviving bank (the "Interim Bank").
C. Immediately after the First Merger, the Interim Bank will declare
and pay a cash dividend of $250 million to the Bank, which will declare and pay
a comparable dividend to Zions (collectively, the "Dividends").
D. Immediately following payment of the Dividends, but prior to the
merger of the Interim Bank into the Bank, Zions will cause the Interim Bank to
issue and sell to each of the Investors, and each of the Investors shall
purchase, shares of the common stock of the Interim Bank equal to 5.4% of the
outstanding shares of common stock of the Interim Bank.
E. Immediately after such investment by the Investors, the Interim Bank
shall merge with and into the Bank (the "Second Merger"), with the Bank as the
survivor, and each of the Investors will, as a consequence of the Second Merger,
own 2.5% of the issued and outstanding common stock (the "Bank Common Stock") of
the Bank.
F. The parties hereto wish to provide for the investment by the
Investors in the Bank and for various aspects of their relationship as
shareholders of the Bank.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
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"AVERAGE PRICE" means 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 (i) ten Nasdaq
trading days immediately preceding a Buy-Back Notice and (ii) the ten Nasdaq
trading days immediately following such Buy-Back Notice.
"BANK" means Grossmont Bank.
"BANK COMMON STOCK" has the meaning specified in Recital E.
"BHC ACT" means the Bank Holding Company Act of 1956, as amended.
"BUY-BACK CLOSING" has the meaning specified in Section 10.6(b) hereof.
"BUY-BACK NOTICE" has the meaning specified in Section 10.6(a) hereof.
"BUY-BACK PRICE" has the meaning specified in Section 10.6(e) hereof.
"BUY-BACK SECURITIES" has the meaning specified in Section 10.6(a)
hereof.
"COMMISSIONER" means the California Commissioner of Financial
Institutions.
"DRAWDOWN DATE" has the meaning specified in Section 9.6 hereof.
"EMPLOYMENT AGREEMENT" has the meaning specified in Section 5.6 hereof.
"EXCHANGE ACT" means the U.S. Securities Exchange Act of 1934, as
amended.
"FDIA" means the Federal Deposit Insurance Act, as amended.
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"GAAP" means generally accepted United States accounting principles.
"INDEPENDENT" when used with respect to an Investment Bank means an
Investment Bank which has not been engaged by Zions for a fee in excess of
$25,000 during the 12-month period preceding the date of its engagement
hereunder.
"INVESTMENT BANK" means a nationally recognized investment banking firm
with experience in evaluating or valuing banking organizations, including
California banking organizations.
"INVESTOR DISCLOSURE LETTER" means the letter from the Investors to
Zions delivered on or before the date hereof with respect to certain
representations and warranties.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, results of operations or financial condition of Zions and its
subsidiaries, taken as a whole, other than any such effect attributable to or
resulting from (x) any change in banking or similar laws, rules or regulations
of general applicability or interpretations thereof by courts or governmental
authorities or (y) any change in GAAP or regulatory accounting principles
applicable to banks or their holding companies or (ii) the ability of Zions to
perform its obligations pursuant to this Agreement.
"NASDAQ" means the Nasdaq Stock Market or other primary market on which
Zions Common Stock is listed.
"OFFICER'S CERTIFICATE" means a certificate signed by the chief
executive officer or the chief financial officer of Zions, stating that (i) the
person signing such
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certificate has made or has caused to be made such investigations as are
necessary in order to permit him to verify the accuracy of the information set
forth in such certificate, and (ii) to the best of such person's knowledge, such
certificate does not misstate any material fact or omit to state any material
fact necessary to make the certificate not misleading.
"PROPORTIONATE SHARE" means, with respect to each of the Shareholders,
a fraction, the numerator of which is the total number of shares of Bank Common
Stock owned by such Shareholder and the denominator of which is the total number
of shares of outstanding Bank Common Stock at such time.
"RIGHTS" means 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 Bank Common
Stock or other equity securities.
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended.
"SHAREHOLDERS" means Zions and each of the Investors.
"TRANSFER" has the meaning set forth in Section 10.1.
"ZIONS COMMON STOCK" means the common stock, no par value, of Zions
together with any rights attached thereto pursuant to the Shareholder Protection
Rights Agreement dated September 27, 1996, between Zions and Zions First
National Bank, as rights agent.
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"ZIONS DISCLOSURE LETTER" means the letter from Zions to the Investors
delivered on or before the date hereof with respect to certain representations
and warranties.
1.2 DEFINITIONS IN MERGER AGREEMENT. Except as otherwise provided
herein, terms defined in the Merger Agreement shall have their same respective
meanings herein.
ARTICLE II
INVESTMENT
2.1 INVESTMENT. Immediately following payment of the Dividends, subject
to the terms and conditions of Articles V and VI hereof, Zions shall cause the
Interim Bank to issue and sell to each of the Investors, and each of the
Investors, severally and not jointly, shall purchase from the Interim Bank, a
number of shares (the "Shares") of the common stock of the Interim Bank,
representing 5.4% of the outstanding shares of common stock of the Interim Bank.
The purchase price for each of the Investors shall be $16,500,000 (the "Purchase
Price"), for an aggregate purchase price of $33,000,000. The Purchase Price
shall increase or decrease in the same percentage as the aggregate consideration
payable by Zions pursuant to the Merger Agreement shall, if at all, increase or
decrease prior to the consummation of the First Merger.
2.2 LOAN TO XXXXXX. At the Closing, Zions shall extend a loan to Xxxxxx
in the amount of $14,850,000 (the "Xxxxxx Loan") to apply to the Purchase Price,
upon the terms and conditions set forth in a Loan Agreement between Xxxxxx and
Zions and in
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a Non-Recourse Promissory Note, both in the form attached as Exhibit A to this
Agreement.
2.3 THE CLOSING. The delivery of the respective Shares to the
Investors, and the payment by each of the Investors of its Purchase Price, will
take place at the offices of Xxxxxxxx & Xxxxxxxx in Los Angeles, California at a
closing (the "Closing") immediately following payment of the Dividends and prior
to the Second Merger. Payment of the Purchase Price shall be by transfer of
immediately available funds to an account designated by Zions.
2.4 MERGER WITH THE BANK. Immediately following the payment of its
Purchase Price by each of the Investors, the Interim Bank shall merge with and
into the Bank, with the Bank being the surviving entity. The outstanding shares
of the Interim Bank shall be canceled. The Bank shall issue to the Investors
newly issued shares of Bank Common Stock equal, in the aggregate, to 5% of the
Bank's issued and outstanding shares of Bank Common Stock, of which each of the
Investors shall own half.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ZIONS
Zions hereby represents and warrants to the Investors that:
3.1 ORGANIZATION, ETC. Each of Zions, the Interim Bank and the Bank
has, or will have following the First Merger, all requisite power and authority
to enter into, carry out and perform its obligations under the terms of this
Agreement.
