General Statement of Beneficial Ownership — Schedule 13D
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 13D General Statement of Beneficial Ownership 13 46K
2: EX-1 Agreement and Plan of Reorganization 126 351K
3: EX-99.1 Agreement to B. John Barry 4 14K
12: EX-99.10 Agreement to Harris H. Simmons and Charles B. 18 60K
Israel
4: EX-99.2 Agreement to J. Thomas Clark 4 14K
5: EX-99.3 Agreement to Morton A. Heller 4 15K
6: EX-99.4 Agreement to Charles B. Israel 4 15K
7: EX-99.5 Agreement to Carol Ann Kopf 4 15K
8: EX-99.6 Agreement to James R. McDade 4 14K
9: EX-99.7 Agreement to Robert R. Oden, M.D. 4 14K
10: EX-99.8 Agreement to Christopher Tolk 4 14K
11: EX-99.9 Agreement to Albert B. Glickman 4 15K
Exhibit 1
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION made as of the 19th day of
November, 1996, between ZIONS BANCORPORATION ("Zions Bancorp"), a Utah
corporation having its principal office in Salt Lake City, Utah, and ASPEN
BANCSHARES, INC. (the "Company"), a Colorado corporation having its principal
office in Aspen, Colorado
W I T N E S S E T H T H A T :
WHEREAS, Zions Bancorp is a bank holding company which desires to affiliate
with the Company; and
WHEREAS, the Board of Directors of the Company has determined that it would
be in the best interests of the Company, its shareholders, its customers and
those of its subsidiaries, PITKIN COUNTY BANK AND TRUST COMPANY ("Pitkin"),
CENTENNIAL SAVINGS BANK, F.S.B. ("Centennial"), and VALLEY NATIONAL BANK OF
CORTEZ, COLORADO ("Valley") (together the "Subsidiary Institutions") and the
areas served by the Company and the Subsidiary Institutions to become affiliated
with Zions Bancorp;
WHEREAS, the respective Boards of Directors of the Company and Zions
Bancorp have agreed to the merger (the "Merger") of the Company with and into
Zions Bancorp pursuant to the provisions of section 7-111-101 et seq. of the
Colorado Business Corporation Act and section 16-10a-1101 et seq. of the Utah
Business Corporation Act; and
WHEREAS, the parties intend that the Merger qualify as a tax-free
reorganization under section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code");
NOW, THEREFORE, in consideration of these premises and the mutual
agreements hereinafter set forth, the parties agree as follows:
1. Combination.
1.1. Form of Combination. Zions Bancorp and the Company will execute a
merger agreement (the "Merger Agreement") substantially in the form of Exhibit I
annexed hereto. Subject to the provisions of the Merger Agreement, the Company
will be merged with and into Zions Bancorp (the "Merger"), and Zions Bancorp
shall be the surviving corporation. The shares of common stock of the Company
shall be canceled and immediately converted into the right to receive, subject
to the terms, conditions, and limitations set forth herein, such consideration
as is provided in section 1.2 hereof.
1.2. Consideration for Merger.
(a) Definitions. For the purposes of this Agreement, the following
terms shall have the meanings set forth in this Subparagraph (a). Additional
terms may be defined elsewhere herein. As used in these definitions and in
sections 10.2(d) and 10.2(e) of this Agreement, the terms "increase" and
"escalate" contemplate the possibility of a negative increase or escalation
(i.e., a decrease or deflation), and the terms "decrease" and "deflate"
contemplate the possibility of a negative decrease or deflation (i.e., an
increase or escalation).
(i) Average Closing Price. The average (rounded to the nearest
penny) of each Daily Sales Price over the Pricing Period, except that, subject
to sections 1.2(a)(iii) and 1.2(a)(ix), (A) if the average (rounded to the
nearest penny) of each Daily Sales Price over the Pricing Period is less than
$83.00, then the Average Closing Price shall be $83.00, and (B) if the average
(rounded to the nearest penny) of each Daily Sales Price over the Pricing Period
is more than $93.00, then the Average Closing Price shall be $93.00.
(ii) Company Closing Price. The average (rounded to the nearest
penny) of the mean (unrounded) of the closing bid and asked prices of Company
Common Stock over the Pricing Period in the over-the-counter market as such
prices are reported by the automated quotation system of the National
Association of Securities Dealers, Inc., or in the absence thereof by such other
source upon which Zions Bancorp and the Company shall mutually agree.
(iii) Company Election. The election of the Company in its sole
discretion, made under the circumstances described in section 10.2(d), that,
notwithstanding section 1.2(a)(i), the Average Closing Price shall be a number
of dollars and cents, rounded to the nearest penny, computed by escalating
$93.00 by a percentage comprising the difference between (A) the number of
percentage points representing the difference between the percentage by which
the Daily Sales Price increased between November 19, 1996 and the Pricing Period
(using the average over such Pricing Period) and the percentage by which the KBW
50 Index of Keefe, Bruyette & Woods, Inc. (the "KBW Index") increased between
November 19, 1996 and the Pricing Period (using the average over such Pricing
Period) and (B) 15 percentage points.
(iv) Daily Sales Price. For any trading day, the last reported
sale price or, if no such reported sale takes place, the mean (unrounded) of the
closing bid and asked prices of Zions Bancorp Stock in the over-the-counter
market as such prices are reported by the automated quotation system of the
National Association of Securities Dealers, Inc., or in the absence thereof
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by such other source upon which Zions Bancorp and the Company shall mutually
agree.
(v) Option Equivalent Number. The number reached by summing the
following values as calculated for each option to purchase one share of Company
Common Stock which is outstanding and unexercised at the Effective Date: (A) the
difference between the Company Closing Price and the exercise price of that
option (or, if a greater number, zero) divided by (B) the Company Closing Price.
(vi) Pricing Period. The twenty consecutive trading days ending
on and including the fifth trading day preceding the Effective Date.
(vii) Purchase Price. The sum of:
(A) $73,000,000.00;
(B) the consolidated net undistributed income of the Company
during the period beginning on July 1, 1996 and ending on the close of business
on the last day of the calendar month preceding the effective date of the Merger
(the "Effective Date"), calculated in accordance with generally accepted
accounting principles. For the purpose of calculating net undistributed income
of the Company, (I) any undistributed gain, net of taxes, derived from
activities or transactions which are not in the ordinary course of its banking
operations (such as, without limitation, the sale of securities or loans, of
capital assets, or of lines of business), all of which shall be determined in
accordance with generally accepted accounting principles, shall be excluded
except as mutually agreed by the parties hereto; and (II) any loss, net of
taxes, resulting from operating transactions recommended by the Company to Zions
Bancorp as likely to produce economic benefits to the Company and approved in
writing by Zions Bancorp prior to their effectuation shall be excluded. It is
understood that the amount calculated under this section 1.2(a)(vii)(B) may be a
negative number and that the effect of summing such a negative number would be a
reduction in the Purchase Price;
(C) the product of the daily average of the net
undistributed income of the Company during the period and calculated in the
manner prescribed in section 1.2(a)(vii)(B) hereof times the number of days in
the month of the Effective Date which precede the Effective Date. It is
understood that the amount calculated under this section 1.2(a)(vii)(C) may be a
negative number and that the effect of summing such a negative number would be a
reduction in the Purchase Price; and
(D) the aggregate contributions to capital caused by the
payments accompanying the exercise of any stock options after June 30, 1996.
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(viii) Zions Bancorp Stock. The common stock of Zions Bancorp, no
par value.
(ix) Zions Election. The election of Zions Bancorp in its sole
discretion, made under the circumstances described in section 10.2(e), that,
notwithstanding section 1.2(a)(i), the Average Closing Price shall be a number
of dollars and cents, rounded to the nearest penny, computed by deflating $83.00
by a percentage comprising the difference between (A) the number of percentage
points representing the difference between the percentage by which the Daily
Sales Price decreased between November 19, 1996 and the Pricing Period (using
the average over such Pricing Period) and the percentage by which the KBW Index
decreased between November 19, 1996 and the Pricing Period (using the average
over such Pricing Period) and (B) 15 percentage points.
(b) Form of Consideration. Subject to the terms, conditions, and
limitations set forth herein, upon surrender of his or her certificate or
certificates in accordance with Section 1.1 hereof, each holder of shares of
Company Common Stock shall be entitled to receive, in exchange for each share of
Company Common Stock held of record by such stockholder as of the Effective
Date, that number of shares of Zions Bancorp Stock calculated by dividing the
Purchase Price by the Average Closing Price, and by further dividing the number
so reached by the sum of the number of shares of Company Common Stock that shall
be issued and outstanding at the Effective Date and the Option Equivalent
Number.
1.3. No Fractional Shares. Zions Bancorp will not issue fractional shares
of Zions Bancorp Stock. In lieu of fractional shares of Zions Bancorp Stock, if
any, each shareholder of the Company who is entitled to a fractional share of
Zions Bancorp Stock shall receive an amount of cash equal to the product of such
fraction times the Average Closing Price. Such fractional share interest shall
not include the right to vote or to receive dividends or any interest thereon.
1.4. Dividends; Interest. No shareholder of the Company will be entitled to
receive dividends on his or her Zions Bancorp Stock until he or she exchanges
his or her certificates representing Company Common Stock for Zions Bancorp
Stock. Any dividends declared on Zions Bancorp Stock (which stock is to be
delivered pursuant to this Agreement) to holders of record on or after the
Effective Date shall be paid to the Exchange Agent (as designated in Section 1.5
of this Agreement) and, upon receipt of the certificates representing shares of
Company Common Stock, the Exchange Agent shall forward to the former
shareholders entitled to receive Zions Bancorp Stock (i) certificates
representing their shares of Zions Bancorp Stock, (ii) dividends declared
thereon subsequent to the Effective Date (without interest) and (iii) the cash
value of any fractional shares determined in accordance with Section 1.3 hereof.
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1.5. Designation of Exchange Agent. The Company and Zions Bancorp hereby
designate Zions First National Bank, Salt Lake City, Utah ("Zions Bank") as
Exchange Agent to effect the exchange contemplated hereby. Zions Bancorp will,
promptly after the Effective Date, issue and deliver to Zions Bank the share
certificates representing shares of Zions Bancorp Stock and the cash in lieu of
fractional shares to be paid to holders of Company Common Stock in accordance
with this Agreement.
1.6. Notice of Exchange. Promptly after the Effective Date, Zions Bank
shall mail to each holder of one or more certificates formerly representing
Company Common Stock, except to such holders as shall have waived the notice
required by this Section 1.6, a notice specifying the Effective Date and
notifying such holder to surrender his or her certificate or certificates to
Zions Bank for exchange. Such notice shall be mailed to holders by regular mail
at their addresses on the records of the Company.
1.7. Treatment of Stock Options. Each stock option to purchase Company
Common Stock not exercised prior to the Effective Date shall automatically be
converted into an option to purchase, on the same terms as the option to
purchase Company Common Stock, and with the same dates of exercisability and of
expiration, that number of shares of Zions Bancorp Stock equal to the number of
shares of Company Common Stock which the holder of such option would be entitled
to receive under Section 1.2 of this Agreement had such option been exercised
immediately preceding the Effective Date. The applicable per-share option price
in effect immediately prior to the Effective Date shall be adjusted to an amount
equal to the product obtained by dividing that option price by the number of
shares of Zions Bancorp Stock which the holder of one share of Company Common
Stock would be entitled to receive under Section 1.2 of this Agreement.
1.8. Voting Agreements. Simultaneously herewith, each person listed on
Schedule 1.8 hereof shall enter into an agreement with Zions Bancorp,
substantially in form and substance as that set forth as Exhibit II attached
hereto, in which he or she agrees to vote all shares of the Company which may be
voted, or whose vote may be directed, by him or her, in favor of the
transactions contemplated by this Agreement at the meeting of shareholders at
which such transaction shall be considered.
1.9. Stock Option Agreement. Simultaneously herewith, the parties shall
execute and deliver the Stock Option Agreement in the form attached hereto as
Exhibit III.
1.10. Employee Benefits. If any employee of the Company or of any of the
Subsidiary Institutions becomes a participant in any employment benefit plan,
practice, or policy of Zions Bancorp, such employee shall be given credit under
such plan, practice, or policy for all service prior to the Effective Date with
the Company
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or any of the Subsidiary Institutions for purposes of eligibility and vesting,
but not for benefit accrual purposes, for which such service is taken into
account or recognized, provided that there be no duplication of such benefits as
are provided under any employee benefit plans, practices, or policies of the
Company or any of the Subsidiary Institutions that continue in effect following
the Effective Date.
2. Effective Date.
The Effective Date shall be the date which is the latest of:
2.1. Shareholder Approval. The date following the day upon which the
shareholders of the Company approve, ratify, and confirm the transactions
contemplated by this Agreement; or
2.2. Federal Reserve Approval. The first to occur of (a) the date thirty
days following the date of the order of the Board of Governors of the Federal
Reserve System or the Federal Reserve Bank of San Francisco acting pursuant to
authority delegated to it by the Board of Governors of the Federal Reserve
System (collectively, the "Board of Governors") approving the Merger, or (b) if,
pursuant to section 321(a) of the Riegle Community Development and Regulatory
Improvement Act of 1994 (the "Riegle Act"), the Board of Governors shall have
prescribed a shorter period of time with the concurrence of the Attorney General
of the United States, the date on which such shorter period of time shall
elapse, or
2.3. Commissioner Approval. If such an order shall be required by law, the
date ten days following the date of the order of the Commissioner of Financial
Institutions of the State of Utah (the "Commissioner") approving the
transactions contemplated by this Agreement; or
2.4. Superintendent Approval. The date ten days following the date of the
order of the Colorado Division of Banking (the "Division") approving the
transactions contemplated by this Agreement; or
2.5. Other Regulatory Approvals. The date upon which any other material
order, approval, or consent of a federal or state regulator of financial
institutions or financial institution holding companies authorizing consummation
of the transactions contemplated by this Agreement is obtained or any waiting
period mandated by such order, approval, or consent has run; or
2.6. Expiration of Stays. Ten days after any stay of the approvals of any
of the Board of Governors, the Commissioner, or the Division of the transactions
contemplated by this Agreement
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or any injunction against closing of said transactions is lifted, discharged, or
dismissed; or
2.7. Mutual Agreement. Such other date as shall be mutually agreed to by
Zions Bancorp and the Company.
3. Conditions Precedent to Performance of Obligations of the Parties.
The obligations of Zions Bancorp and the Company to consummate the Merger
shall be subject to the conditions that on or before the Effective Date:
3.1. Regulatory Approvals. Orders, consents, and approvals, in form and
substance reasonably satisfactory to Zions Bancorp and the Company, shall have
been entered by the requisite governmental authorities, granting the authority
necessary for consummation of the transactions contemplated by this Agreement
and the operation by Zions Bancorp of the business of the Company, the business
of the Subsidiary Institutions, and each of the branches of the Subsidiary
Institutions, pursuant to the provisions of applicable law; and all other
requirements prescribed by law or by the rules and regulations of any other
regulatory authority having jurisdiction over such transactions shall have been
satisfied.
3.2. Absence of Litigation. No action, suit, or proceeding shall have been
instituted or shall have been threatened before any court or other governmental
body or by any public authority to restrain, enjoin, or prohibit the Merger, or
which would reasonably be expected to restrict materially the operation of the
business of the Company or that of the Subsidiary Institutions or the exercise
of any rights with respect thereto or to subject either of the parties hereto or
any of their subsidiaries, directors, or officers to any liability, fine,
forfeiture, divestiture, or penalty on the ground that the transactions
contemplated hereby, the parties hereto, or their subsidiaries, directors, or
officers have breached or will breach any applicable law or regulation or have
otherwise acted improperly in connection with the transactions contemplated
hereby and with respect to which the parties hereto have been advised by counsel
that, in the opinion of such counsel, such action, suit, or proceeding raises
substantial questions of law or fact which could reasonably be decided
materially adversely to either party hereto or its subsidiaries, directors, or
officers.
3.3. Accounting Treatment. It shall have been determined to the
satisfaction of Zions Bancorp that the reorganization contemplated by this
Agreement will be treated for accounting purposes as a "pooling of interests" in
accordance with APB Opinion No. 16, and Zions Bancorp shall have received a
letter to the above effect from KPMG Peat Marwick, certified public accountants.
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3.4. Registration Statement.
(a) Effectiveness. The registration statement to be filed by Zions
Bancorp with the Securities and Exchange Commission (the "SEC") pursuant to the
Securities Act of 1933 (the "Securities Act") in connection with the
registration of the shares of Zions Bancorp Stock to be used as consideration in
connection with the Merger (the "Registration Statement") shall have become
effective under that Act, and Zions Bancorp shall have received all required
state securities laws or "blue sky" permits and other required authorizations or
confirmations of the availability of exemptions from registration requirements
necessary to issue Zions Bancorp Stock in the Merger.
(b) Absence of Stop-Order. Neither the Registration Statement nor any
such required permit, authorization, or confirmation shall be subject to a
stop-order or threatened stop-order by the SEC or any state securities
authority.
3.5. Federal Income Taxation. Zions Bancorp and the Company shall have
received a written opinion of Rothgerber, Appel, Powers & Johnson, or of Dalby,
Wendland & Co., P.C., or of another firm mutually agreeable to Zions Bancorp and
the Company, applying existing law, that the reorganization contemplated by this
Agreement shall qualify as one or more tax-free reorganizations under the Code
and the regulations and rulings promulgated thereunder.
3.6. Adverse Legislation. Subsequent to the date of this Agreement no
legislation shall have been enacted and no regulation or other governmental
requirement shall have been adopted or imposed that renders or will render
consummation of any of the material transactions contemplated by this Agreement
impossible.
4. Conditions Precedent to Performance of the Obligations of Zions Bancorp.
The obligations of Zions Bancorp hereunder are subject to the satisfaction,
on or prior to the Effective Date, of all the following conditions, compliance
with which or the occurrence of which may be waived in whole or in part by Zions
Bancorp in writing:
4.1. Approval by Shareholders of the Company. The shareholders of the
Company, acting pursuant to a proxy statement in form and substance satisfactory
to Zions Bancorp and its counsel, shall have authorized, ratified, and confirmed
the Merger by not less than the requisite percentage of the outstanding voting
stock of each class of the Company, in accordance with the applicable laws of
the State of Colorado.
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4.2. Representations and Warranties; Performance of Obligations. All
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects as of the Effective Date with the
same effect as if such representations and warranties had been made or given at
and as of such date, except that representatives and warranties of the Company
contained in this Agreement which specifically relate to an earlier date shall
be true and correct in all material respects as of such earlier date. All
covenants and obligations to be performed or met by the Company on or prior to
the Effective Date shall have been so performed or met. On the Effective Date,
the president and chief executive officer and the chief financial officer of the
Company shall deliver to Zions Bancorp a certificate to that effect. The
delivery of such officers' certificate shall in no way diminish the warranties,
representations, covenants, and obligations of the Company made in this
Agreement.
4.3. Opinion of Company Counsel. Zions Bancorp shall have received a
favorable opinion from Rothgerber, Appel, Powers & Johnson, dated the Effective
Date, substantially in form and substance as that set forth as Exhibit IV
attached hereto.
4.4. Opinion of Company Litigation Counsel. Zions Bancorp shall have
received a favorable opinion from legal counsel handling litigation matters for
the Company dated the Effective Date, substantially in form and substance as
that set forth as Exhibit V attached hereto.
4.5. Delivery of Branch Authorizations. The Company shall have delivered to
Zions Bancorp originals or certified copies of all of its regulatory
authorizations entitling the Subsidiary Institutions to operate each of their
respective branch offices, together with a certification by the president and
chief executive officer and the chief financial officer of the Company dated the
Effective Date, certifying that such branch certificates have not been revoked
or threatened to be revoked and that such certificates are in full force and
effect.
4.6. No Adverse Developments.
(a) During the period from September 30, 1996 to the Effective Date,
and except as necessary for the Company to comply with its obligations under
Section 7.9 hereof, (i) there shall not have been any material adverse change in
the financial position or results of operations of the Company or the Subsidiary
Institutions taken as a whole, nor shall the Company or the Subsidiary
Institutions have sustained any material loss or damage to their properties,
whether or not insured, which materially affects their ability to conduct their
business; and (ii) none of the events described in clauses (a) through (f) of
Section 6.16 of this Agreement shall have occurred, and each of the practices
and
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conditions described in clauses (x) through (z) of that section shall have been
maintained.
(b) As of the Effective Date, except as adjusted to account for
issuances of Company Common Stock pursuant to the exercise of options described
in section 6.9 of this Agreement, the capital structure of the Company and the
capital structure of the Subsidiary Institutions shall be as stated in section
6.9.
(c) As of the Effective Date, other than liabilities incurred in the
ordinary course of business subsequent to September 30, 1996, there shall be no
liabilities of the Company or the Subsidiary Institutions which are material to
the Company on a consolidated basis which were not reflected on the consolidated
statement of condition of the Company as of September 30, 1996 or in the notes
to the consolidated statement of condition of the Company as of December 31,
1995.
(d) No adverse action shall have been instituted or threatened by any
governmental authority, or referred by a governmental authority to another
governmental authority, for the enforcement or assessment of penalties for the
violation of any laws of regulations relating to equal credit opportunity, fair
housing, or fair lending.
(e) Zions Bancorp shall have received a certificate dated the
Effective Date, signed by the chairman and president and the chief financial
officer of the Company, certifying to the matters set forth in paragraphs (a),
(b), (c), and (d) of this section 4.6. The delivery of such officers'
certificate shall in no way diminish the warranties and representations of the
Company made in this Agreement.
4.7. Consolidated Net Worth. On and as of the Effective Date, the
consolidated net worth of the Company as determined in accordance with generally
accepted accounting principles shall not be less than $30,185,000 plus the
aggregate contributions to capital caused by the payments accompanying the
exercise of any stock options on or after September 30, 1996.
4.8. Loan Loss Reserve Method. On and as of the Effective Date, the
aggregate reserve for loan losses of the Subsidiary Institutions as determined
in accordance with generally accepted accounting principles shall not be less
than $3,206,000.
4.9. CRA Rating. The CRA rating of each of the Company and each of the
Subsidiary Institutions shall be no lower than the lower of "satisfactory" or
the respective CRA rating it was assigned at September 30, 1996.
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4.10. Qualified Thrift Lender. Centennial shall be a "qualified thrift
lender" as such term is then defined in section 10 of the Home Owners' Loan Act
of 1933, as amended (the "HOLA").
4.11. Employment Agreement. Charles B. Israel shall have entered into an
employment agreement with Zions Bancorp substantially in form and substance as
that set forth as Exhibit VI attached hereto.
4.12. Non-Investment Agreements. Each of the following persons shall have
entered into a non-investment agreement with Zions Bancorp substantially in form
and substance as that set forth as Exhibit VII attached hereto:
(a) Charles B. Israel, and
(b) each director of the Company or a Subsidiary Institution who owns
more than 2 percent of the outstanding Company Common Stock at the Effective
Date, and each advisory director of the Company or a Subsidiary Institution
(except those individuals whose primary vocation is the making of equity
investments in financial institutions) who owns more than 2 percent of the
outstanding Company Common Stock at the Effective Date.
4.13. Consent of Lending Institution. If the loan that is the subject of
the Loan Agreement between Aspen Bancshares, Inc. and The Laredo National Bank
dated as of June 18, 1996 (the "Laredo Loan Agreement") shall remain outstanding
at the Effective Date, Laredo National Bank shall have delivered to the Company,
in form and substance reasonably acceptable to Zions Bancorp, the written
consent of Laredo National Bank to the transactions contemplated by this
Agreement, the assumption or discharge by Zions Bancorp of the loan that is
subject of the Laredo Loan Agreement, and the release of the shares of the stock
of the Subsidiary Institutions and Val Cor Bancorporation, Inc. ("Val Cor")
(collectively the "Subsidiaries") which secure such loan. The parties to this
Agreement agree to use commercially reasonable efforts to procure such consent
in good faith and in a timely manner.
5. Conditions Precedent to Performance of Obligations of the Company.
The obligations of the Company hereunder are subject to the satisfaction,
on or prior to the Effective Date, of all the following conditions, compliance
with which or the occurrence of which may be waived in whole or in part by the
Company in writing:
5.1. Representations and Warranties; Performance of Obligations. All
representations and warranties of Zions Bancorp contained in this Agreement
shall be true and correct in all material respects as of the Effective Date with
the same effect as
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if such representations and warranties had been made or given at and as of such
date, except that representations and warranties of Zions Bancorp contained in
this Agreement which specifically relate to an earlier date shall be true and
correct in all material respects as of such earlier date. All covenants and
obligations to be performed or met by Zions Bancorp on or prior to the Effective
Date shall have been so performed or met. On the Effective Date, either the
Chairman of the Board or the President of Zions Bancorp shall deliver to the
Company a certificate to that effect. The delivery of such officer's certificate
shall in no way diminish the warranties, representations, covenants, and
obligations of Zions Bancorp made in this Agreement.
5.2. Opinion of Zions Bancorp Counsel. The Company shall have received a
favorable opinion of Metzger, Hollis, Gordon & Alprin, dated the Effective Date,
substantially in form and substance as that set forth as Exhibit VIII attached
hereto.
5.3. No Adverse Developments. During the period from September 30, 1996 to
the Effective Date, there shall not have been any material adverse change in the
financial position or results of operations of Zions Bancorp nor shall Zions
Bancorp have sustained any material loss or damage to its properties, whether or
not insured, which materially affects its ability to conduct its business; and
the Company shall have received a certificate dated the Effective Date signed by
either the Chairman of the Board or the President of Zions Bancorp to the
foregoing effect. The delivery of such officer's certificate shall in no way
diminish the warranties and representations of Zions Bancorp made in this
Agreement.
5.4. Status of Zions Bancorp Stock. Zions Bancorp Stock shall be listed on
the National Association of Securities Dealers' Automated Quotation System (or
else shall become listed on a national securities exchange).
6. Representations and Warranties of the Company.
The Company represents and warrants to Zions Bancorp as follows:
6.1. Organization, Powers, and Qualification. Each of the Company and the
Subsidiary Institutions is a corporation which is duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own and
operate its properties and assets, to lease properties used in its business, and
to carry on its business as now conducted. Each of the Company and the
Subsidiary Institutions owns or possesses in the operation of its business all
franchises, licenses, permits, branch certificates, consents, approvals,
waivers, and other authorizations, governmen-
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tal or otherwise, which are necessary for it to conduct its business as now
conducted, except for those where the failure of such ownership or possession
would not adversely affect the operation and properties of the Company or the
Subsidiary Institutions in any material respect. Each of the Company and the
Subsidiary Institutions is duly qualified and licensed to do business and is in
good standing in every jurisdiction with respect to which the failure to be so
qualified or licensed could result in material liability or adversely affect the
operation and properties of the Company or the Subsidiary Institutions in any
material respect.
6.2. Execution and Performance of Agreement. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform its respective terms.