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3.2 CAPITALIZATION.
(a) Immediately after the First Merger, (i) the authorized capital
stock of the Interim Bank will consist of 25,000,000 shares of common stock and
5,000,000 shares of preferred stock and (ii) there will be (x) such number of
shares of such common stock outstanding as shall be certified at the Closing by
Zions to the Investors, all of which will be owned by the Bank, free and clear
of all liens, encumbrances, equities or claims, and (y) no shares of such
preferred stock outstanding.
(b) The authorized capital stock of the Bank consists of 3,000,000
shares of Bank Common Stock. As of the date hereof there are, and immediately
prior to the Second Merger there will be, 1,900,000 shares of Bank Common Stock
outstanding, all of which are and will be owned by Zions.
(c) The authorized capital stock of Zions consists of 200,000,000
shares of Zions Common Stock and 3,000,000 shares of Zions preferred stock.
(d) Neither the Interim Bank nor the Bank has any outstanding Rights,
or any other equity securities outstanding except as set forth in this Section
3.2.
(e) All of the outstanding shares of the capital stock of each of the
Interim Bank and the Bank are, or will at the Closing be, validly issued, fully
paid and nonassessable and, upon the issuance and sale of the Shares and of the
Bank Common Stock to be acquired by the Investors, the Shares and such Bank
Common Stock will be validly issued, fully paid and nonassessable.
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3.3 AUTHORIZATION; NO BREACH. The execution, delivery and performance
of this Agreement and the consummation of all transactions contemplated hereby
have been duly authorized by all requisite corporate action of Zions. Assuming
due execution by each of the Investors, this Agreement constitutes a valid and
binding obligation of Zions, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general principles of equity. The execution, delivery and performance by
Zions of this Agreement do not and will not (with or without the giving of
notice, the lapse of time or both) result in the creation of any lien, claim,
security interest, charge or other encumbrance upon Zions', the Interim Bank's
or the Bank's capital stock or assets or (i) conflict with or result in a breach
of the terms, conditions or provisions of, (ii) constitute a default under,
(iii) give any third party the right to accelerate any obligation under or (iv)
result in a violation of, the Articles of Incorporation or Bylaws of Zions, the
Interim Bank or the Bank, or, any law, statute, rule, regulation, instrument,
order, judgment or decree to which Zions, the Interim Bank or the Bank or any of
their respective properties is subject, or any contract, instrument or document
to which either Zions, the Interim Bank or the Bank is a party or by which it is
bound or to which any of its respective properties is subject, assuming that the
Commissioner shall have either approved the investment by the Investors in the
Shares or exempted such investment from the applicable requirements of the
California Financial
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Code and issued a permit or exempted from the permit requirements the issuance
and sale to the Investors of the Shares and the Bank Common Stock.
3.4 REGULATORY MATTERS. No consent, approval, authorization,
registration or qualification of any Governmental Authority or any third party
is required to be obtained by Zions or any of its Subsidiaries in connection
with the execution, delivery or performance by Zions of the Agreement, except
such consents, approvals, authorizations, registrations or qualifications as may
be required under federal or state banking laws.
3.5 RIGHTS OF BANK COMMON STOCK. Each share of Bank Common Stock issued
and sold to the Investors hereunder will have the rights set forth in the Bank's
Articles of Incorporation, a copy of which is set forth as Exhibit B hereto.
3.6 OWNERSHIP OF SHARES AND BANK COMMON STOCK. Upon (a) delivery of the
Shares to the Investors and payment therefor pursuant hereto and (b) the
cancellation of such Shares in exchange for Bank Common Stock pursuant to the
Second Merger, good and valid title to such Shares and Bank Common Stock, free
and clear of all liens, encumbrances, equities or claims, will pass to the
Investors, except for a lien in favor of Zions with respect to the Shares and
the Bank Common Stock securing the Xxxxxx Loan. Neither the issuance and sale of
the Shares pursuant hereto nor the cancellation of such Shares in exchange for
Bank Common Stock in connection with the Second Merger will give rise to any
preemptive rights or will violate any law, statute,
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rule, regulation, instrument, order, judgment or decree to which either the
Interim Bank or the Bank or any of their respective assets are subject.
3.7 FINANCIAL REPORTS AND REGULATORY DOCUMENTS.
(a) Zions' Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, 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, 1997 under the Securities Act or
under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form filed
or to be filed (collectively, "SEC Documents") with the SEC, as applicable, as
of the date filed, (i) complied or will comply in all material respects as to
form with the applicable requirements under the Securities Act and the Exchange
Act, as the case may be, and (ii) 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 light of the
circumstances under which they were made, not misleading; and each of the
consolidated balance sheets contained in or incorporated by reference into any
such SEC Document (including the related notes and schedules thereto) fairly
presents, or will fairly present, the consolidated financial position of Zions
and its Subsidiaries as of its date, and each of the consolidated statements of
income and changes in stockholders' equity and cash flows or equivalent
statements in such SEC Documents (including any related notes and schedules
thereto) fairly presents, or will fairly present, the consolidated results of
operations, changes in stockholders' equity and changes in cash flows, as the
case may be, of Zions and its
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Subsidiaries for the periods to which they relate, in each case in accordance
with GAAP consistently applied during the periods involved, except in each case
as may be noted therein, subject to normal year-end audit adjustments and the
lack of complete footnote disclosure in the case of unaudited statements.
(b) Except as disclosed in the SEC Documents filed on or before the
date hereof or in the Zions Disclosure Letter, since March 31, 1998, (i) Zions
and its Subsidiaries have conducted their respective businesses in the ordinary
and usual course consistent with past practice and (ii) no event has occurred or
circumstance arisen that, individually or taken together with all other facts,
circumstances and events, has had or is reasonably likely to have a Material
Adverse Effect.
3.8 LITIGATION. There are no actions, suits, claims, arbitrations,
proceedings or investigations pending, or, to the knowledge of Zions, threatened
against, affecting or involving Zions or any of its Subsidiaries in connection
with the transactions contemplated by the First Merger, the Second Merger, or
this Agreement, at law or in equity or before or by any court, arbitrator or
governmental authority, domestic or foreign.
3.9 SUMITOMO REPRESENTATIONS. Except as set forth in the Zions
Disclosure Letter, Zions is not aware that any of the representations made by
Sumitomo in the Merger Agreement are untrue as of the date hereof.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE INVESTORS
Each of the Investors hereby represents and warrants to Zions that:
4.1 EXECUTION, DELIVERY AND PERFORMANCE. Such Investor has full power
and authority to execute and deliver this Agreement and to perform his or its
obligations hereunder. This Agreement has been duly authorized, executed and
delivered by such Investor and is his or its valid and binding obligation,
enforceable against him or it, as the case may be, in accordance with its terms
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general principles of equity. No consent, approval,
authorization, order, filing, registration or qualification of or with any
court, governmental authority or third person is required to be obtained by such
Investor in connection with the execution and delivery of this Agreement or the
performance of its obligations hereunder or thereunder, except such consents,
approvals, authorizations, registrations or qualifications as may be required
under federal or state banking laws.
4.2 INVESTMENT. Such Investor is acquiring the Shares for investment
and not with a view to their distribution. One of the partners of the
Partnership is an "accredited investor" as that term is defined in Rule 501(a)
under the Securities Act. The other partner of the Partnership has no more than
35 members who are not accredited investors, each of whom is an officer of the
Bank and has such knowledge and experience in financial and business matters
that he or she is capable of evaluating the merits and
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risks of the prospective investment. The Partnership agrees that it has
provided, or will provide prior to Closing, all information required pursuant to
Rule 502(b) under the Securities Act to each of its partners and the members of
such partners.
4.3 ORGANIZATION. The Partnership is duly formed, validly existing and
in good standing under the laws of the state of its formation.
4.4 NO BREACH. The execution and delivery by such Investor of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not (with or without the giving of notice, the lapse of time or both)
(i) conflict with or result in a breach of the terms, conditions or provisions
of, (ii) constitute a default under, (iii) except for a lien in favor of Zions
with respect to the Shares securing the Xxxxxx Loan, result in the creation of
any lien, security interest, charge or encumbrance upon such Investor's equity
interests or assets, (iv) give any third party the right to accelerate any
obligation under, or (v) result in a violation of, the Partnership's partnership
agreement or any law, statute, rule, regulation, instrument, order, judgment or
decree to which such Investor or any of its properties is subject, or any
contract to which it is a party or by which it is bound or to which any of its
properties is subject, assuming that the Commissioner shall have either approved
the investment by the Investors or exempted it from the applicable requirements
of the California Financial Code.
4.5 FINANCING. Provided that Zions extends the Xxxxxx Loan at the
Closing, each such Investor has, or will have at the Closing, funds available to
it to consummate the purchase of the Shares pursuant to the terms of this
Agreement. Except
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for the Xxxxxx Loan, no part of the Purchase Price will be borrowed from Zions
or any of its affiliates.
4.6 LITIGATION. There are no actions, suits, claims, arbitrations,
proceedings or investigations pending, or, to the knowledge of either of the
Investors, threatened against, affecting or involving either of the Investors in
connection with the transactions contemplated by the First Merger, the Second
Merger, or this Agreement, at law or in equity or before or by any court,
arbitrator or governmental authority, domestic or foreign.
4.7 PARTNERSHIP. The offering and sale of interests in the Partnership
and the Limited Liability Companies was (a) exempt from registration under the
Securities Act and (b) qualified or registered under, or exempt from, the
applicable requirements of state "Blue Sky" laws, including without limitation
the California Corporate Securities Law of 1968.
4.8 SUMITOMO REPRESENTATIONS. Except as set forth in the Investor
Disclosure Letter, such Investor is not aware that any of the representations
made by Sumitomo in the Merger Agreement are untrue as of the date hereof.
ARTICLE V
CONDITIONS TO THE INVESTORS' OBLIGATIONS FOR THE CLOSING
The obligation of each of the Investors to purchase and pay for the
Shares to be purchased by such Investor at the Closing is subject to the
satisfaction on or before the date of the Closing of the following conditions:
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5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Zions contained in Article III hereof shall be true in all material respects
at and as of the Closing as though then made, except as expressly contemplated
thereby.
5.2 BANK REGULATORY ACTION. The Commissioner shall have either approved
the investment in, and issuance of, the Shares and the Bank Common Stock or
exempted the investment in the Shares and the issuance of the Shares and the
Bank Common Stock from the requirements of Sections 701 and 691, respectively of
the California Financial Code, and the Commissioner and the FDIC, as the case
may be, shall have approved the First Merger and the Second Merger.
5.3 PROCEEDINGS. All corporate and other proceedings taken or required
to be taken by Zions, the Bank or the Interim Bank in connection with the
transactions contemplated hereby to be consummated at or prior to the Closing
shall have been taken and all documents incident thereto shall be satisfactory
in form and substance to the Investors.
5.4 CLOSING CERTIFICATE. Zions shall have delivered to the Investors on
the date of such Closing an Officer's Certificate dated the date of such
Closing, stating that the conditions set forth in Sections 5.1 and 5.3 have been
satisfied.
5.5 EXTENSION OF XXXXXX LOAN. Zions shall have extended the Xxxxxx Loan
on the date of Closing.
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5.6 EMPLOYMENT AGREEMENT. The Bank and Xxxxxx shall have entered into
the Employment Agreement substantially in the form attached hereto as Exhibit C
(the "Employment Agreement").
5.7 FIRST MERGER. The First Merger shall have been consummated
immediately prior to the acquisition of the Shares by the Investors.
5.8 NO GOVERNMENTAL ACTION. No action or proceeding by or before any
governmental authority shall have been instituted or threatened (and not
subsequently dismissed, settled or otherwise terminated) which is reasonably
expected to (i) restrain, prohibit or invalidate the transactions contemplated
by the First Merger, the Second Merger or this Agreement, or (ii) have a
Material Adverse Effect on Zions or the Bank, either prior to or after the First
Merger or the Second Merger.
5.9 LEGAL OPINION. Zions shall have furnished a legal opinion as to the
due authorization, full payment and non-assessability of the Shares and the Bank
Common Stock.
5.10 WAIVER. Any condition specified in this Article V may be waived in
writing by the Investors.
ARTICLE VI
CONDITIONS TO ZIONS' OBLIGATIONS FOR THE CLOSING
The obligation of Zions to cause the Interim Bank to deliver the Shares
to the Investors at the Closing is subject to the satisfaction on or before the
date of the Closing of the following conditions:
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6.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Investors contained in Article IV hereof shall be true and correct in all
material respects at and as of the date of the Closing as if made on and as of
such date and Zions shall have received a certificate from each of the Investors
to such effect.
6.2 BANK REGULATORY ACTION. The Commissioner shall have either approved
the investment in, and issuance of, the Shares and the Bank Common Stock or
exempted the investment in the Shares and the issuance of the Shares and the
Bank Common Stock from the requirements of Sections 701 and 691, respectively of
the California Financial Code and the Commissioner and the FDIC, as the case may
be, shall have approved the First Merger, the Second Merger and the payment of
the Dividends.
6.3 PROCEEDINGS. All partnership and other proceedings taken or
required to be taken by the Investors in connection with the transactions
contemplated hereby to be consummated at or prior to the Closing shall have been
taken and all documents incident thereto shall be satisfactory in form and
substance to Zions.
6.4 CLOSING DOCUMENTS. The Partnership shall have delivered to Zions on
the date of such Closing a copy of the partnership agreement of the Partnership
and the certificates of formation of the Limited Liability Companies, certified
by Xxxxxx.