6.3. Absence of Violations. Except as set forth on Schedule 6.3 hereof:
(a) neither the Company nor any of the Subsidiary Institutions is in
violation of its respective charter documents or bylaws, nor of any applicable
federal, state, or local law or ordinance nor any order, rule, or regulation of
any federal, state, local, or other governmental agency or body, in any material
respect, or in default with respect to any order, writ, injunction, or decree of
any court, or in default under any order, license, regulation, or demand of any
governmental agency, any of which violations or defaults could reasonably be
expected to have a materially adverse effect on its business, properties,
liabilities, financial position, results of operations, or prospects; and
neither the Company nor any of the Subsidiary Institutions has received any
claim or notice of violation with respect thereto;
(b) neither the Company nor any of the Subsidiary Institutions nor any
member of the management of any of them is a party to any assistance agreement,
supervisory agreement, memorandum of understanding, consent order, cease and
desist order or condition of any regulatory order or decree with or by the Board
of Governors, the Federal Deposit Insurance Corporation (the "FDIC"), any other
banking or securities authority of the United States or the State of Colorado or
the State of New Mexico, or any other regulatory agency that relates to the
conduct of the business of the Company or the Subsidiary Institutions or their
assets; and except as previously disclosed to Zions Bancorp in writing, no such
agreement, memorandum, order, condition, or decree is pending or threatened;
(c) each of the Company and the Subsidiary Institutions has
established policies and procedures to provide reasonable assurance of
compliance in a safe and sound manner with the federal banking, credit, housing,
consumer protection, and civil rights laws and with all other laws applicable to
the opera-
- 13 -
tions of the Company and the Subsidiary Institutions and the regulations adopted
under each of those laws, so that transactions be executed and assets be
maintained in accordance with such laws and regulations; and the policies and
practices of each of the Company and the Subsidiary Institutions with respect to
all such laws and regulations reasonably limit noncompliance and detect and
report noncompliance to its management; and
(d) each of the Subsidiary Institutions has established a CRA policy
which provides for (i) goals and objectives consistent with CRA; (ii) a
methodology for self-assessment by the board of directors of the applicable
Subsidiary Institution; (iii) ongoing CRA training of all personnel of the
applicable Subsidiary Institution, including the members of its board of
directors; and (iv) procedures whereby all significant CRA-related activity is
documented; and each of the Subsidiary Institutions has officially designated a
CRA officer who reports directly to the board of directors and is responsible
for the CRA program of applicable Subsidiary Institution.
6.4. Compliance with Agreements. Neither the Company nor any of the
Subsidiary Institutions is in violation of any material term of any material
security agreement, mortgage, indenture, or any other contract, agreement,
instrument, lease, or certificate. The capital ratios of each of the Company and
the Subsidiary Institutions comply fully with all terms of all currently
outstanding supervisory and regulatory requirements and with the conditions of
all regulatory orders and decrees.
6.5. Binding Obligations; Due Authorization. Subject to the approval of its
shareholders, this Agreement constitutes valid, legal, and binding obligations
of the Company, enforceable against it in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, moratorium or
similar law, or by general principles of equity. The execution, delivery, and
performance of this Agreement and the transactions contemplated thereby have
been duly and validly authorized by the board of directors of the Company.
Subject to approval by the shareholders of the Company of this Agreement, no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or the carrying out of the transactions contemplated
hereby.
6.6. Absence of Default. None of the execution or the delivery of this
Agreement, the consummation of the transactions contemplated thereby, or the
compliance with or fulfillment of the terms thereof will conflict with, or
result in a breach of any of the terms, conditions, or provisions of, or
constitute a default under the organizational documents or bylaws of the Company
or the Subsidiary Institutions. Such execution and, if the Laredo Loan Agreement
is no longer outstanding at the Effective Date or, if it be outstanding, if the
conditions described in the first sentence of Section 4.13 shall have been
satisfied on or before the
- 14 -
Effective Date, such consummation or fulfillment will not (a) conflict with, or
result in a material breach of the terms, conditions, or provisions of, or
constitute a material violation, conflict, or default under, or, except as set
forth on Schedule 6.6 hereof, give rise to any right of termination,
cancellation, or acceleration with respect to, or result in the creation of any
lien, charge, or encumbrance upon, any property or assets of the Company or any
of the Subsidiary Institutions pursuant to any material agreement or instrument
under which the Company or any of the Subsidiary Institutions is obligated or by
which any of its properties or assets may be bound, including without limitation
any material lease, contract, mortgage, promissory note, deed of trust, loan,
credit arrangement, or other commitment or arrangement of the Company or any of
the Subsidiary Institutions in respect of which it is an obligor; (b) if the
Merger is approved by the Board of Governors under the Bank Holding Company Act
of 1956, as amended (the "BHC Act"), and if the transactions contemplated by
this Agreement are approved by the Commissioner and the Division, violate any
law, statute, rule, or regulation of any government or agency to which the
Company or any of the Subsidiary Institutions is subject and which is material
to its operations; or (c) violate any judgment, order, writ, injunction, decree,
or ruling to which the Company or any of the Subsidiary Institutions or any of
its properties or assets is subject or bound. None of the execution or delivery
of this Agreement nor, if the Laredo Loan Agreement is no longer outstanding at
the Effective Date or, if it be outstanding, if the conditions described in the
first sentence of Section 4.13 shall have been satisfied on or before the
Effective Date, the consummation of the transactions contemplated thereby or the
compliance with or fulfillment of the terms thereof will require any
authorization, consent, approval, or exemption by any person which has not been
obtained, or any notice or filing which has not been given or done, other than
approval of or waiver of jurisdiction over the transactions contemplated by this
Agreement by the Board of Governors, the Commissioner, and the Division.
6.7. Compliance with BHC Act and S&LHC Act.
(a) The Company and Val Cor are each registered as bank holding
companies under the BHC Act. Except as set forth on Schedule 6.7 hereof, all of
the activities and investments of the Company and Val Cor conform to the
requirements applicable generally to bank holding companies under the BHC Act
and the regulations of the Board of Governors adopted thereunder.
(b) No corporation or other entity, other than the Company and Val
Cor, is registered or is required to be registered as a bank holding company
under the BHC Act by virtue of its control over Pitkin or Valley or over any
company that directly or indirectly has control over Pitkin or Valley.
- 15 -
(c) The Company is registered as a savings and loan holding company
under section 10 of the HOLA (the "S&LHC Act"). Except as set forth on Schedule
6.7 hereof, all of the activities and investments of the Company conform to the
requirements applicable generally to unitary savings and loan holding companies
under the S&LHC Act and the regulations of the Office of Thrift Supervision (the
"OTS") adopted thereunder.
(d) No corporation or other entity, other than the Company, is
registered or is required to be registered as a savings and loan holding company
under the S&LHC Act by virtue of its control over Centennial or over any company
that directly or indirectly has control over Centennial.
(e) Eagle Service Corporation ("Eagle") engages in no business
activity.
6.8. Subsidiaries.
(a) Other than (i) Pitkin, which is a direct, wholly-owned subsidiary
of the Company, (ii) Centennial, which is a direct, wholly-owned subsidiary of
the Company, (iii) Val Cor, which is a direct, wholly-owned subsidiary of the
Company, (iv) Valley, 99.1 percent of whose stock is owned directly by Val Cor,
(v) Eagle, which is a direct, wholly-owned subsidiary of Centennial, and (vi)
Thatcher Financial Group, Inc. ("TFG"), 73.2 percent of whose common stock is
owned directly by Pitkin, the Company does not have any direct or indirect
subsidiaries and does not directly or indirectly own, control, or hold with the
power to vote any shares of the capital stock of any company (except shares held
by the Subsidiary Institutions for the account of others in a fiduciary or
custodial capacity in the ordinary course of their business). There are no
outstanding subscriptions, options, warrants, convertible securities, calls,
commitments, or agreements calling for or requiring the issuance, transfer,
sale, or other disposition of any shares of the capital stock of the
Subsidiaries, or calling for or requiring the issuance of any securities or
rights convertible into or exchangeable for shares of capital stock of the
Subsidiaries. There are no other direct or indirect subsidiaries of the Company
which are required to be consolidated or accounted for on the equity method in
the consolidated financial statements of the Company or the financial statements
of the Subsidiaries prepared in accordance with generally accepted accounting
principles.
(b) Except as specified in the previous subsection, neither any of the
Subsidiaries nor the Company, Eagle, or TFG has a direct or indirect equity or
ownership interest which represents 5 percent or more of the aggregate equity or
ownership interest of any entity (including, without limitation, corporations,
partnerships, and joint ventures).
- 16 -
(c) Continually since September 14, 1993, each of the Company, Pitkin,
and TFG have observed the corporate and other requirements necessary to
establish TFG as a separate legal entity with respect to all persons who deal
with the Company, Pitkin, and TFG.
6.9. Capital Structure.
(a) The authorized capital stock of the Company consists of (i)
5,000,000 shares of 7% cumulative convertible preferred stock, $0.01 par value
(the "Company Preferred Stock"), none of which are issued or outstanding as of
the date of this Agreement, and (ii) 5,000,000 shares of Company Common Stock,
$0.01 par value, of which, as of the date of this Agreement, 3,717,714 shares
have been duly issued and are validly outstanding, fully paid, and held by
approximately 241 shareholders of record. The aforementioned shares of Company
Preferred Stock and Company Common Stock are the only voting securities of the
Company authorized, issued, or outstanding as of such date; and except as set
forth on Schedule 6.9 hereof, no subscriptions, warrants, options, rights,
convertible securities, or similar arrangements or commitments in respect of
securities of the Company are authorized, issued, or outstanding which would
enable the holder thereof to purchase or otherwise acquire shares of any class
of capital stock of the Company. No shares of Company Preferred Stock or Company
Common Stock are held by the Company as treasury shares. None of the Company
Common Stock is subject to any restrictions upon the transfer thereof under the
terms of the corporate charter or bylaws of the Company.
(b) Schedule 6.9 hereof lists all options to purchase Company
securities currently outstanding and, for each such option, the date of
issuance, date of exercisability, exercise price, type of security for which
exercisable, and date of expiration. Schedule 6.9 hereof further lists all
shares of Company Preferred Stock and Company Common Stock reserved for issuance
pursuant to stock option plans, agreements, or arrangements but not yet issued
and all options upon shares of Company Preferred Stock or Company Common Stock
designated or made available for grant but not yet granted.
(c) The authorized capital stock of Pitkin consists of 65,000 shares
of common stock, $10.00 par value (the "Pitkin Common Stock"), of which, as of
the date of this Agreement, 65,000 shares have been duly issued and are validly
outstanding, fully paid, and all of which are held of record and beneficially by
the Company. The authorized capital stock of Centennial consists of 2,000,000
shares of serial preferred stock, none of which are issued or outstanding as of
the date of this Agreement, and 3,000,000 shares of common stock, $1.00 par
value (the "Centennial Common Stock"), of which, as of the date of this
Agreement, 647,300 shares have been duly issued and are validly outstanding,
fully
- 17 -
paid, and all of which are held of record and beneficially by the Company. The
authorized capital stock of Val Cor consists of 500,000 shares of common stock,
$5.00 par value (the "Val Cor Common Stock"), of which, as of the date of this
Agreement, 306,259 shares have been duly issued and are validly outstanding,
fully paid, and all of which are held of record and beneficially by the Company.
The authorized capital stock of Valley consists of 600,000 shares of common
stock, $5.00 par value (the "Valley Common Stock"), of which, as of the date of
this Agreement, 354,000 shares have been duly issued and are validly
outstanding, fully paid, and 350,817 of which are held of record and
beneficially by the Company. The authorized capital stock of TFG consists of
500,000 shares of preferred stock, $10.00 par value, $34.00 stated value, of
which, as of the date of this Agreement, 3,400 shares have been issued, and
1,000,000 shares of common stock, $0.01 par value (the "TFG Common Stock"), of
which, as of the date of this Agreement, 79,634 shares have been issued and
58,327 of which are held of record and beneficially by Pitkin. The
aforementioned shares of Pitkin Common Stock, Centennial Common Stock, Val Cor
Common Stock, and Valley Common Stock (collectively the "Subsidiary Common
Stock") are the only voting securities of the Subsidiaries authorized, issued,
or outstanding as of such date; and no subscriptions, warrants, options, rights,
convertible securities, or similar arrangements or commitments in respect of
securities of the Subsidiaries are authorized, issued, or outstanding which
would enable the holder thereof to purchase or otherwise acquire shares of any
class of capital stock of the Subsidiaries. None of the Subsidiary Common Stock
is subject to any restrictions upon the transfer thereof under the terms of the
corporate charter or bylaws of the issuing Subsidiary.
(d) None of the shares of Company Common Stock or Subsidiary Common
Stock has been issued in violation of the preemptive rights of any shareholder.
(e) As of the date hereof, to the best of the knowledge of the
Company, and except for this Agreement, there are no shareholder agreements, or
other agreements, understandings, or commitments relating to the right of any
holder or beneficial owner of more than 1 percent of the issued and outstanding
shares of any class of the capital stock of either the Company or any of the
Subsidiaries to vote or to dispose of his or its shares of capital stock of that
entity.
(f) The Company has not granted any shareholders' rights to dissent
from any merger.
6.10. Articles of Incorporation, Bylaws, and Minute Books. The copies of
the articles of incorporation and all amendments thereto and of the bylaws, as
amended, of the Company and the Subsidiaries that have been provided to Zions
Bancorp and certified by the Company as complete and true copies are true,
- 18 -
correct, and complete copies thereof. The minute books of the Company and the
Subsidiaries which have been made available to Zions Bancorp for its continuing
inspection until the Effective Date contain accurate minutes of all meetings and
accurate consents in lieu of meetings of the board of directors (and any
committee thereof) and of the shareholders of the Company and the Subsidiaries
since their respective inceptions. These minute books accurately reflect all
transactions referred to in such minutes and consents in lieu of meetings and
disclose all material corporate actions of the shareholders and boards of
directors of the Company and the Subsidiaries and all committees thereof. Except
as reflected in such minute books, there are no minutes of meetings or consents
in lieu of meetings of the board of directors (or any committee thereof) or of
shareholders of the Company or the Subsidiaries.
6.11. Books and Records. The books and records of each of the Company and
the Subsidiaries fairly reflect the transactions to which it is a party or by
which its properties are subject or bound. Such books and records have been
properly kept and maintained and are in compliance in all material respects with
all applicable legal and accounting requirements. Except as set forth on
Schedule 7.9 hereof, each of the Company and the Subsidiaries follows generally
accepted accounting principles applied on a consistent basis in the preparation
and maintenance of its books of account and financial statements, including but
not limited to the application of the accrual method of accounting for interest
income on loans, leases, discounts, and investments, interest expense on
deposits and all other liabilities, and all other items of income and expense.
Except as set forth on Schedule 7.9 hereof, the Company and the Subsidiaries
have made all accruals in amounts which fairly report income and expense in the
proper periods in accordance with generally accepted accounting principles. Each
of the Company and each of the Subsidiaries has filed all material reports and
returns required by any law or regulation to be filed by it.
6.12. Regulatory Approvals and Filings, Contracts, Commitments, etc. The
Company has made or will, no later than ten business days after the date hereof,
make available to Zions Bancorp or grant to Zions Bancorp continuing access
until the Effective Date to originals or copies of the following documents
relating to the Company and the Subsidiaries, Eagle, and TFG:
(a) All regulatory approvals received since January 1, 1991, of the
Company and the Subsidiaries, Eagle, and TFG relating to all bank and nonbank
acquisitions or the establishment of de novo operations;
(b) All employment contracts, election contracts, retention contracts,
deferred compensation, non-competition, bonus, stock option, profit-sharing,
pension, retirement, consultation
- 19 -
after retirement, incentive, insurance arrangements or plans (including medical,
disability, group life or other insurance plans), and any other remuneration or
fringe benefit arrangements applicable to employees, officers, or directors of
the Company or the Subsidiaries, accompanied by any agreements, including trust
agreements, embodying such contracts, plans, or arrangements, and all employee
manuals and memoranda relating to employment and benefit policies and practices
of any nature whatsoever (whether or not distributed to employees or any of
them), and any actuarial reports and audits relating to such plans;
(c) All material contracts, agreements, leases, mortgages, and
commitments, except those entered into in the ordinary course of business, to
which the Company or any of the Subsidiaries is a party or may be bound; or, if
any of the same be oral, true, accurate, and complete written summaries of all
such oral contracts, agreements, leases, mortgages, and commitments;
(d) All material contracts, agreements, leases, mortgages, and
commitments, whether or not entered into in the ordinary course of business, to
which the Company or any of the Subsidiaries is a party or may be bound and
which require the consent or approval of third parties to the execution and
delivery of this Agreement or to the consummation or performance of any of the
transactions contemplated thereby, or, if any of the same be oral, true,
accurate, and complete written summaries of all such oral contracts, agreements,
leases, mortgages, and commitments;
(e) All deeds, leases, contracts, agreements, mortgages, and
commitments, whether or not entered into in the ordinary course of business, to
which the Company or any of the Subsidiaries is a party or may be bound and
which relate to land, buildings, fixtures, or other real property upon or within
which the Company or any of the Subsidiaries operates its businesses or is
authorized to operate its businesses, or with respect to which the Company or
any Subsidiary has any application pending for authorization to operate its
businesses;
(f) Any pending application, including any documents or materials
related thereto, which has been filed by the Company or any Subsidiary, Eagle,
or TFG with any federal or state regulatory agency with respect to the
establishment of a new office or the acquisition or establishment of any
additional banking or nonbanking subsidiary; and
(g) All federal and state tax returns filed by the Company or any
Subsidiary for the years 1990 through 1995, a copy of the most recent audit
examination of each of the Company and each of the Subsidiaries by the Internal
Revenue Service ("IRS"), if any, a copy of the most recent state revenue agency
examination, if any, of each of the Company and each of the Subsidiaries, and
- 20 -
all tax rulings with respect to the Company or any Subsidiary received from the
IRS since January 1, 1987.
6.13. Financial Statements. The Company has furnished to Zions Bancorp its
consolidated statement of condition as of each of December 31, 1993, December
31, 1994, December 31, 1995, and September 30, 1996, and its related
consolidated statement of income, consolidated statement of changes in financial
position, and consolidated statement of changes in stockholders' equity for each
of the periods then ended, and the notes thereto (collectively, the "Company
Financial Statements"). Except, in the case of the Company Financial Statements
as of September 30, 1996 and for the period then ended, for the pendency of
normal year-end adjustments and the omission of notes to such statements, and
except as set forth on Schedule 7.9 hereof, all of the Company Financial
Statements, including the related notes, (a) were prepared in accordance with
generally accepted accounting principles applied in all material respects, and
(b) are in accordance with the books and records of the Company which have been
maintained in accordance with generally accepted accounting principles or the
requirements of financial institution regulatory authorities, as the case may
be, and (c) fairly reflect the consolidated financial position of the Company as
of such dates, and the consolidated results of operations of the Company for the
periods ended on such dates, and do not fail to disclose any material
extraordinary or out-of-period items, and (d) reflect, in accordance with
generally accepted accounting principles applied in all material respects,
adequate provision for, or reserves against, the possible loan losses of the
Company as of such dates.
6.14. Call Reports; TFRs; Bank Holding Company Reports.
(a) The Company has made available to Zions Bancorp the Consolidated
Reports of Condition and Consolidated Reports of Income of Pitkin and Valley and
the Thrift Financial Reports ("TFRs") of Centennial for the calendar quarters
dated March 31, 1995 and thereafter. All of such Consolidated Reports of
Condition, Consolidated Reports of Income, and TFRs, including the related
schedules and memorandum items, were prepared in accordance with generally
accepted accounting principles applied in all material respects or, to the
extent different from generally accepted accounting principles, accounting
principles mandated by the respectively applicable instructions to such
Consolidated Reports of Condition, Consolidated Reports of Income, and TFRs.
(b) No adjustments are required to be made to the equity capital
account of any of the Subsidiary Institutions as reported on any of the
Consolidated Reports of Condition or TFRs referred to in Subsection 6.14(a)
hereof, in any material amount, in order to conform such equity capital account
to equity capital as would be determined in accordance with generally accepted
accounting principles as of such date.
- 21 -
(c) The Company has furnished to Zions Bancorp (i) the annual reports
on Form FR Y-6 as filed with the Board of Governors as of December 31, 1995 on
behalf of the Company and Val Cor, (ii) the quarterly reports on Forms FR Y-9C
and FR Y-9LP as filed with the Board of Governors as of March 31, 1996, June 30,
1996, and September 30, 1996 on behalf of the Company and Val Cor, and (iii) the
annual report on OTS Form H-(b)11 as filed with the OTS as of December 31, 1995
on behalf of the Company and all amendments and current reports on OTS Form
H-(b)11 as filed with the OTS subsequent to December 31, 1995.
6.15. Absence of Undisclosed Liabilities. At September 30, 1996, the
Company had no obligation or liability of any nature (whether absolute, accrued,
contingent, or otherwise, and whether due or to become due) which was material,
or that when combined with all similar obligations or liabilities would have
been material, to the Company, except (a) as disclosed in the Company Financial
Statements, or (b) as set forth on Schedule 6.15 hereof, or (c) for unfunded
loan commitments made by the Company or the Subsidiary Institutions in the
ordinary course of their business consistent with past practice. The amounts set
up as current liabilities for taxes in the Company Financial Statements are
sufficient for the payment of all taxes (including, without limitation, federal,
state, local, and foreign excise, franchise, property, payroll, income, capital
stock, and sales and use taxes) accrued in accordance with generally accepted
accounting principles and unpaid at September 30, 1996. Since September 30,
1996, neither the Company nor any of the Subsidiaries, Eagle, or TFG has
incurred or paid any obligation or liability that would be material (on a
consolidated basis) to the Company, except (x) for obligations incurred or paid
in connection with transactions by it in the ordinary course of its business
consistent with past practices, or (y) as set forth on Schedule 6.15 hereof, or
(z) as expressly contemplated herein.
6.16. Absence of Certain Developments. Since September 30, 1996, except as
set forth on Schedule 6.16 hereof, there has been (a) no material adverse change
in the condition, financial or otherwise, or to the assets, properties,
liabilities, or businesses of the Company and the Subsidiary Institutions, taken
as a whole; (b) no material deterioration in the quality of the consolidated
loan portfolio of the Company, and no material increase in the consolidated
level of nonperforming assets or non-accrual loans at the Company or in the
level of its consolidated provision for credit losses or its consolidated
reserve for possible credit losses; (c) no declaration, setting aside, or
payment by the Company or any Subsidiary of any regular dividend, special
dividend, or other distribution with respect to any class of capital stock of
the Company or any Subsidiary, other than customary cash dividends paid by the
Company or a Subsidiary whose amounts have not exceeded past practice and the
intervals between which dividends have not been more frequent than past practice
and
- 22 -
other than a one-time cash dividend from Valley to Val Cor not in excess of $1
million and, if that one-time dividend is paid, a one-time cash dividend from
Val Cor to the Company not in excess of $1 million; (d) no repurchase by the
Company of any of its capital stock; (e) no material loss, destruction, or
damage to any material property of the Company or the Subsidiary Institutions,
which loss, destruction, or damage is not covered by insurance; and (f) no
material acquisition or disposition of any asset, nor any material contract
outside the ordinary course of business entered into by the Company or any
Subsidiary nor any substantial amendment or termination of any material contract
outside the ordinary course of business to which the Company or any Subsidiary
is a party, nor any other transaction by the Company or a Subsidiary involving
an amount in excess of $50,000 other than for fair value in the ordinary course
of its business. Since September 30, 1996, except as set forth on Schedule 6.16
hereof, (x) each of the Company and each of the Subsidiary Institutions has
conducted its business only in the ordinary course of such business and
consistent with past practice; (y) the Company, on a consolidated basis, has
maintained the quality of its loan portfolio and that of each of its major
components at approximately the same level as existed at September 30, 1996; and
(z) the Company, on a consolidated basis, has administered its investment
portfolio pursuant to essentially the same policies and procedures as existed
during 1994 and 1995 and the first nine months of 1996, and has taken no action
to lengthen the average maturity of the investment portfolio, or of any
significant category thereof, to any material extent.
6.17. Reserve for Possible Credit Losses. The Company's consolidated
reserve for possible credit losses is adequate to absorb reasonably anticipated
losses in the consolidated loan and lease portfolios of the Company, in view of
the size and character of such portfolios, current economic conditions, and
other pertinent factors. Management periodically reevaluates the adequacy of
such reserve based on portfolio performance, current economic conditions, and
other factors.
6.18. Tax Matters.
(a) Except as set forth on Schedule 6.18 hereof, all federal, state,
local, and foreign tax returns and reports (including, without limitation, all
income tax, unemployment compensation, social security, payroll, sales and use,
excise, privilege, property, ad valorem, franchise, license, school, and any
other tax under laws of the United States or any state or municipal or political
subdivision thereof) required to be filed by or on behalf of the Company or a
Subsidiary have been timely filed with the appropriate governmental agencies in
all jurisdictions in which such returns and reports are required to be filed, or
requests for extensions have been timely filed, granted, and have not expired
for periods ending on or before December 31, 1995, and all returns filed are
complete and accurate to the best information
- 23 -
and belief of the management of the Company and the Subsidiaries and properly
reflect its taxes for the periods covered thereby. All taxes shown on filed
returns have been paid. As of the date hereof, there is no audit examination,
deficiency, or refund litigation or tax claim or any notice of assessment or
proposed assessment by the IRS or any other taxing authority, or any other
matter in controversy with respect to any taxes that might result in a
determination adverse to the Company or a Subsidiary, except as reserved against
in the Company Financial Statements. All federal, state, and local taxes,
assessments, interest, additions, deficiencies, fees, penalties, and other
governmental charges or impositions due with respect to completed and settled
examinations or concluded litigation have been properly accrued or paid.
(b) Neither the Company nor any Subsidiary has executed an extension
or waiver of any statute of limitations on the assessment or collection of any
tax due that is currently in effect.
(c) To the extent any federal, state, local, or foreign taxes are due
from the Company or any Subsidiary for the period or periods beginning January
1, 1996 or thereafter through and including the Effective Date, adequate
provision on an estimated basis has been or will be made for the payment of such
taxes by establishment of appropriate tax liability accounts on the last monthly
financial statements of the Company prepared before the Effective Date.
(d) Except as set forth on Schedule 6.18 hereof, deferred taxes of the
Company and the Subsidiaries have been provided for in accordance with generally
accepted accounting principles as in effect on the date of this Agreement.
(e) The Pitkin and Valley deductions for bad debts taken and the
reserve for loan losses for federal income tax purposes at September 30, 1996,
were not greater than the maximum amount permitted under the provisions of
section 585 of the Code. The Centennial deductions for bad debts taken and the
reserve for loan losses for federal income tax purposes at September 30, 1996,
were not greater than the maximum amount permitted under the provisions of
section 593 of the Code.
(f) Other than liens arising under the laws of the States of Colorado
and New Mexico with respect to taxes assessed and not yet due and payable, there
are no tax liens on any of the properties or assets of the Company or any of the
Subsidiaries.
(g) The Company and the Subsidiaries have timely filed all information
returns required by sections 6041, 6041A, 6042, 6045, 6049, 6050H, and 6050J of
the Code and have exercised due diligence in obtaining certified taxpayer
identification numbers as required pursuant to Treasury Regulations ss.
35a.9999.
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(h) The taxable year end of the Company for federal income tax
purposes is, and since the inception of the Company has continuously been,
December 31.
6.19. Consolidated Net Worth. The consolidated net worth of the Company on
the date of this Agreement, as determined in accordance with generally accepted
accounting principles, is not less than $30,185,000.
6.20. Examinations. To the extent consistent with law, the Company has
heretofore disclosed to Zions Bancorp relevant information contained in the most
recent Reports of Examination with respect to the Company, Pitkin, and Val Cor
issued by the Board of Governors, the most recent Report of Examination with
respect to Pitkin issued by the Division, the most recent Report of Examination
with respect to Centennial issued by the OTS, and the most recent Report of
Examination with respect to Valley issued by the Comptroller of the Currency.
Such information so disclosed consists of all material information with respect
to the financial condition of the entity under examination which is included in
such reports, and does not omit or will not omit any information necessary to
make the information disclosed not misleading.
6.21. Reports. Since January 1, 1993, each of the Company and each of the
Subsidiaries and Eagle has effected all registrations and filed all reports and
statements, together with any amendments required to be made with respect
thereto, which it was required to effect or file with (a) the Board of
Governors, (b) the FDIC, (c) the United States Department of the Treasury, (d)
the Comptroller of the Currency, (e) the OTS, (f) the Division, and (g) any
other governmental or regulatory authority or agency having jurisdiction over
its operations. Each of such registrations, reports, and documents, including
the financial statements, exhibits, and schedules thereto, does not contain any
statement which, at the time and in the light of the circumstances under which
it was made, is false or misleading with respect to any material fact or which
omits to state any material fact necessary in order to make the statements
contained therein not false or misleading.