6.5 EMPLOYMENT AGREEMENT. Xxxxxx shall have entered into the Employment
Agreement.
6.6 NO GOVERNMENTAL ACTION. No action or proceeding by or before any
governmental authority shall have been instituted or threatened (and not
subsequently
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dismissed, settled or otherwise terminated) which is reasonably expected to (i)
restrain, prohibit or invalidate the transactions contemplated by the First
Merger, the Second Merger or this Agreement, or (ii) have a Material Adverse
Effect on Zions or the Bank, either prior to or after the First Merger or the
Second Merger.
6.7 WAIVER. Any condition specified in this Article VI may be waived in
writing by Zions.
ARTICLE VII
COVENANTS
7.1 FILINGS. If and when necessary, as promptly as practicable, Zions
and the Investors shall make, and Zions shall cause the Bank and the Interim
Bank to make, all filings and submissions under applicable banking laws and
regulations as may be reasonably required to be made in connection with this
Agreement and the transactions contemplated hereby. Zions shall furnish to the
Investors, and the Investors shall furnish to Zions, such information and
assistance as the other may reasonably request in connection with the
preparation of any such filings or submissions.
7.2 CONDITIONS TO CLOSING. Zions and the Investors shall each use their
reasonable best efforts to cause (a) the conditions to the Closing, as described
herein in Articles V and VI, to be satisfied, including, in the case of Zions to
cause each of the Bank and the Interim Bank to take the actions contemplated
hereby, and (b) the Closing to occur promptly after satisfaction of the
conditions thereto.
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7.3 RESTRICTIONS ON OTHER AGREEMENTS. Except as otherwise provided
herein, none of the Shareholders shall grant any proxy or enter into, or agree
to be bound by, any voting trust or voting agreement with respect to the Bank
Common Stock nor shall any of the Shareholders enter into any agreement,
contract or arrangement with any Person with respect to any shares of Bank
Common Stock that would adversely affect its ability to perform its obligations
under this Agreement in any material respect.
7.4 INDEMNITY PAYMENTS. Zions agrees that, so long as the Investors own
any Bank Common Stock, it shall contribute any payments received by it pursuant
to the Indemnification Agreement, dated as of March 25, 1998, between The
Sumitomo Bank, Limited and Zions, to the Bank.
7.5 RIGHT TO RELY ON XXXXXX. Unless and until the chief executive
officer or the chief financial officer of Zions has received notice to the
contrary from an individual purporting to be the successor manager of the
Limited Liability Companies, together with evidence reasonably acceptable to
Zions to establish such succession, Zions shall be entitled to assume that
Xxxxxx is the manager of the Limited Liability Companies. Each and every action
taken or omitted hereunder in reliance on such assumption shall be final and
binding on the Partnership, notwithstanding that it may later be shown that
Xxxxxx was not, at the time of such action or omission, the manager of the
Limited Liability Companies.
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ARTICLE VIII
BANK GOVERNANCE
8.1 THE BOARD OF DIRECTORS. The business and affairs of the Bank shall
be managed under the direction of the Board of Directors of the Bank (the
"Board"). So long as the Investors own, in the aggregate, not less than 3% of
the Bank Common Stock, the Board shall consist of not more than 20 members.
Zions shall vote its shares of the Bank Common Stock to ensure that at least one
representative of the Investors, to be named by Xxxxxx, is at all times a member
of the Board. Xxxxxx, in his individual capacity, shall be the initial
representative of the Investors to serve as a member of the Board.
8.2 CHIEF EXECUTIVE OFFICER. Pursuant to the Employment Agreement, from
and after the Effective Time Xxxxxx has agreed to serve, and the Bank has agreed
to employ Xxxxxx, as the chief executive officer of the Bank, subject to the
terms and conditions set forth in such agreement. If for any reason Xxxxxx
should cease to serve in such capacity, Zions will cause the Board to consider
(but not be bound by) the views of the Investors prior to naming a successor.
8.3 BUY-BACK OPTION. In the event that Xxxxxx should cease to serve as
chief executive officer of the Bank for any reason, the Investors shall be
entitled (but not obligated) to exercise rights under Section 10.6 to require
Zions to purchase all (but not less than all) of the Bank Common Stock
beneficially owned by the Investors by giving Zions an irrevocable Buy-Back
Notice anytime within 90 days of the date that Xxxxxx ceases to serve as chief
executive officer of the Bank. The acquisition by Zions of the
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Investors' shares of Bank Common Stock shall be made in accordance with all of
the terms of Section 10.6.
ARTICLE IX
BANK OPERATIONS
9.1 FINANCIAL INFORMATION. In addition to such internal audits and
credit examinations as may be undertaken by Zions' personnel, for each fiscal
year commencing with the fiscal year ending December 31, 1998 to and including
the fiscal year ending December 31, 2002, Zions shall cause its independent
accountants to perform an annual audit of the financial statements of the Bank.
Subject to any bank regulatory accounting requirements, such financial
statements shall be prepared in accordance with GAAP applied on a consistent
basis. The cost of the internal and external audits and the credit examinations
shall be borne by the Bank. Taxes in respect of income shall be computed by the
Bank as if it were a separate entity, in accordance with a tax sharing agreement
conforming to Zions' practices with its other banking Subsidiaries.
9.2 OVERHEAD ALLOCATIONS. In accordance with its practices consistently
applied with respect to its banking Subsidiaries, Zions shall allocate to the
Bank the latter's share of Zions' general and administrative expenses. In the
event of any dispute as to the reasonableness of such allocations taken as a
whole, the Shareholders agree that such dispute shall be referred to KPMG Peat
Marwick LLP, the independent auditors of Zions, or if KPMG Peat Marwick LLP
declines to serve then to another independent accounting firm mutually agreed by
the Shareholders, which firm's decision
- 22 -
on the matter (including any proposed modifications to make such allocations
reasonable taken as a whole) shall be final and binding (and in the case of any
proposed modifications, shall be implemented by Zions). The sole issue shall be
whether such allocations are unreasonable taken as a whole, including without
limitation the consideration of Zions' general and administrative expenses which
are not so allocated. The expenses of the referee shall be paid by Zions if the
referee determines that the allocations are, taken as a whole, unreasonable;
otherwise, such expenses shall be paid by the Investors.
9.3 BANK POLICIES. Each of the Investors (a) acknowledges that the
Bank's practices and policies as of the date hereof with respect to accounting,
credit (including provisioning for credit losses and the adequacy of the
allowance for such losses), risk management (including liquidity, interest rate
risk and capital management), internal controls and similar matters may not
necessarily conform to the practices and policies applicable to Zions' other
banking Subsidiaries generally and (b) agrees that Zions has the right in its
sole discretion to cause the Bank to modify existing practices and policies of
the Bank or to require the Bank to implement new practices and policies which
Zions deems to be prudent or otherwise warranted under the circumstances and in
accordance with safe and sound banking practices.
9.4 BENEFIT PLANS. The Bank's employee benefit plans shall be generally
consistent with the benefit plans of Zions and its other banking Subsidiaries.
Without limiting the generality of the foregoing, the Bank shall not issue any
Rights.
- 23 -
9.5 RESTRICTIONS ON CAPITAL DISTRIBUTIONS. The Bank shall not make any
capital distribution, as defined in Section 38(b)(2)(B) of the FDIA, which
would, after giving effect to such capital distribution, cause (a) the Bank to
be less than "well-capitalized" as such term is defined in Part 325 of the
regulations of the FDIC, or (b) during the 18-month period following the
Effective Date, the Bank's tangible common equity to be less than $250,000,000.
9.6 ADDITIONAL BANK COMMON STOCK. At any time (other than in connection
with an acquisition by, or merger of, the Bank) shares of Bank Common Stock are
to be issued by the Bank, the Shareholders shall be entitled to acquire
additional shares of Bank Common Stock during the term of this Agreement, such
acquisitions to be made in such amounts and on such dates (each, a "Drawdown
Date") as shall be specified by the Board in notices delivered to the
Shareholders, provided that (i) in connection with each such issuance of Bank
Common Stock each Shareholder shall be permitted to acquire additional shares of
the Bank Common Stock being issued in proportion to their respective
Proportionate Shares, (ii) each Drawdown Date shall be at least 30 business days
after delivery of the applicable notice of the issuance from the Board and (iii)
no Shareholder shall be permitted to acquire additional shares of Bank Common
Stock unless it commits thereto at least three business days prior to the
Drawdown Date. All acquisitions pursuant to this Section 9.6 shall be made in
cash in United States dollars by wire transfer to a bank account of the Bank
specified to the Shareholders in the notice of the issuance from the Board.
Notwithstanding the
- 24 -
foregoing, if on any Drawdown Date (a) one Investor does not acquire its full
Proportionate Share of additional shares of Bank Common Stock, the other
Investor may acquire such additional shares and (b), subject to clause (a), the
Investors do not acquire their full Proportionate Share of additional shares of
Bank Common Stock, Zions may acquire such additional shares. The price of any
additional Bank Common Stock issued pursuant to this Section 9.6 shall be
determined by the Board pursuant to Section 409 of the California General
Corporation Law after it obtains the advice of an Independent Investment Bank,
which shall provide to the Board its written calculation of such price in
accordance with customary criteria.
9.7 CALIFORNIA ACTIVITIES. Except as set forth in Section 9.8 and in
the proviso to this Section 9.7, Zions agrees that until the earlier of (a)
April 1, 2003 and (b) the date the Investors no longer own any shares of Bank
Common Stock, it will not (i) own another insured depository institution (as
such term in defined in the FDIA) with its principal office in California, (ii)
permit any of its insured depository institution Subsidiaries other than the
Bank to maintain branches in California or (iii) engage in any manner either
from within or outside California in any banking business in California;
provided that, Zions may, directly or indirectly, engage in (A) normal marketing
and related banking activities associated with branches located in communities
in a state adjacent to California and within 50 miles from the California border
provided that such activities are conducted only within the branch's normal
market area, (B) activities with customers located (i) outside California which
either move to or have operations in
- 25 -
California or (ii) in California but open an unsolicited account at a branch
located outside California of an insured depository institution owned by Zions,
(C) activities set forth on Exhibit D hereto and (D) activities which whether as
a result of the purchase of an existing operation or the establishment of such
activities internally by Zions, provide products or services to customers in
California; provided in the case of this clause (D) that (x) such products and
services are offered to customers of Zions' other insured depository institution
Subsidiaries and (y) revenues and costs from such activities are equitably and
fully allocated to the Bank and such other Subsidiaries.
9.8 ACQUISITIONS. (a) Zions may acquire one or more other insured
depository institution with its principal office in California or may purchase
the assets and/or assume the liabilities of the California branches of another
insured depository institution, provided that within 90 days of the date of such
acquisition, any such other insured depository institution or such assets and/or
liabilities is combined with the Bank, by merger or otherwise. In addition, the
Bank may make acquisitions of assets and/or assumptions of liabilities of other
insured depository institutions or their branches. In any such case in which the
Bank is combined with another insured depository institution or makes such
acquisitions or assumes such liabilities, to the extent that the consideration
therefor is obtained from Zions, additional shares of Bank Common Stock shall be
issued to Zions (and the Proportionate Share of each of the Investors will be
reduced accordingly) in an amount equal to the amount of such consideration,
provided that the value of the Bank Common Stock so issued pursuant to this
clause (a) shall be
- 26 -
determined by the Board pursuant to Section 409 of the California General
Corporation Law after it obtains the advice of (i) one Independent Investment
Bank mutually agreed to by Zions and the Investors or (ii) if Zions and the
Investors do not mutually agree, two Independent Investment Banks, one of which
shall be selected by Zions and one of which shall be selected by the Investors,
and each of which in the case of clause (i) and (ii) shall provide the Board its
written calculation of such price in accordance with customary criteria. The
value of the consideration given by Zions, if composed of Zions Common Stock,
shall be the Average Price (substituting, however, the date of the execution of
an agreement evidencing the acquisition for the date of the Buy-Back Notice).
(b) In the event that pursuant to Section 9.8(a), Zions proposes to the
Board that the Bank acquire or merge with an institution having more than 20% of
the Bank's assets reflected on the Bank's call report as of the fiscal quarter
immediately preceding such proposal, or acquire in one transaction assets with a
book value of more than 20% of the Bank's assets reflected on the Bank's call
report as of the fiscal quarter immediately preceding such proposal, and such
acquisition is not approved by Xxxxxx, the Investors shall be entitled to
exercise rights under Section 10.6 by giving Zions an irrevocable Buy-Back
Notice, anytime within 90 days of the date that Zions or the Bank enters into an
agreement to make such an acquisition, to require Zions to purchase all (but not
less than all) of the shares of Bank Common Stock beneficially owned by the
Investors. The acquisition by Zions of the Investors' shares of Bank Common
Stock shall be made in accordance with all of the terms of Section 10.6.
- 27 -
9.9 ASSET SALES. Zions agrees to consult with Xxxxxx prior to the sale
by the Bank to Zions or any of its affiliates of any assets outside of the
ordinary course of business of the Bank.
ARTICLE X
TRANSFERS OF CAPITAL STOCK
10.1 PROHIBITION AGAINST TRANSFERS. (a) None of the Shareholders may
sell, assign, transfer, pledge or otherwise dispose of (collectively, a
"Transfer") any Bank Common Stock other than as provided in this Article X. Any
purported Transfer of Bank Common Stock in violation of this Article X shall be
null and void and of no effect whatsoever.