6.22. FIRA Compliance and Other Transactions with Affiliates. Except as set
forth on Schedule 6.22 hereof, (a) none of the officers, directors, or
beneficial holders of 5 percent or more of the common stock of the Company or
any of the Subsidiary Institutions and no person "controlled" (as that term is
defined in the Financial Institutions Regulatory and Interest Rate Control Act
of 1978) by the Company or any of the Subsidiary Institution (collectively,
"Insiders") has any ongoing material transaction with the Company or any of the
Subsidiary Institutions on the date of this Agreement; (b) no Insider has any
ownership interest in any business, corporate or otherwise, which is a party to,
or in any property which is the subject of, business arrangements or
- 25 -
relationships of any kind with the Company or any of the Subsidiary Institutions
not in the ordinary course of business; and (c) all other extensions of credit
by the Company or any of the Subsidiary Institutions to any Insider have
heretofore been disclosed in writing by the Company to Zions Bancorp.
6.23. SEC Registered Securities. Other than the Company Common Stock, no
equity or debt securities of the Company or any of the Subsidiaries are
registered or required to be registered under the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act")).
6.24. Legal Proceedings. Except as disclosed in the Company Financial
Statements or as set forth on Schedule 6.24 hereof, there is no claim, action,
suit, arbitration, investigation, or other proceeding pending before any court,
governmental agency, authority or commission, arbitrator, or "impartial
mediator" (of which the Company or any of the Subsidiaries has been served with
process or otherwise been given notice) or, to the best of the knowledge of the
Company, threatened or contemplated against or affecting it or its property,
assets, interests, or rights, or any basis therefor of which notice has been
given, which, if adversely determined, would have a material adverse effect
(financial or otherwise) on the business, operating results, or financial
condition of the Company or which otherwise could prevent, hinder, or delay
consummation of the transactions contemplated by this Agreement.
6.25. Absence of Governmental Proceedings. Except as set forth on Schedule
6.25 hereof, neither the Company nor any Subsidiary, Eagle, or TFG is a party
defendant or respondent to any pending legal, equitable, or other proceeding
commenced by any governmental agency and, to the best of the knowledge of the
Company, no such proceeding is threatened.
6.26. Federal Deposit Insurance.
(a) The deposits held by the Subsidiary Institutions are insured
within statutory limits by the Bank Insurance Fund of the FDIC pursuant to the
provisions of the Federal Deposit Insurance Act, as amended (12 U.S.C. ss. 1811
et seq.), and each Subsidiary Institution has paid all assessments and filed all
related reports and statements required under the Federal Deposit Insurance Act
(or, in the case of Centennial for periods ended before August 9, 1989, under
title IV of the National Housing Act).
(b) Pitkin and Valley are members of and pay insurance assessments to
the Bank Insurance Fund of the FDIC ("BIF"), and their deposits are insured by
the BIF. None of the deposits of Pitkin or Valley are insured by the Savings
Association Insurance Fund of the FDIC ("SAIF"), and neither Pitkin nor Valley
pays any insurance assessments to the SAIF.
- 26 -
(c) Centennial is a member of and pays insurance assessments to the
SAIF, and its deposits are insured by the SAIF. None of the deposits of
Centennial are insured by the BIF, and Centennial pays no insurance assessments
to the BIF.
6.27. Other Insurance. Schedule 6.27 hereof lists each policy of insurance
carried by the Company and the Subsidiaries, including blanket bond coverage.
All such policies of insurance are in full force and effect, and no notice of
cancellation has been received. All premiums to date have been paid in full.
Neither the Company nor any of the Subsidiaries is in default with respect to
any such policy which is material to it.
6.28. Labor Matters. Neither the Company nor any Subsidiary is a party to
or bound by any collective bargaining contracts with respect to any employees of
the Company or the Subsidiaries. Since January 1, 1974, there has not been, nor
to the best of the knowledge of the Company was there or is there threatened,
any strike, slowdown, picketing, or work stoppage by any union or other group of
employees against the Company or any Subsidiary or any of its premises, or any
other labor trouble or other occurrence, event, or condition of a similar
character. As of the date hereof, the Company is not aware of any attempts to
organize a collective bargaining unit to represent any of its employee groups.
6.29. Employee Benefit Plans.
(a) Schedule 6.29 hereto contains a list or brief descriptions of all
pension, retirement, stock purchase, stock bonus, stock ownership, stock option,
performance share, stock appreciation right, phantom stock, savings, or
profit-sharing plans, any employment, deferred compensation, consultant, bonus,
or collective bargaining agreement, or group insurance contract or any other
incentive, welfare, life insurance, death or survivor's benefit, health
insurance, sickness, disability, medical, surgical, hospital, severance, layoff
or vacation plans, contracts, and arrangements or employee benefit plans or
agreements sponsored, maintained, or contributed to by the Company or any
Subsidiary for the employees or former employees of the Company or any
Subsidiary. The Company has previously made available and will continue to make
available to Zions Bancorp for its continuing review until the Effective Date
true, complete, and accurate copies of all plans and arrangements listed on
Schedule 6.29, together with (i) the most recent actuarial and financial report
prepared with respect to any such plans which constitute "qualified plans" under
section 401(a) of the Code, and (ii) the most recent annual reports, if any,
filed with any government agency and all IRS rulings and determination letters
and any open requests for such rulings and letters that pertain to any such
plan.
- 27 -
(b) Except for liabilities to the Pension Benefit Guaranty Corporation
("PBGC") pursuant to section 4007 of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), all of which have been fully paid, and except for
liabilities to the IRS under section 4971 of the Code, all of which have been
fully paid, neither the Company nor any Subsidiary has any liability with
respect to any pension plan qualified under section 401 of the Code. Neither the
Company nor any Subsidiary sponsors or maintains any defined benefit plan and
has never sponsored or maintained any defined benefit plan.
(c) All "employee benefit plans," as defined in section 3(3) of ERISA,
that cover one or more employees employed by the Company or any Subsidiary (each
individually a "Plan" and collectively the "Plans"), comply in all material
respects with ERISA and, where applicable for tax-qualified or tax-favored
treatment, with the Code. As of September 30, 1996, neither the Company nor any
Subsidiary had any material liability under any Plan which is not reflected on
the Company Financial Statements as of such date (other than such normally
unrecorded liabilities under the Plans for sick leave, holiday, education,
bonus, vacation, incentive compensation, and anniversary awards, provided that
such liabilities are not in any event material). None of the Plans, the Company,
the Subsidiaries, nor any trustee or administrator of the Plans has ever engaged
in a "prohibited transaction" with respect to the Plans within the meaning of
section 406 of ERISA or, where applicable, section 4975 of the Code for which no
exemption is applicable, nor have there been any "reportable events" within
section 4043 of ERISA for which the thirty-day notice therefor has not been
waived. Neither the Company nor any Subsidiary has incurred any liability under
section 4201 of ERISA for a complete or partial withdrawal from a multi-employer
plan.
(d) No action, claim, or demand of any kind has been brought or
threatened by any potential claimant or representative of such a claimant under
any plan, contract, or arrangement referred to in Subsection (a) of this
section, where the Company or any of the Subsidiaries may be either (i) liable
directly on such action, claim, or demand; or (ii) obligated to indemnify any
person, group of persons, or entity with respect to such action, claim, or
demand which is not fully covered by insurance maintained with reputable,
responsible financial insurers or by a self-insured plan.
6.30. Employee Relations. As of the date hereof, each of the Company and
each of the Subsidiaries is, to the best of the knowledge of the Company, in
compliance in all material respects with all federal and state laws,
regulations, and orders respecting employment and employment practices
(including Title VII of the Civil Rights Act of 1964), terms and conditions of
employment, and wages and hours; and neither the Company nor any Subsidiary is
engaged in any unfair labor practice. As of the date hereof,
- 28 -
except as set forth on Schedule 6.30 hereof, no dispute exists between the
Company or any Subsidiary and any of its employee groups regarding any employee
organization, wages, hours, or conditions of employment which would materially
interfere with the business or operations of the Company or any Subsidiary.
6.31. Fiduciary Activities. Each Subsidiary Institution is duly qualified
and registered and in good standing in accordance with the laws of each
jurisdiction in which it is required to so qualify or register as a result of or
in connection with its fiduciary or custodial activities as conducted as of the
date hereof. Each Subsidiary Institution is duly registered under and in
compliance with all requirements of the federal Investment Advisers Act of 1940
as amended, or is exempt from registration thereunder and from compliance with
the requirements thereof. Since January 1, 1993, each of the Subsidiary
Institutions has conducted, and currently is conducting, all fiduciary and
custodial activities in all material respects in accordance with all applicable
law.
6.32. Environmental Liability.
(a) Except as set forth on Schedule 6.32 hereof, neither the Company
nor any of the Subsidiaries is in material violation of any judgment, decree,
order, law, license, rule or regulation pertaining to environmental matters,
including those arising under the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, the
Federal Water Pollution Control Act, the Federal Clean Air Act, the Toxic
Substances Control Act or any state or local statute, regulation, ordinance,
order or decree relating to health, safety or the environment ("Environmental
Laws").
(b) Except as set forth on Schedule 6.32 hereof, neither the Company,
any of the Subsidiaries nor, to the best of the knowledge of the Company, any
borrower of the Company or of the Subsidiary Institutions has received notice
that it has been identified by the United States Environmental Protection Agency
as a potentially responsible party under CERCLA with respect to a site listed on
the National Priorities List, 40 C.F.R. Part 300 Appendix B, nor has the Company
or any of the Subsidiaries or, to the best of the knowledge of the Company, any
borrower of the Company or of the Subsidiary Institutions received any
notification that any hazardous waste, as defined by 42 U.S.C. ss. 6903(5), any
hazardous substances, as defined by 42 U.S.C. ss. 9601(14), any "pollutant or
contaminant," as defined by 42 U.S.C. ss. 9601(33), or any toxic substance,
hazardous materials, oil, or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") that it has disposed of has been
found at any site at
- 29 -
which a federal or state agency is conducting a remedial investigation or other
action pursuant to any Environmental Law.
(c) No portion of any real property at any time owned or leased by the
Company or any of the Subsidiaries (collectively, the "Company Real Estate") has
been used by the Company or any Subsidiary for the handling, processing, storage
or disposal of Hazardous Substances in a manner which violates any Environmental
Laws and, to the best of the knowledge of the Company, no underground tank or
other underground storage receptacle for Hazardous Substances is located on any
of the Company Real Estate. In the course of its activities, neither the Company
nor any of the Subsidiaries has generated and is not generating any hazardous
waste on any of the Company Real Estate in a manner which violates any
Environmental Laws. There has been no past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping (collectively, a "Release") of Hazardous
Substances by the Company or any of the Subsidiaries on, upon, or into any of
the Company Real Estate. In addition, to the best of the knowledge of the
Company, except as set forth on Schedule 6.32 hereof, there have been no such
Releases on, upon, or into any real property in the vicinity of any of the
Company Real Estate that, through soil or groundwater contamination, may be
located on any of such Company Real Estate.
(d) With respect to any real property at any time held as collateral
for any outstanding loan by the Company or any of the Subsidiary Institutions
(collectively, the "Collateral Real Estate"), except as set forth on Schedule
6.32 hereof, neither the Company nor any of the Subsidiary Institutions has
since January 1, 1987 received notice from any borrower thereof or third party,
and has no knowledge, that such borrower has generated or is generating any
hazardous waste on any of the Collateral Real Estate in a manner which violates
any Environmental Laws or that there has been any Release of Hazardous
Substances by such borrower on, upon, or into any of the Collateral Real Estate,
or that there has been any Release on, upon, or into any real property in the
vicinity of any of the Collateral Real Estate that, through soil or groundwater
contamination, may be located on any of such Collateral Real Estate.
(e) As used in this Section 6.32, each of the terms "Company,"
"Subsidiary Institution," and "Subsidiary" includes the applicable entity and
any partnership or joint venture in which it has an interest.
6.33. Intangible Property. To the best of the knowledge of the Company,
each of the Company and the Subsidiary Institutions owns or possesses the right,
free of the claims of any third party, to use all material trademarks, service
marks, trade names, copyrights, patents, and licenses currently used by it in
the
- 30 -
conduct of its business. To the best of the knowledge of the Company, no
material product or service offered and no material trademark, service mark, or
similar right used by the Company or the Subsidiary Institutions infringes any
rights of any other person, and, as of the date hereof, neither the Company nor
any of the Subsidiaries has received any written or oral notice of any claim of
such infringement.
6.34. Real and Personal Property. Except for property and assets disposed
of in the ordinary course of business, and except for the TFG Common Stock, each
of the Company and each of the Subsidiaries possesses good and marketable title
to and owns, free and clear of any mortgage, pledge, lien, charge, or other
encumbrance or other third party interest of any nature whatsoever which would
materially interfere with the business or operations of either of the Company or
any of the Subsidiaries, its real and personal property and other assets,
including without limitation those properties and assets reflected in the
Company Financial Statements as of September 30, 1996, or acquired by the
Company or a Subsidiary subsequent to the date thereof. The leases pursuant to
which the Company and the Subsidiaries lease real or personal property are valid
and effective in accordance with their respective terms; and there is not, under
any such lease, any material existing default or any event which, with the
giving of notice or lapse of time or otherwise, would constitute a material
default. The real and personal property leased by either the Company or any of
the Subsidiaries is free from any adverse claim which would materially interfere
with its business or operation taken as a whole. The material properties and
equipment owned or leased by the Company and the Subsidiaries are in normal
operating condition, free from any known defects, except such minor defects as
do not materially interfere with the continued use thereof in the conduct of its
normal operations.
6.35. Loans, Leases, and Discounts.
(a) To the best of the knowledge of the Company, each loan, lease, and
discount reflected as an asset of the Company in the Company Financial
Statements as of September 30, 1996, or acquired since that date, is the legal,
valid, and binding obligation of the obligor named therein, enforceable in
accordance with its terms; and no loan, lease, or discount having an unpaid
balance (principal and accrued interest) in excess of $50,000 is subject to any
asserted defense, offset, or counterclaim known to the Company or any of the
Subsidiary Institutions.
(b) Except as set forth on Schedule 6.35 hereof, neither the Company
nor any of the Subsidiaries holds any loans or loan-participation interests
purchased from, or participates in any loans originated by, Rocky Mountain
Equity and Mortgage Company or any other person other than the Company or a
Subsidiary.
- 31 -
6.36. Material Contracts. Neither the Company nor any of the Subsidiaries
nor any of the assets, businesses, or operations of any of them is as of the
date hereof a party to, or is bound or affected by, or receives benefits under
any material agreement, arrangement, or commitment not cancelable by it without
penalty, other than (a) the agreements set forth on Schedule 6.36 hereof, and
(b) agreements, arrangements, or commitments entered into in the ordinary course
of its business consistent with past practice, or, if there has been no past
practice, consistent with prudent banking practices.
6.37. Employment and Severance Arrangements. Schedule 6.37 hereof sets
forth
(a) all employment contracts granted by the Company or any of the
Subsidiaries to any of its officers, directors, consultants, or other management
officials and any officer, director, consultant, or management official of any
affiliate providing for increased or accelerated compensation in the event of a
change of control with respect to the Company or any Subsidiary or any other
event affecting the ownership, control, or management of the Company or any
Subsidiary; and
(b) all employment and severance contracts, agreements, and
arrangements between the Company or any of the Subsidiaries and any officer,
director, consultant, or other management official of any of them.
6.38. Material Contract Defaults. All contracts, agreements, leases,
mortgages, or commitments referred to in Section 6.12(c) hereof are valid and in
full force and effect on the date hereof. As of the date of this Agreement and,
if the Laredo Loan Agreement is no longer outstanding at the Effective Date or,
if it be outstanding, if the conditions described in the first sentence of
Section 4.13 shall have been satisfied on or before the Effective Date, as of
the Effective Date, neither the Company nor any of the Subsidiaries is or will
be in default in any material respect under any material contract, agreement,
commitment, arrangement, lease, insurance policy, or other instrument to which
it is a party or by which its assets, business, or operations may be bound or
affected or under which it or its assets, business, or operations receive
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.
6.39. Capital Expenditures. Except as set forth on Schedule 6.39 hereof,
neither the Company nor any of the Subsidiaries has any outstanding commitments
in the nature of capital expenditures which in the aggregate exceed $25,000.
6.40. Repurchase Agreements. With respect to all agreements pursuant to
which the Company or any of the Subsidiary
- 32 -
Institutions has purchased securities subject to an agreement to resell, it has
a valid, perfected first lien or security interest in the securities securing
the agreement, and the value of the collateral securing each such agreement
equals or exceeds the amount of the debt secured by such collateral under such
agreement.
6.41. Domestic Building and Loan Association; Thrift Asset Test and
Qualified Thrift Lender. Centennial qualifies as a domestic building and loan
association under section 7701(a)(19) of the Code and as a qualified thrift
lender under section 10 of the HOLA.
6.42. Internal Controls. Each of the Company and each of the Subsidiary
Institutions maintains internal controls to provide reasonable assurance to its
board of directors and officers that its assets are safeguarded, its records and
reports are prepared in compliance with all applicable legal and accounting
requirements and with its internal policies and practices, and applicable
federal, state, and local laws and regulations are complied with. These controls
extend to the preparation of its financial statements to provide reasonable
assurance that the statements are presented fairly in conformity with generally
accepted accounting principles or, in the case of a Subsidiary Institution and
to the extent different from generally accepted accounting principles,
accounting principles mandated by the federal banking regulatory agency with
principal jurisdiction over that Subsidiary Institution. The controls contain
self-monitoring mechanisms, and appropriate actions are taken on significant
deficiencies as they are identified.
6.43. Dividends. Neither the Company nor any of the Subsidiaries has paid
any dividend to its shareholders which caused its regulatory capital to be less
than the amount then required by applicable law, or which exceeded any other
limitation on the payment of dividends imposed by law, agreement, or regulatory
policy.
6.44. Brokers and Advisers. Except as set forth on Schedule 6.44 hereof,
(a) there are no claims for brokerage commissions, finder's fees, or similar
compensation arising out of or due to any act of the Company or any of the
Subsidiaries in connection with the transactions contemplated by this Agreement
or based upon any agreement or arrangement made by or on behalf of the Company
or any of the Subsidiaries, and (b) neither the Company nor any of the
Subsidiaries has entered into any agreement or understanding with any party
relating to financial advisory services provided or to be provided with respect
to the transactions contemplated by this Agreement.
- 33 -
6.45. Interest Rate Risk Management Instruments.
(a) Schedule 6.45 contains a true, correct, and complete list of all
interest-rate swaps, caps, floors, and options agreements and other
interest-rate risk management arrangements to which the Company or any of the
Subsidiary Institutions is a party or by which any of its properties or assets
may be bound.
(b) All interest rate swaps, caps, floors, and option agreements and
other interest rate risk management arrangements to which the Company or any of
the Subsidiary Institutions is a party or by which any of its properties or
assets may be bound were entered into in the ordinary course of its business
and, to the best of its knowledge, in accordance with prudent banking practice
and applicable rules, regulations, and regulatory policies and with
counterparties believed to be financially responsible at the time and are legal,
valid, and binding obligations enforceable in accordance with their terms
(except as may be limited by bankruptcy, insolvency, moratorium, reorganization,
or similar laws affecting the rights of creditors generally and the availability
of equitable remedies), and are in full force and effect. The Company and each
of the Subsidiary Institutions have duly performed in all material respects of
all of their respective obligations thereunder to the extent that such
obligations to perform have accrued; and to the best of the knowledge of the
Company, there are no breaches, violations or defaults or allegations or
assertions of such by any party thereunder.
6.46. Disclosure. No representation or warranty hereunder and no
certificate, statement, or other document delivered by the Company hereunder or
in connection with this Agreement or any of the transactions contemplated
thereunder contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein, in
light of the circumstances under which they were made, not misleading. There is
no fact known to the Company which reasonably might materially adversely affect
the business, assets, liabilities, financial condition, results of operations,
or prospects of the Company or any of the Subsidiary Institutions which has not
been disclosed in the Company Financial Statements or a certificate delivered to
Zions Bancorp by the Company. Copies of all documents referred to in this
Agreement, unless prepared solely by Zions Bancorp or solely by Zions Bancorp
and third parties hereto, are true, correct, and complete copies thereof and
include all amendments, supplements, and modifications thereto and all waivers
thereunder.
6.47. Regulatory and Other Approvals. As of the date hereof, except as set
forth on Schedule 6.47 hereof, the Company is not aware of any reason why all
material consents and approvals shall not be procured from all regulatory
agencies having jurisdiction over the transactions contemplated by this
Agreement, as shall
- 34 -
be necessary for (a) consummation of the transactions contemplated by this
Agreement, and (b) the continuation after the Effective Date of the business of
the Company and the Subsidiary Institutions as such business is carried on
immediately prior to the Effective Date, free of any conditions or requirements
which, in the reasonable opinion of the Company, could have a material adverse
effect upon the business, operations, activities, earnings, or prospects of the
Company. As of the date hereof, the Company is not aware of any reason why all
material consents and approvals shall not be procured from all other persons and
entities whose consent or approval shall be necessary for (y) consummation of
the transactions contemplated by this Agreement, or (z) the continuation after
the Effective Date of the business of the Company and the Subsidiary
Institutions as such business is carried on immediately prior to the Effective
Date.
7. Covenants of the Company.
The Company hereby covenants and agrees as follows:
7.1. Rights of Access. In addition and not in limitation of any other
rights of access provided to Zions Bancorp herein, until the Effective Date the
Company will give to Zions Bancorp and to their representatives, including their
certified public accountants, KPMG Peat Marwick, full access during normal
business hours to all of the property, documents, contracts, books, and records
of the Company and the Subsidiaries, and such information with respect to their
business affairs and properties as Zions Bancorp from time to time may
reasonably request; provided that copies of documents may be redacted to remove
material whose disclosure is, in the judgment of independent counsel to the
company, inconsistent with the fiduciary obligations of the directors of the
Company.
7.2. Corporate Records, Contracts, etc.
(a) The Company will make available to Zions Bancorp copies of the
articles of incorporation and bylaws of the Company and the Subsidiaries, and
will make available minute books of the Company and the Subsidiaries, all of
which shall be certified to be complete and true copies.
(b) The Company will make available copies of all contracts or
agreements involving amounts in excess of $25,000 to which the Company or any of
the Subsidiaries is a party, including but not limited to data processing
contracts, service contracts, contracts to purchase or lease real property or
equipment, guaranties, employment contracts, and insurance contracts pertaining
to fire, accident, indemnity, fidelity, health, life, hospitalization, or other
employee benefits.
- 35 -
(c) The Company will furnish to Zions Bancorp the following
information with respect to properties owned by the Company and the Subsidiary
Institutions: (i) a brief description and location of each parcel of real
property owned by the Company or any of the Subsidiary Institutions, (ii) a
brief description of real property covered by lease or other rental arrangements
to which the Company or any of the Subsidiary Institutions is a party, including
a copy of the relevant leases; and (iii) a brief description of personal
property with a value in excess of $25,000 covered by lease or other rental
arrangements to which the Company or any of the Subsidiary Institutions is a
party, including a copy of the relevant leases.
7.3. Securities Filings; Monthly and Quarterly Financial Statements;
Minutes of Meetings and Other Materials.
(a) From the date hereof to the Effective Date, the Company shall,
contemporaneously with the making of any filing with the SEC pursuant to
sections 13, 14, or 16 of the Exchange Act, deliver a copy of such filing to
Zions Bancorp.
(b) The Company will continue and will cause each of the Subsidiary
Institutions to continue to prepare all of the monthly and quarterly financial
statements and financial reports to regulatory authorities for the months and
quarterly periods ending between October 1, 1996 and the Effective Date which it
customarily prepared during the period between January 1, 1994 and September 30,
1996 and shall promptly provide Zions Bancorp with copies of all such financial
statements and reports. Such financial statements and reports shall be verified
by the chief financial officer of the reporting entity. All of such financial
statements and reports, including the related notes, schedules, and memorandum
items, will have been prepared in accordance with generally accepted accounting
principles applied in all material respects (except that Consolidated Reports of
Condition and Consolidated Reports of Income required to be filed by the
Subsidiary Institutions under federal law may be prepared in accordance with the
official instructions applicable thereto at the time of filing).
(c) The Company shall promptly provide Zions Bancorp with (i) copies
of all of its and each of the Subsidiaries' periodic reports to directors and to
shareholders, whether or not such reports were prepared or distributed in
connection with a meeting of the board of directors or a meeting of the
shareholders, prepared or distributed between the date of this Agreement and the
Effective Date, and (ii) complete copies of all minutes of meetings of its and
each of the Subsidiaries' board of directors and shareholders which meetings
take place between the date of this Agreement and the Effective Date, certified
by the secretary or cashier or an assistant secretary or assistant cashier of
the Company or the applicable Subsidiary, as the case may be; provided that the
copies so provided may be redacted to remove material
- 36 -
whose disclosure is, in the judgment of independent counsel to the company,
inconsistent with the fiduciary obligations of the directors of the Company.
7.4. Extraordinary Transactions. Without the prior written consent of Zions
Bancorp, the Company will not, and will insure that none of the Subsidiaries
shall, on or after the date of this Agreement: (a) declare or pay any cash
dividends or property dividends with respect to any class of its capital stock,
with the exception of customary periodic cash dividends paid by the Company or a
Subsidiary to holders of its common stock at such intervals and in such amounts
as are in every case consistent with the amounts and intervals characteristic of
that payer, and with the further exceptions of a one-time cash dividend from
Valley to Val Cor not in excess of $1 million (provided that such one-time
dividend does not cause the regulatory capital of Valley to be less than the
amount then required by applicable law, or to exceed any other limitation on the
payment of dividends imposed by law, agreement, or regulatory policy) and, if
that one-time dividend is paid, a one-time cash dividend from Val Cor to the
Company not in excess of $1 million; (b) declare or distribute any stock
dividend, authorize a stock split, or authorize, issue or make any distribution
of its capital stock or any other securities (except for issuances of Company
Common Stock upon exercise of stock options outstanding on the date of this
Agreement or issued subsequent to the date of this Agreement consistently with
the next parenthetical phrase of this sentence), or grant any options to acquire
such additional securities (except pursuant to stock option plans in existence
on the date of this Agreement and in amounts and on terms which are in every
case consistent with past practice of the Company and which, in any event, will
not cover more than 26,000 shares of Company Common Stock); (c) merge into,
consolidate with, or sell its assets to any other corporation or person, or
enter into any other transaction or agree to effect any other transaction not in
the ordinary course of its business except as explicitly contemplated herein, or
engage in any discussions concerning such a possible transaction except as
explicitly contemplated herein; (d) convert the charter or form of entity of any
of the Subsidiary Institutions from that in existence on the date of this
Agreement to any other charter or form of entity; (e) make any direct or
indirect redemption, purchase, or other acquisition of any of its capital stock;
(f) except in the ordinary course of its business or to accomplish the
transactions contemplated by this Agreement, incur any liability or obligation,
make any commitment or disbursement, acquire or dispose of any property or
asset, make any contract or agreement, or engage in any transaction, it being
agreed that for purposes of this section 7.4 repayments by the Company of
principal amounts of bank debt outstanding shall be considered in the ordinary
course of the business of the Company so long as such repayments do not
significantly adversely affect the liquidity or interest-rate sensitivity of the
Company; (g) other than in the ordinary course of business, subject any of its
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properties or assets to any lien, claim, charge, option, or encumbrance; (h)
except for increases in the ordinary course of business in accordance with past
practices, which together with all other compensation rate increases do not
exceed 4.5 percent per annum of the aggregate payroll as of October 1, 1996,
increase the rate of compensation of any employee or enter into any agreement to
increase the rate of compensation of any employee; (i) create or modify any
pension or profit sharing plan, bonus, deferred compensation, death benefit, or
retirement plan, or the level of benefits under any such plan, nor increase or
decrease any severance or termination pay benefit or any other fringe benefit;
(j) enter into any employment or personal services contract with any person or
firm, including without limitation any contract, agreement, or arrangement
described in Section 6.37(a) hereof, except directly to facilitate the
transactions contemplated by this Agreement; (k) purchase any loans or
loan-participation interests from, or participate in any loans originated by,
Rocky Mountain Equity and Mortgage Company or any other person other than the
Company or a Subsidiary; nor (l) permit Eagle to engage in any business
activity.