10.2 REGULATORY COMPLIANCE. Notwithstanding any other provision of this
Agreement, no Shareholder may Transfer any shares of Bank Common Stock otherwise
than in compliance with the Securities Act, the BHC Act, the Change in Bank
Control Act and all other applicable laws.
10.3 NOTIFICATION OF INTENT TO TRANSFER. In the event that a
Shareholder decides to Transfer its Bank Common Stock in a manner permitted
under this Article X and undertakes meaningful steps in furtherance of such
decision, such Shareholder shall give the other Shareholders prompt written
notice of such decision.
10.4 TRANSFER BY THE INVESTORS. Except (i) as provided in this
Agreement, (ii) for the pledge of Bank Common Stock securing the Xxxxxx Loan and
(iii) for Xxxxxx to transfer the Bank Common Stock owned by him (subject to such
- 28 -
pledge) to an entity controlled by Xxxxxx, neither of the Investors may Transfer
shares of Bank Common Stock beneficially owned by him or it without the prior
written consent of Zions, which consent will not be unreasonably withheld.
10.5 TRANSFER BY ZIONS. Except as provided hereunder in this Section
10.5, Zions may not Transfer shares of Bank Common Stock beneficially owned by
it unless (i) Zions is acquired in a merger or other business combination (in
which case this Agreement shall be expressly assumed by the surviving entity),
or (ii) the Investors, in their sole discretion, consent in writing prior to
such Transfer or (iii) Zions Transfers all (but not less than all) of its shares
of Bank Common Stock beneficially owned by it to a Person in a bona fide
transaction at arm's-length and simultaneously with such Transfer by Zions, and
as a condition of Zions' Transfer, the transferee of such shares of Bank Common
Stock shall offer to purchase from the Investors their shares of Bank Common
Stock in accordance with this Section 10.5 at the same price being received by
Zions and for the same type of consideration if the purchase price is paid
solely in cash, or, if the purchase price is made in whole or in part in
securities of the acquiring person, the Investors shall receive for each share
of Bank Common Stock the same consideration received by Zions for each of its
shares of Bank Common Stock provided that the receipt of any securities would be
a non-taxable event to the Investors. If the receipt of securities would be
taxable to the Investors, then the Investors shall be entitled to receive in
U.S. dollars a cash purchase price per share of Bank Common Stock equal to the
sum of any cash and the value of the securities to be received by Zions for each
share of Bank
- 29 -
Common Stock as calculated in accordance with the agreement entered into with
the acquiring person and valued as of the date of the execution of the
agreement. As a condition to the closing of any Transfer pursuant to this
Section 10.5 (iii), an Investment Bank selected by the Investors with the
approval of Zions, which approval shall not be unreasonably withheld, shall
deliver, if requested by Xxxxxx, a fairness opinion to the Board that the
consideration to be received for such Bank Common Stock in such Transfer is fair
to the Investors from a financial point of view. The Investors shall not be
entitled to any consideration pursuant to this Section 10.5 (iii) unless such
Transfer is consummated.
10.6 ZIONS BUY-BACK. (a) At any time after December 31, 2002 and prior
to March 31, 2003, the Investors may give to Zions written notice (the "Buy-Back
Notice"), which shall be irrevocable, of their intention to exercise their
rights under this Section 10.6 to require Zions to purchase all (but not less
than all) of the shares of Bank Common Stock beneficially owned by the Investors
(the "Buy-Back Securities") at the Buy-Back Price (as defined below). If either
of the Investors gives a Buy-Back Notice, then the other Investor will be
conclusively deemed to have given a Buy-Back Notice. At the election of Zions,
the Buy-Back Price may be paid in cash or Zions Common Stock or any combination
thereof. Zions agrees that if any part of the Buy-Back Price is paid in Zions
Common Stock, it will use its reasonable best efforts to register, at Zions'
sole expense and as soon as practicable after the Buy-Back Closing, such Zions
Common Stock pursuant to the Securities Act for resale by the Investors for a
period of one year
- 30 -
after the effective date of the registration statement. None of the information
supplied by Zions for use in such registration statement, including any
prospectus contained therein, will contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made therein, in light of the circumstances under which such statements were
made, not misleading. Furthermore, in connection with such registration Zions
shall use its reasonable best efforts (a) to list on the Nasdaq, or any other
U.S. stock exchange on which Zions Common Stock is listed, the Zions Common
Stock issued to the Investors, and (b) to register or qualify such stock under
the state "blue sky" or securities laws of such jurisdictions as the Investors
reasonably request and to keep such registrations and qualifications effective
for a period of at least one year.
(b) The closing of any purchase and sale of the Buy-Back Securities
pursuant to this Section 10.6 shall take place at such location and on such date
as shall be agreed in writing by the Investors and Zions (the "Buy-Back
Closing"); provided, however, that the Buy-Back Closing shall occur no later
than 60 days after the giving of the conclusive Bank Valuation (as defined
below). At the Buy-Back Closing, the Investors shall deliver to Zions the
certificates representing the Buy-Back Securities, registered in the name of the
Investors and duly endorsed in favor of Zions, and Zions shall, to the extent
the consideration is cash, make payment of the Buy-Back Price by wire transfer
of immediately available funds to an account or accounts designated by the
Investors and, to the extent the consideration is Zions Common Stock, deliver to
the Investors (i) certificates representing such Zions Common Stock (or
confirmation of book
- 31 -
entry delivery of such Zions Common Stock) and (ii) an opinion of counsel for
Zions as to the due authorization, full payment and nonassessability of such
Zions Common Stock being issued. Zions recognizes that its obligations under
this Section 10.6 are unconditional.
(c) Within five days after delivery of the Buy-Back Notice, Zions and
the Investors (acting together) shall each hire an Investment Bank to provide a
valuation of all of the shares of Bank Common Stock (the "Bank Valuation") as of
the date of the Buy-Back Notice. For purposes of this Section 10.6(c), the Bank
Valuation shall be an amount equal to (but in no event less than US$1.00) the
aggregate value of all of the outstanding shares of Bank Common Stock (including
Bank Common Stock beneficially owned by Zions) as of the date of the Buy-Back
Notice based on the estimated aggregate U.S. dollar value of all shares of Bank
Common Stock on the assumption, at the option of the Investors, either (i) that
the Bank is being sold as an entirety by Zions or (ii) that the Bank Common
Stock is being traded on the Nasdaq as an independent going concern and not in
the context of a sale of the Bank. The Buy-Back Notice shall specify which of
such assumptions shall be applicable, which specification shall be irrevocable.