7.5. Preservation of Business. The Company will and will cause each of the
Subsidiary Institutions to (a) carry on its business and manage its assets and
properties diligently and substantially in the same manner as heretofore; (b)
maintain the ratio of its loans to its deposits at approximately the same level
as existed at September 30, 1996, as adjusted to allow for seasonal fluctuations
of loans and deposits of a kind and amount experienced traditionally by it; (c)
manage its investment portfolio in substantially the same manner and pursuant to
substantially the same investment policies as in 1994 and 1995 and the first
nine months of 1996, and will take no action to change the percentage which its
investment portfolio bears to its total assets, or to lengthen the average
maturity of its investment portfolio, or of any significant category thereof, to
any material extent; (d) continue in effect its present insurance coverage on
all properties, assets, business, and personnel; (e) use its best efforts to
preserve its business organization intact; except as otherwise consented to by
Zions Bancorp, to keep available its present employees; and to preserve its
present relationships with customers and others having business dealings with
it; (f) not do anything and not fail to do anything which will cause a breach of
or default in any contract, agreement, commitment, or obligation to which it is
a party or by which it may be bound; (g) not amend its articles of incorporation
or bylaws; (h) not grant or expand any shareholders' rights to dissent from any
merger; (i) ensure that the Company Common Stock continues to be listed on the
National Market System of the National Association of Securities Dealers'
Automated Quotation System (or else shall become listed on a national securities
exchange); and (j) continue to observe and cause Pitkin to continue to observe
the corporate and other requirements
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necessary to establish TFG as a separate legal entity with respect to all
persons who deal with the Company, Pitkin, and TFG.
7.6 Comfort Letter. At the time of the effectiveness of the Registration
Statement, but prior to the mailing of the proxy materials, and at the Effective
Date, the Company shall furnish Zions Bancorp with a letter from Dalby, Wendland
& Co., P.C., in form and substance acceptable to Zions Bancorp, stating that (a)
they are independent accountants with respect to the Company within the meaning
of the 1933 Act and the published rules and regulations thereunder, (b) in their
opinion the consolidated financial statements of the Company included in the
Registration Statement and examined by them comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and the
published rules and regulations thereunder, and (c) a reading of the Company's
audited consolidated financial statements and the latest available unaudited
consolidated financial statements of the Company and unaudited financial
statements of the Subsidiaries and inquiries of certain officials of the Company
and the Subsidiaries responsible for financial and accounting matters as to
transactions and events since the date of the most recent consolidated statement
of condition included in their most recent audit report with respect to the
Company did not cause them to believe that (i) the Company's audited
consolidated financial statements and such latest available unaudited
consolidated financial statements are not stated on a basis consistent with that
followed in the Company's audited consolidated financial statements; or (ii)
except as disclosed in the letter, at a specified date not more than five
business days prior to the date of such letter, there was any change in the
Company's capital stock or any change in consolidated long-term debt or any
decrease in the consolidated net assets of the Company as compared with the
respective amounts shown in the most recent Company audited consolidated
financial statements. The letter shall also cover such other matters pertaining
to the Company's and the Subsidiary Institutions's financial data and
statistical information included in the Registration Statement as may reasonably
be requested by Zions Bancorp.
7.7 Affiliates' Agreements. The Company will furnish to Zions Bancorp a
list of all persons known to the Company who at the date of the Company's
special meeting of shareholders to vote upon the transactions contemplated by
this Agreement may be deemed to be "affiliates" of the Company within the
meaning of Rule 145 under the 1933 Act and for purposes of qualifying the Merger
for "pooling of interests" accounting treatment. The Company will use its best
efforts to cause each such "affiliate" of the Company to deliver to Zions
Bancorp not later than thirty days prior to the Effective Date a written
agreement providing that such person will not sell, pledge, transfer or
otherwise dispose of (a) the shares of Company Common Stock beneficially owned
by such person, or the shares of Zions Bancorp Stock to be received by such
person in the Merger (the "Company Merger Shares") or any other shares of Zions
Bancorp
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Stock held by such person during the period commencing thirty days prior to the
Effective Date and ending at such time as financial results covering at least
thirty days of post-Merger combined operations have been published within the
meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies or (b) the Company Merger Shares except in compliance with the
applicable provisions of the 1933 Act and the rules and regulations thereunder.
7.8 Inconsistent Activities. Unless and until the Merger has been
consummated or this Agreement has been terminated in accordance with its terms,
the Company will not and will not permit any of the Subsidiaries to (a) solicit
or encourage, directly or indirectly, any inquiries or proposals to acquire more
than 1 percent of the Company Common Stock or any capital stock of any of the
Subsidiaries or any significant portion of its or such Subsidiary's assets
(whether by tender offer, merger, purchase of assets or other transactions of
any type); (b) afford any third party which may be considering any such
transaction access to its or any Subsidiary's properties, books or records
except as required by mandatory provisions of law; (c) enter into any
discussions or negotiations for, or enter into any agreement or understanding
which provides for, any such transaction, or (d) authorize or permit any of its
directors, officers, employees or agents to do or permit any of the foregoing.
If the Company becomes aware of any offer or proposed offer to acquire any
shares of its capital stock or any significant portion of its assets (regardless
of the form of the proposed transaction) or of any other matter which could
adversely affect this Agreement or the Merger, the Company shall immediately
give notice thereof to Zions Bancorp.
7.9 Certain Compliance Matters. The Company promptly will and will cause
Centennial promptly to:
(a) comply with the federal laws, rules and regulations set forth in
Schedule 7.9 hereof; and
(b) conform the accounts of Centennial with generally accepted
accounting principles by means of the accounting adjustments summarized in
Schedule 7.9 hereof.
7.10 Certain Accruals. As of or before the close of business on the last
day of the calendar month preceding the Effective Date, the Company shall have
accrued the following items of expense or income, net of applicable tax benefit
or expense:
(a) the one-time special assessment to fulfill Centennial's obligation
to recapitalize SAIF as provided in section 2702 of the Economic Growth and
Regulatory Paperwork Reduction Act of 1996, enacted as title II of H.R. 3610 on
September 30, 1996;
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(b) the cost of the professional services incurred in connection with
the review, report and recommendations of KPMG Peat Marwick in connection with
its October-November 1996 review of the operations of Centennial and the matters
referred to in section 7.9;
(c) the expense or income accompanying the restatement of accounts of
the Company and the Subsidiaries pursuant to section 7.9 to conform their
carrying values to generally accepted accounting principles, and the conforming
of the reserve for loan and lease losses to the requirements of generally
accepted accounting principles; and
(d) the expense, through the Effective Date, of the attorneys,
accountants, investment bankers, consultants, brokers and finders, and other
third parties who will have rendered services to the Company or any Subsidiary
through the Effective Date.
8. Representations and Warranties of Zions Bancorp.
Zions Bancorp represents and warrants to the Company as follows:
8.1. Organization, Powers, and Qualification. It is a corporation which is
duly organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own and operate its properties and assets, to lease properties used
in its business, and to carry on its business as now conducted. It owns or
possesses in the operation of its business all franchises, licenses, permits,
branch certificates, consents, approvals, waivers, and other authorizations,
governmental or otherwise, which are necessary for it to conduct its business as
now conducted, except for those where the failure of such ownership or
possession would not adversely affect its operation and properties in any
material respect. It is duly qualified and licensed to do business and is in
good standing in every jurisdiction in which such qualification or license is
required or with respect to which the failure to be so qualified or licensed
could result in material liability or adversely affect its operation and
properties in any material respect.
8.2. Execution and Performance of Agreement. It has all requisite corporate
power and authority to execute and deliver this Agreement and to perform its
respective terms.
8.3. Binding Obligations; Due Authorization. This Agreement constitutes its
valid, legal, and binding obligations enforceable against it in accordance with
its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency,
- 41 -
moratorium or similar law, or by general principles of equity. The execution,
delivery, and performance of this Agreement and the transactions contemplated
thereby have been duly and validly authorized by its board of directors. No
other corporate proceedings on its part are necessary to authorize this
Agreement or the carrying out of the transactions contemplated hereby.
8.4. Absence of Default. None of the execution or the delivery of this
Agreement, the consummation of the transactions contemplated thereby, or the
compliance with or fulfillment of the terms thereof will conflict with, or
result in a breach of any of the terms, conditions, or provisions of, or
constitute a default under its organizational documents or bylaws. None of such
execution, consummation, or fulfillment will (a) conflict with, or result in a
material breach of the terms, conditions, or provisions of, or constitute a
material violation, conflict, or default under, or give rise to any right of
termination, cancellation, or acceleration with respect to, or result in the
creation of any lien, charge, or encumbrance upon, any of its property or assets
pursuant to any material agreement or instrument under which it is obligated or
by which any of its properties or assets may be bound, including without
limitation any material lease, contract, mortgage, promissory note, deed of
trust, loan, credit arrangement or other commitment or arrangement of it in
respect of which it is an obligor, or (b) if the Merger is approved by the Board
of Governors under the BHC Act, and if the transactions contemplated by this
Agreement are approved by the Commissioner and the Division, violate any law,
statute, rule, or regulation of any government or agency to which it is subject
and which is material to its operations, or (c) violate any judgment, order,
writ, injunction, decree, or ruling to which it or any of its properties or
assets is subject or bound. None of the execution or delivery of this Agreement,
the consummation of the transactions contemplated thereby, or the compliance
with or fulfillment of the terms thereof will require any authorization,
consent, approval, or exemption by any person which has not been obtained, or
any notice or filing which has not been given or done, other than approval of or
waiver of jurisdiction over the transactions contemplated by this Agreement by
the Board of Governors, the Commissioner, and the Division.
8.5. Brokers and Advisers.
(a) There are no claims for brokerage commissions, finder's fees, or
similar compensation arising out of or due to any act of its in connection with
the transactions contemplated by this Agreement or based upon any agreement or
arrangement made by or on behalf of it.
(b) It has not entered into any agreement or understanding with any
party relating to financial advisory
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services provided or to be provided with respect to the transactions
contemplated by this Agreement.
8.6. Books and Records. Its books and records fairly reflect the
transactions to which it is a party or by which its properties are subject or
bound. Such books and records have been properly kept and maintained and are in
compliance in all material respects with all applicable legal and accounting
requirements. It follows generally accepted accounting principles applied on a
consistent basis in the preparation and maintenance of its books of account and
financial statements, including but not limited to the application of the
accrual method of accounting for interest income on loans, leases, discounts,
and investments, interest expense on deposits and all other liabilities, and all
other items of income and expense. It has made all accruals in amounts which
accurately report income and expense in the proper periods in accordance with
generally accepted accounting principles. It has filed all material reports and
returns required by any law or regulation to be filed by it.
8.7. Financial Statements. Zions Bancorp has furnished to the Company its
consolidated statement of condition as of each of December 31, 1993, December
31, 1994, December 31, 1995, and September 30, 1996, and its related
consolidated statement of income, consolidated statement of changes in financial
position, and consolidated statement of changes in stockholders' equity for each
of the periods then ended, and the notes thereto (collectively, the "Zions
Bancorp Financial Statements"). All of the Zions Bancorp Financial Statements,
including the related notes, (a) were prepared in accordance with generally
accepted accounting principles applied in all material respects, and (b) are in
accordance with the books and records of Zions Bancorp which have been
maintained in accordance with generally accepted accounting principles, and (c)
fairly reflect the consolidated financial position of Zions Bancorp as of such
dates, and the consolidated results of operations of Zions Bancorp for the
periods ended on such dates, and do not fail to disclose any material
extraordinary or out-of-period items, and (d) reflect, in accordance with
generally accepted accounting principles applied in all material respects,
adequate provision for, or reserves against, the possible loan losses of Zions
Bancorp as of such dates.
8.8. Absence of Certain Developments. Since September 30, 1996, there has
been (a) no material adverse change in the condition, financial or otherwise,
assets, properties, liabilities, or businesses of Zions Bancorp, and (b) no
material deterioration in the quality of the loan portfolio of Zions Bancorp or
of any major component thereof, and no material increase in the level of
nonperforming assets or nonaccrual loans at Zions Bancorp or in the level of its
provision for credit losses or its reserve for possible credit losses.
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8.9. Disclosure. No representation or warranty hereunder and no
certificate, statement, or other document delivered by it hereunder or in
connection with this Agreement or any of the transactions contemplated
thereunder contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein, in
light of the circumstances under which they were made, not misleading. There is
no fact known to it which might materially adversely affect its business,
assets, liabilities, financial condition, results of operations, or prospects
which has not been disclosed in the Zions Bancorp Financial Statements or a
certificate delivered by it to the Company. Copies of all documents referred to
in this Agreement, unless prepared solely by the Company or solely by the
Company and third parties hereto, are true, correct, and complete copies thereof
and include all amendments, supplements, and modifications thereto and all
waivers thereunder.
9. Closing.
9.1. Place and Time of Closing. Closing shall take place at the offices of
Zions Bancorp, 1380 Kennecott Building, Salt Lake City, Utah, or such other
place as the parties choose, commencing at 10:00 a.m., local time, on the
Effective Date, provided that all conditions precedent to the obligations of the
parties hereto to close have then been met or waived.
9.2. Events To Take Place at Closing. At the Closing, the following actions
will be taken:
(a) Such certificates and other documents as are required by this
Agreement to be executed and delivered on or prior to the Effective Date and
have not been so executed and delivered, and such other certificates and
documents as are mutually deemed by Zions Bancorp and the Company to be
otherwise desirable for the effectuation of the Closing, will be so executed and
delivered; and then
(b) The Merger and the issuance of shares incident thereto shall be
effected; provided, however, that the administrative and ministerial aspects of
the issuance of shares incident to the Merger will be settled as soon thereafter
as shall be reasonable under the circumstances.
10. Termination, Damages for Breach, Waiver, and Amendment.
10.1. Termination by Reason of Lapse of Time. This Agreement may be
terminated by either party on or after September 30, 1997, by instrument duly
authorized and executed and delivered
- 44 -
to the other party, unless the Effective Date shall have occurred on or before
such date.
10.2. Grounds for Termination. This Agreement may be terminated by written
notice of termination at any time before the Effective Date (whether before or
after action by shareholders of the Company):
(a) by mutual consent of the parties hereto;
(b) by Zions Bancorp, upon written notice to the Company given at any
time (i) if any of the representations and warranties of the Company contained
in Section 6 hereof was materially incorrect when made, or (ii) in the event of
a material breach or material failure by the Company of any covenant or
agreement of the Company contained in this Agreement which has not been, or
cannot be, cured within thirty days after written notice of such breach or
failure is given to the Company;
(c) by the Company, upon written notice to Zions Bancorp given at any
time (i) if any of the representations and warranties of Zions Bancorp contained
in Section 8 hereof was materially incorrect when made, or (ii) in the event of
a material breach or material failure by Zions Bancorp of any covenant or
agreement of Zions Bancorp contained in this Agreement which has not been, or
cannot be, cured within thirty days after written notice of such breach or
failure is given to Zions Bancorp;
(d) by the board of directors of Zions Bancorp, upon written notice
given to the Company, provided that Zions Bancorp shall not previously have
entered into a definitive agreement providing for a change in control (which for
purposes of this section means a sale of more than 50 percent of the voting
stock of Zions Bancorp to an unaffiliated person, or a sale of more than 50
percent of the voting stock of Zions Bank to an unaffiliated person, or a merger
or consolidation or a sale of all or substantially all of the assets of Zions
Bancorp or Zions Bank with or to an unaffiliated person in a transaction in
which individuals who constitute the board of directors of Zions Bancorp or
Zions Bank, as the case may be, prior to the transaction cease to constitute at
least a majority thereof following the transaction), if (i) the average (rounded
to the nearest penny) of each Daily Sales Price over the Pricing Period is more
than $93.00, and (ii) the percentage increase in the Daily Sales Price between
November 19, 1996 and the Pricing Period (using the average over such Pricing
Period) is more than fifteen percentage points more than the percentage increase
in the KBW Index between November 19, 1996 and the Pricing Period (using the
average over such Pricing Period), and (iii) Zions Bancorp shall have provided
to the Company before the close of business on the fourth trading day preceding
the Effective Date a written notice styled "Notice of Intent To Terminate Based
Upon Index Differential," and (iv) the Company
- 45 -
shall not thereafter have provided written notice to Zions Bancorp, before the
close of business on the third trading day preceding the Effective Date, that
the Company desires to exercise the Company Election;
(e) by the board of directors of the Company, upon written notice
given to Zions Bancorp, if (i) the average (rounded to the nearest penny) of
each Daily Sales Price over the Pricing Period is less than $83.00, and (ii) the
percentage decrease in the Daily Sales Price between November 19, 1996 and the
Pricing Period (using the average over such Pricing Period) is more than fifteen
percentage points more than the percentage decrease in the KBW Index between
November 19, 1996 and the Pricing Period (using the average over such Pricing
Period), and (iii) the Company shall have provided to Zions Bancorp before the
close of business on the fourth trading day preceding the Effective Date a
written notice styled "Notice of Intent To Terminate Based Upon Index
Differential," and (iv) Zions Bancorp shall not thereafter have provided written
notice to the Company, before the close of business on the third trading day
preceding the Effective Date, that Zions Bancorp desires to exercise the Zions
Election; or
(f) by either Zions Bancorp or the Company upon written notice given
to the other if the board of directors of either Zions Bancorp or the Company
shall have determined in its sole judgment made in good faith, after due
consideration and consultation with counsel, that the Merger has become
inadvisable or impracticable by reason of the institution of litigation by the
federal government or the government of any of the States of Colorado, New
Mexico, or Utah to restrain or invalidate the transactions contemplated by this
Agreement.
10.3. Effect of Termination. In the event of the termination and
abandonment hereof pursuant to the provisions of Section 10.1 or Section 10.2,
this Agreement shall become void and have no force or effect, without any
liability on the part of Zions Bancorp, the Company, or their respective
directors or officers or shareholders in respect of this Agreement.
Notwithstanding the foregoing, (a) as provided in Section 11.4 of this
Agreement, the confidentiality agreement contained in that section shall survive
such termination, and (b) if such termination is a result of any of the
representations and warranties of a party being materially incorrect when made
or a result of the material breach or material failure by a party of a covenant
or agreement hereunder, such party whose representations and warranties were
materially incorrect or who materially breached or failed to perform its
covenant or agreement shall be liable to the other party or parties hereto
solely to the extent of the actual, reasonable out-of-pocket expenses, not to
exceed $250,000, incurred by the other party in connection with the negotiation
and preparation of this Agreement and the carrying out of the transactions
contemplated hereby.
- 46 -
10.4. Waiver of Terms or Conditions. Any of the terms or conditions of this
Agreement may be waived at any time prior to the Effective Date by the party
which is, or whose shareholders are, entitled to the benefit thereof, by action
taken by the board of directors of such party, or by its chairman, or by its
president; provided that such waiver shall be in writing and shall be taken only
if, in the judgment of the board of directors or officer taking such action,
such waiver will not have a materially adverse effect on the benefits intended
hereunder to the shareholders of its or his corporation; and the other parties
hereto may rely on the delivery of such a waiver as conclusive evidence of such
judgment and the validity of the waiver.
10.5. Amendment.
(a) Anything herein or elsewhere to the contrary notwithstanding, to
the extent permitted by law, this Agreement and the exhibits hereto may be
amended, supplemented, or interpreted at any time prior to the Effective Date by
written instrument duly authorized and executed by each of the parties hereto;
provided, however, that this Agreement may not be amended after the action by
shareholders of the Company in any respect that would prejudice the economic
interests of such Company shareholders, or any of them, except as specifically
provided herein or by like action of such shareholders.
(b) If Zions Bancorp and the Company should mutually determine
(following receipt of advice of legal or other counsel) that it has become
inadvisable or inexpedient to effectuate the transactions contemplated by this
Agreement through means of a sequence of mergers such as is contemplated herein,
then the parties hereto agree to effect such change in the form of transaction
as described especially in Sections 1.1 and 9.2 of this Agreement by written
instrument in amendment of this Agreement.
11. General Provisions.
11.1. Allocation of Costs and Expenses. Except as provided in Section 10.3
and this Section, each party hereto shall pay its own fees and expenses,
including without limitation the fees and expenses of its own counsel and its
own accountants and tax advisers, incurred in connection with this Agreement and
the transactions contemplated thereby. For purposes of this Section, (i) the
cost of printing and delivering the proxy statement and other material to be
transmitted to shareholders of the Company shall be deemed to be incurred on
behalf of the Company, (ii) the cost of registering under federal and state
securities laws the stock of Zions Bancorp to be received by the shareholders of
the Company shall be deemed to be incurred on behalf of Zions Bancorp, and (iii)
the costs referred to in Section 7.10 shall be deemed to be incurred on behalf
of the Company.
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11.2. Mutual Cooperation. Subject to the terms and conditions herein
provided, each party shall use its best efforts, and shall cooperate fully with
the other party, in carrying out the provisions of this Agreement and in making
all filings and obtaining all necessary governmental approvals, and shall
execute and deliver, or cause to be executed and delivered, such governmental
notifications and additional documents and instruments and do or cause to be
done all additional things necessary, proper, or advisable under applicable law
to consummate and make effective the transactions contemplated hereby.
11.3. Form of Public Disclosures. Zions Bancorp and the Company shall
mutually agree in advance upon the form and substance of all public disclosures
concerning this Agreement and the transactions contemplated hereby.
11.4. Confidentiality. Zions Bancorp and the Company and their respective
subsidiaries shall use all information that each obtains from the other pursuant
to this Agreement solely for the effectuation of the transactions contemplated
by this Agreement or for other purposes consistent with the intent of this
Agreement. Neither Zions Bancorp nor the Company nor their respective
subsidiaries shall use any of such information for any other purpose, including,
without limitation, the competitive detriment of the other party. Zions Bancorp
and the Company shall maintain and shall cause its respective subsidiaries to
maintain as strictly confidential all information it learns from the other and
shall, at any time, upon the request of the other, return promptly to it all
documentation provided by it or made available to third parties. Each of the
parties may disclose such information to its respective affiliates, counsel,
accountants, tax advisers, and consultants. The confidentiality agreement
contained in this Section 11.4 shall remain operative and in full force and
effect, and shall survive the termination of this Agreement.
11.5. Claims of Brokers.
(a) The Company shall indemnify, defend, and hold Zions Bancorp
harmless for, from, and against any claim, suit, liability, fees, or expenses
(including, without limitation, attorneys' fees and costs of court) arising out
of any claim for brokerage commissions, finder's fees, or similar compensation
arising out of or due to any act of the Company or any of the Subsidiaries in
connection with the transactions contemplated by this Agreement or based upon
any agreement or arrangement made by or on behalf of the Company or any of the
Subsidiaries with respect to Zions Bancorp.
(b) Zions Bancorp shall indemnify, defend, and hold the Company
harmless for, from, and against any claim, suit, liability, fees, or expenses
(including, without limitation,
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attorneys' fees and costs of court) arising out of any claim for brokerage
commissions, finder's fees, or similar compensation arising out of or due to any
act of Zions Bancorp in connection with any of the transactions contemplated by
this Agreement or based upon any agreement or arrangement made by or on behalf
of Zions Bancorp with respect to the Company or any of the Subsidiaries.
11.6. Information for Applications and Registration Statement.
(a) Each party represents and warrants that all information concerning
it which is included in any statement and application (including the
Registration Statement) made to any governmental agency in connection with the
transactions contemplated by this Agreement shall not, with respect to such
party, omit any material fact required to be stated therein or necessary to make
the statements made, in light of the circumstances under which they were made,
not misleading. The party so representing and warranting will indemnify, defend,
and hold harmless the other, each of its directors and officers, each
underwriter and each person, if any, who controls the other within the meaning
of the Securities Act, for, from and against any and all losses, claims, suits,
damages, expenses, or liabilities to which any of them may become subject under
applicable laws (including, but not limited to, the Securities Act and the
Exchange Act) and rules and regulations thereunder and will reimburse them for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any actions whether or not resulting in liability,
insofar as such losses, claims, damages, expenses, liabilities, or actions arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any such application or statement or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary in order to make the statements
therein not misleading, but only insofar as any such statement or omission was
made in reliance upon and in conformity with information furnished in writing by
the representing and warranting party expressly for use therein. Each party
agrees at any time upon the request of the other to furnish to the other a
written letter or statement confirming the accuracy of the information contained
in any proxy statement, registration statement, report, or other application or
statement, and confirming that the information contained in such document was
furnished expressly for use therein or, if such is not the case, indicating the
inaccuracies contained in such document or draft or indicating the information
not furnished expressly for use therein. The indemnity agreement contained in
this Section 11.6(a) shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the other party, and
shall survive the termination of this Agreement or the consummation of the
transactions contemplated thereby.
- 49 -
(b) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement contained in Section 11.6(a) of
this Agreement is for any reason held by a court of competent jurisdiction to be
unenforceable as to either or both parties, then the parties in such
circumstances shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses incurred in
connection with, and any amounts paid in settlement of, any action, suit or
proceeding or any claims asserted) to which either party may be subject in such
proportion as the court of law determines based on the relative fault of the
parties.
11.7. Standard of Materiality.
(a) For purposes of Sections 4, 6, and 7 of this Agreement, the terms
"material" and "materially," when used with reference to items normally
expressed in dollars, shall be deemed to refer to amounts individually and in
the aggregate in excess of 3 percent of the shareholders' equity of the Company
as of September 30, 1996, as determined in accordance with generally accepted
accounting principles.
(b) For purposes of Sections 5 and 8 of this Agreement, the terms
"material" and "materially," when used with reference to items normally
expressed in dollars, shall be deemed to refer to amounts individually and in
the aggregate in excess of 3 percent of the shareholders' equity of Zions
Bancorp as of September 30, 1996, as determined in accordance with generally
accepted accounting principles.
(c) For other purposes and, notwithstanding subsections (a) and (b) of
this section 11.7, when used anywhere in this Agreement with explicit reference
to any of the federal securities laws or to the Registration Statement, the
terms "material" and "materially" shall be construed and understood in
accordance with standards of materiality as judicially determined under the
federal securities laws.
11.8. Covenants of Zions Bancorp.
(a) From the date hereof to the Effective Date, Zions Bancorp shall,
contemporaneously with the filing with the SEC of any periodic or current report
pursuant to section 13 of the Exchange Act, deliver a copy of such report to the
Company.
(b) During the Pricing Period Zions Bancorp shall not repurchase Zions
Bancorp Stock in the open market unless done both (i) in connection with, and
consistently with established patterns of stock repurchases with regard to, a
dividend reinvestment plan, employee stock savings plan, employee investment
savings plan, 401(k) plan, or similar plan, and (ii) following the receipt
- 50 -
of favorable advice from independent securities counsel for Zions
Bancorp.
(c) Following the Effective Date Zions Bancorp will take no action,
and will cause its subsidiaries to take no action, to abrogate or diminish any
right accorded under the articles of incorporation or by-laws of the Company or
any of the Subsidiary Institutions as they existed immediately prior to the
Effective Date to any person who, on or prior to the Effective Date, was a
director or officer of the Company or any of the Subsidiary Institutions to
indemnification from or against losses, expenses, claims, demands, damages,
liabilities, judgments, fines, penalties, costs, expenses (including without
limitation reasonable attorneys fees) and amounts paid in settlement pertaining
to or incurred in connection with any threatened or actual action, suit, claim,
or proceeding (whether civil, criminal, administrative, arbitration, or
investigative) arising out of events, matters, actions, or omissions occurring
on or prior to the Effective Date. To the extent not provided by the foregoing,
following the Effective Date and to the extent permitted by law, all rights to
such indemnification accorded under the articles of incorporation and by-laws of
the Company to any person who, on or prior to the Effective Date, was a director
or officer of the Company shall survive the Effective Date and, following the
Merger, to the extent permitted by law, Zions Bancorp will honor such
obligations in accordance with their terms with respect to events, acts, or
omissions occurring prior to the Effective Date.
11.9. Adjustments for Certain Events. Anything in this agreement to the
contrary notwithstanding, all prices per share and exchange ratios referred to
in this Agreement shall be appropriately adjusted to account for stock
dividends, split-ups, mergers, recapitalizations, combinations, conversions,
exchanges of shares or the like, but not for normal and recurring cash dividends
declared or paid in a manner consistent with the established practice of the
payer.
11.10. Stock Repurchases. The Company acknowledges that from time to time
Zions Bancorp repurchases shares of its common stock in the open market in
accordance with market conditions. Nothing in this Agreement shall be construed
to abridge the right of Zions Bancorp to continue to do so in compliance with
Exchange Act rules and regulations and pursuant to advice of independent
securities counsel for Zions Bancorp.
11.11. Counterparts. This Agreement may be executed in two or more
counterparts each of which shall be deemed to constitute an original, but such
counterparts together shall be deemed to be one and the same instrument and to
become effective when one or more counterparts have been signed by each of the
parties hereto. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for the other counterpart.
- 51 -
11.12. Entire Agreement. This Agreement sets forth the entire understanding
of the parties hereto with respect to their commitments to each other and their
undertakings vis-a-vis each other on the subject matter hereof. Any previous
agreements or understandings between the parties regarding the subject matter
hereof are merged into and superseded by this Agreement. Nothing in this
Agreement express or implied is intended or shall be construed to confer upon or
to give any person, other than Zions Bancorp and the Company and their
respective shareholders, any rights or remedies under or by reason of this
Agreement. Nothing in this Agreement express or implied is intended or shall be
construed to make shareholders or former shareholders of the Company, in their
capacities as shareholders or former shareholders, liable for any damages
incurred by Zions Bancorp or any other person for whose benefit the Company has
made or makes any representation, warranty, covenant, or agreement hereunder.
11.13. Survival of Representations, Warranties, and Covenants. The
respective representations, warranties, and covenants of each party to this
Agreement are hereby declared by the other parties to have been relied on by
such other parties and shall survive for one year following the Effective Date,
provided that if either party should breach a representation, warranty, or
covenant contained in this Agreement through fraud, deliberate
misrepresentation, or other intentional tortious conduct, or through gross
negligence, then the representation, warranty, or covenant so breached shall be
deemed to have survived for six years following the Effective Date. Each party
shall be deemed to have relied upon each and every representation and warranty
of the other parties regardless of any investigation heretofore or hereafter
made by or on behalf of such party.
11.14. Officers' Certificates. Each certificate executed and delivered by
an officer of a party pursuant to this Agreement shall be deemed to have been
executed and delivered by such officer in his or her capacity as an officer of
the party on whose behalf the certificate is executed and delivered, and not in
his or her personal capacity, and such officer shall have no personal liability
by reason of his or her execution or delivery of any such certificate in the
absence of fraud, deliberate misrepresentation, other intentional tortious
conduct, or gross negligence on the part of that officer.
11.15. Section Headings. The section and subsection headings herein have
been inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof. Any reference to a "person"
herein shall include an individual, firm, corporation, partnership, trust,
government or political subdivision or agency or instrumentality thereof,
association, unincorporated organization, or any other entity.
- 52 -
11.16. Notices. All notices, consents, waivers, or other communications
which are required or permitted hereunder shall be in writing and deemed to have
been duly given if delivered personally or by messenger, transmitted by telex or
telegram, by express courier, or sent by registered or certified mail, return
receipt requested, postage prepaid. All communications shall be addressed to the
appropriate address of each party as follows:
If to Zions Bancorp:
Zions Bancorporation
1380 Kennecott Building
Salt Lake City, Utah 84133
Attention: Mr. Harris H. Simmons
President and Chief Executive Officer
With a required copy to:
Brian D. Alprin, Esq.
Metzger, Hollis, Gordon & Alprin
1275 K Street, N.W., Suite 1000
Washington, D.C. 20005
If to the Company:
Aspen Bancshares, Inc.
534 East Hyman Avenue
Aspen, Colorado 81611
Attention: Mr. Charles B. Israel
President and Chief Executive Officer
With a required copies to:
Herbert H. Davis, III, Esq.
Rothgerber, Appel, Powers & Johnson
Suite 3000, One Tabor Center
1200 Seventeenth Street
Denver, Colorado 80202-5839
Tennyson W. Grebenar, Esq.
Rothgerber, Appel, Powers & Johnson
Suite 3000, One Tabor Center
1200 Seventeenth Street
Denver, Colorado 80202-5839
All such notices shall be deemed to have been given on the date delivered,
transmitted, or mailed in the manner provided above.
- 53 -
11.17. Choice of Law and Venue. This Agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Utah,
without giving effect to the principles of conflict of law thereof. The parties
hereby designate Salt Lake County, Utah and Pitkin County, Colorado to be proper
jurisdictions and venues for any suit or action arising out of this Agreement.
Each of the parties consents to personal jurisdiction in each of such venues for
such a proceeding and agrees that it may be served with process in any action
with respect to this Agreement or the transactions contemplated thereby by
certified or registered mail, return receipt requested, or to its registered
agent for service of process in the state of Utah or Colorado. Each of the
parties irrevocably and unconditionally waives and agrees, to the fullest extent
permitted by law, not to plead any objection that it may now or hereafter have
to the laying of venue or the convenience of the forum of any action or claim
with respect to this Agreement or the transactions contemplated thereby brought
in the courts aforesaid.
11.18. Knowledge of a Party. References in this Agreement to the knowledge
of a party shall mean the knowledge possessed by any of such parties or the
present executive officers of such party including, without limitation,
information which is or has been in the books and records of such party.
11.19. Binding Agreement. This Agreement shall be binding upon the parties
and their respective successors and assigns.
[the remainder of this page is left blank intentionally]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ZIONS BANCORPORATION
Attest: /s/ George B. Hofmann By: /s/ Harris H. Simmons
------------------------- -------------------------------------
Harris H. Simmons
President and
Chief Executive Officer
ASPEN BANCSHARES, INC.
Attest: /s/ Amy G. Beidleman By: /s/ Charles B. Israel
------------------------- -------------------------------------
Charles B. Israel
President and
Chief Executive Officer
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----------------------
)
State of Nevada )
) ss.
County of Clark )
)
----------------------
On this eighteenth day of November, 1996, before me personally appeared
Harris H. Simmons, to me known to be the President and Chief Executive Officer
of Zions Bancorporation, and acknowledged said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned, and on oath stated that he was authorized to execute said instrument
and that the seal affixed is the corporate seal of said corporation.
In Witness Whereof I have hereunto set my hand and affixed my official seal
the day and year first above written.
/s/ Carol Ann Voorhees
-------------------------------------
Notary Public
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----------------------
)
State of Colorado )
) ss.
County of Pitkin )
)
----------------------
On this nineteenth day of November, 1996, before me personally appeared
Charles B. Israel, to me known to be the President and Chief Executive Officer
of Aspen Bancshares, Inc., and acknowledged said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned, and on oath stated that he was authorized to execute said instrument
and that the seal affixed is the corporate seal of said corporation.
In Witness Whereof I have hereunto set my hand and affixed my official seal
the day and year first above written.
/s/ Ronee J. Brackett
-------------------------------------
Notary Public
- 57 -
The undersigned members of the Board of Directors of Aspen Bancshares, Inc.
(the "Company"), acknowledging that Zions Bancorporation ("Zions Bancorp") has
relied upon the action heretofore taken by the board of directors in entering
into the Agreement, and has required the same as a prerequisite to Zions
Bancorp's execution of the Agreement, do individually and as a group agree,
subject to their fiduciary duties to shareholders, to support the Agreement and
to recommend its adoption by the other shareholders of the Company.
The undersigned do hereby, individually and as a group, until the Effective
Date or termination of the Agreement, further agree to refrain from soliciting
or, subject to their fiduciary duties to shareholders, negotiating or accepting
any offer of merger, consolidation, or acquisition of any of the shares or all
or substantially all of the assets of the Company or any of its subsidiaries.
/s/ Charles B. Israel /s/ J. Thomas Clark
------------------------------- --------------------------------------
/s/ Carol Ann Kopf /s/ Christopher L. Tolk
------------------------------- --------------------------------------
/s/ Morton A. Heller
------------------------------- --------------------------------------
/s/ Robert R. Oden
------------------------------- --------------------------------------
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SCHEDULE 1.8
B. John Barry
J. Thomas Clark, Jr.
Morton A. Heller
Charles B. Israel
Carol Ann Kopf
Elaine McDade
James McDade
Robert R. Oden, M.D.
Christopher L. Tolk
EXHIBIT I
MERGER AGREEMENT
AGREEMENT OF MERGER
This Agreement of Merger is made and entered into as of [_______________],
1997, between ZIONS BANCORPORATION ("Zions Bancorp"), a corporation organized
under the laws of the State of Utah, and ASPEN BANCSHARES, INC. (the "Company"),
a corporation organized under the laws of the State of Colorado. Zions Bancorp
and the Company are hereinafter sometimes individually called a "Constituent
Corporation" and collectively called the "Constituent Corporations."
RECITALS
Zions Bancorp is a corporation duly organized, validly existing and in good
standing under the laws of the State of Utah. As of [_______________], 1997, the
authorized capital stock of Zions Bancorp consisted of [__________] shares of
Common Stock, no par value, of which [_______] shares were issued and
outstanding; no shares of capital stock were held in its treasury on such date.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Colorado. As of [_______________], 1997,
the authorized capital stock of the Company consisted of (i) 5,000,000 shares of
7% cumulative convertible preferred stock, $0.01 par value (the "Company
Preferred Stock"), none of which were issued or outstanding, and (ii) 5,000,000
shares of Company Common Stock, $0.01 par value (the "Company Common Stock"), of
which [___________] shares were issued and outstanding; no shares of capital
stock were held in its treasury on such date.
Zions Bancorp and the Company have entered into an Agreement and Plan of
Reorganization, dated November 19, 1996 (the "Plan of Reorganization"), setting
forth certain representations, warranties, and agreements in connection with the
transactions therein and herein contemplated, which contemplates the merger of
the Company with and into Zions Bancorp (the "Merger") in accordance with this
Agreement of Merger (the "Agreement").
The Boards of Directors of each of Zions Bancorp and the Company deem the
Merger advisable and in the best interests of each corporation and its
stockholders. The Boards of Directors of each of Zions Bancorp and the Company,
by resolutions duly adopted, have approved the Plan of Reorganization. The
Boards of Directors of each of Zions Bancorp and the Company, by resolutions
duly adopted, have approved this Agreement. The Board of Directors of the
Company has directed that this Agreement, and authorization for the transactions
contemplated hereby, be submitted to stockholders of the Company for approval.
Pursuant to section 16-10a-1103 of the Utah Business Corporation Act, approval
by the shareholders of Zions Bancorp is not required.
At the Effective Date (as defined in Section 1.1 below) shares of Company
Common Stock shall be converted into the right to receive shares of the common
stock of Zions Bancorp, no par value (the "Zions Bancorp Stock"), as provided
herein.
In consideration of the premises and the mutual covenants and agreements
herein contained and subject to the terms and conditions of the Agreement, the
parties hereto hereby covenant and agree as follows:
ARTICLE I
1.1. Merger of the Company into Zions Bancorp. The Company shall be merged
with and into Zions Bancorp on the date and at the time to be specified in the
Articles of Merger to be filed with the Division of Corporations and Commercial
Code of the State of Utah pursuant to section 16-10a-1105 of the Utah Business
Corporation Act and the Secretary of State of the State of Colorado pursuant to
section 7-111-105 of the Colorado Business Corporation Act (such date and time
being referred to herein as the "Effective Date").
1.2. Effect of the Merger. At the Effective Date:
(a) The Company and Zions Bancorp shall be a single corporation, which
shall be Zions Bancorp. Zions Bancorp is hereby designated as the surviving
corporation in the Merger and is hereinafter sometimes called the "Surviving
Corporation."
(b) The separate existence of the Company shall cease.
(c) The Surviving Corporation shall have all the rights, privileges,
immunities, and powers and shall assume and be subject to all the duties and
liabilities of a corporation organized under the Utah Business Corporation Act.
(d) The Surviving Corporation shall thereupon and thereafter possess
all of the rights, privileges, immunities, and franchises, of a public as well
as of a private nature, of each of the Constituent Corporations; and all
property, real, personal and mixed, and all debts due on whatever account,
including subscriptions to shares and all other choses in action, and all and
every other interest of and belonging to or due to each of the Constituent
Corporations shall be taken and deemed to be transferred to and vested in the
Surviving Corporation without further act or deed; and the title to any real
estate, or any interest therein, vested in either of the Constituent
Corporations shall not revert or be in any way impaired by reason of the Merger.
- 2 -
(e) The Surviving Corporation shall thenceforth be responsible and
liable for all the liabilities and obligations of each of the Constituent
Corporations; and any claim existing or action or proceeding pending by or
against either of the Constituent Corporations may be prosecuted as if the
Merger had not taken place, or the Surviving Corporation may be substituted in
its place. The Surviving Corporation expressly assumes and agrees to perform all
of the Company's liabilities and obligations. Neither the rights of creditors
nor any liens upon the property of either Constituent Corporation shall be
impaired by the Merger.
(f) The Articles of Incorporation of Zions Bancorp as they exist
immediately prior to the Effective Date shall be the Articles of Incorporation
of the Surviving Corporation until later amended pursuant to Utah law.
(g) At the Effective Date and until surrendered for exchange and
payment, each outstanding stock certificate which, prior to the Effective Date,
represents shares of Company Common Stock shall, without further action, cease
to be an issued and existing share and shall be converted into a right to
receive from Zions Bancorp, and shall for all purposes represent the right to
receive, upon surrender of the certificate representing such shares, the number
of shares of Zions Bancorp Stock and the amount of cash specified in Article
III; provided that, with respect to any matters relating to stock certificates
representing Company Common Stock, Zions Bancorp may rely conclusively upon the
record of stockholders maintained by the Company containing the names and
addresses of the holders of record of the Company's Common Stock at the
Effective Date.
1.3. Acts to Carry Out This Merger Plan.
(a) The Company and its proper officers and directors shall and will
do all such acts and things as may be necessary or proper to vest, perfect, or
confirm title to such property or rights in Zions Bancorp and otherwise to carry
out the purposes of this Agreement.
(b) If, at any time after the Effective Date, Zions Bancorp shall
consider or be advised that any further assignments or assurances in law or any
other acts are necessary or desirable to (i) vest, perfect, or confirm, of
record or otherwise, in Zions Bancorp its right, title, or interest in or under
any of the rights, properties, or assets of the Company acquired or to be
acquired by Zions Bancorp as a result of, or in connection with, the Merger, or
(ii) otherwise carry out the purposes of this Agreement, the Company and its
proper officers and directors shall be deemed to have granted to Zions Bancorp
an irrevocable power of attorney to execute and deliver all such proper deeds,
assignments, and assurances in law and to do all acts necessary or proper to
vest, perfect, or confirm title to and possession of such rights,
- 3 -
properties, or assets in Zions Bancorp and otherwise to carry out the purposes
of this Agreement; and the proper officers and directors of Zions Bancorp are
fully authorized in the name of the Company or otherwise to take any and all
such action.
ARTICLE II
2.1. Capitalization. The authorized shares of capital stock of Zions
Bancorp as of the Effective Date shall be [______- ____] shares of Common Stock,
no par value.
2.2. By-Laws. The By-Laws of Zions Bancorp as they exist immediately prior
to the Effective Date shall be the By-Laws of Zions Bancorp until later amended
pursuant to Utah law.
ARTICLE III
3.1. Manner of Converting Shares.
(a) Definitions. For the purposes of this Agreement, the following
terms shall have the meanings set forth in this Subparagraph (a). Additional
terms may be defined elsewhere herein. As used in these definitions, the terms
"increase" and "escalate" contemplate the possibility of a negative increase or
escalation (i.e., a decrease or deflation), and the terms "decrease" and
"deflate" contemplate the possibility of a negative decrease or deflation (i.e.,
an increase or escalation).
(i) Average Closing Price. The average (rounded to the nearest
penny) of each Daily Sales Price over the Pricing Period, except that, subject
to sections 3.1(a)(iii) and 3.1(a)(ix), (A) if the average (rounded to the
nearest penny) of each Daily Sales Price over the Pricing Period is less than
$83.00, then the Average Closing Price shall be $83.00, and (B) if the average
(rounded to the nearest penny) of each Daily Sales Price over the Pricing Period
is more than $93.00, then the Average Closing Price shall be $93.00.
(ii) Company Closing Price. The average (rounded to the nearest
penny) of the mean (unrounded) of the closing bid and asked prices of Company
Common Stock over the Pricing Period in the over-the-counter market as such
prices are reported by the automated quotation system of the National
Association of Securities Dealers, Inc., or in the absence thereof by such other
source upon which Zions Bancorp and the Company shall mutually agree.
(iii) Company Election. The election of the Company in its sole
discretion, that, notwithstanding section 3.1(a)(i), the Average Closing Price
shall be a number of dollars
- 4 -
and cents, rounded to the nearest penny, computed by escalating $93.00 by a
percentage comprising the difference between (A) the number of percentage points
representing the difference between the percentage by which the Daily Sales
Price increased between November 19, 1996 and the Pricing Period (using the
average over such Pricing Period) and the percentage by which the KBW 50 Index
of Keefe, Bruyette & Woods, Inc. (the "KBW Index") increased between November
19, 1996 and the Pricing Period (using the average over such Pricing Period) and
(B) 15 percentage points.
(iv) Daily Sales Price. For any trading day, the last reported
sale price or, if no such reported sale takes place, the mean (unrounded) of the
closing bid and asked prices of Zions Bancorp Stock in the over-the-counter
market as such prices are reported by the automated quotation system of the
National Association of Securities Dealers, Inc., or in the absence thereof by
such other source upon which Zions Bancorp and the Company shall mutually agree.
(v) Option Equivalent Number. The number reached by summing the
following values as calculated for each option to purchase one share of Company
Common Stock which is outstanding and unexercised at the Effective Date: (A) the
difference between the Company Closing Price and the exercise price of that
option (or, if a greater number, zero) divided by (B) the Company Closing Price.
(vi) Pricing Period. The twenty consecutive trading days ending
on and including the fifth trading day preceding the Effective Date.
(vii) Purchase Price. The sum of:
(A) $73,000,000.00;
(B) the consolidated net undistributed income of the Company
during the period beginning on July 1, 1996 and ending on the close of business
on the last day of the calendar month preceding the effective date of the Merger
(the "Effective Date"), calculated in accordance with generally accepted
accounting principles. For the purpose of calculating net undistributed income
of the Company, (I) any undistributed gain, net of taxes, derived from
activities or transactions which are not in the ordinary course of its banking
operations (such as, without limitation, the sale of securities or loans, of
capital assets, or of lines of business), all of which shall be determined in
accordance with generally accepted accounting principles, shall be excluded
except as mutually agreed by the parties hereto; and (II) any loss, net of
taxes, resulting from operating transactions recommended by the Company to Zions
Bancorp as likely to produce economic benefits to the Company and approved in
writing by Zions Bancorp prior to their effectuation shall be excluded. It is
understood that the
- 5 -
amount calculated under this section 3.1(a)(vii)(B) may be a negative number and
that the effect of summing such a negative number would be a reduction in the
Purchase Price;
(C) the product of the daily average of the net
undistributed income of the Company during the period and calculated in the
manner prescribed in section 3.1(a)(vii)(B) hereof times the number of days in
the month of the Effective Date which precede the Effective Date. It is
understood that the amount calculated under this section 3.1(a)(vii)(C) may be a
negative number and that the effect of summing such a negative number would be a
reduction in the Purchase Price; and
(D) the aggregate contributions to capital caused by the
payments accompanying the exercise of any stock options after June 30, 1996.
(viii) Zions Bancorp Stock. The common stock of Zions Bancorp, no
par value.
(ix) Zions Election. The election of Zions Bancorp in its sole
discretion, that, notwithstanding section 3.1(a)(i), the Average Closing Price
shall be a number of dollars and cents, rounded to the nearest penny, computed
by deflating $83.00 by a percentage comprising the difference between (A) the
number of percentage points representing the difference between the percentage
by which the Daily Sales Price decreased between November 19, 1996 and the
Pricing Period (using the average over such Pricing Period) and the percentage
by which the KBW Index decreased between November 19, 1996 and the Pricing
Period (using the average over such Pricing Period) and (B) 15 percentage
points.
(b) Form of Consideration. Subject to the terms, conditions, and
limitations set forth herein, upon surrender of his or her certificate or
certificates, each holder of shares of Company Common Stock shall be entitled to
receive, in exchange for each share of Company Common Stock held of record by
such stockholder as of the Effective Date, that number of shares of Zions
Bancorp Stock calculated by dividing the Purchase Price by the Average Closing
Price, and by further dividing the number so reached by the sum of the number of
shares of Company Common Stock that shall be issued and outstanding at the
Effective Date and the Option Equivalent Number.
3.2. No Fractional Shares. Zions Bancorp will not issue fractional shares
of Zions Bancorp Stock. In lieu of fractional shares of Zions Bancorp Stock, if
any, each shareholder of the Company who is entitled to a fractional share of
Zions Bancorp Stock shall receive an amount of cash equal to the product of such
fraction times the Average Closing Price. Such fractional share interest shall
not include the right to vote or to receive dividends or any interest thereon.
- 6 -
3.3. Dividends; Interest. No shareholder of the Company will be entitled to
receive dividends on his or her Zions Bancorp Stock until he or she exchanges
his or her certificates representing Company Common Stock for Zions Bancorp
Stock. Any dividends declared on Zions Bancorp Stock (which stock is to be
delivered pursuant to this Agreement) to holders of record on or after the
Effective Date shall be paid to the Exchange Agent (as designated in Section 3.4
of this Agreement) and, upon receipt of the certificates representing shares of
Company Common Stock, the Exchange Agent shall forward to the former
shareholders entitled to receive Zions Bancorp Stock (i) certificates
representing their shares of Zions Bancorp Stock, (ii) dividends declared
thereon subsequent to the Effective Date (without interest) and (iii) the cash
value of any fractional shares determined in accordance with Section 3.2 hereof.
3.4. Designation of Exchange Agent. The Company and Zions Bancorp hereby
designate Zions First National Bank, Salt Lake City, Utah ("Zions Bank") as
Exchange Agent to effect the exchange contemplated hereby. Zions Bancorp will,
promptly after the Effective Date, issue and deliver to Zions Bank the share
certificates representing shares of Zions Bancorp Stock and the cash in lieu of
fractional shares to be paid to holders of Company Common Stock in accordance
with this Agreement.
3.5. Notice of Exchange. Promptly after the Effective Date, Zions Bank
shall mail to each holder of one or more certificates formerly representing
Company Common Stock, except to such holders as shall have waived the notice
required by this Section 3.5, a notice specifying the Effective Date and
notifying such holder to surrender his or her certificate or certificates to
Zions Bank for exchange. Such notice shall be mailed to holders by regular mail
at their addresses on the records of the Company.
3.6. Treatment of Stock Options. Each stock option to purchase Company
Common Stock not exercised prior to the Effective Date shall automatically be
converted into an option to purchase, on the same terms as the option to
purchase Company Common Stock, and with the same dates of exercisability and of
expiration, that number of shares of Zions Bancorp Stock equal to the number of
shares of Company Common Stock which the holder of such option would be entitled
to receive under Section 3.1 of this Agreement had such option been exercised
immediately preceding the Effective Date. The applicable per-share option price
in effect immediately prior to the Effective Date shall be adjusted to an amount
equal to the product obtained by dividing that option price by the number of
shares of Zions Bancorp Stock which the holder of one share of Company Common
Stock would be entitled to receive under Section 3.1 of this Agreement.
- 7 -
ARTICLE IV
4.1. Counterparts. This Agreement may be executed in two or more
counterparts each of which shall be deemed to constitute an original, but such
counterparts together shall be deemed to be one and the same instrument and to
become effective when one or more counterparts have been signed by each of the
parties hereto. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for the other counterpart.
4.2. Section Headings. The section and subsection headings herein have been
inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof. Any reference to a "person"
herein shall include an individual, firm, corporation, partnership, trust,
government or political subdivision or agency or instrumentality thereof,
association, unincorporated organization, or any other entity.
4.3. Choice of Law and Venue. This Agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Utah,
without giving effect to the principles of conflict of law thereof. The parties
hereby designate Salt Lake County, Utah and Pitkin County, Colorado, to be
proper jurisdictions and venues for any suit or action arising out of this
Agreement. Each of the parties consents to personal jurisdiction in each of such
venues for such a proceeding and agrees that it may be served with process in
any action with respect to this Agreement or the transactions contemplated
thereby by certified or registered mail, return receipt requested, or to its
registered agent for service of process in the state of Utah or Colorado. Each
of the parties irrevocably and unconditionally waives and agrees, to the fullest
extent permitted by law, not to plead any objection that it may now or hereafter
have to the laying of venue or the convenience of the forum of any action or
claim with respect to this Agreement or the transactions contemplated thereby
brought in the courts aforesaid.
4.4. Binding Agreement. This Agreement shall be binding upon the parties
and their respective successors and assigns.
4.5. Amendment. Anything herein or elsewhere to the contrary
notwithstanding, to the extent permitted by law, this Agreement may be amended,
supplemented, or interpreted at any time prior to the Effective Date by written
instrument duly authorized and executed by each of the parties hereto, provided
that this Agreement may not be amended after the action by shareholders of the
Company in any respect that would prejudice the economic interests of such
Company shareholders, or any of them, except as specifically provided herein or
by like action of such shareholders.
- 8 -
4.6. Termination. This Agreement shall terminate and be abandoned upon (i)
termination of the Plan of Reorganization or (ii) the mutual consent of Zions
Bancorp and the Company at any time prior to the Effective Date, and there shall
be no liability on the part of either of the parties hereto (or any of their
respective officers or directors) except to the extent provided in the Plan of
Reorganization.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ZIONS BANCORPORATION
Attest:________________________ By:______________________________________
Harris H. Simmons
President and
Chief Executive Officer
ASPEN BANCSHARES, INC.
Attest:________________________ By:______________________________________
Charles B. Israel
President and
Chief Executive Officer
- 9 -
-----------------------
)
State of Utah )
) ss.
County of Salt Lake )
)
-----------------------
On this ________ day of [____________], 1997, before me personally appeared
Harris H. Simmons, to me known to be the President and Chief Executive Officer
of Zions Bancorporation, and acknowledged said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned, and on oath stated that he was authorized to execute said instrument
and that the seal affixed is the corporate seal of said corporation.
In Witness Whereof I have hereunto set my hand and affixed my official seal
the day and year first above written.
------------------------------------
Notary Public
- 10 -
-----------------------
)
State of Colorado )
) ss.
County of Pitkin )
)
-----------------------
On this ________ day of [____________], 1997, before me personally appeared
Charles B. Israel, to me known to be the President and Chief Executive Officer
of Aspen Bancshares, Inc., and acknowledged said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned, and on oath stated that he was authorized to execute said instrument
and that the seal affixed is the corporate seal of said corporation.
In Witness Whereof I have hereunto set my hand and affixed my official seal
the day and year first above written.