In making a determination regarding the foregoing, neither Investment Bank shall
be required or permitted to communicate with prospective purchasers of the Bank
but shall take into account the other factors it would consider if the Bank were
to be valued in accordance with the assumption specified. If the Investment
Banks are unable to agree on a single Bank Valuation within 30 days of the
commencement of their engagement (the
- 32 -
"Engagement Period"), then (i) each Investment Bank shall furnish its own Bank
Valuation and (ii) Zions and the Investors shall choose a third Investment Bank
(the "Tie Breaker"), which shall be engaged to select as the conclusive Bank
Valuation either of the Bank Valuations proposed by the initial Investment Banks
but not a third bank valuation. If Zions and the Investors are unable to agree
on the selection of the Tie Breaker within 10 business days after the end of the
Engagement Period, then Zions shall recommend three Independent Investment Banks
to the Investors and the Investors shall select one of such Investment Banks
within five business days of such recommendation to act as the Tie Breaker to
provide the conclusive Bank Valuation. Within 20 business days after its
engagement, the Tie Breaker shall deliver to each Shareholder the final,
conclusive Bank Valuation. In making such Bank Valuation, the Tie Breaker shall
observe the valuation parameters set forth in the second and third sentences of
this Section 10.6 (c) and shall consult with, and listen to the views of, the
Investors and Zions and their respective Investment Banks. The fees and expenses
of the initial Investment Banks shall be paid by Zions or the Investors as the
case may be. If it is necessary to retain a Tie Breaker, then Zions shall pay
50% and the Investors shall pay 50% of the Tie Breaker's fees and expenses
incurred in connection with its providing the final, conclusive Bank Valuation.
(d) Each of the Shareholders agrees to provide the Tie-Breaker with
such indemnification and hold harmless provisions as the Tie-Breaker reasonably
requests.
- 33 -
(e) For purposes of this Section 10.6, (i) the "Buy-Back Price" shall
consist of (A) the sum of the Investors' Proportionate Share of the Bank
Valuation with respect to the Bank Common Stock, minus (B) the amount of any
dividends declared and paid to the Investors from the date of the Buy-Back
Notice up to and including the date of the Buy-Back Closing and (ii) to the
extent any portion of the Buy-Back Price is paid in Zions Common Stock, it will
be conclusively deemed to have a value per share equal to the Average Price.
(f) If any Investor sells the Zions Common Stock received by it under
Section 10.6(a): (i) pursuant to a registration statement registering the sale
of such Zions Common Stock pursuant to Section 10.6(a), (ii) from time to time
during the period of 90 days following the effective date of such registration
statement and (iii) for an aggregate net sales price (after taking into account
sales commissions and discounts) (the "Sale Price") less than the Buy-Back
Price, Zions shall issue additional shares of Zions Common Stock to such
Investor in an aggregate amount, valued at the Sale Average Price (as defined
below), equal to the difference between the Buy-Back Price and the Sale Price.
"Sale Average Price" means 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 ten Nasdaq trading
days immediately preceding the delivery of a notice by any Investor, which
notice shall (i) be delivered to Zions during the 90 day period specified above
in this Section 10.6(f) and (ii) shall specify the number of shares of Zions
Common Stock sold and the Sale Price. Zions
- 34 -
shall provide for the registration of such additional shares in the registration
statement pursuant to Section 10.6(a).
10.7 LEGENDS. All certificates for shares of the Bank Common Stock
shall bear a legend substantially in the form set forth below, and at the
Closing Zions shall exchange its share certificates of the Bank Common Stock for
one or more new certificates bearing such legend:
ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY, AND THE RIGHTS OF A
HOLDER OF SUCH SHARES ARE SUBJECT TO, THE TERMS AND CONDITIONS CONTAINED IN
A SHAREHOLDER AGREEMENT, DATED AS OF OCTOBER 1, 1998. THE BANK WILL NOT
TRANSFER ON ITS BOOKS ANY CERTIFICATES REPRESENTING SHARES NOR ISSUE ANY
CERTIFICATES IN LIEU THEREOF UNLESS ALL THE CONDITIONS FOR TRANSFER
CONTAINED IN SUCH SHAREHOLDER AGREEMENT HAVE BEEN COMPLIED WITH, AND A
PURPORTED TRANSFER NOT IN ACCORDANCE WITH THE TERMS THEREOF SHALL BE NULL
AND VOID AND OF NO EFFECT.
ARTICLE XI
TERMINATION
11.1 MUTUAL CONSENT. Prior to the Closing the parties may terminate
this Agreement at any time by mutual written agreement.
11.2 TERMINATION BY EITHER PARTY. Zions or the Investors may terminate
this Agreement, by notice to the other, if:
(a) Any application or notice for regulatory approval or exemption
filed with any regulatory agency or authority for the First Merger,
- 35 -
the Second Merger or the acquisition of the Shares by the Investors is
denied or withdrawn.
(b) A court or other governmental authority of competent jurisdiction
shall have issued an order, writ, injunction or decree or shall have
taken any other action permanently restraining or otherwise
prohibiting the First Merger, the Second Merger or the acquisition of
Shares pursuant to this Agreement, and such order, writ, injunction,
decree or other action shall become final and non-appealable.
11.3 TERMINATION BY INVESTORS. The Investors may terminate this
Agreement if any condition set forth in Article V shall be incapable of being
satisfied.
11.4 TERMINATION BY ZIONS. Zions may terminate this Agreement if any
condition set forth in Article VI shall be incapable of being satisfied.
11.5 LIABILITY FOR TERMINATION. Termination of this Agreement shall not
relieve any party of any liability for any breach, default or non-performance
under this Agreement.
ARTICLE XII
MISCELLANEOUS
12.1 INTERPRETATION. The table of contents and headings contained in
this Agreement are for ease of reference only and shall not affect the meaning
or interpretation of this Agreement. Whenever the words "include", "includes",
or
- 36 -
"including" are used in this Agreement, they shall be deemed followed by the
words "without limitation". Any singular term in this Agreement shall be deemed
to include the plural, and any plural term the singular.
12.2 WAIVER AND AMENDMENT. Any provision of this Agreement may be: (i)
waived in writing by the party benefitted by the provision; or (ii) amended or
modified at any time by an agreement in writing between all of the parties
hereto.
12.3 COUNTERPARTS. This Agreement may be executed in counterparts each
of which shall be deemed to constitute an original, but all of which together
shall constitute one and the same instrument.
12.4 GOVERNING LAW; JURISDICTION. (A) THIS AGREEMENT SHALL BE GOVERNED
BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA
WITHOUT GIVING EFFECT TO CALIFORNIA CONFLICTS OF LAW PRINCIPLES AND, TO THE
EXTENT APPLICABLE, THE LAWS OF THE UNITED STATES.