------------------------------------
Notary Public
- 11 -
EXHIBIT II
VOTING AGREEMENT
November 19, 1996
Zions Bancorporation
1380 Kennecott Building
Salt Lake City, Utah 84133
Mesdames and Gentlemen:
The undersigned understands that Zions Bancorporation ("Zions Bancorp") is
about to enter into an Agreement and Plan of Reorganization with Aspen
Bancshares, Inc. (the "Company") (the "Agreement"). The Agreement provides for
the merger of the Company with and into Zions Bancorp (the "Merger") and the
conversion of outstanding shares of Company Common Stock into Zions Bancorp
Common Stock in accordance with the formula therein set forth.
In order to induce Zions Bancorp to enter into the Agreement, and intending
to be legally bound hereby, the undersigned, subject to the conditions
hereinafter stated, represents, warrants, and agrees that at the Company
Shareholders' Meeting contemplated by Section 4.1 of the Agreement and Plan of
Reorganization (the "Meeting"), and any adjournment thereof, the undersigned
will, in person or by proxy, vote or cause to be voted in favor of the Agreement
and the Merger the shares of Company Common Stock beneficially owned by the
undersigned individually or, to the extent of the undersigned's proportionate
voting interest, jointly with other persons, as well as, to the extent of the
undersigned's proportionate voting interest, any other shares of Company Common
Stock over which the undersigned may hereafter acquire beneficial ownership in
such capacities (collectively, the "Shares"). Subject to the final paragraph of
this agreement, the undersigned further agrees that he will use his best efforts
to cause any other shares of Company Common Stock over which he has or shares
voting power to be voted in favor of the Agreement and the Merger.
The undersigned further represents, warrants, and agrees that beginning
upon the authorization and execution of the Agreement by the Company until the
earlier of (i) the consummation of the Merger or (ii) the termination of the
Agreement in accordance with its terms, the undersigned will not, directly or
indirectly:
(a) vote any of the Shares, or cause or permit any of the Shares to be
voted, in favor of any other sale of control, merger, consolidation, plan of
liquidation, sale of assets, reclassification, or other transaction involving
the Company or any of its subsidiaries which would have the effect of assisting
or
Zions Bancorporation
November 19, 1996
Page 2
facilitating the acquisition of control by any person other than Zions Bancorp
or an affiliate thereof over the Company or any substantial portion of its
assets or assisting or facilitating the acquisition of control by any person
other than Zions Bancorp or an affiliate, or the Company or a wholly-owned
subsidiary of the Company, of any subsidiary of the Company or any substantial
portion of its assets. As used herein, the term "control" means (1) the ability
to direct the voting of 10% or more of the outstanding voting securities of a
person having ordinary voting power in the election of directors or in the
election of any other body having similar functions or (2) the ability to direct
the management and policies of a person, whether through ownership of
securities, through any contract, arrangement, or understanding or otherwise.
(b) voluntarily sell or otherwise transfer any of the Shares, or cause or
permit any of the Shares to be sold or otherwise transferred (i) pursuant to any
tender offer, exchange offer, or similar proposal made by any person other than
Zions Bancorp or an affiliate thereof, (ii) to any person seeking to obtain
control (as the term "control" is defined in paragraph (a), above) of the
Company, any of its subsidiaries or any substantial portion of the assets of the
Company or any subsidiary thereof or to any other person (other than Zions
Bancorp or an affiliate thereof) under circumstances where such sale or transfer
may reasonably be expected to assist a person seeking to obtain such control,
(iii) for the purpose of avoiding the obligations of the undersigned under this
agreement, or (iv) to any transferee unless such transferee expressly agrees in
writing to be bound by the terms of this agreement in all events.
It is understood and agreed that this agreement relates solely to the
capacity of the undersigned as a shareholder or other beneficial owner of the
Shares and does not prohibit the undersigned, if a member of the Board of
Directors of the Company, from acting, in his or her capacity as a director, as
the undersigned may determine to be appropriate in light of the obligations of
the undersigned as a director. It is further understood and agreed that the term
"Shares" shall not include any securities beneficial-
Zions Bancorporation
November 19, 1996
Page 3
ly owned by the undersigned as a trustee or fiduciary for another,and that this
agreement is not in any way intended to affect the exercise by the undersigned
of the undersigned's fiduciary responsibility in respect of any such securities.
Very truly yours,
-----------------------------------
Accepted and Agreed to:
ZIONS BANCORPORATION
By:________________________
Title:_____________________
Name of Shareholder:
Shares of Common Stock of Aspen Bancshares, Inc.
Beneficially Owned
As of November 19, 1996
Name(s) of Number of
Record Owner(s) Beneficial Ownership (1) Shares
--------------- ------------------------ ------
--------
(1) For purposes of this Agreement, shares are beneficially owned by the
shareholder named above if held in any capacity other than a fiduciary capacity
(other than a revocable living trust) and if the shareholder named above has the
power (alone or, in the case of shares held jointly with his or her spouse,
together with his or her spouse) to direct the voting of such shares.
EXHIBIT III
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Option Agreement") made as of the 19th
day of November, 1996, between ZIONS BANCORPORATION ("Zions Bancorp"), a Utah
corporation having its principal office in Salt Lake City, Utah, and ASPEN
BANCSHARES, INC. (the "Company"), a Colorado corporation having its principal
office in Aspen, Colorado
W I T N E S S E T H T H A T :
WHEREAS, the Company and Zions Bancorp have simultaneously herewith entered
into an Agreement and Plan of Reorganization (the "Agreement and Plan of
Reorganization") pursuant to which the Company would merge with and into Zions
Bancorp (the "Merger") on the terms and subject to the conditions set forth in
the Agreement and Plan of Reorganization;
WHEREAS, Zions Bancorp has demanded as a condition to entering into the
Agreement and Plan of Reorganization that the Company grant Zions Bancorp an
option to purchase shares of Common Stock, par value $0.01 per share, of the
Company (the "Common Stock") on the terms set forth herein, and the Company has
agreed to enter into this Option Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and in the Agreement and Plan of Reorganization, the parties hereto
agree as follows:
1. Grant of Option. Subject to any adjustments pursuant to Section 5
hereof, the Company hereby grants to Zions Bancorp an irrevocable option (the
"Option") to purchase up to an aggregate 739,825 authorized but unissued shares
of Common Stock (the "Option Shares"), at a cash price of $18.875 per share (the
"Purchase Price").
2. Exercise of the Option; Term. Subject to Section 3 hereof, Zions Bancorp
may sell, assign, transfer, or exercise the Option, in whole or in part, at any
time or from time to time prior to the expiration of the Option (as set forth
below), except that the Option may be assigned or transferred, in whole or in
part, at any time, prior to the first occurrence of a Trigger Event (as defined
in Section 3 hereof) only to a Subsidiary. Where the context requires, and
unless otherwise specifically provided herein, the term "Zions Bancorp" shall
include any such holder of the Option. The term "Subsidiary" for purposes of
this Option Agreement shall mean a corporation 100 percent of the voting stock
of which is directly or indirectly owned by Zions Bancorp.
Subject to Section 3 hereof, Zions Bancorp may exercise the Option by
written notice to the Company specifying the number of Option Shares to be
purchased, the manner of payment for such Option Shares, and a place and date
for the closing not later than
sixty business days nor earlier than two business days after the date of such
notice (the "Closing"). Notwithstanding the foregoing, to the extent the
exercise of the Option would require the prior consent or approval of the Board
of Governors of the Federal Reserve System (the "Board of Governors") or the
Office of Thrift Supervision (the "OTS") or consents or approvals of or filing
with any other governmental authority under applicable regulations, then
staggered closings shall take place as follows: A Closing shall take place on
the date specified in the notice of exercise with respect to that number of
Option Shares the acquisition of which by Zions Bancorp is permissible under
such regulations without such prior consent or approval, and a second Closing
with respect to any such remaining Option Shares as to which the Option has been
exercised shall take place two business days after notice from Zions Bancorp
stating either (a) that receipt of all required consents and approvals on terms
and conditions satisfactory to Zions Bancorp have been received, or (b) that any
such governmental approvals are no longer required.
Except for Section 9 hereof which shall terminate in accordance with the
provisions set forth therein, the Option and this Option Agreement shall
terminate upon the earliest of (a) the date twelve months after the first
occurrence of a Trigger Event, as defined in Section 3 hereof, (b) the date upon
which consummation of the Merger occurs, (c) the mutual agreement of the parties
hereto, (d) the date ninety days after the date that written certification of
the vote of the Company's shareholders is delivered to Zions Bancorp indicating
that the Company's shareholders have not approved the Merger under the
circumstances specified in Section 3(d) hereof, (e) the date of termination of
the Agreement and Plan of Reorganization by the Company pursuant to Section
10.2(c) of the Agreement and Plan of Reorganization, and (f) termination of the
Agreement and Plan of Reorganization pursuant to Section 10.2(a) of the
Agreement and Plan of Reorganization. If, after the occurrence of a Trigger
Event, the Option cannot be exercised by reason of any Suit (as defined in
Section 6(c)) commenced prior to the expiration of the Option as provided above,
the termination of this Option Agreement shall be extended until the earlier of
(a) the date five business days after such impediment to exercise shall have
been removed, (b) termination of the Option and the Option Agreement by the
Company pursuant to the last sentence of this Section 2, or (c) termination of
the Option and the Option Agreement by Zions Bancorp pursuant to Section 13
hereof.
If, at any time after the commencement of such a Suit, the Company in its
sole judgment determines that its failure to terminate the Option under this
Section 2 would be adverse to the interests of the Company or its shareholders,
the Company may terminate this Option Agreement and the Option by giving notice
of such termination to Zions Bancorp and making a cash payment to
- 2 -
Zions Bancorp in the amount of $2,500,000 payable by delivery of a bank check
payable to the order of Zions Bancorp.
3. Conditions to Exercise of Option. Except for any assignment or transfer
of the Option in whole or in part to a Subsidiary as provided in Section 2
hereof, Zions Bancorp may sell, assign, transfer or exercise the Option, in
whole or in part, only if any one or more of the following events (the "Trigger
Events") shall have occurred:
(a) The Board of Directors of the Company shall have (i) authorized
the execution of an agreement with any person or group of persons other than
Zions Bancorp or a Subsidiary ("Third Party") pursuant to which such Third Party
will acquire, merge or consolidate with, or acquire all or substantially all of
the assets of the Company (or engage in a substantially similar transaction),
(ii) supported an offer or proposal by any Third Party to acquire, merge or
consolidate with the Company, or acquire all or substantially all of the assets
of the Company (or to engage in a substantially similar transaction), or (iii)
recommended to the shareholders of the Company that they not approve the
Agreement and Plan of Reorganization; or
(b) the termination of the Agreement and Plan of Reorganization by
Zions Bancorp pursuant to Section 10.2(b) of the Agreement and Plan of
Reorganization due to a willful breach by the Company; or
(c) the receipt by a Third Party of all required approvals of all
governmental authorities to acquire beneficial ownership of more than 25 percent
of the Common Stock of the Company; or
(d) upon the public announcement by any Third Party with financial
ability of a bona fide proposal or intention to in any manner acquire control of
the Company and, thereafter, if such proposal has not been withdrawn at least
twenty days prior to the meeting of shareholders of the Company called to vote
on the Agreement and Plan of Reorganization, the Company's shareholders fail to
approve the Agreement and Plan of Reorganization by the vote required by
applicable law at the meeting of shareholders called for such purpose.
Notwithstanding the foregoing, the Option may only be exercised (a) with
respect to that number of Option Shares the acquisition of which would be
permissible without the consent or approval of the Board of Governors or the OTS
or consent or approval of or filings with any other governmental authority,
unless all applicable and required governmental approvals have been obtained
with respect to such exercise or if such exercise would not violate any
applicable regulatory restrictions, and (b) if, at the time of exercise Zions
Bancorp is not in material violation or
- 3 -
breach of or in default under any material provisions of the Agreement and Plan
of Reorganization.
The Company shall promptly give notice to Zions Bancorp of the occurrence
of a Trigger Event, it being understood that the giving of such notice by the
Company shall not be a condition to the right of Zions Bancorp to exercise the
Option. As used in this Section 3, "person," "group of persons," and "beneficial
ownership" shall have the meanings conferred thereon by Section 13(d) of the
Securities Exchange Act and the regulations promulgated thereunder.
4. Payment of Purchase Price and Delivery of Certificates. At each Closing,
(a) against delivery of the Option Shares to be purchased, Zions Bancorp shall
pay to the Company the aggregate purchase price for the Option Shares being
purchased at such Closing by delivery to the Company of a bank check payable to
the order of the Company in such amount or, if mutually agreed, by wire transfer
of funds in such amount to an account designated in writing by the Company, and
(b) the Company shall deliver to Zions Bancorp a certificate or certificates
representing the number of Option Shares so purchased, free and clear of all
liens, claims, charges, and encumbrances of any kind or nature whatsoever, in
the denominations and in the name designated by Zions Bancorp in its notice of
exercise and which shall bear the following legend until such time as the legend
is no longer required by applicable law:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"), OR THE SECURITIES LAWS OF ANY
JURISDICTION. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TOWARD DISTRIBUTION OR RESALE AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH
SECURITIES UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE ISSUER, THAT
REGISTRATION IS NOT REQUIRED UNDER THE ACT OR OTHER APPLICABLE LAWS. THE
SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS OF A STOCK OPTION
AGREEMENT DATED NOVEMBER 19, 1996.
5. Antidilution Adjustments. Upon any change in the number of issued and
outstanding shares of Common Stock by reason of any stock dividend, split-up,
merger, recapitalization, combination, conversion, exchange of shares, or the
like or upon the issuance of any shares of Common Stock pursuant to the exercise
of any options (other than the Option), warrants, convertible securities, and
other rights to purchase Common Stock, the number and kind of shares subject to
the Option and the Purchase Price shall be adjusted so that the number of shares
of Common Stock to
- 4 -
be issued upon the exercise of the Option shall equal the same proportion of the
issued and outstanding Common Stock (assuming the Option Shares have been
issued) as the original number of Option Shares bears to the outstanding shares
of Common Stock as of the date hereof (assuming the Option Shares have been
issued), and such additional shares shall be treated as "Option Shares." If, on
or after the date hereof, the Company should declare or pay any cash or stock
dividend (other than regular quarterly cash dividends not exceeding $0.05 per
share) or other distribution or issue any rights with respect to the Common
Stock, payable or distributable to shareholders of record on a date prior to the
transfer to the name of Zions Bancorp or its nominee on the Company's stock
transfer records of the Option Shares, and the Option is exercised, then (a) the
exercise price per Option Share will be reduced by the amount of any such cash
dividend or cash distribution, and (b) the whole of any such non-cash dividend,
distribution, or right which would have been payable with respect to each Option
Share purchased by Zions Bancorp if such shares were outstanding on the record
date for such distribution will be promptly remitted and transferred by the
Company to Zions Bancorp. Upon exercise of the Option, to the extent consistent
with law, pending such remittance, Zions Bancorp will be entitled to all rights
and privileges as owner of any such non-cash dividend, distribution, or right
with respect to each Option Share purchased.
6. Certain Agreements of the Company.
(a) The Company shall not engage in any action or omit to take any
action which could have the effect of preventing or disabling the Company from
delivering the Option Shares to Zions Bancorp upon exercise of the Option or
otherwise performing its obligations under this Option Agreement. The Company
shall at all times continue to reserve for issuance all of the Option Shares and
maintain sufficient authorized but unissued shares of Common Stock so that the
Option may be exercised without additional authorization of Common Stock after
giving effect to all other options, warrants, convertible securities, and other
rights to purchase Common Stock. The Option Shares to be issued upon due
exercise, in whole or in part, of the Option, including all additional shares
that may be issued pursuant to Section 6 hereof, when paid for as provided
herein, will be duly authorized, validly issued, fully paid and nonassessable,
and not subject to preemptive rights.
(b) Neither the execution and delivery of this Option Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby will (i) conflict with or result in any breach or violation of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or give rise to any right of
termination, cancellation, or acceleration of the performance required by, or
result in the creation of any lien or other encumbrance upon any of the
properties or assets of the Company or
- 5 -
any of its subsidiaries under any of the terms, conditions, or provisions of (A)
their respective articles of incorporation and by-laws, (B) any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement, or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or to which they or any of their properties or assets are subject, or (C)
violate any writ, judgment, injunction, decree, ruling, order, statute, rule,
policy, guideline, or regulation applicable to the Company or any of its
subsidiaries, except for such violations, conflicts, breaches, defaults,
terminations, cancellations, accelerations or creations of liens or other
encumbrances which, individually or in the aggregate, will not have a material
adverse effect on the financial condition, properties, business, results of
operations, or prospects of the Company and its subsidiaries, taken as a whole,
or (ii) require any consent, approval, authorization, or permit of or from, or
filing with or notification to, any court, or any regulatory or administrative
agency, department, or commission of any federal, state, local or foreign
government, except (A) the Board of Governors, with respect to the exercise of
more than 5 percent of the Option Shares, or (B) the OTS, with respect to the
exercise of more than 10 percent of the Option Shares, or (C) consents,
approvals, authorizations, permits, filings or notifications which, if not
obtained or made will not, individually or in the aggregate, have a material
adverse effect on the business, financial condition, results of operations or
prospects of the Company and its subsidiaries, taken as a whole.
(c) In the event any claim, action, suit, investigation, or other
proceeding by any governmental body or other person is commenced which questions
the validity or legality of this Option Agreement or any of the other
transactions contemplated hereby or seeks damages in connection therewith
(collectively, a "Suit"), the parties agree to cooperate and use all reasonable
efforts to defend against such Suit and, if an injunction or other similar order
is issued in any such Suit, to use all reasonable efforts to have such
injunction or other order lifted, and to cooperate reasonably regarding any
other impediment to the consummation of the transactions contemplated by this
Option Agreement.
7. Investment Intent.
(a) In connection with the issuance to Zions Bancorp of the Option
Shares upon exercise of the Option, Zions Bancorp hereby represents to the
Company that the Option Shares are being acquired by Zions Bancorp for its own
account and not for the account or beneficial interest of any other person and
that the Option Shares are not being acquired with a view to or for resale in
connection with any distribution within the meaning of any applicable securities
laws that would be in violation of such securities laws. Zions Bancorp
understands that the Option Shares have not been registered under applicable
securities laws and as
- 6 -
such, must be held indefinitely unless they are subsequently registered under
the securities laws or an exemption from registration thereunder is available.
Zions Bancorp is also aware that any sales which may be in reliance upon the
securities laws may be made only in limited amounts after the required holding
periods, and otherwise in accordance with the terms and conditions of the
securities laws.
(b) Zions Bancorp covenants and agrees that it will not transfer the
Option unless such transfer is in compliance with applicable federal and state
securities laws.
(c) Zions Bancorp covenants and agrees that, following the third
anniversary of a Trigger Event, it will not sell, transfer, or convey to any
person or affiliate of such person (except an affiliate of Zions Bancorp or the
Company) shares of Common Stock which (together with shares of Common Stock
previously sold by Zions Bancorp to such person or affiliate) exceed 2 per cent
of the issued and outstanding Common Stock, provided that this subparagraph (c)
shall not apply if any person (other than Zions Bancorp or its affiliates) has
outstanding a bona fide proposal or intention to acquire the Company in any
manner, which proposal or intention has not been withdrawn.
8. Specific Performance. The parties hereto agree that irreparable harm
would occur if any of the provisions of this Option Agreement were not performed
by the Company in accordance with their specific terms or conditions or were
otherwise breached and that money damages are an inadequate remedy for breach of
this Option Agreement because of the difficulty of ascertaining the amount of
damage that will be suffered by Zions Bancorp in the event that this Option
Agreement is not performed in accordance with its terms or conditions or is
otherwise breached. It is accordingly agreed that Zions Bancorp shall be
entitled to a preliminary and permanent injunction or injunctions to prevent
breaches of this Option Agreement by the Company and to enforce specifically the
terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which it is
entitled at law or in equity.
9. Registration of Shares.
9.1 Registration Upon Request. At any time after the Option may be
exercised or sold, but not more frequently than once every six months, Zions
Bancorp may make a written request for registration, in which event the Company
shall use its best efforts to prepare, file, and keep current a registration
statement on a form of general use under the Securities Act of 1933, as amended
(the "Securities Act"), in order to permit the sale or other disposition of the
Option Shares, and shall use its best efforts to cause such registration
statement to become effective and remain
- 7 -
current for a period of ninety days; provided that Zions Bancorp shall have the
right to effect only two such registrations; and provided further, that each
such registration shall relate to not less than 100,000 shares of Common Stock
(assuming for this purpose the exercise of any Option to be covered by such
registration statement). Without the written consent of Zions Bancorp, neither
the Company nor any other holder of securities of the Company may include any
securities in such registration.
9.2 "Piggyback Registration." On or after the occurrence of a Trigger
Event, each time the Company shall determine to proceed with the actual
preparation and filing of a registration statement under the Securities Act in
connection with the proposed offer and sale for money of any of its securities
(other than in connection with a dividend reinvestment, employee stock purchase,
stock option or similar plan, or a registration statement on Form S-4 or
comparable form), by it or any of its shareholders, the Company will give
written notice of its determination to Zions Bancorp. Upon the written request
of Zions Bancorp given within ten days after receipt of any such notice from the
Company, the Company will, except as herein provided, cause all securities which
Zions Bancorp shall request be included in the registration statement
contemplated by this Section 9.2 to be included in such registration statement;
provided that nothing herein shall prevent the Company from, at any time,
abandoning or delaying any registration; provided further that if the Company
determines not to proceed with a registration after the registration statement
has been filed with the Securities and Exchange Commission (the "Commission")
and the Company's decision not to proceed is primarily based upon the
anticipated public offering price of the securities to be sold by the Company,
the Company shall promptly complete the registration for the benefit of Zions
Bancorp if Zions Bancorp agrees to bear all incremental expenses incurred by the
Company as the result of such registration after the Company has decided not to
proceed. Zions Bancorp shall be entitled to a maximum of three registrations
pursuant to this Section 9.2. If any registration pursuant to this section shall
be underwritten in whole or in part, the Company may require that any securities
requested for inclusion pursuant to this section be included in the underwriting
on the same terms and conditions as the securities otherwise being sold through
the underwriters. If the securities requested for inclusion pursuant to this
paragraph would constitute more than 25 percent of the total number of
securities to be included in a proposed underwritten public offering (based, in
the case of the Option, on the number of shares of Common Stock underlying such
Option) and if in the good faith judgment of the managing underwriter of such
public offering the inclusion of all of such securities would interfere with the
successful marketing of the securities offered by the Company, the number of
securities otherwise to be included in the underwritten public offering may be
reduced; provided that after any such required reduction in the securities to be
included in such
- 8 -
offering for the account of Zions Bancorp shall constitute at least 25 percent
of the total number of securities to be included in such offering.
9.3 Registration Procedures. If and whenever the Company is required
by the provisions of Section 9.1 or 9.2 hereof to effect the registration of its
securities under the Securities Act, the Company will:
(a) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement current;
(b) furnish to Zions Bancorp and to the underwriters of the
securities being registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus, and such other documents as
Zions Bancorp or such underwriters may reasonably request in order to facilitate
the public offering of such securities;
(c) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue sky
laws of such jurisdictions as Zions Bancorp or such underwriters may reasonably
request; provided that the Company shall not be required by virtue hereof to
submit to the general jurisdiction of any state;
(d) notify Zions Bancorp, after the Company shall receive notice
thereof, of the time when such registration statement has become effective or
supplement or amendment to any prospectus forming a part of such registration
statement has been filed;
(e) notify Zions Bancorp of any request by the Commission for the
amending or supplementing of such registration statement or prospectus or for
additional information;
(f) prepare and file with the Commission, upon the request of
Zions Bancorp, any amendment or supplement to such registration statement or
prospectus which, in the opinion of counsel for Zions Bancorp and the Company,
are required under the Securities Act or the rules and regulations thereunder in
connection with the distribution of the securities by Zions Bancorp;
(g) prepare and file with the Commission such amendment or
supplement to such registration statement or prospectus as may be necessary to
correct any statements or omissions if, at the time when a prospectus relating
to such securities is required to be delivered under the Securities Act or other
applicable law, any event shall have occurred as the result of which such
prospectus as then in effect would include an untrue
- 9 -
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading;
(h) advise Zions Bancorp, after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and use its best efforts to
prevent the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued; and
(i) at the request of Zions Bancorp, furnish on the date or dates
provided for in the underwriting agreement: (A) an opinion or opinions of the
counsel representing the Company for the purposes of such registration,
addressed to the underwriters and to Zions Bancorp, covering such matters as
such underwriters and Zions Bancorp may reasonably request and are customarily
covered by issuer's counsel at that time; and (B) a letter or letters from the
independent certified public accountants of the Company, addressed to the
underwriters and to Zions Bancorp, covering such matters as such underwriters or
Zions Bancorp may reasonably request, in which letter(s) such accountants shall
state (without limiting the generality of the foregoing) that they are
independent certified public accountants within the meaning of the Securities
Act and that, in the opinion of such accountants, the financial statements and
other financial data of the Company included in the registration statement or
any amendment or supplement thereto comply in all material respects with the
applicable accounting requirements of the Securities Act.
Each and every action required to be taken by the Company under
Sections 9.1, 9.2, or 9.3 hereof shall be taken by the Company as promptly as
practicable after the obligation to take any such action arises (except to the
extent that a specific time period is provided herein).
9.4 Fees and Expenses.
(a) With respect to the registration requested pursuant to
Section 9.1 hereof, Zions Bancorp will bear 50 percent of the reasonable portion
of the following fees, costs, and expenses, and the Company will bear the
remainder of the following fees, costs, and expenses: all registration, filing
and NASD fees, printing and engraving expenses, fees and disbursements of
counsel and accountants for the Company, and all legal fees and disbursements
and other expenses of complying with state securities or blue sky laws of any
jurisdictions in which the securities to be offered are to be registered or
qualified. Fees and disbursements of counsel and accountants for Zions Bancorp,
underwriting discounts and commissions, and transfer taxes for Zions Bancorp and
any other
- 10 -
expenses incurred by Zions Bancorp not expressly included above shall be borne
by Zions Bancorp.
(b) With respect to the registration requested pursuant to
Section 9.2 hereof, the Company shall bear the following fees, costs and
expenses: all registration, filing and NASD fees, printing and engraving
expenses, fees and disbursements of counsel and accountants for the Company, and
all legal fees and disbursements and other expenses of complying with state
securities or blue sky laws of any jurisdictions in which the securities to be
offered are to be registered or qualified. Fees and disbursements of counsel and
accountants for Zions Bancorp, underwriting discounts and commissions, and
transfer taxes for Zions Bancorp and any other expenses incurred by Zions
Bancorp not expressly included above shall be borne by Zions Bancorp.
9.5 Termination. The rights provided in this Section 9 shall expire
upon the third anniversary following the date of the exercise of the Option.
10. Further Assurances.
(a) Upon each exercise of the Option, the Company and Zions Bancorp
will execute and deliver all such further documents and instruments and take all
such further action as may be necessary in order to consummate the transactions
contemplated hereby.
(b) The Company shall take all necessary action to obtain or to
cooperate with Zions Bancorp in obtaining all necessary regulatory consents,
approvals, waivers, or other action (whether regulatory, corporate, or other) to
permit the acquisition of any or all Option Shares by Zions Bancorp.
11. Expenses. Except as otherwise provided in Section 9 hereof, all costs
and expenses incurred in connection with this Option Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses.
12. Parties In Interest. Except as otherwise expressly provided herein,
this Option Agreement is binding upon and is solely for the benefit of the
parties hereto and their respective successors, legal representatives, and
assigns.
13. Termination Fee. If (a) Zions Bancorp's right to exercise the Option
is judicially determined to be unenforceable following the occurrence of a
Trigger Event, or (b) if the Company shall materially breach its obligations set
forth in Section 6(c), then upon notice to the Company from Zions Bancorp, the
Company shall pay Zions Bancorp $2,500,000 in cash payable by delivery of a bank
check payable to the order of Zions Bancorp, and this Option Agreement and
Option shall terminate; provided that in no event
- 11 -
shall the Company be obligated to make any such payment to a person other than
Zions Bancorp.