(b) Except as otherwise expressly provided in this Agreement, any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby (a "Proceeding") shall only be brought in the United States
District Court for the Central District of California or any other state court
sitting in the City of Los Angeles, and each of the parties hereto hereby
consents to the jurisdiction of such courts and of the appropriate appellate
courts therefrom in any such Proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to
- 37 -
the laying of the venue of any such Proceeding in any such court or that any
such Proceeding which is brought in any such court has been brought in an
inconvenient forum and irrevocably agrees that a judgment in any such Proceeding
obtained in any such court may be enforced in the courts of any other
jurisdiction. Process in any such Proceeding may be served on any party anywhere
in the world, whether within or without the jurisdiction of any such court.
Without limiting the foregoing, each party hereto hereby agrees that service of
process on such party as provided in Section 12.7 shall be deemed effective
service of process on such party.
12.5 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO AND THE LIMITED
LIABILITY COMPANIES 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.
12.6 EXPENSES. Except as set forth herein, each party hereto will bear
all expenses incurred by it in connection with this Agreement and the
transactions contemplated hereby.
12.7 NOTICES. All notices, requests, acknowledgments and other
communications hereunder to a party shall be in writing and shall be deemed to
have been duly given when delivered by hand, first-class mail, registered or
certified with return receipt requested, overnight carrier or telecopy (with
receipt confirmed by telephone) to such party at its address set forth below or
such other address as such party may specify by notice to the other party
hereto.
- 38 -
If to Zions:
Zions Bancorporation
Xxx Xxxxx Xxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Telecopy: (000) 000-0000
Attention: Chief Financial Officer
With a copy to:
Xxxxxxxx & Xxxxxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
If to either of the Investors:
Xxxxxx X. Xxxxxx
Southwest Value Partners
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
With a copy to:
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxxxxxxx Xxxxxx X.X.
Xxxxxxxxxx, X.X. 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxx
12.8 ENTIRE AGREEMENT, ETC. This Agreement represents the entire
understanding of the parties hereto with respect to the matters contemplated
hereby and supersedes any and all other oral or written agreements heretofore
made. All terms and
- 39 -
provisions of the Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns. Nothing in
this Agreement is intended to confer upon any other Person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
12.9 ASSIGNMENT. This Agreement may not be assigned by any party hereto
without the prior written consent of the other parties.
12.10 TERMINATION. This Agreement shall terminate and cease to be in
effect at such time as the Investors no longer beneficially own any Bank Common
Stock.
12.11 SEVERABILITY. If one or more provisions of this Agreement are
determined to be unenforceable under applicable law, such provisions shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
- 40 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
ZIONS BANCORPORATION
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
and Chief Financial Officer
XXXXXX X. XXXXXX SEPARATE
PROPERTY TRUST DATED
SEPTEMBER 29, 1997
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name:Xxxxxx X. Xxxxxx, as Trustee
CBT Holdings,
a Wyoming General Partnership
By: CBT I LLC,
a Delaware Limited Liability
Company, as a General Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: The Manager
By: CBT II LLC,
a Delaware Limited Liability
Company, as a General Partner
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: The Manager
- 41 -
EXHIBIT B TO SHAREHOLDER AGREEMENT
RESTATED
ARTICLES OF INCORPORATION
OF
CALIFORNIA BANK & TRUST
ONE: Name
The name of this corporation is:
CALIFORNIA BANK & TRUST
TWO: Purposes
The purpose of this corporation is to engage in commercial
banking business and the trust business, and any other lawful
activities which are not, by applicable laws or regulations,
prohibited to a commercial bank authorized to engage in trust
business.
THREE: Principal Office
The County of the State of California where the principal
office for the transaction of business of this corporation is
to be located is in the County of San Diego.
FOUR: Authorized Stock
This corporation is authorized to issue only one class of
shares of stock, consisting of 3,000,000 shares of common
stock with aggregate par value of $4,500,000; and the par
value of each of said shares of stock shall be One Dollar,
Fifty Cents, ($1.50). The common shares of the corporation
shall be subject to assessment by the board of directors upon
order of the Commissioner, Department of Financial
Institutions of the State of California for the purposes of
correcting an impairment of contributed capital in the manner
and to the extent provided for in Division I of the Financial
Code of the State of California.
FIVE: Exculpation of Directors
The liability of the directors of the corporation for monetary
damages shall be eliminated to the fullest extent permissible
under California law.
-1-
SIX: Indemnification of Agents
The corporation is authorized to provide indemnification of
agents (as defined in Section 317 of the Corporations Code)
for breach of duty to the corporation and its stockholders
through bylaw provisions or through agreements with the
agents, or both, in excess of the indemnification otherwise
permitted by Section 317 of the Corporations Code, subject to
the limits on such excess indemnification set forth in
sections 204 of the Corporations Code.
-2-
ARTICLES OF INCORPORATION
OF
NEW GROSSMONT BANK
ONE: Name
The name of this corporation is:
NEW GROSSMONT BANK
TWO: Purposes
The purpose of this corporation is to engage in commercial
banking business and any other lawful activities which are
not, by applicable laws or regulations, prohibited to a
commercial bank.
THREE: Principal Office
The County of the State of California where the principal
office for the transaction of business of this corporation is
to be located is the County of San Diego.
FOUR: Authorized Stock
This corporation is authorized to issue only one class of
shares of stock, consisting of 3,000,000 shares of common
stock with aggregate par value of $4,500,000; and the par
value of each of said shares of stock shall be One Dollar,
Fifty Cents, ($1.50). The common shares of the corporation
shall be subject to assessment by the board of directors upon
order of the Superintendent of Banks of the State of
California for the purposes of correcting an impairment of
contributed capital in the manner and to the extent provided
for in Division I of the Financial Code of the State of
California.
FIVE: Agent for Service of Process
The name and address in this state of the corporation's
initial agent for service of process in accordance with
subdivision (b) of Section 1502 of the General Corporation Law
is:
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Xxxxx Xxxxxxxxx, Esq.
Xxxxxxxx, Xxxxxxxxx & Xxxxxxxxx
0000 Xxxxxx xxx Xxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
IN WITNESS WHEREOF, for the purpose of forming this corporation
under the laws of the State of California, the undersigned,
constituting the incorporators of this corporation, have executed
these Articles of Incorporation this 21st day of February, 1982.
/s/ Xxxxx del Corral
----------------------------------
Xxxxx del Xxxxxx
/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
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EXHIBIT D TO SHAREHOLDER AGREEMENT
List of Activities (Section 9.7)
Municipal Finance(both full faith and credit and revenue bonds) including
advisory services, underwriting, sales and trading activities relating
thereto
SBA lending and SBA secondary market activities, including purchase and sale of
Section 7A and Section 504 loans and participations
Origination of loans under Xxxxxx Mac programs and capital markets activities
with respect to loans originated by Zions or third parties
Digital Signature Trust Company: acting as a certification authority and
providing other services of Digital Signature Trust Company relating to
electronic commerce
The purchase or sale of loans, deposits or securities from or to participants
in the capital markets and other corporate finance activities
The servicing and secondary marketing of mortgage loans