14. Certain Repurchases.
(a) Company Call. At any time following the date which is 540 days
after the Option becomes exercisable pursuant to Section 2 (hereinafter the
"Repurchase Period"), the Company shall have the right to repurchase from Zions
Bancorp all or such portion (as shall be specified by the Company) of (i) the
Option at the price set forth in subparagraph (1) below and/or (ii) the Option
Shares purchased by Zions Bancorp pursuant to Section 2 at the price set forth
in subparagraph (2) below:
(1) The difference between (i) the Market/Tender Offer Price
for shares of Company Common Stock as of the date the Company gives notice of
its intent to exercise its rights under this Section 14(a) and (ii) the Purchase
Price, multiplied by the number of Option Shares purchasable pursuant to the
Option (or portion thereof with respect to which the Company is exercising its
rights under this Section 14(a)), but only if the Market/Tender Offer Price is
greater than $19.50.
(2) The Purchase Price paid by Zions Bancorp for the Option
Shares acquired pursuant to the Option plus the difference between the
Market/Tender Offer Price and the Purchase Price (but only if the Market/Tender
Offer Price is greater than $19.50) multiplied by the number of Option Shares so
purchased.
(b) Payment and Redelivery of Option or Option Shares. If the Company
exercises its rights under this Section 14, the Company shall, within ten
business days after giving notice of such exercise, pay the required amount to
Zions Bancorp in immediately available funds; at the same time, Zions Bancorp
shall surrender to the Company the Option and/or the certificates evidencing the
Option Shares purchased by Zions Bancorp pursuant thereto; and Zions Bancorp
shall warrant that it owns such shares and that such shares are then free and
clear of all liens, claims, damages, charges, and encumbrances of any kind or
nature whatsoever.
(c) Market/Tender Offer Price. As used in this Section 14,
"Market/Tender Offer Price" shall mean the higher of (i) the price per share
offered as of such date pursuant to any tender or exchange offer or other
takeover proposal that was made prior to such date and not terminated or
withdrawn as of such date or (ii) the mean (unrounded) of the high and the low
reported sales prices or, if no such reported sales take place, the average of
the closing bid and asked prices of a share of Company Common Stock in the
over-the-counter markets as such prices are reported by the automated quotation
system of the National Association of Securities Dealers, Inc., or in the
absence thereof by such other source
- 12 -
upon which Zions Bancorp and the Company shall mutually agree, as averaged for
the ten consecutive trading days immediately preceding such date or (iii)
$19.50.
(d) Condition to Company Call. The right of the Company to repurchase
as provided in section 14(a) hereof shall not apply if on the date 540 days
after the Option becomes exercisable (1) the Company shall have outstanding (i)
its Board's authorization of the execution of an agreement with a Third Party
pursuant to which such Third Party will acquire, merge or consolidate with, or
acquire all or substantially all of the assets of the Company (or engage in a
substantially similar transaction), (ii) an offer or proposal by a Third Party
supported by its Board to acquire, merge or consolidate with the Company, or
acquire all or substantially all of the assets of the Company (or to engage in a
substantially similar transaction), (iii) a recommendation by its Board to the
Company's shareholders that they approve the agreement or proposal of a Third
Party, or (2) a bona fide proposal or intention to acquire the Company in any
manner is outstanding, which proposal or intention has not been withdrawn.
15. Representations and Warranties of Zions Bancorp.
Zions Bancorp represents to the Company that:
(a) Zions Bancorp is a corporation duly organized, validly existing,
and in good standing under the laws of Utah and has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder.
(b) The execution and delivery of this Agreement by Zions Bancorp and
the consummation by Zions Bancorp of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Zions
Bancorp and no other corporate proceedings on the part of Zions Bancorp are
necessary to authorize this Agreement or any of the transactions contemplated
hereby.
(c) This Agreement has been duly executed and delivered by Zions
Bancorp and constitutes a valid and binding obligation of Zions Bancorp and is
enforceable against Zions Bancorp in accordance with its terms except as may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance, moratorium,
and other laws affecting the enforcement of creditors rights generally and by
general equity principles and except as Section 9 may be limited by federal or
state securities laws.
(d) The execution and delivery of this Agreement by Zions Bancorp does
not, and the performance of this Agreement by Zions Bancorp shall not (i)
violate the certificate of incorporation or by-laws of Zions Bancorp, (ii)
result in any breach of or constitute a default (or an event that with notice or
lapse of time, or both, would become a default) under, give rise to any
- 13 -
rights of termination, amendment, acceleration, or cancellation of, or result in
the creation of a lien or encumbrance on any of the property or assets of Zions
Bancorp pursuant to any note, bond, mortgage, indenture, contract, agreement,
lease, license, or other instrument or obligation to which Zions Bancorp is a
party or by which Zions Bancorp or any of its property is bound or affected
other than such breaches, defaults (or rights of termination, amendment,
acceleration, or cancellation), liens or encumbrances which individually or in
the aggregate do not or would not materially impair the performance by Zions
Bancorp of its obligations hereunder, subject to the obtaining of applicable
regulatory approvals and consents, if any.
(e) The execution and delivery of this Agreement by Zions Bancorp does
not, and the performance of this Agreement by Zions Bancorp shall not, require
any consent, approval, authorization, or permit of, or filing with or
notification to, any governmental or regulatory authority except for
registration and qualification under applicable federal and state securities
laws.
16. Representations and Warranties to Survive Delivery. All representations
and warranties contained in this Option Agreement, or contained in certificates
of officers of the Company submitted pursuant to this Option Agreement, shall
survive delivery of and payment for the Option Shares.
17. Counterparts. This Agreement may be executed in two or more
counterparts each of which shall be deemed to constitute an original, but such
counterparts together shall be deemed to be one and the same instrument and to
become effective when one or more counterparts have been signed by each of the
parties hereto. It shall not be necessary in making proof of this Agreement or
any counterpart hereof to produce or account for the other counterpart.
18. Entire Agreement. This Agreement sets forth the entire understanding of
the parties hereto with respect to their commitments to each other and their
undertakings vis-a-vis each other on the subject matter hereof. Any previous
agreements or understandings between the parties regarding the subject matter
hereof are merged into and superseded by this Agreement. Nothing in this
Agreement express or implied is intended or shall be construed to confer upon or
to give any person, other than Zions Bancorp and the Company and their
respective shareholders, any rights or remedies under or by reason of this
Agreement.
19. Section Headings. The section and subsection headings herein have been
inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof. Any reference to a "person"
herein shall include an individual, firm, corporation, partnership, trust,
government or political subdivision or agency or instrumentality
- 14 -
thereof, association, unincorporated organization, or any other entity.
20. Notices. All notices, consents, waivers, or other communications which
are required or permitted hereunder shall be in writing and deemed to have been
duly given if delivered personally or by messenger, transmitted by telex or
telegram, by express courier, or sent by registered or certified mail, return
receipt requested, postage prepaid. All communications shall be addressed to the
appropriate address of each party as follows:
If to Zions Bancorp:
Zions Bancorporation
1380 Kennecott Building
Salt Lake City, Utah 84133
Attention: Mr. Harris H. Simmons
President and Chief Executive Officer
With a required copy to:
Brian D. Alprin, Esq.
Metzger, Hollis, Gordon & Alprin
1275 K Street, N.W., Suite 1000
Washington, D. C. 20005
If to the Company:
Aspen Bancshares, Inc.
534 East Hyman Avenue
Aspen, Colorado 81611
Attention: Mr. Charles B. Israel
President and Chief Executive Officer
With a required copies to:
Herbert H. Davis, III, Esq.
Rothgerber, Appel, Powers & Johnson
Suite 3000, One Tabor Center
1200 Seventeenth Street
Denver, Colorado 80202-5839
Tennyson W. Grebenar, Esq.
Rothgerber, Appel, Powers & Johnson
Suite 3000, One Tabor Center
1200 Seventeenth Street
Denver, Colorado 80202-5839
- 15 -
All such notices shall be deemed to have been given on the date delivered,
transmitted, or mailed in the manner provided above.
21. Choice of Law and Venue. This Agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Utah,
without giving effect to the principles of conflict of law thereof. The parties
hereby designate Salt Lake County, Utah, to be the proper jurisdiction and venue
for any suit or action arising out of this Agreement. Each of the parties
consents to personal jurisdiction in such venue for such a proceeding and agrees
that it may be served with process in any action with respect to this Agreement
or the transactions contemplated thereby by certified or registered mail, return
receipt requested, or to its registered agent for service of process in the
state of Utah. Each of the parties irrevocably and unconditionally waives and
agrees, to the fullest extent permitted by law, not to plead any objection that
it may now or hereafter have to the laying of venue or the convenience of the
forum of any action or claim with respect to this Agreement or the transactions
contemplated thereby brought in the courts aforesaid.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ZIONS BANCORPORATION
Attest:________________________ By:__________________________________
Harris H. Simmons
President and
Chief Executive Officer
ASPEN BANCSHARES, INC.
Attest:________________________ By:__________________________________
Charles B. Israel
President and
Chief Executive Officer
- 16 -
-----------------------
)
State of Utah )
) ss.
County of Clark )
)
-----------------------
On this eighteenth day of November, 1996, before me personally appeared
Harris H. Simmons, to me known to be the President and Chief Executive Officer
of Zions Bancorporation, and acknowledged said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned, and on oath stated that he was authorized to execute said instrument
and that the seal affixed is the corporate seal of said corporation.
In Witness Whereof I have hereunto set my hand and affixed my official seal
the day and year first above written.
-------------------------------------
Notary Public
- 17 -
-----------------------
)
State of Colorado )
) ss.
County of Pitkin )
)
)
-----------------------
On this nineteenth day of November, 1996, before me personally appeared
Charles B. Israel, to me known to be the President and Chief Executive Officer
of Aspen Bancshares, Inc., and acknowledged said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned, and on oath stated that he was authorized to execute said instrument
and that the seal affixed is the corporate seal of said corporation.
In Witness Whereof I have hereunto set my hand and affixed my official seal
the day and year first above written.
-------------------------------------
Notary Public
- 18 -
EXHIBIT IV
OPINION OF ROTHGERBER, APPEL, POWERS & JOHNSON
[____________________], 1997
Zions Bancorporation
1380 Kennecott Building
Salt Lake City, Utah 84133
Re: Merger of Aspen Bancshares, Inc. With Zions
Bancorporation, In Exchange for Stock of Zions
Bancorporation
Mesdames and Gentlemen:
We are special counsel to Aspen Bancshares, Inc., a Colorado corporation
(the "Company"), and its subsidiaries, Pitkin County Bank and Trust Company, a
banking corporation organized under the laws of the State of Colorado with its
head office located at Aspen, County of Pitkin, State of Colorado ("Pitkin"),
Centennial Savings Bank, F.S.B., a federal savings bank organized under the laws
of the United States with its head office located at Durango, County of La
Plata, State of Colorado ("Centennial"), Val Cor Bancorporation, Inc., a
corporation organized under the laws of the State of Colorado with its head
office located at Cortez, County of Montezuma, State of Colorado ("Val Cor"),
and Valley National Bank of Cortez, Colorado, a national banking association
organized under the laws of the United States with its head office located at
Cortez, County of Montezuma, State of Colorado ("Valley") (collectively the
"Subsidiaries"), in connection with the merger (the "Merger") of the Company
with Zions Bancorporation ("Zions Bancorp"), in exchange for which shareholders
of the Company will receive shares of the common stock of Zions Bancorp pursuant
to an Agreement and Plan of Reorganization dated November 19, 1996 (the
"Agreement") and certain additional agreements whose execution is contemplated
in the Agreement, including the Agreement of Merger by and between Zions Bancorp
and the Company (the "Merger Agreement") (the Agreement and the Merger Agreement
to be referred to collectively as the "Agreements").
Zions Bancorporation
[____________________], 1997
Page 2
This opinion is provided to you pursuant to Section 4.3 of the Agreement.
In our capacity as special counsel, we have participated in the preparation
of a Registration Statement filed with the Securities and Exchange Commission on
Form S-4 covering the shares of Zions Bancorp stock to be issued in connection
with the Merger (the "Registration Statement") including the Prospectus/Proxy
Statement for the shareholders of the Company (the "Prospectus/Proxy
Statement"). In addition, in rendering the opinions that follow, we have
examined the Agreements and the exhibits and schedules appended thereto; the
articles of incorporation and by-laws of the Company and the articles of
incorporation or association and by-laws of each of the Subsidiaries; the
minutes of certain meetings of the respective boards of directors of the Company
and each of the Subsidiaries; and such other corporate documents and corporate
records of the Company and the Subsidiaries as we have deemed necessary or
appropriate for the purpose of rendering the following opinions. In addition, we
have interviewed officers of the Company and the Subsidiaries and undertaken and
performed such other procedures as we have deemed necessary or appropriate for
the purpose of rendering the following opinions. In these regards, we have
examined and relied upon representations of Zions Bancorp contained in the
Agreements, and, where we have deemed appropriate, representations or
certifications of officers or public officials.
We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of natural
persons, and the conformity to the originals of all documents submitted to us as
copies. In making our examination of any documents, we have assumed that all
parties other than the Company and the Subsidiaries had the corporate power and
authority to enter into and perform all obligations thereunder and, as to such
parties other than the Company and the Subsidiaries, we have also assumed the
execution and delivery of such documents and the validity and binding effect and
enforceability thereof. We have also assumed that the Agreements have not been
otherwise amended by oral or written agreement or by conduct of the parties
thereto. We have assumed that the certifications and representations dated
earlier than the date hereof on which we have expressed reliance herein continue
to remain accurate, insofar as material to our opinions, from such earlier date
through the date hereof.
On the foregoing basis, and as otherwise described herein, we are of the
opinion that:
Zions Bancorporation
[____________________], 1997
Page 3
(a) Organization, Powers and Qualifications.
(i) The Company is a corporation which is duly organized, validly
existing and in good standing under the laws of the State of Colorado and has
all requisite corporate power and authority to own and operate its properties
and assets, to lease properties used in its business, and to carry on its
business as now conducted. The Company is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended, and as a savings
and loan holding company under the Home Owners' Loan Act of 1933, as amended.
All outstanding shares of capital stock of the Company have been duly and
validly authorized and issued, and are fully paid and non-assessable.
(ii) Each of the Subsidiaries is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own and operate its properties
and assets, to lease properties used in its business, and to carry on its
business as now conducted. The deposit accounts of Pitkin and Valley are insured
by the Bank Insurance Fund of the Federal Deposit Insurance Corporation (the
"FDIC") and, to the best of our knowledge, no proceedings for the termination of
such insurance are pending or threatened. The deposit accounts of Centennial are
insured by the Savings Association Insurance Fund of the Federal Deposit
Insurance Corporation and, to the best of our knowledge, no proceedings for the
termination of such insurance are pending or threatened. All outstanding shares
of capital stock of each of the Subsidiaries have been duly and validly
authorized and issued and are fully paid and non-assessable. All shares of the
Subsidiaries held of record by the Company are owned directly by the Company
free and clear of any adverse claims. All shares of Valley held of record by Val
Cor are owned directly by Val Cor free and clear of any adverse claims.
(b) Execution and Performance of Agreements. The Company has all requisite
corporate power and authority to execute, deliver, and perform each of the
Agreements to which it is a party and to carry out the terms thereof and the
transactions contemplated thereby.
(c) Absence of Violations. To the best of our knowledge, neither the
Company nor any of the Subsidiaries is in violation of its articles of
incorporation or association or its bylaws, or any law, regulation, ordinance,
order, or restriction imposed by the United States, any state, municipality, or
other political subdivision or agency thereof, or any order of any court or
other competent tribunal having jurisdiction over it in respect
Zions Bancorporation
[____________________], 1997
Page 4
of the conduct of its business or the ownership of its properties, which, either
individually or in the aggregate with all such other violations, would
materially and adversely affect the business, operations, or condition
(financial or otherwise) of the Company or the applicable Subsidiary or the
observance or performance by the Company of the terms of either of the
Agreements.
(d) Compliance with Corporate Documents and Agreements. Neither the
execution, delivery, or performance by the Company of either of the Agreements
nor the consummation of the transactions contemplated therein will violate,
conflict with, constitute a breach of or default under the articles of
incorporation or association or by-laws of the Company or any of the
Subsidiaries, or any agreement or instrument to which the Company or any of the
Subsidiaries is a party (or which is binding on them or their assets) or by
which the Company or any of the Subsidiaries is bound, and will not result in
the creation of any lien on, or security interest in, any of their respective
assets.
(e) Binding Obligations; Due Authorization. Each of the Agreements has been
duly authorized by all necessary corporate action on the part of the Company,
has been duly executed and delivered by the Company, and constitutes a valid,
legal, and binding obligation of the Company, enforceable against it in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, receivership, conservatorship, or other
similar laws or judicial decisions relating to or affecting creditors' rights
and remedies generally or the rights of creditors, or of the FDIC as insurer,
regulator, conservator, or receiver of banks or savings associations the
accounts of which are insured by the FDIC in particular, or by general equitable
principles (regardless of whether enforceability is considered in a proceeding
in equity or at law) as to whose availability we express no opinion. No other
corporate proceedings on the part of the Company are necessary to authorize each
of the Agreements or the carrying out of the transactions contemplated thereby.
(f) Absence of Default. Except for those consents (including, but not
limited to, approvals, licenses, registrations, or declarations) that have been
obtained, the execution and delivery by the Company of each of the Agreements
and consummation of the transactions contemplated thereby do not require the
approval or consent of any governmental authority or third party. The execution
and delivery by the Company of each of the Agreements, the consummation of the
transactions contemplated thereby, and the compliance with and fulfillment of
the terms thereof by the Company will not require any authorization, consent,
approval, or
Zions Bancorporation
[____________________], 1997
Page 5
exemption by any person which has not been obtained or any notice or filing
which has not been given or done.
(g) Compliance with Securities Laws. The Prospectus/Proxy Statement
complies as to form in all material respects with the requirements of the
federal securities laws and published rules and regulations of the Securities
and Exchange Commission as of the date thereof. In connection with our
participation in the preparation of the Prospectus/Proxy Statement, we have not
independently verified the accuracy, completeness, or fairness of the statements
contained therein or of documents incorporated by reference therein, and we
cannot make any representation to you as to the accuracy or completeness of
statements of fact contained or incorporated by reference in the
Prospectus/Proxy Statement or Registration Statement. Nothing, however, has come
to our attention that would lead us to believe that the Prospectus/Proxy
Statement as of its issue date or the date hereof, or the Registration Statement
as of the effective date or the date hereof, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (other than the financial statements
and schedules and other financial and statistical data included or incorporated
by reference therein, as to which we make no statement) and that no event has
occurred which should have been set forth in an amendment or supplement to the
Prospectus/Proxy Statement or Registration Statement which has not been set
forth in such amendment or supplement.
This opinion is given solely for your benefit in connection with the
transactions contemplated by the Agreements, and no other person or entity is
entitled to rely thereon, nor may copies be delivered or furnished to any other
party, nor may all or portions of this opinion be quoted, circulated, or
referred to in any other document without our prior consent.
Respectfully submitted,
EXHIBIT V
OPINION OF COMPANY LITIGATION COUNSEL
[____________________], 1997
Zions Bancorporation
1380 Kennecott Building
Salt Lake City, Utah 84133
Re: Merger of Aspen Bancshares, Inc. With Zions
Bancorporation, In Exchange for Stock of Zions
Bancorporation
Mesdames and Gentlemen:
We are special counsel to Aspen Bancshares, Inc., a Colorado corporation
(the "Company"), and its subsidiaries, Pitkin County Bank and Trust Company, a
banking corporation organized under the laws of the State of Colorado with its
head office located at Aspen, County of Pitkin, State of Colorado, Centennial
Savings Bank, F.S.B., a federal savings bank organized under the laws of the
United States with its head office located at Durango, County of La Plata, State
of Colorado, Val Cor Bancorporation, Inc., a corporation organized under the
laws of the State of Colorado with its head office located at Cortez, County of
Montezuma, State of Colorado, Valley National Bank of Cortez, Colorado, a
national banking association organized under the laws of the United States with
its head office located at Cortez, County of Montezuma, State of Colorado, Eagle
Service Corporation, a corporation organized under the laws of the State of
Colorado with its head office located at [____________], County of [________-
____], State of [____________], and Thatcher Financial Group, Inc., a
corporation organized under the laws of the State of Colorado with its head
office located at Aspen, County of Pitkin, State of Colorado (collectively the
"Subsidiaries"), in connection with the merger of the Company with Zions
Bancorporation ("Zions Bancorp"), in exchange for which shareholders of the
Company will receive shares of the common stock of Zions Bancorp pursuant to an
Agreement and Plan of Reorganization dated November 19, 1996 (the "Agreement")
and certain additional agreements whose execution is contemplated in the
Agreement, including the Agreement of Merger by
Zions Bancorporation
[____________________], 1997
Page 2
and between Zions Bancorp and the Company (the "Merger Agreement") (the
Agreement and the Merger Agreement to be referred to collectively as the
"Agreements"). We have been requested by the Company to furnish to you our
opinion pursuant to Section 4.4 of the Agreement.
In rendering the opinion that follows, we have examined the Agreements and
such other documents and records as we have deemed necessary or appropriate for
the purpose of rendering the following opinion. In addition, we have interviewed
officers of the Company and the Subsidiaries and undertaken and performed such
other procedures as we have deemed necessary or appropriate for the purpose of
rendering the following opinion. In these regards, we have examined and relied
upon representations of the Company and Zions Bancorp contained in the
Agreements, and, where we have deemed appropriate, representations or
certifications of officers or public officials.
We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of natural
persons, and the conformity to the originals of all documents submitted to us as
copies. We have also assumed that the Agreements have not been otherwise amended
by oral or written agreement or by conduct of the parties thereto. We have
assumed that the certifications and representations dated earlier than the date
hereof on which we have expressed reliance herein continue to remain accurate,
insofar as material to our opinions, from such earlier date through the date
hereof.
On the foregoing basis, and as otherwise described herein, we are of the
opinion that: (a) there is no action, suit, or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending, or threatened,
against the Company or any of the Subsidiaries which might result in any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs, or business prospects of the Company or the
Subsidiaries considered as one enterprise, or which might materially and
adversely affect the properties or assets thereof or which might prevent, hinder
or delay the consummation of the transactions contemplated in the Agreements;
and (b) all pending legal or governmental proceedings to which the Company or
any of the Subsidiaries is a party or to which any of its property or assets is
the subject, including ordinary routine litigation incidental to its business,
are, considered in the aggregate, not material.
This opinion is given solely for your benefit in connection with the
transactions contemplated by the Agreements, and no
Zions Bancorporation
[____________________], 1997
Page 3
other person or entity is entitled to rely thereon, nor may copies be delivered
or furnished to any other party, nor may all or portions of this opinion be
quoted, circulated, or referred to in any other document without our prior
consent.
Respectfully submitted,
EXHIBIT VI
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") made and entered into this
[___] day of [__________], 1997, by and between CHARLES B. ISRAEL ("Executive")
and ZIONS BANCORPORATION, a Utah corporation, having its principal office in
Salt Lake City, Utah ("Zions Bancorp")
W I T N E S S E T H T H A T :
WHEREAS, the Agreement and Plan of Reorganization (the "Plan") dated as of
November 19, 1996, by and between Zions Bancorp and Aspen Bancshares, Inc.
("Bancshares"), provides that Bancshares will be merged with and into Zions
Bancorp;
WHEREAS, Executive is the President and Chief Executive Officer of each of
Bancshares and Pitkin County Bank and Trust Company, a bank organized under the
laws of Colorado and having its main office in Aspen, Colorado ("Pitkin");
WHEREAS, Zions Bancorp desires to secure the employment of Executive upon
consummation of the transactions contemplated in the Plan;
WHEREAS, Executive is desirous of entering into the Agreement for such
periods and upon the terms and conditions set forth herein; and
WHEREAS, to assist in achieving the objectives of the transactions
described in the Plan, section 4.11 of the Plan contemplates that Executive will
enter into an employment agreement as a condition to the consummation of the
transactions described therein.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements hereinafter set forth, the parties agree as follows:
1. Employment; Responsibilities and Duties.
(a) Zions Bancorp hereby agrees to employ Executive, and Executive hereby
agrees to serve as the chief executive officer and member of the Board of
Directors of Pitkin and of any depository institution which is
successor-in-interest thereto ("Pitkin" hereafter to include any depository
institution which is successor-in-interest thereto) during the Term of
Employment. Executive shall have such duties, responsibilities, and authority of
an executive nature as shall be set forth in the bylaws of Pitkin on the date of
this Agreement or as may otherwise be determined by Zions Bancorp or by Pitkin.
(b) Zions Bancorp hereby agrees to retain Executive as a member of the
Board of Directors of Pitkin and as chief executive
officer of Pitkin during the Term of Employment and to cause his re-election and
re-appointment, as necessary, throughout the Term of Employment.
(c) Executive shall devote his full working time and best efforts to the
performance of his responsibilities and duties hereunder and to the performance
of similar responsibilities and duties with respect to affiliates of Pitkin
located in the State of Colorado. During the Term of Employment, Executive shall
not, without the prior written consent of the Board of Directors of Zions
Bancorp, render services as an employee, independent contractor, or otherwise,
whether or not compensated, to any person or entity other than Zions Bancorp or
Pitkin or their affiliates; provided that Executive may, where involvement in
such activities does not individually or in the aggregate significantly
interfere with the performance by Executive of his duties or violate the
provisions of section 4 hereof, (i) render services to charitable organizations,
(ii) manage his personal investments, and (iii) with the prior permission of the
Board of Directors of Zions Bancorp, hold such other directorships or part-time
academic appointments or have such other business affiliations as would
otherwise be prohibited under this section 1.
2. Term of Employment.
(a) The term of this Agreement ("Term of Employment") shall be the period
commencing on the date hereof (the "Commencement Date") and continuing until the
Termination Date, which shall mean the earliest to occur of:
(i) the second anniversary of the Commencement Date, unless the Term
of Employment shall be extended by mutual written agreement of Executive and
Zions Bancorp;
(ii) the death of Executive;
(iii) Executive's inability to perform his duties hereunder, as a
result of physical or mental disability as reasonably determined by the personal
physician of Executive, for a period of at least 180 consecutive days or for at
least 180 days during any period of twelve consecutive months during the Term of
Employment; or
(iv) the discharge of Executive by Zions Bancorp "for cause," which
shall mean one or more of the following:
(A) any willful or gross misconduct by Executive with respect to
the business and affairs of Zions Bancorp or Pitkin, or with respect to any of
their affiliates for which Executive is assigned material responsibilities or
duties;
- 2 -
(B) the conviction of Executive of a felony (after the earlier of
the expiration of any applicable appeal period without perfection of an appeal
by Executive or the denial of any appeal as to which no further appeal or review
is available to Executive) whether or not committed in the course of his
employment by Zions Bancorp;
(C) Executive's willful neglect, failure, or refusal to carry out
his duties hereunder in a reasonable manner; or
(D) the breach by Executive of any representation or warranty
in section 6(a) hereof or of any agreement contained in section 1, 4, 5, or 6(b)
hereof, which breach is material and adverse to Zions Bancorp or Pitkin or any
of their affiliates for which Executive is assigned material responsibilities or
duties; or
(v) Executive's resignation from his position as chief executive
officer or member of the Board of Directors of Pitkin; or
(vi) the termination of Executive's employment by Zions Bancorp
"without cause," which shall be for any reason other than those set forth in
subsections (i), (ii), (iii), or (iv) of this section 2(a), at any time, upon
the thirtieth day following notice to Executive.
(b) In the event that the Term of Employment shall be terminated for any
reason other than that set forth in section 2(a)(vi) hereof, Executive shall be
entitled to receive, upon the occurrence of any such event:
(i) any salary (as hereinafter defined) payable pursuant to section
3(a)(i) hereof which shall have accrued as of the Termination Date; and
(ii) such rights as Executive shall have accrued as of the Termination
Date under the terms of any plans or arrangements in which he participates
pursuant to sections 3(b) or (c) hereof, any right to reimbursement for expenses
accrued as of the Termination Date payable pursuant to section 3(h) hereof, and
the right to receive the cash equivalent of paid annual leave and sick leave
accrued as of the Termination Date pursuant to section 3(e) hereof.
(c) In the event that the Term of Employment shall be terminated for the
reason set forth in section 2(a)(vi) hereof, Executive shall be entitled to
receive:
(i) for the period commencing on the date immediately following the
Termination Date and ending upon and including
- 3 -
the second anniversary of the Commencement Date, salary payable at the rate
established pursuant to section 3(a)(i) hereof for the year in which the
Termination Date occurs, in a manner consistent with the normal payroll
practices of Pitkin with respect to executive personnel as presently in effect
or as they may be modified by Pitkin from time to time; and
(ii) such rights as Executive may have accrued as of the Termination
Date under the terms of any plans or arrangements in which he participates
pursuant to sections 3(b) or (c) hereof, any right to reimbursement for expenses
accrued as of the Termination Date payable pursuant to section 3(h) hereof, and
the right to receive the cash equivalent of paid annual leave and sick leave
accrued as of the Termination Date pursuant to section 3(e) hereof.
(d) At or about six months before the second anniversary of the
Commencement Date, Zions Bancorp and Executive will each review the employment
relationship between Zions Bancorp and Executive in order to evaluate the
desirability of maintaining that relationship for an additional term beyond that
provided for in section 2(a)(i) of this Agreement, or of modifying such
relationship for such additional term, and Zions Bancorp and Executive will
engage in discussions with respect to mutually agreeable terms and conditions
for such employment, provided that nothing in this section 2(d) shall constitute
an offer or guarantee of employment.
3. Compensation. For the services to be performed by Executive for Zions
Bancorp under this Agreement, Executive shall be compensated in the following
manner:
(a) Salary and Bonus.
(i) Salary. During the Term of Employment Pitkin shall pay Executive a
salary, the amount of which shall be reviewed at least annually, but which in
any event shall not be less than the aggregate salary paid to Executive by
Pitkin and its affiliates as of June 30, 1996. Salary shall be payable in
accordance with the normal payroll practices of Pitkin with respect to executive
personnel as presently in effect or as they may be modified by Pitkin from time
to time.
(ii) Discretionary Bonuses. During the Term of Employment and
beginning with respect to the calendar year ending as of December 31, 1997,
Executive shall be considered annually by the Executive Compensation Committee
of the Board of Directors of Zions Bancorp for a discretionary bonus payment by
Pitkin made in accordance with the compensation policies of Zions Bancorp as
presently in effect or as they may be modified by Zions Bancorp from time to
time.
(b) Value-Sharing Plan and Incentive Stock Option Plan. During the Term of
Employment, Executive shall be entitled to
- 4 -
receive units of participation under the Value-Sharing Plan and stock options
under the Incentive Stock Option Plan of Zions Bancorp, as each is in effect as
of the Commencement Date or as may be modified by Zions Bancorp from time to
time, in such amounts and upon such terms as may be prescribed by the Executive
Compensation Committee of the Board of Directors of Zions Bancorp at its sole
discretion.
(c) Employee Benefit Plans or Arrangements. During the Term of Employment,
subject to the following sentence, Executive shall be entitled to participate in
all employee benefit plans of Zions Bancorp, as presently in effect or as they
may be modified by Zions Bancorp from time to time, under such terms as may be
applicable to officers of Executive's rank employed by Zions Bancorp or its
subsidiaries, including, without limitation, plans providing retirement
benefits, medical insurance, life insurance, disability insurance, and
accidental death or dismemberment insurance.
(d) Vacation and Sick Leave. During the Term of Employment, Executive shall
be entitled to paid annual vacation periods and sick leave in accordance with
the policies of Zions Bancorp as in effect as of the Commencement Date or as may
be modified by Zions Bancorp from time to time as may be applicable to officers
of Executive's rank employed by Zions Bancorp or its subsidiaries, but in no
event less than that provided to Executive by Pitkin and its affiliates at June
30, 1996.
(e) Withholding. All compensation to be paid to Executive hereunder shall
be subject to required withholding and other taxes.
(f) Expenses. During the Term of Employment, Executive shall be reimbursed
for reasonable travel and other expenses incurred or paid by Executive in
connection with the performance of his services under this Agreement, upon
presentation of expense statements or vouchers or such other supporting
information as may from time to time be requested, in accordance with such
policies of Zions Bancorp as are in effect as of the Commencement Date and as
may be modified by Zions Bancorp from time to time, under such terms as may be
applicable to officers of Executive's rank employed by Zions Bancorp or its
subsidiaries.
4. Confidential Business Information; Non-Competition.
(a) Executive acknowledges that certain business methods, creative
techniques, and technical data of Zions Bancorp and Pitkin and their affiliates
and the like are deemed by Zions Bancorp to be and are in fact confidential
business information either of Zions Bancorp or Pitkin or their affiliates or
are entrusted to third parties. Such confidential information includes but is
not limited to procedures, methods, sales relationships
- 5 -
developed while in the service of Zions Bancorp or Pitkin or their affiliates,
knowledge of customers and their requirements, marketing plans, marketing
information, studies, forecasts, and surveys, competitive analyses, mailing and
marketing lists, new business proposals, lists of vendors, consultants, and
other persons who render service or provide material to Zions Bancorp or Pitkin
or their affiliates, and compositions, ideas, plans, and methods belonging to or
related to the affairs of Zions Bancorp or Pitkin or their affiliates. In this
regard, Zions Bancorp asserts proprietary rights in all of its business
information and that of Pitkin and that of their affiliates except for such
information as is clearly in the public domain. Notwithstanding the foregoing,
information that would be generally known or available to persons skilled in
Executive's fields shall be considered to be "clearly in the public domain" for
the purposes of the preceding sentence. Executive agrees that he will not
disclose or divulge to any third party, except as may be required by his duties
hereunder, by law, regulation, or order of a court or government authority, or
as directed by Zions Bancorp, nor shall he use to the detriment of Zions Bancorp
or Pitkin or their affiliates or use in any business or on behalf of any
business competitive with or substantially similar to any business of Zions
Bancorp or Pitkin or their affiliates, any confidential business information
obtained during the course of his employment by Zions Bancorp and Pitkin. The
foregoing shall not be construed as restricting Executive from disclosing such
information to the employees of Zions Bancorp or Pitkin or their affiliates.
(b) Executive hereby agrees that during the Term of Employment, Executive
will not (i) engage in the banking business other than on behalf of Zions
Bancorp or Pitkin or their affiliates within the Market Area (as hereinafter
defined), (ii) directly or indirectly own, manage, operate, control, be employed
by, or provide management or consulting services in any capacity to any firm,
corporation, or other entity (other than Zions Bancorp or Pitkin or their
affiliates) engaged in the banking business in the Market Area, or (iii)
directly or indirectly solicit or otherwise intentionally cause any employee,
officer, or member of the respective Boards of Directors of Zions Bancorp or
Pitkin or any of their affiliates to engage in any action prohibited under (i)
or (ii) of this section 4(b); provided that the ownership by Executive as an
investor of not more than five percent of the outstanding shares of stock of any
corporation whose stock is listed for trading on any securities exchange or is
quoted on the automated quotation system of the National Association of
Securities Dealers, Inc., or the shares of any investment company as defined in
section 3 of the Investment Company Act of 1940, as amended, shall not in itself
constitute a violation of Executive's obligations under this section 4(b).
(c) Executive acknowledges and agrees that irreparable injury will result
to Zions Bancorp and Pitkin in the event of a
- 6 -
breach of any of the provisions of this section 4 (the "Designated Provisions")
and that Zions Bancorp will have no adequate remedy at law with respect thereto.
Accordingly, in the event of a material breach of any Designated Provision, and
in addition to any other legal or equitable remedy Zions Bancorp may have, Zions
Bancorp shall be entitled to the entry of a preliminary and permanent injunction
(including, without limitation, specific performance) by a court of competent
jurisdiction in Salt Lake County, Utah, Pitkin County, Colorado, or elsewhere,
to restrain the violation or breach thereof by Executive or any affiliates,
agents, or any other persons acting for or with Executive in any capacity
whatsoever, and Executive submits to the jurisdiction of such court in any such
action.
(d) It is the desire and intent of the parties that the provisions of this
section 4 shall be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this section 4 shall be adjudicated
to be invalid or unenforceable, such provision shall be deemed amended to delete
therefrom the portion thus adjudicated to be invalid or unenforceable, such
deletion to apply only with respect to the operation of such provision in the
particular jurisdiction in which such adjudication is made. In addition, should
any court determine that the provisions of this section 4 shall be unenforceable
with respect to scope, duration, or geographic area, such court shall be
empowered to substitute, to the extent enforceable, provisions similar hereto or
other provisions so as to provide to Zions Bancorp, to the fullest extent
permitted by applicable law, the benefits intended by this section 4.
(e) As used herein, "Market Area" shall mean:
(i) The Colorado Counties of Archuleta, Delta, Dolores, Eagle,
Garfield, Gunnison, Hinsdale, La Plata, Mesa, Mineral, Montezuma, Montrose,
Ouray, Pitkin, San Juan, and San Miguel;
(ii) Any other county in Colorado in which Zions Bancorp or Pitkin or
any affiliate of either of them at any time during the Term of Employment shall
be approved to operate a main or branch office at which deposits are accepted;
and
(iii) San Juan County, New Mexico.
5. Life Insurance. In light of the unusual abilities and experience of
Executive, Zions Bancorp in its discretion may apply for and procure as owner
and for its own benefit insurance on the life of Executive, in such amount and
in such form as Zions Bancorp may choose. Zions Bancorp shall make all payments
for such insurance and shall receive all benefits from it. Executive shall have
no interest whatsoever in any such policy or policies but, at
- 7 -
the request of Zions Bancorp, shall submit to medical examinations and supply
such information and execute such documents as may reasonably be required by the
insurance company or companies to which Zions Bancorp has applied for insurance.
6. Representations and Warranties.
(a) Executive represents and warrants to Zions Bancorp that his execution,
delivery, and performance of this Agreement will not result in or constitute a
breach of or conflict with any term, covenant, condition, or provision of any
commitment, contract, or other agreement or instrument, including, without
limitation, any other employment agreement, to which Executive is or has been a
party.
(b) Executive shall indemnify, defend, and hold harmless Zions Bancorp and
Pitkin for, from, and against any and all losses, claims, suits, damages,
expenses, or liabilities, including court costs and counsel fees, which Zions
Bancorp or Pitkin has incurred or to which Zions Bancorp or Pitkin may become
subject, insofar as such losses, claims, suits, damages, expenses, liabilities,
costs, or fees arise out of or are based upon any failure of any representation
or warranty of Executive in section 6(a) hereof to be true and correct when
made.
7. Notices. All notices, consents, waivers, or other communications which
are required or permitted hereunder shall be in writing and deemed to have been
duly given if delivered personally or by messenger, transmitted by telex or
telegram, by express courier, or sent by registered or certified mail, return
receipt requested, postage prepaid. All communications shall be addressed to the
appropriate address of each party as follows:
If to Zions Bancorp:
Zions Bancorporation
1380 Kennecott Building
Salt Lake City, Utah 84133
Attention: Mr. Harris H. Simmons
President and Chief Executive Officer
With a required copy to:
Brian D. Alprin, Esq.
Metzger, Hollis, Gordon & Alprin
1275 K Street, N.W., Suite 1000
Washington, D.C. 20005
- 8 -
If to Executive:
Mr. Charles B. Israel
[___________________________]
[___________________________]
All such notices shall be deemed to have been given on the date delivered,
transmitted, or mailed in the manner provided above.
8. Assignment. Neither party may assign this Agreement or any rights or
obligations hereunder without the consent of the other party.
9. Governing Law. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Utah, without giving effect
to the principles of conflict of law thereof. The parties hereby designate Salt
Lake County, Utah, to be the proper jurisdiction and venue for any suit or
action arising out of this Agreement. Each of the parties consents to personal
jurisdiction in such venue for such a proceeding and agrees that he or it may be
served with process in any action with respect to this Agreement or the
transactions contemplated thereby by certified or registered mail, return
receipt requested, or to its registered agent for service of process in the
state of Utah. Each of the parties irrevocably and unconditionally waives and
agrees, to the fullest extent permitted by law, not to plead any objection that
he or it may now or hereafter have to the laying of venue or the convenience of
the forum of any action or claim with respect to this Agreement or the
transactions contemplated thereby brought in the courts aforesaid.
10. Entire Agreement. This Agreement constitutes the entire understanding
between Zions Bancorp and Executive relating to the subject matter hereof. Any
previous agreements or understandings between the parties hereto or between
Executive and Bancshares or any of its affiliates or Pitkin or any of its
affiliates regarding the subject matter hereof, including without limitation the
terms and conditions of employment, compensation, benefits, retirement,
competition following employment, and the like, are merged into and superseded
by this Agreement. Neither this Agreement nor any provisions hereof can be
modified, changed, discharged, or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge, or termination
is sought.
11. Severability. If any provision or provisions of this Agreement shall be
held to be invalid, illegal, or unenforceable for any reason whatsoever:
(a) the validity, legality, and enforceability of the remaining provisions
of this Agreement (including, without limitation, each portion of any section of
this Agreement contain-
- 9 -
ing any such provision held to be invalid, illegal, or unenforceable) shall
not in any way be affected or impaired thereby; and
(b) to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of any section of this Agreement
containing any such provisions held to be invalid, illegal, or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, illegal, or unenforceable.
12. Arbitration. Subject to the right of each party to seek specific
performance (which right shall not be subject to arbitration), if a dispute
arises out of or related to this Agreement, or the breach thereof, such dispute
shall be referred to arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA"). A dispute subject to the
provisions of this section will exist if either party notifies the other party
in writing that a dispute subject to arbitration exists and states, with
reasonable specificity, the issue subject to arbitration (the "Arbitration
Notice"). The parties agree that, after the issuance of the Arbitration Notice,
the parties will try in good faith to resolve the dispute by mediation in
accordance with the Commercial Rules of Arbitration of AAA between the date of
the issuance of the Arbitration Notice and the date the dispute is set for
arbitration. If the dispute is not settled by the date set for arbitration, then
any controversy or claim arising out of this Agreement or the breach hereof
shall be resolved by binding arbitration and judgment upon any award rendered by
arbitrator(s) may be entered in a court having jurisdiction. Any person serving
as a mediator or arbitrator must have at least ten years' experience in
resolving commercial disputes through arbitration. In the event any claim or
dispute involves an amount in excess of $100,000, either party may request that
the matter be heard by a panel of three arbitrators; otherwise all matters
subject to arbitration shall be heard and resolved by a single arbitrator. The
arbitrator shall have the same power to compel the attendance of witnesses and
to order the production of documents or other materials and to enforce discovery
as could be exercised by a United States District Court judge sitting in the
District of Colorado. In the event of any arbitration, each party shall have a
reasonable right to conduct discovery to the same extent permitted by the
Federal Rules of Civil Procedure, provided that such discovery shall be
concluded within ninety days after the date the matter is set for arbitration.
Any provision in this Agreement to the contrary notwithstanding, this section
shall be governed by the Federal Arbitration Act and the parties have entered
into this Agreement pursuant to such Act.
13. Costs of Litigation. In the event litigation is commenced to enforce
any of the provisions hereof, or to obtain declaratory relief in connection with
any of the provisions hereof, the prevailing party shall be entitled to recover
reasonable
- 10 -
attorney's fees. In the event this Agreement is asserted in any litigation as a
defense to any liability, claim, demand, action, cause of action, or right
asserted in such litigation, the party prevailing on the issue of that defense
shall be entitled to recovery of reasonable attorney's fees.
14. Affiliation. A company will be deemed to be "affiliated" with Zions
Bancorp or Pitkin according to the definition of "Affiliate" set forth in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended.
15. Headings. The section and subsection headings herein have been inserted
for convenience of reference only and shall in no way modify or restrict any of
the terms or provisions hereof.
IN WITNESS WHEREOF, the parties hereto executed or caused this Agreement to
be executed as of the day and year first above written.
ZIONS BANCORPORATION
Attest:__________________________ By:_____________________________________
Harris H. Simmons
President and
Chief Executive Officer
CHARLES B. ISRAEL
Witness:_________________________ ________________________________________
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EXHIBIT VII
NON-INVESTMENT AGREEMENT
[____________], 1997
Zions Bancorporation
1380 Kennecott Building
Salt Lake City, Utah 84133
Mesdames and Gentlemen:
This letter is provided to you in connection with an Agreement and Plan of
Reorganization (the "Agreement") between Zions Bancorporation ("Zions Bancorp")
and Aspen Bancshares, Inc. (the "Company"), which provides for the merger of the
Company with and into Zions Bancorp (the "Merger") and the conversion of
outstanding shares of Company Common Stock into Zions Bancorp Common Stock in
accordance with the formula therein set forth. The undersigned understands that
the obligations of Zions Bancorp under the Agreement are subject to the
satisfaction, on or prior to the Effective Date, of various conditions, one of
which is the execution and delivery by the undersigned of this letter.
In order to satisfy a condition to the obligations of Zions Bancorp under
the Agreement, and intending to be legally bound hereby, the undersigned,
subject to the conditions hereinafter stated, agrees as follows:
(a) the undersigned will not own any of the outstanding shares of the
capital stock of any corporation that meets both of the following criteria:
(i) it or an affiliated corporation solicits, accepts, or holds
deposits, which for purposes of this letter means money or its equivalent
received or held by a person in the usual course of business and for which it
has given or is obligated to give credit, either conditionally or
unconditionally, to a demand, checking, savings, time, passbook, negotiable
order of withdrawal, thrift or share account, or which is evidenced by its
passbook, certificate of deposit, thrift certificate, investment certificate,
certificate of indebtedness, or other similar instrument, or a check, draft or
share draft drawn against a deposit account and certified by a person, on which
the person is primarily liable; and
(ii) either the deposits held on a consolidated basis by it (if it is
an Ultimate Parent Entity, as defined below) or by its Ultimate Parent Entity in
offices situated in the Market Area (as defined below) exceed 10 percent of such
entity's total consolidated deposits, or the loan and lease revenue derived on a
consolidated basis by it (if it is an Ultimate Parent Entity, as defined below)
or by its Ultimate Parent Entity from offices
Zions Bancorporation
[____________________], 1997
Page 2
situated in the Market Area (as defined below) exceeds 10 percent of such
entity's total consolidated loan and lease revenue.
For purposes of this letter, "Market Area" means the Colorado Counties of
Archuleta, Delta, Dolores, Eagle, Garfield, Gunnison, Hinsdale, La Plata, Mesa,
Mineral, Montezuma, Montrose, Ouray, Pitkin, San Juan, and San Miguel, and the
New Mexico County of San Juan, and "Ultimate Parent Entity" means a corporation
registered as a bank holding company under the Bank Holding Company Act of 1956,
as amended (the "BHC Act"), or as a savings and loan holding company under
section 10 of the Home Owners' Loan Act of 1933, as amended (the "S&LHC Act"),
and none of whose affiliates would be required to be registered as a bank
holding company under the BHC Act or as a savings and loan holding company under
the S&LHC Act by virtue of its control over it.
The undersigned represents and warrants to Zions Bancorp that as of the
date of this letter, no shares of the capital stock of any corporation are owned
in violation of any of the requirements of this letter.
Very truly yours,
-------------------------
Accepted and Agreed to:
ZIONS BANCORPORATION
By:__________________________
Title:_______________________
EXHIBIT VIII
OPINION OF METZGER, HOLLIS, GORDON & ALPRIN
[____________________], 1997
Aspen Bancshares, Inc.
534 East Hyman Avenue
Aspen, Colorado 81611
Re: Merger of Aspen Bancshares, Inc. With Zions
Bancorporation, In Exchange for Stock of Zions
Bancorporation
Mesdames and Gentlemen:
We are special counsel to Zions Bancorporation, a corporation organized
under the laws of the State of Utah with its head office located at Salt Lake
City, County of Salt Lake, State of Utah ("Zions Bancorp"), in connection with
the merger (the "Merger") of Zions Bancorp with Aspen Bancshares, Inc., a
Colorado corporation (the "Company"), in exchange for which shareholders of the
Company will receive shares of the common stock of Zions Bancorp pursuant to an
Agreement and Plan of Reorganization dated November 19, 1996 (the "Agreement")
and certain additional agreements whose execution is contemplated in the
Agreement, including the Agreement of Merger by and between Zions Bancorp and
the Company (the "Merger Agreement") (the Agreement and the Merger Agreement to
be referred to collectively as the "Agreements").
This opinion is provided to you pursuant to Section 5.2 of the Agreement.
In our capacity as special counsel, we have participated in the preparation
of a Registration Statement filed with the Securities and Exchange Commission on
Form S-4 covering the shares of Zions Bancorp stock to be issued in connection
with the Merger (the "Registration Statement") including the Prospectus/Proxy
Statement for the shareholders of the Company (the "Prospectus/Proxy
Statement"). In addition, in rendering the opinions that follow, we have
examined the Agreements and the exhibits and schedules appended thereto; the
articles of incorporation and by-
Aspen Bancshares, Inc.
[____________________], 1997
Page 2
laws of Zions Bancorp; the minutes of certain meetings of the board of directors
of Zions Bancorp; and such other corporate documents and corporate records of
Zions Bancorp as we have deemed necessary or appropriate for the purpose of
rendering the following opinions. We have also examined a document dated
[_______________], 1997 of the Federal Reserve Bank of San Francisco (the
"Reserve Bank") approving the application of Zions Bancorp to merge with the
Company and thereby acquire control of Pitkin County Bank and Trust Company, a
banking corporation organized under the laws of the State of Colorado with its
head office located at Aspen, County of Pitkin, State of Colorado, Centennial
Savings Bank, F.S.B., a federal savings bank organized under the laws of the
United States with its head office located at Durango, County of La Plata, State
of Colorado, Val Cor Bancorporation, Inc., a corporation organized under the
laws of the State of Colorado with its head office located at Cortez, County of
Montezuma, State of Colorado, Valley National Bank of Cortez, Colorado, a
national banking association organized under the laws of the United States with
its head office located at Cortez, County of Montezuma, State of Colorado, and
Thatcher Financial Group, Inc., a corporation organized under the laws of the
State of Colorado with its head office located at Aspen, County of Pitkin, State
of Colorado, pursuant to the Bank Holding Company Act of 1956, as amended. In
addition, we have interviewed officers of Zions Bancorp and undertaken and
performed such other procedures as we have deemed necessary or appropriate for
the purpose of rendering the following opinions. In these regards, we have
examined and relied upon representations of the Company contained in the
Agreements, and, where we have deemed appropriate, representations or
certifications of officers or public officials.
We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of natural
persons, and the conformity to the originals of all documents submitted to us as
copies. In making our examination of any documents, we have assumed that all
parties other than Zions Bancorp had the corporate power and authority to enter
into and perform all obligations thereunder and, as to such parties other than
Zions Bancorp, we have also assumed the execution and delivery of such documents
and the validity and binding effect and enforceability thereof. We have also
assumed that the Agreements have not been otherwise amended by oral or written
agreement or by conduct of the parties thereto. We have assumed that the
certifications and representations dated earlier than the date hereof on which
we have expressed reliance herein continue to remain accurate, insofar as
material to our opinions, from such earlier date through the date hereof.
Aspen Bancshares, Inc.
[____________________], 1997
Page 3
Based on the foregoing, and as otherwise described herein, we are of the
opinion that:
(a) Organization, Powers and Qualifications. Zions Bancorp is a corporation
which is duly organized, validly existing, and in good standing under the laws
of the State of Utah and has all requisite corporate power and authority to own
and operate its properties and assets, to lease properties used in its business,
and to carry on its business as now conducted.
(b) Execution and Performance of Agreements. Zions Bancorp has all
requisite corporate power and authority to execute, deliver, and perform each of
the Agreements and to carry out the terms thereof and the transactions
contemplated thereby.
(c) Compliance with Corporate Documents. Neither the execution, delivery,
or performance by Zions Bancorp of the Agreements nor the consummation of the
transactions contemplated therein will violate, conflict with, or constitute a
breach of or default under the articles of incorporation or by-laws of Zions
Bancorp.
(d) Binding Obligations; Due Authorization. Each of the Agreements has been
duly authorized by all necessary corporate action on the part of Zions Bancorp,
has been duly executed and delivered by Zions Bancorp, and constitutes a valid,
legal, and binding obligation of Zions Bancorp, enforceable against it in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, receivership, conservatorship, or
similar laws or judicial decisions relating to or affecting creditors' rights
generally or the rights of creditors, or of the FDIC as insurer, regulator,
conservator or receiver, of banks or savings associations the accounts of which
are insured by the FDIC in particular, or by general equitable principles
(regardless of whether enforceability is considered in a proceeding in equity or
at law) as to whose availability we express no opinion. No other corporate
proceedings on the part of Zions Bancorp are necessary to authorize each of the
Agreements or the carrying out of the transactions contemplated thereby.
(e) Regulatory Approvals. All approvals required to be obtained from the
Reserve Bank and the Board of Governors of the Federal Reserve System to
consummate the transactions contemplated by the Agreement have been obtained.
Except for those approvals, the execution and delivery by Zions Bancorp of each
of the Agreements and consummation of the transactions contemplated thereby do
not require the approval or consent of any bank or savings-association
regulatory authority.
Aspen Bancshares, Inc.
[____________________], 1997
Page 4
(f) Issuance of Zions Bancorp Common Stock. The shares of the Common Stock
of Zions Bancorp, no par value, to be issued by Zions Bancorp pursuant to the
Agreement and the Merger Agreement, when issued pursuant to and in accordance
with the Agreement and the Merger Agreement, will be, when issued, duly
authorized and legally issued, fully paid, and non-assessable.
(g) Compliance with Securities Laws.
(i) The Registration Statement has become effective under the
Securities Act of 1933 (the "Act") and, to the best of our knowledge, no stop
order proceedings with respect thereto have been instituted or are pending or
threatened under the Act with respect to the Registration Statement.
(ii) The Registration Statement complies as to form in all material
respects with the requirements of the federal securities laws and published
rules and regulations of the Securities and Exchange Commission as of the date
thereof. In connection with our participation in the preparation of the
Registration Statement, we have not independently verified the accuracy,
completeness, or fairness of the statements contained therein or of documents
incorporated by reference therein, and we cannot make any representation to you
as to the accuracy or completeness of statements of fact contained or
incorporated by reference in the Registration Statement or the Prospectus/Proxy
Statement. Nothing, however, has come to our attention that would lead us to
believe that the Registration Statement as of the effective date or the date
hereof, or the Prospectus/Proxy Statement as of the issue date or the date
hereof, contained or contains an untrue statement of a material fact or omitted
or omits to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading (other
than the financial statements and schedules and other financial and statistical
data included or incorporated by reference therein, as to which we make no
statement) or that any event has occurred which should have been set forth in an
amendment or supplement to the Registration Statement or Prospectus/Proxy
Statement and which has not been set forth in such amendment or supplement.
This opinion is given to you for your sole benefit in connection with the
transactions contemplated in the Agreements, and no other person or entity is
entitled to rely thereon, nor may copies be delivered or furnished to any other
party, nor may all or
Aspen Bancshares, Inc.
[____________________], 1997
Page 5
portions of this opinion be quoted, circulated, or referred to in any other
document without our prior written consent.
Very truly yours,
METZGER, HOLLIS, GORDON & ALPRIN
By:_______________________________
Brian D. Alprin
BDA/bl
Dates Referenced Herein and Documents Incorporated by Reference
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